Back
2019 Supreme(Mad) 1358
IN THE HIGH COURT OF JUDICATURE AT MADRAS
R. SUBBIAH, KRISHNAN RAMASAMY, JJ.
Arun Kapur & Another - Appellants
Versus
Sujatha Hariharan & Another - Respondents
Original Side Appeal Nos. 61 & 117 of 2012
Decided On : 04-06-2019
A. Ramesh Kumar, T. Velumani, Advocates.
Headnote:
Original Side Rules - Order 36 - Rule 1 - Arbitration and Conciliation Act, 1996 - Sections11, 28 and 34 (2) (ii) (iii) (iv) - Claim of Mortgage property - Recovery of amount - A claim petition before Arbitrator/second respondent seeking to recover a sum of from appellant herein - According to claimant/first respondent appellants father by name owned grounds of land and building at Taylors Road Chennai and he mortgaged said property with Indian Overseas Bank Chintadripet Branch - In this regard appellants father incurred a debt of crores and creditors pressurised him for repayment - At this stage appellants father died - Appellant and other family members thereafter approached father in law of first respondent by name an Auditor for assistance and after deliberations it was decided to develop said property into a multi-storeyed apartment and to discharge debts to bank from sale of apartments to be constructed - In order to achieve such object an unregistered partnership firm by name Constructions was constituted by executing a Partnership Deed in which first respondent appellants son and appellants brothers wife were appointed as Partners - Further on same day a joint venture agreement was entered into between partnership firm represented by one of partners son of appellant with wife of late - Appellant and brother of appellant by which firm agreed to give of constructed area to and others - Accordingly with help and assistance provided by father in law of first respondent namely permits licence and all statutory approvals from competent authority have been obtained for proposed construction - An agreement was also entered into with Indian Overseas Bank for selling undivided share of land and a sum of was also paid to bank - It further case of claimant/first respondent that when construction was in progress appellants son in collusion with family members of appellant wrote a letter in September stating that partnership firm could not continue as promoters and that land owners could deal with development of land on their own - At this stage claimant/first respondent herein had borrowed substantial money from her father in law viz to tune of crores and also collected monies from allottees of flats already sold - In meantime monies have also been withdrawn by appellant and his family members to tune of lakhs - Besides this amount appellant and his family members have also drawn a sum of lakhs realised through sale of plot - As there was huge arrears payable to construction contractors and construction work had come to a grinding halt and hence a fresh memorandum of understanding was entered into which it was agreed that in case of any dispute such dispute can be referred to an arbitrator - Memorandum of Understanding also authorised builders to sell flats in floor except three flats for sale of which appellant and other vendors have collected monies - Subsequent to this arrangement vendor have released their rights by way of release deeds respectively appellant became absolute owner - Thereafter firm Construction was also re-constituted leaving first respondent and as partners - According to claimant/first respondent inspite of various hardship she made payments on behalf of appellant and other vendors and entire loan due to Indian Overseas Bank was settled during March crores - Whether conscious or unconscious in relation to a party in issue - Held, Court have perused materials placed on record - Court have discussed factual matrix of case at great length and therefore Court deem it unnecessary to reproduce same any further - Even otherwise important point which arises for our consideration in these appeals is whether award passed by arbitrator is tainted with bias and on that ground it has to be set aside - If Court come to conclusion that award passed by arbitrator/second respondent herein is liable to be interfered with on ground of bias Court need not dwell with merits or otherwise of contentions urged on behalf of both sides - It is vehemently contended that second respondent/arbitrator is a person who has a role to play in dispute between appellant and first respondent - Arbitration proceedings emanated out of a dispute between appellant and first respondent with respect to certain clauses contained in Memorandum of Understanding - Even on second respondent was an agreement holder for purchase of two flats in project in question - For better appreciation Clause of Memorandum of Understanding reads as follows - It is hereby agreed that by all that builders Constructions Balaji Nagar Street Royapettah Chennai that firm shall sell flats which are under control of an agreed minimum rate of per square feet plus for covered car park and for open car park - However with consent of Car parks can be sold at lesser price - Entire area from floor together with proportionate car park allocated to Constructions shall be supported by power of attorney in favour of Taylors Road Chennai covering proportionate share of undivided share of property to flats in floor except flat to be registered to nominee of vendors and Flats already registered - It is very clear that relationship between petitioner and second respondent/ arbitrator was already strained to such an extent that petitioner accused second respondent of fraud collusion and with ulterior motive - In his reply second respondent threatened that if attempts were made by petitioner to assail his integrity and bona-fide same would be dealt with severally in accordance with law - In fact second respondent informed that if any further communication is sent in this regard he would approach appropriate forum for exemplary reliefs - Petitioner herein also threatened that he would also approach legal forum for rendition of accounts and also to declare sale as null and void - Trust and confidence reposed on second respondent by petitioner has already lost as is evident from letters - When these two letters were brought to knowledge and notice of second respondent/arbitrator to raise a doubt about his independence and impartiality same was simply brushed aside by second respondent/arbitrator by simply stating that point raised is devoid of any merits - A heavy onus was caused on second respondent to eliminate doubts raised by petitioner as to his impartiality and independence in light of letters - But second respondent has miserably failed to dispel doubts as to his independence and impartiality - At least he should have explained as to how this point is devoid of merits - Appeals Allowed
R. Subbiah, J.
(Prayer: Original Side Appeals filed under Order 36 Rule 1 of the Original Side Rules of this Court read with Clause 15 of the Letters Patent, against the judgment and decree dated 24.01.2012 passed in O.P. No. 588 of 2004 on the file of this Court.)
1. Both these Original Side Appeals are filed against the Order dated 24.01.2012 passed by the learned single Judge in O.P. No. 588 of 2004. By the said Order dated 24.01.2012, the learned single Judge, while setting aside the award passed by the learned Arbitrator, issued certain directions for completion of the arbitral proceedings. For clarity, the penultimate paragraph of the order dated 24.01.2012 reads as follows:-
"16. In view of all the above, in order to meet the ends of justice, the learned Senior counsel for the first respondent is directed to issue a copy of the Account Books to the petitioner within ten days from the date of receipt of a copy of this order. If the Account Books are in voluminous, the petitioner herself can take the xerox copy of the Account Books viz., Exs. A19 to A22 at her own costs during the working hours at the office of the arbitrator, or, the petitioner is at liberty to take the assistance of the Auditor to recurrent the Account Books on three working days between 10.00 am and 1.00 pm in the presence of the Arbitrator or before the staff of the Second respondent. The Registry is directed to send the documents to the Arbitrator at once. The second respondent is directed to conclude the proceedings within three weeks and he is directed to pass award within a short time.
17. With the above observation, this petition is disposed of. The parties are directed to appear before the Arbitrator on 15.02.2012."
2. While O.S.A. No. 61 of 2012 has been filed questioning the correctness and/or validity of the order passed by the learned single Judge, O.S.A. No. 117 of 2012 has been filed contending that the learned single Judge ought not to have remanded the matter back to the Arbitrator. Thus, the appeals have been filed as against the same order dated 24.01.2012 of the learned single Judge and therefore, both the appeals are taken up for hearing together.
3. For the sake of disposal of these appeals, the parties herein are referred to as per their rank in O.S.A. No. 61 of 2012 as appellant and first respondent.
4. The first respondent Sujatha Hariharan has filed a claim petition before the Arbitrator/second respondent on 08.04.2004 seeking to recover a sum of Rs.2,06,21,144/- from the appellant herein. According to the claimant/first respondent, the appellant's father by name Ved Prakash Kapur owned 11.5 grounds of land and building at No.52, Taylors Road, Kilpauk, Chennai and he mortgaged the said property with M/s. Indian Overseas Bank, Chintadripet Branch. In this regard, the appellant's father incurred a debt of Rs.2.50 crores and the creditors pressurised him for repayment. At this stage, the appellant's father died. The appellant and other family members thereafter approached the father in law of the first respondent, by name C.H. Subramanian, an Auditor, for assistance and after deliberations, it was decided to develop the said property into a multi-storeyed apartment and to discharge the debts to the bank from the sale of apartments to be constructed. In order to achieve such object, an unregistered partnership firm by name Sukrit Constructions was constituted by executing a Partnership Deed dated 22.04.1999 in which the first respondent Sujatha Hariharan, appellant's son Rishi Kapur and appellant's brother's wife Mrs. Rita Kapur were appointed as Partners. Further, on the same day, a joint venture agreement was entered into between the partnership firm represented by one of the partners Rishi Kapur, son of the appellant with (i) Mrs. Vinay Kumari, wife of late. Ved Prakash (ii) appellant and (iii) Atul Kapur, brother of the appellant by which the firm agreed to give 55% of the constructed area to Mrs. Vinay Kumari and others. Ac
