Vedavalli Ammal vs C. Raghavaohari and Another

Pandalai, J.—This is an application to set aside an award u/s 14 of the Indian Arbitration Act, on the ground that the arbitration was

incompetent for want of jurisdiction and also that there was no dispute such as would have furnished the basis for an award.

The 1st respondent was the lessee of some land a portion of which he sub-leased to the 2nd respondent. The 2nd respondent erected

superstructures upon the leasehold property under the terms of the lease, For so doing, he borrowed money from the 1st respondent and

mortgaged his own leasehold interest to him although the mortgage deed was taken in his mother''s name. All this seems to have taken place about

the year 1912. On the 23id of July, 1928, the 2nd respondent lessee agreed to transfer or sell his leasehold interest to the present petitioner. The

1st respondent apparently wanted to prevent the petitioner from acquiring the leasehold right and with that object, wrote on the 28th of July to the

petitioner''s lawyer, that the petitioner''s contract to buy would not avail as the 1st respondent''s mother had under the mortgage a right of pre

emption in the leased property. This was denied on the part both of the petitioner and of the 2nd respondent, though the latter seems to have been

at first dallying with the allegation of preemption by the 1st respondent. Finding the allegation of right to pre-empt useless, the 1st respondent on

the 30th of July wrote to the 2nd respondent alleging that the lease had been forfeited by non-payment of rent for more than twelve months and

calling upon him, in accordance with a clause in the lease-deed, to appoint an arbitrator to value the structures. The 2nd respondent wrote to say

that the nonpayment of rent had not been willful but that it was more or less tolerated by the lesson himself who wanted that the rent should be paid

along with the interest on the mortgage money. The 1st respondent thereupon purported to appoint an arbitrator on the footing that the lease had

been forfeited and invited the 2nd respondent to appoint another arbitrator in his turn. To this invitation the 2nd respondent replied on the 9th of

August that no occasion had arisen for any reference whatever, but the 1st respondent was adamant. He proceeded to appoint one Kuppuswami

Mudaliar, surveyor and draftsman, as the sole arbitrator, purporting to act u/s 9 (6) of the Arbitration Act. This gentleman on the 24th of October

called upon all the parties now before the Court to appear before him on the 28th of that month to make any representations they wanted with

regard to the market value. Neither the present petitioner nor the 2nd respondent appeared and athereupon Kuppuswami Mudaliar purported to

make an award assessing the lessee''s superstructures and trees at Es 1,650 and ordering the present petitioner and the 2nd respondent to transfer

their interests in the leasehold property to the 1st respondent on receipt of that amount. It is this award which has been filed by the 1st respondent

in Court and is sought to be set aside.

The first objection taken to this application is that it is incompetent because it is founded upon the allegation that the arbitrator had no jurisdiction

whatever. The petitioner''s allegation is that the arbitration clause in the lease would come into force only on the determination of the lease. That is

found to be correct by reference to the lease-deed. The petitioner says that the lease had not determined and that, therefore, the arbitration was

incompetent. If that is so, undoubtedly the arbitrator was acting without any jurisdiction. The point taken for the 1st respondent is that an objection

of that character of wait of jurisdiction must be taken only by a separate suit and not by way of a notice of motion like the present. The only

authority cited for that is the decision in Matulal Dalmia v. Ramkissen Das Madam Gopal 69 Ind. Cas. 568 : 47 C. 806. It was not decided there

that an objection to jurisdiction should not be decided u/s 14 of the Arbitration Act. All that happened was that the Court in that case thought that

the objection to the award had better be tried by a separate suit. But there is the highest authority for saying that an objection to jurisdiction may be

taken by way of motion, although that may not be the only remedy; see the decision of the Privy Council in Sasoon and Co. v. Ramdutt Ramkissen

Das 70 Ind. Cas. 777 : 50 C. 1 : AIR 1922 P.C. 374 : 37 C.L.J. 336 : 44 M.L.J. 758 : 27 C.W.N. 660; (1923) M.W.N. 372 : 18 L.W. 537 :

49 I. A 366 (P.C.) where it was held that an award objected to on the ground of want of jurisdiction in the arbitrator could be vacated by way of

application u/s 14 of the Act to set aside the award although that was not the only remedy open to the aggrieved party. To the same effect is the

decision of our own Court in Arunachela Iyah v. Louis Dreyfus and Co. 107 Ind. Cas. 793 : 27 L.W. 267 : 39 M.L.T. 563 : AIR 1928 Mad.

167; (1928) M.W.N. 132. I, therefore, must overrule the preliminary objection that this application does not lie.

On the merits, it seems to me, the case is a very plain one. The correspondence filed shows, to my mind, as clearly as any facts can, that the 1st

respondent was trying by hook or crook to prevent the sale of the leasehold interest of the 2nd respondent to the petitioner. His first pretence was

that there was a right of pre-emption attached to the mortgage taken in favour of his own mother but really by himself This was never abandoned,

in fact, it is repeated in the letter of the 30th of July, where the supposed forfeiture is first mentioned. So far as the right of pre-emption is

concerned, there is not a word in the affidavits to support it. It was a pure pretence and must have been known to the such. When this was found

useless, the next pretence was that the lease had been forfeited. There is clear evidence in the correspondence to show that this pretence had its

origin between the 28th of July and the 30th of July when a new lawyer was engaged. On the 28th the 1st respondent had challenged the petitioner

with this right of pre-emption; which means that on that day the leasehold interest of the 2nd respondent was so far as he was concerned, at any

rate, good, valid and existing. But two days later the same individual through another lawyer discovered that the lease had been forfeited by non-

payment of rent at twelve annas per month for 22 months and this pretence was the foundation for all that subsequently happened. The rent was

actually sent by the 2nd respondent by money order and on the 2nd of August that is long before the appointment of the arbitrator, it was refused

by the 1st respondent''s lawyer. Five days after this the arbitrator was appointed a step which was at once met by the 2nd respondent with the

statement that there had been no forfeiture whatever and no occasion for appointing an arbitrator.

I am of opinion that the lease was never forfeited and that the 1st respondent never treated it as forfeited. The letter of the 30th of July was a

mere pretence to call into play the clause in the lease-deed which enables the ascertainment of the value of superstructures, if in dispute, by

arbitration but only after the determination of the lease. To call that into operation the lease had to be first terminated and the only excuse which the

1st respondent could think of to terminate the lease and defeat the sale to the petitioner was that the rent had fallen into arrears. As a matter of fact,

it is seen from the rent receipts which are filed that, by a practice which apparently had the sanction of the 1st respondent himself, the rents were

being paid at irregular iatervals, the rent for 1996 being paid so late as 1998. The rent wa9 twelve annas a month bat the mortgage interest was

very much more. The lessee had to pay as interest on the1 mortgage a very much larger sum and that was the reason why the twelve annas a

month was treated by both parties as of no importance. That it was so is seen from what happened. So late as the 2dth of July the Ist respondent

thought nothing of the fact that this sum of Rs. 17-4 0, 22 months rent, had not been paid; but on the contrary insisted on repurchasing the lease

but suddenly it became something to be made use of when the lease had to be determined. My finding on this point is that the 1st respondent had,

never, till the 30th of July intended to forfeit the tenancy on the ground of non-payment of rent but with knowledge of that fact, expressly purported

to keep it alive till the 28th of that month. I am opinion, therefore, that there was no valid forfeiture and that if by non payment of rent any forfeiture

had been incurred, it had been waived, and the 1st respondent was not in a position to avail himself of it on the 30th of July.

I do not think it necessary to enter into the other points urged. I consider the whole of the first respondent''s proceedings leading to the alleged

arbitration to be a piece of trickery.

There must be an order setting aside the award and the 1st respondent must pay the taxed costs of the petitioner. Certify for two Counsel.