Case: M/s. Kapoor Nilokheri Co-Operative Dairy Farm Society Limited Vs. Union of India &amp; Others

2. In 1948 the Government of India sponsored a scheme to build and establish a colony for the resettlement and rehabilitation of displaced persons at Nilokheri and started several industries including a dairy farm. Some of the founders of the appellant Society took over the dairy farm business from the Rehabilitation Administration under an agreement dated1950. They later formed themselves into asociety and took over the same business and entered into an agreement onThere is no dispute that originally the whole transaction was made under the agreement ofand that the disputes had to be decided on the basis of the agreement ofOn the ground that the appellant Society did not pay its dues regularly in pursuance of the agreement the dispute between the parties was referred to an arbitrator, a Subordinate Judge of the Punjab Judicial Service. The award was made onThereupon the respondents applied to the Senior Subordinate Judge of Karnal to make the award a Rule of Court and the Subordinate Judge accordingly made it a Rule of Court. The appellants appeal to the High Court also having failed this appeal has been filed by special leave.3. Before the Arbitrator the appellants total claim against the respondents was for a sum of RupeesIn addition they also claimed that the respondents should be directed to transfer the 150 acres of land allotted to them at the rates charged from other agriculturists after adjustment of the rent already received by the Administration. On the other hand the counter claim of the respondents was for a sum of Rupees 79,232.65 and also that the Government land in possession of the appellant should be returned to the Nilokheri Administration.

Court's reasoning:
There is no doubt that if his complaint that the Arbitrator did not give a ruling on the question of privilege claimed by the respondents in respect of certain documents summoned by the appellant and did not decide the question or pass an order therein onthe date on which the order in the file purports to have been made but had subsequently interpolated it, is sustained the appellant would be entitled to succeed completely and the award would have to be set aside in toto without reference to any other consideration. No award given by an Arbitrator who is held guilty of such fraudulent misconduct could ever be upheld. But having given our most anxious consideration to this question we are not able to persuade ourselves to take a view different from that of the learned Subordinate Judge and the High Court who considered the matter. In addition to relying on the evidence of their two witnesses the argument of the appellants was, based on these facts: The appellants had given their written arguments regarding the question of privilege even onThe written arguments on behalf of the respondents was given onand the appellants had reiterated their arguments on this question even in their rejoinder onThe order sheet does not show that the order regarding privilege was pronounced onWe agree with the High Court in this view. That is the most charitable view to take in the circumstances of this case It is obvious that till they found that the award was against them the appellants did not make any serious complaint about the question of privilege. The documents in respect of which privilege was claimed related to the interpretation of the word provisional in respect of 47 Nilliand 39 Tharparkar Cows costing Rs. 11941.00, against both of which the word provisional appears. The appellants case was that this word was put in because depreciation was to be allowed in respect of those cattle and the final cost of these two sets of animals was not decided by that time. The Arbitrator himself had occasion to look into the documents before deciding on the question of privilege and we have also had the benefit of looking into these documents. They are not very helpful to the appellants except enabling them to make a grievance of it. There was already on record a copy of the standing order of the Military Cattle Farm at Ambala regarding this question of depreciation wherein it is pointed out that for the lactation period of 9 months a sum of Rs. 150 was to be allowed as depreciation and thereafter at the rate of 10 per cent of the book value of the animal. Based on this the appellant had claimed a depreciation of Rs.We have looked into the calculation sheet filed by the appellant before the Arbitrator. Curiously nobody seems at any stage, either before the Arbitrator or before the Subordinate Judge or before the High Court to have cared to have a look at these documents at all. To take only one instance, in respect of the Nilli She Buffalo the value is given as Rs. 750 and the depreciation as Rs. 600 instead of showing the depreciation as Rs 150 and the price of the cattle as Rs. 600. Same is the case with regard to the Tharparkar Cows. If this had been looked into it would have been at once noticed that in respect of the depreciation, even if they had been entitled to it, the appellants could not claim Rs. 33,083/but only about Rs. 6000/e also think that there is considerable force in the argument on behalf of the respondents that as the parties had filed applications for extension of time for pronouncing of award after the hearing was over onthey would have raised this question at that time if they had really any grievance. In fact in their letter datedthe appellants showed their interest in the award proceedings coming to a close soon.9. We do not, therefore, feel that we would be justified in reversing the concurrent findings of both the Courts below that the order regarding privilege was made and pronounced on the date on which it was made. There is no particular reason why the Arbitrator should have resorted to this fraudulent act. The award would not have been weakened in any way if the documents in respect of which privilege had been claimed had been placed on record. Nor is it in any way strengthened by the order on the question of privilege.10. We may also refer to the fact that soon after the agreement onthe appellants Manager had written to the Chief Accountant of the Rehabilitation Colony that the cost of the animals was mentioned as provisional because the books were not complete and he requested that exact book value of the animals as onmay be intimated to him. Another document, Ext.also shows that the appellants knew what the book value was. Incidentally the same figures appear in the calculations filed by the appellants on the question of depreciation in respect of the Tharparkar Cows. To the same effect is the letter Ext.3. The figures given by the appellants Society in Ext.Nariman, the Additional Solicitor General, appearing on behalf of the respondents also contended that the appellants having specifically stated that their claims are based on the agreement and on nothing elseand all that the Arbitrator had to decide was as to the effect of the agreement, the Arbitrator had really to decide a question of law, i.e. of interpreting the document, the agreement ofand his decision is not open to challenge. We agree withThe appellants contention that the Arbitrator has no jurisdiction in respect of the land and buildings is also without substance because in their claim before him the appellants themselves had contended that the land should be conveyed to them. The agreement makes it quite clear that only the use of the land was made available to the Society for growing the fodder and other foods for the animals and the limit of 135 acres was fixed against 80 milch cattle. It was also made clear that if there is any deficiency in the number of cattle 1 3/4 acres would have to be relinquished for every head of cattle found short. It is also clear from the evidence that instead of using the land for raising fodder the appellants used it for raising cash crops. The appellants President himself admitted that they raised Paddy, Jowar etc. He maintained, contrary to what is found in the contract, that there was no restriction against raising crops other than fodder crops. Some basis was sought for this argument on behalf of the appellants in the evidence of the Administrator wherein he said that the contract had not been rescinded. But he had been working as Administrator only fromand the arbitration had started even onAs already mentioned, in the claim of the appellants and the counterclaim of respondents as well as in the arguments on behalf of the Government the return of the land was asked for because the Society had used the land for purposes other than stipulated in the agreement and not because the agreement was terminated. Therefore, this argument about the respondents not being entitled to claim return of the land because agreement had not been terminated seems to have been an after thought. This plea has been taken for the first time only in the special leave petition. We hold that there is no merit in this argument and the Arbitrator was competent to give an award on the matter of return of the land.We accept the conclusion of the Courts below that there is no substance in this contention.15. A bare look at the facts of this case would show that having received cattle worth about sixty thousand rupees as well as other equipment worth over ten thousand rupees and not having paid the instalments as stipulated in the agreement it needed a lot of nerve on the part of the appellants to have made out a claim of Rs. 1,26,800/against the Administration However, they have succeeded in hanging on to the land and other facilities for over 14 years since the date of reference to the arbitration. There is no justice at all in their claim and we do not see any defect in the award or in the judgment of the Courts below. They have merely tried to drag on the case relying on any little thing that was available more as a matter of afterthought.