Bansi Lal vs Union of India (UOI)

Mian Jalal-ud-din, J.—Pursuant to an order dated 18th of April, 1974 made by this Court on the application of the Petitioner u/s 20 of the

J. and K. Arbitration Act for the appointment of an arbitrator for resolving the disputes between the parties Shri O.N. Tikku Advocate General

was appointed arbitrator and the disputes mentioned in the said order were referred to him for adjudication, The arbitrator entered upon the

reference. He gave his award on 25th of May, 1975 which is Ex. P.W. 1/1. The Arbitrator has decided that the Central P.W.D, has fairly fixed the

rent of the building at the rate of Rs. 800/ - per month and the Petitioner is entitled to it from 1st of Nov., 1967. The said assessment of rent @ Rs.

800/- per month was conveyed to the Respondents by the Executive Engineer CPWD on 15-9-69 and this assessment is binding on the

Respondents who cannot continue to occupy these premises at the old rate of Rs. 330/- P. M On receipt of the award the parties were asked to

file their respective objections. Respondent through Mr. A.D. Singh Advocate filed objections averring therein that the lease agreement dated 15-

7-65 being not in accordance with Article 299 of the Constitution of India the reference to the Arbitrator was a nullity and it could not confer

jurisdiction on the arbitrator to enter upon the reference. Consequently the award given by the arbitrator is non est in the eye of law. Again, the

arbitrator did not have the jurisdiction to enhance the rent of the demised premises on the mere plea of the Petitioner that he had effected certain

repairs. The arbitrator failed to consider this matter. This was a mistake apparent on the face of the award. Another objection raised is that the

Respondent closed his evidence on 3-12-74 and the case was fixed for arguments. But the arbitrator did not fix any date for arguments. No

summons was issued and no information was given to the counsel for the Respondent regarding any further date of hearing after 3-12-74. The

arbitrator decided the case by hearing the other party at Srinagar. The hearing of the case behind the back of the Respondent constituted legal

misconduct on the part of the arbitrator, Failure to provide an opportunity to the Respondent to be heard violated the principle of natural justice.

Further, the arbitrator did not care to decide issue No. 1 which clearly reflects that he did not bring to bear his mind on the said issue. The

arbitrator had misconstrued the evidence as also the documents on the file. The conclusions drawn by him from the record are not possible. The

findings recoded by him suffer from grave errors which an apparent on the face of the record. The award is against the provisions of the Houses

and Shops Rent Control Act. The only relevant agreement which is the basis of the claim is of 15-7-65; but the arbitrator did not refer to it and on

the contrary relied upon an agreement of 1964. He could not hold that the agreement governing the parties was of 10-7-64 when actually it was

the agreement of 1965 that was the relevant document. The entire claim of the Petitioner being based on the lease agreement of 1985 the arbitrator

could not refer to a different agreement and therefore this finding that the agreement governing the parties is of the year 1964 is wholly

misconceived. Even the said agreement was not registered and could not be relied upon.

Again, the arbitrator never visited the premises in order to assess the rent of the premises. He simply relied upon the letter the Executive

Engineer Modhopur date 15-9-1969 which was later on withdrawn to the C.P.W.D authorities. The arbitrator failed to apply his mind to this

aspect of the matter and as such his finding on this period was clothed with illegality. Also the arbitrator could not declare and give effect to the

award from a retrospective date. On the ground also the award was bad in law.

The award, on the other hand, is M ported by the Petitioner.

In the course of arguments the learned Counsel for the Respondents submitted that the award was a nullity as the lease agreement upon which

the award is founded void as it has not been executed in accordance with Article 299 of the Constitution India. It was contended that the lease

agreement of 1965 which is the basis of the (sic) of the Petitioner though made in the (sic) of the President of India has not been si(sic) at all by the

President or by an authority person on his behalf. Therefore because of the absence of the constitutional requirement no reference could be made

to the arbitrator find no award could be given by him. This in fact also appears to be the subject matter of an application dated 28-3-75 which was

submitted by the counsel. Through some oversight this application was not placed before the court for orders. However the learned Counsel for

the Respondents has thought consideration of this application. By Anr. application 'he highlighted this fundamental point of constitutional law, In

view of the importance of the question raised it was considered expedient to give an opportunity to the Petitioner to file his reply and meet the

objections regarding the invalidity of the agreement as also the invalidity of the award. The Petitioner filed his objections thereto. Learned Counsel

for the Respondents has sought the consideration of the application dated 28-3-1975 and has confined his arguments with respect to this

application.

Dwelling upon the proposition of law Shri Kaul has submitted that the lease agreement dated 15th of July, 1965 which is the basis of the order

of reference and upon which is founded the authority of the arbitrator to arbitrate does not comply with the requirement of law as enshrined in

Article 299 of the Constitution of India the said agreement, it is pointed out, is not signed by the President of India or by any officer authorised by

him and therefore it cannot be said that it was expressed in the time of the President. Therefore no lawful agreement can be said to have come into

being with the result that the arbitration cause in the agreement is destitute of any legal effect. The learned arbitrator, it is sub-suited realised this

legal infirmity in the instrument of lease and it was therefore that the relied upon the agreement of 1964 and (sic) that of 1985. The agreement of

1964 is wholly irrelevant to be taken notice of the Purpose of reference and for resolving the disputes between the parties.

Shri Raina has, on the other hand, submitted that the earliest possible opportunity for the Respondent to raise such a connection was the time of

filing the objections the application u/s 20 of the Arbitration Act. In fact the Respondent never objected to the legality of the agreement at the (sic)

the order of reference was made to such the parties expressed their consent. The application submitted by Shri A.D. Singh during the interim stage

was never pressed. Therefore the Respondent is precluded from raising this objection now. The plea regarding the invalidity of the lease agreement

sought to be raised now is not entertainable at this stage and has become time-barred.

It is also submitted that it is not correct that the agreement has not been signed by an authorised officer on behalf of the President of India. Even

Mr. A.D. Singh admitted in his objections that lease agreement was signed by the parties. Having said so the Respondents cannot now turn round

and contend that the agreement has not been signed by the proper person.

Mr. Raina further canvassed that even if it be assumed that the lease agreement cannot be termed as valid document, nevertheless the arbitrator

could rely upon Anr. agreement, notwithstanding the invalidity of the lease agreement of 1965. In this connection he has relied upon the following

observations of the Supreme Court made in AIR 1962 SC 1810 at p. 1815:

But here if the agreement dated September 7, 1955 is void then there was no submission which was alive on which arbitrators could act and the

proceedings before them would be wholly without jurisdiction. If there had been Anr. arbitration agreement apart from and independent of Clause

14 of the contract dated September 7, 1955, it might have been possible to sustain the proceedings before the arbitrators as referable to that

agreement. But none such has been set up or proved in the present case....

I have given my thoughtful consideration to the submissions made at the bar.

On perusal of the lease agreement of 1965 it is manifest that this agreement has not been signed for and on behalf of the President of India. Even

the learned arbitrator has made a mention of this fact in his award at page 6 wherein he says that the last agreement of lease dated 15-7-65 could

not be executed as the necessary formalities in it could not be explained. According to him it is the agreement dated 16-7-64 that would govern the

conditions of lease between the parties. It is not correct to say that the Respondent slept over the matter and did not raise the plea of the invalidity

of the agreement at the appropriate time. It is true that at the time of making the reference no such objection was raised but immediately thereafter

when the arbitrator was seized of the matter an application was moved by Mr. Anil Dev Singh on 28-3-1975 whereby he sought the revocation of

the reference on the ground that agreement was void as it failed to satisfy the conditions for a valid agreement as envisaged by Section 122 of the

State Constitution. The matter was again raised in the objections which were submitted when the award was filed by the arbitrator in the court.

In view of this it cannot be said that the Respondents are estopped from raising the plea now or that the plea has become time-barred. The

Supreme Court has had an occasion to pronounce upon this question in the case Khardah Co. Ltd. v. Raymon and Co. reported in AIR 1962 SC

1810, Venkatarama Aiyar J. speaking for the court observed:

It is next contended for the Appellants that even if Clause 14 should be held to be inoperative by reason of the fact that the dispute is one relating

to the validity of the contract, the Respondents are estopped from now challenging the award on that ground, because they appeared before the

arbitrators and took part in the proceedings before them ... ... ... ... ... .... All that is alleged is that the Respondents acquiesced in the proceedings.

But what confers jurisdiction on the arbitrator to hear and decide a dispute is an arbitration agreement as defined in Section 2(a) of the Arbitration

Act, and where there is no such agreement, there is an initial want of jurisdiction which cannot be cured by acquiescence. It may also be mentioned

that the decision in (1860) 30 LJ Bcy 10 has been understood as an authority for the proposition that when one of the parties to the submission is

under a disability that will not be a ground on which the other party can dispute the award if he was aware of it. Vide Russel on Arbitration, 16th

Edition, 320, We are therefore unable to accept the contention of Mr. Sanyal, that the Respondents are estopped by their conduct from

questioning the validity of the award.

It is, therefore, settled that an application u/s 33 of the Arbitration Act can be made even after the award is filed in the court and an objection

regarding the invalidity of the reference or the award can be taken even after the award has been filed.

It has been observed above that the agreement does not fulfil the constitutional requirement of Article 299 of the Constitution. It has not been

signed by or on behalf of the President of India, therefore it is not a complete document.

The contention of the learned Counsel for the Petitioner that Shri A.D. Singh the counsel for the Respondents once admitted in his objections

dated 2-8-72 that the document was duly signed by both the parties and therefore this should be taken a conclusive proof of this fact and therefore

there was no legal infirmity in the document, cannot be accepted inasmuch as the relevant para of the objections must be read as a whole which is

as follows:

With regard to the alleged agreement of lease dated 15-7-1965, it is submitted that the same could not be duly executed for the landlord failed to

comply with the necessary formalities before getting the alleged agreement signed by the proper authorities for and on behalf the President of India.

However, the said 'lease agreement' was duly signed by both parties.

It is quite manifest that the position has not been admitted that the lease agreement was signed by a proper authority for and on behalf of the

President of India Mere saying that the lease agreement was signed by both the parties does not convey any meaning and therefore cannot help the

Petitioner, when also it is quite patent from the document itself that it has not been signed for and on behalf of the President of India. It was

because of this fact which was taken notice of by the learned arbitrator that he decided to switch on to the agreement of July 1964 for resolving the

dispute between the parties. Now this approach of the learned arbitrator is not legally correct His jurisdiction to enter upon and proceed with the

reference was the order of this Court which was founded on an applications made to it by the Petitioner in which has based his claim upon the

agreement of July 1965. Clause 17 of this agreement in July 1965 gave authority to the arbitrator to resolve disputes between the parties which

arose o(sic) of or concerning the subject matter of this agreement. The agreement of 1964 was only for a period of one year which expired in July

1965; therefore it ceased to operates thereafter when a new agreement for are other year was executed in July 65. this arbitrator could not

therefore traverse beyond the terms of this agreement of 1965 and look into the terms of the agreement of 1964 for resolving the disputes between

this parties. The observations made by their, Lordships of Supreme Court in AIR 1962 S C 1810 (supra) and relied upon by the learned Counsel

for the Respondents have been given in a different context. At any rate it was not for the arbitrator to decide to look into the terms of the lease

agreement of 1964 for af(sic)brding relief to the Petitioner. At best the Petitioner could have moved the court in this behalf and sought modification

of the order of reference. But this has not been one. The arbitrator could not suo motu refer to an extraneous document upon which the reference

was not founded. Therefore I (sic)n in agreement with the learned Counsel for the Respondents that the arbitrator has gone on a wrong track by

looking into a different agreement, I also agree with him that the agreement of July 1965 in which is imbodied the arbitration clause is not valid

(sic)s it does not fulfil the requirements of Article 299 of the Indian Constitution. There(sic)bre, the award given by the arbitrator is not sustainable

in the eye of law and is void Because of the invalidity of the lease agreement

As the award has been declared void, therefore there is no necessity to go into the other questions raised by the Respondents which affect the

merits of the arbitration Proceedings.

For the foregoing reasons the objection raised by the Respondents must, thereare, prevail. The application is, therefore, allowed and the award

is set aside but without any order as to costs.