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2023 Supreme(Mad) 3325
IN THE HIGH COURT OF JUDICATURE AT MADRAS
THE HONOURABLE MR.JUSTICE S.S.SUNDAR, THE HONOURABLE MR.JUSTICE P.B.BALAJI
R.A.Srinivasan (died) and ors. – Appellants
Versus
Kishorekumar Gokaldas and or Kishore Gokaldas (HUF) and ors. - Respondents
O.S.A.No.354 of 2008 & C.M.P.No.1877 of 2008
Decided On : 24-11-2023
Advocate Appeared:
For the Appellant : Mr. P.R. Raman, Senior Counsel for Ms.S.P.Aarthi
For the Respondent: Mr. R. Parthasarathy, Senior Counsel for Mr. K. Chandrasekaran
IMPORTANT POINT
An arbitration award can be upheld despite the absence of a written agreement if the parties have impliedly consented to arbitration through their conduct and have participated in the proceedings without objection.
Headnote:
ARBITRATION - DISPUTE RESOLUTION - ACT SECTION LIST: 2(a), 15, 30, 33, 39 - The court discussed the Arbitration Act of 1940, particularly focusing on the definition of an arbitration agreement under Section 2(a), which mandates a written agreement for arbitration. The court interpreted Sections 30 and 33 regarding the grounds for setting aside an award, emphasizing that the absence of a written agreement does not invalidate arbitration if both parties have participated without objection. The court concluded that the conduct of the parties indicated an implied agreement to arbitrate, thus upholding the award despite the lack of a formal written agreement.
Fact of the Case:
The appellants, owners of adjoining properties, entered into a joint development arrangement with a property developer (1st respondent). While some appellants had a written agreement, others only had an oral arrangement. Disputes arose, leading to arbitration, where an award was issued favoring both sides. The 1st respondent later challenged the award, claiming lack of a written agreement for arbitration and bias from the arbitrators.
Finding of the Court:
The court found that despite the absence of a written agreement for arbitration between the 1st respondent and appellants 1, 2, and 8, the parties had impliedly agreed to arbitrate their disputes through their conduct. The court held that the arbitrators acted within their jurisdiction and that the claims of bias were raised too late to affect the validity of the proceedings.
Issues: 1) Whether the award in favor of appellants 1, 2, and 8 is invalid due to lack of a written arbitration agreement? 2) Was there bias exhibited by the arbitrators? 3) Did the arbitrators exceed their authority?
Ratio Decidendi: The court concluded that the absence of a written agreement does not invalidate arbitration proceedings if both parties have participated without objection. The conduct of the parties indicated an implied agreement to arbitrate, and claims of bias were deemed an afterthought.
Final Decision: The court set aside the order of the learned Single Judge that had allowed the 1st respondent's petition to set aside the award. The appeal was allowed, and the original award was upheld.
JUDGMENT :
P.B. BALAJI, J.
Prayer:- Original Side Appeal filed under Order 36 Rule 1 of the Original side Rules read with Clause 15 of Letters Patent against the judgment and decree dated 16.06.2003 made in O.P.No.330 of 1996 and to allow this Appeal.
This is a very unfortunate case where the parties, having proceeded under the old Arbitration Act of 1940, are still battling out their disputes in the corridors of Courts.
2. The admitted facts which are not in dispute are culled out hereunder:
The appellants, eight in number, as owners of adjoining properties, offered their respective properties for joint development with the 1st respondent herein, a property developer. Interestingly, only the respondents 3 to 7 entered into a written working arrangement with the respondent. In so far as appellants 1, 2 and 8, admittedly there was no written agreement between the parties and only an oral arrangement was pleaded by the appellants.
3. The memorandum of working arrangement dated 08.12.1987 between the appellants 3 to 7 and the 1st respondent set out various terms of joint development, including sharing of built up area in the proposed multi storey building. The parties, under the said agreement also agreed to refer any difference or disputes between them, pertaining to the project or the agreements to be executed in respect thereof, to arbitration and the arbitrators viz., partners of M/s.Pais, Lobo and Alvares, Advocates, Madras were also specifically named therein. The said memorandum of working arrangement is not in dispute. It is relevant to note that there is absolutely no reference to the appellants 1,2 and 8 or their property in the said memorandum of working arrangement.
4. Despite the above admitted position, disputes arose consequent upon which the appellants, as claimants projected their claim before the named arbitrators under the memorandum of working arrangement dated 08.12.1987.
5. The 1st respondent filed a counter claim to the said claim made by the appellants. The appellants also filed their rejoinder. The named arbitrators proceeded to pass an award on 03.06.1995, allowing certain claims in favour of the appellants 3 to 7, certain claims in favour of appellants 1,2 and 8 and also a portion of the counter claim in favour of the 1st respondent. It is to be noted that the parties did not choose to lead any oral evidence and on the strength of the respective pleadings and documents filed by the parties, the arbitrators proceeded to dispose of the claim petition, together with the counter claim filed by the respondent.
6. On considering the respective cases put forth by the parties by way of claim and counter claim the arbitrators framed 17 issues, which are extracted here under:
1. Whether the Claimants are entitled to the built up areas claimed by them?
2. Whether Leela S.Iyengar one of the Claimants has authorised anybody to represent her in the proceedings?
3. Whether the Opposite Party is bound to allot built up area in terms of the Memorandum of understanding?
3(a). Whether the Opposite Party can be permitted to deviate from the Memorandum of Working Arrangement and the permission obtained from the Court in O.P.No.133 of 1989 and to allot built up area according to the area shown in the Patta?
4. Whether R.A.Srinivasan, R.A.Sundarraj and Leela S.Iyengar, three of the claimants have not entered into an Agreement with the Opposite Party to sell the unutilised part of the FSI in their individual plots of land resulting in sanctioning of an additional FSI of 19180 sq.ft. of built up area marked as second FSI in the Opposite Party’s reply claim statement?
4(a) Or Whether R.A Srinivasan, R.A. Sundarraj and Leela S.Iyengar Claimants are entited to an admitted additional FSI as set out in the Claim?
4(b) Whether or not saleable constructed built up area should be the basis for calculating allotment to each party to the agreement dated 8.12.1987?
5. Whether or not the land measurements taken by the Architects. M/s.Raj& Associates calcul
