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SUPREME COURT OF INDIA
UDAY UMESH LALIT, VINEET SARAN, JJ.
Firm Rajasthan Udyog & Ors – Appellant
Versus
Hindustan Engineering & Industries Ltd – Respondent
Civil Appeal No. 2376 OF 2020 [Arising Out Of Special Leave Petition [C] No. 25056 of 2016]
Decided On : 24-04-2020
The court analyzed the Agreement dated 01.02.1980 and the Arbitration Award dated 09.06.1985. The court noted that the Agreement authorized the Arbitrator to only fix the price of the land to be sold by the appellant to the respondent. The court also noted that the Award only declared the price of the land and did not create any right, title, or interest in the land. The court further noted that neither the Agreement nor the Award had been registered under the Registration Act, which raised questions about their enforceability.
Fact of the Case:
The dispute in this case relates to the execution of an Arbitration Award that determined the compensation amount for the land to be paid under an agreement for sale. The question for consideration is whether the Award can be executed as a suit for specific performance of the agreement. The facts of the case are that the appellant is the owner of a piece of land, which was subject to acquisition. An agreement was entered into between the parties, stating that the land would be sold to the respondent subject to the fixation of the price through arbitration. The Arbitrator determined the compensation amount for the land, and the Award was filed before the court. The respondent filed an application for execution of the Award, seeking the execution of the sale deed. The appellant opposed the execution, stating that the Award only determined the price of the land and did not create any right, title, or interest in the land. The court allowed the execution application, directing the appellant to execute the sale deed. The appellant filed a revision petition, which was dismissed by the High Court. Aggrieved, the appellant filed this appeal.
Finding of the Court:
The court held that the reference to the Arbitrator was only for the determination of the price of the land and not for the execution of the sale deed. The Award was merely declaratory of the price of the land, and the execution of the sale deed could only be based on the Agreement between the parties. The court noted that the respondent had withdrawn the suit for specific performance of the Agreement, which meant that the claim for execution of the sale deed had been abandoned. The court further held that the Award could not be independently executed as it did not contemplate the transfer of the land but only determined the price. The court also noted that neither the Agreement nor the Award had been registered under the Registration Act, which raised questions about their enforceability. The court concluded that the impugned judgment upholding the execution of the sale deed was liable to be quashed.
Ratio Decidendi: The court held that an Arbitration Award can only be executed to the extent of what has been awarded and not beyond. In this case, the Award only determined the price of the land and did not create any right, title, or interest in the land. Therefore, the execution of the sale deed based on the Award was outside the realm of law. The court also emphasized that the execution of the sale deed could only be based on the Agreement between the parties, and since the respondent had withdrawn the suit for specific performance of the Agreement, the claim for execution of the sale deed had been abandoned. The court further noted that neither the Agreement nor the Award had been registered, which raised questions about their enforceability.
Result: The court quashed the impugned judgment and allowed the appeal. The court directed the appellant to pay the amount deposited with the Registry of the Court, along with interest accrued, to the respondent. The court also directed the appellant to pay an additional sum towards the cost of litigation and other expenses incurred by the respondent. With this, the court put an end to the litigation between the parties.
JUDGMENT :
VINEET SARAN, J.
Leave granted.
2. The question for consideration in the present appeal is as to whether an Arbitration Award, which determined the compensation amount for the land to be paid under agreement for sale, can be directed to be executed as a suit for specific performance of agreement, when the reference to the Arbitrator (as per the agreement) was only for fixation of price of land in question, and the Arbitration Award was also only with regard to the same.
3. Briefly stated, the facts of this case are that the appellant no.1 is a partnership firm and other appellants are its partners. The appellant firm is owner of 249.60 Bighas (approximately 100 acres) of land, which was purchased by the appellant in the year 1966. The dispute in the present appeal relates to a period spreading over four decades. The said land was subject matter of acquisition, for which a Notification dated 13.03.1973 under Section 4 of the Rajasthan Land Acquisition Act, 1953 (for short, “Act of 1953”), was issued by the State of Rajasthan, which acquisition was for the benefit of the respondent-industry. The said notification was challenged by the appellant before the Rajasthan High Court in Writ Petition no.389 of 1974, which was dismissed by a learned Single Judge of the High Court vide judgment dated 23.07.1974. Challenging the same, the appellant filed Special Appeal No.448 of 1974 before the Division Bench of the High Court, during the pendency of which a declaration under Section 6, read with Section 17 of the Act of 1953, was issued by the State of Rajasthan on 13.09.1975. The Special Appeal challenging the said acquisition was allowed by the Division Bench of the Rajasthan High Court, vide its judgment dated 05.10.1976 and the acquisition proceedings were thus quashed. Challenging the said decision of the Rajasthan High Court, respondent-Hindustan Engineering & Industries Limited, as well as the State of Rajasthan, filed separate Special Leave Petitions (No. 4199 of 1977 and 1060 of 1978, respectively), which petitions were dismissed by this Court by order dated 29.3.1994.
4. During the pendency of the said Special Leave Petitions, on the intervention of the then Chief Minister-cum-Minister of Industries of the State of Rajasthan, an agreement was arrived at between the parties herein, as well as the State of Rajasthan, which was recorded in the Minutes of the meeting dated 27.11.1978, which was to the effect that out of the 249.60 bighas of land belonging to the appellant firm, approximately 104 bighas would be retained by the appellant and the remaining about 145 bighas would be sold to the respondent-Company, subject to the fixation of price of land, construction etc. to be finalised through Arbitration.
5. Pursuant thereto, an Agreement dated 16.02.1979 was entered into between the appellant-firm and the respondent- Company. The said Agreement dated 16.02.1979 was superseded by another Agreement dated 01.02.1980 executed between the parties.
6. The matter of determination of price of the land to be sold by the appellant to the respondent-Company, was decided by the sole Arbitrator, Justice Chandra Bhan Bhargav (Retired), vide his Award dated 09.06.1985. In the said Award, the Arbitrator mentioned that the parties had “referred their dispute regarding determination of compensation of land to me as Sole Arbitrator”. The salient feature decided in the said Award was that the market value of the land to be transferred in favour of the respondent-Company would be determined as on 27.11.1978, which was the date on which the parties agreed to transfer the land. In pursuance thereof, the total compensation amount for the land in question was determined by the Arbitrator as Rs.12,18,700/-. The said Award was filed before the Additional District Judge-1, Bharatpur on 10.06.1985. After the Award was passed, the respondent-Company, v
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