Akhil Bhartiya Mahajan Shiromani ... vs Rajinder Kumar Mahajan & Ors
2008 Latest Caselaw 1377 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                  OMP No. 293/2008 and 403/2008

%                                  Date of decision : 19.08.2008

AKHIL BHARTIYA MAHAJAN
SHIROMANI SABHA & OTHERS                               ....... Petitioners
            AND

RAJINDER KUMAR MAHAJAN & ORS
                              Through:     Mr. Harish Malhotra, Senior
                                           Advocate with Mr. Rajender
                                           Agarwal, Mr. Vipul Gupta, Ms
                                           Namita Chaudhry, Advocates for
                                           the Petitioners in OMP No.
                                           403/2008
                                           Mr. T.N. Razdan and Mr. P.P.N.
                                           Razdan,    Advocates   for   the
                                           Petitioners in OMP No. 293/2008

                                  Versus

DHARAMVEER MAHAJAN & ORS                          ....... Respondents
                               Through :   Mr. R.P. Bansal, Senior Advocate
                                           with Mr. Rakesh Mahajan, Mr.
                                           Prabhat Ranjan, Mr. Sheetesh
                                           Khanna, Advocates for the
                                           Respondents in OMP
                                           No. 293/2008 and 403/2008

CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.    Whether reporters of Local papers may
      be allowed to see the judgment?                        YES

2.    To be referred to the reporter or not?                 YES

3.    Whether the judgment should be reported                YES
      in the Digest?


RAJIV SAHAI ENDLAW, J. (ORAL)

1. These petitions have been preferred under Section 34 of the

Arbitration and Conciliation Act, 1996 challenging the „Award‟ dated

28th April, 2008 of Justice R.C. Chopra (retd.). Justice R.C. Chopra

(retd.) was appointed as „Arbitrator/Court Commissioner‟ vide order

dated 29th August, 2007 of the Division Bench of this court in R.F.A.

No. 48/2007.

For expediency, the order dated 29th August, 2007 aforesaid is

set out as hereinbelow.

"Appellant has placed on record an affidavit of Mr. T.R. Gupta, President of the Akhil Bhartiya Mahajan Sheromani Sabha whereby he has given his consent to the Court referring all the disputes to a Court Commissioner/Arbitrator of its choice as also for holding the election to the post of the President of Akhil Bhartiya Mahajan Sheromani Sabha and issue necessary directions in this regard. Mr. Razdan submits that though the affidavit, which has been filed, is of Mr. T.R. Gupta on behalf of the Sabha, he is also authorized to make the statement on behalf of Mr. Rajinder Motiyal also. Mr. Jagdish Raj Mahajan, who was a party before the learned Single Judge, has not raised any objection with regard to the reference to these disputes. Let the statements of both the counsel be recorded.

Statement of Mr. T.N. Razdan, counsel for the appellants and Mr. Rakesh Mahajan, counsel for the respondents has been separately recorded. The affidavit filed by Mr. T.R. Gupta and Mr. Dharamvir Singh are taken on record.

In view of the statements and the affidavits filed, we appoint Justice R.C. Chopra, N-113, Greater Kailash Part-I, New Delhi, a retired Judge of this court to act as the arbitrator/Court Commissioner to do the following:

1. To determine whether life members/working committee members enrolled after the cutoff date i.e. 15.9.1997 are validly enrolled and if so, are they entitled to participate in the elections going to be held.

2. To conduct the elections of the President of the Akhil Bhartiya Mahajan Shiromani Sabha in accordance with the provisions of the bye laws of the Sabha.

The Arbitrator/Court Commissioner is also empowered to decide any other matter incidental to the

above and to take such further steps as are necessary to accomplish the aforesaid object. The fee of the Arbitrator/Court Commissioner shall be fixed by him and shall be shared by both the parties equally. The status quo as of now shall be maintained subject to such further directions as may be given by the Arbitrator/Court Commissioner. The Arbitrator/Court Commissioner is requested to see that the elections are held at its earliest and goodwill and harmony is restored within the community. If possible, the entire exercise be completed within three months.

The appeal stands disposed of in the above terms."

2. Justice R.C. Chopra (retd.) pronounced an „Award‟ on 28th April,

2008 as „Sole Arbitrator‟ and found that out of 413 persons who were

claimed to be members of Akhil Bhartiya Mahajan Shiromani Sabha,

399 were enrolled after the „cut off‟ date and their enrolment appeared

to have been done only to gain undue advantage in election of

President which had not been held after 1997 and held their enrolment

contrary to rules and further held the said persons not entitled to

participate in the election to be held by him. He issued further

directions for holding of elections.

3. The grievance of the senior counsel for the Respondents is that

owing to pendency of these petitions, Justice R.C. Chopra (retd.) is not

proceeding with the holding of elections.

4. OMP No. 293/2008 has been preferred by a party to RFA No.

48/2007 vide order in which appointment of Justice R.C. Chopra (retd.)

was made. OMP No. 403/2008 has been preferred by some of the

persons who were held not entitled to participate in the ensuing

election. The said persons contend that they were not issued notice by

the Arbitrator Justice R.C. Chopra (retd.) and the Award dated 28th

April, 2008 is liable to be set aside on this ground.

5. On 1st August, 2008 when OMP No. 293/2008 had come up before

this court, the counsel for the Petitioners therein was asked to satisfy

as to how the order dated 28th April, 2008 is an „Award‟ within the

meaning of Arbitration and Conciliation Act, 1996 and as to how

petitions under Section 34 of the Act are maintainable with respect

thereto in as much as neither was there any arbitration agreement nor

were the persons whose rights to be decided, parties to R.F.A. No.

48/2007 or before the Division Bench or before Justice R.C. Chopra

(retd.).

6. The counsel for the Petitioners in OMP No. 293/2008 has

submitted that if Justice R.C. Chopra (retd.) was intended to be a Court

Commissioner only within the meaning of Order 26 of the Code of Civil

Procedure, the lis in which he was appointed, that is, R.F.A. No.

48/2007 would not have been disposed of and would have been kept

pending and the Court Commissioner would have been ordered to file

his report in the said proceedings. He has drawn attention to the fact

that petition under Section 17 of the Arbitration and Conciliation Act,

1996 was moved before Justice R.C. Chopra (retd.). He has also relied

upon C.M. Nos. 13848-13849/2007 in disposed of R.F.A. No. 48/2007

and the order dated 9th October, 2007 made therein, copies whereof

have been handed over in the court, to contend that while relief was

pressed in the application that the appointment should be as a Court

Commissioner only and not as an Arbitrator, the application was

withdrawn.

7. The senior counsel for the Petitioner, in OMP No. 403/2008 has

inter alia stated that the Petitioners are willing to treat the „Award‟

dated 28th April, 2008 as an Arbitral Award and are willing to submit to

Arbitration but their grievance is that they were not heard and not

given notice and thus, the Award dated 28th April, 2008 be set aside

and the matter be remitted under Section 34 (4) of the Arbitration and

Conciliation Act, 1996 to the Arbitrator. On query as to how the same

constituted an „Award‟ within the meaning of Arbitration Act, the

senior counsel for the Petitioners has drawn attention to Section 89 of

the CPC and urged that since the Petitioners in OMP No. 403/2008 are

members of the Sabha which had consented to Arbitration, they are

also bound by the Agreement of the Sabha in R.F.A. No. 48/2007 of

appointment of Justice R.C. Chopra (retd.) as Arbitrator.

8. I have enquired from the counsel for the Respondents in both the

petitions, if they are willing to the disputes now raised being resolved

by Justice R.C. Chopra (retd.) already appointed by the Division Bench

but the Respondents are not agreeable.

9. R.F.A. No. 48/2007 was preferred against order dated 2nd July,

2007 of dismissal of CS (OS) No. 1716/2006 filed by the Respondents

herein inter alia for declaration that the enrolment of members was

illegal and to restrain the executives of Sabha from acting. The

Hon‟ble Single Judge on 2nd July, 2007 dismissed the suit with

directions to hold election in accordance with the constitution of the

Sabha.

10. The Division Bench, with a view to resolve all disputes as to who,

as per the constitution of Sabha was a member entitled to vote and who

was not, and further to ensure holding of elections, after recording

consent of parties before it, referred for information to Justice R.C.

Chopra (retd.). The reference was of matter in dispute between the

parties to the suit in appeal. The intent was to bring the controversy to

an end and of the parties being bound by the finding/statement of

Justice R.C. Chopra (retd.) and to expedite holding of elections. The

elections could be held only if there was to be no further challenge to

finding of Justice R.C. Chopra (retd.). Mere use of nomenclature

„Arbitrator‟ will not constitute reference to Arbitration.

11. For the Division Bench to have intended to appoint Justice R.C.

Chopra (retd.) as an Arbitrator, it was essential to have an Arbitration

Agreement within the meaning of Section 7 of the Act, of the parties to

agree to Arbitration. A copy of the statements recorded before the

Division Bench on 29th August, 2007, has been handed over and which

does not disclose any agreement of the parties to Arbitration. For the

court, in exercise of the powers under Section 89 of the CPC also, to

refer the parties to Arbitration, an Arbitration Agreement is a must in

as much as Section 89 (2) (a) provides that the provisions of Arbitration

and Conciliation Act, 1996 shall apply to such a reference. In the

absence of an Arbitration Agreement, I find it difficult to hold that

Justice R.C. Chopra (retd.) was intended to act as an Arbitrator or

could have made an Arbitral Award against which objections can be

preferred under Section 34 of the Act. I, therefore, hold that the

„Award‟ dated 28th April, 2008 is not an Arbitral Award.

12. In Hormusji v. Local Board, Karachi, AIR 1934 Sind 200, the

following passage by Lord Esher in 56 LJQB 530 was quoted with

approval "If it appears from the terms of the agreement, by which a

matter is submitted to any person, that that which he is to do is to be in

the nature of a judicial inquiry, and that the object is that he should hear

the parties and decide the matter upon evidence to be led before him,

there the person is an Arbitrator. But if it appears that the object of

appointing the person was not to settle differences after they had

arisen, but to preclude differences from arising, there the person

appointed is not an Arbitrator. There is an intermediate class of cases

in which a person is appointed to determine disputes after they have

arisen, but is not bound to hear evidence or argument. In those cases it

may be more difficult to say whether the person is a valuer or an

Arbitrator. They must be determined according to the circumstances in

each particular instance by the intention of the parties.".

13. Similarly in M/s Garg Builders and Engineers v U.P. Rajkiya

Nirman Nigam Limited (AIR 1995 Delhi 111). This court was

concerned with the interpretation of the following clauses:

"In the event of any dispute arising out of any of the conditions of this agreement, the matter shall be referred to the then unit incharge, whose decision shall be final and binding on both the parties"

Even though the clause used the expression of reference of

dispute, the court held that the clause was only calculated to prevent

disputes from arising and was akin to "finality clause" making provision

for decision by an expert. No judicial determination of disputes was

called for. The court held that mere agreement between the parties to

be bound by the decision of a person does not constitute him as an

arbitrator.

14. The discussion would be incomplete without reference to the

dicta of the Apex Court in K.K. Modi v K.N. Modi (1998) 3 SCC 573

where reference with approval was made to Commercial Arbitration

2nd Edition by Mustill and Boyd wherein the learned Author has

observed that apart from arbitral tribunals, in the complex modern

state, there exist persons entrusted by consent with the power to affect

the legal rights of two parties inter se in the manner creating legally

enforceable rights, but intended to do so by a procedure of ministerial

and not a judicial nature.

15. In my opinion, the appointment of Justice R.C. Chopra (retd.) vide

order dated 29th August, 2007 by the Division Bench was as a "referee"

within the meaning of Section 20 of the Indian Evidence Act and whose

decision on the matters in disputes referred to him was binding on the

parties to the dispute as an admission.

16. The apex court in Hirachand Kothari vs. State of Rajasthan

[1985 (Supp) (1) SCC 17] has discussed such appointment of Referee

within the meaning of Section 20 of the Evidence Act.

17. In Ram Narain and Others Vs Santosh Kumar and Others

(AIR 1952 Punjab 344) also, the expression „Arbitration Agreement‟

was used but it was held that the Agreement was made not in the

nature of a reference to Arbitration but a reference to a referee and as

such the parties were bound by the finding of the said referee.

18. In my view, the parties before the Division Bench did not intend

to have the disputes arbitrated. If that was to be so, the Division Bench

would not have used the expression "Arbitrator/Court Commissioner"

for Justice R.C. Chopra. Further if the finding of justice R.C. Chopra on

the dispute of membership was not intended to bind the parties, the

Division Bench would not have authorized/empowered Justice R.C.

Chopra to hold the election also.

19. Since I have held that there was no arbitration, these petitions

under Section 34 of the Arbitration Act, 1996 are held to be not

maintainable and dismissed.

                                              RAJIV SAHAI ENDLAW
August 19, 2008                                    (JUDGE)
Smp/M