Family accord prevails over law suits

The Supreme Court last week gave thumbs up to settlement of disputes against litigation among business family members when it ended three-decade row in the case, Rajni Sanghi vs Western Indian State Motors Ltd. The court ruled that if the parties settled their differences amicably, their agreement shall prevail though there were other proceedings like arbitration. Even if there is an arbitration award, which has not been made into a decree of the court, the family arrangement will override it. This was a case of partition of business among four branches of a family whose head died in 1961. Differences cropped up in the 1980s and there was litigation in three high courts with complicated questions of fact and law. There was also an arbitration award which was not made decree of the court. Meanwhile, the parties filed settlement deeds before the Bombay and Rajasthan high courts. The disputes continued over technical details. Ultimately, the Supreme Court upheld the settlement arrived at by the various family branches. "An award will acquire the status of a decree only when it is made a rule of the court after rejection of all objections," the judgment emphasised. It also reiterated that once there is an agreement by elders, "junior members of the family are bound by the decisions of Karta in matters of family business unless it can be proved that he acted fraudulently or for immoral purposes." Ignoring this traditional Hindu law has put unnecessary burden not only on the larger family but also on the courts, the judgment observed.

Article referred: http://www.business-standard.com/article/opinion/family-accord-prevails-over-law-suits-115120600838_1.html