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2002 DIGILAW 234 (KER)

C. P. Adam v. E. V. Ahammed Koya

2002-04-01

J.B.KOSHY, K.PADMANABHAN NAIR

body2002
Judgment :- Koshy, J. Since the issues raised in these appeals and revision petitions are common, as agreed to by the parties we are disposing of the same by this common judgment. 2. An agreement for sale was executed on 12.12.1984 between one Botha Van Ingen for himself and on E.V. Ahmed Koya for himself and as power of attorney of one Bava Moopan. As per the agreement, total consideration was Rs. 1.35 crores, 10% of which should be deposited as escrow in the name of Mr. T.K. Lakshmana Iyer, lawyer of Botha Van Ingen, for sale of an estate in Wayanad District called "Brahmagiri 'B' Estate". On 20.2.1984 , agreement dated 12.2.1984 was modified and Bava Moopan was replaced by C.P. Adam as Managing Partner of M/s C.P. Adam. In terms of the agreement, Rs. 6.75 lakhs each was deposited by C.P. Adam and Bava Moopan in the Savings Bank Account No. 4196 of State Bank of India, Kallai Branch, Calicut in favour of the lawyer of Botha Van Ingen. The sale did not take place as per the agreement. On 28.12.1984, it is stated that an award was passed by three Arbitrators in the dispute among the partners of of the firm "Brahmagiri Estate and Produce Co." with respect to the agreement of sale dated 20.2.1984 between Botha Van Ingen and E.V. Ahamed Koya. The award directs partners 1 to 8 of the firm "Brahmagiri Estate and Produce co." to pay the partners 9 to 12, viz., E.V. Ahmed Koya, K.P. Mohammed Ashraf, K.P. Ammira, K.P. Najuma and K.P. Fathima, a sum of Rs. 8,75,000/- in full settlement of all rights and claim of partners 1 to 12 in the firm and its assets and also of all the rights of E.V. Ahmed Koya under the agreement dated 20.2.1984 including the claim of amounts spent by E.V. Ahmed Koys. A supplementary award was also passed, directing the payment of Rs. 6,75,000/- in favour of certain persons. 3. On 2.4.1985, the lawyer of Botha Van Ingen Sri. T.K. Lakshmana Iyer informed E.V. Ahmed Koya, C.P. Adam and Bava Moopan that the agreement is cancelled and the escrow amount less the fee of Rs. 4,00,000/- and other expenses to the tune of Rs. 50,000/- will be returned on giving full and proper settlement receipt. C.P. Adam replied denying any liability to the lawyer and demanded return of full amount. Sri. 4,00,000/- and other expenses to the tune of Rs. 50,000/- will be returned on giving full and proper settlement receipt. C.P. Adam replied denying any liability to the lawyer and demanded return of full amount. Sri. Lakshmana Iyer agreed, by letter addressed to C.P. Adam dated 22.4.1985, to give up his claim of Rs. 4,00,000/-. It is seen that in the letters written by C.P. Adam or Lakshmana Iyer, lawyer of Botha Van Ingen there is no mention of any arbitration agreement or arbitration award. 4. On 26.3.1986, E.V. Ahmed Koya's children viz., K.P. Amina and K.P. Mohammed Ashraf, requested the Arbitrator to file award in Court for passing a decree in terms of the award. C.K. Alikoya, one of the Arbitrators, filed O.P. 50 of 1986 before the Sub court, Kozhikode under Section 14 of the Arbitration Act, for directing issue of notice of the production/filling of the award passed by the Arbitrators to the respondents. Eventhough the alleged award is dated 28.12.1984, the stamp paper is seen purchased on 1.4.1986 in the name of Sri. Alikoya Haji. O.P. 76 of 1986 was filed by Bava Moopan (4th respondent in O.P. 50 if 1986) to set aside the award. O.P. 132 of 1986 was filed by C.P. Adam (3rd respondent in O.P. 50 of 1986) to set aside the award. I.A. 1975 of 1986 was filed by E.V. Ahammed Koya to pass a decree in terms of the award. I.A. 2124 of 1986 was filed by Bava Moopan (4th respondent in O.P. 50 of 1986) to set aside the award. In O.P. 76 of 1986 and I.A. 2124 of 1986 filed by Bava Moopan, it is specifically contended that the award was a forgery. He has not taken part in the award proceedings and he has not affixed his signature to any award. There was no arbitration agreement and he has not accepted the award and there was no reference to arbitration and the alleged arbitrators have no jurisdiction to pass an award. It is also submitted that the second respondent is not empowered to refer any matter to the Arbitrator. As far as the objection filed by C.P. Adam in O.P. 50 of 1986 and in the petition O.P. 132 of 1986, it was specifically contended that he has not accepted the award. It is also submitted that the second respondent is not empowered to refer any matter to the Arbitrator. As far as the objection filed by C.P. Adam in O.P. 50 of 1986 and in the petition O.P. 132 of 1986, it was specifically contended that he has not accepted the award. He has further submitted that the firm M/s. Brahmagiri Estate and Produce Company was a still born child, since no such firm was formed and there is no question of release of the rights of one partner in favour of the other partners, It is further submitted as follows :- "This respondent submits that he has never accepted the Award and he has also not affixed his signature in token of its acceptance of the alleged award. In case any signature is found purporting to be that of his respondent, the same must be a rank forgery. It is false to say that an award has passed with the full concurrence of this respondent and that this respondent has also affixed his signature to the alleged award". It was further submitted that the Arbitrators are guilty of misconduct and there is no reference for arbitration and there is no agreement for arbitration. Personal interests (bias) of the Arbitrators were also highlighted. 5. A decree was passed in terms of the award by the Sub Court and the petitions filed for setting aside the award were dismissed. Against the dismissal of O.P. 132 of 1986, C.P. Adam filed M.F.A. 1219 of 1992. He also filed C.R.P. 2359 of 1992 against the order in I.A. 1975 of 1986 in O.P. 50 of 1986 passing a decree in terms of the award. C.R.P. 2360 of 1992 was filed against the judgment and decree in O.P. 50 1986. similarly, Bava Moopan has filed M.F.A. 81 of 1993 and M.F.A. 123 of 1992 against the order and decree in O.P. 76 of 1986 and O.P. 50 OF 1986. Respondents 2 to 5 in I.A. 1975 of 1986 in O.P. 50 of 1986 have filed C.R.P. 2488 of 1992. 6. We note that the supplementary award is not signed by the Arbitrators. At page 3 of the award, 14 persons have signed after typing the words "we accept the award". That page is also not signed by the Arbitrators. Respondents 2 to 5 in I.A. 1975 of 1986 in O.P. 50 of 1986 have filed C.R.P. 2488 of 1992. 6. We note that the supplementary award is not signed by the Arbitrators. At page 3 of the award, 14 persons have signed after typing the words "we accept the award". That page is also not signed by the Arbitrators. It is the case of the contesting appellants that that paper was signed for some other purpose of partnership and it was not signed for accepting the award and it was a manipulation. On a perusal of page 4, which is stated to be a supplementary award, it is seen that it is not signed by the Arbitrators and as the signature purporting to be one affixed by Sri. C.P. Adam at that page differs from the signature of C.P. Adam contained in page 3 of the award. The difference is clear to naked eye and there are overwriting on the signature of C.P. Adam. Therefore, it was the contention that pages 3 and 4 of the award cannot be accepted and none of the parties have signed it as accepting the award. 7. Another infirmity pointed out by the appellants is that Sri. Lakshmana Iyer who was awarded Rs. 4,00,000/- has given up his claim earlier by letter dated 22.4.1985. In fact he had returned the amount entrusted with him. One of the Arbitrators is his own son. Again in the supplementary award Rs. 1,35,000/- is seen awarded to C.N. Imbichiammoo, Advocate. He is an Arbitrator himself. There is also an allegation that Sri. E.V. Ahmedkoya, main beneficiary in the award, is closely related to two of the Arbitrators. In fact, Arbitrators have substantial interest in the subject matter as they have awarded to themselves, which is a clear misconduct. 8. We have gone through the contentions in detail. The definite case of the contesting parties before the Sub Court was that there was no arbitration agreement and no reference was made to the Arbitrator. Even though that was specifically contended, no arbitration agreement was produced and no reference order was produced. Eventhough the appeal was pending with effect from 1993 with these contentions, neither the Arbitrators nor the contesting respondent before this Court produced the agreement for arbitration or reference for arbitration. It is settled law that without an agreement for arbitration, the matter cannot be arbitrated. Eventhough the appeal was pending with effect from 1993 with these contentions, neither the Arbitrators nor the contesting respondent before this Court produced the agreement for arbitration or reference for arbitration. It is settled law that without an agreement for arbitration, the matter cannot be arbitrated. In the absence of the reference order, the award is liable to be set aside. This is sought to overcome by the Sub Judge on the ground that the parties have stated "we accept the award ". But, as we have seen, that is disputed seriously by the parties, Infact, the only person who gave evidence before the court was C.P. Adam. He definitely deposed before the court that he has not accepted the award and the signature at page 3 of the alleged award is a rank forgery. There is no counter evidence. We further note that in page 3 and in the supplementary award (page 4) signatures of the Arbitrators are absent and the supplementary award is not dated. We are not sure whether that was passed on 1.4.1986 when the stamp paper was produced and whether that was also a part of the main award dated 20.2.1984. Page 3 wherein the parties have signed is also not dated. When they signed accepting the award is not known. There is no evidence in this case to show that parties were aware of any such award before 26.3.1986 when the children of Ahmed Koya requested the Arbitrators to file the award. No evidence was produced in the above line. No request was made to examine either the Arbitrators or the person who filed petition to pass a decree in terms of the award disputing these points alleged by the appellants. Apart from the above, we also note that the award is passed by the Arbitrator without an agreement by the parties, either written or oral. Therefore, the award is not binding and it is not a valid award. The award is passed without jurisdiction. Even if page 3 of the award produced and the signature therein are genuine and they signed after the words "we accept the award", it will not cure the initial jurisdictional error and the award was passed without any reference and without an agreement for arbitration. No contention was raised that there was an oral agreement. Even if page 3 of the award produced and the signature therein are genuine and they signed after the words "we accept the award", it will not cure the initial jurisdictional error and the award was passed without any reference and without an agreement for arbitration. No contention was raised that there was an oral agreement. There is no evidence to show that any of the parties were given notice, any of the parties filed any statement of claims or counter claims and anyone participated in the proceedings of the award. The only witness examined by the Sub Court is C.P. Adam, who denied the existence of any arbitration agreement and deposed that that award is a nullity for the reasons mentioned earlier . Even though a written agreement is compulsory, in spite of specific objection , agreement for arbitration was not produced in this case. Section 2(a) of the Arbitration Act only recognizes a written agreement. From the agreement, it should be clear that parties agreed to refer the disputes to the Arbitrator. Constitution Bench of apex court in Waverly Jute Mills Co. Ltd. v. Raymon & co. (AIR 1963 S.C. 90) held as follows :- "Now an agreement for arbitration is the very foundation on which the jurisdiction of the arbitrators to act rests, and where that is not in existence, at the time when they enter on their duties, the proceedings must be held to be wholly without jurisdiction. And this defect is not cured by the appearance of the parties in those proceedings, even if that is without protest, because it is well settled that consent cannot confer jurisdiction. But in such a case there is nothing to prevent the parties from entering into a fresh agreement to refer the dispute to arbitration while it is pending adjudication before the arbitrators, and in that event the proceedings thereafter before them might be upheld as referable to that agreement & the award will not be open to attack as without jurisdiction. But it will make all the difference in the result whether the parties have entered into an arbitration agreement as defined in S. 2(a) of the Arbitration Act or have merely taken steps in the conduct of proceedings assumed or believed to be valid. In the former case the award will be valid, in the latter, a nullity". Here there was no written agreement for arbitration. In the former case the award will be valid, in the latter, a nullity". Here there was no written agreement for arbitration. There is no evidence to show that anybody participated in the alleged arbitration proceedings. There is also no subsequent agreement before passing of the award to refer the matter for arbitration . Therefore, the award passed was without jurisdiction and a nullity. On that ground alone, the award is liable to be set aside. Even though there are other grounds also for setting aside the award, on this ground alone the award is liable to be set aside as absence of agreement by the parties to the dispute to refer the matter of arbitration goes to the root of the jurisdiction. We, therefore, set aside the award and allow all the appeals and the revisions.