Bombay High Court
Rajesh V. Choudhary vs Kshitij R. Torka And Anr on 15 September, 2015
Bench: K.R. Sriram
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.734 OF 2010
Rajesh V.Choudhary )
of Mumbai inhabitant, having his address at )
D-3, nand Dham, 16-A, Bangur Nagar, Goregaon )
(West), Mumbai-400 090. )
presently residing at 51, Gaurav, Gulmohar Cross )
Road No.11, JVPD Scheme, Mumbai-400 049 ).. Petitioner
Vs.
2) Rajiv Rambhagat Torka
1) Kshitij Rajiv Torka & Ors. )
)
Both adults, Indian inhabitant, having )
their address at 3rd floor, Highway Rose )
Building, Off Dixit Road, Vile Parle(East) )
Mumbai-400 057. ).. Respondents
----
Mr.Simil Purohit i/by Girish B.Kedia for the petitioner.
Mr.Sarosh Bharucha a/w Ms.Swapna Rachure for the respondents.
----
CORAM : K.R.SHRIRAM, J.
RESERVED ON : 28.7.2015.
PRONOUNCED ON : 15.9.2015.
JUDGMENT :-
1 An award dated 7.1.2010 passed by Mr.Justice S.M.Jhunjhunwala
(retired) is sought to be set aside under Section 34 of the Arbitration &
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Conciliation Act 1996 (the said Act). Though it is not stated specifically in
the petition under which part of section 34 of the said Act the petitioner is
praying for setting aside the award, the counsel for the petitioner, across the
bar, submitted that the award has to be set aside under Sections 34(2) (a)
(ii), 34(2) (a) (iii), 34 (2) (b) (i) and 34(2) (b) (ii) of the said Act.
2 As a prelude, it is necessary to mention that the petitioner had filed
a Suit bearing No.1163 of 1999 against the respondents to this petition and
one Dr.S.K.Poddar, in the Original Side of this Court. In the said suit the
petitioner had prayed for the following reliefs :-
"(a) for a decree of specific performance of the
agreement of sale entered into between the plaintiff and
the 2nd Defendant as per Exhibit 'B' hereto by requiring
the 2nd Defendant ;
(i) to execute a conveyance of the suit property as
described in the schedule Exhibit `A' hereto ;
(ii) to give vacant possession of the portion of the suit
property in occupation of the 2nd Defendant, as shown
shaded red and green in the plan Exhibit `C' hereto and
shown in red and green in the plan Exhibit `D' hereto ;
(b) that pending the hearing and final disposal of the
suit, the 2nd Defendant by himself or through his agents,
servants or contractors, be restrained by temporary
injunction from transferring or assigning or parting with
the possession of any part of the suit property to any
person other than the plaintiff ;
(c) for ad-interim relief in terms of prayer (b) above ;
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(d) that pending the hearing and final disposal of the
suit, Receiver, High Court, Mumbai be appointed
Receiver of the suit property described in Exhibit `A'
hereto with all powers under Order 40 Rule 1 of the
Code of Civil Procedure ;
(e) for ad-interim relief in terms of prayer (d) above ;
(f) for costs of this suit and
(g) for such further and other reliefs as the nature and
the circumstances of the case admit."
In the Schedule annexed to the Plaint filed in the said
Suit as Exhibit `A' thereto, the property in respect
whereof the reliefs were claimed by the Claimant has
been described as under :
DESCRIPTION OF THE SUIT PROPERTY
ALL that piece and parcel of land or ground
admeasuring 453.1 square metres or thereabouts, lying,
being and situate at 24, Tilak Mandir Road, Vile Parle
(East), Mumbai 400 057 and bearing C.T.S.No.1287 of
Greater Bombay in the Registration district and sub
district of Bombay City suburban together with a
building constructed in the year 1938 (approx) consisting
of ground and one upper floor with ditched small
ancillary structures used as W.O. Block and Watchman's
cabin and other structures and erections standing
thereon and bound as follows :-
WEST : By plot No.1285 known as Easwar Bhavan,
EAST : By main Tilak Mandir Road,
NORTH : By plot No.1288 known as Trimurti Building,
SOUTH : By plot No.1286 known as Heena Building."
3 The first respondent at that time was a minor and was sued through
his father and natural guardian-the 2nd respondent herein. Though no relief
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against the said Dr. S.K.Poddar was claimed in the suit, according to the
petitioner the said Dr. S.K.Poddar was made party defendant in the suit
since in his capacity as one of the executor named in the Will of Smt.
Dakhibai Mohanlal Saraf, the said Dr. S.K.Poddar was the first confirming
party to the agreement for sale of the property as alleged by the petitioner
and of which, decree for specific performance was sought by the petitioner
herein.
The respondents herein, who were the defendant nos.1 & 2 to the
Suit, took out a Notice of Motion under Section 8 of the said Act seeking
reference of the disputes to arbitration. It was the respondents' case that the
agreement relied upon by the petitioner in the Suit was a forged and
fabricated document and that the petitioner and the 2 nd respondent had
executed an agreement dated 20.9.1995 which was for sale of 1/5 th un-
divided share in the suit property. It was also the case of the respondents
that the petitioner and the 2nd respondent retained one original each of the
agreement, in 1996 the said agreement was revoked, cancelled and torn by
the petitioner in the presence of the 2nd respondent and the reliance of the
respondents on the said agreement was only to substantiate their case that
the agreement which the petitioner was propounding, to be the agreement in
the suit, was a forged and fabricated document. According to the
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respondents, the alleged agreement for sale relied upon by the petitioner in
the suit and of which the petitioner sought specific performance was never
entered into by and between the petitioner and the respondents and that the
petitioner was not entitled to maintain the suit. The 2 nd respondent also
contended that the subject matter of the suit in any event, was required to be
referred to arbitration.
5 By an order dated 15.1.2004 a single Judge of this Court
(D.K.Deshmukh,J as he then was), by consent of the parties, referred the
disputes in the suit to Arbitration and appointed Justice S.M.Jhunjhunwala
(retired) as the sole Arbitrator. The said order reads as under :-
"By consent of both the parties, the dispute in the suit is
referred to Sole Arbitrator Justice S.M.Jhunjhunwala (Retired).
The defendants shall be at liberty to submit before the
Arbitrator any claims that they may desire to make against the
plaintiffs in relation to the subject matter of dispute between the
parties. Interim orders that are passed in this suit and
presently operative, shall continue to operate during the
pendency of the proceedings before the Arbitrator with liberty
to the parties to apply for either modification or vacation of the
interim orders or for any further interim orders. Parties
undertake to inform the Arbitrator about this order by serving
copy of this order on him.
Parties to act on the copy of this order duly authenticated
by the Associate/Personal Secretary as true copy.
Certified copy expedited."
6 The Notice of Motion No.1915 of 2001 taken out on behalf of the
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respondents who were defendant nos.1 & 2 in the suit, was also disposed by
the single Judge (D.K.Deshmukh,J, as he then was) by a separate order
passed on the same day, i.e., 15.1.2004. The said order reads as under :-
"In view of the order passed in the suit today, this notice of
motion does not survive for consideration. Hence disposed
off.
Parties to act on the copy of this order duly authenticated
by the Associate/Personal Secretary as true copy.
Certified copy expedited."
It is to be noted that the order appointing the Arbitrator was passed in
the suit not in the Notice of Motion taken out by the respondents. It has
been necessary to give this much background because the petitioner has also
raised in one of the submissions that dispute was not arbitrable.
8 I have heard in depth both Shri Purohit for the petitioner and
Mr.Bharucha for the respondents. I have considered their submissions, the
award and the pleadings. Both the counsel have done extensive research and
relied upon almost 30 precedents. In my view, the petitioner's challenge to
the award, at the most, could be considered to be under clause b(ii) of sub-
section 2 of Section 34. Let us deal with the other 3 provisions which the
petitioner's counsel said, covers the petitioner's challenge to the award.
As regards section 34 (2) (a) (ii) of the said Act, it should be noted, as
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per the order dated 15.1.2004 of Mr. justice D.K.Deshmukh (retired) quoted
above passed in the suit, the dispute in the suit was referred to the Sole
Arbitrator by consent of both the parties. Therefore, the question of
arbitration agreement not being valid does not and cannot arise.
As regards Section 34(2)(a)(iii), the counsel for the petitioner stated that
he was not permitted by the Arbitrator to complete the cross-examination of
the 2nd respondent as the Arbitrator wrongly curtailed his right which
resulted in violation of principles of natural justice. In my view, this would
not come under the category "........ or was otherwise unable to present his
case". Clause (iii) of sub-section 2(a) provides that an arbitral award may be
set aside by the court only if the party making 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. Applying the
principle of Ejusdem Generis, the portion "otherwise unable to present his
case" would come into play only when the petitioner had no notice of any
arbitration proceedings or even otherwise he was unable to present his case
or participate in the arbitral proceedings. In this case the petitioner was the
claimant. The petitioner's witnesses were examined and so also the
respondents' witness. Therefore, section 34(2)(a) (iii) is not applicable. At
the most the grievance of the petitioner of the Arbitrator curtailing the cross-
examination may come under Section 34 (2) (b) (ii)-Public Policy. Whether
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it requires to be entertained or not is dealt with later. But at the same time,
it is not even the petitioner's case in the petition that he was not given proper
notice of appointment of the Arbitrator or of the arbitral proceedings or that
he was unable to otherwise present his case. In fact, the challenge to the
award on this ground is not even pleaded and finds no mention anywhere in
the petition and the entire argument with regard to the same was made
across the bar at the time of hearing.
As regards section 34 (2) (b) (i), again the parties by consent referred the
dispute in the suit to arbitration to sole Arbitrator Shri Justice
S.M.Jhunjhunwala (retired). The counsel for the petitioner submitted that in
view of the allegation of fraud made against petitioner, the dispute could not
have been decided by the learned Arbitrator and ought to have been decided
by a Civil court and that the Arbitrator went ahead with the matter despite
being informed of the same. This is nothing but a bogey because in
respondents' application under Section 8 of the Arbitration Act, in the
affidavit and the rejoinder filed by the respondents, the allegation of
forgery, fraud and fabrication has been made by the respondents and dealt
with by the petitioner in his reply. Still the petitioner consented to refer to
arbitration, the disputes in the suit thereby agreeing that the learned
Arbitrator was competent and capable to attend to the reference. Therefore,
section 34(2) (b) (i) is also not applicable.
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9 What remains is the challenge under Section 34(2) (b) (ii) which
provides that the arbitral award may be set aside by the Court only if the
award is in conflict with the public policy in India. Let us consider whether
the grievance raised by the petitioner as a challenge to the award will make
the award to be in conflict with Public policy in India.
10 Section 34 read in conjunction with section 5 of the said Act makes it
clear that an award can be set aside only on grounds mentioned under
Section 34 (2) and (3) and not otherwise. It is important to note that the
1996 Act was enacted to replace the 1940 Arbitration Act in order to provide
for an arbitral procedure which is fair, efficient and capable of meeting the
needs of arbitration. The said Act also provides that the Tribunal gives
reasons for its award. The said Act was also enacted to ensure that the
arbitral Tribunal remains within the limits of jurisdiction and to minimize
the supervisory roles of Courts in the arbitral process. Section 34 and
section 5 of the said Act read as under :-
"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--
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(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-
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
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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.
5 Extent of judicial intervention - Notwithstanding
anything contained in any other law for the time being in
force, in matters governed by this Part, no judicial authority
shall intervene except where so provided in this part."
11 None of the grounds contained in section 34(2) (a) deal with the
merits of the decision rendered by an arbitral award. Only when the
challenge to the award is on the ground that the award is in conflict with the
public policy in India, do we look into the merits of the award under certain
circumstances. In the matter of 1P.R.Shah Shares and Stock Brokers (P)
Ltd. Vs. BHH Securities (P) Ltd., the Apex Court has held that the court
does not sit in an appeal over the award of an arbitral Tribunal by re-
assessing or re-appreciating the evidence. Following this judgment, the
Apex Court in paragraph-33 of 2Associate Builders Vs. Delhi Development
Authority has held as under :-
1 (2012) 1 SCC 594
2 (2015) 3 Supreme Court Cases 49
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"It must clearly be understood that when a court is applying
the "public policy" test to an arbitration award, it does not
act as a court of appeal and consequently errors of fact cannot
be corrected. A possible view by the arbitrator on facts has
necessarily to pass muster as the arbitrator is the ultimate
master of the quantity and quality of evidence to be relied
upon when he delivers his arbitral award. Thus an award
based on little evidence or on evidence which does not
measure up in quality to a trained legal mind would not be
held to be invalid on this score. Once it is found that the
arbitrators approach is not arbitrary or capricious, then he is
the last word on facts."
It is also settled law that interference with an award is permissible
only when the findings of the Arbitrator are arbitrary, capricious or perverse
or when conscience of court was shocked or when illegality is not trivial but
goes to the root of the matter but not merely when another view is possible.
It must also be kept in mind that the Arbitrator is the ultimate master of
quantity and quality of evidence while drawing the arbitral award. In fact
the Apex Court in Associates Builders (supra) has also held that even when
the award is based on little evidence or on evidence which does not measure
up in quality to a trained legal mind would not be held to be invalid on this
score, once it is found that the Arbitrators' approach is neither arbitrary nor
capricious.
Keeping this legal position in mind, let us deal with the allegations of
the petitioner.
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13 As mentioned above, dispute relates to the alleged agreement for sale
of the suit property. One Smt. Dakhibai Mohanlal Saraf was the owner of
the suit property. Upon the death of the said Smt. Dakhibai Mohanlal Saraf
on or about 18.7.1993, pursuant to her last Will and Testament dated
15.8.1988 (the said Will), the suit property came to be bequeathed in favour
of the 1st respondent, then a minor. The 2 nd respondent who is the father of
1st respondent and one Dr.S.K.Poddar were the executors under the said
Will. The petitioner's case is that he had executed an agreement dated
20.9.1995 with the 2nd respondent who signed on behalf of the 1 st respondent
who was a minor and as executor of the said Will, for sale of the entire suit
property for an amount of Rs.65,00,000/-. The 2 nd respondent was to obtain
the signature of said Dr. S.K.Poddar as the first confirming party and
executor of the said Will and hand over the original to the petitioner which
was never done. A photo copy of the petitioner's agreement was given to
the petitioner, photo copy whereof is being relied upon by the petitioner.
The petitioner, inter alia, sought a declaration that the petitioner's
agreement was valid, subsisting and binding and sought specific
performance of the same. This agreement relied upon by the petitioner, let
us refer to it as petitioner's agreement.
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14 It was the respondents' case that the petitioner's agreement, of which
the petitioner had sought specific performance, was not entered by and
between the petitioner and the respondents and the petitioner's agreement
was a forged and fabricated document. The stand of the respondents is that
the petitioner and the respondents had executed an agreement dated
20.9.1995 for Rs.65,00,000/- which was for sale of 1/5 th un-divided share in
the suit property (the respondents' agreement), the said agreement was
executed in duplicate on 2 stamp papers bearing nos.257 & 258, whereas
the petitioner and the 2nd respondent retained one original each, in 1996 the
respondents' agreement (both originals) was revoked, cancelled and torn by
the petitioner in presence of the 2nd respondent.
15 Faced with this stand of the respondents, the petitioner altered his
course in the rejoinder. In other words, the petitioner reshaped his case. In
the rejoinder the petitioner admitted that the respondents' agreement had in
fact been executed but after execution the petitioner no longer wanted mere
1/5th share in the suit property but wanted the entire property because of
which the petitioner asked the 2nd respondent to make the necessary
changes. The respondents' agreed for the changes and accordingly pages-1
& 12 of the respondents' agreement being the first and last pages were
retained while pages-2 to 11 were removed and torn. A fresh print out of
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pages 2 to 11 with the necessary changes were taken and the same were
tagged between the original pages 1 & 12 and this is the agreement as
mentioned earlier, the petitioner's agreement. According to the petitioner
the 2nd respondent was to obtain the signature of said Dr. S.K. Poddar and
hand over the original to the petitioner which was never done and as the
petitioner only had a photo copy of the petitioner's agreement, he is relying
on the photo copy.
When one compares the petitioner's agreement with the respondents'
agreement, though the petitioner states that pages-1 & 2 of the respondents
agreement was retained, the deletion of the words 1/5th undivided share from
the title of the 1st page stand out as a contradiction. It also appears that
though the subject matter changes from 1/5th undivided share in the suit
property to the entire suit property, the price remains the same as
Rs.65,00,000/-. The terms of payment contained in clause-3 are also
changed in as much as clause 3(1) of the respondents' agreement requiring
the payment of Rs.6,50,000/- as earnest money is deleted and replaced with
the clause which provides that the respondents would utilize amount of
Rs.40,00,000/- out of Rs.65,00,000/- towards payment to tenant/occupant
of certain rooms in the suit property for alternate accommodation, in
effect bringing down the price of the entire suit property to Rs.25,00,000/-
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as against Rs.65,00,000/- for 1/5th shares in the suit property. On page-12
below signature of the parties in both the agreements, is a clause with regard
to receipt of earnest money of Rs.6,50,000/-. It is to be noted that the
requirement of earnest money was there only in the respondents' agreement
and the petitioner's agreement contained no such requirement, yet this clause
appears on page-20. All these discrepancies with other evidence led the
Arbitrator to conclude that the petitioner's agreement was a fabricated and
forged document.
17 The petitioner pitched his case on 5 limbs :-
(a) the learned Arbitrator failed to decide the relevjanuary-2015ant
agreement ;
(b) the petitioner was unable to present his case ;
(c) Non-consideration of the petitioner's claim ;
(d) The dispute is not arbitrable ;
(e) The learned Arbitrator erroneously concluded that the respondents'
agreement is the correct agreement and proceeded to hold the
petitioner's agreement to be invalid.
18 It is also the case of the petitioner that the learned Arbitrator having
awarded cost to the respondents also shows prejudice and bias of the learned
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Arbitrator because in such proceedings and on facts of the case, such award
of cost is unheard of. This point was not elaborated by the petitioner's
counsel.
19 With regard to point (a) that the learned Arbitrator failed to decide the
relevant agreement, it is the case of the petitioner that the petitioner having
proceeded on the basis of the petitioner's agreement and the respondents
having proceeded on the basis of the respondents' agreement, the Arbitrator
should have framed issues and thereafter adjudicated thereupon to decide
which of the agreement is valid. The counsel submitted that in arbitrations,
normally the Tribunal is not bound to frame issues, but in this case the
Tribunal not having framed any issue was a fatal fault on the part of the
Arbitrator and had the Arbitrator framed issues as to which out of the two is
the valid agreement, he could have granted reliefs accordingly. It was also
submitted that the Arbitrator should have gone beyond the realm of "dispute
in the suit" because the respondents while denying the petitioner's claim had
propounded the respondents' agreement and therefore, the horizon of
dispute widened and learned Arbitrator ought to have considered the entire
dispute. According to Shri Purohit, counsel for the petitioner, the learned
Arbitrator therefore has erred by proceeding to limit his adjudication to the
reliefs sought in the plaint/statement of claim rather than adjudicating on the
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entire dispute. Hence, the award is required to be set aside.
It was also submitted that the Arbitrator ought to have adjudicated
upon the respondents' agreement having concluded that the petitioner's
agreement was found to be forged and fabricated and having failed to
arbitrate on the respondents' agreement, the award needs to be set aside.
20 First of all, I do not find this point being raised in the petition and it
does appear that it has been raised for the first time across the bar when the
matter was heard. Moreover, it was not the case of the petitioner in the
plaint/statement of claim that there was a dispute regarding the respondents'
agreement. The averment regarding respondents' agreement was made in
the respondents' application under Section 8 of the said Act only by way of
defence to the petitioner's case seeking specific performance of the
petitioner's agreement and the same did not find place in the written
statement filed by the respondents before the learned Arbitrator. Thus, the
question of framing of issue with regard to the same or deciding the same
did not arise. Therefore, this submission of the petitioner cannot be
accepted.
21 As regards the 2nd part viz. the petitioner was unable to present his
case, it is the petitioner's case that the award is vitiated and is liable to be
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set aside as the petitioner was prevented from placing his evidence on
record and thereby prevented from getting a fair opportunity to present his
case. According to the petitioner, the petitioner being the claimant led
evidence of 3 witnesses who were cross-examined by the Advocate for the
respondents. Thereafter the respondents filed affidavit of evidence of their
witness who was cross-exmined by the Advocate for the petitioner from
time to time and on 29.1.2009 the learned Arbitrator treated the cross-
examination of the respondents' witness as closed and did not permit the
petitioner's Advocate to further cross-examine the respondents' witness.
According to the respondents this amounted to violation of the principles of
natural justice and the Arbitrator cannot restrain the petitioner or fix a time
frame with regard to cross-examination. The counsel submitted that the
cross-examination of the witness depends on various factors including
truthfulness of the answers given by the witness and also the straight
forwardness of the witness in giving his answers and there cannot be a
straight jacket formula as regards the cross-examination. It is also stated
that the petitioner moved an application on 29.1.2009, the date on which the
Arbitrator closed the petitioner's cross-examination of the respondents'
witness, to allow continuation of cross-examination. The Arbitrator stated
that the same would be dealt with in the award but has not been dealt with
in the award and the Arbitrator has not rendered any reason or finding for
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restraining the cross-examination of the respondents' witness. According to
the counsel for the petitioner, this conduct of the Arbitrator should shock the
conscience of the court and hence in conflict with the public policy of India.
The petitioner's counsel also relied upon the judgment of the Hon'ble High
Court of Kerala in the matter of 3Abdul Rashid Vs. State Bank of
Travancore. Relying on the said judgment, the counsel submitted that no
Tribunal or Court can take an attitude that the cross-examination of the
witness shall be finished within a particular time limit and that the time that
is required for cross-examination of the witness depends upon various
factors. If the Tribunal insists that it will not record evidence of witness for
more than a particular time limit, the parties will be put to irreparable injury
and hardship. Therefore, the order of the learned Arbitrator is illegal and
without jurisdiction and against the principles of natural justice.
22 It must be noted that this point also does not find place in the petition
and has been raised for the first time across the bar when the matter was
heard. Be that as it may, we can consider the same and deal with it.
23 It is true that cross-examination of a witness will depend on various
factors and if a Tribunal unreasonably fetters a party from cross-examining
3 ILR 2003(2) Kerala 150
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a witness or fixes an un-reasonable time limit, it would cause irreparable
injury and hardship. It must be noted that in Abdul Rashid case (supra) the
Tribunal had stopped the cross-examination of the witness on the ground
that he was cross-examined for more than 1 & ½ hours on that date and the
timing recorded by the Tribunal in the deposition-sheet showed that the
witness was cross-examined only for 51 minutes and the witness was
discharged. No permission was given to the petitioner to elicit the matter
which he wanted to elicit from the witness during cross-examination and the
Tribunal closed the evidence of the witness on the ground that his evidence
was recorded for more than a particular time. It was therefore, in the facts
and circumstances of that case, the Court concluded that the order passed by
the Tribunal was illegal and against the principles of natural justice. The
facts in the present case are different.
24 As mentioned earlier, it must be noted that the Arbitrator is the
ultimate master of quantity and quality of evidence. In this case the cross-
examination of the 2nd respondent was carried on for approximately 37
hearings, 2 hours each hearing, over a period of approximately 3.5 years.
1776 questions were asked and answered. Only 51 or odd questions were
dis-allowed which shows that the learned Arbitrator gave the petitioner's
counsel a free hand and complete opportunity to cross-examine. In the
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minutes of the hearing held on 7.3.2008, after the answer to question 1037
was recorded, the Arbitrator has recorded that the cross-examination of the
2nd respondent had started on 9.8.2005 and more than thousand questions
have been asked running into more than 200 pages and it is still not
completed. In the minutes of the hearing held on 26.11.2008 it is recorded
in paragraph-4 as under :-
"At the hearing held on 10th October, 2008, it was inquired
from Mr.Bhatia his estimate as to time still required by him to
complete the cross-examination of the 2nd Respondent.
Mr.Bhatia had then informed that in the next two hearings, he
would try to complete the same and requested for fixation of
hearings at an interval of few days. Accordingly, the hearings
were then fixed on 17th and 26th days of November, 2008.
Since the cross-examination is still not complete, Mr.Bhatia is
requested to inform about his estimate of further time required
to complete the cross-examination. Mr.Bhatia has assured
that he would make his best endeavour to complete the cross-
examination in next two hearings and requested for fixation of
such hearings at an interval of few days. Accordingly, the next
hearings are fixed on 10th and 15th days of December, 2008 at
3.00 pm on each day at the same Venue."
25 Even at the end of the evidence recorded on 26.11.2008 it is noted as
under :-
"Adjourned to 10.12.2008 and 15.12.2008 at 3.00 P.M. on
each day at the same venue.
Mr.Bhatia assures that on these days, he would make his best
efforts to complete the cross-examination of the witness."
KJ 22/52
23 ARBP734.10.doc
26 On 15.12.2008 the learned Arbitrator once again recorded that the
petitioner would make his best endeavour to complete cross-examination in
the next 2 hearings. The next 2 hearings were accordingly fixed on
8.1.2009 and 15.1.2009. It was further directed that if the cross-
examination was not complete by 15.1.2009, the cross-examination would
stand completed on that date. The same is recorded as under :-
"At the hearing held on 26.11.2008, Mr.Bhatia, Learned
Advocate for the Claimant, had assured, as recorded in the
Minutes of the said meeting, that he would make his best
endeavour to complete the cross-examination of this witness
in next two hearings, i.e., at the hearings held on 10.12.2008
and today. Earlier also Mr.Bhatia, Learned Advocate for the
Claimant had stated that he would try to complete the cross-
examination of this witness at the hearings held on 17.11.2008
and 26.11.2008. Mr.Bhatia, Learned Advocate for the
Claimant, however states that he has not completed the cross-
examination of the witness and that he would need two more
hearings to complete the cross-examination of this witness.
Accordingly, the next hearings are fixed on 08.01.2009 at
03.00 P.M. and on 15.01.2009 also at 03.00 P.M. The gap
between these two dates is given in view of the request made
by Mr.Bhatia, Learned Advocate for the Claimant. It is,
however, directed that if the cross-examination of this witness
is still not completed on 15.01.2009, the cross-examination of
this witness will stand as completed on that day."
27 As 8.1.2009, was declared a holiday to make up for 8.1.2009 on
15.1.2009 the next hearing was fixed on 22.1.2009. As per the original
direction, the cross-examination should have concluded on 22.1.2009. On
22.1.2009 the Arbitrator fixed another hearing on 29.1.2009. On 29.1.2009
KJ 23/52
24 ARBP734.10.doc
the learned Arbitrator recorded that in view of his earlier direction regarding
conclusion of cross-examination and since the cross-examination has still
not been completed, the same was treated as closed. The learned Arbitrator
also recorded that the petitioner's counsel has handed over an application
dated 29.1.2009 ( for re-calling the order, closing cross-examination) which
was taken on record and will be dealt with in the award. The noting of the
Arbitrator reads as under :-
"[Per Arbitrator : Mr.Bhatia, Learned Advocate for the
Claimant states that he has still not completed the cross-
examination of the witness. In view of my earlier direction as
regards completion of the cross-examination and since
Mr.Bhatia has not yet completed the cross-examination at the
close of today's meeting, the cross-examination of the witness
is treated as closed. The meeting started at 03.30 P.M. and
has ended at 05.30 P.M.]
Mrs.Malvankar states that the Respondents have no further
witness to be cross-examined and as such recording of
evidence on behalf of the Respondents is closed.
At this stage Mr.Bhatia, Learned Advocate for the Claimant
hands over an application dated 29.01.2009. The
Application is taken on record and it shall be dealt with in the
Award.
Adjourned for arguments.
Mr.Bhatia is directed to commence the arguments on behalf
of the Claimant first.
Adjourned to 25.03.2009 at 11.30 A.M. at the same venue."
28 As regards the submission of the counsel for the petitioner that the
Arbitrator has not dealt with this application dated 29.1.2009, it is not
KJ 24/52
25 ARBP734.10.doc
correct at all. In the award, I find in paragraph-34 of the impugned award
that the Arbitrator has dealt with the same.
29 This Court in the matter of 4Yashpal Jashhai Parikh Vs. Rasiklal
Umedchand Parikh, 318, has held that a Court always has the discretion as
to how far the cross-examination will go or how long it may continue.
Paragraphs-3 & 7 read as under :-
"3 However that may be, the principle is, I think,
indisputable that the Court has, and should have, a
discretion in controlling the cross-examination, and while
the Court will allow reasonable latitude to an advocate or
counsel to cross-examine a party or a witness, it should
always be remembered that the Court has an undoubted
control and 3 discretion in the matter of controlling the
cross-examination of a party by counsel of the opposite
party.
7 In the present case the record shows that the opponent has
been cross-examined so far for a period of 13 hours and that
the applicant has been given a further period of four or five
hours within which to complete the cross-examination of the
opponent. If the grievance is that the applicant has not been
given a proper opportunity, I must - say that that grievance
is entirely unfounded. If it is suggested that not even the
fringe of the case has so far been touched, it would not be
unfair to say that the right of the cross-examination has not
been properly exercised and in this particular case I am
satisfied that the learned Magistrate, who is a Magistrate of
experience, has, looking to the record of the case, justifiably
asked counsel for the applicant to complete the cross-
examination, by 5 p.m. on 30-11-1954.
4 1955 AIR (Bom) 318
KJ 25/52
26 ARBP734.10.doc
While, therefore, I quite agree that the Court should not as a
rule impose a particular time limit as regards the cross-
examination of a party or a witness, I am unable to assent to
the proposition that the Court has no discretion or control in
such a matter. Obviously, the Court must have such power.
Otherwise, the work of the Court would be impossible. On
the whole, therefore, I am satisfied that the order made by
the learned Magistrate is not open to any exception and that
there is no ground to interfere with that order.
30 In the matter of 5Makhan Lal Bangal Vs. Manas Bhunia & Ors., the
Apex court in paragraph-26 has stated as under :-
"An election petition is not a dispute between the petitioner
and respondent merely; the fate of the constituency is on trial.
A Judge presiding over the trial of an election petition, and
any trial for the matter of that, needs to effectively control
examination, cross- examination and re-examination of the
witnesses so as to exclude such questions being put to the
witnesses as the law does not permit and to relieve the
witnesses from the need of answering such questions which
they are not bound to answer. Power to disallow questions
should be effectively exercised by reference to Sections 146,
148, 150, 151 and 152 of the Evidence Act by excluding
improper and impermissble questions. The examination of the
witnesses should not be protracted and the witness should not
feel harassed. The cross- examiner must not be allowed to
bully or take unfair advantage of the witness. Though the
trials in India are adversarial, the power vesting in the court
to ask any question to a witness at any time in the interest of
justice gives the trial a little touch of its being inquisitorial.
Witnesses attend the court to discharge the sacred duty of
rendering aid to justice. They are entitled to be treated with
respect and it is the judge who has to see that they feel
confident in the court. In Ram Chander Vs. State of Haryana
AIR 1981 SC 1036 this Court observed,
5 (2001) 2 Supreme Court Cases 652
KJ 26/52
27 ARBP734.10.doc
". . . . . . . to be an effective instrument in dispensing justice,
the presiding judge must cease to be a spectator and a mere
recording machine. He must become a participant in the trial
by evincing intelligent active interest. . . ."
An alert judge actively participating in court proceedings with
a firm grip on oars enables the trial smoothly negotiating on
shorter routes avoiding prolixity and expeditiously attaining
the destination of just decision. The interest of the counsel for
the parties in conducting the trial in such a way as to gain
success for their respective clients is understandable but the
obligation of the presiding judge to hold the proceedings so as
to achieve the dual objective __ search for truth and
delivering justice expeditiously __ cannot be subdued.
Howsoever sensitive the subject matter of trial may be; the
court room is no place of play for passions, emotions and
surcharged enthusiasm."
31 The Delhi High Court in the matter of 6R.K.Chandolia Vs. CBI &
Ors. (un-reported) has in paragraph nos.15 to 20 stated as under :-
"15 Section 137 gives a statutory right to the adverse party to
cross- examine a witness. Section 138 only lays down the
three processes of examination to which a witness may be
subjected. It does not deal with the admissibility of the
evidence. It also provides that the examination and cross-
examination must relate to relevant facts, but the cross-
examination need not be confined to the facts to which the
witness testified in his examination-in-chief. Under this
Section, the cross-examination can go beyond the facts
narrated in examination-in- chief, but all such questions must
relate to relevant facts. It is not that under the right of cross
examination, the party will have the right to ask reckless,
irrelevant, random and fishing questions to oppress the
witness. The "relevant facts" in cross examination of course
have a wider meaning than the term when applied to
examination-in-chief. For instance, facts though otherwise
irrelevant may involve questions affecting the credit of a
witness, and such questions are permissible in the cross
6 HIGH COURT OF DELHI AT NEW DELHI W.P. (CRL.) 225 OF 2012 decided on 11.4.2012.
KJ 27/52
28 ARBP734.10.doc
examination as per Section 146 and 153 but, questions
manifestly irrelevant or not intended to contradict or qualify
the W.P.(Crl.) 225/2012 Page 8 of 16 statements in
examination-in-chief, or, which do not impeach the credit of a
witness, cannot be allowed in cross examination. It is well-
established rule of evidence that a party should put to each of
a witness so much of a case as concerns that particular
witness.
16. It is experienced that sometimes, cross examination goes
rambling way and assumes unnecessary length and is
directed to harass, humiliate or oppress the witnesses. It is
also experienced that the Courts often either due to timidity
or the desire not to become unpopular or at times, not
knowing its responsibilities and powers, allow the reckless,
scandalous and irrelevant cross examinations of witnesses. In
fact, in such situations, the court has the power to control the
cross examination. The court has a duty to ensure that the
cross examination is not made a means of harassment or
causing humiliation to the witness. While allowing latitude in
the cross examination, court has to see that the questions are
directed towards the facts which are deposed in chief, the
credibility of the witness, and the facts to which the witness
was not to depose, but, to which the cross examiner thinks, is
able to depose. It is also well-established that a witness
cannot be contradicted on matters not relevant to the issue.
He cannot be interrogated in the irrelevant matters merely for
the purpose of contradicting him by other evidence. If it
appears to the Judge that the question is vexatious and not
relevant to any matter, he must disallow such a question.
Even for the purpose of impeaching his credit by
contradicting him, the witness cannot be put to an irrelevant
question in the cross examination. However, if the question is
relevant to the issue, the witness is bound to answer the same
and cannot take an W.P.(Crl.) 225/2012 Page 9 of 16 excuse
of such a question to be criminating. That being so, it can be
said that a witness is always not compellable to answer all
the questions in cross examination. The court has ample
power to disallow such questions, which are not relevant to
the issue or the witness had no opportunity to know and on
which, he is not competent to speak. This is in consonance
KJ 28/52
29 ARBP734.10.doc
with the well-established norm that a witness must be put that
much of a case as concerns that particular witness.
17. A protracted and irrelevant cross examination not only
adds to the litigation, but wastes public time and creates
disrespect of public in the system. The court is not to act a
silent spectator when evidence is being recorded. Rather, it
has the full power to prevent continuing irrelevancies and
repetitions in cross examination and to prevent any abuse of
the right of cross examination in any manner, appropriate to
the circumstances of the case. The court could have such a
power to control the cross examination apart from the
Evidence Act as also the Code of Criminal Procedure. Section
146 though relaxes the ambit of cross examination and
permits the putting of questions relating to the
trustworthiness of the witness, but such questions also must
be relevant for the purpose of impeaching the credit, though
not to the issue. Under the garb of shaking credit, irrelevant
or vexatious questions cannot be allowed, if they do not really
impeach the credit of witness or do not challenge the
evidence given in examination-in-chief relating the matter
under enquiry. It is established proposition of law that if the
question is directly relevant i.e. if it relates to the matters,
which are points in issue, the witness is not protected to
answer even it amounts W.P.(Crl.) 225/2012 Page 10 of 16 to
criminating him but, if it is relevant only tending to impeach
the witness's credit, the discretion lies with the Judge to
decide whether witness shall be compelled to answer it or
not. Generally, he will not be allowed to be contradicted
except in the cases under Section 153. In fact, Section 132,
146, 147 and 148 embrace whole range of questions, which
can properly be addressed to witness and these should be
read together.
18. Thus, it can be said that the relevancy of evidence is of a
two- fold character; it may be directly relevant in the bearing
on, elucidating, or disproving, the very merits of the points in
issue. Secondly, it can be relevant in so far as it affects the
credit of a witness. As regard the relevancy relating to a
credit of a witness, the court has to decide the same under
Section 148 whether the witness is to be compelled to answer
or not or to be warned that he is not obliged to answer. The
KJ 29/52
30 ARBP734.10.doc
Judge has the option in such a case either to compel or
excuse. The provisions of Section 148-153 are restricted to
questions relating to facts which are relevant only in so far as
they affect the credit of the witness by injuring his character;
whereas some of the additional questions enumerated in
Section 146 do not necessarily suggest any imputation on the
witness's character. When we talk of the relevancy of the
questions relating to character, unnecessarily provocative or
merely harassing questions will not be entertained in this
class of questions.
19. As per Section 151 and 152, the questions which are
apparently indecent or scandalous or which appear to be
intended to insult or W.P.(Crl.) 225/2012 Page 11 of 16 annoy
or are offensive in form, are forbidden. Such questions may
be put either to shake the credit of witness or as relating to
the facts in issue. If they are put merely to shake the credit of
the witness, the court has complete dominion over them and
to forbid them even though they may have some bearing on
the questions before the court. But, if they relate to the facts
in issue or are necessary to determine the facts in issue
existed, the court has no jurisdiction to forbid them. The
court cannot forbid indecent or scandalous questions, if they
relate to the facts in issue. It is because what is relevant
cannot be scandalous.
20. Having seen that though the ambit of cross examination of
a witness goes beyond his examination-in-chief, but there has
to be relevancy of the questions as regard to the facts or to
the creditworthiness of a witness. The counsels must exercise
their right of cross examination in a reasonable manner. They
have their obligations no less than their privileges. They have
no right of unlimited arguments or examination of witnesses,
but only so much as would be relevant and reasonably
necessary in the particular matter. When a Judge exercises
his discretion and disallows a question being irrelevant on
any count, the cross examiner should accept the court's
rulings without any demur or display of temper. The court is
entitled to expect such like acceptance of a ruling on the part
of the counsel.
KJ 30/52
31 ARBP734.10.doc
32 Though the Evidence Act is not applicable to Arbitration under the
said Act, certainly the principles therein can be applied by the Arbitrator
while hearing a matter. Therefore, the learned Arbitrator undoubtedly had
the power to control and had discretion in the matter of controlling the
cross-examination of the party by counsel of the opposite party. In the
present case, the learned Arbitrator has not terminated the cross-examination
abruptly but permitted the Advocate for the petitioner to cross-examine the
2nd respondent who was the witness for the respondents for 37 hearings
across 3 & ½ years. On 7.3.2008 the learned Arbitrator had made a note that
the petitioner's counsel had cross-examined the respondents' witness from
9.8.2005 and more than 1000 questions running into 200 pages had been
recorded. On 26.11.2008 the counsel for the petitioner was asked how long
he will take and he said he will make his endeavour to finish in the next 2
hearings. In the next hearings again the counsel for the petitioner was
asked, and he said he will take 2 more hearings. It is recorded in the
Minutes, "Mr.Bhatia........... that he would need two more hearings to
complete the cross-examination of the witness." On the next hearing on
15.1.2008 though as recorded earlier the counsel was to finish in one more
hearing, he was given 2 more hearings and then only the Arbitrator closed
the cross-examination. In my view, therefore, the Arbitrator correctly
KJ 31/52
32 ARBP734.10.doc
exercised the powers in the facts of the present case. The order made by the
learned Arbitrator is not open to any exception and there is no ground to
interfere on that basis with the award.
33 As regards the 3rd part of the petitioner's grievance, non consideration
of the petitioner's claim, the counsel for the petitioner submitted that though
initially the petitioner sought specific performance of the petitioner's
agreement, the petitioner has also made an alternate claim for refund and in
the alternative, compensation. As regards compensation- the counsel
submitted that they are not pressing for it and they are pressing their claim
only for refund.
34 It is the case of the petitioner that the Arbitrator in paragraph nos.10
& 11 of the award records his submission with respect to the claim of the
petitioner for refund but in paragraph-27 merely records the respondents'
contention that the amount of Rs.31.75 lacs ( they were admitted receipt of
at least Rs.31.75 lacs) stand forfeited without in any manner rendering any
finding in respect thereof. It is the case of the petitioner that in paragraph-
27, as observed, the Arbitrator has recorded that the respondents' admit
having received Rs.31.75 lacs but still the Arbitrator has not directed refund
of the amount when he has come to a conclusion that the petitioner's
KJ 32/52
33 ARBP734.10.doc
agreement was not valid and further has erroneously recorded that the
petitioner has not proved that the petitioner has made any payment to the 1 st
respondent or the respondents and hence not entitled to any relief even
alternative relief to the relief of specific performance as prayed for or
otherwise. For refund, the counsel also relied on section 65 and section 70
of the Contract Act 1872. The counsel submitted that their claim for refund
has been rejected without any reason and in any event wrongfully rejected.
In my view, the learned Arbitrator has not made any error in as much
as the petitioner's entire claim was based on the petitioner's agreement under
which the petitioner claimed to have made payment. The petitioner's case
was not based on the respondents' agreement. When the Arbitrator has
come to a conclusion that the petitioner's agreement based on which the
petitioner claimed to have made payment of which he was seeking refund
itself does not exist and such an agreement was never entered into, the
question of refund under the petitioner's agreement did not arise. Nothing
stopped the petitioner from being truthful and raise the claim on the basis of
the respondents' agreement. In my view, the Arbitrator was correct in
coming to a conclusion that the plaintiff was not entitled to any refund.
36 As regards sections 65 & 70 of the Contract Act, again the basis of
KJ 33/52
34 ARBP734.10.doc
the petitioner's claim being under the petitioner's agreement, the Arbitrator
was justified in rejecting petitioner's claim. The Arbitrator having
considered the evidence has given his reasons in paragraph-33 of the award
which reads as under :-
"The evidence on record establish that the said alleged
Agreement for Sale of the said property in its entirety relied
upon by the Claimant, a Xerox copy of the alleged photocopy
thereof is annexed as Annexure `B' to the Statement of Claim
filed, is neither genuine nor valid, but is a false and
fabricated document. Since the Claimant has not established
or proved existence of a valid, legal, subsisting, binding
and/or enforceable at law Agreement for Sale of the said
property in its entirety as alleged by the Claimant, the
question of the Claimant being entitled to the specific
performance of such alleged agreement or any relief
thereunder does not arise. The Claimant has not proved that
the Claimant made any payments to the 1 st Respondent or the
Respondents pursuant to the alleged Agreement for Sale of
the said property in its entirety and as such, the Claimant is
not entitled to any relief even alternative to the relief of
specific performance as prayed for or otherwise."
37 The counsel for the petitioner relied upon the judgment in the matter
of 7Satgur Prasad Vs. Har Narain Das, to submit that section 65 of the
Indian Contract Act, 1872 will apply to a contract held to be void. There is
no dispute with this preposition because section 65 reads as under :-
"65. Obligation of person who has received advantage
under void agreement, or contract that becomes void -
When an agreement is discovered to be void, or when a
contract becomes void, any person who has received any
advantage under such agreement or contract is bound to
7 AIR 1932 Privy Council 89
KJ 34/52
35 ARBP734.10.doc
restore it, or to make compensation for it, to the person
from whom he received it."
The relevant words in section 65 are "when an agreement is discovered
to be void, or when a contract becomes void". Therefore, for restoring the
advantage a party received or to make compensation for it to the person from
whom he received it, there has to be first an agreement or a contract which
is discovered to be void or that becomes void. In the present case the
conclusion arrived at by the Arbitrator is that the petitioner's agreement was
non-est and fabricated which means there was no such agreement or contract
ever entered into between the parties in the first place. Therefore, certainly
section 65 will not apply and the Arbitrator was correct in arriving at that
conclusion.
38 The Privy Council in 8Mohori Bibee & Anr. Vs. Dhurmodas Ghose
has held that section 65 of the Contract Act starts from the basis of there
being an agreement or contract between competent parties and has no
application of the case in which there never was and never could have been
any contract. This decision has been followed by a Division Bench of this
Court in 9Motilal Mansukhram Vs. Maneklal Dayabhai. Therefore, the
8 (1902-03) 30 Indian Appeals 114
9 AIR 1921 Bom 147 (1)
KJ 35/52
36 ARBP734.10.doc
petitioner's agreement having been held to be a fabricated and got up
document, the same never existed and section 65 would thus not apply.
39 The counsel for the petitioner also relied upon the State of West
Bengal Vs. M/s.B.K.Mondal and 11Ram Pratap Kamalia Mills Vs. State of
Bihar, to submit that under Section 70 of the Contract Act 1872, where a
person lawfully does anything for another person or delivers anything to him
not intending to do so gratuitously and such other person enjoys the benefits
thereof, the later is bound to make compensation to the former, in respect of
or to restore the thing so done or delivered. Again there is no dispute on this
preposition.
40 First of all section 70 is a provision under which a claim for
compensation may be made. In the present case, the petitioner as recorded
in paragraph-11 of the award that ".........claimant has not pressed his claim
for damages as prayed in ........."cannot now seek to re-open the same on
the basis of section 70. Even in this court, Shri Purohit stated that petitioner
is not pressing any claim for compensation. In my view,the learned
Arbitrator has rightly held that Section 70 has no application to the facts of
the present case. The claim under Section 70 was not even pleaded but still
10 AIR 1962 Supreme Court 779
11 AIR 1963 PATNA 153
KJ 36/52
37 ARBP734.10.doc
the learned Arbitrator considered the oral submissions and rejected the
claim. In 12M/s. Hansraj Gupta & Co. Vs. Union of India, the Apex Court
has held that the conditions for the applicability of this section must atleast
be set out in the pleadings and proved. Section 70 of the Contract Act
enables the person who supplied goods or rendered some services not
intending to do so gratitiously to claim compensation from the person who
enjoys of the benefits of the supply made or services rendered. It is a
liability which arises on equitable ground even though express agreement or
contract may not be proved. Paragraph-12 of the said judgment in Hansraj
Gupta (supra) reads as under :-
"12. We may now turn to the plaintiff's claim to the benefit of
Section 70 of the Contract Act put forward in this Court for
the first time. It was urged, on the strength of Piloo
Dhunjishaw Sidhwa v. Municipal Corporation of the City of
Poona , that, so long as the claim is there, this Court is not
precluded from applying Section 70 of the Contract Act for
the first time even on appeal by special leave. We, however,
think that the conditions for the applicability of the Section
must atleast be set out in the pleadings and proved. As
already noticed above the plaintiff has not said anywhere in
the plaint that any supplies were made by the plaintiff to the
Army authorities. On the other hand, the assertion is that the
supplies were made by the contractor (defendant No. 2).
Section 70 of the Contract Act enables the person who
actually supplies goods or renders some services, not
intending to do so gratuitiously, to claim compensation from
the person who enjoys the benefit of the supply made or
services rendered. It is a liability which arises on equitable
grounds even though express agreement or a contract may
not be proved.
12 (1973) 2 Supreme Court Cases 637
KJ 37/52
38 ARBP734.10.doc
41 In this case there is no such pleadings let alone the same being
proved. The Apex court in 13Devi Sahai Palliwal Vs. Union of India & Anr.
has held that when there is no allegation in the plaint to support any
pleading under section 70 of the Indian Contract Act, the claim should not
be entertained.
In 14C.I.Abraham Vs. K.A.Cheriyan a Division Bench of the Kerala
High Court held that section 70 of the Contract Act has 3 ingredients and all
3 have to be pleaded and proved. Otherwise, claim under Section 70 cannot
be entertained. The Kerala High Court held that even if a valid contract
may not be existing, section 70 of the Contract Act may still be applied but
there must be evidence and circumstances to hold that a lawful relationship
existed between the two parties and one of the parties rendered services to
the opposite party not intending to do so gratuitously and that action of the
opposite party has been benefited. But at the same time what is required is
each of the 3 ingredients has to be specifically pleaded and proved and in
this case it is not so. Paragraph-8 of CI Abrahim (supra) reads as under :-
"8. The learned counsel for the appellant next contended that
the appellant (defendant) who rendered service to the plaintiff
13 (1976) 4 Supreme Court Cases 763
14 AIR 1986 Ker 60
KJ 38/52
39 ARBP734.10.doc
and thereby benefiting him is at any rate entitled to
compensation as provided under Section 70 of the Contract
Act. Section 70 of the Contract Act provides that where a
person lawfully does anything for another person, or delivers
anything to him, not intending to do so gratuitously, and such
other person enjoys the benefit thereof the latter is bound to
make compensation to the former in respect of, or to restore,
the thing so done or delivered. Learned counsel for the
appellant contended that terms of Section 70 are wide enough
and the court can apply the same with discretion in
appropriate cases and so far as this case is concerned the
court should interfere to do substantial justice between the
parties. Learned counsel for the plaintiff argued that so long
as there is no evidence to show that defendant rendered
service to the plaintiff not intending to do gratuitously,
Section 70 cannot have any application. Evidence in the case
would show that plaintiff who was in Ethiopia, was helped by
his relative the deceased in the purchase of the property and
later in the collection of rent. But, there is hardly any evidence
to show, that at any time defendant informed the plaintiff that
he has been rendering the service not intending to do so
gratuitously. Section 70 of the Contract Act applies to cases
irrespective of any contract or agreement where a person
lawfully does for another person or delivers anything which
was never meant to be gratuitous and the other person has
enjoyed the advantage. The three essential conditions for
invoking Section 70 are :
(1) The goods are to be delivered lawfully or something has to
be done for another person lawfully;
(2) The thing done or the goods delivered must be done or
delivered not intending to do so gratuitously; and (3) the
person to whom the goods are delivered enjoys the benefit
thereof.
It is needless to say when all the above three ingredients are
pleaded and established in a case, Section 70 of the Contract
Act can be invoked. So far as the case in hand is concerned,
the second condition has not been .established by the
appellant. There is not a single document or other evidence to
show that plaintiff was made aware by the defendant that he
was rendering service not intending to do so gratuitously".
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43 The Apex court in the matter of 15Union of India Vs. Sita Ram has
held in paragraph-6 as under :-
6. The three ingredients to support the cause of action
under section 70 of the Indian Contract Act are: First,
the goods are to be delivered lawfully or anything has to be
done for another person lawfully. Second, the thing done or
the goods delivered is so, done or delivered "not intending to
do so gratuiously". Third, the person to whom the goods are
delivered "enjoys the benefit thereof". It is only when the
three ingredients are pleaded in the plaint that a cause of
action is constituted under section 70 of the India Contract
Act. If any plaintiff pleads three
ig ingredients and proves
the three features the defendant is then bound to make
compensation in respect of or to restore the things so done
or delivered.
44 In 16Amar Chand Butail Vs. Union of India, it is held that indirect
benefit is not enough for a claim under Section 70. Paragraph nos. 27 & 29
of the said Judgment read as under :-
"27 In order to attract the aforesaid section three
conditions must be satisfied by the person seeking relief, (i)
He must have lawfully done something for another or
delivered something to him. (ii) He must not have intended to
do so gratuitously, (iii) That other person must have enjoyed
the benefit. The section will not apply if any of the aforesaid
three conditions is not satisfied. Thus where a person merely
derives a benefit without the person seeking compensation
having done anything for him or having delivered anything to
him, the section will not come into play. In the instant case
15 (1976) 4 Supreme Court Cases 505
16 AIR 1962 HP 43
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41 ARBP734.10.doc
respondent No. 1 did not deliver stocks of foodgrains or any
money to the appellants in connection with the disputed
transactions. The sums of money paid by R. B. Jodha Mull
cannot be said to have been paid on behalf or for the use of
respondent No. 1.
29 I, therefore, hold that the appellants were indirectly
benefited to the extent of Rs. 24,198/8/3 and Rs. 37,669/3/6
but that by itself is not sufficient to clothe respondent No. 1
with the right to recover back the aforesaid sums of money
from the appellants."
45 In fact the Andhra Pradesh High Court in Nuli Kanaka Rao Vs. T.
Sriranga Venkata Ramalinga Reddy,17 has held that if something is done for
doers benefit and incidently the other persons benefit, the doer cannot claim
for compensation under section 70. Para-12 reads as under :-
"12. It must also in this connection be remembered that the
act done must have resulted in the enjoyment of its benefits of
other persons sought to be held liable. If the act is done for
the doer's benefit or the person sought to be held liable does
not derive any benefit, or that the benefit is both to the
person who does the act and incidentally it also benefits
some other person, it is obvious that no liability can be
fastened under Section 70 of the Act."
46 In this case I do not even find any pleading that monies were paid by
the petitioner to anybody for and on behalf of the respondents and that the
respondents have benefited and hence entitled to compensation under
section 70. In 18Avudayappa Pillai Vs. T.S.Thillai Thandavaraya Pillai, it
17 AIR 1966 AP 297
18 The Law Weekly, 1928 Vol-XXVII pg-406
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is held that if something is done for the benefit of another which the other
person was not bound or required to do so then claim under Section 70
against the other person does not lie. In other words a thing is said to be
done for some one if that person is bound to do himself. If he was not so
bound and enjoyed the benefit, section 70 would not apply.
47 The counsel for the respondents also relied on some other judgments
on this point to submit that section 70 is not applicable and those judgments
are 19Ganapathi Bhatta & Anr. Vs. Sanna Sedu Beari ; 20
Tangya Fala Vs.
Trimbak Daga and Anr.; M.K.Radhakrishnan Iyer & Anr. Vs. The
Secretary of State for India and 22State of Rajasthan Vs. H.V.Hotels (P) Ltd.
48 In view of the above, as there has been no pleadings and no contract
or agreement, the judgments relied upon by the petitioner's counsel in the
matter of Village Panchayat of Jangarddigudem Vs. Kommireddy
Narasayya ; 24Majesty Krishnaya Vs. Ukala Uppayya and 25Modi Vanaspati
Manufacturing Company & Anr. Vs. Katihar Jute Mills (Private) Limited,
though lays down the correct principle on facts again will not be applicable
19 AIR 1930 Mad. 644
20 AIR 1916 Bom. 302
21 44 L.W. 518
22 (2007) 2 Supreme Court Cases 468
23 AIR 1965 Andhra Pradesh 191
24 AIR 1928 Madras 476(1)
25 AIR 1969 CALCUTTA 496
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to this matter.
49 The counsel for the petitioner also relied upon sections 21, 22 & 33
of the Specific Relief Act 1963 to raise his claim for refund. Section 21
relates to plaintiffs' claim for compensation and not to refund and hence
will not be applicable to the present facts of the case because the petitioner
has given up his claim for compensation. Even section 22 will not be
applicable because it provides that any person suing for the specific
performance of the contract for the transfer of immovable property may, in
an appropriate case ask for- any other relief to which he may be entitled
including the refund of any earnest money or deposit paid or made by him
in case his claim for specific performance is refused. First of all the
plaintiff is not asking for refund of any earnest money or deposit paid or
made by him. In any event, section 22 pre-supposes the existence of a
contract. In this case the Arbitrator after considering evidence has come to
a conclusion that the petitioner's agreement on which the petitioner was
relying upon was a forged and fabricated document and that there was no
contract at all in existence as claimed by the petitioner. Therefore, section
22 is also not applicable.
50 As regards section 33 of the Specific Relief Act, again it provides for
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benefit to be restored or compensation to be made when instrument is
cancelled or is successfully resisted as being void or voidable. The present
proceedings are filed by the petitioner for specific performance of the
petitioner's agreement and not for cancellation of the same. Secondly, the
Arbitrator has arrived at a finding after considering the pleadings and
evidence, by giving reason, that the petitioner's agreement is fabricated and
forged and there was no contract/agreement in existence as claimed by the
petitioner as opposed to being void or voidable. In the circumstances, even
section 33 will also not apply.
51 The petitioner relied on a judgment of this court in the matter of
M/s. Heavy Light Industrial Corporation Vs. The State of Maharashtra.
The ratio of the said judgment is that a claim for damages in a suit for
specific performance arises from the same cause of action and that an
amendment of the plaint to include such a claim must therefore, be allowed
but the petitioner having given up its alternative claim for compensation,
the said judgment does not apply to the present case.
52 To conclude, the petitioner's agreement is held to be non-est, forged
and fabricated document. Therefore, payment if any, made by the
26 2000 (2) Bom. CR 121
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petitioner would be only under the respondents' agreement and that was not
the case of the petitioner before this Court when they filed the suit and
when they filed the statement of claim before the Arbitrator. The
petitioner's claim for refund is not under the respondents' agreement. In
fact the plaintiffs' case was pages-2 to 11 of the respondents' agreement
were torn and destroyed. Therefore, the Arbitrator was justified in coming
to a conclusion that the petitioner was not entitled to any refund.
As regards the fourth ground that the disputes are not arbitrable, the
counsel for the petitioner submitted that in light of the contentions raised by
the respondents, the respondents having raised a contention that the
petitioner's agreement was invalid, though the petitioner does not claim to
be so, the disputes are not arbitrable. According to the counsel for the
petitioner if the respondents contended that the agreement was invalid or
void, the same involved in its entirety and the arbitration clause perishes
with the same. Thus the dispute could never been arbitrated upon. The
counsel also relied upon the judgment of the Division Bench of this court in
the matter of 27Mulheim Pipecoatings GmbH Vs. Welspun Fintrade Limited
& Anr. to submit that the arbitration clause was not separable and therefore
has to fall with the agreement. The counsel stated that when it is the case of
27 2014(3) ALL MR 838
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46 ARBP734.10.doc
the respondents that the petitioner's agreement did not exist at all, there
cannot be an arbitration agreement as against the situation where the
petitioner's agreement is considered to be void in which case the arbitration
agreement does not ipso facto or necessarily come to an end.
54 In this case the Arbitrator was appointed by the court as could be seen
from its order dated 15.1.2004 quoted earlier, by consent of both the
parties. The order reads " By consent of both the parties.........." The parties
have consented that the dispute in the suit be referred to arbitration.
Therefore, this submission of the petitioner also cannot be accepted.
55 The counsel for the petitioner also submitted that in view of the
allegation of fraud made against the petitioner, the dispute could not have
been decided by the learned Arbitrator and ought to have been decided by a
civil Court and the learned Arbitrator went ahead with the matter despite
being informed of the same. In fact the petitioner has filed Notice of Motion
No.481 of 2013 seeking that the present dispute be relegated to the civil
Court in Suit No.1163 of 1999 and that the award be stayed pending the
hearing and final disposal of the said Notice of Motion. The said Notice of
Motion is pending. The counsel for the petitioner relied on 2 judgments in
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support of the above contentions viz. judgment of the Apex court in
N.Radhakrishnan Vs. Maestro Engineers & Ors. and the judgment of this
court in the matter of 29India Assurance Co.Ltd. V/s. Nusli Neville Wadia.
On this point also, I am not in agreement with the counsel for the petitioner
in as much as the dispute was referred to arbitration by a consent order
dated 15.1.2004. The petitioner participated in the arbitration proceedings
and thereafter filed the present petition to challenge the award. This was
despite the fact that serious allegation of fraud has been levelled by both the
parties against each other in the application taken out by the respondents
under section 8 of the said Act and in the pleadings before the learned
Arbitrator. In fact, the petitioner has not taken this stand even in the petition
challenging the award. The Notice of Motion has been filed 3 years after
filing of the petition and 9 years after the reference to arbitration.
Therefore, it is quite obvious that this Notice of Motion has been taken out
only as an after-thought and to harass the respondents. Moreover, such a
Notice of Motion is not maintainable because the effect of an order in
favour of the petitioner in the Notice of Motion would mean setting aside
the award. An award can be set aside only under section 34 of the said Act
and the petitioner having filed this petition, cannot file a Notice of Motion
seeking the same relief.
28 2010 (1) SCC 72
29 2011 (2) Bom. C.R. 559
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56 Moreover, the 2 judgments viz. N.Radhakrishnan (supra) and Ivory
properties (supra) are not applicable because both those judgments are
passed prior to reference to arbitration and not after the award. Reading
those judgments, it is clear that there is no bar to refer dispute to arbitration
where there are allegations of fraud but at the same time, it will be within
the discretion of the court in an application under section 8 or section 11 of
the said Act whether the matter be referred to arbitration or not. But in this
case, the Arbitrator was appointed by consent of the parties and the
petitioner has participated in the arbitration proceedings. Therefore, this
submission of the petitioner cannot be accepted.
57 In any event, the Apex court in the matter of Swiss Timings
Limited Vs. Commonwealth Games 2010 Organising Committee has held
that the judgment in the matter of Radhakrishnan (supra) was per in-curium
and did not lay down the correct law and further held that the arbitral
Tribunal will have jurisdiction to examine the plea of fraud raised by the
party. The said judgment in fact holds that "As a pure question of law, I am
unable to accept the very broad proposition that whenever a contract is said
to be void ab-initio, the courts exercising jurisdiction under Section 8 and
30 (2014) 6 Supreme Court Cases 677
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49 ARBP734.10.doc
Section 11 of the Arbitration Act, 1996 are rendered powerless to refer the
disputes to arbitration." The Hon'ble Supreme Court further holds that
"However, it would not be possible to shut out arbitration even in cases
where the defence taken is that the contract is voidable.
58 The Apex court in the matter of National Insurance Company
Limited Vs Boghara Polyfab Private Limited has held that the arbitrator has
jurisdiction to entertain and deal with the issues involving fraud.
59 As regards the judgment of the division bench of this Court in the
matter of Mulheim Pipecoatings GmbH Vs. Welspun Fintrade Limited &
Another (supra) on which reliance was placed by Shri Purohit to canvas the
doctrine of separability in respect of a contract and the arbitration
agreement contained therein, it is necessary to note that in the facts of that
case, the seed of the matter was a petition under section 45 of the
Arbitration Act. It was also an issue before the Hon'ble Court prior to the
reference to arbitration and not after the passing of the award as in the
present case. The said judgment would thus not apply to the facts of the
present case.
31 (2009) 1 Supreme Court Cases 267
KJ 49/52
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60 The fifth point of the petitioner was that the Arbitrator erred in
concluding that the respondents' agreement is the correct agreement.
The counsel for the petitioner submitted that the learned Arbitrator
erroneously proceeded on the premise that the respondents' agreement is the
correct agreement between the parties and comparing the same, proceeded
to hold that the petitioner's agreement is conversely invalid. According to
the counsel the entire approach of the Learned Arbitrator was erroneous
and contrary to law and even on this ground, the impugned award deserves
to be quashed and/or set aside.
As stated earlier, this court has very limited scope under section 34.
This court is not sitting as an appellate court. The Arbitrator is a sole judge
of quantity and quality of evidence and even if the award is passed on little
evidence, it cannot be held to be invalid. The Arbitrator has considered the
evidence before him and the pleadings and has come to the conclusion that
the petitioner's agreement was invalid and non-est. The Arbitrator has also
given his reasons. So this case of the petitioner also requires to be rejected.
62 To conclude, I do not find the action of the Arbitrator to be capricious
or arbitrary or perverse. I do not find any illegality in the award. The
Arbitrator has heard both the parties, considered the pleadings and has
come to the conclusion based on the evidence and correctly so.
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63 In the circumstances, petition requires to be dismissed with costs.
The petitioner is directed to pay a sum of Rs.1,00,000/- as costs of this
petition.
64 In view of the above, the Notice of Motion No.481 of 2013 does not
survive and is disposed.
ig (K.R. SHRIRAM, J.)
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CERTIFICATE
Certified to be true and correct copy of the original signed
Judgment/Order.
(K.G.Jahagirdar)
Private Secretary to His
Lordship Justice K.R.SHRIRAM
KJ 52/52
