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TMI Blog2008 (2) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... wo other persons by his Will. Similarly, Settlor and Trustees can create a Trust and specify who will be the beneficiaries under the Trust but they cannot create a binding contract between the beneficiaries in respect of settlement of dispute and cannot say that all disputes between the beneficiaries shall be decided by arbitration. The arbitration clause relied upon by the applicant is therefore not binding on the beneficiaries and this application is not maintainable and is hereby dismissed as such. - - - - - Dated:- 19-2-2008 - Shiv Narayan Dhingra, J. ORDER 1. This application under Section 11 of the Arbitration and Conciliation Act, 1996 has been made by the applicant seeking appointment of sole Arbitrator for adjudication ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of them touching this Deed or the construction or the application thereof or any clause or thing herein contained or any account, calculation or dividend or division of assets or liabilities to be made hereunder, as to any act, deed or omission of any one of the TRUSTEES or as to any other matter in any way relating to the Deed of Trust or any affairs thereof or the rights, duties and liabilities of any person under this Deed shall be referred to a single arbitrator in case the parties agree upon or otherwise to two arbitrators, one to be appointed by each party to the dispute, in accordance with and subject to the provisions of Indian Arbitration Act or any statutory modification thereof for the time being in force. In case the two arbitr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Counsel for the applicant argued that it was not necessary that the parties must sign the agreement. It was sufficient that the agreement was in writing and was binding on the parties. He relied upon Babaji Automotive v. Indian Oil Corporation Limited 2006(1) Arb. LR 566 (Calcutta) and Dr. S.Z. Zafrey v. Modern Industrial Enterprises, Indore and Ors. to press this point and submitted that irrespective of the fact that beneficiaries had not signed the Trust Deed, the beneficiaries were bound by the Arbitration Agreement. He pleaded that under the Trust, the applicant and the respondents have been reaping benefits therefore they were bound by the terms of the Trust including the Arbitration Agreement, even if, the beneficiaries had not sign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement, the parties to the agreement must be ad-idem to the fact that if there is a dispute between the parties, the same shall be referred to the Arbitrator. 8. It is not disputed that none of the parties to this application were signatories of the Trust Deed and the only signatories to the Trust Deed were Settlor and Trustees. The beneficiaries were not signatories to the Trust Deed. The question arises, can a person reaping benefit under the Trust, becomes bound by the Arbitration Clause given in the Trust and his disputes with the other beneficiaries is to be referred in terms of the Arbitration Clause? There is no doubt that a beneficiary can have benefits of the Trust only in accordance with the terms of the Trust and in the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etent to enter into the agreement. Moreover, an Arbitration Agreement is binding on the parties who by their own will and consent agree to refer the dispute to the Arbitrator. Two persons cannot bind their successive generations to a contract entered into between them. Similarly, a person may while making a Will and appointing somebody as Executor of the Will, provide for an arbitration clause that any dispute between the beneficiaries of the Will, will be decided by the Arbitrator. Such a clause would not be binding on the beneficiaries, because they were not party to the Arbitration Agreement although they may be getting benefits out of the Will. A person can dispose of his property by Will but a person cannot create a contract between tw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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