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PETITIONER: THEMI P. SIDHWA & ORS.

       Vs.

RESPONDENT: SHIB  BANERJEE & SONS PVT. LTD. & ANR.

DATE OF JUDGMENT03/09/1974

BENCH: ALAGIRISWAMI, A. BENCH: ALAGIRISWAMI, A. REDDY, P. JAGANMOHAN BEG, M. HAMEEDULLAH

CITATION:  1974 AIR 1912            1975 SCR  (2)   1  1974 SCC  (2) 574

ACT: Indian  Registration  Act, 1908-S. 17(1)(b) and  2-Award  of Arbitrator  relating to partition of immovable  property  of value exceeding Rs.100 If requires registration.

HEADNOTE: Various disputes between the parties were referred to a sole arbitrator.   In  an application under s.  151  C.P.C.,  the point  was  raised before the High Court that as  the  award directed  partition of immovable property and the  value  of the  immovable  property was more than one  lakh  rupees  it required  registration  under  s.  17(1)(b)  of  the  Indian Registration Act, 1908 and as it had not been registered, it was not admissible in evidence and could not be enforced and could  not confer any rights.  A single judge of’  the  High Court  held that since the award had not been registered  as required  by  section 17(1)(b) of the  Registration  Act  it could  not  be made a rule of the court under s. 17  of  the Arbitration Act. Allowing the appeal, HELD : The award falls under s. 17(2)(v) of the Registration Act and is, therefore, not registerable. The  High  Court has proceeded on the basis that  the  award related  to  partition of immovable property  of  the  value exceeding Rs. 100/- and, therefore, came within the ambit of s.  17(1) (b) of the Indian Registration Act.  No  doubt  it did;  but  the High Court did not bestow  attention  on  the words of that section and see whether it operated to  create rights  in  the  immovable property  or  whether  it  merely created a right to obtain another document, which will, when executed  create any such right.  The award itself  did  not purport  or  operate to create, declare, assign,  limit  or’ extinguish, whether in present or in future any right, title or interest whether vested of continent of the value of  Rs. 100/-  and  upwards  in respect  of  immovable  property  as contemplated under s. 17(1)(b) of the Registration Act.   It merely  created  a right to obtain  another  document  which would  when  executed,  create  declare,  assign,  limit  or extinguish any such right, title or interest. [2E; 4B] Rajangam  Ayyar v. Rajangam Ayyar, 50 I.A.  134,  Sheonarain Lal  v. Rameshwari Devi, C.A. No 296 of 1960 decided on  6th

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December  1952  Satish  Kumar v. Surinder  Kumar,  [1969]  2 S.C.R. 244 and Ratan Lal Sharma v. Purshottam Harit C.A. No. 1625 of 1967 decided on 11th January, 1974. referred to.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1350  of 1968. Appeal  by special leave from the judgment and  order  dated January 17, 1968 of the Delhi High Court in Suit No. 588  of 1966, S.  T.  Desai,  P.  C. Bhartari and  K.  J.  John,  for  the Appellants. Brijbans  Kishore,  V.  N.  Ganpule and  P.  C.  Kapur,  for respondent No. 1. The Judgment of the Court was delivered by ALAGIRISWAMI,  J.-The question for decision is  whether  the award made by the arbitrator in this case is inadmissible in evidence and 2 therefore no decree can be passed on the basis of that award as held by the Delhi High Court.  The short facts  necessary for decision on this case are these : By an agreement dated 25th April, 1961 various disputes  and matters  in difference between the parties were referred  to the sole arbitration of Mr. B. K. Daphtary.  The  arbitrator made his award on 25th April, 1962.  It is not necessary  to refer  to the various stages the matter went through  except ’that  the case came to be finally heard by the  Delhi  High Court.   Before  that Court by an  application  filed  under section 151 C.P.C. a question was allowed to be raised  that as  "the award directs partition of immovable  property  and the  value of this immovable property is more than one  lakh it  therefore requires registration under s. 17 (1)  (b)  of the,  Registration  Act and the same is  not  admissible  in evidence  and cannot be enforced or confer any rights."  The learned Single Judge of the High Court who heard the  matter held that the award, not having been registered as  required by S. 17 (1 ) (b) of The Indian Registration Act, cannot  be made a rule of the Court under S. 17 of the Arbitration Act. The  learned  Judge  also held that he  would  have  had  no hesitation  to follow the course prescribed in s. 38 of  the Stamp Act and receive the stamp duty and penalty but for his decision that the document requires registration. The  learned  Judge proceeded on the basis  that  the  award relates  to  partition of immovable property  of  the  value exceeding rupees one hundred and therefore comes within  the ambit of S. 17(1) (b) of the Indian Registration Act,  1908. No  doubt it does but the learned Judge did not  bestow  his attention  on the words of that section and see  whether  it operates  to create rights in immovable property or  whether it  merely creates a right to obtain another document  which will,  executed, create any such right.  The  learned  Judge purported to follow the decision of the Andhra Pradesh  High Court in M. Venkataratnam & Anr. v. M. Gheelammyya & Anr.(1) The  award  insofar as it is relevant is  in  the  following terms :               "1.  I  hold  an award  that  the  said  Tehmi               Pheroze  Sidhwa,  Almitra Pheroze  Sidhwa  and               Mani Rustom Sidhwa paid the total contribution               of  Rs. 32,500.00 (Rupees thirty two  thousand               five hundred) as their one fourth share in the               cost  of  the land at  Najafgarh  Road,  Delhi               being  plot  No. 71/5 of the  Industrial  Area

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             Scheme   of   the  Delhi   Improvement   Trust               admeasuring about 7246.67 square yards and the               factory and other buildings and compound  wall               constructed  thereon  and  occupied  by  Delhi               Floorings  Private  Ltd. that the  said  Tehmi               Pheroze  Sidhwa,  Almitra Pheroze  Sidhwa  and               Mani  Rustom Sidhwa are between them  entitled               to a one fourth share or interest in the  said               land  and  buildings  and  in  the  rents  and               profits  thereof; that as  between  themselves               the               (1)   A. I. R. 1967 A. P. 257.               3               shards  or interest of the said Tehmi  Pheroze               Sidhwa, Almitra Pheroze Sidhwa and Mani Rustom               Sidhwa are as follows               Tehmi Pheroze Sidhwa 3/32 share               whole Almitra Pheroze Sidhwa 3/32 share    }In               the hole               Mani     Rustom     Sidhwa     2/32      share               property.               2.    A  lease of the said property  has  been               granted by the Delhi Improvement Trust to Shib               Banerjee  and Sons Private Ltd. and  the  said               property stands in the name of Shib Banerjee &               Sons Private Ltd.  I hold and award that  Shib               Banerjee  &  Sons Private Ltd. hold  the  said               property  upon trust as to one fourth  thereof               for  the  said Tehmi Pheroze  Sidhwa,  Almitra               Pheroze Sidhwa, and Mani Rustom Sidhwa in  the               share  as  above mentioned and that  the  said               Tehmi  Pheroze Sidhwa, Almitra Pheroze  Sidhwa               and  Mani Rustom Sidhwa are entitled to a  one               fourth  share in the rent and profits  of  the               said property from 1st January 1960.               3.    1  award and direct that  Shib  Banerjee               and Sons Private Ltd. do pay to the said Tehmi               Pheroze  Sidhwa,  Almitra Pheroze  Sidhwa  and               Mani Rustom Sidhwa the one fourth share of the               rents and profits of the said property at  the               rate of Rs.93.75 nP per month to Tehmi Pheroze               Sidhwa.   Rs.  93.75 nP per month  to  Almitra               Pheroze  Sidhwa.   Rs. 62.50 nP per  month  to               Mani  Rustom Sidhwa. from 1st January 1960  to                             30th  April  1962 (both  days  inclusi ve)  and               thereafter do pay to them one fourth share  of               the rents and profits of the, said property in               the aforesaid shares.               4.    1  award and direct that  Shib  Banerjee               and  Sons Private Ltd. do forth  with  execute               such   documents  as  may  be  necessary   for               declaring  the  one fourth share of  the  said               Tehmi  Pheroze Sidhwa, Almitra Pheroze  Sidhwa               and  Mani Rustom Sidhwa in the  said  property               and  do  execute  as  soon  as  possible  such               documents  as, may be necessary for  transfer-               ring  the,  said property and the  lease  from               the,  Delhi Improvement Trust (subject to  the               existing  tenancy of Delhi  Floorings  Private               Ltd.) to the joint names of themselves and the               said  Tehmi  Pheroze Sidhwa,  Almitra  Pheroze               Sidhwa and               Mani Rustom Sidhwa as tenants incommon  in               the following shares:--

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Shib Banerjee and Sons Private Ltd.24/32               share.  Tehmi Pheroze Sidhwa.                    3/32               share.  Almitra Pheroze Sidhwa.                  3/32               share.  Mani Rustom Sidhwa.                      2/32               share.                The out of pocket expenses of such  documents               (including amount payable for fee or costs  to               the  Delhi  Improvement  Trust,  Stamp   Duty,               registration charges and expenses               4               for  plans)  shall be borne by  the  aforesaid               parties  in  proportion  to  their  respective               shares in the said property.  The professional               charges of the lawyers of the parties in  con-               nection with such documents shall be borne  by               the respective parties." It  would be noticed that the award itself does not  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, in respect  of  the  immovable property,   as  contemplated  under  s.  17(1)(b)   of   the Registration  Act.   It  merely creates a  right  to  obtain another document which will, when executed, create, declare, assign,  limit  or  extinguish  any  such  right,  title  or interest.  The award directs Shib Banerjee and Sons  Private Ltd.  to  execute  such documents as may  be  necessary  for declaring the one fourth share of the appellants in the said property  and  also  to execute such  documents  as  may  be necessary  for transferring the said property and the  lease from  the  Delhi  Improvement Trust to the  joint  names  of themselves  and  the appellants.   It,  therefore,  squarely falls under s. 1 7 (2) (v) of the Registration Act. The  question  is amply covered by authority.   In  Rajangam Ayyar  v.Rajangam  Ayyar(1) by a document (AY)  the  parties agreed  to  divide  their properties  according  to  certain specified shares.  It then went on to provide :               "A  partition  deed in terms hereof  shall  be               executed  and registered in the office of  the               Sub-Registrar  of  this  place,  as  also               at  Tinnevelly,  as early  as  possible;  that               until then this shall itself be inforce."               The Privy Council observed:               "Exhibit  AY  is  not  a  document  by  itself               creating,     assigning,     limiting,      or               extinguishing, any right or interest in  imov-               able  property; it merely creates a  right  to               obtain  another  document  which  will,   when               executed,   create  a  right  in  the   person               claiming the relief, and on that ground  their               Lordships  think  exhibit AY did  not  require               registration, and accordingly is admissible in               evidence, so far as it goes." In  Sheonarain  Lal v. Rameshwari Devi(2) a  Bench  of  five Judges  of this Court had to deal with a document the  fifth clause of which read :               "Shri  Sheo  Narain Lal and his  heirs  should               execute  as  early as  possible  a  registered               document  in  respect of the shop let  out  on               rent to Beli Sao Sukhdeo Prasad, in favour  of               Shri Prabhu Chand for which Shri Prabhu  Chand               will have to pay nothing as consideration.  He

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             will pay only costs of stamp etc."               (1)   50 I. A. 134.               (2)  C.  A.  No. 296 of 1960  decided  on  6th               December 1952.               5               This Court observed               "Does  this  clause, purport  or  operate,  to               create,  declare, assign, limit or  extinguish               any  right,  title or  interest  in  immovable               properties ? We are clearly of opinion that it               does not.  The award merely provides that some               right  in  the shop should be created  in  the               future  by means of a document to be  executed               by   Sheonarain  Lal  and  his  heirs.    That               document when executed would certainly operate               to create a right in favour of Prabhu Chand in               immovable properties and extinguish the  right               of  Sheonarain Lal and his heirs in  the  same               properties.   That  is  why  the   arbitrators               mention  that  document should be  registered,               as  admittedly,  the value  of  that  property               would be more than Rs. 100.00. It is difficult               to  see  however  how the  fact  that  such  a               document that might be executed in consequence               of the directions in the award, would  operate               to  create or extinguish a right in  immovable               properties,  justifies the court to  say  that               the  award  itself  purports  or  operates  to               create  or  extinguish  such  a  right.    The               position  would  have been  otherwise  if  the               arbitrators  had directed by the award  itself               that  this  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.   It is clear therefore that  the  award               does  not  itself  create  or  extinguish  any               right,  title  or interest  in  the  immovable               properties.  It may be said that it creates  a               right  to obtain another document which  will,               when executed, create or extinguish such right               in  immovable properties and so is a  document               falling  within  cl.  5 of s. 17  (2)  of  the               Registration  Act.  The award  therefore  does               not  require registration in law.  We find  it               unnecessary  to consider the further  question               which  the  High court has considered  on  the               assumption wrongly made that the award decided               questions of title to immovable properties." In Satish Kumar v. Surinder Kumar(1) the concurring judgment of  Hegde,  J.  brings  out the  matter  very  clearly.   He observed               "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 registrable. There

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             is no gain-saying the fact that the award with               which  we are concerned in this case,  at  any               rate, Purporter to creates rights in               (1)   [1969] 2 S. C. R. 244.               6               immovable property of the value of rupees more               than  one hundred.  Hence it  is  compulsorily               registrable." The  other  two learned Judges quoted  the  observations  in Sheonarain Lal’s case that :               "The position would have been otherwise if the               arbitrators  had directed by the award  itself               that  this  shop  would  go  to  Prabhu  Chand               without any other document.  In that case  the               award    itself   would   have   created    in               Prabhuchand a right to these properties." Thus  this  decision  does  not in  any  way  lay  down  any proposition contrary to the, decisions which we have so  far referred to. We  may finally refer to the latest decision of this  Court, to  which  one  of us was a party, in Ratan  Lal  Sharma  v. Purshottam Harit(1).  The relevant clause read as follows :               "The factory and all assets and properties  of               New  Bengal Engineering Works are  exclusively               allotted  to  Dr. Rattan Lal  Sharma,  who  is               absolutely entitled to the same.  He will  pay               all liabilities of the factory."               This Court observed :               "It expressly makes an exclusive allotment  of               the  partnership assets including the  factory               and  liabilities  to the appellant.   It  goes               further and makes him "absolutely entitled  to               the same...... So in express words it purports               to  create rights in immovable property  worth               above  Rs. 100.00 in favour of the  appellant.               It  would  accordingly  require   registration               under s. 17, Registration Act. The  Full  Bench decision of the Andhra Pradesh  High  Court relied upon by the learned Judge decided that an award  that created  a charge must be registered.  That is,  undoubtedly correct.  The question regarding the application of  section 17(2)(v)  of  the  Registration Act however  did  not  arise there. The  learned  Judge does not refer to any of  the  decisions which  we  have referred to, including those of  this  Court because he proceeded to decide the matter on the  assumption that the award itself created a right in immovable  property of the value of over one hundred rupees.  We are clearly  of opinion that the award in this case falls under s. 17(2) (v) and is, therefore, not registrable. As regards the question of stamp duty, we, do not propose to express  any  opinion as it would appear  that  the  learned Judge  of  the High Court would himself have been  ready  to receive  the stamp duty and penalty if he had held that  the agreement was not compulsorily registrable. The  appeal is allowed and the first respondent  should  pay the appellants costs. P.B.R.                   Appeal allowed (1)  C. A. 1625 of 1967 decided on 11-1-1974. 7