Rajneesh Kumar Garg and Others vs Inderjit Garg and Others

Amit Rawal, J—The challenge in the present appeal is to the order dated 18.3.2006 passed by the Additional District Judge, Panchkula, whereby the objections filed by respondent-Inderjit Garg to the award, have been accepted.

Ashok Aggarwal, learned Senior Counsel assisted by Mukul Aggarwal Advocate appearing on behalf of the appellants has raised manifold arguments, which are summarized herein below:-

a) The Additional District Judge, Panchkula has exceeded his jurisdiction in accepting the objections as the award does not fall within the parameters/provisions of Section 34 of the Arbitration and Conciliation Act, 1996 (for short "1996 Act");

b) Respondent Inderjit Garg submitted the claim by putting all the properties in the claim statement before the arbitrator and in support of that, he has referred to the statement of claims, which is at pages 413 to 425 of the record;

c) The authorization given by all the persons would indicate that the properties in their individual names were put to reference, to be decided by the arbitrator and in order to lend support, he has referred to the Authorization-cum-Commitments of the parties, i.e., Inderjit Garg, Sunaina Bhatnagar, Manju Garg and Rajneesh Kumar, which are at pages 389 to 395 of the record;

d) The scope of the objections purported to have been filed under Section 34 of the Act is very limited and in support of his submission, has referred to the judgment of the Hon''ble Supreme Court in Sachin Gupta and Another Vs. K.S. Forge Metal Pvt. Ltd., (2013) 1 ARBLR 535 : (2013) 2 RCR(Civil) 317 : (2013) 3 SCALE 250 : (2013) 10 SCC 540 to contend that the learned Single Judge should not convert itself into a Court of First Appeal and the Judges are required to be restrained and circumspect in use of the language while criticizing the conduct of the parties;

e) The Additional District Judge has committed an illegality and perversity in setting-aside the award without referring to the aforementioned documents and, thus, there is an error apparent on the record and, therefore, the order is illegal, capricious and erroneous;

f) Everyone to the dispute has accepted the award and there is no objection by the daughter, daughter-in-law, son except father, namely, Inderjit Garg. The reasons assigned by the Additional District Judge while accepting the objections are not only fallacious, but erroneous.

Mr. Ashwani Talwar, learned counsel appearing on behalf of the respondents has raised the following submissions in support of the impugned order:-

i) The authorization letter given by the respondent to the arbitrator was only in respect of the properties of Sudarshan Garg, deceased-wife and not with regard to the properties of all other legal heirs, much less, siblings;

ii) The arbitrator has not given the award in consonance with the law for the time being in force and, thus, there is violation of provisions of Section 28 of 1996 Act;

iii) The award is also in consonance with the provisions of Section 31(3) of 1996 Act as it has assigned no reason in support of the findings. In support of his argument, learned counsel has relied upon the following judgments:-

a) Oil and Natural Gas Corporation Ltd. Vs. SAW Pipes Ltd., AIR 2003 SC 2629 : (2003) 2 ARBLR 5 : (2003) 3 CompLJ 1 : (2003) 4 JT 171 : (2003) 4 SCALE 92 : (2003) 5 SCC 705 : (2003) 44 SCL 89 : (2003) 3 SCR 691 : (2003) 2 UJ 1035 to contend that the provisions of Sections 28 and 31 of the Act have conjointly to be read into while dealing and deciding the objections under Section 34 of the 1996 Act and in case the award is found in contravention of the aforementioned provisions, then it is contrary to the basic concept of justice and patently illegal.

b) Anand Brothers P. Ltd. Vs. Union of India (UOI), AIR 2015 SC 125 : (2014) AIRSCW 5458 : (2014) 10 SCALE 313 : (2014) 9 SCC 212 to contend that the award has to be speaking and the expression to be given should be in ordinary literal meaning having regard to the context in which same is used.

c) In Union of India (UOI) Vs. G.S. Atwal and Co. (Asansole), AIR 1996 SC 2965 : (1996) 2 JT 607 : (1996) 2 SCALE 447 : (1996) 3 SCC 568 : (1996) 2 SCR 940 it has been held that the arbitrator cannot enlarge the scope of the dispute unilaterally.

d) In Tamil Nadu Electricity Board Vs. M/s. Bridge Tunnel Constructions and others, AIR 1997 SC 1376 : (1997) 2 ARBLR 1 : (1997) 2 CTC 178 : (1997) 3 JT 467 : (1997) 2 SCALE 653 : (1997) 4 SCC 121 : (1997) 2 SCR 132 : (1997) AIRSCW 1491 : (1997) 3 Supreme 365 , it has been held that where the award is non-speaking as the arbitrator has committed error in jurisdiction, the award is liable to be set-aside.

e) McDermott International Inc. Vs. Burn Standard Co. Ltd. and Others, (2006) 2 ARBLR 498 : (2007) 3 CompLJ 213 : (2006) 11 JT 376 : (2006) 6 SCALE 220 : (2006) 11 SCC 181 : (2006) 2 SCR 409 Supp to contend that the intervention of the Court envisages only in few circumstances, like fraud or bias by the arbitrator, much less, violation of the principles of natural justice and Court cannot correct errors of the arbitrators.

I have heard the learned counsel for the parties and appraised the paper book.

Before adverting to the aforementioned contentions, it would be apt to refer Sections 28(1), 31(3) and as well as Section 34 of the 1996 Act, which read thus:-

"28. Rules applicable to substance of dispute.--(1) Where the place of arbitration is situate in India,--

(a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;

(b) in international commercial arbitration,--

(i) the arbitral tribunal shall decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute;

(ii) any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country and not to its conflict of laws rules;

(iii) failing any designation of the law under clause (a) by the parties, the arbitral tribunal shall apply the rules of law it considers to be appropriate given all the circumstances surrounding the dispute.

Form and contents of arbitral award.-(1) and (2)

xx xx xx xx

(3) The arbitral award shall state the reasons upon which it is based, unless--

(a) the parties have agreed that no reasons are to be given, or

(b) the award is an arbitral award on agreed terms under section 30. 34 Application for setting aside arbitral award.--

(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).

(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 decisions 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.

Explanation.--Without prejudice to the generality of sub-clause (ii) of clause (b), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81.

(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:

Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.

(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award."

On conjoint reading of the aforementioned provisions, it is discernible that the parameters for the Principal Court to entertain the objections are limited. In order to lend support to the aforementioned observation, I rely upon the ratio decidendi culled out in Sachin Gupta''s case (supra) to hold that this Court would not convert itself into a Court of First Appeal and shall be restrained, much less, circumspect while taking into consideration the conduct of the arbitrator.

For adjudication of the controversy raised in the present appeal, it would also be necessary to reproduce the Authorization-cum-Commitments, much less, the claim filed by the respondent. The Authorization-cum-Commitments of all the parties to the dispute is extracted herein below:-

"1. Authorization cum Commitments

It is record with sorrow that my wife Smt. Sudarshan Garg passed away on 11-1-2000. She left behind some properties, F.Ds unsecured loans and shares in family concerns which need to be apportioned among the legal heirs, namely I (Inderjit Garg), Rajneesh Kumar and Sunaina, as husband, son and daughter respectively of the deceased. All of us hold properties in our own names also. Smt. Manju, W/O. Rajneesh Kumar also holds some property.

In the nature of human behavior and counter-claims have emerged in respect of the properties not held in their own name by the above named person.

To avoid misunderstandings as to individual claims and counter-claims and to smoothen these differences, it is advisable to avail the good offices of a close family friend who holds interests of all the members of the family dear to his heart in equal measure.

For this, I believe that Shri S.K. Sud Advocate, is best suited. He has very kindly consented to be the arbitrator for this purpose.

Accordingly I request Shri S.K. Sud to undertake this job and I repose my full faith in him. The decision taken by him shall be binding on me.

(Inderjit Garg)

Dt. 21st Aug, 2003.

CONSENT TO THE APPOINTMENT OF ARBITRATOR

It is to record with great sorrow that consequent to the demise of my mother, Smt. Sudarshan Garg, and in the matter of apportionment of properties left behind by her, counter-claims have emerged in respect of the properties held by me. These need be smoothened by means of arbitration.

It is with satisfaction that Consensus has emerged to have Shri S.K. Sud, Advocate as the sole Arbitrator to give his award as to claims and counter-claims.

I repose my full faith in Shri S.K. Sud, Advocate. I undertake to bind myself with the decision to be taken by him.

(Sunaina Bhatnagar)

Dated Aug 20, 2003

I, Manju Garg, wife of Mr. Rajneesh Garg, resident of 125, Sec-6, PKL give my willing consent to take Mr. S.K. Sood as arbitrator for deciding the family dispute of property, fixed assets and liquid assets.

I will accept the decision given by the arbitrator, Mr. S.K. Sood advocate and request the arbitrator to decide it quickly.

23/8/03

Thanking you, Manju Garg.

I, Rajneesh Kumar s/o. Sh. Inderjit Garg R/o. 125, Sector 6, Panchkula, agree to appoint Sh. S.K. Sud Advocate as arbitrator for deciding on the property and assets.

The issue of property and assets has arisen mainly after the death of my mother. The dispute is not only of the property & assets held in the name of my mother but also for the properties & assets held in the name of other family members.

Rajneesh Kumar 125/6 PKL

22.8.03"

On going through the aforementioned authorization, it is discernible that the parties to the dispute had put entire properties other than the properties owned by late Sudarshan Garg.

Respondent-Inderjit Garg had written a letter dated 14.9.2003, whereby he had empowered the arbitrator to resolve the family dispute, much less, gave him liberty to adopt the procedure on his own discretion. The relevant part of the letter, referred to above, reads thus:-

"The above said statement is being submitted in pursuance to the directions given by the Hon''ble Arbitrator. As the Arbitrator is to resolve the family dispute and the procedure to be evolved for this purpose is entirely his own discretion, in the present submissions, I have just given a brief resume of each property and its sources."

Along with the aforementioned letter, claim statement was also filed, wherein it was specifically mentioned that he had sought the indulgence of the arbitrator in respect of each properties enabling him to assess the entitlement of each of the claimants. The details of the properties are given as under:-

Against every column of the details of the property, he had also sought a claim. The arbitrator without adverting to the source/resources in respect of the acquisition of the properties, ibid, passed the award according to respective shares of the parties.

The contention of Mr. Talwar that the award of the arbitrator lacks reasoning, in my view, is not tenable for the reason that the arbitrator has given the award while taking into consideration the claim filed by Inderjit Garg, though there is no dispute to the ratio decidendi culled out in the judgments cited by Mr. Talwar, but it is equally to be noticed that facts and circumstances of each case have to be taken into consideration for arriving at a decision.

Once respondent Inderjit Garg had himself submitted to the jurisdiction of the arbitrator by giving the description of all the properties owned by him, other than the properties belonging to Sudarshan Garg, there was no occasion for the arbitrator only to delve upon the properties left by Sudarshan Garg. The claim statement submitted by Inderjit Garg would override the authorization. It was a prerogative of the respondent to confine his prayer/adjudication of the dispute only to the assets of Sudarshan Garg, but he enlarged the scope of the arbitrator by putting entire properties owned by him, which fact is evident from the list of the properties, noticed above.

I am in agreement with the contention of Mr. Aggarwal that the learned Additional District Judge, while accepting the objections, has not taken into consideration the statement of claim, rather there is no passing reference to the details of the properties indicated in the claim, much less, contents of the letter dated 14.9.2003.

In my view, the impugned order passed by the Additional District Judge, suffers from not only illegality but perversity. The Additional District Judge, while entertaining the objections, was required to take into consideration the parameters/provisions of Section 34 of the 1996 Act in strict sense, of course by taking into consideration the provisions of other sections, i.e., 28(1) and 31(3) of the 1996 Act. The ratio decidendi culled out by the Hon''ble Supreme Court in Oil & Natural Gas Corporation Ltd. (supra) would not be applicable in the instant case for the reason that the respondent, in his own authorization, enlarged the scope of the arbitrator by submitting the claim in respect of properties not owned by him but by his children also.

There is another aspect of the matter. The dispute primarily revolves between the father and the son. It is most unfortunate that the father and son are fighting tooth and nail and particularly the father, who had filed the objections to the award.

This Court cannot remain oblivious of the fact that since the age of the father, which has been stated at bar to be 85 years, it would not be in the fitness of things to allow the parties to indulge into embroilment and rather this Court expects that wisdom would dawn upon the parties to the lis to live peacefully and happily.

It is expected that the appellant, being the only son of the respondent, would not indulge into any insinuation, much less, cause any harassment to his father at this stage of his life.

The arbitrator had confined the relief only to the properties which have been claimed in the claim statement and, therefore, it was not within the domain of the Principal Court to accept the objections while not noticing the claim.

In view of the reasons given herein above, the impugned order dated 18.3.2006 is set-aside and the award is restored.

It is expected that the parties to the lis would maintain the cordial relations among themselves and the appellant would extend the respect to his elderly father.

The appeal is accordingly allowed.