TaxTMI 
TaxTMI 
1979 (1) TMI 244
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....einafter called the said company. It is not necessary to set out in detail the history of the said dispute. But thereafter the parties agreed to refer the disputes to the arbitration of Shri A. K. Sen, arbitrator; an arbitration agreement in writing dated 10th of May, 1977 was entered into. It would be necessary to refer in brief to the said arbitration agreement. The agreement is between Krishna Kanta Paul the respondent No. 1 herein who is the son of Ramani Kanta Paul being the respondent No. 4 herein, Malay Kumar Paul being the son of one Mrinal Kanti Paul being the respondent No. 2 herein and Ramani Kanta Paul and one Tapan Kumar Paul, son of Ramani Kanta Paul. The said company was also a party to the said agreement. The agreement dated 10th of May, 1977 recited that disputes and differences had arisen between the parties regarding various movable and immovable properties and businesses as set out in Schedule I to the said agreement. The agreement, further, states that some of the parties hold shares in the company as set out in Schedule II of the said agreement. The agreement, further, goes on to recite that as differences and disputes had arisen between the parties to the agr....
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....tive statements and the arbitrator held several meetings of the parties on diverse dates between the 25th of May, 1977 and 30th of January, 1978. On the 30th of Jan. 1978, the arbitrator has made the award which is the subject matter ol challenge in this application. 2. As several points have been taken in respect of the award made by the arbitrator and inasmuch 33 the arbitrator has recorded certain reasons for making of the award it would be necessary to set out in extenso the said award of the arbitrator. After setting out the reference and the fact that several meetings had been held with the parties and their counsel had appeared and evidence was produced, the arbitrator observed, inter alia, as follows :-- "I hereby direct and award as follows : 1. The shop room of the Company (hereinafter referred to as "the said shop room") is situated at premises Nos. 213 and 213-B, Mahatma Gandhi Road, Calcutta and also at premises Nos. 76/1 and 76/G, Netaji Subhas Road, Calcutta, which comprises of (a) the ground floor having an area of 2,144 sq. ft approximately with a frontage of 43' having 5 door openings and 2 shop-windows and an average depth of 45' from the Norther....
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....m on the west and from a point 11-4' from the extreme western end of the said shop room at premises No. 213-B, Mahatma Gandhi Road, Calcutta, respectively and by two straight lines on the north and the south respectively of the said shop room connecting the said straight lines and all marked red. Lot B is a segment falling in the middle portion of the said shop room on the ground floor thereof, bounded by the straight perpendicular line marked in yellow dividing Lot A on the west and another straight line also marked in yellow to the east thereof drawn from the said base line on Mahatma Gandhi Road, at a width of 11'4' in between the said boundary of Lot 'A' and the said line drawn perpendicularly from the said base line on the east and two lines on the north and south of the said shop room connecting the said two straight lines also marked in yellow and shown as Lot B in the annexed plan. Lot A is shown by boundaries in red lines and Lot B is shown as boundaries in yellow lines in the annexed plan. Lot C is a segment shown and bounded by green lines in the annexed plan, being the segment lying to the east of Lot B and bounded on the west by the boundary of the ....
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.... belong to Krishna Kumar Burman. Lot No. C on the ground floor of the said shop room having an area of 914 sq. ft. approximately and falling within the said premises No. 213-B, Mahatma Gandhi Road, Calcutta, has been allotted to and belongs to Madan Mohan Burman. Lot A-1 on the first floor falling within the said premises No. 76/G, Netaji Subhas Road, and shown as bounded by red lines in the annexed plan and having an approximate area of 880 sq. ft. has been allotted to and belongs to Raj Kumar Burman. Lot No. B-1 on the first floor of the said shop room including the said godown falls within the premises No. 76/1, Netaji Subhas Road, Calcutta, and is shown as bounded by yellow lines in the annexed plan. It comprises an area of 460 sq. ft. and the said godown and has been allotted to and belongs to Smt. Kailash Devi Burman. Lot C-1 on the first floor of the said shop room falls within premises No. 76/G, Netaji Subhas Road, Calcutta, and is shown as bounded by green lines in the annexed plan. It Comprises an area of 910 sq. ft. and 340 sq. ft. approximately and has been allotted to and belongs to Madan Mohan Burman. 5. In satisfaction of all the claims that Krishna Kanta Paul has....
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....urman respectively and they shall pay half the rent, now being paid by the Company in respect of the said portions being Lot A and Lot B to Krishna Kumar Burman for the portions marked Lot B of which they shall be the tenants from the date of the Award and also the rent now being paid or payable by the Company to Smt. Kailash Devi Burman for the portion marked and shown as Lot B-1 in the annexed plan of which he shall be the tenant with effect from the date of this Award under Smt, Kailash Devi Burman. The consent for such assignment of Smt. Kailash Devi Burman has been filed before me and I am satisfied that Smt. Kailash Devi Burman has consented to and is agreeable for such assignment. Mrinal Kanti Paul and Malay Kumar Paul shall pay one third of the municipal rates and taxes payable by the Company for the said shop room from the date of this award. 7. On the assignment and transfer of the tenancy of the Company in respect of the said portion Lot A and Lot A-1 in favour of Krishna Kanta Paul, and Lot B and Lot B-1 in favour of Mrinal Kanti Paul and Malay Kumar Paul jointly as directed hereby Krishna Kanta Paul, Mrinal Kanti Paul and Malay Kumar Paul shall have no claim or dema....
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....shall be masonry or wooden and shall not exceed 5' in width. Mrinal Kanti Paul and Malay Kumar Paul shall commence the erection of the said partition walls along the yellow lines shown in the annexed plan within two months from the date of this Award. 11. The Company shall allow uninterrupted use and enjoyment of the portions marked Lots A and A-1 in the annexed plan to Krishna Kanta Paul and the portions shown and marked as Lots B and B-1 in the annexed plan to Mrinal Kanti Paul and Malay Kumar Paul and shall afford all reasonable opportunities to them to put up the partition walls for the said Lots A and A-1 and Lots A-1 and Lots B and B-1 as directed above. 12. Krishna Kanta Paul holds 713 equity shares of the Company of the face value of Rs. 100/- each, Mrinal Kanti Paul holds 804 equity shares in the Company of the face value of Rs. 100/- each and Malay Kumar Paul holds 307 equity shares of the Company of the face value of Rs. 100/- each. I direct that Krishna Kanta Paul, Mrinal Kanti Paul and Malay Kumar Paul shall within one month of the commencement of the erection of partition walls for the portions marked Lots A and A-1 and Lots B and B-1 as directed above, assi....
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....by Shri Ramani Kanta Paul, Shri Krishna Kanta Paul, Shri Mrinal Kanti Paul and Shri Tapan Kumar Paul in equal shares immediately to Shri Amal Mukherjee. 17. The annexed plan has been prepared by Shri D. K. Dutta, Chartered Engineer, under my supervision. I fix his remuneration at Rs. 500. The said sum will be paid by Shri Krishna Kanta Paul, Mrinal Kanti Paul and Malay Kumar Paul in equal shares." 3. The said award is under challenge on several grounds in this application filed on the 29th of August, 1978. It was contended that the award created and/ or extinguished rights of the parties in Immovable properties and as the same was not registered the award could not be looked into and given effect. It was secondly, urged that the annexed plan upon the basis of which the award was made contained inaccuracy and the said plan was prepared without the knowledge and/or consent and without giving any opportunity to the parties in violation of the principles of natural justice and therefore the arbitrator had committed an error and/or misconducted the arbitration proceedings on this aspect. It was, thirdly, contended that on the face of the award, the award indicated errors apparent ....
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....t and therefore required registration and not being registered was bad in the sense that it could not be looked into by the Court. On behalf of the respondent on the other hand it was urged that the award in question did not require registration under Section 17 of the Registration Act, 1908. But during the pendency of this application leave was obtained from me to send the award to the Registrar of Assurances for registration with an application for extension of time for allowing such registration. I was subsequently informed that such registration has been allowed and extension of time has been granted and the award has been registered. Therefore, for the purpose of this application under the Arbitration Act, 1940 the question whether the award in question required registration as such is not of relevance any more. I shall note the relevant authorities on this point cited from the Bar by the different parties. I am not concerned in this application with the validity or otherwise of the order of the Registrar of Assurances granting extension of time. 5. In this connection reliance was placed on a decision of mine in the case of Pramode Kumar v. Bhuramal, AIR1977Cal340 where I h....
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....o. Ltd. 1923 AC 480 : (AIR 1923 PC 66) and reiterated that as the parties chose their own arbitrator they could not, when the award was good on the face of it object to the decision either upon the law or the facts. Therefore, even when an arbitrator committed a mistake either in law or in fact in determining the matters referred to him but such mistake did not appear on the face of the award or in a document appended to or incorporated in it so as to form part of it the award would neither be remitted nor set aside notwithstanding the mistake. In the case of N. Chellappan v. Kerala S. E. Board, [1975]2SCR811 , the Supreme Court again reiterated the well-known principle that an error of law on the face of the award means that you can find in the award or in a document actually incorporated therein as for instance a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which was the basis of the award and which you could (then) say was erroneous. The Court has no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence on the record for the purpose of finding out whether or not the arbitrator had ....
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....rivate limited company which is in the nature of a partnership and where the company is a party to the agreement referring the disputes to the arbitration and where, as in this case there were evidence of claims by the shareholders against the company in respect of their dues, his remuneration as director and unpaid dividends etc., there is no violation of any principle of law in distributing in specie the assets of the company in lieu of or in satisfaction of the claims of the creditors even if they are the shareholders of the company. Giving up a part of the tenancy or parting with some of the assets of the company is possible in law in liquidation of the claims against its creditors even if such creditors are the shareholders of the company and such claims perhaps originated out of the shareholdings in the company. There was evidence before the arbitrator on this point and, furthermore, the entire proceedings before the arbitrators proceeded on the basis that the parties were willing to divide the assets of the company. In such circumstances, in my opinion, the arbitrator did not commit any error of law in the award that he made on this aspect of the matter. Where certain conseq....
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....s was laid in this matter was that the arbitrator has sought to divide the tenancy or assign the tenancy rights without the consent of the landlord. In this connection it is important to bear in mind that there were different landlords in respect of the premises which were the main assets of the company namely, the tenancy in premises Nos. 233 and 213 (B) Mahatma Gandhi Road, and the other adjoining premises. The premises in question belonged to the Burman brothers or members of the Burman family and there was evidence that those brothers and co-sharers of the Burman family had shared amongst themselves the rents payable in respect of the different portions of the premises which comprised the tenancy rights of the company. The arbitrator has divided in essence the said tenancy rights of the different allottees in the manner he has done. Now, it was contended that in view of the provisions of the West Bengal Tenancy Act, 1956 assignment or subletting or transfer of tenancy require the consent in writing of the landlords. My attention was drawn to Section 13(1) of the said Act, to Section 14, Section 17 and to Section 30(3) of the Act, and it was contended that from the evidence on r....
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....ni Ranjan Paul is situated?/I am the owner of the part of the premises which is occupied by them in the first floor. Shown Ext. C tendered by Shri P. C. Sen being a draft plan prepared by Shri S. K. Dey, Chartered Engineer for identification. This may be proved later on in the usual way unless admitted to be correct. It is tendered for identification and marked 'C'. Please look at this map Ext. C and kindly mark the portion of which you are the landlord?/The witness encircles the portion 'CA' as demarcated by him in Blue ink and puts his signature before the learned Arbitrator and states that portion encircled by blue ink belongs to him. Mr. Burman, you have told the learned Arbitrator that you are the landlord in respect of the portion marked as 'CA'?/ correct. Can you tell the learned Arbitrator how you have become the landlord of portion CA?/ This is our ancestral property and it has come to me by partition and this portion was allotted to my father. And it was done by formal partition deed?/ Yes there is a partition deed. Pursuant to which the portion CA has been allotted to you?/ Yes. Mr. Burman, are you willing to give tenancy righ....
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....dging the evidence adduced whether actually in terms consent in praesenti to the division has been given by the landlords to the action of the arbitrator. But judging the evidence from a pragmatic point of view and keeping in the background the manner in which such transactions are done in Calcutta I cannot say that the arbitrator has acted without evidence or he has dealt with the tenancy rights in such a way which was in breach or in violation of the relevant provisions of the West Bengal Premises Tenancy Act, 1956. 11. Before I conclude this aspect of the matter I must say that subsequent to the arbitration award a letter dated 19th of Sept., 1978 written by Bose and Mitter on behalf of Rajkumar Burman was produced before me in aid of the submission that the landlords had not acted in compliance with the so-called consent that they were supposed to have given in respect of this matter. But this letter being subsequent to award, in my opinion, cannot be taken into consideration in judging the validity of the award. 12. It was, then, contended that the arbitrator has acted without jurisdiction in valuing the shares at Rs. 205 while the face value of the shares was very much ....
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....t the possibility of division as indicated in those plans. Then, at the meeting held on the 10th of Sept., 1977 Shri P. C. Sen, counsel made submissions on the ground floor of the draft plan marked 'C' and other counsel took time to make further submissions. The next meeting was held on the 10th of Sept. 197? and thereafter at the last meeting held on the 30th of January, 1978 the arbitrator indicated that he would make the award. It appears that in between these dates the arbitrator had visited the premises in question in the presence of the parties and had made certain alterations or modifications in the draft plan submitted to him. Such alterations in the hand of the arbitrator himself were produced before me from the record of the arbitration proceedings and it appears to me that annexed plan upon which the arbitrator has made the award represents substantially more or less the pictorial representation of the alterations and modifications made by the arbitrator of Ext. C after hearing the submissions of the parties on Ext. C. It is true that the arbitrator had not called upon specifically and separately upon the parties to make any separate submissions on the annexed pl....
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....he award. Such mistakes do not make the award bad -- See Trew v. Burton (1833) 149 ER 511, Russel on Arbitration (1970 Ed.) P. 271. 16. Before I deal with the last aspect of the matter namely, the question of limitation I must reiterate that this was a family dispute between the father, the sons and grandson. The father had married more than once and is now over 85 years old and perhaps in accordance with the normal human conduct has more sympathy for the child of the subsequent or later marriage and reading the award as a whole it appears to me that the arbitrator has tried to resolve the disputes which had arisen between the parties by and large in a fair manner. It would be unfair and improper to read the award of an arbitrator with minute technicality. Judged from this point of view in my opinion the award cannot be said to be bad. 17. The last contention that requires consideration in this case is the question of limitation. On the 30th of January, 1978 the award was made by the arbitrator. On the 31st of January, 1978 the arbitrator wrote to the parties informing them that he had made an award and sending the parties copies of the same. On the same date that is to say o....