JUDGMENT
Sanjay Kishan Kaul, J.
1. The respondents have filed these objections under Section 30 and 33 the Arbitration Act, 1940 (hereinafter referred to as ‘the said Act’) to the award of the sole Arbitrator late Justice Charanjit Talwar (Retd.) dated 23.12.1993.
2. The reference was originally made to Justice A.B.Rohtagi (Retd.) who resigned during the pendency of the arbitration proceedings. Justice G.C. Jain (Retd.) was appointed as the successor arbitrator who passed the interim award and recorded evidence but he also resigned during the pendency of the arbitration proceedings and thereafter the matter was referred to the sole arbitration of the present arbitrator in pursuance ito the directions of the Court. It may be noticed that the respondent did not join the arbitration proceedings before the present arbitrator. The respondent No. 2 failed to pay the fee of the arbitrator pursuant to the directions passed by the High Court whereby the petitioner was to pay the full fee subject to the final orders to be passed in that behalf. Notices were issued to the parties on 9.8.1993 but were received back undelivered to the respondents. The copies of those notices were then sent Under Certificate of Posting. It may be noticed that the stage of the proceedings before the present arbitrator was for arguments as the evidence had already been recorded. The arbitrator heard the arguments on behalf of the petitioner and thereafter adjourned the proceedings to give another opportunity to the respondents to appear and make submissions. A notice was sent to Shri Satish Sahni, respondent No. 2 intimating the date of hearing under UPC clearly pointing out that no further notice would be given to him and thereafter the award was passed.
3. The factual matrix of the dispute is as hereinafter mentioned. M/s J.R. Sahni & Sons, a partnership firm, was involved in the business of construction of the buildings. The partnership consisted of Shri J.R. Sahni (JRS), Satish Sahni (respondent No. 2), Mr. Harish Sahni (HS) and Mr. Tirath Ram Sahni (TRS). TRS passed away on 18.1.1981 and is stated to have been married with Ms. Sudha Sahni and had a son Shri Jatin Sahni. It may be noticed that Shri JRS was the father of the other three partners. On the death of TRS, the partnership was reconstituted by the deed dated 19.1.1981 with JRS, respondent No. 2, HS and Jatin Sahni as the partners. However, the very next day, an amended deed is stated to have been executed on 20.1.1981 with only JRS, respondent No. 2 and HS as partners. JRS died on 7.11.1982 and a new partnership deed was executed on 9.11.1982 consisting of Smt. Raj Rani Sahni (widow of JRS), respondent No. 2 and HS.
4. It is alleged that before his demise, JRS desired that Smt. Sudha Sahni, widow of late Shri TRS should marry HS and the marriage was solemnised on 22.11.1982 and HS adopted Jatin Sahni.
5. Disputes and differences arose between the parties in November, 1985. The petitioner contends that the firm stood dissolved pursuant to a family settlement dated 16.3.1986 but respondent No. 2 deprived the other family members of the business and thus arbitration proceedings had to commence.
6. The respondents contend that during the pendency of the arbitration proceedings, interim award was passed by the then arbitrator Justice G.C.Jain (Retd.) whereby it was directed that some of the work would be conducted by respondent No. 2 while the other work was to be carried on by HS. The work of respondent No. 2 suffered losses while the work of HS earned profits.
7. Smt. Raj Rani Sahni passed away during the pendency of the arbitration proceedings and her other legal heirs were brought on record. In all, nine issues were framed at the initial stage of the arbitration proceedings. Thereafter, three additional issues were framed in May, 1990.
8. One of the issues, which also forms part of the objections, relates to the fact whether the claim of Jatin Sahni could have been adjudicated upon in the proceedings as he was not party to the agreement for reference to arbitration dated 18.5.1987. The arbitrator has found that though Jatin Sahni was not a party to the agreement, he was a petitioner in the petition filed for reference of disputes to arbitration. Jatin Sahni was the minor and sued through his mother and on consent of the parties, the earlier reference was superseded and the disputes between the parties including petitioner were referred to arbitration.
9. A material fact is that Jatin Sahni was admitted to the benefit of the partnership in terms of the partnership deed dated 20.1.1981 which itself contained an arbitration Clause. Thus, on dissolution of the partnership, Jatin Sahni was entitled to seek a reference to arbitration.
10. It would thus be observed that not only was Jatin Sahni a petitioner in the proceedings where reference was made but was entitled in terms of the earlier partnership deed to seek reference to arbitration and thus, in my considered view, no infirmity can be found with this conclusion.
11. Issues No. 2 and 3 have been dealt with together by the late arbitrator and really form the fulcrum of the dispute as it relates to the share in House No. B-457, New Friends Colony, New Delhi. Respondent No. 2 claimed half share in the property. The arbitrator has relied upon the testimony of respondent No. 2 when he appeared as a witness as RW-4, Respondent No. 2 accepted that a lease deed had been executed in December, 1982 in favor of his mother whereby he had relinquished his share in the house which devolved on the demise of his father. The deed has been executed by all the legal heirs of late JRS in favor of their mother and was in fact relied upon by the respondent No. 2 to show that Jatin Sahni was not one of the executants as he was adopted by HS. It is not in dispute that JRS was the perpetual lessee of the plots in question in pursuance to the perpetual sub-lease deed dated 4.1.1972 and during his life time, DDA agreed to register the house in the joint name of Shri JRS and his wife Mrs. Rani Sahni. In pursuance to the relinquishment deed, Mrs. Raj Rani Sahni became the exclusive owner. The respondent No. 2 contends that Mrs. Raj Rani Sahni had only a right to enjoyment and for this reliance has been placed on a family settlement dated 16.3.1986. Clause 16 of this deed states that Smt. Raj Rani will have the right of property during the life time but will not make any Will or sell in respect of the house without the written consent of Shri J.M.Bhasin. J.M. Bhasin gave the consent to make the Will or sell the house in terms of Ex.C-5 dated 28.3.1987. This is stated to have been so given as J.M.Bhasin appeared in the witness box and stated that since the family agreement was not implemented in full and Smt. Raj Rani was not getting even the monthly amount agreed to be paid to her, she should be entitled to be the absolute owner of the house. J.M. Bhasin is the son-in-law of Smt. Raj Rani. It may be noted that this family settlement is not registered nor does it purport to reduce into writing any oral settlement agreed upon earlier. The arbitrator found, in my considered view rightly so, that on the death of JRS, the legal heirs of TRS (being a pre-deceased son) were entitled to the share in the property. The fact that Smt.Sudha Sahni married to HS, would not imply that Jatin Sahni would be deprived of the share which would devolve upon him on the demise of his grandfather JRS since his father TRS was already pre-deceased. This would be irrespective of the fact whether Jatin Sahni was adopted by HS or not.
12. A perusal of the documents filed before the arbitrator shows that the perpetual sub-lease deed dated 4.1.1972 gave the name of the perpetual sub-lessees as JRS. Shri JRS addressed a letter dated 25.9.1981 stating that he had already applied for a joint registration with his wife Smt. Raj Rani in respect of the plot in question and had completed all formalities. This wish of Shri Sahni is also expressed in his letter dated 3.4.1982 stating that he wanted equal share along with his wife in the property. The letter dated 27.12.1982 of the DDA records that the request for addition of the name of Smt. Raj Rani had been acceded to.
13. That other legal heirs of JRS executed lease deed in her favor and consequently the DDA vide its letter dated 8.3.1984 mutated the property exclusively in the name of Smt. Raj Rani Sahni who was also the nominee of JRS. The society also vide its letter dated 1.4.1988 records the same.
14. The family agreement dated 16.3.1986 was a subsequent event. Much prior to that, absolute rights in the property stood vested in Smt. Raj Rani Sahni. The family agreement subsequently sought to restrict the rights of Smt. Sahni which would not be permissible specially since the document is not registered nor does it purport to record the family settlement into writing which had been orally arrived at. Even if it be assumed that the restriction was so placed, the family settlement agreed and gives full authority to Shri J.M.Bhasin to give written consent to Smt. Sahni to make a Will or sell the property in question. This consent has admittedly been given by Shri Bhasin. Thus, Smt. Raj Rani Sahni being the absolute owner of the property bequeathed the same.
15. It cannot be appreciated as to how respondent No. 2 sought half share in the property. At best, on the demise of JRS, his 50% share would have devolved on all the legal heirs which included the sons and the daughters and his wife. Thus, respondent No. 2 would have been entitled to 10% share in the property if he had not executed the release deed. The release deed was admittedly executed and acted upon and thereafter there could not be any restriction put on the rights of Smt. Raj Rani. As stated above, even assuming that such a restriction was placed, the condition for removal of the restriction was met by the consent given by Mr. J.M.Bhasin.
16. The remaining issues related to the assets and liabilities and the profit and losses of the firm M/s J.R.Sahni & sons as also whether the contract of Kondi Gharoli was of the firm or of HS in terms of the family settlement dated 16.3.1986. Similarly, for the contract at Trilok Puri, the issue was whether the parties would be liable to render accounts for the same and whether HS had received payments of work done by the firm which he had failed to account. These are the matters to be decided on appreciation of evidence and have been so decided.
17. In my considered view, these issues have not been dealt with as an appellate Court since that would not be the scope of scrutiny of objections under Section 30 and 33 of the Act. It is not the function of this Court to re-appreciate the evidence or to interfere with the award merely on the basis that the Court would come to a different conclusion on the material available before the arbitrator. It is only in the eventuality of the award being perverse that the second interference would be called for, as held by the Division Bench in DDA v. Bhagat Construction Co. Pvt. Ltd. 2004(3) Arb. L.R. 481. The apex Court has repeatedly cautioned that unless an award is contrary to law and misconduct is with reference to either personal misconduct of the arbitrator or misconduct of law, an award ought not to be interfered with. It is not ordinarily for the Court to re-appreciate the evidence and in the absence of the award being absurd, reasonableness is not a matter to be considered. In this behalf, reference may be made to the judgment in Gujarat Water Supply and Sewage Board v. Unique Erectors (Gujarat) (P) Ltd. and Anr. , Food Corporation of India v. Joginderpal Mohinderpal and Anr. and Arosan Enterprises Ltd. v. Union of India and Anr. . In fact, in Hindustan Tea Co. v. K.Sashikant & Co. , it was held by the Supreme Court that the arbitrator is made the final arbitor of the disputes between the parties and the award is not open to challenge on the ground that the arbitrator has reached a wrong conclusion or has failed to appreciate the facts.
18. It is already noticed that there is a consistent view of the Supreme Court on this issue and two other recent judgments may be usefully referred to in this behalf.
19. In State of U.P. v. Allied Constructions , it was once again reiterated that Section 30 of the Act providing for setting aside an award is restrictive in its operation and unless one of the conditions specified therein is satisfied, an award cannot be set aside. The arbitrator is a Judge chosen by the parties and his decision is final and thus the Court is precluded from re-appraising the evidence. Thus, an error apparent on the face of the record would not imply closer scrutiny on the merits of the documents and material on record. Once it is found that the view of the arbitrator is plausible one, the Court should refrain from interfering.
20. An aspect which has to be examined in the present proceedings arose from failure of the respondent No. 2 to join proceedings. It has to be noticed that the matter was mature for hearing and evidence had been recorded and documents produced. It is at the final stage of hearing of the matter that the respondent No. 2 chose to keep away. Respondent No. 2 initially failed to make payment of the arbitrator’s fee with the result that the Court was called upon to intervene and asked the petitioner to pay even the fee share of respondent No. 2 in order to enable the conclusion of the arbitration proceedings. Thereafter, despite notices having been issued on two occasions under Certificate of Posting, respondent No. 2 chose not to join the proceedings. The award of the arbitrator is a reasoned award and has dealt with the material placed on record.
21. In Hari Om Maheshwari v. Vinikumar Parikh , the Supreme Court has laid down that the ground of refusal of an adjournment by an arbitrator is not a ground for setting aside the award. The refusal of an arbitrator not to entertain an application subsequently would not call for any interference. It was held that the High Court fell into an error in interfering in such a matter with a view to give opportunity to the party who had failed to appear. The position is thus of its own making by respondent No. 2 by refusing to join the arbitration proceedings at the final stage of hearing.
22. In so far as the objection of registration of award is concerned, the award itself must create a right or interest in the immovable property for it to require registration. It has to be kept in mind that the devolution of the estate occurred by reason of the Will of late Smt. Raj Rani Sahni and there is no partition of immovable properties of the firm. As far as the business assets are concerned, the award recognised that two interim orders had already been passed with the consent of the parties and made rule of the Court in the year 1990 and thus could not be set aside now in the proceedings where the final award has been rendered. There were various immovable properties which were dealt with by the interim award of 5.4.1990. Bids were given and the highest bidder got the property. The amounts against the bids were utilised to settle/adjust the accounts. Respondent No. 2 was also the successful bidder for some of the properties and the interim award was passed by consent of the parties. Respondent No. 2 and HS agreed not to be partners in the new contracts taken after 1.4.1985. The contract at Kondli Gharoli was claimed by HS to be awarded after cut-off date of 1.4.1985. The arbitrator has recorded a finding that the tender for this work was filed by HS alone; the funds were arranged by him; and the work was supervised by him alone. It was in these circumstances that a factual finding has been arrived at that the said contract was not of the firm.
23. In the end, it may be noted that the learned Counsel for the petitioner, even at that stage, in order to arrive at an amicable settlement, had made certain offers and learned counsel for the respondent had taken time to obtain instructions specially since Ms. Shashi Sahni had been appointed as the guardian ad litem of respondent No. 2 in terms of the order dated 2.12.2004. However, learned Counsel for the respondent informed after obtaining instructions that no settlement was possible and thus there was no option but to consider this matter on merits.
24. The objections are accordingly dismissed as without any merit and the application stands disposed of.
CS(OS) 254/1994
In view of the objections being dismissed and there being no legal impediment, the award dated 23.12.1993 of late Justice Charanjit Talwar (Retd.) as the sole arbitrator, is made rule of the Court leaving the parties to bear their own costs. Decree sheet be drawn up accordingly.