1998 (2) TMI 566 - SC - Companies Law

Court ruling: Clause 9 not arbitration agreement. Chairman decision not award. Appeal dismissed, costs awarded.

KK. MODI Versus KN. MODI

KK. MODI Versus KN. MODI - 1998 (3) SCC 573, 1998 AIR 1297, 1998 (1) SCR 601, 1998 (1) JT 407, 1998 (1) SCALE 403 Issues Involved:1. Whether Clause 9 of the Memorandum of Understanding dated 24th January 1989 constitutes an arbitration agreement and whether the decision of the Chairman, IFCI dated 8th December 1995 constituted an award.2. Whether Suit No. 1394/1996 is an abuse of the process of court.Issue-wise Detailed Analysis:Issue 1: Arbitration Agreement and AwardThe court examined whether Clause 9 of the Memorandum of Understanding (MoU) constituted an arbitration agreement and whether the decision of the Chairman, IFCI, constituted an award. The court referred to established legal principles and precedents to determine the nature of the agreement and the decision.1. Attributes of Arbitration Agreement:- The decision of the tribunal must be binding.- Jurisdiction must derive from consent, court order, or statute.- The tribunal must determine substantive rights impartially and judicially.- The decision should be enforceable in law.- The tribunal must decide on a pre-existing dispute.2. Relevant Legal Precedents:- Rukmanibai Gupta v. Collector, Jabalpur: Emphasized the finality of the decision in arbitration.- State of U.P. v. Tipper Chand: Differentiated between administrative control and arbitration.- Cursetji Jamshedji Ardaseer Wadia v. Dr. R.D. Shiralee: Distinguished between avoiding disputes and resolving disputes.- State of Orissa v. Damodar Das: Discussed the finality and binding nature of decisions in arbitration.3. Court's Analysis:- Clause 9 aimed to prevent disputes rather than resolve them judicially.- The Chairman, IFCI, was to provide clarifications and decisions for implementation, not judicial determinations.- The decision was not intended to be an arbitration award but an expert's decision.- The Chairman, IFCI, was free to make inquiries and consult experts.4. Conclusion:- The court concluded that Clause 9 did not constitute an arbitration agreement, and the decision of the Chairman, IFCI, was not an arbitration award.- Appeal arising from Special Leave Petition No. 14905 of 1997 was dismissed with costs.Issue 2: Abuse of Process of CourtThe court examined whether Suit No. 1394/1996 constituted an abuse of the process of court.1. Comparison of Pleadings:- The prayers in the arbitration petition and the suit were substantially identical.- The suit was filed as an alternative to challenge the decision of the Chairman, IFCI, if it was not considered an award.2. Legal Principles on Abuse of Process:- Abuse of process includes re-litigation of the same issue, frivolous or vexatious proceedings, and using court machinery for improper purposes.- Greenhalgh v. Mallard: Re-litigation of the same cause of action is an abuse of process.- Mcllkenny v. Chief Constable of West Midlands Police Force: Re-litigating a decided issue is an abuse of process.3. Court's Analysis:- The suit was seen as an attempt to litigate the same issue in a different forum.- The suit was considered an abuse of process to the extent it challenged the decision as an award.- However, the suit was maintainable to the extent it independently challenged the decision as a decision, not as an award.4. Conclusion:- The appeal was partly allowed. The suit could proceed to the extent it challenged the decision as a decision.- The court directed necessary amendments to the suit and imposed conditions regarding the sale of shares in Godfrey Phillips India Ltd.Final Orders:- The appeal arising from Special Leave Petition No. 14905/1997 was dismissed.- The appeal from the judgment striking out the plaint was partly allowed.- The suit was maintainable to the extent it challenged the decision as a decision.- Conditions were imposed regarding the sale of shares and the holding of meetings of the Modipon Board.- Appeals arising from Special Leave Petition Nos. 14905/97, 18711/97, and Transfer Case No. 13/97 were disposed of accordingly.