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An arbitral award declaring only price of land, cannot be 'Executed' by Executing Court by directing execution of Sale Deed: SC

The SC on April 24, 2020 {FIRM RAJASTHAN UDYOG & ORS. v. HINDUSTAN ENGINEERING & INDUSTRIES LTD.} held that   the   Award  passed in present case was   merely   for   the declaration of the price of the land, which would be subject to the agreement and it was not necessary for the respondent to get the sale deed executed at the price so determined by the Arbitrator. It was held that what was thus executable was the agreement, and not the Award. It was held that the relief granted by the Court below for execution of the sale deed in terms of the Award, is thus outside the realm of law, as the Award did not contemplate the transfer of land in favour of the respondent, but only determined the price of land.

It was further held by the SC Bench, comprising of Justice U U Lalit & Justice Vineet Saran, that the specific   performance   could   only   be   of   the   Agreement   dated 01.02.1980 and not of the Award dated 09.06.1985.   It was held that even the operative portion of the Award also does not give any direction for execution of the sale deed. It was observed that it was after the passing of the Award that the respondent could have fallen back on the agreement for execution of the sale deed, which respondent did by filing the suit for specific performance, but abandoned such claim by withdrawing the suit unconditionally.

It was observed by the SC that it is noteworthy that the reference to Arbitrator was only with regard to the determination of price of land of 145 bighas or the compensation to be awarded to the appellant by the respondent for the said land, which is clear from the very observation of the Arbitrator in   award that   the parties had “referred   their   dispute regarding   determination   of   compensation   of   land to   me   as   Sole Arbitrator”, meaning thereby the Arbitrator was to declare the price of land/compensation to be paid for the land by the respondent to the appellant, and nothing more.

It was observed that after the passing of the Award by the Arbitrator dated 09.06.1985, which was later confirmed and made Rule of the Court by the Rajasthan High Court on 01.12.1993 and the Special Leave Petition filed by the appellant against the said order was dismissed on 29.03.1994 and the Award had attained finality, the respondent filed a Civil Suit No.60 of 1996 for specific performance of the Agreement   dated   01.02.1980.     It   was held by the SC that it was  this   suit   for   specific performance of agreement under which a direction could have been issued for execution of the sale deed in terms of the Agreement dated   01.02.1980.     However, it was observed that  the   same   was   unconditionally withdrawn on 13.02.2006, on an application filed by the respondent on   06.02.2006.   It was held that with   the   withdrawal   of   such   suit   for   specific performance, the matter with regard to the execution of the sale deed in terms of the Agreement dated 01.02.1980 came to an end.  It was further held that the effect of withdrawing Civil Suit No. 60 of 1996 would be that the plaintiff therein (respondent herein) had abandoned its claim of execution   of   the   sale   deed   in   terms   of   the   Agreement   dated 01.02.1980, which would be clear from the provisions of Rule 1(4) of Order XXIII CPC.

It was held that it is thus clear that execution of an award can be only to the extent what has been awarded/decreed and not beyond the same. In the present case, it was held that the Arbitrator in its Award had only declared the price of land and nothing more. Thus, it was held that the question of execution of a sale deed of the land at the price so declared by the Arbitrator in its Award, could not be directed.



In   the   factual matrix of the present appeal,   the   only   question which arise for determination before the SC was as to whether the reference   to   the   Arbitrator,   in   terms   of   the   Agreement   dated 01.02.1980, was merely for fixation of price of land to be sold by the appellant to the respondent in terms of the agreement, and if that be so, could a direction to execute the sale deed have been issued vide order dated 04.07.2016, even though the Civil Suit No. 60 of 1996 seeking specific performance of Agreement dated 01.02.1980 filed   by   the respondent   was   unconditionally   withdrawn   by   the respondent on 13.02.2006. It was answered in negative by the SC.

It was held that going   behind   the   decree   for   doing   complete   justice would not mean that the entire nature of the case could be changed, and what was not awarded in favour of the respondent, could be granted by the executing court.   It was held that it is only after the respondent had exercised its right to purchase the land at the price fixed by the Arbitrator that a right to enforce the Agreement could have arisen in favour of the respondent. It was held that the Award of the Arbitrator, in the present case, in itself was not a conclusive contract between the parties, which could be executed.

In the present case, on   05.01.1995,   ADJ­   Bharatpur   allowed   the execution application   of   the   respondent   and   directed   the appellant to execute a registered sale deed and hand over   the   possession   of   land   in   question   to   the respondent. On   04.07.2016, the   impugned   order (subject matter of present appeal before the SC)  was passed   by   the Rajasthan High Court in Civil Revision Petition, whereby order of ADJ Bharatpur dated 05.01.1985 was upheld. Both of which orders were set aside by the SC.

Accordingly, the impugned judgment of the Rajasthan High Court dated   04.07.2016, upholding the order of the Additional District Judge dated 05.01.1995 was quashed, and the appeal was allowed by the SC.

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