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2006 DIGILAW 1685 (MAD)

Union of India rep. by its Secretary, Ministry of Agriculture and Co-operation, New Delhi and Others v. V. Ram Mohan and Another

2006-07-06

S.RAJESWARAN

body2006
Judgment : S. RAJESWARAN, J. This O.P. has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act‘) to set aside the award passed by the 2nd respondent dated 31.10.1997 and 15.11.1999. 2. The petitioners took the building of the 1st respondent on lease in the year 1970 and to this effect a lease agreement dated 29.4.1970 was entered into between the third petitioner representing the 1st petitioner Union of India and the 2nd petitioner. Initially the rent was fixed at Rs.3,200/- per month and the building was situated at Door No. 87,West Madha Church Road,Royapuram, Chennai- 13. The first respondent demanded increase of rent and the dispute was deferred to arbitration. By award dated 24.12.1976, the rent was increased to Rs. 4,975/- per month with effect from 23.9.1971 to 22.9.1977. 3. The1st respondent again demanded increase of rent and the matter was again referred to arbitration and by award dated 5.6.1987 increase in rent was awarded as under : • 1) For the period from 23.9.1977 to 22.9.1982 at the rate of Rs.9.950/- • 2) For the period from 23.9.1982 to 22.9.1987 at the rate of Rs. 19,900/- per month. 4. After 23.9.87, the 1st respondent again demanded increase of rent and to enforce his demand he filed C.S.No.792/1989 before this Court under Section 20 of the Arbitration Act. On 30.7.1996 this Court appointed a Judicial Arbitrator against which an appeal was filed in O.S.A.No. 231/1996 and by judgment dated 3.2.97, the petitioners were directed to appoint an I.A.S. Officer to decide the issue. Accordingly the 2nd respondent was appointed by the petitioners to decide the issue, namely, to fix the fair rent of the building of 1st respondent for the period from 23.9.1987 to 31.3.96. This Court further directed that the fair rent has got to be fixed in terms of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 and thereafter an award was passed by the 2nd respondent on 31.10.1997. By the award dated 31.10.97, 2nd respondent fixed the fair rent for the period from 23.9.1987 to 31.12.91 at Rs.20,47,356/- and for the period from 1.1.1992 to 31.3.96 at Rs. 46.50,681/-. By the award dated 31.10.97, 2nd respondent fixed the fair rent for the period from 23.9.1987 to 31.12.91 at Rs.20,47,356/- and for the period from 1.1.1992 to 31.3.96 at Rs. 46.50,681/-. Challenging the award dated 31.10.97, the petitioners field O.P.No.259/1998 and this Court by order dated 30.4.99 set aside the award and remanded the matter to 2nd respondent for fresh disposal with a direction to examine the parties to the documents and dispose of the claims as per the directions of the Division Bench of this court given in O.S.A.No. 231/96. 5. Subsequently another award dated 15.11.1999 was passed by 2nd respondent after remand and challenging the same these petitioners have filed this O.P. under Section 34 of the Act, 1996. 6. The petitioners attacked the award on the ground that (1) the arbitrator has not considered the evidence properly, (2) the arbitrator failed to consider the decision of this Court in Kanniah Chetty v. Sha Magajee Asal Das (1994) 1 MLJ 648 and (3) 2nd respondent committed misconduct in taking into consideration methods adopted by earlier arbitrator for calculating the fair rent disregarding the provisions contained in Section 4A of the Rent Control Act and the arbitrator committed misconduct in not informing and framing point with regard to the mode of fixation of fair rent to the building. 7. The 2nd respondent filed a counter affidavit stating that he followed the provisions of Rent Control Act, principles laid down by this Court in Kanniah Chetty v. Sha Magajee Asal Das (supra) and the directions of the Division Bench of this Court in O.S.A.No. 231/96. 8. Heard the learned Senior Central Government Standing Counsel appearing for the petitioners and the learned Senior Counsel appearing for the 1st respondent and the learned counsel for the 2nd respondent. I have also gone through the documents referred to by them and the judgments relied on by them. 9. Thelearned Senior Central Government Standing Counsel appearing for the petitioners submitted that the arriving at the market value by 2nd respondent is obviously wrong and he has not complied with the provisions of the Rent Control Act while fixing the fair rent. He further submitted that 2nd respondent has not at all considered the Engineers report submitted by the petitioners and the award is vitiated on the ground of non-application of mind. He further submitted that 2nd respondent has not at all considered the Engineers report submitted by the petitioners and the award is vitiated on the ground of non-application of mind. He relied on the following judgments in support of his contentions :- • (1) Ajit Singh v. Fateh Singh AIR 1962 Punjab 412; • (2) Union of India v. Sharma & Sons AIR 1968 Raj. 99 ; • (3) K. P. Poulose v. State of Kerala AIR 1975 SC 1259 : (1975) 2 SCC 236 ; • (4) Associated Engineering Co. v. Government of Andhra Pradesh AIR 1992 SC 232 : (1991) 4 SCC 93 ; • (5) State of J & K v. Mohammed Mateen wani State of J & K v. Mohammed Mateen wani State of J & K v. Mohammed Mateen wani AIR 1998 SC 2470 : (1998) 6 SCC 233 ; • (6) Rajinder Krishnan Khanna v. Union of India AIR 1999 SC 463 : (1998) 7 SCC 129 ; • (7) Land Acquisition Officer & Mandal Revenue Officer Of ficer v. V. Narasaih AIR 2001 SC 1117 : (2001) 3 SCC 530 ; • (8) Cement Corpn. of India Ltd. v. Purya (2004) 8 SCC 270 . 10. Per contra, the learned Senior Counsel appearing for the 1st respondent submitted that none of the grounds raised by the learned Senior Central Government Standing Counsel appearing for the petitioners would come within the parameters of Section 34 of the Act, 1996 and in such circumstances this Court cannot re-appreciate the evidence to come to a different conclusion even if it is possible. 11. He relied on the following judgments in support of his submissions:- • (1) Puri Construction Pvt. Ltd. v. Union of India AIR 1989 SC 777 : (1988) 1 SCC 411; • (2) Arosan Enterprises Ltd. v. Union of India AIR 1999 SC 3804 : (1999) 9 SCC 449 ; • (3) W. B. State Ware Housing Corpn. v. Sushi Kumar Kayan AIR 2002 SC 2155 : (2002) 5 SCC 679 . 12. Let me first consider the judgments cited on behalf of the petitioners. 13. v. Sushi Kumar Kayan AIR 2002 SC 2155 : (2002) 5 SCC 679 . 12. Let me first consider the judgments cited on behalf of the petitioners. 13. In K. P. Poulose v. State of Kerala (supra), the Hon‘ble Supreme Court held that misconduct under Section 30(a) of the Act, 1940 comprises legal misconduct which is complete if the Arbitrator on the face of the award arrives at an inconsistent conclusion even on his own finding or arrives at a decision by ignoring very material documents which throw abundant light on the controversy to help a just and fair decision. 14. In Associated Engineering Co. v. Government of Andhra Pradesh (supra), the Hon‘ble Supreme Court held that an arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the contract. His sole function is to arbitrate in terms of the contract and if he has travelled outside the bounds of the contract, he has acted without jurisdiction. It was further held that if the arbitrator commits an error in the construction of the contract that is an error within his jurisdiction and if he wanders outside the contract and deals with matter not allotted to him, he commits a jurisdictional error. 15. In Ajit Singh v. Fateh Singh (supra) the Punjab High Court held that it is the fundamental rule of law that whatever is without jurisdiction cannot acquire sanctity merely because the parties do not raise an objection of jurisdiction or later on consent to the same, for no amount of consent can confer jurisdiction. 16. In Union of India v. Sharma & Sons (supra), the Division Bench of the Rajasthan High Court held that legal misconduct under Section 30 (a) of the Arbitration Act, 1940 means any neglect of the duty and responsibility of the arbitrator. 17. In Rajinder Krishnan Khanna v. Union of India (supra), the Hon‘ble Supreme Court held that if the award falls outside the scope of reference to arbitration and is not in relation to a dispute contemplated thereby, the same is liable to be set aside under Section 34 of the Act, 1996. 18. 17. In Rajinder Krishnan Khanna v. Union of India (supra), the Hon‘ble Supreme Court held that if the award falls outside the scope of reference to arbitration and is not in relation to a dispute contemplated thereby, the same is liable to be set aside under Section 34 of the Act, 1996. 18. In State of J & K v. Mohammed Mateenwani (supra), the Hon‘ble Supreme Court held, while deciding the market price of the land under the Land Acquisition Act, that the sale instances of a very small area cannot be said to be comparable to sale instances to determine the market price of a big chunk of acquired land and further upheld that the report of the Tahsildar submitted by him in his capacity as a Government Official in discharge of his duties could be relied upon by the Courts. 19. In Land Acquisition Officer & Mandal Revenue Officer Of ficer v. V. Narasaih (supra), the Hon‘ble Supreme Court held that certified copies of sale deeds regarding the similarly situated or neighbouring lands could be treated as evidence, but the Court is under no obligation to accept them as such. This judgment was also delivered under the Land Acquisition Act, 1894. 20. In Cement Corpn. of India Ltd. v. Purya (supra), the Hon‘ble Supreme Court held that in the land acquisition proceedings sale deeds are required to be brought on record for the purpose of determining the market value and the vendor or vendee is not required to examine themselves for proving the contents thereof, but this would not mean that the contents would be automatically accepted. 21. Now I shall deal with the judgments cited on behalf of the 1st respondent. 22. In Puri Construction Pvt. Ltd. v. Union of India (supra), the Hon‘ble Supreme Court held that when a Court is called upon to decide the validity of an arbitration award under Arbitration Act, 1940, the jurisdiction of the Court is limited and it has no jurisdiction to sit in appeal and examine the correctness of award on merits with reference to materials produced before the arbitrator by reexamining and re-assessing the same. 23. 23. In Arosan Enterprises Ltd. v. Union of India (supra), the Hon‘ble Supreme Court held that when the arbitrator comes to a conclusion on a closer scrutiny of evidence, the re-appraisal of the evidence by the Court is unknown to a proceeding under Section 30 of the Act, 1940. 24. In W. B. State Ware Housing Corpn. v. Sushi Kumar Kayan (supra), the Hon‘ble Supreme Court held that an award made by the arbitrator can be set aside if the arbitrator acts beyond jurisdiction and find out whether the arbitrator has travelled beyond jurisdiction. It would be necessary to consider the agreement between the parties containing the arbitration clause and if the arbitrator acts beyond the arbitration clause then it would be deemed that he has acted beyond jurisdiction. 25. Inthe light of the above decisions, let me now consider whether 2nd respondent has exceeded his jurisdiction in making the award and whether he has rightly arrived at the fair rent fixed by him for the building of 1st respondent. 26. The learned Senior Central Government Standing Counsel appearing for the petitioners submitted that when the matter was remanded by this Court on 30.4.99 after setting aside the earlier award dated 31.10.97, this Court directed that the matter is for fresh disposal before 2nd respondent as per procedure laid down by this Court in O.S.A.No. 231/96 and hence fair rent is to be calculated as per the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960. In the present case fair rent has been fixed and re-fixed previously by the arbitrator and in the absence of 1st respondent making any additions and improvements, his claim for fair rent is not at all maintainable as per Section 5 of the Rent Control Act. Therefore, fixing the fair rent by 2nd respondent is without jurisdiction and against the judgment of the Division Bench of this Court. 27. I am unable to accept this argument advanced by the learned Senior Central Government Standing Counsel. 28. Therefore, fixing the fair rent by 2nd respondent is without jurisdiction and against the judgment of the Division Bench of this Court. 27. I am unable to accept this argument advanced by the learned Senior Central Government Standing Counsel. 28. The Division Bench of this Court, in O.S.A.No.231/96 held as follows :- “ (a) That the appellants shall appoint an I.A.S. Officer either serving or retired on or before 7.3.1997, making it clear in case the appellants fail to appoint arbitrator as indicated above on or before 7.3.1997, the learned Single Judge of this Court will appoint an arbitrator and (b) that the respondent shall file his claim before the arbitrator so appointed within a week form the date of entering reference and the appellants shall file their claim or reply within a period of two weeks thereafter. The arbitrator shall file his award within four months from the date on which he enters upon reference. It is agreed between the parties that the dispute before the arbitrator shall relate only to the fixation of fair rent for the period form 23.9.1987 to 31.3.1996”. 29. Thereafter C.M.P.No.5497/1997 filed by the petitioners herein in O.S.A.No. 231/96 for extension of time for the petitioners to file their claim or reply and while extending the time, the Division Bench, with regard to the applicability of the Rent Control Act for fixing the rent observed as follows :- “ 4. The learned counsel for the petitioners also submitted that in paragraph 3(b) of the order dated 3.2.1997 passed by us in O.S.A.No. 231/96 there is reference to the fair rent and it needs to be clarified, in as much as fair rent has to be calculated under the provisions of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 and not under other enactment. He also added that the respondent had already made a claim under the provisions of the Tamil Nadu Act aforementioned. Further the petitioner has also calculated the rent on the basis of the provisions contained in the Tamil Nadu Act above mentioned. The learned counsel for the respondent submitted that the fair rent referred to in our order dated 3.2.1997 aforementioned is referable to the fair rent contemplated under the provisions of the Tamil Nadu Act aforementioned. This being the position, the fair rent as stated in the order is rightly understood by both the parties. The learned counsel for the respondent submitted that the fair rent referred to in our order dated 3.2.1997 aforementioned is referable to the fair rent contemplated under the provisions of the Tamil Nadu Act aforementioned. This being the position, the fair rent as stated in the order is rightly understood by both the parties. It is also made clear that no further extension of time shall be granted.” 30. While setting aside the earlier award dated 31.10.97 the learned Single Judge of this Court held on 30.4.99 as follows : “ 1. That the award dated 31.10.97 can be and is hereby set aside and the same be and is hereby remanded back to the arbitrator for fresh disposal as per the procedure laid down by this Court in CMP No. 5497/97 in O.S.A.No. 231/96. 2. That the arbitrator herein shall examine the parties to the documents and pass an award within a period of three months from the date of receipt of the records“. 31. From the above it is very clear that the Division bench of this Court has only directed that the arbitrator has to fix the fair rent for the period from 23.9.87 to 31.3.96 and further clarified that the fair rent has to be calculated as per the provisions of the Rent Control Act as rightly understood by both the parties. The only interpretation that is possible on the basis of these two orders is that the fair rent is to be fixed by the arbitrator for the period mentioned thereon and the calculation arrived at for fixing the fair rent is on the basis of the provisions contained in the Rent Control Act. Therefore it cannot be said that 2nd respondent has got no jurisdiction to pass the award by fixing the fair rent as Section 5(3) of the Act bars fixation of fair rent for the second time. 32. However, Section 5(3) is applicable to an application filed under Section 4 of the Act before the Rent Controller and it is not applicable to the present claim petition filed before 2nd respondent. This aspect was properly considered by 2nd respondent after going through the relevant sections of the Rent Control Act and also the relevant portion of the judgment of this Court in Kanniah Chetty v. Sha Magajee Asal Das (supra). This aspect was properly considered by 2nd respondent after going through the relevant sections of the Rent Control Act and also the relevant portion of the judgment of this Court in Kanniah Chetty v. Sha Magajee Asal Das (supra). Therefore I reject the contention that the 2nd respondent has excessed his jurisdiction in fixing the fair rent. 33. The learned Senior Central Government Standing Counsel appearing for the petitioners contended that even otherwise the fair rent fixed by 2nd respondent is not in accordance with the provisions of the Rent Control Act. He particularly pointed out that if evidence of one A. Tamilselvi who was examined on remand to prove document No. 1643/87 (Ex.R24) is properly considered, the market value ought to have been fixed at Rs. 2 lakhs for the year 1987 and not as Rs. 4 lakhs as wrongly fixed by 2nd respondent. 34. I am not able to accept this contention also. 2nd respondent has not arrived at the land value per ground at Rs. 4 lakhs for the year 1987 on the basis of Ex. R24 alone. In fact he perused 8 sale deeds (Ex.R18 to R25), heard the arguments of the respective parties, their witnesses and obtained the details from the registration department. Only on the basis of all the above evidence, the marker value was fixed at Rs. 4 lakhs per ground for the year 1987. As rightly submitted by the learned Senior Counsel appearing, for the 1st respondent this being purely a question of evaluation of evidence, this court cannot go into it under Section 34 of the Act, 1996. 35. The learned Senior Central Government Standing Counsel appearing for the petitioners made further attempt to assail the award by contending that fixation of fair rent arrived at by 2nd respondent is in accordance with the provisions of the Rent Control Act. 36. A perusal of the award make it clear that 2nd respondent is aware of Section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 and the relevant provisions of the Rent Control Act. 36. A perusal of the award make it clear that 2nd respondent is aware of Section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960 and the relevant provisions of the Rent Control Act. He has also applied the Full Bench decision of this Court in Lodha v. Ranganathan (1989) 1 MLJ 213 to come to the conclusion that the built up area of the structure in the ground floor should be multiplied by 1.5 times to arrive at the value of the site and residue of the vacant land could be added as amenities. He has considered the special features of the construction, amenities, the prime locality of the building before arriving at the fair rent. In such circumstances, it cannot be said that he has given a forego to the provisions of the Rent Control Act. 37. Insofar as the consideration of the sale deeds filed for ascertaining the market value before 2nd respondent, 2nd respondent was able to get the oral evidence of 4 persons after making sincere efforts as per the order of this Court while remanding the matter and considered the relevant documents in the light of the oral submissions. Therefore this cannot be found fault with under Section 34 of the Act, 1996 by this Court. 38. In the result, I do not find any grounds as enumerated under Section 34 of the Act, 1996 to set aside the award dated 15.11.1999 of 2nd respondent bearing in mind the limitation imposed on this Court by the Act, 1996. Arbitrator is the final court of facts and this Court cannot re-appreciate the evidence to come to a different conclusion even if it is possible. 39. Hence I do not find any merits in this O.P. and the same is liable to be dismissed and is dismissed. No costs.