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1993 DIGILAW 794 (RAJ)

HINDUSTAN DEVELOPMENT CORPORATION LTD. v. RAJASTHAN UDYOG

1993-12-01

M.R.CALLA

body1993
JUDGMENT M. R. Calla, J. - This matter directed against the order dated 22.11.1988 passed in Civil Misc. Cases No. 23/85 and 21/85 (consolidated vide order dated 6.9.1985) by the Additional District Judge No. 1, Bharatpur, was filed in this court on 11.1.1989 as appeal under Section 39(iii) of the Arbitration Act, 1940 and was initially registered as S.B. Civil Misc. Appeal No. 27/89 and was admitted as such on 7.3.89. On this very date i.e., 7.3.89 in the stay file No. 14/89 the operation of the order dated 22.11.1988 passed by the Additional District Judge No. 1, Bharatpur also stayed. All subsequent proceedings have been recorded in the file of stay application and not in the main case file. Under the Court's order dated 5.2.1989, it was treated as Revision. Thereafter, the main case was registered as S.B. Civil Revision Petition No. 163/90 and the stay matter was registered as S.B. Civil Misc. Stay Petition No. 137/90 therein. 2. The facts giving rise to this case are as under : A notification under Section 4 of the Rajasthan Land Acquisition Act, 1953 (hereinafter referred to as "the Rajasthan Act") was issued on 13.3.1973 for acquiring that land comprising of Khasra No. 1134 measuring 237 Bighas belongings to Rajasthan Udyog, Bharatpur for Hindustan Development Corporation, Calcutta. M/s. Rajasthan Udyog, Bharatpur, filed a writ petition challenging aforesaid notification in the Rajasthan High Court as Jodhpur and this writ petition No. 389/74 was dismissed on 23.7.1974. Against this judgment and order dated 23.7.1974 passed by the learned Single Judge an appeal was preferred before Division Bench by M/s. Rajasthan Udyog, Bharatpur 14.8.1974 being D.B. Civil Special Appeal No. 448/74. On 30.9.1975 notification under Section 6 read with Section 17 of the Rajasthan Act was issued for the above land thereafter, Sub-Divisional Officer, Bharatpur issued notices under Section 9 of the Rajasthan Act. On 5.10.1976 D.B. Civil Special No. 448/74 was allowed by the Rajasthan High Court at Jodhpur and the land acquisition proceedings were quashed. In the meanwhile on 12.11.1975, Rajasthan Udyog had also filed a writ petition No. 1775/1975 before Rajasthan High Court at Jodhpur challenging the notification dated 30.9.1975 under Section 6 read with Section 17 and this writ petition No. 1775/75 was dismissed on 26.10.1976 because the proceedings and already been quashed by Division Bench in the appeal No. 448/1974 on 5.10.1976. In the meanwhile on 12.11.1975, Rajasthan Udyog had also filed a writ petition No. 1775/1975 before Rajasthan High Court at Jodhpur challenging the notification dated 30.9.1975 under Section 6 read with Section 17 and this writ petition No. 1775/75 was dismissed on 26.10.1976 because the proceedings and already been quashed by Division Bench in the appeal No. 448/1974 on 5.10.1976. State of Rajasthan and Hindustan Development Corporation preferred separate Special Leave Petitions before Supreme Court against the aforesaid division bench decision of the Rajasthan High Court. The leave was granted by the Supreme Court on 13.10.1977 and on 10.2.1978 stay order was also passed against Rajasthan Udyog from alienating or encumbering the land. 3. Thereafter on 27.11.1978 parties agreed for arbitration and an agreement dated 7/16.2.1979 (marked as Ex. O-44 by the Arbitrator) was arrived at between the parties and on 21.2.1979 matter was referred to Hon'ble B. P. Beri. Retired Chief Justice of Rajasthan High Court on 21.2.1979 for arbitration. On the principle of live and let live suggested by Shri B. P. Beri, parties agreed to give and take smaller area of and i.e., 145 Bighas instead of the entire land measuring 247 Bighas and 6 Biswas and accordingly the modified agreement (Ext. A. 1 marked by the Arbitrator) was executed on 1.2.1980 Shri Hari Shanker a partner of Rajasthan Udyog filed an application under Section 11 of Arbitration Act before the District Judge, Bharatpur making allegations against Hon'ble Shri B. P. Beri on 28.5.1981 and 25.5.1981, Distt. Judge, Bharatpur stayed the arbitrator proceedings before Hon'ble B. P. Beri Hindustan Development Corporation preferred a revision petition No. 285/81 before the Rajasthan High Court at Jodhpur against the stay order dated 29.5.1981 passed by Distt. Judge. Bharatpur, but Hon'ble Shri B. P. Beri expressed his unwillingness to continue to act as Arbitrator and on 15.7.1981 the stay order dated 29.5.1981 passed by the District Judge, Bharatput was vacated by the Rajasthan High Court in the revision. Judge. Bharatpur, but Hon'ble Shri B. P. Beri expressed his unwillingness to continue to act as Arbitrator and on 15.7.1981 the stay order dated 29.5.1981 passed by the District Judge, Bharatput was vacated by the Rajasthan High Court in the revision. Hindustan Development Corporation approached the High Court for appointment of another Arbitrator under Sections 5, 8, 12, 20 and 34 of the Arbitration Act and on 17.10.1981 High Court directed parties to file application before the District Judge, Bharatpur for appointment of new Arbitrator and accordingly the application was made by Hindustan Development Corporation on 19.12.1981 before the Additional District Judge, Bharatpur (before whom the matter was pending now) for appointment of new Arbitrator in Arbitration Case No. 7/82 (115/81). Additional District Judge, Bharatpur passed an order on 30.5.1983 that the Arbitrator is to be appointed only from amongst the retired High Court Judges, and Hon'ble Shri L. S. Mehta was appointed as the Sole Arbitrator by the Additional District Judge, Bharatpur on 26.9.1983 and in the meantime on 2.9.1983 the Supreme Court dismissed the application of Rajasthan Udyog for release of 104 Bighas of land from the undertaking of not alienating or encumbering the land. The appointment of Hon'ble Shri L. S. Mehta (Retd. Judge of Rajasthan High Court) as Sole Arbitrator was challenged by Rajasthan Udyog before Rajasthan High Court in S.B. Civil Revision Petition No. 616/83 and on 3.10.1983 with the consent of parties the High Court appointed Hon'ble Shri C. B. Bhargava (Retd. Judge of Rajasthan High Court) as the Sole Arbitrator in place of Hon'ble L. S. Mehta. The arbitration proceedings commenced before Hon'ble C. B. Bhargava on 27.11.1983 and on 9.6.1985 the order was delivered by Hon'ble C. S. Bhargava in presence of both the parties and the same was received by the Court of Additional District Judge, Bharatpur with files on 10.6.1985. Rajasthan Udyog as well as its partner Shri Hari Shankar filed applications on 8.7.1985, under Section 33 of the Arbitration Act being No. 21/85 and 23/85 respectively. Hindustan Development Corporation conveyed its acceptance of the award on 15.7.1985 by registered post to all concerned i.e., Rajasthan Udyog, its partner and the Arbitrator and on 18.7.1985 a letter of acceptance of the award was also submitted personally by the Hindustan Development Corporation to Hon'ble C. B. Bhargava. Hindustan Development Corporation conveyed its acceptance of the award on 15.7.1985 by registered post to all concerned i.e., Rajasthan Udyog, its partner and the Arbitrator and on 18.7.1985 a letter of acceptance of the award was also submitted personally by the Hindustan Development Corporation to Hon'ble C. B. Bhargava. Hari Shankar, partner of Rajasthan Udyog filed an amended application under Section 33 before the Additional Distt. Judge and the Additional Distt. Judge, Bharatpur passed orders on 22.11.1988 which is the impugned order before me. 4. The Additional District Judge, Bharatpur has held : (i) that the land Acquisition Act, 1894 (hereinafter referred to as "the Central Act") with the amendments vide Amendment Act No. 68 of 1984 should have been applied by the Arbitrator - as on the date of the award i.e., 9.6.1985, Rajasthan Act was suspended 24.9.1984 by Central Act No. 68/1984 (paras 103 and 104 of the order dated 21.11.1988). (ii) that the Arbitrator should not have ignored the documents Ext. P. 72, Ext. 73 & Ext. P. 74 for valuation of the property in dispute in view of the law laid down by the Hon'ble Supreme Court in the case reported in AIR 1975 SC 1259 and hence it was misconduct within the meaning of Section 30(a) of the Arbitration Act (Paras 78 and 79 of the impugned order dated 22.11.1988). (iii) that despite the applicability of provisions of Section 51(A) of Central Act the Arbitrator ignored several documents, which were on record for determination of the value of the property in dispute viz., Ext. O. 8, Ext. O. 9, Ext. O. 11, Ext. O. 13, Ext. O. 16, Ex. O. 17, Ext. O. 21, Ext. O. 24, Ext. O. 27, Ext. O. 68 and Ext. O. 69 (para 91 of the order dated 22.11.1988). (iv) that the certification of the land in dispute in two categories was on the face of it invalid. (Para 100 of the order dated 22.11.1988). 5. Mr. L. R. Mehta, the learned Counsel for the petitioner has raised he following contentions to assail the order dated 22.11.1988 passed by he Addl. District Judge, Bharatpur : (i) Parties were bound by the terms of agreement. Clause 2 of Ext. O. 44 dated 7/16.2.1979 and Clause 5 of Ext. (Para 100 of the order dated 22.11.1988). 5. Mr. L. R. Mehta, the learned Counsel for the petitioner has raised he following contentions to assail the order dated 22.11.1988 passed by he Addl. District Judge, Bharatpur : (i) Parties were bound by the terms of agreement. Clause 2 of Ext. O. 44 dated 7/16.2.1979 and Clause 5 of Ext. A-1 provide for the determination of compensation in accordance with the Rajasthan Act and hence there was no question of invoking Central Act by saying that Arbitration Agreement Ext. A-1 dated 1.2.1980 was an instrument within the meaning of Section 8(1) of the General Clause Act. (ii) that reference to the Rajasthan Act in Clause (v) of the agreement (Ext. A-1, cannot be construed as reference to the provisions of the Central Act and the provisions of Section 1(A) and Sub-Section (2) of Section 23 the provisions of Sections 28 and 34 and Section 51(A) and various other provisions which have been inserted into the Central Act by Amending Act No. 68/84, are not there in the Rajasthan Act and therefore, the requirement of Section 8(1) of General Clauses Act could not have been invoked but this position of law has not been considered by the Additional District Judge; (iii) that the date of Ext. A-1 is 1.2.1980 and the Arbitrator was under an obligation to determine the value/compensation for the land in dispute according to the Rajasthan Act and he could not have applied the provisions of Central Act, as amended on 24.9.1984, to the matter pending before him, even on the assumption that the provisions of the Central Act could be applied to the proceedings pending before the Arbitrator pursuant to the arbitration agreement (Ext. A-1) dated 1.2.1980. (iv) that the Rajasthan Land Acquisition (Amendment) Act, 1987 and the cases referred by the learned Additional District Judge under Issue No. 10 have been misconstrued and misapplied. In spite of the implied repeal of the Rajasthan Act by the Central Act on 24.9.1984, proceedings pending under the said Act could only be continued under the repealed State law by virtue of Section 6 of the General Clauses Act. In spite of the implied repeal of the Rajasthan Act by the Central Act on 24.9.1984, proceedings pending under the said Act could only be continued under the repealed State law by virtue of Section 6 of the General Clauses Act. (v) that when the award was made on 9.6.1985, the Rajasthan Land Acquisition (Amendment) Act, 1987 had not even been enacted and therefore, the Act of 1987 could not be passed into service for the finding that the Central Act, as amended on 24.9.1984, was applicable to the proceedings pending before the Arbitrator. (vi) that it is evident from the Award dated 9.6.1985 itself that there was a clear understanding between the parties that they will not insist on the formal proof of the documents and on the basis of the understanding the certified copies of the sale-deeds were exhibited and the parties only admitted the genuineness of the certified copies subject to the proof of consideration and other relevant facts and therefore, the finding of the Arbitrator in respect of the documents Ext. O. 8, Ext. O. 9, Ext. O. 11, Ext. O. 13, Ext. O. 16, Ext. O. 17, Ext. O. 21, Ext. O. 24, Ext. O. 27, Ext. O. 68 and Ext. O. 69 was in order and the decision of the Additional District Judge, Bharatpur on this aspect of the matter is wrong, as the admission recorded on the certified copies was in effect about the genuineness of the certified copies only and could not be considered as an admission of the transactions of which such documents were related and the Additional District Judge had no jurisdiction to hold that the petitioner could not raise an objection. (vii) that the award given by the Arbitrator is not liable to be challenged under Section 39(i) of the Arbitration Act and yet, the Addl. District Judge did not care to read the Award as a whole and has failed to consider the reasons given by the Arbitrator. (viii) after considering the documents Ext. P. 72, Ext. P. 73 and Ext. P. 74, which were produced before him on 5.5.1985, while the arguments were going on after hearing the parties, the Arbitrator has observed in his Award that these documents were of no avail to determine the market value of the land on the relevant date and therefore, the learned Addl. P. 72, Ext. P. 73 and Ext. P. 74, which were produced before him on 5.5.1985, while the arguments were going on after hearing the parties, the Arbitrator has observed in his Award that these documents were of no avail to determine the market value of the land on the relevant date and therefore, the learned Addl. District Judge could not decide that the said documents were material for determination of the value of the property in dispute. (ix) that the Additional District Judge had erred in holding that the Arbitrator was wrong in bifurcating the land in dispute into two categories and that the reasons mentioned by him for bifurcating the land in two categories were contradictory. (x) that under the provisions of the Arbitration Act, the Court has no jurisdiction to interfere with the findings arrived at by the Arbitrator after allowing the parties reasonable opportunity of producing evidence and hearing, merely because it does not agree with the reasoning and/or findings of the Arbitrator and hence, the order of the Additional District Judge was clearly in excess of his jurisdiction and beyond the scope of his powers under Sections 30, 31, 33, and 37. (xi) that the Additional District Judge has misread the award in holding that the Arbitrator had admitted that the proceedings before him were of compulsory nature. Shri L. R. Mehta, learned Counsel for the petitioner, has cited the following cases : 1. 1976 WLN 238 . 2. 1978 (2) SCC 542 . Shri Dharam Gopal Chaturvedi, learned Counsel for the respondents, on the other hand sought to support the impugned order dated 22.11.1988 passed by the Additional District Judge, Bharatpur and has sought to support the same on the following grounds : (i) That the order passed by the Additional District Judge does not suffer from any error of jurisdiction and that the revision was not maintainable and in support of this submission, he has placed reliance on the following cases : (a) AIR 1971 SC 2324 . (b) AIR 1973 SC 76 . (c) AIR 1986 SC 446 . (ii) That the Arbitrator has to decide the dispute according to the living law and not as per the dead law and in support of this submission, he has placed reliance on the following authorities : (a) AIR 1967 SC 1032 . (b) 1988 (1) SCC 418 . (c) 1988 (1) SCC 457. (c) AIR 1986 SC 446 . (ii) That the Arbitrator has to decide the dispute according to the living law and not as per the dead law and in support of this submission, he has placed reliance on the following authorities : (a) AIR 1967 SC 1032 . (b) 1988 (1) SCC 418 . (c) 1988 (1) SCC 457. (iii) That no estoppel can be pleaded against the statute and therefore, the arbitration agreement could not be an impediment so as to invoke the new law which became available during the pendency of the proceedings and it was the duty of the Arbitrator to take into consideration the provisions of law which held the field at the relevant time. He has placed reliance on the following cases : (a) AIR 1988 SC 1166 . (b) AIR 1955 SC 468 . (c) 1984 (2) SCC 656 . (iv) That the existing law as on the date of the Award will be applicable. Shri Chaturvedi, learned Counsel for the respondent has placed reliance on the following cases : (a) AIR 1967 SC 1030 . (b) AIR 1973 SC 683 . (c) AIR 1971 (1) SCC 295 . (d) AIR 1955 SC 468 . (e) AIR 1958 SC 1050 . (f) AIR 1960 SC 588 . (g) 1989 (4) SCC 650 . (v) That the Rajasthan Law stood impliedly repealed by the Central Act on 24.9.1984 and therefore, the Arbitrator could not have ignored the Central Law. He has placed reliance on the following cases : (a) AIR 1990 Rajasthan 90. (b) 1984 (4) SCC 650. (c) AIR 1990 SC 981 . (d) AIR 1991 SC 656 . (vi) That for determination of the compensation wealth tax returns were summond in the proceedings before the Arbitrator by Hindustan Development Corporation. The Arbitrator did not consider the effect of such documents. The order of the Wealth Tax Officer dated 21.3.1985 was set aside on 19th July, 1985 and in the departmental appeal, the Income Tax Tribunal remanded the matter on 5.3.1991 and it was still pending. 6. I have gone through the available record and have considered the various submissions made by Shri L. R. Mehta and Shri D. G. Chaturvedi. I have also gone through the Award dated 9.6.1985 as also the impugned order dated 22.11.1988. 6. I have gone through the available record and have considered the various submissions made by Shri L. R. Mehta and Shri D. G. Chaturvedi. I have also gone through the Award dated 9.6.1985 as also the impugned order dated 22.11.1988. So far as the case law which has been cited before me, it may be straightaway observed that there is no quarrel with the legal prepositions laid down therein and therefore it is not necessary for me to deal with in detail the principles laid down therein. 7. I am of the opinion that what is to be examined in this case is as to whether all Additional District Judge while passing the impugned order dated 22.11.1988 had considered the Award in question within the parameters of Section 30 of the Arbitration Act, or not and therefore, if it is found that he has travelled beyond the scope of Section 30 of the Arbitration Act, it will be a case of material irregularity and illegality in the exercise of his jurisdiction, Section 30 of the Arbitration Act is reproduced as under : "30. Grounds for setting aside award - An award shall not be set aside except on one or more of the following grounds, namely : (a) that an arbitrator or umpire has mis-conducted himself or of the proceedings; (b) that an award has been made after the issue of an order by the court superseding the arbitration or after arbitration proceedings have become invalid under Section 35; (c) that an award has been improperly procured or is otherwise invalid." Thus, Section 30 of the Arbitration Act as an orientation of caution and restriction that an Award shall not be set aside, except on one or more of the three grounds mentioned therein clauses (a), (b) and (c). On none of the grounds raised by Shri Chaturvedi and the grounds mentioned in the impugned order dated 22.11.1988, it can be said that the Arbitrator had mis-conducted himself. So far as the mis-conducting of proceedings is concerned, we have to proceed on the premise that the arbitration is by voluntary agreement and it is the agreement of the parties which gives power to the Arbitrator to decide the matter. So far as the mis-conducting of proceedings is concerned, we have to proceed on the premise that the arbitration is by voluntary agreement and it is the agreement of the parties which gives power to the Arbitrator to decide the matter. In the instant case, so far as the acquisition is concerned, it had the sense of compulsion but when the parties had agreed for arbitration by voluntary agreement, such proceedings could not be treated as proceedings for acquisition nor the proceeding could be put in the shackles analogous or parallel to the acquisition proceedings and the Arbitrator could not be expected to Act like a Land Acquisition Officer. In fact, the learned Additional District Judge has himself hold under Issue No. 10, para 70, that the Arbitrator could not be considered to be the Land Acquisition Officer and the proceedings before him were not akin or parallel to the proceedings taken under the land acquisition law for acquisition of the land. In this view of the matter, when the Arbitrator did not invoke the Central Law and he proceeded to apply the law as it was in existence on the date of the arbitration agreement i.e. 1.2.1980, the date of Ext. A-1. Such matters may remain pending with the Arbitration but the Arbitrator gets the jurisdiction to make the award on the basis of the agreement and, therefore, notwithstanding the preposition that the Arbitrator is only a substitute of the court and has to give due regard to the existing law, the existing law for the purpose of arbitration proceedings will be the law on the date of the agreement and not the law as on the date of the Award. Therefore, in my opinion, there is no question of any misconduct in the proceedings if the Arbitrator has applied the law as it was in existence at the time when the parties agreed for arbitration and thus, it cannot be said that the proceedings were mis-conducted because the matter has been decided in accordance with the law as it was in existence on the date of the agreement (Ext. A-1). 8. A-1). 8. With regard to the question of ignoring the documents, the Arbitrator had proceeded on the understanding arrived at between the parties that they would not insist on the formal proof of the documents strictly in accordance with the provisions of the Evidence Act but the transaction was to be proved and it was on the basis of this understanding that the parties only admitted the genuineness of the certified copy, subject to the proof of consideration and other relevant facts. In such circumstances when neither the vendor nor the vendee was examined, the Arbitrator had to ignore such documents and there is no question of any element of misconduct in the proceedings on that basis and the Arbitrator gave a clear finding that Ext. O. 8 etc. referred to above, were instances of the sale which could not be looked into as neither the seller nor the purchase of those lands had been produced to prove the bona fide nature of the transactions. With regard to the documents Ext. P. 72, Ext. P. 73 and Ext. P. 74, the Arbitrator had rightly observed in the Award that these documents were of no avail to determine the market value of the land on the relevant date and in view of the aforesaid clear finding there was no basis for the Additional District Judge to say in the impugned order dated 22.11.1988 that the said documents were material for determination of value of the property in dispute and the Arbitrator committed misconduct within the meaning of Section 30(A) of the Arbitration Act. Thus, having dealt with the three grounds given by the Additional District Judge, Bharatpur, with regard to the misconduct in proceedings with reference to Section 30(A) of the Arbitration Act, lastly I have to consider the question as to whether the bifurcation of the land in dispute in two categories by the Arbitrator was invalid. In para 100 of the Award, learned Additional District Judge had dealt with the question of bifurcation of the land into two categories. In para 100 of the Award, learned Additional District Judge had dealt with the question of bifurcation of the land into two categories. In para 99, the learned Additional District Judge has himself observed that the free hold land was of a superior quality in comparison to the land allotted on the basis of lease by RIICO and that the land in dispute was within the municipal limit but on the outskirts of the town Bharatpur near developed area i.e., Railway Station Marg, Cinema House etc. The learned Additional District Judge has confused himself between the terms "developed land" and 'land near developed areas'. The Arbitrator has stated that the land was near the develop area. In my opinion, the Arbitrator has taken into consideration the relevant factors and the reasons which were absolutely germane, to bifurcate the land with reference to its use being made for certain purposes, even without filling up the pits and at certain places, there was no need to fill up those pits and part of the land could be made use of without filling up of the pits and on that basis, it cannot be said that the finding of the Arbitrator that sufficient money was to be invested for the development of the land, was contradictory. It was a germane factor of the Arbitrator to consider the question with regard to the use of the land for the purpose of godown, water tank, platform etc. and the land was not in a regular shape i.e., it was not in the form of a rectangle or a square and it had an irregular shape and multiple corners. Looking to the whole matter in entirety I am of the considered opinion that on the question of classification of this land based on relevant factors, it cannot be said that the proceedings were mis-conducted within the meaning of Section 30 of the Arbitration Act or that the Award was otherwise invalid. 9. Looking to the whole matter in entirety I am of the considered opinion that on the question of classification of this land based on relevant factors, it cannot be said that the proceedings were mis-conducted within the meaning of Section 30 of the Arbitration Act or that the Award was otherwise invalid. 9. Thus, I have no hesitation in holding that the learned Additional District Judge while passing the impugned order dated 22.11.1988 has get aside the Award and remanded the same although there was no ground for him to have done so, with reference to any of the grounds mentioned in Section 30 of the Arbitration Act and thus, he have acted in the exercise of his jurisdiction illegally and with material irregularity and the impugned order dated 22.11.1988 therefore cannot be sustained in the eye of law. 10. Accordingly this revision petition is allowed. Thus impugned order dated 22.11.1988 passed by the Additional District Judge No. 1, Bharatpur in Cases No. 21/85 and 23/85 (consolidated vide order dated 9.6.1985) is hereby quashed and set aside and the Award dated 9.6.1985 given by the Arbitrator (late Shri C. B. Bhargava, Retired Judge of the Rajasthan High Court) is upheld and is made the rule of the Court. This revision petition is allowed without any order as to costs. Petition allowed.