Supreme Court of India
The State Of Uttar Pradesh vs R.K Pandey on 9 January, 2025
Author: Sanjay Kumar
Bench: Sanjay Kumar
REPORTABLE
2025 INSC 48
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 10212 OF 2014
STATE OF UTTAR PRADESH AND ANOTHER ..... APPELLANTS
VERSUS
R.K. PANDEY AND ANOTHER ..... RESPONDENTS
JUDGMENT
SANJIV KHANNA, CJI.
Delay condoned.
2. This appeal arises from an order dated 28.02.2012 passed by a Division
Bench of the High Court of Judicature at Allahabad in First Appeal from
Order Defective No. 352/2012.
3. The facts, in brief, are – Respondent no. 1, R.K. Pandey, was appointed
as a Lab Assistant/ Technician in the T.B. Section of Dina Nath Parbati
Bangla Infectious Disease1 Hospital located at Kanpur. The Municipal
Signature Not Verified
Board of Kanpur set up this hospital on the land given by the Kanpur
Digitally signed by
Improvement Trust in 1944-45.
Deepak Guglani
Date: 2025.01.09
17:18:29 IST
Reason:
1 Hereinafter, “DNPBID.”
Civil Appeal No. 10212 of 2014 Page 1 of 13
4. On 17.07.1956, DNPBID Hospital was taken over by the State
Government, that is, the Government of Uttar Pradesh, to establish a
new medical college at Kanpur pursuant to a Resolution dated
17.07.1956 passed by the Administrator of the Municipal Board of
Kanpur and six members of the Board of the hospital. On 29.03.1957,
the State Government accepted the proposal dated 17.07.1956.
5. On 20.06.1961, a transfer deed was executed between the Nagar
Mahapalika of the City of Kanpur and the Governor of the State of Uttar
Pradesh. The said deed has been placed on the record. It states that in
terms of the G.O. dated 29.03.1957, the entire municipal staff of the
hospital, as per the list attached to the indenture, will stand transferred
to the State Government service. The staff will not be unfavourably
placed as regards emoluments or other service conditions, nor shall they
suffer in the matter of emoluments, leave, age of retirement, and other
benefits as compared to the terms of service of the Board.
6. After the settlement was executed, the hospital became a unit of Ganesh
Shanker Vidayarthi Memorial2 Medical College, Kanpur. Thereupon, it is
apparent that the employees working in DNPBID Hospital opted for
service under the State Government and had sent their consent which
was accepted. Thereafter, their service records were sent to the State
Government. It was agreed that the concessions and privileges enjoyed
2 Hereinafter, “GVSM.”
Civil Appeal No. 10212 of 2014 Page 2 of 13
by the staff before the aforesaid hospital were provincialized and will
continue in future and they will not be put to a disadvantage by the take-
over. The Board agreed to pay Rs.50,000/- keeping in view the liability
of the Municipal Board.
7. Vide letter dated 09.01.1997, the Chief Medical Superintendent of the
hospital, now a State Government hospital, informed Respondent No. 1,
R.K. Pandey that he would be superannuating on 31.03.1997. He was
requested to contact the office along with pension papers and submit the
same within one week so that the process can be initiated.
8. In March 1997, Respondent No. 1, R.K. Pandey, filed a writ petition
before the High Court of Judicature at Allahabad claiming that he should
retire at the age of 60 years instead of 58 years, relying upon the service
rules as applicable to the employees of the Municipal Board of Kanpur.
9. Pursuant to the filing of the writ petition, Respondent No.1, R.K. Pandey
was directed to make a representation. While a representation was
indeed made, it was subsequently rejected observing that the
respondent had been in service of the State Government for 42 years
and was availing all pay and allowances, as per the State Government
rules.
10. The State Government filed an affidavit opposing the writ petition inter
alia, stating that Respondent No. 1, R.K. Pandey, having acquired the
status of State Government service was bound and governed by the
Civil Appeal No. 10212 of 2014 Page 3 of 13
rules and regulations of the State Government. It was also stated that
the minimum age for entering the government service is 18 years, and if
a government servant retires at the age of 58 years, he would have
completed 40 years of service. In the present case, Respondent No. 1,
R.K. Pandey had completed service of 42 years of service. In other
words, he would be 60 years of age.
11. No interim order was passed in the writ petition, which remained pending
till it was withdrawn by Respondent No. 1, R.K. Pandey on 22.04.2009.
Consequently, the prayers made in the writ petition were not granted.
12. Notwithstanding the pendency of the writ petition, on 11.01.2008,
Respondent No. 1, R.K. Pandey, filed an arbitration suit before the
District Judge, Kanpur Nagar, Kanpur, relying upon an alleged arbitration
agreement dated 01.04.1957 between the then Administrator of the
DNBPID Hospital and the Governor of Uttar Pradesh. The prayer sought
was for the dispute regarding Respondent No. 1, R.K. Pandey’s age of
superannuation and the rejection of his representation dated 03.04.1997
by the Principal of GVSM Medical College be referred to arbitration.
However, the arbitration agreement was not mentioned either in the writ
petition or in the application for its withdrawal. Subsequently, on
15.02.2008, Respondent No. 1, R.K. Pandey, withdrew the suit seeking
to refer the disputes to arbitration.
Civil Appeal No. 10212 of 2014 Page 4 of 13
13. On 29.11.2008, Respondent No. 1, R.K. Pandey, filed two execution
petitions before the District Judge in Kanpur, seeking to enforce two
separate ex parte awards issued on 15.02.2008 and 25.06.2008 by
Advocates Pawan Kumar Tewari and Indivar Vajpayee. These
proceedings were initiated by Respondent No. 1 against the State
Government and the Principal of GSVM Medical College, Kanpur.
14. The first ex-parte award dated 15.02.2008 decreed the claim of
Respondent No. 1, R.K. Pandey for an amount of Rs.26,42,116/- with
interest at the rate of 18 % per annum from 21.01.2008 against the State
of Uttar Pradesh and the Principal GSVM Medical College, Kanpur. The
award states that Respondent No. 1, R.K. Pandey had appointed/
nominated the Arbitrator and there was non-appointment by the opposite
party and, therefore, Pawan Kumar Tewari, Advocate had acted as the
sole Arbitrator.
15. The second ex parte Award dated 25.06.2008 passed by Indivar
Vajpayee awarded an amount of Rs.20,00,000/- along with interest at
the rate of 9% per annum with effect from 11.02.2008 in favour of
Respondent No. 1, R.K. Pandey, and against the opposite party, viz. the
State of Uttar Pradesh and the Principal of GSVM Medical College,
Kanpur. The Award states that Respondent No. 1 had appointed Indivar
Vajpayee as an Arbitrator on 25.06.2008, albeit the opposite party had
not appointed an Arbitrator and, hence Indivar Vajpayee acted as the
sole Arbitrator.
Civil Appeal No. 10212 of 2014 Page 5 of 13
16. The appellant on receiving notice in the execution petition filed viz. the
Award given by Indivar Vajpayee, filed objections against the two awards
under Section 34 of the Arbitration and Conciliation Act, 1996.3 One of
the issues raised before the executing court concerned the existence of
the arbitration agreement, purportedly dated 01.04.1957, which
Respondent No. 1, R.K. Pandey, relied upon. This agreement was
claimed to have been executed and signed on behalf of the Administrator
of the Municipal Board and the Additional Secretary of the Government
of Uttar Pradesh.
17. The authenticity of this document was denied. Notably, this document or
the arbitration agreement is not reflected in the transfer deed executed
on 20.06.1961. Furthermore, the purported arbitration agreement was
neither mentioned in the writ petition filed by Respondent No. 1, R.K.
Pandey, in March 1997, nor referenced in any correspondence or related
documents until Respondent No. 1, R.K. Pandey, filed a petition under
Section 11 of the A&C Act, for the appointment of an arbitrator on
11.01.2008. By this petition, Respondent No. 1, R.K. Pandey, had
prayed for the appointment of an arbitrator. As recorded above, the said
petition was dismissed as withdrawn on 15.02.2008, which was also the
date on which the first award for Rs.20,00,000/- with interest at the rate
of 18 % per annum was passed by Pawan Kumar Tewari, Advocate. The
3 Hereinafter, “A&C Act.”
Civil Appeal No. 10212 of 2014 Page 6 of 13
second Award by Indivar Vajpayee dated 25.06.2008 is also pursuant to
the appointment of an arbitrator by Respondent No. 1, R.K. Pandey
without recourse to court proceedings.
18. The objections filed by the appellants under Section 34 of the A&C Act
were dismissed by the trial court on the ground that they were barred by
limitation and had been filed beyond the condonable period.
Interestingly, during the pendency of the said objections, a query had
been raised as to the existence of the arbitration agreement dated
01.04.1957, which was relied upon by Respondent No. 1, R.K. Pandey.
In a reply given by the Municipal Corporation/Mahanagar Palika to the
Advocate appointed by District Government Counsel (Civil), Kanpur
Nagar, it was stated that the photocopy furnished of the agreement was
not clear and there was no such agreement available on the record.
Hence, it was not possible to verify the said document. The purported
agreement dated 01.04.1957 is not signed and executed by Respondent
No. 1, R.K. Pandey, and a copy of the agreement is not marked to him.
The authenticity of the agreement cannot be established as it is not
available on the record of the Municipal Board. The State Government,
as is evident, has denied the existence of any such agreement.
19. The impugned judgment passed by the Division Bench of the High Court
of Judicature at Allahabad dismissed the intra court appeal on the
grounds that the objections itself were barred by limitation and beyond
the condonable period.
Civil Appeal No. 10212 of 2014 Page 7 of 13
20. We have narrated the facts in detail as they are peculiar, and intervention
by this Court is necessary to prevent any attempt to enforce the so-called
awards, which are null and void ab initio for several reasons. This Court
in its decision in Bilkis Yakub Rasool v. Union of India and Others,4
observes that fraud and justice never dwell together, and a litigant should
not be able to benefit from a fraud practiced with an intention to secure
him an illegal benefit. In the present case, the so-called arbitration
agreement is nowhere available on the records of either the Municipal
Corporation or the State of Uttar Pradesh. Respondent No. 1, R.K.
Pandey, did not file the original agreement since he was not in
possession of the same, nor is he a signatory and party to the arbitration
agreement. An arbitration agreement is sine qua non for arbitration
proceedings, as arbitration fundamentally relies on the principle of party
autonomy; – the right of parties to choose arbitration as an alternative to
court adjudication. In this sense, ‘existence’ of the arbitration agreement
is a prerequisite for an award to be enforceable in the eyes of law. No
doubt, Section 7 of the A&C Act, which defines the ‘arbitration
agreement’, is expansive and includes an exchange of statements of
claim and defence in which the existence of the agreement is alleged by
one party and not denied by the other party, albeit the existence of the
arbitration agreement is not accepted by either the Municipal Corporation
or the Appellant, the State of Uttar Pradesh. The Arbitration Agreement
4 (2024) 5 SCC 481.
Civil Appeal No. 10212 of 2014 Page 8 of 13
is not referred to in the indenture of the transfer executed later on
20.06.1961. There is no evidence to show the existence of the arbitration
agreement, except a piece of paper, which is not even a certified copy
or an authenticated copy of the official records. How and from where RK
Pandey, Respondent No. 1, got a copy of the agreement, and that too
nearly 10 years after his retirement and filing of a writ petition remains
unknown.
21. The arbitration agreement, as propounded, is between the Municipal
Corporation and Development Board, Kanpur, and the appellant, the
Governor of the State of Uttar Pradesh. For the sake of reference, the
arbitration agreement is reproduced:
“This Arbitration Agreement made on the First April, One
Thousand Nine Hundred Fifty Seven between the
Municipal and Development Board Kanpur (hereinafter
called the Board) of the one part and the Governor of Uttar
Pradesh (hereinafter, called the Government) of the other
part.
It is mutually agreed by the and between the parties as
follows:
All disputes or difference whatsoever which shall if any time
arise between the parties including the employees of
Provincialized DN Bangla I.D. Hospital, Kanpur, hereto
touching or concerning the resolution passed by the
Managing Committee of the said Hospital at the meeting
held on 17.07.1956, which was accepted by the
Government, shall be referred to the Arbitrators nominated
by the Principal GSVM Medical College, Kanpur and the
administrator of the Board or employees of the said
provincialized Hospital for arbitration under the Arbitration
Act. Any statutory modification of re-enactment thereof and
the rules made thereunder for the time being enforced shall
apply to the Arbitration proceedings. If one party nominates
the arbitrator and refers the dispute to the nominatedCivil Appeal No. 10212 of 2014 Page 9 of 13
arbitrator for adjudication in writing notice to the other party
and the other party fails to nominate the arbitrator within 10
days then the arbitrator nominated by the First Party shall
be final and act as a sole arbitrator. The award of the
arbitrators/sole arbitrator shall be final and binding on the
parties.
This agreement signed by the administrator on behalf of
the Board and the Additional Secretary of the Government
of UP on behalf of the Government.
M.A. Quraishi, I.C.C.
Administrator
Municipal & Development Board
Kanpur
G.P. Pandey, Addl. Secretary to the Govt. of UP”The agreement postulates that each party, that is, the Municipal and
Development Board, Kanpur, and the Governor of Uttar Pradesh, may
nominate an arbitrator for adjudication by giving written notice to the
other party. In the event the other party fails to nominate an arbitrator
within ten days, the arbitrator nominated by the first party shall act as the
sole arbitrator. It was not the case of Respondent No. 1, R.K. Pandey
that the Municipal and Development Board, Kanpur, or the Governor of
Uttar Pradesh has invoked the arbitration clause. The unilateral
appointment of the arbitrator by Respondent No. 1, R.K. Pandey is,
therefore, contrary to the arbitration clause as propounded by him.
22. Another intriguing aspect is the delay in relying on the arbitration
agreement and initiating arbitration proceedings. Respondent No. 1,
R.K. Pandey, himself filed the writ petition in 1997 concerning the same
dispute. The writ petition had remained pending till 22.04.2009, when it
Civil Appeal No. 10212 of 2014 Page 10 of 13
was withdrawn. It is during the pendency of the petition, that the steps
for initiation of arbitration were taken on 11.01.2008 by Respondent
No.1, R.K. Pandey, by filing a suit for reference in terms of Section 11 of
the A&C Act. However, the petition was later withdrawn without any
decision on merits with the two sole arbitrators appointed by Respondent
No. 1, R.K. Pandey, suo moto taking up the arbitration proceedings and
pronouncing the two awards, the first dated 15.02.2008 for an amount of
Rs.26,42,116/- with interest at the rate of 18% per annum, and the
second dated 25.06.2008 for an amount of Rs.20,00,000/- along with
interest at the rate of nine percent per annum with effect from
11.02.2008, against the Appellants, the State of Uttar Pradesh and the
Principal of GSVM Medical College, Kanpur. Notwithstanding that the
claims made by Respondent No. 1, R.K. Pandey, were ex-facie and
clearly barred by limitation as per Section 3 of the Limitation Act 1963
read with Section 43 of the A&C Act, they have been allowed.
23. A 5-Judge Constitution Bench of this Court in Central Organisation of
Railway Electrification v. ECI PIC SMO MCPL (JV), a Joint Venture
Company5 has observed that equity applies at the stage of appointment
of arbitrators, though the A&C Act recognizes the autonomy of parties to
decide on all aspects of arbitration. The enactment lays down a
procedural framework to regulate the composition of the arbitral tribunal
and conduct of arbitration proceedings. It is only then that the arbitral
5 2024 INSC 857.
Civil Appeal No. 10212 of 2014 Page 11 of 13
tribunals, which have the backing of courts, can act objectively and
exercise their discretion in a judicial manner, without caprice and in
accordance with the principles of law and rules of natural justice. This is
the core of the alternate dispute redressal mechanism, which is also the
core of Section 18 of the A&C Act and is a non-derogable and mandatory
provision. It is only then the arbitrators are vested with the power to
resolve the dispute under the law. This judgment also observed that the
unilateral appointment of arbitrators has a direct effect on the conduct of
arbitral proceedings. Arbitration, which is quasi-judicial, requires a
standard of behaviour of arbitrators, which is impartial and independent,
no less stringent than that demanded of judges. In fact, arbitrators are
expected to uphold a higher standard, as court decisions are subject to
the collective scrutiny of an appeal, while an arbitration award typically
enjoys greater acceptability, recognition, and enforceability.
24. We have made our observations in the context of Section 47 of the Code
of Civil Procedure, 1908, which even at the stage of execution, permits
a party to object to the decree, both on the grounds of fraud, as well as
lack of subject matter jurisdiction. It is apparent that the arbitration
proceedings were a mere sham and a fraud played by Respondent No.1,
R.K. Pandey, by self-appointing/nominating arbitrators, who have
passed ex-parte and invalid awards. To reiterate, Respondent No. 1,
R.K. Pandey, is not a signatory to the purported arbitration agreement.
Moreover, the parties thereto, DNPBID Hospital and the Governor of
Civil Appeal No. 10212 of 2014 Page 12 of 13
Uttar Pradesh, do not endorse any such agreement. From the cumulative
facts and reasons elucidated above, this is a clear case of lack of subject
matter jurisdiction.
25. Accordingly, we allow the present appeal and set aside the two ex parte
Awards dated 15.02.2008 and 25.06.2008. Both the Awards shall be
treated as null and void and non-enforceable in law. Resultantly, the
judgment passed, and the subject matter of the appeal shall be treated
as set aside. The execution proceedings shall stand dismissed. The
appellants will be entitled to costs of the entire proceedings as per the
law.
………………………………..CJI.
(SANJIV KHANNA)
…………………………………..J.
(SANJAY KUMAR)
…………………………………..J.
(R. MAHADEVAN)
NEW DELHI;
JANUARY 09, 2025.
Civil Appeal No. 10212 of 2014 Page 13 of 13