Delhi High Court
O.P. Kapoor And Ors. vs Raman Kapoor And Anr. on 8 June, 2011
Author: Vipin Sanghi
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 31.05.2011
% Judgment delivered on: 08.06.2011
+ O.M.P. 245/2005
O.P. KAPOOR AND ORS. ..... Petitioners
Through: Mr. Harish Malhotra, Senior Adv.
with Mr. Rajender Aggarwal, Adv.
versus
RAMAN KAPOOR AND ANR. B+ ..... Respondents
Through: Mr. Anil Sapra, Senior Adv. with
Mr. Sanjay Bansal, Adv.
+ O.M.P. 351/2009
O.P. KAPOOR & ORS. ..... Petitioners
Through: Mr. Harish Malhotra, Senior Adv.
with Mr. Rajender Aggarwal, Adv.
versus
RAMAN KAPOOR & ANR. ..... Respondents
Through: Mr. Anil Sapra, Senior Adv. with
Mr. Sanjay Bansal, Adv.
+ O.M.P. 400/2009
SHRI RAMAN KAPOOR ..... Petitioner
Through: Mr. Anil Sapra, Senior Adv. with
Mr. Sanjay Bansal, Adv.
versus
SHRI O.P. KAPOOR B+ ..... Respondent
Through: Mr. Harish Malhotra, Senior Adv.
with Mr. Rajender Aggarwal, Adv.
O.M.P. Nos. 245/2005, 351/2009, 400/2009, 428/2009 & 429/2009 Page 1 of 54
+ O.M.P. 428/2009
SHRI RAMAN KAPOOR ..... Petitioner
Through: Mr. Anil Sapra, Senior Adv. with
Mr. Sanjay Bansal, Adv.
versus
SHRI O.P. KAPOOR & ORS ..... Respondents
Through: Mr. Harish Malhotra, Senior Adv.
with Mr. Rajender Aggarwal, Adv.
+ O.M.P. 429/2009
SHRI RAMAN KAPOOR ..... Petitioner
Through: Mr. Anil Sapra, Senior Adv. with
Mr. Sanjay Bansal, Adv.
versus
SHRI O.P. KAPOOR & ORS. ..... Respondents
Through: Mr. Harish Malhotra, Senior Adv.
with Mr. Rajender Aggarwal, Adv.
CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
1. Whether the Reporters of local papers may
be allowed to see the judgment? : No
2. To be referred to Reporters or not? : Yes
3. Whether the judgment should be reported
in the Digest? : Yes
JUDGMENT
VIPIN SANGHI, J.
1. O.M.P. No.245/2005 is a petition under Section 34 of the
Arbitration and Conciliation Act (the Act) to assail the interim award
dated 01.06.2005 passed by Justice P.K. Bahri (Retd.) in Arbitration
Case Nos.157-160/1999 in relation to the claims raised by the
respondent Sh. Raman Kapoor. The same has been preferred by Sh.
O.P. Kapoor, the father of the respondent/claimant, and his three sons.
2. O.M.P. No.351/2009 is a petition under Section 34 of the Act
to assail the final award dated 23.04.2009 passed by Justice P.K. Bahri
(Retd.) in continuation of the aforesaid interim award. This petition
too, has been preferred by Sh. O.P. Kapoor and his three other sons.
3. O.M.P. No.400/2009 is a petition under Section 34 of the Act
preferred by Sh. Raman Kapoor/claimant before the Arbitral Tribunal,
wherein he seeks modification of the final award dated 23.04.2009 to a
limited extent.
4. O.M.P. Nos.428/2009 and 429/2009 are two petitions
preferred by Sh. Raman Kapoor seeking interim measures consequent
to the passing of the aforesaid interim and final award.
5. At the time of arguments, Sh. Raman Kapoor, the petitioner in
O.M.P. No.400/2009 has not pressed the objections raised by him to
the final award dated 23.04.2009, and the same is, accordingly,
dismissed.
6. I may note that no interim measure was directed in the
aforesaid two petitions under Section 9 of the Act preferred by Sh.
Raman Kapoor. These petitions would be disposed of by passing
appropriate directions after considering the objections to the interim
and final award preferred by Sh. O.P. Kapoor and his three sons.
7. The respondent in O.M.P. Nos.245/2005 and 351/2009, Sh.
Raman Kapoor filed four civil suits in this court, namely, C.S.(OS)
Nos.918/1998, 919/1998, 920/1998 and 921/1998. In three suits, he
sought dissolution of the partnership firms, namely, M/s. Kapoor Sons
& Others, M/s. Continental Films and M/s. Ropas International and
sought rendition of accounts and payment of his share in the three
firms. In the fourth suit, he sought partition of property bearing No.B-
5/13, Safdarjung Enclave, New Delhi and grant of 1/4th share by metes
and bounds, and if it is not possible, sale of the property and payment
of 1/4th share of sale proceeds thereof.
8. During the pendency of these suits, the parties agreed that all
the disputes be adjudicated through arbitration by Justice P.K. Bahri
(Retd.). Vide order dated 01.10.1999, the Court appointed Justice P.K.
Bahri (Retd.) as the sole Arbitrator to adjudicate the disputes.
9. I may at this stage itself note that the petitioners Sh. O.P.
Kapoor and others (in O.M.P. Nos. 245/2005 and 351/2009) admit the
respondent Sh. Raman Kapoor to be a partner in M/s. Ropas
International and M/s. Continental Films, and do not challenge the
interim award and the final award, insofar as they relate to the
aforesaid two partnership firms.
10. In relation to the claim of Sh. Raman Kapoor for 1/4 th share in
house property No.5B/13, Safdarjung Enclave, New Delhi, the learned
Arbitrator rejected the defence of the petitioners Sh. O.P. Kapoor and
his three sons, that Sh. O.P. Kapoor was the real owner of the said
property. The learned Arbitrator relied upon the provision in Benami
Transaction (Prohibition) Act, 1998. I may also note that, though, at
the stage of arguments, Mr. Harish Malhotra, learned senior counsel
appearing for the said petitioners Shri O.P. Kapoor and his three sons,
did seek to raise an argument that the property bearing house
No.5B/13, Safdarjung Enclave, New Delhi was owned by Sh. O.P.
Kapoor, as he had purchased the said plot in the name of his mother
Smt. Tej Kaur, and built upon it with his own money, after perusing the
judgment of the Supreme Court in R. Rajagopal Reddy v. Padmini
Chanderrekharan, (1995) 2 SCC 630, Mr. Malhotra fairly does not
press the claim of Sh. O.P. Kapoor towards the ownership of the said
house property. The ostensible owner of the said property was the
mother of Sh. O.P. Kapoor, viz. Smt. Tej Kaur. It is also not in dispute
that Smt. Tej Kaur made a will dated 29.08.1997 bequeathing the said
house in favour of all the four sons of Sh. O.P. Kapoor, viz. Petitioners
No. 2 to 4 and the respondent Sh. Raman Kapoor, bequeathing 1/4th
share each in favour of the four sons. Consequently, the award made
by the learned Arbitrator insofar as it pertains to house No.5B/13,
Safdarjung Enclave, New Delhi also cannot be successfully challenged,
and to that extent the challenge to the awards is repelled.
11. The real dispute between the parties pertains to the
partnership firm M/s. Kapoor Sons & Co. While, according to the
respondent/claimant, he was a partner of the said firm and was
entitled to seek its dissolution and share in the assets of the said firm,
according to the petitioners, the respondent Sh. Raman Kapoor had
resigned as a partner from the said firm and his account had been
settled by transferring the amounts due to him to the other partnership
firms, and the firm was dissolved on 31.03.1992 and reconstituted as
on 01.04.1992 without Shri Raman Kapoor as a partner. According to
the petitioners, the claimant Sh. Raman Kapoor was not a partner of
Kapoor Sons & Co. in the reconstituted firm. The learned Arbitrator
has returned the finding that the respondent Sh. Raman Kapoor
continued to remain a partner of the firm M/s. Kapoor Sons & Co. and
the resignation attributed to him was not believed by the Arbitral
Tribunal. On this basis, the learned Arbitrator has apportioned the
share of the respondent in the partnership firm M/s Kapoor Sons & Co.
It is this finding, which is the subject matter of argument before me.
12. I am conscious of the limits of the jurisdiction of this court in
going into, or interfering with the findings of the Arbitral Tribunal, and
in particular the findings of fact returned by the tribunal. I am also
conscious of the legal position that the power of the Arbitral Tribunal
includes the power to determine the admissibility, materiality and
weight of any evidence. Therefore, to succeed in its challenge, it
would need examination whether the petitioner has been able to make
out a case falling in one of those exceptional categories, which call for
court‟s interference with the award of the Arbitral Tribunal.
13. I may now set out hereinbelow some of the undisputed
background facts, and various findings on disputed factual issues
returned by the learned Arbitrator:
(a) Sh. O.P. Kapoor was one of the two sons of one Sh. Mela Ram,
resident of Jalandhar City in Punjab. Sh. Mela Ram had four
daughters. Sh. Mela Ram‟s wife was Smt. Tej Kaur. Sh. Mela Ram
had hardly any income to meet the needs of his family. He had
two shops and a residential house of ancestral nature.
Admittedly, the two shops were mortgaged. The monies obtained
were spent on performing the marriage of the daughters of Sh.
Mela Ram. All these events took place prior to Sh. O.P. Kapoor
shifted to Delhi.
(b) After the demise of his father, Sh. O.P. Kapoor carried on the
business of „kabari‟ and also had worked as a waiter in Skylark
Hotel. He alone first came to Delhi and took up employment. He
later brought his family to Delhi and lived in a one room
accommodation.
(c) The learned Arbitrator rejected the plea of Sh. Raman Kapoor,
the respondent/claimant that Sh. O.P. Kapoor had utilized the
ancestral funds to set up his business, by observing that in case
Sh. O.P. Kapoor was so affluent as was sought to be made out by
the claimant, the family would not have struggled to make good
in Delhi.
(d) Sh. O.P. Kapoor married off his three sisters after the demise of
his father. He joined service in Hari Singh & sons, Travel Agents
on shifting to Delhi, and thereafter he started his own travel
agency in the name of General Travel Agency. The residential
plot bearing no.B5/13, Safdarjung Enclave was purchased by Sh.
O.P. Kapoor in the year 1996 out of his own funds, benami in the
name of his mother Smt. Tej Kaur.
The learned Arbitrator rejected the respondent/claimants
version that the said plot was purchased by Smt. Tej Kaur from
her own funds and monies. Smt. Tej Kaur was an illiterate
house lady. There was no other earning member in the family,
apart from Sh. O.P. Kapoor. In the income tax assessment
orders, the properties were shown to have been acquired from
the income of Sh. O.P. Kapoor.
(e) The business of travel agency of Sh. O.P. Kapoor flourished and
from the income of the same, he not only purchased the
residential plot B5/13, Safdarjung Enclave, but also purchased
the plot whereon the cinema hall known as "Kamal Cinema" was
constructed. The cinema plot was purchased for Rs. 11 lacs.
(f) Sh. O.P. Kapoor constituted a firm, namely, Kapoor Sons & Co. in
which name, the said cinema was constructed, and he made his
close family members as partners. The assessment of income
tax was made treating the said property, namely, Kamal Cinema
as belonging to Sh. O.P. Kapoor. The respondent/claimant was
minor at the time when the said properties were purchased and
no capital was contributed by any of the partners. Sh. O.P.
Kapoor initially did not himself become a partner of the said firm,
but he had kept complete control over the same and he alone
operated the bank account of the said firm. He made all his
minor sons, his brother in law, his four sisters and his mother, his
own three daughters as partners in the said firm. The firm
continued, but sisters and daughters, on being married, retired
from the partnership. So also his mother and brother in law.
(g) As on 01.04.1988, Sh. O.P. Kapoor and his four sons, namely
Arun Kapoor, Lalit Kapoor, Raman Kapoor (the respondent) and
Anil Kapoor were the partners of the said firm. The claimant and
his three brothers, each had 21% share in this partnership, and
Sh. O.P. Kapoor had 16% share as a partner. The partnership
deed dated 01.04.1988 was marked as C-1 by the learned
Arbitrator. Even according to the respondent/claimant, the final
say in all business matters relating to the said firm had
throughout, from its inception, been that of the father Sh. O.P.
Kapoor. He further states that he and his three brothers, being
obedient son of their father, throughout worked on the directions
of their father.
(h) No evidence was produced to show that any of the partners,
apart from Sh. O.P. Kapoor, ever contributed any capital in the
said partnership firm. The case of the respondent/claimant that
he actively participated in the business at the cost of his studies,
which were left by him when he was studying in Class X, was
negated by the learned Arbitrator on the basis of the
respondent‟s admission in his evidence that he did his
graduation. Sh. Raman Kapoor also admits that before his
marriage, Sh. O.P. Kapoor set up a firm in the name of Kapoor
Jewellers, of which Raman Kapoor was the sole proprietor. His
plea that no business was done in Kapoor Jewellers was also not
believed, as he admitted that in sales tax returns, some sales
were shown to have been effected and license got renewed for
some years.
(i) The learned Arbitrator believed the version of Sh. O.P. Kapoor
that the business of Kapoor Jewelers was set up as the claimant
Sh. Raman Kapoor‟s father-in-law was having jewellery business
and desired that Sh. Raman Kapoor have his own independent
business before he agrees to marry his daughter with the
claimant.
(j) The brother in law of Sh. O.P. Kapoor (wife‟s brother) had settled
in Lima (Peru) long back. Sh. Arun Kapoor, one of the sons of Sh.
O.P. Kapoor, also shifted to Lima in 1972, or there about. The
version of the respondent/claimant that Sh. Arun Kapoor shifted
in the year 1983 was held to be untrue. Sh. Arun Kapoor
flourished in Lima and acquired 28 cinemas. The claimant,
Raman Kapoor shifted to Lima. He acquired knowledge of
Spanish language while living with his brother Arun Kapoor. Sh.
Arun Kapoor bore the expenses of the claimant Raman Kapoor in
Lima.
(k) The learned Arbitrator rejected the version of the claimant
Raman Kapoor, that he did business so long as he stayed with
Arun Kapoor. Admittedly, due to the differences between the
wives of the two brothers, Sh. Raman Kapoor shifted with his wife
to Bogota. He constituted a firm by the name of Continental DC
Commercio, wherein he and his wife became partners. That firm
was admittedly set up to import goods from India through M/s.
Ropas International. Sh. Raman Kapoor started receiving
consignments of goods sent by M/s. Ropas International from
1990 onwards. The claimant, Sh. Raman Kapoor was not making
payment of such consignments before taking deliveries. In
accordance with the Foreign Exchange Controls and Regulations
applicable in India, the exporter M/s. Ropas International had to
ensure that foreign exchange covering the price of the exported
goods are received from the foreign buyer.
(l) The learned Arbitrator has returned the finding that the claimant
Raman Kapoor did not transmit the sale proceeds in their
entirety in favour of M/s. Ropas International. The version of the
claimant that the goods exported by M/s. Ropas International
were overvalued, has also been rejected by the learned
Arbitrator.
(m) The claimant, admittedly, opened a bank account in Miami, USA
in the name of his wife and transferred his earnings to that
account from which he started receiving monthly interest income
of US Dollars 800. Despite repeated directions of the learned
Arbitrator, the claimant failed to submit a consolidated
statement of account of that bank. The claimant also did not
produce the books of accounts of his own firm maintained in
Bogota. The claimant did not refute the communication of his
father Sh. O.P. Kapoor, wherein Sh. O.P. Kapoor accused the
claimant Sh. Raman Kapoor of not paying the price of the goods
exported by M/s. Ropas International. In his communication
dated 21.12.1992 (CW-1/12), Sh. O.P. Kapoor called upon the
claimant to send Rs.1,20,00,000/- in US dollars/foreign exchange
by 31.12.1992. Sh. O.P. Kapoor was angry with the claimant, as
the claimant was not sending the due amount of the exports.
(n) The claimant had himself produced a document (Mark Z-12),
claimed to be in the handwriting of Shri O.P. Kapoor, which
showed that till 31.12.1995 US Dollars 1,69,500/- remained
outstanding from the claimant.
(o) Though the claimant initially disputed the genuineness of the
price of the goods at which the exports were made by M/s. Ropas
International to the claimants‟ firm in Bogota, when the non-
claimants i.e. the petitioners herein wished to examine the
witnesses to prove the bills issued by M/s. Ropas International,
the claimant Sh. Raman Kapoor made a statement that the
claimant was not in a position to dispute the authenticity of such
bills, and consequently the petitioners herein were not required
to examine any witnesses. In fact, the learned Arbitrator holds
that there is a strong probability that the price list RW-1/PW-2
was made for the benefit of the claimant, so that the goods could
be got released from the customs authorities by paying customs
at lower value of goods as per the price list.
14. I may now record the versions of the parties in relation to the
partnership firm M/s Kapoor Sons & Co., in relation to which there are
serious disputes between the parties.
15. The case of the petitioners was that the respondent-claimant had
successfully established himself in Bogota and expressed a desire to
retire as a partner from the firm M/s Kapoor Sons & Co. This desire
was also conveyed by him in his letter dated 15.02.1992 (R-34). It was
the petitioners‟ case that Smt. Sarla, the mother of the respondent-
claimant left India on 07.02.1992 for Miami, and on 25.02.1992 she
came over to Lima and stayed with her son Shri Arun Kapoor till
20.04.1992. The dissolution deed (R-36), two new partnership deeds
of the two other firms M/s Continental Films and M/s. Ropas
International (R-37 and R-38) were sent to Mr. Arun Kapoor at Lima.
They were signed by him and thereafter Smt. Sarla took them with her
to Bogota on 20.04.1992 and handed over the same to the respondent-
claimant. The respondent-claimant then signed the same, and with a
letter dated 24.04.1992 (R-35) (wrongly typed in the impugned award
as R-34) sent the same by post to Shri O.P.Kapoor, petitioner no.1 at
Delhi. These documents were contemporaneously filed with the
Income Tax authorities, and also with the Registrar of Firms. These
two letters (R-34 and R-35) are on the letter heads of the firm M/s.
Continental DC Commercio belonging to the respondent-claimant.
16. These two letters R-34 and R-35 attributed by the petitioners to
the respondent read as follows:
R-34
"15 February 1992
Respected Papaji,
Peripana,
We are fine here and hope that you will be in good health.
With your kind help and guidance and with the financial
help by Arun I have established my business here and
doing very good business.
As I have already told you number of time that I am not
interested to continue as partner in Kapoor Sons & Co. and
I am requesting you once again to please dissolved the
partnership and send me the dissolution deed for my
signature.
Yesterday I send you the fax, ordering tyre and tubes and
cycle parts. Please see that the same are despatched
immediately as these are in great demand, please do not
worry I will send the payment and will also clear the
pending bills shortly, as you know that I am short of funds
as I have investment the same in setting up showrooms.
How is chaiji, pay my regards to her and also let me know
about her legs, please take care of her. I also understand
from Arun that Kamal's husband is not doing any business,
if he feels you can send him to me at Bogota and I will see
that he is fully settled here. Ask Kamal and Poonam to
drop me a letter as Bela remembers them to much.
I have received one peauget car from Lima and got it
cleared from custom. Please send all the containers to
Buenaventura instead of Bogota as custom duty is less at
duty free port.
Cycle part business is very good because I am the only
Importer from India. There is margin of Hundred percent
after deducting on the cost. My turnover this year will be 3
to 4 million USD.
My family is very happy and settled here solani is going to
the best school in Bogota and every week we go for outing.
We have good Indian friends at the Embassy and there is
no problem for Indian food. This year we are planning to
go to Miami to visit Disney land and after that my wife will
visit India to meet her parents.
Rest everything is fine here.
Your son"
R-35
"24 April 1992.
Respected Papa Ji,
Namastey,
I am sending the following documents/ Papers duly signed
on all the pages.
1. Dissolution deed dated 31.3.92 and M/S Kapoor sons &
Co., duly signed on all the pages.
2. Partnership deed of M/S Continental Films and Ropas
International duly signed on all the pages dated 1.4.92.
Rest if O.K. Business is good. Colour tures and tubes are in
good demand, Please send one container of tyres which I
ordered and faxed to you last week.
As told that I am expending the business and making
investment in real estate showrooms and I will try my level
best to clear all the export bills and will send some money.
I have also requested Sh. Arun Kumar to help me and lend
me some money so that pending bills are cleared.
How is chaiji health, is there any improvement in her legs,
Please take her care, Pay my paripan to chaiji.
How are Poonam and Kamal, pay my regard to them and
love to their childrens. Please see Poonam and Kamal can
come to Bogota Bela remember to them very much.
Rest is find, Please take care of your health and if there is
anything to be done, Please let me know.
I know cinema is closed and the business is very bad in
Delhi, I know you have to pay a lot of money to the
suppliers of cycle parts. As I have invested in Property in
Bogota so I am unable to help you right now.
With kind regards;
Your son"
17. The case of the petitioners was that the respondent-claimant
willingly and voluntarily retired from the firm M/s. Kapoor Sons & Co.
On his visit to India in 1994 and 1997, he confirmed this fact to his
close relatives. The petitioners claimed that the said documents were
duly acted upon contemporaneously, and the capital standing in the
name of the respondent-claimant in the said firm M/s Kapoor Sons &
Co. was duly transferred in his name in the other two firms, namely M/s
Continental Films and M/s Ropas International, wherein he continued to
be a partner. The respondent stopped signing the balance-sheet of the
firm M/s Kapoor Sons & Co. for the period after his resignation. Prior to
that he was regularly signing the accounts of the said firm year after
year. He did not raise the issue, ever, as to why the accounts are not
being sent to him for his signatures, as he had voluntarily resigned.
Else he would have raised a claim and a dispute contemporaneously,
and not after six years of his resignation.
18. On the other hand, the case of the respondent-claimant was that
he had complete faith in his father and brothers, and the affairs of the
family were being managed by his father Shri O.P.Kapoor. His sons,
including the respondent-claimant, obediently followed his wishes
without demur. He further claimed that he had given a number of
blank papers duly signed by him to his father, including blank letter
heads of his firm set up in Bogota. He denied that he had ever
expressed any wish to leave the firm M/s Kapoor Sons & Co. He denied
that the dissolution deed of the said firm, or the partnership deeds of
the other two firms, were ever given to him by his mother. He denied
ever signing the said documents. He admitted his signatures on the
said two letter heads, i.e. Ex. R-34 & Ex. R-35, but pleaded that these
letter heads of his firm were blank when he signed the same. He
pleaded that he gave a blank cheque book duly signed, and that
cheques were filled in by the petitioners herein for payment to M/s
Ropas International. He claimed that he came to know about the
forged documents only in the year 1998 when he was not allowed to
access the business and account books of the firm M/s Kapoor Sons &
Co. by the petitioners herein. The respondent claimant had lodged FIR
No. 159/1999 registered at Police Station, Kashmere Gate against the
petitioners alleging forgery, inter alia, of the aforesaid two letters by
the petitioners by using the typewriter in the office of the firm M/s
Kapoor Sons & Co. and of the dissolution deed in relation to the firm
M/s Kapoor Sons & Co. The case of the respondent-claimant was that
in the opinion of the expert from FSL, contained in the report dated
24.09.1999 bearing No. FSL 99/D-0992, the disputed signatures
attributed to him on the dissolution deed were not made by him. He
further claimed that in the investigation, the disputed documents along
with some admitted signatures of the claimant were got examined
from an expert of CFSL and the reports (CW-4/1, C-1/8) were given.
19. The respondent relied on letters dated 21.09.1992, 15.01.1993
and 20.11.1993 i.e., CW-1/12-2, CW-1/13 and CW-1/14 sent by the
petitioners herein, to submit that the petitioners continued to admit
the respondent-claimant to be a partner in the said firm even after the
alleged resignation and dissolution of the firm M/s Kapoor Sons & Co.
20. He also placed reliance on the letter dated 05.02.1997 (Z-19) of
Shri O.P. Kapoor, asking the respondent-claimant to sign a
Memorandum of Association for converting the partnership firm M/s
Kapoor Sons & Co. into a private company showing the claimant as one
of the shareholders.
21. The learned Arbitrator disregarded the two letters dated
15.02.1992 (R-34) and 24.02.1992 (R-35) relied upon by the
petitioners, which admittedly bore the signatures of the respondent-
claimant. While accepting the case of the respondent-claimant that
these two letters were signed blank along with other documents at the
behest of his father, the Arbitrator observed that it is not unusual for a
son to give signed blank documents to his father for use in business.
22. The learned Arbitrator rejected the defence of the petitioners
that these two letters dated 15.02.1992 (R-34) and 24.04.1992 (R-35)
were typed on the same typewriter as the one, on which another letter
of the year 1997 (sent by the respondent to Sh. Arun Kapoor) was
typed. While rejecting this defence, the learned Arbitrator held that
there was no evidence on record that the said letter of 1997 was
written by the respondent-claimant to Shri Arun Kapoor.
23. At the behest of the respondent claimant, the typewriter in the
office of the petitioners was seized. It appears, the case of the
petitioners was that the aforesaid two letters (R-34 and R-35) were
sent by the respondent claimant from Bogota, where they were typed.
To support this contention of theirs, one of the petitioners namely Sh.
Anil Kapoor, along with his letter, submitted to the investing
authorities, inter alia, a photocopy of a typewritten letter stated to
have been written by the respondent Sh. Raman Kapoor to Sh. Arun
Kapoor for comparison purpose. This document was marked by the
FSL as TA-9.
24. The discussion found in the impugned interim award on this
aspect is material, and the same reads as follows:
"34. The two letters dated 15.2.1992 and 24.4.1992 have
been strongly relied upon by the respondents to show that
in fact the claimant received the deeds for signing and he
himself had sent back such deeds after signing. The
claimant has pleaded that these two letters were signed
blank along with other documents at the behest of his
father. It is not unusual for a son to give signed blank
documents to his father for use in business. An effort was
made to show that these two letters were typed on a same
typewriter on which an other of 1997 was typed. There is
no evidence on the record that this letter was written by
the claimant to Sh. Arun Kumar. The second opinion of the
expert was sought no doubt at the request of the claimant
to know whether the said letters had been typed on a
typewriter of the respondents' office. A typewriter was
seized in that connection. It has come out in the statement
of Sh. Mohan Lal ACP, AW3 the investigating officer that
Sh. Anil had given this letter of 1997 for comparison
purposes. The I.O. had not recorded any statement of the
claimant in regard to authenticity of the said letter.
35. Sh. R.S. Chauhan, Inspector, AW2 who had sent the
queries for the second report has admittedly not taken any
steps to get this letter admitted from the claimant. The
learned counsel for the respondents has argued that this
second report of FSL has been brought on the record by
the claimant and so the claimant should be considered to
have admitted the authenticity of the said letter. There is
no merit in this contention. After all this report was
brought on record to show the status of the police case.
The police had reported the case as untraced but the M.M.
has not agreed with the same and is stated to have issued
summons to the respondents in the case. The witness also
deposed that orally he brought this letter to notice of Sh.
Raman. There is no reason if that was a fact why it was
not recorded in the Police File."
25. The submission of Mr. Malhotra, learned senior counsel for the
petitioners, is that the learned Arbitrator has fallen in serious and
patent error in recording the aforesaid findings with regard to the
dissolution deed and the two letters R-34 and R-35, and there is patent
irregularity in the manner in which the learned Arbitrator conducted
the proceedings. He points out that the two reports prepared by FSL
dated 24.09.1999 & 26.12.2001 had been relied upon, and produced
before the learned Arbitrator by the respondent claimant himself
without any reservations or demur. He has tendered in court the list of
documents, along with documents, filed by the respondent claimant
before the learned Arbitrator on 01.06.2002 which contains, inter alia,
the report of the FSL dated 26.12.2001. Mr. Malhotra submits that
before the Arbitral Tribunal the respondent-claimant did not make any
averment, at any stage of the proceedings, and it was not even argued
by the respondent-claimant that the letter of 1997, i.e., TA-9 of the
respondent claimant addressed to Sh. Arun Kumar, which had been
used as specimen typewriting for purpose of comparison, could not be
used as specimen for the reason that the said document, i.e., TA-9 was
disputed by the respondent-claimant or that the said document, had
not been confirmed by the respondent-claimant to be an admitted
document. Mr. Malhotra, by reference to the arbitral record, points out
that the claimants had started their arguments before the learned
Arbitrator on 16.01.2003 and the arguments stood concluded before
the learned Arbitrator on 02.07.2003. The order passed by the learned
Arbitrator on 02.07.2003 reads as follows:
"July 2, 2003
PRESENT:
Shri Anil Sapra, Counsel for the claimant with the claimant.
Shri Harish Malhotra, Counsel for the respondents with
Respondent No. 4.
Arguments completed. Parties to file written
submissions within two weeks and exchange copies and no
reply to written arguments is to be filed. The date of 5 th
July, 2003 is cancelled. In all 37 hearings have taken
place. The parties shall deposit the balance of arbitration
fee and for two hearings extra for giving award, within two
weeks. Award shall be made in due course."
26. Only the written submissions were to be filed before the learned
Arbitrator. The award was reserved by the learned Arbitrator and the
proceedings stood concluded before him. While the parties were
awaiting the award, on 28.01.2004, the respondent claimant moved an
application to seek interim measures, directing the petitioners herein
to pay the arrears as well as all the future charges towards electricity,
water, etc. in respect of residential premises bearing No. B-5/13,
Safdarjung Enclave, Delhi. The learned Arbitrator issued notice on this
application returnable on 04.02.2004.
27. On 04.02.2004, the learned Arbitrator recorded that he had
sought certain clarifications from the counsel for the parties. The
counsel took time to go through the records before making their
comments. The matter was directed to be taken up on 18.02.2004 at
02:30 P.M.
28. The order passed by the learned Arbitrator on 18.02.2004 is
relevant, and the same reads as follows:
"February 18, 2004
PRESENT:-
Sh. Anil Sapra, Counsel for the claimant with claimant
Sh. Harish Malhotra, Counsel for the respondents with Sh.
O.P. Kapoor and Sh. Anil Kapoor.
I have heard counsel for the parties on the clarifications.
There is serious dispute between the parties as to certain
letters allegedly written by Sh. Raman Kapoor to Sh. O.P.
Kapoor. There is another set of two letters allegedly written
by Raman Kapoor to Sh. Arun Kapoor, these are typed
letters and admittedly bear signatures of Sh. Raman
Kapoor. The crucial question which arises for decision is
whether all those letters have been typed on same
typewriter and whether those letters have been typed on
the dates mentioned on those letters or they have been
brought into existence as alleged by Mr. Raman Kapoor
subsequently after the year 1992. An application was also
moved during the proceedings and also later on another
application praying that expert opinion be obtained with
regard to the age of typing in respect of said letters. For
purpose of identifying the exact documents taken into
consideration by Sh. S Ahmed expert of FSL in his report
dated 26th December, 2001, it has become necessary to
call the said witness to prove the said report and also for
identifying the documents taken into consideration by him
in that report. After the documents are properly identified
the concerned expert on the subject of determining age of
typing would be asked to give opinion later on. The
inspector EOW, Crime Branch, Udyog Sadan who was
investigating the case is also to be called along with all
records in order to verify the statement mentioned in the
expert's report that a particular document TA/9 is an
admitted document. Let these two witnesses be
summoned by the claimant through the court. it is agreed
that these witnesses would be allowed to be cross
examined by both the counsel. I am told that original
document already stand filed with the court of Sh. Gurmeet
Singh, Metropolitan Magistrate, Tis Hazari. The Ahalmad of
the said court be called with the original records on the
date fixed. The next hearing shall take place on 26th April,
2004 at 4:30 P.M. for recording evidence of the said
witnesses".
29. The submission of Mr. Malhotra is that without any basis or
pleading, the learned Arbitrator proceeded to consider the dispute
raised by the respondent claimant with regard to his issuance of the
letter of 1997 (TA-9), for the first time, in the proceedings held before
the learned Arbitrator on 18.02.2004, i.e. after conclusion of the final
arguments and only when the learned Arbitrator re-opened the
proceedings on the basis of the application dated 16.01.2003 filed by
the respondent to seek interim measures. He submits that there was
no occasion to call the witness from the FSL to prove the report dated
26.12.2001, as the said report had been produced by the respondent
claimant and not denied by the petitioners. On the other hand, the
petitioners had sought to challenge the report insofar as it held that
the signatures attributed to the respondent claimant, on the
dissolution deed, were not his. He submits that the earlier applications
moved by the respondent on 01.05.2002 and 08.07.2003 did not relate
to the authenticity of the document TA-9, and were not premised on an
assertion that the said document, namely TA-9, was not an admitted
document. Mr. Malhotra submits that the learned Arbitrator fell in
serious and patent error in embarking upon an inquiry, which had no
basis in pleadings. How and why the learned Arbitrator suddenly, of
his own, started the said inquiry is not clear.
30. The next submission of Mr. Malhotra is that before the learned
Arbitrator AW-2 Sh. R.S. Chauhan, Inspector, appeared and made a
categorical statement to the effect that "I did ask Raman Kapoor
about the document (photocopy TA9) and Raman Kapoor
stated that it related to another transaction having nothing to
do with the issues mentioned in the FIR. I did not ask Raman
about the genuineness of the contents of that documents
(TA9), as I was only concerned with the typing of that
document and not with genuineness or otherwise of the
contents of that letter that is why I did not ask Raman Kapoor
about the contents of the letter. Raman Kapoor did not give any
consent to treat the said document as specimen admitted document
rather it was my own decision to treat that document as specimen
admitted document. Raman Kapoor did not say anything of his own
about the signatures appearing on that document." (emphasis
supplied)
31. Inspite of the aforesaid statement, the learned Arbitrator
disbelieved the statement of the independent witness AW-2 Sh. R.S.
Chauhan, merely on the ground that the fact that Sh. R.S. Chauhan,
AW-2 had asked the respondent Raman Kapoor about the document
TA-9, was not recorded in the police file.
32. Even though there was absolutely no averment ever made by
the respondent claimant at any stage, in any proceeding, to the effect
that TA-9 was not an admitted document and that the same was
wrongly relied upon by the FSL for the purposes of comparison of the
typewriting contained in the two letters dated 15.02.1992 (R-34) &
24.04.1992 (R-35) with that contained in the said letter TA-9, the
learned Arbitrator ventured into that enquiry and permitted the
respondent to wriggle out of his own relied upon document, which
established the fact that the two letters R-34 and R-35 had been sent
by the respondent from Bogota to the petitioners.
33. Mr. Malhotra has also submitted that the learned Arbitrator has
placed blind reliance on the report of FSL dated 24.09.1999 in relation
to the dissolution deed dated 31.03.1992. He submits, on the basis of
cross examination of CW-4 Harsh Vardhan, Senior Scientific Officer
(Documents), FSL, conducted by the petitioners on 16.12.2000, that
the said report is not worthy of reliance, as the witness had accepted
the position that he had not taken photographs of the admitted
signatures, or specimen signatures, or disputed signatures. Thus, no
enlargements were made. The dispute signatures were compared only
with the admitted signatures A-91 to A-96, A-108, A-109 and A-109/1
and specimen signatures S-30 to S-34. He had also admitted his
omission to mention in his report that he had compared the admitted
signatures A-97 to A-107 with the disputed signatures Q-1 to Q-12 and
with specimen signatures S-30 to S-34. Mr. Malhotra questions why
the comparison with other admitted signatures of the respondent was
not done, and this exercise was limited to A-91 to A-96 alone.
34. Mr. Malhotra submits that the learned Arbitrator has accepted
the report of the FSL as the gospel truth without applying his mind to
the merit of it, and without examining it critically, or testing its logic.
35. The next submission of Mr. Malhotra is that in the face of the
undisputed findings returned by the learned Arbitrator, as set out in
para 13 above, it is unthinkable, and would constitute highly
inconsistent conduct on the part of the petitioners, that the petitioner
No. 1 would want to oust the respondent claimant from a share in the
partnership business M/s Kapoor Sons & Co., and that too on the basis
of forged and fabricated documents. He submits that the petitioner
No. 1 throughout his life acted selflessly and in the interest of not only
his children, but even his other relations. He provided in every
possible way for all his children, including the respondent. Where was
the question of his trying to clandestinely deny anything to the
respondent who is an equal son with the other children? Moreover, if
the petitioner No. 1 was in complete control of all businesses and all
the wealth, and all the children, including the respondent were under
his sway at all times, there was no need to resort to any forgery, even
if petitioner No. 1 desired that the respondent resign from Kapoor Sons
& Co. He would have directed the respondent to resign and the
respondent would have obeyed his instructions. He submits that, in
fact, the respondent was a dishonest person. He was a failure in
whatever he did and wherever he went. He could not run the jewellery
business in Delhi. He went to Lima and despite the other son doing
flourishing business, the respondent did not achieve anything while
staying in Lima. He then went to Bogota and started importing various
items from India through M/s Ropas International, but did not bother to
make payment for the supplies received. He then parked his earnings
in USA in an account with his wife and despite repeated directions,
failed to disclose particulars thereof to the Arbitral Tribunal. He then
returned to India, and six years after resigning from Kapoor Sons & Co.,
has again started staking his claim in the said firm as a partner.
36. He submits that the arbitral award is unconscionable. He relies
on the judgment of the Supreme Court in the case of ONGC Limited
Vs. Saw Pipes Limited, (2003) 5 SCC 704. Mr. Malhotra submits that
practicably each and every allegation of the respondent claimant was
disbelieved by the learned Arbitrator. For instance the respondent-
claimant had claimed:
(i) Sh. O.P. Kapoor had utilized the ancestral funds to
set up his business;
(ii) Residential plot bearing No. B5/13, Safdarjung
Enclave was purchased by Smt. Tej Kaur;
(iii) All the partners (who were major at that time) pooled
their resources for acquiring the plot and for building
the cinema;
(iv) The plot on which Kamal Cinema was constructed
was purchased with the funds provided by his
grandmother;
(v) That he/respondent actively participated in the
business at the cost of his studies, which were left by
him when he was studying in Class X;
(vi) The goods exported by M/s. Ropas International were
overvalued; and
(vii) The claimant had sent much more amount than the
actual price of goods and the petitioners had inflated
the prices in the invoices prepared for the purpose of
getting more foreign exchange for getting more
incentive from the Government.
All the aforesaid statements of the respondent were found to be
false by the Arbitrator. He further submits that the respondent
conveniently denied each & every document which went against his
case on the ground that either the said document was signed in blank,
or was forged and fabricated by the petitioners. He refers to the
following instances in this regard:
(i) Claimant/respondent alleged that letters of
15.02.1992 (R-34) and 24.04.1992 (R-35) were typed
fraudulently on blank letter heads which he had
signed and given to his father.
(ii) The respondent alleged that petitioners have also
forged signatures of the claimant for opening some
bank accounts.
(iii) The respondent also alleged that petitioner has
forged and fabricated dissolution deed and form V.
37. He submits that there was no question or occasion to take blank
signed letter heads of the petitioner on the letter head of the firm M/s
Continental DC Commercio, as the said firm had no business dealing in
India whatsoever.
38. He submits that, on the other hand, the learned Arbitrator
accepted the following averments of the petitioners to be true and
genuine.
(i) The residential plot bearing no.B5/13, Safdarjung
Enclave was purchased by Sh. O.P. Kapoor in the
year 1996 out of his own funds benami in the name
of his mother Smt. Tej Kaur.
(ii) The business of travel agency of Sh. O.P. Kapoor
flourished and from the income of the same, he not
only purchased the residential plot B5/13, Safdarjung
Enclave, but also purchased the plot whereon the
cinema hall known as Kamal Cinema was
constructed. The cinema plot was purchased for ` 11
lacs.
(iii) Sh Arun Kapoor, one of the sons of Sh. O.P. Kapoor,
shifted to Lima in 1972 or there about.
(iv) The claimant Raman Kapoor did not transmit the sale
proceeds in their entirety in favour of M/s. Ropas
International.
(v) The price of the goods at which the exports were
made by M/s. Ropas International to the claimants'
firm in Bogota were genuine.
39. Mr. Malhotra submits that the respondent was totally discredited.
In the aforesaid circumstances, the learned Arbitrator, inspite of being
the final Arbiter of facts, could not have disregarded the aforesaid
factual background while concluding that the respondent claimant had
continued to remain partner in the firm M/s Kapoor Sons & Co. He
submits that the learned Arbitrator has disregarded the two letters,
i.e., R-34 and R-35 on the specious plea of the respondent that he had
signed the blank letterheads of his firm in Bogota and given the same
to the petitioners, which were misused by the petitioners. He submits
that it was for the respondent to establish the said plea. There was no
evidence led by the respondent to establish the said claim. The
Arbitrator has proceeded on mere assumption and conjuncture that the
respondent would have signed blank letterheads and given the same
to the petitioners. The said story of the respondent was even more
unbelievable, in the light of his discredited position. He submits that
after the financial year ending on 31.03.1992, the respondent, not
once, singed the accounts and balance sheet of the said partnership
firm, even though earlier he was regularly signing these documents
and reports. This, according to him, was only on account of the fact
that, to his knowledge, he ceased to be a partner in the said firm w.e.f.
01.04.1992. He further submits that this contemporarious conduct of
the petitioners was also ignored by the learned Arbitrator.
40. He submits that in relation to the income-tax assessment of the
firm M/s Kapoor Sons & Co., for the assessment year 1993-94, i.e., year
ending on 31.03.1993, the firm had shown only four partners namely:
Sh. Arun Kumar, Sh. Lalit Kapoor, Sh. Navin Kapoor, Sh. O.P. Kapoor.
He refers to the income-tax return dated 23.10.1993, filed before the
learned Arbitrator in this regard. The name of the respondent claimant
was not shown as one of the partners of the firm.
41. In contrast, in the income tax returns of the firm M/s Kapoor Sons
& Co., for the financial year ending on 31.03.1992, the name of the
respondent claimant was shown as one of the partners. This return
was filed on or before 28.10.1992.
42. On 15.06.1992, the partnership firm forwarded the dissolution
deed dated 31.03.1992 of the firm M/s Kapoor Sons & Co., and the new
partnership deed dated 01.04.1992 to the Manager, Oriental Bank of
Commerce. In this letter it was explicitly stated "Sh. Raman Kapoor
has retired from the partnership and now only under noted four
partners are in the firm: Sh. Arun Kumar, Sh. Lalit Kapoor, Sh. Anil
Kapoor, Sh. O.P. Kapoor."
43. So far as the finding with regard to the signatures of the
respondent on the dissolution deed is concerned, Mr. Malhotra submits
that it was the case of the petitioners that the respondent claimant
was in the habit of making different signatures at different times. He
submits that the learned Arbitrator in para 36 of the award takes note
of this submission of the petitioners and even notes the various
documents placed on record which, admittedly, bore the signatures of
the respondent claimant, which were different. He submits that some
of these admitted signatures were never sent for purpose of
comparison with the respondent‟s signatures on the dissolution deed.
44. Mr. Malhotra submits that the learned Arbitrator adopted double
standards. Even though, in relation to the document TA-9 there was
no averment made by the respondent with regard to its authenticity,
etc., the learned Arbitrator took the initiative himself to somehow
dismiss the petitioners reliance placed on the said document and the
second report of the FSL dated 26.12.2001, whereas, on the other
hand, despite it being pointed out that various admitted signatures of
the respondent were not examined for comparison purposes while
preparing the first report dated 24.09.1999, the learned Arbitrator
brushed aside the said submission by observing that the petitioners
were aware of the opinion of the expert of FSL to the effect that the
disputed signatures (on the dissolution deed dated 31.03.1992) are not
made by the respondent and, therefore, the petitioners could have got
the opinion from any other expert in respect of any other admitted
signatures which, according to them, were similar to the disputed
signatures on the dissolution deed. In the absence of any different
opinion, the learned Arbitrator held that it is not possible to ignore the
expert opinion of FSL.
45. On the other hand, the submission of Mr. Sapra, learned senior
counsel for the respondent claimant, is that the learned Arbitrator has
taken into account various letters/documents authored by the
petitioner No. 1 wherein he admitted the factum of the respondent
being a partner in the firm M/s Kapoor Sons & Co., or which show that
the respondent was a partner in the said firm. These letters are all of
the period after the date of the dissolution deed dated 31.03.1992. He
further submits that M/s Kapoor Sons & Co. was the only firm, of the
three firms, which had valuable assets. The other two firms M/s
Continental Films and M/s Ropas International were not having any
assets. There was no reason for the respondent to retire/resign from
M/s Kapoor Sons & Co. and to continue as a partner in M/s Continental
Films & M/s Ropas International. He further submits that even though
it is claimed that US$ 8,60,000/- & US$ 3,40,000/- are due from the
respondent, no counter-claim for the said amounts was raised by the
petitioners before the learned Arbitrator. He submits that the cheque
of US$ 3.40 Lakhs stated to have been issued by the respondent was
not even deposited by the petitioners, simply because there was no
outstanding due owned by the respondent to the petitioners.
46. Mr. Sapra submits that the arbitral tribunal is the final authority
on issues of fact, and this Court cannot go into the merits to appreciate
the evidence and re-determine the findings of fact. The finding of the
arbitral tribunal that the respondent/claimant continued to remain a
partner of the firm Kapoor & Sons has been arrived at after rejecting
the petitioners reliance placed on Ex. R-34 and R-35, and also by
placing reliance upon the various letters issued by the petitioners post
31.03.1992, which tend to show that the respondent continued to
remain a partner of the said firm. The finding is also based upon the
report of the handwriting expert, wherein he has opined that the
signatures on the dissolution deed dated 31.03.1992 of Kapoor Sons &
Co., which were attributed to the respondent/claimant were, infact, not
his.
47. There can be no quarrel with the proposition that the arbitral
tribunal is the final authority to determine issues of fact and its
findings cannot be overturned or substituted by a Court with its own
while examining the award in proceedings under Section 34 of the Act.
However, the Court can examine whether the mechanism/process
adopted by the learned arbitral tribunal while arriving at its findings is
legal and fair. Therefore, the Court will examine whether the tribunal
has ignored relevant material on record, or whether it has considered
wholly irrelevant material in arriving at its findings. The Court will also
inquire whether the finding has been arrived at after giving adequate,
fair and equal opportunity to the parties or not. The Court would also
consider whether the finding is such that no reasonable person could
arrive at, or is such as to shock the conscience of the Court.
48. In State of Rajasthan v. Puri Construction Co. Ltd., (1994) 6
SCC 485, the Supreme Court, inter alia, observed:
"In recent times, error in law and fact in basing an award
has not been given the wide immunity as enjoyed earlier,
by expanding the import and implication of "legal
misconduct" of an arbitrator so that award by the arbitrator
does not perpetrate gross miscarriage of justice and the
same is not reduced to mockery of a fair decision of the lis
between the parties to arbitration. Precisely for the
aforesaid reasons, the erroneous application of law
constituting the very basis of the award and improper and
incorrect findings of fact, which without closer and intrinsic
scrutiny, are demonstrable on the face of the materials on
record, have been held, very rightly, as legal misconduct
rendering the award as invalid. It is necessary, however, to
put a note of caution that in the anxiety to render justice to
the party to arbitration, the court should not reappraise the
evidences intrinsically with a close scrutiny for finding out
that the conclusion drawn from some facts, by the
arbitrator is, according to the understanding of the court,
erroneous. Such exercise of power which can be exercised
by an appellate court with power to reverse the finding of
fact, is alien to the scope and ambit of challenge of an
award under the Arbitration Act. Where the error of finding
of facts having a bearing on the award is patent and is
easily demonstrable without the necessity of carefully
weighing the various possible viewpoints, the interference
with award based on erroneous finding of fact is
permissible. Similarly, if an award is based by applying a
principle of law which is patently erroneous, and but for
such erroneous application of legal principle, the award
could not have been made, such award is liable to be set
aside by holding that there has been a legal misconduct on
the part of the arbitrator. In ultimate analysis, it is a
question of delicate balancing between the permissible
limit of error of law and fact and patently erroneous finding
easily demonstrable from the materials on record and
application of principle of law forming the basis of the
award which is patently erroneous."
49. In Seth Mohanlal Hiralal v. State of M.P., (2003) 12 SCC
144, a case under the Arbitration Ac, 1940, the Supreme Court referred
to the view in K.P. Poulose v. State of Kerala, (1975) 2 SCC 236,
wherein it had been held that misconduct under section 30(a) has no
connotation of moral lapse. It comprises legal misconduct which is
complete if the arbitrator, on the face of the award, arrives at an
inconsistent conclusion even on his own finding or arrives at a decision
by ignoring the very material documents which throw abundant light
on the controversy to help a just and fair decision.
50. In MD, Army Welfare Housing Organisation v. Sumangal
Services (P) Ltd., (2004) 9 SCC 619, the Supreme Court held that the
Court cannot sit in appeal over the award of the arbitrator, but can
certainly interfere when the award suffers from non-application of mind
or when a relevant fact is ignored or an irrelevant fact not germane for
deciding the dispute is taken into consideration.
51. In Arosan Enterprises Ltd. v. Union of India, (1999) 9 SCC
449, wherein it has been held that where the error of finding of fact,
having a bearing on the award is patent and is easily demonstrable
without the necessity of carefully weighing the various possible
viewpoints, the interference with award based on erroneous finding of
fact is permissible. Similarly, if an award is based by applying a
principle of law, which is patently erroneous, and but for such
erroneous application of legal principle, the award could not have been
made, such an award is liable to be set aside by holding that there has
been legal misconduct on the part of the arbitrator.
52. I am afraid the findings returned by the learned arbitrator in
relation to Ex. R-34 and R-35 cannot be sustained, as, in my view,
there is patent illegality in the manner in which the learned arbitrator
has proceeded to deal with the said documents in the impugned
award. The patent illegality is discernible on a mere reading of the
award, the orders passed by the arbitral tribunal and the documents
placed on record before the arbitral tribunal.
53. In relation to these documents, namely, Ex. R-34 and R-35, the
respondent/claimant had admitted his signatures. He had also
admitted that these two letters were issued on the letterhead of his
firm set up in Bagota under the name and style of M/s. Continental DC
Commercio. His explanation was that he had given blank signed
letterheads to his father, namely, petitioner no.1, on which the
petitioners had created these documents, subsequently by using the
typewriter lying in the office of Kapoor Sons & Co. He had lodged FIR
bearing no.159/99 at police station Kashmere Gate alleging, inter alia,
forgery of the aforesaid two letters by the petitioners. At his behest,
the typewriter in the office of Kapoor & Sons was seized.
54. To counter the aforesaid allegations of the respondent, one of
the petitioners, namely, Sh. Arun Kapoor had submitted before the
investigating officer, a letter stated to have been issued in 1997 by the
respondent/claimant from Bagota. It was the case of the petitioners
that the letters Ex. R-34 and R-35 had been typed out on the same
letterhead with the same type style as the letter issued by the
respondent/claimant in the year 1997 from Bagota.
55. The investigating officer had got the letters Ex. R-34 and R-35
examined by FSL, and for comparison purposes, the letter of 1997,
(attributed to the respondent as having been issued from his office in
Bagota), which was marked as TA-9 was also submitted to the FSL.
The two letters, Ex. R-34 (letter dated 15.02.1992) was marked as TQ-
13 by the FSL, and Ex. R-35 (letter dated 24.04.1992) was marked as
TQ-13/1 by the FSL. Upon comparison of Ex. R-34/TQ-13, and Ex. R-
35/TQ-13/1 with TA-9, the FSL returned a finding on 26.12.2001, "that
the sample typewriting marked TA-9 tally with the questioned
typewritings marked TQ-13 and TQ-13/1 in size, design, relative
location of the corresponding characters/words and also super impose
over each other."
56. Pertinently, the report of the FSL dated 26.12.2001 was
produced before the arbitral tribunal by the respondent/claimant
himself, without any protest, demur or reservations, on 01.06.2002.
When the said report was produced, it was not the
respondent/claimants contention that the specimen document TA-9
was not an admitted document, or that the said document had been
treated by FSL as a specimen/admitted document unilaterally, without
the respondent/claimants being confronted with.
57. Despite my repeated query, the learned senior counsel for the
respondent has not been able to point out even a single averment
made by the respondent/claimant from the entire arbitral record, to
the aforesaid effect, which may have been made before the matter
was fully heard and award reserved by the arbitral tribunal.
58. It is pertinent to note that the respondent had himself moved the
application alongwith supporting affidavit dated 01.05.2002 before the
arbitral tribunal, wherein, in relation to the said two letters, i.e. Ex. R-
34 and R-35, it was claimed that the respondent had signed blank
letterheads in the year 1994 and sent the same to the petitioners and
that sometime in the year 1998, after the disputes arose between the
parties, the petitioners had created the forged documents by using the
same. In this application, it was stated that the original of these letters
are lying deposited in the case FIR No.159/99, Kashmere Gate, Delhi.
The respondent desired the arbitral tribunal to get the age of the print
on the said letters investigated by the CFSL to prove that the said
letters were not typed in the year 1992, and that they were typed in or
about 1998. The prayer made in this application was as follows:
"a) the age of printing on said letters dated 15th
February, 1992 and 24th April, 1992 lying deposited
in the case/FIR No.159/1999, Kashmere Gate, Delhi,
be ordered to be verified by Central Forensic
Scientific Laboratory, in order to determine the age
and period of the said printing."
59. The respondent moved yet another application dated 08.07.2003
(i.e. after the conclusion of the final arguments and reservation of the
award by the learned arbitrator) in which, once again, he referred to
his earlier application of 01.05.2002 "in order to determine the age
and period" of Ex. R-34 and R-35. It was stated in this application as
follows:
"4. That the final arguments in the matter have now been
heard by the Hon'ble Tribunal. It is submitted that if the
Hon'ble Tribunal has any doubt regarding the forgery and
fabrication of the letters dated 15th February, 1992 and 24th
April, 1992 the same may be ordered to be verified by
Central Forensic Scientific Laboratory, or any other Govt.
Approved Agency in order to determine the age and period
of the said letter. It is the contention of Claimant that the
said letters have been fabricated on blank signed letter-
heads, much later than 1992 and around the time when
disputes arose between parties and the AGE OF THE
TYPING on the said letters would prove this fact.
It is therefore most respectfully prayed before this Hon'ble
Tribunal that the application under section 151 C.P.C.
dated 1st May, 2002 may be accordingly decided and
appropriate orders be accordingly passed."
60. What is important to note is that both these applications were
filed by the respondent after the preparation of the report by the FSL
dated 26.12.2001 to the effect that Ex. R-34 and R-35 (TQ-13 and TQ-
13/1 respectively) had the same typewriting as in TA-9 (the letter
stated to have been issued by the respondent/claimant in the year
1997). Despite that being the position, in neither of these two
applications, the respondent/claimant claimed that TA-9 was not an
admitted document, or that it was a forged document, or that the said
document could not be used as a specimen for comparison purposes,
for any reason whatsoever. It is, therefore, abundantly clear that
before the learned arbitrator, there was absolutely no pleading or,
even otherwise, any case set up by the respondent, to contend that
TA-9 was not an admitted document, or that it could not be used as a
specimen for the purposes of comparison of the typewriting style etc.
with Ex. R-34 and R-35.
61. The respondent/claimant, for the purpose of discrediting the
report of the FSL dated 26.12.2001, places reliance on the order
passed by the learned Metropolitan Magistrate on 18.05.2002,
whereby the final/closure report filed by the police was rejected by the
learned Magistrate. However, a perusal of the order dated 18.05.2002
passed by the learned Magistrate shows that the same came to be
passed only on the basis of the final report that the signatures on the
dissolution deed dated 31.03.1992 was not found to be that of the
complainant/respondent herein, and on the ground that he was not in
India at the time of execution of the said document. There is absolutely
no mention in the order dated 18.05.2002 of the report of FSL dated
26.12.2001, which is the report in question.
62. The order of the learned Magistrate dated 18.05.2002 read as
follows:
"Final report is submitted by the police is not acceptable.
From the final report it reveals that the signatures on the
partner-ship deed is not that of the complainant and he
was not in India at that time. Further by getting the
signatures of the complainant the accused have been
benefitted in the partner-ship deed as their share was
increased as a result of retiring of the complainant out of
the partnership.
I take cognizance of the offence u/s 420/468/471 and 120-
B IPC.
Issue summons to the accused persons for 18.09.02."
63. Therefore, there is no merit in the respondents submission that
the learned Magistrate had disbelieved the report of the FSL dated
26.12.2001 while rejecting the final report vide order dated 18.05.2002
passed by the learned Magistrate.
64. It is pertinent to note that for the first time, the
respondent/claimant disputed the letter TA-9 in his written synopsis
filed before the learned arbitrator as late as 15.07.2003, i.e. after the
close of the arguments before the learned arbitrator on 02.07.2003.
The question that arises for consideration is whether a party can make
absolutely new factual averments in his written synopsis, filed nearly
two weeks after the close of the final arguments, even though the said
averments could and ought to have been made at the first available
opportunity, i.e. soon after 26.12.2001. The purpose of filing a written
synopsis is to put in writing, in a summarized form, the arguments
advanced before the adjudicator. The purpose is not to slip in a fresh
factual averment which has never before been contended or raised
during the proceedings. It also needs consideration whether a party
who has himself filed a document without any demur or reservation,
and without claiming that the same is illegal or illegally procured, can
seek to resile therefrom in his written synopsis filed, as aforesaid,
nearly two weeks after the close of the final arguments and reservation
of the award.
65. In my view, the answer to the aforesaid question has to be an
emphatic „No‟. Otherwise, there would be no sanctity in legal
proceedings before an arbitrator. The arbitral tribunal did not have
any pleading before it to embark on an enquiry (and that too suo moto
- as the respondent never asked for reopening of the proceedings to
agitate the aforesaid issue) on the issue whether TA-9 was an admitted
document or not, and whether the same could, or could not, have been
relied upon by FSL for comparison with Ex. R-34 and R-35. Moreover, it
would be highly unfair to the opposite party to be suddenly confronted
with an absolutely new case of the first party, to deal with which, it has
had no opportunity, on the basis of something said for the first time in
a written synopsis filed after the close of the arbitral hearing and
reservation of the award. If the arbitrator permits such a course of
action to be adopted, it would clearly be in violation of the principles of
natural justice, i.e. the rule of audi alteram partem.
66. Unfortunately, that is what has happened in the present case.
After the filing of the written synopsis by the respondent/claimant on
15.07.2003, the learned arbitrator, of his own accord, sought to reopen
the proceedings on the ground of seeking clarification from the parties.
This clarification did not pertain to the case of the parties set out in
their pleadings and to the evidence led before the arbitrator. This
clarification pertained to the brand new case set up by the
respondent/claimant before the arbitrator, for the first time, in the
written synopsis dated 15.07.2003 to the effect that TA-9 was a forged
and fabricated letter.
67. The learned arbitrator, in my view, gravely erred in going into
the issue whether TA-9 was an admitted document or not, and whether
it was validly used for comparison purposes with Ex. R-34 and R-35.
The reference by the learned arbitrator in his order dated 18.02.2004
to the two applications moved during the proceedings by the
respondent, praying for expert opinion with regard to age of typing of
Ex. R-34 and R-35 is also misplaced, as even in these applications, it
was not the respondents case that the specimen letter TA-9 used by
FSL for comparison purposes had not been written by the respondent.
Pertinently, there is no finding returned by the arbitral tribunal with
regard to the age of Ex. R-34 and R-35, and that is not the basis on
which the arbitral tribunal has rejected the petitioners reliance on
these documents. If such a course of action is permitted to be adopted,
a party would, after the close of the arguments start raising as an
afterthought new factual pleas with a view to get out of the weakness
in his case. This would not only place the opposite party in a
disadvantageous position but could also lead to a never ending
exercise as one party would try to better the other with one plea after
another as an afterthought.
68. The patent illegality in the impugned award does not stop with
the reopening of the proceedings to inquire into the authenticity of the
specimen letter TA-9. Shri R.S. Chauhan AW-2, the Inspector who was
an independent witness had clearly stated that he had asked the
respondent Raman Kapoor about the documents TA-9, and Raman
Kapoor had stated that it related to another transaction having nothing
to do with the issues mentioned in the FIR. If the aforesaid statement
of AW-2, Sh. R.S. Chauhan is to be believed, it would constitute an
admission on the part of the respondent, as the respondent had
claimed that the said document TA-9 pertained to another transaction
- meaning thereby that there was another transaction in relation to
which the document TA-9 was written. Pertinently, according to this
witness, the respondent did not deny the document TA-9 as not being
genuine or being forged. Despite this being the position, the learned
Arbitrator has rejected the report of the FSL dated 26.012.2011 on the
premise that the Investigating Officer had not mentioned the factum of
his having shown the document TA-9 to the respondent, Raman Kapoor
in the case diary. In my view, the aforesaid reasoning is, with due
respect, flawed and the same cannot be said to be a mere question of
appreciation of evidence. The error is patent and more fundamental,
as the learned arbitrator has ignored the independent witnesses
testimony on a specious ground.
69. I also find merit in the submission of learned counsel for the
petitioners that the learned Arbitrator has adopted different
yardsticks/double standards while dealing with the parties. The
petitioners in their counter statement filed before the learned
Arbitrator has specifically pleaded that the respondent-claimant was in
the habit of signing differently and changing his signatures. Reference
may be made to para 25 at page 418 of the arbitral record. In their
written submissions dated 01.07.2008 (served on the respondent on
19.08.2003), the petitioners had stated that signatures of the
respondent at pages No. 481, 577, 578, 582, 583, 584, 585, 586, 587,
588, 589, 590 & 592 in Volume II, had not been sent for comparison
with his signatures on the dissolution deed when the FSL made its
report dated 24.09.1999.
70. According to me, the learned arbitrator could not have acted,
and that too on his own, to embark on an enquiry on the basis of
statements made in the written submissions of the parties for the first
time. However, if the aforesaid approach of the learned arbitrator
were to be approved for the sake of argument, then the same should
have been adopted without discrimination in relation to both the
parties.
71. Despite the said dispute being raised by the petitioners, the
learned Arbitrator did not send the aforesaid documents for purposes
of comparison with the signatures found on the dissolution deed dated
31.03.1992. It was held that the petitioners knew about the opinion
already given by the expert of FSL to the effect that the disputed
signatures (on the dissolution deed dated 31.03.1992) were not made
by the respondent-claimant. The Arbitrator held that the petitioners
herein could have got an opinion from any other expert in respect of
any other admitted signatures which, according to them, are similar to
the disputed signatures. In the absence of any expert opinion, the
Arbitrator held that it was not possible to ignore the expert opinion of
FSL. However, on the other hand, even though there was no pleading
made by the respondent herein in relation to the specimen document
TA-9, the learned Arbitrator of his own took the initiative to reopen the
proceedings and record evidence to return a finding that TA-9 was not
an admitted document.
72. Therefore, when it came to the case of the petitioners, even
though there was some averment made in the counter statement and
greater elaboration in the written submissions (in relation to non-
comparison of the dissolution deed dated 31.03.2002 with admitted
documents of the respondent), the learned arbitrator rejected the
petitioners submission by observing that the petitioners should have
taken steps on their own, while in the case of the respondent the
learned arbitrator took upon himself, on his own, even though there
was not an iota of pleading made earlier, to reopen the proceedings
and record further evidence of witnesses from the FSL. Pertinently, the
respondent did not seek the reopening of the proceedings and did not
move any application before the arbitral tribunal to lead any further
evidence.
73. In my view the aforesaid conduct of the learned Arbitrator is
clearly in breach of his obligation to treat the parties equally and to
provide them with equal and full opportunity to present their case, as
mandated by Section 18 of the Act. In the light of the aforesaid
discussion, there is a patent illegality and legal misconduct committed
by the learned Arbitrator in rejecting the petitioner‟s case founded
upon Ex.R-34 and R-35. The finding returned by the learned Arbitrator
in relation to Ex.R-34 and R-35, therefore, is patently flawed as it has
been arrived at on the basis of a fundamentally flawed approach of the
learned Arbitrator.
74. From the impugned award, it also appears that the learned
Arbitrator has ignored the contemporaneous conduct of the parties,
namely that on 15.06.1992, the petitioners informed their bank of the
fact that the respondent was no longer a partner in the firm Kapoor
Sons & Co.; that the last time the respondent was shown as a partner
of Kapoor Sons & Co. in the income tax returns was for the year ending
31.03.1992; that the said fact was mentioned in the income tax return
filed for the previous year 1992-93, when he was not shown as a
partner, and that the respondent was never required to sign the
balance sheet and accounts of the firm Kapoor Sons & Co. for the
period after 31.03.1992.
75. The learned Arbitrator, in para 31 of the award has posed a
question as to why the respondent wished to continue as a partner in
the other firms, namely, Ropas International and Continental Films
when those firms did not have any significant assets, and desired to
resign from the firm Kapoor Sons & Co. which owned a very valuable
immovable property. In my view that was a question which should
have been put to the parties. If the respondent indeed resigned from
the firm Kapoor Sons & Co., the said resignation could not be undone,
merely because such conduct may appear to be strange to an
Arbitrator. There could be various reasons for such conduct of the
respondent. From the correspondence placed on record, it appears the
respondent was heavily indebted to the petitioners in relation to the
export business undertaken by the other firms, particularly Ropas
International, while he was in Bogota. It could well be that to square of
his liabilities in those firms, and towards other partners, the
respondent traded of his share in the partnership firm Kapoor Sons &
Co. However, these are issues which should have been examined by
the Arbitrator, and it is not for this Court to derive any conclusions in
these proceedings. The aforesaid possible explanation has been noted
by me only by way of an illustration to show that the mere absence of
an apparent reason for the respondent to resign from the firm Kapoor
Sons & Co. cannot lead to the inference that he, in fact, did not so
resign.
76. I also find merit in the submission of Mr. Malhotra that the
impugned award appears to be unconscionable. I have recorded in
paras 35 to 42 hereinabove the submissions of Mr. Malhotra, which
appeal to me. I cannot help but think that the normal course of human
conduct; particularly, the personality of petitioner No. 1 which emerges
from the struggle of his life as noticed in the award itself, coupled with
various circumstances pointed out by Mr. Malhotra, negate the story
that Ex. R-34 & R-35 were forged and fabricated, and that the
dissolution deed dated 31.03.1992 was also forged and fabricated
insofar as the signatures of the respondent thereon are concerned.
77. Courts have repeatedly commented on the weightage to be
placed on the reports of handwriting experts. It has been held that the
science of reading handwriting is not a perfect science. Reference may
be made in this regard to the following judgments:
(i) Smt. Bhagwan Kaur Vs. Shri Maharaj Krishan Sharma and
Others, 1973 SCC (Cri) 687, wherein it has been held:
"The evidence of a handwriting expert, unlike that of a
fingerprint expert, is generally of a frail character and its
fallibilities have been quite often noticed. The courts
should, therefore, be vary to give too much weight to the
evidence of handwriting expert. In Sri Sri Sri Kishore
Chandra Singh Deo v. Babu Ganesh Prasad Bhagat and
Others, 1954 SCR 919, this Court observed that
conclusions based upon mere comparison of handwriting
must at best be indecisive and yield to the positive
evidence in the case."
(ii) In State of Maharashtra v. Sukhdeo Singh & Another,
AIR 1992 SC 2100, it has been held:
"But the court cannot afford to overlook the fact that the
science of identification of handwriting is an imperfect and
frail one as compared to the science of identification of
finger-prints; courts have, therefore, been wary in placing
implicit reliance on such opinion evidence and have looked
for corroboration but that is not to say that it is a rule of
prudence of general application regardless of the
circumstances of the case and the quality of expert
evidence. No hard and fast rule can be laid down in this
behalf but the Court has to decide in each case on its own
merits what weight it should attach to the opinion of the
expert."
78. I find merit in the petitioners‟ submission that the learned
Arbitrator has not critically examined the report of the FSL dated
24.09.1999 to assess its quality. As to why various documents which
contained the admitted signatures of the respondent, and which were
produced before the FSL were not used for comparison has not been
explained by CW-4 Harsh Wardhan in his cross-examination. To this
extent the reliance placed by the learned Arbitrator on the said report
of FSL appears to be without application of mind. On the other hand,
the report of FSL dated 26.12.2001, filed by the respondent and relied
upon by the petitioners, is a report which is based on empirical and
scientific basis. The said report is worthy of much greater reliance
than the handwriting report pertaining to the dissolution deed dated
31.03.1992.
79. A perusal of these letters, i.e. Ex. R-34 and R-35 ex facie shows
that the respondent-claimant had expressed his intention not to
continue as a partner in Kapoor Sons and Co. and he had requested
the petitioners to send him the dissolution deed for his signature. It is
also evident that the respondent had indeed signed a dissolution deed
dated 31.03.1992 in relation to M/s Kapoor Sons & Co. and sent the
same to the petitioners.
80. No doubt there are various documents relied upon by the
respondent, and considered by the Tribunal which do suggest that the
petitioners were indeed talking about a share of the respondent in the
partnership firm Kapoor Sons & Co. even after 31.03.1992. However,
the learned Arbitrator has, on account of the aforesaid patent error in
rejecting R-34 and R-35, failed to examine and balance the evidence
on the two sides.
81. For all the aforesaid reasons, I partially allow O.M.P. Nos.
245/2005 and 351/2009 and set aside the interim award dated
01.06.2005 passed by Mr. Justice P.K. Bahri (Retd.) in Arbitration Case
Nos. 157-160/1999 insofar as it pertains to the firm Kapoor Sons & Co.
Since the final award dated 23.04.2009 made by the Arbitral Tribunal
is founded upon the said interim award, the same is set aside insofar
as it depends on the findings and award of the Arbitral Tribunal
pertaining to Kapoor Sons & Co. I have already noticed hereinabove in
para 5 that Shri Raman Kapoor has not pressed his objections to the
final award dated 23.04.2009 and, accordingly, O.M.P. No. 400/2009 is
dismissed.
82. O.M.P. Nos. 428/2009 and 429/2009 have been filed, premised
on the impugned award pertaining to M/s Kapoor Sons & Co. Since the
awards have been set aside pertaining to the said firm, these petitions
are dismissed. No order as to Costs.
(VIPIN SANGHI)
JUDGE
JUNE 08, 2011
BSR/SR
