Vinod K.Sharma, J.
1 The petitioner has impugned the order dated 16.2.1991 passed by the learned Sub Judge First Class, Hisar as affirmed by the learned Additional District Judge, Hisar vide order dated 2.4.1991 making the award rule of the Court.
2 The respondent Hari Krishan filed a petition under Sections 14(2) and 17 of the Arbitration Act, 1940 (for short the Act) for making the award dated 21.10.1989 rule of the Court. The award was said to have been made by respondents Nos. 2 to 5.
3 The petitioner purchased half share of plot measuring 389 sq. yards which was subsequently mortgaged by him for a total amount of Rs. 70,000/ with Haryana Khadi and Village Industries Board, Panchkula. It was claimed by Hari Krishan that he purchased half share owned by Laxmi Narain for a sum of Rs. 1,15,000/ and paid him Rs. 45,000/ and the balance Rs. 70,000/ was to be paid by him to the Board.
4 The sale deed in favour of the respondent/decree holder could not be executed without clearance of loan advanced by the Board though Malkana possession of the suit property was delivered to the petitioner by Laxmi Narain who was also bound to execute the sale deed in favour of Hari Krishan and in case of failure or neglect he was to pay double the amount received by him.
5 It was claimed by respondent/decree holder that the dispute arose between the parties as a result of which both the parties entered into an agreement dated 25.6.1989 stating that the dispute be referred to for arbitration for adjudication. It is the case of the decree holder/respondent that the arbitrators appointed by the parties started arbitration proceedings after which they gave unanimous award on 21.10.1989 in favour of the respondent decree holder who was informed by the arbitrators by registered post which was received on 24.10.1989. The award was claimed to have been sent to the petitioner also by post. Thus, it was claimed that the award be made rule of the Court.
6 The petition under Section 14 (2) read with Section 17 of the Act filed by the respondent/decree holder was contested by the petitioner by pleading that half share as claimed by respondent/decree holder was not purchased by him nor the payment of Rs. 45,000/ was made to him.
7 Agreement to sell was also denied. It was claimed that there was no question of execution of sale deed as there was no agreement to sell. It was also the stand of the petitioner that the plot in question was in actual possession of the petitioner and was given on lease to Hisar Progressive Iron and Wooden Works by him for a period of 30 years by way of registered lease deed.
8 It was denied that he had agreed to execute the sale deed in favour of respondent No. 1. It was also denied that any amount was liable to be paid in the event of default as claimed. The petitioner also denied the execution of arbitration agreement dated 25.6.1989.
9 It was claimed that the agreement was false, frivolous and fabricated document and that no arbitration proceedings could have been initiated on the basis of fabricated documents. The objection was also raised with regard to the maintainability of the petition on the plea that the petitioner had not entered into an agreement for arbitration.
10 It was further claimed that no notice of arbitration proceedings was ever given to him and he did not attend the proceedings on any date and thus, the arbitration award was illegal and against facts and therefore, not binding upon his rights being invalid.
11 It was also claimed that award was bad for want of stamp and registration charges. Thus, it was claimed that award be set aside and petition filed by the respondent/decree holder be dismissed.
12 On the pleadings of the parties the learned trial Court framed the following issues :
1. Whether award dated 21.10.89 is liable to be made the rule of the Court ? OPP
2. Whether there was no arbitration agreement between the parties to the suit ? OPR
3. Whether the alleged arbitration award is wrong, and illegal, if s6 its effect ? OPR
4. Relief.
Learned trial Court held that the award dated 21.10.1989 was liable to be made the rule of the Court. On issue No. 2, it was held that there was an arbitration agreement between the parties. The Court further held that the alleged arbitration agreement was not illegal or wrong and consequently made the award rule of the Court.
13 Learned trial Court observed that agreement Ex. P.l showed that the petitioner and respondent No. 1 had entered into an agreement on 25.6.1989 agreeing to refer the dispute regarding execution of the sale deed regarding suit property for arbitration. The learned Court held that there is nothing to disbelieve the Ex. P.l which was signed by Hari Krishan and Laxmi Narain in the presence of the witnesses. The learned Court observed that Ajit Parsad also proved the agreement Ex.P.l and stated that he had written the agreement at the instance of Hari Krishan petitioner and Laxmi Narain which was read over and explained to them. It was claimed that the witnesses had affixed their signatures on the said agreement. The learned Court observed that four persons were appointed as arbitrators and they conducted arbitration proceedings on the basis of agreement Ex. P.l which was produced before them at that time.
14 The learned Court observed that arbitrators claimed that the parties produced their claim and defence regarding suit land after which they pronounced the award.
15 Learned trial Court observed that minutes of arbitration proceedings Ex. P.2 and Ex. P.3 show that arbitration proceedings were conducted on 16.7.1989 and 21.10.1989 which were produced on record showing that the petitioner as well as Hari Krishan participated in arbitration proceedings on 16.7.1989 when the claim was heard by the arbitrators at great length on the basis of agreement Ex. P.l.
16 The learned Court, thus, held that there was evidence brought on record proving that there existed arbitration agreement as a result of which matter was referred to the arbitrators who heard the parties and conducted arbitration proceedings after which award was announced which was binding on the parties and thus, liable to be made the rule of the Court.
17 The learned Court observed that there was nothing on record to show that the award suffered from any legal infirmity. The learned Court rejected the version of the petitioner that he never entered into agreement in view of oral and documentary evidence produced on record. The learned Court further observed that the petitioner could not be allowed to say that he never participated in arbitration proceedings as the proceedings Ex. P.2 showed that he was present before the arbitrators. With the observations referred to above the award was made rule of the Court.
18 The appeal filed against the judgment of learned trial Court was also dismissed. The plea raised by respondent No. 1 that appeal was not competent was rejected. The plea of the petitioner that award was bad on account of nonregistration was rejected by holding that by way of award no rights have been created as the right would only be created after registration of the sale deed.
19 Learned lower appellate Court affirmed the findings recorded by the learned trial Court that arbitration agreement Ex. P.l was executed between the parties which was signed by both the parties to the dispute. The Court further observed that the petitioner was qualified person and therefore, it could not be believed that he would sign the agreement without understanding the same.
20 The learned appellate Court observed that all the terms of the agreement to sell were incorporated in arbitration agreement wherein it was provided that the parties would appear before the arbitrators on 16.7.1989 and thus, it was held that the parties had agreed to refer the dispute to the arbitrators.
21 As regards the validity of award, the learned lower appellate Court held that the civil Court could not sit as appellate Court to adjudicate on the merits of the award, and could set aside the same only if there was error on the face of record or if the arbitrators had misconducted the proceedings.
22 The learned lower appellate Court observed that as the arbitrators have stated that both the parties had appeared before them on 16.7.1989, there was no question of nongiving of notice.
23 The learned lower appellate Court observed that in the award it has been mentioned that on 21.10.1989 the parties were not present and the award was given on the basis of inquiry conducted on 16.7.1989.
24 The learned Court observed that the arbitrators were not required to record statements of the parties or their evidence in writing and could give award by giving personal hearing and thus, no defect could be found with the proceedings conducted by the learned Arbitrators.
25 Mr. V.K. Jain, learned senior counsel appearing on behalf of the petitioner challenged the findings on issue No. 2 on the plea that it was for the respondent/decree holder to have proved that there was an arbitration agreement between the parties. The contention of the learned senior counsel was that once the petitioner had denied the execution of an arbitration agreement it was for respondent No. 1 to have proved the arbitration agreement by examining the expert and once this was not done the finding on issue No. 2 cannot be sustained.
26 In support of this contention learned senior counsel for the petitioner placed reliance on the judgment of Hon We Patna High Court in the case of Chulhai Lal Dass v. Kuldip Singh and others, AIR 1931 Patna 266, wherein the Hon''ble Patna High Court has been pleased to lay down as under :
" Where the defendant admits only that he had put a thumb mark or signature on a document which was not handnote sued upon,the admission does not amount to admission of the execution of the handnote and consequently the burden of proving that the particular hand note sued upon was duly executed by, the defendant is upon the person suing upon the same."
Reliance was also placed on the judgment of Hon''ble Allahabad High Court in the case of Bhagwan Din v. Gouri Shankar and another, AIR 1957 Allahabad 119, wherein Hon''ble Allahabad High Court has been pleased to lay down as under :
"It was obviously the duty of the plaintiff in the first instance to satisfy the Court that the signatures had been affixed by the defendant. It has been observed in two cases of this Court, viz. Darshan Singh v. Prahhu Singh, AIR 1946 All 67 (A) and Azmat Ullah Khan v. Shiam Lal, AIR 1947 All 411 (B) that it is not desirable that a Judge should take upon himself the task of comparing the signatures in order to find out whether the disputed signatures agree with the other admitted signatures and the proper course is to obtain the opinion of an expert. In the present case, the conclusions arrived at by the learned Judge were based entirely on his own comparison of the disputed signatures. The decree passed by the lower Court should therefore be set aside."
Reliance has also been placed on the judgment of HonWe Supreme Court in the case of A. Raghavamma and another v. A. Chenchamma and another, AIR 1964 SC 136(1) to contend that even though onus of issue No. 2 was on the petitioner still burden of proof that there existed an arbitration agreement was on respondent No. 1 as it was his assertion that arbitration agreement had been executed which was denied by the petitioner. The Hon We Supreme Court in the case of A. Raghavamma and another v. A. Chenchamma and another (supra) has been pleased to lay down as under:
"12. Learned AdvocateGeneral contends that the learned Subordinate Judge as well as the High Court did not draw the appropriate presumptions arising from the fact that the transaction were old ones; nor did they give sufficient weight to the entries in the revenue records, the admissions made by the parties and to the conduct of the parties and such other important circumstances and, therefore, their findings are liable to be questioned in this appeal. This argument in effect and substance means that the Courts below have not given due weight to particular pieces of evidence. There is an essential distinction between burden of proof and onus of proof; burden of proof lies upon the person who has to prove a fact and it never shifts, but the onus of proof shifts. The burden of proof in the present case undoubtedly lies upon the plaintiff to establish the factum of adoption and that of partition. The said circumstances do not alter the incidence of the burden of proof. Such considerations, having regard to the circumstances of a particular case, may shift the onus of proof. Such a shifting of onus is a continuous process in the evaluation of evidence. The criticism levelled against the judgment, of the lower Courts, therefore, only pertains to the domain of appreciation of evidence. We shall, therefore, broadly consider the evidence not for the purpose of revaluation, but to see whether the treatment of the case by the Courts below is such that it falls in the category of exceptional cases where this Court, in the interest of justice, should depart from its usual practice."
Learned senior counsel appearing on behalf of the petitioner thereafter contended that bare reading of agreement Ex. P.l would show that the signatures of the petitioner were forged which is clear to the naked eye.
27 I have looked into the signatures alleged to be that of petitioner and compared them with the signatures on the petition and the power of attorney and prima facie find that they are not of the petitioner. Thus, the execution of the alleged agreement itself is doubtful. This finding of mine is based on the facts to be stated hereinafter. The alleged agreement Ex. P.l reads as under :
"An agreement made this 25th day of June, 1989 between Hari Krishan son of Shri Bodh Raj resident of Hisar the 1 st party and Laxmi Narayan son of Shri Manbhar Parshad resident of 53 Dhani Sham Lal Hisar. District Hisar, the second party agreed as follows : Where as a property measuring 389 sq. yards was jointly purchased by the 2nd party and Prem Parkash in equal share vide sale deed No. 1484 dated 18.6.80. Soon after the purchase, it was leased out vide Regd. Lease deed No. 3104 dated 27.10.80 and then the 2nd party Laxmi Narayan pledged the property of his share measuring 25'' x 70'' bounded as North, HTM Road, Sought: House of Kailash Balmiki, East, Plot owned by Purshotam and West: Property of Prem Parkash, for Rs. 30,000/ as per mortgage deed No. 6016 dated 30.3.81 and again for Rs. 40,000/ vide deed No. 6349 dated 29.3.85 thus making in total of Rs. 70,000/. Subsequently in July, 1988, the first party Hari Krishan had purchased the share in the aforesaid property of 2nd party Laxmi Narayan. for Rs. 1,15,000/ and paid a sum of Rs. 4500/ (forty five thousand only) as the balance amount of Rs. 70,000/ was required to be paid towards outstanding loan of Hry. KVI Board and the property being under mortgage with the above said Board, so, it was not possible to get the sale deed completed in favour of 1st party Hari Krishan. However, the Malkana possession of the premises has been delivered to the 1 st party. In case the 3nd party fails or neglects to complete the deed in favour of 1 st party in that eventuality he (Laxmi Narayan) would pay double of the amount, received by him. And whereas a dispute with regard to the above said property has now arisen and subsisting between the parties over the question of executing the deed in favour of 1st Party and they being are agreeable to refer and submit he above dispute to the Arbitrators S/Shri (1) Rajmal Kajal DKV1 Off Hisar (2) Har Gobind Sachdeva son of Shri Total Ram (3) Ashok Mehta son of Shri Jhangi Ram and (4) Y.K. Jaswal son of Kassori Singh, all residents of Hisar to submit the award as arbitrators appointed by the parties. Now it is hereby agreed between the parties hereto as above. The Arbitrators shall take upon themselves and decide the matter in dispute and differences between the parties hereto as aforesaid (b) Before entering into the agreement we had contacted the Arbitrators and they have given their consent to Arbitrator. All the Arbitrators asked the parties to fix the first meeting on 16.7.89 at Kothi No. 179 Lajpat Nagar Hisar at 11.00 AM and we the parties assured them to reach there on the fixed date, time and place. If any of the party willfully shall fail or neglect to attend the proceedings on 16.7.89 or the date whichever subsequently fixed by the Arbitrators. They shall be entitled to proceed with reference ex parte, if the situation so demands (c) The unanimous Award of the Arbitrators shall be binding upon the parties. In the alternative situation, the Award of the umpire shall be final and binding (d) The expenses shall be born by the parties in whose favour an award is given and (e) It shall not be obligatory for Arbitrators or umpire to give reason forward. Dated Hisar this 25th day of June, 1989. In witness whereof the parties here to have set and subscribed their respective hands. Scriber A.P.Jain."
On the basis of this agreement the Arbitrators are said to have held proceedings on 16.7.1989.
28 It is interesting to note that on 16.7.1989 there was no claim petition filed by either of the parties nor there was reply to the claim petition. The proceedings dated 16.7.1989 are also not signed by either of the parties. In the proceedings it has only been mentioned that both the parties have been heard and as the time is 6 PM the proceedings are adjourned to 21.10.1989. On 21.10.1989 again none of the parties is shown to have been present and on the said date award is passed which is impugned. Though the rules of Civil Procedure Code or Evidence Act are not applicable to the arbitration proceedings still it is settled law that the arbitrators are bound to follow the principles of natural justice. In the present case it may be noticed that there is no agreement to sell between the parties on record. The alleged agreement of arbitration had taken upon itself the job of issuance of notice. It seems that the agreement Ex.P.l has been drafted as no notice was issued by the Arbitrators to any of the parties nor there is any material on record to show as to whether any of the parties had appeared before the Arbitrators as the proceedings which are said to be oral have not been signed by either of the parties.
29 Learned Courts below failed to notice this important aspect of the matter in holding the proceedings to be arbitration proceedings though, in fact, it could not be said to be the proceedings in the eyes of law. As already observed above, even the alleged agreement is not free from doubt as signatures of petitioner in the alleged agreement are different fronrpower of attorney or petition.
30 Learned counsel appearing on behalf of the respondents by placing reliance on the judgment of Hon''ble High Court of Nagpur in the case of R.K. Mishra v. Kundanlal Shahni and another, AIR (36) 1949 Nagpur 349 contends that the present revision petition against the award having been made rule of the Court was not competent.
31 Mr. Anurag Jain, learned counsel appearing on behalf of the respondents placed reliance on the judgment of Oudh Judicial Commissioner''s Court in the case of Khwaja Sayiad Badruddin Hasan v. Musammal Amir Begam and others, 1912 Indian Cases 520 to contend that the arbitrator is entitled to conduct his proceedings, in any manner, as he thinks fit and the contention is that the learned Courts below, therefore, were justified in making the award rule of the Court. The contention of the learned counsel for the respondent No. 1 cannot be accepted. In the judgment it has been observed that the arbitrator has to conduct the proceedings in accordance with the principles of natural justice, equity and good conscience. In the present case, as already observed above, there is violation of principles of natural justice. Rather the arbitration agreement itself is not free from doubt and the presence of the petitioner has not been marked either in the proceedings dated 16.7.1989 or on the date of passing of award. No material was brought on record showing that if ever notice was issued to the petitioner. Even notice of passing award was also not placed on record. The alleged arbitration proceedings clearly show that the arbitration proceedings were totally a farce and attempt has been made to grab the property of the petitioner in violation of law. It is not understood as to how the learned Courts below have been pleased to make the award rule of the Court in the absence of agreement to sell, claim petition, reply etc. There is nothing on record to show that any opportunity was given to the petitioner to controvert the stand taken by respondent No. 1. The proceedings have not been signed by either of the parties, nor any statement recorded which is alleged to have been given on 16.7.1989 which is the basis of passing of award. It has also not been disclosed as to what was the dispute between the parties as there is no decision as to whether the sale deed was to be executed or respondent No. 1 was entitled to double the amount. The proceedings being in total violation of principles of natural justice, the award passed by the arbitrators, thus, cannot be sustained. It is also held that there is no arbitration agreement between the parties, and finding of the learned Courts below on issue No. 2 deserves to be set aside. For the reasons stated above, this revision is allowed. The orders passed by the learned trial Court as well as the learned lower appellate Court are set aside and the award passed by the Arbitrators is ordered to be set aside but with no order as to costs. Revision allowed.
