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CASE NO.: Appeal (civil) 723 1973

PETITIONER: CHIRANJILAL SRILAL GOENKA (DEAD), BY LRS.

       Vs.

RESPONDENT: JASJIT SINGH & OTHERS

DATE OF JUDGMENT:       01/12/2000

BENCH: M.J.Rao, M.B.Shah

JUDGMENT:

L.....I.........T.......T.......T.......T.......T.......T..J       J U D G M E N T

     Shah, J.

     Aforesaid  appeal  is filed against the  judgment  and order  passed  by  the  High Court of Delhi  in  Civil  Writ Petition  No.734  of 1971 filed by the deceased  Chiranjilal Srilal  Goenka of Bombay challenging the order No.19 of 1971 dated  8th  February,  1971  passed   by  the  Gold  Control Administrator,  New  Delhi.  Deceased  appellant  challenged confiscation  of  gold by the custom authorities under  Gold Control  orders by filing writ petition which was  dismissed by the High Court.  Against that order, the aforesaid appeal is  filed.   Pending appeal, appellant  (Chiranjilal  Srilal Goenka)  died on 24th November, 1985.  A dispute aroseas to who  is the legal heir of the deceased.  Firstly, one of the daughters, Sushila Bai N.  Rungta claimed under a Will dated 29th  Oct., 1982 and secondly, Radheshyam Goenka claimed  as adopted  son and thirdly, Smt.  Raj Kumai R.  Goenka wife of adopted  son claimed independently.  Keeping the question of right,  title  and  interest  in   the  property  open,  for continuing the proceedings, all the three were ordered to be brought  on  record by order dated 7.10.1991.  It  was  also ordered that appeal be listed to consider the possibility of appointing  an arbitrator by common consent or by orders  of the  Court for bringing about a settlement.  Thereafter,  to settle the dispute as to who would be the legal heirs to the estate  of  Chiranjilal Srilal Goenka, this Court passed  an order  on 1.11.1991 appointing Mr.  Justice V.S.  Deshpande, retired  Chief  Justice of Bombay High Court, as  arbitrator which is reproduced hereunder

     By  consent  of  parties   Justice  V.S.   Deshpande, retired  Chief Justice of the Bombay High Court is appointed as  arbitrator to settle the dispute as to who would be  the legal heirs to the estate of late Chiranjilal Srilal Goenka. The  question as to statutory action under the Gold  Control Act is left open and is made explicitly clear that it is not

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a  part of the reference.  Arbitrator will fix his terms  of fees  and  should function in such a way that the  award  is made available within four months from now.  Parties will be entitled to place the claims before the Arbitrator in regard to  trust  and  other institutions but the same may  not  be finally  dealt with by the arbitrator.  Arbitration expenses shall  be shared equally by the parties corresponding to the share of interest in the property.

     For  deciding  the  dispute, on 10th April,  1992  the Arbitrator framed issues as under

     (1)  Does  claimant No.1 prove execution of  the  Will dated  29th  (28th) October, 1982, and prove the same to  be the last and genuine Will of late Shri C.S.  Goenka?

     (2)  If not, does she prove the execution of the  Will dated 4.7.1978 and prove the same to be the last and genuine Will of late Shri C.S.  Goenka?

     (3)  Does claimant No.2 prove that the late Shri  C.S. Goenka duly adopted him on 26.1.1961?

     (4)  Is the copy of the document dated 26.1.1961 filed by claimant No.2 admissible in evidence?

     (5)  Is  the  said document genuine and  brought  into existence in the way claimed by claimant no.2?

     (6)  If yes, then does the said document constitute an agreement between Mangalchand and late Shri C.S.  Goenka?

     (7)  If yes, can the said agreement be said to be  the one  contemplated  by Section-13 of the Hindu  Adoption  and Maintenance Act?

     (8)  If  yes,  then  would the  said  agreement  dated 26.1.1961  prevent  the late C.S.  Goenka from disposing  of and  dealing  with the estate, according to his wishes by  a Will?

     (9)  In  view of finding on issues above, who are  the legal heirs to the estate of the late Shri C.S.  Goneka?

     For issue nos.1 and 2, it was pointed out that probate suit  is  pending  in  the Bombay High  Court,  wherein  the learned  Judge  has expressed doubt whether  arbitrator  has jurisdiction to decide probate suit.  Hence, IA No.3 of 1992 was  filed  before  this Court to  seek  clarification.   By judgment  and  order dated 18th March, 1993 this Court  held that arbitrator can not proceed with probate suit and decide issue  nos.1  and  2 framed by him and the  High  Court  was requested  to  proceed with the probate suit No.65 of  1985. Till  the  decision in the probate suit, the arbitrator  was requested  not  to  decide  issue nos.1 and  2.   The  Court observed  that it would be open to the arbitrator to proceed with  other issues and would conclude his findings on  issue nos.1  and  2  on  the  basis   of  result  in  the  probate proceedings and make the award according to law.

     Thereafter,  in the probate suit on 27.10.1999 parties filed Minutes of order stating as under:-

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     (1)  The Caveators/Defendants concede to the execution and  genuineness of the Will dated 29th October, 1982 of the deceased  Chiranjilal  Shrilal  Goenka of which  probate  is sought  by the petitioner.  Petition allowed accordingly  as prayed.

     (2)  The parties agree that this order/decree will  be without  prejudice to the rights, claims and contentions  of the  parties  in the arbitration proceedings pending  before Justice V.S.  Deshpande, Retd.  Chief Justice of Bombay High Court.

     (3) No Order as to costs.

     On  the same date, the Court passed order in terms  of minutes of order.

     Subsequently, after recording the evidence, Arbitrator passed  an  Award  on 16th June, 2000.  He  arrived  at  the conclusion  that  Will in favour of Sushila Bai  N.   Rungta executed  by Chiranjilal was in-operative and Radheshyam was the sole heir as adopted son.  It was also held that Sitabai Mangal  Chand Kedia and Raj Kumari wife of Radheshyam do not claim to be such heirs.

     On the basis of that Award, on behalf of Radheshyam IA No.9 of 2000 is filed for making the award rule of the court and  to pass a decree in terms of the award.  That award  is challenged  by  Sushilabai  N.  Rungta by  filing  objection under  Section  33 read with Section 30 of  the  Arbitration Act,  1940.  As against this, Radheshyam has submitted  that there  is  no error of law or facts apparent on the face  of record  and  the  Arbitrator has given well  reasoned  award which does not call for any interference.

     At  the  time  of hearing, Mr.  Vinod  Bobde,  learned senior  counsel  for  objector  submitted that  he  was  not challenging the finding given by the learned Arbitrator that Radheshyam  was  adopted  son of Chiranjilal.   However,  he submitted  that finding of the arbitrator that there was  an agreement   between  Chiranjilal  Goenka   and  parents   of Radheshyam   that  Radheshyam  was   given  on  adoption  to Chiranjilal  on  the conditions mentioned in  the  so-called photocopy  of letter dated 26.1.1961 is, on the face of  it, illegal  and arbitrary.  He further submitted that  assuming that  the said letter can be considered to be an  agreement, it  requires registration as it limits the right of absolute owner  Chiranjilal  to  bequeath the property by  Will.   He further submitted that after codification of Hindu Adoptions &  Maintenance  Act, 1956 (hereinafter referred to  as  the Act),  Sections 12 and 13 govern the rights of the  adopted son and the adoptive parents.

     As  against this, Mr.  Sanghi, learned senior  counsel submitted  that it cannot be said that the award made by the arbitrator  is  in  any way on the face of  it,  illegal  or arbitrary  and that when the reasoned award is passed by the learned  arbitrator,  even if other view is possible on  the interpretation of law, it would not be open to this Court to disturb  the  finding given by the Arbitrator.  For  dealing with  contentions  of  the learned counsel, we  would  first refer  to  relevant parts of Sections 12 and 13 of the  Act, which read as under:-

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     12.   Effects of adoption. An adopted child shall be deemed  to  be  the child of his or her adoptive  father  or mother  for  all purposes with effect from the date  of  the adoption and from such date all the ties of the child in the family of his or her birth shall be deemed to be severed and replaced  by  those created by the adoption in the  adoptive family:

     Provided that

     (a)  ..   (b)  ..  (c) the adopted child  shall  not divest  any person of any estate which vested in him or  her before the adoption.

     13.   Right  of adoptive parents to dispose  of  their properties:

     Subject  to any agreement to the contrary, an adoption does  not deprive the adoptive father or mother of the power to dispose of his or her property by transfer inter vivos or by will.

     Reading Section 12 proviso (c) and Section 13 together it  is apparent that adoption would not divest any person of any  estate  which  is  vested  in him  or  her  before  the adoption.   It also does not deprive the adoptive father  or mother  the  power  to  dispose of his or  her  property  by transfer,  inter  vivos or by Will.  However, this power  to dispose  of  the property would be subject to any  agreement between the parties.

     Legislature has codified and crystalised the situation prevailing  prior to the enactment of the Act that there was no  implied  contract on the part of the adoptive father  or mother  in consideration of the gift of his son by a natural father  or  mother  that  he or she  would  not  dispose  of property  by  transfer  or  by Will.  However,  in  case  of specific  agreement to the contrary between the parties, the power  to  dispose of the property would be subject  to  the said agreement.

     Keeping  these  in background, we would  consider  the facts  of  the  present case.  It is the case  of  both  the parties  that  Mr.   Chiranjilal Goenka  had  two  daughters namely  Sitabai,  born on 29.10.1938 and another  Sushilabai born on 3.9.1950.  Sitabai was married to Mangal Chand Kedia of  Kanpur  and gave birth to Radheshyam on 8.9.1954 and  to another  son  Govind on 3.8.1956.  On 26.1.1961  Chiranjilal adopted  Radheshyam.   It is the contention of  the  learned counsel  for  Radheshyam  that  on the said  date  prior  to adoption,  a writing recording the terms of earlier  arrived oral agreement was dictated by Chiranjilal in the form of an offer letter from the natural parents, which was recorded by relative  Mr.  Hanuman Prasad Poddar.  Photocopy of the said letter  is  produced  on record, which is in Hindi  and  its translation is to the following effect:  -

     Salutations  from Mangalchand Kedia to the  respected Shri  Chiranjilal Goenka.  I am giving you in adoption  with much pleasure my son Chi.  Radheshyam.  From now he is alone your  son.   And he alone will inherit your entire  moveable and  immovable property.  During your life time you shall be entitled to your entire moveable and immovable property.  In case  if  you  die, your wife Smt.  Bhagwandevi  shall  have

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absolute  right.   Similarly, if she dies earlier  you  will have  absolute  right.   After  the death of  both  of  you, Chiranjeev  Radheshyam alone shall have full right on  total moveable  and immovable property.  I am writing this  letter with  pleasure.   26.1.1961.Magh  Shukla   10  Samvat  2017 Thursday.

     Questions  which would require consideration in  these proceedings   would  be  (1)   Whether  the  writing  dated 26.1.1961  can  be  considered to be  an  agreement  between Chiranjilal  and the parents of Rahdeshyam?  (2) Whether  it is  an  agreement as contemplated by Section 13 of  the  Act limiting  the  rights of adoptive parents to dispose of  the property  by  will?   And  if so, (3)  Whether  it  requires registration?

     It  has  been contended by the learned senior  counsel Mr.  Bobde that the aforesaid letter cannot be considered to be any agreement between Chiranjilal and Mangal Chand Kedia, father  of  Radheshyam.  He further submitted that there  is nothing  on  record to prove that the  aforesaid  unilateral offer  of  Kedia  was accepted by Chiranjilal.   He  further pointed out that this letter nowhere provides that rights of Chiranjilal  to  dispose of his property by transfer  or  by Will  is any way restricted.  It is his contention that even this  letter specifically provides that during the life time of  Chiranjilal, he would be absolute owner of the  property meaning  thereby  that he would have right to  transfer  the property or bequeath the same.

     As  against  this, learned senior counsel Mr.   Sanghi submitted  that the aforesaid writing specifically  provides that  Shri  Radheshyam  shall  be   the  sole  heir  to  the properties  of Chiranjilal after his death and death of  his wife.   The  said writing was signed by Mangal Chand  Kedia, his wife Sita Bai and witnessed by Hanuman Prasad Poddar and eight  other  eminent people of the community.   After  this letter,   Chiranjilal  took  Radheshyam   on  adoption   and therefore,  it should be held that terms of the said  letter were  accepted by Chiranjilal.  On the basis of these facts, if  finding  is given by the arbitrator, it cannot  be  said that  award is, on the face of it, illegal.  It is submitted that  only  after  marriage  of Sushilabai  with  Rungta  of Jaipur,  disputes  arose  in 1975  between  Chiranjilal  and Radheshyam.   May  be  that, more than 38  proceedings  were initiated   between  Chiranjilal  and   Radheshyam  and   in proceedings  Chiranjilal resiled from his agreement and  the factum of adoption in subsequent affidavit filed by him, but that  would  not nullify the agreement or the adoption.   It is,  therefore, submitted that because of adoption agreement Radhey  Shyam  would be the sole and exclusive heir  of  the assets  of late Chiranjilal after his death.  Therefore, the Will  dated  29th  October, 1982 executed by  him  would  be inoperative  and of no effect.  The learned counsel  further submitted  that  parties  can  enter  into  a  binding  oral agreement  unless there is any extra requirement by  statute to  record the same in writing.  Section 13 of the Act  does not  require  the  agreement  to be in  writing.   For  this purpose,  he  relied  upon the decision in Tarsem  Singh  v. Sukhminder  Singh  [1998 (3) SCC 471].  In any  case,  after taking  advantage  by  adopting Radheshyam,  Chiranjilal  is bound  by the said letter.  For this purpose, he has  relied upon  Mohaomed  Musa & Others v.  Aghore Kumar Ganguli  (AIR 1914  PC 27), Venkayaamm v.  Apparao (AIR 1916 PC 9) and  Re Basham  (1987  (1) All ER 405).  He also submitted that  the

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said  letter does not require any registration.  He  finally submitted that the award passed by the arbitrator can not be said  to  be illegal which would call for any  interference. Hence,  it  should be made rule of the Court.  In our  view, the  photocopy of the letter, presuming that such letter was written  by  Mangal Das Kedia to Chiranjilal at the time  of giving  Radheyshyam in adoption, there can be no doubt  that it  does not reflect any agreement between the parties.   At the  most  it  was only a unilateral offer giving  child  in adoption  on certain expectations.  The letter appears to be signed  by  number of persons and if really Chiranjilal  had accepted it, then he would have placed his signatures on the said  letter.   There is nothing on record that he  accepted the  same  as  it  was.  Secondly, the letter  at  the  most indicates  that  from  that day, RadhesShyam  would  be  the adopted  son of Chiranjilal and would inherit his  property. However,  it was made clear in that very letter that  during the  life  time of Chiranjilal and his wife, they  were  the absolute  owners  of their properties.  There is nothing  to indicate  in  the  said letter that it was a covenant  or  a contract  restricting the powers of Chiranjilal or his  wife to  dispose  of the property either by transfer or by  Will. Nowhere, it is stated that during his life time, Chiranjilal will  not  be entitled to dispose of his property either  by transfer  or  by  Will.   Hence, there  is  no  positive  or negative  agreement  limiting the rights of  Chiranjilal  to dispose  of  the property by executing the Will.   Presuming that  the  aforesaid letter is an agreement, at the most  it can  be  stated that from the said date Radheshyam would  be son  of  Chiranjilal  and would be entitled to  inherit  his properties.   This  also  would not mean that there  is  any agreement  that  adoptive father has no right to dispose  of his property.

     However,  learned Senior counsel Mr.  Sanghi submitted that  in the letter, it is mentioned that after the death of Chiranjilal  and his wife, Radheshyam alone would have  full right  on  the moveable and immovable property belonging  to them.   He,  therefore, submitted that the  aforesaid  offer implies  that  right  of Chiranjilal was restricted  and  he could  not  execute the Will.  In our view, this  submission has  no  force.   The  aforesaid term  of  the  letter  only indicates  that Radheshyam alone would be the heir and would have  full  right on the moveable and immovable property  as heir.  That is to say, it would mean if any property is left by   deceased  Chiranjilal  which  is  not  transferred   or bequeathed,  then Radheshyam would be the heir and  entitled to receive the same.  This would not mean that there was any restraint  on  the part of Chiranjilal to execute the  will. In  support  of his contention, learned counsel Mr.   Sanghi referred to the following passage from Theobald on Wills (At Page 93), [Fourteenth Editionby J.B.  Clark):

     Contract  to leave residue.  But a covenant to  leave the  covenantee all the property or a share of the  property of the covenantor does not create a debt.

     The  effect  of  such  a  covenant  is  to  leave  the covenantor  free to dispose of his property in his  lifetime by  gift  or otherwise as he thinks fit, so long as he  does not  dispose of it in fraud of the covenant.  The covenantee is  entitled to have the covenant specifically enforced, and he  will  take  subject  to   payment  of  the  funeral  and testamentary expenses and debts of the covenantor.

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     Evasion of contract not permitted.  If the covenant is limited  to  the personal property of the covenantor and  he buys  real  estate, the real estate is, in the hands of  the heir  or  a devisee, charged with the  purchase-money.   And though  the  covenantor can dispose of the property  in  his lifetime,  he cannot defeat the covenant by a disposition by will,  nor by any disposition which has the same effect as a testamentary   disposition,   for   instance,  a   voluntary settlement  whereby he settles property on himself for  life with remainders over.

     The  aforesaid  paragraphs  in  no  way  support   his contention.   On  the contrary it specifically mentions  the effect  of  such  covenant  stating   that  it  leaves   the covenantor  free to dispose of his property in his  lifetime by gift or otherwise as he thinks fit so long as he does not dispose  of it in fraud of the covenant.  Hence, Chiranjilal was  entitled  to  dispose of the said  property  either  by transfer or by will.  Further, in the present case, there is no   question  of  fraud  on   the  part   of   Chiranjilal. Admittedly, the relations between Chiranjilal and Radheshyam were  so  much strained that more than 38  litigations  were pending  between  them  in  various  courts.   Further,  the aforesaid  paragraph  is to be read in context  of  previous paragraph  which  provides for a contract to leave  residue. In  the  present  case, there is no such contract  to  leave residue  in  favour  of  Radheshyam.  In this  view  of  the matter,  it cannot be said that by the said letter, there is any  agreement  limiting the rights of adoptive  parents  to dispose of their property by executing a will.

     The next question would be whether the said letter, if considered  as  an  agreement, restraining or  limiting  the rights  of adoptive father to bequeath the property requires registration?   In  support  of   this  contention,  learned counsel Mr.  Bobde referred to the decision of this Court in Dinaji v.  Daddi (1990 (1) SCC 1).  In that case Hindu widow adopted  a  son on April 28, 1963 by executing the  deed  of adoption.   The  document was not registered and  the  trial court  admitted  the same in evidence in proof of  adoption. Subsequently,  by registered sale deed dated April 28, 1966, she  transferred  immovable property including  agricultural land  and houses in favour of the appellant Dinaji.  On  the basis  of the sale deed, suit for injunction and  possession was  filed  against the adopted son.  After considering  the provisions of Section 12 (c), this Court held that after the Hindu  Succession Act came into force, widow became absolute owner  of the property of her husband and, therefore, merely by adopting a child, she could not be deprived of any of her rights  in  the  property.   The  Court  further  held  the adoption  would  come into play and the adopted child  could get  the rights for which he is entitled after her death  as is clear from the Scheme of S.  12 proviso (c). Thereafter, the Court considered section 13 of the Act and observed that this  section enacts that when the parties intend to  limit the  operation of proviso (c) to S.  12, it is open to  them by an agreement and it appears that what she included in the present deed of adoption was an agreement to the contrary as contemplated   in  S.   13  of   the  Hindu  Adoptions   and Maintenance  Act.  However, the Court held that in view  of Section  17(1)(b) of the Registration Act, the said part  of the  deed which refers to the creation of immediate right in the  adopted  son  and  the divesting of the  right  of  the adoptive  mother  in the property will squarely fall  within the  ambit of Section 17(1)(b) and, therefore, under Section

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49 of the Registration Act.

     As  against  this,  learned  senior  counsel  for  the respondent  Mr.  Sanghi submitted that the aforesaid  letter is  not to be construed as a deed, but is to be taken as  an offer  letter and by conduct of adopting Radheshyam as  son, Chiranjilal  could not dispose of the property by will.   In our  view, this argument is totally devoid of any  substance because  if reliance is required to be placed on the  letter for  holding that it restrains Chiranjlal to dispose of  the property  by  will,  then  it is required to be  read  as  a document which limits the rights of Chiranjilal to deal with his  property including the immoveable property.  Therefore, it  would require registration.  In any case, the  aforesaid question  is not required to be considered in detail because we  have already arrived at the conclusion that there is  no agreement between the parties before adoption indicating any contrary intention as contended.

     Finally,  we would deal with the contention of learned counsel Mr.  Sanghi that when two views are possible and the arbitrator  has taken a plausible view, the award cannot  be interfered  with.   For deciding this contention,  we  would refer to some parts of the award which would reveal that the award  is,  on  the face of it, illegal  and  erroneous  and contrary  to what has been discussed above.  The  arbitrator has  misinterpreted  the  letter as  an  adoption  agreement between   Mangalchand  Kedia  and   late   Chiranjilal   and thereafter relied upon the part of the said agreement as two terms  of  the agreement and has held that as per  the  said terms,  Chiranjilal  has  committed him to  have  only  life interest  in  the  said property for himself and  his  wife. After  their  death,  Radheshyam would be the  successor  of their  entire property.  He, therefore, held that there  is an  implied prohibition against them to transfer any part of their property.  Obviously, either of them is incompetent to transfer  any part of the property inter vivos or under  any will.   In this view of the matter, I hold that the adoption agreement  covered  by  the finding on issue No.   6  is  an agreement  to the contrary as contemplated under Section  13 of  the  Act. In this view of the matter, we hold that  the award dated 16th June, 2000 passed by the arbitrator holding that  the  will executed by Chiranjilal is  inoperative  and requires  to be set aside and we so do.  It is held that  on the  basis  of  the probated Will Sushilabai N.   Rungta  is legal   heir   of  the    deceased   Chiranjilal.    Ordered accordingly.  There shall be no order as to costs.