Research › Search › Judgment

Rajasthan High Court · body

2004 DIGILAW 1060 (RAJ)

Charan Sharan Khemka v. Achint Chemicals

2004-07-27

SUNIL KUMAR GARG

body2004
Honble GARG, J.–This revision petition has been filed by the petitioner against the order dated 26.9.2000 passed by the learned District Judge, Bhilwara in civil execution case No. 12/99 by which the execution application filed by the petitioner under section 36 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ``the Act of 1996) read with Order 21 Rule 11 CPC was dismissed. (2). It arises in the following circumstances:- On 26.7.1999, the petitioner filed an application under Order 21 Rule 11 CPC read with Section 36 of the Act of 1996 before the Court of District Judge, Bhilwara stating inter-alia that the so-called arbitration award dated 14.6.1996 be treated as an arbitral award deemed to have been passed under the provisions of the Act of 1996 and therefore, it has got the status or shape of decree as defined under the Code of Civil Procedure and thus, it was executable under Order 21 Rule 11 CPC. The gist of the so-called arbitration award dated 14.6.1996 passed between the parties is as follows: (i) That petitioner was having a partnership with his partner Guru Sharan Khemka (respondent No. 2) in the firm M/s Achint Chemicals, Bhilwara (respondent No. 1) and due to some personal reasons, the petitioner wanted to retire from that partnership and for that, so-called arbitration award was passed on 14.6.1996 between the parties. (ii) That as per terms of that so-called arbitration award dated 14.6.1996, it was decided that the petitioner would be paid Rs. 8 lacs in lump sum and thereafter, the petitioner would be entitled to Rs. 8000/- per month for rest of his life and that amount would be paid by the respondent No. 2 Guru Sharan Khemka and respondent No. 1 M/s Achint Chemicals, Bhilwara. (iii) That it was also stated in that so-called arbitration award that Shri Dhirendra Kumar Pareek, CA of the firm would take necessary steps for giving legal status or shape to that so- called arbitration award in order to resolve the dispute for ever. According to the petitioner, in pursuance of the so-called arbitration award dated 14.6.1996, he was paid Rs. 8 lacs and thereafter, he was also paid Rs. 8000/- per month for 33 months. According to the petitioner, in pursuance of the so-called arbitration award dated 14.6.1996, he was paid Rs. 8 lacs and thereafter, he was also paid Rs. 8000/- per month for 33 months. However, thereafter, the respondents failed to honour and comply with the so-called arbitration award dated 14.6.1996 and thus, for execution of that arbitration award, the above application under Order 21 Rule 11 CPC read with Section 36 of the Act of 1996 was filed. A reply to the said application was filed by the respondents on 13.3.2000 stating inter-alia that between the parties, there was no arbitration agreement and therefore, provisions of the Act of 1996 are not applicable with the so- called arbitration award dated 14.6.1996. Hence, it was not executable before the civil court. It was further submitted by the respondents that in case the so-called arbitration award be treated as arbitral award deemed to have been passed under the Act of 1996, in such a situation, thereafter, the petitioner should have approached the competent court to make it rule of the Court and in absence of that, the said execution application of the petitioner was not maintainable as the so-called arbitration award dated 14.6.1996 does not come within the definition of arbitral award as defined in the Act of 1996 or decree as defined in the Code of Civil Procedure. It was further submitted that the so-called arbitration award was nothing, but a family settlement between the parties and not more than this. Hence, it was prayed that the application filed by the petitioner be dismissed. It was further submitted that the so-called arbitration award was nothing, but a family settlement between the parties and not more than this. Hence, it was prayed that the application filed by the petitioner be dismissed. After hearing the parties, the learned District Judge, Bhilwara through impugned order dated 26.9.2000 dismissed the application filed by the petitioner under Order 21 Rule 11 CPC read with Section 36 of the Act of 1996 holding inter-alia: (i) That from the partnership deed produced on record, it appears that in the firm M/s Achint Chemicals (respondent No. 1), there were only two partners, namely, Charan Sharan Khemka (petitioner) and Guru Sharan Khemka (respondent No. 2), but in the so-called arbitration award dated 14.6.1996, Smt. Usha Mathur was also shown as partner, meaning thereby after 20.10.1982, one more partnership deed was executed between the parties in which Smt. Usha Mathur was made partner, otherwise she would not have been shown as partner in the so-called arbitration award dated 14.6.1996 and that partnership deed was not produced before the court and in absence of that, the Court could not know whether in that partnership deed, there was any clause to the effect that in case of dispute between the parties, the same shall be referred for settlement to the arbitrator or not. Apart from this, neither the condition No. 13 of partnership deed dated 20.10.1982 could be said to be final nor on the basis of it, it could be said that an agreement was made between the parties that disputes between the parties would be resolved through arbitration award. (ii) That so-called arbitration award dated 14.6.1996 does not come within the definition of arbitral award as defined under the Act of 1996 or decree as defined under the Code of Civil Procedure. (iii) That in the so-called arbitration award dated 14.6.1996, it was specifically stated that Shri Dhirendra Kumar, CA of the firm would take necessary steps for giving it the legal status or shape, but no steps were taken by him in this respect and thus, from this point of view also, the so-called arbitration award dated 14.6.1996 cannot be regarded or termed as arbitral award passed under the Act of 1996. (iv) That since necessary stamps were not affixed on the so-called arbitration award dated 14.6.1996, therefore, it could not be termed or regarded as legal or valid arbitral award and thus, it was not executable by the court. Aggrieved from the said order dated 26.9.2000 passed by the learned District Judge, Bhilwara, this revision petition has been filed by the petitioner. A reply to the revision petition was filed by the respondent No. 2 on 22.7.2004. (3). In this revision petition, the following submissions have been made by the learned counsel for the petitioner:- (i) That the so-called arbitration award dated 14.6.1996 should be treated as arbitral award deemed to have been passed under the Act of 1996 and therefore, it has got the status or shape of decree as defined under the Code of Civil Procedure and thus, it was executable under Order 21 Rule 11 CPC read with Section 36 of the Act of 1996. (ii) That since after passing of the so-called arbitration award dated 14.6.1996, the respondents have not only paid Rs. 8 lacs in lump sum to the petitioner, but they have also paid Rs. 8000/- per month for a long period, therefore, in these circumstances, now they are estopped from challenging it. Hence, it was submitted that the findings of the learned District Judge on the point that the so-called arbitration award dated 14.6.1996 was not arbitral award as defined under the Act of 1996 or decree under CPC and, therefore, the same was not executable, are wholly perverse and erroneous one and liable to be set aside. (4). On the other hand, the learned counsel appearing for the respondents has supported the impugned order dated 26.9.2000 passed by the learned District Judge, Bhilwara. (5). I have heard the learned counsel for the petitioner and the learned counsel for the respondents and gone through the entire materials available on record. (6). There is no dispute on the point that the so-called arbitration award dated 14.6.1996 was passed by the Arbitration Committee in which the petitioner was also one of the members. (7). (5). I have heard the learned counsel for the petitioner and the learned counsel for the respondents and gone through the entire materials available on record. (6). There is no dispute on the point that the so-called arbitration award dated 14.6.1996 was passed by the Arbitration Committee in which the petitioner was also one of the members. (7). There is also no dispute on the point that Shri Dhirendra Kumar, CA of the firm was asked to take necessary steps for giving the legal status or shape to the so-called arbitration award dated 14.6.1996 so as to resolve the dispute for ever, but it appears that no steps were taken by him. (8). There is also no dispute on the point that the petitioner has placed reliance on the partnership deed dated 14.6.1996 in which there is a clause that in case of dispute or disagreement, the matter shall be referred to Param Pujya Aadarneeya Dadaji Maharaj, His Lordship of Radha Soami Satsang, Agra, for settlement and his decision shall be final and binding upon all the partners, continuing here-in-after. (9). There is also no dispute on the point that no order of rectifying the so-called arbitration award dated 14.6.1996 was ever passed by any court or arbitrator separately. (10). There is also no dispute on the point that the so-called arbitration award dated 14.6.1996 was produced for the first time before the Court of District Judge, Bhilwara alongwith the application under Order 21 Rule 11 CPC read with Section 36 of the Act of 1996 treating as if it was a decree as defined under CPC or arbitral award as defined under the Act of 1996. (11). The question for consideration is whether in the facts and circumstances just mentioned above, the findings of the learned District Judge that the so-called arbitration award dated 14.6.1996 could not be said to be a decree as defined under the Code of Civil Procedure or arbitral award as defined under the Act of 1996 and therefore, it was not executable, are liable to be confirmed one or not. (12). Order 21 Rule 11 CPC deals with execution of decree. (13). (12). Order 21 Rule 11 CPC deals with execution of decree. (13). In Sub-section (2) of Section 2 CPC, the word `decree has been defined, which means the formal expression of an adjudication which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit and may be either preliminary or final. It shall be deemed to include the rejection of a plaint and the determination of any question within Section 144, but shall not include.- (a) any adjudication from which an appeal lies as an appeal from an order, or (b) any order of dismissal for default. (14). It may be stated here that in order that a decision of a court may be said to be a decree, it must satisfy the following conditions:- (i) there must be an adjudication; (ii) which must have been given in a suit; (iii) determining the rights of the parties with regard to all or any of the matters in controversy in the suit; (iv) which must be of a conclusive nature; and (v) there must be a formal expression of such adjudication. (15). In the present case, it appears that none of the essential ingredients has been satisfied in order to give the so-called arbitration award dated 14.6.1996 the shape and status of decree as defined in the Code of Civil Procedure. (16). Apart from this, the civil decree must contain number of suit, names and description of the parties, particulars of claim, determination of questions and thereafter, relief granted in the manner whether suit dismissed or decreed and the so-called arbitration award dated 14.6.1996 does not contain the aforesaid details and thus, from this point of view also, the so-called arbitration award dated 14.6.1996 cannot be termed or regarded decree as defined in the Code of Civil Procedure. (17). Thus, it is held that so-called arbitration award dated 14.6.1996 does not acquire the status or shape of decree as defined under the Code of Civil Procedure as none of the essential ingredients has been satisfied in order to give to it the status of decree and when this being the position, the so- called arbitration award dated 14.6.1996 was not executable. Hence, the execution application filed by the petitioner under Order 21 Rule 11 CPC was not maintainable and it was rightly dismissed on that point. (18). Apart from Order 21 Rule 11 CPC, the petitioner has also mentioned Section 36 of the Act of 1996 in the said application and it was submitted by him that the so-called arbitration award dated 14.6.1996 should be treated as arbitral award passed under the provisions of the Act of 1996 and therefore, it was executable. (19). For convenience, Section 36 of the Act of 1996 is quoted here:- ``36. Enforcement Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court. (20). In clause (b) of sub-section (1) of Section 2 of the Act of 1996, ``arbitration agreement has been defined, which means an agreement referred to in Section 7. (21). The expression `arbitration award has not been defined in the Act of 1996. However, in Section 2(b) of the old Arbitration Act, 1940, the expression `award has been defined, which means an arbitration award. It is also not an exhaustive definition. (22). To every award, five things are incidental, namely.- (i) a matter in controversy, (ii) a submission, (iii) parties to the submission, (iv) arbitrators, and (v) the delivery of the award (23). The Honble Supreme Court in Ratan Lal Sharma vs. Purshottam Harit (1), has held that award as defined in Section 2(b) of the Arbitration Act, 1940 means an award which can validly be looked into by Court. (24). Clause (b) of the sub-section (1) of Section 2 of the Act of 1996 defines `arbitral award which includes an interim award. It corresponds to Section 2(b) of the Arbitration Act, 1940 with the difference that in the present definition expression `arbitral award has been used in place of `award. There is no statutory definition of this expression in the Act of 1996. (25). It corresponds to Section 2(b) of the Arbitration Act, 1940 with the difference that in the present definition expression `arbitral award has been used in place of `award. There is no statutory definition of this expression in the Act of 1996. (25). The necessary contents of arbitral award and its form may be summarized in the following manner:- Form and contents of arbitral award as stated in Section 31 of the Act of 1996 (i) An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal. (ii) For the purposes of sub-section (1), in arbitral proceedings with more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated. (iii) The arbitral award shall state the reasons upon which it is based unless.- (a) the parties have agreed that no reasons are to be given or (b) the award is an arbitral award on agreed terms under section 30. (iv) The arbitral award shall state its date and the place of arbitration as determined in accordance with section 20 and the award shall be deemed to have been made at that place. (v) After the arbitral award is made, a signed copy shall be delivered to each party. (vi) The arbitral tribunal may, at any time during the arbitral proceedings make an interim arbitral award on any matter with respect to which it may make a final arbitral award. (vii) (a) Unless otherwise agreed by the parties where and in so far as a arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. (b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per cent per annum from the date of the award to the date of payment. (b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per cent per annum from the date of the award to the date of payment. (viii) Unless otherwise agreed by the parties,- (a) the costs of an arbitration shall be fixed by the arbitral tribunal; (b) the arbitral tribunal shall specify.- (i) the party entitled to costs, (ii) the party who shall pay the costs, (iii) the amount of costs or method of determining that amount, and (iv) the manner in which the costs shall be paid. (26). In the present case, from perusing the so-called arbitration award dated 14.6.1996, it appears that it does not contain the essential ingredients and details, as mentioned above, so as to acquire the status of arbitral award as defined under the Act of 1996 and therefore, in these circumstances, the so-called arbitration award dated 14.6.1996 cannot be regarded or treated as arbitral award deemed to have been passed under the Act of 1996 and thus, it was not executable under section 36 of the Act of 1996. (27). The so-called arbitration award dated 14.6.1996 at the most can be termed or regarded as family settlement or agreement or arrangement between the parties. (28). The family agreement may be defined as an agreement or arrangement made between a father and his son or children or between brothers and other members of a family to dispose of property in a different manner from what would otherwise take place. A family arrangement is an agreement between members of the same family intended to be generally and reasonably for the benefit of the family either by compromise of doubtful or disputed rights or by pressuring the family property or the peace and security of the family by avoiding litigation or by saving its honour. The agreement may be implied from a long course of dealings, but it is more usual to embody or to effectuate the agreement in a deed to which the term `family arrangement is applied. (29). It may be stated here that every agreement or arrangement made between the parties to the disputes cannot get the status of decree as defined under the Code of Civil Procedure or arbitral award as defined under the Act of 1996. (30). (29). It may be stated here that every agreement or arrangement made between the parties to the disputes cannot get the status of decree as defined under the Code of Civil Procedure or arbitral award as defined under the Act of 1996. (30). It may further be stated here that where the parties make a certain decision as embodied in the document, in the present case, so-called arbitration award dated 14.6.1996, and the parties treat it as their own act and some other members of the decision signed it as an attesting witnesses, such document (so- called arbitration award dt. 14.6.1996) cannot be regarded as an award merely because it bears the signatures of some persons other than interested parties. (31). Apart from this, unless there was a valid reference, there can be no award under the arbitration agreement. It is a valid reference which gives the jurisdiction to the arbitrator. (32). Furthermore, in the so-called arbitration award dated 14.6.1996, there is a mention of the fact that Shri Dhirendra Kumar, CA of the firm would take further steps for giving it the legal status or shape, but no steps were taken by him, meaning thereby no legal status or shape was given to the so-called arbitration award dated 14.6.1996. From this point of view also, so-called arbitration award does not acquire the legal status of either decree as defined under CPC or arbitral award as defined under the Act of 1996 and it remains only a family settlement between the parties. (33). Thus, it is held that the so-called arbitration award dated 14.6.1996 cannot be regarded or termed as arbitral award as defined under the Act of 1996 as it does not contain the essential ingredients in order to give to it the status of arbitral award and therefore, it was not executable under section 36 of the Act of 1996. (34). Thus, it is held that the so-called arbitration award dated 14.6.1996 cannot be regarded or termed as arbitral award as defined under the Act of 1996 as it does not contain the essential ingredients in order to give to it the status of arbitral award and therefore, it was not executable under section 36 of the Act of 1996. (34). So far as the argument that since the so-called arbitration award dated 14.6.1996 has been acted upon and payment has been made to the petitioner, therefore, it should be treated as arbitral award as defined under the Act of 1996 or decree as defined under CPC and thus, it was executable is concerned, in my considered opinion, the same has got no force because unless and until so-called arbitration award dated 14.6.1996 was given legal status or shape of decree or award by getting it attested by the competent court or by making it rule of court, it could not be executed by the civil court. Therefore, if pursuant to so-called arbitration award dated 14.6.1996, some amount has been paid to the petitioner, it would not create any right in his favour to get that so-called arbitration award executed or enforced by the Court unless in consequence of that, a decree has been passed by the Court or arbitral award has been passed by the arbitrator. Therefore, the law laid down in State of Himachal Pradesh vs. Inderjeet Singh (2), would not come to help the petitioner. (35). This Court is aware of the fact that equity lies in favour of the petitioner because respondents had agreed to pay Rs. 8000/- per month, but the question is whether the so-called arbitration award dated 14.6.1996 can be executed in the manner as sought by the petitioner and in my considered opinion, since it is neither a decree as defined under CPC nor arbitral award as defined under the Act of 1996, therefore, it is not executable. The petitioner can seek another alternative remedy available to him under the law in appropriate forum. (36). The petitioner can seek another alternative remedy available to him under the law in appropriate forum. (36). For the reasons stated above, the findings of the learned District Judge that the so-called arbitration award dated 14.6.1996 could not be termed or regarded decree as defined under the Code of Civil Procedure or arbitral award as defined under the Act of 1996 and therefore, it was not executable, cannot be said to be perverse or erroneous one. The impugned order dated 26.9.2000 passed by the learned District Judge is within the framework of law and it does not suffer from any basic illegality or infirmity. It does not appear that the learned District Judge has failed to exercise jurisdiction so vested in him or acted in the exercise of his jurisdiction illegally or with material irregularity. Hence, no interference is called for with the impugned order dated 26.9.2000 and this revision petition is liable to be dismissed. Accordingly, this revision petition filed by the petitioner is dismissed.