{"id":18644,"date":"2011-07-28T00:00:00","date_gmt":"2011-07-27T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/shri-basant-lall-shaw-vs-56-years-on-28-july-2011"},"modified":"2018-07-07T12:12:44","modified_gmt":"2018-07-07T06:42:44","slug":"shri-basant-lall-shaw-vs-56-years-on-28-july-2011","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/shri-basant-lall-shaw-vs-56-years-on-28-july-2011","title":{"rendered":"Shri Basant Lall Shaw vs 56 Years on 28 July, 2011"},"content":{"rendered":"<div class=\"docsource_main\">Bombay High Court<\/div>\n<div class=\"doc_title\">Shri Basant Lall Shaw vs 56 Years on 28 July, 2011<\/div>\n<div class=\"doc_bench\">Bench: R. M. Savant<\/div>\n<pre>                                   1\n\n       IN THE HIGH COURT OF JUDICATURE AT BOMBAY\n\n\n\n\n                                                                  \n                   NAGPUR BENCH : NAGPUR\n\n\n\n\n                                          \n               WRIT PETITION NO.2438 OF 2011\n\n\n\n\n                                         \n    1) Shri Basant Lall Shaw s\/o late\n       Jagbandhanram Shaw, aged about\n       78 years, occupation : business,\n\n\n\n\n                                   \n       r\/o 264, Usha Sadan, Pandit\n       Ravishankar Shukla Marg,\n                    \n       Civil Lines, Nagpur.\n\n    2) Shri Arbind Kumar Jayaswal s\/o\n                   \n       Shri Basant Lall Shaw, aged\n       about 57 years, occupation :\n       business, r\/o 264, Usha Sadan,\n       Pandit Ravishankar Shukla Marg,\n      \n\n       Civil Lines, Nagpur.           ...              Petitioners\n   \n\n\n\n             - Versus -\n\n    Shri Manoj Kumar Jayaswal s\/o Shri\n    Basant Lall Shaw, aged about\n\n\n\n\n\n    56 years, occupation : business,\n    r\/o 264, Usha Sadan, Pandit\n    Ravishankar Shukla Marg, Civil\n    Lines, Nagpur.                     ...           Respondent\n\n\n\n\n\n                      -----------------\n\n    Shri A.S. Mardikar, Advocate for the petitioners.\n\n    Shri S.P. Dharmadhikari, Senior Advocate assisted by\n    Shri D.V. Chauhan, Advocate for the respondent.\n\n                      ----------------\n\n\n\n\n                                          ::: Downloaded on - 09\/06\/2013 17:34:07 :::\n                                     2\n\n\n\n\n                                                                        \n         Date of reserving the judgment                  :        6\/7\/2011\n\n\n\n\n                                                \n         Date of pronouncing the judgment                : 28\/7\/2011\n\n\n\n                                   CORAM :      R.M. SAVANT, J.\n\n\n\n\n                                               \n                                   DATED :      JULY 28, 2011\n\n\n\n\n                                   \n    JUDGMENT :        \n<\/pre>\n<p>                Rule, with the consent of the learned Counsel<\/p>\n<p>    for the parties made returnable forthwith and heard.\n<\/p>\n<p>    2)          The above petition filed under Articles 226<\/p>\n<p>    and 227 of the Constitution of India takes exception to<\/p>\n<p>    the order dated 13\/5\/2011 passed by the learned 3rd<\/p>\n<p>    Joint Civil Judge, Senior Division, Nagpur whereby the<\/p>\n<p>    application (Exh. 13) filed by the petitioners herein<\/p>\n<p>    under Sections         5 and 8 of the Arbitration                     and<\/p>\n<p>    Conciliation    Act,    1996   (for   the    sake        of    brevity,<\/p>\n<p>    hereinafter referred to as &#8220;the said Act&#8221;) came to be<\/p>\n<p>    rejected.\n<\/p>\n<p><span class=\"hidden_text\">                                                ::: Downloaded on &#8211; 09\/06\/2013 17:34:07 :::<\/span><br \/>\n<span class=\"hidden_text\">                                    3<\/span><\/p>\n<p>    3)       The issue, which arises for consideration in<\/p>\n<p>    the above petition, is as to whether the dispute as<\/p>\n<p>    regards implementation of the directions of the Escrow<\/p>\n<p>    Agent   appointed    under     the   Indenture        of     Family<\/p>\n<p>    Settlement dated 31\/7\/2008 is arbitrable and has to be<\/p>\n<p>    referred to the Arbitrator ?\n<\/p>\n<p>    4)<\/p>\n<p>             The factual matrix involved in the above<\/p>\n<p>    petition can be stated thus :\n<\/p>\n<p>             The petitioner no.1 is the father of the<\/p>\n<p>    petitioner no.2 as well as the respondent.                        The<\/p>\n<p>    petitioner no.1 has established a business                 empire,<\/p>\n<p>    which is popularly known, according to the petitioners,<\/p>\n<p>    as &#8216;NECO Group of Industries&#8221;. The petitioner no.1 as<\/p>\n<p>    the head of the family commenced business with<\/p>\n<p>    incorporation of the Nagpur Engineering Company<\/p>\n<p>    (Pvt.) Ltd. and later on with the growth of other<\/p>\n<p>    businesses, all connected with iron foundry, a merged<\/p>\n<p>    Company came into being, which was known as<\/p>\n<p>    Jayaswal Neco Ltd.    The said Jayaswal Neco Ltd. was<\/p>\n<p><span class=\"hidden_text\">                                            ::: Downloaded on &#8211; 09\/06\/2013 17:34:07 :::<\/span><br \/>\n<span class=\"hidden_text\">                                4<\/span><\/p>\n<p>    subsequently merged into other two Companies, which<\/p>\n<p>    amalgamated entity, is known as Jayaswal Neco<\/p>\n<p>    Industries Ltd. The said Jayaswal Neco Industries Ltd.\n<\/p>\n<p>    under the leadership of petitioner no.1 set up a<\/p>\n<p>    number of manufacturing units, factories and foundries<\/p>\n<p>    involved in the business of iron, steel and aluminium<\/p>\n<p>    metal, iron scrap processing, road construction and toll<\/p>\n<p>    collection and manufacturing of ferro alloys, auto<\/p>\n<p>    components, steel valves and steel.          The business<\/p>\n<p>    empire of the petitioner no.1 is spread throughout<\/p>\n<p>    India with major activities being carried on from<\/p>\n<p>    Nagpur in Maharashtra, Bhilai, Anjora and Siltara<\/p>\n<p>    (Raipur) in Chhattisgarh, Durgapur in West Bengal,<\/p>\n<p>    Ranchi in Jharkhand, Bangalore in Karnataka and<\/p>\n<p>    Chennai in Tamil Nadu.     With passage of time, the<\/p>\n<p>    petitioner no.2 and respondent joined business of the<\/p>\n<p>    petitioner no.1.\n<\/p>\n<p>    5)       It appears that on account of differences and<\/p>\n<p>    disputes, which had arisen between petitioners and the<\/p>\n<p><span class=\"hidden_text\">                                        ::: Downloaded on &#8211; 09\/06\/2013 17:34:07 :::<\/span><br \/>\n<span class=\"hidden_text\">                                          5<\/span><\/p>\n<p>    respondent, the petitioner no.1 with a view to maintain<\/p>\n<p>    family peace and harmony and to avoid any future<\/p>\n<p>    friction in the family or misunderstandings and to<\/p>\n<p>    arrive at an amicable settlement between the brothers,<\/p>\n<p>    i.e. petitioner no.2, Rameshkumar Jayaswal and the<\/p>\n<p>    respondent, decided to have a family settlement,<\/p>\n<p>    which   was       arrived<br \/>\n                           ig       at   with     the    assistance           and<\/p>\n<p>    intervention of relatives and well wishers, as a result of<\/p>\n<p>    which the business empire of the petitioner no.1 was<\/p>\n<p>    divided into two groups, namely, BLS group, which was<\/p>\n<p>    to   consist     of     the    petitioners     and     Rameshkumar<\/p>\n<p>    Jayaswal    and         the    MKJ   Group      consisting          of     the<\/p>\n<p>    respondent.      The said family settlement was reduced<\/p>\n<p>    into writing and accordingly an Indenture of the Family<\/p>\n<p>    Settlement       (for    the     sake    of   brevity,       hereinafter<\/p>\n<p>    referred to as &#8220;IFS&#8221;) was executed on 31\/7\/2008. The<\/p>\n<p>    said family settlement was executed by the petitioners<\/p>\n<p>    and Rameshkumar Jayaswal forming part of the BLS<\/p>\n<p>    Group      and     the        respondent      signed        the       family<\/p>\n<p>    settlement for himself and on behalf of his family<\/p>\n<p><span class=\"hidden_text\">                                                    ::: Downloaded on &#8211; 09\/06\/2013 17:34:07 :::<\/span><br \/>\n<span class=\"hidden_text\">                                   6<\/span><\/p>\n<p>    members, who constituted the MKJ Group.\n<\/p>\n<p>    6)           The said family settlement resulted in the<\/p>\n<p>    separation of the joint interest of the petitioners and<\/p>\n<p>    the respondent in the shareholding of the different<\/p>\n<p>    business Companies, other family Companies and<\/p>\n<p>    assets and properties held jointly or individually in the<\/p>\n<p>    name of any family member between BLS Group and<\/p>\n<p>    MKJ Group in the ratio of 3:1 wherein each of the four<\/p>\n<p>    parties was to get equal and near equal share therein.\n<\/p>\n<p>    The     relevant clauses of the said Family Settlement<\/p>\n<p>    from    the point of view of the above petition are<\/p>\n<p>    Clauses 7(l), 19 and 27.          The same are, therefore,<\/p>\n<p>    reproduced hereunder :\n<\/p>\n<blockquote><p>           &#8220;7. It is hereby agreed by and between the<br \/>\n           parties hereto as follows :<\/p><\/blockquote>\n<p>           (l)    Notwithstanding anything herein contained,<br \/>\n           it has been expressly agreed and confirmed by<br \/>\n           the     Parties   hereto    that   all    pending           loan<br \/>\n           agreements and personal guarantees in respect<br \/>\n           of the loans already sanctioned\/to be sanctioned<br \/>\n           by CIAL &#8211; Strip Mill (Siltara) and Inertia Rolling<\/p>\n<p><span class=\"hidden_text\">                                              ::: Downloaded on &#8211; 09\/06\/2013 17:34:07 :::<\/span><br \/>\n<span class=\"hidden_text\">                                7<\/span><\/p>\n<p>     Mill and JNIL &#8211; working capital shall be signed by<\/p>\n<p>     MKJ.      MKJ will also procure and ensure that<\/p>\n<p>     additional Term Loans are sanctioned by the<br \/>\n     banks to CIAL for the Strip Mill and to INERTIA for<br \/>\n     Rolling Mills at Siltara and sanctioned funds are<\/p>\n<p>     released for improvising the Strip Mill and<br \/>\n     repayment of the advances given by JNIL for the<br \/>\n     Strip Mill so that it is commissioned at the<\/p>\n<p>     earliest.    For this purpose, BLS Group shall<\/p>\n<p>     extend its reasonable cooperation to MKJ Group<br \/>\n     for release of the funds for the Strip Mill out of<\/p>\n<p>     the funds disbursed. MKJ shall deduct a sum of<br \/>\n     Rs.593 lacs as stated in Clause 7(d) and any<br \/>\n     similar     sums   paid       by   CIAL\/MKJ       Group         and<\/p>\n<p>     transfer the balance fund to the Units. All these<\/p>\n<p>     Units referred above are being run by Jayaswal<br \/>\n     Neco Industries Limited under Lease on payment<\/p>\n<p>     of monthly rentals and as per the understanding<br \/>\n     monthly\/quarterly         instalments           along          with<br \/>\n     interest thereon payable to respective Bank\/<br \/>\n     Institutions are being provided by JNIL out of<\/p>\n<p>     accrual of monthly lease rentals, barring only for<br \/>\n     the Strip Mill acquired by CIAL as the Strip Mill&#8217;s<br \/>\n     improvisation is still not complete due to lack of<br \/>\n     funds and once the additional sanctioned Term<br \/>\n     Loan is released by Bankers for completion of<\/p>\n<p><span class=\"hidden_text\">                                           ::: Downloaded on &#8211; 09\/06\/2013 17:34:07 :::<\/span><br \/>\n<span class=\"hidden_text\">                               8<\/span><\/p>\n<p>     improvisation, the same shall be operated under<\/p>\n<p>     lease from CIAL and the accrued lease rent<\/p>\n<p>     provided    by    JNIL       shall        be     paid        to      the<br \/>\n     Bankers\/Institutions funding the CIAL &#8211; Strip Mill<br \/>\n     towards part payment of principal and interest<\/p>\n<p>     till the date of merger of the Units with JNIL.<br \/>\n     Once all the units are merged with JNIL, the<br \/>\n     liability for payment of the balance loans and its<\/p>\n<p>     interest shall be on JNIL. Till merger of the units<\/p>\n<p>     with JNIL, the system of running the units on<br \/>\n     lease rental basis shall continue and out of the<\/p>\n<p>     lease rental accruals, instalments and interests<br \/>\n     shall continue to be provided for payment to the<br \/>\n     Lenders    of    the   Units         by     JNIL       through          a<\/p>\n<p>     designated account to be operated by the<\/p>\n<p>     nominees of both the Groups.                        It is hereby<br \/>\n     clarified and accepted by the Parties that the<\/p>\n<p>     system of Lease of Units has been adopted by<br \/>\n     BLS Family for commercial convenience and the<br \/>\n     lease rentals are no way connected to the actual<br \/>\n     repayment of interest and principle of the Units.\n<\/p>\n<p>     BLS Group agrees to pay total interest and<br \/>\n     principle payments in priority in accordance with<br \/>\n     the Sixth Schedule, including all other incidental<br \/>\n     amounts due to the Bankers of the Units on due<br \/>\n     dates.&#8221;\n<\/p>\n<p><span class=\"hidden_text\">                                               ::: Downloaded on &#8211; 09\/06\/2013 17:34:07 :::<\/span><br \/>\n<span class=\"hidden_text\">                                9<\/span><\/p>\n<p>     &#8220;19.   As per the Settlement recorded herein,<\/p>\n<p>     which is to be implemented in stages, the<br \/>\n     parties hereto have decided, on their free will<br \/>\n     and accord,        to appoint      Messrs          Kanga         and<\/p>\n<p>     Company, Advocates and Solicitors, Mumbai<br \/>\n     hereinafter referred to as &#8220;the Escrow Agent&#8221; to<br \/>\n     be duly assisted by Shri B.K. Agarwal, Chartered<\/p>\n<p>     Accountant, Nagpur and Shri Sohan Chaturvedi,<\/p>\n<p>     Chartered Accountants, Mumbai and the Escrow<br \/>\n     Agreement shall be executed within 7 (seven)<\/p>\n<p>     days from the date of execution of these<br \/>\n     presents.      A     photocopy         of    this      executed<br \/>\n     Indenture shall be provided to the Escrow Agent<\/p>\n<p>     for full and final implementation of the terms of<\/p>\n<p>     this   Indenture        and      on         completion\/non-<br \/>\n     completion of this Indenture, the Escrow Agent<\/p>\n<p>     shall submit its Report to both the Groups, which<br \/>\n     shall be prepared with the assistance of Shri B.K.<br \/>\n     Agarwal and Shri Sohan Chaturvedi, on the Final<br \/>\n     Date   as    provided     in    this    Indenture.               The<\/p>\n<p>     Provisions    of    the       escrow        mechanism             are<br \/>\n     mentioned below :\n<\/p>\n<p>     a. Each Group shall, within 10 (Ten) days from<br \/>\n     the date of execution of this Indenture, i.e. the<\/p>\n<p><span class=\"hidden_text\">                                            ::: Downloaded on &#8211; 09\/06\/2013 17:34:07 :::<\/span><br \/>\n<span class=\"hidden_text\">                            10<\/span><\/p>\n<p>     Effective Date, deposit the following instruments<\/p>\n<p>     with the Escrow Agent to be held in Escrow as<\/p>\n<p>     provided herein :\n<\/p>\n<p>     (i)     Duly filled in, signed and executed share<\/p>\n<p>     transfer forms together with the originals of the<br \/>\n     share certificates of the companies representing<br \/>\n     shareholders of the respective Parties in the<\/p>\n<p>     Compan(ies) duly completed in favour of the<\/p>\n<p>     parties to whom the concerned shares of the<br \/>\n     Companies are being given\/allotted under Terms<\/p>\n<p>     of this Indenture (hereinafter referred to as the<br \/>\n     &#8220;Allottee Parties&#8221;) to enable the Allottee Parties<br \/>\n     to get those shares registered\/endorsed in their\/<\/p>\n<p>     their     Nominee&#8217;s names.     In case of Shares<\/p>\n<p>     mortgaged with the Lenders, the transfer forms<br \/>\n     along with a request letter for the transfer shall<\/p>\n<p>     be submitted and in case of shares in demat<br \/>\n     forms the relevant forms shall be executed and<br \/>\n     submitted.\n<\/p>\n<p>     (ii) A Power of Attorney executed by each of the<br \/>\n     Groups hereto in favour of the Escrow Agent to<br \/>\n     do all such acts, deeds, matters are things as<br \/>\n     may be necessary for the purpose mentioned in\n<\/p>\n<p>     (i) hereinabove. The Power of Attorney executed<\/p>\n<p><span class=\"hidden_text\">                                    ::: Downloaded on &#8211; 09\/06\/2013 17:34:07 :::<\/span><br \/>\n<span class=\"hidden_text\">                             11<\/span><\/p>\n<p>     in favour of the Escrow Agent shall have wide<\/p>\n<p>     powers to enable the Escrow Agent to ensure<\/p>\n<p>     effective   implementation          of    this       Indenture<br \/>\n     including    powers         to     consult        Advocates,<br \/>\n     Chartered     Accountants           and        such         other<\/p>\n<p>     Consultants, if necessary, and to incur such<br \/>\n     expenditure as the Escrow Agent may deem fit.\n<\/p>\n<p>     (iii)   Letter of Resignation of a blank date<\/p>\n<p>     executed by the members of each of the Groups<br \/>\n     hereto and their Nominees on the Boards of<\/p>\n<p>     various companies, tendering their resignation<br \/>\n     as Directors of the Companies allotted to other<br \/>\n     parties\/Groups.\n<\/p>\n<p>     (iv) It has also been agreed by and between the<br \/>\n     parties that all actions, acts and deeds shall be<\/p>\n<p>     performed by both the Groups, viz. BLS Group<br \/>\n     and MKJ Group simultaneously and the Escrow<br \/>\n     Agent shall permit both Groups to examine all<br \/>\n     the     documents     in     his    office       with        prior<\/p>\n<p>     appointment and confirm in writing that the<br \/>\n     required    documents        and     necessary             Board<br \/>\n     Resolutions have been adopted and executed in<br \/>\n     proper form and order so as to avoid future<br \/>\n     disputes. The other compliances\/defects pointed<\/p>\n<p><span class=\"hidden_text\">                                          ::: Downloaded on &#8211; 09\/06\/2013 17:34:07 :::<\/span><br \/>\n<span class=\"hidden_text\">                            12<\/span><\/p>\n<p>     out by the other Group shall be rectified within 7<\/p>\n<p>     (Seven) days.\n<\/p>\n<p>     (b) In the event one of the two Group or both<br \/>\n     Groups do not cooperate with each other in the<\/p>\n<p>     implementation     of this Indenture of Family<br \/>\n     Settlement and\/or in the event of any of the<br \/>\n     party&#8217;s default, delay or failure to carry out his<\/p>\n<p>     obligation hereunder, the Parties hereby agree<\/p>\n<p>     that the Escrow Agent shall have power to take<br \/>\n     binding   decision    on   behalf     of      the       non-\n<\/p>\n<p>     cooperating and\/or defaulting Group and cause<br \/>\n     the same to be implemented, including power to<br \/>\n     transfer shares of Business and Other Family<\/p>\n<p>     Companies, by such Group and\/or to release to<\/p>\n<p>     the other Group such of the documents and<br \/>\n     papers as the Escrow Agent shall, in his absolute<\/p>\n<p>     discretion, deem fit and proper.\n<\/p>\n<p>     (c)   The Escrow Agent shall, (i) on such date<br \/>\n     prior to the Final Date or (ii) on the Final Date<\/p>\n<p>     (failing fixation of mutual date prior to Final<br \/>\n     Date), hand over the above documents to the<br \/>\n     respective      Allottee   Parties         only        after<br \/>\n     compliances of the following :\n<\/p>\n<p><span class=\"hidden_text\">                                    ::: Downloaded on &#8211; 09\/06\/2013 17:34:07 :::<\/span><br \/>\n<span class=\"hidden_text\">                             13<\/span><\/p>\n<p>     (i) Fulfillment of all the conditions as specified<\/p>\n<p>     under Clause 19(a)(i), (ii), (iii) and (iv),<\/p>\n<p>     (ii) On full compliance of the provisions as per<br \/>\n     Clause 18 above.\n<\/p>\n<p>     (d)   On handing over of the documents to the<br \/>\n     respective    Allottee      Parties   along         with        a<\/p>\n<p>     Compliance Certificate for compliance of all the<\/p>\n<p>     terms of this Indenture, the Escrow Agent shall<br \/>\n     stand fully discharged of his obligations as such<\/p>\n<p>     Escrow Agent and neither party shall have any<br \/>\n     claim of any nature whatsoever against the<br \/>\n     Escrow Agent by virtue of this Indenture or<\/p>\n<p>     otherwise.\n<\/p>\n<p>     (e) The parties agree that the obligations of the<\/p>\n<p>     Escrow Agent under this Indenture shall not be<br \/>\n     affected by any disputes or contentions between<br \/>\n     the parties hereto and that the Escrow Agent<br \/>\n     shall be entitled to carry out its obligations as<\/p>\n<p>     set out herein regardless of any such disputes or<br \/>\n     conventions that may be raised.\n<\/p>\n<p>     (f)   The Escrow Agent shall not be liable for any<br \/>\n     action taken or omitted to be taken pursuant to<\/p>\n<p><span class=\"hidden_text\">                                       ::: Downloaded on &#8211; 09\/06\/2013 17:34:07 :::<\/span><br \/>\n<span class=\"hidden_text\">                           14<\/span><\/p>\n<p>     this Indenture, except in the case of gross<\/p>\n<p>     negligence or willful misconduct.\n<\/p>\n<p>     (g) In consideration of the Escrow Agent having<br \/>\n     agreed to hold the documents in Escrow, as<\/p>\n<p>     provided in this Indenture, the Escrow Agent<br \/>\n     shall be paid necessary fees to be shared<br \/>\n     between the BLS Group and MKJ            Group in the<\/p>\n<p>     proportion of 3:1 (Three is to One), respectively<\/p>\n<p>     and such payment shall be made within Seven<br \/>\n     (07) days from the Escrow Agent raising its<\/p>\n<p>     invoices on the parties hereto.&#8221;\n<\/p>\n<p>     &#8220;27.   Each party shall fully co-operate with the<\/p>\n<p>     others or other of them to implement and give<\/p>\n<p>     full effect to the provisions of this Indenture. It<br \/>\n     is agreed that in case there is any difference of<\/p>\n<p>     opinion between the two groups or any of the<br \/>\n     parties hereto in any way relating to or arising<br \/>\n     under this Indenture or the separation agreed<br \/>\n     hereunder or otherwise relating to any of the<\/p>\n<p>     Companies, Businesses or Properties of the BLS<br \/>\n     Family, the parties hereby agree to refer, except<br \/>\n     the disputes referred under Clause 7(i) and 27,<br \/>\n     all such disputes and difference to Arbitration in<br \/>\n     accordance with the provisions of the Arbitration<\/p>\n<p><span class=\"hidden_text\">                                    ::: Downloaded on &#8211; 09\/06\/2013 17:34:07 :::<\/span><br \/>\n<span class=\"hidden_text\">                                  15<\/span><\/p>\n<p>          and Conciliation Act, 1996. None of the parties<\/p>\n<p>          hereto shall resort to, initiate or threaten to<\/p>\n<p>          initiate or cause to be initiated, any legal<br \/>\n          proceedings in any Court of Law, to resolve any<br \/>\n          dispute, etc. relating to Family Businesses or any<\/p>\n<p>          matter covered by this Indenture. The place of<br \/>\n          the    Arbitration   shall   be   at   Mumbai.               The<br \/>\n          language of the Arbitration shall be English. The<\/p>\n<p>          decision of the Arbitrator shall be final and<\/p>\n<p>          binding upon the Parties hereto.&#8221;\n<\/p>\n<p>    7)       Pursuant to the said IFS, a separate Escrow<\/p>\n<p>    Agreement dated 26\/12\/2008 was entered into by the<\/p>\n<p>    parties. The parties also executed a Power of Attorney<\/p>\n<p>    in favour of the Escrow Agent, one M\/s. Sohan<\/p>\n<p>    Chaturvedi    and   Company,       Chartered       Accountants,<\/p>\n<p>    Mumbai. In terms of the IFS, mutual obligations were<\/p>\n<p>    cast upon both the groups, i.e. BLS Group and MKJ<\/p>\n<p>    Group.       It is for the smooth implementation and<\/p>\n<p>    execution of the IFS that     the Escrow Agent, namely,<\/p>\n<p>    M\/s. Sohan Chaturvedi and Company came to be<\/p>\n<p>    appointed. The Escrow Agent was given powers under<\/p>\n<p><span class=\"hidden_text\">                                             ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                  16<\/span><\/p>\n<p>    the said Clause 19, which are reflected in sub-clauses<\/p>\n<p>    (b) and (c) thereof. The said powers can also be seen<\/p>\n<p>    from the Escrow Agreement as well as from the Power<\/p>\n<p>    of Attorney, which the parties executed in favour of<\/p>\n<p>    Escrow Agent.       The cause of filing the present<\/p>\n<p>    proceedings has arisen on account of the alleged non-\n<\/p>\n<p>    fulfillment of the obligations by the petitioners under<\/p>\n<p>    Clause 7(l), which is in respect of the demerger of the<\/p>\n<p>    Strip Mill. The said Strip Mill was to be demerged from<\/p>\n<p>    the Company known as CIAL and to be merged with<\/p>\n<p>    the Company known as JNIL, i.e. the group Company of<\/p>\n<p>    the petitioners.   The same was to be done within 90<\/p>\n<p>    days from the date of the execution of the IFS.\n<\/p>\n<p>    Further, in terms of the obligations cast by the IFS, the<\/p>\n<p>    petitioners were liable to make payment against the<\/p>\n<p>    loan to the Bankers simultaneously on the transfer of<\/p>\n<p>    the ownership rights. It is the case of the petitioners<\/p>\n<p>    that   after   execution   of the IFS,   the respondent<\/p>\n<p>    continued to delay the process of demerger and<\/p>\n<p>    merger of Strip Mill with JNIL on one pretext or the<\/p>\n<p><span class=\"hidden_text\">                                         ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                17<\/span><\/p>\n<p>    other, whereas it is the case of the respondent that<\/p>\n<p>    during the pendency of the procedure of merger of the<\/p>\n<p>    Units with JNIL,   BLS Group is under an obligation to<\/p>\n<p>    continue to pay regular instalments and interest to the<\/p>\n<p>    Banker of the Unit through a designated Account to be<\/p>\n<p>    operated by the nominees of both the Groups. It is the<\/p>\n<p>    case of the respondent that the petitioners have<\/p>\n<p>    stopped the payment since August 2010 whereas it is<\/p>\n<p>    the case of the petitioners that in spite of making<\/p>\n<p>    payment of about      Rs.150 crores against the Bank<\/p>\n<p>    loans, the ownership has not been transferred from<\/p>\n<p>    CIAL to JNIL, resulting into the Strip Mill not being<\/p>\n<p>    commissioned as the ownership of the said plant has<\/p>\n<p>    remained vested with the respondent and hence,<\/p>\n<p>    without having ownership of the plant, the same could<\/p>\n<p>    not be commissioned by the petitioners&#8217; Company. It<\/p>\n<p>    is the case of the petitioners that the amount of Rs.150<\/p>\n<p>    crores approximately, which they have invested in the<\/p>\n<p>    said Strip Mill on account of repayment of loan and<\/p>\n<p>    renovation is lying idle for more than three years.\n<\/p>\n<p><span class=\"hidden_text\">                                         ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                 18<\/span><\/p>\n<p>    8)        As regards the said dispute, the parties<\/p>\n<p>    charted different paths.    Insofar as the respondent is<\/p>\n<p>    concerned, he approached the Escrow Agent against<\/p>\n<p>    non-fulfillment of the obligations by the petitioners, as<\/p>\n<p>    a consequence of which the Escrow Agent issued<\/p>\n<p>    directions on 7\/11\/2009, in respect of payment of<\/p>\n<p>    instalments by the petitioners towards the loan of the<\/p>\n<p>    said Strip Mill and the Escrow Agent made observations<\/p>\n<p>    about the default being continued by the BLS Group<\/p>\n<p>    while issuing the said directions.       The Escrow Agent<\/p>\n<p>    thereafter issued further directions on 14\/4\/2011 and<\/p>\n<p>    by the said order, directed the BLS Group, i.e.<\/p>\n<p>    petitioners to make the payment of the instalments to<\/p>\n<p>    the Bankers of the Strip Mill.\n<\/p>\n<p>    9)        Insofar as petitioners are concerned, the<\/p>\n<p>    petitioners issued a notice to the respondent on<\/p>\n<p>    23\/2\/2011 calling upon him in view of the dispute<\/p>\n<p>    between the parties as regards the Strip Mill, to give<\/p>\n<p>    consent   for   appointment      of   Shri   B.V.       Bhargava,<\/p>\n<p><span class=\"hidden_text\">                                             ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                  19<\/span><\/p>\n<p>    Ex-Vice Chairman and Managing Director of the ICICI<\/p>\n<p>    Bank as the sole Arbitrator to adjudicate upon the said<\/p>\n<p>    dispute along with other disputes that may be detailed<\/p>\n<p>    out once the arbitration commences and modalities as<\/p>\n<p>    suggested     by   the   agreement   are    agreed.             The<\/p>\n<p>    respondent replied to the said notice by his letter<\/p>\n<p>    dated 26\/3\/2011. The sum and substance of the reply<\/p>\n<p>    of the respondent was that the disputes in question as<\/p>\n<p>    regards the directions of the Escrow Agent, were not<\/p>\n<p>    arbitrable since they were not covered by Clause 27 of<\/p>\n<p>    the IFS.\n<\/p>\n<p>    10)        The petitioners having received the said reply<\/p>\n<p>    and seeing that the respondent was not cooperating in<\/p>\n<p>    the resolution of the disputes, filed Miscellaneous Civil<\/p>\n<p>    Application No.325\/2011 under Section 11(6) of the<\/p>\n<p>    said Act in this Court. The case of the petitioners was<\/p>\n<p>    that the disputes between the parties more specially<\/p>\n<p>    the dispute regarding demerger of the Strip Mill was<\/p>\n<p>    arbitrable in terms of Clause 27 of the IFS. The said<\/p>\n<p><span class=\"hidden_text\">                                          ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                     20<\/span><\/p>\n<p>    Miscellaneous       Civil   Application        had     come         up      for<\/p>\n<p>    hearing before a learned Judge of this Court, who by<\/p>\n<p>    order dated 1\/4\/2011 was pleased to issue notice to<\/p>\n<p>    the respondent. The said notice has been served upon<\/p>\n<p>    the respondent thereafter.\n<\/p>\n<p>    11)        The respondent herein, after the said notice<\/p>\n<p>    came to be issued in the said Miscellaneous Civil<\/p>\n<p>    Application,    on     9\/5\/2011        filed   Special         Civil      Suit<\/p>\n<p>    No. 584\/2011, inter alia for the following substantive<\/p>\n<p>    reliefs:\n<\/p>\n<blockquote><p>           &#8220;Prayer :     It is, therefore, most humbly prayed<br \/>\n           that this Hon&#8217;ble Court be pleased to &#8211;<\/p><\/blockquote>\n<p>           (a) pass a Decree of Declaration in favour of the<br \/>\n           plaintiff and against the defendants, declaring<br \/>\n           therein that the act of the defendants in stopping<\/p>\n<p>           the payment of the monthly instalments of the<br \/>\n           banker of Strip Mill with effect from August 2010,<br \/>\n           in the peculiar facts and circumstances of the<br \/>\n           case    is    contrary     to     the     Deed         of     Family<br \/>\n           Settlement executed between the parties and<br \/>\n           the directives dated 07.11.2009 and 14.04.2011<\/p>\n<p><span class=\"hidden_text\">                                                    ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                  21<\/span><\/p>\n<p>     of Escrow Agent interpreting the same;\n<\/p>\n<p>     (b) pass a Decree of Permanent Mandatory<br \/>\n     injunction in favour of the plaintiff and against<br \/>\n     the defendants, their servants, agents and other<\/p>\n<p>     persons      claiming       through        or     under         them,<br \/>\n     directing them to follow the directives of the<br \/>\n     Escrow Agent dated 14.4.2011 in relation to the<\/p>\n<p>     reimbursement ig            of      the          amount                of<br \/>\n     Rs.30,82,04,954\/- from August 2010 to March<br \/>\n     2011, to the plaintiff;\n<\/p>\n<p>     (c) pass a Decree of Permanent Mandatory<br \/>\n     injunction directing the defendants their agents,<\/p>\n<p>     servants and persons claiming through or under<\/p>\n<p>     them    to    start    repayment           of      the      monthly<br \/>\n     instalments to the bankers of Strip Mill regularly<\/p>\n<p>     on due dates with effect from April 2011 in<br \/>\n     compliance of their obligations to do so, under<br \/>\n     the Deed of Family Settlement and the directives<br \/>\n     dated 14.4.2011, which are in continuation of<\/p>\n<p>     directives dated 7.11.2009;\n<\/p>\n<pre>     (d)    cost    of     the    suit   be saddled               on the\n     defendants;\n\n\n\n\n<span class=\"hidden_text\">                                               ::: Downloaded on - 09\/06\/2013 17:34:08 :::<\/span>\n<span class=\"hidden_text\">                                     22<\/span>\n\n          (e)      And the Hon'ble Court may pass any other\n\n\n\n\n                                                                         \n<\/pre>\n<p>          order as this Hon&#8217;ble Court deems fit in the<\/p>\n<p>          interest of justice;\n<\/p>\n<p>                  And for which act of kindness, the plaintiff<br \/>\n          shall remain duly bound and ever pray.&#8221;\n<\/p>\n<p>    12)      It was the case of the respondent that the<\/p>\n<p>    petitioners have not complied with the directions<\/p>\n<p>    issued   by    the<br \/>\n                      ig  Escrow     Agent    on      7\/11\/2009            and<\/p>\n<p>    14\/4\/2011 in respect of payment of the instalments in<\/p>\n<p>    respect of the loan relating to the Strip Mill, which was<\/p>\n<p>    to be demerged.         It was the further case of the<\/p>\n<p>    respondent     that    the     petitioners     were         under        an<\/p>\n<p>    obligation to comply with the directions given by the<\/p>\n<p>    Escrow Agent by his communication dated 14\/4\/2011.\n<\/p>\n<p>    13)      The    petitioners      after   receipt       of     the      suit<\/p>\n<p>    summons, appeared before the trial Court and filed an<\/p>\n<p>    application under Sections 5 and 8 of the said Act. In<\/p>\n<p>    the said application, the substratum of the case of the<\/p>\n<p>    petitioners    was    that   the     dispute      raised        by      the<\/p>\n<p><span class=\"hidden_text\">                                                 ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                 23<\/span><\/p>\n<p>    respondent\/plaintiff   being      arbitrable       in     view       of<\/p>\n<p>    Clause 27 of the IFS should be referred to the<\/p>\n<p>    Arbitrator.   It was further averred by the petitioners<\/p>\n<p>    that the issue raised in the suit is the subject matter of<\/p>\n<p>    the   application   made    by    the   petitioners           under<\/p>\n<p>    Section 11(6) of the said Act, which is pending before<\/p>\n<p>    this Court and hence, the suit was not maintainable.\n<\/p>\n<p>    14)      To the said application, the respondent filed a<\/p>\n<p>    reply, inter alia, contending that the directions of the<\/p>\n<p>    Escrow Agent are independent of Clause 27 of the IFS<\/p>\n<p>    and are not arbitrable.          It was the case of the<\/p>\n<p>    respondent that the parties have vested the Escrow<\/p>\n<p>    Agent with powers under Clause 19 to see that the IFS<\/p>\n<p>    is implemented and executed and the orders dated<\/p>\n<p>    7\/11\/2009 and 14\/4\/2011 are, therefore, the orders,<\/p>\n<p>    which are passed by the Escrow Agent in terms of the<\/p>\n<p>    power vested in him.        The respondent, therefore,<\/p>\n<p>    contended that the application filed by the petitioners<\/p>\n<p>    could not be entertained.\n<\/p>\n<p><span class=\"hidden_text\">                                            ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                  24<\/span><\/p>\n<p>    15)       The said application was considered by the<\/p>\n<p>    learned   Civil   Judge,   Senior   Division     and       by      the<\/p>\n<p>    impugned order dated 13\/5\/2011, the said application<\/p>\n<p>    came to be rejected.       The gist of the finding of the<\/p>\n<p>    learned Judge was that the dispute in the said suit is in<\/p>\n<p>    respect of the directions given by the Escrow Agent in<\/p>\n<p>    terms of the agreement dated 26\/12\/2008 and in terms<\/p>\n<p>    of Clause 19 of the said agreement, it is specifically<\/p>\n<p>    mentioned that the parties agreed that the rights<\/p>\n<p>    provided in Clause 27 of the IFS are in addition to this<\/p>\n<p>    Clause and not by way of dilution or substitution. The<\/p>\n<p>    learned Judge further held that since in terms of Clause<\/p>\n<p>    5 of the Escrow Agreement dated 26\/12\/2008, the<\/p>\n<p>    parties agreed that the obligation of the Escrow Agent<\/p>\n<p>    under the said Family Settlement shall not be affected<\/p>\n<p>    by any dispute or difference between the parties to the<\/p>\n<p>    said IFS and that the Escrow Agent shall be entitled to<\/p>\n<p>    carry out his obligation as set out herein regardless of<\/p>\n<p>    any dispute or contention that may be raised as well as<\/p>\n<p>    due to unwillingness of the parties to implement the<\/p>\n<p><span class=\"hidden_text\">                                            ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                25<\/span><\/p>\n<p>    Deed in accordance with the interpretation of the<\/p>\n<p>    Escrow Agency provided in Clause 4 of the agreement.\n<\/p>\n<p>    The trial Court, therefore held that the subject matter<\/p>\n<p>    of the present suit is not a subject matter of the<\/p>\n<p>    arbitration agreement since powers of the Escrow<\/p>\n<p>    Agent described in the agreement are above all the<\/p>\n<p>    disputes between the parties.\n<\/p>\n<p>                    ig                 The learned Judge<\/p>\n<p>    further held that if the petitioners herein, who are<\/p>\n<p>    defendants, have followed the directions of the Escrow<\/p>\n<p>    Agent till July 2010, then the petitioners cannot take<\/p>\n<p>    shelter of the arbitration clause in the IFS to overcome<\/p>\n<p>    totally separate agreement whereby Escrow Agent is<\/p>\n<p>    appointed.\n<\/p>\n<p>    16)      As mentioned hereinabove, it is the said<\/p>\n<p>    order, which is impugned in the present petition.\n<\/p>\n<p>          SUBMISSIONS ON BEHALF OF THE PETITIONERS :\n<\/p>\n<p>    i)       That, since notice of arbitration has already<\/p>\n<p><span class=\"hidden_text\">                                        ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                          26<\/span><\/p>\n<p>    been    given        on    23\/2\/2011      and       thereafter            the<\/p>\n<p>    Miscellaneous Civil Application has already been filed<\/p>\n<p>    wherein notice has been issued to the respondent on<\/p>\n<p>    1\/4\/2011 by this Court, the arbitration proceedings are<\/p>\n<p>    deemed to have commenced and, therefore, it was not<\/p>\n<p>    open for the respondent to file a suit for the reliefs<\/p>\n<p>    claimed. For the said purpose, the learned Counsel for<\/p>\n<p>    the petitioners relied upon the judgment of the Apex<\/p>\n<p>    Court in Milkfood Ltd. vs. M\/s. GMC Ice Cream (P) Ltd.\n<\/p>\n<p>    (AIR 2004 SC 3145).\n<\/p>\n<p>    ii)      That, the dispute in question as regards<\/p>\n<p>    demerger of the Strip Mill is covered by Clause 27 of<\/p>\n<p>    the IFS. The appointment of the Escrow Agent is part<\/p>\n<p>    of the IFS and, therefore, the Escrow Agreement dated<\/p>\n<p>    26\/12\/2008 cannot be considered independently and<\/p>\n<p>    would   be   governed           by    Clause   27      of     the      main<\/p>\n<p>    agreement.      In support of the said submission, the<\/p>\n<p>    learned Counsel for the petitioners relied upon the<\/p>\n<p>    judgments       of        the    Apex     Court         in      Olympus<\/p>\n<p><span class=\"hidden_text\">                                                   ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                27<\/span><\/p>\n<p>    <a href=\"\/doc\/925897\/\">Superstructures Pvt. Ltd. vs. Meena Vijay Khetan and<\/p>\n<p>    others<\/a> {(1999) 5 SCC 651},         Owners and Parties<\/p>\n<p>    interested in the Vessel M.V. Baltic Confidence and<\/p>\n<p>    another v. State Trading Corporation of India Ltd. and<\/p>\n<p>    another (AIR 2001 SC 3381).\n<\/p>\n<p>    iii)      That, the respondent could not have resorted<\/p>\n<p>    to filing of the suit. However, if he was claiming any<\/p>\n<p>    directions, then it was open for him to file an<\/p>\n<p>    appropriate application under the provisions of the said<\/p>\n<p>    Act.\n<\/p>\n<p>           SUBMISSIONS ON BEHALF OF THE RESPONDENT :\n<\/p>\n<p>    i)        That, reading of Clause 19 of the IFS relating<\/p>\n<p>    to the Escrow Agent and the Escrow Agreement dated<\/p>\n<p>    26\/11\/2008 discloses that the parties have provided for<\/p>\n<p>    an interim arrangement so that the IFS can be<\/p>\n<p>    executed and complied with and for the said purpose<\/p>\n<p>    have vested the Escrow Agent with powers, which can<\/p>\n<p><span class=\"hidden_text\">                                         ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                28<\/span><\/p>\n<p>    be seen from Clause 19(b) of the IFS. The said Escrow<\/p>\n<p>    Agreement, therefore, stands independently or apart<\/p>\n<p>    from the main IFS. In support of the said submission,<\/p>\n<p>    the learned Senior Counsel for the respondent relied<\/p>\n<p>    upon the judgment of the Apex Court in the matter of<\/p>\n<p>    <a href=\"\/doc\/1474648\/\">Siddhivinayak Realities (P) Ltd. vs. Tulip Hospitality<\/p>\n<p>    Services Ltd. and others<\/a> {(2007) 4 SCC 612}.\n<\/p>\n<p>    ii)     That, the trial Court on a consideration of<\/p>\n<p>    Clauses 19 and 27 of the IFS and the relevant Clauses<\/p>\n<p>    of the Escrow Agreement having come to a conclusion<\/p>\n<p>    that the dispute is not arbitrable under Clause 27 of<\/p>\n<p>    the IFS in view of the powers conferred on the Escrow<\/p>\n<p>    Agent by Clause 19 of the IFS, this Court should not<\/p>\n<p>    exercise its writ jurisdiction.   The learned Senior<\/p>\n<p>    Counsel referred to the guidelines, which have been<\/p>\n<p>    laid down by the Apex Court in the judgment in the<\/p>\n<p>    matter of <a href=\"\/doc\/188958994\/\">Booz Allen and Hamilton Inc. vs. SBI Home<\/p>\n<p>    Finance Limited and others<\/a> {(2011) 5 SCC 532} and<\/p>\n<p>    especially para (19) thereof was relied upon.\n<\/p>\n<p><span class=\"hidden_text\">                                         ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                  29<\/span><\/p>\n<p>    iii)     The learned Senior Counsel contended that for<\/p>\n<p>    non compliance of the directions of the Escrow Agent,<\/p>\n<p>    the respondent was entitled to approach the Civil Court<\/p>\n<p>    for a mandatory order directing the petitioners to<\/p>\n<p>    comply with the said directions dated 7\/11\/2009 and<\/p>\n<p>    14\/4\/2011.\n<\/p>\n<p>                      CONSIDERATION<\/p>\n<p>    17)      Having heard the learned Counsel for the<\/p>\n<p>    parties, I have given my anxious consideration to the<\/p>\n<p>    rival contentions. In the instant case, it is relevant to<\/p>\n<p>    note that the petitioners in view of the dispute as<\/p>\n<p>    regards the mutual obligations under Clause 7(l) of the<\/p>\n<p>    IFS and the dispute as regards fulfillment of obligations<\/p>\n<p>    and binding promises as set out in the IFS had issued a<\/p>\n<p>    notice   dated   23\/2\/2011        to   the   respondent              for<\/p>\n<p>    appointment of an Arbitrator under Section 11 of the<\/p>\n<p>    said Act for resolving the said disputes, which had<\/p>\n<p>    arisen out of the said IFS dated 31\/7\/2008.                        The<\/p>\n<p><span class=\"hidden_text\">                                             ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                30<\/span><\/p>\n<p>    petitioners had called upon the respondent by the said<\/p>\n<p>    notice to give consent for appointment of Shri B.V.\n<\/p>\n<p>    Bhargava, Ex-Vice Chairman and Managing Director of<\/p>\n<p>    the ICICI Bank as the sole Arbitrator to adjudicate upon<\/p>\n<p>    the disputes mentioned in the notice along with others,<\/p>\n<p>    which will be detailed out once the arbitration has<\/p>\n<p>    commenced.     The said notice has been replied to by<\/p>\n<p>    the respondent by his letter dated 26\/3\/2011.                   The<\/p>\n<p>    respondent has denied the claims and contentions of<\/p>\n<p>    the petitioners and in fact, has taken a stand that it is<\/p>\n<p>    the petitioners, who have not fulfilled the obligations<\/p>\n<p>    under the said IFS. The respondent in the concluding<\/p>\n<p>    paragraph of the reply has stated that he does not<\/p>\n<p>    agree with the petitioners that the matter requires to<\/p>\n<p>    be referred to an Arbitrator and more particularly,<\/p>\n<p>    Shri B.V. Bhargava, which name was referred to in the<\/p>\n<p>    notice. In view of the said stand of the respondent, the<\/p>\n<p>    petitioners   herein   filed    a   Miscellaneous              Civil<\/p>\n<p>    Application bearing No.325\/2011 under Section 11(6)<\/p>\n<p>    of the said Act for appointment of an Arbitrator. This<\/p>\n<p><span class=\"hidden_text\">                                          ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                    31<\/span><\/p>\n<p>    Court in the said Miscellaneous Civil Application was<\/p>\n<p>    pleased to issue notice to the respondent on 1\/4\/2011.\n<\/p>\n<p>    The respondent thereafter on 9\/5\/2011, i.e. after a<\/p>\n<p>    period of one month has filed the said Special Civil Suit<\/p>\n<p>    No. 584\/2011 inter alia for the reliefs, which have been<\/p>\n<p>    referred to in the earlier part of this judgment.\n<\/p>\n<p>    18)<\/p>\n<p>                 In the context of the aforesaid facts, it would<\/p>\n<p>    be apposite to refer to the judgment of the Apex Court<\/p>\n<p>    in the case of <a href=\"\/doc\/1293440\/\">Milkfood Ltd. vs. M\/s. GMC Ice Cream (P)<\/p>\n<p>    Ltd.<\/a> (supra). The question before the Apex Court was<\/p>\n<p>    as to when the arbitration proceedings can be said to<\/p>\n<p>    have commenced. The Apex Court held that service of<\/p>\n<p>    notice for appointment of an Arbitrator by one party to<\/p>\n<p>    another is the relevant date for commencement of the<\/p>\n<p>    arbitral proceedings.        Paragraph (73) of the said<\/p>\n<p>    judgment is material and is reproduced hereunder :\n<\/p>\n<blockquote><p>          &#8220;73.       Keeping in view the fact that in all the<br \/>\n          decisions referred to hereinbefore, this Court has<br \/>\n          applied the meaning given to the expression<br \/>\n          `commencement of the arbitral proceeding&#8217; as<\/p>\n<p><span class=\"hidden_text\">                                            ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                  32<\/span><\/p>\n<p>          contained in Section 21 of the 1996 Act for the<\/p>\n<p>          purpose of applicability of the 1940 Act having<\/p>\n<p>          regard to Section 85(2)(a) thereof, we have no<br \/>\n          hesitation in holding that in this case also, service<br \/>\n          of a notice for appointment of an arbitrator would<\/p>\n<p>          be   the   relevant   date   for    the       purpose           of<br \/>\n          commencement of the arbitration proceeding.&#8221;\n<\/p><\/blockquote>\n<p>    In the light of the judgment of the Apex Court, there is<\/p>\n<p>    merit in the contention of the learned Counsel for the<\/p>\n<p>    petitioners that since in the instant case, apart from<\/p>\n<p>    notice, the petitioners have also filed Miscellaneous<\/p>\n<p>    Civil Application No.325\/2011 wherein a notice came<\/p>\n<p>    to be issued by this Court on 1\/4\/2011, the arbitration<\/p>\n<p>    proceedings are deemed to have been commenced<\/p>\n<p>    and, therefore, it was not open for the respondent to<\/p>\n<p>    file the said Special Civil Suit No.584\/2011 and the<\/p>\n<p>    parties were, therefore, obliged to refer the disputes to<\/p>\n<p>    arbitration.\n<\/p>\n<p>    19)        The question is whether in respect of non-\n<\/p>\n<p>    compliance of the directions of the Escrow Agent, a<\/p>\n<p><span class=\"hidden_text\">                                             ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                33<\/span><\/p>\n<p>    suit is maintainable for enforcement of the same or<\/p>\n<p>    whether the parties have to be relegated to the<\/p>\n<p>    Arbitrator in terms of Clause 27 of the IFS ?\n<\/p>\n<p>    20)      No doubt, in terms of Clause 19(b) of the IFS,<\/p>\n<p>    the parties have vested the Escrow Agent with the<\/p>\n<p>    powers to take binding decisions on behalf of non-\n<\/p>\n<p>    cooperating and\/or defaulting Group and cause the<\/p>\n<p>    same to be implemented, including power to transfer<\/p>\n<p>    shares of Business and Other Family Companies, by<\/p>\n<p>    such Group and\/or to release to the other Group such<\/p>\n<p>    of the documents and papers as the Escrow Agent<\/p>\n<p>    shall, in his absolute discretion, deem fit and proper.\n<\/p>\n<p>    As rightly contended by the learned Senior Counsel for<\/p>\n<p>    the respondent, the Escrow Agent arrangement is by<\/p>\n<p>    way of an interim measure to facilitate the compliance<\/p>\n<p>    and implementation of the IFS. Insofar as the Escrow<\/p>\n<p>    arrangement is concerned, it is now a common<\/p>\n<p>    practice to appoint an Escrow Agent to see that the<\/p>\n<p>    parties are performing their obligations in terms of the<\/p>\n<p><span class=\"hidden_text\">                                          ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                    34<\/span><\/p>\n<p>    agreement that is arrived at between the parties.\n<\/p>\n<p>    21)         In     the   instant    case,       as        mentioned<\/p>\n<p>    hereinabove, the issue is as to whether the Escrow<\/p>\n<p>    Agreement is to be considered independent of the IFS<\/p>\n<p>    and, therefore, for implementation of the directions of<\/p>\n<p>    the Escrow Agent, a suit is maintainable. There can be<\/p>\n<p>    no dispute as regards the fact that the Escrow Agent<\/p>\n<p>    has been appointed to facilitate the implementation of<\/p>\n<p>    the   IFS    and    in   furtherance    thereof,       the      Escrow<\/p>\n<p>    Agreement dated 26\/12\/2008 has been executed as<\/p>\n<p>    well as a Power of Attorney has been executed by the<\/p>\n<p>    parties in favour of the Escrow Agent.                 The present<\/p>\n<p>    dispute is mainly on account of alleged non-fulfillment<\/p>\n<p>    of the mutual obligations under Clause 7(l) of the IFS,<\/p>\n<p>    which is in respect of demerger of the Strip Mill.\n<\/p>\n<p>    Allegations and counter-allegations have been made<\/p>\n<p>    by the parties against each other in respect of non-\n<\/p>\n<p>    fulfillment of the obligations.        However, there cannot<\/p>\n<p>    be any dispute that the directions given by the Escrow<\/p>\n<p><span class=\"hidden_text\">                                                ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                   35<\/span><\/p>\n<p>    Agent for which the respondent has filed the said suit,<\/p>\n<p>    are referable to Clause 7(l), which is part of the IFS.\n<\/p>\n<p>    Hence, though there is a separate Escrow Agreement<\/p>\n<p>    as well as a Power of Attorney executed in favour of<\/p>\n<p>    the Escrow Agent and though the Escrow Agent has<\/p>\n<p>    the power under Clause 19(b) of the IFS, Clause 27 of<\/p>\n<p>    the IFS, which provides for arbitration, can be said to<\/p>\n<p>    be over imposing itself over the said documents.                      As<\/p>\n<p>    the said Clause unequivocally states that in case there<\/p>\n<p>    is any difference of opinion between the two groups or<\/p>\n<p>    any of the parties hereto in any way relating to or<\/p>\n<p>    arising under this Indenture or the separation agreed<\/p>\n<p>    hereunder    or   otherwise    relating      to     any       of     the<\/p>\n<p>    Companies, Businesses or Properties of the BLS Family,<\/p>\n<p>    the parties have agreed to refer, except the disputes<\/p>\n<p>    referred under Clause 7(i) and 27, all such disputes<\/p>\n<p>    and differences to Arbitration in accordance with the<\/p>\n<p>    provisions of the said Act.        It was further agreed by<\/p>\n<p>    the parties that none of them shall resort to, initiate or<\/p>\n<p>    threaten to initiate or cause to be initiated, any legal<\/p>\n<p><span class=\"hidden_text\">                                              ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                36<\/span><\/p>\n<p>    proceedings in any Court of Law, to resolve any<\/p>\n<p>    dispute relating to family businesses           or matters<\/p>\n<p>    covered by the said Indenture.    The said Clause 27,<\/p>\n<p>    therefore, insofar as the IFS is concerned wherein<\/p>\n<p>    Clause 19(b) is a part, is omniscient, omnipresent and<\/p>\n<p>    omnipotent and looming large over any dispute that<\/p>\n<p>    may arise in respect of the implementation of the IFS.\n<\/p>\n<p>    It is also required to be noted that by way of prayer<\/p>\n<p>    clauses (a) to (c) of the suit, what the respondent in<\/p>\n<p>    fact is claiming is the compliance of the obligations by<\/p>\n<p>    the petitioners imposed upon them by the IFS.             In the<\/p>\n<p>    light of the above, the impugned order of the trial<\/p>\n<p>    Court holding that the Escrow Agreement being a<\/p>\n<p>    separate and independent Agreement and, therefore,<\/p>\n<p>    Clause 27 of the IFS would not cover the same is,<\/p>\n<p>    therefore, unsustainable and is required to be quashed<\/p>\n<p>    and set aside.\n<\/p>\n<p>    22)     In the said context, the judgment cited on<\/p>\n<p>    behalf of the petitioners in the matter of Olympus<\/p>\n<p><span class=\"hidden_text\">                                        ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                37<\/span><\/p>\n<p>    Superstructures Pvt. Ltd. (supra) is relevant. The Apex<\/p>\n<p>    Court held that where disputes and differences in<\/p>\n<p>    connection with the main agreement and also disputes<\/p>\n<p>    in respect of any other matter in any way connected<\/p>\n<p>    with the subject matter of the main agreement exist,<\/p>\n<p>    the situation would be governed by the general<\/p>\n<p>    Arbitration Clause in the main agreement under which<\/p>\n<p>    disputes connected therewith can be referred to the<\/p>\n<p>    Arbitral Tribunal.\n<\/p>\n<p>    23)      As observed hereinabove, the dispute being<\/p>\n<p>    in respect of the directions issued by the Escrow Agent,<\/p>\n<p>    which are referable to Clause 7(l) of the IFS, would,<\/p>\n<p>    therefore, be a dispute, which is arbitrable under<\/p>\n<p>    Clause 27 of the IFS.\n<\/p>\n<p>    24)      Now coming to the judgment of the Apex<\/p>\n<p>    Court in the case of Siddhivinayak Realities (P) Ltd.\n<\/p>\n<p>    (supra), the issue before the Apex Court was as<\/p>\n<p>    regards the powers conferred on the Escrow Agent in<\/p>\n<p><span class=\"hidden_text\">                                        ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                 38<\/span><\/p>\n<p>    terms of the agreement in question therein and<\/p>\n<p>    whether the Escrow Agent should be entrusted with<\/p>\n<p>    deciding the question as to which party is in default,<\/p>\n<p>    which the Escrow Agent had undoubtedly the power to<\/p>\n<p>    determine in terms of the agreement, as it was the<\/p>\n<p>    case of one of the parties to the said Escrow<\/p>\n<p>    Agreement      that the Escrow Agent is likely to be<\/p>\n<p>    biased.    Though the Apex Court held that since the<\/p>\n<p>    parties have jointly agreed to the appointment of the<\/p>\n<p>    Escrow Agent, he should be allowed to determine the<\/p>\n<p>    issue in question. In the facts of the said case where<\/p>\n<p>    there was likelihood of one of the Escrow Agents being<\/p>\n<p>    a Judge in his own cause, the Apex Court declined to<\/p>\n<p>    interfere with the order of the High Court upholding the<\/p>\n<p>    Arbitral   Tribunal&#8217;s   order    restraining      the       Escrow<\/p>\n<p>    proceedings pending the arbitration.            However, the<\/p>\n<p>    facts in the instant case can be distinguished                  from<\/p>\n<p>    the facts in the case before the Apex Court.                      The<\/p>\n<p>    question in the instant case is as regards enforceability<\/p>\n<p>    of the directions issued by the Escrow Agent.                     The<\/p>\n<p><span class=\"hidden_text\">                                            ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                   39<\/span><\/p>\n<p>    Escrow Agent in terms of the powers conferred by<\/p>\n<p>    Clause 19 of the IFS has already issued directions on<\/p>\n<p>    7\/11\/2009 and 14\/4\/2011 and, therefore, it is not a<\/p>\n<p>    case where the Escrow Agent has not determined the<\/p>\n<p>    issue   in question.       The question       is as regards<\/p>\n<p>    enforceability of the directions. Hence, the judgment<\/p>\n<p>    relied upon by the learned Senior Counsel for the<\/p>\n<p>    respondent would not aid the respondent in the facts<\/p>\n<p>    of the present case.\n<\/p>\n<p>    25)      Insofar as the judgment of the Apex Court in<\/p>\n<p>    the case of Booz Allen and Hamilton Inc. (supra) is<\/p>\n<p>    concerned, though the said judgment lays down the<\/p>\n<p>    guidelines     for   the   Court   whilst   considering             an<\/p>\n<p>    application under Section 8 of the said Act filed by a<\/p>\n<p>    party, it has also been held in the said judgment that<\/p>\n<p>    generally and traditionally all disputes relating to<\/p>\n<p>    rights in personam are considered to be amenable to<\/p>\n<p>    arbitration.    Paragraphs (38) and (39) of the said<\/p>\n<p>    judgment are material in the context of the present<\/p>\n<p><span class=\"hidden_text\">                                            ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                 40<\/span><\/p>\n<p>    controversy and are, therefore, reproduced hereunder :\n<\/p>\n<blockquote><p>          &#8220;38.       Generally and traditionally all disputes<br \/>\n          relating to rights in personam are considered to<\/p>\n<p>          be amenable to arbitration; and all disputes<br \/>\n          relating to rights in rem are required to be<br \/>\n          adjudicated by courts and public tribunals, being<\/p>\n<p>          unsuited for private arbitration.           This is not<\/p>\n<p>          relating<\/p>\n<p>          however a rigid or inflexible rule.\n<\/p><\/blockquote>\n<pre>                     to   subordinate    rights    in\n                                                            Disputes\n                                                          personam\n                    \n<\/pre>\n<blockquote><p>          arising from rights in rem have always been<br \/>\n          considered to be arbitrable.\n<\/p><\/blockquote>\n<blockquote><p>          39)        The Act does not specifically exclude<\/p>\n<p>          any category of disputes as being not arbitrable.<br \/>\n          Sections 34(2)(b) and 48(2) of the Act however<br \/>\n          make it clear that an arbitral award will be set<\/p>\n<p>          aside if the court finds that &#8220;the subject matter<br \/>\n          of the dispute is not capable of settlement by<br \/>\n          arbitration under the law for the time being in<\/p>\n<p>          force.&#8221;\n<\/p><\/blockquote>\n<p>    Hence, considering the fact that the two directions of<\/p>\n<p>    the Escrow Agent, which are the subject matter of the<\/p>\n<p>    suit are referable to Clause 7(l) of the IFS, even on the<\/p>\n<p><span class=\"hidden_text\">                                           ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                  41<\/span><\/p>\n<p>    application of the above judgment, the same are<\/p>\n<p>    arbitrable.\n<\/p>\n<p>    26)      As observed hereinabove, in view of the<\/p>\n<p>    notice given by the petitioners dated 23\/2\/2011, the<\/p>\n<p>    arbitration proceedings in terms of the law laid down<\/p>\n<p>    by the Apex Court in the case of Milkfood Ltd. (supra)<\/p>\n<p>    are deemed to have commenced. Since Clause 27 of<\/p>\n<p>    the IFS can be said to be an all-encompassing Clause,<\/p>\n<p>    the dispute regarding enforceability of the directions of<\/p>\n<p>    the Escrow Agent, which are referable to Clause 7(l)<\/p>\n<p>    would fall within the ambit of said Clause 27 and<\/p>\n<p>    would, therefore, be arbitrable.   It would, therefore, be<\/p>\n<p>    for the respondent to file proceedings under Section 9<\/p>\n<p>    of the said Act seeking appropriate directions against<\/p>\n<p>    the   petitioners   either   pre-arbitration       or      during<\/p>\n<p>    pendency of the arbitration. However, the suit filed for<\/p>\n<p>    the reliefs sought as mentioned hereinabove, is not<\/p>\n<p>    maintainable in the light of Clause 27 of the IFS.\n<\/p>\n<p><span class=\"hidden_text\">                                          ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span><br \/>\n<span class=\"hidden_text\">                                    42<\/span><\/p>\n<p>    27)        In   the   light   of    what   has      been         stated<\/p>\n<p>    hereinabove, the impugned order of the trial Court is<\/p>\n<p>    required to be set aside and is accordingly set aside<\/p>\n<p>    and the application filed by the petitioners under<\/p>\n<p>    Sections 5 and 8 of the said Act is required to be<\/p>\n<p>    allowed.\n<\/p>\n<p>    28)<\/p>\n<p>               Rule is accordingly made absolute in terms of<\/p>\n<p>    prayer clause (1) of the above petition with parties to<\/p>\n<p>    bear their respective costs.\n<\/p>\n<p>                                                            JUDGE<\/p>\n<p>    khj<\/p>\n<p><span class=\"hidden_text\">                                               ::: Downloaded on &#8211; 09\/06\/2013 17:34:08 :::<\/span>\n <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bombay High Court Shri Basant Lall Shaw vs 56 Years on 28 July, 2011 Bench: R. M. Savant 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH : NAGPUR WRIT PETITION NO.2438 OF 2011 1) Shri Basant Lall Shaw s\/o late Jagbandhanram Shaw, aged about 78 years, occupation : business, r\/o 264, Usha [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[11,8],"tags":[],"class_list":["post-18644","post","type-post","status-publish","format-standard","hentry","category-bombay-high-court","category-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Shri Basant Lall Shaw vs 56 Years on 28 July, 2011 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/shri-basant-lall-shaw-vs-56-years-on-28-july-2011\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Shri Basant Lall Shaw vs 56 Years on 28 July, 2011 - Free Judgements of Supreme Court &amp; 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