AVADH BEHARI - (1.) THIS case raises an interesting question of law regarding the registration of an arbitration award made with the intervention of the court on which there is scant authority in our law books in recent years.
(2.) ON August 9, 1958, a partnership business was started for colonising and sale of plots. Dalip Singh, Raghbir Singh, Net Ram, Hari Shankar Bhargava, Mattu Mal Gupta and Moti Ram were the original partners. Dalip Singh separated from the partnership. Remaining partners continued the partnership business and a new deed of partnership was executed on October 9, 1958. This partnership business was known and styled as Shankar Housing Corporation. Raghbir Singh and Net Ram were the sole owners of the land which formed Shankar Garden. The land was divided in two blocks block A and B. Raghbir Singh and Net Ram agreed to transfer their rights in the said land to the partnership for purpose of its development and sale of plots. Some plots of land were sold to purchasers. The partners then experienced difficulty in the development of the remaining land. It was realised in 1964 that the development work would take not less than 3 years more. To consider the situation a meeting of the partners was held on August 28, 1964. The meeting continued on August 29, 1964. At that meeting Net Ram expressed a desire to retire from the partnership and after deliberations it was decided by other partners that Net Ram should be allowed to retire. It was agreed that profits and losses of Shankar Housing Corporation would be calculated upto August 31,1964, in accordance with certain principles which were also formulated. The decisions and the principles were recorded in writing in a document. Ex. P-24. At the stage of settlement of accounts disputes arose between Net Ram and other partners. Hari Shankar Bhargava, petitioner, tiled an application on October 28, 1964 under Section 20 of the Arbitration Act (hereinafter referred to as the Act). The partnership deed dated October 9, 1958, contained a clause regarding arbitration for the settlement of disputes. The petitioner prayed that the arbitration agreement be filed in court and the disputes be referred to an arbitrator. In the clause it was provided that the arbitrator shall be a chartered accountant. The application made by the petitioner was contested by Net Ram alone. The other partners, who are respondents I to 3 now, supported the petitioner's claim. After protracted legal proceedings Jagjit Singh J. by order dated July 22, 1969, ordered the agreement to be filed and referred the disputes between the parties to Shri H. S. Ahuja, a chartered accountant of Delhi as the sole arbitrator. The learned Judge in his order formulated the disputes which required settlement by arbitration. The disputes are : (i) Dispute relating to transfer of the land of rectangle No. 6 (Killa No. 22/2, 23) and rectangle No. 9 (Killa No. 3/1, 8, 13, 18), situated in the area of the village Posangipur, Delhi, in favour of the firm, and (ii) Dispute regarding the amount claimed by the petitioner on the basis of the terms for determining profits and losses as agreed to by the retiring partner Net Ram. The first dispute related to refusal to transfer the land by Net Ram in favour of the partnership. The second dispute related to the amount due from Net Ram on account of the losses of the firm. Net Ram died in 1967. He left behind five sons, three daughters and a widow. They are respondents 4 to 12 before me. The legal representatives of Net Ram preferred an appeal against the order of Jagjit Singh J. That appeal was dismissed. The sole arbitrator heard the parties. The proceedings continued for more than two years. On July 25, 1972, he made his award. On the first dispute referred to the arbitrator he held as follows:- "In respect of the dispute relating to the transfer of land as detailed above in clause (a) being the first issue I hold that the firm known as Shankar Housing Corporation Block A and B Tilak Nagar, New Delhi had the absolute right to the transfer of land. As per the records, part of the land has already been sold and registered by Late Shri Net Ram in the name of the respective parties on the directions of the firm. The remaining land i.e. 15925 sq. yds. now remains to be transferred to Shankar Homing Corporation, Block A and B Tilak Nagar, New Delhi." As regards the second dispute he found that a sum of Rs. 35,857.43 was due from Net Ram to the other partners. On August 3, 1972, the petitioner moved an application under Section 14(2) of the Act praying to the court that the arbitrator be directed to file the award in court. This application was registered as Suit No. 316-A of 1972. The arbitrator filed a separate application under Section 14 of the Arbitration Act on December II, 1972 (IA 2043 of 1972). He filed the award together with the depositions and documents taken or proved before him. Objections were filed to the award under Sections 30 and 33 of the Act by the legal representatives of deceased, Net Ram (IA 96 of 1973). They are the real contesting parties. The co-partners of the petitioner, viz., respondents 1, 2 and 3 support him. On the objections of the legal representatives I framed the following issues on January 18, 1974 :- 1. Whether the Arbitrator misconducted himself and the proceedings for the reasons given in the objection-petition ? 2. Whether the Arbitrator made an award in respect of matters outside the scope of the reference ? 3. Whether the award requires registration, if so, what is effect of its not being registered ? 4. Relief. Evidence was ordered to be taken on affidavits. The parties have filed their affidavits. Issue No. 3 I will first take up issue No. 3. The main question debated before me by the counsel for the legal representatives of Net Ram is that the award of the sole arbitrator was compulsorily regigtrable under Section 17(l)(b) of the Registration Act and since it was not registered the award cannot be enforced This is the main question which is to be decided and as I have said there is scant authority on this question under the Arbitration Act, 1940. Mr. Bhatia, counsel for the petitioner, has raised a three-fold argument. He says that the document does not require registration for three reasons. Firstly, it is submitted that the award does not create or declare a right in immovable property. It is, according to the counsel, a mere finding of the arbitrator. It is further submitted that the award by itself does not create a right as either execution will have to be taken out of the award or some independent proceeding will have to be launched in order to make the award effectual. I have already set out the operative portion of the award in this regard. In my opinion, the award docs create or declare a right in favour of Shankar Housing Corporation. The arbitrator has in so many words held that the Corporation "had the absolute right to the transfer of the land" and that "15925 square yards now remains to be transferred to Shankar Housing Corporation, Block A and B." The dispute referred to the arbitrator was in respect of 15925 square yards of. land. Net Ram refused to transfer it. It is not dispuled that this land stood in the name of Net Ram. Before the partnership could lay claim to it the dispute had to be decided. The arbitrator decided the dispute and held that the partnership was entited to the transfer of land and had an "absolute right" to it. The arbitrator created a right in favour of the partnership or in any case he declared the right of the partnership to this land. I, therefore, do not agree with Mr. Bhatia that the award docs not create a right and is not required to be registered.
(3.) THE second reason advanced by Mr. Bhatia is that this operative portion of the award at best amounts to an assignment of interest of Net Ram in favour of the partnership. He relies on Narayanappa v. Bhaskara Krishnappa AIR 1965 SC 1300, (I) in that case it was held that a document recording the fact of refinquishment of interest by a partner in partnership assets by way of adjustment was not compulsorily registrable under Section 17(1) of the Registration Act. This is true that the interest of a partner in the partnership assets has been held to be movable property and a document evidencing . relinquishment of that interest docs not require registration. But here it cannot be said that Net Rani was relinquishing his interest in the land. THE land was an asset of the partnership. THE other partners wanted him to transfer the entire land to the partnership because they had already paid Rs. 15085 to Net Ram as price of the land. THE dispute was regarding the ownership of a partnership asset. I do not agree that this portion of the award amounts to an assignment and, therefore, did not require registration. Lastly, Mr. Bhatia submitted that as the award was given by an arbitrator appointed by the court in proceedings under Section 20 oil the Act the award was a part Of the judicial proceeding and, therefore, did not require registration. Mr. R. M. Lal, counsel for the legal representatives, combats this argument by saying that the proceedings under Section 20 of the Act did not make any difference and the award was compulsorily registrable. In order to decide this last contention of Mr. Bhatia it is necessary to consider the scheme of the Arbitration Act (Act X of 1910). Broadly speaking the Act contemplates three kinds of arbitration. Chapter II is entitled as "arbitration without intervention of a court". Chapter III is headed as "arbitration with intervention of a Court where there is no suit pending". Chapter IV has the title of "arbitration in suits". The three clauses of arbitration were dealt with in paras 1, 17 and 20 of Schedule II, Code of Civil Procedure (1908) before its repeal and thereafter in Chapters IV, III and II of the Indian Arbitration Act respectively. ;