RAJNI SANGHIversusWESTERN INDIAN STATE MOTORS LTD. & ORS.

                   [2015] 14 S.C.R. 217


                      RAJNI SANGHI                               A
                              v.
    WESTERN INDIAN STATE MOTORS LTD. &ORS.
              (Civil Appeal No. 3687 of 2006)
                                                                 B
                   DECEMBER 01, 2015
   [VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ~)
     Arbitration Act, 1940:
      s.30 - Arbitration agreement .between four business        C
groups owned by four brothers (NK, AK, RK and MK) and
their families - For affecting partition of the business into
four equal lots - During pendency of the arbitral proceedings
company petition filed by MK in Bombay High Court, wherein
settlement regarding the partition of the properties was done    D
between two brothers (MK and RK)-Another company case
filed by RK in Rajasthan High Court - Arbitration award
passed -AK filed application u/s 17 of Arbitration Act before
Delhi High Court to make the award rule of the Court -
Rajasthan High Court approved a scheme of reconstruction         E
and family settlement dated 6.9.1994 arrived at between 3
brothers (AK, RK and NK)-AK undertook therein to withdraw
his application u/s. 17 of Arbitration Act- Order of Rajasthan
High Court challenged in appeal by fourth brother (MK in
Company appeal No.30 of 1994) - Later son of AK also             F
transposed as appellant - Widowed daughter-in-law of one
of the brothers (NK) also challenged the order of Rajasthan
High Court (in Appeal No.24 of 1994) - However,
subsequently she entered into compromise and settlement
in 1995 - Contempt petition against AK for not withdrawing       G
the application u/s. 17 - Dismissed by Delhi High Court on
the ground that the non-withdrawal was not wi/Jful- Delhi High
Court set aside the arbitration award in view of the orders of
Bombay High Court and Rajasthan High Court - MK
withdrew his appeal against the Rajasthan High Court             H
                              217
218       SUPREME COURT REPORTS                  [2015] 14 S.C.R.


A order - However, the appeal continued at the behest of son
    of AK - Division Bench of Rajasthan High Court allowed the
    appeals (Appeal Nos.3011994 and 2411994) remitting the
    matter to Company Judge on the ground of non-compliance
    of s.391(1) of Companies Act - Appeals to this Court
B challenging the orders of Delhi High Court whereby
    arbitration award was set aside and the contempt petition was
    dismissed and that of Division Bench of Rajasthan High Court
    whereby appeal Nos. 30 and 24 of 1994 were partly allowed
  · - Held: When the courts of competent jurisdiction at Bombay
c and Rajasthan were allowed to proceed and decide the family
    arrangement, the proceedings and orders of those courts
    cannot be ignored on account of pendency of an award still
    waiting to be made rule of the Court - The award has to be
    set aside on the ground that it was otherwise invalid on the
o date it was being considered for being made rule of the Court
    - The agreement/settlement between the parties in 1994 and
    1995 approved by Rajasthan High Court and Bombay High
    Court will prevail over the award as the award had not acquired
    the status of decree as it was yet not made rule of the Court
E as required by Arbitration Act, 1940 -AK not honouring his
    undertaking to withdraw his application u/s. 17 and attempt
    by his son to obstruct the scheme of family settlement of 1994
    (while his father had signed the settlement as Head of the
    family) were impermissible conduct of approbate and
F reprobate- The status of head of the family as a 'Karta' under
    Hindu Law deserves to be kept in mind-Junior members of
    the family are bound by decisions of'Karta' in matters of family
    business and property unless proved that act of the Karla'
    was fraudulent and for immoral purpose - Remand of the
G appeal by Division Bench of Rajasthan High Court should
    have been avoided because it was not on the basis of defect
    in the settlement but on the technical ground - Order of
    remand set aside - The settlements of 1994 and 1995 are
    affirmed - Orders passed by Delhi High Court are upheld -
H Hindu Law - Companies Act, 1956.
  RAJNI SANGH Iv. WESTERN INDIAN STATE MOTORS               219
                    LTD.&ORS.

      s.30(c)- Ground under, for setting aside award- Scope A
of- The ground for setting aside the award is quite wide in its
amplitude - Clause (c) of s. 30 does not attract the principle·
of 'ejusdem generis' so far as the term 'otherwise invalid' is
concerned.
      Doctines/Principles - Principle of 'ejusdem generis' - B
Applicability of.
      Partly allowing appeal No.3687 of 2006 and
dismissing the appeal Nos.2763 of 2002 and 503 of 2001,
the Court
                                                             c
        HELD:1.1 Clause (c) of Section 30 of Arbitration
Act, 1940 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 0
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 E
disposal in accordance with the award under
consideration. [Para 25] [246-D-F]
     Union of India v. Om Prakash 1976 (3) SCR 998
     : (1976) 4 SCC 32; Mis. Siddeshwari Cotton Mills
     (P) Ltd. v. Union of India 1989 (1) SCR 214 : (1989)    F·
     2 sec 458 - referred to.
      1.2 In the present 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 G
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, the award has to be set aside on the ground H
220         SUPREME COURT REPORTS                [2015] 14S.C.R.


A that it is otherwise invalid on the date it is being
  considered for being made a rule of the court. This
  course of action is available and has been rightly
  adopted by the Delhi High Court. [Para 25] [246-F-H; 247-
      A]
B          Ram Prasad Surajmull v. Mohan Lal
           Lachminarain AIR 1921 Calcutta 770; Sheobabu
           v. Udit Narain and Another AIR 1914 Allahabad
           275 - referred to.
C           2. In view of the scheme of the Arbitration Act, 1940
      and provisions of Code of Civil Procedure, 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-
D     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
 E    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 4'h group, i.e., 'M.K.' group later decided to go along
      with that arrangement by opting to withdraw its appeal.
 F    Hence, if parties settle their·disputes amicably by an
      agreement, even post-award, such settlement/
      agreement will prevail in view of requirement of the Act.
      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
G     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. [Para 26]
      [247-C-H]
 H
  RAJNI SANGHI v. WESTERN INDIAN STATE MOTORS                 221 .
                    LTD.&ORS.

     Munshi Ram v. Banwari Lal (deceased) AIR 1962            A
     SC 903 : 1962 Suppl. SCR 477; Kale v. Deputy
     Director of Consolidation 1976 (3) SCR 202 :
     (1976) 3 sec 119 - referred to.
      3. The act of' A.K.' in not honouring his undertaking
                                                              8
to withdraw his petition for making the award a rule of
court and the attempt made by his son 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 had signed the          C
settlement on behalf of his group, were impermissible
conduct of approbate and reprobate on the part of A.K.
Sang hi. group which shouid not have been permitted.
The status of the head of the family acting as a Karta
under the traditional Hindu law deserves to be kept in
                                                              0
mind in such a situation. The junior members of the
family are bound by decisions of a Karla 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. In such a situation,    E
 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.
 [Para 27] [248-A-D]
     Noorali Babu/ Thanewa/a v. K.M.M. Shetty1989             F
     (2) Suppl. SCR 561 : (1990) 1 sec 259; P.R.
     Deshpande v. Maruti Balaram Haibatti 1998 (3)
     SCR 1079: (1998) 6 SCC 507- referred to.
      4. The remand order is not on the basis of any defect
in the agreements or supplementary agreements but on G
account of certain technicai 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
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222      SUPREME COURT REPORTS              [2015] 14 S.C.R.

A partnerships and when all were agreeable, interest of
  justic.e was best subserved by recognizing even the
  supplementary family settlement of 1995 in favour of 'R'
  (widowed daughter-in-law of 'NK') as well as the original
  family arrangement of 1994 accepted by the Company
B Judge. In that view of the matter the order of remand
  under challenge at the instance of 'R' 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
c 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. [Para 28] [248-E·H]
        Raj Kumar Dey and Ors. v. Tarapada Dey and
D       Ors. 1988 (1) SCR 118: 1987(4) sec 398; Mis.
        General Radio & Appliances Co. Ltd. v. M.A.
        Khader (dead) by LRs AIR 1986 SC 1218 : 1986
        (2) SCR 607; Singer India Ltd. v. Chander Mohan
        Chadha 2004 (3) Suppl. SCR 535 : (2004) 7 sec
 E      1 ; Oudh Commercial Bank Ltd. v. Thakurain Bind
        Basni Kuer AIR 1939 PC 80 - referred to.
                     Case Law Reference
  1988 (1) SCR118                  referred to    Para 11
F AIR 1921 Calcutta 770            referred to    Para 14
  AIR 1914 Allahabad 275           referred to    Para 14
  1986 (2) SCR 607               · referred to    Para 15
  2004 (3) Suppl. SCR 535          referred to    Para 15
G 1962 Suppl. SCR 477              referred to    Para 17
  1976 (3 ) SCR 202                referred to    Para 17
  AIR 1939 PC 80                   referred to    Para 19
  1989 (2) Suppl. SCR 561          referred to    Para 20
  1998 (3) SCR 1079                referred to    Para 21
H
  RAJNI SANGH! v. WESTERN INDIAN STATE MOTORS                  223
                    LTD.&ORS.

1976 (~) SCR 998                 referred to      Para.22      A
1989 (1) SCR 214                 referred to      Para 22
     CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3687 of 2006.
      From the Judgment and Order dated 03.04.2002 of the B
Division Bench of the Raja:sthan High Court at Jodhpur in D.B.
Civil Special Appeal No. 24 of 1994
                              WITH
     C. A. Nos. 503/2001 and 2763/2002.                        c
     Dhruv Mehta, Gaurav Pachnanda, Anoop G Chaudhari, .
Ms. June Chaudhari, A. N. S. Nadkarni, Arvind P. Datar, Shyam
Divan, Sr. Advs., Yashraj Singh Deora, Ms. ShreyaAgarwal,
Sameer Abhaynkar, Ms. Priyadarshini Singh, Shashwat
Purohit, Ms. Shruti Gupta, Ms. Rajni Sanghi, Ankit Kr. Lal, D
Mishra Saurabh, Sarwa Mitter, Amit Gupta, AnantA. Pavgi (For
M/s. Mitter & Mitter Co.), Pratap Venugopal, Ms. Surekha
Raman, Anuj Sarma, Debarshi Bhuyan, Ms. Niharika (For
M/s. K. J. John & Co.), Siddhartha Chowdhury, Puneet Jain,
Ms. Christi Jain, Abhinav Gupta, Manu Maheshwari, Ms. Anikta E
Gupta, Sushi! Kumar Jain, Yashraj Singh Deora, Pratap
Venugopal, Jai Munim, Ms. Tihsha Mukherjee, Senthil
Jagadeesan, Abhijtat P. Medh, Milind Kumar,
V. Ramasubramanian, Ashok Kumar, Chand Qureshi,
Ms. Mukti Chowdhry for the appearing parties.                 F
     The Judgment of the Court was delivered by
     SHIVA KIRTI SINGH, J. 1. These three Civil Appeals
have been heard together because in essence they relate to G
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
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224         SUPREME COURT REPORTS                  [2015] 14 S.C.R.


A 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. Sanghi and M.K. Sanghi got charge of business at
  Bombay. In 1964 Sanghi Motors Private Limited {Bombay)
B 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 Sang hi Motors Private Limited
  (Bombay). Whether in the form of partnership firm or as a
c 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
o 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 th.e family business consisting of four partnership firms
E 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
F groups entered into an arbitration agreement on 6.8.1984 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
G 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
 H
   RAJNI SANGH Iv. WESTERN INDIAN STATE MOTORS                    225
          LTD. &ORS. [SHIVA KIRTI SINGH, J.]

   18.8.1984 and made communications with the other three A
   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. Sang hi .
   filed a company petition bearing C.P. No. 128 of 1985 before B
   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.
   Sang hi filed a petition under Section 33 of the Arbitration Act, c
 · 1940 before Delhi Hi:;ih Court to challenge the existence and
   validity of arbitration agreement dated 6.8.1984 but ultimately
   High Court of Delhi 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 D
   notice was issued to the parties. Objection to the award was
   filed by M.K. Sang hi within time and beyond time by R.K. Sanghi
   and also by Sang hi Motors Private Limited (Bombay). On the
   other hand A.K. Sanghi (now represented by his sons Vijay
· Sang hi and Ajay Sanghi, appellants in C.A. No. 2763 of 2002) E .
   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 tlie company case
   at Bombay High Court and in another Company petition no. 6 F
   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.                                                  G
      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
 respectto the Sanghi Motors Private Limited (Bombay) and
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226       SUPREME COURT REPORTS                [2015] 14S.C.R.


A all its subsidiaries by an 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
B 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.
  Sang hi opposed the aforesaid settlement scheme before the
  Company Court as well as through an appeal before the
c 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 De: hi as care was taken to ensure that under
  the scheme the transfer of shares would be effected only after
D the injunction would be vacated by the Delhi High court. The
  Bombay company case has thus attained finality.
        4. Tfle 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
E Companies Act against Western India State Motors Limited
  (WISM), Smt. Uma Sanghi (widow of late N.K. Sanghi), Vijay
  Kumar Sang hi (son of A.K. Sang hi) and an official of Rajasthan
  State Industrial Development and Investment Corporation. In
  this company petition which remained pending for a number
F 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.
G 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
H
  RAJNI SANGHI v. WESTERN INDIAN STATE MOTORS                 227
         LTD. &ORS. [SHIVA KIRTI SINGH, J.]

scheme of reconstruction filed in Company Petition No. 6 of A
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 B
      being petition no. 581-A/1988. ShriA.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. Sang hi also C
on behalf of their respective family members. It involved
passing of 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 D
Sang hi 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 Sang hi were personally
present before the learned Single Judge when the Company
Petition No. 6 of 1986 was disposed of in terms of the scheme E
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.
                                                               F
      5. The orders of learned Single Judge of High Court of
Rajasthan acceptingthe 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 G
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 Sanghi H
228       SUPREME COURT REPORTS                 [2015] 14S.C.R.


A 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
B 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
c ground thatA.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
D Bombay, under the control of N.K. Sang hi 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.
E This contempt petition was dismissed vide order dated
  3.4.2000 as the Court came to the opinion that non-compliance
  was on account of certain circumstances and not wilful. This
  order against Sang hi Motors is subject matter of Civil Appeal
  No. 503 of 2001 which shall also be governed by this common
F 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
G 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
H
                        ·~,




  RAJNI SANGHI v. WESTERN INDIAN STATE MOTORS                    229
         LTD. &ORS. [SHIVA KIRT! SINGH, J.]

Division Bench found a case of non-compliance of sub-clause      A
(1) of Section 391 of the Companies Act. The DivisionBench
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.         B
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-signatory         c
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 settl.ement and family arrangement,
there was no need of interfering with the order of the Single    D
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 Sang hi in Civil Appeal No.   E
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 F
otherwise. That civil appeal has been argued at great length
as the lead case. But of equal significance is the civil appeal
of Rajni Sang hi 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 G
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 Delhi High Court through which he
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230         SUPREME COURT REPORTS                   [2015] 14 S.C.R.


A     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
B     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
C     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
 D    (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
 E    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 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
 F    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
 G    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
 H
  RAJNI SANGH Iv. WESTERN INDIAN STATE MOTORS                    231
         LTD. &ORS. [SHIVA KIRTI SINGH, J.]

against the arbitrator in letter dated 20.11.1987 were noticed   A
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    B
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,
amended, modified or in any way affected otherwise than as
pr_ovided in the Act (emphasis supplied).                        c
     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 D
      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."                                     E
      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 F
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 G
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 in
Company Petition No. 6 of 1986 nor any undertaking of A.K. H
232         SUPREME COURT REPORTS                    [2015] 14S.C.R.


A     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.
B        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
C 5.9.1994 recorded by the learned Single Judge of High Court
  of Rajasthan under which Uma Sanghi (N.K. Sanghi group)
  received be;:efits. 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
D 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.

 E       11. On the other hand learned Senior Counsel Mr. Arvind
  P. Datar appearing for M.K. Sanghi group and Mr. Shyam
  Divan, 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
F 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
G pointed out that immoveable properties in lot No. 2 at serial
  Nos. 8 and 9 given toA.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
H further conveyance deeds and documents. However, the award
   RAJNI SANGH Iv. WESTERN INDIAN STATE MOTORS                      233
          LTD. &ORS. [SHIVA KIRTI SINGH, J.]

  towards the end, in paragraph 16 stipulates that all obligations, A
  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 B
  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 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 c
  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 D
· 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 E
 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 F
 property of M/s. Sanghi Motors at Bombay which as per
 settlement by the Bombay High Court has gone to M.K. Sang hi
 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. 109 G
 of 1989 filed by Sanghi Motors Private Limited, Bombay but
 in appeal before the Division .Bench, Sang hi Motors Private
 Limited (Bombay) was not impleaded as aparty and therefore
 no useful purpose will be served by interfering with the orders
                                                                 H
234         SUPREME COURT REPORTS                     [2015] 14S.C.R.


A 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 nextcor:itenc;Jed that the Delhi High Court
B     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
C     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
D     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 ground covered by clause (c) of Section 30 of the Act. Mr.
 E    Datar further submitted that both, A.K. Sang hi 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
 F    {ace 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
 G     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
 H
  RAJNI SANGH Iv. WESTERN INDIAN STATE MOTORS                         235
         LTD. &ORS. [SHIVAKIRTI SINGH, J.]

proceedings cannot be ignored at the time of deciding, at the A
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 lawful for B
such court to set aside the award under clause (c) of Section
30 of the Act by holding thatthe 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, c
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            D
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       E
 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   F
ousted. In simpler words, the proposition is that the courts'
decisions will not be overridden by an award arising out 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      G
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 H
236        SUPREME COURT REPORTS                [2015] 14 S.C.R.


A 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
B 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 appellantA.K. Sanghi Group
c 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 Mk. 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.
D General Radio &AppliancesCo. 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
 E 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
 F 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. Sang hi Group ~o that she and
   her children may enjoy their share separately. This was
 G achieved by amended family settlement dated 20.02.1995.
   Although M.K. Sang hi had not signed the family settlement he
   took time to consider the cfevelopments and ultimately he
   withdrew his appeal which signifies that lie also consented to
   the settlements. It was pointed out that A.K. Sanghi Group
 H
 . RAJNI SANGHI v. WESTERN INDIAN STATE MOTORS                    237
          LTD. & ORS. [SHIVA KIRTI SINGH, J.]

including his son Vijay Sanghi had acted upon the Scheme of A
Family Settlement and also derived benefits, but they
subsequently developed ill designs and Vijay Sanghi got
himself 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 B
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            c
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. D
 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 E
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 agreement or F
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 G
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
                                                                    H.
238         SUPREME COURT REPORTS                    [2015] 14 S.C.R.


A     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
·B    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
c            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
 D           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 arrangements are
             governed by a special equity peculiar to themselves and
             would be enforced if honestly made. In this connection,
 E           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:

 F             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
 G
               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.
 H
RAJNI SANGH Iv. WESTERN INDIAN STATE MOTORS                    239
       LTD. &ORS. [SHIVA KIRTI SINGH, J.)

    The object of the arrangement is to protect the family A
    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 B
     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 c
     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 o
     as to include within its fold not only close relations or
     legal heirs but even those persons who may have some
     sort of aritecedent title, a semblance of a claim·or even
     if they have a spes succession is so that future disputes
     are sealed for ever and the family instead of. fighting E
     claims inter se and 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 F
     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 estoppal
      is pressed into service and is applied to.shut out plea
     of the person who being a party to family arrangement G
     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. lri Halsbury's Laws of
      England, Vol.17, Third Edition, at pp.215-216, the H
240       SUPREME COURT REPORTS                   [2015] 14 S.C.R.


A         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
B
            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.
c
                  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.
D
                    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
 E
           . 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 would be fatal to the validity of similar
 F
             transactions between strangers are not objections to
             the binding effect of family arrangements."
           The legal principles enunciated above have not been
           disputed.
G
        18. Before this Court all the parties appear to be in
   agreement over the limited issue that the properties given to
   widow Rajni Sang hi and her children should belong to them.
   On behalf of Rajni Sanghi it has been reiterated that she
 H undertakes to abide by her undertaking and liabilities under
   RAJNI SANGHI v. WESTERN INDIAN STATE MOTORS                       241
          LTD. &ORS. [SHIVAKIRTI SINGH, J.]

the amended Family Settlement dated 20.02.1995.                      A
         19. On behalf of R.K. Sanghi Group all the arguments
 advanced by Mr. Datarwere adopted and thereafter Mr. Shyam
 Divan, learned senior advocate advanced his own arguments.
 He cited some judgments which give discretion to this Court         B
 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 ottier all the groups including A.K. Sanghi
 group were opposed e.ither to the arbitration agreement or to       C
 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 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        D
 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        E
  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 withdrawar. Transposition of Vijay Sanghi should not have   F
 given him any advantage when originally he had not filed any
  appeal and had also taken advantage flowing to his father A.K.
  Sang hi 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          G
 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
                                                                     H
242       SUPREME COURT REPORTS                   [2015] 14 S.C.R.


A Rajasthan was a well 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
B 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.
C 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
o 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
E 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 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
F 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
G 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
H agreement can be accepted by the Executing Court without
   RAJNI SANGH Iv. WESTERN INDIAN STATE MOTORS                    243
          LTD. &ORS. [SHIVA KIRTI SINGH, J.]

 attracting the criticism that it has attempted to amend or vary A
 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 parti,es'
 liberty of contract with reference to their rights and obligations B
 under the decree but such agreement may not be enforceable
 in all cases through execution proceedings and 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
                                                                   c
  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
  b~sed on such undertaking, the order amounts in substance
  to an injunction restraining that party from acting in breach D
  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 l')eed not be adverted to. But it is
  important to note that he pointed out the relevant documents E
  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 F
  deed of Vijay Sang hi dated 08.11.1994 and another retirement
  deed of wife as well as of daughter-in-law of A.K. Sang hi were
  also shown for the same purpose. On the basis of such
  undisputed materials he submitted that a family settlement
  already implemented deserves to be protected by setting G
  aside the order of Division Bench challenged by Rajni Sang hi
  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 H
244       SUPREME COURT REPORTS                  [2015] 14 S.C.R.


A 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
B 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
C 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 a.lso equity can be restored by ordering
  for refund of money for UMR property to R.K. Sanghi group
D with appropriate interest or even that building may be ordered
  to be with R.K. Sanghi group. A concession was offered by
  him on behalf of A.K. Sang hi 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
E 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
F Haibatti (1998) 6 sec 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 411der Section 34
G 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
H
  RAJNI SANGH Iv. WESTERN INDIAN STATE MOTORS                       245
         LTD. &ORS. [SHIVAKIRTI SINGH, J.]

when notice thereof has been given to the arbitrators or umpire. A
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 ·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 B
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 c
shows that 'otherwise invalid' is not controlled by the principle
of ejusdem generis. To same effect is the judgment in the case
of Mis. Siddeshwari Cotton Mills (P) Ltd. v. Union of India
(1989) 2 sec 458.
       23. According to Mr. Chaudhari, non-impleadment of            D
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            E
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            F
withdraw his such 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          G
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 H
246         SUPREME COURT REPORTS                   [2015] 14 S.C.R.


A     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
B     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
c     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.

         25. So far as the argument in favour of maintaining the
D 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
E 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
F 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
G 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
 H
    RAJNI SANGH Iv. WESTERN INDIAN STATE MOTORS                       247
           LTD. &ORS. [SHIVAKIRTI SINGH, J.]

 made a rule of the couit. Since this course of action is available A
 and has 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 B
 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          C
  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-              D
  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   E
  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 go along with that arrangement by opting to
  withdraw its appeal. Hence we accept the submissions
  advanced by Mr. Datar, Mr. Pachnanqa and Mr. Shyam Divan            F
  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    G
  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.                                                           H
248        SUPREME COURT REPORTS                (2015] 14 S.C.R.


A        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.
B 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 under the traditional Hindu law
c 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 f:=tmily 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
o any such case on behalf of Vijay Sang hi. 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
 E 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
 F 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_
 G arrangement of 1994 accepted by the Company Judge. In
   that view of the matter the order of remand under challenge at
   the instance of F.lajni 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
 H aggrieved party will be free to initiate appropriate proceedings
  RAJNI SANGH! v. WESTERN INDIAN STATE MOTORS                     249
         LTD. &ORS. [SHIVA KIRT! SINGH, J.]

including those of contempt before the concerned High Court A
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
                                                               8
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.
Kalpana K. Tripathy                        Appeals disposed of.