Research › Search › Judgment

Karnataka High Court · body

2022 DIGILAW 656 (KAR)

P. Gopala Krishna Rao v. Pathange Poultry Farm

2022-05-24

ALOK ARADHE, J.M.KHAZI

body2022
JUDGMENT Alok Aradhe, J.- This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short) has been filed against judgment dated 15.12.2011 passed by the trial court, by which objections preferred by the appellant under Section 24 of the Act has been dismissed. 2. Facts giving rise to filing of this appeal briefly stated are that appellant as well as respondent Nos. 2 to 5 are the partners of respondent No. 1-Firm, which is a registered partnership firm incorporated in the year 1972. The respondent No. 1 firm was re-constituted vide partnership deed dated 15.05.2000. Thereafter, the respondent No. 1-Firm was re-constituted several times. The appellant had retired from the Firm on 15.05.2005. 3. One Sri. P.J. Vishwanath Rao viz., brother of the original appellant viz., P. Gopal Krishan Rao vide registered sale deed dated 30.06.1982 purchased land measuring 2 acres and 15 guntas and 0.06 guntas of Sy. No. 53/1 and Sy. No. 53/2 situated in Bogadi Village, Kasaba Hobli, Mysore Taluk. The appellant vide registered sale deed dated 03.03.1982 purchased land measuring 3 acres and 15 guntas of Sy. No. 336/2 situated in Bogadi Village, Kasaba Hobli, Mysore Taluk. One of the partners of the firm viz., late P. Dayarao died on 10.03.1983 and therefore, the firm was reconstituted on 25.03.1983. Respondent No. 5 vide registered sale deed dated 25.09.1983 purchased the land measuring 1 acre and 25 guntas of Sy. No. 337/2 of situated in Bogadi Village, Kasaba Hobli, Mysore Taluk. However, respondent Nos. 1 to 5 issued a public notice dated 21.02.2006 stating that the aforesaid respondents intend to enter into a Development Agreement and agreement to sale with regard to schedule properties and objections to the same were invited. The land bearing Sy. No. 336/2, which was claimed to have been purchased by the appellant was also included. The appellant thereupon submitted an objection on 02.03.2006, in which it was stated that the appellant was the owner of the land bearing Sy. No. 336/2 and had 1/5th share in respect of remaining lands. The dispute therefore, arose between the parties viz., whether the firm during the course of business has acquired immovable properties like land building, poultry shed, machinery and other equipments or whether the properties were purchased by the father of the appellant as well as respondent Nos. No. 336/2 and had 1/5th share in respect of remaining lands. The dispute therefore, arose between the parties viz., whether the firm during the course of business has acquired immovable properties like land building, poultry shed, machinery and other equipments or whether the properties were purchased by the father of the appellant as well as respondent Nos. 2 to 5 and therefore, whether the appellant had an equal share in the remaining property. 4. The Arbitrator was appointed to adjudicate the dispute between the parties who passed an award dated 20.01.2009 inter alia held that the six items of immovable property mentioned in the amended statement of claim belonged to the firm and the sale deed dated 22.09.2008 does not bind the appellant. The appellant challenged the aforesaid award in a petition under Section 34 of the Act. The trial court by judgment dated 15.12.2011 dismissed the objection preferred by the appellant under Section 34 of the Act. In the aforesaid factual scenario, this appeal has been filed. 5. Learned counsel for the appellant submitted that the Arbitrator as well as the trial court ought to have appreciated that the firm could not have purchased the agricultural land in view of bar contained in Section 79A of Karnataka Land Reforms Act, 1961. It is further submitted that the Arbitrator as well as the trial court grossly erred in not appreciating that the provisions of Benami Transactions (Prohibition) Act, 1988 applies to the transaction in question. It is also argued that award is in conflict with public policy of India. On the other hand learned counsel for respondent submitted that scope of interference by this court with an award passed by the Arbitrator is limited to the grounds mentioned under Section 34 of the Act and this court cannot act as a court of appeal and cannot interfere even if there has been an erroneous application of law by the Arbitrator. It is also urged that funds of the firm were utilized to purchase the property in the name of the partners as the firm is not a legal entity. It is also argued that the provisions of Section 79A of the Karnataka Land Reforms Act, 1961 do not apply as the partners of the firm were agriculturists. It is also urged that funds of the firm were utilized to purchase the property in the name of the partners as the firm is not a legal entity. It is also argued that the provisions of Section 79A of the Karnataka Land Reforms Act, 1961 do not apply as the partners of the firm were agriculturists. It is also submitted that the properties in question were purchased in the years 1982 and 1983 i.e., prior to coming into force of the Benami Transactions (Prohibition) Act, 1988 (hereinafter referred to as the 1988 Act' for short). It is also urged that the provisions of 1988 Act have no retrospective operation. It is also urged that the trial court has rightly dismissed the objections preferred by the appellant under Section 34 of the Act and no interference is called for in this appeal. 6. We have considered the rival submissions made on both sides and have perused the record. The unamended Section 34 would apply to the facts of the case as the petition under Section 34 of the Act was filed in the year 2009 and the same was decided by the trial court by judgment dated 15.12.2011. 6. We have considered the rival submissions made on both sides and have perused the record. The unamended Section 34 would apply to the facts of the case as the petition under Section 34 of the Act was filed in the year 2009 and the same was decided by the trial court by judgment dated 15.12.2011. Section 34(2) of the Act, which existed at the relevant time reads as under: (2) An arbitral award may be set aside by the court only if- (a) the party making the application furnishes proof that - (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration; Provided that, if the decision on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or failing such agreement, was not in accordance with this part; or (b) the court finds that - (i) the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. 7. The scope and ambit of Section 34 of the Act is well defined by catena of decisions of the Supreme Court. It is trite law that arbitrator's power to appreciate the evidence on record is final and the court cannot re-appreciate and re examine the evidence and cannot act as an appellate forum. 7. The scope and ambit of Section 34 of the Act is well defined by catena of decisions of the Supreme Court. It is trite law that arbitrator's power to appreciate the evidence on record is final and the court cannot re-appreciate and re examine the evidence and cannot act as an appellate forum. The court can interfere with an award only on the grounds mentioned under Section 34(2) of the Act. 8. It is equally well settled legal proposition that appeal is a continuation of an original proceeding and in the absence of any statutory provision to the contrary, power of appellate court is co terminus with all plenary powers of the subordinate court. [See: 'Jute Corpn. of India Ltd. vs. Cit,, 1991 SUPP (2) SCC 744]. Thus, an appellate court exercising power under Section 37 of the Act would interfere only if a ground under Section 34 of the Act is made out. In 'State of Chhattisgarh And Another vs. Sal Udyog Private Limited' has held that in an appeal under Section 37 of the Act, grounds on which an award can be set aside can also be raised in an appeal. Thus, the scope of jurisdiction under Section 37 of the Act is akin to a scope of proceeding under Section 37 of the Act. 9. In the instant case, the award passed by the Arbitrator was challenged only on the ground that it is contrary to public policy of India. It is trite law that even if an Arbitrator has applied the law erroneously while passing an award, the same cannot be termed to be a patent illegality and contravention of law not linked to public policy or public interest is beyond the scope of expression patent illegality'. In the instant case, the property in question has been purchased in the names of the partners who were agriculturists and therefore, the bar contained in Section 79A of the Karnataka Land Reforms Act, 1962 does not apply. Similarly, the properties in question were purchased in the years 1982 and 1983 and therefore, prior to coming into force of 1988 Act. The Supreme Court in 'Samittri Devi And Another vs. Sampuran Singh And Another', (2011) 3 SCC 556 and 'R. Rajagopal Reddy (Dead) By Lrs. and Others Vs. Similarly, the properties in question were purchased in the years 1982 and 1983 and therefore, prior to coming into force of 1988 Act. The Supreme Court in 'Samittri Devi And Another vs. Sampuran Singh And Another', (2011) 3 SCC 556 and 'R. Rajagopal Reddy (Dead) By Lrs. and Others Vs. Padmini Chandrasekharan (Dead) By Lrs.', (1995) 2 SCC 630 has held that the provisions of Benami Transactions (Prohibition) Act, 1988 has no retrospective operation. Therefore, the provisions of Benami Transactions (Prohibition) Act, 1988 do not apply to the transaction in question. Thus, it is evident that the Arbitrator has correctly applied the legal principles. The impugned judgment neither suffers from any illegality nor any error apparent on the face of the record. In the result, we do not find any merit in this appeal, the same fails and is hereby dismissed.