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Structured Summary of the Opinion

Factual and Procedural Background

The dispute concerns possession of survey No. 758/1 of Uran (10 acres and 8 gunthas) and a family house that originally belonged to Masu. Masu died in 1907 leaving his widow Bhagu and his son-in-law (defendant 1). On Masu's death his property devolved upon his adopted son Appa, who died shortly afterwards and the property reverted to his mother Bhagu. In 1909 Bhagu made a gift of 9 acres and 1 guntha (and the house) in favour of her son-in-law (defendant 1), but she disclaimed that gift by a notice served on defendant 1 in 1916. Bhagu died on 3 May 1939. Disputes about heirship arose.

The plaintiff Aba claimed the property as the nearest reversionary heir (he is the son of Masu's cousin Kushaba). Defendants 2, 3 and 4 (Aba's nephews) also claimed shares; defendant 1 claimed under the deed of gift executed by Bhagu. The parties referred their disputes to arbitration by Village Police Patil Anna Dada by a deed of reference dated 19 July 1939. The arbitrator gave an award the next day, finding (inter alia) that the plaintiff was the nearest reversionary heir, that defendants 2–4 were not reversionary heirs, and that Bhagu had made a gift in favour of defendant 1 in accordance with Masu's wishes; nonetheless, the arbitrator divided the property among the four to avoid litigation.

The plaintiff filed suit on 23 August 1939 challenging the award as illegal on its face, alleging fraud in obtaining his signature on the deed of reference, and alleging that the award was vitiated by fraud, partiality, misconduct and illegality of the arbitrator. The trial court found the deed of reference valid and the plaintiff's thumb-mark not fraudulently taken, but held the award illegal on its face and not binding; it granted the plaintiff possession of the land and house with mesne profits. On appeal the District Judge held the arbitrator did not exceed his powers, found no error or illegality on the face of the award, and held the award binding; appeal was allowed and the plaintiff's suit dismissed. The present appeal to the higher court follows.

Legal Issues Presented

  1. Whether the arbitrator's award was illegal on the face of it because it was in direct contravention of the definite findings recorded by the arbitrator himself.
  2. Whether the deed of reference authorised the arbitrator to disregard his findings and distribute the property according to his own discretion to pacify parties and avoid litigation.
  3. Whether, if the award is set aside, the plaintiff (as nearest reversionary heir) is entitled to the entire property left by Bhagu.
  4. Whether any alleged oral direction by Masu to Bhagu to gift the property (and any resulting gift) can validate the gift made by Bhagu in the circumstances of joint family/coparcenary ownership.

Arguments of the Parties

Plaintiff's Arguments

  • The arbitrator's award was illegal on its face because it contradicted the arbitrator's own recorded findings (that the plaintiff was the sole reversionary heir and defendants 2–4 had no interest).
  • The plaintiff's signature on the deed of reference was obtained by fraud.
  • The award was vitiated by fraud, partiality, misconduct and illegal conduct of the arbitrator, who deliberately ignored the plaintiff's obvious title to favour other parties.
  • The plaintiff sought recovery of possession of the entire property of Masu as the nearest reversionary heir after Bhagu's death.

Defendants' Arguments

  • There was a proper reference of the dispute to the arbitrator (Police Patil) and no fraud was committed upon the plaintiff in obtaining the reference.
  • The arbitrator gave a proper hearing and decided the dispute impartially; his award is valid and binding on the plaintiff.
  • The plaintiff's suit challenging the award is not maintainable because the arbitrator is the sole and final judge of matters referred to him, subject to limited exceptions (as relied upon by defendant 1's counsel).
  • Defendant 1 (through counsel Mr. Jahagirdar) relied upon authorities establishing that an arbitrator is the sole and final judge of law and fact in a reference, except in cases of corruption/fraud or an error of law apparent on the face of the award.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Williams, J., (1857) 3 C.B. (N.S.) 1802 (p. 202) Arbitrator is sole and final judge of law and fact in a reference; exceptions are corruption/fraud and errors of law apparent on the face of the award or accompanying documents. Quoted by defendant 1's counsel to support finality of arbitration; the court acknowledged the passage but emphasised the exception for errors of law apparent on the face of the award and applied that exception where the award contradicted its own findings.
Lord Dunedin, 50 I.A. 3243 (page 331) Clarifies that an "error of law on the face of the award" must be a legal proposition visible in the award or a document actually incorporated into it; courts should not go behind the award to find errors. The court accepted these observations as good law and used them to define the narrow ambit of review; nonetheless, it concluded the present award displayed an apparent error because the arbitrator's disposition directly contradicted his recorded findings.
Viscount Sumner, 29 Bom. L.R. 11501 (as cited) Where the arbitrator makes a mistake of law visible on the face of the award, he is guilty of "judicial misconduct" and such an award must be set aside. The court relied on this phrasing to support the proposition that an award which is in direct contravention of the arbitrator's own findings is illegal on its face and should be set aside.
35 Bom. 1534 Upheld an award where an arbitrator gave a minor a smaller share than what might otherwise be expected, because the arbitrator's decision was consistent with his view of the law and the validity of the award is judged by circumstances as they existed at the date it was passed. Distinguished by the court: in that case the arbitrator's distribution was consistent with his legal conclusion; here the arbitrator recorded findings that should have led to a different property distribution but nevertheless divided the property contrary to those findings.
2 Lah. 1145 Holds an arbitrator is not strictly controlled by rules of Hindu law and may give effect to what he perceives to be the intention of a deceased father. Distinguished: the court noted the present arbitrator did not claim to give effect to Masu's wishes consistently; rather, he recorded findings that Bhagu had gifted as per Masu's wishes and yet distributed substantial portions to other parties—contradictory conduct that justified setting aside the award.

Court's Reasoning and Analysis

The court's analysis proceeded in two main parts: (A) review of the scope of the deed of reference and the arbitrator's recorded findings; and (B) consequences if the award were set aside.

(A) Scope of the deed of reference and the award's legality on its face

  • The deed of reference explicitly set out the matters in dispute and required the arbitrator to "give your decision after hearing what the parties have to say" and that "Your decision will be acceptable to us and we will regard that decision as final." Thus the arbitrator was required to decide specified points in dispute and then pass orders regarding possession in accordance with those findings.
  • The arbitrator recorded definite findings: (i) the plaintiff was the sole reversionary heir; (ii) defendants 2, 3 and 4 had no interest; and (iii) Bhagu had made a deed of gift in favour of defendant 1 in accordance with Masu's direction. Because these findings were recorded in the course of the reference, they were final between the parties.
  • Notwithstanding these findings, the arbitrator proceeded to divide the property among all four parties to "pacify" them and avoid further litigation. The court held that recording findings favourable to one party and then awarding parts of the property to others was not what the parties authorised and constituted an apparent error in law on the face of the award.
  • The court invoked authorities on the narrowness of judicial review of awards: while an arbitrator is generally the sole judge of law and fact (per Williams, J.), an award containing an error of law apparent on its face or in incorporated documents can be set aside. The court determined that the present award displayed such an error because the distribution contradicted the arbitrator's own dispositive findings, amounting to judicial misconduct visible on the face of the award.
  • The court distinguished other cases relied upon by the defence (e.g., 35 Bom. and 2 Lah.) where either the arbitrator's distribution followed from his legal conclusions or where the arbitrator sought to give effect to perceived intentions; in the present case the arbitrator's distribution could not reasonably be said to implement any consistent legal finding he recorded.

(B) Consequence if the award is set aside — entitlement to property

  • Having concluded the award was illegal on its face and not binding, the court proceeded to the issue of the plaintiff's entitlement. The trial judge had found that Masu, being a coparcener in a joint family and having an adopted son Appa alive at his death, could not make an oral will gifting joint family property to defendant 1.
  • The court accepted that finding (which was not challenged before the District Judge) that any alleged direction by Masu to Bhagu to gift the property could not validate the gift. Consequently, the gift could not be sustained so as to defeat the plaintiff's rights as nearest reversionary heir.
  • On that basis the court held that the plaintiff is entitled to all the property left by Bhagu as nearest reversionary heir, now that the award was set aside.

Holding and Implications

Holding: APPEAL ALLOWED.

The court allowed the appeal, set aside the decree of the lower appellate Court (which had held the award binding), and restored the decree of the trial Court (which had held the award illegal on its face and granted the plaintiff possession). The court ordered defendant 1 to pay the costs of the appellants throughout and directed that all the defendants bear their own costs.

Implications:

  • Direct effect on the parties: the arbitrator's award is held illegal on its face and is not binding on the plaintiff; the plaintiff is declared entitled to the entire property left by Bhagu as the nearest reversionary heir; the trial court's decree for possession and mesne profits is restored; defendant 1 must pay the appellants' costs throughout; other defendants bear their own costs.
  • On precedent or broader legal rules: the court applied established principles limiting interference with arbitration awards but affirmed that an award which is in direct contradiction of the arbitrator's own recorded findings can be set aside as illegal on its face. The opinion does not purport to create a new legal principle beyond applying existing authority.

Note: This summary is strictly confined to the content of the provided opinion and does not add information beyond that text.

    Maruti Aba Bongane v. Akaram Pandu More

    1. This appeal arises out of a suit for possession of survey No. 758/1 of Uran measuring 10 acres and 8 gunthas and a house in that village which belonged to defendant 1's father-in-law Masu. Masu died in 1907 leaving behind him his widow Bhagu and his son-in-law defendant 1 whose wife Mamata had already died in 1903. On Masu's death his property devolved upon his adopted son Appa. Appa died shortly afterwards and the property went to his mother Bhagu. Bhagu made a gift of 9 acres and 1 guntha out of survey No. 758/1 and the house in favour of her son-in-law defendant 1 in 1909. But she disclaimed that gift by a notice served on defendant 1 in 1916. She died on 3rd May, 1939 and disputes arose regarding the heirship to her land and house. Defendant 1 claimed them under the deed of gift executed by her. The plaintiff Aba, who is the son of Masu's cousin Kushaba, claimed the property as the nearest reversionary heir. Defendants 2, 3 and 4 are Aba's nephews and therefore one degree more remote. Still they also put forward their claim to a share in the property along with the plaintiff. All these claimants, therefore, referred their disputes to the arbitration of the Village Police Patil Anna Dada by a deed of reference dated 19th July, 1939. The arbitrator gave his award on the very nest day and held that the plaintiff was the nearest reversionary heir, that defendants 2, 3 and 4 were not such heirs, and that Bhagu had made a gift of the property in favour of her son-in-law in accordance with the wishes of her husband Masu, but in order that there might not be any litigation and needless expenditure, he divided the property among all the four. The deed of gift passed by Bhagu in favour of her son-in-law included only 9 acres and 1 guntha out of survey No. 758/1, so that it left 1 acre and 7 gunthas untouched. The plaintiff as the nearest reversionary heir became, therefore, entitled to that area. But the ??? awarded him two acres. He also awarded 13 gunthas to each of defendants 2, 3 and 4 and the remaining property consisting of 7 acres and 9 gunthas out of survey No. 758/1 and the family house were awarded to defendant 1. The plaintiff who was not satisfied with the award immediately filed this suit on 23rd August, 1939, alleging that the award was illegal on the face of it, that his signature on the deed of reference was obtained by fraud, that the award was not binding on him as it was vitiated by fraud, partiality, misconduct and illegal conduct of the arbitrator and that the arbitrator had deliberately ignored his obvious title with the deliberate purpose of favouring the other parties. He, therefore, sought to recover possession of the entire property of Masu as the nearest reversionary heir after the death of his widow Bhagu. The defendants contended that there was a proper reference of he dispute between the parties to the arbitration of the Police Patil, that no fraud was committed on the plaintiff, that the arbitrator gave a proper hearing and decided the dispute, that his decision was impartial, that his award was valid and binding on the plaintiff and that the plaintiff's suit was not maintainable. The trial Court held that the plaintiff's thumb-mark was not taken on the deed of reference fraudulently and that the reference was proper. But it held that in view of the findings recorded by the arbitrator his award was illegal on the face of it and was therefore not binding on the plaintiff. The plaintiff was given a decree for possession of both the land and the house together with mesne profits from the date of suit. In appeal, the learned District Judge held that the arbitrator did not go beyond his powers in dividing the property between the parties before him in the way he thought best in their interest and that there was no error or illegality on the face of the award. He, therefore, held that the award was binding on the plaintiff and his suit for possession was not maintainable. The appeal was, therefore, allowed and the plaintiff's suit was dismissed.

    2. In this Court it is urged on behalf of the plaintiff that the arbitrator's award was obviously opposed to the findings recorded by him and was, therefore, illegal on the face of it. The deed of reference sets out in detail the matters in dispute between the parties. It says that the plaintiff claimed that as he was the nearest relative of Masu and his adopted son Appa, he was entitled to all the property as the nearest reversionary heir on the death of Bhagu who had inherited it from her adopted son. Defendants 2, 3 and 4 claimed that the plaintiff was not the sole reversionary heir but they also were reversionary heirs along with him. Thus the first question which the arbitrator had to decide was who was the reversionary heir or heirs on Bhagu's death. Defendant 1 claimed that although Bhagu had only a widow's interest in the property inherited from her adopted son, yet she made a gift in his favour as ordered by her husband, and as the gift was intended to carry out the wishes of her deceased husband, it was valid and, binding on the reversionary heirs. This question also had to be decided by the arbitrator before making a final award regarding the property. After setting out these matters in dispute the deed of reference proceeded to say:

    “These are the matters in dispute between the parties. You should give your decision after hearing what the parties have to say. Tour decision will be acceptable to us and we will regard that decision as final.”

    3. Thus the deed of reference required the arbitrator to give his decisions on the specific points in dispute between the parties and then pass an order regarding the possession of the property of deceased Bhagu. On these points in dispute the arbitrator did record definite findings and by reason of the reference the parties are bound by those findings, which must be regarded as final. Those findings are that the plaintiff alone is the reversionary heir, that defendants 2, 3 and 4 have no interest in the property and that Bhagu passed the deed of gift in favour of defendant 1 in accordance with the direction of her husband. The arbitrator does not say whether Bhagu's gift, though made in accordance with her husband's wishes is valid and binding on the reversionary heir. If it be valid and binding on the plaintiff, then the entire property which was gifted should have been given to defendant 1 and the plaintiff should have been given only the property not comprised in the deed of gift, namely, 1 acre and 7 gunthas out of survey No. 758/1, but no part of the property could have been given to defendants 2, 3 and 4. Yet after recording his findings, the arbitrator set them at naught and proceeded to divide the property according to his sweet will with the sole object of pacifying the parties before him lest otherwise they might start a fresh litigation and incur needless expenditure. That was not the reference made to him. He was authorised by the deed of reference to decide the points in dispute and pass orders regarding the property in accordance with his findings. But to record findings in favour of one party and then order delivery of property to some other party is illegal on the face of the award itself and must be regarded as an apparent error in law. In such a case to use the words of Viscount Sumner in 29 Bom. L.R 11501, where the arbitrator makes a mistake of law visible on the face of his award, he is guilty of “judicial misconduct,” and such an award must be set aside.

    4. Mr. Jahagirdar for defendant 1 relied upon the following observations of Williams, J. in (1857) 3 C.B (N.S) 1802 (p. 202):

    “The law has for many years been settled, and remains so at this day, that, where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and of fact…. The only exceptions to that rule are, cases where the award is the result of corruption or fraud, and one other, which though it is to be regretted, is now, I think, firmly established, viz., where the question of law necessarily arises on the face of the award, or upon some paper accompanying and forming part of the award. Though the propriety of this latter may very well be doubted, I think it may be considered as established.”

    5. Citing with approval this passage, Lord Dunedin observed in 50 I.A 3243 as follows (page 331):

    “Now the regret expressed by Williams, J. in (1857) 3 C.B (N.S) 189 has been repeated by more than one learned Judge, and it is certainly not to be desired that the exception should be in any way extended. An error in law on the face of the award means, in their Bordships' view, that you can find in the award or a document actually incorporated thereto, as for instance, a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous. It does not mean that if in a narrative a reference is made to a contention of one party, that opens the door to seeing first what that contention is, and then going to the contract on which the parties' rights depend to see if that contention is found. Here it is impossible to say, from what is shown on the face of the award, what mistake the arbitrators made.”

    6. These observations are still good law and in that case their Lordships found that on the face of the award no mistake could be attributed to the arbitrators. In the present case the arbitrator evidently thought that whatever be his findings, he was at liberty to distribute the property according to his own sweet will. The wording of the deed of reference clearly shows that this power was not conferred upon him by the parties to it. They wanted him to decide the matters in dispute after hearing what they had to say and give his finding as to who was entitled to the property. They wanted it to be determined by the arbitrator what the rights of the parties to the property were, but they did not want him to distribute the property wantonly on the alleged apprehension that a decision according to his findings might lead to future litigation. Mr. Jahagirdar also referred to the ruling in 35 Bom. 1534 where the award of an arbitrator was upheld although he had given to a minor party to the reference a smaller share than what he was entitled to. But there according to the view of the law taken by the arbitrator, he held that the minor was entitled to a smaller share only and gave his decision in accordance with that finding, Chandavarkar, J. observing (p. 155) that the validity of the award must be determined according to the circumstances as they existed at its date; and not by what transpired some years after it had been passed by the arbitrator.

    7. To the same effect is the ruling in 2 Lah. 1145 where it was held that an arbitrator was not controlled in his decision by the rules of Hindu law and could give effect to what he conceived to be the intention of the deceased father of the parties. But in this case the arbitrator did not even think that he was giving effect to any wishes of Bhagu's husband. On the other hand he found that according to his wishes Bhagu had given all her property except 1 acre and 7 gunthas of the land to her son-in-law. If so, by no stretch of imagination can it be said that he was giving effect to Masu's wishes in giving 39 gunthas to defendants 2, 3 and 4, or, 2 acres to the plaintiff. It is true that a Court cannot go into the question as to whether the award is reasonable or not, but the Court can certainly see whether the award is illegal on the face of it, and if the award passed by the arbitrator is in direct contravention of the findings arrived at and definitely recorded by him, then the award must be held illegal on the face of it. I, therefore, agree with the finding of the trial Court that the award is not binding on the plaintiff.

    8. The next question that arises, if the award goes out of the plaintiff's way, is whether he is entitled to the entire property. The learned trial Judge has considered this point and has rightly observed that as Masu's adopted son Appa was living at the time of his death, Masu was a coparcener in a joint family and as such he could not make an oral will about gifting away any part of the joint family property to defendant 1.

    9. Hence the direction alleged to have been given by him to his wife Bhagu about gifting away the suit property to defendant 1, even if proved, can be of no avail to defendant 1 and cannot validate the gift made by Bhagu. That finding was not challenged in appeal before the learned District Judge. The plaintiff is, therefore, entitled to all the property left by Bhagu as the nearest reversionary heir.

    10. For these reasons, I allow the appeal, set aside the decree of the lower appellate Court and restore that of the trial Court. Defendant 1 shall pay the costs of the appellants throughout. All the defendants shall bear their own costs.

    11. Appeal allowed.

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    Maruti Aba Bongane v. Akaram Pandu More
    (Mar 20, 1946)