FIRM RAJASTHAN UDYOG & ORS. versus HINDUSTAN ENGINEERING & INDUSTRIES LTD.
[2020] 5 S.C.R. 813, Supreme Court of India, 2020
Outcome: Appeal(s) allowed (Granted)
Segment: Issues
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FIRM RAJASTHAN UDYOG & ORS.
v.
HINDUSTAN ENGINEERING & INDUSTRIES LTD.
(Civil Appeal No. 2376 of 2020)
APRIL 24, 2020
[UDAY UMESH LALIT AND VINEET SARAN, JJ.]
Arbitration Act, 1940 – Extent of execution of an award –
249.60 Bighas of land owned by appellant-firm was acquired in
1973 for the benefit of respondent-Company – Challenged by
appellant – Rejected by High Court – Special appeal allowed by
Division Bench – SLPs filed by respondent and State of Rajasthan,
dismissed by Supreme Court – Agreement arrived at between the
parties, as well as State of Rajasthan stating that out of 249.60
bighas of land, approx. 104 bighas would be retained by the
appellant and the remaining about 145 bighas would be sold to the
respondent, subject to fixation of price of land, construction etc. to
be finalised through arbitration – Eventually, agreement dated
01.02.1980 entered into between parties and accordingly, the issue
as to determination of price of 145 bighas of land was decided by
sole arbitrator vide award dated 09.06.1985 – Award was affirmed
– Appellant filed SLP – Dismissed – Respondent sought execution
of award – Allowed by ADJ-I inter alia directing appellant to execute
registered sale deed – Appellant filed Civil Revision Petition – During
pendency thereof, respondent filed Civil Suit against appellant
seeking specific performance of agreement dated. 01.02.1980 –
Withdrawn – Civil Revision Petition dismissed by High Court,
upholding the order of ADJ-I –
Held: Award passed by the arbitrator
could not be independently executed, as the same was only for
fixation of price of land and not for enforcement of the agreement
– Respondent could not be permitted to achieve the goal of execution
of sale deed by indirectly claiming for execution of award, when
the direct claim for execution of sale deed of the agreement dated.
01.02.1980 was abandoned by it by withdrawing the suit for specific
performance of the agreement – Further, execution of an award
can be only to the extent what has been awarded/decreed and not
beyond it – Arbitrator in its award only declared the price of land
[2020] 5 S.C.R. 813
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and nothing more – Thus, the question of execution of a sale deed
of the land at the price so declared by the arbitrator in its award,
could not be directed – Judgment of High Court, quashed –
Rajasthan Land Acquisition Act, 1953 – Code of Civil Procedure,
1908 – Or.XXIII, r.1(4) – Registration Act, 1908.
Allowing the appeal, the Court
HELD: 1.1 The Award passed by the Arbitrator could not
be independently executed, as the same was only for fixation of
price of land and not for enforcement of the Agreement. The Award
was only declaratory of the price of the land.  As per the agreement,
if the respondent agreed to the price so fixed, it could then get
the sale deed executed in terms of the Agreement dated
01.02.1980 as it had the option of either accepting the price and
getting the sale deed executed, or not accepting the price and
thus not getting the sale deed executed. This would clearly mean
that the Award was merely for the declaration of the price of the
land, which would be subject to the agreement and it was not
necessary for the respondent to get the sale deed executed at
the price so determined by the Arbitrator. What was thus
executable was the agreement, and not the Award. The relief
granted by the Court below for execution of the sale deed in
terms of the Award, is thus outside the realm of law, as the Award
did not contemplate the transfer of land in favour of the
respondent, but only determined the price
of land. Once the
respondent had given up its claim of execution of sale deed in
terms of the Agreement dated 01.02.1980 by withdrawing the
suit for specific performance of the agreement (Civil Suit No. 60
of 1996), which was permitted to be withdrawn unconditionally
on 13.02.2006, the appellant had abandoned its claim for
execution of the sale deed. Thus, the respondent could not be
permitted to achieve the goal of execution of sale deed by
indirectly claiming for execution of Award, when the direct claim
for execution of sale deed of the Agreement dated 01.02.1980
had been abandoned by the respondent. [Paras 30, 32][830-F-H;
831-A, C-D]
1.2 Execution of an award can be only to the extent what
has been awarded/decreed and not beyond the same. In the
present case, the Arbitrator in its Award had only declared the
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price of land and nothing more. Thus, the question of execution
of a sale deed of the land at the price so declared by the Arbitrator
in its Award, could not be directed. Going behind the decree for
doing complete justice would not mean that the entire nature of
the case could be changed, and what was not awarded in favour of
the respondent, could be granted by the executing court. It was
only after the respondent had exercised its right to purchase the
land at the price fixed by the Arbitrator that a right to enforce the
Agreement could have arisen in favour of the respondent. The
Award of the Arbitrator, in the present case, in itself was not a
conclusive contract between the parties, which could be executed.
The impugned judgment of the Rajasthan High Court passed in
Civil Revision Petition No. 81 of 1985, upholding the order of
the Additional District Judge dated 05.01.1995 is quashed. In
terms of the interim order, the petitioner deposited
Rs. 50,00,000/- with the Registry of this Court, which was directed
to be placed in a short-term fixed deposit account. The amount
so deposited by the appellant along with interest accrued thereon,
shall be paid to the respondent, and besides this a further sum of
Rs.10,00,000/- shall also be paid by the appellant to the respondent
within six weeks from today, which all would be towards the cost
of litigation and other expenses incurred by the respondent. With
this, a quietus would be put to the long drawn
litigation between
the parties. [Paras 38, 44-46 and 48][833-H; 834-A; 836-C-E, G;
837-F-G]
Bhavan Vaja v. Solanki Hanuji Khodaji Mansang
(1973) 2 SCC 40; Meenakshi Saxena v. ECGC Limited
(2018) 7 SCC 479 : [2018] 5 SCR 421; Topanmal
Chhotamal v. Kundomal Gangaram AIR 1960 SC 388
– distinguished.
State of M.P. v. Mangilal Sharma (1998) 2 SCC 510 :
[1997] 6 Suppl. SCR 662; Coal Linker v. Coal India
Ltd. (2009) 9 SCC 491 : [2009] 14 SCR 155; J&K
Bank Ltd. v. Jagdish C. Gupta (2004) 10 SCC 568;
Gurdev Singh v. Narain Singh (2007) 14 SCC 173 :
[2007] 11 SCR 1093; Ramesh Kumar v. Furu Ram
(2011) 8 SCC 613 : [2011] 10 SCR 453 – relied on.
Manakchand v. Manoharlal 71 Ind. App. 65 : (AIR
1944 P.C. 46) – referred to.
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Case Law Reference
[1997] 6 Suppl. SCR 662
relied on
Para 35
[2009] 14 SCR 155
relied on
Para 36
(2004) 10 SCC 568
relied on
Para 37
[2007] 11 SCR 1093
relied on
Para 38
[2011] 10 SCR 453
relied on
Para 40
(1973) 2 SCC 40
distinguished
Para 42
[2018] 5 SCR 421
distinguished
Para 43
AIR 1960 SC 388
distinguished
Para 43
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2376
of 2020.
From the Judgment and Order dated 04.07.2016 of the High Court
of  Judicature for Rajasthan, Jaipur Bench, Jaipur in S.B. Civil Revision
Petition No. 81 of 1995.
 Sudhir Chandra Agarwala, Brijender Chahar, Sr. Advs., Pradeep
Kumar Bakshi, Kushara Pandit, Shashi Bhushan, Advs. for  the
Appellants.
Dushyant Dave, Sr. Adv., T.S. Ahuja, Varun S. Ahuja, Ms.  Neha,
D.K. Thakur, Nitin Kumar Thakur, Advs. for the Respondent.
The Judgment of the Court was delivered by
VINEET SARAN, J.
1. Leave granted.
2. The question for consideration in the present appeal is as to
whether an Arbitration Award, which determined the compensation
amount for the land to be paid under agreement for sale, can be directed
to be executed as a suit for specific performance of agreement, when
the reference to the Arbitrator (as per the agreement) was only for
fixation of price of land in question, and the Arbitration Award was also
only with regard to the same.
3. Briefly stated, the facts of this case are that the appellant no.1
is a partnership firm and other appellants are
its partners. The appellant
firm is owner of 249.60 Bighas (approximately 100 acres) of land, which
was purchased by the appellant in the year 1966. The dispute in the
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present appeal relates to a period spreading over four decades. The said
land was subject matter of acquisition, for which a Notification dated
13.03.1973 under Section 4 of the Rajasthan Land Acquisition Act, 1953
(for short, “Act of 1953”), was issued by the State of Rajasthan, which
acquisition was for the benefit of the respondent-industry. The said
notification was challenged by the appellant before the Rajasthan High
Court in Writ Petition no.389 of 1974, which was dismissed by a learned
Single Judge of the High Court vide judgment dated 23.07.1974.
Challenging the same, the appellant filed Special Appeal No.448 of 1974
before the Division Bench of the High Court, during the pendency of
which a declaration under Section 6, read with Section 17 of the Act of
1953, was issued by the State of Rajasthan on 13.09.1975. The Special
Appeal challenging the said acquisition was allowed by the Division Bench
of the Rajasthan High Court, vide its judgment dated 05.10.1976 and the
acquisition proceedings were thus quashed. Challenging the said decision
of the Rajasthan High Court, respondent-Hindustan Engineering &
Industries Limited, as well as the State of Rajasthan, filed separate Special
Leave Petitions (No. 4199 of 1977 and 1060 of 1978, respectively), which
petitions were dismissed by this Court by order dated 29.3.1994.
4. During the pendency of the said Special Leave Petitions, on
the intervention of the then Chief Minister-cum-Minister of Industries of
the State of Rajasthan, an agreement was arrived at between the parties
herein, as well as the State of Rajasthan, which was recorded in the
Minutes of the meeting dated 27.11.1978, which was to the effect that
out of the 249.60 bighas of land belonging to the appellant firm,
approximately 104 bighas would be retained by the appellant and the
remaining about 145 bighas would be sold to the respondent-Company,
subject to the fixation of price of land, construction etc. to be finalised
through Arbitration.
5. Pursuant thereto, an Agreement dated 16.02.1979 was entered
into between the appellant-firm and the respondent-Company. The said
Agreement dated 16.02.1979 was superseded by another Agreement
dated 01.02.1980 executed between the parties.
6. The matter of determination of price of the land to be sold by
the appellant to the respondent-Company, was decided by the sole
Arbitrator, Justice Chandra Bhan Bhargav (Retired), vide his Award
dated 09.06.1985. In the said Award, the Arbitrator mentioned that the
parties had “referred their dispute regarding determination of
FIRM RAJASTHAN UDYOG & ORS. v. HINDUSTAN
ENGINEERING & INDUSTRIES LTD. [VINEET SARAN, J.]
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compensation of land to me as Sole Arbitrator”. The salient feature
decided in the said Award was that the market value of the land to be
transferred in favour of the respondent-Company would be determined
as on 27.11.1978, which was the date on which the parties agreed to
transfer the land. In pursuance thereof, the total compensation amount
for the land in question was determined by the Arbitrator as
Rs.12,18,700/-. The said Award was filed before the Additional District
Judge-1, Bharatpur on 10.06.1985.  After the Award was passed, the
respondent-Company, vide its communication dated 15.07.1985 conveyed
its acceptance of the Award to the appellant by registered post. The
same was also conveyed to the Arbitrator vide communication dated
18.07.1985.
7. The appellant then filed its objections to the Award before the
Additional District Judge-1, Bharatpur and vide order dated 22.11.1988,
the objections were allowed and the matter was remanded back to the
Sole Arbitrator. Challenging the said order dated 22.11.1988, the
respondent-Company filed Civil Revision Petition No. 163 of 1990 before
the Rajasthan High Court, which Revision Petition was allowed on
01.12.1993 and the Award dated 09.06.1985 passed by the Arbitrator
was affirmed and made Rule of the Court. Challenging the said order of
the Rajasthan High Court, the appellant had filed the Special Leave
Petition No.3684 of 1994, which was dismissed by this Court on
29.03.1994.  The Award thus attained finality.
8. It was thereafter that on 16.05.1994, the respondent-Company
filed an application for execution of the Award.  In the said application,
it was stated that “according to the directions contained in the Award
of the Arbitrator, the petitioner Hindustan Corporation Limited, is
required to furnish stamp paper to the respondent for execution of
the sale deed _ _ _ _”.  The prayer made in the said application was
that the appellants herein be directed to take steps and execute the sale
deed on the stamp papers filed by the respondent herein and thereafter
produce the sale deed before the Sub Registrar for its registration. In
the alternative, it was prayed that if the appellants herein failed to execute
the sale deed, the same may be executed by the Court. In response to
the same, the appellants filed its reply on 19.7.1994 opposing the execution
application and specially denied that any such direction for the execution
of the sale deed, as has been made in the prayer of the application by the
respondent herein, was made in the Award of the Arbitrator.
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9. By judgment and order dated 05.01.1995, the Additional District
Judge-I, Bharatpur, exercising its power under Section 17 of the
Arbitration Act, 1940, allowed the application of the respondent herein
and directed the appellants to execute and register the sale deed and
hand over possession of the land in question to the respondent herein.
Aggrieved by the judgment of the Additional District Judge-I, Bharatpur,
dated 05.01.1995, the appellants filed Civil Revision Petition No. 81 of
1995 before the Rajasthan High Court.
10. During the pendency of the Civil Revision Petition filed by the
appellants, the respondent-Company filed Civil Suit No. 60 of 1996 against
the appellants seeking specific performance of the Agreement dated
01.02.1980 between the parties i.e., the appellants and the respondent-
Company. The Civil Revision Petition No. 81 of 1995 filed by the
appellants remained pending before the Rajasthan High Court, when the
respondent-Company had filed the Civil Suit No. 60 of 1996. Even when
the Civil Suit of the appellants was not decided, the respondent - Company
sought to withdraw the Civil Suit No. 60 of 1996 vide its application
dated 06.02.2006. Pursuant thereto, the Civil Suit No. 60 of 1996 seeking
specific performance of the Agreement dated 01.02.1980 was permitted
to be unconditionally withdrawn by the respondent-Company vide order
dated 13.02.2006 passed by the Trial Court.
11. It was then, after more than a decade of withdrawal of the
suit by the respondent – Company, that the Civil Revision Petition 81 of
1995, challenging the order of the Additional District Judge-I dated
05.01.1995 was dismissed by the Rajasthan High Court by a detailed
order dated 04.07.2016. The High Court opined that the Civil Suit No.
60 of 1996 was filed by the respondent–Company as a matter of abundant
precaution but was later withdrawn and mere filing of the Civil Suit
would not amount to admission by the respondent-Company that the
Award and subsequent order based on it, were not suitable and
enforceable. Upholding the order of the Additional District Judge-I dated
05.01.1995, the Civil Revision Petition was dismissed by the Rajasthan
High Court.  Aggrieved by the said judgment dated 04.07.2016, this appeal
has been filed by way of Special Leave Petition.
12. The submission of Mr. Sudhir Chandra Agarwala, learned
Senior Counsel for the appellants is that the Executing Court has travelled
beyond the Award while passing the order dated 05.01.1995, inasmuch
as by the Arbitration Award dated 09.06.1985  only price of the land in
FIRM RAJASTHAN UDYOG & ORS. v. HINDUSTAN
ENGINEERING & INDUSTRIES LTD. [VINEET SARAN, J.]
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question was determined by the Arbitrator and it did not declare, create
or confer  any right, title or interest in the land in question in favour of
the respondent – Company. It was contended that by the Agreement
dated 01.02.1980, the appellants had agreed to sell their land to the
respondent-Company at the rate to be fixed in future by an Arbitrator,
and the respondent-Company was given an option  in the agreement to
be exercised within a period of 45 days of the fixing of the price by the
Arbitrator, either to purchase or decline to purchase the land. Thus,
according to the learned Senior Counsel, the Agreement dated 01.02.1980
was to result in a concluded contract only after the respondent-Company
had either given its consent to purchase the land at the price fixed by the
Arbitrator or declined to do so.  It was thus contended that the respondent
had not acquired any enforceable right even at the time of the passing of
the Award, as  there did not exist any concluded contract between the
parties even at the time of the passing of the Award, as the contractual
obligations  of the parties were to arise subsequent to the passing of the
Award and only after the respondent-Company had exercised its option
of purchasing the land at the price fixed by the Arbitrator. Learned Senior
Counsel contended that the Executing Court could not have gone behind
or beyond the Award, and thus could not have considered the Agreement
dated 01.02.1980 entered into between the parties. The scope of
reference to the Arbitrator being only with regard to determination of
the price of  land at which it may be sold by the appellants to the
respondent-Company,  thus in execution of the Award, no direction for
execution of the sale deed by the appellants in favour of the respondent-
Company in pursuance of the Agreement dated 01.02.1980 could have
been issued by Executing Court, especially when the suit for specific
performance of the Agreement dated 01.02.1980 had been withdrawn
by the respondent-Company on 13.02.2006, which was without any
condition.
13. Learned Senior Counsel for the appellants further submitted
that any instrument or award creating right, title or interest in an
immoveable property would be required to be compulsorily registered
under Registration Act, and the same having not been registered, could
not be executable. It was contended that neither the Agreement dated
01.02.1980 nor the Award dated 09.06.1985, was registered in the present
case.  It was vehemently urged  that when the respondent-Company
was barred for seeking execution of the Agreement dated 01.02.1980
(which was not registered) and also when the Civil Suit No. 60 of 1996
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filed by the respondent-Company for specific performance dated
01.02.1980 was dismissed as unconditionally withdrawn on an application
filed under Order XXXIII Rule 1 Code of Civil Procedure by the
respondent on 06.02.2006, the execution of the said agreement dated
01.02.1980 (while deciding the application under Section 17 of the
Arbitration Act, 1940) in execution of the Award determining the price
of the land could not have been passed. In the alternative, it was
contended that the Agreement dated 01.02.1980 was not enforceable
also because the same had been obtained by undue influence.
14. With regard to the price of land as determined in the Award of
the Arbitrator, on merits, it was submitted that the price which was fixed
as on 27.11.1978, and not the date on which the sale deed was to be
executed.  Since the price fixed was a meagre amount of Rs. 12.18 lacs
for about 145 bighas (about 55-60 acres) of land, the fixation of the price
under the Award was highly unreasonable as the present value of the
land would be in crores. In the end, learned Senior Counsel for the
appellants submitted that as proposed and recorded in this Court’s Order
dated 23.02.2007 in this appeal, the appellants were ready to compensate
the respondent–Company towards costs of litigation and other expenses
incurred by it, which the appellants are still ready and willing to pay.
While concluding his submission, learned Senior Counsel reiterated that
the Executing Court had
grossly erred and exceeded its jurisdiction in
travelling beyond the Award, which was only for fixation of the price of
land and not execution of sale deed. It was thus urged that the orders
dated 05.01.1985 passed by the Executing Court and the order dated
04.07.2016 passed by the Rajasthan High Court in Civil Revision Petition,
be quashed.
15. Per contra Shri Dushyant Dave and Shri Sidharth Dave,
learned Senior Counsel appearing for the respondent-Company
contended that this is not a case where the Court should exercise its
discretionary jurisdiction under Article 136 of the Constitution as the
appellants had agreed to sell the land in question in terms of the Agreement
dated 01.02.1980, at the price to be fixed by the Arbitrator, and once the
Arbitrator had fixed price of land, the execution of the same, as directed
by the Executing Court, was perfectly justified. It was the solemn
agreement entered into between the parties in the year 1980, which was
sought to be executed after the passing of the Award of the Arbitrator
on 09.06.1985 and by directing execution of sale deed, the Executing
FIRM RAJASTHAN UDYOG & ORS. v. HINDUSTAN
ENGINEERING & INDUSTRIES LTD. [VINEET SARAN, J.]
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Court has done substantial justice between the parties. It has been
contended that the appellants had never filed any suit for declaration
that the Agreement dated 01.02.1980 was void by virtue of Section 23
of the Indian Contract Act, 1872, nor  did it ever raise the challenge to
the validity and legality of the agreement while assailing the Award or
while resisting  the execution proceedings. Learned Senior Counsel
submitted that it was wrong to allege that the agreement entered into by
the appellants was purportedly under coercion. The agreement always
remained binding between the parties and was executable after the
determination of price of land in question by the Arbitrator, and the
appellants could not seek to wriggle out of the same on any count. The
quantum of price of the land as fixed by the Arbitrator could not now be
reagitated on the ground that the current market value of the land is very
high. It was then contended that the power of the Executing Court was
very wide and it was its duty to give effect to the Award of the Arbitrator.
It was thus urged that the scope and power of the Executing Court has
been held to be wide enough to interpret the Award, the agreement upon
which the Award is based, and also the pleadings. Thus, while considering
the above, the Executing Court was justified in ordering the execution of
the agreement and by having done so, it was not only justified and suitable
in the facts
of the present case, but the Court has done complete justice
between the parties.
16. As regards the filing the Civil Suit No. 60 of 1996 for specific
performance of the Agreement dated 01.02.1980 by the respondent-
Company, learned Senior Counsel for the respondent - Company has
submitted that on receiving legal advice, the said Civil Suit No. 60 of
1996 was withdrawn on 13.02.2006, as the petition for execution of the
Award was already pending. It has been submitted that the contention
that filing of the Civil Suit No. 60 of 1996 for specific performance of
the Agreement dated 01.02.1980 tantamounts to admission on the part
of the respondent-Company that the Award did not envisage direction
for execution of sale deed and handing over the possession of the land in
question, is wholly misconceived, as in any case, there cannot be any
admission against the law. Learned Senior Counsel for the respondent
thus contended that the appeal is devoid of merits, and deserves to be
dismissed.
17. In the end, with regard to the order of this Court dated
23.02.2017 passed in this appeal, giving suggestion to the respondent-
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Company that whether the respondent- Company would be satisfied if
Rs.60 lacs  was paid to it towards cost  of litigation and other expenses
made by it and put the controversy to the end, learned Senior Counsel
for the respondent suggested that the respondent-Company would be,
on the other hand, agreeable to deposit Rs.60 lacs to be paid to the
appellants for putting a quietus to the litigation.
18. We have heard learned Senior Counsel for the parties at length
and have perused the record.
19. Learned Senior Counsel for the parties have, in support of
their respective submissions, relied on several decisions rendered by this
Court, which shall be considered while dealing with their submissions.
20. The facts of this case, relevant for the purpose of this appeal,
may be summarised as follows:
(a) In 1966, the appellant firm purchased 249.60 bighas (app.
100 acres) of land.
(b) On 13.03.1973, a Notification under Section 4 of the Rajasthan
Land Acquisition Act, 1953 was issued for acquisition of said
land for benefit of respondent-industry.
(c) On 23.07.1974, Rajasthan High Court dismissed the Writ
Petition of the appellant herein, challenging the aforesaid
acquisition.
(d) On 13.09.1975, a declaration under Section 6 of the Act of
1953 issued by the State of Rajasthan.
(e) On 05.10.1976, a Special Appeal against the order dated
23.07.1974 passed in Writ was allowed by the Division Bench
of the Rajasthan High Court and the acquisition proceedings
were
quashed.
(f) In 1977/1978, Special Leave Petitions challenging the judgment
dated 05.10.1976 were filed by respondent and State of
Rajasthan, which petitions were dismissed by this Court on
29.03.1994.
(g) On 27.11.1978, on the intervention of the Chief Minister of
the State of Rajasthan, an agreement was arrived at to the
effect that out of 249.60 bighas, 104 bighas would be retained
by the appellant herein and 145 bighas be sold to the respondent
herein, subject to price to be fixed through Arbitration.
FIRM RAJASTHAN UDYOG & ORS. v. HINDUSTAN
ENGINEERING & INDUSTRIES LTD. [VINEET SARAN, J.]
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(h) On 16.02.1979, an agreement was entered into between the
appellant and respondent herein.
(i)
On 01.02.1980, a fresh agreement was entered into between
the parties superseding the earlier agreement dated 16.02.1979,
whereby it was provided that the price of about 145 bighas of
land to be sold to the respondent would be determined through
arbitration.
(j)
On 09.06.1985, an award passed by the Arbitrator fixing price
of 145 bighas of land (as on 27.11.1978) to be Rs.12,18,700,
which would be the price payable for the land to be sold to
the respondent.
(k) Appellant herein filed objections to the award before the ADJ-
1, Bharatpur.
(l)
On 22.11.1988, ADJ-1, Bharatpur allowed the objections and
remanded the matter back to the Arbitrator.
(m) Challenging the said order, respondent filed Civil Revision
Petition No. 163 of 1993 before the Rajasthan High Court.
(n) On 01.12.1993, Civil Revision Petition was allowed by the
Rajasthan High Court and the award dated 09.06.1985, was
affirmed and made Rule of the Court.
(o) On 29.03.1994, the Special Leave Petition filed by the
appellant against the order dated 01.12.1993 was dismissed
by this Court and the award attained finality.
(p) On 16.05.1994, the respondent filed an application under
Section 17 of the Arbitration Act for execution of the award
dated 09.06.1985.
(q) On 06.07.1994, the appellant filed objections to the application
for execution of the award.
(r) On
05.01.1995, ADJ-1 Bharatpur allowed the application of
the respondent and directed the appellant to execute a
registered sale deed and hand over the possession of land in
question to the respondent.
(s) In 1995, the appellant filed Civil Revision Petition No. 81 of
1995 before the Rajasthan High Court, challenging the order
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of the ADJ-1 Bharatpur dated 05.01.1995 which remained
pending till 04.07.2016.
(t) On 29.11.1996, the respondent filed Civil Suit No. 60 of 1996
against appellant seeking specific performance of Agreement
dated 01.02.1980.
(u) On 06.02.2006, the respondent filed an application to withdraw
its Civil Suit No. 60 of 1996.
(v) On 13.02.2006, Civil Suit No. 60 of 1996 allowed to be
withdrawn unconditionally.
(w) On 04.07.2016, impugned order passed by the Rajasthan High
Court in Civil Revision Petition No. 81 of 1995 filed by the
respondent, whereby order of ADJ-1, Bharatpur dated
05.01.1985 was upheld.
(x) On 17.08.2016, the appellant filed this Appeal, challenging
the judgment dated 04.07.2016.
(y) On 02.09.2016, this Court passed Stay Order in this Appeal
on deposit of Rs.50,00,000/- by the appellant in the Registry
of this Court.
(z) On 23.02.2017, this Court recorded a suggestion in the order
that whether the respondent would be satisfied to take
Rs.60,00,000/- towards the cost of litigation and other expenses
and put the controversy to an end.
21. The anchor sheet of the case of the respondent is the Agreement
dated 01.02.1980 between the parties (i.e. appellant and respondent) as
well as the Arbitration award dated 09.06.1985.
22. The relevant portion of the Agreement dated 01.02.1980
(superseding the earlier Agreement dated 16.02.1979) is reproduced
below:
“………………………….
AND WHEREAS in pursuance of the aforementioned
agreement for arbitration, the
dispute was agreed to be
referred to arbitration by Hon’ble ex-chief Justice Mr. B.P.
Beri for determining the quantum of compensation to be paid
to Party No.2 in respect of land under acquisition in
FIRM RAJASTHAN UDYOG & ORS. v. HINDUSTAN
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accordance with the provisions of the Rajasthan Land
Acquisition Act.
…………………………..
AND WHEREAS in the course of arbitration proceedings the
parties with a view to accommodate each other have agreed
to modify the aforementioned agreement to refer the dispute
for arbitration in the following manner:-
1……………………….
2. That Party No.1 Hindustan Development Corporation Ltd.
and General Engineering Works expressly abandon the
determination of the price by the arbitrator of the area
measuring approximately 104 bighas marked, A, B, C, D, E,
F, G, H in plain No.1 dated 14.01.1977 and all claims
regarding acquisition thereof before all authorities shall be
deemed to have been abandoned by Party No.1 in respect of
the land marked A,B,C,D,E,F,G,H of plan No.1 dated
14.01.1977.  The Party No.1 shall not claim the aforesaid
land A,B,C,D,E,F,G,H by way of acquisition or otherwise in
future.
3. That after excluding portion marked, A,B,C,D,E,F,G,H the
remaining land under acquisition measures about 145 bighas
in “L” shape shown in green colour marked as
A,B,C,D,E,F,G,H,I,J,K,L,M,N,O,P,Q,R,S,T,U,V,W,X,Y, in the
aforesaid plan.
4. That the arbitrator shall determine compensation for the
land referred to in para No.3 above.
5……………………….
6……………………….
7……………………….
8. That the amount of compensation determined by the
arbitrator shall be binding on the parties.  Provided that in
case such amount of compensation is not acceptable to party
No.1 it
shall have the option of not accepting the same and
will not in whatsoever manner be entitled to take the
aforementioned land.
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9. In case the Party No.1 in exercise of the option reserved to
it in para 8 accepts the amount of compensation determined
by the arbitrator, is shall within 45 days from the date of the
receipt of the copy of the Award from the Arbitrator
communicate to the party No.2 as well as to the Arbitrator the
exercise of its option.  The communication to the arbitrator
will be considered as sufficient communication, that the Party
No.1 has chosen to exercise its option to purchase the area of
the land marked as A, B, C, D, E, F, G, H, I, J, K, L, M, N, O,
P, Q, R, S, T, U, V, W, X, Y in the plan dated 14.01.77.  The
Party No.2 will be bound to execute the sale deed (the draft
whereof is enclosed to this deed of arbitration) within thirty
days of the delivery of the stamped deed of transfer, by the
Party No.1 to the Party No.2 (The stamp duty and registration
charges shall be borne by Party No.1) and the consideration
of the sale deed shall be paid by the Party No.1 to the Party
No.2 in the presence of the sub-Registrar, at Bharatpur at the
time of registration.  The Party No.2 shall hand over
possession simultaneously to party No.1 of the aforesaid land
at the time of registration.
10. That the award of the arbitrator shall be conclusive and
binding upon both the parties aforesaid and any proceedings
pending anywhere at any stage with regard to the matter of
the acquisition of the said land shall be deemed to have been
propped for all practical purposes.
11…………………….
12…………………….
13…………………….”
(emphasis supplied)
23. Salient features of the Agreement dated 01.02.1980 are, thus,
as under:
• Reference to be made to the Arbitrator was for determining
the quantum of compensation for the land (145 bighas) to be
paid by the respondent.
• Respondent-company was to abandon its claim of app. 104
bighas of land in favour of the appellant-firm.
FIRM RAJASTHAN UDYOG & ORS. v. HINDUSTAN
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• Arbitrator was to determine compensation of the 145 bighas of
land (meant to be transferred by the appellant to the respondent),
which was to be binding on the parties in all respects.
• If compensation was not acceptable to the respondent-company,
it shall have an option of not accepting the same.
• If respondent accepted the same, it was to communicate to the
appellant in 45 days, after which the appellant would be bound
to execute the sale deed within 30 days of the delivery of the
stamp deeds of transfer by the respondent to the appellant, and
the consideration was to be paid before the Sub-Registrar at
the time of registration, and the appellant was to simultaneously
deliver the possession.
(Note: In the earlier agreement dated 16.02.1979, the
provision was for the respondent to deposit the
compensation amount in the bank account of the appellant,
if the appellant was unwilling to accept the same, which
was to be considered as valid payment.)
24. In the award dated 09.06.1985 passed by the sole Arbitrator,
in the opening paragraph it was observed that by the Agreement dated
01.02.1980, the parties (i.e. appellant and respondent) had “referred
their dispute regarding determination of compensation of land to
me as Sole Arbitrator”.  While determining the question of price of
land the Arbitrator held that “I accordingly hold that the market value
of the land shall be determined (as) on 27.11.1978”.  This was
decided on the basis that the initial Minutes of the meeting prior to the
agreement were recorded on the said date i.e. 27.11.1978.  The operative
portion of the said award reads as under:
“As a result of the above findings, Party No. 2 (i.e. respondent
herein) is entitled to the following amounts as compensation
from Party No. 1 (i.e. appellant herein).
Construction for land mentioned in Para 3 of Ex. A.1 and
shown in green colour in Ex. A.2;
(i) 95 Bighas of land @ Rs.9,000/-
per Bigha
...Rs.8,55,000.00
(ii) 50 Bighas of land @ Rs.4,500/-
per Bigha
...Rs.2,25,000.00
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—————————
Rs.10,80,000.00
(iii) Solatiam (illegible) on
the above Amount.
           …Rs.1,08,000.00
—————————
Rs.11,88,000.00
(iv) Compensation for the compound wall
   …Rs.20,700.00
(v) Compensation for the trees.
   ...Rs.10,000.00
—————————
Total
Rs. 12,18,700.00
—————————
(Rupees Twelve Lakhs Eighteen Thousand Seven Hundred).
Announced and signed in the presence of the parties”.
25. It is noteworthy that the reference to Arbitrator was only with
regard to the determination of price of land of 145 bighas or the
compensation to be awarded to the appellant by the respondent for the
said land, which is clear from the very observation of the Arbitrator in
award that the parties had “referred their dispute regarding
determination of compensation of land to me as Sole Arbitrator”,
meaning thereby the Arbitrator was to declare the price of land/
compensation to be paid for the land by the respondent to the appellant,
and nothing more.
26. In the aforesaid facts of this case, the only question which
arise for determination by this Court is as to whether the reference to
the Arbitrator, in terms of the Agreement dated 01.02.1980, was merely
for fixation of price of land to be sold by the appellant to the respondent
in terms of the agreement, and if that be so, could a direction to execute
the sale deed have been issued vide order dated 04.07.2016, even though
the Civil Suit No. 60 of 1996 seeking specific performance of Agreement
dated 01.02.1980 filed by the
respondent was unconditionally withdrawn
by the respondent on 13.02.2006.
27. In our considered opinion, in the facts of the present case, the
answer to the same would be an emphatic “no”.
28. There cannot be any doubt that in terms of the Agreement
dated 01.02.1980, the Arbitrator was authorized to only fix the price of
the land which was to be sold by the appellant to the respondent as per
FIRM RAJASTHAN UDYOG & ORS. v. HINDUSTAN
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the aforesaid agreement.  In the said Agreement dated 01.02.1980, there
was an option given to the respondent to either accept the price fixed by
the Arbitrator and go ahead with the sale deed, or to refuse to get the
sale deed executed at the price fixed by the Arbitrator. Thus, there was
no certainty that the sale was to be executed at the price fixed by the
Arbitrator.  As such, it was the Agreement dated 01.02.1980 alone which
could have been executed at the price fixed by the Arbitrator, in case the
respondent agreed to the same.
29. After the passing of the Award by the Arbitrator dated
09.06.1985, which was later confirmed and made Rule of the Court by
the Rajasthan High Court on 01.12.1993 and the Special Leave Petition
filed by the appellant against the said order was dismissed on 29.03.1994
and the Award had attained finality, the respondent filed a Civil Suit
No.60 of 1996 for specific performance of the Agreement dated
01.02.1980.  It was this suit for specific performance of agreement under
which a direction could have been issued for execution of the sale deed
in terms of the Agreement dated 01.02.1980. However, the same was
unconditionally withdrawn on 13.02.2006, on an application filed by the
respondent on 06.02.2006. With the withdrawal of such suit for specific
performance, the matter with regard to the execution of the sale deed in
terms of the Agreement dated 01.02.1980 came to an end. The effect
of
withdrawing Civil Suit No. 60 of 1996 would be that the plaintiff therein
(respondent herein) had abandoned its claim of execution of the sale
deed in terms of the Agreement dated 01.02.1980, which would be clear
from the provisions of Rule 1(4) of Order XXIII CPC.
30. From the facts of this case, it is clear that the Award passed
by the Arbitrator could not be independently executed, as the same was
only for fixation of price of land and not for enforcement of the
Agreement.  The Award was only declaratory of the price of the land.
As per the agreement, if the respondent agreed to the price so fixed, it
could then get the sale deed executed in terms of the Agreement dated
01.02.1980 as it had the option of either accepting the price and getting
the sale deed executed, or not accepting the price and thus not getting
the sale deed executed. This would clearly mean that the Award was
merely for the declaration of the price of the land, which would be subject
to the agreement and it was not necessary for the respondent to get the
sale deed executed at the price so determined by the Arbitrator. What
was thus executable was the agreement, and not the Award. The relief
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granted by the Court below for execution of the sale deed in terms of
the Award, is thus outside the realm of law, as the Award did not
contemplate the transfer of land in favour of the respondent, but only
determined the price of land.
31. It is also noteworthy that the application for execution of Award
filed on 16.05.1994 before the Additional District Judge-I, Bharatpur did
not provide for any provision of law under which the same was filed.
Though, in paragraph 2 of the said application, it was mentioned that the
Award of the Arbitrator contained a direction for execution of the Award,
but in fact there was no such direction issued in the Award, in which the
Arbitrator had only fixed the price of the land and nothing more.
32. In our view, once the respondent had given up its claim of
execution of sale deed in terms of the Agreement dated 01.02.1980 by
withdrawing the suit for specific performance of the agreement (Civil
Suit No. 60 of 1996), which was permitted to be withdrawn
unconditionally on 13.02.2006, the appellant had abandoned its claim for
execution of the sale deed. Thus, in our opinion, the respondent could
not be permitted to achieve the goal of execution of sale deed by indirectly
claiming for execution of Award, when the direct claim for execution of
sale deed of the Agreement dated 01.02.1980 had been abandoned by
the respondent.
33. At the cost of repetition, it may be mentioned that the specific
performance could only be of the
Agreement dated 01.02.1980 and not
of the Award dated 09.06.1985. Even the operative portion of the Award
also does not give any direction for execution of the sale deed. It was
after the passing of the Award that the respondent could have fallen
back on the agreement for execution of the sale deed, which respondent
did by filing the suit for specific performance, but abandoned such claim
by withdrawing the suit unconditionally.
34. The submission of the learned Senior Counsel for the
respondent that substantial justice has been done by the Court by directing
execution of the sale deed, is not worthy of acceptance. In a Civil Case,
the Courts have to follow the law in letter and spirit, which has not been
done in the present case, as in law the sale deed could have been directed
to be executed in execution of the Agreement dated 01.02.1980 and not
the Award, which was only a declaration, fixing the price of land.
FIRM RAJASTHAN UDYOG & ORS. v. HINDUSTAN
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35. This Court, while considering the question of execution of a
decree  which  only  declared  the rights of the decree holder and nothing
more, has in the case of State of M.P. vs. Mangilal Sharma (1998) 2
SCC 510 held as follows:
“6. A declaratory decree merely declares the right of the
decree-holder vis-à-vis the judgment-debtor and does not in
terms direct the judgment-debtor to do or refrain from doing
any particular act or thing. Since in the present case decree
does not direct reinstatement or payment of arrears of salary
the executing court could not issue any process for the purpose
as that would be going outside or beyond the decree. The
respondent as a decree-holder was free to seek his remedy
for arrears of salary in the suit for declaration. The executing
court has no jurisdiction to direct payment of salary or grant
any other consequential relief which does not flow directly
and necessarily from the declaratory decree………..”
36. In Coal Linker vs. Coal India Ltd. (2009) 9 SCC 491,
where this Court was considering an Award of an Arbitrator whereby
interest was awarded for certain period but not for other period, and
executing court had awarded interest for such period also, this Court
held as under:
“16. Admittedly, in the instant case interest has been granted
by the arbitrator in the award for the first two periods. But
interest has not been granted by the arbitrator in the award
for the last period. As
noted above, the appellant awardee
herein, filed an application under Section 17 of the Act for
pronouncing a judgment in terms of the award. So there is no
scope for the executing court to go beyond the award and
grant interest for the post-award period which was not granted
in the award. Here the executing court has gone beyond the
award and thus had gone beyond its jurisdiction and passed
a decree which thus becomes a nullity.”
37. While considering the power of the executing court for granting
promotion which was not part of the decree, this Court in the case of
J&K Bank Ltd. Vs. Jagdish C. Gupta (2004) 10 SCC 568 held as
under:
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“2. The short question involved in the case is whether the
executing court could go beyond the decree by directing that
the respondent be promoted to the post of Chief Manager. It
is no more res integra that the executing court has no
jurisdiction to go behind the decree. It is not disputed that
the decree did not contain any direction to promote the
respondent to the post of Chief Manager. Under such
circumstances, we are of the view that the executing court as
well as the High Court fell in error in issuing directions in
execution case that the respondent be promoted to the post of
Chief Manager. The order under challenge, therefore,
deserves to be set aside. We order accordingly. The appeal is
allowed. There shall be no order as to costs.”
38. Similarly, in the case of Gurdev Singh vs. Narain Singh
(2007) 14 SCC 173, where the question of execution of a decree prayed
for was beyond what was decreed, this Court held as follows:
“7. We agree with the said contention. A bare perusal of the
decree in question would clearly demonstrate that the
appellant herein was restrained by a permanent injunction
from planting any tree on Khasra No. 17/2 on the one side
and Khasra Nos. 218/1 and 17/1 on the other side. The decree
did not speak of removal of any tree which had already been
planted. The executing court, as noticed hereinbefore, while
interpreting the said decree proceeded completely on a wrong
premise to hold that there should not be any tree within two
karams on either side of the common boundary of the parties.
Such an interpretation evidently is not in consonance with
the tenor of the decree. A jurisdictional error, thus, has been
committed by the High Court.
8. It is well settled that executing court cannot go behind the
decree. As the decree did not clothe the decree-holder to pray
for execution of the decree by way of removal of the trees, the
same could not have been directed by the learned executing
court in the name of construing the spirit of the decree under
execution.”
It is thus clear that execution of an award can be only to the
extent what has been awarded/decreed and not beyond the same. In the
FIRM RAJASTHAN UDYOG & ORS. v. HINDUSTAN
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present case, the Arbitrator in its Award had only declared the price of
land and nothing more. Thus, the question of execution of a sale deed of
the land at the price so declared by the Arbitrator in its Award, could not
be directed.
39. Even otherwise, there cannot be any equity in favour of the
respondent, as neither any amount was paid nor deposited by the
respondent. No earnest money was also paid by the respondent. It was
only the stamp paper worth Rs.1,21,870/-, which was deposited by the
respondent along with a deposit of Rs.5,500/- in Court at the time of
filing of the application on 16.05.1994 for execution of the Award.
40. It is also noteworthy that neither the Agreement dated
01.02.1980 nor the Award dated 09.06.1985 had been registered under
the Registration Act, 1908. This Court  in  the  case  of Ramesh Kumar
vs. Furu Ram (2011) 8 SCC 613 had considered the effect of non-
registration of an Arbitration Award relating to right, title and interest in
an immovable property and held as under:
 “46. Thus the awards are clearly documents which purport
or operate to create and declare a right, title or interest in an
immovable property of the value of more than Rs. 100 which
was not the subject of the dispute or reference to arbitration.
Therefore, the awards were compulsorily registrable. If they
were not registered, they could not be acted upon under Section
49 of the Registration Act, 1908 nor could a
decree be passed
in terms of such unregistered awards.”
41. Although, in the present case, the Award did not relate to
right, title or interest in an immovable property and was only for
determination of the price of land, yet if the execution court was to treat
the same for execution of sale deed of land (immovable property), it
ought to have considered the impact of non-registration of such Award,
which has not been done in the present case.
42. In support of his contention that the powers of the executing
Court are wide enough, learned Senior Counsel for the respondent has
relied on the decision of this Court in the case of Bhavan Vaja vs Solanki
Hanuji Khodaji Mansang (1973) 2 SCC 40, wherein it has been held
that:
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“20…………For Construing a decree it can and in appropriate
cases, it ought to take into consideration the pleadings as
well as the proceedings leading up to the decree. In order to
find out the meaning of the words employed in a decree the
Court, often has to ascertain the circumstances under which
those words came to be used. That is the plain duty of the
execution Court and if that Court fails to discharge that duty
it has plainly failed to exercise the jurisdiction vested in
it………”
The question in the present case is different, which is as to whether
the execution of an award could have been directed in the absence of
there being any direction in the Award for execution of the sale deed,
which direction could have been given only in the case of execution of
the Agreement dated 01.02.1980.  The question under consideration in
the aforesaid case was that of a decree which was under execution,
whereas there was no such decree passed by any Court which was to
be executed in the present case. The facts of the present case are thus
distinguishable from those in the aforesaid case.
43. Learned Senior Counsel for the respondent has also relied on
the decisions of this Court rendered in Meenakshi Saxena vs ECGC
Limited (2018) 7 SCC 479 as well as Topanmal Chhotamal vs
Kundomal Gangaram AIR 1960 SC 388, which in our opinion are
both distinguishable on facts.  In the case of Meenakshi Saxena (supra),
there was a clear verdict of the Consumer Court, which was to be
executed by the Court. In paragraph 17 of the said judgment, this Court
held that “the whole purpose of the execution proceedings is to
enforce the verdict of the Court.  Executing court while executing
the decree is only concerned with the execution part of it but nothing
else.  The court has to take the judgment in its face value.”  In the
case of Topanmal (supra), the decree under consideration was against
the partnership firm and was to be executed against the personal assets
of the partners.  In paragraph 4 of the said judgment, this Court held that
“at the worst the decree can be said to be ambiguous.  In such a
case it is the duty of the executing Court to construe the decree.
For the purpose of interpreting a decree, when its terms are
ambiguous, the Court would certainly be entitled to look into the
pleadings and the judgment: see Manakchand v. Manoharlal, 71
Ind. App. 65: (AIR 1944 P.C. 46).  In the plaint in the Agra suit, Suit
FIRM RAJASTHAN UDYOG & ORS. v. HINDUSTAN
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No. 205 of 1949, not only relief was asked for against the firm, but
also a personal decree was claimed against defendants 2 to 6.”  In
the present case, the Court is concerned about execution of the Award
and not the Agreement. In the Award passed by the Arbitrator, the price
of land was fixed, which was to be executed in terms of the Agreement
dated 01.02.1980, and that too at the option of the respondent. Thus,
there could be no direction to execute the sale deed at the price fixed in
the Award, that too in a petition for execution of the Award, without
there being any prayer for execution of the Agreement dated 01.02.1980.
44. Going behind the decree for doing complete justice would not
mean that the entire nature of the case could be changed, and what was
not awarded in favour of the respondent, could be granted by the executing
court. It was only after the respondent had exercised its right to purchase
the land at the price fixed by the Arbitrator that a right to enforce the
Agreement could have arisen in favour of the respondent. The Award
of the Arbitrator, in the present case, in itself was not a conclusive contract
between the parties, which could be executed.
45. For the reason given hereinabove, we are of the definite opinion
that the impugned judgment of the Rajasthan High Court dated 04.07.2016
passed in Civil Revision Petition No. 81 of 1985, upholding the order of
the Additional District Judge dated
05.01.1995 is liable to be quashed,
and is hereby quashed, and this appeal deserves to be allowed.
46. Now what is to be next considered by this Court is as to
whether any compensation is to be awarded in favour of the respondent,
keeping in view the interim order passed by this Court on 02.09.2016,
which is reproduced below:
“Issue notice returnable within eight weeks.
There shall be stay of operation of the impugned judgment
subject to the petitioner depositing a sum of Rs.50,00,000/-
(Rupees fifty lac only) before the Registry of this Court within
six weeks hence.”
In terms of the said order, the petitioner has deposited
Rs.50,00,000/- with the Registry of this Court, which has been directed
to be placed in a short-term fixed deposit account.
47. Then on, 23.02.2017, this Court passed the following order:
“In the course of hearing, it was put to Mr. Gopal Jain,
learned senior counsel for the respondent, whether by virtue
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of the award passed by the learned Arbitrator, could the
respondent become the owner of the property, more so when
the award has not been registered as per the Stamps Act.
Additionally, it was also put to him whether when the suit for
specific performance of the contract was withdrawn, could
he get right, title and interest on the basis of the award passed
by the Arbitrator, who had entered into reference on the basis
of intervention by an authority who wanted that the parties
should negotiate and arrive at a settlement.
Be it noted, prima facie, the award relates to quantification
of the price and, therefore, the issue that would arise for
consideration is whether determination of price creates any
right, title and interest in the respondent. Apart from all these
questions, a suggestion was given to the learned counsel for
the respondent as to whether he would, apart from money he
claims to have deposited before the District Court, be satisfied
to take Rs.60,00,000/- for the cost of litigation and other
expenses made by him and put the controversy to an end.”
(emphasis supplied)
When the aforesaid facts were put to the learned Counsel for the
parties, Mr. Sudhir Chandra Agarwala learned Senior Counsel appearing
for the petitioner agreed to pay such amount towards cost of litigation
and other expenses to the respondent, as may be fixed/determined by
this Court.
48. In our view, in the aforesaid facts and circumstances of this
case, we are of the opinion
that the amount so deposited by the appellant,
in terms of the interim orders passed by this Court, along with interest
accrued thereon, shall be paid to the respondent, and besides this a further
sum of Rs.10,00,000/- shall also be paid by the appellant to the respondent
within six weeks from today, which all would be towards the cost of
litigation and other expenses incurred by the respondent. With this, a
quietus would be put to the long drawn litigation between the parties.
49. Accordingly, this appeal stands allowed in terms of the directions
given hereinabove.
Divya Pandey
Appeal allowed.
FIRM RAJASTHAN UDYOG & ORS. v. HINDUSTAN
ENGINEERING & INDUSTRIES LTD. [VINEET SARAN, J.]