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Monday, November 15, 2021

Arbitrator had committed an error in deciding the issue relating to 99 diamonds and one emerald ring for the 16 | P a g e following reasons. As has been rightly held by the High Court, the mandate for the Arbitrator is to decide whether said jewellery is stridhana property of the Respondent No. 1. A plain reading of the terms of reference No.(iii) would indicate the fact that the said jewellery being given to the Appellants in 1971 has been taken note of. Mere handing over of the jewellery to the Appellants in 1971, therefore, cannot be the reason for holding that the Appellants are entitled to retain the jewellery. The Arbitrator has concluded that 99 diamonds and one emerald ring, are in fact, stridhana property of Respondent No.1. That concludes point No.(iii) of the terms of reference. Point No.(iv) of the terms of reference relates to division of 99 diamonds and one emerald ring among 7 sharers only in case the Arbitrator comes to a conclusion that they are stridhana property. In the interim award, the Arbitrator heavily relied upon the award of 1971 and the fact of the 99 diamonds and one emerald ring being handed over to the Claimants, for the purpose of deciding that Respondent No. 1 is not entitled to claim the return of the said jewellery. The Arbitrator has committed a jurisdictional error by travelling beyond the terms of reference. Further, the Arbitrator has committed an error in permitting the Appellants to retain the jewellery. According to item No.(iv) of the terms of reference, the Arbitrator had to 17 | P a g e decide the entitlement of all the seven parties to equal shares in the event of finding that the jewellery is not stridhana property. Therefore, we approve the conclusion of the High Court by upholding the impugned judgment. The appeals are accordingly, dismissed.

 Non-Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal Nos. 6657-6658 of 2021

(Arising out of SLP (C) Nos. 30737-30738 of 2018

Pusapati Ashok Gajapathi Raju

& Anr. .... Appellant (s)

Versus

Pusapati Madhuri Gajapathi Raju

& Ors. ….Respondent(s)

W I T H

Civil Appeal Nos.6659-6660 of 2021

(Arising out of SLP (Civil) Nos. 12061-12062 of

2019)

 J U D G M E N T

L. NAGESWARA RAO, J.

Leave granted.

1. The Petition filed under Section 34 of the Arbitration and

Conciliation Act, 1996 (hereinafter referred to as “the Act”) by

Respondent No.1 was dismissed by the District Judge,

Vizianagaram and the interim award of the Arbitrator dated

26.05.2007 was upheld. The High Court partly allowed the

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Appeals filed by the Respondents under Section 37 of the Act,

aggrieved by which the Appellants are before this Court.

2. Pusapati Vijayaram Gajapathi Raju succeeded to

Vizianagaram estate on 25.10.1937. He was married to Kusum

Madgoankar. They had three children namely, P. Ashok

Gajapathi Raju, P. Anand Gajapathi Raju and Smt. Vasireddi

Sunita Prasad. A public trust known as “MANSAS” was created

by P.V.G. Raju for education and charitable purposes. As the

karta of the family, P.V.G. Raju partitioned the properties of the

joint family in terms of the registered document dated

18.06.1960.

3. P.V.G. Raju divorced Kusum Madgoankar and married

Madhuri Gajapathi Raju, Respondent No.1 herein, in 1963. P.

Alaakanarayana Gajapathi Raju, P. Monish Gajapathi Raju and

Sudhani Devi were born to them. The dispute that arose

amongst the family members of P.V.G. Raju was referred to

Arbitration to Kumaraja of Bobbili who passed an award on

28.06.1971 allotting the properties to eight members of the

family. The said award was duly registered and made a decree

of court on 21.04.1972 in O.S. No.70 of 1971.

4. Thereafter, the Appellants filed a suit bearing OS No.

29/74 in the sub-court at Vizianagaram seeking division of

certain properties by metes and bounds. The suit was partly

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decreed by the District Court on 31.10.1979. Against the

decree dated 31.10.1979, the Appellants filed an Appeal and

the Defendants in this suit filed certain cross-objections. On

24.07.1992, the High Court dismissed the Appeal filed by the

Appellants while partly allowing the cross-objections filed by

the Defendants in the suit. Not satisfied with the judgment of

the Hight Court, the Appellants filed SLP which was converted

as Civil Appeal No. 5251 of 1993.

5. During the pendency of the Civil Appeal No. 5251 of 1993

before this Court, Sri. PVG Raju passed away on 14.11.1995.

Post his demise, on 08.03.2000, all the parties filed a joint

application before this Court to refer the matter for arbitration.

The terms of reference in the application are as follows:

“(i) The entire subject matter of the appeal in dispute including

the properties that were partitioned in 1960 between late

P.V.G. Raju and his two sons Sri P. Anand Gajapathi Raju and Sri

P. Ashok Gajapathi Raju, and the lands given to Smt. Sunita

Prasad (daughter) and the properties that were divided in the

award proceedings in pursuance of the award of Kumararaja of

Bobbili of 1971.

(ii) All the shares with companies, certificates, bonds,

Government Securities, and all moveable and immoveable

properties including impartible properties (except those which

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have been alienated by late P.V.G. Raju during his life time

before his death on 14.11.1995 subject to proof) will be

divided into seven equal shares and allot one such share to

each of the parties to the appeal;

(iii) The Arbitrator will also take into account 99 diamonds and

one emerald ring given to the applicants in 1971 and claimed

to be streedhana property of Smt. Madhuri V. Raju. The

Arbitrator will decide whether the aforesaid items are the

streedhana properties or not of Smt. Madhuri V. Raju;

(iv) In case the Arbitrator comes to the conclusion that the said

diamonds and emerald ring are not streedhana properties of

Smt. Madhuri V. Raju, all the parties to the appeal are entitled

to 1/7

th

 share equally in the said diamonds and emerald ring;

and

(v) The Arbitrator will not take into account the findings

recorded by the courts below.”

6. Mr. Justice S. Ranganathan, retired Supreme Court Judge

was appointed as the Sole Arbitrator by this Court on

28.03.2000 and the dispute with respect to the

aforementioned terms of reference were referred for arbitration

to him.

7. On 26.05.2007, the Arbitrator passed an interim award in

the following terms :

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“ IX. CONCLUSIONS AND INTERIM AWARD

156. Having dealt with the various contentions raised

by the parties, the Tribunal proceeds to set out its

findings and conclusions:

(I) As the agreement of 08.03.2000 among all the

parties (embodied in the Supreme Court's order)

envisages the division of all the divisible properties

(movable and Impartible) of the family into seven equal

shares and allotment of one share to each of the

parties here, it is directed that the properties should be

so divided and allotted among the parties. However, it

will not follow that each sharer will be entitled to a one

seventh share in each asset as some items have been

divided differently in 1960 and 1971 and these

divisions have been accepted by us with slight

modification.

(2) The Tribunal has considered the partitions of 1960

and 1971 on their merits and is of opinion that the

allotments made at these partitions do not require to

be disturbed, except to a small extent specified against

the relevant Items and, necessarily, to the extent they

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are affected by the death of PVG requiring a division of

the items allotted to his share at these partitions.

3) The lands described in Schedule I-A and II-B to II-H

have already been partitioned in 1960 and 1971.

Though the division is not in equal shares, there is no

need to disturb the earlier allotments and inequalities,

if any, will be made up in the final adjustments that will

require to be made. The division and allotments will be

made as per the terms of the 1960 partition deed and

the 1971 partition award as modified hereunder. As

these items already stand divided much earlier, they

do not really form part of this Award. However, the

properties listed in Schedule II-A, which had been

allotted to PVG in-1971, need to be divided equally

under the present sharers.

(4) The Tribunal is of opinion that one-fifth of the

extents of land in Schedule I-A and I-B claimed as set

apart for maintenance holders cannot on principle, be

excluded from partition although the sharers will be

responsible to meet the claims, if any, of maintenance

holders in equal shares and their liability in this regard

will be joint and several. It is, however, seen that even

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in the plans and sketches drawn up by R-1 and

appended to the award, portions have been shown as

earmarked for the maintenance holders. With a view to

avoid unnecessary confusion, it is made clear that the

parties will be at liberty, in those cases where the

sketches have been approved, to adhere to these

plans, If they so desire, retain the earmarked portions

in favour of the maintenance holders and divide only

the balance among themselves in accordance with the

plans.

(5) The properties set out in Schedules 1 to IX will be

divided in the manner set out in the discussions under

the relevant schedules and keeping in mind the

findings contained therein. In doing so, help may be

taken from the plans appended to the award in respect

of some of the items, without, however, treating them

as conclusive. They may need modifications, if only for

including the areas earmarked for maintenance holders

in the land available for division if so opted for by the

parties.

(6) A very vital reservation is hereby made in regard to

the assets described in Schedules IA and IB. In paras

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148 to 154, it has been pointed out that the provisions

of Urban Celling Act will override any partition

arrangement in respect of lands covered thereby. Thus,

while all the sharers may determine their right in

respect of these lands among item inter se, the

partitions directed hereby can only affect these pieces

of lands that. remain with the various members of the

family on the final outcome of the proceedings under

the land ceiling Act.

(7) The discussions in the award will show that out of

the items listed in the various schedules, several are

not available for various reasons such as item 3 of

Schedule I-A, Items 2 to 6 of Schedule 1-B and items 3

and 4 of Schedule 11-A. The half share of property In

Item 7 of Schedule II-A Is stated to have been disposed

of by him and it is agreed that this can be left out of

this award. This apart, the partition of the Item

Schedules IA and II-B to II-H have already been effected

by stamped and registered documents and are not

really under this document. Hence these items are not

effectively the subject matter of partition under this

document. So also, Items 2, 6 and 7 of Schedule V

which have been found to belong exclusively to RI and

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the items set out in Schedule X (also in items 20 and

22 of Schedule V and item 16 of Schedule VI) have

been found to be not partible among all the sharers

and though the issue of their partibility has been

decided here, no partition of these items is being

directed under this document.

(8) The more difficult and cumbersome process is that

of carrying out the physical division envisaged herein.

This Is usually done by Commissioners appointed for

the purpose. However the Tribunal wishes to strongly

impress on the parties that all the further steps in this

regard will consume time, expense and energy which

can be avoided if parties sit across the table and select

specific items of the properties in each schedule. They

should be having a fair idea of the value of the

properties and, with mutual goodwill and give and take,

this should not be impossible. If this is done the whole

matter can be given a quietus and the entire

controversy settled finally and once for all. It is hoped

that the parties will see the wisdom of this course in

preference to the tortuous and prolonged course that

may be otherwise have to be pursued. It is a happy

circumstance that, in its efforts to evaluate the

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properties covered by the award, the Tribunal had

occasion to appoint three valuers agreed to by the

parties who have given detailed reports setting out

their opinions on the values of the several assets.

While these opinions may not be binding on the

sharers, they will certainly facilitate discussions among

the parties and enable them to agree upon the mutual

division in specie of the assets inter se, so as to avoid

the last resort of selling all or any of them and dividing

the proceeds.

(9) The Tribunal has come to the conclusion (vide para

112 et seq) that this Award requires to be stamped in

according with Article 12 of Schedule I-A to the Stamp

Act (as applicable to Delhi). The detailed evaluation of

the properties for purposes of Stamp Duty Is made In

Annexure R to the Award to which are appended as

Annexure S, T, U, V and W, the reports of the three

valuers appointed for the purpose. The parties were

apprised of the stamp duty payable and have

submitted by pro- rata contribution, nonjudicial stamp

papers of appropriate denomination on which this

Award is inscribed.

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(10) Since this is a partition proceeding with all seven

parties entitled to equal shares, the costs of these

proceedings (including fee of arbitrators, fee of valuers,

stamp duty payable) and any expenses that, may have

to be incurred for registration of the award, the

consequent mutation in public records and the like,

shall be borne equally by all the seven parties.

157. Though the points of controversy between the

parties have been decided by this award, it will be only

in the nature of an interim award as several further

determinations and the task of physical division of the

properties are yet to be considered. Appropriate orders

recording the final partition will still have to be made

thereafter and, in so doing, it will also be necessary to

consider the value of the properties allotted to each of

the sharers and direct such adjustments as may be

necessary monetarily or in specie. One more important

aspect to be considered at the time of the final

discussion will be that of the mesne profits, if any,

payable by the shares in respect of properties allotted

to other remaining in their possession. This will need a

detailed consideration from several angles, extents,

date, quantum etc. and will have to be considered

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later. For these purposes, the tribunal will resume its

sittings and pass appropriate orders after the parties

have had time to study the contents of this award.”

8. Aggrieved by interim award dated 26.05.2007,

Respondent No.1 filed a Petition under Section 34 of the Act

which was dismissed by the District Judge, Vizianagaram on

24.06.2013. The District Judge, Vizianagaram refused to

interfere with the award by rejecting the contention of

Respondent No.1 that the award suffers from patent illegality

and jurisdictional errors. Against the order of the District

Judge, Vizianagaram dated 24.06.2013, appeals were filed by

Respondent Nos. 1 to 3 under Section 37 of the Act before the

High Court.

9. The Appeals filed by the Respondents under Section 37 of

the Act were partly allowed by the High Court. The

Respondents contended before the High Court that the

Arbitrator committed an error in being guided by the 1960

partition and the 1971 award. It was argued by the

Respondents that the partition of the properties had to be

decided afresh without reference to the earlier 1960 partition

and the 1971 award in view of the terms of reference. The

High Court rejected the said submission of the Respondents by

holding that the Arbitrator was not solely guided by the earlier

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partition and the award. The High Court approved the finding

of the Arbitrator who referred to the earlier partition and the

award wherever he found that such arrangements were just

and equitable.

10. One of the terms of reference of the Arbitration relates to

99 diamonds and one emerald ring claimed by Respondent

No.1 to be stridhana property. The High Court set aside the

interim award of the Arbitrator to the extent that it held that

the Respondent No.1 had relinquished her rights over the 99

diamonds and one emerald ring and that the Appellants were

entitled to deal with the same in the manner in which they

wish. It is relevant to note that the Respondents have not

preferred any Appeal against this judgment of the High Court.

The Appellants have challenged the findings of the High Court

in respect of the 99 diamonds and one emerald ring.

Therefore, in these Appeals, this Court is concerned only with

the correctness of the interim award relating to terms of the

reference (iii) and (iv) which pertains to 99 diamonds and one

emerald ring.

11. The terms of reference relating to the 99 diamonds and

one emerald ring are as under:

“(iii) The Arbitrator will also take into account 99

diamonds and one emerald ring given to the applicants

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in 1971 and claimed to be streedhana property of Smt.

Madhuri V. Raju. The Arbitrator will decide whether the

aforesaid items are the streedhana properties or not of

Smt. Madhuri V. Raju;

(iv) In case the Arbitrator comes to the conclusion that

the said diamonds and emerald ring are not

streedhana properties of Smt. Madhuri V. Raju, all the

parties to the appeal are entitled to 1/7

th

 share equally

in the said diamonds and emerald ring;”

12. In the interim award, the Arbitrator held that the 99

diamonds and one emerald ring were initially given to

Respondent No.1 by P.V.G. Raju as stridhana at the time of

engagement and marriage. The Arbitrator relied upon the

written statement filed by P.V.G. Raju in O.S. No.29 of 1974, the

evidence of Respondent No.1 in the said suit as well as the

affidavit filed by Respondent No.1 before him to come to a

conclusion that 99 diamonds and one emerald ring were

initially given to her as stridhana property. However, the

Arbitrator observed that these 99 diamonds and one emerald

ring were given by the Respondent No. 1 to the Claimants

(Appellant herein) in the year 1971 pursuant to the 1971

award for partition. The Arbitrator took note of the fact that

prior to the year 1971, the stridhana property was shown in

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the wealth tax returns by P.V.G. Raju. There is no reference to

the 99 diamonds and one emerald ring in the wealth tax

returns of P.V.G. Raju after 1971. The Appellants claimed

before the Arbitrator that 99 diamonds and one emerald ring

were voluntarily given by Respondent No. 1 to them. Whereas,

Respondent No.1 pleaded that she was coerced to part with 99

diamonds and one emerald ring. The request of Respondent

No.1 that the said stridhana property should be returned to her

was not accepted by the Arbitrator on the ground that the

arrangement made in 1971 cannot be disturbed. The

Arbitrator further recorded the statement of Claimant No.1 that

his wife Uma had broken the miniature studded with gems and

made jewellery out of it and that he had delivered the

diamonds to his estranged wife. The Arbitrator also took note

of the submission on behalf of the Claimant No.2 that he has

made a chain out of the 99 diamonds and presented it to his

wife and Claimant No.3 that he had sold the diamonds which

fell to his share. Finally, the Arbitrator held that Respondent

No.1 had validly relinquished the stridhana property which was

divided amongst all the shareholders and she cannot be

permitted to seek return of the jewellery.

13. While setting aside the finding of the Arbitrator regarding

the stridhana property, the High Court was of the opinion that

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the Arbitrator committed a jurisdictional error in his conclusion

about the right of Respondent No.1 over the 99 diamonds and

one emerald ring. According to the High Court, the Arbitrator

could not have rejected the plea of Respondent No.1,

especially after finding that the 99 diamonds and one emerald

ring was stridhana property of the Respondent No. 1. The

mandate of the Arbitrator was to decide whether the said

jewellery is stridhana property and only in case the Arbitrator

found that the said jewellery is not stridhana property, the

Arbitrator shall decide the entitlement of the parties for the

equal share. The High Court found fault with the interim award

on the ground that the Arbitrator traversed beyond the terms

of reference. If the said jewellery is held to be the stridhana

property of Respondent No. 1, the question of deciding on the

division of the property due to the change in the nature of the

properties subsequently does not arise. The High Court further

observed that the award passed in 1971 is not final and

binding. If it was binding, the dispute relating to said jewellery

being stridhana property would not have been referred to the

Arbitrator.

14. We are in agreement with the judgment of the High Court

that the Arbitrator had committed an error in deciding the

issue relating to 99 diamonds and one emerald ring for the

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following reasons. As has been rightly held by the High Court,

the mandate for the Arbitrator is to decide whether said

jewellery is stridhana property of the Respondent No. 1. A

plain reading of the terms of reference No.(iii) would indicate

the fact that the said jewellery being given to the Appellants in

1971 has been taken note of. Mere handing over of the

jewellery to the Appellants in 1971, therefore, cannot be the

reason for holding that the Appellants are entitled to retain the

jewellery. The Arbitrator has concluded that 99 diamonds and

one emerald ring, are in fact, stridhana property of Respondent

No.1. That concludes point No.(iii) of the terms of reference.

Point No.(iv) of the terms of reference relates to division of 99

diamonds and one emerald ring among 7 sharers only in case

the Arbitrator comes to a conclusion that they are stridhana

property. In the interim award, the Arbitrator heavily relied

upon the award of 1971 and the fact of the 99 diamonds and

one emerald ring being handed over to the Claimants, for the

purpose of deciding that Respondent No. 1 is not entitled to

claim the return of the said jewellery. The Arbitrator has

committed a jurisdictional error by travelling beyond the terms

of reference. Further, the Arbitrator has committed an error in

permitting the Appellants to retain the jewellery. According to

item No.(iv) of the terms of reference, the Arbitrator had to

17 | P a g e

decide the entitlement of all the seven parties to equal shares

in the event of finding that the jewellery is not stridhana

property. Therefore, we approve the conclusion of the High

Court by upholding the impugned judgment. The appeals are

accordingly, dismissed.

15. We are informed by the learned counsel appearing for the

parties that an Arbitrator has to be appointed to pass the final

award. It is stated that after the resignation of Justice S.

Ranganathan (Retd.), Justice P. Lakshman Reddy (Retd.) was

appointed as an Arbitrator by the High Court. However, in

September 2019, Justice P. Lakshman Reddy (Retd.) has been

appointed as Lokayukta. In light of the above, we appoint Mr.

Justice Kurian Joseph to act as a sole Arbitrator and to continue

the arbitration proceedings and pass a final award in S.R.A.T.

No. 2/2000 pending between the parties. As the dispute has

been pending for a number of years, we request the Arbitrator

to expedite and complete the proceedings at the earliest.

 …….................................J.

 [ L. NAGESWARA RAO ]


........................J.

 [ B.R. GAVAI ]

New Delhi,

November 09, 2021.

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