Court Finds No Urgency in Execution Proceedings; Directs Parties to Arbitral Tribunal for Resolution
In a recent decision, the Delhi High Court has declined to grant interim relief in an execution petition involving a complex family settlement dispute within the Hamdard Laboratories family. The case, brought before the court by Hammad Ahmed, the decree holder, against Abdul Majeed and others, centers around the execution of a consent decree arising from a family settlement deed and issues related to the appointment of a statutory auditor.
Presided over by Justice Tushar Rao Gedela, the court addressed an application seeking a declaration that the appointment of Ellahi Goyal & Co. as the statutory auditor was illegal. The decree holder also sought the appointment of an independent statutory auditor to undertake tax compliances and file a corrected Form 10AB, a critical document for maintaining tax exemption status under the Income Tax Act, 1961.
The court, however, found that the urgency projected by the decree holder was unsubstantiated. It noted that the filing of Form 10AB for tax exemption was a five-year compliance, already undertaken by the judgment debtors. Consequently, no immediate intervention by the executing court was warranted. The court emphasized that the core issues concerning the Form 10AB were intricately linked to the segregation and vesting of properties under the family settlement deed, matters already referred to arbitration as per previous agreements.
Justice Gedela pointed out that appointing an independent auditor at such a late stage could be detrimental to both parties. Instead, the court encouraged the decree holder to approach the arbitral tribunal for any interim or other necessary reliefs, given that the disputes were already under arbitration.
The judgment also left open questions regarding the executability of the consent decree and the interpretation of the family settlement deed's clauses, deciding to refrain from adjudicating on these matters at this stage. The court's decision underscores the judiciary's preference for arbitration in resolving complex family and commercial disputes, particularly when an arbitration agreement exists.
Bottom Line :
Execution of consent decree arising from family settlement - Prayer for declaration that appointment of statutory auditor was illegal and for appointment of independent/neutral auditor to undertake tax compliances and file corrected Form 10AB - Where dispute regarding Form 10AB was intrinsically connected with segregation/vesting of properties under Family Settlement Deed and such disputes were already pending before sole arbitrator - In absence of urgency, Court declined to grant interim directions in execution and permitted decree holder to approach arbitral tribunal.
Statutory provision(s):
Civil Procedure Code, 1908 Sections 47, 151, Order XXI; Arbitration and Conciliation Act, 1996
Hammad Ahmed v. Abdul Majeed, (Delhi) : Law Finder Doc id # 2989271
