Anil Bansal Vs. Ashok Kumar Bansal and Ors.
EmailAppeal: Civil Appeal Nos. 1260-1261 of 1999
(From the Judgment and Order dated 05.05.98 of the Madhya Pradesh High Court in F. A. Nos. 18 and 59 of 1998)
(From the Judgment and Order dated 05.05.98 of the Madhya Pradesh High Court in F. A. Nos. 18 and 59 of 1998)
Petitioner: Anil Bansal
Respondent: Ashok Kumar Bansal and Ors.
Apeal: Civil Appeal Nos. 1260-1261 of 1999
(From the Judgment and Order dated 05.05.98 of the Madhya Pradesh High Court in F. A. Nos. 18 and 59 of 1998)
(From the Judgment and Order dated 05.05.98 of the Madhya Pradesh High Court in F. A. Nos. 18 and 59 of 1998)
Judges: V. N. KHARE, CJI & S. H. Kapadia, J.
Date of Judgment: Feb 27, 2004
Appearances:
Mr. U. N. Bachawat, Mr. Sunil Gupta, Mr. A. K. Chitale, Senior Advocates, Mr. Sunil Kumar Jain, Mr. A. P. Dhamija, Mr. H. D. Thanvi, Mr. Ram Niwas, Mr. Alok Bachawat, Mr. L. P. Singh, Mr. Ankur Mody, Mr. Siddharth Singla, Ms. Suruchi Aggarwal, Mr. Prakash Shrivastava, Mr. Niraj Sharma, Mr. Vikrant Singh, Mr. Sudhir Kumar Gupta, Mr. Anurag Pandey, and Ms. Jaya Rakhecha, Advocates with them for the appearing parties.
Head Note:
ARBITRATION
Arbitration Act, 1940
Section 14 – Arbitration in the matter of inter-se disputes relating to family property – Arbitrator working out an adjustment of the assets and liabilities and giving an award – When an application for making the award Rule of court was made, one of the parties filing objection stating that the award was a nullity in as much as the parties appointed two arbitrators only, it was not open to the parties to arbitration to co-opt three additional arbitrators – District judge dismissing the objections and upholding the award – High Court however allowing the appeal and setting side the award – Heirs of the aggrieved party appealing to Supreme Court. All throughout appellant taking the stand that the arbitrators erred in directing handing over of a portion of the house by ‘J’ to ‘L’. Portion handed over to ‘L’ in terms of the award disposed of for consideration. Court therefore declining to go into the merits of the case since the appellant had not come to the court with clean hands. (Para 4)
Arbitration Act, 1940
Section 14 – Arbitration in the matter of inter-se disputes relating to family property – Arbitrator working out an adjustment of the assets and liabilities and giving an award – When an application for making the award Rule of court was made, one of the parties filing objection stating that the award was a nullity in as much as the parties appointed two arbitrators only, it was not open to the parties to arbitration to co-opt three additional arbitrators – District judge dismissing the objections and upholding the award – High Court however allowing the appeal and setting side the award – Heirs of the aggrieved party appealing to Supreme Court. All throughout appellant taking the stand that the arbitrators erred in directing handing over of a portion of the house by ‘J’ to ‘L’. Portion handed over to ‘L’ in terms of the award disposed of for consideration. Court therefore declining to go into the merits of the case since the appellant had not come to the court with clean hands. (Para 4)
Cases Reffered:
1. Pooran Chand Nangia v. National Fertilizers Ltd. (JT 2003 (8) SC 273) (Para 2)
JUDGEMENT:
Kapadia, J.
1. A partnership firm, M/s Laxmi Fancy Stores had among others Laxmi Narayan Bansal, Om Prakash Bansal, and Jagdish Prasad Bansal as its partners. It carried on business form a shop owned by Laxmi Narayan Bansal located at Topi Bazar, Lashkar Gwalior. The three partners were members of Hindu Undivided Family (HUF). The were occupying different portions of a residential house at 31, Dahimandi, Daulatganj, Lashkar, Gwalior. On 28th May, 1971 dispute arose between the parties in the matter of repayment of loan of Rs. 2,50,400/- owed by the firm to its creditors. By written agreement of even date, the partners appointed two arbitrators, Mattulal and Nathulal for decision on the said dispute. On 12th June, 1971 award was given by five arbitrators. The award refers to an oral agreement dated 09.06.1971 between the partners by which they had agreed to addition of three more arbitrators and to enlargement of the scope of reference by which the parties sought settlement of all disputes including dissolution of the firm, settlement of accounts, settlement of assets and liabilities as also settlement of disputes pertaining to the shop of Laxmi Narayan and the ancestral house (see the recital clause). Under the award dated 12.06.1971, directions were given on the question of repayment of loan undertaken by Laxmi Narayan on behalf of the firm; contributions to be made by Laxmi Narayan, Jagdish Prasad and Om Prakash towards the said repayment and it further recorded a family settlement involving partition and transfer of immovable properties. Thereafter, an application was moved by the arbitrators before the district judge under section 14(2) of the Arbitration Act 1940 to make the award date 12.06.1971, rule of the court. An objection was filed by Laxmi Narayan stating that the award was a nullity as the partners had appointed only two arbitrators by written agreement dated 28.05.1971 and that the two arbitrators had no authority to co-opt three additional arbitrators. It was further submitted that reference was made to the arbitrators only for liquidation of the loans incurred by the firm and that the arbitrators could not have enlarged the scope of the reference agreement which was in writing by placing reliance on oral consent which was also disputed. That the family settlement involving partition as ordered by the arbitrators was beyond the scope of the reference. At this stage it may be noted that Om Prakash and Jagdish Prasad also objected to para 7 of the award by which Jagdish prasad was asked to hand over a portion of the residential house in his occupation to Laxmi Narayan. Laxmi Narayan died in 1993. By judgment and order dated 29.11.1997 the district judge upheld the award and dismissed the above objections. Being aggrieved, heirs of Laxmi Narayan and Jagdish Prasad came to the High Court by way of first appeal no. 18/98 and cross appeal no. 59/98 respectively. By impugned judgment, the High Court allowed the appeal filed by the heirs of Laxmi Narayan and set aside the award. By the impugned judgment the cross appeal filed by Jagdish Prasad for deletion of clause 7 was also disposed of and parties were ordered to be relegated to their original position vis-a-vis the house. Being aggrieved, heirs of Om Prakash filed the present civil appeals before this Court.
2. Mr. U. N. Bachawat, learned senior counsel for the appellant submitted that all the partners had acquiesced to the co-option of three additional arbitrators, that all the parties had taken part in the proceeding, that the award has been counter signed by all the parties saying that accepted the award and that the award has been implemented and acted upon and in the circumstances the High Court had erred in setting it aside. In this connection reliance was placed on the judgment of this Court in the case of Pooran Chand Nangia v. National Fertilizers Ltd.1 .
3. Mr. Sunil Gupta, learned senior counsel appearing on behalf of the respondents (heirs of Laxmi Narayan) submitted that in view of section 2(a) of the Arbitration Act, co-option of three additional arbitrators could not have been done by oral consent. He submitted that there was no such consent. He submitted that the conduct of the parties cannot jurisdiction on the arbitrators which was not there from the inception. He further submitted that countersigning of the award by the partners stating that they accepted it was a subsequent independent agreement which would not infuse fresh life into the proceedings which were ab initio void. Mr. Gupta, learned counsel next contended that the impugned award went beyond the reference inasmuch as in terms of the written agreement the only issue before the arbitrators was liquidation of debt of the firm and that the arbitrators had no authority to record a family settlement involving partition and transfer of immovable properties.
4. We do not propose to examine the arguments advanced as we find on examination of the record that the appellant has come to this Court with unclean hands. As the facts mentioned above show that by the impugned award the arbitrators have worked out an adjustment of assets and liabilities of the firm and settlement of various disputes between the parties (including those relating to residential house) and in the process the arbitrators ordered Jagdish Prasad to hand over a portion of the house in his occupation to Laxmi Narayan which was objected to by Om Prakash and Jagdish Prasad vide objection dated 21.06.1972 filed before the district judge. Moreover, all throughout, the appellant has contended that the award of the arbitrators was valid except to the extent of clause 7 by which Jagdish Prasad was ordered to hand over possession of the portion of the house to Laxmi Narayan. On 17.08.1972, pending decision on these objections by the civil court, Om Prakash, Jagdish Prasad and their mother sold the portion of the house covered by clause 7 to a third party for consideration. Therefore, the appellant before us seeks to eat the cake and have it too. He wants all the benefits but not the liability. The appellant has contended right up to this Court that the arbitrators had erred in directing Jagdish Prasad to hand over a portion of his house to Laxmi Narayan. The award is based on distribution of assets, liabilities and properties of the parties. If we are to uphold the award it would lead to an iniquitous position because the portion of the house under the award which is to go to the heirs of Laxmi Narayan – respondent herein has been disposed of by Jagdish Prasad and Om Prakash for consideration in which event the appellant herein would have best of both the worlds. Hence, we have refrained from going into the merits of the case as we are satisfied that the appellant has come to this Court with unclean hands.
5. For the aforestated reasons, we dismiss these civil appeals. In the facts and circumstances of the case, parties will bear their respective costs.
1. A partnership firm, M/s Laxmi Fancy Stores had among others Laxmi Narayan Bansal, Om Prakash Bansal, and Jagdish Prasad Bansal as its partners. It carried on business form a shop owned by Laxmi Narayan Bansal located at Topi Bazar, Lashkar Gwalior. The three partners were members of Hindu Undivided Family (HUF). The were occupying different portions of a residential house at 31, Dahimandi, Daulatganj, Lashkar, Gwalior. On 28th May, 1971 dispute arose between the parties in the matter of repayment of loan of Rs. 2,50,400/- owed by the firm to its creditors. By written agreement of even date, the partners appointed two arbitrators, Mattulal and Nathulal for decision on the said dispute. On 12th June, 1971 award was given by five arbitrators. The award refers to an oral agreement dated 09.06.1971 between the partners by which they had agreed to addition of three more arbitrators and to enlargement of the scope of reference by which the parties sought settlement of all disputes including dissolution of the firm, settlement of accounts, settlement of assets and liabilities as also settlement of disputes pertaining to the shop of Laxmi Narayan and the ancestral house (see the recital clause). Under the award dated 12.06.1971, directions were given on the question of repayment of loan undertaken by Laxmi Narayan on behalf of the firm; contributions to be made by Laxmi Narayan, Jagdish Prasad and Om Prakash towards the said repayment and it further recorded a family settlement involving partition and transfer of immovable properties. Thereafter, an application was moved by the arbitrators before the district judge under section 14(2) of the Arbitration Act 1940 to make the award date 12.06.1971, rule of the court. An objection was filed by Laxmi Narayan stating that the award was a nullity as the partners had appointed only two arbitrators by written agreement dated 28.05.1971 and that the two arbitrators had no authority to co-opt three additional arbitrators. It was further submitted that reference was made to the arbitrators only for liquidation of the loans incurred by the firm and that the arbitrators could not have enlarged the scope of the reference agreement which was in writing by placing reliance on oral consent which was also disputed. That the family settlement involving partition as ordered by the arbitrators was beyond the scope of the reference. At this stage it may be noted that Om Prakash and Jagdish Prasad also objected to para 7 of the award by which Jagdish prasad was asked to hand over a portion of the residential house in his occupation to Laxmi Narayan. Laxmi Narayan died in 1993. By judgment and order dated 29.11.1997 the district judge upheld the award and dismissed the above objections. Being aggrieved, heirs of Laxmi Narayan and Jagdish Prasad came to the High Court by way of first appeal no. 18/98 and cross appeal no. 59/98 respectively. By impugned judgment, the High Court allowed the appeal filed by the heirs of Laxmi Narayan and set aside the award. By the impugned judgment the cross appeal filed by Jagdish Prasad for deletion of clause 7 was also disposed of and parties were ordered to be relegated to their original position vis-a-vis the house. Being aggrieved, heirs of Om Prakash filed the present civil appeals before this Court.
2. Mr. U. N. Bachawat, learned senior counsel for the appellant submitted that all the partners had acquiesced to the co-option of three additional arbitrators, that all the parties had taken part in the proceeding, that the award has been counter signed by all the parties saying that accepted the award and that the award has been implemented and acted upon and in the circumstances the High Court had erred in setting it aside. In this connection reliance was placed on the judgment of this Court in the case of Pooran Chand Nangia v. National Fertilizers Ltd.1 .
3. Mr. Sunil Gupta, learned senior counsel appearing on behalf of the respondents (heirs of Laxmi Narayan) submitted that in view of section 2(a) of the Arbitration Act, co-option of three additional arbitrators could not have been done by oral consent. He submitted that there was no such consent. He submitted that the conduct of the parties cannot jurisdiction on the arbitrators which was not there from the inception. He further submitted that countersigning of the award by the partners stating that they accepted it was a subsequent independent agreement which would not infuse fresh life into the proceedings which were ab initio void. Mr. Gupta, learned counsel next contended that the impugned award went beyond the reference inasmuch as in terms of the written agreement the only issue before the arbitrators was liquidation of debt of the firm and that the arbitrators had no authority to record a family settlement involving partition and transfer of immovable properties.
4. We do not propose to examine the arguments advanced as we find on examination of the record that the appellant has come to this Court with unclean hands. As the facts mentioned above show that by the impugned award the arbitrators have worked out an adjustment of assets and liabilities of the firm and settlement of various disputes between the parties (including those relating to residential house) and in the process the arbitrators ordered Jagdish Prasad to hand over a portion of the house in his occupation to Laxmi Narayan which was objected to by Om Prakash and Jagdish Prasad vide objection dated 21.06.1972 filed before the district judge. Moreover, all throughout, the appellant has contended that the award of the arbitrators was valid except to the extent of clause 7 by which Jagdish Prasad was ordered to hand over possession of the portion of the house to Laxmi Narayan. On 17.08.1972, pending decision on these objections by the civil court, Om Prakash, Jagdish Prasad and their mother sold the portion of the house covered by clause 7 to a third party for consideration. Therefore, the appellant before us seeks to eat the cake and have it too. He wants all the benefits but not the liability. The appellant has contended right up to this Court that the arbitrators had erred in directing Jagdish Prasad to hand over a portion of his house to Laxmi Narayan. The award is based on distribution of assets, liabilities and properties of the parties. If we are to uphold the award it would lead to an iniquitous position because the portion of the house under the award which is to go to the heirs of Laxmi Narayan – respondent herein has been disposed of by Jagdish Prasad and Om Prakash for consideration in which event the appellant herein would have best of both the worlds. Hence, we have refrained from going into the merits of the case as we are satisfied that the appellant has come to this Court with unclean hands.
5. For the aforestated reasons, we dismiss these civil appeals. In the facts and circumstances of the case, parties will bear their respective costs.
