Research › Search › Judgment

Himachal Pradesh High Court · body

2012 DIGILAW 780 (HP)

Ashok Kumar v. Deepti Sharma

2012-11-02

RAJIV SHARMA

body2012
Judgment Rajiv Sharma, J. Since common questions of law and facts are involved in these writ petitions, the same were heard together and are being disposed of by this common judgment. 2. Petitioners in Arbitration Case No. 05 of 2010, namely, Mrs. Deepti and Shipra Sharma have filed a Civil Suit bearing No. 566 of 2004 in the Court of learned Civil Judge (Junior Division), Indora, District Kangra. The learned Civil Judge (Junior Division), Indora, District Kangra vide order dated 25.10.2005, referred the matter to the sole Arbitrator, Shri Jagdish Chowdhary, Advocate. The petitioners filed a claim before the learned Arbitrator, claiming an amount of Rs.1,68,79,000/- being 1/3rd of the total value of the business which was assessed as Rs.5,06,37,000/-. The claim was resisted by the respondents by filing reply. The learned Arbitrator made the award on 02.10.2009. He has awarded an amount of Rs.10,33,000/- in favour of the petitioners, namely, Mrs. Deepti and Shipra Sharma with interest @ 9% per annum from the date of death of Shri Vijay Kumar, i.e., 22.11.2003. The petitioner in Arbitration Case No. 03 of 2010 and Arbitration Case No. 05 of 2010, have assailed the award, dated 02.10.2009 3. The partnership deed was entered into between Shri Ashok Kumar and Shri Ashwani Kumar on 17.02.1988. A loan of Rs.5,00,000/- was also raised from the Punjab National Bank, Mukerian. The lease agreement was entered into with the Mining Department of Himachal Pradesh Government on 04.10.1989. The firm was registered with the Registrar of Firms on 04.07.1990. The Stone Crusher started its production in the year 1991. The Vijay Kumar joined the partnership vide partnership deed registered on 04.05.1992. Shri Vijay Kumar died on 22.11.2003. 4. Mr. J.S. Bhogal, learned Senior Counsel has vehemently argued that the learned Arbitrator has not given any reasons. According to him, the award is against the public policy. He also argued that the learned Arbitrator has ignored Clause 14 of the partnership deed. He also argued that the learned Arbitrator has not taken into consideration the tippers. He lastly contended that the learned Arbitrator ought to have summoned account books. 5. Ms. Jyotsna Rewal Dua, learned counsel has also argued that the award, dated 02.10.2009 is against the public policy and the learned Arbitrator has not assigned any reasons while assessing the value of the old Stone Crusher and old J.C.B. machine. He lastly contended that the learned Arbitrator ought to have summoned account books. 5. Ms. Jyotsna Rewal Dua, learned counsel has also argued that the award, dated 02.10.2009 is against the public policy and the learned Arbitrator has not assigned any reasons while assessing the value of the old Stone Crusher and old J.C.B. machine. She then argued that her client could not sell machinery of old Stone Crusher and J.C.B. machine without the consent of other partners and it was the duty case upon all the partners to lookafter the property of the firm. 6. I have heard the learned counsel for the parties and gone through the pleadings carefully. 7. What emerges from the facts enumerated hereinabove, is that the partnership deed was entered into between Shri Ashok Kumar and Shri Ashwani Kumar on 17.02.1988. A loan of Rs.5,00,000/- was also raised from the Punjab National Bank, Mukerian. The lease agreement was entered into with the Mining Department of Himachal Pradesh Government on 04.10.1989. The firm was duly registered with the Registrar of Firms on 04.07.1990. The Stone Crusher started production in the year 1991. Shri Vijay Kumar, father of Mrs. Deepti and Shipra Sharma died on 22.11.2003. 8. Shri Vijay Kumar has maintained the Day Book for the period w.e.f. 31.01.1997 to 31.05.1998. It has come on the record that Shri Ashok Kumar has set up a separate Stone Crusher. It has also come on the record that old Stone Crusher machine and J.C.B. machine were lying on his land. Shri Ashok Kumar could not sell the old Stone Crusher machine and J.C.B. machine without the consent of other partners. It was the duty cast upon all the partners to look after the property of the firm. The Stone Crusher was set up in the year 1991. The learned Arbitrator has assessed the price of the Stone Crusher of the firm at Rs.21,00,000/- at the time of death of Vijay Kumar, i.e., 22.11.2003. How the learned Arbitrator has come to the conclusion, is not supported by any documentary or oral evidence. It could not be decided merely on the basis of guess work. The J.C.B. was purchased in the year 1997 at a consideration of Rs.14,10,107/-. He has assessed the value of J.C.B. machine at Rs.10,00,000/-. He has not taken into consideration that the value of J.C.B. machine has depreciated between 1997-2009. It could not be decided merely on the basis of guess work. The J.C.B. was purchased in the year 1997 at a consideration of Rs.14,10,107/-. He has assessed the value of J.C.B. machine at Rs.10,00,000/-. He has not taken into consideration that the value of J.C.B. machine has depreciated between 1997-2009. It was necessary for the learned Arbitrator to summon the account books and he was required to take into consideration the provisions of partnership Act while making the award. There are no reasons assigned by the learned Arbitrator how Sh. Ashok Kumar was responsible for depreciation of the Stone Crusher. Thus, he could not be held accountable for the same. 9. The petitioners in Arbitration Case No. 05 of 2010 have not led any tangible evidence to establish that their father, Sh. Vijay Kumar has invested any amount in partnership firm. Shri Ashok Kumar has set up a Stone Crusher from his own funds and the petitioners in Arbitration Case No. 05 of 2010 cannot claim any profit from the same. 10. According to Section 31(3) of the Arbitration and Conciliation Act, 1996, the learned Arbitrator ought to have assigned the reasons while making the award. The award, dated 02.10.2009 is non-speaking and is liable to be set aside on this score alone. 11. Their Lordships of the Hon’ble Supreme Court in Mcdermott International Inc. Vs. Burn Standard Co. Ltd. and others (2006) 11 Supreme Court Cases 181 have held that it is mandatory on the part of the Arbitrator to give reasons. Their Lordships have held as under: “55. Another important change which has been made by reason of the provisions of the 1996 Act is that unlike the 1940 Act, the Arbitrator is required to assign reasons in support of the award. A question may invariably arise as to what would be meant by a reasoned award. 57. In Konkan Railway Corporation Ltd. v. Mehul Construction Company [ (2000) 7 SCC 201 ], this Court emphasized the mandatoriness of giving reasons unless the arbitration agreement provides otherwise. 12. Their Lordships of the Hon’ble Supreme Court in Delhi Development Authority Vs. A question may invariably arise as to what would be meant by a reasoned award. 57. In Konkan Railway Corporation Ltd. v. Mehul Construction Company [ (2000) 7 SCC 201 ], this Court emphasized the mandatoriness of giving reasons unless the arbitration agreement provides otherwise. 12. Their Lordships of the Hon’ble Supreme Court in Delhi Development Authority Vs. R.S. Sharma and Company, New Delhi (2008) 13 Supreme Court Cases 80 have held that the award can be challenged on the following grounds: “12) From the above decisions, the following principles emerge: (a) An Award, which is (i) contrary to substantive provisions of law ; or (ii) the provisions of the Arbitration and Conciliation Act, 1996 ; or (iii) against the terms of the respective contract ; or (iv) patently illegal, or (v) prejudicial to the rights of the parties, is open to interference by the Court under Section 34(2) of the Act. (b) Award could be set aside if it is contrary to : (a) fundamental policy of Indian Law; or (b) the interest of India; or (c) justice or morality; (c) The Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court. (d) It is open to the Court to consider whether the Award is against the specific terms of contract and if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India.” 13. Accordingly, in view of the observations and discussions made hereinabove, both the Arbitration Cases are allowed. The award, dated 02.10.2009 is set aside. However, the parties are left to bear their own costs. The pending application(s), if any, also stands disposed of.