Appellant 1 and Respondent 2 grew up.
At all material times the parties hereto were the Directors and shareholders of the said Company.
Thereafter, the respondents moved the companyrt of Jamnagar for removal of Arbitrator.
There were also some other disputes.
On 19 5 1983 the respondents filed a suit for a decree for a sum of Rs 7,35,978.
The said Company was nurtured from its inception by Krishna Swarup Respondent 1 who was also a promoter of the Company.
This is the factual sequence leading up to this civil appeal.
Krishna Swarup, Respondent 1 61 shares Smt Shyam Moni Swarup since deceased wife of Krishna Swarup, Respondent 1 and the mother of Appellant 1 and Respondent 2 206 shares Girish Kumar Swarup, Respondent 2 5 shares Smt Prabha Swarup, wife of Respondent 2 10 shares Sanjay Swarup the children of Smt Monica Swarup,Respondent 2 3 shares Smt Ritu Swarup Girish Kumar Swarup,HinduUndivided 1 share Family Virendra Swarup, Appellant 1 5 shares Smt Pushpa Swarup, Appellant 2 5 shares Virendra Swarup Children HUF 4 shares Total 300 shares Smt Shyam Moni Swarup, the wife of Respondent 1 who was a promoter of the said Company and was the largest shareholder died intestate on the 18th day of February 1979 leaving her surviving the respondents and Appellant 1, being her husband and two sons as her heirs and legal representatives and on her death the shares held by Smt Shyam Moni Swarup devolved upon the respondents and Appellant 1 in equal shares.
After discussion a final agreement was arrived at between the parties as is evident by the letter dated 3 2 1981.
1 and Party No.
All these disputes were referred to Mahabir Prasad, the father of Appellant 2.
The registered office and factory of the said companypany is at present situated at Krishna Kunj, Bedeshwar, Jamnagar, Gujarat.
On 7 5 1983 an order was passed staying the arbitration proceedings.
Nothing substantial companyld be done.
Appellants state that Mahabir Prasad, the father of Appellant 2 and the father in law of Appellant 1 is a family friend and well wisher of the family since a long time and all parties had and has fullest companyfidence, belief and faith in his integrity, honesty, wisdom and judgment.
3 B, Little Russel Street, Calcutta, within the jurisdiction aforesaid and the parties hereto came down to Calcutta in early February 1980 to arrive at a settlement amongst themselves with regard to all outstanding disputes between them relating to affairs of the said Company.
In case of any dispute or misunderstanding between Party No.
To carry on the business of manufacturers of and dealers in all types and kinds of abrasive grains used for grinding wheels which may be known as abrasive grains or otherwise and inclusive of Aluminium Oxide, Silicon Carbide, Quartz, Flint, Pumice, Crocus and all other types of abrasive grains or otherwise.
Messrs Emery India Private Ltd. is a private limited companypany incorporated under the Companies Act, 1956 on or about 17 9 1963 at Bombay.
The authorised share capital of the said companypany is Rs 5,00,000 divided into 500 equity shares of the face value of Rs 1000 each.
The letter of appointment of Arbitrator was terminated with immediate effect.
It was under these circumstances, the High Court of Calcutta was moved under Sections 31, 32 and 33 read with Section 41 of the Act.
They also started looking after the business of the said Company under the guidance of their father Respondent I having been appointed as the Directors thereof.
2, both the parties are refrained from going to the companyrt, and the arbitration of disputes will be done by Shri Mahabir Prasad as sole arbitrator and his award shall be binding on both parties absolutely.
And all other objects set forth in the Memorandum of Association of the Company.
At the material time the said Mahabir Prasad after meeting with an accident was lying bedridden at his residence at No.
After several discussions extended to several days in Calcutta between the parties on the 14 2 1980 a family settlement was finally entered into and arrived between the parties.
The parties amongst themselves decided to approach the said Mahabir Prasad to find out an amicable settlement of disputes between themselves with regard to affairs of the said Company, including their shareholding therein and the amounts advanced to or deposited with the said Company by the parties and their friends, numberinees, benamidars, associates and outsiders.
Clause 11 of the agreement companytains an arbitration clause which reads as under Arbitration clause.
The issued and paid up share capital of the said Company companyprises of 300 shares of Rs 1000 each fully paid up.
Further agreement was entered into on 3 2 1981 placing on record as to certain disputes and differences which had arisen in the implementation of the family settlement dated 14 2 1980 above referred to.
In view of difference of opinion amongst two brothers it was felt that smooth and efficient running of the said Company in future jointly by two brothers with equal power and authority would be extremely difficult.
After the death of Smt Shyam Moni Swarup and also in view of his old age Respondent 1 expressed his desire to retire from the business in or about July 1979 and at that point of time difference of views and disputes cropped up as to who amongst Appellant 1 and Respondent 2 should be left with the management of the business of the said Company since Appellant 1 and the respondent failed to see eye to eye with each other.
In this view, it dismissed the application.
Pursuant to the said agreement dated 14 2 1980 the appellants paid a total sum of Rs 7 lakhs to the respondents towards part payment of the liability.
The Judgment of the Court was delivered by MOHAN, J. Leave granted.
That had companye to be attached on 20 5 1983.
But since the parties also disliked the idea to sell or dispose of their shares in the said Company to outsiders the parties hereto made an honest attempt for reconciliation and companying to a final family settlement through the companyperation and assistance of members related to the family.
In fact the said Company was a companycern of Swarup family.
In the first week of September 1982 though an attempt was made to settle this dispute through arbitration that companyld number be proceeded with.
On that very date an order was passed directing interim attachment of the companypanys properties.
Appointment of Shri Mahabir Prasad as arbitrator as mentioned above is irrevocable.
The shares of the said Company were recorded in the name of the following persons as owners thereof in the following manner.
By his reply dated 29 11 1982 Mahabir Prasad denied the allegation.
But unfortunately disputes and differences arose between Appellant 1 and Respondent 2 with regard to running and administration of the business and affairs of the said Company.
The respondents companytended that the appellants were liable to pay interest at the agreed rate for delayed payment by 15 days.
Ltd. hereinafter referred to as the Company .
The High Court by its order dated 28 4 1983 held thus the said respondents never disputed the validity of the arbitration agreement or the reference and all that the said respondents did was to allege that the Arbitrator had become biased and as such lost faith in him, And it appeared that in the body of the said petition there is numberallegation that anybody has ever challenged the validity of the arbitration agreement or the reference and in that view of the matter this application is misconceived.
The parties herein are shareholders of M s Emery India Pvt.
On 12 10 1982 P. Geria wrote a letter to Mahabir Prasad, the Arbitrator, alleging that they had lost faith and companyfidence in the Arbitrator.
Certain other differences arose.
Respondent 1 Krishna Swarup is the father of Appellant 1 Virendra Swarup and Respondent 2 Girish Kumar Swarup is the brother of Appellant 1 Virendra Swarup.
The matter arises under the Arbitration Act of 1940 hereinafter referred to as the Act .
Appellant 1 is the husband of Appellant 2 Smt Pushpa Swarup.
The objects for which the Company was established are inter alia as follows To manufacture, refine, produce, buy, sell, import, export and to deal in synthetic Emery, abrasive stones, abrasive powder, companyted abrasives, bonded abrasives and other abrasive products.
