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PETITIONER: RATAN LAL SHARMA

       Vs.

RESPONDENT: PURSHOTTAM HARIT

DATE OF JUDGMENT11/01/1974

BENCH: DWIVEDI, S.N. BENCH: DWIVEDI, S.N. REDDY, P. JAGANMOHAN GOSWAMI, P.K.

CITATION:  1974 AIR 1066            1974 SCR  (3) 109  1974 SCC  (1) 671  CITATOR INFO :  R          1974 SC1912  (7)  D          1987 SC 841  (15)  R          1989 SC1923  (18)

ACT: Arbitration   Act.   1940,  Sec.   17--Award--Whether,   one assigning  share  in partnership or one creating  rights  in immovable property worth more than Rs. 100/-. Registration  Act  1908--Requirement of  registration  under Sec. 17. Held,   court   cannot  pronounce  judgment  in   terms   of unregistered  award  creating rights in  immovable  property worth above Rs. 100/-

HEADNOTE: The  appellant  and  the respondent  set  up  a  partnership business in December, 1962.  The partners soon fell out.  At the  time  the disputes arose, the running  business  had  a factory  and various movable and immovable  properties.   On August  22,  1963,  by agreement  in  writing,  the  parties referred "the disputes of our concern" to the arbitration of two  persons  and gave "the arbitrators  full  authority  to decide  our dispute".  The arbitrators gave their  award  on September  10, 1963.  The award made an exclusive  allotment of  the  partnership  assets,  including  the  factory,  and liabilities  to the appellant.  He was "absolutely  entitled to the same" in consideration of a sum of Rs. 17,000/-  plus half  the amount of the realisable debts of the business  to the  respondent  and of the appellants renouncement  of  the right  to  share  in the amounts  already  received  by  the respondent.  The award, stipulated that the appellant should not  run  the  factory  unless  he  has  paid  the   awarded consideration to the respondent.  The arbitrators filed  the award  in the High Court on November 8, 1963.  On  September 10,   1964,   the  respondent  filed  an   application   for determining  the validity of the agreement and  for  setting aside the award.  On May 27, 1966, a learned single judge of the  High  Court dismissed the application as  time  barred. But  he declined the request of the appellant to proceed  to pronounce  judgment  according to the award because  in  his view;  (i) the award was void for uncertainty and  (ii)  the

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award, which created rights in favour of the appellant  over immovable   property   worth  over   Rs.   100/-,   required registration  and was unregistered.  From this part  of  the order, the appellant filed an appeal which was dismissed  as not  maintainable by the Division Bench of the  High  Court. In this Court, the appellant preferred an appeal by  special leave against the decision of the single Judge declining  to pronounce  judgement in accordance with the award.  He  also filed a special leave petition against the judgement of  the Division  Bench.   In  tile appeal before  this  Court,  the appellant  contended  : (i) that the award is not  void  for uncertainty;  (ii)  that  the  award  seeks  to  assign  the respondent’s  share in the partnership to the appellant  and so  does not require registration; (iii) that under sec.  17 of  the  Arbitration Act, the court was bound  to  pronounce judgment  in  accordance.  with  the  award  after  it   bad dismissed the respondent’s application for setting it aside. Dismissing both the appeal and the special leave petition, HELD  :  (i)  The share of a partner in the  assets  of  the partnership,  which  has  also,  immovable  properties,   is movable  property and the assignment of the share  does  not require registration under Sec. 17 of the Registration  Act. But  the award in the instant case does not seek  to  assign the  share  of the respondent to the  appellant,  either  in express  words  or  by  necessary  implication.   The  award 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", in consideration of a  sum  of  Rs. 17000/-  plus  half of the amount of Rs. 1924  88P.  to  the respondent  and the appellants renouncement of the right  to share in the amounts already received by the respondent.  In "press  words  the  award  purports  to  create  rights   in immovable  property worth above Rs. 100/- in favour  of  the appellant.  It would accordingly require registration  under Sec. 17 of the Registration Act. [111D; 112F] 110 Ajudhia Parshad Ram Parshad v. Sham Sunder and Ors.  A. 1.R. 1947,   Lahore  13  at  p  .20,Addanki  Narayan   v.Bhaskara Krishtappa,  [1966]3  S.C.R.400  at  pp  406  and  407   and Commissioner  of  Income  Tax v. West  Bengal,  Calcutta  v. Juggilal Kamalapat [1967] S.C.R. 784 at p. 790 referred to. Satish Kumar and Others v. Surinder Kumar and others  [1969] 2 S.C.R. 244 at pp. 251-252 applied. (ii) As the award is unregistered, the Court could not  took into it.  The award being inadmissible in evidence for  want of  registration the Court could not pronounce  judgment  in accordance with it.  Sec. 17 of the Arbitration Act  presup- pose an award which can be validly looked into by the Court. The appellant cannot successfully invoke sec. 17.  The award is  an inseparable tangle of several clauses and  cannot  be enforced as to the part not dealing with immovable property. [112]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : CIVIL Appeal  No.  1625  of 1967. Appeal  by Special leave from the judgment and  order  dated the 27th May, 1966 of the Calcutta High Court in Award  Case No. 320 1963. S. K. Mehta, K.R. Nagaraja, M. Qamaruddin and Vinod  Dhawan, for the appellant and petitioner. B. P. Maheshwari, Suresh Sethi and R. K. Maheshwari, for the

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respondent. The Judgment of the Court was delivered by DWIVEDI,  J.,-Before us there is this associate  litigation- the  civil  appeal  and  the  special  leave  petition   for admission.  Its history runs thus : There is the New  Bengal Engineering Works.  It has a factory and various movable and immovable  properties.   It  is  a  running  business.   The business  was set up by the appellant and the respondent  as partners in December 1962.  As usual with many partnerships, the partner did not march in step for long Within six months they  fell  out.  On August 22, 1963, they  could,  however, agree  to  refer their disputes to the  arbitration  of  two persons, Sri R.N. Sharma and Sri C.M. Sharma.  The agreement is  in writing.  It referred "the disputes of  our  concern" and  gave  "the  arbitrators full authority  to  decide  our dispute".  The arbitrators gave their award on September 20, 1963.   They filed the award in the high Court on  November, 1963.   On  September  10,  1964  the  respondent  filed  an application  for determining the validity of  the  agreement and for setting aside the award.  On May 27, 1966 a  learned single Judge of the High Court dismissed the application  as time-barred.   But he declined the request of the  appellant to  proceed to pronounce judgement according to  the  award. From  this part of the order the appellant filed an  appeal, but the appeal was dismissed as unmaintainable by a Division Bench.  The appellant has     now   preferred  the   present appeal against the decision of the single Judge declining to pronounce judgement in accordance with the   award.  He  has also  filed the special leave petition against the  judgment of the Division Bench. We shall first take up the civil appeal.  The special  leave petition  will  become  infructuous  or  anaemic  after  our decision  for or against the appellant.  The learned  Single Judge  refused to pronounce judgment in accordance with  the award because (1) according to 111 him  the award was void for uncertainty, and (2) the  award, which  created  rights  in  favour  of  the  appellant  over immovable   property   worth  over   Rs.   100/-,   required registration   and  was  unregistered.   Counsel   for   the appellant  has advanced three arguments : (1) the  award  is not void for uncertainty; (2) the award seeks to assign  the respondent’s  share in the partnership to the appellant  and so does not require registration; and (3) under s. 17 of the Arbitration  Act, the Court was bound to pronounce  judgment in  accordance  with the award after it  had  dismissed  the respondent’s application for setting it aside. It  is  not necessary to express any opinion  on  the  first argument  as  we  are of opinion  that  the  award  requires registration  and, not being registered, is inadmissible  in evidence   for  the  purpose  of  pronouncing  judgment   in accordance  with  it.  So we pass on to  the  remaining  two arguments of the appellant. It  is well settled now that the share of a partner  in  the assets   of  the  partnership  which  has   also   immovable properties  is  movable property and the assignment  of  the share does not require registration under s. 17 Registration Act.  (See  Ajudhia Parshad Ram Parshad v. Sham  Sunder  and others (1) Addanki Narayanappal v. Bhaskara Kristappa(2) and Commissioner of Income-tax, west Bengal Calcutta v. Juggilal Kamalapat  (3).  But the award with which we  are  concerned does  not seek to assign the share of the respondent to  the appellant,   either  in  express  words  or   by   necessary implication.  We set out the relevant portion of the award : "(We) make our award as follows

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(1) The factory and all assets and properties of New  Bengal Engineering Works are exclusively allotted to Dr. Ratan  Lal Sharma, who is absolutely entitled to the same.  He will pay all liabilities of the factory. (2)  Dr.  Ratan Lal Sharma shall have no claim for  the  re- ceipts assigned by Sri Purushottam Harit. (3) Payment of all cheques issued by Dr. Ratan Lal Sharma on behalf of Modern Processors to Shri Purushottam Harit  shall be treated invalid. (4)  Dr.  Ratan  Lal Sharma shall  pay  Rs.  17,000/-(Rupees seventeen thousand only) to Shri Purushottam Harit. (5)  Shri Purushottam Harit shall render all  assistance  to Dr. Ratan Lal Sharma for realising all the dues of the  said firm as and when necessary and for transfer of tenancy right of the Factory in favour of Dr. Ratan Lal Sharma. (6) All papers and documents in respect of the said business shall be made over to Dr. Ratan Lal Sharma. (1)    A. I. R. 1947 Lahore 13 at p. 20. (2)   [1966] 3 S. C. R. 400 at pp. 406 and 407. (3)  [1967] 1 S. C. R. 784 at p. 790. 112 (7)  The  following  sums when  realised  shall  be  divided equally  between Dr. Ratan Lal Sharma and  Shri  Purushottam Harit Name of Debtors                         Amount 1. Associated Engineering CorporationRs. 284.17 2. Link Machinery Ltd.                  Rs. 1079.28 3. Clendent Products                    Rs.47.25 4. Minerva Engineering Works          Rs.514.18      Total                              Rs.  1924.88               N.B. (8) -The factory should not be run by Dr.               Ratan Lal Sharma until and unless the  payment               of  the award is not made to Shri  Purushottam               Harit". The  word "not" is a slip here. The parties conceded  before the learned Single Judge that the award deals with immovable property  worth  above Rs. 100/-.  So if it is found  by  us that  the award purports to create rights in. the  appellant over immovable property, it would require registration under s.  17  Registration Act. (See Satish Kumar  and  others  v. Surinder  Kumar and others (1).  On the dissolution  of  the partnership  or  with the retirement of a partner  from  the partnership  the  share of the partner  in  the  partnership assets  is  equal  to  the value of his  share  in  the  net partnership  assets after deduction of all  liabilities  and prior   charges.   Even  during  the  subsistance   of   the partnership, he may assign his share to another partner.  In that event the assignee partner would get only the right  to receive   the  Share  of  profits  of-the   assigner.   (See Narayanappa (supra) at p. 407). Now   the  award  does  not   transfer  the  share  of   the respondent,  interpreted  in  the aforesaid  sense,  to  the appellant  in  express  words.  Nor such  is  the  necessary intendment  of the award.  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".   in consideration  of  a sum of Rs. 17000/-(See clause  4)  plus half  of the amount of Rs. 1924.88 p. to the respondent  and the  appellant’s renouncement of the right to share  in  the amounts  already received by the respondent.  So in  express words  it  purports to create rights in  immovable  property worth  above Rs. 100/-in favour of the appellant.  It  would accordingly require registration under S. .17,  Registration Act.   As it is unregistered, the Court could not look  into

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it.  If the Court could not, as we held, look in to it,  the Court  could not pronounce judgment in accordance  with  it. Sections  17 Arbitration Act presupposes an award which  can be  validly looked into by the Court.  The appellant  cannot successfully invoke s. 17. (1) [1969] 2 S. C. R. 244 at pp. 251-252. 113 The  award is an inseparable tangle of several  clauses  and cannot be enforced as to the part not dealing with immovable property.  As already stated, various other relevant clauses constitute  consideration for, clause (1), that is, for  the creation  of  absolute  rights  in  the  factory  and  other properties  in favour of the appellant.  This  is  perfectly clear  from  a the note of the arbitrators appended  to  the award as clause 8. The appellant is not given a right to run the factory unless he had paid the awarded consideration  to the respondent. For the reasons a ready discussed, we agree with the learned single  Judge that the award requires registration  and  not being  registered, no judgment could be pronounced upon  it. In  the view that we have taken, the special leave  petition cannot be admitted. The  appeal  as  well  as the  special  leave  petition  are accordingly  dismissed.  The respondent shall get his  costs in the appeal. S.B.W.                     Appeal and petition dismissed.. 114