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1969 DIGILAW 168 (DEL)

BALDEV MITTAR AND TIRATH PARKASH v. BASANT RAM

1969-09-19

S.N.SHANKAR

body1969
S. N. SHANKAR ( 1 ) THIS revision is directed against the order of the Additional District Judge, Delhi, dated 10th May, 1965. dismissing the appeal of the present petitioner and affirming the order of the trial Court refusing an award, filed before it in a dispute between the parties, to be made a rule of the Court. ( 2 ) BEFORE dealing with the contentions raised, it will be appropriate to briefly state the facts which have led to the present litigation. Baldev Mittar and Tirath Parkash petitioners herein and Basant Ram and Bhagwan Das respondents in this revision carried on business in partnership under the name of Jhol Brothers. On disputes arising between them, they appointed one Shri Ram Labhaya Kapoor as Arbitrator to decide the same. The Arbitrator gave his award dated 4th May, 1962. dividing the partnership assets and held that the back portion of the shop premises No. 2706, which was being used by the firm as godown with three doors on the back side. was allotted to Basant Ram and he was to pay Rs. 35. 00 per month on account of rent for this portion to the landlord and the front portion of the same premises was allotted to the other three partners, Bhagwan Das, Tirath Parkash and Baldev Mittar, who were held to be liable to pay the balance of the rent payable to landlord for the entire premises. He further held that Basant Ram was to be provided with goods and raw materials worth Rs. 1,000. 00 by the other partners in order to enable him to continue his business separately in the portion allotted to him and the remaining partners thereafter were to be entitled to the remaining assets of the firm Jhol Brothers including its goodwill and were also liable for its debts and liabilities and that they were to keep Basant Ram saved and indemnified against any claims, demands, costs, losses and damages in respect of the firm Messrs Jhol Brothers. This award, it is not denied, was implemented between the parties, and they entered into separate possessions of the respective shares of the premises allotted to them in terms of the award and the goods and raw materials worth Rs. 1,000 were also given over by the other partners to Basant Ram as directed in the award. This award, it is not denied, was implemented between the parties, and they entered into separate possessions of the respective shares of the premises allotted to them in terms of the award and the goods and raw materials worth Rs. 1,000 were also given over by the other partners to Basant Ram as directed in the award. On 13th of June, 1962, the Arbitrator filed this award in Court and prayed that it may be made a rule of the Court. Notice of the filing of the award was issued to the parties, and was served on Basant Ram on 30th of July, 1962. On 7th of September. 1962, he filed objections to the award and prayed that it may be set aside. No objections were filed by the other partners. During the pendency of his objections, on 10th of October, 1962. Basant Ram also filed an application under Section 33 of the Arbitration Act, which was later not pressed by him and was consequently dismissed. On the objections filed by Basant Ram, the learned trial Court framed the following issues: (1) Whether the objections of Basant Ram are within time? (He having been served on 30-7-1962?) (2) Whether the award is illegal, void, and without jurisdiction as given in preliminary objection No. 1 dated 28-8-1962? (3) Whether the landlord consented to the severance of the tenancy of the parties? If not. with what effect? (4) Whether Basant Ram is estopped from taking the objections? (5) Whether the objectors received goods and cash worth Rs. 1,000. 00 and as such the award has been acted upon? If so, with what effect? (6) Whether the objections under S. 33 Arbitration Act, filed on 10-10-1962 are competent and maintainable? (7) Whether the agreement dated 1-5-1962 is invalid, illegal and unenforceable as alleged? (8) Whether the award is liable to be set aside on objections taken in para 7 of the objections under S. 33 of the Arbitration Act (dated 9-10-1962)? (9) Relief. ( 3 ) ISSUES 1, 6, 7 and 8 were decided against Basant Ram and it was held that objections filed by him were barred by time. Under issues 4 and 5, it was held that Basant Ram had already received goods and cash worth Rs. 1,000. 00 but he was not estopped from challenging the award. (9) Relief. ( 3 ) ISSUES 1, 6, 7 and 8 were decided against Basant Ram and it was held that objections filed by him were barred by time. Under issues 4 and 5, it was held that Basant Ram had already received goods and cash worth Rs. 1,000. 00 but he was not estopped from challenging the award. Under issues 2 and 3 the finding was that the landlord had not consented to the severance of the tenancy as directed by the award and the same was, therefore, illegal. By order dated 25th of May, 1963, with these findings, the learned trial Judge in exercise of his inherent powers refused to make the award a rule of the Court. He also directed Basant Ram to deposit in Court the amount of Rs. 1,000. 00 for payment to the other partners. Aggrieved from this, the other partners went up in appeal and the learned Additional District Judge reiving on Hastimal Dali Chand Bohra v. Hira Lal Moti Chand, AIP 1954 Bom 243, held that the trial Court was justified in the circumstances of this case to invoke its inherent powers and to refuse to make the award a rule of the Court. Following Smt. Dulari Devi v. Rajinder Prakash, AIR 1959 All 711 , the learned Judge further held that as this award touched the rights of the landlord, who was a non-party to the arbitration agreement, the Arbitrator was guilty of judidal misconduct, and the award deserved to be set aside. In support of his conclusion he also referred to several practical difficulties in the matter of actual payment of rent of the entire premises to the landlord by one of the partners, when the landlord was not willing to break up the tenancy, and observed that this would result in multiplicity of judicial proceedings, and, for this reason also the award was illegal. ( 4 ) I have heard the learned counsel for the parties. Pt. Maharaj Kishan, appearing for the respondents, has taken a preliminary objection that this revision is not maintainable. ( 4 ) I have heard the learned counsel for the parties. Pt. Maharaj Kishan, appearing for the respondents, has taken a preliminary objection that this revision is not maintainable. I do not, however, see any substance in this contention, as I am of the view that in this case the Court below has failed to observe the mandatory provisions of Section 17 of the Arbitration Act and has acted Illegally and with material irregularity in the exercise of its jurisdiction in setting aside the award on extraneous grounds. ( 5 ) SECTION 17 of the Arbitration Act reads as under: "17. Where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall, after the time for making an application to set aside the award has expired, or suchapplication having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with, the award. " A bare reading of the section would show that if the Court sees no cause to remit the award for reconsideration a contingency provided in Section 16 of the Act, or to set it aside, on grounds mentioned in Section 30 of the Act, it shall proceed to pronounce judgment according to the award. This position in law is well established. Reference in this connection may also be made to Y. L. Paul v. G. C. Joseph, AIR 1948 Mad 512, where when time for making an application for setting aside an award had expired, the applicant was held to be not entitled to show grounds upon which the award could be set aside and was also held not to be entitled to resist the prayer for filing of the award. The learned counsel for the respondents, however, contends that normally it would be so but in a case where the Court finds that third-party interests were involved in the award, it has a discretion to refuse to make it a rule of the Court. In support of this proposition, he places reliance on AIR 1954 Bom 243 (supra), which has also been referred to by the learned Court below. In. In support of this proposition, he places reliance on AIR 1954 Bom 243 (supra), which has also been referred to by the learned Court below. In. that case A. I. R. the Arbitrator held that the agreement between the parties was one of mortgage and not of sale and on that footing directed defendants 1 to 3 in those proceedings to pay to the plaintiff Rs. 8,500. 00 as interest at the rate mentioned in the award. The principal contention raised before the Court for resisting this award being made a rule of the Court and noticed on page 244, column 1 of the Report, with reference to which the decision was given, was that the Arbitrator had no jurisdiction to pass a virtual decree on the mortgage as he had purported to do in that case, because, according to the defendants, it was beyond the jurisdiction of the Arbitrator, as the dispute referred for his decision was simply whether the transfer of the defendants properties should take the form of a sale or a mortgage and nothing more. In the award, the Arbitrator directed not only that the mortgage deed should be executed by the defendants in favour of the plaintiff but also that in certain contingencies the plaintiff would execute the award itself and recover the amount by sale of the mortgaged properties. It was in this context that while affirming; the legal proposition on page 245, column 1 of the Report, that if a party to an award wants to challenge its validity on any ground and desires the award to be remitted or set aside, he has to make an application in that behalf, the Court observed that it would not follow that the Court cannot suo motu set aside the award in a proper case. If the award directed a party to do an act, which was prohibited by law or if it was otherwise patently illegal or void, the Court held that it was open to it to consider this patent defect suo motu. This authority will not help the respondents in this case, as there is no illegality or patent defect in the present award. It is not disputed that the partnership Messrs. Jhol Brothers consisted of four persons, who were all parties to the present reference on the basis of which this award has been made. This authority will not help the respondents in this case, as there is no illegality or patent defect in the present award. It is not disputed that the partnership Messrs. Jhol Brothers consisted of four persons, who were all parties to the present reference on the basis of which this award has been made. As partners, they were joint tenants in respect of the premises and the tenancy stood in the name of the partnership. All that the Arbitrator has done by this award is to allot separate portions of the same premises to the partners to be enjoyed by them separately and has also determined their liabilities for rent in respect of the portions so separated. As far as the landlord is concerned, they continue to be liable to him for the full rent severally as well as jointly, as before. There is nothing illegal in such a division. It is not infrequent that in suitable cases of dissolution of partnership separate portions of the partnership premises are allotted by mutual arrangement to individual partners to entitle them to conti- nue their business separately. This does not involve any adjudication of the rights of the landlord. Such an arrangement between the partners does not affect him at all and no third-party interest comes to be involved in such a case. It is admitted before me that the partners in this case entered into separate possessions of their respective portions of the premises in implementation of the award as far back as 1962, and rents have been paid to the landlord during all these years for the entire premises. I fail to see how the award, in these circumstances. Involved the adjudication of any thirdparty interest. Details or the manner in which such an arrangement is worked by the parties concerned, are not at all relevant for purposes of the point in issue so long as the arrangement arrived at by the parties is not illegal or otherwise void. I fail to see how the award, in these circumstances. Involved the adjudication of any thirdparty interest. Details or the manner in which such an arrangement is worked by the parties concerned, are not at all relevant for purposes of the point in issue so long as the arrangement arrived at by the parties is not illegal or otherwise void. Reference in this connection may also be made to Shyam Sunder v. Brij Lal Chaman Lal Purani, AIR 1968 Pandh 28, where on the dissolution of a firm consisting of two partners due to the death of one of the partners, the surviving partner alone came to be in possession of the entire tenancy premises of the partnership and it was contended before the Court that this amounted to a transfer of the premises. The argument was repelled and it was held that in case of a dissolution of a firm where a partner came into exclusive enjoyment of the part of the joint property coming to his share, all that happened was that a person in joint possession came to be in separate and exclusive possession of the same property. There is no change either in regard to the tenancy or the conditions under which the premises is held. ( 6 ) IN Badra Narain Jha v. Rameshwar Dayal Singh, AIR 1951 SC 186 . the effect of inter se partition between the tenants came up for consideration and their Lordships observed: "in law, therefore, an inter se partition of the mokarrari interest could not affect the integrity of the lease and it could not be said that Bisheshwar Dayal Singh under the alleged partition became a mokarraridar under another contract of lease. Suchpartitions amongst several lessees inter se are usually made for convenience of enjoyment of the leasehold but they do not in any way affect the integrity of the tenancy or make each holder of an interest in it as a separate holder of a different tenancy. Suchpartitions amongst several lessees inter se are usually made for convenience of enjoyment of the leasehold but they do not in any way affect the integrity of the tenancy or make each holder of an interest in it as a separate holder of a different tenancy. "i am, therefore, unable to sustain the submission of the learned counsel for the respondents that in allotting different parts of the tenancy premises of the partnership to the two sets of partners, the award in any way affected the rights of the landlord or for that reason became illegal and could be set aside by the Court 1970 Delhi/8 VI G 24 suo motu in exercise of its inherent powers. The Court after holding that the objections filed by Basant Ram were barred by time should have proceeded to deal with the award in terms of Section 17 of the Arbitration Act and, in the facts of this case, should have proceeded to pronounce judgment in terms of it. ( 7 ) MY attention has also been drawn to the objections to the award filed by Basant Ram. In para 1 as a preliminary objection, he submitted that the award involved division about the tenancy premises, which was beyond the competency of the Arbitrator to decide and that this could be done only with the consent and the authority of the landlord in writing and so the division of the tenancy premises as illegal, void, without jurisdiction and unenforceable in law. This objection involved questions of fact as well as law. Basant Ram s application under Section 33 already stood dismissed. His objections under Section 30 also stood time-barred. In these circumstances, therefore, it was not open to the Court to invoke its inherent powers to sustain this objection. Exactly a similar situation arose in Madan Lal v. Sunder Lal, AIR 1967 SC 1233 . In this case the Court held: "assuming that the Court has power to set aside the award suo motu, that power cannot be exercised to set aside an award on grounds which fall under S. 30 of the Act, if taken in an objection petition filed more than 30 days after service of notice of filing of the award, for if that were so the limitation provided under Art. 158 of the Limitation Act would be completely negatived. "this case, therefore, leaves no scope for the invocation of the inherent powers of the Court for the setting aside of the award in the circumstances of the present case. ( 8 ) THE learned counsel for the respondents had placed reliance on the Bench decision of the Patna High Court in Deep Narain Singh v. Mt. Dhaneshwari, AIR 1960 Pat 201 , where the suo motu powers of the Court were affirmed in the facts of that case and to Premji Kumbhabhal v. Union of India, AIR 1965 Assam and Nagaland 81. In the first case, the Court held that it had power under Section 17 itself to set aside the award without waiting for an objection to the award being filed or without considering any application for setting it aside. But that situation would arise, as observed in this very case, where the award was found to be a nullity because of the invalidity of arbitration agreement or for any other similar reason or when the award was prima facie illegal and not fit to be maintained. In the second case of Assam, the Court found that the award on the face of It was in excess of the jurisdiction of the Arbitrator and was for that reason set aside. These cases do not in any way help the respondents. ( 9 ) IN view of this position of law, I am of the view that the setting aside of the award by the Court in this case was wholly wrong and erroneous and this revision petition deserves to be accepted, but, in the circumstances of the case. the parties should be left to bear their own costs. It is ordered accordingly.