Karnataka High Court
Sri P Gopala Krishna Rao vs M/S Pathange Poultry Farm on 24 May, 2022
Bench: Alok Aradhe, J.M.Khazi
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 24TH DAY OF MAY 2022
PRESENT
THE HON'BLE MR. JUSTICE ALOK ARADHE
AND
THE HON'BLE MS.JUSTICE J.M. KHAZI
M.F.A. NO.2718 OF 2012 (AA)
BETWEEN:
1. SRI. P. GOPALA KRISHNA RAO
S/O LATE P. JAYA RAO
AGED ABOUT 65 YEARS
SINCE DECEASED BY HIS LR'S.
1(a) SMT. MALATHI G. PATHANGE
W/O LATE P. GOPALA KRISHNA RAO
AGED ABOUT 65 YEARS
NO.476, II FLOOR, 60 FT. ROAD
BEML LAYOUT, 3RD STAGE
SRI. RAJARAJESHWARI NAGAR
BENGALURU-560098.
1(b) SRI. VISHAL PATHANGE G
S/O LATE P. GOPALA KRISHNA RAO
AGED ABOUT 42 YEARS
NO.476, II FLOOR, 60 FT. ROAD
BEML LAYOUT, 3RD STAGE
SRI. RAJARAJESHWARI NAGAR
BENGALURU-560098.
1(c) SRI. RUTHVI K. NARANG
D/O LATE P. GOPALA KRISHNA RAO
AGED ABOUT 39 YEARS
NO.476, II FLOOR, 60 FT. ROAD
BEML LAYOUT, 3RD STAGE
2
SRI. RAJARAJESHWARI NAGAR
BENGALURU-560098.
... APPELLANTS
(BY MR. K. VARAPRASAD, ADV.,)
AND:
1. M/S. PATHANGE POULTRY FARM
A PARTNERSHIP FIRM REGISTERED
UNDER THE INDIAN PARTNERSHIP ACT
NO.1979, HOTEL CHALUKYA COMPLEX
RAJKAMAL TALKIES ROAD, MYSORE
REP. BY ITS MANAGING PARTNER.
2. SRI. P.J. JAGANNATHA RAO
S/O LATE P. JAYA RAO
AGED ABOUT 70 YEARS
NO.1979, HOTEL CHALUKYA COMPLEX
RAJKAMAL TALKIES ROAD, MYSORE-570001.
3. SRI. P.J. DAYASHANAKR RAO
S/O LATE P. JAYA RAO
AGED ABOUT 56 YEARS
NO.1979, HOTEL CHALUKYA COMPLEX
RAJKAMAL TALKIES ROAD, MYSORE-570001.
4. SRI. P.J. KUMARA RAO
S/O LATE P. JAYA RAO
AGED ABOUT 67 YEARS
NO.228, 8TH CROSS, III STAGE
GOKULAM, MYSORE-570 002.
5. SRI. P.J. RAJASHEKAR RAO
S/O LATE P. JAYA RAO
AGED ABOUT 55 YEARS
NO.1979, HOTEL CHALUKYA COMPLEX
RAJKAMAL TALKIES ROAD, MYSORE-570001.
6. SRI. A. VENKAT RAO
(RETD. DISTRICT & SESSIONS JUDGE)
SOLE ARBITRATOR
M.I.G-5, KAMAKSHI HOSPITAL ROAD
AFTER DOUBLE ROAD
3
I CROSS, SARASWATHIPURAM
MYSORE-570009.
... RESPONDENTS
(BY MR. Y.K. NARAYANA SHARMA, ADV., FOR C/R1, R3, R4 & R2
MR. A. KESHAVA BHAT, ADV., FOR R5
V/O DTD:19.10.2014 NOT NECESSARY TO
BRING THE LR'S OF R6)
---
THIS MFA IS FILED U/S 37(1) OF ARBITRATION AND
CONCILIATION ACT, AGAINST THE ORDER DATED 15.12.2011
PASSED IN A.S.NO.1/2009 ON THE FILE OF PRINCIPAL DISTRICT
& SESSIONS JUDGE, MYSORE, DISMISSING THE ARBITRATION
SUIT FILED U/S 34 OF ARBITRATION AND CONCILIATION ACT FOR
SETTING ASIDE THE IMPUGNED AWARD.
THIS M.F.A. COMING ON FOR FINAL HEARING, THIS DAY,
ALOK ARADHE J., DELIVERED THE FOLLOWING:
JUDGMENT
This appeal under Section 37 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as 'the Act' for
short) has been filed against judgment dated 15.12.2011
passed by the trial court, by which objections preferred by
the appellant under Section 24 of the Act has been
dismissed.
2. Facts giving rise to filing of this appeal briefly
stated are that appellant as well as respondent Nos.2 to 5
are the partners of respondent No.1-Firm, which is a
registered partnership firm incorporated in the year 1972.
The respondent No.1 firm was re-constituted vide partnership
deed dated 15.05.2000. Thereafter, the respondent No.1-
Firm was re-constituted several times. The appellant had
retired from the Firm on 15.05.2005.
3. One Sri.P.J.Vishwanath Rao viz., brother of the
original appellant viz., P.Gopal Krishan Rao vide registered
sale deed dated 30.06.1982 purchased land measuring 2
acres and 15 guntas and 0.06 guntas of Sy.No.53/1 and
Sy.No.53/2 situated in Bogadi Village, Kasaba Hobli, Mysore
Taluk. The appellant vide registered sale deed dated
03.03.1982 purchased land measuring 3 acres and 15 guntas
of Sy.No.336/2 situated in Bogadi Village, Kasaba Hobli,
Mysore Taluk. One of the partners of the firm viz., late
P.Dayarao died on 10.03.1983 and therefore, the firm was
reconstituted on 25.03.1983. Respondent No.5 vide
registered sale deed dated 25.09.1983 purchased the land
measuring 1 acre and 25 guntas of Sy.No.337/2 of situated
in Bogadi Village, Kasaba Hobli, Mysore Taluk. However,
respondent Nos.1 to 5 issued a public notice dated
21.02.2006 stating that the aforesaid respondents intend to
enter into a Development Agreement and agreement to sale
with regard to schedule properties and objections to the
same were invited. The land bearing Sy.No.336/2, which
was claimed to have been purchased by the appellant was
also included. The appellant thereupon submitted an
objection on 02.03.2006, in which it was stated that the
appellant was the owner of the land bearing Sy.No.336/2 and
had 1/5th share in respect of remaining lands. The dispute
therefore, arose between the parties viz., whether the firm
during the course of business has acquired immovable
properties like land building, poultry shed, machinery and
other equipments or whether the properties were purchased
by the father of the appellant as well as respondent Nos.2 to
5 and therefore, whether the appellant had an equal share in
the remaining property.
4. The Arbitrator was appointed to adjudicate the
dispute between the parties who passed an award dated
20.01.2009 inter alia held that the six items of immovable
property mentioned in the amended statement of claim
belonged to the firm and the sale deed dated 22.09.2008
does not bind the appellant. The appellant challenged the
aforesaid award in a petition under Section 34 of the Act. The
trial court by judgment dated 15.12.2011 dismissed the
objection preferred by the appellant under Section 34 of the
Act. In the aforesaid factual scenario, this appeal has been
filed.
5. Learned counsel for the appellant submitted that
the Arbitrator as well as the trial court ought to have
appreciated that the firm could not have purchased the
agricultural land in view of bar contained in Section 79A of
Karnataka Land Reforms Act, 1961. It is further submitted
that the Arbitrator as well as the trial court grossly erred in
not appreciating that the provisions of Benami Transactions
(Prohibition) Act, 1988 applies to the transaction in question.
It is also argued that award is in conflict with public policy of
India. On the other hand learned counsel for respondent
submitted that scope of interference by this court with an
award passed by the Arbitrator is limited to the grounds
mentioned under Section 34 of the Act and this court cannot
act as a court of appeal and cannot interfere even if there
has been an erroneous application of law by the Arbitrator. It
is also urged that funds of the firm were utilized to purchase
the property in the name of the partners as the firm is not a
legal entity. It is also argued that the provisions of Section
79A of the Karnataka Land Reforms Act, 1961 do not apply
as the partners of the firm were agriculturists. It is also
submitted that the properties in question were purchased in
the years 1982 and 1983 i.e., prior to coming into force of
the Benami Transactions (Prohibition) Act, 1988 (hereinafter
referred to as the '1988 Act' for short). It is also urged that
the provisions of 1988 Act have no retrospective operation. It
is also urged that the trial court has rightly dismissed the
objections preferred by the appellant under Section 34 of the
Act and no interference is called for in this appeal.
6. We have considered the rival submissions made
on both sides and have perused the record. The unamended
Section 34 would apply to the facts of the case as the
petition under Section 34 of the Act was filed in the year
2009 and the same was decided by the trial court by
judgment dated 15.12.2011. Section 34(2) of the Act, which
existed at the relevant time reads as under:
(2) An arbitral award may be set aside
by the court only if-
(a) the party making the application
furnishes proof that -
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid
under the law to which the parties have
subjected it or, failing any indication
thereon, under the law for the time being in
force; or
(iii) the party making the application was
not given proper notice of the appointment
of an arbitrator or of the arbitral
proceedings or was otherwise unable to
present his case; or
(iv) the arbitral award deals with a dispute
not contemplated by or not falling within the
terms of the submission to arbitration, or it
contains decisions on matters beyond the
scope of the submission to arbitration;
Provided that, if the decision on matters
submitted to arbitration can be separated
from those not so submitted, only that part
of the arbitral award which contains
decisions on matters not submitted to
arbitration may be set aside; or
(v) the composition of the arbitral tribunal
or the arbitral procedure was not in
accordance with the agreement of the
parties, unless such agreement was in
conflict with a provision of this Part from
which the parties cannot derogate, or failing
such agreement, was not in accordance with
this part; or
(b) the court finds that -
(i) the subject matter of the dispute is not
capable of settlement by arbitration under
the law for the time being in force, or
(ii) the arbitral award is in conflict with the
public policy of India.
7. The scope and ambit of Section 34 of the Act is
well defined by catena of decisions of the Supreme Court. It
is trite law that arbitrator's power to appreciate the evidence
on record is final and the court cannot re-appreiciate and re
examine the evidence and cannot act as an appellate forum.
The court can interfere with an award only on the grounds
mentioned under Section 34(2) of the Act.
8. It is equally well settled legal proposition that
appeal is a continuation of an original proceeding and in the
absence of any statutory provision to the contrary, power of
appellate court is co terminus with all plenary powers of the
subordinate court. [See: 'JUTE CORPN. OF INDIA LTD. VS.
CIT', 1991 SUPP (2) SCC 744]. Thus, an appellate court
exercising power under Section 37 of the Act would interfere
only if a ground under Section 34 of the Act is made out. In
'STATE OF CHATTISGARH AND ANOTHER VS. SAL
UDYOG PRIVATE LIMITED' 2021 SCC ONLINE 1027 has
held that in an appeal under Section 37 of the Act, grounds
on which an award can be set aside can also be raised in an
appeal. Thus, the scope of jurisdiction under Section 37 of
the Act is akin to a scope of proceeding under Section 37 of
the Act.
9. In the instant case, the award passed by the
Arbitrator was challenged only on the ground that it is
contrary to public policy of India. It is trite law that even if an
Arbitrator has applied the law erroneously while passing an
award, the same cannot be termed to be a patent illegality
and contravention of law not linked to public policy or public
interest is beyond the scope of expression 'patent illegality'.
In the instant case, the property in question has been
purchased in the names of the partners who were
agriculturists and therefore, the bar contained in Section 79A
of the Karnataka Land Reforms Act, 1962 does not apply.
Similarly, the properties in question were purchased in the
years 1982 and 1983 and therefore, prior to coming into
force of 1988 Act. The Supreme Court in 'SAMITTRI DEVI
AND ANOTHER VS. SAMPURAN SINGH AND ANOTHER',
(2011) 3 SCC 556 and 'R.RAJAGOPAL REDDY (DEAD)
BY LRS. AND OTHERS VS. PADMINI
CHANDRASEKHARAN (DEAD) BY LRS.', (1995) 2 SCC
630 has held that the provisions of Benami Transactions
(Prohibition) Act, 1988 has no retrospective operation.
Therefore, the provisions of Benami Transactions
(Prohibition) Act, 1988 do not apply to the transaction in
question. Thus, it is evident that the Arbitrator has correctly
applied the legal principles. The impugned judgment neither
suffers from any illegality nor any error apparent on the face
of the record.
In the result, we do not find any merit in this appeal,
the same fails and is hereby dismissed.
Sd/-
JUDGE
Sd/-
JUDGE
SS
