REKHA PALLI,J. - (1.) The present decision deals with five petitions filed before this Court; two execution petitions seeking enforcement of the Arbitral Award dated 02.08.2016 along with three petitions filed under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act').
(2.) For the sake of convenience, the parties will hereinafter be referred to by their names. The facts in brief, relevant to the purpose of the present decision, are as follows: i. The parties to these petitions are two brothers, Mr. Deepak Beri and Mr. Atul Beri, and their aged father, Mr. S.K. Beri; the brothers are feuding about the division of business assets belonging to the Beri family. In the early 1950's, Mr. S.K. Beri set up various companies engaged in the industry of manufacture and sale of industrial knives in the country and his business comprised of two incorporated companies, the flagship concern M/s DB Engineering Pvt. Ltd, ('DBEPL') and M/s Banaras Marbles and Granite Ltd. ('BMGL'), as also two partnership firms, namely S.K. Beri and Bros. ('SKB') and DB Company ('DBC'). All the four entities are closely held family concerns and do not have any outside shareholder. These businesses thrived with the passage of time and Mr. S.K. Beri, in the year 1982, inducted his two sons to join him with the fond hope that the business empire would grow and expand with their participation. The businesses were operating from the following premises: (i) A-119, Okhla Phase-II, Delhi; (ii) B-113, 114, 115, 131, 132, Sector 6, Noida, Uttar Pradesh; (iii) F-61, Sector 11, Noida, Uttar Pradesh; (iv) C-27, Sector 59, Noida, Uttar Pradesh; (v) A-32, Sector 64, Noida, Uttar Pradesh; (vi) B-1, Sector 68, Noida, Uttar Pradesh; (vii) C-57, Phase-II, Noida, Uttar Pradesh; and (viii) Plot at C-12, Ecotech-11, Greater Noida, Uttar Pradesh ii. However, Mr. S.K. Beri found his hopes of a united family concern dashed in the light of growing differences and acrimony between his sons, each of whom accused the other of siphoning off funds from the family businesses for their personal greed. Against this backdrop of growing familial conflict, Mr. SK Beri, in the year 2014, began contemplating the idea of dividing the businesses between the brothers in order to achieve a quietus in these disputes. As a result, on 20.01.2016, Mr. S.K. Beri, Mr. Deepak Beri and Mr. Atul Beri entered into a mediation-cum-arbitration agreement whereunder a Chartered Accountant, Mr. Manoj Nagrath, was appointed as the mediator/arbitrator to resolve the disputes between them. iii. In terms of the mediation-cum-arbitration agreement, Mr. Nagrath was firstly required to endeavour resolving the disputes by way of mediation which, at that stage, had appeared to be successful and fruitful, culminating in three separate agreements. The first agreement was the Memorandum of Understanding (MoU) executed on 17.02.2016 and signed by the two brothers and their father, which contemplated the division of the businesses. This was followed by a second agreement executed on 14.03.2016 or the 'Minutes of Meeting' which was signed between the father and the arbitrator, Mr. Nagrath; these Minutes set out the detailed mode of division of the businesses and while the document was not signed by the two brothers, it was accepted by them. The last document is the Deed of Arrangement dated 30.04.2016 signed between the two brothers and their father and, collectively, these three agreements shall be referred to as the 'family settlement' agreements. Although a detailed reference to the terms of these family settlement agreements will be made later, it may be useful to sum up the manner in which the parties agreed to divide ownership of the businesses: A. The two incorporated companies, M/s DB Engineering Pvt. Ltd, ('DBEPL') and M/s Banaras Marbles and Granite Ltd. ('BMGL'),were allocated to Mr. Atul Beri, to the exclusion of Mr. Deepak Beri, B. The two partnership entities, S.K. Beri and Bros. ('SKB') and DB Company ('DBC'), were allocated to Mr Deepak Beri, to the exclusion of Mr. Atul Beri. C. Mr. S.K. Beri, their father, retained 50% ownership in all the four business entities. iv. Since DBEPL, falling in the share of Mr. Atul Beri, was the flagship company of the family business and had more assets than any of the three other business entities, the parties agreed that certain assets belonging to DBEPL, which included three of its six immovable properties, would be allocated in the name of Mr. Deepak Beri. This is how the properties came to be divided between the brothers: JUDGEMENT_138_LAWS(DLH)12_2020_1.html v. In the light of these agreements, Mr. Nagrath proceeded to issue certain directions by way of an award dated 02.08.2016 incorporating all the three settlement agreements, along with some additional directions which he felt were essential to effect the terms and conditions of the family settlement. vi. A week later, on 10.08.2016, Mr. Deepak Beri instituted a petition under Section 9 of the Act, being OMP(I) COMM 326/16 (captioned herein) before this Court seeking inter alia directions to restrain his brother and father from derogating the terms of the agreements and to take all necessary steps to ensure smooth functioning of all the units. This Section 9 petition filed in 2016 also sought appointment of a receiver to take charge of the account books of the four business entities, their stock registers, their email services and their domain names etc., as also the record of orders placed on them, along with details of any unsold stock lying in the concerned premises. In August 2016 itself, when this petition was pending consideration, Mr. S.K. Beri and Mr. Atul Beri assailed the award dated 02.08.2016 by preferring petitions under Section 34 of the Act, being OMP(COMM) 382/2016 and 396/2016. Thereafter, on 09.02.2017, Mr. Atul Beri also filed a petition under Section 9 of the Act, being OMP (I) COMM 72/17 (captioned herein) seeking inter alia a direction to Mr. Deepak Beri to refrain from diverting any business, customers, receipts stock manpower material etc. of any of the four business entities to any other private concern. In this petition, for the very first time, a specific reference was made to M/s Marvel Engineering and Trade Pvt. Ltd. and M/s DB Engineering solutions LLP, allegedly run by Mr. Deepak Beri and his family members, insofar as a direction was sought to restrain them from carrying on business in these names. vii. In the meanwhile, when the Section 34 petitions were taken up by this Court, Mr. S.K. Beri contended that although he was not a party to the arbitration proceedings, the award included certain directions against him which were wholly unwarranted and surpassed the terms of the settlement agreements executed between the parties. Similarly, Mr. Atul Beri opposed the award as well by challenging the decision of the learned Arbitrator to issue directions which travelled beyond the parameters of the family settlement agreements and did not follow a due process of law. On 31.05.2018, a Coordinate bench of this Court partly allowed the two Section 34 petitions by upholding the award insofar as it adhered to the family settlement agreements. The Court, after observing that these family settlement agreements had been voluntarily entered into between Mr. S.K. Beri, Mr. Deepak Beri and Mr. Atul Beri, proceeded to set aside all directions issued by the learned Arbitrator which exceeded the terms of the agreements. Since the judgment dated 31.05.2018 was not assailed by any of the parties, it has attained finality as on date and the award stands modified to such extent as directed. viii. Shortly after the award attained finality in its modified form, on 08.08.2018, Mr. Deepak Beri filed the captioned enforcement petition OMP(Enf)(Comm) 187/2018 wherein, besides praying for appointment of an Observer to effect implementation of the remaining terms of the settlement agreement, he sought appointment Receiver to take complete charge of all aspects of the businesses which fell in his brother Atul's share, viz. DBEPL and BMGL, and a forensic audit into the funds and assets thereof. A further prayer was sought to restrain Mr. Atul Beri and Mr. SK Beri from acting in contravention of the three settlement agreements. A month later, Mr. Atul Beri preferred a Section 9 petition on 27.09.2018, being OMP(I) COMM 396/18 (captioned herein), primarily seeking injunctions against Mr. Deepak Beri from acting on behalf of DBEPL and BMGL, the companies which fell in his share, as also against certain employees, who were allegedly employed by Mr. Deepak Beri, from claiming any wages from and/or initiating any legal proceedings against Mr. Atul Beri's DBEPL before any Court or Tribunal on the ground of non-payment of salaries. Finally, on 16.07.2019, Mr. Atul Beri also moved his own enforcement petition OMP(Enf)(Comm) seeking enforcement of the award dated 02.08.2016, as modified by the judgment dated 31.05.2018. Thus, in these proceedings, both parties are seeking execution of the award as it stands modified by way of the judgment dated 31.05.2018 which only calls for enforcement of the terms of the three settlement agreements. ix. These two enforcement petitions under Section 36 of the Act, along with the three Section 9 petitions, have remained pending before this Court for the last several years, during the course whereof certain interim orders have been passed from time to time. One of these interim directions were issued on 03.01.2017 by this Court, in response to the grievance of Mr. Deepak Beri that while the enforcement was still pending adjudication, Mr. Atul Beri had opened new bank accounts in the names of DBEPL without informing him in his capacity as a Director thereof and had also proceeded to transfer some amounts to his personal accounts and those of his son. Accordingly, this Court appointed a Court Commissioner and a Chartered Accountant to inspect and file a report on all the premises owned by the four family concerns as also the LLP privately owned by Mr. Deepak Beri. The Court Commissioner initially filed interim reports on 17.01.2017, 14.04.2017, 25.04.201, which were followed by a comprehensive final report filed on 15.05.2017, setting out the status of inter alia accounts, records pertaining to statutory liabilities, inventory of pending orders, stocks, plants and machineries, raw materials, employees in the different businesses and the premises as well. The data in this report was to include a separate list of machines which were earmarked to be transferred to the other units/entities in terms of the settlement agreements. Notwithstanding the submission of these reports, the matter remained pending and on 01.11.2018, this Court once again observed that the best way to proceed further in the matter was to ensure division of assets in terms of the award. Apparently, barring the inspections carried out in the years 2017 and 2018, the premises of these four business entities have never been inspected. Therefore, today, the parties remain at the same position as they were at the time of filing of these enforcement petitions.
(3.) In support of his case that the separation of the assets and businesses is yet to take place in terms of the settlement agreements, learned senior counsel for Mr. Deepak Beri, Mr. Sandeep Sethi has made the following submissions - i. With passage of time, Mr. Deepak Beri realised that Mr. Atul Beri was siphoning off assets of the family businesses. This led to friction between the brothers and they could no longer carry on the family businesses together. As a result, they were constrained to contemplate partition of the family concerns and, to that effect, executed the arbitration agreement on 20.01.2016. This brought in Mr. Nagrath to mediate the disputes between them, which led to the execution of the three agreements forming the family settlement today. These three agreements, undoubtedly, contemplated division of the assets, which division was then to be followed by a complete separation, to be effected as per the steps postulated in the agreements and preceded the separation. These agreements also display that the intent of the parties was to pool the assets of the family business and then divide them equally between the two brothers, while the father remained equal shareholder/partner in all the business entities. When the parties were drawing up the MoU and minutes of meeting on 17.02.2016 and 14.03.2016 respectively, they fixed dates for effecting various steps towards separation including preparation of inventory of raw material, stock and machinery, division of employees and logos etc., as they were hopeful that by the time the final document, i.e., the deed was executed on 30.04.2016, the division would have taken place and a smooth separation would thereafter follow. Unfortunately, by the time the Deed was signed on 30.04.2016, the parties had realised that it was not possible to adhere to the dates agreed upon, which then inspired the final clause (34) in the Deed which states that this date was variable. However, the parties were always ad idem that till division takes place according to the various steps envisaged in the three agreements, there was no question of any separation between them. This common intent of the parties can be easily gleaned from the language of the three settlement agreements. Further, in the light of the decisions in Bhavan Vaja and Ors. Vs. Solanki Hanuji Khodaji Mansang and Anr., 1973 2 SCC 40 and Deep Chand and Ors. Vs. Mohan Lal, 2000 6 SCC 259, it is settled that this Court, as an executing court, has to consider the true effect of the three agreements in the light of all surrounding circumstances rather than arriving upon its decision on mere technicalities. Moreover, considering the decisions in Kale and Ors. Vs. Deputy Director of Consolidation and Ors., 1976 3 SCC 119 and Hari Shankar Singhania Vs. Gaur Hari Singhania and Ors., 2006 4 SCC 658, one has to bear in mind that these agreements are essentially family settlements which are placed on a far different footing than commercial agreements. Thus, rather than adopting a hypertechnical consideration while regarding them, these agreements and the terms thereof should be given effect to in letter as well as spirit. On doing so, it would become apparent that the parties had agreed to first divide and separate the businesses, following which they would recognise and appoint a date of separation. Thus, they had always intended to undertake physical division of the businesses first and follow it up by agreeing upon a Date of Separation. This implies that despite the date of 30.06.2016 being mentioned in all the three settlement agreements, this was purely a tentative date. The prayer of Mr. Atul Beri seeking for a declaration from this Court that the Date of Separation had been set out as 30.06.2016 under the agreements is in blatant contravention of the terms of the settlement agreed upon between the parties. The settlement agreements contemplate a separation in presenti and not in relation back to a purportedly agreed Date of Separation. If this Court were to adopt the interpretation supported by Mr. Atul Beri and hold that the agreements contemplate a Date of Separation to be fixed first, which would then be followed by distribution and separation of assets with reference to an earlier date, the same would be at divergence with the settlement sought to be enforced in these proceedings. ii. Contrary to the submissions of Mr Atul Beri and Mr. S.K. Beri, no division has taken place since the parties have not even completed the major steps required to be taken towards separation. The three agreements are self-explanatory in that each of them requires the parties to complete certain steps by certain dates, all of which are much prior to 30.06.2016. However, since a majority of these steps have not been effected, there is no question of a Date of Separation coming into play. Even an affidavit filed by Mr. Atul Beri in the Section 9 petition state that most of the steps required to be taken for the division have not yet taken place and, thus, even he has admitted that no separation has taken place. The fact that no separation has taken place is also evident from the various orders passed by this Court during the hearing of the present petitions. To begin with, on 15.12.2016, not only had the Court asked the parties to suggest steps which were yet to be carried out to effectuate the division, but it had also appointed a Court Commissioner and Chartered Accountant on 03.01.2017 in order to prepare a complete inventory of the raw materials, stocks, employees, logos, etc; however, in none of these orders did the Court direct any of the processes to be effected keeping in mind the Date of Separation as 30.06.2016, yet Mr. Atul Beri did not assail these orders on that ground. Next, the report eventually filed by the Court Commissioner on 15.05.2017 shows that Mr. Atul Beri had tried to obstruct the Court Commissioner and, clandestinely, shifted goods and machinery for his benefit from one business premises to another. That apart, this report also happened to be the most comprehensive exercise with respect to the businesses in question and also showed that the division is yet to take place. In fact, when the parties were unsuccessful in their original intent to separate by 30.06.2016, they were hit by a deluge of litigations instituted by Mr. Atul Beri before this Court against the award dated 02.08.2016 [OMP(COMM.) 396/2016], which further delayed implementation of the award and the formal partition of the family businesses. As on date, post-award, Mr. Deepak Beri has only received 10% of the assets falling in his share under the settlement while Mr. Atul Beri has been using the remaining assets, which has caused irreparable loss to Mr. Deepak Beri. Thus, if this Court were to pay heed to the steps effected by the parties so far, it would be evident that Mr. Deepak Beri has not even received his half of the share in the family businesses. Any claims of Mr. Atul Beri to the effect that most of the steps towards separation have been carried out are completely baseless, unsubstantiated and devoid of material proof. To make matters worse, over the past four years, Mr. Atul Beri has made huge profits by using the assets, more particularly, the machinery and premises which were to come to Mr. Deepak Beri's share and moved some of this machinery to his personal entities. Owing to the unrestrained scheming of Mr. Atul Beri, Mr. Deepak Beri has suffered an estimated loss in profits/business to an approximate tune of Rs.64 crores, which ought to be recovered from Mr. Atul Beri after directing him to hand over 50% of family assets to Mr Deepak Beri in accordance with the family settlement arrangement, the value whereof should be approximately Rs.130 crores. Having wrongfully continued to hold on and profit from assets of the family businesses which were never his and deprived Mr. Deepak Beri of his share thereto for the last four years, it is not open for Mr. Atul Beri to now contend that the division has already taken place from a backdated Date of Separation. Rather, the award ought to be executed immediately since Mr. Atul Beri is continuing to enjoy the assets which fell in the share of Mr. Deepak Beri as per the terms of the three family settlements. For all these reasons, this Court must appoint a Court Commissioner in order to freshly ascertain the status of assets of the family concerns and draft a plan to divide them in terms of the agreements between the parties. Considering the large scale siphoning off of funds and assets by Mr. Atul Beri, it is further prayed that this Court be pleased to direct a forensic audit to be conducted into the finances and assets of the family businesses, as they existed on 30.06.2016. ;