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Govindlal Maneklal Sheth Vs. the Manekchowk Spinning and Weaving Mills Company - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case NumberSecond Appeal No. 479 of 1930
Judge
Reported inAIR1934Bom140; (1934)36BOMLR174
AppellantGovindlal Maneklal Sheth
RespondentThe Manekchowk Spinning and Weaving Mills Company
DispositionAppeal dismissed
Excerpt:
.....of its terms. the fact that he had received compensation from government could not in any way have satisfied him since he would have got the compensation in any case under the land acquisition act, even without a reference to arbitration......objected, and was not willing to agree to the proposed acquisition, and in order to facilitate the land acquisition proceedings the question between the parties was referred to arbitration. it appears also that certain questions arose as to the use by the neighbouring mill, harivallabhdas mill, of which the plaintiff was the agent, of the siding to be built for the maneckchowk mills, and the conditions under which such user should be allowed. these matters were referred to arbitration without the intervention of the court, and an award was given. subsequent to the award the land was acquired, the siding was built and handed over to the defendants. under the terms of - the award the plaintiff was to receive compensation for his interest in the land, i.e., as a lessee, which he was to pay.....
Judgment:

Baker, J.

1. The plaintiff sued to recover Rs. 1,485 from the defendants, the Manekchowk Spining and Weaving Mills Co., Ltd. on the strength of an award between the parties which was passed on March 31, 1919. The circumstances under which this award came to be passed are that the defendant Mills wanted a siding to be constructed by the B.B. & C.I. Railway Company for the purpose of their Mill, and moved Government to acquire certain land adjoining the Mill. That land was held by the plaintiff under a perpetual lease although he was not the owner. The plaintiff, who was the agent of a neighbouring Mill, objected, and was not willing to agree to the proposed acquisition, and in order to facilitate the land acquisition proceedings the question between the parties was referred to arbitration. It appears also that certain questions arose as to the use by the neighbouring mill, Harivallabhdas Mill, of which the plaintiff was the agent, of the siding to be built for the Maneckchowk Mills, and the conditions under which such user should be allowed. These matters were referred to arbitration without the intervention of the Court, and an award was given. Subsequent to the award the land was acquired, the siding was built and handed over to the defendants. Under the terms of - the award the plaintiff was to receive compensation for his interest in the land, i.e., as a lessee, which he was to pay over to the Manekchowk Mills, and the Mills were to pay him compensation at the rate of Rs. 55 per guntha a year for the land over which he had rights which was acquired for the siding. The plaintiff brings this present suit in 1926 to recover three years' arrears of this payment, which amounts to Rs. 495 per year at the rate of Rs. 55 per guntha from the defendants.

2. The original defence in the first Court was that there was no reference to arbitration, the reference, if any, was outside the agent's powers, the company was not bound by what the agent may have done, that the amount of land acquired was not what the plaintiff said, and that the award was inadmissible in evidence for want of registration. The Joint Subordinate Judge at Ahmedabad awarded the plaintiff's claim. On appeal, the Assistant Judge at Ahmedabad reversed the decree of the lower Court and dismissed the plaintiff's suit. The plaintiff makes this second appeal.

3. The plaintiff under the award was bound to pay a certain amount received as compensation to the defendants, and this admittedly he has not done. It was argued that the amount which he had to pay was not the amount of compensation which he received but the amount of the expenses incurred in the acquisition. That, however, is a point which is not of importance in the present case. It is not a suit by the defendants to recover that amount. The plaintiff's case originally was that he had set off this amount of Rs. 1,363 odd against the rent which is due by the defendants to him. The Courts below have both found against him on this issue. As a matter of fact the award is dated 1919, and the amount of Rs. 495 per annum would be payable from that date, but the plaintiff sues in 1926, i.e., after seven years, and sues only for three years' arrears. It is open to question, therefore, whether the amount which he received from the Collector has not as a matter of fact been set off against the amount which he was to receive annually from the defendants, but that also is not a matter of any importance in the present case. The view which the learned Judge of the lower appellate Court has taken is that the defendants have proved that the award was not acted upon, and therefore the plaintiff is not entitled to claim anything thereunder. That, by the way, was not the case of the defendants in the first Court, where they simply denied the award or its binding character. The Judge was of opinion that if the intention of the parties had been to keep the award in force, they would have executed the necessary documents as contemplated in the last clause of the award, and that they would have executed a registered lease, which they had intended to do, as appears from the award, but this could not be done because there was no ownership left in the plaintiff. In the next paragraph the Judge says:

The agreement is therefore clearly to pay rent for the land acquired for railway siding and in that respect the award amounts to a lease of the description mentioned in Section 17(1), Clause (d) and is therefore compulsorily registrable. Owing to the want of the registered instrument it seems that the plaintiff cannot recover the rent which he asks for in this suit.

4. I am unable to follow this reasoning. Under Section 16 of the Land Acquisition Act, from the date of the acquisition Government or the railway company became the absolute owner of the land in question. The plaintiff, therefore, had no interest which he could transfer to the defendants by way of lease, and therefore under no circumstances could the award amount to a lease of the description mentioned in Section 17(1)(d) of the Indian Registration Act. No question of a registered instrument could, therefore, arise. An award itself does not require registration, being specially exempted under the Act as it stood at the time of the suit. That will dispose of any question of registration.

5. Then as to the award not being acted upon, it seems that in consequence of this award between the parties the plaintiff withdrew his op-, position to the land acquisition proceedings, which consequently took place without interruption. I may mention that the plaintiff's case is that he threatened to bring a suit on the ground that the land was not being acquired for a public purpose, and whether or no this suit was successful, it may have resulted in considerable delay in the acquisition proceedings. It is not, therefore, correct to say that the award has not been acted upon nor was that the case of the defendants in the first Court. Possession was given by the plaintiff, and the land is now in the possession of the railway company, and is occupied by railway sidings. The only question then is, what is the result of the award in this state of circumstances? The learned Counsel for the appellant has referred to several cases, of which the first is Krishna Panda v. Balaram Panda I.L.R. (1896) Mad. 290 in which it was held that an award even though never carried into effect is equivalent to a final judgment and binding on the parties in the absence of positive evidence that both parties agreed that the former state of things should be restored. In the judgment, which is very short, it is said:

In order that the parties should be remitted to their previous rights, it is not enough that the award was not enforced or that even both parties objected to it. There must be positive evidence that both parties agreed that the former state of things should be restored.

6. In the present case, even supposing that the award was not acted upon, which is not proved, it is impossible that the former state of things should be restored, because the plaintiff's land is now in the pos-session of the railway, who have an absolute title to it under Section 16 of the Land Acquisition Act, and it is actually covered with railway lines. The status quo cannot, therefore, be restored. Then the learned Counsel has referred to a Privy Council case of Muhammad Newaz Khan v. Alam Khan I.L.R. (1891) Cal. 414 in which it was held that even though an award was not filed, and the application to file it was refused, it would have its ordinary legal effect, and it was held that the suit brought in that case was barred by the award. In Laldas v. Bai Lala (1908) 11 Bom. L.R. 20 it was held that an award is not a mere agreement, but is equialvent to a judgment. It is binding between the parties on all matters which it professes to decide, and when once the matter has been decided between the parties, the parties ought to be concluded by the adjudication, whatever it may be. In order that the parties should be remitted to their previous rights it is not enough that the award was not enforced or even that both parties objected to it. There must be positive evidence that both parties agreed that the former state of things should be restored. In Bhajahary Saha Banikya v. Behary Lal Basak I.L.R. (1906) Cal. 881 it was held that a valid award is operative even though neither party has sought to enforce it by suit or by application under Section 525 of the Code of Civil Procedure. As the ordinary rule, a valid award operates to merge and extinguish all claims embraced in the submission and after it has been made the submission and award furnish the only basis by which the rights of the parties can be determined, and constitute a bar to any action on the original demand. Both the Courts below have found that there was a submission to arbitration, and that the award is valid, and from the authorities quoted it would be seen that the fact that the terms of the award have not been fully carried out will not prevent it operating as an adjudication between the parties as to their respective rights. Under this award the plaintiff is entitled to an annual payment of Rs. 55 per guntha from the defendants, which he seeks in the present case, and it was rightly allowed to him by the first Court.

7. No point as regards limitation arises. It is argued that this is a suit for specific performance of the award, and is governed by Article 113 of the Indian Limitation Act. The plaintiff, however, seeks to recover a sum which is payable annually for three years only, and this being a recurring right, no question of limitation arises. Moreover, the argument that this is a suit for the specific performance of a contract is answered by Bhajahary Saha Banikya v. Behary Lal Basak, where it is held that a suit for recovery of possession of land on declaration of the plaintiff's right thereto on the basis of an award cannot be regarded as a suit for the specific performance of a contract. In that case the suit was held to be governed by Article 144.

8. In these circumstances, the view of the lower appellate Court appears to be wrong. The decree will be set aside, and the decree of the first Court restored, with costs throughout.

N.J. Wadia, J.

9. I agree. There are concurrent findings of both the lower Courts that the award was validly made, that there was a proper reference to arbitration, and that the award had, at the time it was made, been accepted by both the parties. There is nothing in the written statement of the defendants to suggest that the parties had expressly agreed not to act upon the award and to restore the original state of things. As a matter of fact, in the circumstances of this case it would not have been possible to restore the original position, since the principal cause, according to the plaintiff, of the reference to arbitration was the plaintiff's objection to the acquisition of the land and the defendants' anxiety to get the acquisition proceedings through as quickly as possible. Once the acquisition had been made, and the land became the property of the railway company, it was no longer possible for the parties to the award to go back to their original position.

10. It has been suggested that even though there might be no express agreement between the parties not to act upon the award, this could be inferred from their conduct. It is argued that nothing had been done by either party which could be construed as an action taken upon the award. This is an argument which I find difficult to understand. It is clear from the plaint and from the award itself that the principal object of the parties in referring the matter to arbitration was the objection raised by the plaintiff to the acquisition. In consequence of the award the plaintiff withdrew that objection, allowed the acquisition proceedings to go through, and the land was acquired and taken possession of by Government. The plaintiff's withdrawing from his opposition to the acquisition and refraining from filing a suit, as he had threatened to do, was clearly in consequence of the award and in pursuance of its terms. It is true that there was a delay of seven years on his part in claiming the amount of Rs. 495 a year to which under the award he was entitled. That delay has been explained by him. According to him it was agreed between him and the then agent of the defendant company that the amount which he received from the railway company by way of compensation for the land acquired from him was to be taken by him in satisfaction of the rent payable to him by the defendants. He has further explained that when that amount was exhausted he had claimed the rent, and when this was denied, the suit was filed. The explanation appears to me sufficient to justify the delay in the filing of the suit. An attempt was made in the course of this appeal to show that the amount due to the defendants from the plaintiff under the terms of the award was much larger than the sum of Rs. 1,363 mentioned by the plaintiff. Beyond a statement elicited in the cross-examination of one of the plaintiff's witnesses there is nothing whatever on the record to show that the amount due from the plaintiff to the defendants under the award was Rs. 4,000. The defendants' written statement makes no mention of this amount. On the contrary it expressly refers to the amount of Rs. 1,363 mentioned by the plaintiff himself. During the trial of the suit no attempt was made at any time to show that a larger amount than Rs. 1,363 was due from the plaintiff. The plaintiff's conduct in not demanding rent from the defendants till 1926 cannot, under the circumstances stated by him, be taken to mean that he had agreed not to act upon the award. Even if the award had not been acted upon by both parties, that by itself would not be sufficient to justify us in holding that the parties had agreed to restore the former state of things. In the present case, from the very circumstances it was impossible that the plaintiff could have agreed not to act upon the award. He had done the principal thing which under the award he had to do, while the defendantsh ad done nothing. The fact that he had received compensation from Government could not in any way have satisfied him since he would have got the compensation in any case under the Land Acquisition Act, even without a reference to arbitration. Defendants could never have restored the plaintiff to his former position, and under such circumstances it is difficult to understand how the plaintiff could ever have agreed not to act upon the award. The finding of the lower appellate Court, therefore, that the award was not acted upon, and that the parties did not intend to act upon it, cannot be supported.

11. The other ground on which the lower appellate Court decided against the plaintiff was that the agreement in the award for the payment of a sum of Rs. 55 per guntha per year by the defendants to the plaintiff was a lease, and therefore required registration. The agreement could not be a lease since from the date of the acquisition the plaintiff ceased to have any rights over the land, the ownership of which passed to the railway company, and could not therefore lease it. The agreement was only for payment of a certain sum in consideration of the plaintiff withdrawing his objection to the acquisition. Such an agreement could not be considered as a lease, and would not require registration. It was argued for the respondent that the plaintiff's claim was time-barred since the award merely declared the rights of the parties and provided for proper deeds being executed; that the plaintiff's suit must, therefore, be treated as a suit for specific performance of the terms of the award, and as such would be time-barred under Article 113 of the Indian Limitation Act. The article in the award which relates to the payment of rent does not contemplate the execution of any document to carry out the agreement. In this case no document was necessary beyond the award itself as regards the payment of the annual amount by the defendants. It is true that the last clause of the award makes a provision that the parties agreed to execute such documents as may be required by law. But this apparently refers to any documents which might be necessary if the Harivallabhdas Mulchand Mill wanted to exercise the option which had been left to it under the award to make use of the siding. Clause 2 of the award says that in case the Harivallabhdas Mill has to make use of any land of the New Maneckchowk Mills for taking a siding for its own use, then the New Maneckchowk Mills should give the said land and the Harivallabhdas Mill should pay to the New Maneckchowk Mills rent at a certain rate per guntha and should execute at its own cost such registered documents as may be required by law. With regard to the rights which the plaintiff claims under the award, the award is not a declaratory one, and Article 113 of the Indian Limitation Act would not apply.

12. The decision of the lower appellate Court must, in my opinion, be reversed, and that of the trial Court restored.


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