India | India
Clause 20 of the Trust Deed, which is relevant for the disposal of this case, provides that every dispute or differences regarding the interpretation of any of the clauses or provisions or the contents of the Trust Deed or any dispute inter se trustees or disputes between the trustees and beneficiaries or disputes between beneficiaries inter se as and when arise, the same would be resolved in pursuance of the provisions of the Indian Arbitration Act, 1940 and the decision of arbitrator(s) shall be final and binding on the parties to the arbitration.
The basic question, which arises for consideration in this appeal, is whether a clause in a Trust Deed, which provides for resolving the disputes arising between the beneficiaries of the Trust through arbitration, can constitute an “arbitration agreement” within the meaning of Section 2(b) and 2(h) read with Section 7 of the Act and whether the application filed by the respondents under Section 11 of the Act can be held as maintainable?
We are of the view that if the Will is held not to constitute an arbitration agreement despite containing an arbitration clause therein – a fortiori, the Trust Deed can also not be held to constitute an agreement much less an arbitration agreement despite containing an arbitration clause therein.
We, accordingly, hold that the disputes relating to Trust, trustees and beneficiaries arising out of the Trust Deed and the Trust Act are not capable of being decided by the arbitrator despite existence of arbitration agreement to that effect between the parties.