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2014 DIGILAW 323 (CAL)

Sugata Mohan Bose v. Bhagirath Pasari

2014-04-04

SANJIB BANERJEE

body2014
JUDGMENT Sanjib Banerjee, J. 1. The two petitions are by the same petitioner for challenging arbitral awards of December 30, 2005 in references arising out of similar agreements of January 18, 1983. The prayers for annulment of the arbitral awards are fashioned under Sections 30 and 33 of the Arbitration Act, 1940. 2. The facts are not in much dispute. The two agreements of January 18, 1983 were in respect of two plots at premises No. 52 Amherst Street; 12 members of the Bose family agreed to sell the two plots to two sets of Pasaris. The agreements recorded the initial payments tendered by the vendees. The agreements obliged the vendors to obtain the clearance that was then necessary under the Income-Tax Act, 1961. Conveyance was to be completed within a period of six months from the date of the agreements. Such agreements contained identical arbitration clauses wherein two arbitrators were named. The arbitration agreements were invoked by the two vendees on January 31, 1985 by making written requests to the two joint arbitrators to adjudicate upon the disputes between the parties. During the pendency of such references, between October 30, 1985 and March 14, 1986, the deeds of conveyance covering the undivided interests of all the co-owners of the properties were executed in favour of the agreement-holders or their nominees, save by Nripendra Mohan Bose who died on July 3, 1984. 3. On April 3, 1987 the vendees called upon the petitioner herein, as the executor and sole beneficiary under the will of Nripendra, to execute the deeds of conveyance pertaining to testator Nripendra’s shares in the two plots. On April 22, 1987 the petitioner denied knowledge of any agreement or any part payment received thereunder by Nripendra. The petitioner then filed Suit No. 875 of 1988 in this court against the two Pasari agreement-holders and the other Bose family members seeking to exercise a right of pre-emption to purchase the undivided shares of the other co-owners. By this time, the Pasaris had filed two petitions under Section 28 of the 1940 Act for enlarging the time for making the awards and such petitions had been disposed of on January 15, 1988. It is evident that the petitioner herein was a party to the Section 28 proceedings. By this time, the Pasaris had filed two petitions under Section 28 of the 1940 Act for enlarging the time for making the awards and such petitions had been disposed of on January 15, 1988. It is evident that the petitioner herein was a party to the Section 28 proceedings. The petitioner applied for the orders dated January 15, 1988 to be recalled on the ground that his consent to refer the matters to the sole arbitration of Mr P. K. Khaitan as recorded in the relevant orders was not accorded by him. Upon such essay failing, the petitioner carried the resultant orders of January 25, 1990 in appeal. The appeals were disposed of by an order of February 22, 2001 by taking on record the terms of settlement executed by the parties. Such terms appointed the arbitrator who has passed the awards now assailed and contained the following clause: “10. None of the parties would be entitled to question the legality or competence of the reference on any ground whatsoever henceforth;” 4. Though two separate awards were passed on the same day, there is a common reasoning in support of the awards. The petitioner questions the propriety of the awards on the ground of limitation and on the ground that the two agreements had been abandoned by the agreement-holders or had been superseded by subsequent agreements pursuant to which the deeds of conveyance were executed by the other Bose family members in favour of several Pasari family members who were not parties to the original agreements. The petitioner reasons that since the original reference had been initiated against a dead person and the petitioner was roped in only in course of the Section 28 proceedings, the claimants could not pursue the respective claims against the petitioner and the arbitrator misconducted himself and the proceedings in failing to appreciate the ground of statutory prohibition under the laws of limitation as canvassed by the petitioner. The petitioner suggests that it would matter little that the statements of claim ultimately taken up by the arbitrator were lodged only after the appellate order of February 22, 2001 since the reference had been initiated against a dead person and the omission to implead the petitioner was not demonstrated by the claimants to be a mistake in good faith for the proviso to Section 21(1) of the Limitation Act, 1963 to be attracted. The petitioner asserts that the bar of limitation qua the claims against the petitioner could not have been overcome on the strength of the other Bose members being parties to the references since the claimants were aware that Nripendra had died and that he had executed a will; and, the intestate heirs of Nripendra could not have represented Nripendra as a consequence thereof. 5. In support of the contention that the claims were barred by limitation, the petitioner has first relied on a judgment reported at (1903) 31 ILR Mad 86 (Veerappa Chetty v. Tindal Ponnen) where the issue that arose was whether a suit, which was instituted in ignorance of the fact of the death of the defendant before the institution of the suit, could be continued by amending the plaint and bringing the legal representatives of the deceased defendant on record when a fresh suit against such representatives would be barred by limitation. The court held, upon relying on a Calcutta decision which has also been cited, that the suit could not be pursued by substituting the defendant who had died prior to the suit being launched by his heirs. In the previous Calcutta judgment reported at 12 WR 45 (Cal) (Mohun Chunder Koondoo v. Azeem Gazee Chowkeedar) it was held that the court had no jurisdiction to proceed with a suit against a defendant who had died prior to the institution of the suit, but the time during which the suit was being prosecuted bona fide and with due diligence against the dead man could be deducted in calculating the period of limitation against his representatives. It needs, however, to be emphasised that the proviso to Section 21(1) of 1963 Act was not there in the corresponding provision of the predecessor statute, the Limitation Act, 1908. 6. The petitioner also relies on a judgment reported at AIR 1972 Punjab & Haryana 276 (Suraj Bhan v. Balwan Singh) for the proposition that a party who was seeking to escape the consequence of his mistake or omission had to state the circumstances under which that mistake had been made. In other words, the good faith and bona fides had to be averred and established for such party to be entitled to the benefit under the proviso to Section 21(1) of the Limitation Act. In other words, the good faith and bona fides had to be averred and established for such party to be entitled to the benefit under the proviso to Section 21(1) of the Limitation Act. Another judgment of the same court, reported at AIR 1984 Punjab & Haryana 426 (Lalit Kumar v. Jairam Dass) has been brought by the petitioner for the principle that the circumstances leading to the mistake in impleading a dead person have to be asserted before the court can be invited to form an opinion that the mistake was made in good faith. A more recent judgment, reported at (1993) 4 SCC 41 (Karuppaswamy v. C. Ramamurthy), has been relied upon by the petitioner for the principle that “an averment … should be made and the court must on proof be satisfied” that the motion to include the right defendant by substitution or addition was just and proper and that the mistake in impleading a dead defendant was in good faith. 7. In dealing with the issue of limitation, the arbitrator noticed Section 37(3) of the 1940 Act and held that the arbitration proceedings commenced on the date the claimants served notices upon the joint arbitrators on January 31, 1985. Section 37(3) of the 1940 Act provides that an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other parties thereto a notice requiring the appointment of an arbitrator, or where the arbitration agreement provides that the reference shall be to a person named or designated in the agreement requiring that the difference be submitted to the person so named or designated. Though the claimants had addressed letters invoking the arbitration agreements to the joint arbitrators, they had not caused copies of such letters to be served on the other parties to the arbitration agreements. The joint arbitrators served notices on July 1, 1985 to the parties to the arbitration agreements, including to Nripendra who had died almost a year earlier. In the impugned awards, the arbitrator reckoned that notwithstanding the claimants not marking copies of their letters of January 31, 1985 issued to the joint arbitrators to the other parties to the arbitration agreements, the date of commencement of the arbitration references, within the meaning of Section 37(3) of the 1940 Act, had to be regarded as January 31, 1985. In the impugned awards, the arbitrator reckoned that notwithstanding the claimants not marking copies of their letters of January 31, 1985 issued to the joint arbitrators to the other parties to the arbitration agreements, the date of commencement of the arbitration references, within the meaning of Section 37(3) of the 1940 Act, had to be regarded as January 31, 1985. It was a possible view by applying the law to the facts – indeed, it may be the only possible and correct view – and the propriety of the award cannot be questioned by asserting that there was another possible view which could have been taken in the circumstances. 8. The arbitrator also held that at the time the references were commenced, the intestate heirs of Nripendra, in the event Nripendra had died without executing his will, were parties to the reference. There is no evidence that the claimants were aware at the time that they issued the letters of January 31, 1985 to the arbitrators named in the agreements that Nripendra had died. The factual basis of the following sentence appearing at page 33 of the reasoning in support of the awards has not been attempted to be questioned by the petitioner in course of the present proceedings: “After the claimants had come to know that Nripendra had died leaving a will, on 3rd April, 1987 they had called upon the respondent No. 10 as his executor to execute conveyances on their favour.” 9. The petitioner had not been able to establish before the arbitrator that the claimants were aware of the death of Nripendra at the time that they invoked the arbitration agreements by their letters of January 31, 1985. In fact, as recorded above, the joint arbitrators issued notices, inter alia, to Nripendra on July 1, 1985 inviting all parties to attend a meeting on July 11, 1985. If, in such circumstances, the arbitrator formed an opinion that the claimants may not have been aware of the death of Nripendra some six months before they invoked the arbitration agreements, the arbitrator cannot be faulted therefor. 10. The arbitrator has observed that at the time of commencement of the arbitral reference, the other Bose parties to the agreements were parties to the references and, thus, deceased Nripendra was represented by at least one of his intestate heirs. 10. The arbitrator has observed that at the time of commencement of the arbitral reference, the other Bose parties to the agreements were parties to the references and, thus, deceased Nripendra was represented by at least one of his intestate heirs. The petitioner says that since the Bose parties to the two agreements of January 18, 1983 had agreed to execute the deeds of conveyance in favour of the Pasaris, there was no Bose party to either reference who could have represented deceased Nripendra’s interest since all such Boses had a conflict of interest with the estate of Nripendra. Such argument is of no consequence as, at the time of the initiation of the arbitral proceedings, the other Boses who were parties to the agreements of January 18, 1983 had not conveyed their interest in the lands to the Pasaris. Also, even if it be assumed that the claimants were aware or ought to have been aware of Nripendra’s death at the time of the commencement of the arbitral proceedings in January, 1985, the petitioner has not asserted or established that at the time that the arbitration agreements were invoked the claimants were aware that Nripendra had executed a will. It may also have mattered very little even if the claimants were aware of Nripendra having died and leaving behind the will at the time they invoked the arbitration agreements. 11. It cannot be doubted that for a court to be satisfied that an omission was in good faith within the meaning of the expression “the court is satisfied” in the proviso to Section 21(1) of the Limitation Act, the satisfaction has to be based on the averments made and established by the person seeking to obtain the benefit under such provision. However, it may also be noticed that the corresponding expression used in Section 5 of the same statute is, “if the appellant or the applicant satisfies the court that he has sufficient cause …” The difference may be only in degrees, but it would appear that the court has a bit more latitude under the proviso to Section 21(1) of the Limitation Act than under Section 5 thereof to condone an act of omission by the party having the carriage of proceedings. 12. 12. It must also not be lost sight of that there are two aspects of limitation which are relevant in arbitration matters: the right to pursue the substantive claim; and, the right to proceed with the reference. It is elementary that once the clock of limitation is arrested it, ordinarily, does not begin to run again. The commencement of arbitral proceedings as defined in the statute is akin to the filing of a suit if the mode of resolution of the disputes under an agreement is not by way of arbitration. The schedule to the Limitation Act, 1963 prescribes the period of limitation in respect of various actions, appeals and applications. Section 2(j) of the Act defines the period of limitation to be such period as prescribed for the relevant kind of matter by the schedule and the expression “prescribed period” implies the period of limitation computed in accordance with the provisions of the Act. Section 3 of the Act mandates that every suit instituted, appeal preferred and application made after the prescribed period shall be dismissed although limitation may not be set up as a defence. However, the bar under Section 3 is subject to the exceptions as recognised in Sections 4 to 24 of the Act. A suit is deemed to have been instituted, ordinarily, when the plaint relating thereto is presented to the proper officer. In arbitration law, the commencement of an arbitration amounts to the presentation of the plaint, though no statement of claim is necessary to be filed along with the notice invoking the arbitration agreement. 13. But merely because the clock of limitation qua the substantive claim has been arrested in an arbitration matter upon the arbitration agreement being invoked and there being a commencement of the arbitral proceedings within the meaning of Section 37(3) of the 1940 Act, it does not imply that the claimant need worry no more about the prescription of limitation. Though there may be a juridical difference in the substantive claim not attracting the prescription of limitation once arbitral proceedings have commenced (unless the award has been set aside), the right to proceed to arbitration or the right to pursue the reference may still be vulnerable to the prescription of limitation on account of laches or want of diligence. Though there may be a juridical difference in the substantive claim not attracting the prescription of limitation once arbitral proceedings have commenced (unless the award has been set aside), the right to proceed to arbitration or the right to pursue the reference may still be vulnerable to the prescription of limitation on account of laches or want of diligence. Upon a would-be claimant invoking an arbitration agreement but either the appointing authority or the other party, as the case may be, not taking steps for the actual arbitral reference, there are remedies available to the would-be claimant which may be incapable of pursuing after a lapse of time. Thus, it is possible that the clock of limitation is stopped qua the substantive claim, but the right to go to a reference is barred by the subsequent laches on the part of the would-be claimant. In either case, the effect would be the same. 14. In the present case, it makes no difference whether the arbitral proceedings had commenced within the meaning of Section 37(3) of the 1940 Act on January 31, 1985, when the claimants issued the letters to the joint arbitrators invoking the arbitration agreements, or on July 1, 1985, when the joint arbitrators issued notices to the parties to attend an initial hearing on July 11, 1985. The arbitrator has found that the arbitral proceedings commenced on January 31, 1985. Since the mandate of the arbitral tribunal under the 1940 Act is to make the award within four months after entering on the reference or after having been called upon to act by a notice in writing by any party to the arbitration agreement, such mandate would run out after the expiry of four months from the relevant date. The time to make the award in this case had, thereafter, to be enlarged by court under Section 28 of the 1940 Act. The period of limitation for applying to court under Section 28 of the 1940 Act would be governed by residuary Article 137 of the schedule to the Limitation Act. Since the claimants in this case applied under Section 28 of the 1940 Act in the year 1987, their right to pursue the arbitral reference was not lost. The petitioner herein was impleaded as the tenth respondent in the two petitions filed under Section 28 of the 1940 Act. Since the claimants in this case applied under Section 28 of the 1940 Act in the year 1987, their right to pursue the arbitral reference was not lost. The petitioner herein was impleaded as the tenth respondent in the two petitions filed under Section 28 of the 1940 Act. Those petitions were allowed in January, 1988 and the appeals therefrom were disposed of by taking on record the consent and terms of February 22, 2001. 15. Any which way the matter is viewed, there does not appear to be any merit in the ground of limitation canvassed by the petitioner. At any rate, clause 10 of the consent terms precluded the petitioner from urging the ground of limitation. In the context of clause 10 of the consent terms, the appearing respondents have referred to the celebrated judgment reported at (1987) 4 SCC 217 (Prasun Roy v. The Calcutta Metropolitan Development Authority). In such case it was held that where a party was aware from the beginning that by reason of some disability the matter was legally incapable of being submitted to arbitration but such party participated in the arbitration proceedings without protest, a subsequent challenge to the proceedings could not be entertained. The decision may not be apposite in this case since the petitioner has not challenged the authority of the arbitrator but has only questioned the decision rendered against the petitioner on the ground of limitation. Nonetheless, in addition to the grounds indicated above, it may have been impermissible on the part of the petitioner to dislodge the reference on the ground of limitation in view of clause 10 of the consent terms. 16. On the second ground canvassed by the petitioner – that the two agreements had been abandoned by the agreement-holders or had been superseded by subsequent agreements pursuant to which the deeds of conveyance were executed by the other Bose family members except Nripendra – the arbitrator has held that the two agreements were divisible and severable and were separately enforceable against one or more of the vendors. The arbitrator enunciated the general rule that is recognised and opined that there were no special circumstances to negate the operation of the rule in the present case. The arbitrator enunciated the general rule that is recognised and opined that there were no special circumstances to negate the operation of the rule in the present case. Indeed, the arbitrator noticed the line of judicial precedents that the court has the power to pass a decree for specific performance of a part of a contract against one of the parties even if the contract with another was void or invalid or inoperative. Since the petitioner cannot demonstrate either the fallacy of the rule or its applicability to the facts, the reasons furnished in support of the awards on such count are found to be unexceptionable. The two agreements to convey the undivided interest of the several vendors thereunder could, in the circumstances, be specifically enforced against Nripendra or his executor and sole legatee. 17. The authority of the court upon receiving a challenge to an arbitral award is limited. Apart from the obvious that proceedings under Sections 30 and 33 of the 1940 Act are not akin to an appeal, the court is enjoined with a duty to support an award of the forum of consensus rather than find fault with it. Even a wrong conclusion or the failure of the arbitrator to appreciate facts in their proper perspective may not be good enough for the court to interfere with an award. It is also beyond question that an arbitrator is to be regarded as the sole judge of assessing the quality and quantity of the evidence in support of a finding. The court is not to look into the reasonableness of the reasons furnished by an arbitrator in support of a finding or the award itself. Merely because the view taken by an arbitrator may not appeal to the court is also not a ground for annulling an award or a finding therein if the arbitrator’s view is a possible or a plausible view. In short, an award or a finding therein may not be interfered with by court unless it is found to be bad in the meanest sense and mistakes in construing a provision of law or in interpreting the matrix contract may still not excite the court to lift its pen against the award. In short, an award or a finding therein may not be interfered with by court unless it is found to be bad in the meanest sense and mistakes in construing a provision of law or in interpreting the matrix contract may still not excite the court to lift its pen against the award. The court looks to correct errors of jurisdiction and, more often than not, glosses over the perceived errors of the arbitrator if the matters pertaining thereto were within the bounds of the arbitrator’s authority to adjudicate upon and if there is no manifest miscarriage of justice thereby. 18. AP No. 346 of 2010 and AP No. 347 of 2010 are dismissed. The arbitral awards are not interfered with. The petitioner will pay costs assessed at 500 GM in either case. 19. Certified website copies of this judgment, if applied for, be urgently made available to the parties, subject to compliance with all requisite formalities. Petition dismissed.