Judgement

SRINIVASACHARI, J. : -

We have before us a Civil Miscellaneous Appeal and a regular appeal filed against the order of the Subordinate Judge, Kakinada, setting aside an award, and superseding the reference to arbitration.

2. The following genealogical table would indicate the relationship of the parties :

3. By an agreement of refernce the following persons, VenkatarajaGopala Bhavamayya Garu (No. 5-A)in the table and Bhavanarayana Rao Garu (No. 15) on the one hand and C.V Rao Garu (No. 11),Sitaramaswamy (No. 13), Vnkata Rao Garu(No. 6) Venkayya (No. 5), Buchi Venkata Rao(No. 9), and Venkata Ramana Rao Garu (No. 10) on the other, referred the matters in dispute and more particularly described in the agreement of reference to two persons viz.; the Zamindar of Gollaprolu and I. V. Rama Rao Bhadur.

The arbitrators gave an award on 31-8-1949 being Ex. B-2. An application was filed by Venkatarao "(No. 6), Buchivenkat Rao (No. 9) and Ven-gala Rao (No. 12) to call upon the arbitrators to file the award with a prayer that a decree be passed in terms of the award. This application was registered as a suit being O. S. No. 110 of 1949. The award was filed and after notice was issued to the other parties Bhavanarayana Rao (No. 15) and Venkata Rajagopala Bhavayamma Garu (No. 5-A) filed an application under Section 33 of the Arbitration Act, to set aside the award.

This application was numbered as I. A. No. 1777 of 1949. The Subordinate Judge after trial set aside the award holding that there was misconduct of the arbitrators. In the result he allowed I. A. No. 1777 of 1949 and dismissed the Suit No. 110 of 1949. Hence the above appeals.

4. Venkayya (No. 5) in the pedigree died in 1943 leaving him surviving Srinivasam (No. 14). This Srinivasam died in 1947 unmarried. Therefore, the prooerties devolved upon his mother (No. 5-A). This lady, in order to perpetuate the lineage and for her husbands spiritual benefit, desired to adopt Bhavanarayana Rao (No. 15). She applied to the reversioners who were 7 in number, for giving their consent to the proposed adoption.

Of these, three gave their assent while the other four declined to give their assent. Venkata Rajagopala Bhavayamma adopted Bhavanarayana Rao on 29-8-1948. Disputes therefore arose, about the adoption, the reversioners questioning the adoption. Finally to avoid the contingency of protracted litigation the parties referred the matters ir dispute to two persons who were well conversant with the affairs of the family viz. (1) Shri R. V. K. M. Surya Rao and (2) Shri I. V. Rama Rao.

This agreement of reference to arbitration was made on 7-6-1949, being Ex. B-1. The arbitrators after enquiry gave their award on 31-8-1949 being Ex. B-2 by which they allotted certain landed properties mentioned in the award to the extent of 40 acres 32 cents to the seven reversioners with equal and absolute rights. All the rest of the properties both moveable and immoveable of the late Srinivasam were given to the adopted son and his mother.

5. As has been stated above one party sought for a decree in the terms of the award while the other party sought to get the award set aside.

6. The Subordinate Judge has set aside the award on the ground that there was no dispute with regard to the properties of the late Srinivasam, obviously as the Sapindas had then no immediate right to Srinivasams properties and this matter was never referred to the arbitrators and that, therefore, they had no jurisdiction to award a portion of the properties to the Gnatis, as that was beyond the scope of the reference.

The Judge also held that the award was vitiated by reason of the fact that they held the adoption to be valid while holding that there was not the requisite consent of the Gnatis. A further ground on which the award was set aside by the Subordinate Judge was that there was not Consensus Ad Idem in the matter of the allotment of the properties to the Gnatis. Yet another plea which was raised to invalidate the award and which was accepted by the Subordinate Judge was that there was no proper enquiry that copies of the statements filed by one party were not given to the other side.

7. As regards the first ground of attack viz.; that the arbitrators exceeded the scope of their authority we are not in agreement with the Subordinate Judge that the terms of reference to arbitration limited the decision with regard to adoption alone. The relevant portion of Clause 7 of the agreement of reference Ex-B-1 reads as under :

"You personally know about our family affairs from the beginning. All of us having equal respect towards you. If the abovementioned disputes are aggravated and if proceedings are taken in Courts both parties would incur enormous expenditure, and undergo difficulties and incur loss. With this view we agree that you should decide the disputes that arose in respect of the alleged adoption of the 2nd individual by 1st individual and in respect of all the properties of late Srinivasam alias Bhavana Rao."

The above clause would clearly indicate that there were disputes with regard to the adoption of Bhavana Rao and also with regard to his properties, and both matters were referred to aribitration to save the parties from becoming subject matters of suit, and the consequential entailing of enormous expenditure and unnecessary loss, which they would sulfer by going to court.

A fair reading of this Clause makes the point clear that the arbitrators were invested with the authority not only to decide about the adoption that had taken place but also settle once and for all the disputes that had sprung up, as regards the properties of Srinivasam. The learned Subordinate Judge has merely relied upon the fact that the matter of the dispute relating to the properties, had not been stated in express terms in the agreement of the reference.

No doubt the fact that there was a dispute between the parties had not been stated in so many words but the words that occur in the relevant clause are and in respect of all the properties of late Srinivasam, have to be given some meaning. Reliance was sought to be placed on the judgment of the Madras High Court in Gopalam v. Suryanarayana AIR 1926 Mad 752 (A). The learned Judges on the facts and the terms of reference in that case came to a definite conclusion that the claim of the plaintiffs to a share in the family property had been omitted.

In the case before us there is no omission at all. The fact of the matter of the dispute relating to the properties of Srinivasam as having been also referred to the arbitrators has not been stated in so many words but nevertheless indicated. The particular words referred to by us above signify that the parties agreed that the disputes in respect of the properties of the late Srinivasam should be gone into by the arbitrators.

The Gnatis were intending to go to Court to contest the adoption and the adopted son becoming entitled to the properties and both parties were anxious that they should be saved the enormous expenditure that they would incur and the loss they would suffer by going to Court, and therefore requested the arbitrators to settle the matters out of Court by giving an award.

The agreement of reference should be construed as an agreement by the parties giving power to the arbitrators to decide the dispute between them about the matter of adoption and about the properties of Srinivasam as appeared to the arbitrators to be just and equitable. And this power under reference in our opinion was wide enough to make a provision for the Gnatis by the setting apart of certain properties for them for the whole estate.

8. The next formidable objection raised for holding the award to be invalid is that they were wrong in holding the adoption to be valid in the face of the conclusion that consent had not been given by a major portion of the group of reversioners and it was contended that this was a wrong and erroneous decision of law. The mere fact that the arbitrators had erred in law can be no ground for interference.

An arbitrator is regarded as the sole and final judge on all matters whether of fact or of law and it may be taken to be settled law that the error of law, if any, should be apparent on the face of the award to justify any interference by the Court. We may refer to the case of Champsey Bhara and Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd. ILR 47 Bom 578 : (AIR 1923 PC 66) (B). The question is, is there an error of law apparent on the face of the record.

The question of law for consideration was whether the consent of a few among others of the Gnatis was enough to validate an adoption. The evidence would show that three out of the seven sapindas had given their consent. The proof of assent as has been held in decided cases is necessary in order to determine whether the adoption was made by the widow with any capricious or corrupt motive with a view to defeat the interests of this or that Sapinda.

The leading case on this point is the case of Vellanki Venkata Krishna Rao v. Venkatarama Lakshmi 4 Ind App 1 (PC) (C) where their Lordships of the Privy Council emphasised the fact that where upon a fair consideration by a family council of the reversioners the substituting of an heir was decided upon, that would be enough tor the validity of an adoption by the widow. The matter was further elucidated in the case of Veerabasava Raju v. Balasurya Prasada Rao 45 Ind App 265 : (AIR 1918 PC 97) (D) wherein while discussing about the assent of the Sapindas then : Lordships observed :

"In the absence then of the father the assent of the divided brothers is equally requisite for the validity of the widows adoption. If a majority assent and one refuses his objection may be discounted."

Again the same principle was reiterated in the case of Rama Subbayya v. Chenchuramayya, 74 Ind App 162 : ( AIR 1947 PC 124) (E) viz.; that it is enough if there is evidence of consent as would show that the widow in making the adoption was not acting improperly or capriciously. Finally it is not a quantitative test that has to be applied in judging whether there was the requisite consent of the Sapindas.

As was held by a Bench decision of the Madras High Court of which one of us was a party, it would be a question of fact in each case as to whether the consent of the Sapindas was sufficient to validate the adoption, the only legal test being whether there is evidence of the act having been done bona fide in the performance of a religious duty. Vide : Subba Rao v. Venkata Satyanarayana : (AIR 1953 Mad 755) (F).

9. Therefore on a construction of the award we do not think that the conclusion of the arbitrators that the adoption could be held to be valid could be regarded as an error apparent on the face of the record, especially where the trend of decisions, as has been shown above, has been that it would have to be decided as a fact in each case whether the adoption was with any capricious motive. Further, not deciding in strict accordance with law could not be regarded as amounting to misconduct, to justify interference under S. 30(c) of the Arbitration Act. We may refer to the judgment of the Madras High Court in Ratha Krishna Murthy v. Balasubramania and Co., 1948-2 Mad LJ 601 : (AIR 1949 Mad 559) (G).

10. The next ground of attack is that there was no consensus ad idem in the matter relating to the awarding of some properties to the Gnatis. In this regard reliance is placed on the depositions of C.Ws. 1 and 2, and it is urged that although C. W. 1 says that both himself and C.W. 2 were agreed that the Makhta or 1/3 should be given to Gnatis, C.W. 2 says that all that is false.

An analysis of the statements of these two arbitrators would show that they were agreed and had decided that a portion of the properties should go to the Gnatis and it is abundantly clear that the arbitrators were agreed that the Gnatis should be awarded some property. I. V. Rama Raos evidence is clear on this point. It could not be said, therefore, that in the decision that they arrived at there was no consensus of opinion.

11. It was also contended that the respondents were not given copies of the statements filed by the appellants before the arbitrators. There could be no question of the copy of a statement filed by one party being given to the other side. The statements of the arbitrators would show that statements were filed by both the parties before them and it was open to either of them to obtain copies of the documents. There has been no irregularity.

It was urged that the arbitrators were influenced by other documents filed by the other side in basing their award and as such it was liable to be set aside. Support was drawn for this argument from a judgment of the Supreme Court in Vengamma v. Kesanna, AIR 1953 SC 21 (H). In that case although the arbitrator was to give his award on the plaint and the written statement filed before him still, he relied upon a settlement deed and a will, and awarded certain lands after perusing these documents.

Under those circumstances, their Lordships of the Supreme Court declared that, that amounted to legal misconduct which vitiated the award. It was also found that one party had no opportunity to have her say with regard to the settlement deed. No such thing has happened in this case. No document was placed before the arbitrators by one party of which the other side had no notice this argument, therefore, fails. We are of the opinion that the grounds urged by the respondents are not sufficient to set aside the award under S. 30 of the Arbitration Act.

12. It would be clear from the evidence of C.W. 1 one of the arbitrators that the two arbitrators were in agreement that a third of the total properties forming part of the estate should be given to the Gnatis. In this regard there was unanimity. In implementing the decision that they had come to, they allotted 40 acres and odd to the Gnatis being under the belief that that represented 1/3 of the total extent of the estate.

The evidence of C.W. 1 would show that he was assured that the 40 acres and odd would represent 1/3 share and that C.W. 2 the other arbitrator assured him that even if there was any error it could be corrected later. Neither of the arbitrators knew about the value of the lands proposed to be given to the Gnatis. After the award was concluded they approached one Matepalli Sat-yam to value the lands. On a rough and ready basis Satyam apportioned 40 acres and odd as representing 1/3 of the total extent.

Subsequently Satyam came and represented that, he had committed a mistake in the values. But tile arbitrators did not choose to make any alteration in the award with regard to the extent of the property awarded to the Gnatis. It would therefore appear that while the arbitrators agreed that 1/3 of the total property should be given to Gnatis, they did not actually find out what 1/3 of the estate would come to, and allot the property of that value.

In awarding 40 acres the arbitrators were under the impression that it represented 1/3 of the estate without satisfying themselves that the value of the lands so allotted amounted to 1/3 of the value of the total estate. There is no satisfactory evidence on record of the value of the portion awarded to the Gnatis. This was a matter which required further enquiry and we might have remitted the case again for this purpose but we were informed that one of the arbitrators had since died.

This supervening circumstance has now changed the aspect of the whole case. There is provision in the Arbitration Act, for the appointment of a new arbitrator to supply the vacancy caused by the death of one of the arbitrators. This is provided for by S. 8 of the Act. Section 8 envisages cases where the proceedings are pending before the arbitrators and any of the arbitrators dies or becomes incapable of acting. In the case before us the award has been given and after the award one of the arbitrators died.

There is no provision as such in the Act for the naming of another arbitrator after the award had been given, and the arbitrators had become functus officio. Under the English Law, where there is power to appoint an arbitrator in place of one who dies and the arbitrator dies after making his award, the award may be remitted to a new arbitrator appointed by the Court in accordance with the provisions in the agreement to refer.

This means that where there is a provision in the agreement of reference to arbitration for the appointment of an arbitrator in place of one who has died, the Court has the power to appoint a new arbitrator even after the making of the award. In the case before us, in the agreement of reference to arbitration, there does not appear to be any provision to that effect. Under these circumstances where the Act also does not empower the Court to appoint a fresh arbitrator in place of the one who has ceased to exist, it would be difficult to appoint one in place of the deceased arbitrator and remit the case to him.

In Lord v. Howkins, (1857) 157 ER 23 (I) an action was referred to the arbitration of 12 persons and it was further provided that in the event of any of the arbitrators declining to act or dying before the award was made, the parties might, or if they could not agree, one of the Barons of the Court might appoint fresh arbitrators. One of the arbitrators died after the award was made. On a motion to set aside the award which was admitted to be bad, it was held that the Court had power to remit any matter to the surviving 11 and a fresh arbitrator was appointed in pursuance of the provisions in the agreement of reference to arbitration.

In the case, because there was a provision for appointing a new one, it was held that if there was any defect in the award it could be sent back to the surviving arbitrators and a new arbitrator also could be appointed. Inasmuch as there is no specific provision in the agreement of reference in the case before us for nominating another arbitrator in place of one who died, we are helpless. Where the arbitrators through an error of judgment allotted a large portion to the Gnatis without knowing the value of the land it cannot be a ground for setting aside an award under S. 30 of the Arbitration Act.

13. We have pointed out that none of the matters pointed out by the learned Counsel for the respondent have been established and therefore there has been no judicial misconduct to justify our setting aside the award. As the case cannot be remitted, the award will stand. The judgment of the lower Court is set aside and a decree in terms of the award is passed, but in the circumstances of the case there will be no order as to costs.

Order accordingly.