Bombay High Court
Smt. Veena W vs Seth Industries Limited on 29 October, 2010
Bench: S.J. Vazifdar
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 180 OF 2007
1. Smt. Veena wd/o Naresh Seth, age about 52 ]
years, occupation: Housewife, residing at ]
Simplex House, 44, Jai Hind Co-op..Hsg. Soc. ]
Ltd., J.V.P.D.Scheme, Mumbai 400 049. ]
2. Suchit Naresh Seth, a minor, aged about 7 ½ ]
years by his mother and natural guardian ]
Smt. Veena wd/o Naresh Seth, both residing at ]
Simplex House, 44, Jai Hind Co-op. Hsg. Soc.
]
J.V.P.D. Scheme, Mumbai 400 049. ]
In their capacity as the heirs and legal ]
representatives of Naresh Seth the deceased ]
Petitioner who died on 22nd June, 2007. ] ... Petitioners
Versus
1. Seth Industries Limited, a company which was ]
incorporated under the Companies Act, 1956 on]
30.5.1975 as public limited company and ceased]
as legal entity by General Body Resolution at ]
meeting of 7.1.2002 filed with Registrar of ]
Companies, Maharashtra of which company the ]
registered office was at Sadhana Rayon House ]
2nd Floor, Dr.D.N. Road, Fort, Mumbai 400001 ]
and even after it ceased as legal entity it ]
purported to be carrying on illegally by the ]
Claimant and to the care Shiv Prakash Seth ]
nd
(Resp.No.2) at Sadhana Rayon House, 2 floor, ]
Dr.D.N. Road, Mumbai 400001 ]
2. Shiv Prakash Seth son of Benarsidas Seth, ]
Indian Inhabitant, Occupation Business, aged ]
about 77, residing at Usha Kiran, 9th Floor, ]
Carmaicheal Road, Mumbai 400026. ]
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3. Janak Raj Seth since deceased by his heirs and ]
legal representatives;
a) Shukla Janak Raj widow of Janak Raj, Indian ]
Inhabitant, Housewife, aged about 69 years, ]
residing at 30 Maqbool Road, Amritsar, Punjab ]
b) Benu Bharany (incorrectly mentioned as Belu]
Baharani in Award) daughter of Janak Raj, ]
Indian Inhabitant, housewife, aged about 43 ]
years, residing at 8/2, Shanti Niketan New Delhi]
c) Bela Sehgal daughter of Janak Raj Seth, ]
Indian inhabitant, Housewife aged about 45 ]
years, residing at Kothi No.76, Sector 5, ]
Chandigarh. ]
4a) Smt. Asha Ramesh Seth, Indian inhabitant ]
Indian inhabitant, age not known,
ig ]
Occupation : Not known ]
4b) Dinesh Ramesh Seth, Indian inhabitant ]
age not known, Occupation : Not known ]
4c) Ashok Ramesh Seth, Indian inhabitant ]
Occupation : Not known ]
4d) Nisha d/o Ramesh Seth, Age Not known, ]
Occupation : Not known. ]
All Adults, widow, 2 sons and one daughter ]
of Ramesh Kumar Seth, ]
All residing at 31-B, Jolly Maker Apartment, ]
Cuffe Parade, Mumbai - 400005 ]
In their capacity as the legal representatives ]
of the deceased Respondent No.4, Ramesh ]
Kumar Seth, s/o Benarsidas Seth who died ]
on 4th July, 2007. ]
5. Seth Industries Pvt. Ltd., incorporated under ]
the Companies Act, 1956 as a Pvt. Ltd. ]
Company as per certificate dated 12..4.2001 ]
issued by the Registrar of Companies, ]
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Maharashtra, and having its registered office ]
at Sadhana Rayon House, 2nd Floor, ]
Dr.D.N. Road, Fort, Mumbai 400001. ]... Respondents
.....
Mr. Feredun DeVitre, senior counsel with Mr. Arif Bookwala, senior
counsel and Mr. Farhan Dubash i/b M/s. Bharat Shah & Co. for the
Petitioners.
Mr. S.U. Kamdar, senior counsel with Mr. Dinyar D. Madon, senior
counsel and Mr. A.H. Gokhale i/b Mr. Madhukar Harmawar for
Respondents Nos.1, 2, 4A to 4C and 5.
....
ig CORAM : S.J. VAZIFDAR, J.
DATED : 29th OCTOBER , 2010.
ORAL JUDGMENT :
1. This is a petition under section 34 of the Arbitration &
Conciliation Act, 1996 to challenge an award dated 1st December,
2006.
The learned arbitrator declared that a mortgage deed of
Rs.10,45,000/- and interest thereon is fully satisfied and stood
discharged as on 31st March, 1991, directed the original Petitioner to
reassign and deliver the mortgaged property to the Claimant i.e.
Respondent No.1, admeasuring about 2000 square feet on the second
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floor and the entire first floor of a building named Simplex House
which was part of the mortgaged property, latest by 31st January, 2007.
The original Petitioner was also directed to return to Respondent No.1
by 31st January, 2007, the original deed of mortgage as also the
original deed of transfer of the mortgage and all like documents. The
arbitrator also directed the original Petitioner to pay Respondent No.1,
a sum of Rs.27,36,351/- with simple interest thereon at eighteen per
cent per annum from 1st September, 2000, till payment and
compensation at the rate of eighteen per cent per annum on Rs.
1,42,60,046/-, being the value of the said first and second floor
premises from 12th April, 2000, being the date of expiry of the notice
period given by the first Respondent to the original Petitioner till
reassignment thereof. The original Petitioner's counter-claim was
dismissed as not pressed.
2. Respondent No.1 was the Claimant before the arbitrator. The
original Petitioner, Naresh Seth, Respondent No.2 Shiv Prakash Seth,
original Respondent No.3 Janak Raj Seth and original Respondent No.
4, Ramesh Seth were brothers. After this petition was filed, the
original Petitioner died and his heirs viz. his widow and his minor son
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were brought on record as Petitioners. After the petition was filed,
Respondent No.4 Ramesh Seth died and his heirs have been brought
on record as Respondent Nos.4(a) to 4(d). Respondent No.3 Janak
Raj Seth died before the award was made. His heirs Respondent Nos.
3(a), (b) and (c) were brought on record by the arbitrator in the
circumstances which have been challenged by the Petitioner. The
original Petitioner alleged that the learned arbitrator brought them on
record without even an application for the same. Respondent No.5
Seth Industries Private Limited is only the new name of Respondent
No.1. I will in the judgment refer to it as Respondent No.1.
3. A property admeasuring 800 square yards of land was leased in
favour of one Chunilal Shah for 999 years who assigned the same to
one Sumanben Shah and Shantilal Shah. They, in turn, assigned the
lease in favour of Respondent No.2 Shiv Prakash Seth as a Director
and for and on behalf of the first Respondent. The first Respondent
paid the consideration for the same and constructed a building
thereon.
4. Respondent No.1 executed an English mortgage in favour of
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one Ravi Madan Shah, his wife, their son and daughter as security for
a loan availed of by Respondent No.1 from them in the sum of Rs.
10,00,000/-. The repayment of the loan was guaranteed by the
original Petitioner, Respondent No.2 and original Respondent No.3,
who were the Directors of the first Respondent.
Respondent No.1 was unable to repay the loan although
the time for repayment was extended. Ultimately, the mortgagees
insisted upon the loan being repaid failing which they threatened to
enforce their rights under the mortgage.
5(a). The original Petitioner was in occupation of the premises
on the second floor admeasuring 2000 square feet as a Director of the
first Respondent. At the request of the first Respondent, the original
Petitioner on 28th September 1984 paid the mortgagees a sum of Rs.
10,45,000/- of which Rs.45,000/- was towards interest. By a deed of
transfer dated 28th September, 1984, the mortgagees transferred the
mortgage in favour of the original Petitioner. The transfer deed
provided that the sum of Rs.10,45,000/- together with interest at
eighteen per cent per annum on the principal sum of Rs.10,00,000/-
would be paid to the original Petitioner by Respondent No.1 on or
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before 1st September, 1985.
(b) The original Petitioner, by a letter dated 20th June, 1985,
informed the parties herein and the mortgagees that he had taken over
possession of the property pursuant to the deed of transfer dated 28th
September, 1984 and that he would auction the property in the event
of the mortgagors and the guarantors committing default in payment
of the amounts thereunder. By a further letter dated 27th September,
1985, the original Petitioner stated that as there was a failure to pay
the mortgage debt, he became entitled to recover his dues under the
indenture of mortgage dated 24th December, 1979 read with the deed
of transfer dated 28th September, 1984.
(c) Respondent No.1 by a letter dated 22nd February, 1986,
addressed to the original Petitioner stated that he could sell the
mortgaged properties and realise his dues from the sale proceeds.
(d) The original Petitioner created a monthly tenancy in
favour of one S. Agarwal with effect from 1st April, 1986, in respect of
the ground floor of the said building. Thereafter, by a conveyance
dated 30th June, 1986, he sold the ground floor premises to the said S.
Agarwal for a sum of Rs.11,00,000/-.
(e) Respondent No.1 contended that as on 30th June, 1986, it owed
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the original Petitioner a sum of Rs.13,75,000/-, inclusive of interest
and that after adjusting the amount of Rs.11,74,000/-, a sum of only
Rs.2,01,220/- was due and payable by it to the original Petitioner. A
sum of Rs.74,00,000/- was alleged to be payable by the original
Petitioner for his occupation of the second floor of the said building.
6. Original Respondent No.3 filed Company Petition No.158 of
1986 for winding up the first Respondent. By an order dated 27th
September, 1984, in interlocutory proceedings taken out by the
parties, the Court Receiver was appointed as the Receiver of the
property. The original Petitioner was allowed to continue as the agent
of the Receiver in respect of the premises in his possession, subject to
payment of royalty which was fixed at Rs.6,000/- per month.
7. The parties ultimately executed a Memorandum of
Understanding dated 20th July, 1995, clause 12 whereof contains an
arbitration agreement. The relevant clauses of the Memorandum of
Understanding are as under :-
"1. All the assets and properties of the said Seth
Industries Ltd (Props : of Simplex Woollen Mills) and the
said two firms viz: Messrs Shiv Prakash Janakraj and
M/s. Seth Textiles shall be sold at the price and on the
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terms to be expressly agreed upon in writing by and
between Shiv Prakash Seth, Janakraj Seth, Ramesh
Kumar Seth and Naresh Seth as expeditiously as possible
and the sale proceeds thereof shall be accumulated in a
common pool. The parties hereto shall procure
orders/sanctions/ approvals, if any required for sale of the
said assets and properties.
.........
7. All payments made since 1986 either by Shiv
Prakash Seth, Janakraj Seth, Ramesh Kumar Seth and
Naresh Seth for and on behalf of the said Company and
the said two firms or personally relating thereto from his
private and personal sources shall be reimbursed out of
the said common pool.
7-A. All the moneys received by the sale of properties
under the Memorandum of Understanding will be paid
into a separately opened bank account in the name of
SETH INDUSTRIES LTD., which will be operated
jointly by all the four parties, namely Shiv Prakash Seth,
Janakraj Seth, Ramesh Kumar Seth and Naresh Seth.
Any party desiring that any payment should be made
from such account will give one week's written notice to
the remaining parties as far as possible unless all parties
agree in writing to waive such notice. It is agreed that
for the day-to-day operations a separate account
including existing account may be used, as mutually
agreed, by transferring limited funds from the above
common joint account to this account.
8. The balance remaining in the said common pool
after satisfying all the dues and liabilities of the said
Company and the said two firms including all taxes and
other legal liabilities shall be distributed by the said
Company as mutually agreed, subject to payment of tax
thereon according to law. This distribution must be done
within five years or if so agreed mutually by all parties
within further extended period of three more years.
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9. The parties hereto and Shiv Prakash Seth, Janakraj
Seth, Ramesh Kumar Seth and Naresh Kumar agree to
withdraw all legal proceedings filed by one against the
other immediately after execution of this Memorandum
of Understanding.
10. T%he parties agree to execute all
documents/writings required for carrying out and
implementation of the terms of this Memorandum of
Understanding.
11. The Memorandum of Understanding shall be
binding upon the parties hereto and Shiv Prakash Seth,
Janakraj Seth, Ramesh Kumar Seth and Naresh Seth and
their heirs, executors and administrators and share-
holders of the said Company.
12. The parties agree to have all differences and
disputes, if any, among them in relation to or in
connection with this Memorandum of Understanding
decided by arbitration for which purpose, their
Lordships, S.C. Pratap and failing him, P.B. Sawant and
failing him, B. Lentin, who are all retired Judges will be
the sole arbitrator, if possible."
8. By an order dated 20th December, 1996, this court discharged
the Receiver. According to the first Respondent, the original
Petitioner delivered to Respondent No.1, vacant and peaceful
possession of the entire first floor of the said building which consisted
of two flats one of which was given by the first Respondent to a third
party on leave and licence and the other is in its possession. The first
Respondent further contended that it requested the original Petitioner
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to vacate the second floor to enable the sale thereof pursuant to the
Memorandum of Understanding but that he failed to do so. The
Petitioners' case as to what transpired thereafter, after the discharge of
the Court Receiver is as follows :-
"The claimants also requested Naresh Seth (original
Petitioner) to vacate the second floor so that the same
could be sold pursuant to the Memorandum of
Understanding. Naresh Seth requested the claimants to
let him occupy the same for a period of three years so
that he could find alternative premises. Since he was one
of the former directors of the claimant company and a
close relation of the respondents being their brother, the
claimants allowed him to occupy the premises on the
second floor for a period of three years from 1st January
1997 to 31st December 1999 on payment of compensation
at the then prevailing market rate of Rs.60,000/- per
month. Naresh Seth agreed. Even so, however, he
consistently failed to pay the agreed compensation and
also failed to vacate the premises despite repeated
demands. As on 29th February 2000 a sum of Rs.
27,36,351/- (less Rs.3,25,139/- received from the Court
Receiver) fell due and payable by him to the claimants
towards compensation for use and occupation of second
floor premises."
9. The first Respondent, by a notice dated 28th March, 2000, called
upon the Petitioner to vacate the said premises stating that in default
thereof, it would adopt legal proceedings. The original Petitioner, by
his letters, dated 10th May, 2000 and 28th July, 2000 contended that he
was the owner/tenant/mortgagee in possession of the second floor
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premises.
10. In view thereof, the first Respondent invoked the arbitration
agreement contained in clause 12 of the Memorandum of
Understanding.
11.(A) Mr. DeVitre, the learned senior counsel appearing on
behalf of the Petitioner challenged the award on the following
grounds:
(I) The arbitrator had no jurisdiction to decide the
claims.
The submission was based on the following grounds :--
(a) The arbitrator wrongly granted the relief of reassignment of the
property although the same was not prayed for.
(b) The arbitrator awarded claims sought in the statement of claim
but not raised in the letter invoking the arbitration agreement.
(c) The Memorandum of Understanding deals only with the sale of
the properties and not with the inter-se disputes between the parties
thereto.
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(d) The arbitrator wrongly proceeded on the basis that the
Claimant/Respondent No.1 had sought specific performance of the
Memorandum of Understanding.
(e) The arbitrator had no jurisdiction to decide the disputes arising
in respect of the licence allegedly created by Respondent No.1 in
favour of the original Petitioner in view of the provisions of the
Presidency Small Cause Courts Act, 1882 and in particular section 41
thereof.
(f)
The disputes and claims did not fall within the arbitration
agreement contained in clause 12 of the Memorandum of
Understanding.
II A. Having come to the conclusion that he had no
jurisdiction to consider the issue of tenancy raised by the
original Petitioner, the arbitrator could not have made
any observations in regard thereto.
II B. The arbitrator, therefore, was also not entitled to
grant the monetary compensation.
(III) The award is contrary to the record and is,
therefore patently absurd.
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(IV) The arbitrator did not consider the relevant
evidence.
(B) I have rejected submissions I(a) to (d). Submission I(e) is
answered in the Petitioner's favour resulting in the entire award being
set aside in so far as it pertains to the second floor. Submission I(f) is
answered in the Petitioner's favour in so far as it pertains to the
second floor in respect of the monetary amounts awarded furnishing
an additional ground for setting aside the award in respect thereof.
I have answered submissions IIA and IIB against the Petitioners
with the clarification that the enforceability of the award of monetary
amounts would be dependent upon and subject to the
findings/judgment of the appropriate court or tribunal regarding the
Petitioner's claim of tenancy in respect of the property.
Submission III is answered in the Petitioner's favour in so far as
it relates to the grant of monetary compensation in respect of the first
floor.
Submission IV is rejected.
In the result I have set aside the entire award.
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Re: (I) : The arbitrator had no jurisdiction to decide the claims.
12. Mr. DeVitre submitted that the arbitrator wrongly directed the
original Petitioner to reassign the mortgaged property and to hand
over and deliver the same to the first Respondent as the first
Respondent had not even prayed for the same.
13. To accept the submission would be taking far too technical a
view of the pleading in the statement of claim. The claim, in my view,
was clearly made in the statement of claim filed before the arbitrator.
In prayer a(ii), the first Respondent sought a declaration that the
original Petitioner was bound and liable to give vacant and peaceful
possession of the said premises on the second floor admeasuring 2000
square feet and the entire first floor of the said building. Prayer a(ii)
bases this declaration "in view of the redemption of the loan covered
by the agreement dated 28th September, 1984 i.e. the deed of transfer
of the mortgage from the original mortgagees to the original
Petitioner." In prayer b(ii) of the statement of claim, the first
Respondent sought an award ordering and decreeing the original
Petitioner to give vacant possession of the said premises on the same
basis viz. in view of the repayment of the loan covered by the deed of
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transfer of mortgage dated 28th September, 1984.
14. The submission that the award is bad for having granted the
relief of reassignment of the said property on the ground that the first
Respondent had not prayed for the same is, therefore, rejected.
15. Mr. DeVitre submitted that the first Respondent's letter dated
26th July, 2000, invoking arbitration restricted the disputes and the
claim to possession of the second floor. Despite the same in the
statement of claim additional reliefs were sought including
declarations and decrees in respect of the first floor and claims for
monetary compensation as well. According to Mr. DeVitre an
arbitrator is not entitled to consider any claims or reliefs other than
those stated in the letter invoking arbitration. He submitted that the
arbitrator having considered and awarded the same, acted in excess of
his jurisdiction.
16. In support of this submission, Mr.DeVitre relied upon a
judgment of the Supreme Court in Indian Aluminium Cables Ltd. vs.
Haryana State Electricity Board & Ors., 1996 (5) SCALE 768.
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The facts in this case were that the Respondent had
served a notice in relation to the purchase of material for Rs.11,300/-
as against the contractual rate of Rs.4390/-. The difference in price
was claimed by way of damages. The rate had increased from time to
time during the period 31st March, 1974 to 26th May, 1975. The
Respondent had placed an order for purchasing the material with one
M/s. Industrial Cables Limited. The differential amount claimed as
damages was stated in the notice to be Rs.37,61,465/-. (In paragraph
2 of he judgment, the figure is Rs.87,81,465/-. This, as the report itself
indicates, was a typographical error and the correct figure is stated
later in paragraph 2 of the judgment itself while quoting the
arbitrator's award). However, in the statement of claim, the rate was
stated to be Rs.12,100/-. The party which supplied the material was
stated to be M/s. J.J.H Industries and the relevant date was stated to be
10th February, 1976. The claim made in arbitration, therefore, was Rs.
63,56,737.42. The arbitrator noticed the change, but observed that the
question whether the Respondent was entitled to the rate claimed is a
matter of evidence which could not be decided "at this stage". The
arbitrator observed that the effect of the inconsistency would have to
be decided on merits and that the claim cannot be held to be
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unsustainable and beyond the scope of the arbitration clause or the
reference to arbitration so as to oust the jurisdiction of the arbitrators
on account of such inconsistency. The Supreme Court held as under :-
"..............................................................
We are afraid this approach of the Arbitrators is not
correct. If the claim made by HSEB is outside the scope
of the reference made to the Arbitrators, the Arbitrators
must confine themselves to the reference and cannot
travel outside it merely because under the terms of the
contract the dispute in regard to this matter would have
been covered and could have been referred to arbitration.
In the instant case, since the reference is in relation to the
item set out in the notice, the jurisdiction of the
Arbitrators stands confined to those matters only and
cannot travel outside it. Therefore, there is no question of
examining the claim which is totally different from the
one made in the notice which is the basis of the reference
as to whether or not damages could be awarded on that
claim. Once the claim is outside the reference, it is
outside the scope and ambit of the inquiry by the
Arbitrators and, therefore, the Arbitrators cannot go into
it. Therefore, in our view, the claim made in the
reference, which is inconsistent with paragraph 6 of the
notice, cannot be entertained by the Arbitrators."
17. I do not read the judgment to hold as an absolute proposition
that the claim made in arbitration must in every case be limited to the
claim stated in the notice/letter invoking arbitration. Indeed in many,
if not most cases, the letter/notice of invocation of the arbitration
agreement does not stipulate and crystallize the claims. The judgment
does not set out the arbitration agreement that applied between the
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parties therein. It does not indicate the nature of the arbitration
agreement.
If Mr. DeVitre's submission is accepted, it would denude
the arbitral tribunal of the power to even allow an amendment to a
statement of claim.
Mr. DeVitre's submission would be valid only in those
cases where the arbitration agreement stipulates a demand for a
reference of the disputes to the arbitral tribunal to be preceded by a
notice and further provides that the claim in the arbitration shall be
limited to those raised in such notice. This is not an unusual provision
in arbitration agreements. Such limitations are found in several
arbitration agreements. Clause 12 of the Memorandum of
Understanding which contains the arbitration agreement between the
parties herein, does not place any such limitation.
18. There is nothing in the Arbitration and Conciliation Act, 1996,
or in principle, which requires the notice invoking the arbitration to
state the claims proposed to be made in the reference. A notice merely
indicating the disputes or that disputes have arisen and invoking the
arbitration clause is sufficient unless the arbitration agreement itself
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requires the invocation to be in a particular manner.
Mr. DeVitre's submission is, therefore, not well founded.
19. The reliance placed by Mr. Kamdar, the learned senior counsel
appearing on behalf of the Respondent Nos.1, 2, 4A to 4C and 5, on
the judgment of the Supreme Court in State of Orissa vs. Asis Ranjan
Mohanty (1999) 9 SCC, 249, in regard to this submission is well
founded. The Supreme Court held that the original statement of
claim reserved the right to file additional claims. This was not,
however, the only ground upon which the submission that the
additional claims could not be raised before the second arbitrator was
rejected. Indeed if Mr. DeVitre's submission is correct, such a
reservation in the statement of claim would make no difference. One
of the learned Judges was also a party to the judgment in Indian
Aluminium Cables Limited.
20. Even on the facts of this case, the submission is not well
founded.
(A) Firstly apart from the Memorandum of Understanding and the
letter of invocation dated 26th July 2000, the parties had even before
the arbitrator expressly agreed to all the disputes and differences being
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referred to arbitration in respect of the entire property. This is clear
from a "Recorded Note" dated 19th June, 2002, filed by counsel on
behalf of all the parties. Before the arbitrator, the counsel for all the
parties filed the following statement describing it a Recorded Note :-
"Recorded Note
1. Advocate and parties on either side agree that this
reference be considered as related and restricted only to
the disputes and differences concerning the property
Simplex House (except ground floor thereof) at Juhu
which is at item no.5 in annexure "A" to the
Memorandum of Understanding dated 20h July 1995.
2. Advocates and parties on either side further agree
that all other disputes and differences and all other
claims and contentions constituting the subject matter of
their respective pleadings (including the statement of
claim and reply thereto as also the counterclaim and
reply thereto) and/or arising out of the Memorandum of
Understanding dated 20th July 1995 and/or otherwise,
are not pressed in this arbitration and should, therefore,
not be considered in this arbitration. Parties are,
however, at liberty to raise and agitate the same in
separate proceedings including separate arbitration
proceedings."
The parties had thus agreed that the reference be
considered as related and restricted only to the disputes and
differences concerning the property Simplex House (except the
ground floor thereof) which is at item 5 of Annexure A to the
Memorandum of Understanding dated 20th July, 1995. The first
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Respondent was, therefore, entitled to raise before the arbitrator, all
claims in respect of Simplex House, except in respect of the ground
floor thereof. There is no restriction as regards the first floor or any
other part of the property, except the ground floor. In view of the
Recorded Note also, the submission is rejected.
(B) Secondly, another notice also dated 26th July, 2000, was
addressed by Respondent No.1 to the original Petitioner wherein all
the disputes with respect to the redemption of the mortgage of the
entire property, including the claim for the surplus amount payable
upon redemption, were referred to and raised. The claims were not
restricted to the second floor, but to the entire property and included
therein all the claims which were raised in the statement of claim.
The notice refers "to the premises being Simplex House" in general
and not merely to the second floor.
21. Moreover, the original Petitioner did not, in reply to the notices
both dated 26th July, 2000, contend that the claims made therein were
beyond the scope of the reference and the arbitrator's jurisdiction,
including on the ground that the claims raised before the arbitrator in
the statement of claim were outside the scope/purview of the letters
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dated 26th July, 2000. It is, therefore, not open to the Petitioners now
to raise this contention.
22. The submission is, therefore, rejected both in law and on facts.
That the above findings are in the ultimate analysis of no avail
to the Respondents qua the second floor on account of the license
agreement pleaded by Respondent No.1 is another matter. These
findings are without taking into consideration the said license
agreement which I will deal with later.
23. Mr.DeVitre submitted that the arbitrator had no jurisdiction to
consider the reliefs sought by the Respondents for possession of the
premises, return of the mortgage property and the monetary amounts
as the same do not fall within the ambit of the arbitration clause of the
Memorandum of Understanding. He contended that the Memorandum
of Understanding deals only with the sale of the properties mentioned
therein. It does not deal with the inter-se rights of any of the parties
therein qua such properties. He submitted that the original Petitioner
by entering into the Memorandum of Understanding did not agree to
having the disputes between himself and the others including the first
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Respondent being referred to arbitration.
24. Considering the nature of the arbitration clause, this submission
is not well founded. I have set out the arbitration clause earlier. The
parties had agreed to have all differences and disputes, if any, among
them 'in relation to or in connection with' the Memorandum of
Understanding decided by arbitration. The expressions 'in relation to'
and 'in connection with' are of wide amplitude. I need go no further
than to refer to the judgment of the Supreme Court in Renusagar
Power Co. Ltd. v. General Electric Co., (1984) 4 SCC 679 where the
Supreme Court held :
"25. Four propositions emerge very clearly from the authorities
discussed above:
(1) Whether a given dispute inclusive of the arbitrator's
jurisdiction comes within the scope or purview of an
arbitration clause or not primarily depends upon the terms of
the clause itself; it is a question of what the parties intend to
provide and what language they employ.
(2) Expressions such as "arising out of" or "in respect of" or
"in connection with" or "in relation to" or "in consequence of"
or "concerning" or "relating to" the contract are of the widest
amplitude and content and include even questions as to the
existence, validity and effect (scope) of the arbitration
agreement.
(3) Ordinarily as a rule an arbitrator cannot clothe himself with
power to decide the questions of his own jurisdiction (and it
will be for the court to decide those questions) but there is
nothing to prevent the parties from investing him with power
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to decide those questions, as for instance, by a collateral or
separate agreement which will be effective and operative.
(4) If, however, the arbitration clause, so widely worded as to
include within its scope questions of its existence, validity and
effect (scope), is contained in the underlying commercial
contract then decided cases have made a distinction between
questions as to the existence and or validity of the agreement
on the one hand and its effect (scope) on the other and have
held that in the case of former those questions cannot be
decided by the arbitrator, as by sheer logic the arbitration
clause must fall along with underlying commercial contract
which is either non-existent or illegal while in the case of the
latter it will ordinarily be for the arbitrator to decide the effect
or scope of the arbitration agreement i.e. to decide the issue of
arbitrability of the claims preferred before him."
25. If the property was in the possession of a third party, it would
have been necessary for the parties to the Memorandum of
Understanding to take steps for obtaining possession thereof as well
as recovery of monetary compensation for the use thereof if the same
was illegal. Such third party not being a party to the Memorandum of
Understanding and the arbitration agreement contained therein, the
dispute could not be referred to arbitration. However, in the case of
parties to the Memorandum of Understanding, the situation would be
different.
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26. The Memorandum of Understanding contemplates the sale of
the properties mentioned therein.
When some of the parties to the Memorandum of
Understanding demand for the sale of a property mentioned therein,
they in effect state that the first Respondent is entitled to do so being
the owner thereof. One of the questions that would arise is whether
the parties to the Memorandum of Understanding inter-alia by having
agreed to the properties mentioned therein being sold in the manner
stated therein acknowledged the title of the first Respondent in respect
thereof. Whether the representation in the Memorandum of
Understanding by the parties thereto are evidence of clear title of the
first Respondent in respect of such properties is a question of fact.
However, when one or more of the parties to the Memorandum of
Understanding wishes that the properties mentioned therein be sold in
terms of the Memorandum of Understanding and another party
thereto either denies the first Respondent's title thereto or clear title
thereto, an issue to this effect arises. The property then can be sold
only after an adjudication thereof. The property can be sold
effectively only upon determining the title or the extent of the title of
the first Respondent to such property. This is a dispute between the
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parties to the Memorandum of Understanding and in respect of the
subject matter of the Memorandum of Understanding. It is a dispute
a decision in respect whereof precedes the grant of an award to sell
the property as provided in the Memorandum of Understanding. In
other words, the award for the sale of the property as per the
Memorandum of Understanding is dependent upon the adjudication
regarding the saleability thereof by the first Respondent. A dispute as
to the first Respondent's title is therefore certainly "in relation to" or
"in connection with" the Memorandum of Understanding.
27. The parties having agreed to the sale of the said properties,
when one of them raises an objection as to the saleability of such
property based on his title, it is equally a question in connection with
or in relation to the sale or saleability of the property. The question as
to the parties title is only the other side of the coin - the first
Respondent's title. The title of one determines as a consequence the
question of the title of the other.
28. Clause 10 of the agreement supports the Respondents in this
regard. While effecting the sale of the property, the arbitrator would
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be entitled to call upon the parties to the Memorandum of
Understanding to execute all documents/writings required for carrying
out and implementing the terms thereof. Before the arbitrator can call
upon the parties to execute any documents/writings contemplated in
clause 10 of the agreement, it would of necessity require him to
decide the rival contentions of the parties as regards the nature and
details of such documents/writings that he may call upon the parties
to execute for carrying out and implementing the terms of the
Memorandum of Understanding one of which is the sale of the
property. It is implicit, therefore, if not explicit that the rival claims
and contentions of the parties as regards the property mentioned in the
Memorandum of Understanding can be decided by the arbitrator.
29. A dispute relating to the title of the parties in respect of the
properties mentioned in the Memorandum of Understanding therefore
falls within the ambit of the arbitration clause.
30. The arbitrator inter alia relied upon the fact that the parties
having included the property in the schedule to the Memorandum of
Understanding admitted that the first Respondent is the owner thereof.
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The learned arbitrator, therefore, rejected the contention on behalf of
the original Petitioner that he had become the owner of the property
on account of the first Respondent having failed to redeem the
mortgage. These are questions of fact which fall within the
jurisdiction of the arbitrator and warrant no interference, even if I
were to interpret and analyse the facts differently.
31. Mr.DeVitre submitted that in any event the arbitrator would
have no jurisdiction to decide the monetary claims granted by him for
the same reason.
32. I do not agree. These claims for monetary compensation are
inextricably linked to the issue of title and are attached to the property
and are necessary incidents of ownership thereof. If the arbitrator has
jurisdiction to adjudicate issues relating to a mortgage, he would also
have jurisdiction to adjudicate the claims for the amounts due by a
mortgagee for wrongful occupation of the mortgage property after the
mortgagees right to continue in possession thereof ceases. The
monetary claims would form part of and represent the rights of the
parties in the property itself. That the original Petitioner had not
undertaken to or incurred liability in or under the Memorandum of
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Understanding to vacate the premises or to pay compensation for the
use thereof is irrelevant.
33. In the circumstances, Mr.DeVitre's submission that the claims
made before the arbitrator and the reliefs granted in the award did not
fall within the ambit of the arbitration agreement contained in clause
12 of the Memorandum of Understanding on the above grounds is
rejected.
34. Mr.DeVitre challenged the basis on which the arbitrator
answered issue nos.4 and 15. Issue Nos.4 & 15 reads as under :
Issue No.4 : Is this reference to arbitration valid ?
Issue No.15 : Does the arbitrator have jurisdiction to decide the
claimant's monetary claim against the Respondent
Naresh Seth( original Petitioner) ?
35. The learned arbitrator answered these issues in the affirmative
on the basis that an arbitrator has jurisdiction to consider and grant the
relief of specific performance. He submitted that the claims made by
first Respondent in effect are for specific performance of the
Memorandum of Understanding.
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36. Mr.DeVitre submitted that the first Respondent had not even
claimed specific performance. Nor had the first Respondent averred
that it was ready and willing to perform the Memorandum of
Understanding which indicates that even the first Respondent did not
considered its claim to be in the nature of specific performance.
37. Although the basis on which issue nos.4 & 15 have been
answered in the affirmative may not be accurate I would set not aside
the award on that ground. For the award read as a whole indicates
that the arbitrator even otherwise came to the conclusion that the
claims fall within the scope of the arbitration clause.
38 Mr.DeVitre submitted that the first Respondent had not even
sought an order for the sale of the said property. He submitted that it
was therefore, clear that the reference claimed before the arbitrator
was not in accordance with the Memorandum of Understanding.
39. It was not necessary for any of the parties to have sought an
order for the sale of the property. It was sufficient for them to have
raised the dispute to the limited extent that they did. The parties
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would or may proceed to sell the property in exercise of rights under
the Memorandum of Understanding after the dispute as to the title is
determined. The other parties are not obliged to proceed on the basis
that an award declaring the rights of the parties to the Memorandum
of Understanding qua the property would not be honoured. The
presumption is that the parties would abide by the orders and
judgments of Courts, Tribunals and other authorities. If however, the
original Petitioner did not implement the Memorandum of
Understanding on the basis of such a award, it would be open to the
other parties to adopt appropriate proceedings including making a
further reference for the sale thereof. Nothing prevented a limited
reference as to the title and consequential reliefs without also seeking
a sale of the said property. The reference was necessitated in view of
the original Petitioner having denied the first Respondent's title.
40. Mr.Kamdar submitted that the record note establishes that the
original Petitioner had agreed to refer the disputes regarding
redemption to arbitration. I do not agree.
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41. The record note by itself does not establish the same. It merely
refers to the subject matter of the reference namely Simplex House
except the ground floor thereof. This was the reason for my holding
earlier that the "Recorded Note" negated Mr.DeVitre's submission
that the arbitrator exceeded his jurisdiction by awarding claims not
raised in the letter invoking the arbitration. If however, the questions
of redemption and payment of monetary compensation were not
within the purview of the Memorandum of Understanding, the
arbitrator would not have had jurisdiction to decide the same merely
in view of what is recorded in the note dated 19th June 2002, which is
extracted in paragraph 14 of the award.
42. The fact that the original Petitioner had made a counter-claim in
respect of the mortgage debt itself does not indicate that he had
abandoned any objection as to jurisdiction. The counter-claim was
made expressly without prejudice to the original Petitioner's
contentions as to jurisdiction as is evident from the written statement
and counter-claim. Thus, the counter-claim having been made by
itself would not confer jurisdiction upon the arbitrator to decide the
issue if he otherwise did not have such jurisdiction.
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43. Mr.DeVitre's next submission pertains only to the second floor .
He submitted that it is the case of the Respondents themselves that
with effect from 1st January 1997, the first Respondent granted a
licence in favour of the original Petitioner in respect of the premises
on the second floor for a period of three years at the rate of Rs.
60,000/- per month. The submission is based inter-alia on the
following averments in the statement of claim :-
"21. After the aforesaid order dated 20.12.1996 was passed
the Respondent gave vacant and peaceful possession of the
entire premises situate on the first floor of the said property to
the Claimants. There are two flats situate on first floor of the
said property. The smaller of the said two flats thereafter was
given by the Claimants on Leave and License basis whereas the
other flats is in possession of the Claimants.
At that time, the Claimants requested the Respondent to
also vacate the said second floor premises (more particularly
described in Exhibit 'D' hereto) occupied by the Respondent so
that the same could be sold by the Claimants in pursuance of
the Memorandum of Understanding, when the Respondent
requested the Claimants to allow him to occupy the same for a
period of three years so that in the meantime he would find
alternative premises. Since the Respondent was one of the
former Directors of the Claimants and since the Respondent
was the brother of one of the Claimant's Directors, the
Claimants allowed the Respondent to occupy the premises
situate on the second floor of the said property though the
mortgage amount alongwith interest thereon had stood repaid
long back i.e., on or about 31.3.1991 as is evident from
statement annexed as Exhibit 'H' hereto.
At that time, the Claimants had specifically informed the
Respondent that he could continue to remain in possession of
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35 ARBP180.07
the said premises for the period of three years as requested by
the Respondent, but, only upon payment of compensation /
mesne profits at the then prevailing market rate of Rs.60,000/-
p.m. i.e., Rs.7,20,000/- p.a. inasmuch as the mortgage amount
alongwith interest thereon stood repaid to the Respondent long
back i.e., on 31-3-1991. The Respondent had agreed to the
above. Accordingly, the Claimants allowed the Respondent to
occupy the said premises only for a period of three years from
1.1.1997 i.e., upto 31.12.1999.
22. The Claimants say that on or about 3.3.1997, the
Claimants received a cheque of Rs.3,25,139/- from the Court
Commissioner of the Hon'ble Bombay High Court from the
moneys paid on account of the aforesaid Company Petition.
The Claimants have duly given credit for the said amount to the
Respondent in the particulars of their claim made herein. The
Claimants have made correspondence with the Court Receiver
to know the exact amount paid by the Respondent in pursuance
of the aforesaid order dated 27.2.1997. However, the Claimants
have still not received the entire details in that behalf. The
Claimants crave leave to refer to and rely upon the relevant
evidence in regard to the aforesaid such as their bank
statements, the aforesaid correspondence, when produced.
Claimants say that if the Respondent proves that certain other
payments were also made by him in the said Company Petition
towards royalty, the Claimants are ready and willing to give the
necessary credit for the same to the Respondent.
23. The Claimants say that despite the aforesaid, the
Respondent consistently failed to pay the agreed compensation
of Rs.60,000/- p.m. to the Claimants. Further, the Respondent
did not vacate the said premises despite repeated requests of the
Claimants and therefore, the Claimants could not sell the
aforesaid premises as per the said Memorandum of
Understanding dated 20.7.1995. In view of the above as on
29.2.2000, a sum of Rs.27,36,351/- was due and payable by the
Respondent to the Claimants towards the amount of
compensation payable by the Respondent for retaining
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36 ARBP180.07
possession of the said second floor premises. The Claimants
says that due to some mistake and/or inadvertence, the
aforesaid amount of Rs.3,25,139/- was not taken into account
by them while calculating the aforesaid figure of Rs.
27,36,351/-. However, in the present claim, the Claimants have
duly given credit to the Respondent for the said amount."
44 . It is, therefore, clear that both the monetary amounts and
possession of the premises on the second floor were claimed on the
basis of the first Respondent allegedly having permitted the original
Petitioner to occupy the second floor premises for three years from 1st
January 1997 to
31st December 1999 upon payment of
compensation/mesne profits at the market rate of Rs.60,000/- per
month.
45. Based on this pleading and nothing more Mr.DeVitre submitted
that the arbitrator had no jurisdiction to adjudicate upon the claims for
two reasons :
Firstly, he submitted that disputes in respect of the
alleged licence are not arbitrable in view of the provisions of the
PSCC Act, in particular section 41 thereof.
Secondly, he submitted that it was the Respondent's case
that the first Respondent had granted the original Petitioner a licence
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to occupy the premises on the second floor on payment of
compensation of Rs.60,000/- per month. This alleged subsequent
agreement between the original Petitioner and the first Respondent
does not fall within the Memorandum of Understanding. The
arbitration clause therefore cannot apply to any disputes arising in
respect of the alleged licence.
46. Mr.Kamdar submitted that it is not open to the Petitioners to
raise this contention as it had not been raised before the arbitrator. I
have proceeded on the basis that the contention was not raised before
the arbitrator. My conclusions on this submission in a nutshell are as
follows :
(i) The first Respondent itself contended at all times
including in the statement of claim that it had granted a
licence in favour of the original Petitioner for the period
1st January 1997 to 31st December 1999 at the market rate
of Rs.60,000/- per month.
(ii) The reliefs claimed before and awarded by the
arbitrator pertained to and were a consequence of the said
licence agreement.
(iii) An arbitral tribunal lacks inherent jurisdiction to
decide disputes relating to licence agreement in view of
Section 41 of the PSCC Act.
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(iv) An objection as to such inherent lack of
jurisdiction is non-derogable and cannot be waived.
(v) Such an objection can be raised even in a petition
under section 34 even if it was not raised before the
arbitral tribunal.
47. Mr.DeVitre submitted that disputes pertaining to a licence
agreement are not arbitrable. This issue is concluded in favour of the
Petitioner by the judgment of a Full Bench of this Court in case of
Central Warehousing Corporation Vs. Fortpoint Automotive Pvt.
Ltd. 2010 (3) LJOFT 49 = (2001) 1 Bom.C.R.562. The Full Bench
held that the Small Causes Court has exclusive jurisdiction to decide
disputes relating to possession of premises and recovery of
compensation in respect of licence agreements. No other court or
tribunal including an arbitral tribunal has jurisdiction to decide such
disputes. The Full Bench further held that the term 'licence' must be
determined on the basis of section 52 of the Easements Act. It was
submitted that there being an inherent lack of jurisdiction in the
arbitrator to decide the disputes that arose in respect of the said
licence even if the point had not been raised before him, it can be
taken as a ground of challenge in a petition under section 34 of the
Act.
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48. Mr.Kamdar firstly submitted that the pleadings in the statement
of claim and even in the correspondence prior thereto was not one of a
licence. He submitted that the contentions raised on behalf of the
Respondent was not that it had agreed to creating a licence in favour
of the original Petitioner, but that the original Petitioner was liable to
pay the amount as a mortgagee continuing in possession after the
mortgage was discharged. The reliefs claimed, therefore, are not
against the original petitioner as a licensee but as a trespasser
continuing in possession after the discharge of the mortgage.
49. It may have been entirely different, had the pleading been that
the original petitioner wrongly continued in possession even after the
extinguishment of the mortgage. In that event, the first Respondent's
claim would have been for compensation for the wrongful use and
occupation of the premises even after the original petitioner's
entitlement to do so as a transferee of the mortgage came to an end.
However, what is pleaded is entirely different. The specific case of
the Respondents is that upon discharge of the Court Receiver, the
original Petitioner was bound and liable to handover possession of the
premises to the first Respondent. Here again the matter may have
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40 ARBP180.07
been different had it ended there.
However, in the statement of claim, it is specifically
pleaded by the Respondents that the first Respondent allowed the
original Petitioner to occupy the premises for a period of three years
upon payment of compensation at the market rate of Rs.60,000/- per
month. This is an arrangement de hors and unconnected to the
mortgage, the agency of the Court Receiver and the Memorandum of
Understanding. It is not the Respondent's case that under this
arrangement/agreement the original Petitioner was permitted to
continue under or in terms of the mortgage or as a tenant or as a
owner. The agreement pleaded is nothing but a licence created by the
first Respondent in favour of the original Petitioner. Even if it was a
gratuitous licence, it would make no difference. The judgment of the
Full Bench would apply even to a gratuitous licensee. The Full Bench
held that :
"40. In summation, we would hold that section 41(1) of
the Act of 1882 is a special law which in turn has
constituted special Courts for adjudication of disputes
specified therein between the licensor and licensee or a
landlord and tenant. The effect of section 41(2) of the Act of
1882 is only the suits or proceedings for recovery of
possession of immovable property or of licence fee thereof,
to which, the provisions of specified Acts or any other law
for the time being in force apply, have been excepted from
the application of non-obstante clause contained in section
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41 ARBP180.07
41(1) of the Act. The expression "or any other law for the
time being in force" appearing in section 41(2) will have to
be construed to mean that such law should provide for
resolution of disputes between licensor and licensee or a
landlord and tenant in relation to immovable property or
licence fee thereof, to which immovable property, the
provisions of that Act are applicable. The Act of 1996 is not
covered within the ambit of section 41(2) in particular the
expression "or any other law for the time being in force"
contained therein. The question whether the exclusive
jurisdiction of the Small Causes Court vested in terms of
section 41 of the Act of 1882 is ousted, if an agreement
between the licensor and licensee contains a clause for
arbitration, the same will have to be answered in the
negative. For,section 5 of the Act of 1996 in that sense is not
an absolute non-obstante clause.section 5 of the Act of 1996
cannot affect the laws for the time being in force by virtue
of which certain disputes may not be submitted to
arbitration, as stipulated in section 2(3) of the Act of 1996.
We hold that section 41 of the Act of 1882 falls within
the ambit of section 2(3) of the Act of 1996. As a result of
which, even if the Licence Agreement contains Arbitration
Agreement, the exclusive jurisdiction of the Courts of Small
Causes under section 41 of the Act of 1882 is not affected in
any manner. Whereas, Arbitration Agreement in such cases
would be invalid and inoperative on the principle that it
would be against public policy to allow the parties to
contract out of the exclusive jurisdiction of the Small
Causes Courts by virtue of section 41 of the Act of 1882."
41. Accordingly, we answer the question referred to us in
the negative. We, therefore, hold that inspite of Arbitration
Agreement between the parties and non-obstante clause in
section 5 of the Act of 1996, the exclusive jurisdiction of the
Small Causes Court to try and decide the dispute specified
in section 41 of the Act of 1882 is not ousted."
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42 ARBP180.07
50. The learned arbitrator therefore lacked inherent jurisdiction
to decide the disputes in respect of the licence agreement. That being
so, if the decision had been rendered in a suit the Petitioners would
have been entitled to raise this contention in appeal or in execution
proceedings even if it was not taken before the trial court. This is
established by the following judgments of the Supreme Court :
(A) The Supreme Court in "Hira Lal Patni v. Kali Nath,(1962) 2
SCR 747 held :
"4. The only ground on which the decision of the High Court is
challenged is that the suit instituted on the original side of the
Bombay High Court was wholly incompetent for want of
territorial jurisdiction and that, therefore, the award that
followed on the reference between the parties and the decree of
Court, under execution, were all null and void. Strong reliance
was placed upon the decision of the Privy Council in the case
of Ledgard v. Bull 1. In our opinion, there is no substance in
this contention. There was no inherent lack of jurisdiction in
the Bombay High Court where the suit was instituted by the
plaintiff-decree holder. The plaint had been filed after obtaining
the necessary leave of the High Court under clause 12 of the
Letters Patent. Whether the leave obtained had been rightly
obtained or wrongly obtained is not a matter which can be
agitated at the execution stage. The validity of a decree can be
challenged in execution proceedings only on the ground that
the court which passed the decree was lacking in inherent
jurisdiction in the sense that it could not have seisin of the case
because the subject-matter was wholly foreign to its
jurisdiction or that the defendant was dead at the time the suit
had been instituted or decree passed, or some such other
ground which could have the effect of rendering the court
entirely lacking in jurisdiction in respect of the subject-matter
of the suit or over the parties to it. But in the instant case there
was no such inherent lack of jurisdiction. The decision of the
Privy Council in the case of Ledgard v. Bull1 is an authority for
the proposition that consent or waiver can cure defect of
jurisdiction but cannot cure inherent lack of jurisdiction. In that
case, the suit had been instituted in the Court of the
Subordinate Judge, who was incompetent to try it. By consent
of the parties, the case was transferred to the Court of the
District Judge for convenience of trial. It was laid down by the
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Privy Council that as the court in which the suit had been
originally instituted was entirely lacking in jurisdiction, in the
sense that it was incompetent to try it, whatever happened
subsequently was null and void because consent of parties
could not operate to confer jurisdiction on a court which was
incompetent to try the suit. That decision has no relevance to a
case like the present where there could be no question of
inherent lack of jurisdiction in the sense that the Bombay High
Court was incompetent to try a suit of that kind. The objection
to its territorial jurisdiction is one which does not go to the
competence of the court and can, therefore, be waived. In the
instant case, when the plaintiff obtained the leave of the
Bombay High Court on the original side, under clause 12 of the
Letters Patent, the correctness of the procedure or of the order
granting the leave could be questioned by the defendant or the
objection could be waived by him. When he agreed to refer the
matter to arbitration through court, he would be deemed to
have waived his objection to the territorial jurisdiction of the
court, raised by him in his written statement. It is well settled
that the objection as to local jurisdiction of a court does not
stand on the same footing as an objection to the competence of
a court to try a case. Competence of a court to try a case goes
to the very root of the jurisdiction, and where it is lacking, it is
a case of inherent lack of jurisdiction. On the other hand, an
objection as to the local jurisdiction of a court can be waived
and this principle has been given a statutory recognition by
enactments like section 21 of the Code of Civil Procedure.
Having consented to have the controversy between the parties
resolved by reference to arbitration through court, the
defendant deprived himself of the right to question the
authority of the court to refer the matter to arbitration or of the
arbitrator to render the award. It is clear, therefore, that the
defendant is stopped from challenging the jurisdiction of the
Bombay High Court to entertain the suit and to make the
reference to the arbitrator. He is equally stopped from
challenging the authority of the arbitrator to render the award.
In our opinion, this conclusion is sufficient to dispose of the
appeal. It is not, therefore, necessary to determine the other
points in controversy, including the question whether the
Decrees and Orders Validating Act, 1936 (Act 5 of 1936) had
the effect of validating what otherwise may have been invalid."
(B) In Kiran Singh v. Chaman Paswan,(1955) 1 SCR 117, the
Supreme Court held :
"6. The answer to these contentions must depend on what the
position in law is when a court entertains a suit or an appeal
over which it has no jurisdiction, and what the effect of section
11 of the Suits Valuation Act is on that position. It is a
fundamental principle well established that a decree passed by a
court without jurisdiction is a nullity, and that its invalidity
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44 ARBP180.07
could be set up whenever and wherever it is sought to be
enforced or relied upon, even at the stage of execution and even
in collateral proceedings. A defect of jurisdiction, whether it is
pecuniary or territorial, or whether it is in respect of the
subject-matter of the action, strikes at the very authority of the
court to pass any decree, and such a defect cannot be cured
even by consent of parties. If the question now under
consideration fell to be determined only on the application of
general principles governing the matter, there can be no doubt
that the District Court of Monghyr was coram non judice, and
that its judgment and decree would be nullities. The question is
what is the effect of section 11 of the Suits Valuation Act on
this position."
(C) In Harshad Chiman Lal Modi v. DLF Universal Ltd.,(2005) 7
SCC 791 the Supreme Court held :
30. We are unable to uphold the contention. The jurisdiction of
a court may be classified into several categories. The important
categories are (i) territorial or local jurisdiction; (ii) pecuniary
jurisdiction; and (iii) jurisdiction over the subject-matter. So far
as territorial and pecuniary jurisdictions are concerned,
objection to such jurisdiction has to be taken at the earliest
possible opportunity and in any case at or before settlement of
issues. The law is well settled on the point that if such
objection is not taken at the earliest, it cannot be allowed to be
taken at a subsequent stage. Jurisdiction as to subject-matter,
however, is totally distinct and stands on a different footing.
Where a court has no jurisdiction over the subject-matter of the
suit by reason of any limitation imposed by statute, charter or
commission, it cannot take up the cause or matter. An order
passed by a court having no jurisdiction is a nullity.
31. In Halsbury's Laws of England, (4th Edn.), Reissue, Vol.
10, para 317, it is stated:
317. Consent and waiver.--Where, by reason of any limitation
imposed by a statute, charter or commission, a court is without
jurisdiction to entertain any particular claim or matter, neither
the acquiescence nor the express consent of the parties can
confer jurisdiction upon the court, nor can consent give a court
jurisdiction if a condition which goes to the root of the
jurisdiction has not been performed or fulfilled. Where the
court has jurisdiction over the particular subject-matter of the
claim or the particular parties and the only objection is whether,
in the circumstances of the case, the court ought to exercise
jurisdiction, the parties may agree to give jurisdiction in their
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particular case; or a defendant by entering an appearance
without protest, or by taking steps in the proceedings, may
waive his right to object to the court taking cognizance of the
proceedings. No appearance or answer, however, can give
jurisdiction to a limited court, nor can a private individual
impose on a judge the jurisdiction or duty to adjudicate on a
matter. A statute limiting the jurisdiction of a court may contain
provisions enabling the parties to extend the jurisdiction by
consent."
32. In Bahrein Petroleum Co.13 this Court also held that
neither consent nor waiver nor acquiescence can confer
jurisdiction upon a court, otherwise incompetent to try the suit.
It is well settled and needs no authority that "where a court
takes upon itself to exercise a jurisdiction it does not possess,
its decision amounts to nothing". A decree passed by a court
having no jurisdiction is non est and its invalidity can be set up
whenever it is sought to be enforced as a foundation for a right,
even at the stage of execution or in collateral proceedings. A
decree passed by a court without jurisdiction is a coram non
judice.
51. I had considered the above judgments in a judgment dated 14th
September 2010 in United Spirits Limited Vs. Paras Collins
Distilleries Private Limited & Ors, in Arbitration Petition 1072 of
2010. It was contended that the first two judgments, both delivered
by a Bench of four learned Judges were conflicting. I held that they
were not and attempted to reconcile them. In the present case,
however it is not even necessary to do so. If Mr.DeVitre's submission
is correct namely that the arbitrator does not have jurisdiction to
decide the matters relating to licensee agreements in view of section
41 of the PSCC Act, it is a question of inherent lack of jurisdiction as
the arbitrator had no jurisdiction in respect of the subject matter of the
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reference.
52. If the above principle applies to arbitral proceedings under the
1996 Act, the arbitrator having lacked inherent jurisdiction, did not
have seisin of the case because the subject matter was alien to his
jurisdiction. The award was therefore made by a tribunal entirely
lacking in jurisdiction in respect of the subject matter of the dispute.
The arbitrator having lacked inherent jurisdiction to decide the matter
his lack of jurisdiction was not curable and could not have been
waived. The award would therefore be void.
The only question is whether the ratio of these judgments would
also apply to a Court hearing a petition under section 34 of the
Arbitration and Conciliation Act, 1996. If the ratio applies to matters
under the 1996, Act it would be open to the Petitioners to urge these
contentions in a petition under section 34 of the said Act even if it was
not raised before the arbitrator.
53. In my view, the principle in this regard would apply to an
arbitral tribunal with as much force as it does to a Civil Court. The
ratio of this judgment was based on principle. It was not confined to
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civil courts. The judgments had only incidentally been delivered in
proceedings which originated in a civil court. These principles were
not discussed in the context of the proceedings initiated in a civil
court. It would be incorrect then to confine the ratio of these
judgments to such proceedings. It applies to all courts, tribunals and
authorities.
54. Mr.Kamdar however submitted that if a question of even
inherent lack of jurisdiction is not raised before the Arbitral Tribunal,
it cannot be raised in a petition under section 34. He relied upon
sections 16 and 34 of the 1996, Act which read as under:
16. Competence of arbitral tribunal to rule on its
jurisdiction.--(1) The arbitral tribunal may rule on its
own jurisdiction, including ruling on any objections with
respect to the existence or validity of the arbitration
agreement, and for that purpose,--
(a) an arbitration clause which forms part of a
contract shall be treated as an agreement independent of
the other terms of the contract; and
(b) a decision by the arbitral tribunal that the
contract is null and void shall not entail ipso jure the
invalidity of the arbitration clause.
(2) A plea that the arbitral tribunal does not have
jurisdiction shall be raised not later than the submission
of the statement of defence; however, a party shall not be
precluded from raising such a plea merely because that
he has appointed, or participated in the appointment of,
an arbitrator.
(3) A plea that the arbitral tribunal is exceeding the scope
of its authority shall be raised as soon as the matter
alleged to be beyond the scope of its authority is raised
during the arbitral proceedings.
(4) The arbitral tribunal may, in either of the cases
referred to in sub-section (2) or sub-section (3), admit a
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later plea if it considers the delay justified.
(5) The arbitral tribunal shall decide on a plea referred to
in sub-section (2) or sub-section (3) and, where the
arbitral tribunal takes a decision rejecting the plea,
continue with the arbitral proceedings and make an
arbitral award.
(6) A party aggrieved by such an arbitral award may
make an application for setting aside such an arbitral
award in accordance with section 34.
34. Application for setting aside arbitral award.--(1)
Recourse to a Court against an arbitral award may be
made only by an application for setting aside such award
in accordance with sub-section (2) and sub-section (3).
(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 decisions 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.
Explanation.--Without prejudice to the generality of sub-
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clause (ii), it is hereby declared, for the avoidance of any
doubt, that an award is in conflict with the public policy
of India if the making of the award was induced or
affected by fraud or corruption or was in violation of
section 75 or section 81.
(3) An application for setting aside may not be made
after three months have elapsed from the date on which
the party making that application had received the
arbitral award or, if a request had been made under
section 33, from the date on which that request had been
disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant
was prevented by sufficient cause from making the
application within the said period of three months it may
entertain the application within a further period of thirty
days, but not thereafter.
(4) On receipt of an application under sub-section (1), the
Court may, where it is appropriate and it is so requested
by a party, adjourn the proceedings for a period of time
determined by it in order to give the arbitral tribunal an
opportunity to resume the arbitral proceedings or to take
such other action as in the opinion of arbitral tribunal
will eliminate the grounds for setting aside the arbitral
award.
55. There is nothing under section 16 which indicates that a plea of
inherent lack of jurisdiction cannot be raised in a petition under
section 34 of the said Act even if it was not raised before the
arbitrator.
56. I cannot persuade myself to accept Mr.Kamdar's submission
that as the term 'validity' in section 16(1) includes questions of
inherent lack of jurisdiction, if an objection of inherent lack of
jurisdiction is not raised, it cannot be raised in a petition under section
34.
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Questions relating to the lack of jurisdiction which can be
waived or cured, must be raised as required under section 16 of the
Act. In that event, the challenge to such findings under section 34 of
the Act would be dealt with in the same manner and on the same
principles as a challenge to an award in any other respect. Questions
relating to inherent lack of jurisdiction may also be raised before the
arbitrator. However, that does not imply that if not raised before the
arbitrator questions relating to inherent lack of jurisdiction cannot be
raised in a petition under section 34 of 1996 Act.
57. Mr.DeVitre's submission that section 34 answers the question in
the Petitioner's favour in this regard is well founded. He drew a
distinction between clauses (a) and (b) of sub section (2) of section
34. Sub section 2(a) provides that the Court may set aside the award
only if a party making an application furnishes proof of the
circumstances and facts mentioned therein. Sub section 2(b) on the
other hand provides that an arbitral award may be set aside by the
Court "if the Court finds that the subject matter of the dispute is not
capable of settlement by arbitration under the law for the time being
enforce." In other words while scrutinizing an award under sub
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section 2(b), it is not necessary for the party making the application to
furnish proof that the subject matter of the dispute is not capable of
settlement by arbitration. The award may be set aside even if the
Court itself finds that the subject matter of the disputes is not capable
of settlement by arbitration. Indeed, if the Arbitral Tribunal lacks
inherent jurisdiction which cannot be cured or waived, the Arbitral
Tribunal award would also be in conflict with the public policy of
India for section 41, as held by the Full Bench is based on public
policy.
58. Mr.Kamdars reliance upon the judgment of the Supreme Court
in (2007) 5 SCC 38 is of no assistance in this regard. He relied upon
paragraph 24 & 25 of this judgment. It is however necessary to note
that this was not a case of inherent lack of jurisdiction. The Petitioner
had challenged the constitution of the Arbitral Tribunal. It is,
therefore, necessary also to note para 4 of the judgment. The Supreme
Court held as under:
"4. The principal ground on which the petition under
section 34 of the Act had been filed by Respondent 1 was
that it had invoked the arbitration clause by sending a
notice to Appellant 1 on 17-7-1999 and accordingly
Appellant 1 was required to send a panel of three names
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for arbitration within 30 days of receipt of notice. Since
Appellant 1 did not respond to the notice and did not send
a panel within 30 days, it forfeited its right to nominate a
panel and thereafter Respondent 1 sent its own panel on
28-10-1999. Appellant 1 again did not make any response
and did not choose anyone from the panel nominated by
Respondent 1 and accordingly it informed Appellant 1 on
10-12-1999 that it had selected Brig. Nardip Singh (Retd.)
as an arbitrator and the said arbitrator entered upon the
reference on 6-1-2000. Appellant 1 appointed Justice N.N.
Goswami (Retd.) as an arbitrator subsequently on
13-1-2000, which appointment was not valid being
contrary to the terms of the agreement entered into
between the parties. Respondent 1 thus submitted that the
appointment of Justice N.N. Goswami (Retd.) was invalid
and the award given by him was liable to be set aside in
view of section 34(2)(a)(v) of the Act.
24. The whole object and scheme of the Act is to secure an
expeditious resolution of disputes. Therefore, where a
party raises a plea that the Arbitral Tribunal has not been
properly constituted or has no jurisdiction, it must do so at
the threshold before the Arbitral Tribunal so that remedial
measures may be immediately taken and time and expense
involved in hearing of the matter before the Arbitral
Tribunal which may ultimately be found to be either not
properly constituted or lacking in jurisdiction, in
proceedings for setting aside the award, may be avoided.
The commentary on Model Law clearly illustrates the
aforesaid legal position.
25. Where a party has received notice and he does not raise
a plea of lack of jurisdiction before the Arbitral Tribunal,
he must make out a strong case why he did not do so if he
chooses to move a petition for setting aside the award
under section 34(2)(a)(v) of the Act on the ground that the
composition of the Arbitral Tribunal was not in accordance
with the agreement of the parties. If plea of jurisdiction is
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not taken before the arbitrator as provided in section 16 of
the Act, such a plea cannot be permitted to be raised in
proceedings under section 34 of the Act for setting aside
the award, unless good reasons are shown."
In this case, the Supreme Court did not deal with a case of
inherent lack of jurisdiction.
59. Mr. Kamdar then relied upon the judgment of a Division Bench
of the Karnataka High Court in K.S.R.T.C. Vs. M.Keshava Raju, AIR
2004 Karnataka 109. The judgment not only does not support his
submission but in fact militates against it. In that case, an arbitrator
had been appointed by an order passed under section 11. In a petition
to challenge the award the Petitioners contended that the appointment
of the arbitration under section 11 was not appropriate. The Division
Bench of the Karnataka High Court analysed the provisions of section
16. It referred to the public policy of reducing the scope of
interference by Courts with arbitral awards and the need for
expediting the process. Mr.Kamdar relied upon paragraphs 16 and 17
of the judgment, which read as under :
"16. Thirdly, the appellant should be deemed to have
waived his right to object to the jurisdiction of the
Arbitrator to pass the impugned award in terms of the
provisions of section 4 of the Act. Section 4 reads as
follows :--
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"4. Waiver of right to object
A party who knows that ---
(a) any provision of this Part from which the parties
may derogate, or
(b) any requirement under the arbitration agreement,
has not been complied with and yet proceeds with
the arbitration without stating his objection to such non-
compliance without undue delay or, if a time limit is
provided for stating that objection, without that period of
time, shall be deemed to have waived his right to so
object."
17. Section 4 narrates the circumstances in which the
party, who knowingly fails to object the non-compliance of
any non-mandatory provisions of Part-I or any requirement
under the arbitration agreement by the other party, is
deemed to have waived his right to object. This section is
based on general principles such as "estoppel" or "venire
contra factum proprium". It is intended to help the arbitral
process function efficiently and in good faith. If there is
non-compliance of any non-mandatory provision of Part I
or of any requirement of the arbitration agreement by a
party to an arbitration agreement of which the other party
to the agreement though has the knowledge of such non-
compliance but does not object without undue delay, or if a
time limit is provided for stating that objection and no
objection is taken within that period of time, such a party
later on can neither raise objection about that non-
compliance of any provision of Part I nor any requirement
of the arbitration agreement since such party shall be
deemed to have waived its objection. Though, in order to
apply the doctrine of waiver by invoking section 4, the first
condition is that the non-compliance must be of non-
mandatory provision of Part I of any requirement under the
arbitration agreement, certain mandatory provisions of the
Act also provide for a grant of waiver in the event of
failure to object. For example, sub-sections (2) and (3) of
section 16 are one of such mandatory provisions. Section
16(2) of the Act provides that a plea that the Arbitral
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Tribunal does not have jurisdiction shall be raised not later
than the submission of the statement of defence,section
16(3) of the Act provides that a plea that the Arbitral
Tribunal is exceeding the scope of its authority shall be
raised as soon as the matter alleged to be beyond the scope
of its authority is raised during the arbitral proceedings."
I am concerned here with a mandatory, non-derogable
provision. The observations, therefore, regarding non-mandatory
provisions can be of no assistance to the Respondents. Reliance,
however, was placed on the two sentences in paragraph 17 which state
that certain mandatory provisions of the Act also provide for a grant of
waiver such as sub sections (2) and (3) of section 16. With respect
sub sections (2) and (3) are not non-derogable provisions. They in any
event do not denude the arbitral tribunal of inherent jurisdiction. The
judgment does not deal with a question as to whether an award can be
challenged on the ground that the arbitrator lacked inherent
jurisdiction over the subject matter of the reference.
60. Mr.Kamdar submitted that in view of section 16(6), a finding
on a question of jurisdiction can be challenged under section 34. If
however the objection was not taken, no award in that respect would
obviously be made. In that even, there is nothing to challenge in a
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petition under section 34.
61. This submission is not well founded. Even in a Civil Court, and
even in execution proceedings, the same situation would obtain
namely that the judgment of the trial court would not have dealt with
the question of inherent lack of jurisdiction where the point was not
raised. That, however, it has been held cannot prevent the Appellate
Court or even the executing court from considering the question of
inherent lack of jurisdiction. On a parity of reasoning Mr.Kamdar's
submissions in this regard is rejected.
62. In view of this contention the entire award is liable to be set
aside. The claims were consequent to the alleged licence granted with
effect from 1st January 1997 i.e. after the Memorandum of
Understanding. The licence was not pleaded in the alternative. Nor
was it pleaded that upon the expiry of the licence the rights of the
parties prior thereto revived. It is doubtful whether it would make
any difference even if such pleas were raised.
63. This brings me to Mr.DeVitre's other contention viz. that the
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licence was created after the Memorandum of Understanding and
therefore disputes relating thereto clearly fell outside the ambit of the
arbitration agreement contained therein. The Memorandum of
Understanding is dated 20th July, 1995 whereas the alleged licence
was granted only thereafter with effect from 1st January, 1997.
64. Mr.Kamdar submitted that the contention that the Memorandum
of Understanding did not cover the reliefs claimed was not raised by
the Petitioner in the first or the second affidavits, in the draft issues
tendered on behalf of the Petitioner, in the written statement and the
additional written statement. It is not open, therefore, for the
Petitioner to raise this issue in a petition under section 34 in any
event. Relying upon the judgment of the Supreme Court in Gas
Authority of India Ltd. v. Keti Construction (I) Ltd.,(2007) 5 SCC
38, he submitted that even assuming there is any force in Mr.DeVitre's
submission it cannot be raised in this petition.
65. I will presume Mr.Kamdar's submission in this regard to be
well founded as regards the claim for possession and to Rs.
27,36,351/-. However, with regard to the claim for compensation at
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eighteen percent per annum on the value of the property after 31st
December 1996 it is not. This claim was raised by the first
Respondent for the first time by an amendment which was allowed by
an order of the arbitrator dated 6th May 2005. The challenge to the
jurisdiction of the arbitrator as regards this claim was specifically
raised by the original Petitioner in paragraphs 2 & 27 in the additional
written statement dated 8th June 2005.
66.
This claim was not related to or even in the contemplation of
the parties when the Memorandum of Understanding was entered into
on 20th July 1995. It was a subsequent, independent agreement of
license unrelated to the Memorandum of Understanding. The
arbitrator, therefore, did not have jurisdiction to entertain this claim.
67. The learned arbitrator has not dealt with this aspect of the
matter at all. The contention was also raised in the written
submissions. I would normally not consider the parties written
submissions. However, the learned arbitrator has himself while
considering the claim being one for specific performance of the
Memorandum of Understanding referred to the Respondent's written
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submission.
68. Thus, the award so far as it grants compensation of eighteen per
cent per annum on the value of the first and the second floor is liable
to be set aside also on the ground that the dispute in this regard did not
fall within the arbitration agreement and on the ground that the award
in this regard contains no reasons.
69.
In this view of the matter, it is not necessary for me to consider
Mr.DeVitre's submission that the claim of compensation at eighteen
percent per annum on the value of the property was without any
particulars or evidence and is therefore bad.
Re. : (IIA) Having come to the conclusion that he had
no jurisdiction to consider the issue of tenancy raised by
the original Petitioner, the arbitrator could not have
made any observations in regard thereto.
(IIB) The arbitrator, therefore, was also not entitled to
grant the monetary compensation.
70. The learned arbitrator has rightly not decided the original
Petitioner's case of tenancy as he had no jurisdiction to do so.
However, observations have been made regarding the claim of
tenancy which with respect was not justified. Once it is held that the
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arbitrator does not have jurisdiction to decide a particular issue, it
ought not to make observations in that regard. It is made clear that
the appropriate Court that may decide the Petitioner's case regarding
their being tenants will decide the same on its own merits
uninfluenced by any of the observations made in the award.
71. Mr.DeVitre submitted that the tenancy rights do not get
extinguished upon the redemption of a mortgage in a case where a
mortgagee was the tenant. In this regard, he relied inter alia on the
judgment of the Supreme Court in the case of Nirmal Chandra
Vs.Vimal Chand, AIR 2001 SC 2284.
72. It is not necessary for me to consider this issue as a question of
tenancy cannot be the subject matter of the arbitration proceeding and
accordingly of this petition. It is open to the Petitioners to raise this
contention before the appropriate Court.
73. Mr.DeVitre submitted that having come to the conclusion that
the issue of tenancy cannot be decided in arbitration, the arbitrator's
award of compensation is unsustainable.
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74. I would agree with this submission only upto a point. The
award of monetary compensation was granted on the basis that the
Petitioner's claim for tenancy is not established. The award of
monetary compensation cannot be executed until and unless the issue
of tenancy is decided. If for instance, the issue of tenancy is decided
in favour of the Petitioners, there would be no question of their being
liable to pay the monetary amounts. Mr.Kamdar also fairly stated that
the question of the Petitioners being required to pay the monetary
amount would arise only in the event of the issue of tenancy being
decided against the Petitioners. He stated that the RAD suit filed by
the original Petitioner has been dismissed for default only recently.
Had I upheld the award, the amounts would have been payable only
in the event of the order of dismissal attaining finality and subject to
any further proceeding that the Petitioners may adopt in respect of
their alleged tenancy.
Re. : (III) : The award is contrary to the record and is,
therefore, patently absurd.
75. Mr.DeVitre submitted that the award of monetary compensation
for the alleged illegal use of the first floor was unsustainable, patently
absurd and contrary to the record in view of the fact that it was the
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Respondent's case that possession of the first floor was in fact given
to the first Respondent after the order dated 20th December 1996. The
Respondent reiterated this even in the affidavit in reply in this
petition. He further stated that the arbitrator had himself in paragraph
9 noted the same as follows :
"........ Thereafter Naresh Seth (original Petitioner) delivered to
the claimants (first Respondent) vacant and peaceful possession of the
entire premises situated on the first floor of Simplex House. ......"
In that view of the matter, he submitted that the arbitrator could
never have awarded compensation for unauthorized occupation of the
premises on the first floor with effect from 12th April 2000 till re-
assignment.
76. I had set out earlier paragraph 21 of the statement of claim. In
the first sentence it is stated that after the order dated 20th December
1996, the original Petitioner gave vacant and peaceful possession of
the entire premises situated on the first floor of the said property to the
claimants i.e. the original Respondent. It is also pertinent to note that
in the letter dated 20th March 2000, invoking arbitration possession is
sought only of the second floor. By a letter dated 26 th July 2000, the
first Respondent had demanded possession only of the second floor.
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This is consistent with the pleading in the statement of claim.
77. Mr.Kamdar offered no explanation in this regard. The award of
compensation regarding the first floor is therefore set aside.
Re. IV: The arbitrator did not consider the relevant
evidence and wrongly shut it out.
78. Mr.DeVitre in this regard submitted that the arbitrator erred in
disregarding an affidavit dated 5th November 2005 of Janak Raj Seth,
original Respondent No.3. He stated that although Janak Raj Seth
was willing to be cross-examined, the other Respondents did not
cross-examine him. Without such cross-examination, the affidavit
could not have been disregarded.
79. This submission is incorrect. The arbitrator in paragraph 18
dealt with this aspect in considerable detail. The arbitrator extracted
in extenso the earlier affidavits filed by original Respondent No.3, his
wife and his daughters. The affidavit supported the first Respondent's
case and affirmed the Memorandum of Understanding. That affidavit
was dated 27th April 2001. The affidavit relied upon by Mr.DeVitre is
dated 5th November 2005. The learned arbitrator noted that the heirs
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of original Respondent No.3, did not filed such an affidavit. The
learned arbitrator came to the conclusion that this subsequent affidavit
dated 5th November 2005 does not inspire any confidence also, in
view of the fact that it was totally contradictory to the previous
affidavit and that it was made when original Respondent No.3 was not
keeping well and was seriously ill and he unfortunately expired about
three months thereafter.
80.
It cannot therefore be said that the learned arbitrator did not
considered the affidavit. The arbitrator was not bound to accept the
contents thereof merely because original Respondent No.3 was not
cross-examined. The arbitrator weighed the evidence, analyzed the
circumstances and drew inferences which were entirely within his
jurisdiction. The submission in this regard is, therefore, rejected.
81. In the result, the petition is dismissed but with no order as to
costs.
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