Varshaben Naranbhai Dantani vs Radheshyam Tarachand Agrawal
2022 Latest Caselaw 565 Guj

 C/LPA/1011/2021                                 CAV JUDGMENT DATED: 18/01/2022



              IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                  R/LETTERS PATENT APPEAL NO. 1011 of 2021
               In R/SPECIAL CIVIL APPLICATION NO. 2473 of 2021
                                     With
                  CIVIL APPLICATION (FOR STAY) NO. 1 of 2021
                 In R/LETTERS PATENT APPEAL NO. 1011 of 2021
                                     With
                  R/LETTERS PATENT APPEAL NO. 1012 of 2021
                                      In
                  SPECIAL CIVIL APPLICATION NO. 2897 of 2021
                                     With
                  CIVIL APPLICATION (FOR STAY) NO. 1 of 2021
                 In R/LETTERS PATENT APPEAL NO. 1012 of 2021
                                      In
                  SPECIAL CIVIL APPLICATION NO. 2897 of 2021
                                     With
                  R/LETTERS PATENT APPEAL NO. 1013 of 2021
                                      In
                  SPECIAL CIVIL APPLICATION NO. 2425 of 2021
                                     With
                  CIVIL APPLICATION (FOR STAY) NO. 1 of 2021
                 In R/LETTERS PATENT APPEAL NO. 1013 of 2021
                                      In
                  SPECIAL CIVIL APPLICATION NO. 2425 of 2021
                                     With
                  R/LETTERS PATENT APPEAL NO. 1014 of 2021
                                      In
                  SPECIAL CIVIL APPLICATION NO. 2899 of 2021
                                     With
                  CIVIL APPLICATION (FOR STAY) NO. 1 of 2021
                 In R/LETTERS PATENT APPEAL NO. 1014 of 2021
                                      In
                  SPECIAL CIVIL APPLICATION NO. 2899 of 2021
                                     With
                  R/LETTERS PATENT APPEAL NO. 1015 of 2021
                                      In
                  SPECIAL CIVIL APPLICATION NO. 2901 of 2021
                                     With
                  CIVIL APPLICATION (FOR STAY) NO. 1 of 2021
                 In R/LETTERS PATENT APPEAL NO. 1015 of 2021
                                      In
                  SPECIAL CIVIL APPLICATION NO. 2901 of 2021


FOR APPROVAL AND SIGNATURE:

HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR

and
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK




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1       Whether Reporters of Local Papers may be allowed       Yes
        to see the judgment ?
2       To be referred to the Reporter or not ?                Yes
3       Whether their Lordships wish to see the fair copy Does not arise
        of the judgment ?
4       Whether this case involves a substantial question
        of law as to the interpretation of the Constitution - NIL -
        of India or any order made thereunder ?

==========================================================

VARSHABEN NARANBHAI DANTANI Versus RADHESHYAM TARACHAND AGRAWAL ========================================================== Appearance:

MR YATIN OZA, SENIOR ADVOCATE WITH MS SRUSHTI A THULA(5014) for the Appellant(s) No. 1,2 DS AFF.NOT FILED (N)(11) for the Respondent(s) No. 1,2,3,4,5 MR TIRTHRAJ PANDYA, AGP(1) for the Respondent(s) No. 6, 7,10,11 MR PK PANCHOLI(532) for the Respondent(s) No. 10 MR ANSHIN DESAI, SENIOR ADVOCATE WITH MR MEHUL S SHAH, SENIOR ADVOCATE WITH MR PREMAL S RACHH(3297) for the Respondent(s) No. 3 MR ROHAN N SHAH(8866) for the Respondent(s) No. 8,9 ========================================================== CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR and HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK

Date : 18/01/2022

CAV COMMON JUDGMENT

(PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR)

1. These intra-court appeals are directed against the

common oral order dated 27.9.2021 passed in Special Civil

Application No.2425 of 2021 with Special Civil Applications

Nos.2473 of 2021, 2897 of 2021, 2901 of 2021 and 2899 of

2021 whereunder learned Single Judge has set aside "so called

order passed by respondent No.11 herein masquerading as an

Arbitrator" by exercising the extra-ordinary jurisdiction vested

under Article 226 of the Constitution of India on two grounds,

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namely, (i) on an affidavit/declaration on oath submitted by 11 th

respondent that such orders came to be passed by him was on

account of mistake and undertaking given to the Court that he

would not conduct any arbitration proceedings in future; (ii)

private respondents namely, appellants herein also undertaking

that they would take all necessary steps to undo the damage

which had been caused on account of the order passed by the

11th respondent.

2. The short facts shorn off unnecessary details for disposal

of these appeals can be crystalised as under:

Land bearing Survey no.212 situated at Moje Bodakdev,

Taluka Daskroi, Ahmedabad admeasuring 6 Acres-00 Gunthas

was purchased by the 1st petitioner jointly along with Tarachand

Shivkarandas Agrawal from its original owner Budhhalal Zaveri

under two registered sale deeds dated 26.8.1980 and 4.6.1981.

Accordingly, revenue entries came to be mutated in the name of

purchasers and it was duly certified by the jurisdictional

authorities. From the date of purchase, petitioners were said to

be in lawful ownership and possession of the said land. In the

year 2018, the District Collector vide order dated 18.10.2018

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granted permission for change of land use to non-agricultural

purposes in favour of petitioners. Respondent no.1 herein,

through his Power of Attorney Holder i.e. 2 nd respondent herein,

Shri Ashokbhai Keshavlal Luhar, after a period of 40 years of the

execution of the sale deed without laying challenge to the

abovestated sale deeds questioned the order of granting non-

agricultural permission by filing revision application raising

several contentions and also contending that original owner viz.,

Budhhalal Zaveri had executed a "notarized will" in favour of

Naranbhai Dantani (father of 1st respondent) and as successor 1st

petitioner had acquired title to the subject property. During the

pendency of the said revisional proceedings, respondent Nos.1

and 2 filed Arbitration Case No.112/2020/02 by appointing the

11th respondent herein as the Sole Arbitrator and also prayed for

interim relief by impleading various statutory authorities.

3. Contending inter-alia that neither there is any privity of

contract nor any written agreement between the petitioners and

original respondent Nos.1 and 2 (appellants herein) for invoking

the provisions of the Arbitration and Conciliation Act, 1996 (for

short "the Act") and respondent No.11 herein has no legal

authority or power to decide any dispute between the parties

C/LPA/1011/2021 CAV JUDGMENT DATED: 18/01/2022

particularly in the absence of any agreement to said effect

sought for quashing of the arbitration case filed by the appellants

herein before the 11th respondent herein and to impose

exemplary costs on the ground of the said proceedings being

patently void, illegal, nullity, without competence and jurisdiction

and 11th respondent does not have power to initiate Arbitration

proceedings and without having any force of law, he is

conducting the proceedings.

4. On appellant Nos.1 and 2 herein as well as 11 th respondent

herein, who proclaimed to be an arbitrator appointed by the

appellants herein were called upon to submit explanation as to

the basis on which they had commenced the arbitration

proceedings and 11th respondent had passed the interim

directions to the authorities, he appeared before the learned

Single Judge and filed an affidavit of undertaking admitting

thereunder that on account of mistake on his part as well as

limited understanding and limited knowledge, such orders were

passed and conceded that all such orders which are under

challenge in the Special Special Applications may be interfered

and further undertaking was given by 11 th respondent that he

would not pass such orders or conduct any arbitration

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proceedings in future and also based on the affidavit-in-reply

filed by the 2nd appellant herein (2nd respondent before the

learned Single) whereunder he deposed that notice sent by his

advocate on 8.7.2021 to the authorities to act on the interim

direction issued by 11th respondent had been withdrawn on

3.8.2021, all Special Civil Applications came to be allowed by

setting side the order passed in Arbitration Cases

Nos.112/2020/1, 112/2020/2, 112/2020/3, 112/2020/4 and

112/2020/5. A further direction was also issued to 10 th

respondent herein to take all steps in accordance with law with

regard to documents registered by the petitioners under the sale

deed dated 31.8.2020. It was also clarified that the said order

passed in Special Civil Application is with regard to the "so

called" arbitration proceedings only initiated at the behest of

appellant Nos.1 and 2 herein and conducted by respondent

No.11 herein.

5. It would also be apt and appropriate to note at this juncture

itself that on account of petitioners having executed sale deed to

subsequent purchaser on 31.8.2020 having been objected to by

the appellants herein before the revenue authorities, Mr. Yatin

Oza, learned advocate appearing with Mr. R.D.Dave and Mr. Anil

C/LPA/1011/2021 CAV JUDGMENT DATED: 18/01/2022

Patel, learned advocates had submitted before the learned

Single Judge that their consent may be recorded to issue

appropriate directions to the Sub-Registrar where the

registration with regard to the properties had taken place and for

issuing appropriate directions for doing of such things pursuant

to the registered sale deed. The abovesaid learned advocates

also submitted that in the affidavits filed by them on 27.9.2021

with regard to the petitioners having sold the property and buyer

having not been impleaded as parties is also not pressed by

them and requested the learned Single Judge that such part of

the affidavit may be treated as not forming part of the affidavit,

which request came to be accepted by the learned Single Judge

and Special Civil Applications came to be allowed.

6. Despite aforesaid affidavits having been filed by the

appellants herein before the learned Single Judge by conceding

that impugned orders can be set aside, they have filed the

present appeals challenging the order of the learned Single

Judge contending inter alia that arbitrator who was appointed is

duly qualified and eligible to be appointed as an arbitrator under

Section 14 of the Act and he is an advocate who is having a

standing of 35 years; when notice was issued by the learned

C/LPA/1011/2021 CAV JUDGMENT DATED: 18/01/2022

arbitrator, none of the respondents herein had objected to his

appointment and respondents are deemed to have acquiesced

to the jurisdiction of the arbitrator; the arbitral award even if

nullity is required to be challenged by taking recourse to the

remedy available under the Act namely, by filing an appeal

under Section 37 of the Act and extra-ordinary jurisdiction vested

under Article 226 of the Constitution of India could not have been

invoked; the arbitrator could not have been joined as a party; the

post of arbitrator is not a statutory post nor he is an authority

whose orders can be challenged under Article 226 of the

Constitution of India; the Special Act namely, The Arbitration and

Conciliation Act, 1996 is a complete Code and, as such, the

procedure conducted by an independent arbitrator even though

not appointed by the arbitral institution as contemplated under

the Act is to be construed as arbitral proceedings and, as such,

no fault can be found in the arbitration proceedings. Mr. Yatin

Oza, learned advocate appearing for the appellants has

reiterated the aforesaid grounds. In support of his submissions,

he has relied upon the following judgments:

(i) AIR 2003 SC 2252 in the case of Sukanya Holdings Pvt. Ltd. Vs. Jayesh H. Pandya and Anr.

(ii) AIR 2018 (Gujarat) 142 : Equivalent 2018(2) GLH 490

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in the case of Gujarat Composite Limited Vs. A. Infrastructure Limited.

(ii) (2014) 15 SCC 689 in the case of Narinder S. Chadha and others Vs. Municipal Corporation of Greater Mumbai and Others.

7. Per contra, Mr. Anshin Desai and Mr. Mehul S. Shah,

learned Senior Advocates appearing on behalf of Mr. Premal

Rachh for respondent No.3, Mr. Rohan Shah, learned advocate

appearing for respondent Nos.8 and 9, Mr. P.K.Pancholi, learned

advocate appearing for respondent No.10 and Mr. Tirthraj

Pandya, learned AGP appearing for respondent Nos.6, 7, 10, and

11 have supported the impugned order.

8. The learned Senior Advocates appearing for the

respondent Nos.1 and 2 herein namely, original petitioners

before the learned Single Judge, by reiterating the grounds urged

before the learned Single Judge, have contended that entire

proceeding before so called arbitrator is without jurisdiction,

illegal and violative of Articles 14 and 19 of the Constitution of

India. It is also contended that there is no privity of contract or

any agreement entered into between respondent Nos.1 and 2 as

required under the Act for invoking the provisions of the Act and

respondent No.11 herein had no legal authority or power to

C/LPA/1011/2021 CAV JUDGMENT DATED: 18/01/2022

decide any dispute between the parties under the Act more

particularly in the absence of any agreement to that effect. It is

also contended that arbitration agreement being the very

foundation on which the jurisdiction of the Act rests and no

person can proclaim himself to act as an arbitrator and conduct

any proceedings under the Act in the absence of any such

agreement. Hence, said proceeding is a nullity, as it is without

jurisdiction. It is also contended that argument of the appellants

that respondent Nos.1 and 2 herein have acquiesced in the

proceedings is far fetched inasmuch as consent does not confer

jurisdiction. They would also elaborate their submissions by

contending that the 11th respondent herein who proclaims

himself to be an arbitrator had assumed the jurisdiction on the

ground that there is an arbitration clause in utter disregard to

the settled law and procedure to institute arbitration

proceedings. It is further contended that appellants herein had

adopted the modus operandi of appointing an Arbitrator (11 th

respondent), who on acquiesced jurisdiction had issued certain

interim directions only to harass the lawful owners by raising

such frivolous disputes with regard to title to an immovable

property on the basis of a concocted "will". It was also contended

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before learned Single Judge that appellants herein have initiated

several litigations against different parties with intention of

extracting money. Hence, on these grounds, they sought for

entire proceedings before the so-called arbitrator being

quashed by invoking extra-ordinary jurisdiction of learned Single

Judge, who accepted said plea and had allowed the applications

as noted herein supra. Hence, these intra-court appeals.

9. Having heard the learned advocates appearing for

the parties, we are of the considered view that following points

would arise for our consideration:

(1) Whether the present appeals are maintainable ?

(2) Whether the common order dated 27.9.2021 passed in

Special Civil Applications Nos.2425, 2473, 2897, 2901

and 2899 of 2021 suffers from any infirmity either in

law or on facts calling for our interference ?

(3) What order ?

RE: POINT NO.(1)

10. At the outset, it requires to be noticed that Sub-

Section (3) of Section 96 of The Code of Civil Procedure, 1908

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mandates that no appeal would lie from a decree passed by the

Court by consent of parties. It is no doubt true that the Arbitral

Tribunal would not be bound by The Code of Civil Procedure,

1908. Sub-Section (2) of Section 17 of the Act would indicate that

any order issued by the Arbitral Tribunal under the said section is

deemed to be an order of the Court for all purposes and shall be

enforceable under The Code of Civil Procedure, 1908, in the

same manner as if it were an order of the Court. In this

background, when we turn our attention to the facts on hand, it

would clearly indicate that in the instant case, on service of

notice of Special Civil Applications under which applications, the

respondent Nos.1 and 2 herein had challenged the arbitral

proceedings initiated by the appellants herein before the 11 th

respondent herein on the ground of same being void-ab-initio,

nullity and without authority of law, the 11 th respondent herein

had appeared and conceded before the learned Single Judge that

such an order had been passed by him on account of mistake. In

fact, 11th respondent herein in his affidavit dated 8.9.2021 has

declared to the following effect:

"I state on oath that, in SCA No. 2425/2021, SCA No. 2473/2021, SCA No. 2897/2021, SCA No. 2899/2021, SCA No. 2901/2021, SCA No. 10643/2020, SCA No. 703/2021 in all these

C/LPA/1011/2021 CAV JUDGMENT DATED: 18/01/2022

matters, all arbitration proceedings, interim orders and directions given by me was my mistake. Because of my limited under standing and limited knowledge, I have done these proceedings, and I hereby say on oath and tender my unconditional apology for the same.

All these writ petitions are filed before this Honourable Court because of my orders in Arbitration Proceedings and further I pray this Honourable Court to pass appropriate order in all cases.

Hence forth, I shall not conduct any arbitration proceedings in future."

11. Appellant No.2 (Ashokbhai Keshavlal Luhar), who is

the Power of Attorney Holder for 1 st respondent in his affidavit

dated 27.9.2021 has conceded to the following effect:

"It is stated that upon the instructions, the notice was sent by advocate on 08/07/2021, the said has been withdrawn vide notice dtd 03.08.2021. The said withdrawal notice has been duly received by the other side. No other litigation or action have been initiated by the respondent upon the interim order passed the Arbitrator."

12. When the learned Single Judge took up the Special

Civil Applications for hearing, 11th respondent herein appeared

before the Court in person and conceded that proceedings

conducted by him was on account of mistake as well as his

limited understanding and limited knowledge and also conceded

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that his orders may be interfered. In fact, he undertook that he

would not conduct any arbitration proceedings in future. The

appellants herein had also submitted before the learned single

judge that they would take all necessary steps to undo the

damage which had been caused on account of the so called

arbitral award (interim) having been passed and undertook to

file affidavit showing as to what actions they have taken to

mitigate/undo the damage which had occurred on account of the

interim directions issued by the 11th respondent herein and in the

subsequent affidavit filed, which has been extracted

hereinabove, the appellant No.2 herein had also conceded that

notice issued by him pursuant to interim direction has since been

withdrawn. Thus, having conceded before the learned Single

Judge for the orders passed by the 11 th respondent herein being

set aside, it would not lie in their mouth to challenge the order

passed by the learned Single Judge who had accepted the

consent given by the appellants as well as the 11 th respondent

herein for setting aside the orders passed by the 11 th

respondent herein. As such, we are of the considered view that

present Letters Patent Appeals are held to be not maintainable

and same are liable to be dismissed on that ground.

C/LPA/1011/2021 CAV JUDGMENT DATED: 18/01/2022

RE: POINT NO.(2)

13. Though we have answered Point No.(1) in the

affirmative by holding that appeals are not maintainable, in light

of the peculiar facts and circumstances that has unfolded in the

instant case, we have gone into merits and we answer Point No.

(2) also in the negative for reasons indicated hereinbelow.

14. In the instant case, the 11th respondent claims to be

an arbitrator and had acted under the Act to conduct arbitration

proceedings. As to his authority and the source of his

appointment is not forthcoming from the pleadings. They are

silent. Obviously, appellants herein had set up 11 th respondent to

act as an arbitrator and on the said right given to him, he had

assumed jurisdiction under the Act, which he did not possess.

Thus, commencement of the arbitration proceedings is not only

illegal but also void-ab-initio and nullity from its inception. It

would be apt to deal with the first contention raised in these

appeals by appellants viz., whether learned Single Judge could

have exercised extra-ordinary jurisdiction to set aside the

awards/proceedings initiated by 11th respondent and he ought to

have directed the appellants/respondent Nos.1 and 2 herein to

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avail the alternate remedy of filing an application under Section

34 of the Act.

15. The High Court would not act as a court of appeal

against the decision of a Court or a Tribunal to correct errors of

fact and does not assume the jurisdiction under Article 226 of the

Constitution when an alternate remedy is provided by the

Statute for obtaining the relief is available, where it is open to

the aggrieved person to avail such alternate remedy for

redressal of the grievance. This Court will not permit

entertaining a petition under Article 226 of the Constitution of

India and thereby the machinery provided under the Statute is

by-passed.

16. The Hon'ble Apex Court in the case of Nivedita

Sharma Vs. Cellular Operators Association of India

reported in (2011)14 SCC page 337 has held as under:

"11. We have considered the respective arguments/submissions. There cannot be any dispute that the power of the High Courts to issue directions, orders or writs including writs in the nature of habeas corpus, certiorari, mandamus, quo warranto and prohibition under Article 226 of the Constitution is a basic feature of the Constitution and cannot be curtailed by parliamentary legislation--L. Chandra Kumar v. Union of India [(1997) 3 SCC 261 : 1997 SCC (L&S) 577] . However, it is one thing to say that in exercise of the power vested in it under Article 226 of the Constitution, the High Court can entertain a writ petition against any order

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passed by or action taken by the State and/or its agency/instrumentality or any public authority or order passed by a quasi-judicial body/authority, and it is an altogether different thing to say that each and every petition filed under Article 226 of the Constitution must be entertained by the High Court as a matter of course ignoring the fact that the aggrieved person has an effective alternative remedy. Rather, it is settled law that when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation."

17. In the matter of M/s Deep Industries Ltd. Vs. Oil

and Natural Gas Corporation reported in 2020 (15) SCC 706,

their Lordships of the Hon'ble Apex Court have held that extra-

ordinary jurisdiction can be exercised for entertaining of writ

petition filed for enforcement of fundamental rights or where

there has been violation of principles of natural justice or where

order under challenge is wholly without jurisdiction or the

vires of the Statute is under challenge. It has been further held

thus:

"16. It can, thus, be said that this Court has recognized some exceptions to the rule of alternative remedy. However, the proposition laid down in Thansingh Nathmal v. Supt. of Taxes [Thansingh Nathmal v. Supt. of Taxes, AIR 1964 SC 1419] and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. In SBP & Co. (supra), this Court while considering interference with an

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order passed by an Arbitral Tribunal under Articles 226/227 of the Constitution laid down as follows :

"45. It is seen that some High Courts have proceeded on the basis that any order passed by an Arbitral Tribunal during arbitration, would be capable of being challenged under Article 226 or 227 of the Constitution. We see no warrant for such an approach. Section 37 makes certain orders of the Arbitral Tribunal appealable. Under Section 34, the aggrieved party has an avenue for ventilating its grievances against the award including any in- between orders that might have been passed by the Arbitral Tribunal acting under Section 16 of the Act. The party aggrieved by any order of the Arbitral Tribunal, unless has a right of appeal under Section 37 of the Act, has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act. The Arbitral Tribunal is, after all, a creature of a contract between the parties, the arbitration agreement, even though, if the occasion arises, the Chief Justice may constitute it based on the contract between the parties. But that would not alter the status of the Arbitral Tribunal. It will still be a forum chosen by the parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the Arbitral Tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution. Such an intervention by the High Courts is not permissible.

46. The object of minimising judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated if the High Court could be approached under Article 227 or under Article 226 of the Constitution against every order made by the Arbitral Tribunal. Therefore, it is necessary to

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indicate that once the arbitration has commenced in the Arbitral Tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage."

18. In this background, when the facts on hand are examined,

following facts would clearly emerge from the pleadings :

(1) Admittedly there is no agreement between the parties

namely, the appellants and respondent Nos.1 to 4 herein

of any sort whatsoever agreeing for disputes between

them would be resolved through arbitration;

(2) The 11th respondent herein has assumed the role of an

arbitrator based on the unilateral consent given by the

appellants.

(3) Neither the respondent Nos.1 to 4 herein nor the

appellants have agreed upon any dispute much less the

dispute relating to the property in question being

resolved through arbitration.

19. In other words, the parties never at ad-idem for

resolving their dispute by taking recourse to the alternate

dispute redressal mechanism namely, arbitration. The provisions

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of the Act would be applicable only in the circumstances where

the parties are at ad-idem and have agreed for resolution of

their disputes through arbitration process. The Hon'ble Apex

Court in Dharma Prathishthanam Vs. Madhok Construction

Pvt. Ltd. reported in 2005 (9) SCC 686 has held as under:

"12. On a plain reading of the several provisions referred to hereinabove, we are clearly of the opinion that the procedure followed and the methodology adopted by the respondent is wholly unknown to law and the appointment of the sole arbitrator Shri Swami Dayal, the reference of disputes to such arbitrator and the ex parte proceedings and award given by the arbitrator are all void ab initio and hence nullity, liable to be ignored.

In case of arbitration without the intervention of the court, the parties must rigorously stick to the agreement entered into between the two. If the arbitration clause names an arbitrator as the one already agreed upon, the appointment of an arbitrator poses no difficulty. If the arbitration clause does not name an arbitrator but provides for the manner in which the arbitrator is to be chosen and appointed, then the parties are bound to act accordingly. If the parties do not agree then arises the complication which has to be resolved by reference to the provisions of the Act. One party cannot usurp the jurisdiction of the court and proceed to act unilaterally. A unilateral appointment and a unilateral reference -- both will be illegal. It may make a difference if in respect of a unilateral appointment and reference the other party submits to the jurisdiction of the arbitrator and waives its rights which it has under the agreement, then the arbitrator may proceed with the reference and the party submitting to his jurisdiction and participating in the proceedings before him may later on be

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precluded and estopped from raising any objection in that regard. According to Russell (Arbitration, 20th Edn., p. 104).

"An arbitrator is neither more nor less than a private judge of a private court (called an Arbitral Tribunal) who gives a private judgment (called an award). He is a judge in that a dispute is submitted to him; ... He is private insofar as (1) he is chosen and paid by the disputants, (2) he does not sit in public, (3) he acts in accordance with privately chosen procedure so far as that is not repugnant to public policy, (4) so far as the law allows he is set up to the exclusion of the State courts, (5) his authority and powers are only whatsoever he is given by the disputants' agreement, (6) the effectiveness of his powers derives wholly from the private law of contract and accordingly the nature and exercise of these powers must not be contrary to the proper law of the contract or the public policy of England, bearing in mind that the paramount public policy is that freedom of contract is not lightly to be interfered with."

xxxx xxxx xxxx

20. Thus, there is ample judicial opinion available for the proposition that the reference to a sole arbitrator as contemplated by para 1 of the First Schedule has to be a consensual reference and not a unilateral reference by one party alone to which the other party does not consent.

                      xxxx          xxxx        xxxx







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        29.        In the event of the appointment of an

arbitrator and reference of disputes to him being void ab initio as totally incompetent or invalid the award shall be void and liable to be set aside dehors the provisions of Section 30 of the Act, in any appropriate proceedings when sought to be enforced or acted upon. This conclusion flows not only from the decided cases referred to hereinabove but also from several other cases which we proceed to notice.

xxxx xxxx xxxx

36. In the present case, we find that far from submitting to the jurisdiction of the arbitrator and conceding to the appointment of and reference to the arbitrator Shri Swami Dayal, the appellant did raise an objection to the invalidity of the entire proceedings beginning from the appointment till the giving of the award though the objection was belated. In ordinary course, we would have after setting aside the impugned judgments of the High Court remanded the matter back for hearing and decision afresh by the learned Single Judge of the High Court so as to record a finding if the award is a nullity and if so then set aside the same without regard to the fact that the objection petition under Section 30 of the Act filed by the appellant was beyond the period of limitation prescribed by Article 119(b) of the Limitation Act, 1963. However, in the facts and circumstances of the case, we consider such a course to follow as a futile exercise resulting in needless waste of public time. On the admitted and undisputed facts, we are satisfied, as already indicated hereinabove, that the impugned award is a nullity and hence liable to be set aside and that is what we declare and also do hereby, obviating the need for remand."

20. The agreement of arbitration is the very foundation

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on which the jurisdiction of arbitrators to act rests and where it is

not in existence, the proceedings must be held to be wholly

without jurisdiction. Appearance of the parties submitting to the

jurisdiction would not confer the jurisdiction on the arbitrator or

the Arbitral Tribunal. However, the parties can enter into an

agreement even at that point of time. In the instant case, as

noticed hereinabove and at the cost of repetition, there is no

such agreement entered into between the parties much less the

arbitration agreement which gave rise for the 11 th respondent

herein to assume the jurisdiction and donned the role of an

arbitrator to conduct the arbitration proceedings. It is in this

factual scenario the 11th respondent appeared before the learned

Single Judge and conceded for his orders being set aside. In fact,

he filed an affidavit to the said effect which has already been

noticed by us hereinabove. In that view of the matter, we are of

the considered view that order passed by the learned Single

Judge in setting aside the orders passed in the arbitration

proceedings commenced by the 11th respondent does not suffer

from any infirmity either in law or on facts as it was without

jurisdiction and a nullity. Said order does not call for our

interference.

C/LPA/1011/2021 CAV JUDGMENT DATED: 18/01/2022

RE: POINT NO.(3)

21. The learned Single Judge obviously did not mulct the

appellants herein with costs who are the private respondents, for

the reason, they had conceded for the arbitral proceedings being

set at naught as it was wholly without jurisdiction. Despite such

order by consent having been passed and without any fear of law

or respect to the rule of law, they have filed the present appeals

raising hyper technical plea, which cannot be countenanced. At

this juncture, it would be apt and appropriate to note the

judgment of the Hon'ble Apex Court in the case of Dalip Singh

Vs. State of Uttar Pradesh and Others reported in 2010 (2)

SCC 114 wherein their Lordships have expressed that two basic

values of life "satya" (truth) and "ahimsa" (non-violence), which

was guided by the Father of the Nation has been over shadowed

by greed. It was observed by the Hon'ble Apex Court as under:

"1. For many centuries Indian society cherished two basic values of life i.e. "satya" (truth) and "ahimsa"

(non-violence). Mahavir, Gautam Buddha and Mahatma Gandhi guided the people to ingrain these values in their daily life. Truth constituted an integral part of the justice-delivery system which was in vogue in the pre-Independence era and the people used to feel proud to tell truth in the courts irrespective of the consequences. However, post-Independence period

C/LPA/1011/2021 CAV JUDGMENT DATED: 18/01/2022

has seen drastic changes in our value system. The materialism has overshadowed the old ethos and the quest for personal gain has become so intense that those involved in litigation do not hesitate to take shelter of falsehood, misrepresentation and suppression of facts in the court proceedings.

2. In the last 40 years, a new creed of litigants has cropped up. Those who belong to this creed do not have any respect for truth. They shamelessly resort to falsehood and unethical means for achieving their goals. In order to meet the challenge posed by this new creed of litigants, the courts have, from time to time, evolved new rules and it is now well established that a litigant, who attempts to pollute the stream of justice or who touches the pure fountain of justice with tainted hands, is not entitled to any relief, interim or final.

xxxx xxxx xxxx

4. In Welcom Hotel v. State of A.P. [(1983) 4 SCC 575 : 1983 SCC (Cri) 872 : AIR 1983 SC 1015] the Court held that a party which has misled the Court in passing an order in its favour is not entitled to be heard on the merits of the case.

xxxx xxxx xxxx

7. In Prestige Lights Ltd. v. SBI [(2007) 8 SCC 449] it was held that in exercising power under Article 226 of the Constitution of India the High Court is not just a court of law, but is also a court of equity and a person who invokes the High Court's jurisdiction under Article 226 of the Constitution is duty-bound to place all the facts before the Court without any reservation. If there is suppression of material facts or twisted facts have been placed before the High Court then it will be fully justified in refusing to entertain a petition filed under Article 226 of the Constitution. This Court referred to the judgment of Scrutton, L.J. in R. v. Kensington Income Tax Commissioners [(1917) 1 KB

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486 (CA)] , and observed: (Prestige Lights Ltd. case [(2007) 8 SCC 449] , SCC p. 462, para 35)

In exercising jurisdiction under Article 226 of the Constitution, the High Court will always keep in mind the conduct of the party who is invoking such jurisdiction. If the applicant does not disclose full facts or suppresses relevant materials or is otherwise guilty of misleading the court, then the Court may dismiss the action without adjudicating the matter on merits. The rule has been evolved in larger public interest to deter unscrupulous litigants from abusing the process of court by deceiving it. The very basis of the writ jurisdiction rests in disclosure of true, complete and correct facts. If the material facts are not candidly stated or are suppressed or are distorted, the very functioning of the writ courts would become impossible.

xxxx xxxx xxxx

24. From what we have mentioned above, it is clear that in this case efforts to mislead the authorities and the courts have transmitted through three generations and the conduct of the appellant and his son to mislead the High Court and this Court cannot, but be treated as reprehensible. They belong to the category of persons who not only attempt, but succeed in polluting the course of justice. Therefore, we do not find any justification to interfere with the order under challenge or entertain the appellant's prayer for setting aside the orders passed by the prescribed authority and the appellate authority."

22. Keeping the aforesaid authoritative principles in

mind, when the facts on hand are re-looked into, it would clearly

C/LPA/1011/2021 CAV JUDGMENT DATED: 18/01/2022

indicate that in the absence of any agreement between the

parties, the appellants herein vested the 11 th respondent herein

with the jurisdiction to conduct arbitration proceedings and

despite there being no authority of law namely, there being no

order of appointing the 11th respondent by virtue of any

agreement having been entered into between the appellants and

respondent Nos.1 and 2 herein, the 11 th respondent proceeded to

conduct the arbitration proceedings and has passed certain

orders/directions in favour of the appellants herein which was

wholly without jurisdiction and it would not only amount to abuse

of the process of law but also amounts to abuse of the judicial

system, inasmuch as 11th respondent herein had donned the

robes of an arbitrator by colourable exercise of power and if such

instances were to go unchecked, the situation may go out of

hands and, as such, such acts or deeds are required to be dealt

with iron hands. But for 11th respondent herein conceding before

the learned Single Judge for the arbitration awards and the

proceedings commenced by him being set aside, we would have

mulcted the 11th respondent herein also with costs. However, we

desist from doing so since the 11 th respondent had conceded

before learned Single Judge for his orders being set aside.

C/LPA/1011/2021 CAV JUDGMENT DATED: 18/01/2022

Though appellants herein had also virtually conceded and the

records would also indicate that 11th respondent in similar

circumstances had passed awards and criminal cases having

been initiated against him for having assumed the role of an

arbitrator without authority of law, costs deserve to be imposed

on appellants herein for filing such frivolous appeals.

Hence, we proceed to pass the following

O R D E R

(i) Appeals are dismissed with costs.

(ii) Orders dated 27.9.2021 passed in Special Civil

Application No.2425 of 2021 with Special Civil

Applications Nos.2473, 2897, 2901 and 2899 of

2021 are confirmed.

(iii) Appellants herein are directed to pay in each of the

appeals a sum of Rs.20,000/- (Rupees Twenty

Thousand only) to respondent Nos.1 and 2 herein

failing which, the respondent Nos.1 and 2 would be

at liberty to recover the same by initiating

execution proceedings before jurisdictional Court.

C/LPA/1011/2021 CAV JUDGMENT DATED: 18/01/2022

(iv) In the event of cost as ordered herein is not

deposited or paid by the appellants to the

respondent Nos.1 and 2 within an outer limit of six

weeks, the Registry of this Court shall issue a

certificate to the said effect in favour of the

respondent Nos.1 and 2 herein so as to enable them

to recover the same by initiating execution

proceedings before jurisdictional Court as if it were

to be a decree passed by Civil Court.

(ARAVIND KUMAR,CJ)

(HEMANT M. PRACHCHHAK,J) RADHAKRISHNAN K.V.