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PETITIONER: SATISH KUMAR & ORS.

       Vs.

RESPONDENT: SURINDER KUMAR & ORS.

DATE OF JUDGMENT: 27/09/1968

BENCH: SIKRI, S.M. BENCH: SIKRI, S.M. BACHAWAT, R.S. HEGDE, K.S.

CITATION:  1970 AIR  833            1969 SCR  (2) 240  CITATOR INFO :  R          1974 SC1066  (5)  R          1974 SC1912  (6)  D          1984 SC 241  (67)  D          1987 SC 841  (15)  R          1989 SC1923  (16)  R          1990 SC  53  (18)

ACT:      Indian  Arbitration Act (10 of 1940)--Award in  respect of property over Rs. 100--Registration if compulsory.      Indian  Registration   Act   (16  of  1908),  s   17(1) (b)--Award   in  respect  of  immovable  property  over  Rs. 100--Registration if compulsory.

HEADNOTE:     An arbitrator appointed by the appellants and respondent partitioned their immovable property exceeding the value  of Rs.  100.  The arbitrator applied under s. 14 of the  Indian Arbitration  Act, 1940 to the Court for making the  award  a rule  of the court.  On the question whether the  award  was admissible in evidence as it was not registered,     HELD:(per Full Court.) The award required registration.     (Per  Sikri and Bachawat, JJ.) All claims which are  the subject  matter of a reference to arbitration merge  in  the award  which  is pronounced In the  proceedings  before  the arbitrator  and  after  an award has  been  pronounced,  the rights and liabilities of the parties in respect of the said claims  can  be  determined only on the basis  of  the  said award.   After  an  award is pronounced, no  action  can  be started  on  the original claim which had been  the  subject matter  of the reference.  The position under the Act is  in no  way different from what it was before the Act came  into force.  Therefore. the conferment of exclusive  jurisdiction on  ’a  court under the Arbitration Act does  not  make  ’an award  any less binding than it was under the provisions  of the  Second  Schedule of the Code of Civil  Procedure.   The filing  of  an  unregistered  award  under  s.  49  of   the Registration  Act is not prohibited: what is  prohibited  is that  it  cannot  be taken into evidence  so  as  to  affect immovable  property falling under s. 17 of the  Registration Act.   It cannot be said that the registration does  not  in

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any manner add to its efficacy or give it added  competence. If  an award affects immovable property order the  value  of Rs.  100  its registration does get rid  of  the  disability created  by  s.  49 of the Registration Act.  The  award  in question  was  not  a mere waste paper but  had  some  legal effect  and  it  plainly   purports  to  affect  or  affects property   within  the  meaning  of  s.  17(1)(b)   of   the Registration Act [248 F-H; 249 F, 250 E]     M/s.  Uttam Singh Dugal & Co. v. Union of  India,   C.A. No.   162  of  1962  dated  11-10-1962,  Champalal  v.  Mst. Samarath  Bai,  [1960]  2 S.C.R. 810.  816  and  Kashinathsa Yamosa Kabadi v. Narsingsa Baskarsa Kabadi, [1961] 3  S.C.R. 792, 806, followed.     Sheonarain Lal v. Prabhu Chand, I.L.R. 37 Pat.  252  and Sardooll  Singh v. Hari Singh I.L.R. [1967] 1 Punj.  &  Har. 622 disapproved.     Chamanlal Girdhat Ghanchi v. Dhayabhai Nathubhai  Ghandi A.I.R.  1938   Bom.   422,  M.A.  M.  Salamullah  Khan  v.M. Noorullah  Khan, A.I.R. 1939 Nag. 233, Keltaha v.U.  Pannawa A.I.R.  1940 Rang. 228, Nani Bela Saha  v. Ram  Gopal  Saha. A.I.R. 1945 Cal. 19 and Bhajahari Saha Banikya v. Behary Lal Basak, 33 Cal. 881, approved.     (Per Hegde. J. concurring): It is one thing to say  that a  right is not created. it is an entirely  different  thing to. say that the right created can- 245 not be enforced without further steps.  An award does create rights in that property but those rights cannot be  enforced until  the  award is made a decree of the  Court.   For  the purpose of s. 17(1)(b) of the Registration Act, all that had to  be  seen  is whether the award in  question  purport  or operate  to create or declare, assign, limit or   extinguish whether   in present or future any right, title or  interest whether  vested  or contingent of the value of  one  hundred rupees  and upwards to or in immovable property.   Since  it does, it is compulsorily registerable. [252 B-D]

JUDGMENT:      CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 822  of 1966.      Appeal  by special leave from the judgment  and  order, dated  April  27,  1965 of the Punjab High  Court  in  Civil Revision No. 841 of 1964.      Sarjoo Prasad, D.N. Mishra and Ravinder Narain, for the appellants.      A.K.   Sen,  S.V.  Gupte,  B.P.  Maheshwari  and   R.K. Maheshwari, for respondent No. 1      The  Judgment  of  S.M. SIKRI  and  R.S.  BACHAWAT  was delivered  by SIKRI, J.K.S. HEGDE, J., delivered a  separate Opinion.      Sikri,  J.   This appeal by special leave  is  directed against  the  judgment, dated April 27, 1965,  of  the  High Court of Punjab at Chandigarh (S. B. Capoor, J.)  dismissing Civil  Revision No. 841 of 1964.  The Civil  Revision  arose out of  the  following facts.      The  following  pedigree table shows  the  relationship between the parties:          Sohan Lal (Decd.) Husband of Gujri -------------------------------------------------  Harbans Lal (D)                         Sudarshan L(D)  husband of Kamla Wati                 husband of Lachmi                                              Devi (Resp.6)  Satish   Rakeah   Jatindar   Kaka   Chand  Surinder Kumar

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 Kumar   Kumar    Kumar    (Minor)   Rani   (Resp. 6)   App. 1  App. 2   App. 3   App. 4    (Minor)                            Smt.          Smt.          Smt                            Nirmal        Kanda         Lajya                            Devi          Devi          Devi                            Reap. 3       Reap.4       Reap.5 On  the  death of Sohan Lal, Behari Lal was   appointed   as arbitrator  by  Harbans Lal, Surinder Kumar  (then  a  minor through     his  mother Smt. Lachmi Devi)  and  Smt.  Gujri, widow  of  Sohan Lal, for partition of the  joint  property. Behari Lal, by his award dated October 21, 1956, divided the property into two  equal 246 shares, between Harbans Lal and Surinder Kumar.  Harbans Lal and  Surinder Kumar signed the award.  Harbans Lal  died  on May  20,  1960, upon which Surinder Kumar filed a  suit  for partition  of  the  properties, the  subject-matter  of  the award.   This suit was dismissed as withdrawn on  March  13, 1962.   On March 11, 1962, Behari Lal, arbitrator, filed  an application under s. 14 of the Indian Arbitration Act,  1940 (X of 1940)--hereinafter referred to as the Act--for  filing the  award  in Court and for making the same a rule  of  the Court.   Surinder   Kumar  entered  appearance   and   filed objections  under s. 30 of the Act.  One of  the  objections was  that  the  award  dated  October  21,  1956,  was   not admissible  in  evidence  for  want  of  proper  stamp   and registration  and could not, ’therefore, be made a  rule  of the  Court.   On  January  31,  1963,  the  objections  were dismissed by Miss Harmohinder Kaur, Subordinate Judge, First Class,  Ludhiana, as time-barred, but she did not  make  the award  a rule of the Court as there was a further  objection to  the effect that the award not having been executed on  a properly  stamped paper and  not  having   been  registered, was  not admissible in evidence.  This objection  was  dealt with  by  Shri Om Parkash Saini,  Subordinate  Judge,  First Class, Ludhiana, who, by his order, dated June 5, 1963, held that the award in question was not admissible in evidence as it  was  executed on deficiently stamped paper and  was  not registered.  He accordingly dismissed the application.     An  appeal  was  taken to the District  Judge,  and  the Additional  District Judge by his order, dated November  23, 1964, upheld the order of the Subordinate Judge.  A revision was then taken to the High Court.  Capoor, J., held that the award    actually   effected  a   partition   and   required registration  under s. 17(1)(b) of the  Indian  Registration Act, 1908.  The learned Judge dissented from the decision of &  Full  Bench of the Patna High Court in Seonarain  Lal  v. Prabhu Chand(1), and preferred to follow the view  expressed by  the Bombay High Court  in  Chimanlal Girdhar Ghanchi  v. Dahyabhai Nathubhai Ghandhi,(2) by the Nagpur High Court  in M  .A.  M. Salamullah Khan v.M. Noorullah  Khan,(3)  by  the Rangoon High Court in U. Keltaha v.U. Pannawa,(4) and by the Calcutta High Court in Nani Bela Saha v. Ram Gopal  Saha(5). He accordingly dismissed the  revision petition.     The decision of the Patna High Court was, however, later followed  by  a Full Bench of the Punjab  and  Haryana  High Court  in  Sardool Singh v. Hari Singh(6),  judgment,  dated November 8, 1966. (1) I.L.R. 37 Pat. 252.          (2) A.I.R. 1938 Bom. 422. (3) A.I.R. 1939 Nag. 233, 235.   (4) A.I.R. 1940 Rang. 228. (5) A.I.R. 1945 Cal. 19, 21-22. (6) I.L.R. [1967] 1 Pun.& Hat. 622. 247     The question which arises before us is whether an  award given  under  the  Act  on  a  private  reference   requires

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registration  under s. 17(1) (b) of the Indian  Registration Act,  if the award effects partition of  immovable  property exceeding  the  value of Rs. 100. The main reason  given  by Sinha, J. speaking for the Patna Full Bench in Seonarain Lal v. Prabhu Chand(1), for holding that such an award does. not require registration is that  under  the scheme of the Act a private  award,  unless a decree is passed in terms  of  the award, has no legal effect.  this, according to him, follows from the conclusion that once a matter has been referred  to arbitration,  it comes within the immediate control  of  the Court  under  the  Act,  and  no  other  authority  has  any jurisdiction to deal with the matter except as provided  for in s. 35 of the Act.  He thought that what distinguishes the provisions in the Arbitration Act from the provisions in the Second  Schedule in the Code of Civil Procedure is that  the Act  bars jurisdiction of all Courts to Pronounce  upon  the validity,  effect  or existence of an award  or  arbitration agreement except the Court under the Act itself. Sinha,  J., looking  at it from another point. of view, namely, that  an award  is only effective when a decree follows the  judgment upon  the award, observed that such an award may be  covered by the exception mentioned in section 17(2)(vi) (any  decree or order of a Court) of the Registration Act.     The  Punjab Full Bench has followed this reasoning,  and indeed  reproduced  paras 5 to 15 of the  Patna  Full  Bench judgment  in its own judgment.  Mahajan, J., with  whom  the two other Judges agreed, observed:                   "I  am  in respectful agreement  with  the               entire  line  of-reasoning in the  Patna  case               barring the underlined observations :--                    "...  an award is only effective  when  a               decree follows the judgment on the award  such               an  award  may  be covered  by  the  exception               mentioned in section 17(2) (vi) (any decree or               order of a Court) of the Registration Act."                    If  these.  observations  are  meant   to               convey  that award as such is covered  by  the               exception  (vi)  of  section  17  (2)  of  the               Registration  Act, I am unable to  agree.  But               the  decree that follows the award when it  is               made a rule of the Court, no exception can  be               taken  to  the  view that  such  a  decree  is               covered by the exception."                 The  Punjab Full Bench gave  two  additional               reasons:               "(1) If an award is registered, it is still  a               waste  paper unless it is made a rule  of  the               Court.   Thus  registration does not,  in  any               manner,  add  to its efficacy or give  it  any               added competence.   Section  32  of  the (1) I.L.R. 37 Pat.252. 248               Arbitration  Act is specific for no right  can               be  rounded on an award as such  after  coming               into force of the 1940 Arbitration Act;                   (2) It is not disputed and indeed it could               not  be  that the Court has the  power,  under               section  16, to remit the award from  time  to               time.   If  registration  of  an award  is  an               essential  pre-requisite  before it  could  be               made  a  rule of the Court under  section  17,               every  time  an award is remitted  and  a  new               award  is  made, the new  award  will  require               registration.   The result would be  that,  in               the  same controversy, there can be  not  only

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             one registration but a number of registrations               regarding  the  same title, a situation  which               is  not  even envisaged  by  the  Registration               Act." It seems to us that the main reason given by the two. Full Benches  for their conclusion is contrary to. what was  held by  this  Court in its unreported decision  in  M,Is.  Uttam Singh  Dugal & Co. v. The Union of India(1).  The  facts  in this case, shortly stated, were that M/s. Uttam Singh  Dugal &  Co.  filed an application under s. 33 of the Act  in  the Court  of  the Subordinate Judge,Hazaribag.   The  Union  of India, respondent No. 1, called upon respondent No. 2,  Col. S.K. Bose, to adjudicate upon the matter  in dispute between respondent No. 1 and the appellant company.The case of  M/s. Uttam Singh Dugal & Co. was that this purported reference to respondent No. 2 for adjudication on the  matters alleged to be  in  dispute between them and respondent No.  1  was  not competent because by an award passed by respondent No. 2  on April 23, 1952, all the. relevant disputes between them  had been decided.  The High Court held inter alia that the first award  did not create any bar against the competence of  the second  reference.  On appeal this Court after holding  that the  application  under  s. 33  was  competent  observed  as follows:               "The  true  legal position in  regard  to  the               effect  of an award is not in dispute.  It  is               well  settled  that  as a  general  rule,  all               claims  which  are  the  subject-matter  of  a               reference  to arbitration merge in  the  award               which is pronounced in the proceedings  before               the  arbitrator  and that after an  award  has               been  pronounced,  the rights and  liabilities               of the parties in respect of the said  claims.               can  be  determined only on the basis  of  the               said award.  After an award is pronounced,  no               action  can be started on the  original  claim               which  had  been the   subject-matter  of  the               reference. As has been observed by  Mookerjee,               J.  in  the  case of  Bhajahari  Saha  Banikya               v.Behary Lal Basak(2) "the  award is, in fact,               a final (1)  Civil  Appeal  No. 162 of  1962-judgment  delivered  on October 11, 1962. (2)  33 Cal. 881 at p. 898. 249               adjudication  of a Court of the ’parties’  own               choice,  and until impeached  upon  sufficient               grounds  in  an  appropriate  proceeding,   an               award, which is on the fact of it regular,  is               conclusive upon the merits of the  controversy               submitted,  unless   possibly   the    parties               have  intended  that the award  shall  not  be               final  and conclusive... in reality, an  award               possesses  all the elements of vitality,  even               though it has not been formally enforced,  and               it  may  be  relied upon   in   a   litigation               between  the parties relating  to   the   same               subjectmatter."  This conclusion, according to               the    learned  Judge,  is  based   upon   the               elementary  principle  that,  as  between  the               parties   and  their  privies,  an  award   is               entitled  to that respect which is due to  the               judgment   of   a  court   of   last   resort.               Therefore,   if  the  award  which  has   been               pronounced  between the parties has, in  fact,

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             or  can, in law, be deemed to have dealt  with               the  present  dispute,  the  second  reference                             would be incompetent. This position  a lso   has               not been  and  cannot be seriously disputed."’      This Court then held on the merits "that the dispute in regard  to overpayments which are sought to be. referred  to the arbitration of respondent No. 2 by the second  reference are not new disputes; they are disputes in regard to. claims which  the  Chief  Engineer  should  have  made  before  the arbitration   under  the  first  reference."    This   Court accordingly  allowed  the  appeal and set  aside  the  order passed by the High Court.      This  judgment is binding on us.  In our  opinion  this judgment lays down that the position under the Act is in  no way  different  from what it was before the  Act  came  into force,  and that an award has some legal force and is not  a mere  waste paper.  If the award in question is not  a  mere waste paper but has some legal effect it plainly purports to or affects property within the meaning of s. 17(1)(b) of the Registration Act.      We  may mention that an appeal was filed in this  Court against the decision of the Division Bench of the Patna High Court,  which had referred the case of  Sheonarain  Lal   v. Prabhu  Chand(1)  to the Full Bench for opinion  on  certain questions and which decided the case in accordance with that opinion,  and  the  same  was dismissed  by  this  Court  in Sheonarain  Lal v. Rameshwari Devi(2) in which the  judgment was  delivered by the same Bench which decided the  case  of M/s. Uttam Singh Dugal v. The Union of India(a). It is  true that this Court in Sheonarain  Lal v. Rameshwari Devi(2) did not expressly rule on the validity (1) I.L.R. 37 Pat. 252. (2)  Civil  appeal No. 296 of  1960--judgment  delivered  on December 6, 1962. (3)  Civil  Appeal No. 162 of  1962--judgment  delivered  on October 11, 1962. Sup. C1/69--17 250 of  the answer given by the Patna Full Bench  in  Sheonarain Lal  v.  Prabhu Chand(1) that such awards  did  not  require registration, but decided the case on the point whether  the award in dispute in that case in fact purported or  operated to  create a right, title or interest of the value  of  more than  Rs. 100 in immovable properties.  But,  after  holding that  the document did not operate to create  or  extinguish any right in immovable property, this Court observed:                   "The position would have been otherwise if                             the  arbitrators  had  directed  by  t he  award               itself  that  tiffs shop would  go  to  Prabhu               Chand  without any further document.  In  that               case  the award itself would have  created  in               Prabhuchand a right to these properties.  That               is  not, however, the provision in the  award.               In  the  absence  of  a  registered  document,               Prabhu Chand would get no title on  the  award               and   Sheonarain’s title would remain  in  the               shop."     In this connection we may mention two other decisions of this  Court.  In Champalal v. Mst. Samarath  Bai(2),  Kapur, 1., speaking for the Court, observed as follows:                   "The  second  question  that  the    award               required  registration and would not be  filed               by the arbitrators before it was registered is

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             equally  without substance. The filing  of  an               unregistered   award  under  s.  49   of   the               Registration  Act is not prohibited;  what  is               prohibited  is  that it cannot be  taken  into               evidence  so as to affect  immovable  property               falling under s. 17 of the Act. That the award               required registration was. rightly admitted by               both parties."     Again   in  Kashtinathsa  Yamosa  Kabadi  v.   Narsingsa BhctsKarsa  Kabadi(3)  Shah  J.,  speaking  for  the   Court observed:                   "The records made by the Panchas about the               division  of the properties, it is true,  were               not  stamped nor were they registered.  It  is               however  clear that if the record made by  the               Panchas  in so far as it deals with  immovable               properties is regarded as a   non’testamentary               instrument   purporting  or    operating    to               create, .declare, assign, limit or  extinguish               any  right,  title or  interest  in  immovable               property,  it was   compulsorily  registerable               under   s.  17  of  the   Registration    Act,               and .would not in the absence of  registration               be admissible in evidence." (1)  I.L,R. 37 Pat. 252.      (2) [1960] 2 S,C.R 810, 816 (3)  [1961] 3 S.C.R. 792, 806. 251     In  view of the above decisions it is not  necessary  to refute the other reasons given by both the Full Benches, but out  of  respect for the learned Judges we  will  deal  with them.   We  may mention that no comment was  made  in  these cases on the provisions of para 7 of Schedule 1 to the  Act. This para provides:     "7. The award shall be final and binding on the  parties and persons claiming under them respectively." If  the  award is final and binding on the  parties  it  can hardly be said that it is. a waste paper unless. it is  made a rule of the Court.     We  are  unable  to. appreciate why  the  conferment  of exclusive  jurisdiction  on a court under the Act  makes  an award any the less binding than it was under the  provisions of the Second Schedule of the Code of Civil Procedure.   The Punjab   Full Bench held that the registration does  not  in any  manner  add  to  its efficacy  or  give  it  any  added competence.   We cannot concur with these observations.   If an award affects  immovable  property over the value of  Rs. 100, its registration does get rid of the disability created by s. 49 of the Registration Act.     Regarding  the  difficulty pointed out  by  the   Punjab Full  Bench that there may be many registrations we are  not called upon to decide whether these difficulties would arise because  the  language of s. 17 of the Registration  Act  is plain.   It  may  be that no such  difficulties  will  arise because  under  s.  16(2) of the  Act  what  the  arbitrator submits to the Court is his decision and it may be that  the decision  may  not  be  registerable  under  s.  17  of  the Registration  Act.   But as we have said before we  are  not called upon to decide this point.     In our opinion, Capoor, J., was right in dissenting from the  Patna Full Bench in Sheonarain Lal v.  Prabhu  Chand(1) and holding that the award in dispute required registration.     In  the result the appeal fails and is.  dismissed  with costs.     We  may  make it clear that we are dealing only with  an award  made  on  a  reference by  the  parties  without  the

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intervention of court.     Hegde,  J. I agree.  But I would like to add few  words. Arbitration  proceedings, broadly speaking may  be   divided into two stages.  The first stage commences with arbitration agreement  and ends with the making of the award.   And  the second  stage  relates  to the  enforcement  of  the  award. Paragraph  7  of the First Schedule to the  Arbitration  Act lays down that, "the award shall be final and binding on the parties  and  persons  claiming  under  them  respectively". Therefore  it is not possible to agree with the  Full  Bench decisions of the Patna High Court (1)  I.L.R. 37 Part. 252. 252 and that of the Punjab and Haryana High Court that an  award Which is not made a decree of the Court has no existence  in law.  The learned Judges’ who decided those cases appear  to have  proceeded on the basis that an award which  cannot  be enforced  is not a valid award and the same does not  create any  rights in the property which is the subject  matter  of the  award.  This in my opinion is not a  correct  approach. The  award  does create rights in that  property  but  those rights  cannot be enforced until the award is made a  decree of  the Court.  It is one thing to say that a right  is  not created,  it is an entirely different thing to say that  the right created cannot be enforced without further steps.  For the purpose of s. 17(1)(b) of the Registration Act, all that we  have to see is whether the award in question purport  or operate  to create or declare, assign, limit  or  extinguish whether  in present or future any right, title  or  interest whether  vested  or contingent of the value of  one  hundred rupees and upwards to or in immovable property.  If it does, it is compulsorily registerable.  In the aforementioned Full Bench  decisions  sufficient attention has not been given to s. 17 of the Registration Act. The focus was entirely on the provisions  of  the Arbitration Act and there again  on  the enforcement of the award and not in the making of the award. A  document may validly create rights but those  rights  may not  be enforceable for  various  reasons. Section  17  does not  concern  itself with the enforcement  of  rights.  That Section  is  attracted  as  soon  as  its  requirements  are satisfied  There  is no gainsaying the fact that  the  award with  which  we  are concerned in this case,  at  any  rate, purported to creat rights in immovable property of the value of rupees more  than  one hundred.  Hence it is compulsorily registerable. Y.P.                                     Appeal dismissed. 253