VINOD KUMAR SACHDEVA (DEAD) THR LRS versus ASHOK KUMAR SACHDEVA & ORS on 25 July 2023

1. Leave granted.

2. The appeals arise from a judgment of a Single Judge of theHigh Court of Punjab and Haryana dated 1 August 2017 in CR Nos2819 and 2820 of 2017. Both the petitions involving the jurisdiction underArticle 227 of the Constitution arose from the orders passed by the CivilJudge (Junior Division), Amritsar allowing applications under Section 8of the Arbitration and Conciliation Act 1996[1] in two suits instituted bythe first respondent, namely, Case No 64/2438/2014 and Civil Suit No28/53/2015.

3. The appellant and the first respondent are brothers and wereconducting business in the name and style of Sachdeva and Sons inpartnership. The partnership is alleged to have purchased a number ofproperties in the name of the appellant and his deceased father. It hasalso been alleged that subsequently the ownership of the property wastransferred to a concern by the name of Sachdeva and Sons. A privatelimited company has since been incorporated.

4. On 14 September 2010, a Memorandum of Understanding[2]was arrived at between the appellant and the first respondent in termsof which it was decided that the joint family properties should be liquidatedto repay the liabilities of the business which had arisen over a period oftime. The MoU contained an arbitration agreement in Clause 15 in thefollowing terms:

“15.That in case of any clarification needed or dispute arising,the same shall be referred for settlement and arbitrationto Revered Maa Deva Ji and/ or Sh.Surinder Kumaralias Chhindi Ji of Ghaziabad and/ or if required, to anyother person to be mutually appointed and decision ofthe arbitrator(s) shall be binding on both the parties. Thearbitration shall however, always be in accordance withthe Arbitration and Conciliation Act, 1996 as amendedfrom time to time.”

5. The appellant instituted a suit before the Civil Judge (JuniorDivision), Amritsar, numbered as Case No 64/2438/2014 against the first 1 “1996 Act”

2 “MoU”

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Arespondent and Sachdeva and Sons Industries Private Limited seeking apermanent injunction in the following terms:

“Under the circumstances, above referred, it is mostrespectfully prayed that a decree for permanent injunctionrestraining the defendants themselves, through their officials,Bagents, privies and representatives from selling or alienatingin any manner land having an area of 10 ½ qillas with KhasraNos. 29/12(8-0), 11/2/1/2(1-13), 11/2/2/2 (1-17), 8/2/1(5-8), 19/1 (5-1), 21/2(5-1), 22/1(6-4), 8/1/1(1-18), 23(8-0), 9/3/2/2(3-11), 24(5-8), 20/1(0-10), 29/13(8-0), 14(2-10), 17(3-18) and 18(8-4) as per jamabandi for the year 2006-07Csituated at Village Gilwali, Chabba, Sangrana Sahib, TarnTaran Road, Amritsar, with complete costs of the presentsuit, may kindly be passed in favour of the plaintiff andagainst the defendants.”

6. A second suit, Suit No 28/53/2015, was instituted by theDappellant. Besides the first respondent, the other parties to the suit wereSachdeva and Sons Industries Private Limited and Canara Bank. Thereliefs which have been sought in the second suit were in the followingterms:

“Under the circumstances, above referred, it is mostErespectfully prayed that a decree for permanent injunctionrestraining the defendants No.3,4 and 5 from disbursing orreleasing any kind of loan or any other finance facility toand in the names of defendants No. 1 and 2 as against theproperties having an area of 10 ½ Qillas with Khasra Nos.F29/12(8-0), 11/2/1/2(1-13), 11/2/2/2 (1-17), 8/2/1(5-8), 19/1(5-1), 21/2(5-1), 22/1(6-4), 8/1/1(1-18), 23(8-0), 9/3/2/2(3-11), 24(5-8), 20/1(0-10), 29/13(8-0), 14(2-10), 17(3-18) and18(8-4) as per jamabandi for the year 2011-2012 situatedat village Gilwali, Chabba, Sangrana Sahib, Tarn Taran Road,Amritsar, and further for permanent injunction restrainingGthe defendants No.3,4 and 5 from taking over any loan ofany other bank as against the abovesaid properties pertainingto the loan accounts of defendants No.1 and 2 as well asthe business concern of the relatives and kins and wards ofdefendants No.1 and 2, and further for giving directions tothe defendants No.3,4 and 5 to recall back any finance or G

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loan that has been so released by defendants No.3,4 and 5to defendants No. 1 and 2 as against the above said property,with complete costs of the present suit, may kindly be passedin favour of the plaintiff and against the defendants. Theplaintiff may also be awarded any other relief to which heshall be found entitled to under the law, equity and justice.”

7. Applications under Section 8 of the 1996 Act were moved bythe first respondent seeking a reference to arbitration in both the suits.The trial court dismissed the applications by separate orders dated 27March 2017. The first respondent challenged the orders of the trial courtunder Article 227 of the Constitution. The High Court, by the impugnedorder dated 1 August 2017, set aside the judgment of the trial court anddirected that the disputes in both the suits be referred to arbitration underSection 8 of the 1996 Act. The dispute has travelled to this Court.

8. We have heard Mr Rajiv Talwar, counsel for the appellant, MrVishal Mahajan, counsel for the first and second respondents and MrGunjan Kumar, counsel for the third to fifth respondents.

9. The narration of facts indicates that the MoU dated 14September 2010 is between the appellant and the first respondent. Theappellant instituted two suits. In the first suit, the first respondent hasbeen impleaded as the first defendant while Sachdeva and Sons IndustriesPrivate Limited is impleaded as the second respondent. Admittedly,Sachdeva and Sons Industries Private Limited is not a party to the MoUwhich is executed solely between the appellant and the first respondent.In the second suit, apart from the two defendants who are parties to thefirst suit, relief has been sought against Canara Bank. While the reliefwhich has been sought in the first suit is in terms of an injunction simpliciterfrom the alienation of certain land, the relief which has been sought inthe second suit is for a permanent injunction restraining Canara Bankfrom disbursing or releasing any loan or finance in the name of the firstrespondent and the second respondent in respect of the landed property.Certain consequential reliefs have been sought against Canara Bank.Hence, it is evident that there are several parties to the suit who are notparties to the arbitration agreement. The MoU which is executed betweenthe parties indicates that the Sachdeva family comprising of both theappellant and the first respondent was carrying on business in severalcompanies, partnership firms and proprietorship under the joint ownershipof the Sachdeva family. The MoU contains a description of the respective A

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Afamily units and their concerns. The MoU indicates that there are certainnon-family shareholdings.

10. In this backdrop and since the MoU was executed exclusivelybetween the appellant and the first respondent, the reference to arbitrationunder Section 8 of the trial Judge was patently in error. Neither CanaraBBank nor the company are parties to the arbitration agreement. TheMoU has been executed between the appellant and the first respondent.The non-family shareholdings, in any event, cannot be bound by theterms of the MoU since they are not parties to the document.

11. For the above reasons, we set aside the impugned judgmentCand order of the Single Judge of the High Court dated 1 August 2017. Inconsequence, the applications filed by the first respondent under Section8 of the 1996 Act shall stand dismissed. The High Court, while allowingthe applications under Section 8 of the 1996 Act had directed the CivilJudge (Junior Division) to pass consequential orders. As a consequenceof the present judgment, the consequential order which has been passedDby the trial Judge shall no longer survive.

12. The appeals shall stand allowed in the above terms.

13. Pending application, if any, stands disposed of.

EDivya Pandey(Assisted by : Roopanshi Virang, LCRA)

Appeals allowed.

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