Vinod Kumar Sachdeva (Dead) Thr Lrs vs Ashok Kumar Sachdeva

Reportable 2023 INSC 650 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

Civil Appeal Nos 4656-4657 of 2023 (Arising out of SLP(C) Nos 22728-22729 of 2017)

Vinod Kumar Sachdeva (Dead) Thr Lrs .... Appellant(s)

Versus

Ashok Kumar Sachdeva & Ors ....Respondent(s)

JUDGMENT

Dr Dhananjaya Y Chandrachud, CJI

1 Leave granted.

2 The appeals arise from a judgment of a Single Judge of the High Court of Punjab

and Haryana dated 1 August 2017 in CR Nos 2819 and 2820 of 2017. Both the

petitions involving the jurisdiction under Article 227 of the Constitution arose

from the orders passed by the Civil Judge (Junior Division), Amritsar allowing

applications under Section 8 of the Arbitration and Conciliation Act 1996 1 in two

suits instituted by the first respondent, namely, Case No 64/2438/2014 and Civil

Suit No 28/53/2015.

3 The appellant and the first respondent are brothers and were conducting

Signature Not Verified business in the name and style of Sachdeva and Sons in partnership. The Digitally signed by Sanjay Kumar Date: 2023.07.26 16:22:54 IST partnership is alleged to have purchased a number of properties in the name of Reason:

the appellant and his deceased father. It has also been alleged that

1 “1996 Act” 2

subsequently the ownership of the property was transferred to a concern by the

name of Sachdeva and Sons. A private limited 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 terms of which it was decided

that the joint family properties should be liquidated to repay the liabilities of the

business which had arisen over a period of time. The MoU contained an

arbitration agreement in Clause 15 in the following terms:

“15. That in case of any clarification needed or dispute arising, the same shall be referred for settlement and arbitration to Revered Maa Deva Ji and/ or Sh.Surinder Kumar alias Chhindi Ji of Ghaziabad and/ or if required, to any other person to be mutually appointed and decision of the arbitrator(s) shall be binding on both the parties. The arbitration shall however, always be in accordance with the Arbitration and Conciliation Act, 1996 as amended from time to time.”

5 The appellant instituted a suit before the Civil Judge (Junior Division), Amritsar,

numbered as Case No 64/2438/2014 against the first respondent and Sachdeva

and Sons Industries Private Limited seeking a permanent injunction in the

following terms:

“Under the circumstances, above referred, it is most respectfully prayed that a decree for permanent injunction restraining the defendants themselves, through their officials, agents, privies and representatives from selling or alienating in any manner land having an area of 10 ½ qillas with Khasra Nos. 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- 07 situated at Village Gilwali, Chabba, Sangrana Sahib, Tarn Taran Road, Amritsar, with complete costs of the present suit, may kindly be passed in favour of the plaintiff and against the defendants.”

6 A second suit, Suit No 28/53/2015, was instituted by the appellant. Besides the

2 “MoU” 3

first respondent, the other parties to the suit were Sachdeva and Sons Industries

Private Limited and Canara Bank. The reliefs which have been sought in the

second suit were in the following terms:

“Under the circumstances, above referred, it is most respectfully prayed that a decree for permanent injunction restraining the defendants No.3,4 and 5 from disbursing or releasing any kind of loan or any other finance facility to and in the names of defendants No. 1 and 2 as against the properties having an area of 10 ½ Qillas with Khasra Nos. 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 2011-2012 situated at village Gilwali, Chabba, Sangrana Sahib, Tarn Taran Road, Amritsar, and further for permanent injunction restraining the defendants No.3,4 and 5 from taking over any loan of any other bank as against the abovesaid properties pertaining to the loan accounts of defendants No.1 and 2 as well as the business concern of the relatives and kins and wards of defendants No.1 and 2, and further for giving directions to the defendants No.3,4 and 5 to recall back any finance or loan that has been so released by defendants No.3,4 and 5 to defendants No. 1 and 2 as against the abovesaid property, with complete costs of the present suit, may kindly be passed in favour of the plaintiff and against the defendants. The plaintiff may also be awarded any other relief to which he shall be found entitled to under the law, equity and justice.”

7 Applications under Section 8 of the 1996 Act were moved by the first respondent

seeking a reference to arbitration in both the suits. The trial court dismissed the

applications by separate orders dated 27 March 2017. The first respondent

challenged the orders of the trial court under Article 227 of the Constitution.

The High Court, by the impugned order dated 1 August 2017, set aside the

judgment of the trial court and directed that the disputes in both the suits be

referred to arbitration under Section 8 of the 1996 Act. The dispute has

travelled to this Court.

8 We have heard Mr Rajiv Talwar, counsel for the appellant, Mr Vishal Mahajan,

counsel for the first and second respondents and Mr Gunjan Kumar, counsel for 4

the third to fifth respondents.

9 The narration of facts indicates that the MoU dated 14 September 2010 is

between the appellant and the first respondent. The appellant instituted two

suits. In the first suit, the first respondent has been impleaded as the first

defendant while Sachdeva and Sons Industries Private Limited is impleaded as

the second respondent. Admittedly, Sachdeva and Sons Industries Private

Limited is not a party to the MoU which is executed solely between the appellant

and the first respondent. In the second suit, apart from the two defendants who

are parties to the first suit, relief has been sought against Canara Bank. While

the relief which has been sought in the first suit is in terms of an injunction

simpliciter from the alienation of certain land, the relief which has been sought

in the second suit is for a permanent injunction restraining Canara Bank from

disbursing or releasing any loan or finance in the name of the first respondent

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 not parties to the

arbitration agreement. The MoU which is executed between the parties

indicates that the Sachdeva family comprising of both the appellant and the first

respondent was carrying on business in several companies, partnership firms

and proprietorship under the joint ownership of the Sachdeva family. The MoU

contains a description of the respective family units and their concerns. The

MoU indicates that there are certain non-family shareholdings.

10 In this backdrop and since the MoU was executed exclusively between the

appellant and the first respondent, the reference to arbitration under Section 8

of the trial Judge was patently in error. Neither Canara Bank nor the company

are parties to the arbitration agreement. The MoU has been executed between

the appellant and the first respondent. The non-family shareholdings, in any 5

event, cannot be bound by the terms of the MoU since they are not parties to

the document.

11 For the above reasons, we set aside the impugned judgment and order of the

Single Judge of the High Court dated 1 August 2017. In consequence, the

applications filed by the first respondent under Section 8 of the 1996 Act shall

stand dismissed. The High Court, while allowing the applications under Section

8 of the 1996 Act had directed the Civil Judge (Junior Division) to pass

consequential orders. As a consequence of the present judgment, the

consequential order which has been passed by 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.

..…..…....…........……………….…........CJI.

[Dr Dhananjaya Y Chandrachud]

…..…..…....…........……………….…........J. [J B Pardiwala]

…..…..…....…........……………….…........J. [Manoj Misra]

New Delhi;

July 25, 2023

-S-

6

ITEM NO.9 COURT NO.1 SECTION IV-B

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C) No(s).22728-22729/2017

(Arising out of impugned final judgment and order dated 01-08-2017 in CRN No. 2819/2017 and 01-08-2017 in CRN No. 2820/2017 passed by the High Court of Punjab & Haryana at Chandigarh)

VINOD KUMAR SACHDEVA (DEAD) THR LRS Petitioner(s)

VERSUS

ASHOK KUMAR SACHDEVA & ORS. Respondent(s)

Date : 25-07-2023 These petitions were called on for hearing today.

CORAM :

HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE J.B. PARDIWALA HON'BLE MR. JUSTICE MANOJ MISRA

For Petitioner(s) Mr. Rajiv Talwar, Adv.

Mr. Sanjay Sarin, Adv.

Ms. Gagan Deep Kaur, Adv.

Mr. Pushkar Karni Sinha, Adv.

Mr. Dinkar Kalra, AOR

For Respondent(s) Mr. Vishal Mahajan, Adv.

Mr. Abhishek Mahajan, Adv.

Mr. Anil Kumar, Adv.

Mr. Reena Devi, Adv.

Mr. Vinod Sharma, AOR

Mr. Gunjan Kumar, Adv.

Mr. Rajeev Maheshwaranand Roy, AOR Mr. P. Srinivasan, Adv.

UPON hearing the counsel the Court made the following O R D E R

1 Leave granted.

2 In terms of the signed reportable judgment, the appeals shall stand allowed.

7 3 Pending application, if any, stands disposed of.

(SANJAY KUMAR-I) (RENU BALA GAMBHIR) DEPUTY REGISTRAR COURT MASTER

(signed reportable judgment is placed on the file)