Champalal vs Mst. Samarath Bai

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

Court: supreme-court

Case Number: Civil Appeal No. 34 of 1956

Decision Date: 21 January 1960

Coram: J. L. Kapur, Syed Jaffer Imam

In the matter titled Champalal versus Mst. Samarath Bai, decided on 21 January 1960, the Supreme Court of India recorded a judgment authored by Justice J L Kapur with Judges Syed Jaffer Imam and Subbarao K. serving on the bench. The case is reported in 1960 AIR 629, 1960 SCR (2) 810 and cited in R 1970 SC 833 (11). The dispute concerned the interpretation and effect of a will in which the deceased husband authorised his wife to adopt the petitioner, Champalal Ishwardas, and to make him executor of his estate. The pertinent portion of the will was registered after the testator’s death and read: “Under this will, I am authorising the said Champalal Ishwardas to execute the same. I have appointed him the executor of this will. Under the said will the said Champalal alone shall be the full owner of my entire movable and immovable property and the executor of the will after my death if I adopt him during my lifetime or even if my wife adopts him after my death.” Champalal consequently applied under section 192 of the Indian Succession Act, 1925, for appointment of a curator. Before the application could be decided, the parties entered into an arbitration agreement covering the determination of their respective rights in the estate should the respondent adopt the petitioner. Three arbitrators were appointed, and, on their request, the court extended the period allowed for the arbitrators to render their award pursuant to section 14(2) of the Arbitration Act, 1940. The arbitration agreement required the arbitrators to decide the parties’ rights in the estate in the event of adoption. The arbitrators eventually issued an award which they filed in court. The award directed that the respondent should adopt Champalal in accordance with Hindu law within four months; failing such adoption, Champalal would become the sole owner and executor of the entire property of the deceased, while the respondent would be entitled to maintenance of Rs 200 per month. Although the respondent was prepared to adopt, the petitioner refused to be adopted within the stipulated four‑month period, thereby forfeiting any claim to ownership or executorship. The award was initially unregistered; after being returned, it was subsequently registered and re‑filed. The attorneys for two of the arbitrators submitted to the Sub‑Registrar a schedule of the property covered by the award. The proceedings under the Succession Act and the Arbitration Act were then separated. The respondent subsequently filed an application under section 14(2) of the Arbitration Act, whereas the petitioner sought to set aside the award. The trial court passed a decree consistent with the award, and the High Court, on the petitioner's appeal, affirmed the award.

The Court considered several objections raised against the arbitration proceedings. It was alleged that the matter could not have been referred to arbitration, that the award had been filed outside the period prescribed by the Limitation Act, that the award had not been registered in accordance with statutory requirements, that the First Additional Judge lacked authority to extend the time for making the award, that the arbitrators had engaged in misconduct, and that the award exceeded the jurisdiction granted to them. An additional contention was that, even if the award were proper and lawful, the respondent’s refusal to adopt the appellant meant that the decree should have been issued exactly as the award stipulated for the occurrence of the contingency, and that the Court that passed the decree had no power to consider subsequent events. The Court held that the filing of the award by the arbitrators after giving notice to the parties was not barred by the limitation period because Article 178 of the Limitation Act applies only to applications made by the parties themselves and does not govern the arbitrators’ filing of the award. Although the award was required to be registered, the Court observed that filing an unregistered award under Section 49 of the Registration Act was not prohibited; what was prohibited was using such an unregistered award as evidence to affect immovable property covered by Section 17 of the same Act. Consequently, the Court affirmed that it possessed jurisdiction to entertain the application for filing the award and to extend the time for such filing.

The Court further examined the substance of the arbitration agreement. By virtue of the testator’s will, the appellant could not acquire the property of the testator, nor could he be appointed executor, unless he were adopted. Accordingly, the appellant was not entitled to enter into an arbitration agreement until such adoption occurred. The arbitration agreement expressly provided that the consequences of adoption or non‑adoption would be decided by the arbitrators. The arbitrators therefore correctly articulated the outcome that should follow if adoption failed because of either party’s default, and they implicitly imposed a time limit within the terms of the agreement. The award therefore did not exceed the powers conferred upon the arbitrators by the arbitration agreement. Moreover, the award could not be said to have distorted the line of succession merely by stating that, if adoption did not take place, the respondent would receive a share of the testator’s property which would constitute her stridhan. The judgment then proceeded to set out the appellate context: this was Civil Appeal No. 34 of 1956 under the civil appellate jurisdiction, arising from the Nagpur High Court’s judgment dated 19 February 1954 in Miscellaneous Appeal No. 164 of 1949, which in turn derived from the decree dated 22 November 1949 of the First Additional District Judge, Akola, in Civil Suit No. 12‑A of 1948. Counsel for the appellant and counsel for the respondent were listed, and the judgment dated 21 January 1960 was delivered by Justice KAPUR. The Court noted that the present appeal challenged the earlier judgment and order of the Nagpur High Court and stemmed from proceedings under the Indian Arbitration Act, with the appellant identified as Champalal and the respondent as the opposing party.

In this matter the appellant, Champalal, and the respondent, Samarath Bai, who was the widow of Lal Chand, were both members of the Jain community residing at Balapur in the district of Akola, then part of the former State of Madhya Pradesh. The family relationship among the parties was set out in a pedigree that traced the lineage from Phool Chand through several generations, including Nanak Chand, Khushal Chand, Sundarlal, Bulakhidas, Lal Chand, Deolal, Jivanbai, and finally the two parties, Champalal and Samarath Bai, together with other relatives such as Rasiklal, Vijay Kumar, Ishwardas, Baglal, Digamber Das, Sakarchand, Vinaychand and Vimalchand. On 14 September 1944 Lal Chand executed a will in which he authorised his wife Samarath Bai to adopt Champalal and made certain dispositions of his property in favour of the adopted son. Lal Chand subsequently died on 26 September 1944. Shortly thereafter, on 20 October 1944 the appellant filed an application under section 192 of the Succession Act before the First Additional District Judge of Akola, seeking the appointment of a curator to manage the estate. This proceeding was recorded as Miscellaneous Judgment No. 3 of 1944, and notices were issued to the respondent and her daughters. The will itself was formally registered on 29 December 1944. On 10 January 1945 the parties entered into an arbitration agreement, and on 16 January 1945 each applied for a stay of the pending succession proceeding (Miscellaneous Judgment No. 3 of 1944). The court consequently adjourned the matter first to 28 March 1945 and then to 18 June 1945. On the later date the arbitrators moved the First Additional District Judge for a four‑month extension to prepare their award; although the appellant opposed the request, the court granted a three‑month extension on 26 July 1946. The arbitrators finally rendered their award on 18 October 1946.

The award was filed by the arbitrators on 21 October 1946 in the court of the First Additional District Judge, who on 30 October gave both parties ten days within which to raise any objections. The appellant lodged formal objections to the award on 15 November 1946. The respondent, on the other hand, applied on 31 January 1947 for a judgment in accordance with the award and for the issuance of a decree. Because the award had not been registered, the respondent directed that it be presented to an attorney, Mithulal, who represented two of the three arbitrators, Magandas and Sakarchand, for the purpose of registration. Mithulal submitted the award to the Sub‑Registrar on 7 February 1947; however, the Sub‑Registrar returned it, noting that it lacked an accompanying list and particulars of the property covered by the award. After the required list and particulars, signed by Mithulal, were supplied on 15 February 1947, Mithulal again presented the award for registration. As he was counsel only for two arbitrators, the Sub‑Registrar registered the document on 26 March 1947 insofar as it related to those two arbitrators, while refusing registration with respect to the third arbitrator, Bhogilal. Subsequently, following directions from the Registrar, the document was also entered in the name of Bhogilal, and the fully registered award was re‑filed on 21 July 1948 in the Court of the First Additional District Judge.

The First Additional District Judge ordered that the two separate suits, one instituted under section 192 of the Succession Act and the other under the Arbitration Act, be divided into distinct proceedings. He directed that the arbitration matter be entered on the court’s register as a suit on 14 August 1948. Subsequently, on 30 August 1948, the judge directed that a proper application, as prescribed by the High Court Rules, be filed in compliance with procedural requirements. Accordingly, on 15 September 1948 an application invoking section 14(2) of the Arbitration Act was lodged. On 14 October 1948 the appellant submitted an application seeking the setting aside of the award; in that application the appellant raised a number of objections, all of which were rejected by the trial judge. Thereafter, on 22 November 1949 a judgment was pronounced confirming the award and a decree was issued in accordance with its terms. Dissatisfied with that outcome, the appellant appealed to the High Court. The High Court dismissed the appeal on 19 February 1954.

In its disposal, the High Court observed that the application filed by the respondent on 15 September 1948 under section 14(2) of the Arbitration Act was untimely, whereas the original application filed by the arbitrators on 21 October 1946 had been filed within the prescribed period. The High Court further held that no objection could be sustained on the ground that two separate awards existed – one rendered by the arbitrators and a second prepared by Mithulal who had merely attached the list and particulars of the property. It concluded that the First Additional District Judge possessed the authority to extend the time for making the award and for filing the arbitrators’ application, and that the judge was properly seized of the matter. The High Court found no evidence of misconduct by the arbitrators, no proof of illegality, and noted that the appellant had not derived any benefit under the will except by adoption and had not, at that stage, been appointed as executor.

Following the High Court’s decision, the appellant filed a certificate‑issued appeal. In that appeal, counsel for the appellant advanced six separate contentions: (1) that the filing of the award was time‑barred because no application had been made under section 14 within the period fixed by the Limitation Act; (2) that the award required registration, that it had not been registered in accordance with the law, and that mere registration did not confer legality on the award; (3) that the First Additional District Judge lacked jurisdiction to grant a three‑month extension of time to the arbitrators for making the award, an extension that had allegedly been granted on 26 July 1946; (4) that the arbitrators had engaged in misconduct; (5) that the award exceeded the powers conferred upon the arbitrators by the arbitration agreement; and (6) that even if the award were proper and lawful, the respondent’s refusal to adopt the appellant meant that the decree should have been issued as provided for by the award upon the occurrence of that contingency, and alternatively, that the First Additional District Judge who passed the decree had no authority to consider subsequent events. The Court, after examining these submissions, expressed the opinion that the first three points raised by the appellant were entirely without merit.

In this case, the Court observed that the arbitral award had been rendered on 18 October 1946. The arbitrators thereafter lodged the award with the court of the First Additional District Judge and also dispatched a notice to the parties by registered post to inform them of the award’s creation. No allegation was made showing that the filing of the award was barred by the Limitation Act. The Court noted that Article 178 of the Limitation Act, which the appellant relied upon, governed applications made by the parties and did not apply to the filing of an award by the arbitrators. The appellant’s second contention was that the award could not be filed before registration. The Court held that this argument also lacked substance because filing an unregistered award under section 49 of the Registration Act was not prohibited; the only restriction was that an unregistered award could not be admitted as evidence to affect immovable property under section 17 of that Act. Both parties had conceded that registration of the award was required. The appellant’s counsel argued that section 21 of the Registration Act and the rules under section 22 required a description of the property, and that such description had been supplied by a person named Mithulal, who allegedly lacked authority, rendering the award incomplete and unregistrable. The High Court examined the circumstances and concluded that a list of particulars was not necessary in this case, and therefore any action taken by Mithulal, whether authorized or not, did not impair the legality of the registration. The Court also rejected the third ground that the First Additional District Judge, before whom an application for extending the time to make the award was filed, lacked jurisdiction. It explained that the same court possessed jurisdiction to entertain applications concerning the filing of awards, and it was also the court where an application under section 192 of the Succession Act had been presented. Consequently, there was no defect in filing the time‑extension application with that court or in the court granting the extension. Regarding the allegation of arbitrator misconduct, the appellant claimed that the arbitrators had pre‑decided the award before hearing the parties. The High Court found that this charge was unproven. The allegation stemmed from a statement that one arbitrator, Magandas, had suggested that the appellant should concede an absolute estate in part of the property to the respondent to settle the dispute, but the appellant was willing only to grant a life estate, after which the arbitrators purportedly said they would award an absolute estate to the respondent. The Court noted that this claim had not been pleaded in the appellant’s initial application.

The Court observed that the objections raised by the appellant appeared to have been introduced only after the main proceedings and were therefore regarded as an after‑thought. The Court also noted that reliance was placed on a statement made by the arbitrator Magandas during cross‑examination, identified as P.W. 3, in which he said, “We had decided as to how the award was to be made by us, but as these two persons did not come we made the application to the Court for extension of time.” The Court considered the explanation offered by the other arbitrators, who contended that their intention was to achieve an amicable settlement. According to them, they had travelled first to Balapur and subsequently to Akola in pursuit of that settlement. The appellant and his brother had assured the arbitrators that they would meet them at those locations; however, when the arbitrators did not appear, they filed an application seeking an extension of time. The Court held that there was nothing improper in the arbitrators’ conduct and that the evidence did not support any inference of misconduct on their part.

The appellant then submitted that the arbitral award exceeded the powers conferred upon the arbitrators and was therefore invalid. This submission was divided into three distinct sub‑issues: (i) that the original reference to arbitration was itself invalid, rendering the award a nullity; (ii) that the award was beyond the scope of the arbitrators’ authority; and (iii) that the award was, on its face, contrary to law. In support of the first sub‑issue, it was argued that because the appellant had accepted the position of executor, he could not partake in arbitration concerning the execution of the will, the authority to adopt, or the property covered by the will. The Court found it unnecessary to decide the merits of this argument because, on a proper construction of the will, the appellant was not to become executor until after his adoption. Paragraph 10 of the will stated: “I have this day, made as above the will of my estate. Under this will, I am authorising the said Champalal Ishwardas to execute the same. I have appointed him the executor of this will. Under the said will, the said Champalal alone shall be the full owner of my entire movable and immoveable property and the executor of the will after my death if I adopt him during my lifetime or even if my wife adopts him after my death.” These words indicated that the appellant’s appointment as executor was conditional upon his adoption, which had not occurred. Consequently, the argument that an executor could not engage in arbitration did not arise. The Court therefore concluded that the appellant was not an executor eo nomine at the relevant time, but only would become one upon adoption. The Court further noted that the question of whether the appellant, after purportedly accepting the executor’s office, had renounced it or required a discharge under the relevant statutory provision was not necessary to address in the present order.

The Court observed that the issues identified as points (ii) and (iii) could be considered together. It was submitted that the arbitral award exceeded the authority granted to the arbitrators because the award determined the appellant’s rights as an executor and because it allegedly went beyond paragraph 1 of the arbitration agreement, which required the arbitrators to preserve the gifts to charities and the gifts in favour of the testator’s daughters and others. The Court found it difficult to accept the contention that the award ignored that paragraph. In fact, the arbitrators affirmed the charitable gifts and all other gifts made by the testator in the will, and they expressly stated that the person who became owner of the deceased’s property would be required to maintain the persons named in the will and to pay the enumerated charities. Another objection raised was that, under the arbitration agreement, the arbitrators were bound to enforce the will and could not act beyond it, and that they were not permitted to impose a time limit for adoption. The Court noted that no material was produced to show that the arbitrators acted outside the will. The contention that the arbitration agreement required the arbitrators to decide the proportion in which the parties should “enjoy” the estate, and not to leave one party with nothing, was also examined. As the Court read paragraph 10 of the will, and as the High Court had similarly interpreted it, the appellant could acquire the testator’s property only if he was adopted by the testator or by the testator’s widow, the respondent. Consequently, it was not correct to read the arbitration agreement as granting the appellant any portion of the property irrespective of his adoption.

The Court further explained that paragraph 2 of the arbitration agreement required the arbitrators to determine the respective rights of the parties in the estate in the event that the respondent adopted the appellant. Accordingly, the arbitrators directed that the respondent should adopt the appellant under Hindu law within four months prior to February 1947; if the respondent failed to adopt within that period, the appellant would become heir and executor of the entire property of the deceased, while the respondent would be entitled only to a maintenance allowance of Rs 200 per month. Conversely, if the respondent was prepared to adopt but the appellant refused adoption within the four‑month window, the appellant would obtain no rights in the deceased’s property and would not become executor. Since the arbitration agreement expressly vested the arbitrators with the power to decide the consequences of adoption or non‑adoption, the Court held that the arbitrators correctly stipulated the outcomes should adoption not occur. Moreover, the award provided that a specific consequence would follow if the default was attributable to the appellant, and a different consequence would follow if the default was attributable to the respondent, thereby giving effect to the parties’ agreement.

If the failure to adopt was attributable to the respondent, the agreement provided that a different consequence would follow. The language of the agreement states: “In the same way the arbitrators may also decide that in case it is decided that the party No. 2 should adopt the party No. 1 and if that thing is accepted by the party No. 1 and in case the adoption takes place, what shall be the rights of both the parties and how they will stand in respect of the property ….” The Court interpreted these words to mean that the power to set a time limit was implicit, because the occurrence of the adoption and the determination of rights could not be allowed to extend indefinitely without a prescribed period.

The lower courts examined the evidence and concluded that the appellant was not willing to be adopted. After reviewing the material that was placed before the Court, it found no reason to depart from the High Court’s view that the appellant had refused adoption. The appellant’s own position is evident from Ground No. 37 of his appeal before the High Court, which reads: “The lower Court erred in holding that Champalal was not within his rights in consenting to get adopted by Mt. Samarathbai within the time fixed by the arbitrators without prejudice to his objections against the award.” The present Court accepted that assessment and affirmed that the appellant’s attitude was clearly against adoption. Consequently, the argument that later events should be taken into account does not arise. It was also contended that the arbitrators, by issuing the award, had distorted the line of succession. However, the award merely stipulated that, should adoption occur, the respondent would receive one share of the testator’s property, which would constitute her stridhana. The claim that this provision altered the succession line is not substantiated. In the absence of any merit in the appeal, the Court ordered that the appeal be dismissed with costs, and the judgment of the lower court stands affirmed.