Skip to content


C.L. Kavish Vs. Saransingh Pruthi - Court Judgment

LegalCrystal Citation
SubjectProperty;Arbitration
CourtMumbai High Court
Decided On
Case NumberA.F.O.D. No. 279 of 1971
Judge
Reported inAIR1979Bom152
ActsRegistration Act, 1908 - Sections 17(1); Arbitration Act, 1940 - Sections 39(1)
AppellantC.L. Kavish
RespondentSaransingh Pruthi
Appellant AdvocateDara Zaiwala, Adv. and ;H.K. Shroff, Adv. for Rustomji and Jinwala, Advs.
Respondent AdvocateC.A. Phadkar and ;B.S. Purohit, Advs.
DispositionAppeal allowed
Excerpt:
.....grounds such as non-payment of arrears of rent etc. phadkar is of no help to him because clause 11 of the award in that case clearly declared the rights of the parties in regard to the immovable properties in the manner set out in annexure iii to that award, clause 1 of which provided for a partition on certain terms and subject to certain conditions and limitations. the respondent to pay to the appellant the costs of this appeal as well as of the court below......of the parties in regard to the immovable properties in the manner set out in annexure iii to that award, clause 1 of which provided for a partition on certain terms and subject to certain conditions and limitations.13. another point raised by mr. zaiwala related to the question of penalty purported to have been fixed by the arbitrators pursuant to clause 6 of the award. as indicated before, the award which was made and published first on 26-5-1964 was a typed document and after publication of this award, the parties had accepted the same. according to the appellant, the quantum of penalty which was left open by the arbitrators was finalised at the instance of the respondent-landlord, but according to the respondent, the arbitrators acted in excess of their authority as it was not a term.....
Judgment:

Aggarwal, J.

1. This appeal has been filed under Section 39(1) of the Arbitration Act, 1940. The appeal ordinarily lies to a single Judge, It appears that when the appeal came for hearing before the learned single Judge of this Court on 16-6-1978, the appeal was referred to a Division Bench.

2, The few undisputed facts are that the appellant at all times material was the tenant of the respondent-landlord in respect ofa flat admeasuring 500 sq. ft. on the ground floor of a building known as Pruthi Building situate at Prabhat Colony, Santacruz (East), Bombay. 'The respondent was desirous of constructing a new building by demolishing the old building and accordingly he brought an ejectment suit against the appellant on that ground as well as on other grounds such as non-payment of arrears of rent etc. While the suit was pending in the Court of Small Causes at Bombay, the respondent, by a letter dated 26-5-1964 and confirmed by the appellant, agreed to refer all the disputes between the parties to the arbitration of three arbitrators. It is also common ground that pursuant to this letter, the three arbitrators met on 26-5-1961 itself and after hearing the parties, made and published their award on the same day. It is also not in dispute that no oral evidence was led on behalf of the parties before the Arbitrators. It is also common ground that after the award was published, it was delivered to the parties and they put their respective signatures in token of their acceptance of the same. It is also not in dispute that thereafter the arbitrators further added a rider to the said Award by fixing the quantum of penalty in case of default by either of the parties and signed the same, It may be clarified that the parties are not in agreement with regard to the circumstances in which the said rider came to be added after the publication of the award. This rider was scribed in ink, whereas the earlier 'Award was scribed with the aid of a typewriter. It was stated before us that there are 12 flats in the new building and 11 are rented out and one flat is occupied by the respondent-landlord.

3. Thereafter, in the mouth of Feb. 1970, the Award was filed in the Bombay City Civil Court by one of the arbitrators. On 13-4-1970, the respondent-landlord filed a petition being No. 18 of 1970 for setting aside the said Award dated 26-5-1964 and for taking the same off the file on various grounds. The appellant-tenant contested the said petition. The respondent, by application dated 2-10-1970, applied for adding two additional grounds (1) that the combined effect of Sub-clauses (b) and (c) of Clause 1 of the Award is to declare, create or limit the rights in respect of immovable property and the same requires to be registered under Section 17(1)(b) of the Registration Act; 1908, and since the Award is riot registered, the same is a nullity and liable to be set aside, and (2) that the agreement of reference is unstamped and, there-fore,'the Award made on an unstampedagreement of reference is not maintainable in law and the same is liable to be set aside.

4. The learned Judge of the City Civil Court, Bombay, by his judgment and order dated 5-10-1970, held that the arbitrators in fixing the amount of penalty exceeded their right in giving an award on a point or a matter which was not referred to them and that the question of penalty which was not referred to the arbitrators was separable from the rest of the Award, and accordingly the portion of the Award as regards the penalty was set aside. The relevant findings of the lower Court for the purpose of deciding the appeal before us are that Clauses 1 (b) and 1 (c) of the Award show that right in the property to the extent of 500 sq. ft. of area was created in favour of the present appellant on his paying a certain amount. If the respondent chose to keep him as a tenant, then the appellant was to pay him monthly rent. This would not in any way create any right in the property except tenancy right. The respondent-landlord had to reserve the right to accommodate the appellant-tenant in the portion of the premises. The Award states that explicit provision has to be made in the conveyance by the respondent-landlord to reserve the right of occupation of the appellant. In this view of the matter, the learned Judge held that rights in the property to occupy on ownership basis or in case the property was transferred to some other person by the respondent-landlord, rights of occupation still remained in the appellant, are not rights only to seek a declaration but the appellant obtained a right to get possession of the premises on payment of the actual amount of construction. The rights created in favour of the appellant to that extent restrict or limit the rights of the respondent landlord in the property. Accordingly, the learned Judge held that the Award requires to be registered and till the award is registered, it could not be taken into consideration. In the result, the learned Judge set aside the Award till it is not registered. Feeling aggrieved of the said judgment and order, the appellant tenant has filed the present appeal.

5. Mr. Zaiwala, learned Counsel appearing for the appellant, contended that the Award does not attract the application of Section 17 (1) (b) of the Registration Act, The Award by itself does not create any right, title or interest in the flat which is directed to be given by the respondent-landlord to the appellant-tenant. In support of his contention, the learned Counsel relied upon two decisions of the Supreme Court in SatishKumar v. Surinder Kumar, : [1969]2SCR244 , and Mrs. Telimi P. Sidhwa v. Shib' Banerjee and Sons Pvt. Ltd., : [1975]2SCR1 . oP. the other hand, Mr. Phadkar, learned Counsel appearing for the respondent, submitted that reading Sub-clauses (b) and (c) of Clause 1 of the Award together, it means that the Award purports to declare or limit in the future interest contingent to or in immoveable property and hence the Award requires registration and it not being registered, is inadmissible in evidence for the purpose of pronouncing judgment in accordance with it. In support of this proposition, reliance was placed on a judgment of this Court reported in Kusumlataben v. Prafulchandra, : (1977)79BOMLR284 .

6. Clause 1 (b) and (c) of the Award is in these terms :--

'1. (b) That Shri Saransingh Pruthi has undertaken and assured Shri. C. L. Kavish through the arbitrators that he shall make available to Shri C. L. Kavish an accommodation covering the area of his present residence (approximately) at the current rent affixed by the Municipal Corporation at that time, for the said newly built premises. This clause shall apply under all circumstances whether Shri Saransingh Pruthi builds the new premises on rental or ownership basis. This further needs that Shri C. L. Kavish shall be entitled to get the premises (not exceeding the present area occupied by him at the present moment) on rental basis only at the standard rent fixed by the Municipality fit the time of the occupation of the newly built premises. In the event of the said premises being built on Housing Society basis the requisite premises covering an area as mentioned above shall be allowed to Shri C. L. Kavish at no-loss no-profit basis i. e. at the actual building cost of the premises.

(c) That Shri Saransingh Pruthi in the event of his transferring or otherwise disposing of the said property on which the present stand he shall make explicit provision in the conveyance deed to accommodate Shri C. L. Kavish as per terms of this document.'

7. Sub-clause (a) provides that the appellant shall pay the rent of the premises in his possession till the date of his vacating the same. Sub-clause (d) records the undertaking given by the respondent to complete the new premises in whatever form or shape he likes in view of the alternatives mentioned in Sub-clauses (b) and (c) and to provide the requisite agreed accommodation within a period of three years from the date of the appellant's handing over possession of the premises presently occupiedby him to the respondent. By. Clauses 2, 3, 4 and 5, the arbitrators have decided the various questions of water charges, electric charges, test of repairs- and that cases pending between the parties in the Court shall be withdrawn etc. By Clause 6, the arbitrators have reserved their right and option to impose any penalty On the defaulting party who does not hand over possession in the manner decided by the arbitrators.

8. It is the intendment of the said Award which is the subject-matter of controversy. Now, in live out of the six clauses, the arbitrators have pronounced upon the dispute between the landlord and tenant in respect of the premises. The arbitrators' mind is focused on preserving and securing a flat for the appellant tenant in the new building. The appellant had a right to such a flat. The award preserves the existing right of the appellant-tenant in the flat occupied by him, which he was called upon to hand over under the Award to the respondent-landlord to enable him to put up a new building on the same land either himself or through a Cooperative Housing Society or through his successor-in-title. No new rights are created under the Award in favour of the appellant-tenant by the respondent-landlord, The Award requires that in the new building to be put up by the respondent-landlord, an area approximately equal to the area in the occupation of the appellant-tenant in the old building was to be offered in the new building except that fresh rent thereof was to be fixed on the basis of the Municipal assessment. In case the respondent-landlord were to decide that the new building proposed to be put up by him would be on the basis of a Co-operative Housing Society, in that event an area approximately equal to the area occupied by the appellant-tenant was to be secured from the Society on the basis of actual cost of the same. Further, in case the respondent-landlord decided to transfer or otherwise dispose of the property of which he obtained vacant possession on the faith of demolishing it and putting up a new structure thereon, to a third person, then he was required to make a provision in the sale deed to accommodate the appellant-tenant, so that his successor-in-title fulfils the same obligation which he would have fulfilled had he not sold the property.

9. All that the Arbitrators have done is to preserve the existing rights of the appellant-tenant by visualizing the three possible ways in which the respondent-landlord could have gone about after obtaining possession from his tenants. This intendment of theAward is clear from Sub-clause (d) of Clause 1 and is also inferable from the opening words of Clause 1(b), It records the respondent-landlord's undertaking and assurance to the appellant-tenant through the arbitrators that he would 'make available' to the appellant tenant accommodation covering the area of his present residence.

10. The reading of the said sub-clausesdo not indicate that by virtue of the Awarditself, any right, title or interest are soughtto be created, declared, assigned, limited orextinguished to or in any immovable property. The Award, by virtue of its ownforce, is not creating, declaring, assigningor limiting any right, title orinterest in immoveable propertywithout any further documentation. Now, assumming if the respondent-landlord were todeal with or dispose of his property to a Go-operative Housing Society, a further documentation in that behalf would be necessary.Likewise, documentation would also be required if he were to decide to convey the property to a third person.

11. The essence of the Award can also be considered from another angle and that is that no specific or identifiable premises are ear-marked in the Award to the appellant-tenant, nor by virtue of the Award the respondent-landlord has been directed to create, declare, assign or limit any present or future right, title or interest in a particular part of the property. The Award, as it exists today, does not comprise in itself any premises. In our opinion, it merely recognises the existing right of the appellant-tenant to obtain a flat of the same area which he had been occupying in the old premises which were sought to be demolished by the respondent-landlord in order to put up a new construction, and the Award by itself has not created any right, title or interest to or any immoveable property. In our opinion, therefore, the present Award does not attract the provisions of Section 17 (1) (b) of the Registration Act, 1908.

12. We are fortified in the view that we have taken by the two decisions relied upon by Mr. Zaiwala. The view expressed by Their Lordships of the Supreme Court is that where an Award purports or operates to create or declare, assign, limit or extinguish, whether in present or future, any right, title or interest whether vested or contingent of the value of one hundred rupees and upwards to or in immovable property, it is compulsorily registrable. But where the Award by itself does not purport or operate in the manneras contemplated under Section 17 (1) (b) of the Registration Act, 1908, and merely creates a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest, the same is not compulsorily registrable. The decision of this Court relied upon by Mr. Phadkar is of no help to him because Clause 11 of the Award in that case clearly declared the rights of the parties in regard to the immovable properties in the manner set out in Annexure III to that Award, Clause 1 of which provided for a partition on certain terms and subject to certain conditions and limitations.

13. Another point raised by Mr. Zaiwala related to the question of penalty purported to have been fixed by the Arbitrators pursuant to Clause 6 of the Award. As indicated before, the Award which was made and published first on 26-5-1964 was a typed document and after publication of this Award, the parties had accepted the same. According to the appellant, the quantum of penalty which was left open by the Arbitrators was finalised at the instance of the respondent-landlord, but according to the respondent, the Arbitrators acted in excess of their authority as it was not a term of reference. The factual position taken by the respondent is untenable in view of Clause 6 of the typed Award which says that in the event of either party failing in the fulfillment of the decision of the arbitration, it is explicitly agreed by both the parties that the three Arbitrators shall have the right and option to impose any penalty on the defaulting party who shall have no option or right to question the same in any Court of law. It is, therefore, clear that the parties had left it to the Arbitrators to consider the question of penalty, but the Arbitrators decided not to fix the same and retained to themselves the right and option to impose any penalty on the defaulting party. Now, what is sought to be done by the Arbitrators after making and publishing the Award is that they proceeded to decide the quantum of penalty of Rs.10/- per day against a party who makes a default in complying with clause 1 of the Award. This, in our view, is patently illegal. The authority which was vested in Arbitrators by virtue of the agreement of reference was exhausted as soon as they made and published the Award and they became functus officio and they had no authority to make a supplemental award in the manner done by them. The making of the award determines the arbitrator's authority and an arbitrator who hasmade his award is functus officio. This part of the Award, therefore, has been rightly set aside by the learned Judge. He was also right in separating this part of the Award from the rest of the Award.

14. It was also urged on behalf of the respondent that there is an illegality in the filing of the Award by the Arbitrators, inasmuch as in the affidavit filed by the Arbitrator who filed the Award in the lower Court, it is stated that the evidence taken before the Arbitrators' is filed along with the other documents. Mr. Zaiwala drew our attention to the affidavit made by another Arbitrator stating that no evidence was in fact recorded before the Arbitrators and in view of this factual position, Mr. Phadkar did not pursue the point.

15. No other point has been argued before us.

16. In the result, the appeal is allowed. The order dated 5-10-1970 passed by the City Civil Court is hereby set aside. The lower Court is directed to pass a decree in terms of paras. 1 to 6 of the Award. However, the supplemental part added in the original Award is directed to be excluded from consideration. The respondent to pay to the appellant the costs of this appeal as well as of the Court below.

17. The respondent- Saransingh Pruthi is restrained by an order of injunction from transferring or parting with the possession of Flat No. 7 on the first floor of Pruthi building at Prabhat Colony, Santacruz (East), Bombay, or any part thereof, for a period of four weeks from today to enable the appellant to move the lower Court for doing the needful. The respondent is present in Court and the order of injunction has been announced in open Court and is also conveyed to the respondent through his learned Advocate Mr. B. S. Purohit.

18. Appeal allowed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //