SHRI VIMAL KISHOR SHAH & ORS. versus MR. JAYESH DINESH SHAH & ORS.

SHRI VIMAL KISHOR SHAH & ORS. versus MR. JAYESH DINESH SHAH & ORS.

Clause 20 of the Trust Deed does not constitute a valid, binding, and enforceable arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996, as beneficiaries are not signatories and the Trust Act provides remedies and jurisdiction to civil courts, thereby impliedly excluding arbitration for trust disputes. Consequently, the application under Section 11 for appointment of arbitrator is not maintainable.

Parties
Appellants: Shri Vimal Kishor Shah & Ors.; Respondents: Mr. Jayesh Dinesh Shah & Ors.
Jurisdiction
India
Judgment Date
17 August 2016
Procedural Posture
Civil Appeal / Appeal Against High Court Order on Arbitration Application Under Section 11 of the Arbitration and Conciliation Act, 1996
Outcome
Appeal allowed; High Court order set aside; application under Section 11 dismissed as not maintainable.
Legal Topics
Arbitration Agreement Validity, Jurisdiction of Civil Courts, Trust Disputes, Statutory Interpretation
Trusts Arbitration Arbitration Agreement Validity Jurisdiction of Civil Courts Trust Disputes Statutory Interpretation

Case Brief

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Parties

Shri Vimal Kishor Shah & Ors.

Appellants

Mr. Jayesh Dinesh Shah & Ors.

Respondents

Procedural Posture

Civil Appeal / Appeal Against High Court Order on Arbitration Application Under Section 11 of the Arbitration and Conciliation Act, 1996

Legal Issues

  1. 1 Whether a clause in a Trust Deed providing for arbitration constitutes a valid and enforceable 'arbitration agreement' under section 7 of the Arbitration and Conciliation Act, 1996
  2. 2 Whether disputes between beneficiaries under a Trust Deed can be referred to arbitration given the remedies prescribed under the Trust Act, 1882

Ratio Decidendi

Clause 20 of the Trust Deed does not constitute a valid, binding, and enforceable arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996, as beneficiaries are not signatories and the Trust Act provides remedies and jurisdiction to civil courts, thereby impliedly excluding arbitration for trust disputes. Consequently, the application under Section 11 for appointment of arbitrator is not maintainable.

Court Disposition

Appeal allowed; High Court order set aside; application under Section 11 dismissed as not maintainable.

Orders

  • The application filed by the respondents under Section 11 of the Arbitration and Conciliation Act, 1996 is dismissed as not maintainable.
  • Parties are at liberty to take recourse to legal remedies as may be available to them for adjudication of their rights.