Case Note & Summary
The appeal arose from a decision of a Learned Single Judge dismissing a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an award made by three panchas appointed under a power of attorney executed on 31 October 2007. The appellant, Jayantilal Hiralal Patel, and the respondents were heirs of late Hiralal Velji Sankhala. The power of attorney appointed three panchas to divide the property among the co-sharers, with a clause that the decision of the panchas would be binding. The panchas made an award dividing the property. The appellant challenged the award under Section 34, contending that the power of attorney did not constitute an arbitration agreement and that the award was vitiated by bias and non-application of mind. The Single Judge dismissed the petition. On appeal, the Division Bench held that the power of attorney clearly evidenced an intention to refer disputes to arbitration and constituted an arbitration agreement in writing under Section 7 of the Act. The court further held that the award was not liable to be set aside under Section 34 as it did not suffer from patent illegality or conflict with public policy. The award was reasoned and based on material, and the appellant's allegations of bias were not substantiated. The appeal was dismissed.
Headnote
A) Arbitration Law - Arbitration Agreement - Power of Attorney as Arbitration Agreement - Section 7, Arbitration and Conciliation Act, 1996 - The court held that a power of attorney executed by co-sharers appointing three panchas to divide property, with a clause that the decision of the panchas would be binding, constitutes an arbitration agreement in writing. The document evidenced an intention to refer disputes to arbitration and the panchas were to act as arbitrators. (Paras 1-5)
B) Arbitration Law - Challenge to Award - Section 34, Arbitration and Conciliation Act, 1996 - The court held that the award of the panchas was not liable to be set aside under Section 34 as it did not fall within the grounds of patent illegality or conflict with public policy. The appellant's challenge based on alleged bias and non-application of mind was rejected as the award was reasoned and based on material. (Paras 6-8)
Issue of Consideration
Whether a power of attorney appointing panchas to divide property constitutes an arbitration agreement and whether the award is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996.
Final Decision
The appeal is dismissed. The decision of the Learned Single Judge dismissing the petition under Section 34 of the Arbitration and Conciliation Act, 1996 is upheld.
Law Points
- Arbitration agreement
- Panchayat award
- Section 34 Arbitration and Conciliation Act 1996
- Power of attorney as arbitration agreement
- Public policy challenge
Case Details
2012 LawText (BOM) (08) 55
Appeal No.42 of 2012 in Arbitration Petition No.154 of 2008
Dr. D.Y. Chandrachud, R.D. Dhanuka
Mr. Udaya Sankar Samudrala for the Appellant, Mr. K.K. Malpathak for the Respondents
Dhanlaxmi Kantilal Patel and others
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Nature of Litigation
Appeal against dismissal of petition under Section 34 of Arbitration and Conciliation Act, 1996 challenging an arbitration award.
Remedy Sought
Appellant sought to set aside the award made by panchas dividing property among co-sharers.
Filing Reason
Appellant contended that the power of attorney did not constitute an arbitration agreement and that the award was vitiated by bias and non-application of mind.
Previous Decisions
Learned Single Judge dismissed the petition under Section 34 of the Arbitration and Conciliation Act, 1996 on 18 November 2011.
Issues
Whether the power of attorney executed on 31 October 2007 constitutes an arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996.
Whether the award of the panchas is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996.
Submissions/Arguments
Appellant argued that the power of attorney did not contain an arbitration agreement and that the panchas were not arbitrators but mere agents.
Appellant argued that the award was biased and without application of mind.
Respondents argued that the power of attorney clearly evidenced an intention to refer disputes to arbitration and that the award was valid.
Ratio Decidendi
A power of attorney appointing panchas to divide property, with a clause that their decision shall be binding, constitutes an arbitration agreement in writing under Section 7 of the Arbitration and Conciliation Act, 1996. The award of such panchas is not liable to be set aside under Section 34 unless it falls within the grounds of patent illegality or conflict with public policy.
Judgment Excerpts
The power of attorney would indicate that an agreement was entered into by the co-sharers in the property, including the Appellant by which three members of the community were appointed to effect a division of the property among the co-sharers.
The power of attorney authorised the three panchas, after considering the division already made and the terms of the will to take a decision 'after making changes as required' and the decision made by Panch after applying their awareness and brains is accepted and will be acceptable by us all.
Procedural History
The appellant filed Arbitration Petition No.154 of 2008 under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the award. The Learned Single Judge dismissed the petition on 18 November 2011. The appellant filed Appeal No.42 of 2012 against that dismissal. The Division Bench heard the appeal and dismissed it on 6 August 2012.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 7, Section 34
