Holding

The award, being the product of arbitrators appointed by mutual consent without misconduct, is valid and may be made a rule of court under Section 39(1)(6) of the Arbitration Act, 1940, and may be modified by the parties’ settlement.

Summary

The brothers Balwant Singh and Dungar Singh disputed the partition of their father’s property and, by mutual consent, appointed three close relatives as arbitrators under an agreement dated 23‑11‑1981. The arbitrators passed a detailed award allocating houses, land, jewellery and cash, which was later registered. Dungar Singh applied to the District Judge to make the award a rule of court; Balwant Singh objected, leading the District Judge to reject the application on grounds of procedural irregularities and alleged haste. The respondents appealed to the High Court under Section 39(1)(6) of the Arbitration Act, 1940, which held that the award was unanimous, free of arbitrator misconduct, and based on the parties’ submissions, and set aside the District Judge’s order. On further settlement, the parties agreed to modify the award, including a payment of Rs 10,00,000 for jewellery, and sought to have the modified award enforced. The Supreme Court affirmed the High Court’s view, holding that the award was valid and could be made a rule of court, and ordered the registry to draft a decree reflecting the modified award. The appeal was disposed of.

Issues considered

Whether an arbitral award passed by arbitrators who are close relatives, appointed by mutual consent, can be made a rule of court under Section 39(1)(6) of the Arbitration Act, 1940.
Whether the award was passed after due consideration despite alleged procedural irregularities such as delayed signing and hurried proceedings.
Whether the award may be modified by the parties’ subsequent settlement and still be enforceable as a rule of court.

Legislation cited

Arbitration Act, 1940s. 39(1)(6)

Subjects

ArbitrationArbitral awardSection 39Rule of courtFamily partitionClose relatives as arbitratorsAward modificationSettlement

Judgment

[2020] 1 S.C.R. 609 609

BALWANT SINGH (D) THR. LR. A
v.
DUNGAR SINGH (D) THR. LRS.
(Civil Appeal No. 7850 of 2009)
FEBRUARY 12, 2020 B
[R. BANUMATHI AND A. S. BOPANNA, JJ.]
Arbitration Act, 1940 – s.39(1)(6) – Disputes arose between
appellant and respondent (brothers) after the death of their father,
regarding partition of family properties – By an agreement they
C
appointed three arbitrators, who were their close relatives for
partitioning immovable properties, shares and jewellery –
Arbitrators passed award mentioning therein that the decision given
unanimously by the three of them will be binding on the parties –
Respondent filed application before District Judge to make the award
rule of the court – Objection raised by appellant – Application D
dismissed by the District Judge – Respondents filed appeal
u/s.39(1)(6) – Allowed by High Court – Held: Parties by mutual
consent agreed to the appointment of all the three arbitrators and
submitted their respective claims before them – Arbitrators are close
relatives of the parties and no misconduct is alleged against them –
E
High Court rightly set aside the order of the District Judge holding
that the award has been passed after due consideration – With a
view to further amicably settle the matter, the parties arrived at
settlement – In view of the same, with the consent of the parties, the
award is modified – Registry to draft the decree in terms of the
modified award. F
Disposing of the appeal, the Court
HELD: 1.1 The parties had by mutual consent agreed to
the appointment of all the three arbitrators and they had submitted
their respective claims before the arbitrators. The arbitrators
are the close relatives of the parties and no misconduct is alleged G
against the arbitrators. They have also filed the will made by their
father before the arbitrators. Both the parties were present and
gave their consent in writing. That apart, the parties also
submitted their respective claims in the properties and the
H
609
610 SUPREME COURT REPORTS [2020] 1 S.C.R.

A arbitrators after hearing the parties, passed the award. Having
regard to the fact that the parties have consented for the
arbitrators to consider their claims and pass the award, the High
Court rightly set aside the order of the District Judge holding
that the award has been passed after due consideration. In view
of further settlement arrived at between the parties, with the
B
consent of the parties, the award stands modified. Registry is
directed to draft the decree accordingly. [Paras 6, 8 and 10][613-
C-E, H; 615-B]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7850
Of 2009.
C
From the Judgment and Order dated 01.06.2006 of the High Court
of Rajasthan at Jodhpur in S.B. Civil Miscellaneous Appeal No. 180 of
1989.
Prashanto Chandra Sen, Sr. Adv., P. S. Sudheer, Kaushthubh Singh,
D Rishi Maheshwari, Ms. Anne Mathew, Bharat Sood, Ms. Shruti Jose,
Advs. for the Appellants.
Puneet Jain, Ms. Christi Jain, Harsh Jain, Harshit Khanduja,
Abhinav Deshwal, Ms. Pratibha Jain, Advs. for the Respondents.
The Judgment of the Court was delivered by
E
R. BANUMATHI, J.
1. This appeal has been filed by the appellant against the final
order and judgment dated 01.06.2006 passed by the High Court of
Rajasthan at Jodhpur in SB Civil Miscellaneous Appeal No.180 of 1989
in and by which the High Court allowed the appeal of the respondents
F
and made the arbitral award between the parties the rule of the court.
2. Balwant Singh and Dungar Singh are real brothers. After the
death of their father-Jeet Mal Jain, disputes arose between them regarding
partition of family properties. The parties decided to settle their dispute
amicably through arbitration proceedings. Vide agreement dated
G 23.11.1981, they have appointed Shri Fateh Lal, Kiran Mal and Sensh
Mal as arbitrators for partitioning immovable properties, shares and
jewellery. These arbitrators were also close relatives of the parties. The
arbitrators Shesh Mal Pagaria is brother-in-law of Dungar Singh, Shri
Kiranmal Swansukha is co-brother of Balwant Singh and Fateh Lal Hingad
H is a close relative of the parties. The arbitrators passed award dated
BALWANT SINGH (D) THR. LR. v. DUNGAR SINGH (D) THR. 611
LRS. [R. BANUMATHI, J.]

23.11.1981 mentioning therein that the decision given unanimously by A
the three of them will be binding on both the parties. By this award, the
arbitrators had given the following decisions:-
• “In the house situated at Babelon Ki Sehri, except for the one
house which is on the left side of the pole and is known as
Popat Wala House, all other houses will belong to Shri Dungar B
Singh Ji Babel.
• After giving the benefit of all the houses to Dungar Singh Ji,
plot admeasuring 80× 40 situated in Mehtaji Ki Badi and Papat
Wala House and plot located in Babelon Ki Sehri will remain
with Shri Balwant Singh Ji. Whole agricultural land will remain C
with Shri Dungar Singh Ji and Shri Dungar Singh Ji will give
Rs.9,000/- to Balwant Singh Ji.
• According to the list of jewellery placed in bank locker, “Baju”
will remain with Shri Dungar Singh Ji and “Kangania” – (two)
will remain with Shri Balwant Singh Ji. The remaining gold D
and silver jewellery will be given to both of them in equal parts.
• Capital that has been received from the shop by Shri Jeetmal
Ji and his wife by Notice Munju dated 13.06.1973 comes to a
total amount of Rs.20,381/- + Rs.4281.17 = Rs.2466.17
(Rupees Twenty Four Thousand Six Hundred Sixty Eight and E
Paise Seventeen Only) and from that both will get fifty – fifty
share and accordingly Shri Dungar Singh Ji will give Rs.12,334/
- (Twelve Thousand Three Hundred Thirty Four Only) to
Balwant Singh Ji.
• Both will get equal share of the share certificates that are in F
the name of Shri Jeetmal Ji Babel.
• Utensils that are given in the list will be distributed equally
between them.
• In the above decision, demands made by both of you and G
whatever is possessed by each of you is maintained on as is
where is basis. And this decision is taken that all other demands
are over. Meaning both of them has nothing to do with each
other.”
On 10.12.1982, Collector (Stamps), Udaipur registered the award.
H
612 SUPREME COURT REPORTS [2020] 1 S.C.R.

A 3. On 07.04.1983, Dungar Singh filed an application before the
District Judge to make the award rule of the court. Along with the
application, acceptance of both the parties and award given by the
arbitrators were also presented. Appellant Balwant Singh raised objection
assailing the award. The court called for evidence of both the parties.
B The application for making the award rule of the court was dismissed by
the District Judge, Udaipur. The District Judge held that the panch had
conducted the whole proceedings in their own way and such an award
cannot be considered valid in law. The court noted that on examining the
award, it was found that the award was written on 23.11.1981 and the
respondent Dungar Singh had signed the award after a long time on
C 26.07.1982. The court also noted that on 26.07.1982 itself, one panch
Sheshmal Pagaria produced the award before the arbitration judge where
stamp deficiency was removed and on the very same day i.e. 26.07.1982,
the same was produced before the Deputy Registrar, Udaipur for
registration. It was observed that it is not clarified as to where was the
D original award from 23.11.1981 to 26.07.1982. The District Judge further
held that though allegations of misconduct by any panch was not
established but it was found that the three panchas completed the
proceedings quite hurriedly and probably have not given enough time to
Balwant Singh to put forth his side. The court therefore observed that
making the award rule of the court does not appear to be safe and
E
justifiable because the award by the panch is not fully clear on the basis
of which the dispute between the parties could be finally settled.

4. Aggrieved, the respondents filed appeal before the High Court
under Section 39(1)(6) of the Arbitration Act, 1940. The High Court by
F impugned judgment dated 01.06.2006 opined that on going through the
award, it is seen that the award was given unanimously by the arbitrators.
The High Court further held that no misconduct was found on the part
of the arbitrators and the award is based on the materials supplied by the
parties and after due deliberation and discussion. The High Court held
that the arbitrators are the close relatives of the parties and one of the
G arbitrators Shri Kiran Mal is the brother-in-law of Balwant Singh and as
per Ex.-7, the arbitrators were appointed by mutual consent. Pointing
out that mere passing of the award on the same day in one sitting does
not give rise to any suspicion and would not raise any doubt or ambiguity
and that no misconduct has been alleged against the arbitrators, the High
H
BALWANT SINGH (D) THR. LR. v. DUNGAR SINGH (D) THR. 613
LRS. [R. BANUMATHI, J.]

Court set aside the order of the learned District Judge and concluded A
that the award deserves to be made rule of the court and accordingly,
declared to be so. Being aggrieved, the appellant has preferred this appeal.
5. We have heard Mr. Prashanto Chandra Sen, learned Senior
counsel appearing for the appellant and Mr. Puneet Jain, learned counsel
appearing for the respondents and also perused the impugned judgment B
and materials on record.
6. It can be seen from the terms of reference dated 23.11.1981
that the parties had agreed that the arbitral award would be passed
unanimously by the arbitrators and the same would bind the parties. As
C
pointed out by the High Court, the parties had by mutual consent agreed
to the appointment of all the three arbitrators and they had submitted
their respective claims before the arbitrators. As pointed out earlier, the
arbitrators are the close relatives of the parties and no misconduct is
alleged against the arbitrators. They have also filed the will made by
their father Jeetmal Singh before the arbitrators. Both the parties were D
present and gave their consent in writing. That apart, the parties have
also submitted their respective claims in the properties and the arbitrators
after hearing the parties, passed the award. Having regard to the fact
that the parties have consented for the arbitrators to consider their claims
and pass the award, the High Court rightly set aside the order of the E
District Judge holding that the award has been passed after due
consideration.
7. With a view to further amicably settle the matter, the parties
have negotiated and agreed that on Item No.8-Jewellery, in lieu of 50%
of the jewellery which the LRs of Dungar Singh are entitled i.e. 40 tolas, F
LR of Balwant Singh shall pay the amount of Rs.10,00,000/- to the LRs
of Dungar Singh within a period of nine months. The parties have further
agreed that insofar as the land falling in Khasra No.15/1Ka which has
been sold by Balwant Singh which is the subject matter of litigation
against the third party, LRs of Dungar Singh shall continue the litigation
G
with the third party.
8. In view of further settlement arrived at between the parties,
with the consent of the parties, the award shall stand modified as under:-

H
614 SUPREME COURT REPORTS [2020] 1 S.C.R.

A Description of Properties involved in the Arbitration Award
and stand of the parties
Sl. De scription of Property Assigne d to as pe r Party in Possession
No. the Award Who is in possession Stan d of the parties
1. House at Babelon Ki Sehri Dungar Singh LRs of Dungar Singh LRs of Dungar Singh cont inue
to remain in possession of the
house.
2. Popat W ala House, Old House Balwant Singh LRs of Dungar Singh LRs of Dungar Singh are ready
to hand over possession of the
B said house.
Possession of house shall be
handed over on or before
31.05.2020.
3. Remaining House Dungar Singh LRs of Dungar Singh LRs of Dungar Singh cont inue
to remain in possession.
4. P lot ad measuring 80*40 Rs.9,000/- payable Balwant Singh In vie w of the com promise ,
situat ed in Mehtaji ki Badi by LRs of Dungar payment of amount of
Singh t o LRs of Rs.10,00,000/- by LRs of
Balwant Singh Bal want Singh qu a Item No.8
– Jewellery to be paid to LRs
C of Dungar Singh within a
peri od of nine m onths. The
amount of Rs.9,000/- is not
payable by LRs of Dun gar
Singh to LRs of Balwan t
Singh .
5. Agricult ure Land Dungar Singh The said agriculture land Land falling in Khasra
falls in Khasra No.15/1Ka No.15/1Ka has been sold by
and 13/3, Vallabh Nagar,
Balwant Singh regarding which
Udaipur.
litigat ion is pending against
Land falling in Khasra third party.
No.15/1Ka has been sold
LRs of Dungar Singh are at
D by Balwant Singh.
liberty to cont inue the lit igation
with the third party at their cost.
6. Money from Shop Owned by To be split equally Amount payable In view of the amount of
Lat e Shri Jeetmal and Wife Rs.12,334/- by LRs of Rs.10,00,000/- agreed to be
Dungar Singh to LRs of paid by LRs of Balwant Singh
(20,381+4281.17=24668.17) Balwant Singh. qua i tem No.8 – Jewellery, this
amount of Rs.12,334/- is not
payable by the LRs of Dun gar
Singh .
7. Share cert ificat e in the name of To be split equally LRs of Dungar Singh LRs of Dungar Singh are ready
Jeetmal Ji Babel to equally divide the shares
E amongst themselves and LRs of
Balwant Singh.
Shares shall be divided within a
period of t hree mont hs.
8. Jewellery: Dungar Singh LRs of Balwant Singh The said jewelleries are said t o
i. Baju have been taken or withdrawn
ii. Kangan*2 Dungar Singh
by Balwant Singh from Bank
iii. Remaining gold and silver To be distributed in Locker of Bank of Rajasthan on
equal share
21.08.1991.
Weight of the said jewelleries is
F 80 t olas (800 gms) and the LRs
of Dungar Singh are entit led t o
50% i.e. 40 t olas of the same.
In lieu of 50% of the je wellery,
LRs of Balwant Singh agree d
to pay an amount of
Rs.10,00,000/- to LRs of
Dungar Singh. Amount of
Rs.10,00,000/- is payable
within a pe riod of nine
mon ths.
G
9. LRs of Balwant Singh – Deepak B Jain s/o Balwant Singh has
filed an affidavit stating that the appellant shall pay an amount of
Rs.10,00,000/- within a period of nine months in lieu of the share of gold
of Lrs. of Dungar Singh in full and final settlement. Mr. Lalit Kumar
Babel, LRs of Dungar Singh has also filed an affidavit that in lieu of
H jewellery of 40 tolas, they are ready to receive Rs.10,00,000/-. In case,
BALWANT SINGH (D) THR. LR. v. DUNGAR SINGH (D) THR. 615
LRS. [R. BANUMATHI, J.]

if the amount of Rs.10,00,000/- is not paid within a period of nine months, A
the appellant is liable to pay an interest at the rate of 9% per annum on
the said amount of Rs.10,00,000/-.
10. In terms of the above modified award as stated in Para No.
(8), the appeal shall stand disposed. Registry is directed to draft the
decree accordingly. The chart in Para No.(8) shall form part of the B
decree.

Divya Pandey Appeal disposed of.

C

D

E

F

G

H