Delhi District Court
Sandeep Jajodia vs Sudha Jajodia on 6 May, 2022
IN THE COURT OF SH. SUDHANSHU KAUSHIK :
ADDL. DISTRICT JUDGE-02 & WAQF TRIBUNAL :
PATIALA HOUSE COURTS : NEW DELHI
ARBTN NO.271/2022
CNR NO.DLND01-000883-2022
SANDEEP JAJODIA
R/O 1/17, SHANTI NIKETAN,
NEW DELHI-110021
.....PETITIONER
VERSUS
SUDHA JAJODIA
R/O 1/17, SHANTI NIKETAN,
NEW DELHI-110021
.....RESPONDENT
DATE OF INSTITUTION : 03.02.2022
DATE OF CONCLUSION OF FINAL ARGUMENT : 30.04.2022
DATE OF PRONOUNCEMENT OF ORDER : 06.05.2022
ORDER
1. By this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act'), Sandeep Jajodia (hereinafter referred to as 'the petitioner') has challenged the arbitration award dated 31.12.2021 passed by the sole Arbitrator Retd. Justice R.C.Chopra (hereinafter referred to as 'the Arbitrator'). Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 1 of 27
2. The brief facts as revealed from the record are;
A) Parties are related to each other. Smt. Sudha Jajodia (hereinafter referred to as 'the respondent') is the mother of petitioner. Late Sh. Mahender Kumar Jajodia, father of the petitioner, died in October, 2019. During the life time of father, some dispute erupted between the parties over the management of their business and ownership of property bearing No.1/17, Shanti Niketan, New Delhi-110021 (hereinafter referred to as 'the property'). The parties arrived at a family settlement, which was reduced in writing on 20.01.2017. Subsequent to the death of father, a dispute arose between the petitioner and respondent relating to the family settlement. The family settlement contained an arbitration clause and according parties referred the matter to Arbitration and mutually agreed on the appointment of the Arbitrator. B) Respondent filed a statement of claim before the arbitrator claiming; she and her husband purchased the property on 04.10.1979 vide a registered conveyance deed; The conveyance deed was executed in favour respondent and petitioner; The petitioner was minor at the time of this transaction; Although, the convince deed was executed in her name and the name of her Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 2 of 27 minor son but the entire sale consideration was paid by her only; She paid 50% of the price of the property from her own personal funds and provided funds to the petitioner for paying the remaining 50% of the purchase price; It was stated that the said transaction was entered into by the parents to secure the interest of their minor children; Respondent had been giving various loans to the petitioner from time to time for tiding over the business needs; Statements of accounts were placed on record to show that the funds for purchase of the property were provided to the petitioner by the respondent and her late husband; In the year 2014, the business of the petitioner started going down and he required urgent funds; Petitioner persuaded respondent to mortgage the property in question for obtaining loans, thereafter, his behavior changed towards respondent; In order to settle the disputes, several rounds of discussion were held between the petitioner, respondent & late husband of the respondent and the parties arrived at an oral family settlement, which was reduced in writing on 22.01.2017. All these facts were not disputed by the petitioner.
Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 3 of 27 C) Respondent disclose in her statement of claim that her husband died on October 2019 and thereafter, petitioner started resiling from the commitments and assurances given by him at the time of family settlement. She mentioned that the petitioner refused to abide by the terms of the family settlement and started denying that he was only a nominal owner of the half portion of the property, which actually belongs to her.
D) The respondent sought the following reliefs in the statement of claim; (i) An Award declaring that the petitioner is in breach of the terms of the recordal of oral family settlement dated 20.01.2017;
(ii) An award that the affairs of the Jajodia family in relation to their assets and the estate of Late Mr. Mahendra Kumar Jajodia be managed as per the recordal of oral family settlement and his last will and testament; (iii) An award that the petitioner be restrained from acting contrary to the recordal of oral family settlement and he should not interfere in working of the companies which are not owned by him; (iv) An award declaring that 100% of the property belongs to the claimant as it was purchased by her using her own personal funds; (v) An award that the petitioner be restrained from acting to the contrary.
Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 4 of 27 E) Petitioner filed his statement of defence before the Arbitrator and raised preliminary objection that the claims made by the respondent were not maintainable. He sated that the property could not have been transferred in the favour of respondent as it was lying mortgaged with HDFC Bank Ltd. He admitted that the respondent and her husband purchased the property from their savings. He claimed that the funds for the purchase of property were transferred in his name by the respondent as a gift and the same cannot be revoked. He admitted that he was minor at the time of conveyance deed and he had no source of income. He admitted that at the time of purchase of property, respondent transferred a sum of Rs.5,67,063/- to him out of her own personal funds. He admitted that in the year 2012-2013, his business started falling and he was under financial stress and his parents supported him in tiding over the difficulties. He claimed himself to be the absolute owner of one half of the property and submitted that respondent had no right, title or interest in respect of his share of the property. He admitted having availed a loan from HDFC bank Ltd by mortgaging the property and disclosed that respondent is a co-borrower in the said loan. He admitted that Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 5 of 27 respondent had been repaying the loan through a company. He raised a legal objection that the family settlement was neither registered not stamped. He contended that in the absence of registration, the oral family settlement cannot be looked into. He argued before Arbitrator that the 50% of the share of the property, which was purchased in his name, should be treated as a gift from his parents. He contended that the gift was irrevocable and as such the declaration sought by the respondent cannot be granted. F) Parties filed their respective documents and after hearing the arguments, the Arbitrator made a declaration to the effect that 100% of the share of property bearing No.1/17, Shanti Niketan, New Delhi-110021 belongs to the respondent only and petitioner is merely an ostensible owner of 50% share therein which stands extinguished in terms of the records of the oral family settlement dated 20.01.2017. The declaration as made by the Arbitrator in para-17 of the award is as under;
"A declaration is therefore made that the affairs of the Jajodia family in relation to their assets and/or the estate of Late Mahender Kumar Jajodia shall be managed as per the recordal of the oral family settlement and the respondent shall not act contrary to the terms of the said settlement. It is also declared that 100% share in Property No.1/17, Shanti Niketan, New Delhi-
Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 6 of 27 110021 belongs to the claimant only and the respondent was merely an ostensible owner of the ½ share therein which stands extinguished in terms of the recordal of the oral family settlement dated 21.01.2017. Both the parties shall remain bound by the terms of settlement dated 20.01.2017."
3. The award passed by the Arbitrator is under challenge by way of present petition. The petition was filed within limitation. Respondent appeared on the very first day and accepted the service. Original Award and record of Arbitration proceedings was summoned. Respondent did not file written reply to the petition but opposed the petition by addressing arguments. The award has been challenged on the following grounds;
(a) That the award was passed on erroneous interpretation of the provisions of The Registration Act, 1908 & The Indian Stamp Act, 1899 and therefore, suffers from a patent illegality, which goes to the root of the matter;
(b) That Arbitrator failed to appreciate that 50% share of the property was bought in the name of the petitioner and he is in possession of the property;
(c) That Arbitrator failed to take into account that the conveyance deed of the property did not contain condition that the ownership of the petitioner was not subject to any future event. Even if, it is Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 7 of 27 accepted that the money for purchase of property was provided by the parents of petitioner, it was in the form of a gift, which was irrevocable;
(d) That the oral family settlement reduced into writing was insufficiently stamped & unregistered and therefore, it was not admissible in evidence;
(e) That the oral family settlement, which was reduced into writing had the effect of creating, assigning, limiting and extinguishing right, title or interest in the property, whose admitted value was over Rs.100/- and thus, the registration of settlement was compulsorily;
(f) That the finding of Arbitrator that the family settlement did not require registration or stamping is in contravention with the fundamental policy of Indian law and the same is in conflict with basic notions of justice and is in conflict with the public policy of India;
(g) That Arbitrator failed to appreciate the principle laid down by the Hon'ble Supreme Court in the decisions in "Subriya M.N. Vs Vittala M.N." 2016 (8) SCC 705, "Roshan Singh Vs Zile Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 8 of 27 Singh" AIR 1988 SCC 881 and "Shyam Narayan Prasad Vs Krishna Prasad" 2018 (7) SCC 646;
(h) That the award passed by the Arbitrator is based on incorrect application of facts to the relevant provisions of law and the award is based on miss-appreciation of facts;
(i) That the impugned award is based on erroneous application of legal principles.
4. I have heard the rival submissions.
5. The petitioner has primarily challenged the award on the ground that it was based on erroneous interpretation of law. Ms. Anne Methew, Ld. Counsel for the petitioner has contended that the Arbitrator could not have relied on the family settlement as it was neither stamped nor registered. She has argued that the family settlement extinguished the rights of the petitioner and therefore, the registration was compulsory. She has submitted that award was patently illegal as it was based on incorrect interpretation of law. It has also been argued by the petitioner that the finding of the arbitrator that the family settlement did not require stamping or registration is in conflict with the fundamental policy of Indian Law as well as basic notions of justice. Apart from these submissions, it has also been argued on behalf of petitioner that the Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 9 of 27 award was based on miss-appreciation of facts. Counsel for the petitioner has argued that the patent illegality in the award goes to the root of the matter and therefore, the award deserves to the set aside. In order to support his arguments, petitioner relied on the decisions in "Roshan Sigh Vs Zile Singh"(supra), "Subraya M.N. Vs Vittala M.N." (supra) and "Shyam Narayan Prasad Vs Krishna Prasad" (supra).
6. On the other hand, Sh. Saurabh Kirpal, Sr. Advocate for the respondent argued that the challenge to the award is not maintainable. He has argued that the award can be challenged only on the basis of the grounds set-out under Section 34 of the Act. Counsel has submitted that the scope of examining the validity of the award is very limited. He has submitted that the court is not competent to re-appreciate facts and question the validity of the award merely on account of reason that a different view was possible on the same facts. He has contended that the court cannot substitute its own opinion for the findings given by the Arbitrator. He has argued that so long as the finding of the Arbitrator is based on evidence and facts brought on record during the arbitration proceedings, the court cannot over turn the finding. He has argued that it is not sufficient to merely allege that the award is patently illegal. He has contended that the patent illegality should be such which goes to the root of the matter and Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 10 of 27 unless it is so, the award cannot be set aside. He has mentioned that the award is not in conflict with the public policy of India. He has mentioned that the petitioner raised similar set of arguments before the Arbitrator but his arguments were rejected. He has mentioned that the award shows that the Arbitrator appreciated each and every argument of the petitioner and reached at the conclusion that the registration and stamping of the family agreement was not required. He has mentioned that the finding given by the Arbitrator cannot be re-appreciated by the court while deciding a petition under Section 34 of the Act. He has contended that the court dealing with the petition under Section 34 of the Act is not sitting as a court of appeal against the award passed by the Arbitrator. He has mentioned that there is nothing, which may show that the award is unfair and unreasonable. He has argued that the recordal of the oral family settlement did not require registration and the Arbitrator rightly took into account the said family settlement. In support his arguments, counsel has relied on the decisions in "Delhi Airport Metro Express Private Limited Vs. Delhi Metro Rail Corporation Limited" (2022) 1 SCC 131, "NHAI Vs M.Hakeem" (2021) 9 SCC 1, "McDermott International Inc. Vs Burn Standard Co. Ltd." (2006) 11 SCC 181, "Renusagar Power Co. Ltd. Vs General Electric Co." (2006) Supp (1) Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 11 of 27 SCC 644, " ONGC Vs Saw Pipes Ltd." (2003) 5 SCC 705, "Associate Builders Vs DDA" 2015 (5) SCC 49, "Padmawati Bhalla Vs Master Ahil & Ors." (2017 SCC OnLine Del 6957 and "Korukonda Chalapathi Rao & Anr. Vs Korukonda Annapurna Sampath Kumar" (2021 SCC OnLine SC 847.
7. I have perused the record in the light of respective arguments.
8. The grounds for setting aside of an award have been enumerated under Section 34 of the Act, which reads as under;
"34. Application for setting aside arbitral award - (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub- section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if-
(a) the party making the application furnishes proof that i. a party was under some incapacity, or ii. the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any Indication thereon, under the law for the time being in force; or iii.the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or iv. the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 12 of 27 v. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that;
i. the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or ii. the arbitral award is in conflict with the public policy of India.
Explanation 1: For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if;
i. the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or ii. it is in contravention with the fundamental policy of Indian law; or iii. it is in conflict with the most basic notions of morality or justice.
Explanation 2: For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2-A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re- appreciation of evidence".
9. While interpreting and defining the scope and extent of judicial intervention for setting aside an award, the Apex Court has observed in the matter of "Delhi Airport Metro Express Private Limited Vs Delhi Metro Rail Corporation Limited" (2022) 1 SCC 131 that while Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 13 of 27 deciding applications filed under Section 34 of the Act, courts should strictly act in accordance with and within the confines of Section 34 of the Act. It was held that the Courts would refrain from appreciating or re-appreciating the matters of fact as well as law. The Apex Court made an observation that the court dealing with the application under Section 34 of the Act is not authorized to dissect and re-access the factual aspects of the case. The observation contained in para-28 of the judgment aptly summarizes the scope of judicial intervention.
"28....There is a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavors made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorizing them as perverse or patently illegal without appreciating the contours of the said expressions...."
10. While dealing with the scope of challenging the award on the ground that it is against the 'public policy', it has been observed by the Hon'ble Supreme Court in case of "Associate Builders Vs DDA" 2015 (5) SCC Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 14 of 27 49 that it must be clearly understood that when a court is applying the 'public policy' test to an arbitration award, it does not act as a court of appeal and consequently errors of facts cannot be corrected. The court held that a possible view by the Arbitrator on facts as necessarily to pass muster as the Arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award.
11. The Court observed in Delhi Airport Metro's case (supra) that 'Patent illegality' should be an illegality which goes to the root of the matter. It was held that every error of law committed by the Arbitral Tribunal would not fall within the expression patent illegality. The court observed that mere erroneous application of law cannot be categorized as patent illegality. It was further observed that contravention of law not linked to public policy or public interest is beyond the scope of the expression patent illegality. The court held that the Courts dealing with the applications under Section 34 are prohibited to re-appreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as courts do not sit in appeal against the arbitral award. The observations made in this regard in para No.29 of the Judgment are as under;
Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 15 of 27 "29...the permissible grounds for interference with a domestic award under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a clause in the contract in such a manner which no fair-
minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression patent illegality."
12. In Delhi Airport Metro Express case (supra), the Apex Court interpreted the expression 'Public Policy of India' and cited with approval the decision in "Ssangyong Engineering and Construction Company Limited vs National Highways Authority of India (NHAI)"
(2019) 15 SCC 131 wherein it was observed as under;
"34. What is clear, therefore, is that the expression public policy of India, whether contained in Section 34 or in Section 48, would now mean the fundamental policy of Indian law as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA i.e. the fundamental policy of Indian law would be relegated to Renusagar (supra) understanding of this expression. This would necessarily mean Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 16 of 27 that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 expansion has been done away with. In short, Western Geco [ONGC v. Western Geco International Ltd, as explained in paras 28 and 29 of Associate Builders, would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2) (a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders.
35. It is important to notice that the ground for interference insofar as it concerns interest of India has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the most basic notions of morality or justice. This again would be in line with paras 36 to 39 of Associate Builders, as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders, Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)
(b)(ii) was added by the Amendment Act only Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 17 of 27 so that Western Geco [ONGC, as understood in Associate Builders, and paras 28 and 29 in particular, is now done away with."
13. Coming to the facts of the present matter, the main ground of challenge has been that the Arbitrator made an erroneous interpretation of law by holding that the family settlement dated 20.01.2017 did not require registration and stamping. Record shows that this ground was raised by the petitioner during arbitration proceedings. Petitioner also placed on record certain judgments to support this argument. The objections about the admissibility of family settlement on account of its non-registration and being insufficiently stamped were taken into account by the Arbitrator. The Arbitrator appreciated the arguments in the light of evidence produced before him and came to the conclusion that the family settlement dated 20.01.2017 was merely a recordal of the oral family settlement between the parties and therefore, it neither required registration nor stamping. The Arbitrator held that the family settlement was admissible in evidence and even in the absence of stamping and registration, it could be taken into while determining the rights and liabilities of the parties. There is a concrete finding of the Arbitrator that the oral family settlement, which was reduced into writing on 20.01.2017 did not require registration and stamping. The Arbitrator Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 18 of 27 came to the conclusion that the recordal of oral family settlement was a valid and binding document between the parties.
14. The preposition of law in respect to the requirement of registration, stamping and admissibility of family settlement has been reiterated in number of judicial pronouncements. It has been held in a recent decision given by the High Court of Delhi in the case titled as "Himani Walia Vs Hemant Walia & Ors." (Ex. Petition No.26/2019, decided on 23.03.2022) that family settlements are not required to be compulsorily registered and stamp duty is not required to be compulsorily paid in respect of the same, when the settlement has been arrived at initially as an oral partition and thereafter, the same has been put into writing for purpose of information. The court referred to the decision of the Apex Court in "Kale & Ors. Vs Dy. Director of Consolidation & Ors." 1976 (3) SCC 119 wherein it was observed;
"10. In other words to put the binding effect and the essentials of a family settlement in a concretised form, the matter may be reduced into the form of the following propositions:
1. The family settlement must be a bona fide one so as to resolve family disputes and rival claims by a fair and equitable division or allotment of properties between the various members of the family;
Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 19 of 27
2. The said settlement must be voluntary and should not be induced by fraud, coercion or undue influence;
3. The family arrangement may be even oral in which case no registration is necessary;
4. It is well-settled that registration would be necessary only if the terms of the family arrangement are reduced into writing. Here also, a distinction should be made between a document containing the terms and recitals of a family arrangement made under the document and a mere memorandum prepared after the family arrangement had already been made either for the purpose of the record or for in formation of the court for making necessary mutation. In such a case the memorandum itself does not create or extinguish any rights in immovable properties and therefore does not fall within the mischief of s.
17(2) of the Registration Act and is, therefore, not compulsorily registrable;
5. The members who may be parties to the family arrangement must have some antecedent title, claim or interest even a possible claim in the property 'It which is acknowledged by the parties to the settlement. Even if one of the parties to the settlement has no title but under the arrangement the other party relinquishes all its claims or titles in favour of such a person and acknowledges him to be the sole owner, then the antecedent title must be assumed and the family arrangement will be upheld and the Courts will find no difficulty in giving assent to the same;
6. Even if bona fide disputes, present or possible, which may not involve legal claims are settled by a bona fide family arrangement which is fair and equitable the family arrangement is final and binding on the parties to the settlement."
15. The Division Bench of High Court of Delhi has held in "Nitin Jain Vs Anuj Jain & Anr." ILR 2007 (II) Delhi 271 that a memorandum Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 20 of 27 recording an oral family settlement, which has already taken place is not an instrument dividing or agreeing to divide a property and is therefore not required to be stamped. Similar view has been expressed in "Padwamati Bhalla Vs Master Sahil & Ors." 2017 SCC OnLine Del 6957 wherein it was held that an oral family settlement dividing or partitioning the property is not required to be stamped. It was further held that a memorandum recording an oral family settlement, which has already taken place is not an instrument dividing or agreeing to divide property and is therefore not required to be stamped.
16. It has been held in "Subraya M.N Vs Vittala M.N & Ors." 2016 (8) SCC 705 that even if a written family arrangement has not been registered, still, it can be used as a corroborative evidence for explaining the arrangement made thereunder and conduct of the parties. Hon'ble Supreme Court has held in "Korukonda Chalapathi Rao & Anr. Vs Korukonda Annapurna Sampath Kumar" (2021) SCC OnLine SC 847 that a document in the nature of a memorandum evidencing a family arrangement already entered into and the document being prepared as a record of what had been agreed upon, does not require to be either stamped or registered.
Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 21 of 27
17. Record demonstrates that the petitioner took identical pleas before Arbitrator about non-registration and insufficient stamping of the family settlement dated 20.01.2017 but the pleas were rejected by the Arbitrator. The Arbitrator evaluated the documents produced by the parties and came to the conclusion that the family settlement dated 20.01.2017 was a recordal of oral family settlement between the parties, which was neither required to be registered nor it was required to be on a stamp paper. As observed in Delhi Metro's case (supra), the court dealing with an application under Section 34 of the Act is not authorized to re-appreciate the finding of the Arbitrator. From the material placed on record, it cannot be concluded that the Arbitrator arrived at the finding, which is perverse. The Arbitrator recorded reasons for arriving at a finding that the family settlement did not require either registration or stamping. There is nothing to demonstrate that the view taken by the Arbitrator is the one which could not have been taken by a fair minded reasonable person. It is not the case of the petitioner that Arbitrator wandered outside the scope of his authority. There is no material to indicate that the Arbitrator arrived at the conclusion by ignoring vital piece of evidence or that the conclusion was not based on evidence. In view of this, it cannot be concluded that Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 22 of 27 there was any patent illegality in the award. The finding of the Arbitrator that the family settlement did not require registration and stamping is based on sound reasoning, which finds support from various judicial pronouncements on this aspect. The Arbitrator came to a finding that the family settlement dated 20.01.2017 was mere a memorandum prepared after a family arrangement had already been made and this finding is backed with proper reasoning. The argument that the arbitrator misinterpreted the provisions of The Registration Act and The Indian Stamp Act has to be rejected. It is not the case of the petitioner that the family settlement was never recorded. He has only challenged the admissibility of the recordal of family settlement on the submission that it was not registered and insufficiently stamped. This challenge was rightly turned down by the Arbitrator. Once, such a finding has been given by the Arbitrator, this court cannot disturb the finding, more particularly, when it is based on the correct interpretation of law. Parties cannot be allowed to re-agitate the same issue by way of present petition under Section 34 of the Act. The court deciding the petition under Section 34 of the Act does not sit in appeal to overturn the finding given by the Arbitrator.
Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 23 of 27
18. Now coming to the argument of the petitioner that the amount contributed by the respondent towards the purchase of the property should be treated as a gift. The arbitrator has given a finding in the award that since the respondent has admitted that he did not contribute anything for the purchase of the property in question and his 50% of the share of property was paid by his mother (respondent herein), therefore, he was merely an ostensible owner of the half share of the property in question and the mother remained real owner of the entire property. The petitioner's plea that the amount contributed by his mother should be treated as gift was considered and rejected by the Arbitrator. There is a finding in the award that petitioner has not been able to prove that there was a gift in his favour. The Arbitrator backed this finding by observing that had there been any gift, the same would have been reflected either in the tax returns of the parties or the gift would have been reported to the tax authorities dealing with gifts. The Arbitrator held that there was nothing on record to show that the amount paid by the respondent to the petitioner was a gift. The Arbitrator observed that even in the recordal of oral family settlement, it was nowhere stated that the respondent had gifted her half share of the property or the amount spent for the purchase thereof to the petitioner. The Arbitrator further observed that no gift deed Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 24 of 27 was ever executed in favour of respondent and therefore, it cannot be held that respondent is the owner of 50% share in the property. The findings of the Arbitrator were based on the evidence produced by the parties. The Arbitrator evaluated the statement of accounts and came to the conclusion that the amount contributed by the respondent towards the purchase of property cannot be treated as gift. This court cannot substitute its own opinion in place of the finding on facts given by the Arbitrator.
19. The petitioner has failed to point out any infirmity in the award, which may support his argument that the award was in conflict with public policy of India. It is not the petitioner's case that the making of the award was induced or affected by fraud or corruption or it was in violation of Section 25 & 81 of the Act. It cannot be considered by any stretch of imagination that the award was in contravention of the fundamental policy of Indian Law or it was in conflict with basic notions of morality or justice. There is no material to suggest that the award was patently illegal. The submissions of the petitioner that the award was based on erroneous interpretation of the law does not hold ground. The award was based on sound reasoning and correct interpretation of law. Even if the argument of the petitioner is accepted that there was Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 25 of 27 erroneous application of law, still, in view of the pronouncement in Delhi Airport's case (supra), it cannot be categorized as patent illegality. The contravention of law, as alleged by the petitioner, is no way linked to the public policy or public interest and therefore, it is beyond the scope of expression of 'patent illegality'. In arbitration proceedings, petitioner did not deny that the family settlement was arrived at between the family members. The execution of the recordal of family settlement dated 20.01.2017 was also admitted by the petitioner. In view of this, I am not able to find any fault in the findings of the Arbitrator, which are based on facts and documents produced during the arbitration proceedings. This court cannot dissect and reassess the factual aspects of the matter to come to a conclusion that the award was vitiated by either perversity or patent illegality. On appreciating the record, I have reached a conclusion that the findings of the Arbitrator on facts, law, admissibility of recordal of family settlement and the binding effect of the family settlement were well within the realm of Arbitration. These findings were backed with evidence and correct interpretation of law and they do not need any intervention from this court by exercising the powers under Section 34 of the Act. Accordingly, I find no merit in the present petition and the same is accordingly dismissed.
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20. Arbitral Record be sent back to the concerned Arbitrator.
21. File be consigned to Record Room after due compliance. Announced in open Court on 06.05.2022 (Sudhanshu Kaushik) Addl. District Judge-02 & Waqf Tribunal, New Delhi District, Patiala House Courts, New Delhi/06.05.2022 Arbtn. No.271/2022 Sandeep Jajodia Vs Sudha Jajodia page 27 of 27