CMA/2908/2007 of RAMESH DEVNANI Vs SMT LATA DEVNANI and ORS on 20 December 2013

J U D G M E N T

BY THE COURT

1. All these six appeals arise out of the commonjudgment and order dated 26[th] May, 2007 passed by theDistrict Judge, Jaipur City, Jaipur (hereinafter referred to as'the Court below') in Arbitration Cases Nos.325/2006,

563/2006 and 569/2006, whereby the Court below hasallowed the objections filed by the respondents nos.1, 2 and3(non-claimants) under Section 34 of the Arbitration andConciliation Act, 1996 (hereinafter referred to as 'the saidAct') and set aside the award dated 22[nd] June, 2006 passedby the sole Arbitrator. The S.B. Civil Misc. AppealNos.2908/2007, 2909/2007 and 2910/2007 have beenpreferred by the appellant-Shri Ramesh Devnani, whereasthe S.B.Civil Misc. Appeal Nos.2931/2007, 2932/2007 and2933/2007 have been preferred by the appellant-Shri MukeshDevnani against the impugned order passed by the Courtbelow.

2. The short facts, giving rise to the present appeals, arethat late Shri Manga Ram Devnani had three sons, named,Ramesh Devnani, Mukesh Devnani and Bhagwan Devnani. Thesaid Bhagwan Devnani had two sons, named, Jayant Devnaniand Bhishm Devnani, and the name of his wife was Smt. LataDevnani. On 13[th] May, 1992, a partnership firm was createdby Shri Bhagwan Das Devnani, Shri Ramesh Devnani, ShriMukesh Devnani and Shri Jayant Devnani, in the name andstyle of M/s. Maharaja Carpet & Textile Industries(hereinafter referred to as 'the M.C.T.I.). Subsequently on16[th] November, 1992, it was agreed between the said

partners that the business of the firm shall be carried on atMaharaja House, Gangapole, Jaipur with the contribution ofthe capital to be made by the partners. It was further agreedthat the duration of the firm shall be 'AT WILL' and thepartners may retire from the firm by giving three monthsnotice. All the four partners had agreed to have equal sharei.e. 25% each in the profits of the said firm. It was alsoagreed that in case of dispute, the matter shall be referredto the Arbitrator under the Indian Arbitration Act. It appearsthat on 15[th] September, 1993, a further declaration wasmade by the three partners i.e. Bhagwan Devnani, RameshDevnani and Mukesh Devnani to the effect that threeseparate pieces of lands owned by them, totally admeasuring3241.22 sq. yards at Maharaja House Gangpole, the details ofwhich were given in the said declaration, shall be allowed tobe used freely along with the built up apartments thereonfor a period of 21 years i.e. upto 31[st] May, 2012 for thepurpose of promoting the business of the said firm. It wasalso declared inter-alia that the said firm shall not have theright to sell or dispose of the said lands or any portion thereof, however, the firm shall have right to mortgage the saidland along with the apartments built thereon, by way ofequitable mortgage.

3. It further transpires that subsequently the disputes had arisen between the partners, and therefore appellantRamesh Devnani served notices to the other partners callingupon them to appoint arbitrator for resolving the disputes.

The said notices were replied to by the other partners. Sinceno consensus was arrived at between the partners for theappointment of the arbitrator, the appellant-RameshDevnani had made an application being No.246/2005 beforethe Court below seeking appointment of the arbitrator forresolving the disputes as mentioned therein, under Section11 of the said Act. The Court below vide the order dated 2[nd]September, 2005 appointed the sole arbitrator Shri J.P.Bansal for resolving the disputes between the parties. The Court below inter-alia passed the following order:-

4. पऽावली पर उपल ध ूाथ नापऽ एवं जवाबूाथ नापऽ के त यो से यह साफ जा हर है “क प”कार केम य फम के “वघटन एवं एकाउं”स से संबिधत “ववाद है,”जसका िनपटारा दोन प एकल पंच के मा यम सेकरवाना चाहता है । “जसक” िनयु�� हेतु ूाथी ने मौजूदाआवेदन पेश कया है । जस हेतु अूािथगण “ारा अपनीसहमित जा”हर “क गई है । अतः प”कारन के म यउ प न “ववादो के िनपटारे हेतु एकल पंच िनयु” कयाजाना उिचत ूतीत होता है |

5. अतः प कारन के म य उ प न “ववादो केिनपटारे हेतु ौी जे. पी. बंसल, सेविनयु” आर. एच. जे.स.को एकल पंच िनयु “कया जाता है । जो प”कारान कोसुनवाई का उिचत अवसर ूदान करते हुए अपना अवाड 6माह म पा रत करे । चू क प कारान का यह कहना है “कमामला एकाउं”स से संबिधत है| अतः एकल पंच महोदयौी राज ि शमा , सी.ए. से एकाउं स संबधी राय लेने हेतुःवतंऽ है |

4. The appellant-applicant-Ramesh Devnani submitted hisstatement of claims before the arbitrator to which the otherthree non-applicants i.e. Bhagwan Das Devnani, MukeshDevnani and Jayant Devnani filed their common reply. Theappellant-applicant-Ramesh Devnani also filed his rejoinderto the said reply. The arbitrator from the pleadings of theparties had framed as many as 12 issues, and both theparties had led their respective evidence before thearbitrator. It appears that during the course of the saidproceedings, Shri Bhagwan Devnani expired on 25[th]November, 2005 and his heirs being Bhishm Devnani and Smt.Lata Devnani were brought on record, as Shri Jayant Devnaniwas already on record. It further appears that on 20[th] March,2006, the arbitrator had passed the order for proceedingexparte against Mukesh Devnani, Bhishm Devnani and Smt.Lata Devnani, however, only Smt. Lata Devnani submittedan application for setting aside the said order. The arbitratordismissed the said application vide the order dated 10[th] June,2006, by observing that after the death of Bhagwan Devnani,notices were issued to his legal heirs including Smt. LataDevnani, and that the Advocate Shri Radhey Shyam Sharmaappearing for Smt. Lata Devnani and Bhishm Devnani hadinformed the arbitrator that his clients did not want to file S.B. Civil Misc. Appeal Nos. 2908/2007, 2909/2007, 2910/2007, 2931/2007, 2932/2007 and 2933/2007

any separate pleadings, and wanted to adopt the reply filedby their predecessor in interest Shri Bhagwan Devnani. It wasalso observed that the said Advocate Shri Sharma hadcontinued to attend the proceedings thereafter on 3[rd] March, 2006, and since he did not remain present on 20[th] March,2006, exparte proceedings were drawn against them. Thearbitrator thereafter passed the award dated 22[nd] June, 2006

granting following reliefs.

“I pass the Final Award whereby I appoint ShriV.N. Saxena, Advocate, 4/480, Pradhan Marg,Malviya Nagar, Jaipur as Receiver who will actand operate as hereunder:-

(i) That he will take possession of the landand building and fittings and fixturesappurtenant thereto and prepare an inventorythereof.

(ii) That all the parties shall vacate thepremises and hand over vacant possession of theland and building to the receiver within onemonth from the date of receipt of this award,failing which the receiver shall secure vacantpossession with the help of the court.

(iii) That having received vacant possession ofland and all the property standing thereon thereceiver shall sell it off by public auction and allthe proceeds shall be deposited in the court ofDistrict Judge, Jaipur City, Jaipur.

(iv) That out of the sale proceeds, thereceiver shall pay off the taxes, if any, and Bankdebts outstanding against the firm.

(v) That the balance shall be distributedamong the partners who shall get the money indirect proportion to their shares in the land. SriJayant Devnani, Smt. Lata Devnani and ShriBhishm Devnani together in the capacity oflegal representatives of deceased BhagwanDevnani shall get money proportionate to hisshare in the land, that is 1326.33 sq. yards. Shri

Ramesh Devnani shall get what corresponds to1241.89 sq. yards and Mukesh Devnani in respectof 646 sq. yards.

(vi) That until the receiver gets vacantpossession of the premises he will receive witheffect from 1.4.1997 monthly rental ofRs.20,000/- from Smt. Lata Devnani and SarvaShri Jayant Devnani and Bhsima Devnani forunauthorized use and occupation of thepremises. This amount shall first be deductedfrom the amount which they shall finally getfrom the sale proceeds of the firm properties.The amount so collected shall then bedistributed among the stakeholders in themanner specified in para (v) above.

(vii) That the receiver shall get as hisremuneration one percent of the total saleproceeds of the firm properties in addition toofficial /routine expenses. He shall take allsteps necessary to give effect to this award.(viii) That the applicant shall get Rs.1,00,000/-as costs from the contesting non-applicants”.

5. Being aggrieved by the said award, the three objection applications being No. 325 of 2006, 563 of 2006 and 569 of2006 came to be filed by the applicants Smt. Lata Devnani,Shri Jayant Devnani and Shri Bhishm Devnani respectively,under Section 34 of the said Act before the Court below. Allthe three applications came to be allowed by the Courtbelow by setting aside the award in question made by thesole arbitrator, vide the common order dated 22[nd] June,2006. Being aggrieved by the said common order passed bythe Court below, these six appeals have been preferred bythe appellants Shri Ramesh Devnani and Shri MukeshDevnani, as stated here-in-above.

6. The learned counsel Mr. J.M. Saxena appearing for theappellant Ramesh Devnani, and the learned counsel Mr. R.D.Rastogi appearing for the appellant Mukesh Devnani hadmade their respective oral submissions, and also submittedthe written arguments, relying upon various decisions of theApex Court. The crux of their arguments is that the Courtbelow had committed an error in setting aside the speakingaward made by the arbitrator, mainly on the ground thatSmt. Lata Devnani was not given sufficient opportunity ofhearing by the arbitrator, and on the ground that the awardmade by the arbitrator was beyond the terms of reference,and was against the public policy of India. According to thecounsels, the arbitrator had passed the order dated 10[th]June, 2006 rejecting the application of Smt. Lata Devnani forsetting aside the earlier order to proceed exparte againsther, as the counsel appearing for her and Shri BhishmDevnani had informed the arbitrator that his clients did notwant to file any separate pleadings, and wanted to adopt thereply filed by their predecessor i.e. Bhagwan Devnani. Thecounsels also submitted that even otherwise the said orderdated 10[th] June, 2006 passed by the arbitrator had remainedunchallenged at the instance of Smt. Lata Devnani, andtherefore the Court below could not have set aside the

award on the ground that Smt. Lata Devnani was not givensufficient opportunity of hearing. Relying on the variousdocuments on record, and on the decisions of the ApexCourt, they submitted that the parties were free to maketheir claims supported by the documents, and to amend orsupplement their claims and differences before thearbitrator, and that the expression “terms of reference”could not be said to be limited to the order passed by theCourt below appointing the arbitrator. They furthersubmitted that from the pleadings of the parties, it clearlyemerged that the disputes had arisen in respect of theproperties of the partnership firm M.C.T.I. and the saiddisputes had to be settled by the arbitrator in the light ofthe partnership deed dated 16[th] November, 1992, and thedeclaration dated 15[th] September, 1993. According to them,the arbitrator having decided the disputes on the basis of thepleadings, and evidence led by the respective parties, itcould not be said that the arbitrator had travelled beyondthe terms of reference. They also submitted that from thepleadings and evidence of the parties, it was sought to beestablished that the M.C.T.I. was established using the fundsof the other firms like Maharaja Taxtile Printers, MaharajaSaries and Peugot, and therefore the arbitrator had dealt

with the issue of the creation of the said firms, which couldnot be said to be passing of the award beyond the terms ofreference. The counsels have relied upon the decisions ofthe Apex Court on the interpretation of Section 34(2) of thesaid Act to submit as to under what circumstances, theaward of the arbitrator could be set aside. The saidjudgments shall be dealt hereinafter as and when foundnecessary.

7. The learned senior counsel Mr.R.K. Agarwal and thelearned counsel Mr. R.K. Daga appearing for therespondents, however, submitted that the arbitrator had notonly travelled beyond the scope of reference, but had givendirections in the award without any authority of law byappointing one Advocate Shri V.N. Saxena as the receiverand directing the concerned respondents to vacate thepremises, and hand over the possession of land and buildingsto the receiver, and further directing the receiver to sell offthe said properties by public auction. According to them, thearbitrator had committed an error apparent on the face ofrecord in not deciding the issues for which the reference wasmade, and in not awarding any share to Shri Jayant Devnani,who was admittedly the partner of the firm M.C.T.I. Thecounsels had also referred to the various notices, and the

statement of claim made by the appellant Ramesh Devnanito show that the Maharaja Saries and other firms were notthe family firms, and that the reference was made to thearbitrator only in respect of the disputes pertaining to thedissolution and the accounts of the M.C.T.I. In short thelearned counsel for the respondents have supported theorder passed by the Court below, setting aside the awardmade by the arbitrator.

8. The moot question that arises before this Court is,whether the Court below was justified in setting aside theaward made by the sole arbitrator, on the ground that thecase was covered under the provisions contained in Section34(2)(a)(iii) as the respondent Lata Devnani was not givenopportunity to represent her case, and under Section 34(2)(a)(iv) as the arbitrator had travelled beyond the terms ofreference, and on the ground that the award was in conflictwith the Public Policy of India. So far as the question of notgiving opportunity to the respondent Smt. Lata Devnani isconcerned, it transpires from the order dated 10[th] June, 2006passed by the arbitrator that on 2[nd] February, 2006, theconcerned counsel appearing for Smt. Lata Devnani hadconveyed the arbitrator that his clients did not want to fileany separate pleadings, and wanted to adopt the reply put in

by their predecessor in interest Shri Bhagwan Devnani. It alsoappears that thereafter the said counsel Mr. Sharma hadappeared on 3[rd] March, 2006, but did not appear on the nextdate i.e. 20[th] March, 2006, and therefore the arbitrator hadclosed the evidence of the respondent Shri Jayant Devnaniand proceeded further with the hearing of arguments. It ispertinent to note that Shri Jayant Devnani was beingrepresented through a lawyer. Apart from the fact that hewas party to the arbitration proceedings, he was also one ofthe legal heirs of the deceased Bhagwan Devnani. The sameAdvocate, who was representing Smt. Lata Devnani andBhishm Devnani in the arbitration proceedings was alsorepresenting Shri Jayant Devnani. When the Advocateappearing for Smt. Lata Devnani having already statedbefore the arbitrator that his client did not want to file anyfurther pleading and wanted to adopt the pleadings filed byShri Bhagwan Devnani, and when the evidence of ShriBhagwan Devnani was already recorded prior to his death, itcould not be said that the arbitrator had not given sufficientopportunity to Smt. Lata Devnani and Shri Bhishm Devnani topresent their case. The award could be set aside underSection 34(2)(a)(iii) of the said Act, only when the partymaking application was not given proper notice of the

appointment of the arbitrator or of the arbitral proceedings,or was otherwise unable to present his case. Such was notthe case in case of Smt. Lata Devnani. The Court, therefore,does not agree with the finding recorded by the Court belowthat the award was liable to be set aside under Section 34(2)(a)(iii) of the said Act on the ground that Smt. Lata Devananiwas not given sufficient opportunity to present her case.

9. Now, let us examine whether the award in questionwas liable to be set aside under Section 34(2)(a)(iv) of theAct on the ground that the arbitrator had travelled beyondthe scope of reference or was liable to be set aside underSection 34(2)(b) on the ground that it was in conflict withthe Public Policy.

10. It is settled legal position that if the arbitral awarddeals with a dispute not contemplated by or not fallingwithin the terms of the submission to the arbitration, or itcontains decisions on matters beyond the scope of thesubmission to the arbitration, such an award could be setaside under Section 34(2)(a)(iv) of the said Act. The ApexCourt in case of Food Crop. of India vs. ChanduConstruction, (2007) 4 SCC 697 had observed that thearbitrator being a creature of the agreement between theparties, has to operate within the four corners of the

agreement. It was also observed in case of Bharat CokingCoal Ltd. vs. Annapurna Construction, (2003) 8 SCC 154

that the arbitrator can not act arbitrarily, irrationally,capriciously or independent of the contract. The Apex Courtin case of ONGC Ltd. vs. Saw Pipes Ltd., (2003) 5 SCC 705had considered the issue as to when the award could be setaside on the ground of being opposed to the public policy, and it was laid down as under :-

31. Therefore, in our view, the phrase 'PublicPolicy of India' used in Section 34 in context isrequired to be given a wider meaning. It can bestated that the concept of public policy connotessome matter which concerns public good and thepublic interest. What is for public good or inpublic interest or what would be injurious orharmful to the public good or public interest hasvaried from time to time. However, the awardwhich is, on the face of it, patently in violationof statutory provisions cannot be said to be inpublic interest. Such award/judgment/decisionis likely to adversely affect the administration ofjustice. Hence, in our view in addition tonarrower meaning given to the term 'publicpolicy' in Renusagar case it is required to be heldthat the award could be set aside if it is patentlyillegal. The result would be - award could be setaside if it is contrary to: - (a) fundamental policy of Indian law; or (b) the interest of India; or

(c) justice or morality, or

(d) in addition, if it is patently illegal.

Illegality must go to the root of the matter and ifthe illegality is of trivial nature it cannot be heldthat award is against the public policy. Awardcould also be set aside if it is so unfair andunreasonable that it shocks the conscience of

the Court. Such award is opposed to public policyand is required to be adjudged void.”

11. Subsequently, the Apex Court had an occasion to deal with the issue as to under what circumstances, and on whatgrounds the award could be set aside under Section 34(2) ofthe said Act, in case of Delhi Development Authority vs.

R.s. Sharma and Company, New Delhi, (2008) 13 SCC 80,wherein the Apex Court had deduced the principles forinterference with an arbitral award by holding, as under:- “From the above decisions, the followingprinciples emerge:

(a) An Award, which is

(i) contrary to substantive provisions of law; or

(ii) the provisions of the Arbitration andConciliation Act, 1996; or

(iii) against the terms of the respectivecontract; or

(iv) patently illegal, or

(v) prejudicial to the rights of the parties; is open to interference by the Court underSection 34(2) of the Act.

(b) Award could be set aside if it is contrary to:

(a) fundamental policy of Indian Law; or (b) the interest of India; or

(c) justice or morality;

(c) The Award could also be set aside if it is sounfair and unreasonable that it shocks theconscience of the Court.

(d) It is open to the Court to consider whetherthe Award is against the specific terms ofcontract and if so, interfere with it on the

ground that it is patently illegal and opposed tothe public policy of India.”

12. In the light of the aforestated settled legal position,if

the facts of the present case are appreciated, it appearsthat as per Clause 15 of the partnership deed dated 16[th]November, 1992, the partners of M.C.T.I., namely, BhagwanDevnani, Ramesh Devnani, Mukesh Devnani and JayantDevnani had agreed to divide the net profit of the firm inequal shares i.e. 25% each, and had further agreed that incase of any dispute or differences amongst the partners, thesame shall be referred to the arbitrator under the IndianArbitration Act. It is not disputed that as per the subsequentdeclaration dated 15[th] September, 1993, the partnersBhagwan Devnani, Ramesh Devnani and Mukesh Devnani hadagreed to allow free use of their respective lands along withbuilt up apartments thereon for the purpose of the businessof the firm. It was also stated in the said declaration thatthe said firm shall not have the right to sell or dispose of thesaid lands or any portion thereof without the consent of thepartners, but the firm shall have right to mortgage the saidlands, and the apartments built thereon by way of equitablemortgage. It appears that since the disputes between thepartners had arisen, the partner Ramesh Devnani had givenlegal notice dated 18[th] May, 2002, calling upon the other

partners i.e. Bhagwan Devnani , Jayant Devnani and MukeshDevnani to appoint the arbitrator to resolve the disputesunder Section 11 of the said Act. In the said notice, thedisputes were raised with regard to the accounts of the firmM.C.T.I. on the ground that the other partners were notallowing Shri Ramesh Devnani to have access into theaccounts, and to participate in the affairs of the business ofthe firm. The said Ramesh Devnani again gave notice dated2[nd] June, 2005 to the other two partners calling upon themto given consent to refer the disputes to the Advocate ShriKailash Nath Bhatt, and in the said notice also, he hadreferred to the dispute with regard to the M.C.T.I. The saidRamesh Devnani again gave notice on 10[th] June, 2005 to theother three partners calling upon them to hand over the landof his ownership being used for the purpose of business ofthe M.C.T.I. It is significant to note that in the applicationfiled by the said Mr. Ramesh Devnani before the Court belowseeking appointment of arbitrator under Section 11 of thesaid Act also, the disputes sought to be referred to thearbitrator were regarding the dissolution and accounts of thefirm M.C.T.I. The deceased Bhagwan Devnani in his reply tothe said application had also agreed to refer the disputeswith regard to the accounts of the firm M.C.T.I. to the

arbitrator. The Court below had accordingly passed the orderdated 2[nd] September, 2005 for referring the said disputes tothe sole arbitrator. The relevant part of the said order isalready reproduced hereinabove. Under the circumstances, it

clearly transpires that what was intended by the parties, andwhat was referred to the arbitrator by the Court below werethe disputes with regard to the dissolution and the accountsof the partnership firm M.C.T.I. Only. It is also required tobe noted that for referring the disputes to the arbitrator, theClause 15 of the partnership deed dated 16/11/1992, whichpertained to the firm M.C.T.I. was pressed into service. Thearbitrator, therefore, was required to decide the dispute asto when the said partnership firm M.C.T.I. stood dissolvedand the dispute about the accounts of the said firm.However, the arbitrator travelling beyond the terms ofreference and the terms of agreement had sought to decideas to whether the Maharaja Saries, Majaraja Textile Printersand Peugot were family business firms or not, withoutdeciding the real disputes in respect of the firm MCTI,referred to him.

13. As transpiring from the award itself, though thespecific issues were framed from the pleadings of theparties, the arbitrator clubbed the issue Nos.1, 4, 5, 6, 9 and

11, and again raised other five points. The arbitrator held inpara 10 of the award that the firms-Maharaja TextilePrinters, Maharaja Saries, Peugot and M.C.T.I. were familyfirms, though no such issue was referred to nor framed in theproceedings. The arbitrator did not decide issue Nos.2, 3 and12 specifically. While deciding issue Nos.7 and 10, thearbitrator held that the firm M.C.T.I. had stood dissolvedwith effect from 12/01/2003, and while dealing issue No.8,the arbitrator appointed the receiver and issued variousdirections without any authority of law. It is needless to saythat the award being executable as decree, it is theconcerned Court only which could execute the award bygiving necessary directions in accordance with law, and thatthe arbitrator had no authority to appoint the receiver andexecute the award by giving the directions as contained inthe impugned award. Such an award made by the arbitratoris exfacie arbitrary, perverse, illegal and therefore liable tobe set aside.

14. At this juncture, it is pertinent to note that in thestatement of claims made by the appellant-applicant ShriRamesh Devnani before the arbitrator, it was stated inter-alia that the said applicant and Shri Bhagwan Das Devnaniand Mukesh Devnani had totally purchased ten plots from

their own respective personal income, and the building'Maharaja House' was constructed from the income of thefirm M.C.T.I. It was also stated that the respective plotspurchased by the applicant and the other partners i.e. thenon-applicant Nos.1 and 2 from their own income were to befreely used for the promotion of the business of the firmM.C.T.I. as per the declaration dated 15[th] September, 1993.Even in the rejoinder to the reply filed by the non-applicants, the appellant-applicant Shri Ramesh Devnani hadspecifically stated in para No.4 thereof that the firm M/s.Maharaja Saries was never the firm of joint family, and thathe had 30% share in the said firm M/s.Maharaja Saries, andthat the income of the partners of M/s. Maharaja Saries wasalso accordingly shown separately in the income tax returnsand not shown as the income of HUF firm. It also appearsthat in the reply to the application filed by the non-applicants under Order XI Rule 14 of CPC, the appellant-applicant Ramesh Devnani had stated that the properties ofthe applicant had nothing to do with the partnership firmM.C.T.I. and only the dispute with regard to the dissolutionof the firm was referred to the arbitrator, and that thearbitrator could not decide any dispute, which was not thesubject matter of the firm. Thus, even as per the case of the

appellant- Ramesh Devnani, the parties had never intendedto refer the disputes as to whether the Maharaja Saries andother firms were family firms or not or whether the M.C.T.I.was created out of the fund of other firms or not. The onlydispute, which was referred to the arbitrator, was withregard to the dissolution and accounts of the M.C.T.I. firm.

15. Though, it is true that in the statement of claims, theappellant-Ramesh Devnani had sought for the relief seekingpossession of the land belonging to him, which was given tothe firm free of cost for using the same for the business ofthe firm, the said dispute having not been referred to thearbitrator by the court below, the arbitrator could not havedecided the same. It is also pertinent to note that the non-claimants in their reply to the said claim made by theapplicant had raised the issue of jurisdiction of the arbitratorto grant such relief, and the arbitrator had also framed theissue No.11 as to whether the arbitrator had the jurisdictionto grant relief of possession to the applicant or not,however, the arbitrator did not decide the said issue ofjurisdiction and straight-away directed the non-applicants tohand over possession of the lands to the receiver appointedby the arbitrator. It is also significant to note that thearbitrator did not decide the issue about the accounts of the

firm, though specifically referred to him, and passed theaward without deciding about the shares of each partner inthe profits of the said firm. It is also pertinent to note thatthough the non-applicant Shri Jayant Devnani had equalshare in the profits of the firm M.C.T.I. along with the otherthree partners, his share has not been recognized and hasbeen totally discarded by the arbitrator.

16. It is further interesting to note that the arbitrator,while passing the impugned award, had directed the non-applicants to vacate the premises, and to hand over thevacant possession of the plots and buildings to the receiver,though admittedly as per the declaration dated 15[th]September, 1993, the said plots did not belong to the firm,and they belonged to the respective parties, namely, ShriBhagwan Devnani, Ramesh Devnani and Mukesh Devnani, whohad permitted their respective plots to be used only for thebusiness purposes of the firm. When the said plots of landwere not the properties of the firm M.C.T.I., there was noquestion of arbitrator directing the parties to hand over thepossession of the said land and other properties standingthereon to the receiver, and further directing the receiverto sell off the same by public auction. By recording suchfindings on the issues not referred to him, and issuing the

directions without any authority of law, the arbitrator hadindeed travelled beyond the scope of reference, renderingthe award liable to be set aside under Section 34(2)(a)(iv) ofthe said Act. Such an award, which is patently illegal andprejudicial to the rights of the parties and to theadministration of justice, could certainly be termed as theaward in conflict with the Public Policy of India, andtherefore also the same is liable to be set aside.

17. It was lastly submitted by the learned counsels for theappellants that the case be remanded to the arbitrator fordetermining the issues not decided by him in view of theprovisions contained in Section 34(4) of the said Act. Thecounsels have relied upon the decision of the Apex Court incase of Som Datt Builders Limited vs. State of Kerala,(2009) 10 SCC 259in support of their submissions. Now, ifthe provision of Section 34(4) is considered, it appears thatsuch provision could be invoked before the Court where theapplication under sub-section (1) of Section 34 is made andwhen the party requests the Court to adjourn theproceedings in order to give the arbitral tribunal anopportunity to resume the arbitral proceedings or to takesuch other action as in the opinion of arbitral tribunal willeliminate the grounds for setting aside the arbitral award. In

the instant case, apart from the fact that no such applicationwas made by either of the parties before the Court below,there is no question of giving the arbitral tribunal anopportunity to resume the arbitral proceedings or to takeany other action to enable the tribunal to eliminate theground for setting aside the arbitral award. As discussedhereinabove, the Court has found that the arbitrator hadnot dealt with the disputes as contemplated by and fallingwithin the terms of the reference, and had decided thematters beyond the scope of the submission to thearbitration. The entire award therefore is liable to be setaside in toto. In case of Som Datt Builders Limited vs. Stateof Kerala (supra), the award was remitted to the arbitraltribunal for recording the reasons in support of the award, asthe arbitral tribunal had not assigned any reasons. In theinstant case, the arbitrator having passed detailed awardwith reasons, there is no need to grant him any opportunityto record the reasons by remanding the case. It is held bythe Apex Court in case of Mcdeormott International Inc. vs.Burn Standard Co. Ltd. & Anr., (2006) 11 SCC 181, that theCourt cannot correct the errors of the arbitrator. The Courtcan only quash the award leaving the parties free to beginthe arbitration again, if it is so desired.

18. In that view of the matter, the award in question made by the arbitrator, being liable to be set aside under Section34(2)(a)(iv) and Section 34(2)(b)(ii) of the said Act, the Courtbelow had rightly set aside the same. However, it isobserved that since the arbitrator has not decided thedisputes, which were specifically referred to him, in respectof the dissolution and accounts of the firm M.C.T.I., it willbe open for the parties to initiate fresh proceedings as maybe advised to resolve their disputes.

19. The appeals are accordingly dismissed. Registry isdirected to place a copy of this order in each connected file.

(Bela M. Trivedi) J.

Sanjay SolankiJrPA 57

Sanjay SolankiJrPA41 “All corrections made in the judgment/order have been incorporated in the judgment/order beingemailed.”Sanjay Solanki Jr. Personal Assistantemailed.”Sanjay Solanki Jr. Personal Assistant