2010 (9) TMI 1298 - HC - Indian Laws

Summary

Issues Involved:
1. Nature and scope of the suit.
2. Application under Section 8 of the Arbitration and Conciliation Act, 1996.
3. Validity and scope of the arbitration agreement.
4. Inclusion of family business entities and their assets in the joint family properties.
5. Implementation and fairness of the Memorandum of Understanding (MOU) of 1989.
6. Jurisdiction and authority of the arbitrator.
7. Allegations of fraud and concealment of family assets.
8. Inclusion of parties not bound by the arbitration agreement.
9. Applicability of the Sukanya Holdings case.
10. Continuation of interim orders.

Detailed Analysis:

1. Nature and Scope of the Suit:
The suit is in the nature of partition, with the plaintiffs claiming reliefs under 30 heads spread over nine pages of the 111-page plaint. The plaintiffs argue that the family business entities and their assets are part of the joint family properties.

2. Application under Section 8 of the Arbitration and Conciliation Act, 1996:
GA No. 1756 of 2010 is the first defendant's application under Section 8 of the Arbitration and Conciliation Act, 1996, seeking a reference of the disputes to arbitration. The court must first address this application as its outcome could render the plaintiffs' interlocutory application meaningless.

3. Validity and Scope of the Arbitration Agreement:
The arbitration agreement dated January 31, 2004, between the four brothers, refers all disputes and differences, mode and manner of implementation of matters, and all other connected and incidental issues or matters arising out of or in relation thereto, to arbitration. The court finds that the arbitration agreement covers the plaintiffs' grievances regarding the MOU and subsequent family assets and business.

4. Inclusion of Family Business Entities and Their Assets:
The plaintiffs claim that the family business entities and their assets, including those acquired after the MOU, should be included in the joint family properties for partition. The court concludes that the arbitration agreement's broad terms encompass these claims, allowing the arbitrator to address them.

5. Implementation and Fairness of the MOU of 1989:
The plaintiffs argue that the MOU was unfair and that the first defendant retained control of the family assets and business. The court determines that these issues are connected to the MOU and fall within the scope of the arbitration agreement.

6. Jurisdiction and Authority of the Arbitrator:
The plaintiffs question the arbitrator's propriety and jurisdiction. The court finds that the arbitrator has the authority to determine the terms and conditions of the mode, manner, and time of payment of any sum due, as well as to address all disputes and differences related to the MOU and subsequent family assets and business.

7. Allegations of Fraud and Concealment of Family Assets:
The plaintiffs allege fraud and concealment of family assets by the first and eleventh defendants. The court notes that these allegations are connected to the MOU and fall within the arbitration agreement's scope.

8. Inclusion of Parties Not Bound by the Arbitration Agreement:
The plaintiffs argue that several defendants, including the 84th defendant, are not parties to the arbitration agreement. The court acknowledges this but emphasizes that the arbitration agreement's broad terms allow the arbitrator to address the family business entities and their assets, even if some parties are not directly bound by the agreement.

9. Applicability of the Sukanya Holdings Case:
The plaintiffs rely on the Sukanya Holdings case, which holds that a suit cannot be bifurcated to refer a part of it to arbitration. The court distinguishes this case, noting that the arbitration agreement's broad terms cover the entire subject matter of the suit, including subsequent family assets and business.

10. Continuation of Interim Orders:
The court vacates all interim orders subsisting in the suit but allows them to continue for a period of a fortnight from the date of the judgment.

Conclusion:
The court allows GA No. 1756 of 2010 in terms of prayer (a) of the notice of motion dated May 17, 2010, and disposes of CS No. 121 of 2010 and all interlocutory applications therein, including GA No. 1596 of 2010. There will be no order as to costs.