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C.A.No.3687/06 etc.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3687 OF 2006

Rajni Sanghi        …..Appellant   

Versus

Western Indian State Motors Ltd. & Ors.        …..Respondents  

WITH

C.A. Nos. 503 of 2001 and 2763 of 2002

J U D G M E N T

SHIVA KIRTI SINGH, J.

1. These three Civil Appeals have been heard together because  

in  essence  they  relate  to  and  arise  out  of  common  facts  and  

disputes  between  members  of  a  larger  family  belonging  to  the  

branches of four sons of Late Motilal Sanghi, the family patriarch  

who died in 1961. From the materials on record it appears that his  

four sons effected a de facto partition of  the then existing three  

family  business.  The  eldest  son  (Late)  N.K.  Sanghi  became  in  

charge of family business in Rajasthan. The next brother (Late) A.K.  

Sanghi got charge of business at Delhi and the remaining two, R.K.  

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Sanghi and M.K. Sanghi got charge of business at Bombay. In 1964  

Sanghi Motors Private Limited (Bombay) expanded to establish a  

factory for manufacture of oxygen in the name of Sanghi Oxygen.  

R.K.  Sanghi  looked  after  the  oxygen  division  and  the  youngest  

brother M.K. Sanghi looked after the motor division of the Sanghi  

Motors  Private  Limited  (Bombay).  Whether  in  the  form  of  

partnership firm or as a company, the family business appears to  

have been held by the brothers like a partnership firm in which all  

the  brothers  have  cross  holdings.  With  passage  of  almost  two  

decades and changing profile of family headed by the four brothers  

there was apparently some friction first at Bombay which led to an  

arrangement  signed by the four brothers on 6.7.1983.  This  was  

mainly for resolving dispute of authority between the two brothers  

in  respect  of  business  at  Bombay.  Soon  thereafter  attempt  was  

made for a larger family agreement for partition of all  the family  

business consisting of four partnership firms and four companies.  

This  family  agreement  involving  the  methodology  of  partition  

chalked out on 22.2.1984 in a board meeting of M/s Sanghi Motors  

Private Limited (Bombay) held at Jodhpur ran into rough weather  

and could not be implemented because of differences. Thereafter all  

the four groups entered into an arbitration agreement on 6.8.1984  

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and appointed one Sh.  H.K.  Sanghi,  a  family  friend as the sole  

arbitrator for effecting a partition of the family business under the  

control  of  four  groups  into  four  equal  lots  but  with  an  

understanding  that  the  division  would  maintain  the  place  of  

business of each group as it existed already.  

2. The  subsequent  developments  and  relevant  facts  will  be  

detailed hereinafter at appropriate place but it is useful to notice  

that on 7.8.1984 N.K. Sanghi filed the arbitration agreement with  

the Arbitrator who entered into reference on 18.8.1984 and made  

communications with the other three brothers. N.K. Sanghi expired  

on 19.10.1984. On filing of appropriate application by N.K. Sanghi  

group the Delhi High Court enlarged the time for publication of the  

award by the Arbitrator. During the pendency of the reference M.K.  

Sanghi filed a company petition bearing C.P. No. 128 of 1985 before  

the High Court of Bombay mainly seeking injunction against A.K.  

Sanghi and R.K. Sanghi in respect of shares and management of  

both  the  divisions  of  Sanghi  Motors  Private  Limited  (Bombay).  

Family members of  A.K. Sanghi and R.K. Sanghi filed a petition  

under Section 33 of  the Arbitration Act,  1940 before Delhi High  

Court  to  challenge  the  existence  and  validity  of  arbitration  

agreement  dated  6.8.1984  but  ultimately  High  Court  of  Delhi  

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permitted the arbitrator to make and publish the award. The award  

dated 3.12.1987 was filed with High Court of Delhi which recorded  

the  filing  on  17.12.1987  and  notice  was  issued  to  the  parties.  

Objection to the award was filed by M.K. Sanghi within time and  

beyond time  by R.K.  Sanghi  and also  by  Sanghi  Motors  Private  

Limited (Bombay). On the other hand A.K. Sanghi (now represented  

by his sons Vijay Sanghi and Ajay Sanghi, appellants in C.A. No.  

2763 of 2002) filed Suit No. 581-A/1988 under Section 17 of the  

Arbitration Act,  1940 in the High Court  of  Delhi    to  make the  

award a rule of the Court. Learned Single Judge of the Delhi High  

Court took notice of subsequent developments in the company case  

at Bombay High Court and in another Company petition no. 6 of  

1986 filed by R.K. Sanghi in the High Court of Rajasthan and set  

aside the award by order dated 11.12.1996. This order was upheld  

in  appeal  by  the  Division  Bench  vide  impugned  order  dated  

5.10.2001  which  is  under  challenge  in  Civil  Appeal  of  2763  of  

2002.

3. Interestingly, no one could obtain a stay of the proceedings in  

the Company Petition No. 128 of  1985 before the High Court of  

Bombay  which appointed  a  Receiver  with  respect  to  the  Sanghi  

Motors  Private  Limited  (Bombay)  and  all  its  subsidiaries  by  an  

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order dated 11.9.1987. On the basis of a successful bid, Vaibhav  

Sanghi  son of  M.K.  Sanghi  entered  into  an  agreement  with  the  

receiver  and  exercised  right  of  management  in  terms  of  such  

agreement.  Ultimately,  Bombay  High  Court  vide  order  dated  

6.7.1989 sanctioned the scheme of division of two units of Sanghi  

Motors Private Limited (Bombay). Motors division fell to the group  

of M.K. Sanghi and oxygen division to the group of R.K. Sanghi.  

A.K.  Sanghi opposed the aforesaid settlement scheme before the  

Company Court as well as through an appeal before the Division  

Bench but without any success. The Division Bench dismissed the  

appeal  on  30.6.1992  after  holding  that  the  scheme  of  

reconstruction  did  not  violate  the  injunction  order  of  the  High  

Court of Delhi as care was taken to ensure that under the scheme  

the transfer of shares would be effected only after the injunction  

would be vacated by the Delhi High court. The Bombay company  

case has thus attained finality.

4. The Company Petition No. 6 of 1986, already noticed earlier  

was filed by R.K. Sanghi group on 6.8.1986 before the High Court  

of Rajasthan under Section 397-398 of the Companies Act against  

Western  India  State  Motors  Limited  (WISM),  Smt.  Uma  Sanghi  

(widow  of  late  N.K.  Sanghi),  Vijay  Kumar  Sanghi  (son  of  A.K.  

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Sanghi) and an official of Rajasthan State Industrial Development  

and  Investment  Corporation.  In  this  company  petition  which  

remained pending for a number of years, ultimately a scheme of  

reconstruction  and  family  settlement  was  arrived  at  between  

persons  representing  three  groups  i.e,  A.K.  Sanghi,  R.K.  Sanghi  

and N.K.  Sanghi.  This  scheme dated 5.9.1994 with  a correction  

dated 6.9.1994 was approved by the High Court of Rajasthan on  

5/6.9.1994. Although M.K. Sanghi was not a party to this scheme  

but  his  interest  clearly  received  considerable  attention.  His  

objection to the award was within time and pending before the High  

Court  of  Delhi  in  the Suit  no.  581-A/1988 filed by A.K.  Sanghi  

group to make the award a rule of the Court. In paragraph 13 of  

the scheme of  reconstruction filed in Company Petition No. 6 of  

1986 a clear stipulation was made in following words –  

“13. That Shri A.K. Sanghi and his family  members have filed a petition in Delhi High Court  for  making  the  award  of  the  Arbitrator  dated  3.12.1987 as rule of the Court being petition no.  581-A/1988. Shri A.K. Sanghi hereby undertakes  to withdraw the said proceedings unconditionally  and all  the parties further  agree  that  they shall  abide  by  the  terms  of  the  scheme  of  reconstruction.”

The scheme was signed by R.K. Sanghi and A.K. Sanghi also  

on behalf of their respective family members. It involved passing of  

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immovable property from one group to another as well as payment  

of  substantial  amounts  of  money for  completing  the adjustment  

required  by  way  of  reconstruction-cum-family  settlement.  The  

widow of N. K. Sanghi, Smt. Uma Sanghi as well as the petitioners  

of that company petition, Mr. R.K. Sanghi and his wife along with  

A.K. Sanghi as well as one son and daughter in law of Uma Sanghi  

were personally present before the learned Single Judge when the  

Company Petition No. 6 of 1986 was disposed of in terms of the  

scheme of reconstruction-cum-family settlement. The order of the  

Court dated 5.9.1994 records that Mr. R.K. Sanghi as well as Mr.  

A.K. Sanghi agreed to obtain the consent of their family members  

and file the same within two weeks.

5. The orders of learned Single Judge of High Court of Rajasthan  

accepting the scheme of reconstruction-cum-family settlement were  

challenged  in  appeal  filed  by  M.K.  Sanghi  bearing  Civil  Special  

Appeal No. 30 of 1994. Much later in October 1998 R.K. Sanghi  

filed an affidavit in the aforesaid appeal alleging that  Uma Sanghi  

was not honouring her commitments under the scheme, hence he  

was now of the view that the scheme be set aside. Since learned  

Single Judge had rejected an application for impleadment filed by  

Mrs. Rajni Sanghi, widowed daughter-in-law of Uma Sanghi, Rajni  

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Sanghi  also  preferred  Special  Appeal  No.  24  of  1994 before  the  

Division  Bench  but  while  both  the  appeals  were  pending,  on  

20.2.1995 she entered into a compromise and settlement with the  

other  parties  who  were  signatory  to  the  family  settlement.  M.K.  

Sanghi prayed for and was granted time to examine the terms of  

the aforesaid settlement. While the appeal preferred by M.K. Sanghi  

was  still  pending  before  the  Division  Bench  of  Rajasthan  High  

Court, curiously he and his group filed an additional affidavit on  

14.8.1995 in Suit No. 581-A/1988 before High Court of Delhi for  

setting aside the award on the additional ground that A.K. Sanghi  

had undertaken before the High Court of Rajasthan to withdraw his  

application to make the award a rule of the Court. As noted earlier,  

this weighed heavily with the learned Single Judge as well as the  

Division Bench of the Delhi High Court in setting aside the award.  

Sanghi Motors  Bombay, under the control of N.K. Sanghi group  

also  filed  a  Contempt  Petition  no.  107 of  1997 before  the  High  

Court  of  Rajasthan  alleging  that  Mr.  A.K.  Sanghi  was  guilty  of  

contempt of order dated 5.9.1994 as he was still  persisting with  

Suit  No.  581-A/1988 when he  had undertaken to  withdraw the  

same.  This  contempt  petition  was  dismissed  vide  order  dated  

3.4.2000 as the Court came to the opinion that  non-compliance  

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was on account of certain circumstances and not wilful. This order  

against Sanghi Motors is subject matter of Civil Appeal No. 503 of  

2001 which shall also be governed by this common judgment.

6. The Division Bench of High Court of Rajasthan had permitted  

Vijay Sanghi son of A.K. Sanghi to be transposed as appellant in  

Company Appeal No. 30 of 1994 and hence the appeal continued  

even after M.K. Sanghi filed an application on 4.7.2000 to withdraw  

that appeal. Ultimately by judgment and order dated 3.4.2002 the  

Rajasthan High Court allowed Appeal No. 30 of 1994 as well  as  

Appeal No. 24 of 1994 and remitted the matter again to the learned  

Company Judge to proceed in accordance with law, mainly because  

the Division Bench found a case of non-compliance of sub-clause  

(1)  of  Section  391  of  the  Companies  Act.  The  Division  Bench  

noticed  objections  raised  on  behalf  of  respondents  that  the  

situation had become irreversible as major part of the scheme had  

been given effect to, but it left this aspect open for consideration by  

the learned Company Judge after remand. Rajni  Sanghi did not  

accept  the  Division  Bench  order  and  preferred  a  Civil  Review  

Petition bearing No. D.R. (J) 2536/2002 pointing out that she had  

already compromised  the matter by way of a subsequent scheme  

and  filed  the  compromise  petition  on  20.2.1995;  the  only  non-

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signatory group i.e, M.K. Sanghi group had subsequently accepted  

that  compromise/settlement  and  had  prayed  for  withdrawal  of  

Appeal No. 30 of 1994 and therefore when all the stake holders had  

accepted  the  terms of  settlement  and family  arrangement,  there  

was no need of interfering with the order of the Single Judge. The  

review petition was however dismissed on 26.8.2003. The aforesaid  

orders  of  Division  Bench  dated  3.4.2002  partly  allowing  Appeal  

Nos. 24 and 30 of 1994 and order dated 26.8.2003 dismissing the  

review petition are under challenge at the instance of Rajni Sanghi  

in Civil Appeal No. 3687 of 2006.

7. In  the  aforesaid  fact  situation,  this  common judgment  will  

govern all the three civil appeals. For the sake of convenience, facts  

have been taken from convenience compilations in C.A. No. 2763 of  

2002 unless indicated otherwise. That civil appeal has been argued  

at great length as the lead case. But of equal significance is the civil  

appeal  of  Rajni  Sanghi  because  it  offers  an  alternative  and  

competing solution to the family dispute sought to be settled by the  

arbitration award. The High Court of Delhi has set aside the award  

primarily because of orders passed by High Courts at Bombay as  

well  as Rajasthan approving schemes of  reconstruction and also  

the undertaking of A.K. Sanghi that he will withdraw his petition in  

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Delhi  High Court  through which he  had prayed for  making the  

Award of the Arbitrator dated 3.12.1987 as rule of the Court. In  

this scenario, our task is also to find out whether the view taken by  

the Delhi High Court is correct or not and further whether order of  

remand  by  Division  Bench  of  Rajasthan  High  Court  under  

challenge by Rajni Sanghi is legally sustainable.

8. Since A.K. Sanghi is dead, Civil Appeal No. 2763 of 2002 has  

been pressed on behalf of his two sons namely Ajay Sanghi and  

Vijay Sanghi. On behalf of Ajay Sanghi, Senior Advocate Mr. Dhruv  

Mehta has forwarded elaborate submissions for contending that the  

judgment of the learned Single Judge as well as affirming judgment  

of the Delhi High Court under appeal have wrongly set aside the  

Award ignoring the provisions of Section 30 of the Arbitration Act,  

1940 (hereinafter referred to as ‘the Act’). As per his submissions  

the High Court has travelled beyond the permissible grounds for  

setting aside an Award, which cannot include an undertaking or  

conduct  of  a  party  recorded  by  the  Rajasthan High  Court  after  

about seven years of making of the Award. He highlighted the legal  

position that as per Section 30 of the Act, an Award can be set  

aside  only  on  one  or  more  of  the  three  grounds  mentioned  in  

Clause  (a),(b)  and  (c).  He  has  also  contended  that  in  this  case  

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misconduct by the Arbitrator cannot be a ground, for the additional  

reason that no notice of any alleged misconduct was served upon  

the Arbitrator which is required under the Delhi High Court rules.  

The other ground under clause (b) can also not arise because it is  

nobody’s case that there was any order by the Court superseding  

the arbitration or holding the arbitration proceeding invalid under  

Section 35. So far as the third permissible ground is concerned, it  

has been submitted that there is no case made out that the Award  

has been improperly procured or is otherwise invalid. On behalf of  

other son of A.K. Sanghi, Mr. Anoop G. Chaudhari, Senior Advocate  

has also assailed the judgments of the Delhi High Court. According  

to him the allegations by Mr. M.K. Sanghi against the arbitrator in  

letter dated 20.11.1987 were noticed by the Single Judge and at  

one place the learned Single Judge described these accusations as  

“wild  allegations”.  Mr.  Chaudhari  has  further  contended  that  

Section  32  of  the  Act  not  only  contains  a  bar  to  suits  seeking  

decision  upon  the  existence,  effect  or  validity  of  the  arbitration  

agreement or award but that Section contains a further prohibition  

that  notwithstanding  any  law  for  the  time  being  in  force,  no  

arbitration  agreement  or  award  can  be  enforced,  set  aside,  

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amended,  modified  or  in  any  way  affected  otherwise  than  as  

provided in the Act (emphasis supplied).  

9. Section 32 of the Act reads as follows:-

“32.  Bar  to  suits  contesting  arbitration  agreement or award – Notwithstanding any law for  the  time  being  in  force,  no  suit  shall  lie  on  any  ground  whatsoever  for  a  decision  upon  the  existence,  effect  or  validity  of  an  arbitration  agreement  or  award,  nor  shall  any  arbitration  agreement  or  award  be  enforced,  set  aside,  amended, modified or in any way affected otherwise  than as provided in this Act.”

According to Mr. Chaudhari if the schemes of settlement as  

ordered  by  Bombay  High  Court  or  Rajasthan  High  Court  are  

allowed to come in the way of arbitration agreement or the award  

made  by  the  Arbitrator,  it  shall  amount  to  a  disregard  of  the  

mandate  of  law  in  Section  32.  The  second  contention  of  Mr.  

Chaudhari is that Delhi High Court had passed an interim order  

dated 16.3.1988 restraining the parties from transferring, parting  

with, alienating or leasing out the properties covered by the award  

of the Arbitrator including shares of the partnership and company  

businesses in any manner and therefore,  M.K. Sanghi could not  

have proceeded with the company petition in Bombay to obtain a  

scheme of division of the two units of Sanghi Motors at Bombay nor  

any scheme could have been approved by the Rajasthan High Court  

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in Company Petition No. 6 of  1986 nor any undertaking of  A.K.  

Sanghi  could  have  been  recorded  therein.  According  to  Mr.  

Chaudhari also, the allegations of misconduct could not have been  

gone  into  in  absence  of  any  notice  to  the  Arbitrator.  Lastly,  

according to Mr. Chaudhari belated objections to the award could  

not have been taken into consideration.

10. Learned Counsel for Uma Sanghi, widow of N.K. Sanghi has  

reversed Uma Sanghi’s stance before the High Court and sought to  

support the award and assail the judgments of Delhi High Court on  

the grounds already noticed. He also opposed the family settlement  

and  agreement  dated  5.9.1994  recorded  by  the  learned  Single  

Judge of High Court of Rajasthan under which Uma Sanghi (N.K.  

Sanghi group) received benefits.  But he defended and supported  

the other  agreement dated 20.2.1995 in favour  of  Rajni  Sanghi.  

According to him the latter agreement of February 1995 is in effect  

an arrangement between the family members of late N.K. Sanghi  

and the same will be honoured by Uma Sanghi and other heirs and  

legal representatives of N.K. Sanghi even if the award is held valid  

and restored.

11. On  the  other  hand  learned  Senior  Counsel  Mr.  Arvind  P.  

Datar  appearing  for  M.K.  Sanghi  group  and  Mr.  Shyam  Divan,  

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Senior Advocate appearing for R.K. Sanghi group sought to strongly  

defend the judgments of Delhi High Court setting aside the award.  

According to Mr. Datar the award deals with immoveable properties  

and  therefore  in  terms  of  the  Registration  Act,  1908  requires  

registration and since that was not done, as per Section 49 of the  

Registration  Act,  the  award  shall  not  affect  any  immoveable  

property  or  be  received  as  evidence  of  any  transaction  affecting  

such property.  He pointed out that immoveable properties in lot  

No. 2 at serial Nos. 8 and 9 given to A.K. Sanghi Group and one  

workshop of  Sanghi  Motors  in  lot  No.  3  allotted  to  R.K.  Sanghi  

Group were illustrative of the fact that the award sought to transfer  

immovable properties to different persons without requiring further  

conveyance deeds and documents.   However,  the award towards  

the  end,  in  paragraph  16  stipulates  that  all  obligations,  

conveyances,  deeds  and  documents  (including  transfers  and  

assignments) required to be executed to implement the award shall  

be made and executed faithfully by each and every member of all  

groups within three months.  This stipulation, in our view, fully  

meets  the  above  noted  grievance  on  the  basis  of  the  non-

registration of award and more particularly when it is an arguable  

point, as contended by Mr. Mehta in reply that the period when an  

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award was called for by the Court and remained under its custody  

may be excluded for the purpose of limitation on the ground that  

court’s  action  shall  not  prejudice  any  of  the  parties.   For  this  

dictum Mr. Mehta placed reliance on judgment in the case of  Raj  

Kumar Dey and Ors. vs. Tarapada Dey and Ors., 1987(4) SCC  

398. However, it is not necessary to go into several other judgments  

cited on behalf of the parties on the effect of non-registration of an  

award which requires registration and as to when an award may  

not  require  registration,  in  view  of  somewhat  different  issue  on  

which we propose to decide this case.  

12. Mr. Datar pointed out that the main controversy between the  

parties  is  in  respect  of  two  properties,  one  UMR  property  in  

Rajasthan which is to be with R.K. Sanghi Group on account of  

payments made for that property under the Rajasthan settlement  

arrived in the company case before the Single Judge in 1994.  But  

that property, as per the award is to be with N.K. Sanghi Group.  

The other property is the workshop property of M/s. Sanghi Motors  

at Bombay which as per settlement by the Bombay High Court has  

gone to M.K. Sanghi Group whereas under the award it shall go to  

A.K. Sanghi Group.   Mr. Datar pointed out that the learned Single  

Judge of Delhi High Court allowed several I.As including OPM No.  

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109 of 1989 filed by Sanghi Motors Private Limited, Bombay but in  

appeal before the Division Bench,  Sanghi Motors Private Limited  

(Bombay)  was not impleaded as a party and therefore no useful  

purpose will be served by interfering with the orders of the Delhi  

High Court rejecting the award when the same order of the learned  

Single Judge has attained finality qua M/s Sanghi Motors Pvt. Ltd.,  

Bombay.

13. Mr. Datar has next contended that the Delhi High Court was  

bound by the undertaking recorded in the judgment of Company  

Judge of Rajasthan High Court.  Under such undertaking which  

amounts to an injunction, as per submissions, the application of  

Mr. A.K. Sanghi for making the award a Rule of the Court under  

Section 17 of the Act required outright dismissal without going into  

the issue of validity of the award on grounds under Sections 30 and  

33  of  the  Act.   According  to  him  the  undertaking  before  the  

competent court of law, in the facts of the case, was sufficient to  

render the award unenforceable on the ground under clause (c) of  

Section 30 of the Act viz. “otherwise invalid”.  According to him the  

award  was  signed  on  3.12.1987  and  it  dealt  with  Bombay  

properties which were  then under the receiver appointed by the  

Bombay  High  Court.   This  also  made  the  award  invalid  on  the  

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C.A.No.3687/06 etc.

ground covered by clause (c) of Section 30 of the Act.  Mr. Datar  

further  submitted  that  both,  A.K.  Sanghi  Group  which  is  now  

propounding the award and R.K. Sanghi Group had preferred OM  

No.  23  of  1986 to  challenge  the  Arbitration  Agreement  itself  on  

grounds and allegations of facts which amounted to admission on  

their part as to the invalidity of the arbitration agreement and in  

such a situation their turning volte face and seeking to support the  

award after it was signed and filed under orders of the court inspite  

of  their  pending  objections,  cannot  make  the  award  good   and  

enforceable at their instance unless it is held that their admissions  

in pleadings can be ignored for some good reasons.  Mr. Datar next  

submitted that Section 34 of the Act gave an option to the parties  

to the Arbitration Agreement to obtain stay of the legal proceedings  

at Bombay or Rajasthan on account of Arbitration Agreement and if  

they chose not to get the legal proceedings stayed or even if they  

failed  to  do  so,  the  effect  of  such  legal  proceedings  cannot  be  

ignored at the time of deciding, at the stage of Section 17, as to  

whether an order/decree could be passed in terms of the award or  

not.  According to the submissions, once at the stage of Section 17,  

the court is made aware of judgment of a competent court of law  

affecting the matter covered by the award, it would be proper and  

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C.A.No.3687/06 etc.

lawful  for such court to set aside the award under clause (c)  of  

Section  30  of  the  Act  by  holding  that  the  award  is  "otherwise  

invalid”.  It was argued on the basis of Section 35 of the Act that  

the principle is salutary that in case there is no stay granted under  

Section 34 and if the conditions under Section 35 are met, further  

proceedings in a pending reference shall be invalid.

14. This  principle  appears  to  have  been  developed  and  

generalized further. Mr. Datar has placed reliance upon judgment  

in  the  case  of  Ram  Prosad  Surajmull  vs.  Mohan  Lal  

Lachminarain, AIR  1921  Calcutta  770  and  in  the  case  of  

Sheobabu vs. Udit Narain and Another, AIR 1914 Allahabad  275.  

The  Calcutta  judgment  was  rendered  in  the  context  of  Indian  

Arbitration  Act  of  1899  but  the  principle  enunciated  therein  is  

equally  applicable  to  an award under the Arbitration Act,  1940.  

The principle is - “if the court has refused to stay an action or if the  

defendant has abstained from asking it  to do so,  the Court  has  

seisin of the dispute and it is by its decision and by its decision  

alone, that the rights of  the parties are settled.”  This view was  

adopted on a larger proposition that the Courts will not allow their  

jurisdiction to be ousted.  In simpler words, the proposition is that  

the courts’ decisions will not be overridden by an award arising out  

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C.A.No.3687/06 etc.

of an arbitration proceeding.  In the Allahabad case, in somewhat  

similar situation as in the Calcutta case, the judgment of the Court  

under Specific Relief Act in a regular suit was held valid because  

the parties could not or did not take proper steps to suspend the  

regular suit. We find no legal or other infirmity in this proposition  

of law.

15. Our attention was drawn to judgment of Bombay High Court  

dated 30.06.1992 passed by a Division Bench in Appeal No.350 of  

1992 preferred by A.K. Sanghi Group against order of the Company  

Judge dated 06.07.1989 to  highlight  that  in  paragraph 3 of  the  

judgment, the Division Bench rejected the contention advanced on  

behalf of A.K. Sanghi Group and held that the companies are not  

parties to the arbitration proceedings and consequently the decree  

on  the  basis  of  award  cannot  bind  the  companies.   Mr.  Datar  

pointed out that A.K. Sanghi Group allowed the matter to attain  

finality and hence in the present appeals, the appellant A.K. Sanghi  

Group cannot be permitted to take the stand that the award will  

bind the  companies.   He  also  highlighted  the  fact  that  Bombay  

property under dispute is a property leased to M/s. Sanghi Motors  

and vests with A.K. Sanghi Group as a leasehold property and in  

view  of  law  laid  down  in  the  case  of  M/s.  General  Radio  &  

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C.A.No.3687/06 etc.

Appliances Co. Ltd. v.  M.A. Khader (dead) by LRs AIR 1986 SC  

1218 and in  the  case  of  Singer  India  Ltd. v.  Chander  Mohan  

Chadha (2004) 7 SCC 1, such leased property cannot be legally  

sublet or granted to another under assignment. That will  be the  

effect if award is allowed to operate.  On this ground also it has  

been submitted that the award suffers from patent illegality.

16. Mr. Gaurav Pachnanda, learned senior advocate appearing for  

Rajni  Sanghi  has  submitted  that  Rajni  Sanghi  preferred  Special  

Appeal No.24 of 1994 before the Division Bench of Rajasthan High  

Court against orders of Company Judge accepting the Scheme of  

Reconstruction-cum-Family  Settlement  because  she  wanted  her  

specific share out of the family business allotted to M.K. Sanghi  

Group  so  that  she  and  her  children  may  enjoy  their  share  

separately.  This was achieved by amended family settlement dated  

20.02.1995.   Although  M.K.  Sanghi  had  not  signed  the  family  

settlement  he  took  time  to  consider  the  developments   and  

ultimately  he  withdrew  his  appeal  which  signifies  that  he  also  

consented to the settlements.  It was pointed out that A.K. Sanghi  

Group including his son Vijay Sanghi had acted upon the Scheme  

of  Family  Settlement  and  also  derived  benefits,  but  they  

subsequently  developed ill  designs and Vijay  Sanghi  got  himself  

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C.A.No.3687/06 etc.

transposed  as  appellant  in  Company  Appeal  No.30  of  1994  

preferred  by  M.K.  Sanghi  although  the  latter  had  applied  to  

withdraw the appeal.  It was argued that the Division Bench failed  

to notice that the only non-signatory to the Compromise Petition  

filed on 20.02.1995, i.e., M.K. Sanghi Group had later accepted the  

settlement/compromise and prayed for withdrawal of their appeal  

and this showed that all the four groups had accepted the Terms of  

Settlement-cum-Family  Arrangement.   In  such  circumstances,  

according to learned counsel, the Division Bench should not have  

interfered with the order of the learned Single Judge and ought not  

to  have allowed the appeals and remanded the matter  to Single  

Judge  vide  impugned  order  dated  03.04.2002,  on  mere  

technicalities.  He submitted that thereafter review filed by Rajni  

Sanghi was also erroneously dismissed on 26.08.2003.

17. Learned senior counsel placed reliance upon a judgment of  

this Court in the case of  Munshi Ram v.  Banwari Lal (deceased)  

AIR 1962 SC 903 in support of the proposition that a compromise  

between the parties even after filing of  award by the arbitrators  

deserves to be respected and such compromise will be made a part  

of the decree which will be based upon the award as modified by  

the compromise.  The Court held that the power to record such  

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C.A.No.3687/06 etc.

agreement  or  compromise  was  available  to  the  court  under  the  

provisions of the Act because Section 41 makes the Civil Procedure  

Code applicable to the proceedings under the Act.  The observation  

of the Court in paragraph 20 is of some significance where it was  

pointed  out  that  ‘there  is  nothing  in  the  Arbitration  Act  which  

disentitles  the  court  from  taking  note  of  an  agreement  …..’.  

Reliance was also placed upon judgment in the case of  Kale v.  

Deputy Director of Consolidation (1976) 3 SCC 119 to highlight  

the nature, effect and value of family arrangement under the Hindu  

Law.  All the three Judges deciding this case were agreed on the  

relevant proposition that the object of family arrangement is to sink  

their differences and disputes and resolve their conflicting claims to  

buy peace of mind and bring about complete harmony and goodwill  

in the family.  Paragraph 9 of the judgment deserves full respect  

and is extracted hereinafter :

“9. Before dealing with the respective contentions put  forward  by  the  parties,  we  would  like  to  discuss  in  general  the  effect  and  value  of  family  arrangements  entered into between the parties with a view to resolving  disputes once for all.  By virtue of a family settlement or  arrangement  members  of  a  family  descending  from a  common ancestor or a near relation seek to sink their  differences  and  disputes,  settle  and  resolve  their  conflicting claims or disputed titles once for all in order  to  buy  peace  of  mind  and  bring  about  complete  harmony  and  goodwill  in  the  family.   The  family  

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C.A.No.3687/06 etc.

arrangements are governed by a special equity peculiar  to themselves and would be enforced if honestly made.  In this connection, Kerr in his valuable treatise Kerr on  Fraud at  p.364  makes  the  following  pertinent  observations  regarding  the  nature  of  the  family  arrangement which may be extracted thus :

The  principles  which  apply  to  the  case  of  ordinary  compromise  between  strangers  do  not  equally apply to the case of  compromises in the  nature  of  family  arrangements.   Family  arrangements  are  governed  by  a  special  equity  peculiar  to  themselves,  and  will  be  enforced  if  honestly  made,  although  they  have  not  been  meant as a compromise, but have proceeded from  an  error  of  all  parties  originating  in  mistake  or  ignorance of fact as to what their rights actually  are, or of the points on which their rights actually  depend.

The object of the arrangement is to protect the family  from  long-drawn  litigation  or  perpetual  strifes  which  mar the unity  and solidarity  of  the family and create  hatred and bad blood between the various members of  the family.  Today when we are striving to build up an  egalitarian  society  and  are  trying  for  a  complete  reconstruction of  the society,  to maintain and uphold  the  unity  and  homogeneity  of  the  family  which  ultimately results in the unification of the society and,  therefore, of the entire country, is the prime need of the  hour.  A family arrangement by which the property is  equitably divided between the various contenders so as  to  achieve  as  equal  distribution  of  wealth  instead  of  concentrating  the  same  in  the  hands  of  a  few  is  undoubtedly a milestone in the administration of social  justice.   That  is  why  the  term  ‘family’  has  to  be  understood in a wider sense so as to include within its  fold not only close relations or legal heirs but even those  persons who may have some sort of antecedent title, a  semblance  of  a  claim  or  even  if  they  have  a  spes  successionis so that future disputes are sealed for ever  and the family instead of fighting claims inter se and  

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C.A.No.3687/06 etc.

wasting  time,  money and energy  on such fruitless  or  futile  litigation is  able to devote its  attention to more  constructive work in the larger interest of the country.  The  courts  have,  therefore,  leaned  in  favour  of  upholding a  family  arrangement  instead of  disturbing  the same on technical  or  trivial  grounds.   Where the  courts find that the family arrangement suffers from a  legal lacuna or a formal defect the rule of  estoppel is  pressed into service and is applied to shut out plea of  the  person  who  being  a  party  to  family  arrangement  seeks to unsettle a settled dispute and claims to revoke  the  family  arrangement  under  which  he  has  himself  enjoyed some material benefits.  The law in England on  this point is almost the same.  In  Halsbury’s Laws of  England, Vol.17,  Third  Edition,  at  pp.215-216,  the  following  apt  observations  regarding  the  essentials  of  the family settlement and the principles governing the  existence of the same are made:

A family arrangement is an agreement between  members  of  the  same  family,  intended  to  be  generally or reasonably for the benefit of the family  either  by  compromising  doubtful  or  disputed  rights or by preserving the family property or the  peace  and  security  of  the  family  by  avoiding  litigation or by saving its honour.

The  agreement  may  be  implied  from  a  long  course of dealing, but it is more usual to embody  or to effectuate the agreement in a deed to which  the term ‘family arrangement’ is applied.

Family  arrangements  are  governed  by  principles  which  are  not  applicable  to  dealings  between strangers.  The court, when deciding the  rights  of  parties  under  family  arrangements  or  claims  to  upset  such  arrangements,  considers  what in the broadest view of the matter is most for  the  interest  of  families,  and  has  regard  to  considerations which, in dealing with transactions  between persons not members of the same family,  would not be taken into account.  Matters which  

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C.A.No.3687/06 etc.

would  be  fatal  to  the  validity  of  similar  transactions between strangers are not objections  to the binding effect of family arrangements.”

The legal principles enunciated above have not been disputed.

18. Before this Court all  the parties appear to be in agreement  

over  the  limited  issue  that  the  properties  given  to  widow Rajni  

Sanghi and her children should belong to them. On behalf of Rajni  

Sanghi it has been reiterated that she undertakes to abide by her  

undertaking and liabilities under the amended Family Settlement  

dated 20.02.1995.

19. On behalf of R.K. Sanghi Group all the arguments advanced  

by  Mr.  Datar  were  adopted  and  thereafter  Mr.  Shyam  Divan,  

learned senior advocate advanced his own arguments.   He cited  

some judgments which give discretion to this Court to dismiss a  

civil  appeal  summarily  even  after  grant  of  leave  to  appeal.  

According  to  Mr.  Divan,  the  civil  appeal  of  A.K.  Sanghi  Group  

deserves to be dismissed in limine considering how at one point of  

time  or  other  all  the  groups  including  A.K.  Sanghi  group  were  

opposed either to the arbitration agreement or to the award.  He  

submits  that  the  judgments  rendered  by  Bombay  High  Court  

settling  the  business  interests  of  all  the  groups  in  respect  of  

business at Bombay and the judgment of Company Judge of High  

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C.A.No.3687/06 etc.

Court of Rajasthan disposing of Company Petition No.06 of 1986 in  

terms of Scheme of Reconstruction-cum-Family Settlement of 1994  

followed  by  the  amended  family  settlement  before  the  Division  

Bench in 1995 deserve to be given a finality because the judgment  

of  Division  Bench  of  Bombay  High  Court  is  no  longer  under  

challenge  and  practically  all  the  four  groups  had  agreed  to  the  

family  settlement  made  before  the  Rajasthan  High  Court.  

According to Mr. Divan, the Division Bench should have disposed  

of  the  appeal  of  Rajni  Sanghi  in  terms  of  the  compromise  and  

revised family settlement and the other appeal preferred by M.K.  

Sanghi  should  have  been  dismissed  because  M.K.  Sanghi  had  

prayed for its withdrawal. Transposition of Vijay Sanghi should not  

have given him any advantage when originally he had not filed any  

appeal  and had also  taken advantage  flowing to  his  father  A.K.  

Sanghi and his group.  He highlighted that the undertaking by the  

head of A.K. Sanghi group was a solemn undertaking as a head  

and karta between family members and the group should not have  

been  permitted  to  resile  from the  undertaking  whereunder  they  

agreed not to seek enforcement of the award for which they had  

filed an application and which they agreed to withdraw.  He has  

submitted  that  the  family  arrangement  at  Rajasthan was a  well  

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C.A.No.3687/06 etc.

thought out and considered family arrangement arrived after more  

than six years of making of the award.  Such choice of the parties  

should be given pre-eminence over award made by an arbitrator to  

which many of  the family members had objections.  It  was also  

highlighted that under the Act of 1940, an award does not have the  

force of a decree as is the case with an award under the Arbitration  

and  Conciliation  Act  1996  and  hence  under  the  Act  there  is  

absolutely no legal impediment in the way of parties arriving at a  

settlement  even  after  making  of  an  award  by  the  arbitrator.  

Referring to the amendments made in the Code of Civil Procedure  

such as introduction of Section 89 and provisions in the Family  

Courts Act it has been submitted that policy of law is in favour of  

settlement of dispute by agreement especially between members of  

a family.  Mr. Divan highlighted provisions of Sections 14 and 17 of  

the  Act  to  contend  that  an  award  need  not  be  set  aside  if  the  

parties, even post-award, agree for another settlement because in  

the 1940 Act the arbitrators are required to file the award only on  

the request of any party or upon direction by the court which in  

usual course, is required to be moved by one or the other party.  

Even judgment in terms of award can be passed only after rejection  

of application to set aside the award or after the time for making  

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C.A.No.3687/06 etc.

such application has expired.  On the other hand, a judgment or  

order of a court has a different and higher sanctity. It shall bind the  

parties till  they get rid of such order or judgment in accordance  

with  law.   He  relied  upon  judgment  in  the  case  of  Oudh  

Commercial Bank Ltd. v.  Thakurain Bind Basni Kuer AIR 1939  

PC 80 in support of his submission that even a decree does not  

stand in the way of parties in arriving at a different settlement.  In  

the context of power of Executing Court under Section 47 of the  

Code of Civil Procedure, the Privy Council in the aforesaid case held  

that the judgment-debtor and the decree-holder could enter into an  

agreement and bargain for time, in consideration of a reasonable  

rate  of  interest.  It  is  permissible  and  such  agreement  can  be  

accepted by the Executing Court without attracting the criticism  

that it has attempted to amend or vary the decree.  Even in general  

terms, while considering the issue as to whether the parties could  

alter or vary a decree by consent,  the Privy Council  came to an  

opinion  that  the  Civil  Procedure  Code  contains  no  general  

restriction of the parties’ liberty of contract with reference to their  

rights and obligations under the decree but such agreement may  

not be enforceable in all cases through execution proceedings and  

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C.A.No.3687/06 etc.

in that event the Executing Court will leave the beneficiary party to  

bring a separate suit upon the new contract/agreement.

20. Mr. Divan relied upon the case of  Noorali Babul Thanewala  

v.  K.M.M.  Shetty (1990)  1  SCC  259  to  highlight  the  following  

passage in paragraph 11, ‘when a court accepts an undertaking  

given  by  one  of  the  parties  and  passes  orders  based  on  such  

undertaking,  the  order  amounts  in  substance  to  an  injunction  

restraining  that  party  from  acting  in  breach  thereof.’   He  also  

referred to certain judgments in support of well recognized principle  

of law that a party cannot approbate and reprobate at the same  

time.  Since the proposition is well settled, the judgments need not  

be adverted to.  But it is important to note that he pointed out the  

relevant  documents  such  as  affidavit  by  R.K.  Sanghi  dated  

10.10.1998 filed in D.B.Civil Special Appeal No.30 of 1994 in the  

High Court of Judicature for Rajasthan at Jodhpur to show that  

family  settlement had been acted upon and considerable  money  

was  paid  by  Mr.  R.K.  Sanghi  in  terms  of  such  settlement.  

Retirement  deed  of  Vijay  Sanghi  dated  08.11.1994  and  another  

retirement deed of wife as well as of daughter-in-law of A.K. Sanghi  

were  also  shown for  the  same  purpose.   On  the  basis  of  such  

undisputed materials he submitted that a family settlement already  

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C.A.No.3687/06 etc.

implemented deserves to be protected by setting aside the order of  

Division  Bench  challenged  by  Rajni  Sanghi  and  the  family  

settlements, original as well as amended, be accepted as valid and  

binding on the parties.

21. In reply Mr. Mehta and Mr. Chaudhari have reiterated their  

earlier  stand  and  Mr.  Mehta,  as  noted  earlier,  submitted  that  

registration of the award was not necessary in law in view of its  

contents and even if it is required, a long period when the award  

was lying with the court may deserve to be excluded.  According to  

him the  judgment  of  Bombay  High  Court  cannot  invalidate  the  

award because it is not a permissible ground under Section 30 of  

the Act nor that proceeding could have been stayed because the  

statutory powers available to a Company Judge cannot be available  

to  an  arbitrator.   In  support  of  binding  effect  of  the  family  

settlement  made  before  the  High  Court  of  Rajasthan,  it  was  

submitted that  the Division Bench has allowed the appeals  and  

remitted the matter back to the learned Single Judge.  On equity,  

Mr. Mehta contended that if award is upheld then also equity can  

be restored by ordering for refund of money for UMR property to  

R.K. Sanghi group with appropriate interest or even that building  

may be ordered to be with R.K. Sanghi group.  A concession was  

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C.A.No.3687/06 etc.

offered by him on behalf of A.K. Sanghi group that the appellants of  

Civil  Appeal  No.2763  of  2002  will  be  satisfied  to  have  50%  of  

market value of the property under dispute at Mumbai in lieu of  

the  said  leasehold  property.   Lastly  he  replied  that  principle  of  

impermissibility of approbate and reprobate at the same time is an  

equitable  principle  and therefore  subject  to  statutory  rights.   In  

support of this proposition he placed reliance upon judgment in the  

case of P.R. Deshpande v. Maruti Balaram Haibatti (1998) 6 SCC  

507.

22. Mr.  Chaudhari  also  reiterated  that  in  view of  the  peculiar  

jurisdiction  of  the  Company  Judge  the  matter  before  the  court  

could not  have been referred to arbitration and that  ousted the  

parties’  option  of  seeking  a  stay  under  Section  34  of  the  Act.  

According to him if Section 34 is not applicable then Section 35 will  

also not be applicable.  He pointed out that Section 35 is attracted  

only when legal proceeding before a court is upon the whole of the  

subject  matter  of  the  reference  and  when  it  is  between  all  the  

parties to the reference and when notice thereof has been given to  

the arbitrators or umpire.  According to him such conditions were  

not  met  in  this  case  and  therefore  proceedings  in  the  pending  

reference  and  the  award  resulting  therefrom  are  not  adversely  

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C.A.No.3687/06 etc.

affected or rendered invalid by virtue of Section 35 of the Act.  He  

referred to case of Union of India v. Om Prakash (1976) 4 SCC 32  

to  support  his  submission  that  post-award  conduct  of  a  party  

cannot be relevant for rendering the award invalid.  However this  

judgment is to an extent against this proposition because it holds  

that the term – ‘otherwise invalid’ – is  wide enough to include all  

invalidity including that of the arbitral reference.  This shows that  

‘otherwise  invalid’  is  not  controlled  by  the  principle  of  ejusdem  

generis.   To  same  effect  is  the  judgment  in  the  case  of  M/s.  

Siddeshwari Cotton Mills (P) Ltd. v. Union of India (1989) 2 SCC  

458.  

23. According  to  Mr.  Chaudhari,  non-impleadment  of  Sanghi  

Motors (Bombay) in the appeal before the Division Bench of Delhi  

High  Court  cannot  have  any  adverse  consequence  because  no  

objection was taken to such defect.  According to him the company  

is not a necessary party because all the shareholders and directors  

of the company are parties and in the context of present dispute  

the presence of company is a mere formality.  Lastly Mr. Chaudhari  

contended that under Section 17 of the Act there is no requirement  

of  any obligation for  making the award a  rule  of  the court  and  

therefore  the  undertaking  of  A.K.  Sanghi  to  withdraw  his  such  

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C.A.No.3687/06 etc.

application cannot be of  any consequence in law.  On behalf  of  

Rajni Sanghi it was submitted in reply that Rajni Sanghi would be  

satisfied if the order of remand is modified even partially and the  

modified family settlement of 1995 is accepted.  It was made clear  

on her behalf that she has no interest in the 1994 agreement which  

benefitted the three groups and who have now to face the matter  

once again if the remand order is to stand.

24. In the light of aforesaid submissions and the entire facts and  

circumstances relating to this dispute between family belonging to  

four brothers, we are required to decide whether the award under  

the  Act  which  is  yet  to  be  made  a  rule  of  the  court  deserves  

implementation or preference needs to be given to the settlements  

finalized by the judgment of  Bombay High Court  and the family  

settlements  of  1994 and 1995 before  the  Rajasthan High Court  

which have been now put to peril by the order of remand impugned  

by  Rajni  Sanghi.   In  course  of  deciding  this  issue  we  are  also  

required to decide another larger issue of significance as to whether  

any  good  ground  was  available  to  Delhi  High  Court  under  the  

provisions of Section 30 of the Act for invalidating the award and  

for refusing to make it a rule of the court in exercise of power under  

Section 17 of the Act.

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C.A.No.3687/06 etc.

25. So far as the argument in favour of maintaining the award is  

concerned, we find that clause (c) of Section 30 does not attract  

the  principle  of  ejusdem  generis so  far  as  the  term  ‘otherwise  

invalid’ is concerned.  That ground for setting aside award is quite  

wide in amplitude and available to the concerned court if it finds  

that the award requires to be treated as invalid because on face of  

the things it runs counter to a valid law prohibiting such an award  

or when the subject matter of the award has been lawfully dealt  

with by a statutory authority or a court and it is no longer available  

for  disposal  in  accordance  with  the  award  under  consideration.  

Such a situation is only illustrative and has been enunciated by us  

in the light of facts obtaining in this case.  When the Courts having  

jurisdiction  were  allowed  to  proceed  and  decide  the  properties  

available at Bombay and record a family arrangement in respect of  

other matters in a company proceeding before the Rajasthan High  

Court, the judgments and orders in these proceedings cannot be  

ignored  or  obliterated  on account  of  pendency of  an award  still  

waiting to be made a rule of the court.  In such a situation, in our  

view,  the  award  has  to  be  set  aside  on  the  ground  that  it  is  

otherwise invalid on the date it is being considered for being made  

a rule of the court.  Since this course of action is available and has  

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C.A.No.3687/06 etc.

been  rightly  adopted  by  the  Delhi  High  Court,  we  do  not  feel  

necessary to examine the hypothetical question as to whether even  

in absence of any ground for setting aside such an award, could  

the court concerned refuse to make the award a rule of the court  

under Section 17 of the Act if it was confronted with a situation like  

the  one  on  hand  in  this  case.  Such  a  question  need  not  be  

answered in the present proceeding.

26. We  have  already  referred  to  judgments  highlighting  the  

significance of family arrangement under Hindu Law and in light of  

such  judgments  and  considering  the  scheme  of  the  Act  and  

provisions of Code of Civil Procedure we are satisfied that family  

arrangements  made  before  the  Rajasthan  High  Court  in  1994  

before the Company Judge and in 1995 before the Division Bench  

need to be protected and given pre-eminence over the award which  

is yet not made the rule of the court.  The family arrangement was  

arrived at in spite of knowing the award for six years and obviously  

because the parties who are family members, were at loggerheads  

over the terms of the award.  No doubt the family arrangements  

were initially made only on behalf of three groups who originally  

signed the agreements for themselves as well as on behalf of their  

families but the 4th group, i.e., M.K. Sanghi group later decided to  

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C.A.No.3687/06 etc.

go along with that arrangement by opting to withdraw its appeal.  

Hence  we  accept  the  submissions  advanced  by  Mr.  Datar,  Mr.  

Pachnanda and Mr. Shyam Divan and hold that if  parties settle  

their disputes amicably by an agreement, even post-award, such  

settlement/agreement will prevail in view of requirement of the Act  

that an award will acquire the status of a decree only when it is  

made a rule of the court after rejection of all objections.  In that  

view of the matter there is no hindrance in law in upholding the  

family arrangements made before the High Court at Rajasthan as  

well  as judgment of  the Bombay High Court which has attained  

finality.  They  deserve  to  have  pre-eminence  over  the  award  in  

question.

27. The act of A.K. Sanghi in not honouring his undertaking to  

withdraw his petition for making the award a rule of court and the  

attempt  made  by  Vijay  Sanghi  to  obstruct  the  scheme  of  

reconstruction-cum-family  settlement  of  1994  by  getting  

transposed as an appellant  in  Company Appeal  No.  30 of  1994  

when his father A.K. Sanghi had signed the settlement on behalf of  

his group, were impermissible conduct of approbate and reprobate  

on  the  part  of  A.K.  Sanghi  group  which  should  not  have  been  

permitted. The status of the head of the family acting as a  Karta  

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C.A.No.3687/06 etc.

under the traditional  Hindu law deserves to be kept in mind in  

such a situation. The junior members of the family are bound by  

decisions of  a  Karta in matters  of  family  business and property  

unless it can be pleaded and proved that the head of the family has  

acted  fraudulently  or  for  immoral  purposes.  We  have  not  been  

shown any such case on behalf of Vijay Sanghi. In such a situation,  

ignoring the traditional Hindu law and the rights of the head of the  

family or Karta has put unnecessary burden not only on the larger  

family but also upon the courts.

28. We  have  examined  the  Division  Bench  judgment  of  the  

Rajasthan High Court under challenge by Rajni Sanghi and we find  

that  the  remand order  is  not  on the  basis  of  any defect  in  the  

agreements or supplementary agreements but on account of certain  

technical requirements which should have been ignored when the  

issues  had  been  settled  by  all  the  stake  holders  by  reaching  

amicable agreement.  The companies of family of four brothers are  

almost like partnerships and when all were agreeable, interest of  

justice was best subserved by recognizing even the supplementary  

family settlement of 1995 in favour of Rajni Sanghi as well as the  

original  family  arrangement  of  1994  accepted  by  the  Company  

Judge.   In  that  view  of  the  matter  the  order  of  remand  under  

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C.A.No.3687/06 etc.

challenge at the instance of Rajni Sanghi is set aside and both the  

family arrangements indicated above are affirmed.  If any party fails  

to  act  as  per  those  arrangements  within  three  months,  the  

aggrieved  party  will  be  free  to  initiate  appropriate  proceedings  

including those of  contempt before the concerned High Court  or  

seek  execution  of  the  agreements  through  other  appropriate  

proceedings.  Civil  Appeal  No.3687  of  2006  is  allowed  to  the  

aforesaid extent and is disposed of accordingly.

29. In view of the discussions made above, Civil Appeal Nos.2763  

of 2002 and Civil  Appeal No.503 of 2001 are dismissed.  In the  

facts of the case there shall be no order as to costs.

     …………………………………….J.       [VIKRAMAJIT SEN]

      ……………………………………..J.                  [SHIVA KIRTI SINGH]

New Delhi. December 01, 2015.

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