Holding

The award is not set aside as there is no ground under Section 30; the arbitrator did not misconduct himself and acted within the scope of the reference.

Summary

The dispute between Jagdish Chander Bhatia and Lachhman Das Bhatia over shares in two houses was referred to arbitration by the Supreme Court, which appointed a retired chief justice as sole arbitrator. The arbitrator issued a speaking award allocating specific shares based on contributions to the purchase price, without addressing a large set of documents relating to properties left in Pakistan. Jagdish Bhatia objected to the award under Section 30 of the Arbitration Act, 1940, alleging arbitrator misconduct for not considering those documents. The Supreme Court held that the award contained no infirmity on its face, the arbitrator acted within the limited scope of the reference, and an erroneous conclusion does not constitute misconduct. Consequently, the Court declined to set aside the award, transferred the pending civil appeal to its own file, and made the arbitrator's award the rule of the Court, disposing of the appeal.

Issues considered

Whether the arbitrator committed misconduct by not considering certain documents and thus the award can be set aside under Section 30 of the Arbitration Act, 1940.
Whether the court may re‑assess evidence or interfere with the arbitrator's conclusions on the merits.
Whether the arbitrator exceeded the terms of the reference by addressing matters beyond the two houses in dispute.

Legislation cited

Arbitration Act, 1940s. 14, s. 17, s. 30, s. 33, s. 35

Subjects

ArbitrationSection 30MisconductSpeaking awardScope of referenceSetting aside awardSupreme CourtProperty dispute

Judgment

JAGDISH CHANDER BHATIA A
~ v.
LACHHMAN DAS BHATIA

JANUARY 11, 1993

(L.M. SHARMA, CJ AND A.M. AHMADI, J.] B

Arbitration Act, 1940:

Sections 14, 17, 30 and 33-Awart:f-When can be set aside-Non-
consideration by the Aroitrator of al! documents submitted by patty-Whether.
c
- amounts to misconduct-lnteiference by Coult-Whether called for-Coult
not to sit in appeal or re-assess evidence.

The dispute betweeu the appellant and the respondent in respect of
. --< their interests In certain properties, was referred to arbitration by this
Court and a retired Chief Justice of a High Court was appointed as the D
sole Arbitrator with direction to make a speaking award, and the Ar·
bitrator submitted his Award. Against this award the appellant-objector
filed objections under Section 30 of the Arbitration Act, 1940, contemliug
that the Arbiteator bad misconducted himself in that he did not take into
consideration several documents which were placed on record before him
to support the objector's case and, hence, the aw.ard was invalid under E
clauses (a) and (c) of Section 30.

Disposing of the Appeal, this Court

HELD : 1.1. There is no infirmity on the face of the award which
would entitle this Court to exercise jurisdiction under Section 30 of the F
-, Arblteation Act. The Arbitrator has made a speaking award setting out bis
' reasons for the conclusfons reached by him and bas thus complied with
the direction of this Court giveu earlier. [S6D, SSE]

1.2. The documents in question mainly relate to the rights and inter-
G
ests of the parties in the properties situate in that part which now belongs to
the Dominion of Pakistan. Since they were refugees they bad made certain
claims under the law governi!lg rehabilitation of displaced persons in
) respect of the properties left behind by them. The claim was sanctioned in the
joint name of the objector's predecessor-in-interest and the respondent in
respect of the properties left behind by the family. On the strength of that H
51
52 SUPREME COURT REPORTS (1993] 1 S.C.R.

A claim, one of the houses was purchased in the said name. The Arbitrator,
however, came to the conclusion, that the property in question was pur-
chased from the funds contributed by the objector's predecessor-in-interest
and the respondent. The share of the objector was held to be 1/7th in the
share of the predecessor-in-interest, since deceased. Since the contribution
made for payment of the price was not equal, the Arbitrator allotted a larger
B share to objector's predecessor-in· interest and consequently, the objector
has got a share on the basis thereof, when inheritance opened on the death of
the predecesso1·-in interest. (558-D,H, 56A]

1.3. It is clear from the award that the Arbitrator did not go into the

c
rights and interests of the parties including the HUF in the properties left
behind in the Dominion or Pakistan. That was not necessary because the
fact that the claim was sanctioned in the joint name of the Objector's
predecessor-in-interest and the respondent was never in dispute. The
-
short question, which the Arbitrator was required to consider, was as
regards the title of the properties, which were the subject matter of the
D reference, which included a house purchased on the strength of that claim.
It is not necessary for the Court to go into the question of.the rights and
interests of the parties in the properties left behid in the Dominion of
Pakistan since the Arbitrator was right that he was called upon to decide
the interest of the parties in respect of two houses alone, which were the
subject matter of the reference. Therefore, the Arbitrator bad not miscon-
E
ducted himself by refusing to enumerate all !hose documents in question
in his award because be was bound by the scope of the reference which was
limited to the two houses and not the properties left behind in the
Dominion of Pakistan by the parties. [SSF, 568-C]

F 2. In order to interfere with an award, the Court must find out
whether the Arbitrator has misconducted himself or there was any infir·
mity in the procedure, such as, the Arbitrator having travelled beyond the
terms of the reference or there being an error apparent on the face of the
award. It is not misconduct on the part of an Arbitrator to come to an
G erroneous conclusion on a disputed issue. The Court does not sit in
appeal and does not reassess the evidence. Even if the Court feels that had
it been left to it, it would have assessed the evidence differently that would
not be a valid ground for setting aside the award. [56E, G] ........

3. Therefore, in the facts and circumstances of tbe case, there is
H no reason to interfere with tbe award, which is made the rule of the
JAGDISH BHATIA v. LACHHMAN BHATIA 53

.,.' Court. [56H, 57A·B) A
Food Co!pOratiOn of India v.JoginderpaJ Mohinderpal &Anr., (1989) 2
S.C.C.347 and Hind Builders v. Union ofIndia, (1990) 3 S.C.C.338, relied ou.

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
32 of 1982. B
From the Judgment and Order _dated 1.10.1981 of the Delhi High
.- .I
Court in Criminal Misc. (Main) No. 304 of 1980.

S.L. Chowdhary and Pradeep Misra for the Appellant.

- Rakesh K. Khanna and R.P. Singh for the Respondent.

The following order of the Court is delivered:
c

-"'<'.
Even though the dispute between the parties came to this Court from
an initial order passed under Section 145 of the Code of Criminal Proce- D
dure, this Court realising that the dispute was between close relatives in
respect of their interests in certain properties which were also the subject
matter in a Civil Suit No. 434ns (Remand) of the Court of Sub-Judge, First
Class, Delhi, advised the parties to have the same resolved through an
/-. Arbitrator. On the parties agreeing, this Court passed an order on Septem-
ber 5, 1986 recording the agreement to refer the dispute to arbitration and E
appointed Mr. Justice V.D. Misra, retired Chief Justice of the High Court
of Himachal Pradesh, as the Sole Arbitrator. The parties had agreed to
deposit a suni of Rs. 3,000 each with the Ar':>itrator to meet with his
expenses and remuneration subject to further directions that may be made
in that behalf. It was further directed that the learned Arbitrator will F
render a speaking award within four months. In view of the said ~eement,
\ the appeal was allowed and the High Court's impugned order was set aside.
It appears that thereafter one Of the parties, namely, J agdish Chander
Bhatia, did not deposit the expenses with the Arbitrator and raised objec-
tion in regard to the arbitration proceedings on the plea that the property
in dispute was proposed to be resumed by the Union of India. In the G
meantime, it appears that the sole Arbitrator passed away and in his place
---.., Mr. Justice M.S. GujraJ,. retired Chief Justice of the High Court of Sikkim,
was appointed the Sole Arbitrator. This Court did not approve of the
conduct of Jagdish Chander Bhatia in not depositing the amount and in
trying to avoid adjudication of the dispute through arbitration. After this H
54 SUPREME COURT REPORTS [1993) 1 S.C.R.

A order was passed on October 12, 1990 by which a further sum of Rs. 8,000 ,.-
was directed to be deposited with the Arbitrator, subject to the Arbitrator
deciding who should bear the cost, the newly appointed Arbitrator entered
upon the reference and submitted his award on November 14, 1991. This
concluding part of his Award reads as under:

B 'House No. 17 would entirely belong to Lachhman Das Bhatia
whereas House No.18 would be jointly owned by Lachhman
Das and Jagdish Chander. Lachhman Das would have 76.50%
share whereas Jagdish Chander would have 23.50% share in
'

-
House No.18. As House No.17 has entirely been given to
c Lachhman Das Bhatia in all fairness, Jagdish Chander Bhatia
should give vacant possession of House No.17 to Lachhman
Das Bhatia."

The parties were directed to bear their own costs of the arbitration >-- -
proceedings except that J agdish Chander Bhatia had to pay Rs. 4,000 to
D Lacbhman Das Bhatia as his share of the Arbitrator's fees which he had
initally failed to deposit. Against this award, J agdish Chander Bhatia
(hereinafter called 'the objector') bas filed objections under Section 30 of
the Arbitration Act, 1940 which provision reads as under:

"An award shall not be set aside except on one or more of the -"-
E following grounds, namely -

(a) that an arbitrator or umpire has misconducted himself or
the proceedings;

(b) that an award has been made after the issue of an order by
F the Court superseding the arbitration proceedings have become
invalid under Section 35;

(c) that an award has been improperly procured or is otherwise
invalid."
G It was conceded by the learned counsel for the Objector that clause
(b) would not be attracted. His main submission was that the Arbitrator
had misconducted himself, in that, he did not take into consideration
several documents which were placed on record before him which support
the Objector's case and hence the Award was invalid. He, therefore, partly
H relied on clauses (a) and (c) for setting aside the Award.
JAGDISH BHATIA v. LACHHMAN BHATIA 55

The documents to which the learned counsel for the.Objector invited A
our attention, are to be found in Vol.2 of the paper book placed before us.
~ These documents are 31 in number and they mainly relate to the rights and
interests of the parties in properties situate in that part which now belongs
to the Dominion of Pakistan. Since they were refugees they had made
certain claims under the la:-v governing rehabilitation of displaced persons
B
in respect of the properties left behind by them. These documents show
that the claim was sanctioned in the name of Punnu Ram Lachhman Das
in respect of the properties left behind by the family. On the strength of
.J that claim, House No.18 was purchased in the said name. The Arbitrator,
however, came to the conclusion, as is evident from the discussion from
paragraph 26 and onwards of the Award, that the property in question was c
purchased for Rs. 12,850 from the funds contributed by Punnu Ram and
Lachhman Das, the former paying Rs. 9,233 and the latter Rs. 3,617. This
is the conclusion reached by the Arbitrator 'as is evident from paragraph
37 of the Award. The share of the Objector was held to be l/7th in the
-~
share of Punnu Ram, since deceased. It was on this finding recorded by
D
the Arbitrator that he passed the ultimate order extracted above.

The arbitrator has made a speaking award setting out his reasons for
the conclusions reached by him. He has thus complied with the direction
of this Court given earlier. On a perusal of the award, it becomes clear that
the Arbitrator did not go into the rights and interests of the parties E
A.
including the HUF in the properties left behind in the Dominion of
Pakistan. That was, in our opinion, not necessary because the fact that the
claim was sanctioned in the name to the Punnu Ram Lachhman Das was
never in dispute. The short question, which the Arbitrator was required to
consider, was as regards the title of the properties which were the subject F
matter of the reference which included the property purchased for Rs.
--., U,850 on the strength of that claim. In dealing with that question the
Arbitrator came to the conclusion that Punnu Ram and Lachhman Das
had contributed the entire consideration of Rs. 12,850 and hence they were
the owners of the property and on the death of Punnu Ram inheritence
opened insofar as his share in the property was concerned and the Ar- G
bitrator came to the conclusion that the Objector was entitled to l/7th out
of the share of the deceased. Since the contribution made for payment of
) the price was not equal, the Arbitrator allotted a larger share to Punnu
Ram and consequently the Objector has got a share on the basis thereof.
Practically, all the documents included in Vol2 relate to the interest of the H
56 SUPREME COURT REPORTS (1993) 1 S.C.R.

A parties and their HUF in the properties left behind in the Dominion of
Pakistan. The learned counsel for the Objector then tried to take us into
the rights and interests of the parties in those properties, but we declined
to go into the same as we thought that the Arbitrator was right that he was
called upon to decide the interest of the parties in Houses Nos. 17 and 18
alone which were the subject matter of the reference. We are, therefore,
B of the opinion that the Arbitrator had not misconducted himself by refusing
to enumerate those documents in Vol.2 in his award because he was bound
by the scope of the reference which was limited to Houses Nos. 17 and 18
and not the properties left behind in the Dominion of Pakistan by the
parties. For this reason, we are of the opinion that there is no infirmity on
C the face of the award which would entitle us to exercise jurisdiction under
Section 30 of the Arbitration Act.

This Court pointed out in Food Corporation of India v. Joginderpal
Mohinderpal & Anr., [1989) 2 sec 347 that an award of an Arbitrator can
D only be interfered with or set aside or modified within the four comers of
the procedure .provided by the statute. The Court must find out whether
the Arbitrator has misconducted himself or there was any infirmity in the
procedure, such as, the Arbitrator having travelled beyond the terms of the
reference or there being an error apparent on the face of the award. It is
not misconduct on the part of an Arbitrator to come to an erroneous
E conclusion on a disputed issue. In case of error apparent on the face of
the award, the award can be set aside only if there is any proposition of
law on which the award is based which is in conflict with law. It must be
demonstrated to the Court that the reasons given by the Arbitrator are so
palpably erroneous in law that they have resulted in the Arbitrator taking
a view which cannot be sustained in law. To put it differently the Court
F
does not sit in appeal and does not re-assess the evidence. Even if the
Court feels that had it been left to it, it would have assessed the evidence ·
differently that would l_notj be a valid ground for setting aside the award.
In Hind Builders v. lfnion of India, [1990) 3 SCC 338, this Court pointed
out that where on an interpretation of any q>ntract or document, two views
G are possible and the Arbitrator accepts one view while the other view is
more appealing, it would not be open to the Court to interfere with the
Award. We, therefore, in the facts and circumstances of this case, see llO
reason to interfere with the award of the Arbitrator. -r
I

H The Suit No. 434(78 pending in the Court of the Sub-Judge, Delhi,
JAGDISH BHATIA v. LACHHMAN BHATIA 57

was disposed of by that Court, and an appeal, being Civil Appeal No. 211 A
of 1979 (Jagdish Chander Bhatia v. Lachhman Das Bhatia) preferred on
April 23, 1979 against that decree, is pending in the Court of the District
Judge, Delhi. We transfer that appeal to our file and make the Arbitrator's
award the rule of the Court. The decree of the trial court is set aside and
a decree in terms of the award will be drawn up in the appeal proceedings
arising out of Suit No. 434n8. We, however, do not make any order as to
B
costs in the present proceedings.

N.P.V. Appeal disposed of.