Case Note & Summary
The petitioners, Basant Lall Shaw and Arbind Kumar Jayaswal, filed a writ petition under Articles 226 and 227 of the Constitution of India challenging an order dated 13/5/2011 passed by the 3rd Joint Civil Judge, Senior Division, Nagpur. The impugned order rejected the petitioners' application (Exh. 13) under Sections 5 and 8 of the Arbitration and Conciliation Act, 1996 (the Act). The petitioners are father and son, and the respondent, Manoj Kumar Jayaswal, is also a son of petitioner no.1. The parties entered into an Indenture of Family Settlement dated 31/7/2008, which contained an arbitration clause. Under the settlement, an Escrow Agent was appointed to oversee certain aspects. A dispute arose regarding the implementation of the Escrow Agent's directions. The petitioners sought to refer the dispute to arbitration, but the trial court rejected their application. The High Court framed the issue of whether the dispute regarding implementation of the Escrow Agent's directions is arbitrable. The Court analyzed the terms of the settlement and the arbitration clause. It held that the dispute falls within the scope of the arbitration agreement and must be referred to arbitration. The Court set aside the trial court's order and allowed the petition, directing the parties to refer the dispute to the Arbitrator as per the settlement.
Headnote
A) Arbitration Law - Arbitrability of Dispute - Family Settlement - Sections 5 and 8 of Arbitration and Conciliation Act, 1996 - The issue was whether a dispute regarding implementation of directions of the Escrow Agent under a Family Settlement is arbitrable. The Court held that the dispute falls within the ambit of the arbitration clause and must be referred to arbitration. The Escrow Agent's directions are part of the settlement mechanism and any non-compliance is a dispute under the agreement. (Paras 3, 10-12)
Issue of Consideration
Whether the dispute as regards implementation of the directions of the Escrow Agent appointed under the Indenture of Family Settlement dated 31/7/2008 is arbitrable and has to be referred to the Arbitrator?
Final Decision
The High Court allowed the writ petition, set aside the order dated 13/5/2011 passed by the 3rd Joint Civil Judge, Senior Division, Nagpur, and directed that the dispute be referred to the Arbitrator as per the Indenture of Family Settlement dated 31/7/2008.
Law Points
- Arbitrability of disputes arising from family settlement
- Scope of arbitration agreement
- Implementation of Escrow Agent directions
- Sections 5 and 8 of Arbitration and Conciliation Act
- 1996
Case Details
2011 LawText (BOM) (07) 137
Writ Petition No.2438 of 2011
Shri A.S. Mardikar for petitioners; Shri S.P. Dharmadhikari, Senior Advocate assisted by Shri D.V. Chauhan for respondent
Shri Basant Lall Shaw and Shri Arbind Kumar Jayaswal
Shri Manoj Kumar Jayaswal
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Nature of Litigation
Writ petition under Articles 226 and 227 of Constitution of India challenging rejection of application under Sections 5 and 8 of Arbitration and Conciliation Act, 1996.
Remedy Sought
Petitioners sought to set aside the order dated 13/5/2011 and refer the dispute to arbitration.
Filing Reason
The trial court rejected the petitioners' application to refer the dispute to arbitration under Sections 5 and 8 of the Arbitration and Conciliation Act, 1996.
Previous Decisions
The 3rd Joint Civil Judge, Senior Division, Nagpur rejected the application (Exh. 13) filed by the petitioners under Sections 5 and 8 of the Arbitration and Conciliation Act, 1996 vide order dated 13/5/2011.
Issues
Whether the dispute regarding implementation of the directions of the Escrow Agent appointed under the Indenture of Family Settlement dated 31/7/2008 is arbitrable and has to be referred to the Arbitrator?
Submissions/Arguments
Petitioners argued that the dispute falls within the arbitration clause of the Family Settlement. Respondent contended that the dispute is not arbitrable as it relates to implementation of Escrow Agent directions which are not covered by the arbitration agreement.
Ratio Decidendi
The dispute regarding implementation of the Escrow Agent's directions under a Family Settlement is arbitrable as it falls within the scope of the arbitration clause. The arbitration agreement covers all disputes arising out of or in connection with the settlement, including those related to the Escrow Agent's role.
Judgment Excerpts
The issue, which arises for consideration in the above petition, is as to whether the dispute as regards implementation of the directions of the Escrow Agent appointed under the Indenture of Family Settlement dated 31/7/2008 is arbitrable and has to be referred to the Arbitrator ?
Procedural History
The petitioners filed an application (Exh. 13) under Sections 5 and 8 of the Arbitration and Conciliation Act, 1996 before the 3rd Joint Civil Judge, Senior Division, Nagpur, which was rejected on 13/5/2011. Aggrieved, the petitioners filed the present writ petition under Articles 226 and 227 of the Constitution of India.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 5, 8
- Constitution of India: 226, 227
