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V.S. Ramanuja Chariar Vs. VeenA. AvannA. ManA. Vatapathra Sayee Thathachariar - Court Judgment

LegalCrystal Citation
SubjectCivil;Arbitration
CourtChennai
Decided On
Reported inAIR1943Mad172; (1942)2MLJ698
AppellantV.S. Ramanuja Chariar
RespondentVeenA. AvannA. ManA. Vatapathra Sayee Thathachariar
Cases ReferredChidambaram Chettiar v. Ayyappa Chettiar
Excerpt:
- - it refers to the muchilika of 3rd september, 1933, and states that all the properties and debts having been divided 'as regards the money-lending items due to the family in your name, it has been decided that you should make good rs. he has in fact done that which a court would have done in similar circumstances on the same materials and has made the best possible division of the outstandings which was practicable. 9. the learned subordinate judge finds that the award is also bad because the arbitrator has imported his personal knowledge into his decisions......is the younger brother of the defendant and it was his case that the division of their joint family properties was by consent of parties referred to the arbitration of their brother-in-law, p.w. 4, who passed an award on 21st november, 1934, which award the defendant had wrongfully refused to accept. the defendant raised many contentions, most of which have been held to be unfounded in fact. he denied the truth of the reference to arbitration, setting up another reference of a completely different character, denied the existence of a joint family at the time when the reference was made and made various allegations suggesting partiality on the part of the arbitrator. the trial court has found that the muchilika ex. a, which contains the reference to arbitration is true, that the.....
Judgment:

Wadsworth, J.

1. The appellant was the plaintiff in a suit under paragraph 20 of Schedule II, Civil Procedure Code, to enforce an award in a matter referred to arbitration without the intervention of the Court. The plaintiff is the younger brother of the defendant and it was his case that the division of their joint family properties was by consent of parties referred to the arbitration of their brother-in-law, P.W. 4, who passed an award on 21st November, 1934, which award the defendant had wrongfully refused to accept. The defendant raised many contentions, most of which have been held to be unfounded in fact. He denied the truth of the reference to arbitration, setting up another reference of a completely different character, denied the existence of a joint family at the time when the reference was made and made various allegations suggesting partiality on the part of the arbitrator. The trial Court has found that the muchilika Ex. A, which contains the reference to arbitration is true, that the other muchilika Ex. LIV put forward by the defendant is false and that the plaintiff's version of the facts is substantially the truth. It is not now contended that these findings are incorrect. The learned Subordinate Judge has, however, dismissed the suit on the ground of various legal defects in the proceedings of the arbitrator.

2. The reference to arbitration is contained in Ex. A, dated 3rd September, 1933, the material portion of which runs as follows:

Since certain disputes arose in the matter of effecting a division, into two parts, of the nanja, punja, house and other immovable properties belonging to our family and the money-lending items due to the family through individual No. 1, out of us, and the debts payable, it was found impossible to make a division. In these circumstances, we requested you to act as mediator in regard to the aforesaid division and as to how we should act regarding the same and agreeing that both of us would act according to the decision passed by you and that we would execute documents' as per the award that you may pass in that behalf, we have executed this muchilika in your favour. Therefore both of us shall act according to the decision that you would make in the matter and conduct ourselves accordingly.

It will be noticed that this reference contemplates the passing of an award by the arbitrator and the execution of documents by the parties in accordance with the terms of that award. Apart from these provisions the reference does not indicate in any way how the arbitrator shall proceed. On 20th April, 1934, the parties met the arbitrator at Srivilliputtur and a decision was reached, apparently by consent, as to the way in which the immovable properties in the neighbourhood of Srivilliputtur should be divided. Nothing appears to have been drawn up in writing on this date and it is clear that the money-lending capital still remained to be divided. On 1st May 19,34, the plaintiff took a lease from his sister Janaki of the lands settled on her under a deed of 1924, Ex. E. This action of the plaintiff provoked the defendant and on the 2nd May, under Ex. LV he executed a deed in which he purported to cancel the settlement Ex. E. On the next day, 3rd May 1934, a registered notice Ex. XXIX was issued by the arbitrator to the parties reciting the reference to arbitration, the inspection of the Srivilliputtur properties and the decision of the 20th April regarding the immovable properties and the admitted debts. He forwarded a draft partition agreement which makes a division of the bulk of the immovable properties and the debts due by the two brothers. In the same notice the brothers are required to appear before the arbitrator on 5th June, 1934, to produce evidence of debts alleged to have been incurred individually for family purposes and of the amounts due to the family in respect of money-lending dealings. On 7th May, 1934, the defendant sent a notice, Ex. J, to the arbitrator in which he denied having executed any such reference as is mentioned in Ex. XXIX, denied having consented to the division of the immovables and referred to certain Koilpatti lands and other properties as having been got under a will and asserted that the family had been divided ever since 1904. The effect of Ex. J is a denial by the defendant of the whole basis of the arbitration and an assertion that there were no joint family properties capable of division. The Koilpatti lands referred to are certain dry lands of small value which appear to have been omitted from the draft partition deed attached to Ex. XXIX by oversight. After the exchange of further notices between the parties, the arbitrator on 15th June, 1934, sent a further notice Ex. K-l to the defendant stating that the defendant had not appeared on the date fixed for hearing, but the plaintiff had given a statement of his case and had filed documents and that the matter was reposted to 25th June for the examination of the defendant and that in case of , default a decision would be made ex parte. On the following day a further notice Ex. K-2 was sent intimating that the Koilpatti lands had been divided into two halves, the northern half being allotted to the plaintiff and that the decision with reference to the money-lending transactions was adjourned to 10th July. There is no suggestion that the division of the Koilpatti lands was unfair and the defence claim to these lands as acquired under a will having been found to be untrue, it is evident that the arbitrator, probably reminded of these lands by the defendant's notice, Ex. J, was merely adding to his previous division of the family properties what had been omitted by oversight.

3. On the 11th July, 1934, the arbitrator sent a further notice Ex. K-3 to the defendant. It refers to the muchilika of 3rd September, 1933, and states that all the properties and debts having been divided 'as regards the money-lending items due to the family in your name, it has been decided that you should make good Rs. 4,000 to the said V. S. Ramanujachariar ' (plaintiff)' on the liability of your share of family properties and that an award has been passed on this date containing other particulars.' The English word 'award' is used in this notice. There is 110 suggestion that any written award was in fact passed at this time. But the arbitrator appears to have orally announced his decision regarding the money-lending assets. With reference to these assets the evidence is that all the documents were in the possession of the defendant who was refusing to co-operate with the arbitrator. The plaintiff was able to produce only certain accounts said to have been signed by the defendant showing the financial position of the family in 1909 and 1910 and an abstract of the money-lending documents as they stood in 1913. On the basis of these materials the arbitrator appears to have made & rough calculation of the amount of the money-lending capital which must be presumed to be comprised in the documents suppressed by the defendant and as he was unable to deal with the actual documents he awarded to the plaintiff a half share of the estimated value of these assets.

4. Up to this date we find that the arbitrator has communicated to the defendant three piecemeal decisions regarding the partition of various items of the family property. Firstly, there is the division of the bulk of the immovables and the admitted debts on 20th April communicated with the notice Ex. XXIX of the 3rd May. Secondly, there is the division of the Koilpatti lands communicated under Ex. K-2 of the 26th June, and thirdly, there is the decision regarding the outstandings communicated under Ex. K-3 on the 11th July with this reference to an oral award. Nothing more of importance seems to have happened until the 21st November, 1934, when the arbitrator passed a formal award, Ex. D, which summarises the whole of his proceedings and his various decisions including an observation that neither party has adduced evidence regarding his individual borrowings for the family and that each must therefore be held responsible for his own debts. It is this award which the Court is asked to enforce.

5. It has been rejected by the lower Court on various grounds. Firstly, the learned Subordinate Judge finds that the award is not in conformity with the terms of reference, because instead of dividing the outstandings into two portions they are allotted en bloc to the share of the defendant and he is directed to pay a lump sum of Rs. 4,000 to the plaintiff. It is difficult to see how the award can be held invalid on these grounds. It was the duty of the arbitrator to divide these outstandings as fairly as possible having regard to the materials placed before him. All the essential documents were in the custody of the defendant who deliberately withheld them from the arbitrator's enquiry. The only materials available to the arbitrator were these old accounts furnished by the plaintiff on the basis of which he was able to make a rough estimate of the approximate value of the money-lending capital. It was impossible for him on these materials to divide the individual debts; for he did not know what these debts were, from whom they were due and how much was outstanding under each. The absence of this information was entirely due to the default of the defendant. It seems to us that the arbitrator has done the only, thing which he could possibly have done in these circumstances and has acted on inferences which are the proper legal inferences to draw having regard to the conduct of the defendant. He has in fact done that which a Court would have done in similar circumstances on the same materials and has made the best possible division of the outstandings which was practicable. It would in our opinion be most improper to allow the defendant to defeat the arbitration by the simple process of suppressing all the evidence at his disposal.

6. A mere serious challenge to the validity of the award and in fact the only substantial challenge made actually in the defendant's written statement is based on the contention that the arbitrator has made more than one award and that therefore the arbitration cannot be upheld. The learned Subordinate Judge finds that there were three awards, one on the 20th April, embodied in Ex. XXIX of 3rd May, another relating to the Koilpatti lands on the 26th June, and a third relating to the outstandings on the 11th July, preceding the final award which, is sought to be enforced. It is no doubt the law that an arbitrator must make a single award unless the terms of reference permit him to make a series of awards. The case commonly referred to as authority, for this doctrine is Winter v. Munton (1818) C.P. 2 Moore 723. That was a case in which Winter filed two suits, one against Munton and the other against White. The suits were closely interconnected and a reference to arbitration was first made in Munton's case. Subsequently the Court ordered that White should be made a party to the arbitration between Winter and Munton and that the award should be binding and effectual upon all three as if White had been a party to the original order and that all matters in difference between the three parties jointly and severally should be referred to the determination of the same arbitrator, who should make an award thereof and that the costs in both suits should abide by the award. Instead of making a single award consolidating the two connected disputes the arbitrator made two separate awards, one of the liabilities as between Winter and Munton and the other of the liabilities as between Winter and White. It was held that there was no award determining all the matters in difference between all the parties and that the arbitrator had no power to separate the two disputes and that his award was defective also in that it did not decide whether there were any liabilities between the two defendants White and Munton.

7. It seems clear on the authority of this case and other similar decisions that if in a partition dispute a reference is made of the whole matter to the arbitrator with directions to make an award, the arbitrator would not be empowered to make a series of separate awards each dealing with one branch of the dispute, and this is reasonable, for on the making of an award, the arbitrator would be functus officio and would have no power to do anything further. Moreover, the first award which he made would be defective in that it did not cover the whole of the matters referred. We do not, however, consider that it is the law that an arbitrator dealing with a complicated partition dispute is debarred from taking up the enquiry piecemeal, classifying the evidence according to the subject-matter more or less under issues just as a Court would do and arriving at tentative conclusions on each section of the case, always provided that he does not make anything in the nature of an award in writing until the whole matter is decided. In a partition enquiry the arbitrator must decide firstly what are the properties available for division, before he proceeds to decide how those properties should be divided. The apportionment of the debts will not infrequently depend upon the apportionment of the lands and it is to our minds almost inevitable that an arbitration of this kind should proceed piecemeal. It follows that there is nothing wrong in the procedure of the arbitrator in this ease unless he can be deemed to have made a final and formal award at any of the stages before he passed his award, Ex. D, which is sought to be enforced.

8. When we examine these various stages it does not appear that there was in fact or in intention any final or formal award prior to Ex. D. The notice of 3rd May, Ex. XXIX, enclosing the draft partition is in terms nothing more than a notice calling for the consent of the parties to the draft agreement and requiring them to appear at a future date for the decision of the remaining matters. It is true that the notice speaks of a decision regarding the lands, the word 'faisal' being used. But there is not, in our opinion, anything which can properly be regarded as a final award. The notice of 26th June about the Koilpatti lands is a mere addendum to the decision regarding the immovable properties. Had there been a final award on 3rd May, presumably the arbitrator would not have had the power to revise that award or add to it. But we do not consider that there was any final award embodied in Ex. XXIX. Much emphasis has been placed upon the use of the word 'award' in Ex. K-3 which says that, 'an award has been passed on this date containing other particulars.' No such award appears to have been reduced to writing. The most that there seems to have been is an oral communication of the decision of the arbitrator on the various matters submitted to him. This decision must have been substantially the decision embodied in the formal award, Ex. D, passed some four months later. It does, not appear that the formal award, Ex. D, adds anything to the decisions already communicated in the earlier notices, except perhaps the finding that in the absence of evidence each party must be liable for the debts standing in his own name. We are not prepared to hold on the materials available that there was any final and formal award at the time of Ex. K-3. There was probably an indication given to the plaintiff of the nature of the arbitrator's findings. But this had necessarily to be reduced to a formal document signed by the arbitrator embodying the result of the arbitration as a whole and the only document of this nature is, in our opinion, Ex. D. We therefore hold that the award sought to be enforced is not invalid because of earlier awards in the same matter.

9. The learned Subordinate Judge finds that the award is also bad because the arbitrator has imported his personal knowledge into his decisions. We doubt very much whether as a matter of law an award can be invalidated merely because the arbitrator is personally acquainted with some of the facts upon which a decision is required. No doubt cases might arise in which the use by an arbitrator of his personal knowledge as a ground for rejecting the evidence put before him might amount to misconduct; but much must depend upon the nature of the arbitration and the relations between the arbitrator and the parties. When an arbitrator is apparently chosen for his personal knowledge of the questions in issue, it would be ridiculous to hold that the mere fact of his possessing such personal knowledge and examining the evidence in the light of that personal knowledge would amount to misconduct. So much has been held in Chidambaram Chettiar v. Ayyappa Chettiar (1934) 69 M.L.J. 558. In the present case the parties selected as the arbitrator their own sister's husband, a man intimately connected with the family and necessarily aware of its status and to some extent of its properties, The lower Court has criticised the arbitrator because he judged the truth of Ex. L-l an account filed by the plaintiff showing the financial position of the family, with reference to his personal knowledge of one of the items mentioned in that account which was an assignment made in the presence of the arbitrator many years ago. Curiously enough, the other instance in which the arbitrator has been criticised under this heading is an instance in which the arbitrator believed the evidence of the plaintiff and did not attack that evidence by reference to a transaction alleged to be within the personal knowledge of the arbitrator. That is to say, in one instance the arbitrator is criticized for using his personal knowledge and in the other instance the real burden of the criticism is that he did not use his personal knowledge. It seems to us that when as in this case the arbitrator is chosen from the family circle he must necessarily make the enquiry in the light of his personal knowledge of the family and so long as he bases his enquiry on the materials placed before him read in the light of his knowledge of the family, we do not think that he can be held guilty of misconduct on that account.

10. The learned Subordinate Judge also comes to the conclusion that the arbitrator displayed partiality. The basis for this conclusion is the arbitrator's action in going on with the enquiry when the defendant repudiated the reference and accused him of bias, the action of the arbitrator in awarding a lump sum payment to the plaintiff instead of dividing the outstandings, the action of the arbitrator in pronouncing his award without notice to the parties and in passing his award at a place other than the place where the parties reside. It seems to us that in all these matters the conduct of the arbitrator was correct. It would have been most improper for him to abandon the arbitration merely because the defendant tried to resile from the reference and put forward false pleas as to its nature. The defendant having refused to appear before the arbitrator in response to repeated notices to produce his evidence, there was, in our opinion, no necessity whatever for the arbitrator to give him notice of the date on which he proposed to sign his award. Nor is there any obligation upon an arbitrator to pronounce his award in any particular place or in the presence of the parties.

11. Summing up the case, we have no doubt that the positive assertions of the defendant regarding the facts are almost entirely untrue, that the conduct of the arbitrator has not been marked by partiality and that his procedure in deciding the various sections of the enquiry piecemeal and summing them up in one final award, does not amount to the giving of several awards so as to render his decision invalid. The appeal is therefore allowed with costs throughout and there will be a decree in terms of the award. Ex. D.


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