Payyavula Vengamma vs Payyavula Kesanna And Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 37 of 1952

Decision Date: 29 October 1952

Coram: Natwarlal H. Bhagwati, B.K. Mukherjea, N. Chandrasekhara Aiyar

In this case the Supreme Court of India delivered a judgment on 29 October 1952 in the matter of Payyavula Vengamma versus Payyavula Kesanna and others. The opinion was authored by Justice Natwarlal H. Bhagwati, who sat with Justices B. K. Mukherjea and N. Chandrasekhara Aiyar. The official citation for the decision appears as 1953 AIR 21 and also as 1953 SCR 119 in the Supreme Court Reports. The case was identified in a citator as R 1990 SC1426 (22) and concerned the provision of section 21 of the Indian Arbitration Act. The headnote stated that when an arbitrator takes statements from each party in the absence of the other and then makes an award, the arbitrator commits legal misconduct that vitiates the award, regardless of whether any prejudice to a party is shown. The court emphasized that a fundamental principle of justice requires that no party may influence the mind of a judge or arbitrator by means that the other party cannot meet or resist. The judgment referred to earlier authorities including Harvey v. Shelton (1844) 7 Beav. 455, Ganesh Narayan Singh v. Malida Koer (1911) 13 Cal. L.J. 399, and Haigh v. Haigh (1861) 31 L.J. Ch. 420. Consequently the Supreme Court concluded that the arbitral award must be set aside because the arbitrator’s misconduct invalidated the proceeding.

The appeal was listed as Civil Appeal No. 37 of 1952 and was filed in the Civil Appellate Jurisdiction of the Supreme Court. It challenged the judgment and decree dated 24 September 1948 pronounced by the Madras High Court in the case identified as A.A.O. No. 688 of 1945. The High Court decision arose from an earlier decree dated 1 October 1945 issued by the District Judge of Anantapur in Original Petition No. 15 of 1945. For the appellant, counsel consisting of D. Munikanniah together with J. B. Dadachandji appeared, while the respondents were represented by counsel comprising S. P. Sinha with M. O. Chinnappa Reddi and K. B. Chowdhury. The judgment of the Supreme Court was delivered by Justice Bhagwati on 29 October 1952 after hearing arguments from both sides. The plaintiff had originally filed Original Petition No. 15 of 1945 in the Court of the District Judge of Anantapur seeking to set aside an arbitral award on the ground of legal misconduct by the arbitrator. The trial court had set aside the award, but the Madras High Court reversed that order and dismissed the plaintiff’s suit. The present appeal therefore arose from the certificate of the High Court permitting the plaintiff to challenge the High Court decision before the Supreme Court. The factual backdrop involved the death of P. Narayanappa in 1927, leaving his widow, who was the plaintiff, as his surviving spouse. Also surviving were the defendant identified as his undivided brother, a second defendant who was the son of another pre-deceased brother, and a third defendant who was the son of the deceased’s pre-deceased wife. The deceased had purported to execute a will dated 1 May 1927 that provided for the widow’s maintenance and residence. Initially the plaintiff lived with the family for some time, but she later left the family house because of disputes with the senior wife of the first defendant. She subsequently resided with her mother for eleven years and eventually filed a suit in forma pauperis numbered 19 of 1943 in the District Court of Anantapur seeking maintenance, arrears, residence, household utensils, and recovery of certain jewels and clothes claimed as her stridhanam. The defendants contested the plaintiff’s claims, asserting that the provisions of the 1927 will already secured her maintenance and residence, that she was in possession of the property, and that her claim for jewels and clothes was untenable. The suit was subsequently heard before the Subordinate Judge of Anantapur and was finally disposed of by that judge. During the examination of the plaintiff as witness number one on 27 February 1945, all parties filed a petition under section 21 of the Arbitration Act agreeing to appoint Sri Konakondla Rayalla Govindappa Garu as arbitrator.

In this case the plaintiff was forced to leave the family house because of disputes that arose between her and the senior wife of defendant 1. After leaving the house she lived with her mother for eleven years and eventually filed a suit in forma pauperis, O.S. No. 19 of 1943, in the Court of the District Judge of Anantapur. The suit sought maintenance, arrears of maintenance, a right to residence, household utensils, and the recovery of certain jewels and clothes that the plaintiff claimed as her stridhanam property. The defendants opposed the plaintiff’s claim, arguing that the will dated 1 May 1927 had already made adequate provision for her maintenance and residence, that she was therefore in possession and enjoyment of the property, and that her claim was therefore untenable. The defendants also denied that any jewels or clothes were payable to the plaintiff. The suit was heard and finally disposed of before the Subordinate Judge of Anantapur.

When the plaintiff was examined as plaintiff-witness 1 on 27 February 1945, all the parties filed a petition under section 21 of the Arbitration Act. The petition expressed their agreement to appoint Sri Konakondla Rayalla Govindappa Garu as the sole arbitrator to settle the disputes in the suit, their intention to abide by his decision, and a request that the court forward the plaint, the written statement and other records to the arbitrator for his consideration. Consequently the court made a reference to arbitration. The arbitrator entered upon the reference and, on 6 March 1945, examined the plaintiff and obtained from her a statement identified as Exhibit No. 4 in the record. He similarly examined defendant 1 on 10 March 1945 and recorded a statement identified as Exhibit No. 5. After receiving the two statements, the arbitrator issued and published his award on 12 March 1945. The plaintiff challenged that award on the ground of legal misconduct.

The plaintiff alleged that the arbitrator had committed legal misconduct by hearing each party in the absence of the other. She argued that, although the petition for arbitration and the statements in Exhibits 4 and 5 authorised the arbitrator to decide the matter after reviewing the plaint and the written statements, the arbitrator had examined defendant 1 without the plaintiff being present and had also examined the provisions of the 1 May 1927 will without giving the plaintiff an opportunity to be heard, thereby breaching the principles of natural justice. The defendants, on the other hand, contended that the arbitrator’s actions were limited to obtaining from the parties a reiteration of the request contained in the petition that his award be based on the pleadings. They maintained that no fact recorded by the arbitrator from defendant 1 was omitted from his written statement, and therefore the arbitrator could not be said to have engaged in legal misconduct.

The petition filed by the parties on 27 February 1945 (the report mistakenly writes 1915) did not confer any special powers on the arbitrator. The arbitrator had been appointed solely to settle the disputes arising out of the suit, and the parties had agreed to accept his decision. The plaint, the written statement and the other records were expressly to be sent to him for his decision, and the order indicated that the arbitrator was to make his award after perusing those documents. Consequently, the plaintiff’s counsel questioned why the arbitrator proceeded to interview the plaintiff and defendant 1 and to record their statements when the procedural framework required only a review of the pleadings and the written statements.

The petition did not confer any special authority on the arbitrator. The arbitrator was appointed solely to settle the disputes arising out of the suit, and the parties expressly agreed to be bound by whatever decision he rendered. Accordingly, the plaint, the written statements, and all other relevant records were to be forwarded to him for consideration, as directed by the Court’s order. Given this arrangement, it was puzzling that the arbitrator proceeded to obtain separate statements directly from the plaintiff and from Defendant 1, recording their oral testimonies. The plaintiff’s statement to the arbitrator merely reiterated the request that the arbitrator should examine the plaint and the written statements and decide the case in accordance with law and justice. In contrast, the statement obtained from Defendant 1 went beyond a simple reiteration of that request and introduced several factual assertions that were absent from his written statement. Those assertions were: (1) “She felt glad with what was given to her by her husband”; (2) “It is seen from the Government accounts that as per the settlement made by her husband, the lands given to her have been in her possession”; (3) “Just like the plaintiff has her jewels in her possession, the other females in the house have their jewels in their respective possession only. The undivided family has no manner of right therein”; and (4) “Considering the domestic circumstances our elder brother provided maintenance for the third wife, the plaintiff, just as he had provided maintenance for his second wife.” These statements constituted additional evidence presented by Defendant 1, evidence that was not part of his earlier written pleading. Consequently, Defendant 1’s argument that the arbitrator merely recorded a narration already contained in his written statement was untenable.

The arbitrator’s own award confirms that he acted on more than the documents originally filed. In the award, the arbitrator acknowledged that the Court had directed him to make the award after reviewing the plaint and the written statements of both the plaintiff and the defendants, and that the Court had supplied those documents along with its order. Nevertheless, the arbitrator further explained that, in compliance with the order, he had taken statements from the plaintiff as well as from Defendant 1, who served as the manager of the defendant’s family. He also stated that he had examined the settlement alleged by Defendant 1 to have been executed on 1 May 1927, in the plaintiff’s favour. Relying on this examination, the arbitrator awarded to the plaintiff eight acres and seventeen cents of land bearing Survey No. 507, in addition to the forty acres already conveyed to her by the deceased. The language of the award clearly indicates that the arbitrator considered not only the plaint and the written statements but also the oral statement he obtained from Defendant 1, thereby extending his role beyond the scope originally prescribed by the petition.

The arbitrator further relied upon the will dated 1st May, 1927. Consequently, there was no doubt that the arbitrator heard the testimony of defendant 1 while the plaintiff was absent. The arbitrator did not give any notice of this hearing to the plaintiff, and the plaintiff was not afforded an opportunity to have the evidence of defendant 1 taken in her presence. Because of this, she could not suggest any cross-examination, could not cross-examine the defendant herself, and could not obtain any evidence that might counter or meet the evidence presented by defendant 1. Lord Langdale M. R., speaking in Harvey v. Shelton(1), observed that it is a settled principle of justice that no party may use any means of influencing the mind of the adjudicator that are unknown to, and therefore cannot be met or resisted by, the opposite party. He described the arbitrator’s conduct as “an extremely indiscreet mode of proceeding” and emphasized that it runs contrary to every principle of fair trial. Lord Langdale further rejected any distinction between mercantile arbitrations and legal arbitrations, stating that the first principles of justice must be applied equally in every case. Except in the rare situations where an exception is unavoidable, both sides must be heard in each other’s presence. In any litigation, whether before regular courts or in arbitrations, and whether before lawyers or merchants, the adjudicator must consider the representations of both parties and must not permit one side to influence the adjudicator by means concealed from the other. The decision in Harvey v. Shelton(1) is the leading authority on this point and has been followed not only in England but also in India. (See Ganesh Narayan Singh v. Malida Koer (2)).

The plaintiff also had no opportunity to be heard on the settlement dated 1st May, 1927, and the approach adopted by the arbitrator clearly contravened the principles of natural justice. The relevant authorities cited include (i) (1844) 7 Beav 455 at P. 462 and (2) (1911) 13 c.L. J. 399 at pages 401, 402. Shri S. P. Sinha, however, submitted that the plaintiff suffered no prejudice because the arbitrator had obtained the statement marked Exhibit No. 5 from defendant 1, and therefore the arbitrator was not guilty of legal misconduct. This contention was found to be unsound. Even if the arbitrator were a most respectable person, his conduct could not be reconciled with the general principles of justice. As Lord Eldon, Lord Chancellor, remarked in Walker v. Frobisher(1), a judge must not decide whether improperly admitted evidence influenced his mind; an award may accomplish perfect justice, but it cannot be sustained on general principles if the process is flawed. The same view was echoed by Lord Justice Knight-Bruce in Haigh v. Haigh(1), who noted that it is impossible to gauge the influence of undisclosed statements on the adjudicator’s mind, and that such conduct amounts to legal misconduct sufficient to vitiate the award.

In this matter, the Court referred to the observations of the Chancellor in Walker v. Frobisher (1). The Court also quoted the remarks made by Lord Justice Knight-Bruce in Haigh v. Haigh (1), wherein the Lord Justice stated that although the arbitrator had declared in his affidavit that he did not permit certain explanations to affect his report on the accounts, and although the Court believed the arbitrator honestly intended that position, it is impossible to determine the exact influence such statements may have had on his mind. Consequently, the Court held that, without any further detailed examination of the arbitrator’s state of mind, the arbitrator was guilty of legal misconduct and that finding alone was sufficient to invalidate the award.

Counsel for the appellant then argued that the plaintiff had, by her conduct, waived any right to challenge the award on the ground of legal misconduct. The Court observed, however, that no such waiver had been pleaded by the first defendant and that it was not proper for that party to raise the issue at this late stage of the proceedings.

Accordingly, the Court concluded that the judgment and decree of the High Court could not be sustained. The appeal was allowed, the High Court’s judgment and decree were set aside, and the judgment and decree of the trial Court were restored, with costs awarded throughout the proceedings. The appeal was therefore allowed. Counsel for the appellant was Naunit Lal and counsel for the respondents was M. S. K. Aiyangar. Citations: (1801) 6 Ves. 70 at page 72; (1861) 31 L.J. Ch. 420.