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CASE NO.: Appeal (civil)  3280 of 2002

PETITIONER: N. Khosla                                                                

RESPONDENT: Rajlakshmi (dead) & Ors.                                         

DATE OF JUDGMENT: 06/03/2006

BENCH: H.K. SEMA & Dr. AR  LAKSHMANAN

JUDGMENT: J U D G M E N T

H.K.SEMA,J.                          Dewan Niranjan Prasad was ex-Minister and a retired  Senior Judge of the High Court of Patiala.  He had an  ancestral kothi known as ‘Nishkam’ situated at 23, Bhupender  Nagar Road, Patiala, Punjab.  He had two sons, namely \026 Sh.  K.J. Khosla and Sh. N. Khosla and three daughters namely  Smt. Rajlakshmi (respondent No. 1 herein whose appeal  stands abated), Smt. Nirmala and Smt. Saraswati.  Since the  kothi was an ancestral property, Dewan Niranjan Prasad and  his two sons were the coparceners.          On 14.10.1956, Dewan Niranjan Prasad had gifted three  plots of land forming part of the kothi in its rear portion to his  three daughters  with the consent of his wife \026 Smt. Amar Devi  and his two sons.  The said gift was duly recorded in the  family year book known as "Dussehra Bahi."  The said gift was  conditional and the condition was that the beneficiaries would  construct houses on the gifted plots and shall reside there.    The said gift of plots to his three daughters was affirmed by  Dewan Niranjan Prasad through a registered deed on  10.6.1961.  However, possession was not delivered.  In 1966  Smt. Saraswati died and was survived by her husband B.S.  Talwani and sons, respondent No.3.          As none of the three daughters, to whom the plots were  gifted, took possession and constructed the houses, Dewan  Niranjan Prasad revoked the Gift Deed and resumed the plots  with the express consent of his daughters, Smt. Rajlakshmi,  Smt. Nirmala and Sh. B.S. Talwani \026 husband of late Smt.  Saraswati and paid Rs. 10,000/- to each of them in lieu of the  said plots.  Receipt of the amount as consideration for  resumption of the said plots was also duly acknowledged by  each of the beneficiaries.  Thereafter, Dewan Niranjan Prasad  partitioned the entire property "Nishkam" (including the plots  earlier gifted to his daughters and then resumed by him) by  allotting separate shares to his two sons, namely, S/Sh.K.J.  Khosla and N. Khosla.  The oral partition was recorded in  writing in the memo of partition dated 6.12.1974.  Dewan  Niranjan Prasad died on 15.1.1975 leaving behind his two  sons, two daughters and legal heirs of late Smt. Saraswati.           After the death of Dewan Niranjan Prasad, a dispute  arose between his sons and daughters \026 namely Smt.  Rajlakshmi, Smt. Nirmala and legal heirs of Smt. Saraswati  regarding the rear part of the compound of the ancestral kothi  called "Nishkam".  Parties to the dispute by mutual consent  and by an Arbitration Agreement dated 27.10.1978 referred

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the dispute to the sole Arbitrator,  Dewan Ram Kishan Khosla,  Sr. Advocate.         It appears that on 22.1.1977, the respondents  fraudulently managed to get the mutation of the portion of the  property in question recorded in the revenue records in their  favour showing Dewan Niranjan Prasad, who had expired on  15.1.1975 and Smt. Saraswati, who had expired in 1966, as  present and witnessing the said mutation.           The Arbitrator examined the contentious issues  presented from both sides and after threadbare discussion  delivered his award on 10.7.1979.  The Arbitrator in his award   found inter-alia that the gift in question in favour of daughters  was revoked and the plots were resumed by late Dewan  Niranjan Prasad with the consent of the two daughters and  Sh. B.S. Tawlani \026 husband of Smt. Saraswati in lieu of cash  payment received by them.  The Arbitrator also found that the  mutation in favour of the respondents was obtained by  fraudulent means and therefore, non-est.           On 1.8.1979, S/Sh. K.J. Khosla and N. Khosla, the two  sons of Dewan Niranjan Prasad filed an application under  Section 14 of the Arbitration Act, 1940 for making the award a  Rule of the Court.  It appears that on 24.5.1981, notice of the  application was issued to the respondents who filed objections  contending inter-alia that the award dated 10.7.1979 created,  declared, assigned, limited or extinguished right, title and  interest of the value of Rs. 100 and upwards to or in  immovable property and, therefore, the award was  compulsorily registrable under Section 17(1)(b) of the  Registration Act, 1908 (hereinafter as ’the Act’ ) and since the  award was not registered, it could not be made a rule of the  Court.  The Sub-Judge, by his order dated 25.5.1981 held that  the award purports/operates to extinguish the rights of the  daughters and create/declare rights, title and interest in the  sons in immovable property, the value of which was more than  Rupees One hundred only and thus, it compulsorily required  registration under Section 17 of the Act.  On this reasoning,  the Sub-Judge declined to make the award as a rule of the  Court.   Aggrieved thereby, the two sons of Dewan Niranjan  Prasad filed appeal before the Appellate Court, which was  dismissed on 8.8.1983 holding the same view.  Thereafter, a  civil revision, namely revision No. 3064 of 1983 was preferred  before the High Court, which was dismissed by the impugned  order on 8.1.2001.  Hence, the present appeal.           The High Court, in our view, erroneously dismissed the  Civil Revision affirming the orders passed by the Trial court  and Appellate Court.  The  High Court dismissed the civil  revision with the following reasoning: (1)     the award took away some rights from the  sisters by giving a declaration that the  donees did not comply with the condition of  the gift and in this way, the sisters were  divested of some rights and those rights  were created for the first time in favour of  the brothers by the award;  

(2)     as the Arbitrator observed that the  mutation of the land in favour of the  daughters was of no value, it cannot be  said in such a situation that the award only  declared a pre-existing right in favour of the  sons;  

(3)     by the award itself, an adjudication has  been made by the Arbitrator that the gift  created by the father in favour of his

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daughters was not enforceable because it  was never accepted by the donees and it  was never acted upon as per the conditions  of the gift.  One of the conditions was that  the daughters should construct their  houses.  Thus, the document of award  declares and creates rights in favour of the  brothers by taking it from the sisters and  when those rights are created in  praesenti,  then such document/award requires  registration and such an award without  registration cannot be acted upon as it does  not confer any right, title or interest in  favour of the brothers;

(4)     the rights were created for the first time  through the award itself and, therefore, this  award required registration;   

(5)     the present award is a declaration vide  which certain rights of the Respondents  were extinguished and rights in favour of  the Petitioner (and Respondent No. 5) were  created by making them the owners of the  disputed plots by rejecting the defence and  contentions of the sisters and thus the  award is squarely covered by the provisions  of Section 17(1)(b) of the Registration Act."

During the pendency of this appeal, an application was  taken out for substitution of respondent No. 1 \026 Smt.  Rajlakshmi by her legal representatives.  This Court, on  11.7.2005 rejected the substitution application on ground of  delay.  Accordingly, the appeal stood abated as far as deceased  respondent No. 1 is concerned.  Therefore, the question  whether on abatement of the appeal in respect of deceased  respondent No. 1, the appeal is maintainable qua the other  respondents also poses for consideration.   The questions posed for determination in this appeal are: A.      Whether with abatement of appeal in respect of  deceased Smt. Rajlakshmi, the whole appeal qua   other respondents abated or not?

B.      Whether the award of the Arbitrator dated  10.7.1999 purports or operates to create,  declare, assign, limit or extinguish in praesenti  or in future any right, title or interest of the  value of one hundred rupees and upwards to or  in immovable property which requires  registration under Section 17 (1)(b) of the  Registration Act, 1908?

A. Abatement of appeal in respect of deceased Smt.  Rajlakshmi & maintainability of the appeal qua other  respondents

       Mr. C.A. Sundram, learned Senior counsel, appearing on  behalf of the appellant strenuously contended that the Gift  Deed in respect of the daughters, which had been revoked,  was distinct and separate and therefore, the decree is  distinctly and severally executable on the abatement of appeal  in respect of Smt. Rajlakshmi and, therefore, the appeal qua  other respondents does not abate and is maintainable.  Per  contra, Mr.Manish Vasisth, learned counsel appearing on

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behalf of the respondents contended that the issue is common  and when the appeal against one of the respondents abated,  the whole appeal qua other respondents also abated.             To answer this question, we may refer to the Gift Deed  dated 14.10.1956 executed by Dewan Niranjan Prasad.  The  aforesaid Gift Deed was entered in the Dussera Bahi of the  family.  The partition portion of the Gift Deed in the Dussera  Bahi reads as under:  "On this auspicious occasion, on my behalf and on  behalf of both brothers I offer by way of present one  piece of land in the rear portion of "Nishkam" to all  the three sisters, which has a breadth of three  hundred feet.  All three sisters will get a front of 100  feet each.  The length will be 150-160 feet i.e. up to  the contractor’s hut, that is up to the middle of the  rons (walk) on which it stands.  Bibi Saraswati’s  plot will be towards Narrn house, Nirmal’s towards  Lola Atka Rao and Raj’s in the middle."

As already noticed, the Gift Deed was revoked by a  memorandum dated 10.5.1971 and the two daughters and  husband of the deceased daughter were paid Rs. 10,000/-  each in lieu of the plots.  It appears from the record that on  2.9.1971 Smt. Rajlakshmi and Sh. B.S. Talwani, husband of  Smt. Sarswati had written a letter to Dewan Niranjan Prasad  that they have received the full amount of Rs. 10,000/- as  their share.   The facts, as adumbrated above, would clearly show  that each of the daughters had a distinct and separate share  by metes and bounds and also that each one of them had  received Rs. 10,000/- in lieu of the plots of land and therefore,  it cannot be held that abatement of respondent No. 1 would  abate the appeal qua the other respondents.            In Sardar Amarjit Singh Kalra (Dead) by LRs.  (appellant) v. Pramod Gupta (Smt.)(Dead) by LRs. & Ors.  (respondents) (2003) 3 SCC 272 a Constitution Bench of this  Court, after considering various decisions held, at page 305  SCC, that whether an appeal partially abates on account of   the death of one or the other party on either side has to be   considered depending upon the fact as to whether  the decree  obtained is a joint decree or a severable one.  It was further  held that in case of a joint and inseverable decree if the appeal  abated against one or the other, the same cannot be proceeded  with further for or against the remaining parties as well.  If  otherwise, the decree is a joint and several or separable one,  being in substance and reality a combination of many decrees,  there can be no impediment for the proceedings being carried  with among or against those remaining parties other than the  deceased.  Finally, this Court held in paragraph 34, at page  SCC 307 as under:  "34. In the light of the above discussion, we hold:-  

(1)     Wherever the plaintiffs or appellants or  petitioners are found to have distinct, separate  and independent rights of their own and for  purpose of convenience or otherwise, joined  together in a single litigation to vindicate their  rights the decree passed by the Court thereon  is to be viewed in substance as the  combination of several decrees in favour of the  one or the other parties and not as a joint and  inseverable decree. The same would be the  position in the case of defendants or

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respondents having similar rights contesting  the claims against them.

(2)     Whenever different and distinct claims of more  than one are sought to be vindicated in one  single proceedings as the one now before us,  under the Land Acquisition Act or in similar  nature of proceedings and/or claims in  assertion of individual rights of parties are  clubbed, consolidated and dealt with together  by the Courts concerned and a single judgment  or decree has been passed, it should be treated  as a mere combination of several decrees in  favour of or against one or more of the parties  and not as joint and inseparable decrees.

(3)     The mere fact that the claims or rights asserted  or sought to be vindicated by more than one  are similar or identical in nature or by joining  together of more than one of such claimants of  a particular nature, by itself would not be  sufficient in law to treat them as joint claims,  so as to render the judgment or decree passed  thereon a joint and inseverable one.

(4)     The question as to whether in a given case the  decree is joint and inseverable or joint and  severable or separable has to be decided, for  the purposes of abatement or dismissal of the  entire appeal as not being properly and duly  constituted or rendered incompetent for being  further proceeded with, requires to be  determined only with reference to the fact as to  whether the judgment/decree passed in the  proceedings vis-a-vis the remaining parties  would suffer the vice of contradictory or  inconsistent decrees. For that reason, a decree  can be said to be contradictory or inconsistent  with another decree only when the two decrees  are incapable of enforcement or would be  mutually self-destructive and that the  enforcement of one would negate or render  impossible the enforcement of the other."

In  the case of Shahazada Bi and Ors. v. Halimabi  (since dead) By her LRs. (2004) 7 SCC 354, during the  pendency of the suit, defendant No. 4 had died.  This Court,  after considering various decisions of this Court on the  provision of Order 22 Rule 4 C.P.C., held that the Rule does  not provide that by the omission to implead the legal  representatives of a defendant, the suit is abated as a whole.   This Court further held that whether the defendant  represented the entire interest or only a specific part is a fact  that would depend on the circumstances of each case.  If the  interests of the co-defendants are separate, as in case of co- owners, the suit will abate only as regards the particular  interest of the deceased party.   In that case the 4th defendant, who died on 8.5.87, was in  possession of one of the seven rooms, which were let out to  defendant No. 5.  The trial court found different rooms to be in   possession of different defendants who claimed to be tenants- in-common in possession of each of the seven rooms and  therefore, in those circumstances, this Court held that the  death of the 4th defendant would not abate the suit qua the  other defendants.  

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Learned counsel for the respondents relied on the  decision of this Court in Badni (Dead) by LRs. & v. Siri  Chand (Dead) by LRs. & Ors. (1999) 2 SCC 448.  In that case  the fact of adoption of one Ratan Singh, plaintiff was the  common issue.  The High Court dismissed the appeal on the  ground that the legal heirs of one Shiv Lal, one of the  appellants, were not brought on record.  The High Court was  also of the view that on abatement of Shiv Lal’s appeal, other  appeals also stood abated because of the common issue  regarding the adoption of the plaintiff’s pre-deceased interest  (Ratan Singh).  There cannot be two conflicting decrees.  The  adoption issue being common and decisive in all the appeals  pending before the High Court, dismissing one appeal alone on  the ground of abatement and allowing the other appeals on  merits might result in conflicting decrees in case other appeals  are accepted on merits.  The facts of that case are not  applicable to the facts of the case at hand.  Here, no common  issues among the sisters arise because as already said all the  sisters had different and distinct share by metes and bounds.   Therefore, the said decision is of no assistance to the  respondents.   Learned counsel for the respondents also referred to the  decision in Pandit Sri Chand & Ors. v. M/s. Jagdish  Parshad Kishan Chand & Ors. (1966) 3 SCR 451.  In that  case the parties agreed to the decree jointly and severally and  Basant Lal, one of the appellants died on 18.10.1962.  The  counsel also referred the case in Ram Sarup & Ors. v.  Munshi & Ors. AIR 1963 SC 553 in which case the issue was  a pre-emption decree which was indivisible.  Both these cases  are not applicable to the facts of the case in hand.    In the facts and circumstances of the present case and  the well settled position of law, as referred to above, we are of  the view that the abatement of appeal in respect of Smt.  Rajlakshmi would not abate the appeal qua  other  respondents.  We hold that the appeal qua other respondents  is maintainable.  B. Whether the award of the Arbitrator dated 10.7.1999  purports or operates to create, declare, assign, limit or  extinguish in praesenti or in future any right, title or  interest of the value of one hundred rupees and upwards  to or in immovable property which requires registration  under Section 17 (1)(b) of the Act?

We may first notice the provisions of Section 17(1)(b) of  the Act: 17. Documents of which registration is compulsory.-  (1) The following documents shall be registered, if  the property to which they relate is situate in a  district in which, and if they have been executed on  or after the date on which, Act No.XVI of 1864, or  the Indian Registration Act, 1866, or the Indian  Registration Act, 1871, or the Indian Registration  Act, 1877, or this Act came or comes into force,  namely:- (a)\005\005.. (b) other non-testamentary instruments which  purport or operate to create, declare, assign, limit or  extinguish, whether in present or in future, any  right, title or interest, whether vested or contingent,  of the value of one hundred rupees and upwards, to  or in immovable property; (c)-(e)\005\005\005"                                                  (emphasis supplied)

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Clause (b) of Section 17(1) enjoined registration of   non- testamentary instruments which purport or operate to create,  declare, assign, limit or extinguish, whether in present or in  future, any right, title or interest, whether vested or  contingent, of the value of one hundred rupees and upwards,  to or in immovable property.  This section speaks of creating  rights or extinguishing rights in praesenti or in future.  Any  right created or extinguished in the past is conspicuously  absent.  The creation of any right or extinguishment of any  right is expressly excluded by the Act itself.   It is contended by Mr. Sundram, learned Senior counsel  for the appellant that the award of the Arbitrator does not  create any right or extinguish any right in praesenti or in  future.  He further submitted that the award of the Arbitrator  noticed the pre-existing facts of a Gift Deed dated 14.10.1956  registered on 10.6.1961 and the revocation of Gift Deed on  10.5.1971 and payment of consideration amount received in  lieu of gift of plot.  He, therefore, argued that by no stretch of  imagination it can be held that the award created any rights or  extinguished any rights in praesenti or in future which would  require registration under the Act.  Per contra, learned counsel  for the respondents contended that  the award created rights  in favour of the sons and extinguished the rights of the  daughters in the immovable property and therefore, the award  would require registration under the Act.    To answer this question, it would be necessary to  examine the award of the Arbitrator.           Before we examine the award of the Arbitrator, we may at  this stage notice the mutual agreement entered into between  the parties referring the dispute to the Arbitrator.  The  dispute, which was referred to the Arbitrator by the parties,  was with regard to Gift Deed and the  resumption of the  property gifted in favour of his three daughters \026 Smt.  Rajlakshmi, Smt. Nirmala and Smt. Sarsaswati survived by  her husband, B. C. Talwani.  After the parties filed the written  statements and documents in support of their respective  claims, the Arbitrator  framed the following issue:          "Whether the gift of the three plots in favour of  the daughters still stand and was not revoked and  the plots were not resumed by their father?"

       The Arbitrator, after examining the issues, came to the  following conclusion:

1.      That the gift was made in 1956 on condition that  the daughters would build houses and settle  there.  No houses were built during this long  period.  Even the possession was neither  delivered by the donor nor was possession taken  by the donees.  A document dated 10.05.1971,  Ex. K-5 is clear.  

2.      That the gift was not acted upon even the Gift  Deed remained in possession of the donor, their  father throughout.  

3.      That Dewan Niranjan Prasad the donor revoked  the gift and resumed the three plots at the  instance and with the consent of the donees, the  daughters, who agreed to the resumption of the  plots on the ground that the plots were not of any  remuneration value and agreed to convert the  plots into cash.  They accepted the cash in lieu of  the plots as mentioned in Ex. K04 and Ex. K-5  and in written statements.

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4.      Smt. Nirmala’s plea that Rs. 5000/- were paid  back to her on account of the loan, advanced by  her husband to Naval her brother, has not been  substantiated.  She did not mention in her letter  dated 17.08.1973 Ex. K-2, that it was a loan.   The other item of Rs. 5,000/- has also not been  proved that it was due to her otherwise.

5.      The mutation of the land in favour of the  daughters has no value.  The entries are wrong.   Dewan Niranjan Prasad and Smt. Saraswati, who  are recorded as present, had died long before the  mutation was sanctioned.  No notice appears to  have been issued to any party.  

6.      That the execution of the Memorandum of  Partition, which is a subsequent act of the Late  Dewan Niranjan Prasad, impliedly shows also  that the gift to the three daughters was revoked.  

I give my award in favour of Shri Krishen Jiwan and  Shri Naval Jiwan and hold that the gift was revoked  and plots were resumed by the Late Dewan Niranjan  Prasad at the instance and with the consent of the  second part in lieu of cash payment received by  them."

       The award of the Arbitrator, as quoted above, would  clearly show that by the award the Arbitrator simply recorded  the finding on the basis of the pre-existing  facts, namely, the  Gift Deed, the revocation of the gift and the partition of the  property between his sons subsequent to the revocation of Gift  Deed.  It is a declaration of pre-existing rights.  It neither  creates any right nor extinguishes any right in praesenti or in  future.  What Section 17(1)(b) of the Act requires is the  creation of rights by decree in praesenti or in future.  In the  present case the award of the Arbitrator, as noted above,  clearly delineated the pre-existing facts, on the basis of which  the award was passed.           In Capt. (Now Major)Ashok Kshyap  (appellant) v. Mrs.  Sudha Vasisht & anr. (respondents) AIR 1987 SC 841, the  award of the Arbitrator, though declared the share of the  parties in the property, it created a right by itself, in favour of  one party to get particular sum from another party and right  to obtain the payment and on payment the obligation of  relinquishment of right or interest in the property.  This Court  held on an analysis of the award that it did not create any  right in any immovable property and as such it was not  compulsory to register it.           This Court in the case of Sardar Singh v. Krishna Devi  (Smt.) and Anr. (1994) 4 SCC 18 held in paragraph 12 page  26 (SCC) as under: "It is, thus, well settled law that the unregistered  award per se is not inadmissible in evidence. It is a  valid award and not a mere waste paper. It creates  rights and obligations between the parties thereto  and is conclusive between the parties. It can be set  up as a defence as evidence of resolving the  disputes and acceptance of it by the parties. If it is a  foundation, creating right, title and interest in  praesenti or future or extinguishes the right, title or  interest in immovable property of the value of Rs.  100 or above it is cumpulsorily registrabie and non-

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registration render it inadmissible in evidence. If it  contains a mere declaration of a pre-existing right,  it is not creating a right, title and interest in  praesenti, in which event it is not a compulsorily  registrable instrument. It can be looked into as  evidence of the conduct of the parties of accepting  the award, acting upon it that they have pre- existing right, title or interest in the immovable  property.                                                 (emphasis supplied)

       To buttress his contention, learned counsel for the  respondents has referred to the decision of this Court in  Ratan Lal Sharma v. Purshottam Harit (1974) 1 SCC 671.   In that case the award expressly created or purported to create  rights in immovable property in favour of the appellant, which  required registration. This is not the position in the facts of the  present case.            Looking at the award of the Arbitrator and the law laid  down by this Court the arguments of learned counsel for the  respondents that the award created any right or extinguished  any right in praesenti or in future which would require  registration under the Act is noted only to be rejected.          In the result, all the decisions of the courts below are  patently erroneous and  are set aside.  This appeal is allowed.   The award of the Arbitrator is made the Rule of the Court.           It is clear from the record that Dewan Niranjan Prasad  died on 15.1.1975 and Smt. Saraswati also in 1966.  The  respondents fraudulently obtained mutation on 22.1.1977  showing Dewan Niranjan Prasad and Smt. Saraswati as  present.  Fraud clocks everything.           Fraud avoids all judicial acts.  A decree obtained by  playing fraud is a nullity and it can be challenged in any  court, even in collateral proceedings.  (See S.P.  Chengalvaraya Naidu (Dead) By LRs. V. Jagannath (Dead)  by LRs. & Ors. (1994)1 SCC 1.           It is open to the appellant to file a suit against the legal  heirs of Smt. Rajlakshmi, whose appeal has been abated.  If  the suit is filed within two months from today, it shall not be  dismissed as being barred by limitation.  With the aforesaid  directions, the appeal is allowed.  Parties are asked to bear  their own costs.