TaxTMI 
TaxTMI 
2025 (8) TMI 862
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....ent was entered into between members of the Gupta family, namely Pawan Gupta and Kamal Gupta (hereinafter referred to as 'PG' and 'KG'). The said oral agreement was said to be reduced in a Memorandum of Understanding /Family Settlement Deed (hereinafter referred to as 'the MoU/FSD') dated 09.07.2019. This MoU/FSD was not signed by Rahul Gupta, son of KG (hereinafter referred to as 'RG'). Proceedings under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') were filed by PG and another against KG and others seeking appointment of a sole arbitrator for adjudicating disputes between the parties under the MoU/FSD. In the proceedings filed under Section 11(6) of the Act, an application for intervention being I.A. No.13282 of 2023 was filed by RG, a non- signatory, seeking permission to intervene in the said proceedings so as to oppose the maintainability of the same. PG and one other also filed a petition under Section 9 of the Act seeking interim measures on the basis of the MoU/FSD dated 09.07.2019. A similar application for intervention was filed by RG and one other in these proceedings being I.A. No.12227 of 2023. By the order dated 22.....
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.....11.2024 the various applications as filed were considered. Insofar as the prayer made for recall of the order dated 22.03.2024 was concerned, the learned Judge held that he was not inclined to recall or review the said order as it was passed by another learned Judge. Insofar as the prayer for issuing various directions as made by RG and the other non-signatory companies was concerned, it was held that RG could remain present in all future proceedings before the sole arbitrator. The order dated 07.08.2024 was made absolute. It was further directed that properties belonging to the intervenor companies mentioned in Annexure A and B of the submissions filed by RG would remain outside the process of arbitration and that the arbitral proceedings qua properties mentioned in Annexure B would be limited to 77% thereof. 7. The parties to the arbitration proceedings, namely PG and KG are aggrieved by the aforesaid directions issued by the learned Judge on 12.11.2024 and have thus challenged the same in these appeals. 8. Mr. C. Aryama Sundaram and Mr. V. Giri, learned Senior Advocates in support of the appeals submitted that the learned Judge had no jurisdiction whatsoever to entertain ....
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....ched the principle of confidentiality. The impugned direction also affected the autonomy of the arbitral process and was beyond the provisions of the Act. The same was therefore liable to be set aside. It was further submitted that since the impugned order was without jurisdiction, various directions issued including the recognition of 23% share of RG in the family corpus were without jurisdiction. By granting such declaration, relief was granted to RG which was not permissible in proceedings that had been disposed of on 22.03.2024 with the appointment of the sole arbitrator. In fact, the impugned order had proceeded to review and modify the earlier order that was passed under Section 11(6) of the Act. On these counts, it was urged that the impugned order was liable to be set aside. 10. Mr. Amit Sibal and Mr. J. Sai Deepak, learned Senior Advocates as well as Ms. Bansuri Swaraj learned Advocate for the respondents supported the impugned order. According to them, since it was found that there had been breach of the assurance given by PG and KG as recorded in paragraphs 17 and 18 of the judgment dated 22.03.2024, the said fact gave rise to the filing of interim applications by the....
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....edings under Section 9 of the Act came to be dismissed as can be seen in paragraph 34 of the judgment dated 22.03.2024. 13. It is not in dispute that RG and the other intervenors are not signatories to the MoU/FSD that has given rise to the arbitration proceedings. The provisions of Section 35 of the Act are clear inasmuch as an award passed would only bind parties to the arbitration and persons claiming under them. The expression 'party' has been defined by Section 2(h) of the Act to mean a party to an arbitration agreement. By virtue of the order passed under Section 11(6) of the Act, the sole arbitrator is empowered to adjudicate the disputes between the signatories to the MoU/FSD. Once it is clear that the arbitral award would not bind non-parties to the said MoU/FSD as such parties were not signatories to the said documents, there would be no legal basis whatsoever to permit a non-signatory to the MoU/FSD to remain present in the proceedings before the sole arbitrator. When the arbitration proceedings can take place only between parties to an arbitration agreement and Section 35 of the Act does not make the arbitral award to be passed binding on non-signatories to such agre....
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....e application under Section 9 of the Act also came to be filed on 13.06.2023 with a prayer to restrain the parties to the MoU/FSD from creating any third party rights or from alienating the immovable properties that were subject matter of the MoU/FSD. In the said proceedings, a similar application came to be filed by RG and other intervenors seeking leave to intervene in those proceedings vide I.A. No.12227 of 2023. The petition filed under Section 11(6) of the Act bearing Arbitration Petition No.1010 of 2022 as well as the petition filed under Section 9 of the Act bearing OMP(I) (COMM) No.198 of 2023 were heard and decided together by the learned Single Judge on 22.03.2024. Insofar as the prayer for appointment of an arbitrator was concerned, a retired judge of this Court was appointed as the sole arbitrator. Insofar as the application filed under Section 9 of the Act was concerned, it was directed that the same be treated as an application under Section 17 of the Act for being decided by the sole arbitrator. Accordingly, Arbitration Petition No.1010 of 2022 and OMP(I) (COMM) No.198 of 2023 came to be disposed of. This would indicate that no further proceedings were pending on 22.....
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....statutory support. 21. The matter can be viewed from another angle. Section 5 of the Act restricts the extent of judicial intervention making it permissible only where it is so provided in Part-I of the Act. In paragraph 80, the Constitution Bench in Re: Interplay (supra) held as under: "80. Section 5 has two facets - positive and negative. The positive facet vests judicial authorities with jurisdiction over arbitral proceedings in matters expressly allowed in or dealt with under Part I of the Arbitration Act. The flip side to this approach is that judicial authorities are prohibited from intervening in arbitral proceedings in situations where the Arbitral Tribunal has been bestowed with exclusive jurisdiction. This is the negative facet of Section 5. The non obstante clause limits the extent of judicial intervention in respect of matters expressly provided under the Arbitration Act. [Secur Industries Ltd. v. Godrej & Boyce Mfg. Co. Ltd., (2004) 3 SCC 447] In Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd. (2022) 1 SCC 75, a Bench of three Judges of this Court observed that the "non obstante clause is provided to uphold the intention of the legislature....