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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:

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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.