THE HONOURABLE SRI JUSTICE C.V. NAGARJUNA REDDY AND THE HONOURABLE Ms. JUSTICE J. UMA DEVI
C.M.A. No.1057 of 2013
22-09-2017
Pusapati Madhuri Gajapathi Raju Appellant
Pusapati Ananda Gajapathi Raju, (died), per legal representatives and others Respondents
Counsel for the Appellant: Mrs. Sundari R. Pisupati
Counsel for respondent Nos.2 and 3 : Mr. V. Ravinder Rao, Senior Counsel, for Mr. V.N. Anagani
Counsel for respondent Nos.4 and 5 : Mr. E.V.V.S. Ravi Kumar
Counsel for respondent No.6 : Mr. D.V. Sitarama Murthy, Senior Counsel, for Mr. N. Aswini Kumar
Counsel for respondent Nos.8 and 9 : Mr. M. Adinarayana Raju, for Mr. Koka Satyanarayana
<GIST :
>HEAD NOTE :
? CITATIONS:1. AIR 1985 SC 628
2. (1997) 2 SCC 397
3. (2010) 1 SCC 549
4. (2014) 9 SCC 263
5. (2015) 3 SCC 49
6. 2 (1893) 6R67 (HL)
7. (1998) 3 SCC 561
8. (2001) 7 SCC 69
9. AIR 1965 SC 214
10. AIR 1923 PC 66
11. (1991) 4 SCC 93
12. (2006) 11 SCC 181
THE HONBLE SRI JUSTICE C.V. NAGARJUNA REDDY
AND
THE HONBLE Ms. JUSTICE J. UMA DEVI
THE COURT DELIVERED THE FOLLOWING:
COMMON JUDGMENT: (per the Honble Sri Justice C.V. Nagarjuna Reddy)
These two civil miscellaneous appeals are directed against order and
decree dt.24.06.2013 in Arbitration O.P. No.631 of 2007 on the file fo the
Court of the District Judge, Vizianagaram.
For convenience, the parties are referred to as they are arrayed in
C.M.A. No.1057 of 2013.
2. The facts to the extent they are relevant for the purpose of adjudication
of these appeals are stated hereunder.
Dr. P.V.G. Raju had three children through his first wife Kusum. They
are respondent Nos.1 to 3. Under registered document dt.19.10.1957 the
coparcenary status of Dr. P.V.G. Rajus family was put an end to. On
12.11.1958 Dr. P.V.G. Raju constituted a public Trust, by name MANSAS.
Certain immovable properties belonging to the erstwhile joint family were
vested in the said Trust for educational and charitable purposes. On
18.06.1960 partition of certain agricultural lands by metes and bounds has
taken place between Dr. P.V.G. Raju and respondent Nos.1 and 2 - his two
sons. By settlement deed dt.18.6.1960 some agricultural lands were settled
in favour of respondent No.3 daughter of Dr. P.V.G. Raju, through his first
wife. Some other properties were also allotted to respondent No.3 under
1960 partition. It was agreed that the properties were to be registered in
each sharers individual name. Separate possession was delivered to each of
them. In the year 1963 Dr. P.V.G. Raju divorced his first wife Kusum and
married the appellant. After P.V.G. Raju had three children, i.e., respondent
Nos.4 to 6, through the appellant, as certain issues out of the previous
partition arose, the same were referred to arbitration, under an agreement
entered on 03.10.1970 between Dr. P.V.G. Raju, respondent Nos.1 to 3, the
appellant and respondent Nos.4 to 6, to Raja of Bobbili. The reference of the
dispute pertains to the properties covered by the previous partition, and
settlement by way of a fair and equitable division of the properties among the
parties. On 28.06.1971, Raja of Bobbili gave his award. All the properties
specified in schedules A to H were allotted to all the eight members of the
family. The award was duly registered and was also made the decree of the
Court on 21.4.1972 in O.S. No.70 of 1971. Under this award, twenty nine
items of jewellery were partitioned as per joint note singed by all the parties.
3. Respondent Nos.1 to 3 filed O.S. No.29 of 1974 in the Sub-Court,
Vizianagaram, for division by metes and bounds of the properties mentioned
in schedules I to VIII of the plaint, as per the shares specified therein. The
suit was partly decreed and the properties specified in the award were ordered
to be partitioned by metes and bounds. A preliminary decree was drawn up in
respect of the specified items and the suit for the rest of the items was
dismissed. Feeling partly aggrieved by the said judgment and decree,
respondent Nos.1 to 3 filed A.S. No.283 of 1980 before this Court. By
judgment dt.24.07.1992 this Court has dismissed the appeal while allowing
the cross-objections in part, with respect to scheduleI properties.
Respondent Nos.1 to 3 filed Civil Appeal No.5251 of 1993 before the Supreme
Court. On 14.09.1995, Dr. P.V.G. Raju died. On 08.03.2000 all the parties
jointly filed an application before the Supreme Court to refer the disputes for
arbitration. A former Judge of the Supreme Court, Justice S. Ranganathan,
was appointed as the Arbitrator by order dt.28.03.2000, of the Supreme
Court. A claim petition was filed before the Arbitrator on 16.09.2000. On
26.05.2007 the Arbitrator made an interim award. Feeling aggrieved by the
said award, the appellant filed Arbitration O.P. No.631 of 2007 in the Court of
the District Judge, Vizianagaram. The said O.P. was dismissed by order
dt.24.06.2013. Assailing this order, C.M.A. No.1057 of 2013 is filed.
Respondent Nos.4 and 5 filed C.M.A. (SR) No.27224 of 2015 with a delay of
641 days against the said order.
4. Smt. Sundari R. Pisupati, learned counsel for the appellant, submitted
that the learned Arbitrator travelled beyond the scope of reference inasmuch
as, while all the properties partitioned in the year 1960 and also under the
award of the Arbitrator made in 1971 were to be divided into seven equal
shares and one such share to be allotted to each of the parties to the appeal,
the learned Arbitrator has relied upon previous arbitration award and failed to
allot shares to the respective parties as agreed in the joint application for
reference. She has further submitted that the Arbitrator has committed a
serious error in not allotting the ninety-nine diamonds and one emerald ring
given to the appellant in 1971, even though it was proved that the same are
stridhana property of the appellant. In support of her submissions, she relied
upon the judgments in Pratibha Rani v. Suraj Kumar , Rashmi Kumar v. Mahesh
Kumar Bhade .
5. Mr. E.V.V.S. Ravi Kumar, learned counsel for the appellants in
C.M.A.(SR) No.27224 of 2015, adopted the submissions of the learned counsel
for the appellant in C.M.A. No.1057 of 2013.
6. Opposing the above submissions, Mr. V. Ravinder Rao, learned Senior
Counsel for respondent Nos.1 to 3, submitted that the learned Arbitrator was
very much conscious of the scope of reference of the disputes, that he has
only passed an interim award, by leaving several further determinations and
the task of physical division of the properties to be considered in the final
award with reference to the value of each item of the property and directing
making of such adjustments as may be necessary and that therefore such an
interim award is not liable to be interfered with. The learned Senior Counsel
further submitted that the scope of interference with arbitration awards is
limited to the grounds mentioned in Section 34 of the Arbitration and
Conciliation Act, 1996 (for short, the Act) and that the interim award does
not suffer from any errors which fall within the scope for interference. The
learned Senior Counsel has taken the Court through various portions of the
award. He has also referred to and relied upon the judgments in Madnani
Construction Corporation Private Limited v. Union of India , Oil and Natural
Gas Corporation Ltd. V. Western Geco International Ltd. and Associate
Builders v. Delhi Development Authority . As regards the ninety-nine
diamonds and one emerald ring, the learned Senior Counsel submitted that in
the year 1971 Dr. P.V.G. Raju has given these diamonds and emerald ring to
respondent Nos.1 to 3, and that after allotment of these items to the said
respondents he has stopped showing the same in the wealth tax returns. He
has further argued that even as per the pleading of the appellant, Dr. P.V.G.
Raju has placed the jewellery at the disposal of the family on being coerced by
respondent No.1 in lieu of discharge of certain liabilities of Dr. P.V.G. Raju.
The learned Senior Counsel submitted that the obligation towards Stridhana
property lies with the husband only and that too the same is a moral
obligation and not legal obligation and that such moral obligation does not
bind the third parties. He has further argued that the appellant is a signatory
to the list of the properties in the year 1971 and that she has voluntarily
given up her claim over these items. He has further submitted that the
learned Arbitrator has given cogent reasons for not accepting the claim of the
appellant with regard to this item of the property, that the scope of
interference with an arbitral award being limited, the lower Court has rightly
dismissed the O.P. and that as the scope of the appeal under Section 37 of the
Act is equally limited as that of the lower Court, the Award of the learned
Arbitrator is not liable for interference.
7. We have carefully considered the respective submissions of the learned
counsel for the parties with reference to the material on record. Having
regard to the rival submissions of the learned counsel for the parties, the
following points emerge for consideration.
(i) Whether the Arbitrator has exceeded the scope of reference while
passing the Award with regard to the properties other than the
Stridhana property?
(ii) Whether the award relating to the Stridhana property is
sustainable?
(iii) Whether the award is in the nature of interim award or final award?
and,
(iv) Whether the award is liable to be interfered with?
Re Point (i)
8. All the parties have filed a joint memo, vide I.A. No.6 of 2000 in Civil
Appeal No.5251 of 1993. The reference of the dispute delineated in the said
I.A., is as follows:
(i) The entire subject matter of the appeal in dispute including the
properties that were partitioned in 1960 between late P.V.G. Raju
and his two sons Sri P. Anand Gajapathi Raju and Sri P. Ashok
Gajapathi Raju, and the lands given to daughter Smt. Sunita Prasad
and the properties that were divided in the award proceedings in
pursuance of the award of Kumararaja of Bobbili of 1971;
(ii) All the shares with companies, certificates, bonds, Government
securities and all movable and immovable properties mentioned in
para (i) including impartible properties except those which have been
alienated by late P.V.G. Raju during his life time before his death on
14.11.1995, subject to proof, will be divided into seven equal shares
and allot one such share to each of the parties to the appeal;
(iii) The arbitrator will also take into account 99 diamonds and one
emerald ring given to the appellants in 1971 and claimed to be
streedhana property of Smt. Maduri V. Raju. The arbitrator will
decide whether the aforesaid items are the streedhana properties or
not of Smt. Madhuri V. Raju. In case the arbitrator comes to the
conclusion that the said diamonds and emerald ring are not
streedhana property of Smt. Madhuri V. Raju, all the parties to the
appeal are entitled to 1/7th share equally in the said diamonds and
emerald ring; and
The arbitrator will not take into account the findings recorded by the
courts below.
The learned counsel for the appellant submits that as the whole issue of
partition was thrown open with specific reference to 1960 partition and 1971
award, the Arbitrator ought not to have been guided by the said two
instruments and that in the light of the specific agreement between the
parties that all the shares with companies, certificates, bonds, Government
securities and all movable and immovable properties, except those which are
alienated by P.V.G. Raju during his life time will be divided into seven equal
shares and one such share be allotted to each of the parties to the appeal, the
learned Arbitrator has erred in considering 1960 partition and 1971
arbitration award as still existing and allowed himself to be guided by those
instruments. Dealing with this contention urged before him, the learned
Arbitrator rendered the following finding:
Above all, the contention is based on the assumption that the 1960 and
1971 partitions have disappeared or been obliterated which is an incorrect
assumption. These two partitions are legally alive and effective, one by way of a
registered partition deed and the other by a decree of a court passed on
21.04.1972. The respective parties had acquired rights in specific items of
property thereunder. Nothing has happened to obliterate them. For
understandable reasons, the earlier partitions dealt with only some of the
properties of the family. Now the members male and female have agreed to
divide all the properties in equal shares and they have agreed that, while doing this,
the earlier partitions should also be taken into account and a comprehensive
partition decided upon. For doing this, it is open to, but not obligatory, on the
arbitrator to scrap the earlier partitions altogether. If, and to the extent, the
arbitrator decides to retain the earlier partitions in tact, they will continue to remain
effective. It is only if he decides otherwise that his decision may have the effect in
law of superseding the earlier arbitrations.
9. On a careful consideration of the reasoning of the learned Arbitrator,
we feel that it is a plausible one. It does not flow from the three clauses of
the joint application for reference that the Arbitrator must completely ignore
the partition deed and the arbitration award or that these two instruments
have outlived their purpose. The learned Arbitrator has specifically observed
that male and female members of the family have agreed to divide all the
properties in equal shares and that they have also agreed that while doing
this, the earlier partitions should also be taken into account and a
comprehensive partition decided upon. In paragraph 142 of the award, the
learned Arbitrator also placed on record the agreement of all the parties that
the award of 1971 may be permitted to stand, save for the modification now
necessary to partition the lands allotted to P.V.G. Raju. However, he has also
recorded the dissent of the appellant on the ground that there was an error in
the list of properties allotted to respondent No.5 (respondent No.3 before the
Arbitrator), who is the second son of the appellant. The Arbitrator of course
found this contention as flimsy and rejected the same by giving detailed
reasons. It is in this context, that the learned Arbitrator opined that it is open
but not obligatory for him to scrap the earlier partitions altogether and that
only to the extent that he decides to continue to allow the previous partitions
in tact, they remain effective.
10. Irrespective of whether the earlier partition and the arbitration award
must be retained or scrapped, the bottom-line is that all the properties
covered by the 1960 partition and also the arbitral award of 1971 except the
properties alienated by Dr. P.V.G. Raju during his lifetime, have to be divided
into seven equal shares and one such share to be allotted to each of the
parties to the appeal. The request of all the members of the family has also
been specifically recorded by the arbitrator in paragraph 141 of his award as
extracted hereinbefore. Being conscious of the fact that the parties have
agreed to the partition of the properties into seven equal shares, the learned
Arbitrator has directed that the properties should be so divided and allotted
among the parties. He has, however, made clear that by doing so, it will not
follow that each sharer will be entitled to 1/7th share in each asset as some
items have been divided differently under 1960 and 1971 instruments. Those
divisions have been accepted by the learned Arbitrator with slight
modifications. The Arbitrator further made it clear that the final adjustments
relating to the value of the properties allotted to each of the sharers will be
made while passing final award.
11. In the light of the above, it is not possible to accept the submission of
the learned counsel for the appellant that by taking into consideration the
previous partition and the award and in not allotting 1/7th share in each of the
items of the properties to all the sharers, the learned Arbitrator has exceeded
the terms of reference. In our opinion, the learned Arbitrator was not solely
guided by the previous partition and the award, but he declined to disturb the
arrangement made in those instruments wherever he found that such
arrangements were just and equitable. For the aforementioned reasons, point
No.(i) is held against the appellant.
Re Point No.(ii)
12. Ninety nine diamonds and one emerald ring claimed to be the Stridhana
property were included in items 20 and 22 of Schedule V of the claim petition
(item 6 of the schedule property in the counter claim by the appellant). The
reference of the dispute as agreed between the parties with regard to the
Stridhana property is contained in paragraph (1) clause (iii) which was already
reproduced hereinbefore. On a careful reading of this clause, the entire
dispute referred to the Arbitrator under this clause could be conveniently
divided into two parts. In the first part, the arbitrator has to first decide
whether the ninety nine diamonds and one emerald ring are the Stridhana
properties of the appellant. In the second part, the parties agreed that if the
Arbitrator holds that the property does not constitute Stridhana property of
the appellant, all the parties are entitled to 1/7th share equally. It is clearly
implied from the second part of the dispute referred to the Arbitrator, that the
diamonds and the emerald ring are not liable for partition, if they are held to
be the Stridhana property of the appellant. It further follows therefrom that if
the Arbitrator holds that the diamonds and the emerald ring constitute the
Stridhana property, the further question may not arise and it has to be
necessarily held that the appellant alone is entitled to the said property.
13. The appellant has contended before the Arbitrator that both these
items and also items 2, 6 and 7 of schedule V of the claim petition are not
partible. The learned Arbitrator in paragraph 121 of his award rendered an
unequivocal finding that category [A] items ninety nine diamonds and one
emerald ring, were shown in the wealth tax returns of Dr. P.V.G. Raju for the
assessment years 1965-66 and 1966-67 as Stridhana jewellery given to the
appellant. He has observed that it cannot also be disputed, having regard to
the status of PVG Raju, that he could, and normally would, have given
jewellery to his wife as Stridhana at the time of his engagement and marriage.
The trial court has also come to the same conclusion. Having held so, the
Arbitrator however referred to the division on 13.07.1971, the absence of
reference to these items in the PVG Rajus wealth statements post 1971, the
appellant handing over these items to late PVG Raju and the improbability of
the appellant throwing these items in the family hotchpot under coercion.
The learned Arbitrator also went into the legal position regarding the
Stridhana property with reference to the judgments in Browne v. Dunne ,
State v. Nahar Singh and Rajendra Prasad v. Darshana Devi and rendered a
finding that while there can be no doubt about the proposition laid down in
the aforementioned cases, the acceptance of the mere fact that the appellant
had helped her husband in this manner to meet his liabilities does not
invalidate the bona fides or validity of surrender of the jewels to her husband.
He then referred to the division of the properties under the 1971 award which
was allowed to become final by the decree of the court without any protest by
PVG Raju or the appellant.
14. While referring to the Judgments of the Supreme Court in Pratibha Rani
(1 supra), the learned Arbitrator held that in view of the division of the
properties in the year 1971, there is no need for reconsideration regarding the
Stridhana items. He relied upon the affidavit dated 28-7-2003 filed by the
respondents which reads:
On 13.07.1971 with the consent of the 1st respondent Late Sri P.V.G. Raju
divided some items of Jewellery into 8 equal Shares, including 99 Diamonds and an
Emerald Ring. A list was prepared and it was signed by the 1st respondent also.
The Claimants proposed that the parties should agree that each one could keep his
or her share without disturbing the partition. The 2nd and 3rd respondents have
agreed to the said proposal. There was no dissent by the 4th respondent. The
claimants further state that if the proposal is accepted by all, Claimants are
prepared to release the share of Late Sri P.V.G. Raju in these items in favour of
the respondents. It is further submitted that if the proposal is accepted the
Claimants agree that the total land allowed to be retained by the parties can be
divided into 7 equal shares, allotting one such share to each of the Claimants and
Respondents.
Considering the above extracted portion of the affidavit, the learned arbitral
Tribunal held as under :
I think the claimants would be acting fairly if they would adhere to this
offer. In other words, the allotment of 1971 regarding the items set out in
Schedule X to the claim petition among the seven parties now here will stand and
that the share allotted therein to PVG (I, 111) will stand allotted exclusively to the
four respondents in equal shares.
Subject to the above recommendations, it is held that these items can no
longer be treated as the stridhana and hence the exclusive property of R-
1 and that, as they have been already allotted to the three claimants in the division
of 13.07.1971, they cannot be considered for partition once again in these
proceedings.
The position regarding items 2, 6 and 7 have been considered earlier in
paras 86 to 90 ante and they have been found to have been gifted to R-1 by PVG
in his life time. The question of his competence to do is being considered below
under topic IV.
(emphasis supplied)
The learned Arbitrator further held as under:
So also, the exclusive right of Respondent-1 to the items of jewellery
given to her as Stidhana cannot be questioned but she had agreed to surrender
them and make them available for partition in 1971 and no case has been made
out for disturbing that division.
15. With reference to the plea of respondent Nos.1 to 3 that if the
Arbitrator decided that they have to return these items to the appellant, they
should be given some items in lieu thereof, the learned Arbitrator held that in
the event he accepts that the allocation of these items to respondent Nos.1 to
3 was the result of some coercion or fraud, the appellant is entitled to get
them back as her exclusive property following the ratio in Pratibha Rani (1
supra). He has further observed that the division of 1971 would have lost its
meaning and a repartition of the other assets included in the division may
have to be considered. The learned Arbitrator however held that in view of
the conclusions reached by him, there is no need for any such reconsideration
and the allotment of the items and he has accordingly confirmed these items
to respondent Nos.1 to 3. At the same time he has observed that these items
may have had, and continue to have, a special value to the appellant and he
would leave it open to the parties to work out an arrangement by which the
appellant can get the diamonds and emerald ring on payment in cash of their
value today or by transfer to respondent Nos.1 to 3 of some other jewellery of
equal value. He has accordingly left the arrangement entirely to the parties by
mutual consent.
16. Under Section 34(2)(a)(iv) of the Act, an award can be challenged if it
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. In a slew of judgments arising under
the Arbitration Act, 1940, the Apex Court held that the Arbitrator travelling
outside the scope of reference commits misconduct as envisaged under Section
30(a) of the said Act rendering the award invalid. Therefore these judgments
apply in all fours to a case where the Arbitrator travels beyond the scope of
reference.
17. In Jivarajbhai Ujamshi Sheth and others. v. Chintamanrao Balaji and
others after considering the judgment of the Privy Council in Champsey Bhara
& Co v. Jivrai Ballo Spinning & Weaving Co. Ltd. , the Supreme Court held
that the primary duty of the arbitrator under the deed of a reference in which
was incorporated the partnership agreement, was to value the net assets of
the firm and to award to the retiring partners a share therein. In making the
"valuation of the firm", his jurisdiction was restricted in a manner provided by
paragraph 13 of the partnership agreement. As the arbitrator has expressly
stated in his award that in arriving at his valuation, he has included the
depreciation and appreciation of the property, the arbitrator has travelled
outside his jurisdiction and the award was on that account liable to be set
aside. This was not a case in which the arbitrator has committed a mere error
of fact or law in reaching his conclusion on the disputed question submitted
for his adjudication. It is a case of assumption of jurisdiction not possessed by
him, and that renders the award, to the extent to which it is beyond the
arbitrator's jurisdiction, invalid. Hidayatulla, J, in his concurring judgment,
observed:
The first point is therefore to decide what were the limits of the arbitrator's
action as disclosed by the reference and the deed of partnership and then to see
what the arbitrator has actually done and not what he may have stated loosely in
his award. This is the only way in which the excess of jurisdiction can be found. If
the interpretation of the deed of partnership lies with the arbitrator, then there is
no question of sitting in appeal over his interpretation, in view of the passage
quoted above from Champsey's case (supra), but if the parties set limits to action
by the arbitrator, then the arbitrator had to follow the limits set for him, and the
Court can find that he has exceeded his jurisdiction on proof of such action.
18. In Associated Engineering Company v. Government of Andhra
Pradesh , the Supreme Court held:
27. If the arbitrator commits an error in the construction of the contract,
that is an error within his jurisdiction. But if he wanders outside the contract and
deals with matters not allotted to him, he commits a jurisdiction error. Such error
going to his jurisdiction can be established by looking into material outside the
award. Extrinsic evidence is admissible in such cases because the dispute is not
something which arise under or in relation to the contract or dependent on the
construction of the contract or to be determined within the award. The dispute as
to jurisdiction is a matter which is outside the award or outside whatever may be
said about it in the award. The ambiguity of the award can, in such cases, be
resolved by admitting extrinsic evidence. The rationale of this rule is that the nature
of the dispute is something which has to be determined outside and independent of
what appears in the award. Such jurisdictional error needs to be proved by
evidence extrinsic to the award
28. In the instant case, the umpire decided matters strikingly outside his
jurisdiction. He out stepped the confines of the contract. He wandered far outside
the designated area. He digressed far away from the allotted task. His error arose
not by misreading or misconstruing or misunderstanding the contract, but by acting
in excess of what was agreed. It was an error going to the root of his jurisdiction
because he asked himself the wrong question, disregarded the contract and
awarded in excess of his authority. In many respects, the award flew in the face of
provisions of the contract to the contrary.
29. The umpire, in our view, acted unreasonably, irrationally and
capriciously in ignoring the limits and the clear provisions of the contract. In
awarding claims which are totally opposed to the provisions of the contract to
which he made specific reference in allowing them, he has misdirected and
misconducted himself by manifestly disregarding the limits of his jurisdiction and the
bounds of the contract from which he derived his authority thereby acting ultra
fines compromissi."
19. Let us now apply the settled legal principles discussed above to the
instant cases. From the finding of the learned Arbitrator referred to above, it
is manifest that the diamonds and emerald ring were held to be the Stridhana
property of the appellant. But he opined that as the allotment of 1971 is
allowed to stand, they can no longer be treated as the Stridhana property of
the appellant. In our considered opinion, the limited scope of reference of the
dispute pertaining to the diamonds and the emerald ring is to decide whether
they are the Stridhana property or not and whether they continue to be the
Stidhana property or not. As per the unequivocal understanding among the
parties, if the items are held to be not the Stridhana property, they must be
divided into seven shares and one share has to be allotted to each of the
parties. With due respect, we feel that the learned Arbitrator having held that
the subject items were Stridhana property, has exceeded his jurisdiction by
proceeding further and holding that these items though Stridhana items once,
no longer continue to be Stridhana by falling back upon the 1971 award and
justifying retention of these items by respondent Nos.1 to 3. If the parties
have treated the 1971 award as sacrosanct, they would not have framed the
reference clause with respect to these items in the manner as they did. In
other words, if they intended that the Arbitrator must decide the further issue
whether the items ceased to be Stridhana, such intention would have been
clearly reflected in the reference. Reading the reference even in the most
liberal manner, such intention could not be culled out therefrom.
20. For the aforementioned reasons, we have no option except to hold that
the award of the Arbitrator in respect of the Stridhana property travels
beyond the scope of the reference and hence the same cannot be sustained.
This point is accordingly answered.
Re Point No.(iii)
21. Under Section 2(c) of the Act, arbitral award includes an interim award.
Under Section 31(6) of the Act, the Arbitrator may, at any time during the
arbitral proceedings, make an interim arbitral award on any matter with
respect to which it may make a final arbitral award. In Mc.Dermott
International Inc. v. Burn Standard Co. Ltd. and others , the Supreme Court
held that an interim award in terms of Section 31(6) may be a final award on
the matters covered thereby but made at an interim stage. Whether an award
is interim in nature or the same is intended to be final, in our view, depends
upon the true purport of the award gathered from the contents of the award.
Therefore, in order to decide this aspect, the award needs to be looked into.
22. Part IX of the award contains the heading CONCLUSIONS AND
INTERIM AWARD. It could be gathered from Points 1 to 10 under para-156
of the award that the learned arbitrator while holding that the properties have
to be divided into 7 equal shares and one share to each of the parties to be
allotted, he has however ruled out the possibility of such division with respect
to each asset. He did not allow the partitions of 1960 and 1971 to be
disturbed except to a small extent specified against the relevant items. In
para-157, the learned Arbitrator held as under :
Though the points of controversy between the parties have been decided
by this award, it will be only in the nature of an interim award as several further
determinations and the task of physical division of the properties are yet to be
considered. Appropriate orders recording the final partition will still have to be
made thereafter and, in so doing, it will also be necessary to consider the value of
the properties allotted to each of the sharers and direct such adjustments as may
be necessary monetarily or in specie. One more important aspect to be
considered at the time of the final discussion will be that of the mesne profits, if
any, payable by the sharers in respect of properties allotted to other remaining in
their possession. This will need a detailed consideration from several angles,
extents, date, quantum etc. and will have to be considered later. For these
purposes, the Tribunal will resume its sittings and pass appropriate orders after the
parties have had time to study the contents of this award.
23. In the above reproduced para, the learned arbitrator has made his
intention explicit that allotment of various items of properties to the parties is
only interim in nature pending further determinations and the task of physical
division has to be undertaken after the Tribunal resumes its sittings for making
the final award. We therefore agree with the submissions of the learned
Senior Counsel for respondent Nos.1 to 3 that the award in respect of
movable and immovable properties except the Stridhana property is only
interim in nature pending passing of a final award. This point is accordingly
answered.
Re Point No.(iv):
24. Having regard to the findings rendered above, the award is liable to be
interfered only with respect to the Stridhana properties and the same is
accordingly set-aside to the said extent alone. The Civil Miscellaneous Appeals
are accordingly allowed in part by confirming the order of the lower Court
confirming the arbitral award in all other respects.
As a sequel to disposal of the appeals, C.M.A.M.P. Nos.2190, 2191 and
2192 of 2013, 105 of 2015 and 1428 of 2016 in C.M.A. No.1057 of 2013, and
C.M.A.M.P. (SR) No.27230 of 2015 in C.M.A.(SR) No.27224 of 2015 shall
stand disposed of as infructuous.
_________________________
C.V. NAGARJUNA REDDY, J
________________________
J. UMA DEVI, J
22-9-2017
C.M.A. No.1057 of 2013
22-09-2017
Pusapati Madhuri Gajapathi Raju Appellant
Pusapati Ananda Gajapathi Raju, (died), per legal representatives and others Respondents
Counsel for the Appellant: Mrs. Sundari R. Pisupati
Counsel for respondent Nos.2 and 3 : Mr. V. Ravinder Rao, Senior Counsel, for Mr. V.N. Anagani
Counsel for respondent Nos.4 and 5 : Mr. E.V.V.S. Ravi Kumar
Counsel for respondent No.6 : Mr. D.V. Sitarama Murthy, Senior Counsel, for Mr. N. Aswini Kumar
Counsel for respondent Nos.8 and 9 : Mr. M. Adinarayana Raju, for Mr. Koka Satyanarayana
<GIST :
>HEAD NOTE :
? CITATIONS:1. AIR 1985 SC 628
2. (1997) 2 SCC 397
3. (2010) 1 SCC 549
4. (2014) 9 SCC 263
5. (2015) 3 SCC 49
6. 2 (1893) 6R67 (HL)
7. (1998) 3 SCC 561
8. (2001) 7 SCC 69
9. AIR 1965 SC 214
10. AIR 1923 PC 66
11. (1991) 4 SCC 93
12. (2006) 11 SCC 181
THE HONBLE SRI JUSTICE C.V. NAGARJUNA REDDY
AND
THE HONBLE Ms. JUSTICE J. UMA DEVI
THE COURT DELIVERED THE FOLLOWING:
COMMON JUDGMENT: (per the Honble Sri Justice C.V. Nagarjuna Reddy)
These two civil miscellaneous appeals are directed against order and
decree dt.24.06.2013 in Arbitration O.P. No.631 of 2007 on the file fo the
Court of the District Judge, Vizianagaram.
For convenience, the parties are referred to as they are arrayed in
C.M.A. No.1057 of 2013.
2. The facts to the extent they are relevant for the purpose of adjudication
of these appeals are stated hereunder.
Dr. P.V.G. Raju had three children through his first wife Kusum. They
are respondent Nos.1 to 3. Under registered document dt.19.10.1957 the
coparcenary status of Dr. P.V.G. Rajus family was put an end to. On
12.11.1958 Dr. P.V.G. Raju constituted a public Trust, by name MANSAS.
Certain immovable properties belonging to the erstwhile joint family were
vested in the said Trust for educational and charitable purposes. On
18.06.1960 partition of certain agricultural lands by metes and bounds has
taken place between Dr. P.V.G. Raju and respondent Nos.1 and 2 - his two
sons. By settlement deed dt.18.6.1960 some agricultural lands were settled
in favour of respondent No.3 daughter of Dr. P.V.G. Raju, through his first
wife. Some other properties were also allotted to respondent No.3 under
1960 partition. It was agreed that the properties were to be registered in
each sharers individual name. Separate possession was delivered to each of
them. In the year 1963 Dr. P.V.G. Raju divorced his first wife Kusum and
married the appellant. After P.V.G. Raju had three children, i.e., respondent
Nos.4 to 6, through the appellant, as certain issues out of the previous
partition arose, the same were referred to arbitration, under an agreement
entered on 03.10.1970 between Dr. P.V.G. Raju, respondent Nos.1 to 3, the
appellant and respondent Nos.4 to 6, to Raja of Bobbili. The reference of the
dispute pertains to the properties covered by the previous partition, and
settlement by way of a fair and equitable division of the properties among the
parties. On 28.06.1971, Raja of Bobbili gave his award. All the properties
specified in schedules A to H were allotted to all the eight members of the
family. The award was duly registered and was also made the decree of the
Court on 21.4.1972 in O.S. No.70 of 1971. Under this award, twenty nine
items of jewellery were partitioned as per joint note singed by all the parties.
3. Respondent Nos.1 to 3 filed O.S. No.29 of 1974 in the Sub-Court,
Vizianagaram, for division by metes and bounds of the properties mentioned
in schedules I to VIII of the plaint, as per the shares specified therein. The
suit was partly decreed and the properties specified in the award were ordered
to be partitioned by metes and bounds. A preliminary decree was drawn up in
respect of the specified items and the suit for the rest of the items was
dismissed. Feeling partly aggrieved by the said judgment and decree,
respondent Nos.1 to 3 filed A.S. No.283 of 1980 before this Court. By
judgment dt.24.07.1992 this Court has dismissed the appeal while allowing
the cross-objections in part, with respect to scheduleI properties.
Respondent Nos.1 to 3 filed Civil Appeal No.5251 of 1993 before the Supreme
Court. On 14.09.1995, Dr. P.V.G. Raju died. On 08.03.2000 all the parties
jointly filed an application before the Supreme Court to refer the disputes for
arbitration. A former Judge of the Supreme Court, Justice S. Ranganathan,
was appointed as the Arbitrator by order dt.28.03.2000, of the Supreme
Court. A claim petition was filed before the Arbitrator on 16.09.2000. On
26.05.2007 the Arbitrator made an interim award. Feeling aggrieved by the
said award, the appellant filed Arbitration O.P. No.631 of 2007 in the Court of
the District Judge, Vizianagaram. The said O.P. was dismissed by order
dt.24.06.2013. Assailing this order, C.M.A. No.1057 of 2013 is filed.
Respondent Nos.4 and 5 filed C.M.A. (SR) No.27224 of 2015 with a delay of
641 days against the said order.
4. Smt. Sundari R. Pisupati, learned counsel for the appellant, submitted
that the learned Arbitrator travelled beyond the scope of reference inasmuch
as, while all the properties partitioned in the year 1960 and also under the
award of the Arbitrator made in 1971 were to be divided into seven equal
shares and one such share to be allotted to each of the parties to the appeal,
the learned Arbitrator has relied upon previous arbitration award and failed to
allot shares to the respective parties as agreed in the joint application for
reference. She has further submitted that the Arbitrator has committed a
serious error in not allotting the ninety-nine diamonds and one emerald ring
given to the appellant in 1971, even though it was proved that the same are
stridhana property of the appellant. In support of her submissions, she relied
upon the judgments in Pratibha Rani v. Suraj Kumar , Rashmi Kumar v. Mahesh
Kumar Bhade .
5. Mr. E.V.V.S. Ravi Kumar, learned counsel for the appellants in
C.M.A.(SR) No.27224 of 2015, adopted the submissions of the learned counsel
for the appellant in C.M.A. No.1057 of 2013.
6. Opposing the above submissions, Mr. V. Ravinder Rao, learned Senior
Counsel for respondent Nos.1 to 3, submitted that the learned Arbitrator was
very much conscious of the scope of reference of the disputes, that he has
only passed an interim award, by leaving several further determinations and
the task of physical division of the properties to be considered in the final
award with reference to the value of each item of the property and directing
making of such adjustments as may be necessary and that therefore such an
interim award is not liable to be interfered with. The learned Senior Counsel
further submitted that the scope of interference with arbitration awards is
limited to the grounds mentioned in Section 34 of the Arbitration and
Conciliation Act, 1996 (for short, the Act) and that the interim award does
not suffer from any errors which fall within the scope for interference. The
learned Senior Counsel has taken the Court through various portions of the
award. He has also referred to and relied upon the judgments in Madnani
Construction Corporation Private Limited v. Union of India , Oil and Natural
Gas Corporation Ltd. V. Western Geco International Ltd. and Associate
Builders v. Delhi Development Authority . As regards the ninety-nine
diamonds and one emerald ring, the learned Senior Counsel submitted that in
the year 1971 Dr. P.V.G. Raju has given these diamonds and emerald ring to
respondent Nos.1 to 3, and that after allotment of these items to the said
respondents he has stopped showing the same in the wealth tax returns. He
has further argued that even as per the pleading of the appellant, Dr. P.V.G.
Raju has placed the jewellery at the disposal of the family on being coerced by
respondent No.1 in lieu of discharge of certain liabilities of Dr. P.V.G. Raju.
The learned Senior Counsel submitted that the obligation towards Stridhana
property lies with the husband only and that too the same is a moral
obligation and not legal obligation and that such moral obligation does not
bind the third parties. He has further argued that the appellant is a signatory
to the list of the properties in the year 1971 and that she has voluntarily
given up her claim over these items. He has further submitted that the
learned Arbitrator has given cogent reasons for not accepting the claim of the
appellant with regard to this item of the property, that the scope of
interference with an arbitral award being limited, the lower Court has rightly
dismissed the O.P. and that as the scope of the appeal under Section 37 of the
Act is equally limited as that of the lower Court, the Award of the learned
Arbitrator is not liable for interference.
7. We have carefully considered the respective submissions of the learned
counsel for the parties with reference to the material on record. Having
regard to the rival submissions of the learned counsel for the parties, the
following points emerge for consideration.
(i) Whether the Arbitrator has exceeded the scope of reference while
passing the Award with regard to the properties other than the
Stridhana property?
(ii) Whether the award relating to the Stridhana property is
sustainable?
(iii) Whether the award is in the nature of interim award or final award?
and,
(iv) Whether the award is liable to be interfered with?
Re Point (i)
8. All the parties have filed a joint memo, vide I.A. No.6 of 2000 in Civil
Appeal No.5251 of 1993. The reference of the dispute delineated in the said
I.A., is as follows:
(i) The entire subject matter of the appeal in dispute including the
properties that were partitioned in 1960 between late P.V.G. Raju
and his two sons Sri P. Anand Gajapathi Raju and Sri P. Ashok
Gajapathi Raju, and the lands given to daughter Smt. Sunita Prasad
and the properties that were divided in the award proceedings in
pursuance of the award of Kumararaja of Bobbili of 1971;
(ii) All the shares with companies, certificates, bonds, Government
securities and all movable and immovable properties mentioned in
para (i) including impartible properties except those which have been
alienated by late P.V.G. Raju during his life time before his death on
14.11.1995, subject to proof, will be divided into seven equal shares
and allot one such share to each of the parties to the appeal;
(iii) The arbitrator will also take into account 99 diamonds and one
emerald ring given to the appellants in 1971 and claimed to be
streedhana property of Smt. Maduri V. Raju. The arbitrator will
decide whether the aforesaid items are the streedhana properties or
not of Smt. Madhuri V. Raju. In case the arbitrator comes to the
conclusion that the said diamonds and emerald ring are not
streedhana property of Smt. Madhuri V. Raju, all the parties to the
appeal are entitled to 1/7th share equally in the said diamonds and
emerald ring; and
The arbitrator will not take into account the findings recorded by the
courts below.
The learned counsel for the appellant submits that as the whole issue of
partition was thrown open with specific reference to 1960 partition and 1971
award, the Arbitrator ought not to have been guided by the said two
instruments and that in the light of the specific agreement between the
parties that all the shares with companies, certificates, bonds, Government
securities and all movable and immovable properties, except those which are
alienated by P.V.G. Raju during his life time will be divided into seven equal
shares and one such share be allotted to each of the parties to the appeal, the
learned Arbitrator has erred in considering 1960 partition and 1971
arbitration award as still existing and allowed himself to be guided by those
instruments. Dealing with this contention urged before him, the learned
Arbitrator rendered the following finding:
Above all, the contention is based on the assumption that the 1960 and
1971 partitions have disappeared or been obliterated which is an incorrect
assumption. These two partitions are legally alive and effective, one by way of a
registered partition deed and the other by a decree of a court passed on
21.04.1972. The respective parties had acquired rights in specific items of
property thereunder. Nothing has happened to obliterate them. For
understandable reasons, the earlier partitions dealt with only some of the
properties of the family. Now the members male and female have agreed to
divide all the properties in equal shares and they have agreed that, while doing this,
the earlier partitions should also be taken into account and a comprehensive
partition decided upon. For doing this, it is open to, but not obligatory, on the
arbitrator to scrap the earlier partitions altogether. If, and to the extent, the
arbitrator decides to retain the earlier partitions in tact, they will continue to remain
effective. It is only if he decides otherwise that his decision may have the effect in
law of superseding the earlier arbitrations.
9. On a careful consideration of the reasoning of the learned Arbitrator,
we feel that it is a plausible one. It does not flow from the three clauses of
the joint application for reference that the Arbitrator must completely ignore
the partition deed and the arbitration award or that these two instruments
have outlived their purpose. The learned Arbitrator has specifically observed
that male and female members of the family have agreed to divide all the
properties in equal shares and that they have also agreed that while doing
this, the earlier partitions should also be taken into account and a
comprehensive partition decided upon. In paragraph 142 of the award, the
learned Arbitrator also placed on record the agreement of all the parties that
the award of 1971 may be permitted to stand, save for the modification now
necessary to partition the lands allotted to P.V.G. Raju. However, he has also
recorded the dissent of the appellant on the ground that there was an error in
the list of properties allotted to respondent No.5 (respondent No.3 before the
Arbitrator), who is the second son of the appellant. The Arbitrator of course
found this contention as flimsy and rejected the same by giving detailed
reasons. It is in this context, that the learned Arbitrator opined that it is open
but not obligatory for him to scrap the earlier partitions altogether and that
only to the extent that he decides to continue to allow the previous partitions
in tact, they remain effective.
10. Irrespective of whether the earlier partition and the arbitration award
must be retained or scrapped, the bottom-line is that all the properties
covered by the 1960 partition and also the arbitral award of 1971 except the
properties alienated by Dr. P.V.G. Raju during his lifetime, have to be divided
into seven equal shares and one such share to be allotted to each of the
parties to the appeal. The request of all the members of the family has also
been specifically recorded by the arbitrator in paragraph 141 of his award as
extracted hereinbefore. Being conscious of the fact that the parties have
agreed to the partition of the properties into seven equal shares, the learned
Arbitrator has directed that the properties should be so divided and allotted
among the parties. He has, however, made clear that by doing so, it will not
follow that each sharer will be entitled to 1/7th share in each asset as some
items have been divided differently under 1960 and 1971 instruments. Those
divisions have been accepted by the learned Arbitrator with slight
modifications. The Arbitrator further made it clear that the final adjustments
relating to the value of the properties allotted to each of the sharers will be
made while passing final award.
11. In the light of the above, it is not possible to accept the submission of
the learned counsel for the appellant that by taking into consideration the
previous partition and the award and in not allotting 1/7th share in each of the
items of the properties to all the sharers, the learned Arbitrator has exceeded
the terms of reference. In our opinion, the learned Arbitrator was not solely
guided by the previous partition and the award, but he declined to disturb the
arrangement made in those instruments wherever he found that such
arrangements were just and equitable. For the aforementioned reasons, point
No.(i) is held against the appellant.
Re Point No.(ii)
12. Ninety nine diamonds and one emerald ring claimed to be the Stridhana
property were included in items 20 and 22 of Schedule V of the claim petition
(item 6 of the schedule property in the counter claim by the appellant). The
reference of the dispute as agreed between the parties with regard to the
Stridhana property is contained in paragraph (1) clause (iii) which was already
reproduced hereinbefore. On a careful reading of this clause, the entire
dispute referred to the Arbitrator under this clause could be conveniently
divided into two parts. In the first part, the arbitrator has to first decide
whether the ninety nine diamonds and one emerald ring are the Stridhana
properties of the appellant. In the second part, the parties agreed that if the
Arbitrator holds that the property does not constitute Stridhana property of
the appellant, all the parties are entitled to 1/7th share equally. It is clearly
implied from the second part of the dispute referred to the Arbitrator, that the
diamonds and the emerald ring are not liable for partition, if they are held to
be the Stridhana property of the appellant. It further follows therefrom that if
the Arbitrator holds that the diamonds and the emerald ring constitute the
Stridhana property, the further question may not arise and it has to be
necessarily held that the appellant alone is entitled to the said property.
13. The appellant has contended before the Arbitrator that both these
items and also items 2, 6 and 7 of schedule V of the claim petition are not
partible. The learned Arbitrator in paragraph 121 of his award rendered an
unequivocal finding that category [A] items ninety nine diamonds and one
emerald ring, were shown in the wealth tax returns of Dr. P.V.G. Raju for the
assessment years 1965-66 and 1966-67 as Stridhana jewellery given to the
appellant. He has observed that it cannot also be disputed, having regard to
the status of PVG Raju, that he could, and normally would, have given
jewellery to his wife as Stridhana at the time of his engagement and marriage.
The trial court has also come to the same conclusion. Having held so, the
Arbitrator however referred to the division on 13.07.1971, the absence of
reference to these items in the PVG Rajus wealth statements post 1971, the
appellant handing over these items to late PVG Raju and the improbability of
the appellant throwing these items in the family hotchpot under coercion.
The learned Arbitrator also went into the legal position regarding the
Stridhana property with reference to the judgments in Browne v. Dunne ,
State v. Nahar Singh and Rajendra Prasad v. Darshana Devi and rendered a
finding that while there can be no doubt about the proposition laid down in
the aforementioned cases, the acceptance of the mere fact that the appellant
had helped her husband in this manner to meet his liabilities does not
invalidate the bona fides or validity of surrender of the jewels to her husband.
He then referred to the division of the properties under the 1971 award which
was allowed to become final by the decree of the court without any protest by
PVG Raju or the appellant.
14. While referring to the Judgments of the Supreme Court in Pratibha Rani
(1 supra), the learned Arbitrator held that in view of the division of the
properties in the year 1971, there is no need for reconsideration regarding the
Stridhana items. He relied upon the affidavit dated 28-7-2003 filed by the
respondents which reads:
On 13.07.1971 with the consent of the 1st respondent Late Sri P.V.G. Raju
divided some items of Jewellery into 8 equal Shares, including 99 Diamonds and an
Emerald Ring. A list was prepared and it was signed by the 1st respondent also.
The Claimants proposed that the parties should agree that each one could keep his
or her share without disturbing the partition. The 2nd and 3rd respondents have
agreed to the said proposal. There was no dissent by the 4th respondent. The
claimants further state that if the proposal is accepted by all, Claimants are
prepared to release the share of Late Sri P.V.G. Raju in these items in favour of
the respondents. It is further submitted that if the proposal is accepted the
Claimants agree that the total land allowed to be retained by the parties can be
divided into 7 equal shares, allotting one such share to each of the Claimants and
Respondents.
Considering the above extracted portion of the affidavit, the learned arbitral
Tribunal held as under :
I think the claimants would be acting fairly if they would adhere to this
offer. In other words, the allotment of 1971 regarding the items set out in
Schedule X to the claim petition among the seven parties now here will stand and
that the share allotted therein to PVG (I, 111) will stand allotted exclusively to the
four respondents in equal shares.
Subject to the above recommendations, it is held that these items can no
longer be treated as the stridhana and hence the exclusive property of R-
1 and that, as they have been already allotted to the three claimants in the division
of 13.07.1971, they cannot be considered for partition once again in these
proceedings.
The position regarding items 2, 6 and 7 have been considered earlier in
paras 86 to 90 ante and they have been found to have been gifted to R-1 by PVG
in his life time. The question of his competence to do is being considered below
under topic IV.
(emphasis supplied)
The learned Arbitrator further held as under:
So also, the exclusive right of Respondent-1 to the items of jewellery
given to her as Stidhana cannot be questioned but she had agreed to surrender
them and make them available for partition in 1971 and no case has been made
out for disturbing that division.
15. With reference to the plea of respondent Nos.1 to 3 that if the
Arbitrator decided that they have to return these items to the appellant, they
should be given some items in lieu thereof, the learned Arbitrator held that in
the event he accepts that the allocation of these items to respondent Nos.1 to
3 was the result of some coercion or fraud, the appellant is entitled to get
them back as her exclusive property following the ratio in Pratibha Rani (1
supra). He has further observed that the division of 1971 would have lost its
meaning and a repartition of the other assets included in the division may
have to be considered. The learned Arbitrator however held that in view of
the conclusions reached by him, there is no need for any such reconsideration
and the allotment of the items and he has accordingly confirmed these items
to respondent Nos.1 to 3. At the same time he has observed that these items
may have had, and continue to have, a special value to the appellant and he
would leave it open to the parties to work out an arrangement by which the
appellant can get the diamonds and emerald ring on payment in cash of their
value today or by transfer to respondent Nos.1 to 3 of some other jewellery of
equal value. He has accordingly left the arrangement entirely to the parties by
mutual consent.
16. Under Section 34(2)(a)(iv) of the Act, an award can be challenged if it
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. In a slew of judgments arising under
the Arbitration Act, 1940, the Apex Court held that the Arbitrator travelling
outside the scope of reference commits misconduct as envisaged under Section
30(a) of the said Act rendering the award invalid. Therefore these judgments
apply in all fours to a case where the Arbitrator travels beyond the scope of
reference.
17. In Jivarajbhai Ujamshi Sheth and others. v. Chintamanrao Balaji and
others after considering the judgment of the Privy Council in Champsey Bhara
& Co v. Jivrai Ballo Spinning & Weaving Co. Ltd. , the Supreme Court held
that the primary duty of the arbitrator under the deed of a reference in which
was incorporated the partnership agreement, was to value the net assets of
the firm and to award to the retiring partners a share therein. In making the
"valuation of the firm", his jurisdiction was restricted in a manner provided by
paragraph 13 of the partnership agreement. As the arbitrator has expressly
stated in his award that in arriving at his valuation, he has included the
depreciation and appreciation of the property, the arbitrator has travelled
outside his jurisdiction and the award was on that account liable to be set
aside. This was not a case in which the arbitrator has committed a mere error
of fact or law in reaching his conclusion on the disputed question submitted
for his adjudication. It is a case of assumption of jurisdiction not possessed by
him, and that renders the award, to the extent to which it is beyond the
arbitrator's jurisdiction, invalid. Hidayatulla, J, in his concurring judgment,
observed:
The first point is therefore to decide what were the limits of the arbitrator's
action as disclosed by the reference and the deed of partnership and then to see
what the arbitrator has actually done and not what he may have stated loosely in
his award. This is the only way in which the excess of jurisdiction can be found. If
the interpretation of the deed of partnership lies with the arbitrator, then there is
no question of sitting in appeal over his interpretation, in view of the passage
quoted above from Champsey's case (supra), but if the parties set limits to action
by the arbitrator, then the arbitrator had to follow the limits set for him, and the
Court can find that he has exceeded his jurisdiction on proof of such action.
18. In Associated Engineering Company v. Government of Andhra
Pradesh , the Supreme Court held:
27. If the arbitrator commits an error in the construction of the contract,
that is an error within his jurisdiction. But if he wanders outside the contract and
deals with matters not allotted to him, he commits a jurisdiction error. Such error
going to his jurisdiction can be established by looking into material outside the
award. Extrinsic evidence is admissible in such cases because the dispute is not
something which arise under or in relation to the contract or dependent on the
construction of the contract or to be determined within the award. The dispute as
to jurisdiction is a matter which is outside the award or outside whatever may be
said about it in the award. The ambiguity of the award can, in such cases, be
resolved by admitting extrinsic evidence. The rationale of this rule is that the nature
of the dispute is something which has to be determined outside and independent of
what appears in the award. Such jurisdictional error needs to be proved by
evidence extrinsic to the award
28. In the instant case, the umpire decided matters strikingly outside his
jurisdiction. He out stepped the confines of the contract. He wandered far outside
the designated area. He digressed far away from the allotted task. His error arose
not by misreading or misconstruing or misunderstanding the contract, but by acting
in excess of what was agreed. It was an error going to the root of his jurisdiction
because he asked himself the wrong question, disregarded the contract and
awarded in excess of his authority. In many respects, the award flew in the face of
provisions of the contract to the contrary.
29. The umpire, in our view, acted unreasonably, irrationally and
capriciously in ignoring the limits and the clear provisions of the contract. In
awarding claims which are totally opposed to the provisions of the contract to
which he made specific reference in allowing them, he has misdirected and
misconducted himself by manifestly disregarding the limits of his jurisdiction and the
bounds of the contract from which he derived his authority thereby acting ultra
fines compromissi."
19. Let us now apply the settled legal principles discussed above to the
instant cases. From the finding of the learned Arbitrator referred to above, it
is manifest that the diamonds and emerald ring were held to be the Stridhana
property of the appellant. But he opined that as the allotment of 1971 is
allowed to stand, they can no longer be treated as the Stridhana property of
the appellant. In our considered opinion, the limited scope of reference of the
dispute pertaining to the diamonds and the emerald ring is to decide whether
they are the Stridhana property or not and whether they continue to be the
Stidhana property or not. As per the unequivocal understanding among the
parties, if the items are held to be not the Stridhana property, they must be
divided into seven shares and one share has to be allotted to each of the
parties. With due respect, we feel that the learned Arbitrator having held that
the subject items were Stridhana property, has exceeded his jurisdiction by
proceeding further and holding that these items though Stridhana items once,
no longer continue to be Stridhana by falling back upon the 1971 award and
justifying retention of these items by respondent Nos.1 to 3. If the parties
have treated the 1971 award as sacrosanct, they would not have framed the
reference clause with respect to these items in the manner as they did. In
other words, if they intended that the Arbitrator must decide the further issue
whether the items ceased to be Stridhana, such intention would have been
clearly reflected in the reference. Reading the reference even in the most
liberal manner, such intention could not be culled out therefrom.
20. For the aforementioned reasons, we have no option except to hold that
the award of the Arbitrator in respect of the Stridhana property travels
beyond the scope of the reference and hence the same cannot be sustained.
This point is accordingly answered.
Re Point No.(iii)
21. Under Section 2(c) of the Act, arbitral award includes an interim award.
Under Section 31(6) of the Act, the Arbitrator may, at any time during the
arbitral proceedings, make an interim arbitral award on any matter with
respect to which it may make a final arbitral award. In Mc.Dermott
International Inc. v. Burn Standard Co. Ltd. and others , the Supreme Court
held that an interim award in terms of Section 31(6) may be a final award on
the matters covered thereby but made at an interim stage. Whether an award
is interim in nature or the same is intended to be final, in our view, depends
upon the true purport of the award gathered from the contents of the award.
Therefore, in order to decide this aspect, the award needs to be looked into.
22. Part IX of the award contains the heading CONCLUSIONS AND
INTERIM AWARD. It could be gathered from Points 1 to 10 under para-156
of the award that the learned arbitrator while holding that the properties have
to be divided into 7 equal shares and one share to each of the parties to be
allotted, he has however ruled out the possibility of such division with respect
to each asset. He did not allow the partitions of 1960 and 1971 to be
disturbed except to a small extent specified against the relevant items. In
para-157, the learned Arbitrator held as under :
Though the points of controversy between the parties have been decided
by this award, it will be only in the nature of an interim award as several further
determinations and the task of physical division of the properties are yet to be
considered. Appropriate orders recording the final partition will still have to be
made thereafter and, in so doing, it will also be necessary to consider the value of
the properties allotted to each of the sharers and direct such adjustments as may
be necessary monetarily or in specie. One more important aspect to be
considered at the time of the final discussion will be that of the mesne profits, if
any, payable by the sharers in respect of properties allotted to other remaining in
their possession. This will need a detailed consideration from several angles,
extents, date, quantum etc. and will have to be considered later. For these
purposes, the Tribunal will resume its sittings and pass appropriate orders after the
parties have had time to study the contents of this award.
23. In the above reproduced para, the learned arbitrator has made his
intention explicit that allotment of various items of properties to the parties is
only interim in nature pending further determinations and the task of physical
division has to be undertaken after the Tribunal resumes its sittings for making
the final award. We therefore agree with the submissions of the learned
Senior Counsel for respondent Nos.1 to 3 that the award in respect of
movable and immovable properties except the Stridhana property is only
interim in nature pending passing of a final award. This point is accordingly
answered.
Re Point No.(iv):
24. Having regard to the findings rendered above, the award is liable to be
interfered only with respect to the Stridhana properties and the same is
accordingly set-aside to the said extent alone. The Civil Miscellaneous Appeals
are accordingly allowed in part by confirming the order of the lower Court
confirming the arbitral award in all other respects.
As a sequel to disposal of the appeals, C.M.A.M.P. Nos.2190, 2191 and
2192 of 2013, 105 of 2015 and 1428 of 2016 in C.M.A. No.1057 of 2013, and
C.M.A.M.P. (SR) No.27230 of 2015 in C.M.A.(SR) No.27224 of 2015 shall
stand disposed of as infructuous.
_________________________
C.V. NAGARJUNA REDDY, J
________________________
J. UMA DEVI, J
22-9-2017
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