IN THE HIGH COURT OF DELHI AT NEW DELHI SUBJECT : INDIAN ARBITRATION ACT, 1940 1. FAO(OS) NO.174/1997 Date of Decision : 3rd March 2009 S.N.P. PUNJ...Appellant Mr. Sanjay Jain, Sr. Adv. with Gurkamal, Ms. Ruchi Jain, Advs. Mr. Sumeet Bansal, Adv. for Mrs. Aarti Singh versus V.P. PUNJ & ORS....Respondents Mr. Ravinder Sethi, Sr. Adv. with Mr. Naresh Thanai, Mr. Puneet Sharma, Advs. AND 2. FAO(OS) NO.88/1998 S.C. MATHUR...Appellant Mr. Sanjay Jain, Sr. Adv. with Gurkamal, Ms. Ruchi Jain, Advs. VIRENDER PRAKASH PUNJ & ORS. CORAM: HON'BLE MR. JUSTICE MUKUL MUDGAL HON'BLE MR. JUSTICE VIPIN SANGHI versus...respondents Mr. Ravinder Sethi, Sr. Adv. with Mr. Naresh Thanai, Mr. Puneet Sharma, Advs. MUKUL MUDGAL,J. 1. With the consent of the learned counsel for the parties, these appeals are taken up for hearing and are being decided by this common judgment. 2. These appeals challenge the judgment of the learned Single Judge dated 30th May 1997 by which the award dated 15th November 1989 rendered by the sole arbitrator Shri S. C. Mathur, Chartered Accountant was affirmed and made the Rule of the Court under Section 17 of the Indian
Arbitration Act, 1940 with a slight modification, i.e., to the effect that the arbitrator was not to act as the arbitrator for future disputes in relation to the award dated 15th November, 1989. 3. The facts of the case are as follows: a) By an earlier Award dated 5th August 1987 made by the same Arbitrator Shri S. C. Mathur, seven sons and one married daughter of late Pandit Kanhiya Lal Punj were awarded various companies, assets and properties. Subsequently, disputes arose between four of such seven brothers, namely, Virender Prakash Punj, Satya Narain Prakash Punj, Ravinder Prakash Punj and Nilinder Prakash Punj about running of their businesses, allocation and determination of their respective shares. b) As the four brothers aforesaid could not arrive at any agreement on the terms and conditions for controlling and running the businesses, a Reference Agreement dated 9th October 1989 admittedly came to be executed by the respondent No.1 V.P. Punj, the appellant, S.N.P. Punj, the respondent No.9, R.P. Punj, and respondent No.14, N.P. Punj, referring the disputes for resolution to the sole arbitrator Shri R. C. Mathur so that they could work independently as far as possible and run their own affairs, as regards the ownership of the properties. Each of the said brothers represented their respective branches of the family. c) The sole arbitrator rendered the award dated 15th November 1989 distributing/allocating businesses, assets and properties amongst the parties to the Reference Agreement. d) The said award divided the parties to the reference and the award, into four groups which are as follows: Group A : Represented by Sh. V.P. Punj. Group B : Represented by S.N.P.Punj. Group C : Represented by R.P. Punj. Group D : Represented by N.P. Punj. The award referred to the above persons as the heads of their respective families with their family members and also the companies and firms stated to be under their control. 4. It is not in dispute that the arbitrator had been a Chartered Accountant of the Punj Group / family for the last 30 years at the time of his appointment as the sole Arbitrator. It is also not in dispute that this very arbitrator had, by award dated 5th August 1987, awarded various companies, assets and properties between seven sons and one married daughter of late Pandit Kanhaiya Lal Punj, out of which, four brothers figure in the present dispute. The said earlier award was accepted by all the parties having their joint consent and as such the award became the Rule of the Court. 5. Shri Ravinder Sethi, the learned Senior Counsel, appearing for the respondents raised a preliminary objection as to the maintainability of the objections as also the present appeal on the ground that the award was founded upon a family settlement. He submits that the award clearly states that it was arrived at by consent between the parties, and there was no challenge to the recording of such consent, even in the objections raised before the learned Single Judge. He further submits that the family settlement, which formed the basis of the impunged award has been acted upon and the parties have taken control of the properties, assets and businesses as per the award. 6. The learned counsel for the respondent in furtherance of the above plea has relied upon the award, and in particular on the following finding in the award:
Whereas now the parties have left it to me as to how the running businesses are to be allotted, finally divided and shared between the aforesaid four brothers and their heirs who are the parties to this arbitration and to decide how the assets, liabilities and running businesses are to be settled. Now, I, the undersigned, have heard and examined the parties and considered all the allegations and counter allegations and submissions made against each other and all documents and other evidence as produced and laid before me. In order to resolve differences among the family members a negotiated family settlement agreeable to all the parties have been arrived at and contents of this negotiated settlement are as below: To facilitate smooth transfer of, businesses and immoveable properties I have formed four groups: 1) Shri Virendra Prakash Punj, Mrs. Brigette Punj, Shri Rajinder Dorian Punj, Ms. Cornelia Punj. 2) Group B represents - Shri Satya Narain Prakash Punj, Mrs. Indu Rani Punj, Mr. Atul Prakash Punj, Mrs. Navina Punj nee Narang, Mr. Uday Prakash Punj and Mrs. Mangalam Punj nee Tiwari. 3. Group C represents - Shri Ravinder Prakash Punj, Mrs. Pushpanjali punj, Miss Malini Punj, Ms. Nandita Punj and Mr. Gaurav Punj. 4. Group D represents - Shri Nilinder Prakash Punj, Mrs. Gita Punj, Shri Gautam Punj, Ms. Gauri Punj and Ms. Gayatri Punj.... (emphasis supplied) 7. Again, at the end of the award, the learned Arbitrator again recorded as follows: The above family settlement is hereby confirmed as an award by me in my capacity as Arbitrator for disputes arising among these family members. The implementation and interpretation of this Award shall be undertaken by me and any dispute arising therefrom shall be referred to me by family members for settlement and resolution. This Award and all subsequent clarifications shall be binding on all the members of the family in confirmation of which they have signed hereunder. 8. It was contended that the said award was passed by an arbitrator who was the family chartered accountant of the parties, and it was passed by joint consent of all the parties to amicably divide shares between the four brothers. The learned counsel for the respondent has particularly laid stress on the fact, that no objection was taken in respect of the finding that the settlement was arrived at with the consent of the parties. It was never contended that the consent of the parties was wrongly recorded when the appellants filed their respective objections under Sections 30 and 33 of the Arbitration Act, 1940.
8. We asked Shri Sanjay Jain, the learned Senior Counsel appearing for the appellant S.N.P. Punj in FAO(OS) No.174/1997 and Shri Sumeet Bansal, the learned counsel appearing for Mrs. Aarti Singh, appellant in FAO(OS) No.88/1998 to show us the objection to the award, to the effect that the factum of the award being founded upon a family settlement was wrongly recorded by the arbitrator, but they have been unable to point out any such plea before the learned Single Judge. Consequently, by taking into account the nature of the controversy involved, i.e., the fact that the disputes were between family members, and the relationship that the learned Arbitrator bore with the family due to his professional association for a long span of time, as the family Chartered Accountant, we are satisfied that the recording of the factum of a family settlement being reached and the same forming the basis of the award at more than one place, indicates that the agreement was arrived at by consent of the parties and on that basis, the award was passed. Family settlements, the Supreme Court has held in K.K. Modi vs. K.N. Modi (1998) 3 SCC 573, should not be lightly interfered with, especially when the same has been substantially acted upon by the parties. Family settlements are treated differently from commercial settlements. Such settlement generally meet with the approval of courts. They are governed by a special equity principle where the terms are fair and bonafide, taking into account the well-being of the family. It is the duty of the Court to give effect to such arrangements in the letter and spirit. (See Harishankar Singhania (2) vs. Gaur Hari Singhania (2006) 4 SCC 658). The categorical assertion of Sh. Sethi, the learned Senior Counsel for the respondents that the impugned award has been acted upon and the parties have taken control of the assets and businesses distributed under the award has not been controverted by the appellants. 9. The only plea, which suggests the raising of a dispute to the existence of family settlement was raised for the first time in the present appeals and reads as follows: That a perusal of the award shows that instead of rendering an arbitration award, the learned arbitrator on his own records that he was returning a negotiated family settlement agreeable to all the parties. This observation which is contrary to the records is a gross misconduct on the part of the learned arbitrator besides rendering of the award as illegal and bad in law. 10. The above is a plea which was not raised before the learned Single Judge. This plea also does not state that the said plea was raised before the learned Single Judge and was not dealt with by him. In this view of the matter, we are satisfied that the aforesaid objection raised by the appellant to the award at this scope cannot be entertained. The same appears to be an afterthought to improve upon the objections raised to the award before the learned Single Judge. Since objections to an arbitral award have to be raised in a time bound manner, it is not permissible to raise fresh objections after the expiry of the limitation period, which was before the appellate court. Reliance placed by Mr. Sanjay Jain, Senior Advocate on the communications dated 4th November 1989 sent by Shri S.N.P. Punj, and the communication sent by Shri Uday N. Punj dated 8th November 1989 to the arbitrator wherein they sought the exclusion of shares held in individual names from being considered for division, are not of much importance in our view, since the award is dated 15th November 1989, i.e., after the issuance of these communications. Often, parties take a stance in such disputes, which is given up when a settlement is arrived at. 11. Mr. Sethi, the learned counsel for the respondent has also pointed out the fairness of the award, inasmuch as, respondent no.1 V.P. Punj, the elder brother of the appellant had offered to
exchange his share with that of the appellant S.N.P. Punj, and such offer was not accepted by the appellant. That is the another factor indicating the fairness of the award. 12. Shri Sumeet Bansal has stated that Mrs. Aarti Singh was not even a party to the reference before the arbitrator and as such, the arbitrator could not have covered her property situated at 24, Vayu Nagar, Gwalior, (MP) in arbitration proceedings. The learned Single Judge has dealt with the aforesaid issue in the following terms: 10. As far as objections vide I.A. No.5658/90 (I.A.No.6723/90) are concerned, the objector is with regard to property bearing No.24, Vayu Nagar, Gwalior on the basis of owner thereof. Contending that, this property has been let out to M/s Lepinus Rockwool Private Limited a company for Rs.4,000/- per month with effect from Ist November 1989 and that the arbitrator misconducted himself and the arbitration proceedings by including this property. The reply by respondent no.1 is that the record of the arbitration proceedings demonstrates that the aforesaid property was brought in the hoch-poch by respondent No.5 and declared to be available for reallocation as part of the property of the family; that the agreement covers the wives and children as individual and their HUF and certain outsiders who are close family friends connected with the investment companies, and holding properties. Item No.18 in Schedule-II sets out House No.24, Vayu Nagar, Gwalior and discloses the current owner. Similarly, House No.25 also brought simultaneously from Mr. Sushil Kumar Verma shown in the name of Rohini Chibba, D/o respondent no.11 (R.P. Punj) is also shown as property which is the subject of distribution. The arbitration reference clearly mentions that the parties and abovesaid firms have factories and immovable properties as mentioned in Schedule-II attached; that award in Schedule-IV demonstrates that the aforesaid property has gone to the share of respondent No.5. The agreement, as pointed out above at serial No.18 in Schedule-II, includes House No.24, Vayu Nagar, Gawlior. It is also suggested from Schedule-II that House No.25 has also been brought simultaneously from Sh. Sushil Kumar Verma which is shown in the name of Rohini Chibba, D/o respondent no.11 and all these properties are shown the subject of distribution and reallocation. This would go to show that this applicant is a party to the agreement and the award and, therefore, bound by the award and the remedy is by way of objection under Sections 30-33 of the Act and the bar of suit contained in section 32 of the Act would apply. I.A.6723/90 is disposed of accordingly. According to the objector, Mrs. Arti Singh, House No.24, Vayu Nagar, Gwalior has been let out to M/s Lepinus Rockwool Private Limited for Rs.4,000/- per month with effect from 1st November 1989. It may be appreciated that the reference agreement is dated 9th October 1989, i.e., prior to the letting out of the property to M/s Lepinus Rockwool Private Limited for Rs.4,000/- per month. A certified copy of the power of attorney dated 12th August 1975 executed by Mrs. Arti Singh, D/o Sh. S. N. P. Punj in favour of her father respondent No.5 suggests that respondent no.5 is the constituted general power of attorney of the objector. Apart from anything else, even on the strength of this general power of attorney, the objector Smt. Arti Singh could be legally bound by her attorney so long as the power of attorney dated 12th August 1975, is not revoked/cancelled by her.
13. The above clearly shows that the Mrs. Arti Singh had made the Power of Attorney dated 12th August 1975 in favour of her father, i.e., the appellant Shri S.N.P. Punj and in fact, the said general power of attorney has still not been revoked/cancelled. We have also noticed that no objection is said to have been taken to the property in the name of Ms. Rohini Chibbar, the daughter of respondent no.9 R.P. Punj also being included in the award of the arbitrator, though Rohini Chibbar was in the same portion as Aarti Singh. It is not uncommon that properties are purchased by the parents in the names of their children from out of the earning derived from family business. The parties, it is evident sought to put all such properties in the common hotchpotch for ascertaining the respective shares and dividing the properties and assets. Even otherwise, the appellant Aarti Singh has not been divested of her rights in the said property, inasmuch as, the said property has been allocated to the branch of the family which is headed by her father Sh. S.N.P. Punj. Thus, it is evident that properties in the names of all the members of the family including the parents of Arti Singh by virtue of General Power of Attorney given by Arti Singh were included in the terms of the reference and therefore, we are unable to agree with the plea of Shri Sumeet Bansal and the same cannot be accepted. In any case, if Mrs. Aarti Singh has any grievance, the same may be against the appellant Sh.S.N.P. Punj, her father. In this view of the matter, we are satisfied that the preliminary objection of the learned counsel for the respondent deserves to succeed and the objections to the award cannot be entertained. 14. Accordingly, we are satisfied that the order of the learned Single Judge does not call for interference and consequently, the appeals are dismissed. Sd./- MUKUL MUDGAL,J March 03, 2009 Sd./- VIPIN SANGHI,J