- (1.) These three Civil Appeals have been heard together because in essence they relate to and arise out of common facts and disputes between members of a larger family belonging to the branches of four sons of Late Motilal Sanghi, the family patriarch who died in 1961. From the materials on record it appears that his four sons effected a de facto partition of the then existing three family business. The eldest son (Late) N.K. Sanghi became in charge of family business in Rajasthan. The next brother (Late) A.K. Sanghi got charge of business at Delhi and the remaining two, R.K. Sanghi and M.K. Sanghi got charge of business at Bombay. In 1964 Sanghi Motors Private Limited (Bombay) expanded to establish a factory for manufacture of oxygen in the name of Sanghi Oxygen. R.K. Sanghi looked after the oxygen division and the youngest brother M.K. Sanghi looked after the motor division of the Sanghi Motors Private Limited (Bombay). Whether in the form of partnership firm or as a company, the family business appears to have been held by the brothers like a partnership firm in which all the brothers have cross holdings. With passage of almost two decades and changing profile of family headed by the four brothers there was apparently some friction first at Bombay which led to an arrangement signed by the four brothers on 6.7.1983. This was mainly for resolving dispute of authority between the two brothers in respect of business at Bombay. Soon thereafter attempt was made for a larger family agreement for partition of all the family business consisting of four partnership firms and four companies. This family agreement involving the methodology of partition chalked out on 22.2.1984 in a board meeting of M/s Sanghi Motors Private Limited (Bombay) held at Jodhpur ran into rough weather and could not be implemented because of differences. Thereafter all the four groups entered into an arbitration agreement on 6.8.1984 and appointed one Sh. H.K. Sanghi, a family friend as the sole arbitrator for effecting a partition of the family business under the control of four groups into four equal lots but with an understanding that the division would maintain the place of business of each group as it existed already.
(2.) The subsequent developments and relevant facts will be detailed hereinafter at appropriate place but it is useful to notice that on 7.8.1984 N.K. Sanghi filed the arbitration agreement with the Arbitrator who entered into reference on 18.8.1984 and made communications with the other three brothers. N.K. Sanghi expired on 19.10.1984. On filing of appropriate application by N.K. Sanghi group the Delhi High Court enlarged the time for publication of the award by the Arbitrator. During the pendency of the reference M.K. Sanghi filed a company petition bearing C.P. No. 128 of 1985 before the High Court of Bombay mainly seeking injunction against A.K. Sanghi and R.K. Sanghi in respect of shares and management of both the divisions of Sanghi Motors Private Limited (Bombay). Family members of A.K. Sanghi and R.K. Sanghi filed a petition under Section 33 of the Arbitration Act, 1940 before Delhi High Court to challenge the existence and validity of arbitration agreement dated 6.8.1984 but ultimately High Court of Delhi permitted the arbitrator to make and publish the award. The award dated 3.12.1987 was filed with High Court of Delhi which recorded the filing on 17.12.1987 and notice was issued to the parties. Objection to the award was filed by M.K. Sanghi within time and beyond time by R.K. Sanghi and also by Sanghi Motors Private Limited (Bombay). On the other hand A.K. Sanghi (now represented by his sons Vijay Sanghi and Ajay Sanghi, appellants in C.A. No. 2763 of 2002) filed Suit No. 581-A/1988 under Section 17 of the Arbitration Act, 1940 in the High Court of Delhi to make the award a rule of the Court. Learned Single Judge of the Delhi High Court took notice of subsequent developments in the company case at Bombay High Court and in another Company petition no. 6 of 1986 filed by R.K. Sanghi in the High Court of Rajasthan and set aside the award by order dated 11.12.1996. This order was upheld in appeal by the Division Bench vide impugned order dated 5.10.2001 which is under challenge in Civil Appeal of 2763 of 2002.
(3.) Interestingly, no one could obtain a stay of the proceedings in the Company Petition No. 128 of 1985 before the High Court of Bombay which appointed a Receiver with respect to the Sanghi Motors Private Limited (Bombay) and all its subsidiaries by an order dated 11.9.1987. On the basis of a successful bid, Vaibhav Sanghi son of M.K. Sanghi entered into an agreement with the receiver and exercised right of management in terms of such agreement. Ultimately, Bombay High Court vide order dated 6.7.1989 sanctioned the scheme of division of two units of Sanghi Motors Private Limited (Bombay). Motors division fell to the group of M.K. Sanghi and oxygen division to the group of R.K. Sanghi. A.K. Sanghi opposed the aforesaid settlement scheme before the Company Court as well as through an appeal before the Division Bench but without any success. The Division Bench dismissed the appeal on 30.6.1992 after holding that the scheme of reconstruction did not violate the injunction order of the High Court of Delhi as care was taken to ensure that under the scheme the transfer of shares would be effected only after the injunction would be vacated by the Delhi High court. The Bombay company case has thus attained finality.;