The matters are listed for final hearing by consent of the parties. Heard accordingly. The rival contentions so raised are revolved around the common facts and circumstances, between the parties and therefore, this common judgment.
2 There are two groups of the same family involved in the matter. The Petitioner Nos.1 to 5 (in Arbitration Application No.34 of 2012) be referred to as âCPS groupâ, and the Respondents therein (i.e. Respondent Nos.1 to 3) be referred as âAPS groupâ. The APS group has filed Arbitration Application(Lodg.) No.493 of 2013 and prayed for an appointment of Sole Arbitrator to resolve the dispute in accordance with Deed of Family settlement and agreement dated 24.4.2006. The APS group, apart from joining CPS group, has also added three companies as parties-respondent nos.6 to 8. Both the parties have invoked Section 11 of Arbitration And Conciliation Act, 1996 (for short 'Arbitration Act').
3 The basic events are quoted as under:
(a) âBetween 2010-2012, 22 proceedings were filed and pending between the parties, including the Arbitration Application No.34 of 2012. On 07.09.2012, an order was passed referring the parties in Arbitration Application No.34 of 2012 to mediation and appointing Mr. Sriram Panchu, Senior Advocate, as the Mediator. It was recorded in the order that:
âParties are agreed that all their disputes and differences may be made the subject matter of the mediation proceedings without prejudice to their rights and contentions and that the criminal proceedings shall be held in abeyance in the meantime to facilitate a settlement being exposed.â
(b) On an Application for speaking to the minutes of the order dated 7 September 2012 made by the petitioners before Dr. Justice D.Y. Chandrachud, an order was passed adding the words âand otherâ after the word criminal in para-2 of the order dated 7 September 2012.
(c) On 25 and 26 October 2012, the first session of mediation before the learned Mediator Mr. Sriram Panchu, Senior Advocate was held in Mumbai and was attended by Respondent Nos.1 and 2 and Petitioner No.1 with their Attorneys.
(d) On 04.12.2012, Appeal from Order No.275 of 2012 filed by the Respondents was listed before Justice Mr. S.C. Dharmadhikari, and following order was passed:
âas a last chance list this Appeal from Order under the same caption on 14th January 2013. No further adjournments will be granted.â
(e) On 22 and 23 October 2012, the second session of mediation before the learned Mediator was held in Mumbai. The next session for mediation was fixed on 25th and 26th January 2013.
(f) On 4 January 2013, Arbitration Application was listed before Justice Dr. D.Y. Chandrachud, when the following order was passed:
âthe Court has been apprised of the fact that Mediation proceedings are in progress. Hence, on the joint request of Counsel, the further hearing shall stand over to 15 March 2013.
On 10 January 2013, the learned Mediator filed his Interim Report in the above matter, inter alia recording that:
âThe first mediation session with the parties was conducted on 25.10.2012 and 26.10.2012 in Mumbai. The second mediation session was held on 22.12.12 and 23.12.12 in Mumbai. The next session has been fixed for 25.01.13 and 26.01.13. The mediation has made substantial progress. The parties are trying to narrow down their differences and arrive at a settlement which effectively resolves the dispute between them. The parties are in the process of preparing a draft settlement agreement for consideration during the next mediation session.
On 14 January 2013, Appeal from Order No.275 of 2012 was listed before Mr. Justice S.C. Dharmadhikari. The Respondent herein produced the Interim Report dated 10 January 2013 of the learned Mediator before the said Court. The order dated 4 January 2013 passed in the Arbitration Application No.34 of 2012 was also tendered. The learned Judge has passed the order directing that:-
âIf the Mediator does not finalize the proposal placed before him and submit his final report as stated on or before 15 March 2013, this Appeal from Order to stand dismissed without any further reference to the Court.â
On 22 January 2013, Letters Patent Appeal No.45 of 2013 was filed by the Respondents herein impugning the order dated 14 January 2013 which was not passed after hearing the parties on merits. On 22 January 2013, a purported requisition was issued by Maharashtra Erectors Pvt. Ltd. (MEPL) and signed by Petitioner Nos.1 and 2 for convening an Extra Ordinary General Meeting of MEPL to remove Respondent Nos.1 and 2 as Directors of MEP. According to the Respondents, they were unaware of the said requisition and learnt of the same for the first time on 29 January 2013, when they received a purported Notice for a Board Meeting dated 28 January 2013 issued by MEPL through Petitioner No.1.
On 23 January 2013, the order dated 14 January 2013 in Appeal from Order No.275 of 2012 was clarified by the Division Bench, Letters Patent Appeal No.45 of 2013 by an Order dated 23 January 2013. The Petitioners made no mention of the purported requisition dated 22 January 2013 issued by Petitioner Nos.1 and 2.
On 28 January 2013, at 5.54 pm, the Advocates for the Respondents were served by the Advocates for the Petitioners with the Confidentiality Agreement required for the mediation proceedings signed by Petitioner No.1 and Respondent No.1, thus clearly suggesting every intention to proceed with the mediation.
On 28 January 2013, a purported notice dated 28 January 2013 was addressed by MEPL purporting to give notice that a meeting of the Board of Directors of the Company was to be held on 2 February 2013, inter alia to consider the various items on the Agenda, including:
(I) holding of a purported EOGM for removal of Respondent Nos.1 and 2 as Directors of MEPL;
(II) to approve changes in the operation of Current Accounts of MEPL so as to divest Respondent No.1 of any authority in this regard and to vest the authority to operate the said accounts solely with Petitioner no.1 and/or Petitioner No.2.â The said notice was received by Respondents on 29 January 2013.
On 29 January 2013, the Respondents received the aforesaid purported notice dated 28 January 2013. At 10.04 pm, the Advocates for the Petitioners communicated to the Advocates for the Respondents that they had purportedly terminated the mediation proceedings with immediate effect.
On 31 January 2013, the Respondents filed Notice of Motion No.167 of 2013 before this Court in Arbitration Application No.34 of 2012 for the following reliefs:
âa) That this Hon'ble Court be pleased to pass an appropriate order, direction or injunction restraining the Petitioners from acting upon or in furtherance of any purported termination of the Reference to mediation under the order of this Hon'ble Court dated 7 September 2012;
b) Pending the mediation, this Hon'ble Court be pleased to pass an appropriate order, direction and injunction restraining the Petitioners by themselves or by their servants, agents and officers from altering the status quo and acting on the notice dated 28 January 2013;
c) Pending the mediation, this Hon'ble Court be pleased to pass an appropriate order, direction or injunction restraining the Petitioners by themselves or by their servants, agents and officers from acting upon or in furtherance of the purported requisition dated 22 January 2013 for convening of an extra-ordinary general meeting;
d) For ad-interim and interim reliefs in terms of prayers (a) to (c) hereinabove.
(g) On 1 February 2013, Respondent No.1 address a letter informing MEPL that he had transferred Rs.3,30,00,000/- from one of the Current account of MEPL to his personal account. He further stated that:
â..I am not claiming any rights in the said amount of Rs.3,30,00,000/-. It is MEPL's funds which I am holding in safe-custody for MEPL to prevent Mr. Chandrakant P. Sanghvi and Mrs. Mina Sanghvi from misappropriating this amount also. The money is in a Fixed Deposit with Kotak Mahindra and MEPL is entitled also to the interest which accrues on this Fixed Deposit so that there is no loss to MEPL.â
On 1 February 2013, after hearing the parties at length, the Hon'ble Chief Justice in his capacity as the Court having referred parties to mediation was pleased to pass the following order dated 1 February 2013:
3 In the meantime, the applicants in arbitration application (respondents in this notice of motion) have given notice to the applicants herein for the Board meeting to be held tomorrow i.e. 2 February 2013. the agenda of the said Board meeting indicates that the resolution is proposed to be moved for removal of the applicants Nos.1 and 2 herein from Directorship of the company M/s Maharashtra Erectors Private limited and also for changing operation of current accounts maintained by the company with several banks. Learned mediator Mr. Sriram Panchoo has not yet submitted any final report, much less, any failure report. It would, therefore, be in the fitness of things that parties shall maintain status-quo as of now till the learned Single Judge hears and decides Arbitration Application no.34 of 2012.
4 In view of the above, there shall be ad-interim injunction in terms of prayers (a),(b) and (c) till the next date of hearing of Arbitration Application No.34 of 2012, which shall now be placed before Dr. Justice D.Y. Chandrachud on 15 February 2013.â
On 2 February 2013, Petitioner No.1 purporting to act as the Chairman of MEPL, purported to issue a Notice for convening a Board Meeting on 4 February 2013 to conduct the business set out in the Agenda annexed thereto.
On 4 February 2013, the aforesaid Notice dated 2 February 2013 was duly replied to by Respondent no.1 vide his email dated 4 February 2013, setting out how the proposed Board Meeting was yet another attempt to overreach the orders of this Court.
On 7 and 8 February 2013, Mediation Meeting were proposed to be held. However since the Petitioner declined to attend the meeting by purporting to reiterate his earlier termination and hence the meeting could not be held.
On 8 February Petitioner No.1 vide his letter replied to the email of Respondent No.1 dated 4 February 2013, purporting to deny that the resolutions purportedly passed on 4 February 2013 were invalid, illegal or of no effect. Petitioner No.1 vide the said letter also enclosed alleged certified copies of the resolutions purportedly passed on 4 February 2013. Respondent No.1 received a letter from the Petitioner No.1 in reply to the Respondent No.1's letter dated 1 February 2013 addressed by him to MEPL.
On 11 February 2013, the Petitioners purported to reiterate their earlier purported termination of the mediation proceedings in breach of the order of the Court dated 1 February 2013 by which inter alia the Petitioners had been restrained from acting upon or in furtherance of any purported termination of the Reference to mediation under the order of this court dated 7 September 2012. The Petitioners refused to attend the mediation meeting scheduled on 16 February 2013.
On 13 February 2013, Appeal from Order No.55 of 2013 in Suit No.1800 of 2011 was admitted. Rule on interim reliefs made returnable after six weeks. Being aggrieved by the breach of the aforesaid order of this court dated 1 February 2013, the Respondents filed Notice of Motion No.248 of 2013 in the instant proceedings for the following reliefs:
â(a) That this Hon'ble Court be pleased to pass appropriate orders and directions:-
I) directing the petitioners to continue with, attend and participate in the mediation proceedings pursuant to the orders dated 7 and 14 September 2012, 23 January 2013 and 1 February 2013;
II) directing the Petitioners to act in accordance with the order dated 1 February 2013 (Coram: Hon'ble Chief Justice) in Notice of Motion No.167 of 2013 in Arbitration Application No.34 of 2012;
b) that this Hon'ble Court be pleased to pass appropriate orders and directions directing the parties and particularly the Petitioners to attend before the Mediator on the dates as may be fixed by the Mediator or by this Hon'ble Court;
c) That this Hon'ble Court be pleased to restrain the Petitioners from in any manner obstructing or impeding the mediation proceedings pursuant to the said orders set out in (i) above.
On 15 February 2013, the Advocates for the Respondents received a Report of the learned Mediator dated 13 February 2013 inter alia recording that:-
Â âThe Hon'ble Chief Justice of the Bombay High Court by order dated 1st February 2013 passed an ad interim injunction restraining the Petitioners in the present application from acting upon or in furtherance of any purported termination of the reference to mediation under order dated 7 September 2012. The Hon'ble Chief Justice mentioned that no report had been received from the Mediator.
Pursuant to the said order of the Hon'ble Chief Justice, and being of the view that another mediation meeting would be of value, the Mediator made his best efforts to hold a mediation session on 7 and 8 February 2013. However, these efforts did not fructify, since the Petitioner declined to attend the session on the ground that he had terminated the mediation. The Mediator has thus not been able to proceed further in the reference. The Mediator is therefore referring the matter to the Hon'ble Court for passing such orders as may be deemed fit.
On 28 February 2013, the Advocates for the Respondents received, vide fax at about 7.03 pm, a letter from the applicants enclosing therewith a praecipe for withdrawal stating that â...Applicants do not wish to pursue the matter...â. The Respondents herein through their Advocates sent a notice, vide email at about 9.09 pm referring the disputes and differences to Arbitration.
(h) On 1 March 2013, Justice Dr. D.Y. Chandrachud passed an order inter alia granting the Respondents herein an opportunity to file a reply to the withdrawal Application and thereafter the Applicants to file a rejoinder, if any. In the meanwhile, the ad-interim order dated 1 February 2013 was continued till the next date of hearing. On 20 March 2013, the Respondents reply to the purported Board Notice dated 28 January 2013 and the requisition for their removal.
On 4 April 2013, the Respondents filed Arbitration Application (L) no.493 of 2013 under Section 11 of the Arbitration and Conciliation Act, 1996.
On 8 April 2013, I passed an order directing that by consent Arbitration Application No.34 of 2012 with notices of motion nos.167 of 2013 and 248 of 2013 be listed alongwith Arbitration Application (L) No.493 of 2013 on 18 April 2013. Interim order dated 1 March 2013 is continued till the next date of hearing. Applicants state that they wish to file an affidavit in reply to the Respondents' Arbitration Application.
On 18 April 2013, Applicants once again seek time to file their reply to the Respondents Arbitration Application (L) No.493 of 2013 and the matters were adjourned to 3 May 2013. Interim orders were continue till the next date of hearing.
(i) On 3 May 2013, the Applicants serve an affirmed copy of the affidavit-in-reply in Arbitration Application (L) No.493 of 2013. the unaffirmed hard copy of was served on 2 May 2013. Matters were adjourned to 8 May 2013 and interim orders are continued till the next date of hearing.â
4 The prayer Clause (a) of Arbitration Application No.34 of 2012 reads as under:
â(a) That the Hon'ble the Chief Justice of this Hon'ble Court or his designate be pleased to appoint an appropriate person as the Sole Arbitrator to arbitrate upon the disputes between the Petitioners and the Respondent in accordance with Deed of Family Settlement and Agreement dated 24 April 2006.â
5 The prayer clause (a) of Arbitration Application Lodg. No.493 of 2013 reads as under:
â(a) That this Hon'ble Court be pleased to appoint Mr. R.A. Kapadia as the Sole Arbitrator under Clause 7 of the Deed of Family Settlement and Arrangement dated 24th April 2006, being Exhibit âCâ hereto to adjudicate upon the disputes between the parties hereto as per the Notice dated 28th February 2013 (Exhibit âHâ hereto)â
6 The learned Senior Counsel appearing for the CPS group submitted to withdraw the Arbitration Application in view of the praecipe/requisition filed on record. The other group has opposed the same for various reasons. There are number of interlocutory orders passed by the Courts presided over by the Hon'ble the Chief Justice and the designated judge from time to time, in view of the Notice of Motions for interim relief/protection taken out by the APS group.
Existence/subsistence of arbitration clause and dispute:-
7 It is necessary for the Court under Section 11 to decide the existence/subsistence of arbitration and the arbitrable dispute which required to be settle and/or resolved by the Arbitrator as agreed. To adjudicate the same, it is essential to consider the terms and conditions of the arbitration agreement between the parties. There is no dispute that parties have partly acted upon the same. The determination and/or termination, even if any, just cannot be the reason not to consider the rival submissions so raised and as contended to appoint an Arbitrator to resolve their dispute.
8 The basic clauses of the Deed of Family Settlement and Arrangement (The agreement) read thus as under:
âWHEREAS Chandrakant P. Sanghvi and Anilkumar P. Sanghvi are real btothers and have been doing business and have formed and incorporated for the purpose of carrying on the business, four companies namely:
1) Sanghvi Movers Ltd, a listed Public Company (for brevity-SM)
2) Sanghvi Projects Ltd. (for brevity SPL)
3) Maharashtra Erectors Pvt. Ltd, (for brevity MEPL)
4) Sanghvi Hi Lift Pvt. Ltd. (for brevity SHPL)
AND WHEREAS the shares in the said companies are held by Chandrakant P. Sanghvi and Anilkumar P. Saghvi themselves or through their family members and/or through the aforesaid companies formed and incorporated for carrying on business and that all such holdings are joint family properties of both the aforesaid CPS Group and the APS Group, irrespective of the names of the members in which they may appear.
AND WHEREAS differences between Chandrakant P. Sanghvi and Anilkumar P. Sanghvi as to the conduct of business as also about Anilkumar wanting to diversify into real estate and share trading and investment business.
AND WHEREAS it has been deemed prudent by Chandrakant P. Sanghvi and Anilkumar P. Sanghvi to settle the differences, so that each can carry on the business of his liking in the best interest of both the families without any interference of one another as also to protect the controlling interest that the family has in SMKL.
AND WHEREAS though mediation of common friends, Chandrakant P. Sanghvi and Anilkumar P. Sanghvi deliberated between themselves and have come to conclusion that the business should be divided between CPS group and APS group and accordingly Chandrakant P. Sanghvi and Anilkumar P. Sanghvi decide upon the division of business between themselves.
AND WHEREAS Chandrakant P. Sanghvi and Anilkumar P. Sanghvi in unequivocal terms agreed upon the division of business through companies and consequential and other matters.
AND WHEREAS parties desire it necessary to record the terms of settlement.
NOW THEREFORE THESE PRESENTS WITNESS and it is agreed to by and between the CPS group and APS group as titled as under:
I Definition of terms used in the DEED âClosureâ means completion of Rights or Preferential issues as the case may be, by the De-meged MEPL and the Resulting Company âDe-merged MEPLâ means MEPL after the merger of SPL into MEPL and after the De-merger of RIP Division from MEPL in to the Resulting Company.
âEscrow Agentsâ means Mr. Prasanna Joshi and Mr. Kiran Mehta acting jointly as per terms of this Deed as Escrow Agents.
âDeedâ means this Deed of Family Settlement and Arrangement.
âReal Estate, investments and Power divisionâ or RIP Division: means the division of the Merged MEPL comprising of assets and ---more particularly described in Annexure I hereto including â 206 crores to be provided for the development and expansion of the RIP Division and investments made by Anilkumar P. Sanghvi through SPL after 8th January 2006 as described hereinafter and the Wind Turbine Generating Unit.
âResulting Companyâ means the Company to which MEPL in the De-merger shall transfer the RIP Division post merger of SPL.
âNet Consideration Amount, means minimum amount of Rs.36.16 crores to be paid to APS Group on or before the 7th day of May 2006 (or such later date as may be agreed to by APS group in writing).
9 The other basic terms, additional terms and modus operandi, are not in dispute. The relevant arbitration clause i.e. Clause-7 reads as under:
âClause-7 In case of any disputes or differences as regards the understanding or implementation of these presents, the parties hereto shall not resort to courts or legal proceedings but such disputes and differences shall be referred for arbitration by Mr. Tulsibhai Tanti whose decision shall be final and binding.â
10 The parties have filed their reply/affidavit/counter affidavits and rejoinder in their respective matters. The learned Senior Counsel for both the parties referred the various orders and averments so made in their respective affidavits in support of their contentions. The reason for their dispute cannot be gone into at this stage, under Section 11 petition. One thing is certain that there exists family dispute between the parties.
11 Considering the averments in both these arbitration applications filed by the parties including their rival affidavit-in-reply, they always wanted to settle and/or got their dispute resolved by invoking the arbitration clause. The change of stand and/or contention so raised and/or referred above, in no way sufficient to deny the rights of the parties to refer the matter to the Arbitrator. The events so referred above and undisputed position on record, including filing of suits by one group and the opposition on every aspects by other group even in those pending suits itself shows that there exists arbitrable dispute between the parties.
The conduct of the parties-abandonment of arbitration clause:-
12 I am inclined to observe that it is not necessary, at this stage, to deal with the rival contentions revolving around the conduct of the parties, as for one reason or other, both opposed the appointment of the arbitrator, in their respective defences. There is no denial to the existence of the agreement/family settlement and the arbitration clause.
13 The contention that the APS group has abandoned their rights to initiate the arbitration proceedings is unacceptable. The written arbitration clause, which is not in dispute, just cannot be overlooked merely by the conduct of the parties. Nothing is pointed out and/or recorded that parties thereafter agreed and/or resolved the dispute otherwise. Mere filing of suit by the APS group and/or initiations of proceedings in other Courts, that itself, cannot be stated to be the reason to overlooked the written arbitration agreement between the parties. This submission is also unsustainable at least at the instance of the CPS group. Though opposed initially, but the fact that the APS group has also filed arbitration application (lodg.) no.493 of 2013 and prayed for the appointment of the Arbitrator cuts both-sides' submissions/objection. Such conduct of both the parties in no way sufficient to hold that there subsist no arbitration agreement and the arbitrable dispute between the parties. Mere averments are not sufficient to consider the case of abandonment and/or waiver. There is no denial to the existence of the agreement and the arbitration clause though the CPS group sought withdrawal of the petition.
Family settlement-disclosed and undisclosed considerations:-
14 The agreement has admittedly been signed by the members of both the groups, and they have acted upon it partly. This fact itself means the parties had decided to act on the basis of family settlement. They proceeded accordingly. The positions were not restored back after termination of the arrangement. The settlement of the dispute in family matters, in my view, just cannot be equated with the normal and ordinary dispute between the parties/and or companies. There are always various disclose and undisclose consideration when the family members decide to settle the matter amongst themselves even by appointing a private Arbitrator whose decision, they agreed to be final and binding.
15 The dispute could not be settled even by the earlier Arbitrator. It is not the case that both the parties have abandoned their rights arising out of family settlement. The settlement in family matters means, equal division and/or partition of immovable, as well as, movable properties. I will be in the interest of both the parties that the family arrangement as needs to be resolved through the arbitration proceedings.
16 After hearing learned Senior Counsel for both the parties and after going through the record and considering the rival contentions, I am inclined to observe that there exists arbitrable dispute, so also the arbitration agreement to resolve the dispute through the agreed process. The family Companies-not signed the arbitration agreement-necessary parties:-
17 Respondent nos.6, 7 and 8 (in Arb.Application Ldg. No.493 of 2013) are the companies consist of members of both these groups in the family settlement as reproduced. The reference is made of these respondents-companies. The companies, private and/or public, if basically in control of family members, covering both these groups and the family settlement and arrangement and covers the respective rights/liabilities of members of both the groups, I am inclined to observe that it is difficult to dissect these companies from the arbitration proceedings, basically when both the parties have decided to resolve their family dispute even concerning these companies. The contention that the arbitration proceedings just cannot be by and against the third person and/or party because they have not actually signed except by the members of these two groups, in the present facts and circumstances and specially when the resolution of disputes involved and these companies itself sufficient to proceed and get the dispute resolved by the arbitration process.
18 The companies, if not made parties in view of above clause and situation so referred above, as they have also their different legal entity, the purpose of resolving the matter, would be frustrated. It will be difficult even for the Arbitrator and/or the Court to adjudicate rights of the directors/companies, and or its obligations and/or shares of the members of the groups. I am inclined to observe that there is no total bar for the third party to participate or join as the party, to such arbitration proceedings. The basic requirement in such situation would be to have a permission and/or consent of the parties. In the present case, considering the terms and conditions, including the recital of the Deed of Settlement and considering the dispute so raised, I am inclined to observe that the family companies are the necessary parties.
19 In Suit No.1800 of 2011 (the APS group) pending before the Civil Court, SD, Pune, the Defendants sought a reference of the disputes to the Arbitration. Section 8 application for that purpose was filed by Defendant Nos.1 to 3 (The CPS group) and adopted and accepted by Defendant Nos.4 and 5. Defendant No.5 (MEPL) stated that âthis Defendant also adopts all the contentions raised by other Defendants in their reply and WS.âThere is no specific denial to this averments.
The opposition to the withdrawal:-
20 The learned Senior Counsel appearing for the CPS group (in arbitration application lodging no.34 of 2012) sought permission to withdraw their petition. The learned Senior Counsel appearing for the Respondents (Petitioners in other matter) APS group has opposed the same, basically on the following events and grounds as the designated Judge by order dated 7 September 2012, referred all the disputes to the mediation and appointed the Mediator by consent of parties. The operative part of the order read as under:
â2. Parties are agreed that all their disputes and differences may be made the subject matter of the mediation proceedings without prejudice to their rights and contentions and that the criminal proceedings Shall be held in abeyance in meantime to facilitate a settlement being explode.
2. The further hearing shall stand over to 2 November 2012 so that the Court can be apprised of the progress in the meantime.
3. Both sets of parties agree to bear the fees and expenses of the mediator in equal proportion.â
The order was modified also.
21 On 25 and 26 October 2012, the first session of mediation before the learned Mediator was held in Mumbai and was attended by the parties with their Attorneys. The learned Mediator proceed with the matter as both the parties, at the relevant time, also wanted to settle all their disputes. They appeared and even agreed to submit their respective settlement proposals. On 4 January 2013, the statement was made by the parties that the mediation proceedings are in progress, and the matter was accordingly listed for hearing. On 10 January 2013, the learned Mediator filed his Interim Report and informed that the mediation has made substantial progress. It is further informed that the parties are in the process of preparing a draft settlement agreement for consideration during the next mediation session. This Interim Report was filed in view of the order passed in Appeal from Order No.275 of 2012 filed by the APS group. On 14 January 2013, a conditional order was passed directing the Mediator to finalize the proposal and submit the final report on or before 15 March 2013, failing which the Appeal from Order stand dismissed without further reference to the Court. The APS group preferred a Letters Patent Appeal against the order on 21 January 2013.
22 A requisition issued by MEPL ( Maharashtra Erectors Pvt. Ltd., the Respondent), which was signed by two members of the CPS group to convey the extra-ordinary general meeting to remove two members of the APS group as Directors. The requisition was received on 29 January 2013 though board meeting was fixed on 28 January 2013.
The power of mediator to enlarge the time:-
23 A Division Bench presided over by the Hon'ble the Chief Justice (I was also a Member of the Bench) by order dated 23 January 2013, considered the various aspects of Section 89 read with Order 10 Rule 1A to 1C of Code of Civil Procedure, 1908 (for short âCPCâ) apart from the power of Courts and even of the Mediator to enlarge time fixed, as contemplated under Section 148 of CPC. The basic observations, as relevant, are as under:
â10. At this stage it would also not be out of place to refer to section 148 CPC, which reads as under:-
â148. Enlargement of time. - Where any period is fixed or granted by the Court for the doing of any act prescribed or allowed by this Code, the Court may, in its discretion, from time to time, enlarge such period, not exceeding thirty days in total, even though the period originally fixed or granted may have expired.â
We are of the view that the limit of 30 days in total indicated in the above provision would apply where a period is fixed or granted by the Court for the parties to do any act prescribed or allowed by the Code, but the conciliation forum or authority should not be subjected to such deadlines.
11. The scheme of section 89 read with Order 10 Rule 1A to 1C of CPC is that when the Court directs the parties to a suit to opt for one of the various modes of settlement, on the option of parties the Court shall fix the date of appearance before such forum or authority as may be opted by the parties, the parties shall appear before such forum or authority for conciliation of the suit and where the forum or authority is satisfied that it would not be proper in the interest of justice to proceed with the matter further, then, it shall refer the matter again to the Court and direct the parties to appear before the Court on a date fixed by it. The above statutory scheme does not require the Court to impose a deadline on the conciliation forum or authority to put an end to the endeavours for amicable settlement of disputes between the parties to the suit. Even where the Court specifies the date by which the conciliation forum or authority should put an end to the conciliation process, the Court itself is not powerless to extend the date for continuing the conciliation proceedings depending on the progress being made in mediation/conciliation.
12. Section 151 CPC saving inherent powers of Court would be the more appropriate provision for a Court to rely upon in such matters when a suit is referred to conciliation forum or authority. Section 151 reads as under:
â151. Saving of inherent powers of Court.- Nothing in this Code shall be deemed to limit or otherwise affect the inherent power of the Court to make such orders as may be necessary for the ends of justice, or to prevent abuse of the process of the Court.â
14. It is also necessary to keep in mind that appointment of the learned Mediator was not made in the course of hearing appeal from order, but in the course of hearing of arbitration application under Section 11 of the Arbitration Act. That Court has been extending the time for submission of the report of the learned Mediator and the last extension granted by the learned Single Judge, hearing arbitration application, was on 4 January 2013, which clearly indicates that further hearing of arbitration application has been adjourned to 15 March 2013. The Court, which appointed the learned Mediator has not fixed any dead-line for the learned Mediator to conclude the mediation proceedings. We are informed that the said learned Mediator has succeeded in getting another serious dispute amongst partners of partnership firm, after spending considerable time and energy and in that case mediation proceedings were successfully concluded almost after a year and half.
15. As is well known, mediation is being resorted to world over for amicable settlement of civil disputes between parties and is becoming more popular because this method of dispute resolution addresses underlying interests of parties in an informal congenial environment rather than formal adjudication of rights of parties by merely looking at the letter of the law in an adversarial environment. As already stated earlier, parties herein are brothers. Therefore, it will always be in the best interest of parties and also in the interest of society that the disputes between such close relatives are resolved by mediation rather than encouraging the parties to fight legal battles, which would move from trial Court to the High Court in appeal and thereafter to the Apex Court sapping the energy, equanimity and resources of the parties for decades. It, therefore, ordinarily be worth while to grant the parties a few more weeks or months to resolve their disputes through mediation or conciliation. Advantage of mediation settlement is that by one settlement, parties may be able to put an end to several proceedings. In the instant case also, there are several other proceedings between the same parties including criminal proceedings, which have been stayed by the other learned judges of this Court and other Courts in the State.â
24 On 28 January 2013, the APS group expressed intention to proceed with the mediation. On same day, a notice for removal of two directors of MEPL issued, received on 29 January 2013. On same day at about 10.04 pm, the CPS group's Advocate communicated that they have terminated mediation proceedings with immediate effect.
Urgent Interim Protection in Section 11 Petition pending mediation:-
25 Considering the above development and unexpected events and the situation, the APS group filed Notice of Motion No.167 of 2013, on 31 January 2013, in arbitration application no.34 of 2012 and sought restrainment orders against the CPS group from acting upon or in furtherance of any purported termination of the Reference to mediation and also sought status-quo with regard to notice dated 28 January 2013 and interim relief pending mediation proceedings.
26 The Hon'ble the Chief Justice, in view of urgency shown, passed the order on 1 February 2013. In Notice dated 2 February 2013 issued by the CPS group have conveyed Board Meeting on 4 February 2013. It was duly replied and resisted. It appears that they proceeded in spite of the objection.
27 The meeting could not be conducted before the Mediator though fixed on 7 February 2013 and 8 February 2013 as the CPS group reiterated their stand of termination of arbitration proceedings. The correspondence exchanged between the parties with regard to the resolution passed. They refused to attend the mediation meeting which was scheduled on 16 February 2013. The APS group's appeal was admitted on 13 February 2013. In Notice of Motion taken out by the APS group on the same day alleging the breach of orders passed by the designated Judge. The prayers are sought against the CPS group for directions to continue and participate in mediation proceedings and further to act in accordance with orders dated 1 February 2013.
28 The learned Mediator, in view of above, submitted the final report on 13 February 2013, received by APS group on 15 February 2013. It appears that the learned Mediator, in view of his expertise, made his efforts to hold a mediation session on 7th and 8th February 2013. However, the CPS group declined to attend the session on the ground that they have terminated the mediation. The Mediator, therefore, unable to proceed with the mediation and referred the matter to the Court for passing appropriate order.
Pending mediation-invoked arbitration clause:-
29 The Advocate for the APS group received Fax/Praecipe dated 28 February 2013 for withdrawal of petition from the CPS group stating that â..Applicants do not wish to pursue the matter.â On the same day, the APS group through their Advocates sent a notice vide email referring the disputes and differences to arbitration. It is relevant to note that no such notice was issued prior to the termination of mediation proceedings. It is clear that even prior to this date, the APS group was opposing Section 11 application filed by the CPS group. However, both the parties agreed to settle their dispute through the mediation. It is very clear that in view of this development and when one side opposing the mediation, the dispute needs to be resolved through the agreed arbitration proceedings.
30 The CPS group's Section 11 application was pending for hearing. The learned designated Judge on 1 March 2013, permitted the APS group to file reply to the withdrawal application and also granted time to file rejoinder. Adinterim order dated 1 February 2013 thus continued till the next date of hearing. However, the rights and contentions of the parties even with regard to the maintainability of the Notice of Motion was kept open. The APS group filed Section 11 application on 4 April 2013, pending the application filed by the CPS group which they now want to withdraw unconditionally. All the matters were directed to be placed for hearing and permitted the parties to file their affidavit/reply. The CPS group filed reply to the application filed by APS group. The matters were again adjourned. Admittedly, those interim orders have been in force till this date.
Right to withdraw the proceedings at any stage:-
31 Having once held that there exists an arbitration agreement and arbitrable dispute between the parties which is till this date in subsistence, now it is necessary to consider the CPS group's right to withdraw proceedings so initiated. There is no bar and/or prohibition that the Defendants and/or respondents in the proceedings so initiated by the Claimants/Plaintiffs cannot pray for injunction and/or appropriate reliefs, if case is made out in their favour, even against the Plaintiffs and/or claimants. The interim orders have been in force in favour of the APS group. Considering the provisions of CPC and the decision so referred by Senior Counsel for the parties that the Plaintiffs and/or Claimants, at any stage of the proceedings can withdraw and/or settle and/or waive the reliefs so sought. The rights of set off and/or counter claim, even if any, as contemplated under CPC, may continue subject to order of the Court. The Court, therefore, needs to consider the facts and circumstances of the case before permitting the parties to withdraw the proceedings/suits/claim, I am inclined to observe that in every matter, even at any stage, merely because Plaintiffs and/or claimants has asked for withdrawal of the proceedings, the Court just cannot grant the permission and/or endorse the withdrawal without considering the case and/or submission of the other side, including the issue of set off or counter claim, if any.
32 All the provisions, in my view, required to be considered by the Court while granting and/or endorsing the withdrawal so sought by the Plaintiffs/and or claimants. The judgment so cited by the learned Counsel appearing for both the parties, so far as law is concerned, needs no further discussion. The reading of those judgments itself show that the learned Courts have considered the facts and circumstances and passed the order. The Court just cannot permit the withdrawal mere by asking by one party. The family dispute which the family members willing to resolve, though initially agreed for the mediation, but for some reason or other it could not be proceeded with and the arbitration proceeding is another mode available for the parties to adjudicate the dispute.
The purpose and object of mediation:-
33 The interim orders so passed under Section 11 petition just cannot be overlooked as it was pending mediation proceedings. Both the learned Senior Counsel read and referred the 'Civil Procedure Alternative Dispute Resolution Rules, 2006 made under sub-section (2) of Section 89 of CPC by the High Court of Judicature at Bombay. The Division Bench has elaborated the purpose and object of mediation process as an effective alternative mode of settlement. Those observations are definitely not in Section 11 application, though it was in reference to the dispute between the parties pending the mediation and the arbitration proceedings in question. That was after protective order passed in Notice of Motion taken by the APS group pending the mediation proceedings.
34 The Hon'ble Supreme Court, in case of Afcons Infrastructure Limited and Anr. Vs. Cherian Varkey Construction Company Private Limitied and Anr. [(2010) 8 SCC 24], has insightfully elaborated the scheme, purpose and object of Section 89 Order 10 Rule 1A to 1C of CPC including process/modes and its procedure to settle the matter. We are concerned with the mediation and arbitration process which the parties have invoked. The operative part reads as under:
â49. In the light of the above discussion, we answer the questions as follows:
(I) The trial court did not adopt the proper procedure while enforcing Section 89 of the Code. Failure to invoke Section 89 suo motu after completion of pleadings and considering it only after an application under Section 89 was filed, is erroneous.
(II) A civil Court exercising power under Section 89 of the Code cannot refer a suit to arbitration unless all the parties to the suit agree for such reference.â
35 I am inclined to observe that even otherwise, apart from provision so referred above, the parties at any stage in Court and/or even otherwise can resolve their dispute through mediation mode and/or process. There is no bar whatsoever for the parties to settle their dispute through the mediation process, pending the arbitration petition. The power of Court against the unwilling party to participate further in the mediation sessions.
36 The matter was reached even upto to the stage of settling the terms, but for some reason, which in my view, not necessary to discuss, one party (the CPS group) terminated the mediation proceedings. The APS group and/or Mediator in view of this development, though unilaterally and also contrary to their own consent to settle their matter through the mediation, compel to terminated the mediation proceedings. This is not the case where the Court has, after considering the pleadings and/or documents on record and after recording elements of settlement referred the matter to the mediation process after obtaining the consent of the parties and selected the mediation process out of the modes available. The parties themselves have selected this mode of mediation.
The delay frustrate the mediation process:-
37 It is also not the case that the CPS group though agreed never participated and/or appeared before the Mediator. They did, but later on terminated unilaterally the proceedings. To say that the Court has power to compel the parties to continue to appear, though not willing to settle through Mediator referring to the Rules, in my view, is unacceptable, basically in the present case. It is necessary for the Mediator to decide and file final report within reasonable time so prescribed. The whole purpose is to see that the mediation proceedings must also end, as expeditiously as possible, as the parties themselves have decided to resolve their dispute at the earliest. The delay would definitely frustrates the mediation process.
38 The Division Bench, presided over by the Hon'ble the Chief Justice has elaborated, by referring the provisions of Section 148 read with Section 151 of the CPC that in given case time can be enlarged and/or extended though specifically provided under the Rules and/or as per Mediator's agreed schedule. There is nothing wrong if parties are about to settle the matter, and sought time to consider points and/or settlement terms and for that purpose requests to extend time. The reasonableness is required basically in such process where the parties themselves consent to settle their dispute and are ultimately bound to file their consent terms and/or settlement deed to settle their dispute. Any sort of compulsion, in my view, definitely obstruct the mediation process. This also means that the court cannot compel the parties to settle the matter only by this mode. Ultimately, they are the master of their consent/procedure without which the settlement terms cannot be finalised even by the Mediator.
39 In this background, I am inclined to observe that failure of report of Mediator concluded this mediation proceedings. The fact that pending mediation proceedings, as the case was made out to grant tentative/interim protection so that mediation proceedings so initiated by consent of the parties should not be frustrated, and therefore, passed the order and granted interim reliefs in terms of prayers (a), (b) and (c), and further directed to maintain status-quo in Section 11 which remained intact till this cannot be termed as without jurisdiction in the present case. It is settled now by the Supreme Court in the case of SBP and Co Vs. Patel Engineering Ltd. and Anr. [(2005) 8 SCC 618] that the power exercised by the Chief Justice of India, and/or Chief Justice of High Courts, and/or designated Judge and/or Institution is âjudicial power and not administrative powerâ. It is also now settled that in given case, the Chief Justice and/or designated Judge even require to take note of documents/evidence in support of averments to decide the rights of the parties, including clear decision that there exist an arbitration agreement/arbitrable dispute between the parties. The judicial power, so discussed, elaborated and even otherwise it is settled, always with power to pass an appropriate and ancillary and/or relevant/related orders, pending the final decision of the matter. It is settled that judicial power just cannot be without any purpose and object. In CPC and/or in Indian Evidence Act, though not stated to be applicable to arbitration proceedings, the principles so elaborated just cannot be overlooked by any authority, who decides the rights of the parties. The purpose and power of Judicial order flowing from Section 11 of the Arbitration Act:-
40 The Arbitration Act itself recognises the concept of âCourtâ âJudicial Authorityâ and âChief Justice and/or designated Judge and/or Institution as contemplated under Section 11â. The contention that the Chief Justice and/or designed Judge have no authority and power to pass appropriate and/or order to aid the main relief as sought even in Section 11 petition is unacceptable. The issue is not that there is no remedy available to the parties in such situation when the parties have invoked arbitration clause and file Section 11 petition, but the objection is that the Chief Justice and/or designated Judge has no jurisdiction to pass such interim order as passed in the present case. I am inclined to observe that there is no provision and/or bar under the Act, especially in view of the Supreme Court's judgment elaborating scheme of Arbitration Act which was silent on this issue prior to the Judgment. Earlier the orders passed by the Chief Justice and/or designated Judge were treated as an administrative orders. The same provision elaborated and considered by the Supreme Court and now declared for all the purpose, on the basis of same arbitration provisions that the order so passed by the Chief Justice and/or designated Judge is a âjudicial power/orderâ. This, in my view, also has changed the situation. Therefore, though there is no specific provision under the Act, the interim protective order passed by the Chief Justice and/or designated Judge, as the case was made out and/or situation required; and as there is no bar for want of contrary specific provision cannot be termed as without jurisdiction.
The power of Courts-pending mediation:-
41 There is nothing to say or demonstrate that specific procedure agreed to be followed before the Mediator and/or by the Mediator. This action brings to the situation revolving around Section 89 Order 10 Rule 1A to 1C of CPC. This also means specific procedure so prescribed in the rules to be followed by all the concerned. In a given case, the Court initiated mediation, if case is made out and so also the urgency, the Court is empowered to pass protective orders as provided under CPC itself. To exercise discretion and not to pass protective order just cannot be equated with the case and/or submission that the Court has no jurisdiction even in such circumstances to pass any interim and/or protective reliefs pending mediation process. I am inclined to observe here that in the present case, parties themselves pending Section 11 application, agreed to resolve their dispute through mediation process. Pending mediation, a situation, as alleged by the APS group compelled them to file such Notice of motion for protection as sought and as granted. This is also in the back ground that the APS group was opposing Section 11 petition filed by the CPS group even by denying the existence of arbitration, realizing this background, and to see that the parties get their all disputes settled through the mediation as they agreed, such action and or inaction should not impede and/or obstruct the procedure; and therefore, the Hon'ble the Chief Justice has passed the interim/injunction and placed the main matter for hearing immediately after 15 days, in no way can be stated to be without authority.
42 I am inclined to observe that the constitutional post and the power of the Chief Justice and the Judgment [SBP and Co.(supra)] and based upon the Arbitration Act, just cannot be overlooked. Even under Section 11 of Arbitration Act, the Chief Justice of India and the Chief Justice of respective High Courts have only been provided powers to appoint an Arbitrator in National, as well as in International Arbitration matters. This is specific provisions for specific purpose to achieve the aim and object of arbitration.
43 The mediation procedure if controlled and governed by Rules as contemplated under Section 89 of CPC, invocation of mediation procedure by the parties pending Section 11 petition itself means, in my view, akin to the power of Court and/or similar power as contemplated, for a situation like pending a mediation process by which the Chief Justice and/or designated Judge can pass appropriate order.
44 The submission that any interim measures ought to have been by invoking Section 9 and/or such related procedure, in a present facts and circumstances, is also not sufficient to say that interim orders so passed under Section 11 of Arbitration Act are without jurisdiction, and therefore, there is no question to extend the orders and/or continuation of the orders as the CPS group wants to withdraw the application itself.
45 It is also relevant that the Chief Justice and/or designated Judge in a case where one party denying the existence of arbitration agreement, unless adjudicate the same and/or decide finally, may not in a position to accept the other side's case that Section 9 is only remedy available to the parties in view of the denial to the arbitration clause at the relevant time. I am inclined to observe that even Section 9 requires Court's decision to adjudicate first of all about the existence of arbitration clause/ arbitrable dispute. Therefore, the remedy available to the petitioner/APS group, at the relevant time, based upon their own averments denying the existence of arbitration were only by way of Notice of Motion for interim protection, pending the mediation and the arbitration petition. The parties just cannot be rendered remedyless. The CPS group wants to withdraw section 11 petition now the APS group is praying for appointment of an Arbitrator, based upon the same arbitration clause between the parties, as mediation failed or even otherwise. The submission that designated Judge under Section 11, as prayed in Notice of Motion, can direct the parties to continue with the mediation process for the reasons so recorded, in my view, is impermissible. Once there is a failure report, the wish and/or opinion of the learned Mediator, one who tried to settle the matter, just cannot be the reason for any Court and/or designated Judge under Section 11 to compel parties to appear and settle their dispute only through the mediation process.
46 The mediation, if fails and terminated in view of final report, the interim orders so passed just cannot be continued as it was admittedly passed pending the mediation process. The learned Senior Counsel appearing for the CPS group made a statement that they are willing to appear before the Mediator, but on condition that the mediation process should be disposed of within a period of two to three weeks only. The other side though definitely wants to appear and to continue with the mediation process unable to accept the condition so put. In the present case, one cannot overlooked the situation where the Court in other matter passed conditional order directing the Mediator to finish and to submit report within a particular time, order was conditional to dismiss the proceedings itself. The Division Bench has elaborated the purpose of mediation not accepted such condition. Therefore, now there is no reason to put any sort of condition again and compel the parties to mediation.
47 I am endorsing their withdrawal but on condition and in view of the fact that the interim orders so recorded which have been in force, till this date, to continue for further for 8 weeks. This also for the reason that there is nothing on record and/or pointed that the interim order so passed on 1 February 2013 was challenged by other side. The orders if remained intact till this date and extended by this Court from time to time, I see there is no reason not to continue the same with liberty to parties to take out appropriate proceedings in accordance with law.
48 The APS group's petition, in view of, above required to be granted as a case is made out to appoint an Arbitrator as per the agreement between the parties. I am also inclined to endorse and permit the CPS group to withdraw their petition (Arb.Application No.34 of 2012) .
49 The withdrawal and/or permission to withdraw, in my view, is the decision of the parties. The interim order so granted in favour of APS group as recorded above, can be protected for certain period by giving them liberty to initiate the proceedings. It is settled that in family dispute matter, if there are two groups, one group may or may not support the particular action and/or oppose many things though agreed upon, it is not necessary that in such settlement matters all parties may be plaintiff and/or plaintiffs. Once the matter is required to be settled even at the instance of one party, I see there is no reason not to appoint an Arbitrator.
50 The named Arbitrator in the application and specifically in prayer clause (a) thereof, was not in a position to take the matter, therefore, the submission is made to appoint Sole Arbitrator one who can adjudicate and take the arbitration proceedings considering the place of residence of parties or place of their business. Both the groups, in their respective Section 11 applications, prayed to appoint Arbitrator over than named Arbitrator. The earlier named mentioned in the application by APS group is not in a position to take the matter. The learned Senior Counsel for the CPS group, in view of order dictated in open court, without prejudice to their rights, suggested the name of Shri N.K. Sodhi, former Chief Justice of Karnataka High Court as an Arbitrator to which the learned Senior Court for APS group, on instructions, agreed to the same.
51 It is made clear that though points of reference are mentioned in petition as per notice dated 28 February 2013, a liberty is granted to both the parties to make additional point of reference, if any.
52 Resultantly, the following order:-
a) Arbitration Application (Lodg.) No.493 of 2013 is allowed.
b) Mr. V.K. Sodhi, former Chief Justice of Karnataka High Court is appointed as Sole Arbitrator, to decide/resolve the family disputes between the parties as per the family agreement.
c) The parties to take steps.
d) Arbitration Application No.34 of 2012 is permitted to be withdrawn on the conditions as referred in the reasons. By separate orders, both motions are disposed of accordingly.
e) Both Arbitration Applications stand disposed of.
f) There shall be no order as costs.