Hammad Ahmed v. Abdul Majeed & Ors.

What happened

Hammad Ahmed is the decree holder under a Family Settlement Deed decreed by the Delhi High Court on 13 December 2019 in CS (OS) No. 211/2017. Under it the affairs of Hamdard Laboratories India (HLI) are managed by two charitable trusts: the medicines and cosmetics business by Hamdard Laboratories (Trust), under the judgment debtors 1 and 2, and the foods business by Hamdard Foods India under the decree holder and others. HLI is a tax-exempt entity under the Income Tax Act whose registration must be renewed every five years by Form 10AB. The Income Tax authorities had rejected an application for registration under section 12A on 30 March 2026 because of discrepancies in Form 10AB about certain properties, and issued a show-cause notice on 31 August 2026. The decree holder sought a declaration that the appointment of Ellahi Goyal & Co. as HLI's statutory auditor was illegal, a restraint on it, and the appointment of a neutral statutory auditor to complete statutory compliance, prepare consolidated accounts and file a corrected Form 10AB.

Questions before the court

• Should the executing court appoint an independent statutory auditor for Hamdard Laboratories India and restrain the existing auditor?

Why the court ruled this way

The Court noted that Form 10AB must be filed once in five years to extend the exemption, and that HLI had filed it on 30 September 2025 after the Family Settlement Deed and the consent decree, so there was no urgency in the sense claimed (paragraph 7). The objections to Form 10AB related to properties that were to be transferred to the decree holder, though that transfer was pending at the decree holder's own end (paragraph 12). Clause 45 of the Family Settlement Deed contains an arbitration agreement, earlier orders of the Court had referred disputes under the deed to arbitration, and the filing of Form 10AB and the objections are intertwined with the segregation of properties, some of which are subject to arbitration (paragraph 14). Even if there were a deadline for statutory filings on 30 September 2026, it would be contrary to the interests of justice to appoint an independent chartered accountant at the eleventh hour, which might prove disastrous for both sides (paragraph 15).

Controlling point

Prayers for the appointment of an independent auditor to deal with the Form 10AB dispute, which is intertwined with property questions before an arbitral tribunal and involves no established urgency, are referable to arbitration.

Order and next steps

The Court declined to pass any interim directions and disposed of the application, permitting the decree holder to apply to the learned Arbitrator for interim or other directions, which the tribunal is to decide on its own merits without being influenced by the order. It consciously did not deal with the judgment debtors' objections on the executability of the consent decree or certain clauses of the deed, which are left open. The execution petition was listed on 2 December 2026.

Practical implications

A party to a family settlement with an arbitration clause should expect the court to send disputes about the implementation of the settlement, including related tax filings, to the arbitral tribunal rather than manage them through the execution court. Urgency must be shown by dates and consequences, not assumed.

Limits of this ruling

• The Court expressed no view on whether the consent decree is executable or on the merits of the Form 10AB objections; it only held that the application was referable to arbitration and not urgent.