1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO. 583 OF 2003 IN ARBITRATION PETITION NO. 155 OF 2002 IN AWARD NO. 2 OF 2002 Satinderpal Singh Anand, ) Residing at 501, Violena Building, ) St. Anne' s Church Road, ) Bandra (W), ) Mumbai-400 050. ) ...Appellant. (Orig. Petitioner) Vs. Sharanpal Balmukund Chopra, ) Residing at Chopra House, ) 108, Dr.Ambedkar Road, ) Bandra (W), ) Mumbai-400 050. ) ...Respondent. (Orig. Respondent.) Mr. O. J. Menezes with Mr. R. S. Tripathi for the Appellant. Mr. H.J. Thakkar, Sr. Advocate i/by Ms. Geeta Shastri for the Respondent. WITH APPEAL NO. 680 OF 2003 IN ARBITRATION PETITION NO. 155 OF 2002 IN AWARD NO. 2 OF 2002 2 Sharanpal Balmukund Chopra, ) Residing at Chopra House, ) 108, Dr.Ambedkar Road, ) Bandra (W), ) Mumbai-400 050. ) ...Appellant (Orig. Respondent.) Vs. Satinderpal Singh Anand, ) Residing at 501, Violena Building, ) St. Anne' s Church Road, ) Bandra (W), ) Mumbai-400 050. ) ...Respondent. (Orig. Petitioner) Mr. H.J. Thakkar, Sr. Advocate i/by Ms. Geeta Shastri for the Appellant. Mr. O. J. Menezes with Mr. R. S. Tripathi for the Respondent. CORAM :- DR. S.RADHAKRISHNAN & ANOOP V. MOHTA, JJ. DATE OF RESERVING THE JUDGMENT :- 10TH MARCH, 2008. DATE OF PRONOUNCING THE JUDGMENT :- 5TH, MAY, 2008. JUDGMENT (PER ANOOP V. MOHTA, J.):- . As the parties, issues and impugned judgment are common, we are disposing of both the Appeals by this common judgment. 2. The original Petitioner- Appellant (also called hereinafter for reference “Anand's) has preferred this Appeal No.583/2003 against the impugned order passed in Arbitration Petition No. 155/2002 in Award 3 No. 2 of 2002. The original respondent (called hereinafter for reference Chopra's) has also preferred Appeal No.680 of 2003 on limited ground against the said judgment. The appellant's case in Appeal No.583/2003 is as under:- 3. Prior to 24/07/1979, Chopra and his brother were owners of a plot of land admeasuring 4644 sq.yards. By an Agreement of Sale dated 10/11/1979, both the brothers agreed to sell to M./s. Emkay Construction Co., 3300 sq. yards which was demarcated from the rest of the property by a red boundary line in the plan annexed to the Agreement. A compound wall was thereafter constructed separating the said two pieces of land. The respondent is the owner of immovable property at Bandra admeasuring 1344 sq. yds., with a structure of a ground floor and part first floor standing thereon having 4 flats besides a portion of the said structure in possession of the respondent. Flat No.3 was in occupation of the appellant who resided there with his family. On the first floor of the building there were two rooms and a toilet. They were also in occupation of the appellant. 4. Flat No. 4 was in the occupation of a tenant named Mr.Naik and Flat Nos. 1 and 2 were in the occupation of a tenant named Mr. Pereira who had also encroached on a portion of the open land surrounding his flats. Tenant named Mr. Pereira was not on speaking terms with the respondent for more than 15 years due to acrimonious litigation 4 between the two of them. The respondent is an Engineer, Builder and Contractor by profession. The appellant is one of the legal heirs and representatives of Mr. Sardar Singh Gurdit Singh Anand (father of the appellant). 5. In the year 1987, pursuant to instructions of respondent the appellant negotiated with tenant Pereira for vacating the flats in his occupation and securing alternate accommodation elsewhere. The respondent and late Sardarsingh Anand and appellant were also negotiating for sale of a portion of land of the respondent. Sometime prior to July, 1987, the respondent approached the appellant along with a broker. Both of them impressed upon the appellant the possibility of developing the property. The appellant was reluctant as there was problem from the two tenants occupying the flats. The ejectment proceedings initiated against tenant Pereira was pending in Small Causes Court. Besides, BMC was not ready to give permission to sub divide the plot of land in view of previous sale of the land of a portion admeasuring 3300 sq. yards to M/s. Emkay Construction Co. The issue of extra FSI used by Emkay Construction Co. was also one of the problem. 6. On 23/06/1987, pursuant to negotiations tenant Pereira agrees to vacate the two flats on the respondent paying him Rs.11.60 lacs to secure alternate accommodation elsewhere. The respondent executed 5 document with tenant Pereira stating that on respondent paying Pereira a sum of Rs.11.60 lacs the tenant shall vacate the premises (2 flats) in his occupation. 7. On 01/07/1987, the respondent executed agreement with tenant Naik for obtaining possession of flat No.4 in his occupation on payment of Rs.3.35 lacs by the respondent. 8. On 05/07/1987, tenant Naik addresses letter to the respondent stating that he had secured accommodation at Andheri and calls upon the respondent to make arrangement to pay him Rs.3.35 lacs as per agreement. 9. On 11/07/1987, the respondent executes stamped receipt in favour of father of the appellant acknowledging receipt of a sum of Rs.4.50 lacs for sale of open land admeasuring 4533 sq.ft. @ Rs.1000/- per sq.ft., for a total consideration of Rs.45 lacs. The said receipt states that possession of open land given to the appellant's father. Out of the consideration of Rs.4.50 lacs paid, Rs.3.35 lacs paid in cheque and balance amount of Rs.1.15 lacs paid in cash. This fact is recorded in the receipt executed. 10. On 11/07/1987, tenant Naik executes receipt for Rs.3.35 lacs received from the respondent and hands over vacant possession of flat No.4 to the respondent. 11. On 24/07/1987, the respondent addressed letter of authority to 6 the tenant Pereira authorising him to deal with the Appellant's father for obtaining vacant possession of 2 flats in Pereira's possession within the limits mentioned in the agreement i.e. Rs.11.60 lacs. On 24/07/1987, prior to the hearing of the Motions the respondent produced a forged Letter of authority wherein in his own handwriting he has inserted the sentence “as the liability to vacate is that of S.S.Anand”. He also forged the signature of tenant Pereira on the same for which he was prosecuted for forgery. (By doing so he wanted to cast the burden of shifting the tenant Pereira on S.S.Anand and create a dispute about the price of the land which was sold. 12. The respondent paid a sum of Rs.11,60,000/- to tenant Pereira and obtained vacant possession on 31/07/1987 from him on behalf of the appellant. Pereira executing a writing recording that he had received Rs.7,50,000/- by cheque and Rs.4.10 lacs by cash from S.S.Anand and handed over vacant possession of the flat Nos. 1 and 2 to S.S.Anand as per instructions from S.P.Chopra. S.S.Anand also obtained writing from tenant Pereira recording the above facts. The said writing further stated that he or the owner S.P.Chopra shall have no claim in respect of the flat required by Pereira as an alternative accommodation. 13. As alleged, on 12/09/1987, as respondent not executing a regular Agreement for sale the respondent gave appellant's father a copy of 7 the application addressed to B.M.C. and signed by him for the construction of a building on 4533 sq.ft. of land in accordance with the plans annexed. 14. On 20/01/1988, the respondent's Advocate's letter to Advocate at Baroda stating that the draft agreement ready and would be forwarded separately. 15. On 02/02/1988, the respondent filed suit No.363/1988 against the appellant and his father for eviction from only 2 flats on the ground that they are trespassers therein. No prayer in the plaint for declaration that they are trespassers in the flats. Said suit filed even before receipt of letter dated 29/01/1988. In his plaint the respondent annexed only 2 documents and no other correspondence prior to the suit i.e. letter of authority dated 24th July, 1987 without the interpolation and police complaint. In the plaint, the respondent clearly states that the appellant had removed his material from the open space and that cars are being parked in the compound. Mesne profits sought @ Rs.15000/- p.m., for 2 flats. Possession of open space and shed not claimed. 16. On 29/02/1988, the appellant's father files Suit No.721/1988 against the respondent for specific performance of the agreement for sale cum development. In the plaint it is clearly stated that possession of open land had been given as per receipt dated 11/07/1987 and the 8 said area of 4533 sq.ft., had been demarcated and that the late Sardar Singh and his family were freely, openly and exclusively occupying the said 2 flats and surrounding land. About occupation of land admeasuring 4533 sq.ft. and it has been stated that after filing of the suit he had received letter dated 29/01/1988 enclosing respondent's draft agreement for sale cum development. In the plaint it has been stated that the respondent is wanting to take possession of the 2 flats and land which was in exclusively possession of the appellant. 17. On 27/05/1988, this court, passed Ad-interim Order whereby pending the hearing of the Motions taken out by both parties, the shed shall be under lock and key of the appellant and his father, that they are allowed to bring their cars in the compound and that the open space claimed by the appellant and his father would not be put to use by either party. 18. On 18/10/1991, this Court made appellant's Notice of Motion No.944/1988 absolute and the respondent is restrained by an injunction order from interfering with appellant's possession of the 2 flats and open space admeasuring 4533 sq.ft. The order further allows the appellant and his father non-residential use of the flats on payment of Municipal taxes. 19. The appellant took out Notice of Motion No. 1071 of 1988 in suit No. 363 of 1988. The late father of the respondent took out Notice of 9 Motion No. 944 of 1988 in Suit No. 721 of 1988 and also Notice of Motion No. 545 of 1988 in Suit No. 363 of 1988. All the Motions were disposed of by a common order dated 18/10/1991. The appellant had filed affidavit dated 29/03/1988 in Notice of Motion No. 944 of 1988 in Suit No. 721 of 1988, wherein in para 23, had offered to reutrn the amount paid to Mr. Periera and Rs.3,35,000/- paid to Mr. Naik to late S.S. Anand but late S.S.Anand in his affidavit in rejoinder dated 09/06/1988 in para 25 had stated that it is too late for the appellant to refund the same. 20. On 05/12/1991, the respondent filed Written Statement on Suit No.363 of 1988 denying the claim of the appellant and contending that they had right to possess the property under alleged writing dated 11/07/1987 and claimed possession not only of 2 flats but of land admeasuring 4533 sq.ft. and shed in the compound alleged to have been sold them and they were put in possession in part performance. 21. On 22/10/1991, the respondent's application for continuation of the Ad-interim order passed by this Court rejected. Pursuant to the same, the appellant renovated the dilapidated shed and starts using the same. It is submitted from the above facts and is clear that the appellant and his father were in possession of not only the 2 flats but also the open land admeasuring 4533 sq.ft. and the shed even prior to the respondent's suit No.363/1988 which for eviction from only 2 flats. 10 22. On 05/12/1991, the appellant and his father file written Statement in respondent's suit No. 363/1988. In para 1, it is clearly stated that they are in possession of not only the 2 flats but also the open space of 4533 sq.ft. and the shed. It has been stated that the area of 4533 sq.ft. has been demarcated by constructing a small bund (which is also reflected at page 58 of the appellant's suit No.721/88), and it has been stated that respondent's suit No. 363/1988 is bad for non-joinder of causes of action as the said suit is restricted only to possession of 2 flats. It has also been stated that the appellant and his father are not trespassers and as the foundation of the respondent's suit is false the same was liable to be dismissed. 23. On 23/06/1992, two Appeals filed by the respondent against the order of the learned Single Judge and the same disposed of by filing consent terms and the two suits are referred to arbitration. All differences, claims and counter claims between the parties arising out of and in relation to suit No. 363 of 1988 and suit No. 721 of 1988 were referred to arbitration of Sole Arbitrator, Mr.S.R.Shah. 24. On 09/09/1992, the respondent files his written statement in appellant's Suit No.721/1988 and he still states that he is in possession of the open land and denies the appellant's possession. Same fact is repeated at page 140 and 141 which is submitted in contrary to the Ad-interim order dated 27th May, 1988 passed by this Court and the 11 Interim Order dated 18/10/1991 passed by this court. Various meetings held before the Arbitrator and the respondent suddenly stopped attending the meetings as he was in the process of disposing off the entire property in violation of the Interim injunction. The said fact was not known to the appellant at that time. 25. On 27/10/1994, the respondent sells the entire property including the subject matter of the injunction and receives Rs.90 lacs as earnest money. 26. On 20/12/1994, the respondent convicted for forgery by trial Court for forgery and cheating and sentenced to one month's rigorous imprisonment and fine of Rs.1 lakh. 27. On 21/12/1995, the appellant's father expires and Chamber Summons No.633/1996 taken out to bring on record the legal heirs in appellant's Suit No.721/1988. Said Chamber Summons allowed vide order dated 19 th March, 1997 and legal heirs of deceased S.S.Anand bought on record and described as such in Suit No.721/1988. The said Chamber Summons was allowed on 19/03/1997. After amendment, the plaint in Suit No.721 of 1988 was reaffirmed and signed by the respondent for himself and as Constituted Attorney of the other heirs of deceased S.S.Anand. 28. On 02/09/1997, the respondent terminates agreement for sale with third party and forfeits Rs.90 lacs. Third party files suit for specific 12 performance against the respondent. 29. In the month of February, 1998, the appellant comes to know about sale of the property to the third party. 30. On 29/04/1998, all the legal heirs of the deceased file Contempt Petition against the respondent and third party and on 27/07/1998 this court issues a bailable warrant against the respondent. Heirs of deceased Mr.S.S.Anand, including Smt. Basant Kaur filed Appeal No. 308 of 2002 against order dated 25/01.2002 though Ms. Basant Kaur had expired on 20/07/2000. In the said Appeal, Advocate Mr. Owen Menezes represented the respondent and all other heirs of deceased S.S.Anand. The said Appeal was admitted on keeping the plea of maintainability raised by appellant open to be decided at stage of hearing. The said Appeal No.308 of 2002 dismissed by Division Bench of this Court. 31. On 24/11/1998, the respondent filed Petition for appointment of Arbitrator under the new Act and in the petition all legal heirs of deceased S.S. Anand are shown. 32. On 08/04/1999, the Respondent took out interim application before Arbitrator for dismissal of suit No. 363 of 1988 under O-22 Rule 9 of CPC and also to strike off defence under O-39 Rule 11 of CPC in Suit No.721 of 1988 for alleged contempt. The appellant filed reply and same was argued and the order was to be passed with main 13 Award. The common evidence was lead in both suit No.s 721/1988 and 363 of 1988. Examination in chief and cross examination was done of the respondent and Mr. Rohira before the Arbitration. 33. On 13/08/1999, an order passed appointing Arbitrator under the 1940 Act without prejudice to rights and contentions of the parties. 41. On 08/09/1999, the appellant makes an application before Arbitrator for passing Interim Award (1) for dismissal of respondents Suit No. 363/1988 on the ground that legal heirs of deceased S.S.Anand not brought on record (2) for striking defense of Respondent in Appellant's Suit No. 721/1988 in view of the fact that the respondent had disposed off the entire property in violation of the Interim order passed by this Hon'ble Court. 34. On 22/10/1999, the respondent files affidavit of evidence claiming possession of only 2 flats and in para 42 for the first time claims possession of only the shed. Possession of open land admeasuring 4533 sq.ft. not claimed. In para 41 he still asserts that he is in physical and legal possession of all structures including the shed. For the first time he claims mesne profits @ Rs.15,000/- p.m. per flat in contrast to his claim in Suit No. 363/1988. 35. On 25/10/1999, the arbitrator settled issues in both suits. 36. On 14/12/1999, at the very first date of the respondent's cross- 14 examination objection is taken by the appellant's Advocate that the respondent's evidence is beyond his pleadings and the same recorded by the Arbitrator. 37. On 24/01/2000, the appellant files his affidavit of evidence and in para 14 repeats that the respondent's Suit No. 363/1988 is bad for non-joinder of causes of action in that open space admeasuring 4533 sq.ft. not claimed, as well as, the shed. 38. On 06/10/2000 , cross-examination of all parties completed and matters posted for argument. 39. On 21/03/2001, during the course of argument and after 13 years respondent makes application to amend his suit No.363/1988 to claim possession of the open space admeasuring 4533 sq.ft. and shed. Also increase in mesne profits from Rs.15,000/- for 2 flats to Rs.45000/- p.m. per flat. 40. On 09/04/2001, detailed affidavit- in-reply filed by the appellant to the respondent's amendment Application. Arbitrator hears amendment application but declines to pass an order stating that the same would be passed at the time of final award. 41. On 17/01/2002, Award passed by the arbitrator who condones delay in bringing legal heirs on record of the deceased S.S.Anand even though no application made by respondent for the same and has rejected the amendment application of the respondent. The Arbitrator 15 awards possession of not only 2 flats but also open land admeasuring 4533 sq.ft. and shed to the respondent directly in conflict with Issue No.1 framed. He also awards mesne profit of Rs.15000/- p.m. for both flats and Rs.30,000/- p.m. if possession is not given. The respondent is also directed to refund the appellant Rs.11.60 lacs @ 6% interest. 42. On 15/04/2002, Arbitration petition filed by the appellant and stay granted by the learned single Judge. 43. On 13/06/2002, the respondent filed his affidavit- in-reply. 44. On 24/06/2002, the arbitration petition was admitted, expedited and interim reliefs granted. 45. On 25/02/2003, the Judgment of this court modifying the award, the learned Judge hold that the appellant is not a trespasser but yet awards possession of 2 flats and open space admeasuring 4533 sq.ft. and shed to the respondent contrary to issue No.1 framed. The learned Judge does not grant specific performance only on the ground that a view taken by the arbitrator was a possible view. No appeal filed by the respondent challenging these findings. The appeal of the respondent only restricted to learned Judge declining to grant mesne profit and increasing rate of interest from 6% to 18%. 46. On 28/07/2003, Appeals admitted. 47. On 10/09/2003, Notice of Motion disposed of. The Court records that the Appellant Chopra had already deposited in Court a sum of 16 Rs.31,50,600/- interim order passed by Division al Bench of this Court. 48. First of all, it is necessary to consider the scope of the Appellate Court in such matter arising out of Section 30 and 33 of the Arbitration Act-1940 in view of the following judgments:- 1. (2005) 6 S.C.C. 462, Bhagawati Oxygen Ltd. Vs. Hindustan Copper Ltd. 2. (2003) 7 S.C.C. 396, State of U.P. Vs. Allied Constructions. 3. (2002) 6 S.C.C. 201, Shyama Charan Agarwala & Sons Vs. Union of India. 4. AIR 1987 S.C. 2316, Municipal Corporation of Delhi Vs. M/s. Jagan Nath Ashok Kumar & Anr. 5. AIR 1971 S.C.1646, The President, Union of India & Anr. Vs. Kalinga Construction Co. (P) Ltd. 6. 2007 (2) Mh.L.J. 499 Union of India Vs. Ghanekar Builders and Chemicals Pvt. Ltd. The following are the basic principles which can be taken note of in this background. a) An arbitrator is a Judge, appointed by the parties and as such the award passed by him is not to be likely interfered with. b) The Court while exercising the power under Section 30 cannot re- appreciate the evidence or examine correctness of the conclusions arrived at by Arbitrator. c) The jurisdiction is not appellate in nature and an award passed by an Arbitrator cannot be set aside on the ground that it was 17 erroneous. d) It is not open to the Court to interfere with the Award merely because in the opinion of the court, another view is equally possible. e) It is only when the Court is satisfied that the Arbitrator had misconducted himself or the proceedings or the award had been improperly procured or is 'otherwise' invalid that the Court may set aside the award. f) The Court cannot reappreciate the evidence. The interpretation of the contract is a matter within the jurisdiction of the Arbitrator. (Vide Bhagvati Oxigen (Supra) ) g) Unless one or the other condition under Section 30 is satisfied, an Award cannot be set aside. (Vide State of U.P. (Supra) ). h) The Award can be set aside if there is a jurisdictional error acting without jurisdiction or beyond jursidiction, ignoring relevant clauses. (Vide Shyam Charan Agarwala (Supra)) i) Reasonableness of the reason given by an Arbitrator in making award when there is no evidence of violation of principle of natural justice and or two views are possible. 18 (Municipal Corporation Delhi (Supra).) j) In proceeding to set aside the award Appellate Court cannot sit in appeal over the conclusion of the Arbitrator by re-examining and re-appraising the evidence considered by the Arbitrator and hold that the conclusion reached by the Arbitrator is wrong specially when the finding of the Arbitrator is not perverse. (Vide The president Union of India (Supra)) k) The Appellate Bench would not be justifying in enlarging the scope upon the controversy, in an Appeal against dismissal of petition challenging the Arbitral Award. (Union of India Vs. Ghanekar Builders. (Supra)) 49. The learned Single Judge after considering the record and rival submissions of the parties, by the impugned Judgment principally passed the decree in terms of the award except the following modifications which is reproduced as under:- '(1) Mesne profits awarded in favour of Chopra are set aside. (2) The amount of Rs.16,10,000/- to be paid by Chopra to legal heirs of Sardar Singh who are on record in Suit No. 721/88, with interest thereon for pre- reference period at the rate of 18% p.a. on the principal sum of Rs.16,10,000/- from 11/7/1987 till judgment and thereafter at the rate of 18% from the date of the suit till date of the award and thereafter, at the same rate from the date of the award till realisation. This is both towards 19 compensation and interest. (3) Mr.Chopra to deposit the said amount in this Court on or before 31/8/2003. On such deposit, legal heirs of Sardar Singh including Satinder to hand over possession of the property to Chopra within two months of deposit. On possession being handed over, the amount deposited along with interest, if any, to be paid to the L.Rs. of Sardar Singh Anand. Petition stands disposed of accordingly.“' 50. The operative part of the award is as under:- 'In result I pass the final order of award as under: (a) The Respondents