2013 (6) TMI 871 - HC - Benami Property

Summary

Issues Involved:
1. Whether the division or distribution of the individual properties of the family members was outside the scope of the arbitral mandate.
2. Whether the refusal to allow representation by an advocate violated Section 34(2)(a)(iii) of the Arbitration Act.
3. Whether the arbitrator could order the dissolution of the family partnership firm.
4. Whether the cross-objections filed by the respondents were maintainable.

Summary:

1. Scope of Arbitral Mandate:
The appellants argued that the arbitration agreement and subsequent documents constituted a reference to arbitration that included the division of family properties, including agricultural lands. The respondents contended that the agricultural lands were not within the scope of the arbitration agreement. The court found that the arbitration agreement covered disputes related to family properties, including those held by individual members, and that the arbitrator had jurisdiction to decide on these matters. The learned District Judge's contradictory findings were deemed incorrect, and the arbitrator's jurisdiction was upheld.

2. Representation by Advocate:
The appellants maintained that the arbitrator's direction to conduct proceedings without lawyers was based on an informal understanding to avoid delays. The respondents argued that they were denied fair representation. The court held that the arbitrator's discretion to refuse legal representation, applied equally to both parties, did not violate Section 18 of the Arbitration Act. The decision to not allow lawyers was justified to prevent delays, and the parties were given full opportunity to present their case through written submissions.

3. Dissolution of Partnership Firm:
The arbitrator's order to dissolve the family partnership firm, Weikfield Ventures International, was challenged by the respondents. The court found that the dissolution of the firm was within the arbitrator's jurisdiction as it was part of the family business disputes referred to arbitration. The arbitrator's decision was supported by the Supreme Court's ruling in V.H. Patel & Co. & Others vs. Hirubhai Himabhai Patel & Others, which allowed arbitrators to dissolve partnerships under certain conditions.

4. Maintainability of Cross-Objections:
The appellants argued that cross-objections were not maintainable under Section 37 of the Arbitration Act. The respondents contended that they were entitled to challenge adverse findings through cross-objections. The court held that the provisions of the Code of Civil Procedure, including Order 41 Rule 22, applied to arbitration proceedings in court. The cross-objections were deemed maintainable as they challenged adverse findings while supporting the overall decision to set aside the award.

Conclusion:
The court allowed the appeal, setting aside the order of the learned District Judge and dismissing the respondents' application under Section 34. The cross-objections filed by the respondents were also dismissed. The arbitrator's decisions regarding the scope of the mandate, representation by advocates, and the dissolution of the partnership firm were upheld.