PADAM CHAND JAIN v. HUKAM CHAND JAIN — 1998 DIGILAW 694 (DEL)

Usha Mehra, J. ( 1 ) APPELLANT has felt aggrieved by the impugned order whereby the award of the arbitrator has been set aside and Court order remanding the dispute to the same arbitrator. ( 2 ) ACCORDING to appellant Trial Court was not sitting in appeal over the decision of the arbitrator whom the parties choose being a relation. Arbitrator was a layman. He decided what was best and acceptable to the parties. ( 3 ) ON the other hand respondent/objector before the Trial Court averred that arbitrator exceeded his jurisdiction. He mis-conducted himself and the proceedings. ( 4 ) IN order to resolve the controversy the moot questions which arise for consideration are, (i) whether the arbitrator could give a declaratory award; and (ii) could the arbitrator effect the rights of parties qua the properties and persons who were not parties to reference nor subject matter of arbitration dispute. ( 5 ) IN order to determine these questions lets have a quick glance to the facts of this case. Briefly stated the facts are that S/shri Padam Chand Jain and Hukam Chand, appellant and respondent herein are real brothers. They are the sons of late Shri Sunder Singh Jain and Smt. Vidyawati Jain. After the death of their parents dispute arose between them pertaining to moveable and immoveable properties left by their parents. Appellant herein claimed certain shares in the properties on the basis of alleged will stated to have been executed by their father. He sought probate on the same. This was contested by the respondent erein before the Probate Court i. e. District Judge, Delhi alleging therein that will was not genuine. Appellant herein withdrew the probate proceedings. However, parties entered into an agreement dated 24th March,1992 to get their disputes decided through arbitration. Dispute regarding moveable and immoveable properties left by their parents was REFERRED TO to the sole arbitration of their relation Shri Prem Chand Jain. In that arbitration agreement/reference they also indicated that the decision of Mr. Prem Chand Jain would be binding on them and that they would not file any objection against his award. This agreement was signed beside S/shri Padam Chand Jain and Hukam Chand Jain, also by one Rajesh Jain and Pankaj Jain, sons of the parties to the arbitrator agreement. Pursuance to this agreement, parties appointed Mr. Prem Chand Jain as the Sole Arbitrator. This agreement was signed beside S/shri Padam Chand Jain and Hukam Chand Jain, also by one Rajesh Jain and Pankaj Jain, sons of the parties to the arbitrator agreement. Pursuance to this agreement, parties appointed Mr. Prem Chand Jain as the Sole Arbitrator. He entered upon the reference. As per the contents of the award the arbitrator after considering all the aspects of the case and after hearing the parties made and published his award on 22nd July,1992. This award was filed in the District Court, Delhi. It was challenged by the respondent Shri Hukam Chand Jain, inter alia, on the ground that the arbitrator was not competent to look into the will alleged to have been executed by their late mother Smt. Vidyawati Jain or of their father late Sunder Singh Jain. So far the will alleged to have been executed by their father that was subject matter of probate proceedings. Moreover, late Smt. Vidya Wati Jain was not competent to execute a will in respect of the property which actually belonged to objector s father. He alleged that Smt. Vidya Wati Jain did not acquire any right, title or interest in the said property. But relying on a will which was not produced in his presence before the arbitrator, Arbitrator took such a document behind his back and thus deprived him opportunity to refute the same. The Arbitrator thus transgressed his jurisdiction and encroached upon the jurisdiction of the Probate Court. He mis-conducted himself and the proceedings by accepting a document without the knowledge of the objector. He could not have given a declaration in favour of the parties with regard to property which was not subject matter of disputes. The property bearing No. 1613 already stood partitioned by registered deed. Half of it stood in the name of the appellant and other half in the name of objector. This property was not a subject matter of dispute nor REFERRED TO for his arbitration. It was also alleged by the objector that award was bad because it was published after the stipulated period. It was published in July,1992 but sent to him in December,1992. Immediately on receipt of the award, the respondent wrote a letter to the arbitrator indicating his objections and also that the arbitrator collected privately information in the absence of the objector. It was published in July,1992 but sent to him in December,1992. Immediately on receipt of the award, the respondent wrote a letter to the arbitrator indicating his objections and also that the arbitrator collected privately information in the absence of the objector. Arbitrator took assistance from Shri Kailash Chand Jain and Shri Uttam Prakash Jain, who were not parties to the proceedings. Thus by ordering demarcation of property of the parties which already stood in their name and which did not form part of reference, the arbitrator exceeded his jurisdiction. ( 6 ) THAT by the impugned order the learned Additional District Judge set aside the award and remanded the case to the arbitration of said Shri Prem Chand Jain. The grievance of the appellant is that since parties had agreed to abide by whatever the decision of the arbitrator, the respondent could not challenge the award. That the Trial Court could not have remanded the case to the arbitration of Mr. Prem Chand Jain because by then he had already expired and this fact was brought to the notice of the Court. ( 7 ) AFTER hearing counsel for the parties, I must at the outset mention that except the award no other document alleged to have been filed before the Arbitrator was filed by the Arbitrator on the record of the Trial Court. Even the proceedings had also not been filed by the Arbitrator. ( 8 ) NOW turning to the objection whether Arbitrator mis-conducted himself or the proceedings, counsel for the respondent drew my attention to the body of the award where it is mentioned that it was an award by consent. However, on bare reading of the award it cannot be inferred that the objector gave his consent. It is also a fact that all the parties whom the arbitrator alleged to have afforded opportunity were not parties to the reference or the dispute. The arbitrator could not in law give a declaration in favour of such a party. But in the case in hand the arbitrator not only gave a declaration but also affirmed and confirmed a will alleged to have been executed by the parents of the parties which was not a subject matter of the dispute. The Supreme Court in umpteen number of cases held that the arbitrator has no authority nor any power to give a declaratory award. The Supreme Court in umpteen number of cases held that the arbitrator has no authority nor any power to give a declaratory award. Such an award is bad in law. Placing of reliance by the Arbitrator on the will alleged to have been executed by late Smt. Vidya Wati Jain and also declaring it genuine and conferring right in favour of to Mr. Rajesh Jain on the basis of that will , to my mind, tantamount to declaration which the arbitrator had no authority to do. I am in agreement with the contention of the respondent/objector that the arbitrator exceeded his jurisdiction by giving a declaration thereby declaring the will of late Shri Sunder Singh Jain and of late Smt. Vidya Wati Jain to be genuine nor the Arbitrator could distribute moveable and immoveable properties amongst those persons who were rank outsiders to the arbitration agreement. The division and demarcation of properties by the Arbitrator on the face of it appears to be beyond the term of reference. The Arbitrator gave his award in favour of those persons who were not parties to the reference, for example, the amount lying in the bank account plus interest was ordered to be distributed among four sisters of the parties. This was not stipulated in the term of reference. Likewise properties distributed to the sons of the parties was not a part of the reference. Hence Arbitrator by awarding properties in favour of sons and sisters of the parties mis-conducted himself and the proceedings. The arbitrator in para 2 of his award stated that "he heard Padam Chand Jain, Shri Hukam Chand Jain and their sons". This expression clearly show that the arbitrator heard persons not party to the dispute nor to the reference. Law does not permit the Arbitrator to hear strangers to the reference particularly when parties were there to argue their case. To my mind, this amounts to mis-conduct on the part of the Arbitrator. Arbitrator not only heard parties sons but in fact awarded properties in their favour. Argument of the learned counsel for the appellant that Shri Rajesh Jain and Mr. Pankaj Jain were parties to the agreement dated 24th March,1992 and thus to the reference, has no merits nor sustainable. Arbitrator not only heard parties sons but in fact awarded properties in their favour. Argument of the learned counsel for the appellant that Shri Rajesh Jain and Mr. Pankaj Jain were parties to the agreement dated 24th March,1992 and thus to the reference, has no merits nor sustainable. Reading of arbitration agreement dated 24th March,1992 in substanceclearly indicate that this agreement was between Shri Padam Chand Jain and Shri Hukam Chand Jain pertaining to the properties left by their parents. The agreement reads "mein PADAM CHAND JAIN, S/o LATE SARV SUNDER SINGH JAIN, MAKAN NO. 1613 AUR SHRI HUKAM CHAND JAIN, S/o LATE SARV SUNDER SINGH JAIN, MAKAN NO. 1613, HAM DONO KA PITAJI AUR MATAJI KE SWARGWAS KE BAD JAYADAD OF CHAL ACHAL SAMPATTI KE SAMBANDH APAS MEIN JO VIVAD, US VIVAD KE FAISLA KARNE KE LIYE SHRI PREM CHAND JAIN KO APNA NIRNAYAK NIYUKT KARTE HEIN". When translated it will read that "i, Padam chand Jain, S/o late Shri Sarv Sunder Singh Jain, House No. 1613 and Shri Hukam Chand Jain, S/o latshri Sarv Sunder Singh Jain, House No. 1613 a dispute has arisen between us, after the death of our father and mother, pertaining to the moveable and immoveable properties left by them, to resolve this dispute which has arisen between us through the arbitration of our respected member of the Biradri, we appoint Shri Prem Chand Jain as our Arbitrator. " Reading of this agreement clearly show that dispute had arisen between the present appellant and respondent in respect of the properties left by their parents. Dispute was not regarding distribution of properties to S/shri Rajesh Jain and Pankaj Jain. Therefore, there was no question of their being party to the arbitration agreement. By merely putting signature on this agreement S/shri Rajesh Jain and Pankaj Jain did not become party to the arbitration agreement or to the reference. Hence, the Arbitrator could not have dealt with the distribution of properties in favour of sons of the parties. ( 9 ) READING of the award show it was by consent of the parties, but in that case it ought to have been signed by both the parties. But unfortunately, perusal of the award speaks otherwise. It has only been signed by the present appellant and not by the respondent. Therefore, in the absence of the consent of the objector, the consent cannot be presumed. But unfortunately, perusal of the award speaks otherwise. It has only been signed by the present appellant and not by the respondent. Therefore, in the absence of the consent of the objector, the consent cannot be presumed. It is well settled principle of law that whenever there is a compromise in Court or before quasi-judicial authority, it must be signed by the parties to the compromise. In the absence of which it is not valid. Similarly, by saying that it was agreed award consented by both the parties, on the face of it appears to be erroneous. The award does not bear the signatures of the objector/ respondent herein. ( 10 ) THE contention of the appellant that the objector implemented the award qua the property bearing No. 1613, Purana Dakkhana Wali Gali, therefore, he is bound by the award. This argument is not sustainable on the basis of the facts available on record. The award itself shows that the appellant and respondent herein were in possession of this house of their respective shares. Arbitrator could not re-demarcate their shares. Thus there was no question of implementation of the award by the objector with regard to property bearing No. 1613. The arbitrator in so many words stated "i decide and confirm that ownership of this property is conferred in favour of Shri Rajesh Jain, grand son of Smt. Vidya Wati Jain, who was living with her and served her till her last moment". The question whether Smt. Vidya Wati Jain executed a will or not and whether the alleged will was genuine or not, could not have been gone into by the arbitrator. He could not have relied upon a will to decide the right of a person who was not party to the reference. Therefore, such a declaratory award cannot be but bad in law. The contention of Mr. P. D. Jain, counsel for the appellant that it was not a consent award, to my mind, cannot be appreciated in view of the contents of the award. It is clearly mentioned in the opening and concluded paras of the award that the award was agreed to by both the parties. In view of this statement of the arbitrator, the argument of Mr. P. D. Jain has no merits. It is clearly mentioned in the opening and concluded paras of the award that the award was agreed to by both the parties. In view of this statement of the arbitrator, the argument of Mr. P. D. Jain has no merits. ( 11 ) ADMITTEDLY daughters of late Smt. Vidya Wati Jain were not party to the reference or to the agreement still the arbitrator awarded cash amount in their favour. The arbitrator thus not only enlarged the scope of reference by awarding properties in favour of S/shri Rajesh Jain, Pankaj Jain and sisters of the parties but mis-conducted himself and the proceedings. ( 12 ) THE proceedings recorded by the arbitrator are not on record. Therefore, it is difficult to conclude whether the site plan and the alleged will of late Smt. Vidya Wati Jain were filed in the presence of the objector or not. However, contention of counsel for the objector appears to have force when he contended that the Arbitrator in his award mentioned that the will executed by late Smt. Vidya Wati was produced by this appellant Mr. Padam Chand Jain. He nowhere indicated that the will was produced in the presence of this respondent. Had it been produced, Arbitrator would have mentioned about the same. Property bearing No. 2245, Gali Anar, was purportedly bequeathed by late Smt. Vidya Wati Jain in favour of Mr. Padam Chand Jain s son Mr. Rajesh Jain. On the basis of this will the arbitrator decided and conferred the ownership of this property on Mr. Rajesh Jain. If the proceedings had been produced it would have been clear whether will was produced in the presence of this respondent and whether the arbitrator afforded opportunity to the respondent/objector. In the absence of documents and proceedings having been produced by the arbitrator, the objections raised by the respondent herein could not be brushed aside lightly. The award was made and published on 22nd July,1992. ( 13 ) THERE is no dispute that the decision of the arbitrator is final. But he is not expected to give a decision on the issues not REFERRED TO to him nor he could give declaratory award, nor the arbitrator can accept documents in the absence of any party. Therefore, reliance by the appellant on the decision of Privy Council in the case of Mohinder Singh Vs. Ramindar Singhand anr. But he is not expected to give a decision on the issues not REFERRED TO to him nor he could give declaratory award, nor the arbitrator can accept documents in the absence of any party. Therefore, reliance by the appellant on the decision of Privy Council in the case of Mohinder Singh Vs. Ramindar Singhand anr. , AIR 1944 PC page 83 is of no help to him. The arbitrator can take a decision which may not be what a Court would take but he cannot be allowed to mis-conduct himself and the proceedings. In the present case, the arbitrator not only mis-conducted himself but also the proceedings. He as an arbitrator could not have given a declaration that the will of late Smt. Vidya Wati Jain was genuine hence confirmed and declared that property bearing No. 2245, Gali Anar would vest with Mr. Rajesh Jain. I have no hesitation to accept that by not filing the minutes of proceedings the award would not be vitiated. But if there are allegations of mis-conduct then it became necessary for the arbitrator or the party relying on the award to ensure that the minutes of the proceedings are produced in the Court, unless it was the stand of the arbitrator that he did not record any proceedings. But that again is not the case here. Lahore High Court in the case of Budh Ram Vs. Chandu, AIR 1922 Lahore page 480, held that the Arbitrator could made enquiry privately. But the facts of that case are distinguishable. In that case the arbitrator was left with no alternative but to make an enquiry from the neighbours because party did not appear. Since the parties had not represented hence the arbitrator made enquiry. But that is not the case in hand. Reading of the award shows that document, namely, the will of late Smt. Vidya Wati Jain was accepted by the arbitrator from the present appellant which was in favour of his son. Nowhere it was mentioned that this document was shown or confronted to the present respondent. Therefore, ratio of the above decision does not apply to the facts of this case. Similarly, reliance by the appellant on the decision of Madhya Pradesh High Court in the case of Shivlal Prasad Vs. Nowhere it was mentioned that this document was shown or confronted to the present respondent. Therefore, ratio of the above decision does not apply to the facts of this case. Similarly, reliance by the appellant on the decision of Madhya Pradesh High Court in the case of Shivlal Prasad Vs. Union of India, AIR 1975 M. P. page 40 and of Punjab and Haryana High Court in the case of Mahar Singh and Sons Vs. State of Punjab, AIR 1973 P and H page 114 are of no help to him. There is no quarrel with the law propounded by the Allahabad High Court in the case of Kanhaiya Lal Dubey Vs. Smt. Awinash Talwar and anr. , AIR 1972 All. page 237 that the arbitration proceedings can be accepted by the Court even after the award had been filed. This decision again is of no help to the appellant because the arbitrator or for that matter the appellant had not produced the proceedings before the Court. Admittedly, this Court is not sitting in appeal over the award of the arbitrator. But if the arbitrator mis-conducted himself or the proceedings or there is error apparent on the face of the award then this Court would be justified in setting aside such an award. As already observed above, I find that the arbitrator in this case mis-conducted himself and the proceedings by giving declaratory award which he was not empowered to do so. He treated this to be a consent award but did not care to obtain the signatures of the objector/respondent herein. He did not in fact decided the dispute of the parties to reference but considered the claim of the persons who were not party to the reference or to the arbitration agreement. He, thus by giving award in favour of sons of the parties or their sisters, exceeded his jurisdiction. ( 14 ) FOR the reasons stated above, I find no merits in the appeal nor any ground to interfere with the impugned order. However, the Trial Court could not have remanded the case to the same arbitrator who had since expired. Therefore, the order of remanding is set aside. The appeal is otherwise dismissed with no order as to costs.