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Parkash Lal Vs. Shori Lal and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtDelhi High Court
Decided On
Case NumberFirst Appeal No. 159 of 1983
Judge
Reported in26(1984)DLT458
ActsArbitration Act, 1940 - Sections 30
AppellantParkash Lal
RespondentShori Lal and anr.
Advocates: G.L. Rawal and; R.P. Bansal, Advs
Cases ReferredRattan Lal Sharma v. Purshottam Harjit
Excerpt:
a) in the instant case arbitration proceedings were closed on 15th may, 1975 and arbitrator took up the matter and concluded in award two years later- the lower court held that once the proceedings were closed, it cannot be considered as pending-the arbitrator shall be deemed to have entered upon reference and passed award on timeb) in the instant case, only one party requested arbitrator to enter upon reference- it was questioned whether reference could be unilateral- it was found that reference requires assent from both sides-in absence of either agreement by both sides about the terms of reference or an order under section 20(4) of the arbitration act, 1940 compelling a reference, the arbitrator is not vested with exclusive jurisdiction - - during the pendency of the proceedings,..........23-9-1977 the arbitrator gave his award. he decided : - (1)shorilal shall be the sole owner of the plot. parkashlal shall be deemed to have relinquished his share and shorilal shall be entitled to have the lease executed in his favor. (2) the shop no. 119 shall be in the sole tenancy and occupation of shorilal. (3) parkash lal shall be paid rs. 15,000.00 by shorilal in settlement of all his, claims, rights and interest in respect of the plot and the partnership.(11) shorilal has since then surrendered the shop to the landlady. he has not said why in spite of having won the case. (12) on 19-10-1977, shorilal field an application under sections 14 and 17 of the arbitration act for direction to the arbitrator to file the award for making the award a rule of the court. (13) the arbitrator.....
Judgment:

M.L. Jain, J.

(1) In April 1948, Parkasblal, Shorilal and Ram Nath began a partnership business in the name and style of M/s Raj Kamal Electric Press. In November 1949, Ram Nath left the partnership. The other two continued. This is clear from the partnership deed (Ex DW-1/P-2) dated 1-7-1955.

(2) On 2-8-1969 the aforesaid remaining two partners entered into an agreement (Ex. DW-1/P-1) by which they appointed their friend Radha Kishan Arora as an arbitrator to settle the disputes relating to dissolution of the partnership. Later on, they entered into a deed of dissolution on 8-8-1969, by which the name, goodwill and other assets of the firm were assigned to Shorilal. All disputes stood resolved except those relating to a shop and a plot.

(I)A shop No. 119 Indira Market was taken on rent from Kishan Singh by the firm. Kishan Singh had taken up proceedings for ejectment. Those proceedings were to be defended by both the partners at their joint cost in equal proportion. During the pendency of the proceedings, Shorilal shall enjoy the benefit of occupation and use and pay the rents. After the conclusion of the proceedings they will mutually decided as to who should have the exclusive possession. If amicable settlement was not possible, Radha Kishan Arora shall arbitrate. (ii) On 15-10-1966, Rajkamal Electric Press applied for allotment of an industrial plot to the Delhi Development Authority, (here in after referred to as DDA. The partnership had deposited a sum of Rs. 10,800.00 with the Dda for the purpose. The dissolution deed provided that the plot when allotted and con veyed shall be the property of both the parties in equal proportion. All the expenses thereof will be borne equally. On the registration of the lease, the plot shall be in the ownership and possession of the parties in equal proportion. One of them could, however, relinquish his share in the plot in favor of the other. Any dispute regarding the manner and way of use of the plot or any other matter or thing in respect of rights of the parties regarding the said plot shall be referred to the sole arbitration of Radha Kishan Arora and his decision shall be final. On 24-10-1970, the Dd Allotted the plot on G.T. Karnal Road. On 4-10-1976, the D.D.A. wrote to the firm that in terms of the dissolution deed the plot cannot be registered in their name. On 11-4-1977 the D.D.A. informed Parkash Lal that the lease of the plot could be registered in the name of both the parties. Possession of the plot was handed over on 25-5-1977. On 31-5-1977 the D.D.A. issued a no objection certificate for consideration of building plan. On 18-6-1977 the D.D.A. wrote to the firm that the lease deed will be executed in the name of the firm and that the division of the plot is not allowed. On 17-10-1977 the D.D.A. wrote to Parkash Lal that the plot can be registered in the name of the firm with Shri Parkash Lal and Shorilal as its partners. On 13-3-1984, the D.D.A. has issued notice why the allotment be not cancelled.

(3) Shorilal on 19-7-1974 asked the said arbitrator to settle the disputes that arose between them. The arbitrator was ill and took up the matter on 15-3-1975 upon a memo given by Shorilal.

(4) Parkash Lal filed an objection on 29-3-1975 that the matter of shop is still pending in the court and the lease deed of the plot has not yet been registered. There is thus occasion for any dispute and arbitration. Besides, he charged the arbitrator with bias and prejudice.

(5) On 15-5-1975 the arbitrator closed the reference and permitted the parties to approach him as and when necessary.

(6) On 24-5-1977 Shorilal wrote that Prakash Lal has not paid the amount falling to his share in connection with the litigation of the shop. The Press was required to be shifted to the said plot. Due to intransigence of Parkash lal the disputes cannot be settled. He requested the arbitrator to enter upon reference.

(7) On 1-6-1977 the arbitrator resumed proceedings and issued notices.

(8) On 5-6-1977 Parkashlal filed some letters of the D.D A. On 11-6-1977 Parkashlal repeated the same objections as he had done earlier and asked the arbitrator not to proceed.

(9) On 12-7-1977 Shorilal wrote to the arbitrator that the Rent Controller by his order of 31-1-1977 has held that Raj Kamal Electric Press is the tenant. He has also paid the amount of rents due. Parkashlal has contributed nothing. As regards the plot he stated that the plot was meant for the Press which has fallen to his share and the plot cannot be divided.

(10) On 23-9-1977 the arbitrator gave his award. He decided : -

(1)Shorilal shall be the sole owner of the plot. Parkashlal shall be deemed to have relinquished his share and Shorilal shall be entitled to have the lease executed in his favor. (2) The shop No. 119 shall be in the sole tenancy and occupation of Shorilal. (3) Parkash Lal shall be paid Rs. 15,000.00 by Shorilal in settlement of all his, claims, rights and interest in respect of the plot and the partnership.

(11) Shorilal has since then surrendered the shop to the landlady. He has not said why in spite of having won the case.

(12) On 19-10-1977, Shorilal field an application under sections 14 and 17 of the Arbitration Act for direction to the arbitrator to file the award for making the award a rule of the court.

(13) The arbitrator filed the award on 28-7-1978. Parkash Lal filed his objections. The learned trial court rejected the objections and made the award a rule of the court on 4-6-1980. This appeal is directed against the decision.

(14) I have heard the learned counsel and seen the record.

(15) The record of proceedings of the arbitrator shows that the dispute regarding the shop was not referred by Shorilal in his letter of 19-7-1974. He only said that there was dispute regarding the plot. But in his letter of 24-5-1977 he said that he had spent a considerable sum on the litigation relating to the shop and towards payment of rent. In his accompanying claim he disclosed that the rent controller has on 31-1-1977 held that the Raj Kamal Electric Press is the tenant. There was a dispute with regard to the execution of the lease deed of the plot.

(16) The arbitrator decided that on payment of Rs. 15,000.00 to him, Parkashlal shall be deemed to have surrendered his share and that the plot and the shop shall exclusively belong to Shorilal.

(17) The first objection against the award that was raised was that the arbitrator entered upon the arbitration on the 9th of July 1974 but he did not proceed with the arbitration because he was unwell. On 15th of March, 1975 Shorilal presented himself in person and gave him a letter for arbitration. On 15-5-1975 the arbitrator closed the matter after recording the statement of Shorilal by which Shorilal withdrew the arbitration. The arbitrator directed that they can again apply to him for arbitration. It appears that again Shorilal approached the arbitrator by a letter sent by registered post and thereafter the arbitrator took up the matter on 1-6-1977 and concluded in an award on 23-9-1977. The learned lower court held that after closing the proceedings on 15-5-1975 on the ground that the reference was premature it cannot be considered that the proceedings were pending between 15-5-1975 and 1-6-1977. He held that the arbitrator shall be deemed to have entered upon the reference on 1-6-1977 and, thereforee, the award was within time. I think the learned lower court was right in this. As a matter of fact the consideration of the reference commenced on 1-6-1977 and the previous proceedings cannot be taken into account.

(18) The second contention raised on behalf of the appellant is that the award was unilateral. There is no doubt that it was only Shorilal who asked the arbitrator to enter upon the reference. In Thawardas Pherumal and another v. Union of India : [1955]2SCR48 , it was held that a reference requires the assent of both sides. If one side is not prepared to submit a given matter to arbitration when there is an agreement between them it should be referred, the recourse must be had to the court under-section 20 of the Arbitration Act and the recalcitrant party can then be compelled to submit the matter under sub-section (4) thereof. In the absence of either agreement by both sides about the terms of reference or an order under section 20(4) compelling a reference, the arbitrator is not vested with the necessary exclusive jurisdiction. This objection is upheld.

(19) The third objection was that the award was a non-speaking award but no objection can be raised in this regard as an arbitrator can make such an award.

(20) The fourth submission was that the reference was pre-mature because no dispute had arisen on 1-6-1977. This contention is partly correct. According to the terms of the dissolution deed to the which I have already made a reference the ejectment proceedings in relation to the shop were to be defended by both the parties in equal proportion. When the matter was decided by the Controller, the parties were decide as to who should have the exclusive possession, if they could not then the matter would be referred to arbitration. The Controller bad given his decision in January 1977 in favor of the firm. The allegation was that the parties have failed to arrive at an amicable solution as to the exclusive occupation of the shop. There was thus a dispute in respect of the shop.

(21) As regards the plot it was settled by the dissolution deed that it was to be a joint property. It is also clear from the correspondence with the D.D.A. that it could be registered in the names of both the parties and unless one of them relinquished his share in favor of the other, some arrangement for its use shall be made and if no arrangement could be arrived at the arbitrator was to decide how the joint ownership was to be exercised and how the parties shall deal with the plot. There is no doubt that the electric press was to be shifted to this plot and, thereforee, it can be used only by Shorilal, but this matter could arise only after the lease deed was executed and registered. Until then there was no question of the manner of its use. In respect of the plot the award was certainly pre-mature. The arbitration agreement provided that the plot when allotted shall be a joint property and the lease deed shall be executed in joint name. No lease deed was executed and registered and, thereforee, there was no question of any dispute as to its use and occupation. Apart from this, Parkashlal had not surrendered his rights and thereforee, the arbitrator did not have jurisdiction to say that he shall be deemed to have surrendered his share until Parkashlal agreed, he had no right to extinguish his share. The arbitrator has exceeded the authrity provided by the deed of dissolution.

(22) The fifth contention is that the arbitrator has misconducted in as much as:-

(A)he recorded no evidence ; (b) he awarded a grossly inadequate amount in lieu of extinction of all rights of Parkashlal in the joint tenancy in the shop and the joint ownership of the plot ; and (c) he disqualified himself on account of bias.

(23) The proceedings of the arbitrator show that there was no evidence before the arbitrator of any kind by which he could arrive at any amount to be paid by one party to the other. The award of Rs. 15,000.00 was a grossly inadequate sum in view of the prevailing prices of the plot and value of the tenancy in the shop. There was no allegation or evidence before the arbitrator respecting the value of the tenancy and the plot. According to the evidence led by Parkashlal before the court below, the value of the plot was in the neighborhood of Rs. l,50,000.00 . Thus the award of Rs. 15,000.00 is a grossly inadequate price for what Parkashlal is asked to part with. It is also admitted that Radha Kishan attended the marriage of the son of Shorilal and the funeral rites of his mother. The appellant charged that the arbitrator was having his material printed from Shorilal in the said Press after dissolution of partnership. I do not think that the visit on the occasion of the marriage or the last rites of the mother are any evidence of collusion or bias but his work of printing being done in the Press of one party justifies an apprehension of bias. I would, thereforee, hold that there has been misconduct on the part of the arbitrator.

(24) The sixth objection is that the award required to be registered and since no registration had taken place, no decree can be pronounced upon such an award. To this objection, the reply is that this objection was not taken in the memo of objections by Parkashlal and could not now be permitted to be raised and that the award did not require registration.

(25) It stands settled by Rattan Lal Sharma v. Purshotam Hari : [1974]3SCR109 , that if an award requires to be registered and is not registered, it cannot be made a rule of the court. In Commissioner of Income Tax, West Bengal v .Juggilal Kamalapat AlR 1967 S.C. 401 the court did hold that Where a partner relinquishes his share in the assests of partnership, such deed does not require registration, but it was not categorical and added that a deed of relinquishment was in the nature of a gift and would be operative at least in respect of movable property. Now the deed of dissolution of 8-8-1969 did not perhaps require registration but the award did. The award assigned the share of Parkashlal in the plot and in the tenancy in the shop to Shorilal for a consideration of Rs. 15,000.00 it was certainly document which requires to be registered. It is the same type of award as was in Rattan Lal Sharma v. Purshottam Harjit (Supra). It was urged that this was the question which could be raised within 30 days of the service of notice of the filing of the award and cannot be raised after that period and that too in appeal. But it being a legal question could be raised at any stage because the mistake is apparent on the face of the record and is capable of determination without any evidence. I uphold this objection.

(26) I would, thereforee, hold that the award is hit by clauses (a) and (c) of section 30 of the Arbiration Act and the impugned order cannot be justified. I accept the appeal and quash the impugned order. The costs of the appeal shall be borne by the respondent.


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