Section 106 the Kerala Land Reforms Act?
3) When did the defendant came into possession of the
plaint schedule ?
4) Is the defendant liable to pay any amount to the
plaintiff as arrears of licence fee ? If so, what is the
amount or is the defendant defaulted in payment of
lease premium ?
5) Can the mandatory injunction prayed for be
allowed ?
6) Reliefs and costs?
Additional Issues
7) Whether issue NO.2 is to be referred to the Land
Tribunal concerned under Section 125(3) of the KLR
Act ?
8) Whether the defendant is entitled to the benefit of
Section 60(b) of Easement Act ?
RFA. N0. 90/06
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6. At trial, the oral evidence consisted of the
testimony of plaintiff as PW1 and that of the defendant as
DW1 and that of a witness - a surveyor as DW2. The
documentary evidence on the side of the plaintiffs consisted
of Exts.A1 to A12. Ext.A1 is copy of the settlement deed
executed by late Bhaskara Pillai in favour of his children.
Ext.A2 is the settlement deed executed by Nagarajan Pillai
in favour of his brother, the second plaintiff. Ext.A3 series
are basic tax receipts in favour of plaintiffs 1 and 2. Ext.A4
is produced as a deed of licence executed by the defendant
in favour of Bhaskara Pillai. Strong exception is taken by
the defendant to Ext.A4 which according to him is a
fraudulent document not executed by him. Ext.A5 is copy of
the notice dated 3-2-1994 terminating the licence. Ext.A6 is
the reply notice dated 11-02-1994. Ext.A7 is the copy of
the plaint in O.S.No.1181/1978 which was a suit filed by the
defendant praying that injunction be issued against the
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plaintiff from creating obstruction in the matter of
conducting timber business. Ext.A8 is the copy of the
judgment in O.S.No. 1181/78. Ext.A9 is copy of the decree
in O.S.No. 1181/78. Ext.A10 is the certificate issued by the
Ulloor Panchayath. Ext.A11 is copy of the plaint in O.S.No.
1099/94 of the Munsiff Court, Thiruvananthapuram, a suit
filed by the defendant, but later dismissed as withdrawn.
Ext.A12 is copy of the written statement in O.S.No.
1181/78. Ext.B1 is the lawyer notice dated 21-04-1980 by
which late Bhaskara Pillai terminated the licence and
demanded vacant possession of the suit schedule property.
Ext.B2 is copy of the affidavit filed by the defendant along
with the petition to pass an order for returning Exts. A1 to
A7 submitted before the court in O.S. No. 1181/78. Ext.B3
(a) is the plan prepared by DW3. Ext.B4 is also a plan
showing the office building of the defendant. Ext.B5 is a
notice which is seen issued as a reply to Ext.B1 notice. In
RFA. N0. 90/06
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Ext.B4 it is contended that the defendant is not liable to be
evicted and that the defendant is in possession of the
property prior to 2-6-1967 as a lessee. Ext.B5 is copy of
the Mahazar prepared in O.S. No. 1181/81. Ext.B6 series
would go to show that the defendant was paying rent since
20-6-1967. Sketch of the property is also attached to
Ext.B6 file. Ext.C1 is the report filed by the Advocate
Commissioner Sri.S.N. Sarma.
7. The learned Subordinate Judge considered issue
No.3 first. It was found that the said issue is virtually
answered finally in Ext.A8 judgment in O.S.No. 1181/78. It
was noticed that Ext.A4 lease deed relied on by the plaintiff
to prove that the licence commenced on 30-09-1967 had
been rejected in Ext.A8 suit and relying on the receipt which
had been marked in Ext.A8 suit as Ext.A5, the learned
Subordinate Judge would answer the issue finding that the
defendant came into occupation of the property on 10-2-66.
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8. Issue Nos. 1, 2 and 7 were considered together by
the learned Subordinate Judge. On making a thorough
analysis of the evidence - oral, documentary and
circumstantial in the light of certain judicial precedents
which were cited before him, the learned Subordinate Judge
held that the defendant failed to establish his claim as
lessee and hence he is not entitled to the protection of
Section 106 of the KLR Act. Issue Nos. 1 and 7 were
answered against the defendant and it was found that he is
only a licensee upon the plaint schedule property and that
there is no necessity to refer Issue No. 2 to the Land
Tribunal concerned under Section 125(3) of the KLR Act.
Additional issue No. 8 regarding the eligibility of the
defendant to the benefit of Section 60(b) of the Easements
Act was answered next by the learned Subordinate Judge.
This issue was also answered against the defendant by the
learned Subordinate Judge after considering the ratio of
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various judicial precedents cited before by the counsel and
in the light of the evidence in the case. Issue No.4
regarding the plaintiff's entitlement for a decree for arrears
of licence fee was answered against the plaintiff since it was
found that the amount was deposited pursuant to the
judgment of the Supreme Court. It was issue No. 5
regarding limitation which was answered by the learned Sub
Judge last. It was noticed by the learned Subordinate Judge
that the contention that the suit is barred by limitation does
not have any foundation in the written statement.
Nevertheless, the above contention was also considered on
its merits and found against the defendant.
9. Very extensive submissions were addressed
before me by Sri.S.V.Balakrishna Iyer, learned senior
counsel for the appellant and by Sri.C.Unnikrishnan learned
counsel for the respondents. With reference to the question
whether the defendant is a lessee of the land forming
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subject matter of the plaint schedule property,
Sri.Balakrishna Iyer, learned senior counsel submitted that
Ext.A4 is the document on which the plaintiff placed much
reliance. According to him, the very nature of the document
" " (counter part of lease) is indicative of the
real relationship between the parties to the document. He
submitted that the document shows that a right in
immovable property has been created. He pointed out that
the document recites that the defendant will have a right to
put up saw mill. The document also says that it was for the
said purpose that the property was put in possession of the
defendant on 2-6-1967 on a monthly rent of Rs. 125/-. The
document says that pursuant to the entrustment,
possession was taken and sheds were put up. Document
also recites that the same is being executed since Bhaskara
Pillai, the lessor, wanted documentary evidence regarding
the entrustment and its terms. Document also recites about
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the security deposit and clearly mentions that monthly rent
will be payable at the rate of 105/- after setting off interest
calculated at the rate of 12% on the amount under deposit.
Sri.Balakrishna Iyer, learned senior counsel, submitted that
though the genuineness of Ext.A4 document is strongly
disputed by the defendant who contends that he has not
subscribed his signature to the same, the terms of the
transaction between the parties is substantially as reflected
in the document itself. According to him, the most serious
contention of the defendant regarding Ext.A4 is that
contrary to the date 02-06-1967 mentioned in the
document, the transactions started really on 10-02-1966
and that a later date was mentioned in Ext.A4 with the sole
purpose of defeating the defendant's eligibility for the
benefit of Section 106 of the KLR Act. The crucial date in
the context of Section 106, learned counsel pointed out is
20-5-1967 and this explains why a subsequent date is
RFA. N0. 90/06
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mentioned in Ext.A4. Sri.Balakrishna Iyer submitted that
the defendant had been consistently contending that a lease
of the land was given to him on 10-02-1966. Ext.A7 plaint
in O.S.No.1181/78 and Ext.A8 and A9 judgment and decree
in that suit was referred to by the learned senior counsel.
Sri.Balakrishna Iyer, learned senior counsel, submitted that
apart from specifically pleading that he is a lessee of the
land since 10-02-1966 he had also relied on the receipt
dated 10-02-1966 to support the contention that his
possession commenced on that date. Learned senior
counsel highlighted that in Ext.A12 written statement filed
in that suit, the plea of the plaintiff that the property was
leased out to the plaintiff on 10-02-1966 was not denied.
Learned counsel would read over to me paragraph 3 of
Ext.A12 written statement. Learned senior counsel
submitted that though the frame of O.S.No. 1181/78 which
was as a suit for injunction and adjudication of rights
RFA. N0. 90/06
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claimed by the present defendants under Section 106 of the
KLR Act did not arise, the plaintiff herein being conscious of
the right claimed by the defendant herein had denied the
execution of receipt dated 10-02-1966 which was made
mention of in paragraph 5 of Ext.A7 plaint and had also
contended that the date of the lease is incorrect. It was
asserted that the "lease" executed on 2-6-1967 and the
document which is produced as Ext.A4 in this case was
produced as Ext.B2 in Ext.A7 suit. According to the learned
counsel, the finding in Ext.A7 suit that Ext.A4 is not a
genuine document has been rightly accepted by the learned
Sub Judge in the impugned judgment.
10. The learned senior counsel submitted that the
contention of the present plaintiff in Ext.A12 written
statement regarding receipt dated 10-2-1966 issued by
Bhaskara Pillai was only a vague one, including the
contention that the original is not produced and it is only a
RFA. N0. 90/06
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photocopy which is produced. Learned senior counsel
submitted that it is an undeniable fact that the receipt dated
10-2-1966 was produced and marked as Ext.A5. The
document must have been marked through PW1 in that suit
who is the present defendant. Sri.Bhaskara Pillai, the father
of the plaintiffs himself was examined as DW1 in that suit
and according to him, a reading of Ext.A8 judgment will
show that no objection was raised at the time of hearing
regarding the admissibility or evidentiary value of the
document which was marked as Ext.A5. Ext.B2 application
submitted by the present defendant for getting back the
documents produced in O.S.No. 1181/1978 including Ext.A5
without success is also relied on by the learned senior
counsel to submit that original of Ext.A5 was before the
court which delivered Ext.A8 judgment. According to the
learned senior counsel, the present plaintiffs cannot contend
that what was marked as Ext.A5 in O.S.No.1181/1978 was a
RFA. N0. 90/06
-17-
photocopy or that even assuming that it was a photocopy
which was marked as secondary evidence, the same could
not have been relied on in that suit. Objections as to the
admissibility of a document according to the learned counsel
are to be raised at the appropriate stage and if objections
are not raised, such objections will be taken to have been
waived. For this proposition, the learned counsel relied on
the judgment of this court in Anandan Nambiar v.
Rajalakshmi ( 1988 (1) KLT 536) and that of the Supreme
Court in R.V.E. Venkitachala Gounder v. Arulmigu
Visweswaraswami & V.P.Temple and another ( 2003(8)
S.C.C. 752) and also in Dayamathi Bai v. K.M.Shaffi ( AIR
2004 S.C. 4082). The said receipt dated 10-02-1966 is
part of the record in the present suit as oral evidence of
PW1 and according to the learned senior counsel, objections
raised regarding its admissibility is to be overruled and the
same is to be treated as part of the record. The
RFA. N0. 90/06
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admissibility of the receipt dated 10-02-1966 will have
to be decided by this court and the court below merely says
that the document is not before the court, so submitted
learned senior counsel. Learned senior counsel requested
that the agreement dated 10-02-1966 may be relied on and
it may be held that the jural relationship between the
parties is that of lessor and lessee. Learned senior counsel
submitted that having come to the court seeking reliefs
relying on Ext.A4 the plaintiff cannot disown the evidentiary
value of Ext.A4. Even going by the terms of Ext.A4 grant of
an interest in immovable property is spelt out. Learned
senior counsel submitted that it is found in Ext.A8 judgment
that the defendant is in possession and enjoyment of the
property as a lessee though it is also found that the said
interest of the defendant does not take within its fold the
right to pluck nuts from the coconut trees.
11. The learned senior counsel submitted that a
RFA. N0. 90/06
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reading of Ext.A12 written statement and Ext.A8 judgment
in O.S.1181 of 1978 will show that the plaintiffs and their
predecessors had no case that the present defendant was
holding the property as a licensee. He submitted that a
case of licence is put forward for the first time only after
Ext.P8 judgment and through Ext.B1 notice. To Ext.B1,
Ext.B4 reply was given reiterating that the defendant is a
lessee of the land entitled to protection of section 106 of the
Kerala Land Reforms Act. Counsel argued that a reading of
Ext.A4 will show that the intention of the parties was to
create an interest in land in favour of the present defendant
for the purpose of conduct of his trade. Referring to the
judgment of the Supreme Court in Associated Hotels of
India v. R.N.Kapoor, AIR 1959 SC 1262 and the judgment of
this Court in Chandy Varghese v. Abdul Khader, (2003)3
KLT 553), the learned senior counsel submitted that the
intention of the parties as gatherable from the documentary
RFA. N0. 90/06
-20-
evidence including Ext.A4was to create an interest in
immovable property. According to him the clause inExt.A4
that on termination of the rental arrangement, the present
defendant will remove the constructions will not detract
from the grant of an interest. That clause is only by way of
abundant caution and recognizes the right of the lessee
under section 108(h) and his liability under section 108(m)
of the T.P. Act. This clause helps the lessor only to the
extent of exonerating him from the liability to pay any
compensation to the lessee in the event of termination of
the lease for the improvements effected by the lessee.
Referring to Ext.Ext.B6 series the learned counsel submitted
that these documents will strongly indicate that the
defendant was paying rent. B6(e) receipt dated 2-7-1967,
according to him, probabilises that an amount of Rs.1000-
out the deposit of Rs.2000/- had been paid in the first
instance. Ext.A4 would have been concocted by the
RFA. N0. 90/06
-21-
plaintiffs being quite oblivious of Ext.B6(e) receipt dated 2-
6-1967 for Rs.150/-. This rent receipts at any rate, the
learned counsel submitted, will prove that the defendant is a
lessee of the land. Referring to the judgment of this Court
in Abdul Rahiman v. Iype, 1965 KLT 247 and of the
Supreme Court in Chandy Varghese v. Abdul Khader, (2003)
3 KLT 553) and the judgment of this Court in Kochunni v.
Kuriakose, (1981KLT 338) Mr.Balakrishna Iyer submitted
that the defendant is a protected lessee under section 106
of the KLR Act. For this argument, the learned senior
counsel relied on Ext.A4 document. According to him, since
the plaintiff is relying on Ext.A4 it cannot be disputed that
as on the date of Ext.A4 there had been construction of
shed or sheds on the land. The time of construction of the
sheds could have been any day between 2-6-1967 and 30-
9-1967. Ext.A10 certificate issued by the local authority
cannot be pressed into service to argue that the sheds could
RFA. N0. 90/06
-22-
have been constructed only after 5-10-1968, the date of
alleged remittance of fee for issue of permit to put up shed.
Counsel pointed out that Ext.A4 dated 2-6-2007 is only 13
days from the appointed day - 20-5-1967, the relevancy of
the amendment to Ext.A12 written statement, the
emergence of Ext.A4 document contemporaneously with the
said amendment, failure to prove due execution of Ext.A4
(both in the previous suit O.S. No.1181 of 1978 and in the
present suit) marking of the agreement receipt dated 10-12-
1966 as Ext.A5 in O.S. No. 1181 of 1978 and its proof in
O.S. No.1181 of 1978 become all the more important.
Ext.B6(e) receipt dated 2-7-1967 evidencing payment of
Rs.115/- as rent for the month of June 1967 also would very
much probabilise that out of the rent of Rs.112/- per month,
Rs.10/- alone was deducted for the month of June 1967.
This in turn probabilises that the defendant was inducted
into possession on 10-2-1966 after receiving Rs.1000/- as
RFA. N0. 90/06
-23-
deposit under the agreement dated 10-2-1966. According
to the learned senior counsel in the light of all these
evidence very little evidence alone is required to find that
the construction of the shed was prior to 20-5-1967. The
period from 10-2-1966 to 20-5-1967 is a long period of 15
months and it cannot be easily accepted that during that
long period of 15 months a lessee did not put up any
structure or shed at least to protect himself, his manual
labourers and overseers and customers from the vicissitudes
of climatic conditions. The oral evidence of the defendant
in this context was quite convincing and according to the
learned counsel the evidence in this case including
circumstantial evidence is sufficient to hold that the
defendant is entitled to the protection of section 106 of the
KLR Act. The legislative objectives of the provisions
contained in Section 106 of the KLR Act is to protect the
lessees who had come into possession prior to 20-5-1967
RFA. N0. 90/06
-24-
should not be lost sight of by this court, submitted
Mr.Balakrishna Iyer. Receipt dated 10-2-1966 marked as
Ext.A5 stands proved. Thus lease of land prior to 29-5-1967
stands proved. Having regard to the nature of the purpose
for which the lease was granted, common course of natural
events and human conduct and the recital in Ext.A4
regarding construction of the shed, the construction should
have been immediately after 10-2-1966 and at any rate,
much prior to 20-5-1967. Counsel argued that a
presumption under section 114 of the Evidence Act can be
drawn in favour of the defendant. According to the learned
counsel, in as much as section 106 is intended to uplift the
weaker sections of the society who have expended money
and constructed buildings for commercial or industrial
purpose and to promote commerce and industry, the court
may lean in favour of protecting their interests if two views
are possible on proven facts. According to the learned senior
RFA. N0. 90/06
-25-
counsel, there is every justification for holding that the
defendant is entitled to the protection of section 106 of the
KLR Act.
12. Alternatively the learned senior counsel argued that
even assuming that the defendant is not a protected lessee
he will not be liable to be evicted without a proper notice
under section 106 of the T.P. Act. According to him, in the
light of the provisions contained in section 106 of the T.P.
Act, the lease which was for commercial or industrial
purpose, could have been terminated only with 6 months'
notice. Ext.B1 does not amount to termination of lease
since B1 purports to terminate only the licence. Ext.A5
notice dated 3-2-1994 also purports to terminate the
transaction (calling it 'licence') with effect from 2-3-1994.
Even A5 cannot have the effect of terminating the lease.
My attention was drawn by the learned senior counsel to
Section 106 as amended by the T.P. Amendment Act (3 of
RFA. N0. 90/06
-26-
2003). Senior counsel referred also to Section 3 of the
Transfer of Property (Amendment) Act 2002 dealing with
transitory provision. According to the learned senior
counsel it is the amended provision of section 106 which
applies to the present suit. The amended provision came
into effect on 30-12-2002 and it was argued that by virtue
of the transitory provision contained in section 3 (a) that the
notice is bad under the amended section 106(1) since the
notice does not give 6 months' notice and the suit is not
filed beyond the period of 6 months from the date of notice.
Counsel submitted that the fact that arrears of rent was
deposited in court and withdrawn will not amount to an
assent to the continuance of the lessee after termination of
the lease so as to call the defendant a lessee by holding
over as contemplated by section 116 of the T.P. Act.
According to him, there was no determination of the lease
as indicated in section 116 and determination has to be by
RFA. N0. 90/06
-27-
one or more of the modes contemplated by section 111 of
the T.P. Act. Lease continues despite Ext.A5 notice which is
an incompetent notice. Mr. Balakrishna Iyer relied on the
judgment of the Supreme Court in Bhawanji v. Himatlal (AIR
1972 SC 819), in Kewal Chand Mimani v. S.K.Sen and
others (2001) 6 SCC 512) and in Shanti Prasad Devi v.
Shankar Mahto (AIR 2005 SC 2905).
13. Learned counsel then argued that even assuming
that the defendant is not a lessee at all, but a licensee as
contended by the plaintiff, the suit for mandatory injunction
is not maintainable and is barred by the law of limitation.
The learned senior counsel referred to the judgment of the
Supreme Court in Sant Lal Jain v. Avtar Singh (AIR 1985
SC 857) and submitted that suits will not be dismissed for
the technical reason of the manner in which the relief is
couched and court fee paid, if the suit is filed with
promptitude without any unreasonable delay. Referring to
RFA. N0. 90/06
-28-
the judgment of the Supreme Court in Joseph Severance v.
Benny Mathew, (2005(4) KLT 290) the learned senior
counsel submitted that suit on title and suit for mandatory
injunction are governed for the purpose of limitation by
Articles 65 and 113 respectively of the Limitation Act and
that if the suit is for mandatory injunction the licensor has
to file the suit with promptitude failing which the suit will be
dismissed as not maintainable. Mr. Balakrishna Iyer relied
also on the judgments of this court in Rajappan v.
Veerraghava Iyer, (1969 KLT 811), in Aspinwall & Co. Ltd.
v. Soudamini Amma, (1974 KLT 681) and in George v. John
(1984 KLT 179) for this proposition. According to him, in a
given case for mandatory injunction the suit filed within the
outer time limit of 3 years the court can justifiably dismiss
the suit as not maintainable if it is seen that the plaintiff did
not approach the court with promptitude. The learned
Counsel relied on the judgment of a learned single Judge in
RFA. N0. 90/06
-29-
Paramu v. Balan (2001(3) KLT 803) in this connection. The
counsel submitted that B1 is dated 21-4-1980. According to
the counsel, there is admission of PW-1 that his father
demanded back possession in 1978. The suit is filed only on
30-3-1984. The cause of action for the suit in any event
had occurred when B1 was sent. Through B4 the alleged
status as licensee was repudiated. Senior counsel pointed
out that the present plaintiffs cannot feign ignorance
regarding the nature of contentions raised by the
defendants, since they were eo nomine parties in O.S.
No.1185 which led to A8 and A9 judgment and decree. A
suit for mandatory injunction filed in 1994 against the
defendant who to the knowledge of the plaintiff had
asserted possession in 1978 cannot be maintainable. The
learned senior counsel submitted that in any event the suit
for mandatory injunction is time barred. Right to sue
accrues when there is occurrence of the right asserted in the
RFA. N0. 90/06
-30-
suit and unequivocal threat by the other party to infringe
the same. Cause of action arises only once and by sending
repeated notices the plaintiffs cannot postpone the
occurrence of the cause of action. For this proposition
Mr.Balakrishna Iyer relied on various authorities including
the judgment of the Privy Council in MT. Bolo v. Mt. Koklan
& others, (AIR 1930 P.C. 270), in Annamalai Chettiar v.
Muthukaruppan, (AIR 1931 P.C. 9) the judgment of the
Supreme Court in Gannon Dunkerley & Co. v. Union of
India (AIR 1970 SC 1433) and in Mohammed Yunus v. Syed
Unnissa (AIR 1961 SC 808) and the judgment of this Court
in Premier Cable Co. Ltd. v. Govt.of Inida, 1990(2) KLT
477. Counsel submitted that while interpreting the law
relating to limitation, equitable considerations are out of
place and for this proposition strong reliance was placed by
the learned counsel on the judgment of the Supreme Court
in P.K.Ramamchandran v. State of Kerala (1997)7 SCC 556.
RFA. N0. 90/06
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Counsel submitted that issue No.5 takes in the plea of
limitation and on true facts question of limitation can be
gone into by this court. The suit instituted for mandatory
injunction based on the plaintiffs' plea that the defendant
was a licensee is liable to be held as not maintainable and is
also barred by limitation.
14. Mr. Balakrishna Iyer would lastly argued that if at
all the earlier contentions failed and it is found that the
defendant is a mere licensee, then it has to be found that he
is entitled to the benefit of section 60(b) of the Indian
Easements Act. He submitted that paragraph 9A to the
written statement is added by way of amendment, as
permitted by the Supreme Court. On the plea of the
plaintiffs the defendant is entitled to succeed, since
admittedly acting on the transaction evidenced by Ext.A4
which according to the plaintiff is the transaction of a
licence, the defendant had put up constructions. These
RFA. N0. 90/06
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constructions, according to the defendant, are permanent in
nature. The learned senior counsel submitted that the
question whether the transaction is lease or a licence or
whether a person is lessee or licensee is not aways easy to
decide. According to him, denial or grant of benefit under
section 60(b) of the Easements Act cannot therefore rest on
the mental element of the person making the permanent
constructions. He referred to the judgment of the Supreme
Court in Sankar v. Gangabai (1976 SC 2506) and submitted
that the Supreme Court would uphold the alternative plea of
section 60(b) raised before that court for the first time, after
the appellant therein got worsted in the other pleas taken
up before the courts below. It is the conduct of the licensor
which has been given emphasis by the Supreme Court
rather than the mental element of the person putting up the
constructions, according to Mr.Balakrishna Iyer and in this
regard he relied on the judgment of the Supreme Court in
RFA. N0. 90/06
-33-
Ram Sarup Gupta v. Bishun Narain Inter College, (1987)2
SCC 555). The person who put up the construction may or
may not believe himself to be the licensee. That is beside
the point. According to him, in the light of the judgment of
the Supreme Court in Ram Sarup Gupta's case, the one
proposition laid down in AIR 1976 SC 2506 followed by this
court in Geetha Varma v. Amminikutty, (1995(1) KLT 525 is
not good law and need not be followed. Counsel submitted
that a mere statement in Ext.A4 that the licensee will
remove the constructions at the time of vacating the land
will not amount to contract to the contrary for the purpose
of section 60(b). Contract to the contrary envisaged is that
there must be recital in the deed of licence to the effect that
if acting on the licence, constructions are put up, the same
will not result in the licence being rendered as irrevocable.
According to Mr.Balakrishna Iyer, the structures in question
as evident from the commission reports are structures of a
RFA. N0. 90/06
-34-
permanent nature. In this regard the learned senior counsel
relied on the judgment in Thakur Prasad v. Thomkinson,
(AIR 1927 Oudh 206) wherein a building of mud walls and
thatched roof was held to be of permanent nature, entitling
protection under section 60(b) of the Easements Act. Mr.
Balakrishna Iyer concluded by submitting that failing of the
other contentions it has to be found that the appellant is
entitled for the protection of section 60(b) of the Easements
Act.
15. Sri Unnikrishnan, learned counsel for the
respondent would oppose all the submissions of Sri
S.V.Balakrishna Iyer. He would support the judgments of
the learned Subordinate Judge not only by the reasons
stated in that judgment, but also on various other reasons
on the basis of several judicial precedents which were cited
by him. According to him the first question to be decided in
the case was whether the transaction between the parties
RFA. N0. 90/06
-35-
was a lease or a licence. According to Mr. Unnikrishnan it
had to be answered that the transaction is a licence only.
Learned counsel submitted that in Ext.A8 judgment it had
been conclusively and categorically found that the defendant
is not in possession and enjoyment of the property.
Possession and enjoyment of the property was an essential
pre-requisite for the creation of lease, referring to sec.105
of the T.P. Act it was argued by the learned counsel.
Counsel referred to certain passages of the cross-
examination of PW.1 and submitted that there was clear and
categorical admission by the defendant himself that it is the
plaintiffs who are in enjoyment of the property in respect of
the usufructus, even after the defendant came to occupy the
property for carrying on timber business. Counsel relied on
the judgment of this Court in Paranchu Ouseph v. Pakku
Kunjathu - 1951 KLT 44 (DB) and submitted that
"possession" as used in the TP Act is distinct from
RFA. N0. 90/06
-36-
"enjoyment" and does not necessarily take in "enjoyment".
Counsel submitted that in leases, usufructus i.e. fruits of the
fruit bearing trees belong to the lessee and not to the
lessor. Mr. Unnikrishnan relied on the judgment of the
Supreme Court in Associated Hotels India Ltd. v. R.M.
Kapoor and it was submitted on the basis of paragraph 27 of
the said judgment that if a documents gives only a right to
use the property in a particular way or under certain terms
while it remains in possession and control of the owner
thereof, the arrangement will be only a licence. Counsel
submitted that there is clear distinction between the concept
of licence and lease. The dividing line according to him is
clear that though he submitted that sometimes it becomes
very thin or even blurred. Counsel referred to the judgment
of Lord Denning in Errington v. Errington (1952 - 1 ALL.
E.R. 149) in this context. Learned counsel relied also on
the judgment of this Court in Qudrat Ullah v. Muncipal
RFA. N0. 90/06
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Board, Bareli - 1974 (1) SCC 202, the judgment of this
Court in Parameswaran Pillai v. Gopinathan Nair - 1975 KLT
64, the judgment in Ulahannan v. George - 1988 (1) KLT
335, the judgment of the Supreme Court in Corporation of
Calicut v. K. Sreenivasan - 2002 (5) SCC 361 and in
C.M.Beena and another v. P.N.Ramachandra Rao - 2004 (3)
SCC 595 to argue that unless there is exclusive possession
of the property by the defendant coupled with a right to
enjoy the property, there will not be any lease of the
property in favour of the defendant. Ext.A8 has become
final and binding on the parties. Mr. Unnikrishnan referred
to sec.107 of the TP Act which mandates that lease of
immovable property from year to year or for any term
exceeding one year or reserving an early rent can be made
only by a registered instrument. Counsel pointed out that
Exts.A4 and B2 which are documents produced by the
parties are not both registered documents or documents
RFA. N0. 90/06
-38-
executed by both parties together. According to the
learned counsel it is therefore clear that no lease is created
from year to year or for a period exceeding one year or in
perpetuity.
16. The relationship between the parties is only that of
a licensor and a licensee. Learned counsel would then dealt
with the question whether the appellant is entitled to the
benefit of sec.106 of the KLR Act. According to the learned
counsel this question will arise seriously for consideration
only if this court finds that the relationship between the
parties is that of a lessor and a lessee. According to him
even if this court finds that the arrangement between the
parties is a lease, then also the appellant will not be entitled
for the benefit of sec.106 of the KLR Act. He submitted
that in order that a party gets the protection of sec.106,
both the lease of the land and the construction of building
must have been prior to 20.5.1967. Learned counsel
RFA. N0. 90/06
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submitted that the appellant has not specifically contended
in his written statement or in Ext.A6 reply notice, in Ext.A7
plaint in OS 1181/1978, in Ext.A11 plaint in OS 2905/1992
or in Ext.B4 reply notice as to the actual date of
construction of the building. According to the counsel
Ext.A10 certificate dated 3.12.1979 issued by the Panchayat
clearly proves that the Panchayat has issued licence for the
stocking and selling of timber on 20.2.1968, for erecting
machinery on 14.2.1968 and for shed No.UP 4/86 dated
5.10.1968, If Ext.A4 is accepted, it will have to be found
that the construction of the shed is after 2.6.1967, if Ext.A4
is rejected, the only available documentary evidence is
Ext.A10. As regards Ext.B2 dated 10.2.1966, learned
counsel argued that Ext.B2 is a concocted document. The
plaintiff had taken the very same contention in OS
1181/1978. Counsel referred to Ext.A12 written statement
in OS 1181/1978. Counsel submitted that in Ext.A8
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judgment it was held that Ext.A5 therein (Ext.B2) does not
in any way advance the case of the plaintiff. According to
the learned counsel the conclusion in the impugned
judgment that the defendant came into possession of the
property on 10.2.1966 is wrong. Counsel pointed out that
to arrive at that conclusion the learned Subordinate Judge
has observed that in Ext.A8 judgment the Munsiff's Court
had discussed the issue of possession of the property and it
was found that as on 10.2.1966 the defendant was in
possession of the property. Reading over to me Ext.A8, Mr.
Unnikrishnan argued that no issue had been raised in Ext.A8
as regards the date of the entry of the defendant to the
property and counsel would assail the finding of the learned
Subordinate Judge invoking the provisions of Rule 33 of
Order 41 CPC. Mr. Unnikrishnan submitted that Ext.A4 was
a genuine document and pointed out that even the appellant
is relying on Ext.A4 to a considerable extent. It is not
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correct to say that the lower court has found Ext.A4 to be a
bogus document. Ext.A4 was not taken into consideration
for the reason that the same was not proved in OS
1181/1978. According to the learned counsel, the other
documents in the case and the oral evidence will show that
the appellant came into possession only on 2.6.1967. The
earliest rent receipt produced is receipt for the month of
June,1967. According to Mr. Unnikrishnan from that
document it can be easily concluded that on 2.6.1967 the
defendant came into possession of the property for timber
business and on completion of one month exactly,
defendant/appellant paid the rent on 2.7.1967 and obtained
the receipt.
17. Coming to the question whether the
defendant/appellant is entitled to the benefit of sec.60B of
the Easements Act, learned counsel placed strong reliance
on the judgment of a Division Bench of this Court in Geetha
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Varma v. Amminikutty - 1995 (1) KLT 525. Counsel
submitted that all through the litigation the defendant
maintained that he is a lessee. Therefore it is abundantly
clear that constructions of permanent or temporary nature
were put up by him on the plaint schedule land with the
state of mind of a lessee and not that of a licensee.
According to him Ext.A4 contains a contract to the contrary
as envisaged by sec.60(b) and even in Ext.A8 judgment it is
stated that PW1 has admitted the terms and conditions
incorporated in Ext.B2 (Ext.A4) though Ext.A4 has not been
relied on by the learned Sub Judge in this case for the
reason that Ext.A4 has not been proved. The learned
counsel relied on the statement of the defendant in cross-
examination that there was a contract between the parties
to surrender the premises.
18. Mr. Unnikrishnan would then answer the argument
of Mr. Balakrishna Iyer that the suit is barred by limitation.
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According to the learned counsel there is no plea in the
written statement that a suit for mandatory injunction is
barred by limitation. Relying on the judgment of this court
in Musaliarakath Abdulla v. Abdul Azeea Naha - 2006(2)
KLT 228, Mr. Unnikrishnan submitted that the question of
limitation is a pure question of law only if it arises out of
admitted facts. In the instant case where the suit is not
barred by limitation, going by plaint averments defendants
will have to deny the averments and plead that the suit is
barred by limitation. In support of his argument that the
question of limitation can be mixed question of fact and law,
Mr. Unnikrishnan relied on the judgment of the Supreme
Court in Narne Rama Murthy v. Ravulla Somasundaram -
2005 (6) SCC 614. According to Mr.Unnirkrishnan
permitting the appellant to take up a plea before this court
that the suit is barred by limitation will result in serious
prejudice to the respondent. Had such a plea been raised in
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the written statement, the plaintiff could have shown that
ignoring Ext.B1 issued by their father, the jural relationship
between the parties was allowed to continue till the issuance
of Ext.A5 notice. Counsel pointed out that even in Ext.A6
reply notice the defendant admitted the relationship
between the parties and offered to pay the rent. Counsel
relied on the judgment of this court in Eapen Panicker v.
Krishna Panicker - 1970 KLT 42 and also on the recent
judgment of the Supreme Court in P.T. Munichikkanna
Reddy and others v. Revamma and others - 2007(6) SCC 59
to argue that when two views are possible, court must lean
against limitation and that since right of property has been
recognized as a human right, courts around the world has
been taking unkind view towards statutes of limitation
overriding property rights.
19. Mr. Unnirkrishnan would lastly argue that the
present suit for mandatory injunction and not for recovery of
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possession is very much maintainable. According to him
contrary argument is raised for the first time in this appeal.
Counsel relied on the judgment of the Supreme Court in
Joseph Severance v. Benny Mathew - 2005 (4) KLT 290 and
that of the Supreme Court in Sant Lal Jain v. Avtar Singh -
AIR 1985 SC 857 and submitted that the relief is not to be
denied for the reason that the prayer in the plaint had not
been couched in proper words.
20. I have anxiously considered the rival submissions
addressed at the Bar in the light of the pleadings, evidence
and ratio emerging from the decisions cited by the counsel
on either sides. The first question to be considered is as to
what is the nature of the transaction between the parties in
respect of the suit schedule property, whether a lease or
licence? Lease of immovable property is denied as transfer
of a right to enjoy the property in consideration of a price
paid or promised to the transferor by the transferee who
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accepts the transfer on such terms (see section 105 of T.P.
Act). Ext.A8 judgment in O.S. 1181 of 1978 of the Munsiff's
Court, Thiruvananthapuram is a judgment inter partes. The
said judgment has become final. It is certainly held in that
judgment the possession of the property by the defendant is
limited to the user of the premises for doing his timber
business on a rental basis under Kumara Pillai (sic) who is in
enjoyment of the trees standing in the plaint schedule
property and the defendant has no right of enjoyment of
the plaint schedule property except to the extent of user of
the property for conduct of timber business. The appellant
in cross-examination as DW1 has deposed as follows:
(fees is being paid to Bhaskara Pillai. Bhaskara Pillai owns
one acre in total. I was permitted to stack timber in 50
RFA. N0. 90/06
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cents out of the same). Later at page 9 of the cross-
examination he would state as follows:
(I have stated that the land has been given tome for the
conduct of trade in timber and also to saw timber to slices.)
Again at page 5 of cross-examination DW1 would state as
follows:
( After Ext.A8 it is the plaintiffs who are taking usufructs. I
have never obstructed the same). Thus DW1 has admitted
without much ambiguity that the plaintiffs are in enjoyment
of the property in respect of usufructs- that it is the
plaintiffs who are taking income from the fruit bearing trees
which are standing on the property even after the defendant
came to occupy the property and that the defendant was not
in exclusive possession of the property. A Division Bench of
RFA. N0. 90/06
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this Court in Pranchu Ouseph v. Pakku Kunjathu (1951 KLT
44) has explained the term "enjoy" and its distinctions from
the word "possess". Their Lordships have held that "the
word "enjoy" is not used as the equivalent of "possess".
The connotation of the words "possession" as used in the
Act is distinct from "enjoyment" and does not necessarily
include enjoyment. Under a lease, the usufructs of the
property belong to the lessee. The transfer of a bare right of
possession without the right of collecting usufructs is not a
lease. The word "enjoy" seems to be used in the sense of
the beneficial occupation of property. There must be a
transfer of the exclusive right of possession of the leased
property in order to constitute a lease". The Supreme Court
in Associated Hotels of India Ltd. v. R.N.Kapoor (AIR 1959
SC 1262) coined the following propositions in the context of
the distinction between lease and licence:
1) To ascertain whether a document creates a license
RFA. N0. 90/06
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or lease, the substance of the document must be
preferred to the form.
2) The real test is the intention of the parties - whether
they intended to create a lease or license.
3) If the document creates an interest in the property,
it is a lease; but if it only permits another to make
use of the property, of which the legal position
continues with the owner, it is license.
4) If under the document the party get exclusive
possession of the property, prima facie, he is
considered to be a tenant, but circumstances may be
established which negative the intention to create a
lease.
It is clarified in paragraph 27 of the judgment that as per
section 52 of the Easements Act if a document gives only a
right to use the property in a particular way or under certain
terms while it remains in possession and control of the
RFA. N0. 90/06
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owner itself, the transaction will be a licence. The legal
possession therefore continues with the owner of the
property, but the licensee is permitted to make use of the
premises for a particular purpose. But for the permission,
his occupation would be unlawful. Such permission does not
create in favour of the permissee any estate or interest in
the property. Therefore there is clear distinction between
the two concepts.
21. As rightly argued by Mr.C. Unnikrishnan the
dividing line between the two concepts of lease and licence
is clear. But at times the line becomes very thin and even
gets blurred. On a survey of the decisions it would appear
that the prevailing trend of judicial opinion regarding the
distinction between lease and licence is reflected in
Errington v.Errington, (1942 - 1 ALL ER 149) wherein Lord
Denning on a review of the case law on the subject would
state as follows:
RFA. N0. 90/06
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"The result of all these cases is that, although a person
who is let into exclusive possession is "Primafacie", to
be considered to be tenant, nevertheless he will not be
held to be so if the circumstances negative any
intention to create a tenancy"
In Rajappan v. Veeraraghava (1969 KLT 811) Justice
Krishnamoorthy Iyer of this Court has held that "the primary
and important character of the lessee's right is his right to
possession and enjoyment of the demised land to the
exclusion of the lessor." The Hon'ble Supreme Court has
held in Qudrat Ullah v. Municipal Board, Bereli ( 1974 (1)
SCC 202 that there is no simple litmus test to distinguish a
lease as defined in Section 105 of Transfer of Property Act
from a license as defined in Section 52 of Easement Act, but
the character of the transaction turns on the operative
intend of the parties. To put it pithily, if an interest in
immovable property, entitling the transferors (sic) to
enjoyment, is created, it is a lease; if permission to use land
without right to exclusive possession is alone granted, a
RFA. N0. 90/06
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license is the legal result. Marginal variations to this broad
statement are possible. In the case of Parameswaran Pillai
v. Gopinathan Nair, (1975 KLT 64) decided by Justice
K.Bhaskaran, the facts are similar to the facts of the
present case. It was held therein that "no doubt, for the
purpose of carrying on the trade and for the effective
performance of the terms of the contract contained in
Ext.P3, it might have been certainly necessary for him to
enter the plaint schedule property and also to remain there
as long as his business remained there. Such possession, as
rightly pointed out by the counsel for the respondent, is in
the nature of custody, which has to be distinguished from
legal possession as understood in law. At any rate, it is not
possible to find out from Ext.P2 that any interest in
immovable property was passed from the plaintiff to the
defendant." Justice Varghese Kalliath, also had occasion to
notice the distinction between the lease and licence in
RFA. N0. 90/06
-53-
Ulahannan v. George (1988 (1) KLT 335). The learned
Judge held that "the primary and important character of the
lessees right is his right to possession and enjoyment of the
demised land to the exclusion of the lessor. The Supreme
Court in Corporation of Calicut v. K.Sreenivasan (2002) 5
SCC 361) held that "person having permission or authority
to occupy the property under certain terms without having
any right or interest in the property which remain with the
owner, is a licensee -though occupation of the licensee is
permissive but he acquires right to continue his occupation
unless the authority or license has expired or the same has
been determined or license revoked or licensee evicted."
The Supreme Court in C.M.Beena and another v.
P.N.Ramachandra Rao, (2004(3) SCC 595) held that user of
the terms like "lease" or "License", "lesser", or "licensor"
"rent" or "license fee" is not by itself decisive of the nature
of the right created by the document. An effort should be
RFA. N0. 90/06
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made to find out whether the deed confers a right to
possess exclusively coupled with transfer of a right to enjoy
the property or what has been parted with is merely a right
to use the property while possession is retained by the
owner. When the issue is considered in the light of the
above decisions there is not much difficulty to accept the
argument of Mr.Unnikrishnan that in the present case
exclusive possession of the property coupled with transfer of
a right to enjoy the property has not been transferred to the
defendant. The evidence on the contrary will reveal that the
plaintiffs are collecting usufructs of the property and they
alone have the right to enjoy the usufructs of the property.
Right to collect usufructs of the property and to enjoy the
usufructs presupposes necessary tilling of the land (so much
of the land as occupied by the fruit bearing trees standing
therein) and manuring. The evidence reveals that what the
defendant was given is only a permission to use the
RFA. N0. 90/06
-55-
remainder portions of the land for the purpose of carrying
on timber business.
22. It is true that the Munsiff's Court in Ext.A8
judgment has used the terms "Lessee" and "rent" in
different parts of Ext.P8, i.e. in page 3 paragraph 9 bottom
"Therefore, I hold that the plaintiff (defendant herein) is in
possession and occupation of the plaint schedule property
as a lessee on monthly rent for his timber business under
the first defendant, who is in enjoyment of the trees
standing in the property, and the plaintiffs has no right to
enjoyment of the plaint schedule property except the user of
the property for his timber business as a lessee under the
first defendant and the plaintiff cannot be held to be in
exclusive possession of the plaint schedule property and his
possession is limited to the user of the premises for doing
his timber business on a rental basis under the first
defendant." However, the learned Munsiff has clearly found
RFA. N0. 90/06
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that the exclusive possession of the property and right of
enjoyment of the property in full has not been transferred to
the defendant. The finding in Ext.A8 notwithstanding the
usage of the terms "lessee" and "rent" means only that
defendant is only a user of the property without exclusive
enjoyment of the property. In the light of the judgment of
the Supreme Court in C.M.Beena and another v.
P.N.Ramachandra Rao (2004(3) SCC 595 usage of the terms
"lessee" and "rent" are not by itself decisive of the nature of
the right created by the document. The case of the
defendant is that it is a very long lease or lease in
perpetuity or lease exceeding period of one year which was
given to him. In terms of section 107 of the T.P. Act and
section 47 of the Registration Act it is mandatory that leases
for a term exceeding one can be made only by means of a
registered instrument. It will not be possible to accept the
case of the defendant that being lessee of the land in
RFA. N0. 90/06
-57-
question which is supported only by Ext.B2 or Ext.A4, both
of which are not registered documents. Under the above
circumstances according to me, the conclusion is irresistible
on a consideration of the entire evidence available in this
case that the relationship between the parties is only that of
licensor and licensee continuing on the basis of the original
licence granted by late Bhaskara Pillai, father of the
plaintiffs.
23. The next question which arises is whether the
appellant is entitled to the protection of section 106 of the
Kerala Land Reforms Act. In the light of my finding that the
relationship between the parties is that of licensor and
licensee the above question does not seriously arise. Even
assuming that the arrangement between the parties is a
lease, then also it will be difficult to hold that the defendant
is entitled to the protection of immunity from eviction
conferred under section 106 of the KLR Act. The statutory
RFA. N0. 90/06
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mandates for obtaining the protection of section 106 is that
on land leased out for commercial or industrial purpose, the
lessee should have constructed buildings on or before 20-
5-1967. As rightly submitted by Mr.Unnikrishnan neither in
the written statement nor in Ext.A6 reply notice, in A7 plaint
in O.S.1181 of 1978, in A11 plaint in O.S. No. 2905 of 1992
or in Ext.B4 reply notice dated 15-5-1980 the defendant
does not state as to what was the actual date on which he
constructed the building. The submissions of
Mr.S.V.Balakrishna Iyer in the light of the finding in Ext.A8
that the lease was given on 10-2-1967 have some appeal
when the issue is explored in the realm of probabilities. But
there is Ext.A10 certificate relied on by the plaintiff. A10
dated 3-12-1979 is issued by the Ulloor Panchayath. A10
will show that the Panchayat has issued licence for stocking
and selling timber on plaint schedule premises on 20-2-
1968, for the erecting machinery on 14-2-1968 and for
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putting up shed No. UP. 4/86 on 5-10-1968. Ext.A4 deed
has not been relied on by the learned Subordinate Judge in
the impugned judgment mainly on the reason that steps
have not been taken in proving the signatures of the
defendant in Ext.A4 by the plaintiff. As already indicated
earlier, Sri.S.V.Balakrishna Iyer, the learned senior counsel
in his submissions did not disown Ext.A4 completely. In
fact he submitted that the terms of the real transaction
between the parties in respect of the plaint schedule
property were substantially as recorded in Ext.A4. He
assailed Ext.A4 only to the extent it mentions the date of
entry into the property by the defendant as 20-2-1967.
Such a date was deliberately incorporated so as to deprive
the defendant of the benefit of section 106 of the KLR Act,
according to Mr.Balakrishna Iyer. Having gone through
Ext.A4 and having compared the purported signatures of
Sri.Narayana Pillai in Ext.A4 with his admitted signatures in
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Ext.A7 and his own deposition before the Court and other
papers available in the records containing his admitted
signatures including his affidavit dated 4th March, 1957 and
having regard to the apparent situation that Mr.Narayana
Pillai's signature is a seasoned one, I am inclined to feel
that Sri.Narayana Pillai himself is the signatory to Ext.A4.
As rightly submitted by Mr.Balakrishna Iyer all the terms in
Ext.A4 which is written on stamp paper purchased in the
name of Sri.Narayana Pillai from a local vendor some three
weeks prior to the execution of Ext.A4 are favourable to
Sri.Narayana Pillai who is described therein as the lessee of
the land. The only question which arises for consideration is
whether there is any manipulation in the matter of
mentioning the date of entry as second June 1967? I am
not very much impressed by the submission of the learned
senior counsel Mr.Balakrishna Iyer that a date later than
20th May, 1967 was deliberately mentioned in Ext.A4 for
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-61-
evading section 106 KLR Act. Section 106 of the KLR Act
was substituted as it presently obtains by Act 35 of 1969
which came into effect on 17-12-1969. Prior to such
substitution section 106 read as follows:
"Notwithstanding anything contained in this Act, or in
any other law, or in any contract, or order or decree of
Court, where on any land leased for commercial or
industrial purpose, the lessee has constructed buildings
for such commercial or industrial purpose before the
18th December, 1957, he shall not be liable to be
evicted from such land, but shall be liable to pay rent
under the contract of tenancy. Such rent shall be liable
to be varied every twelve years on the motion of the
lessor or the lessee, in such manner as may be
prescribed."
There is absolutely no case for the defendant that he was in
possession of the land as lessee prior to 18th December 1957
or that the buildings were constructed before that date.
Even before this court, the case was only that the lease
commenced on 10-2-1966. Ext.A4 is dated 30th September,
1967 and it is long thereafter only on 17-12-1969 that
section 106 was substituted into the present form and the
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date 20th May 1967 attained significance. Thus going either
by Ext.A4 or by Ext.A10 the conclusion becomes irresistible
that the construction of the building was only subsequent to
20th may 1967. In the teeth of Exts.A4 and A10 the
argument of Mr.Balakrishna Iyer based on the apparent
finding in Ext.A8 and in the impugned judgment that the
defendant entered into the property on 10-2-1966 cannot
receive acceptance. The finding of the learned Subordinate
Judge that the lease was on 10-2-1966 was assailed
strongly by Mr.Unnikrishnan invoking Rule 22 of Order 41
CPC without filing any cross objections. The impugned
judgment will show that the learned Subordinate Judge has
found at paragraph 13 of his judgment that the learned
Munsiff in Ext.A8 has found that the defendant had come
into possession of the property on 10-2-1966. But on going
through Ext.A8, it is seen that the learned Munsiff has not
entered any finding as to when the plaintiff in A8 suit came
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into possession of the property. The date of commencement
of possession was never considered by the learned Munsiff
though it is true that the learned Munsiff found that rent
receipt dated 10-2-1966 had been issued by Bhaskara Pillai
in favour of Narayana Pillai, the defendant herein.
According to me, the crux question to be decided is whether
the defendant is a lessee and whether the buildings in
question were put up by him prior to 20-5-1967. Both hose
questions necessarily have to be answered against the
defendant. B6 series receipt are produced by the defendant.
These are receipts against remittance of payment of
monthly rent. Earliest one is dated 2-7-1967 and the same
is for the month of June 1967. From the above receipt and
from Ext.A4, the version of the plaintiff that the lease
commenced on 2-6-1967 appears to be more probable.
Whatever that be, there is no evidence to justify finding that
the buildings were constructed prior to 20-5-1967 and I
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-64-
therefore confirm the finding of the Subordinate Judge that
the appellant is not entitled for protection of section 106 of
the KLR Act.
24. The question which arises nest is whether the
appellant is entitled to the benefit of section 60(b) of the
Easements Act. It has been very clearly held by a Division
Bench of this Court in Geetha Varma v. Amminikutty, (1995
(1) KLT 525) that the meaning of the words "acting upon
licence" mean the state of mind of the licensee at the time
when he constructed the structures or building. In a case
where the licensee has considered himself to be a lessee or
mortgagee and has constructed the building or erected other
structures in the property, he would not be entitled to get
the benefit under section 60(b). The stand of the appellant
through out was that he is a lessee. Thus following the
judgment of the Division Bench in Geetha Varma's case it
will have to be found that the appellant is not entitled to the
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benefit of section 60(b). Section 60(b) is subject to contract
to the contrary. In view of my finding that Ext.A4 is in all
probabilities executed by the defendant and in view of the
submission of Mr.Balakrishna Iyer that Ext. A4 incorporates
the terms of the transaction between the parties in respect
of the suit property except the date of commencement of
the lease I am of the view that there is a contract to the
contrary incorporated in Ext.A4 that the defendant shall
remove the structures upon his vacating the premises. In
this context it will be noticed that in cross examination DW1
also stated that security amount was deposited to be paid
back at the time when the premises are vacated. For both
these reasons the appellant will not be entitled for the
benefit of section 60(b).
25. The question which now arises is whether the suit
is barred by limitation. The question of limitation in the
facts and circumstances of this case arises not as a pure
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-66-
question of law but as a mixed question of law and fact. The
question whether the suit is barred will have to be
adjudicated. In other words, for deciding whether the suit is
barred by limitation, the issue regarding the continuation of
the jural relationship of the parties ignoring Ext.B1 will have
to be enquired into and settled by the court. A Division
Bench of this Court in Musliarakath Abdulla v. Abdul Azeea
Naha (2006(2) KLT 228) held that the question of limitation
is a question of law only if it arises out of admitted facts. If
on the averments in the plaint, the suit is not barred by
limitation, the defendant will have to deny the averments
and plead that the suit is barred by limitation. In the
absence of such contentions, the averments in the plaint
regarding cause of action will have to be accepted. The
Supreme Court also in Rama Murthy v. Ravula
Somasundaram (2005) 6 SCC 614) held that in cases where
the question of limitation is a mixed question of fact and law
RFA. N0. 90/06
-67-
and the suit does not appear to be barred by limitation on
the face of it, then the facts necessary to prove limitation
must be pleaded, an issue raised and then proved. In the
instant case on the averment in the plaint the suit is not
barred by limitation. The defendant did not raise a
contention that the suit is barred and no issue was
therefore raised regarding limitation. I find force in the
submission of Mr.Unnikrishnan that serious prejudice will be
occasioned to the plaintiff if the defendant is permitted to
raise the issue of limitation now in the absence of pleading.
It will be noticed that the case of the plaintiff is that ignoring
Ext.B1 notice issued by Bhaskara Pillai the jural relationship
between the parties was allowed to continue till the issuance
of Ext.A5 notice dated 3-2-1994 based on which the present
suit is filed. Even in Ext.A6 reply dated 11-2-1994 the
defendant admitted the relationship between the parties and
offered to pay the rent and the arrears. The suit according
RFA. N0. 90/06
-68-
to me, cannot be rejected as barred by limitation. I am
persuaded to take such a view in view of the judgment of
the Supreme Court in P.T.Munichikkanna Reddy and others
v. Revamma and others (2007) 6 SCC 59 and the view of
this court in Eapen Panicker v. Krishna Panicker (1970 KLT
42).
26. The question which arises last is whether the
present suit for mandatory injunction can be a substitute for
a regular suit for recovery of possession. According to me
this issue has been settled by the Supreme Court by its
judgment in Joseph Severance v. Benny Mathew (2005(4)
KLT 290 wherein it was held that specific plea should have
been taken in the written statement itself to the effect that
suit was not maintainable being one for mandatory
injunction and not one for recovery, since such a question is
not a substantial question of law, but one whose
adjudication would depend upon factual adjudication of the
RFA. N0. 90/06
-69-
issue relating to reasonableness of time. It will also be seen
that the Supreme Court has in Sant Lal Jain v. Avtar Singh
(AIR 1985 SC 857) held that the suit is in effect one for
possession though couched in the form of a suit for
mandatory injunction as what would be given to the plaintiff
in case he succeeds is possession of the property which he
may be found to be entitled. Therefore, I am of the opinion
that the appellant should not be denied relief merely
because he had couched the plaint in the form of a suit or
mandatory injunction.
The appeal will stand dismissed. However, the parties
are directed to suffer their costs in this appeal.
(PIUS C.KURIAKOSE, JUDGE)
sv/ksv/mt.
? IN THE HIGH COURT OF KERALA AT ERNAKULAM
AR.No. 44 of 2008()
1. M/S.MOTOROLA INDIA PRIVATE LIMITED
... Petitioner
Vs
1. BHARAT SANCHAR NIGAM LIMITED, A COMPANY
... Respondent
2. CHIEF GENERAL MANAGER, KERALA TELECOM
For Petitioner :SRI.E.K.NANDAKUMAR
For Respondent :SRI.K.RAMAKUMAR (SR.)
The Hon'ble MR. Justice PIUS C.KURIAKOSE
Dated :24/04/2009
O R D E R
PIUS C. KURIAKOSE, J.
-----------------------------------------------
A.R. No. 44 OF 2008
-----------------------------------------------
Dated this the 24th day of April, 2009
O R D E R
M/s. Motorola India (P) Ltd. is once again before this
court invoking the power of the Chief Justice under
subsection (6) of section 11 of the Arbitration and
Conciliation Act, 1996 and the Scheme for Appointment of
Arbitrators. The earlier motion of the applicant was AR.
No.18/06 which was allowed by this court under Annexure
P7 order. Annexure P7 was approved by the Honourable
Supreme Court under Annexure P8. As in Annexure P7 case
the respondents in this application are Bharat Sanchar
Nigam Limited and the Chief General Manager, Kerala
Telecom Circle of BSNL Ltd. Annexure P1 dated 4-1-2001 is
copy of the tender notice issued by the second respondent
on behalf of the first respondent inviting bids from eligible
bidders for the planning, engineering, supply, installation
and commissioning of GSM based cellular mobile network in
AR. N0. 44/08
-2-
the telecom circles of the Southern Region covering the
States of Kerala, Karnataka, Tamil Nadu and Andhra
Pradesh. The applicant submits that disputes have arisen
between them and the first respondent on account of what
is described as arbitrary and illegal actions of the first
respondent in purporting to withhold monies rightfully due
and payable to the applicant under Annexure P1. Applicant
refers to and extracts clause 20, the arbitration clause in
Annexure P1 as contained in section 3 thereof. The
applicant points out that it is evident from clause 20.1 of
Annexure P1 that any dispute which arises under the tender
or in connection therewith would be referred to the sole
arbitration of respondent No.2 or in case his designation is
changed or his office is abolished, in such cases to the sole
arbitration of the Officer for the time being entrusted with
the functions of the second respondent. It is pointed out
that clause 20.1 further provides that if respondent No.2 or
AR. N0. 44/08
-3-
the said officer is unable or unwilling to act as such, then
the disputes should be referred to the sole arbitration of
some other persons appointed by respondent No.2 or the
said officer. The applicant highlights the last line of clause
20.1 and mentions that the last sentence of clause 20.1
expressly states that the agreement to appoint an
arbitrator should be in accordance with the Arbitration and
Conciliation Act, 1996. The applicant relies on Annexure P2
clarification issued by the first respondent wherein it has
been clarified that while appointing arbitrator in accordance
with the relevant Arbitration Act, the arbitrator shall be a
neutral party and due care will be taken to appoint an
arbitrator in accordance with the provisions of the Act.
2. The applicant claims on the basis of Annexure P2
that the person to be appointed as arbitrator by the second
respondent should be a neutral person belonging neither to
the applicant nor to the first respondent. Annexure P3
AR. N0. 44/08
-4-
dated 25-10-05 is copy of the notice invoking arbitration
clause sent by the petitioner through its lawyers in the light
of the disputes between the parties. Subsequently, the
General Manager (CMTS), BSNL, Trivandrum sent Annexure
P4 letter to the applicant calling upon the applicant to refer
the disputes arising out of Annexure P1 agreement to the
second respondent CGMT who alone is the concerned
authority in terms of Annexure P1. To Annexure P4 dated
8-11-200t the applicant readily sent Annexure P4(2) and (3)
dated 17-11-2005 stating that Annexure P3 was correctly
addressed and that copy of Annexure P3 was marked to
second respondent so that he could appoint an independent
arbitrator since he himself was disqualified from acting as
arbitrator having dealt with the tender and the decision to
withhold payments due to the petitioner under the tender.
Pursuant to Annexure P4 (2) and (3) the second respondent
appointed one N.Haribabu, GM(O), Office of the PGM, TD
AR. N0. 44/08
-5-
Ernakulam to act as arbitrator and Annexure P5 is the
communication issued in that regard. On receiving
Annexure P5 the applicant informed the first respondent
that the appointment of Sri.N.Haribabu was unjustified and
illegal. The first respondent would refute the stand of the
applicant and contend that there was no justification or
illegal sanction for attributing bias on the arbitrator. The
applicant would reiterate their stand by letter dated 31-1-
2006 rejecting the appointment of Sri.Haribabu as the
arbitrator inter alia on the ground that there are justifiable
doubts about the impartiality and neutrality of Sri.Haribabu
in as much as he is an employee of the first respondent and
a subordinate officer of the second respondent. Annexure
P6 collectively are copies of these letters. The applicant
produced Annexure P7 and submits that in the context of
certain other disputes which arose between the applicant
and the first respondent relating to alleged liability of the
AR. N0. 44/08
-6-
applicant for delay, the applicant approached this Court
under section 11(6) seeking appointment of an independent
and impartial arbitrator and that this court allowed the said
application and appointed Mr.Justice K.T.Thomas, a retired
Judge of the Supreme Court of India. Against Annexure P7
the applicant filed a special leave petition before the
Hon’ble Supreme Court. But the Supreme Court would
confirm Annexure P7 by Annexure P8 judgment. Referring
to certain passages in the judgment of the Supreme Court,
the applicant highlights that the test of impartiality and
independence of the arbitrator required by section 12 of the
Act would not be satisfied if the CGM Kerala Circle is to be
appointed as arbitrator. The applicant concedes that they
filed objections before the arbitrator on 2nd December, 2005
inter alia taking the ground that the arbitrator suffered
from inherent bias and lacked independence. But by
Annexure P9 the objections were overruled by the
AR. N0. 44/08
-7-
arbitrator. The applicant submits that thereafter the
applicant participated in the arbitration proceedings under
protest. After Annexure P8 judgment of the Supreme Court
was available the applicant submitted a fresh application
dated 28-9-2008 before the arbitrator seeking withdrawal
of the arbitrator from the post of sole arbitrator contending
that the mandate stood de jure terminated in view of the
judgment of the Supreme Court and sought reference of the
disputes to arbitration before Mr. Justice K.T.Thomas since
both parties will have to appear before Mr. Justice
K.T.Thomas pursuant to Annexure P8 for adjudication of
other disputes and differences arising under the very same
contract. Annexure P10 is copy of the said application. But
AnnexureP10 was dismissed by the arbitrator by Annexure
P11 order dated 29-9-2008. Seeking reconsideration of
Annexure P11 the applicant submitted Annexure P12
application which was also dismissed by the arbitrator by
AR. N0. 44/08
-8-
Annexure P13 order.
3. The applicant contends that a mere perusal of
Annexure P13 would demonstrate that the arbitrator is de
jure incapable of performing his duties as an arbitrator.
According to the applicant, from the very outset the
appointment of Sri.Haribabu as arbitrator for arbitration of
present disputes was illegal, invalid and null and void, since
it was in violation of the mandatory principles of impartiality
and neutrality of an arbitrator, that Sri. Haribabu, an
employee of the first respondent was appointed as the
arbitrator. The applicant submits that by letter dated 17-
10-08 the applicant’s counsel informed the second
respondent that the mandate of the arbitrator stood
terminated particularly in the light of the judgment of the
Supreme Court Annexure P8 as Sri.Haribabu is de jure
disqualified to act as arbitrator and requested the second
respondent to confirm that Mr.Justice K.T.Thomas who was
AR. N0. 44/08
-9-
already appointed as the sole arbitrator under the same
contract, would act as the arbitrator in relation to the
disputes that were referred to him. That letter was also
answered in the negative by the second respondent by
Annexure P14 letter dated 18-10-2008. According to the
applicant, in view of the judgment of the Supreme Court,
Annexure P8 there is no room for doubt that themandate of
N.Haribabu stands terminated as he is de jure disqualified
to act as an arbitrator. Without prejudice to that contention
the applicant also contends that the mechanism for
appointment of an arbitrator under the contract is void and
cannot be given effect to and therefore only this Court has
the jurisdiction to appoint an arbitrator. Hence the
arbitration request seeking the following relief:
“Appoint a sole arbitrator being an independent and
impartial arbitrator for adjudication of disputes
between the petitioner and the first respondent arising
from the tender”.
AR. N0. 44/08
-10-
4. A joint counter affidavit has been filed by
respondents 1 and 2 raising various contentions. At the
outset it is contended that the application is not
maintainable in law or on facts. It is submitted that an
application under subsection (6) of section 11 is not
maintainable when a duly appointed arbitrator is already in
seizin of the matter. It is also submitted that the dispute
regarding termination of the mandate of arbitrator is not
liable to be agitated in an application under subsection (6)
of section 11. More specifically it is contended that
subsection (6) of section 11 is not attracted in this case (a)
since the CGMT had already appointed arbitrator in terms of
clause 20 and under the provisions of the Act, (b) since
there was no failure of two arbitrators to reach an
agreement in this case and ) since there was no failure on
the part of CGMT to perform his functions. It is then
submitted that Sri.Haribabu, whose competence and
AR. N0. 44/08
-11-
functioning is also challenged in the instant application is
not made a party to this application and hence the petition
is bad for non-joinder of necessary parties. Without
prejudice to the contention regarding maintainability, it is
alleged that the instant application amounts to gross abuse
of process of this court. It is pointed out that the objective
of the applicant is to delay the adjudication of the instant
arbitration by the present arbitrator, where the case stands
posted for evidence for cross examination of witnesses on
the side of the applicant. Annexure R2(a) copy of notice of
posting on resumption of hearing is produced in this
context. It is contended that the instant application before
this court is the 4th attempt of the respondent to wriggle out
of the ongoing proceedings for the reason that in view of the
manifest failure to fulfill various technical and contractual
obligations the applicant apprehends that they may not be
entitled to any favourable decision. It is submitted that
AR. N0. 44/08
-12-
though there was no justifiable basis for the challenge
against the impartiality and independence of the arbitrator
appointed, the applicant’s challenge was considered by the
arbitrator with all seriousness. Annnexure R2(b) copy of the
written submission made on behalf of the applicant and
Annexure R2(c) copy of the arguments in reply submitted
by BSNL are produced in this context. It is submitted that it
is after considering all the issues that Annexure P9 order
was passed. Annexure P9 order has become final and is
binding on the parties. It is pointed out that the applicant
continued to participate effectively in the arbitration
proceedings after filing proof affidavit and documents.
Referring to section 13 of the Arbitration and Conciliation
Act it is contended that when a challenge against the
arbitrator fails, the arbitrator is entitled to proceed with the
hearing and finally the affected party can challenge the
decision rendered under section 13 or 16 of the Act only
AR. N0. 44/08
-13-
through an application under section 34 against the final
award and not otherwise. It is submitted that the applicant
is indirectly trying to by-pass the legal mandates of sections
13(4), 13(5) and 16 of the Act.
5. The counter affidavit details how the issues which
are being arbitrated by Mr.Justice K.T.Thomas which are
different from the issues which are being arbitrated by
Sri.N.Haribabu. Annexures R2(d), R2 (e) are produced by
the respondent in this context. It is pointed out that the
only ground on which the BSNL resisted the applicant’s
request for arbitration was that the dispute was an excepted
matter and hence not arbitrable. It was that contention
which was ultimately repelled by the Hon’ble Supreme Court
by Annexure P 8. By Annexure P8 decision rendered in the
limited context considering the background of the case
cannot be extended any further to hold that CGMT is
incompetent to be the appointing authority or to find that
AR. N0. 44/08
-14-
clause 20 is unconscionable and illegal. It is submitted that
the mechanism provided under clause 20 of the agreement
for appointment of the arbitrator is absolutely legal and
proper after mutual consent of the parties and hence the
parties cannot retract from the position. Neither this Court
in Annexure P7 nor the Hon’ble Supreme Court in Annexure
P8 accepted the proposition of the petitioner that clause 20
which enables appointment of CGMT as arbitrator is illegal.
Annexure P13 order, it is submitted was finally passed by
the arbitrator applying his mind to all the objections in the
application submitted by the applicant under section 14 of
the Act alleging that the arbitrator is de jure disqualified.
Annexure R2(f) order dated 6-10-08 permitting variation of
the earlier order and the consequential corrected order
Annexure R2(g) are produced. It is pointed out that it was
subsequent to R2(g) that the applicant filed a request
before the CGMT on 17-10-08, significantly on the date of
AR. N0. 44/08
-15-
the proposed hearing of the matter by the arbitrator for
cross-examination of the witnesses of the applicant.
Annexure R2(h) is copy of the above request of the
applicant. R2 (g) addressed to CGMT who became functus
officio after the appointment of Sri.N.Haribabu as arbitrator
was certainly meant to be a dilatory tactics. Still as a
matter of fairness, BSNL conceded for an adjournment
whereupon under the request of the applicant the case was
adjourned sine die. Later CGMT has declined the request on
proper grounds. Annexure R2(i) is copy of the letter dated
18-10-08 issued by the CGMT.
6. I have heard the submissions of Sri.Ciccu
Mukhopadyaya, Advocate and Mr.Abhjeet Sinha, Senior
Advocate on behalf of the applicant and those of Sri.P.
Vijayakumar, Advocate and Sri.K.Ramakumar, Senior
Advocate on behalf of the respondent. The learned counsel
for the applicant drew my attention to subsection (8) of
AR. N0. 44/08
-16-
section 11 and section 12 and section 14 of the Arbitration
and Conciliation Act. The learned counsel drew my
attention also to the various exhibits placed on record
particularly, Annexures P3, P7 and P11. The learned
counsel would place reliance on the judgment of the Delhi
High Court in Alcove Industries Ltd. v. Oriental Structural
Engineers Ltd. (2008 (1) Arb. LR 393 (Delhi) to argue that
on the occurrence of any of the contingencies mentioned in
section 14 of the Arbitration and Conciliation Act the
mandate of the arbitrator terminates automatically – ipso
jure by force of law. Mr. Ciccu Mukhopadyaya relied on the
very same decision to argue that the availability of a
remedy under section 34 of the Act to have the award set
aside is no good answer to the argument that the mandate
of the arbitrator stands terminated by the apparent bias of
the arbitrator. Relegating the petitioner to remedy under
section 34 will be wasteful expense of time and resources,
AR. N0. 44/08
-17-
since the award to be passed ultimately would not stand
scrutiny in the eyes of law. Counsel submitted on the
authority of the very same decision that what the law
stipulates as a disqualification to become or remain an
arbitrator in a given dispute is not the existence of actual
bias, but the existence of such facts and circumstances as
are likely to give rise to justifiable doubts as to his
independence and impartiality. In the instant case there
exists justifiable doubts regarding the impartiality and
independence of Sri.Haribabu. Mr.Ciccu Mukhopadyaya
relied also on the judgment of Gauhati High Court in State
of Arunachal Pradesh v. Subhash Projects & Marketing Ltd.
(2007(1) Arb. LR 564) to argue that the quintessence of an
arbitral procedure is fairness, and impartiality is an
essential attribute of fairness. Therefore it is not enough to
provide just any arbitration, not even a speedy arbitration
but also an impartial arbitration. An arbitrator earns the
AR. N0. 44/08
-18-
prerogative of conducting the proceedings by the confidence
he commands. Fairness, impartiality, independence and
neutrality are the indispensable qualities of an arbitrator, so
submitted the learned counsel on the authority of the above
decision. The omission to invoke the procedure provided
under section 13(2) will operate as an estoppel against a
party from invoking the remedy available under section 14,
so submitted Mr.Mukhopadyaya. The judgment of the
Calcutta High Court in Kailash Saving Units Pvt. Ltd. v.
S.K.Ghosh, (1983 Arb. LR 404) was also relied on by the
learned counsel to argue that when the arbitrator becomes
a Judge in his own cause, actual bias need not be proved to
vitiate the award. The judgment of K.K.Narendran, J. in
Koshy v. K.S.E.B. (1983 KLT 674) was also relied on in this
context by Mr.Mukhopadyaya to argue that the court has
always power to grant leave to revoke the arbitrator’s
authority. Supporting his argument that appointing Justice
AR. N0. 44/08
-19-
K.T.Thomas in substitution of Sri.Haribabu will be justifiable
the learned counsel relied on the judgment of the Delhi High
Court in Cinevistaas Ltd. v. Prasar Bharati, (2008(106) DRJ
682) wherein the Delhi High Court after substituting an
arbitrator, appointed Justice D.P.Wadhwa who was already
in seizin of similar connected disputes.
7. Sri. K.Ramakumar, senior counsel for the
respondents would answer the submissions of
Sri.Mukhopadyaya on the basis of the various contentions
raised in the counter affidavit. Strong reliance was placed
by him on the judgment of the Supreme Court in Secretary
to Government, Transport Dept. Madras v. Munuswamy
Mudaliar and another, (1988 (Supp) SCC 651) to argue that
a named and agreed arbitrator cannot and should not be
removed in exercise of a discretion vested in the Court
under section 5 of the Act (Arbitration Act, 1940) unless
there is allegation against the named arbitrator either
AR. N0. 44/08
-20-
against his honesty or capacity or mala fide or interest in
the subject matter or reasonable apprehension of bias.
Mr.Ramakumar would submit that bias means a
predisposition to decide for or against one party, without
proper regard to the true merits of the dispute. There must
be reasonable apprehension of that predisposition based on
cogent material. The test for bias, according to the learned
senior counsel, is whether a reasonable intelligent man, fully
appraised of all the circumstances with apparent bias.
Capricious and unreasonable people should not be made the
standard to regulate normal human conduct. Mr.
Ramakumar placed reliance also on the judgment of the
Supreme Court in Dharma Prathishthanam v. Madhok
Construction (P) Ltd. (2005 9 SCC 686) and particularly
paragraph 31 of the judgment. Counsel argued that when
parties have entered into a contract and settled a procedure,
due importance has to be given to such procedure and the
AR. N0. 44/08
-21-
court has to respect the terms of the contract entered into
by the parties and shall endeavour to give importance and
effect to the contract. In this context the learned senior
counsel relied on the judgment of the Supreme Court Datar
Switchgears Ltd. v. Tata Finance Ltd. (2000) 8 SCC 151.
8. I have considered the rival submissions addressed at
the bar in the light of the pleadings raised by the parties
and the ratio emerging from the various decisions cited at
the Bar. The instant application is an application under
section 11(6) of the Arbitration and Conciliation Act, 1996
and the prayer is that the Chief Justice or the designate
Judge appoints a sole arbitrator being an independent and
impartial arbitrator for adjudication of the disputes between
the parties which are subject matter of the arbitration
request. It is not in dispute that clause 20 of section 3 of
Ext.P1 contract incorporates a valid arbitration agreement
between the parties at clause 20.1. Clause 20.1 reads as
AR. N0. 44/08
-22-
follows:
“In the event of any question,dispute or difference
arising under the agreement or in connection therewith
(except as to the matters, the decision to which is
specifically provided under this agreement), the same
shall be referred to the sole arbitration of the CGM,
Kerala Telecom Circle, BSNL or in case his designation
is changed or his office is abolished, then in such cases
to the sole arbitration of the officer for the time being
entrusted (whether in addition to his own duties or
otherwise) with the functions of the CGM, Kerala
Telecom Circle, BSNL or by whatever designation such
an officer may be called (hereinafter referred to as the
said officer), and if the CGM, Kerala Telecom Circle or
the said officer is unable or unwilling to act as such,
then to the sole arbitration of some other person
appointed by the CGM, Kerala Telecom Circle or the
said Officer. The agreement to appoint an arbitrator
will be in accordance with the Arbitration and
Conciliation Act 1996.
There will be no objection to any such appointment on
the ground that the arbitrator is a Government Servant
or that he has to deal with the matter to which the
agreement relates or that in the course of his duties as
a Government Servant he has expressed his views on
all or any of the matters in dispute. The award of the
arbitrator shall be final and binding on both the parties
to the agreement. In the event of such an arbitrator to
whom the matter is originally referred, being
transferred or vacating his office or being unable to act
for any reason whatsoever, the CGM, Kerala Telecom
Circle, BSNL or the said officer shall appoint another
AR. N0. 44/08
-23-
person to act as an arbitrator in accordance with terms
of the agreement and the person so appointed shall be
entitled to proceed from the stage at which it was left
out by his predecessors.”
Clause 20.1 quoted above itself is relied on by the applicant
to maintain the instant arbitration request under subsection
(6) of section 11. Subsection (6) of section 11 comes into
play when (a) a party fails to act as required under that
procedure or (b) the parties, or the two appointed
arbitrators fail to reach an agreement expected of them
under that procedure or (c) a person including an
institution, fails to perform any function entrusted to him or
it under that procedure. It is provided that under the
above circumstances party may request the Chief Justice or
any person or institution designated by him to take the
necessary measure, unless the agreement on the
appointment procedure provides other means for securing
the appointment. According to me, subsection (6) of section
11 cannot have application in this case where concededly
AR. N0. 44/08
-24-
the appointing authority viz., CGM, Kerala Telecom Circle
has already appointed Sri.N.Haribabu as the arbitrator for
adjudication of the disputes as will be clear from Annexure P
issued long prior to the institution of this arbitration request.
Apparently clauses (b) and ) of subsection 6 of section 11
do not apply at all to the instant case.
9. The basis for the applicant’s claim for appointment
of arbitrator by the Chief Justice or designated Judge
invoking the power under subsection (6) of section 11 is
that the mandate of the arbitrator Sri.N.Haribabu stands
terminated by virtue of section 14 of the Arbitration and
Conciliation Act. The contention is that Sri.Haribabu has
become de jure unable to perform his functions as
arbitrator. The case is that due to bias and absence of
independence and impartiality the mandate of N.Haribabu,
the appointed arbitrator stands terminated automatically.
When the pleadings are carefully scanned, it will be seen
AR. N0. 44/08
-25-
that the applicant does not contend that Sri.Haribabu does
not possess the qualification required to arbitrate upon the
disputes. The applicant also does not specifically challenge
the integrity of Sri.Haribabu. The case of the applicant is
only that the circumstances existing in this case give rise to
justifiable doubt in the applicant’s mind as to the
independence and impartiality of Sri.Haribabu. The specific
allegation raised is that Sri.Haribabu is an employee of the
first respondent BSNL, that the second respondent who
appointed him, is his superior officer and hence it is
humanly impossible for Sri.Haribabu to be independent or
impartial, particularly when the superior officer has already
held that the very withholding is made which were subject
matter of the dispute are justified. Strong reliance is seen
placed on the observations in paragraph 16 of the judgment
of the Supreme Court Annexure P8 in the context of the
legality of the CGM, Kerala Telecom Circle himself
AR. N0. 44/08
-26-
functioning as an arbitrator over a dispute in which the CGM
himself had already taken a decision against the claimant.
10. One of the main planks on which the present
arbitration request has been filed wherein virtually the
prayer is for substitution of Sri.Haribabu the appointed
arbitrator by Justice K.T.Thomas who was appointed as
arbitrator by this court under Annexure P7 and approved by
the Hon’ble Supreme Court under Annexure P8, is Annexure
P8 judgment itself. I am unable to accept the submission of
Sri.Ciccu Mukhopadyaya that Annexure P8 judgment itself
would lead to a finding that the mandate of Sri.N.Haribabu,
the appointed arbitrator stands terminated and that he will
stand substituted by Justice K.T.Thomas as arbitrator. As
rightly contended and could be discerned from Annexures P7
and P8 the fact situation in AR.18/06 in which Annexures P7
and P8 judgment were given was entirely different from the
situation in the instant A.R. In AR. 18/06 the issue which
AR. N0. 44/08
-27-
was essentially decided by this court and the Supreme Court
was the issue as to whether the dispute between the parties
regarding imposition of liquidated damages was an excepted
matter or an arbitrable matter. This court and the Supreme
Court under Annexures P7 and P8 originally decided that
issue in favour of the applicant and held that the dispute
regarding imposition of liquidated damages is not an
excepted matter. Incidentally the Supreme Court under
Annexure P8 also held that the authority to decide on the
liability or otherwise of the applicant to liquidated damages
and also to quantification of liquidated damages cannot be
conceded to the CGMT, a party to the contract. Two reasons
have obviously weighed with the Supreme Court in taking
such a view which was taken approving the earlier view of
the Supreme Court in State of Karnataka v. Shree
Rameshwara Rice Mills, (1987) 2 SCC 160. The first reason
was that the CGMT had already taken a decision in the
AR. N0. 44/08
-28-
matter as was evident from his letter dated 25-4-2006 that
the BSNL was right in imposing liquidated damages upon
the applicant and therefore permitting such a person himself
to be the arbitrator or adjudicator would not satisfy the test
of impartiality and independence which is required under
section 12 of the Arbitration and Conciliation Act. The other
reason was that such an appointment will defeat the well
settled notion under the principles of natural justice that a
party cannot be a Judge in his own cause. The fact situation
in the present case is different. Here unlike in AR. 18/06,
the appointing authority did not reject the applicant’s
request for reference to arbitration. In terms of clause 20.1
arbitrator was appointed. Sri.Haribabu unlike the CGMT is
not a party to annexure P1. Doubts are expressed
regarding Sri.Haribabu’s impartiality and independence on
the allegation that Sri.Haribabu is an employee of the first
respondent organisation. Here again the contention of the
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respondent that Sri.Haribabu is not a regular employee of
the first respondent organization but is a class-I officer of
the Telecom Department of Government of India presently
on deputation to BSNL is not seen replied. I am therefore
not prepared to accept the contention that Haribabu is an
employee of the first respondent and in that way the second
respondent is Haribabu’s superior officer and will have a
bias towards the second respondent. The orders passed by
Sri.Haribabu on the petitions successively filed by the
applicant taking objection to the continuance of the
arbitration proceedings by him on the ground of partiality
and bias sufficiently indicates that Haribabu is mindful
enough of the office he holds and the nature of functions he
is expected to perform as an arbitrator appointed in terms of
the Arbitration and Conciliation Act. On reading through
the pleadings of the applicant it would appear that the
applicant company is challenging the very mechanism for
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appointment of an arbitrator under Annexure P1 – clause 20
under section 3 thereof as void. It is also contended that at
the time of execution of Annexure P1 the petitioner had no
option but to accept the clause as it was not negotiable and
formed part of the tender put out by the first respondent.
According to me it is too late in the day for the applicant to
contend like this especially after they had successfully
invoked the very clause 20 before this court and the
Supreme Court by proceedings which culminated in
Annexures P7 and P8. The applicant is not an up country
villager. The applicant on its own showing is receiving the
best legal advice while entering into contracts and while
dealing with parties to the contracts. Parties to contract
should not be allowed to wriggle out of contracts easily.
Annexure P1, the appointment under which cannot be
disputed by the applicant, a party specifically incorporates
that the CGMT has the power to appoint some person other
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than himself as the arbitrator and that such appointment
will not be objected to on the ground interalia that the
applicant is a Government servant. I am fairly convinced
that the arbitrator Sri.Haribabu is a Government servant on
deputation to the BSNL and hence qualified to be appointed
as arbitrator in terms of clause 20.1 of section 3 of
Annexure P1. It is too early for the petitioner to contend
that Sri.Haribabu is biased in favour of BSNL and will not be
able to discharge his adjudicatory functions as arbitrator in
the true spirit of arbitration as envisaged by the statute as a
speedy and effective alternative method of dispute
resolution agreed to by the parties to the contract.
Arbitrator has already commenced his proceedings and
challenge was made apparently on his authority under
section 13 of the Arbitration Act. The arbitrator entertained
written submissions Annexure R2(b) by the applicant and
Annexure R2(c) by the respondent and passed orders
AR. N0. 44/08
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Annexure P9 repelling the ground raised by the applicant in
challenge of the authority of the arbitrator. Subsections (4)
and (5) of section 13 of the Act will show that once
challenge made against the arbitrator fails, the arbitrator is
entitled to continue with the proceedings and pass his final
award. If the applicant is aggrieved by the final award he is
entitled to challenge the same on all grounds available to
him under section 34 of the Arbitration Act. Annexure 13
will show that the contention that the arbitrator has become
de jure disqualified and his mandate has been automatically
terminated was raised before the Arbitrator and was
considered and decided by the arbitrator. By filing the
instant application under subsection (6) of section 11 the
applicant seems to be challenging Annexures 9 and 14
orders passed by the arbitrator before this court. Those
orders according to me, can be challenged by the applicant
only in terms of section 34 of the Arbitration and
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Conciliation Act by filing an application for setting aside the
award when the same is passed.
The A.R. will stand dismissed. No costs. It is made
clear that in the event of the award of the arbitrator
becoming unfavourable to the applicant it will be open to
the applicant to challenge the same on all grounds available
to him. It is clarified that the applicant will have the liberty
to challenge the award if necessary on the ground that the
award is vitiated due to bias and partiality of the arbitrator
demonstrable by valid materials.
(PIUS C.KURIAKOSE, JUDGE)
ksv/-
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