CASE NUMBER:

Suit number 597 of 1961

EQUIVALENT CITATION:

AIR 1964 CAL 239

BENCH:

Single judge bench, Judge Bijayesh Mukherji presiding.

DECIDED ON:

Friday, 10^th January 1964

RELEVANT ACT/SECTION:

Section 68 of the Partnership Act, 1932
Section 28 of the Partnership Act, 1932
Section 67 of Evidence Act, 1872
Section 114 A of Evidence Act, 1872
Order 14 of the Procedure Code

BRIEF FACTS AND PROCEDURAL HISTORY:

Shree Hanuman Transport Company (hereafter referred to as Transport Company) was a firm involved in the shipment business. Snow White Food Product Company Ltd (hereafter referred to as Snow White) contracted the Transport Company for the shipment of two products, namely refined groundnut oil and Balloon brand vegetable product, to Raiganj and Islampur in the district of West Dinajpur. The said delivery was to take place on 20^th April 1960. According to the facts of the case presented, the Transport Company, for the benefit of Snow White, had insured the goods to be delivered with an insurance company bearing the name of New India Assurance Co. Ltd. (hereafter referred to as the Insurance Company). The complaint filed by Snow White Company claims that while the goods were in transit, the goods were tampered with and damaged by the partners of the Transport Company, namely Sohanlal Bagla and Madanlal Poddar, also the Insurance Company. The plaintiff claimed damages of sixteen thousand for the goods to be delivered to Islampur and a subsequent amount of rupees nine hundred and thirty-one for the goods to be transported to Raiganj. This comes to a total of rupees seventeen thousand five hundred and thirty-one. Out of this, the Transport Company had already paid the plaintiff rupees four thousand and five hundred. Snow White Food Product Company Ltd brought this suit to recover the remaining damages of Rs 13031.

ISSUES BEFORE THE COURT:

The issues in question before the Hon’ble Court were:

Whether Sohanlal Bagla (first defendant) was ever a partner of Shree Hanuman Transport Company (third defendant)?
Whether Shree Hanuman Transport Company had insured the goods delivered to Snow White Food Products Ltd. from the New India Assurance Co. Ltd for the plaintiff’s benefit (Snow White Food Products Ltd.)?
Whether the consignment called in question were damaged or converted to benefit their use by the defendants when the goods were in transit?
Whether New India Assurance Co. Ltd (fourth defendant) is liable to pay the amount of the claim to Snow White Food Products Ltd.?
Whether the plaintiff is entitled to any reliefs, and if so, then what reliefs must be granted?

RATIO OF THE CASE:

Sohanlal presented certain evidences before the Court sufficient enough to prove that he was not a partner of Shree Hanuman Transport Co. Ltd. To corroborate Sohanlal’s statements in the Register of firm’s entries, Madanlal Poddar and Babulal Saraogl were mentioned as the partners of the Transport Company. Against this evidence, Snow White put before the Court that although the terms on paper were maybe different, Sohanlal, through his various actions, has provided a reasonable reason for Snow White to believe him to be a partner of the Transport Company. It presented before the Court, evidence of official communication between Snow White and the Transport Company through letters signed by Sohanlal on behalf of the firm. Not only this but also the surveyor of the Insurance Company, on instructions from Sohanlal, had sold the damaged good to the highest bidder and returned the proceeds of the sale (Rs 11556) to Sohanlal. Thus, this gives reasonable reason for Snow White to believe him to be a partner of the Transport Company, making him liable to pay for the loss suffered due to the non-delivery of goods.

DECISION OF THE COURT:

After careful consideration of the facts of the said case and taking into account the pieces of evidence and witnesses presented, the Calcutta High Court concluded that Sohanlal had presented himself as a partner when dealings were taking place between the Transport Company and Snow White Food Product Company Ltd. He had also signed documents it the capacity of a partner and thus is qualified as a partner by holding out of the Transport Company. Therefore he was made liable to pay the remaining amount of the claim to Snow White Food Product Company Ltd.

This case analysis is provided by Debasmita Nandi, a first year law student at CHRIST (DEEMED TO BE UNIVERSITY), LAVASA.

Edited by- Deeksha Arora

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Case Number

CS (OS) 2011/2006

Equivalent Citation

(2016) 226 DLT 647

Coram

HON’BLE MR. JUSTICE NAJMI WAZIRI

Decided on

22 DECEMBER 2015

Relevant Act/ Section

SECTION 6 WITHIN THE HINDU SUCCESSION (AMENDMENT) ACT, 2005

Background

Before the enactment of the Hindu Succession (Amendment) Act, 2005 women were considered physically and mentally inferior to men. The Indian patriarchal society disregards the Hindu women’s right to property and she or he is formed to suffer inequality and oppression. Women could hold only two sorts of property- Stridhan and Women’s Estate. Over which the feminine had meager powers only. Since they had no absolute powers and rights over the property and couldn’t acquire property from their father, they might not become Karta or play any role within the family property.

On 9 September 2005, the Hindu Succession (Amendment) Act, 2005 came into force incorporating the reforms suggested within the 174th Report of the Law Commission of India. This amendment deleted section 4(2) of the act and paved the way for equal rights for girls. According to the newly amended provision, a lady by birth becomes a coparcener within the same manner as a son. The daughter now has equivalent rights and liabilities as a son. She fully enjoys the rights of the property of her father also as her in-laws.

Brief Facts and Procedural History

In this case, DR Gupta and his sons held a bungalow in Delhi and a few movable properties and shares on a long-term lease. On 1^st October 1971, Mr. DR Gupta died leaving behind him the five sons alongside their respective families. Mr. Kishan Mohan Gupta, the eldest son, became the Karta of the Hindu Undivided Family. At a later time, all the five sons of DR Gupta also died, and therefore the son of the younger brother of Kishan Gupta declared himself as the Karta of the HUF because he was the oldest living member of the said HUF.

The plaintiff challenged him by stating that after her father and her uncles, she is the senior-most member of HUF by the plaintiff, eldest daughter of Mr. Kishan Gupta.

Arguments

Arguments made by the plaintiff

Plaintiff contended that her being a lady can’t be the only reason for disqualification from being its Karta. She further contended that under the new provision, a daughter of a coparcener during a HUF, can enjoy rights to those enjoyed by a son of a coparcener.

Arguments made by the defendant

The defendant objected to such claims and contended that the amended section 6 of HSA only grants daughters equal rights to be considered coparceners as those enjoyed by a male member and not extends to management of HUF property. He further argued that since the plaintiff has been married, she can’t be considered as a requisite part of HUF.

Issues before the Court

Whether the eldest daughter amongst the coparceners of Hindu Undivided family, be entitled as Karta?

9 Cited Judgements

Tribhuvan Das Haribhai Tamboli v. Gujarat Revenue Tribunal

In this case, the Court held that Karta must be a senior-most member in a HUF.

Raghunath Raj Bareja and Another v. Punjab National Bank and others
Ram Belas Singh v. Uttam Singh and others
Swedish Match AB v. Securities and Exchange Board, India
Prakash Nath Khanna v. C.I.T.
S.Sai Reddy v. S.Narayana Reddy and Ors
Badshah v. Urmila badshah Godse and another

The decision of the Court

The Delhi High Court held that while women would have equal rights in a HUF property, this right could not be curtailed when it comes to the management of the same property. The court further held that hurdles that prevented a women member of a HUF from becoming its Karta were that she did not have the necessary qualifications of Copartnership. Now, Under Hindu Succession Amendment Act, 2005, this deprivation has been deleted and there is no reason left that Hindu women should be denied the position of Karta in HUF. If the eldest son is often Karta, so can a female member.

Comments

In Prakash v. Phoolwati, the court held that the 2005 amendment will have the prospective effect which means that when the predecessor will die on or after 9 September 2005, then only women can claim to become Karta. But in the given case, the Court held that women have the right to become Karta, even though her father died before the introduction of the 2005 amendment. With due respect, the above judgment is patchy as it does not explain the actual position and role of Karta of HUF. The court only focussed on the proprietary rights and management aspect of the Karta, and other aspects like the socio-religious position of the Karta in HUF are neglected. But this judgment will create a positive impact on society because it settles an equal place for women.

SITUATION ON GROUND

Although the proper of being the Karta has been conferred abreast of the daughter, being the senior member of the family, through legislation and judicial pronouncements, she didn’t come to the fore to require up this responsibility. The family, where there are brothers notwithstanding younger than her, consider their sons to be more competent and hand over the responsibility of the family, by holding the title of the Karta. Most of the time Daughters are not even considered a member of their existing family but as a member of her husband’s family. Inconclusive words, the position of classic India or things before the amendment, persists in India Society.

Conclusion

When the legislature passes the amendment act of 2005, it is very evident that they want to include female members of HUF to inherit Mitakshara co-coparcenary property. Due to unclarity in the provisions of the Amendment act and lack of awareness of the recent amendments, the discrimination continued even nowadays. But this judgment has clarified the legislature’s actual intent by including the management of the HUF property. Hopefully, it would assist in eliminating the gender discrimination, oppression, and negation of the fundamental right of equality of women guaranteed under the Indian Constitution. And over time, strengthen the position of women in the hierarchy of society.

The case analysis has been done by Megha Patel, a 2^nd year Law Student at the Mody University of Science and Technology, Laxmangarh, Rajasthan.

The case analysis has been done by Shubham Yadav, a 4th-year law student from Banasthali Vidyapith.

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Citation

(2003) 6 SCC 265

Decided On

9^th May 2003

Case Number

Civil Appeal No. 13337 of 1995

Bench

Bench: Shivraj V. Patil & K.G. Balakrishnan J.J.

Relevant Section

Section 32(2), 32(3) & 72 of Indian Partnership Act, 1932

Facts

The plaintiff filed two suits against the respondent. Respondent number 1 in both the suits is a partnership firm engaged in engineering works. Respondent numbers 2 to 4 are its partners. The first suit was filed to recover the amount of Rs. 59, 775.95/- with interest. The plaintiff alleged that a loan of Rs. 40,000/- was sanctioned in favor of the respondent on 5^th December 1974, for expansion of industry of the respondent. The loan was to be repaid after 9 months in installments. The respondent had also executed the requisite documents in favor of the plaintiff bank. Respondent number 2 & 3 in their written statement admitted that the respondent had borrowed Rs. 40,000/- from the appellant. The two respondents subsequently retired without giving any notice of this development to the appellant bank. The respondent defaulted on the payment of the loan. Trial Court held that respondents number 2 & 3 would not be liable for the suit claim & High Court upheld the decision of the Trial Court.

Another suit filed by the appellant against the respondents in Karnataka High Court alleged that the respondents were given an overdraft facility by the appellant bank; the respondent availed the facility & committed default in paying the same. Respondents raised similar contention as in the previous suit that the partnership was dissolved & respondent number 4 took entire liability. The contention was accepted by the Trial Court against respondents number 1 & 3 was passed. The plea was rejected by the High Court in which the appellant prayed that Decree shall be passed against all the respondents as all have joint & several liabilities. Hence, the plaintiff moved an appeal to the Hon’ble Supreme Court for the same.

Issue before the Court

Whether the retiring partner would be liable to pay for the liability incurred during partnership?

Whether respondents giving notice to the appellant bank regarding dissolution of the firm would absolve the retiring partner from dues?

Judgment

The appellant contended that all the respondents should be held jointly liable as they executed various documents to the said & had admitted its execution, the dissolution of the partnership firm will not affect their liability to discharge of the suit claim & inter se arrangements between the partners of the firm will not be binding on the appellant bank & as per clause 3 of Section 32 of the Act respondent number 2 & 3 cannot escape from the liability concerning the suit claim made by the appellant. In response, the respondent said as a prior notice was sent to the appellant bank about the dissolution of the firm & they did not raise any objection therefore, respondents numbers 2 & 3 are not liable for any under the suit as per clause 2 of Section 32 of the Act.

Hon’ble Supreme Court held that the appellant had every right to proceed against all the defendants present in the suit, Court also said that no public notice was given about the retirement of respondents number 2 & 3 from the partnership firm as envisaged under Section 32(3) of the Act. Court pointed out at one of the contentions made that the “dissolution of firm will not affect the respondents from liability retiring partners” by the appellant. Like the fact the appellant was aware of the dissolution of the partnership firm, as per section 32(2) of the Act, the liability of the retiring partner as against a third party would be discharged only if there was an agreement made by the retiring partners, the bank being the third party in this case & partners of the reconstituted firm, this was absent from the case expressly or impliedly.

Conclusion

Perhaps it is self-evident from the case that the creditor’s right normally will not be prejudiced by an agreement transferring an acquired liability from one partner to another in a partnership firm unless the creditor is made a party to the agreement. Otherwise, the agreement (regarding him) will be strictly res inter alias acta (transacted between other parties).

The case analysis has been done by Ajay Kataria, from Dr. B.R. Ambedkar National Law University, Sonepat, Haryana.

The case analysis has been edited by Shubham Yadav, from Banasthali Vidyapith, Jaipur.

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Case Number:

CA 1903

Equivalent Citation:

[1903] 1 K.B. 81

Bench:

Collins, M.R. and Methew, J.

Decided on:

19 November 1902

Relevant Act:

The Partnership Act 1890

Brief Facts and Procedural History:

In this case the defendant company is a partnership company with two partners, Mr Houston and Mr Strong, who represented the company. Mr Houston took care of the functioning of the company and Mr Strong was a sleeping partner. Mr Houston, acting within the scope of his authority, bribed the clerk of the plaintiff’s company and induced him to commit a breach of contract with the plaintiff as a result of which the clerk divulged some of the secret, important information of the plaintiff’s company. This act of Mr Houston was done without Mr Strong’s knowledge. The information was used by Mr Houston in a way to make the plaintiff company, his competitor, suffer the loss. Plaintiff sued both the partners of the defendant company for breach of contract under vicarious liability. The trial court said that both the partners are liable for breach of the contract. The case went to the Court of Appeal.

Contention:

Whether or not Mr Houston acted within the scope of his authority in obtaining the details of the plaintiff company?
Whether or not Mr Strong is liable for the wrongful act committed by Mr Houston?

The ratio of the Case:

The defendant’s counsel argued that gaining information about your competitor’s business is something that a businessman can do and hence, it is legal. So, what Mr Houston did is legal and that he is not liable for the breach of contract. The court agreed with this argument of the defence counsel and stated that Mr Houston acted as an agent and it is done within the scope of his authority, it is illegitimate and amounts to a breach of contract. This was based on the board risk principle, according to which if the principal is the one who will benefit from the acts of the agent, then he is also liable for the risks the agent goes through, while he is performing the acts delegated to him. In this case, the clerk was an agent of Mr Houston and so he is liable for the risk the clerk incurred, that is, the breach of contract, while delivering the information Mr Houston has asked for.

The decision of the Court:

The Court of Appeal upheld the order of the trial court and said that both the partners of the defendant company, Mr Houston and Mr Strong, are guilty of inducing breach of contract, even though it was committed by only one of them.

This case comment is written by Santhiya V, a 3^rd year BBA LLB (Hons.) studying at Alliance University.

Editor- Deeksha Arora

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Case Number

CRIMINAL APPEAL NO.271 OF 2011

Equivalent Citation

(2011) 3 SCC 650

Bench

Altamas Kabir
Cyriac Joseph

Decided on

31 January 2011

Respondents

(R1) Manoj Bhimrao Wankhade
(R2) Ramabai, Appellant’s mother-in-law
(R3) Appellant’s sister-in-law

Relevant Act/ Section

Section 2(q) of The Protection of Women from Domestic Violence Act, 2005
Section 498-A of India Penal Code

Brief Facts and Procedural History

Although the main body of Section 2(q) expressly states that a respondent is a “adult male person,” the proviso broadens the scope of the proceedings by allowing an aggrieved wife or female in a relationship in the nature of marriage to file a complaint against a relative of her husband/male partner. This refutes the claim that the legislation was written with the intention of excluding women. The appeal was granted, with the Trial Courts directed to consider R2 and R3 as respondents in the case.

Issues before the Court

Do females fall under the definition of “respondents” in the Domestic Violence Act’s Section 2(q)?
Are females excluded from prosecution under the Domestic Violence Act?

Facts of the Case

The appellant lived with R1, R2, and R3 for over a year following her marriage in 2005, during which time her marriage was disrupted. She reported her husband to the police under section 498-A IPC For attacking her. She also filed a complaint against all three respondents. The First-Class Judicial Magistrate approved it, directing R1 to pay on a monthly basis maintenance. All respondents were also barred from evicting the appellant from her matrimonial home. Criminal appeals and applications brought before the Sessions Judge by an aggrieved R1. The appeals to the Supreme Court and the High Court were both dismissed.
R2 and R3 went before the First-Class Magistrate, but their request was denied. They filed an appeal, arguing that women cannot be named respondents in domestic violence cases. The Court agreed and overturned the order, allowing appellant to be evicted from her marriage home, which was solely owned by R2. As a result, it was not a “shared house.” The Court, on the other hand, ordered R1 to furnish separate accommodations or make additional payments for it.
The appellant’s appeal in Sessions Court was dismissed based on the determination that “females” are not included among “respondents.” The HC took a similar stance, striking R2 and R3’s names from the proceedings and ordering the appellant to evacuate the matrimonial home. As a result, this appeal has been made.

Decision of the Court

Although the main body of Section 2(q) expressly states that a respondent is a “adult male person,” the proviso broadens the scope of the proceedings by allowing an aggrieved wife or female in a relationship in the nature of marriage to file a complaint against a relative of her husband/male partner. This refutes the claim that the legislation was written with the intention of excluding women. The appeal was granted, with the Trial Courts directed to consider R2 and R3 as respondents in the case.

The case analysis has been done by Shrey Hasija.

The case analysis has been edited by Shubham Yadav, pursuing B.com LL.B.(4th Year) from Banasthali Vidyapith.

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CASE NUMBER

4 P.C. 419.

EQUIVALENT CITATION

(1872) L.R. 4 P.C. 4.

BENCH

Sir Montague E. Smith.

DECIDED ON

27^th July, 1872.

Brief Facts And Procedural History

In this case, W. N. Watson & Co. borrowed some amount of money from Raja Pratap Chandra Singh, but the company failed to return the money back to Raja. So, the company signed a mortgage deed and an agreement with Raja, according to which the company gave the power of control over business to Raja Pratap Chandra Singh and the right to take benefit from the company’s profit until the due amount is paid. Thereafter, the W. N. Watson Co. entered into a contract with Mollwo, March Company (Plaintiff). The W. N. Watson Co. failed to fulfill the contract with the Mollwo, March & Co. As a result, the Mollwo, March & Co. filed a suit against Raja and W. N. Watson Co. as they thought that Raja is a partner in W. N. Watson Co. as he was taking his share in the profits.

Issues Before The Court

The main issue was whether Raja Pratap Chandra Singh can be considered as a partner or not, as he is sharing the profits of the business?

Ratio Of The Case

In this case, the court said that Mollwo, March Company cannot sue Raja as the real intention of the contract between Raja and W. N. Watson Company was not to become partners but to pay the due amount that the company was unable to pay.

Decision Of The Court

In this case, the court held that Raja cannot be considered as a ‘Partner’ (referring to the guidelines given in Cox v. Hickman case), as the contract which was made between Raja and W. N. Watson Company was not a partnership but the company wanted to pay the debt and hence they gave power and rights to Raja on their business. Therefore, the relation between W. N. Watson Company and Raja is of a debtor and creditor and so that is why, the Mollwo, March Company cannot sue Raja.

The case analysis has been done by Priyanka Choudhary, currently pursuing BA LLB from Mody University of Science and Technology, Lakshmangarh, Rajasthan.

The case analysis has been edited by Shubham Yadav, pursuing B.com LL.B. (4th Year) from Banasthali Vidyapith.

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CASE NUMBER

Special Leave Petition (Crl.) No. 6432 Of 2012

EQUIVALENT CITATIONS

(2012) 8 SCC 795, AIR 2012 SC 3316.

BENCH

P. Sathasivam and Ranjan Gogoi.

DECIDED ON

September 12, 2012

RELEVANT ACT/ SECTION

The Salt Cess Act, 1953.
Section 438 in the Indian Penal Code.
The Indian Penal Code.
The Special Courts Act, 1979.
Article 136 of the Constitution of India.
The Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act, 1989.
Section 438 in the Code of Criminal Procedure, 1973

BRIEF FACTS AND PROCEDURAL HISTORY

In this case, the complainant was of a lower caste. She lived with her family. On 15.06.2012 they allowed the rain water accumulated in their field to flow to the field of the petitioner. The petitioner then abused on their caste and then assaulted her whole family by using stones, sticks, etc., the reason being that the complainant allowed the rain water to flow on their field. The complainant then on the same day filed an FIR against the petitioner. The petitioner along with the other accused members filed an anticipatory bail under section 438 of CrPC before the Additional Sessions Judge, who rejected their application for anticipatory bail. Then the petitioners moved the anticipatory bail to the High Court. The Hon’ble High Court allowed the anticipatory bail to 13 accused out of 15. The two petitioners moved to the Hon’ble Supreme Court of India. And the SC also rejected the application for anticipatory bail.

ISSUE BEFORE THE COURT

The main issue was that whether an accused charged with various offences under the IPC along with the provisions of the SC/ST Act is entitled for anticipatory bail (also called as pre-arrest bail) under Section 438 of the CrPC or not.

RATIO OF THE CASE

The Hon’ble Supreme Court of India rejected the application for anticipatory bail of the petitioners because the Section 18 of the SC/ST Act creates a bar over Section 438 of CrPC that denies the anticipatory bail for the person against whom the allegations has been filed under this Act and therefore no court can entertain such applications for anticipatory bail unless, the court prima facie finds that the offence made under the SC/ST Act is not made out.

DECISION OF THE COURT

The anticipatory bail is not maintainable in the cases of the offence committed under SC/ST Act as there is a bar under section 18 of this Act. Therefore the Hon’ble SC has held that the petitioners have committed the offence under SC/ST Act, and hence they are not entitled for release on pre-arrest bail.

The case analysis has been done by Priyanka Choudhary, currently pursuing BALLB from Mody University of Science and Technology, Lakshmangarh, Rajasthan.

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EQUIVALENT CITATION

(1860) 8 HLC 268

BENCH

LORD CRANWORTH & LORD WENSLEYDALE

RELEVANT ACT/ SECTION

The Indian Partnership Act, 1932

BRIEF FACTS AND PROCEDURAL HISTORY

Under the name of B Smith & Son, Benjamin Smith and Josiah Timmis Smith carried on a business of iron and maize traders. They owed large amounts of money to the creditors of the company. A meeting was held between S & S and the creditors that included Cox and Wheatcroft. They executed a deed of arrangement in favor of the creditors. The party to the first part of the deed was S & S; to the second part were five creditors including Cox and Wheatcroft. The party to the third part of the deed were the general body creditors of S & S. The party to the second part was to carry the business under the name of The Stanton Iron Company as a trustee. This deed also contained a provision that stated that they would not sue Smiths for their debts. Cox never acted as a trustee; Wheatcroft had resigned six weeks later after the deed. No other trustees were appointed in place of Cox and Wheatcroft.

Hickman – a businessman, drew three bills of exchange for the goods supplied to him after Wheatcroft had resigned. These bills were received on behalf of the Stanton Iron Company by one of the three creditors. Hickman sued Cox and Wheatcroft and stated that they both were liable because they were the original parties to the second part of the deed.
The case was tried before Lord Jervis, who ruled it in favor of the defendants. The action went to the Exchequer Chamber, where three judges wanted to reverse the decision, whereas the other three judges asked to uphold the judgment.

ISSUES BEFORE THE COURT

Is there any partnership between the merchants who were in the essence of the creditors of the company?

RATIO OF THE CASE

The argument that mere sharing of the profits constitutes the partnership is a misconception. The right to share the profits does not cause liability for the debts of the business.
The fact that the business was carried on by the person acting on his behalf is the actual ground for the liability.

DECISION OF THE COURT

The execution of the deed did not make the creditors partners in the Stanton Iron Company. The deed is only an arrangement to pay debts out of the existing and future profits. The creditors were given special powers as per the deed. To make rules to carry out the trade and to decide whether to continue the business. The creditors let the trustees carry out the trade instead of them. This act of the creditors did not make them partners. The trustees would not have accepted the bills of exchange if the creditors had chosen to carry out the trade. The agreement did not constitute the relations of partners between the creditors and trustees. Therefore, the creditors are not liable because they are not the principals of the trustees. However, the trustees are liable because they are the agent of the contract.
Hence, the defendants are not held liable and overturned the decision of the Court of Common Pleas.

The case analysis has been done by Gracy Singh, a student of 2^nd Year BA.LLB (Hons.) from Mody University of Science and Technology, Lakshmangarh, Rajasthan.

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Case Number

Civil Appeal No. 4649 of 1984

Equivalent Citations

AIR 1989 SC 777, 1989 (1) ARBLR 306 SC, JT 1989 (1) SC 132, 1989 (1) SCALE 126, (1989) 1 SCC 411, 1989 (1) UJ 416 SC

Bench

K.N. Singh, L.M. Sharma

Date of Judgment

January 20, 1989

Relevant Act/ Sections

Section 17, 20 of Arbitration Act, 1940

Order 41 Rule 33 – Code of Civil Procedure, 1908

Facts of the Case:

The Government of India decided to hold the Third Asian International Trade Fair, scheduled to be opened in November 1972. Various countries were invited to participate in the Fair and were assured of getting space, by the first week of October 1972, in two huge structures named Hall of Nations and Hall of Industries. Tenders were invited on 9.10.1971 by an open advertisement described by the parties as Notice Inviting Tenders (NIT in short). The appellant, Puri Construction (Pvt.) Ltd. (hereinafter referred to as the contractor), submitted its tender and was allotted the work. The contractor completed the work within the stipulated period and the Fair opened in time. The parties disagreed as to the amount payable for the executed work and even about the terms relating to arbitration.

Procedural History:

The contractor filed before the Delhi High Court an application under Section 20 of the Arbitration Act on 30/5/1974 which was registered as Suit No. 329-A of 1974. By consent of the parties, the High Court referred the dispute to Sri M.K. Shivasubramaniam, Chief Engineer, Central Public Works Department, to act as the sole arbitrator. The suit was accordingly disposed of. Sri Shivasubramaniam was appointed as the Chief Engineer (Vigilance Cell) and could not thereafter proceed with the arbitration. The Union of India (UOI) then purported to appoint one Sri M.K. Koundinya as the sole arbitrator, whose authority was challenged by the contractor before the High Court by filing a miscellaneous petition. By consent order, Sri D.N. Endlaw retired Chief Engineer, C.P.W.D. was appointed the sole arbitrator to continue with the arbitration proceeding. The dispute included mainly the claim of the contractor and several counter-claims by the Union of India. Sri Endlaw made a non-speaking award and filed it in court on 29.5.1981. A case being Suit No. 551/A/81 was registered and notices were issued and the Union of India filed objections thereto. The case was disposed of by a judgment dated April 16, 1982, passed by the single judge bench of G.K. Luthra, J. dismissing the objections and accepting the award. The Union of India challenged the judgment in the appeal which was heard and disposed of by a Division Bench consisting of Rajinder Sachar and Jagdish Chandra, JJ on May 21, 1984. The present appeal is directed against their judgment.

Issues before the Court:

Whether the sole arbitrator is required to give reasons in support of his award. (Part 4)
The contractor contended that it had to execute many new items of work, as directed from time to time during the course of construction, and these were beyond the awarded contract and were accordingly entitled to an additional payment.
Whether the amount payable to the contractor had to be reduced by the value of the discardable additional steel described by the parties as ‘salvaged steel’.
Whether the court can sit in appeal over the views of the arbitrator by re-examining and re-assessing the materials.
Whether a plea/claim is liable to be entertained if not raised before the lower courts.

Ratio of the Case

The Union of India contended that in view of the special provisions in the NIT, which was binding on the parties requiring the arbitrator to give a speaking award, Sri Endlaw was bound to do so. The learned Single Judge agreed with the appellant contractor that the case was governed by the general rules applicable to arbitration and Sri Endlaw was, therefore, not obliged to support his decision by reasons. The Supreme court upheld the decision of the Single Judge bench.
The Union of India after the award of the contract sought the construction of “Space frame structures” for housing the Hall of Nations and the Hall of Industries. It was the first venture to construct a “space frame structure in exposed concrete” in India. The result, therefore, was that till the contract work was allotted to the appellant no detailed drawings were available from the architects, and when the work was actually entrusted to the appellant, they were still struggling for evolving a design for a suitable “space frame structure”, which could be stable with all the various loading and other structural considerations.
At the time the contract work was given to the appellant, it was intended to put up prefabricated structures, but later what was built in accordance with the changed directions has been described as “cast-in-situ”. The Court stated that as a result of this change, it became necessary to use huge quantities of additional steel for a continuous period of about 9 months after which they had to be discarded. The discarded surplus steel was, thus, available to the appellant-contractor for resale and termed salvage.
When a court is called upon to decide the objections raised by a party against an arbitration award, the jurisdiction of the court is limited, as expressly indicated in the Arbitration Act, and it has no jurisdiction to sit in appeal and examine the correctness of the award on merits.
Some of the objections taken by the UOI before the appellate court were not raised before the lower court and therefore such objections cannot be considered in appeal and are liable to be rejected at the outset. One such example is the plea belatedly taken on behalf of the respondent in regard to Claim No. 16, which also has to be rejected. No such objection to the award was taken before the learned Single Judge.

Final Decision:

It was held that, for the reasons mentioned above, the High Court judgment dated May 21, 1984, passed in by the division bench in F.A.O. (O.S.) 67 of 1982 is set aside, and the judgment dated April 16, 1982, passed by the learned Single Judge in Suit No. 551-A of 1981 is restored. The appeal is allowed with costs.

This case law analysis is written by Prateek Chandgothia, a first-year BA LLB (Hons.) student at the Rajiv Gandhi National University of Law, Punjab.

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The article is written by Sanjana Suman, a student of Amity Law School, Amity University Jharkhand, Ranchi.

Case Number

Appeal (civil) 822 of 1966

Equivalent Citations

1970 AIR 833, 1969 SCR (2) 240

Bench

Sikri, S.M.

Date of Judgement

27/09/1968

Relevant Act/ Section

Indian Arbitration Act (10 of 1940)

Indian Registration Act (16 of 1908), Sec 17(1)(b)

Facts of the case and Judgement

All that had to be seen for s. 17(1)(b) of the Registration Act was whether the award in question purports or operates to create, declare, assign, limit, or extinguish any right, title, or interest to or in immovable property, whether vested or contingent, of the value of one hundred rupees and upwards, whether now or in the future.

252 and Sardooll Singh v. Hari Singh I.L.R.

An arbitrator appointed by the appellants and respondent partitioned their immovable property exceeding the value of Rs.100.

The award required registration.

Samarath Bai, [1960] 2 S.C.R.

The arbitrator requested that the award be made a rule of the court under section 14 of the Indian Arbitration Act, 1940.

Say that the created right cannot be enforced without additional steps.

If an award has an impact on immovable property, a value of Rs. 100 should be ordered.

HELD per Full Court on the issue of whether the award was admissible in evidence because it was not registered.)

Chamanlal Girdhat Ghanchi v. Dhayabhai Nathubhai Ghandi A.I.R.

100 its registration does get rid of the disability created by s. 49 of the Registration Act.

816 and Kashinathsa Yamosa Kabadi v. Narsingsa Baskarsa Kabadi, [1961] 3 S.C.R.

After an award is made, no further action on the initial claim that was the subject of the reference can be taken. Prabhu Chand would not receive a title on the reward unless he had registered paperwork, and Sheonarain’s title would remain in the shop.”

Satish Jatindar Rakesh Chand Kaka Surinder Kumar is an Indian businessman. Kumar Kumar (Minor) Smt Nirmal Kanda (Resp. Rani) Reap Lajya Devi Reap Lajya Devi

As a result, in the same controversy, there may be not just one but several registrations for the same title, a circumstance that the Registration Act does not even contemplate.”

According to Section 17(1)(b) of the Registration Act, all that is required is that the award in question purports or operate to create or declare, assign, limit, or extinguish, whether in present or future, any right, title, or interest to or in immovable property worth one hundred rupees or more.

C1/69—17 of the answers given by the Patna Full Bench in Sheo Narain Lal v. Prabhu Chand(1) held that such awards did not need to be registered, but the case was determined on the question of whether the award in question in that instance intended or operated to establish a right, title, or interest worth more than Rs. 100.

Issues before the Court

The issue before us is whether an award made under the Act on a private reference needs registration under section 17(1)(b) of the Indian Registration Act if it affects the division of immovable property worth more than Rs. 100.
The claim that the award needed registration and that the arbitrators would not submit it until it was registered is also without merit.

The decision of the Court

The case was then appealed to the High Court. According to Capoor, J., the award affected a partition and required registration under section 17(1)(b) of the Indian Registration Act, 1908. The learned Judge disagreed with the decision of the Patna High Court’s Full Bench in Seonarain Lal v. Prabhu Chand, preferring to follow the views expressed by the Bombay High Court in Chimanlal Girdhar Ghanchi v. Dahyabhai Nathubhai Gandhi, the Nagpur High Court in M.A. M. Salamullah Khan v.M. Noorullah Khan, and the Rangoon and by the Calcutta High Court in Nani Bela Saha v. Ram Gopal Saha.

The judgment of the Patna High Court was, however, eventually followed by a Full Bench of the Punjab and Haryana High Court in Sardool Singh v. Hari Singh, ruling, dated November 8, 1966.
The Punjab Full Bench added two more reasons: “Even though an award is registered, it remains a waste paper unless it is made a rule of the Court.” As a result, registration has no bearing on its effectiveness or competence. Section 32 of the I.L.R. 37 Pat.252. The 248 Arbitration Act is specific in that no right can be established on an award as such after the 1940 Arbitration Act comes into force; it is not argued and could not be that the Court has the jurisdiction, under section 16, to remit the award from time to time. If the registration of an award is required before it can be made a rule of the Court under section 17, then every time an award is remitted and a new award is made, the new award must be registered. As a result, in the same controversy, there could be not one but several registrations for the same title, a situation that the Registration Act does not even contemplate.”

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