Bombay High Court
Mrs. Melanie Fialho And Ors. vs Malcolm Francis Pereira And Anr. on 15 March, 1993
Equivalent citations: 1993(3)BOMCR556, (1993)95BOMLR722
JUDGMENT N.D. Vyas, J.
1. By the present petition, the petitioners pray that judgment be pronounced in terms of Award dated 26th October 1990 made by Mr. Justice B. Lentin (Retired) and that decree in accordance thereof be passed and that the Court Receiver appointed by an order dated 24th July 1984 in Notice of Motion No. 1212 of 1983 in Testamentary & Intestate Jurisdiction Suit No. 13 of 1983 in Petition No. 490 of 1982 be directed to distribute the properties to the petitioners and the respondents as per decree in terms of Award and take all required steps including registering the decree in terms of the Award with the office of Sub-Registrar of Assurances and make payment of stamp duty and other charges.
2. Briefly stated, the facts giving rise to the present petition are as follows :
(i) One Dr. Vincent Pereira died intestate on 2nd May 1981 leaving petitioners and respondents as his only heirs. On 31st May 1982 the 1st respondent filed Testamentary Petition No. 490 of 1982 in this Court for Letters of Administration to the estate of the said deceased. The 4th petitioner filed a caveat dated 14th March 1983 along with his affidavit in support of the Caveat. The said Petition No. 490 of 1982 was thereafter converted into Testamentary Suit No. 13 of 1983. By an order passed on 24th July 1984, Court Receiver of this Court was appointed as Receiver of the entire moveable and immovable properties of the said deceased. Thereafter by a judgment and order dated 8th January 1985, the Caveat of the 4th petitioner herein was dismissed. An appeal was filed against the said order of dismissal being Appeal No. 227 of 1985. The said appeal came up for hearing and final disposal on 9th February 1992 and the same was allowed and order dated 8th January 1985 was set aside and the petition for grant of Letters of Administration was dismissed. By a consent order dated 26th November 1989 passed in Arbitration Petition No. 72 of 1989 in the said Suit No. 1542 of 1985 the disputes between the petitioners and the respondents herein pertaining to the estate of the said deceased were referred to the sole arbitration initially of Mr. M.H. Shah, Senior Advocate of this Court, subsequently by consent the above order was modified and the disputes were referred to Mr. Justice B. Lentin (Retired).
(ii) The consent order of reference to arbitration inter alia provided as follows:
"2. All questions and matters in difference relating to the said estate of Dr. Vincent Albert Pereira deceased and to the tenancy rights of the deceased between defendants Nos. 1 and 2 on the one hand and the plaintiff and defendants Nos. 3 to 6 on the other hand are hereby referred to the sole arbitration of Shri Mahendra H. Shah, Senior Advocate. The questions and matters in difference to include the following :---
(a) Extent of the said estate.
(b) Recovery of the rents, compensation, damages and dues payable to the estate.
(c) Payment of taxes, dues and liabilities of the said estate.
(d) Devolution or transmission of the tenancy rights of the said deceased in the tenanted premises at Pereira House, 1 (Old No. 35), Pereira Road, Bandra, Bombay -400 050, and distribution, division by metes and bounds, and allotment of the said tenanted premises or portions thereof.
(e) Distribution, division by metes and bounds, vesting and allotment of the properties and assets of the said estate including the telephone and jewellery of the deceased.
It is agreed and understood that the sole arbitrator shall decide questions relating to jewellery which defendants Nos. 1 and 2 claim are in possession of the plaintiff and defendants Nos. 3 to 6, and the existence of which jewellery is denied by defendant No. 5."
(iii) The learned Arbitrator published his Award dated 26th October 1990 and by his letter of the same date informed 2nd respondent and Advocates for the petitioners and respondent No. 1 of his having made and signed the Award on 26th October 1990 and enclosed herewith a copy of the said Award.
(iv) Under the said Award decisions have been given by the learned Arbitrator under 17 heads. Heads I to XIV relate to movable properties and Head No. XV relates to immovable properties. Under sub-head I of Heads X & XA, claimants (petitioners before me) were ordered to pay a sum of Rs. 35,000/- to the respondents herein within 4 weeks of the date of the Award. The said amount was paid and thus received by the respondents. There is no dispute as to this.
(v) The said Award was filed in this Court on 13th November 1990. Notice of the filing of the above award was issued by the office of the Prothonotary and Senior Master of this Court on 27th December 1990. The respondents have received the same. As of the date of the present petition i.e. 4th September 1991 none of the parties had filed any proceedings challenging the award. No such proceedings are adopted even thereafter. Certificate dated 8th July 1991 was issued by the office of the Prothonotary and Senior Master of this Court inter alia certifying that the notices of the filing of the Award were served and no application has been made in Court for setting aside or remitting the said Award.
(vi) In these circumstances, the petitioners submitted that this Hon'ble Court be pleased to pass decree in terms of the said Award as prayed in the petition.
3. After the petition was filed, affidavit in reply has been filed dated 3rd December 1991 by the 1st respondent inter alia challenging and Award on several grounds, I shall deal with the grounds individually little later on. The petitioners have filed their rejoinder and the 1st respondent has also filed sur-rejoinder dated 22nd December 1992.
4. Before I deal with the challenges made by the respondents to the said Award, there are two questions which require determination at the outset. The first question which is raised by the petitioners is as to the maintainability of the said challenge. It is the contention of the petitioners that as required in law, no proceedings were adopted by the respondents for challenging the said Award within the time allowed under Article 119 of the Limitation Act. In view thereof it is the contention of the petitioners that the respondents cannot challenge the Award and decree must be passed as a matter of course. Mr. Doctor, learned Counsel appearing for the respondents on the other hand contended that under section 17 of the Arbitration Act, the Court can even suo motu set aside the Award if in the opinion of the Court, there were sufficient grounds for doing so. In view of this, it is the submission that even if no proceedings are taken within the time provided for in law either by way of petition or by way of any other application, the Court has to scrutinise the Award. It is the contention of the respondents before me that in view of the fact that the Award is null and void, the Court can certainly go into that question and come to the conclusion without there being any proceedings adopted by the respondents. Mr. Doctor, in support of his contention relied on the decision in Hastimal Dalichand Bora v. Hiralal Motichand Mutha, reported in 56 Bom.L.R. page 99, the decision in Smt. Kusumlataben D. Kamani v. Prafulchandra Narbheram Kamani, reported in 79 Bom.L.R. page 284, and the decision in Union of India v. Ajit Mehta & Associates, . In Hastimal Dalichand Bora v. Hiralal Motichand Mutha, reported in 56 Bom.L.R. at page 99, it has been inter alia held that the courts would exercise this jurisdiction rarely and only where the awards may be patently illegal and void. It further laid down that if the award directs a party to do what is prohibited by law, the Court can exercise its jurisdiction though no application may have been made by either party to set aside the offending award. In Smt. Kusumlataben D. Kamani v.Prafulchandra Narbheram Kamani, reported in 79 Bom.L.R. at page 284, it is inter alia held that the Court should consider whether the award has been filed in the proper Court and whether the Court has jurisdiction to pass a decree on the award and that even without any independent application being made to take the award off the file or for similar relief, the Court can and indeed should, even suo motu go into the question as to whether it has jurisdiction to pass a decree in terms of the award. Now coming to the third authority cited viz., in Union of India v. Ajit Mehta & Associates, , the Division Bench of this Court, after considering the entire law on the subject, inter alia laid down that the Court has suo motu power to set aside an award on the ground of illegality and such an award can be challenged at any stage inasmuch as bar of limiation under Article 119 of the Limitation Act does not prevent party from raising such objection or prevent Court from ignoring it as nonest or using its suo motu power to set it aside. In these circumstances, the Court held that Article 119 of the Limitation Act had no application.
5. It is the submission of Mr. Doctor that the award is null and void. It is mentioned that the reference itself is null and void as it referred to the Arbitrator the question and the dispute relating to the devolution or transmission of the tenancy rights of the said deceased of tenanted premises at Pereira House, Pereira Road, Bandra and distribution and division by metes and bounds and allotment of the said tenanted premises or portion thereof. It is submitted that such a question could not have been referred to the Arbitrator for arbitration as the dispute squarely fell within the provision of section 5(11)(c)(i) of the Bombay Rent., Hotel and Lodging House Rates Control Act, 1947 read with section 28 of the said Act. More about this submission a little later. However, for the purpose of disposing of this question suffice to say that Mr. Doctor is right in his contention that even in the absence of any application or any petition filed within a period prescribed under Article 119 of the Limitation Act, such a question can be raised as it is the duty of the Court even suo motu to go into the question when it is alleged that the Award is null and void and non est.
6. Coming to the next question which arises for determination at the threshold, is this : Whether the party who has acquiesced by acceptance of the award by in fact accepting payment of certain amounts payable under the Award can be permitted to challenge the award? It is an admitted position that under Heads X and XA, the learned Arbitrator awarded Rs. 35,000/- as due and payable by the claimants to the respondents and ordered the same to be paid within 4 weeks from the date of the Award. Admittedly petitioner No. 4 has by his two cheques of Rs. 17,500/- each in favour of respondents Nos. 1 and 2 respectively paid a total amount of Rs. 35,000/- as awarded under the Award and the respondents have accepted the same unconditionally. It is the contention of Mr. Bharucha that here is not only a case of consent being given by parties to the reference or even during the hearing of the arbitration proceedings, but here is a case when Award is made, an amount is awarded to be paid by and to the parties to the arbitration, and in pursuance of the Award, the payment made is accepted by the respondents unconditionally. In these circumstances, it is his submission that how can a party receiving benefits under the Award be permitted to turn round and challenge the said Award? Mr. Bharucha relied on the passage from Russell on Arbitration, Nineteenth Edition at page 488. Therein it is observed as follows :---
"Acquiescence by taking benefit under award.---
It will be a good answer to a motion to set aside an award if the opposing party can show that the party moving has acquiesced in the award by knowingly accepting a benefit under it. Even an acceptance of a benefit under protest may amount to acquiescence in the award, especially if there is delay in taking proceedings to set it aside,
1. By an order of the Court disputes were referred to arbitration on the terms of the defendant paying the costs of the cause and the reference and of the award. The plaintiff sought to have the award set aside, but the defendant objected that the plaintiff had acquiesced in the award by accepting payment of the costs of it. Held that the plaintiff in these circumstances was precluded from seeking to have the award set aside : Kennard v. Harris, (1824)2 B. & C. 801.
2. Similarly, where an award in the form of a special case awards various sums on the basis of the various legal contentions, a party may not both approbate and reprobate one of the alternatives, accepting payment in accordance with it and yet contending that it is wrong : Dexters Ltd. v. Hill Crest Oil Co., (1926)1 K.B. 348 ; but see ante p. 322."
Mr. Bharucha further relied on the decision in Rameshai v. Harishchandra, . In the said decision the facts were as follows : In pursuance of the decision of the Arbitrator, the parties accepted the decision and accordingly dealt with the materials allotted to them. In these circumstances, it was held that it was not possible for a party to an arbitration having accepted and been benefited from part of the arbitrator's decision to question the rest. The arbitrator was to decide every one of the disputes arising between the parties. He gave the decision in the award in regard to such of them as could be calculated in terms of money while he decided separately the dispute regarding the materials as such later on. The whole process was really one arbitration in which a piecemeal acceptance or challenge of the decision cannot be allowed. Enunciating the principles, it was held that a party to arbitration should take the decision of the arbitrator as a whole and cannot, having taken advantage of the part suitable to him, be heard to challenge a part which he finds not so suitable. Mr. Bharucha further relied on a decision of the Calcutta High Court in Kripa Sindhu v. Sudha Sindhu, . In that case also a party, after the award was made, has accepted certain payments which were made. It was held that the party challenging the award had for many years enjoyed the fruits of the award and then challenged the award on the ground that the award was null and void. It was held that the party challenging had taken a chance of a favourable decision in going before the arbitrators and the matter in dispute was finally determined by the chosen forum and yet after accepting the award challenged the same which cannot be permitted in law. Mr. Bharucha also relied on the decision of the Supreme Court in Kashinathan v. Narsingsa, . There also parties had acted in pursuance of the award whereby properties were partitioned and possession of the land allotted to parties under the award had taken place. Mr. Bharucha submitted that apart from the aspect of acquiescence by acceptance even on the question of acquiescence simpliciter, the respondents cannot be heard to challenge the award. He relied on the decision of Supreme Court in, Prasun Roy v. Calcutta M.D. Authority, and the decision in N. Chellappan v. Kerala S.E. Board, . In (supra), it was inter alia held that where though a party is aware from the beginning that by reason of some disability the matter is legally incapable of being submitted to arbitration, and that party participates in arbitration proceedings without protest and fully avails of the entire arbitration proceedings and then when he sees that the award has gone against him comes forward, to challenge the whole of the arbitration proceedings as without jurisdiction on the ground of a known disability, the same cannot be allowed. It is further held that this principle applied both before and after making of the award. The principle is that a party shall not be allowed to blow hot and cold simultaneously, and that long participation and acquiescence in proceeding precluded such a party from contending that the proceedings were without jurisdiction. Before me the situation is similar. The contention raised by Mr. Doctor in view of the above Supreme Court decision, cannot be raised. Now coming to (supra) the facts were that the arbitrators failed to make award within specified time, however, schedule 1, R. 4 authorised the Umpire to forthwith enter upon the reference in lieu of the arbitrators. Neither the fact that the Umpire expressed his unwillingness to enter upon the reference without an order of the Court nor the fact that an application was made to extent the period of making the award by the arbitrators long after the expiry of the period for making the award, had the effect of depriving him of his jurisdiction under Rule 6 of the First Schedule. It was held that a party who submitted to the jurisdiction of the Umpire and took part in the proceedings before him without any demur would be precluded by his acquiescence from challenging the award for lack of jurisdiction.
7. On the other hand, Mr. Doctor, learned Counsel appearing for the respondents, stated that the award was severable. In that view of the matter, payment under sub-head I of Head X & XA and acceptance thereof could not be held to be fatal. He further submitted that consent or acquiescence would not give jurisdiction to the Arbitrator in view of the fact that according to him, the reference itself was illegal que dispute regarding devolution or transmission of tenancy and that the entire proceedings including the award were null and void and party's consent or acquiescence would not matter. I am not at all impressed by the submission made by Mr. Doctor. The Supreme Court authorities are very clear as far as acquiescence are concerned and decisions cited by Mr. Bharucha i.e. , and go to the extent of saying that the party cannot be allowed to enjoy the fruits of award and yet to challenge the same. In view of this, the challenge to the award cannot be maintained. However, I do not wish to dispose of the petition on that ground alone.
8. Assuming I am wrong in arriving at the conclusion which I have done as far as the question of acquiescence by acceptance was concerned, let us see what substance the challenges raised by the respondents to the Award have.
9. It is the respondents' contention that devolution or transmission of tenancy right could not have been referred or examined or determined by the learned Arbitrator. It was submitted that an Award given by an arbitrator over the subject matter or on other grounds which go to the root of his exercise of jurisdiction, lacked inherent jurisdiction and thus was coram non judice. This question, according to Mr. Doctor, fell squarely within section 5(11)(c)(i) read with section 28 of the Rent Act. Section 5(11)(c)(i) reads as follows :
"5. In this Act unless there is anything repugnant to the subject or context :---
(11) "tenant" means any person by whom or on whose account rent is payable for any premises and includes,---
(c)(i) in relation to any premises let for residence, when the tenant dies, whether the death has occurred before or after the commencement of the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Act, 1978 any member of the tenant's family residing with the tenant at the time of his death or, in the absence of such member, any heir of the deceased tenant, as may be decided in default of agreement by the Court."
Section 28 of the Rent Act gives exclusive jurisdiction to Small Causes Court to inter alia decide any application made under the Rent Act and to deal with any claim or question arising out of the said Act or any of its provisions. It is the submission that on the death of the deceased who was tenant of the premises concerned, in the absence of any member of the family of the said deceased residing with the deceased at the time of death, the tenancy would devolve upon an heir and in the absence of agreement between heirs inter se, the question has to be decided by the `Court' and the Court would be only Small Cause Court Bombay and no other. Mr. Doctor relied on Natraj Studios (P.) Ltd. v. Navrang Studios and other, A.I.R. 1981 S.C. 537, (1981 Mah.L.R. page 876), Mirablle Hotel Company Pvt. Ltd. v. Manu Subedar, , Bahadur Singh and another v. Muni Subrat Dass and another, 1969(2) S.C.R. 432, Smt. Kaushalya Devi and others v. K.L. Bansal, and Narayan Deju Puthrani v. The Labour, 57 Bom.L.R. 261. It is not necessary to go through these decisions in detail inasmuch as that none of these decisions deal with a situation similar to the one I have before me. Therefore, let us examine what was referred to the learned Arbitrator and what has been decided. Out of 7 heirs, 5 heirs were on one side and two viz., respondents were on the other. What was left to the determination of the learned Arbitrator was as to which group, the tenancy right should go. This question was referred to Arbitration by agreement. By the Award the Arbitrator has not declared any single individual as having inherited tenancy right. All he has done is as per the agreement between the parties when parties resolved to refer all the disputes between them including that relating to the tenanted premises and the parties agreed to abide by the decision. In effect what the learned Arbitrator did was to consider one group to be entitled to the tenancy right and that he has done after taking into consideration all the facts and circumstances of the case viz., the estate involved and how the estate had to be distributed between the heirs. The learned Arbitrator by no stretch of imagination declared a single individual as tenant as contemplated by section 5(11)(c)(i) of the Rent Act. The decision of this Court reported in 1981 Mah.L.J. at page 876 is very clear on this point. Only one person could be declared as a tenant. Has the learned Arbitrator declared any one of the parties as tenant? The answer is no. He has not done so. Moreover, for the declaration or determination of an `heir' as `tenant' as contemplated by section 5(11)(c)(i) of the Rent Act, the presence of landlord would be necessary as this requires determination of a legal status of a person. The determination by the learned Arbitrator is not a determination as contemplated by the said provision but a step towards final determination. The `Agreement' contemplated by the said provision is two-fold. Firstly between `heirs' inter se and, secondly between the `heirs' and the landlord. In these circumstances, there is no question of any illegality as far as reference is concerned or Award is concerned. In view of the above, I find no substance in the submission made.
10. Mr. Doctor's next ground of challenge was that the learned Arbitrator assumed to himself powers wider than those conferred upon him by the Court. It was Mr. Doctor's submission that as per the Reference, the learned Arbitrator was inter alia required to divide and distribute the estate of the deceased by metes and bounds. However, in respect of an immovable property viz. plot No. N.A. 228, Pereira Road, Bandra, the learned Arbitrator, on the basis of the value of the available F.S.I. divided the same, which according to Mr. Doctor travelled beyond the Reference. In other words, it was his submission, the learned Arbitrator, was bound to make an award which should have been within four corners of the order of Reference as it was incumbent upon the learned Arbitrator acting under an order of Reference to strictly comply with its terms. Mr. Doctor relied on the decision in Hastimal Dalichand Bora v. Hiralal Motichand Mutha, reported in 56 Bom.L.R. 99, and the decision of the Supreme Court in Associated Engineering v. Government of Andhra Pradesh, . In 56 Bom.L.R. 99 (supra) a Division Bench of this Court inter alia held, while considering the question of ex gratia payment awarded by the Arbitrator, that an Arbitrator, was bound to make an Award which was in obedience to the order of reference and that where there was a reference to arbitration by Court, any alteration in the powers of the arbitrator even by consent of the parties amounted to a new submission and thus required as order of the Court. In (supra) the Supreme Court, while dealing with the grant of certain claims in favour of the contractor by the Umpire, inter alia held that the Arbitrator's sole function was to arbitrate in terms of the contract and that an Arbitrator cannot widen his jurisdiction by deciding a question not referred to him. Mr. Bharucha on the other hand submitted that it was not possible to divide the said property by metes and bounds and the learned Arbitrator's Award is within four corners of the Reference and that he has not travelled beyond the Reference.
11. The consent order of Reference inter alia recorded that parties agreed and declared that the properties, assets and liabilities of the estate of the said deceased should be divided in the proportion of 2/7 share to respondents and 5/7 share to the petitioners and the division should be by metes and bounds with payment of amounts for adjustment in value of shares. The learned Arbitrator has done precisely that. Whatever assets were capable of being divided by metes and bounds have been divided accordingly and whatever was incapable of such division has been divided keeping in mind not only the letter but also the spirit of the mandate. Surely, it cannot be argued that it was possible for the arbitrator to adopt another method. Law is well-settled that it is not open to the Court to probe the mental process of the arbitrator and speculate, where no reasons are given by the Arbitrator, as to what impelled the arbitrator to arrive at his conclusion and that the Court is not permitted to substitute its own views . What the Arbitrator has done is something which is squarely and within the four corners of the reference where it was not possible to divide that property by metes and bounds. The valuation of the same which was arrived at by the valuer who was appointed by the consent of the parties was taken as the basis by the learned Arbitrator and notionally division has been done on the basis of F.S.I. In these circumstances, I find no substance in this submission.
12. This brings me to the last submission of Mr. Doctor which was however ultimately not pressed. All the same, since it was argued at the outset with earnestness, I wish to deal with the same. It was the respondents' contention that by reason of Clause 8 of the Consent Order of Reference which required the Award to be stamped and registered, the Award operated to create, declare, assign, limit and extinguished and was compulsorily registrable under the provisions of section 17(1)(b) and (e) of the Registration Act and despite the same, the learned Arbitrator had not registered it. Reliance was again put on 56 Bom.L.R. 99 (supra). It was thus the submission that the Arbitrator was bound to make his Award in obedience to the Court's Order of Reference and where there was reference by Court, even by consent of parties, an alteration amounted to a new submission which required an order of the Court. I must mention here that the learned Arbitrator did not have the Award registered as both, the petitioners and the respondents `Persuaded' him not to do so, in view of the decision of a Single Judge of this Court in Chandrakant v. Ishwarlal, . In this decision this Court has, after discussing the law on the subject of registration of an Award, came to the conclusion that in respect of arbitration through intervention of Court, Award did not require registration. It is, recorded in the Award that parties requested the learned Arbitrator to forward the Award duly stamped and retain with him a duly stamped duplicate of the Award and that the parties would "endeavour to persuade the Court at the time of the passing of the decree in terms of the Award, that registration was not necessary". And yet the challenge and that too on the ground of non-registration. Although Mr. Doctor had ultimately not pressed this ground, this particular challenge by the respondents speaks volumes for their `honesty'. Here are persons who in fact requested the learned Arbitrator not to, have the Award registered as they were to `endeavour' to persuade the Court not to insist upon the same. However, before me there definitely was an endeavour, but to the contrary. This is nothing also but misleading the learned Arbitrator to proceed in a particular manner and then turning around and condemning the learned Arbitrator for his resultant act. In any view of the matter, (supra) is very clear. Registration is not required.
13. In view of the fact that I have not found any substance in the submissions made by Mr. Doctor, the petition requires to be made absolute. Petition made absolute in terms of prayers (a) and (b). Respondents to pay costs of the petition.