1. This is an appeal by the original plaintiff against the order of the learned Judge of the Bombay City Civil Court, Dated 4-10-1974 raising a question as to the registrability of an award, made in reference by the Court in pending proceedings, under Section 17(b) of the Registration Act.
2. Few facts relevant for the disposal of this appeal are as under:–
The plaintiffs had filed a suit being suit No. 825 of 1967 against 15 defendants in respect of certain property. On 24-10-1969, the parties to the suit filed consent terms agreeing to refer to the arbitration of Advocate Shri P. C. Kapadia all questions or issues arising out of pleadings of the parties including those specifically set out in the said consent terms. Initially defendants Nos. 1 to 3 were joined as defendants to the suit. However, subsequently defendants Nos. 4 to 15 were joined as defendants to the suit as it was disclosed that they had interest in the property.
3. The Arbitrator Shri Kapadia made his award on 27th June 1973. The said award was filed in Court and notices of the award being filed were issued to the parties. Defendants Nos. 1 to 3 received the said notices on 28th” August 1973. On 24th September 1973, they filed a petition raising objections to the said award and prayed for setting aside the same. The said petition was subsequently amended by taking one more ground viz., the award was invalid for want of registration under Section 17(b) of the Registration Act.
4. The learned Judge who heard the said petition dealt only with the question of registration of the award and by his order dated 4th October 1974, held that the said award was compulsorily registrable under the said provisions of Section 17(1)(b) of the Registration Act and since it was not so registered it was invalid. He, therefore set aside the said award on that ground alone and directed that the suit be referred back to the Court for trial from the stage at which it was referred to the arbitration of Shri Kapadia.
5. Against the said judgment and order of the learned Judge, the plaintiff filed an appeal to this Court being appeal from Order No. 417 of 1977. The said appeal came up for hearing before my brother Judge Desai on 27th September 1979. To the said appeal although the plaintiff had made all the defendants to the suit as party respondents, notices were issued only to defendants Nos. 1 to 3 and no bhatta was paid in respect of notices to be issued to the other defendants being defendants Nos. 4 to 15 although they were parties not only to the suit but also to the consent terms and the arbitration proceedings before Shri Kapadia.
6. The learned Judge after considering the rival contentions on the question of registrability of the said award and various decisions cited across the bar in support thereof, held on merits that the award made as a result of an arbitration in a suit was not required to be registered and that the learned Judge of the City Civil Court was not right in taking a contrary view. The learned Judge, however, held that since the appellant plaintiff had not paid bhatta for respondents Nos. 4 to 15 who were joined as party respondents to the appeal and not served them with the notices of the appeal, there was no proper appeal before him. Accordingly, although disagreeing with the lower Court’s finding on the main issue, on the said technical ground only he dismissed the appeal.
7. Against the said decision of Desai J., the plaintiff filed a Letters Patent Appeal to the Division Bench of this Court being Letters Patent Appeal Number 88 of 1979. The Division Bench allowed the said appeal holding that the dismissal of the appeal by Dasai J., on a technical ground was not correct and remanded the matter back to the Court for hearing and disposal of the same on merits. The Division Bench also disposed of the cross objections filed by the defendants in the said Letters Patent Appeal as for want of any finding against defendants Nos. 1 to 3 the said cross objections could not survive. They, however, allowed defendant Nos. 1 to 3 to raise at the hearing of the appeal the contentions raised in the cross objections. That is how this appeal from order has come to be heard by me de novo.
8. Before me both the sides have raised the same contentions as were raised before my brother Judge Desai.
9. The provisions of Registration Act under which the Registrability of the said award is pleaded is Section 17(1)(b). The said Section 17(1)(b) provides :–
“The following document shall be registered…
(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 immoveable property.”
“Section 17(2) excludes certain instruments from operation of Section 17(1)(b) and (c). Section 17(2)(vi) as it stood before its amendment by Act XXI of 1929, which came into force on 1-4-1930, excluded from the operation of Section 17(1)(b) and (c) any decree or order of a Court or any award.”
10. However, by the said Act XXI of 1929 the said clause was amended so as to delete the words ‘any award’ there from and add the words except a decree or order, made on a compromise and comprising immovable property other than that which is the subject matter of the suit proceedings.
11. It seems that it is this amendment of Section 17(2)(vi) by deletion of the said words ‘any award’ that has given rise to the controversy in this case.
12. The contention of the learned counsel for the appellant mainly was that there was a vital distinction under the Arbitration Act between an award obtained in an arbitration proceedings without the intervention of the Court (for the sake of convenience referred to as a private award) and one brought about by the intervention of the Court in a judicial proceedings pending before it While not disputing that a private award was compulsorily registrable, if it otherwise fell within the provisions of Section 17(1)(b), according to him, it would not be so in respect of an award in Court proceedings. He submitted that in case of such an award the source of jurisdiction of an arbitrator was an order of reference by the Court, with the arbitrator acting under the orders of the Court, that the provisions of the Arbitration, Act showed that unlike in the case of private arbitration, in an arbitration in the judicial proceedings before the Court the Court retained full control over the arbitration proceedings and it was a permissible delegation by the Court of part of its functions to the arbitrator, on the parties by consent agreeing to do so. Further, according to him, in fact, such arbitration proceedings were part of the judicial proceedings kept pending before the Court, the same coming to an end only on the Court passing a decree in terms of the award. He further contended that unlike a private award, the award made in the pending proceedings cannot by itself purport or operate to create, declare, assign etc, any right in or to immoveable property which was the subject matter of the award, but merely created a right to obtain a decree in terms of the award, with the power of the Court either to set it aside, vary or remit the same.
13. In support of his said contention the learned counsel for the appellant has relied upon certain decisions of different High Courts, which it would be convenient to deal with first.
14. At the outset, it may be stated that all the said decisions excepting the Full Bench decisions of Patna High Court and of Punjab & Haryana High Court
have held that a private award was compulsorily registrable if it otherwise falls within the provisions of Section 17(1)(b) of the Registration Act. Even the view held by the aforementioned Full Bench decisions of the Patna and the Punjab-Haryana High Courts, that private awards as well were not compulsorily registrable, was in terms subsequently negated by the Supreme Court in the case of Satish Kumar v. Surinder Kumar . However, from amongst the said decisions in all those decisions when the question arose as regards the registrability of the award in the pending Court proceedings., the Courts are unanimous in their view that such awards were not compulsorily registrable under said Section 17(1)(b) of the Registration Act.
15. Now dealing with the said decisions, the first in point of time is the decision of the Rangoon High Court in the case of Kya Hla Pru v. Ma Pan Mra Pru (AIR 1935 Rang 16). In that case while dealing with the said question the Court held that an award made by the arbitrators appointed by the Court with a view to having its terms incorporated in decree of the Court is not an award which was compulsorily registrable. While negativing the contention that in view of the fact that the word ‘award’ had been removed from Section 17(2)(vi) of the Registration Act, it was necessary for any award which deals with immovable property to be registered and if not the same was invalid, the Court observed :–
“The argument was unsound. When a matter relating to partition of immoveable property has been referred by the Court to an arbitration and the arbitrators make what is called an award that award in itself does not purport or operate to create, declare, assign, etc., any right, title or interest in or to immovable property. An award of this nature purports to be a recommendation to the Court and it has no validity and in no way affects any immoveable property until and unless it is incorporated in a decree of the Court or is made a part of the decree of the Court. Had the reference to arbitration been a private one outside the Court, then the reference to arbitration together with the award of the arbitrators would constitute a pair of documents which would by themselves purport to effect the partition and the award of this nature would no doubt be of no effect unless registered, but an award made by the arbitrators appointed by the Court with a view to having its terms incorporated in a decree of the Court is not an award which can be compulsorily registrable”.
16. The Full Bench of the Sind Judicial Commissioner’s Court in its decision in the case of Hassanand Naraindas v. Jadhomal Chengomal AIR 1936 Sind 79 following the aforesaid decision of the Rangoon High Court took the same view. The reasoning of the Court for the said view was that an award in a suit being a part of judicial proceedings did not require registration.
17. The Calcutta High Court in the case of Jitendra Nath De v. Nagendra Nath De held:
“An Award made by an arbitrator under orders of the Court has no force unless a decree is passed on it. A private award, if it is valid, is operative even though neither party has sought to enforce it by a regular suit. A private award therefore falls within the class of documents specified in Section 17(1)(b) Registration Act, whereas the award of other classes does not.”
18. Oudh Court in the case of B. Sher Bahadur Singh v. Ram Narain Singh AIR 1945 Oudh 1 following the aforesaid decision of the Rangoon High Court held that where the reference to arbitration is a private one outside the Court, then the reference to arbitration together with the award of the arbitrator constitutes a pair of documents which in themselves purport to effect the partition and an award of this nature is of no effect unless registered, but an award made by arbitrators appointed by the court with a view to having its terms incorporated in a decree of the court is not an award which is compulsorily registrable.
19. Two other decisions which had to be referred to are :– (1) The decision of the Full Bench of Patna High Court in the case of Seonarayan Lal v. Prabhu Chand and (2) of the Full Bench of the Punjab & Haryana High Court in the case of Sardool Singh v. Harisingh who held that even a private award was not compulsorily registrable.
20. The Andhra Pradesh High Court in its Full Bench decision in the case of M. Venkataratnam v. M. Chelamayya took the view that a private award required compulsory registration.
21. However, the question as to the registrability of a private award specifically came to be considered by the Section C. in the case of Satish Kumar v. Surinder Kumar where the Supreme
Court while dealing only with a private award had specifically negatived the said view taken by the Patna and Punjab & Haryana High Courts that the private award was not compulsorily registrable and held that the same falling within the ambit of Section 17(1)(b) of the Registration Act was compulsorily registrable. While making it specifically clear both in the beginning and at the end of the judgment, that they were dealing only with an award made on a reference by the parties without intervention of the court, it pointed out that by reason of Clause 7 to Schedule I which made the award final and binding on the parties, it can hardly be said that it was waste paper unless it was made a rule of the court.
22. Hegde, J. in his further reasoning to the concurring judgment pointed out by referring to para 7 of First Schedule to the Arbitration Act that:–
“It was not possible to accept the view of Patna and Punjab High Courts that the award which was not made a decree of the court has no existence in law.”
He further pointed out that;–
“Learned Judges who decided those cases, appear to have proceeded on the basis that the award which cannot be enforced is not a valid award and the same does not create any rights in the property which was 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 Section 17(1)(b) of the Registration Act, all that we have to see is whether the award in question purports or operates to create or declare, assign or extinguish any right, title or interest, whether vested or contingent of the value of Rs. 100/- or upwards to or in immovable property. If it does, it is compulsorily registrable.”
23. According to the learned counsel for the respondent the question of registrability of any award had got to be determined only by reference to the provisions of Section 17(1)(b) of the Registration Act, and now that the amendment of Section 17(2)(vi) has removed an award from the list of instruments excluded from the application of Section 17(1)(b) and (d) of the said Act, there was no reason for making any distinction between a private award and an award in reference made in the pending court proceedings. According to him even an award made in the pending court proceedings if it were to fall within the purview of Section 17(1)(b) of the said Act was compulsorily registrable and it was not permissible for the court to distinguish the said award from the private award by reference to the provisions of the Arbitration Act particularly as regards the enforceability thereof.
24. In support of his ,said contention the learned counsel for the respondent hag strongly relied on the aforequoted observations of Hegde, J. in his separate reasoning in the aforecited decision of the Supreme Court in Satishkumar’s case .
25. To a limited extent the said contention of the learned counsel for the respondent viz. that for the purpose of determining whether an award was registrable or not, one has to look to the provisions of Section 17(1)(b) of the said Act and the same cannot be determined with reference to the provisions of the Arbitration Act as to its enforce-ability viz. it would not be enforced till the court passed a decree in terms thereof, could be accepted. However, merely because by the amendment of Section 17(2)(vi) of the said Act, awards were removed from the list of instruments excluded from the application of Section 17(1)(b) and (c), it cannot be said that every type of an award would automatically become compulsorily registrable or that for the purpose of determining the nature of the award to find out whether it could at all fall within the provisions of Section 17(1)(b) of the Registration Act, the court cannot look to the provisions of the Arbitration Act. As the aforecited decision of the Supreme Court at page 837 of the report, itself shows that the court there in fact did consider the provisions of para 7 of Schedule I to the Act viz. the award shall be final and binding on the parties; to find out whether a private award, with which the court was specifically concerned in that case, would be compulsorily registrable under the provisions of Section 17(1)(b) of the said Act.
26. The court there observed :–“If the award shall be 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.” So also the above quoted observations of Hegde, J. in that decision on which the learned counsel for the respondent has strongly relied, refer to the said provisions of para 7 of Schedule I (which is under Section 3 of the said Act applying only to the private arbitration) to point out that a private award (with which the court was dealing) did create rights in property but those rights could not be enforced until the award was made a decree of the court and that it was one thing to say that a right was created and is an entirely different thing to say that the rights created cannot be enforced.
27. In my view, the very circumstance that a private award by reason of the specific provisions of para. 7 of Schedule 1 of the said Arbitration Act making it final and binding on the parties was held to be capable of validly creating rights though they could not be enforced without making the award a decree of the court, constitutes a vital distinction between a private award and an award made in a reference in pending court proceedings, as regards its registrability. So far as the latter type of the award was concerned unlike in the case of private award there was no provision making the award as such final and binding on the parties. Such an award, therefore, unlike a private award unless it is made B decree of the court was incapable of operating or purporting to create any rights, declaration, etc., between the parties to or in immovable property and as such has no more value than a mere scrap of paper. Arbitration proceedings in pending court proceedings though culminating into an award have no independent existence and continue to be a part of the judicial proceedings pending before the court in which reference was made and the award made in such proceedings has got to be made a decree of the court if it were to create any rights between the parties thereto. The distinction drawn by the Supreme Court in the case of a private award viz. its capacity to create rights without being made a decree of the court and its enforceability only on it being made a decree of the court, cannot exist in respect of an award in court proceedings. Further, as the provisions of Section 16(2) of the said Act (which is also applicable to award in pending court proceedings, under Section 25 of the said Act) suggest that such an award at the most can be considered to be a decision of the arbitrator but as such it was incapable of operating or even purporting to create, declare etc. rights in or to an immoveable property. As the Rangoon High Court in the afore cited decision has observed that at the most it could be a recommendation to the court and has no validity unless made a decree of the court.
28. In my view, therefore, for the aforesaid reasons an award in the proceedings pending before the court was incapable of and/or could not operate or purport to create, declare, assign, etc. any rights in or to an immovable property and was therefore not compulsorily registrable under the provisions of Section 17(1)(b) of the Registration Act. In that view of the matter, I am in agreement with the similar view taken by the other courts in the aforesaid decisions and also with the view expressed by my brother Judge S. K. Desai in this very case in his judgment dated 24th September, 1979.
29. The result, therefore, is that the appeal is allowed. The order of the lower court is set aside. However, since the lower court had disposed of the respondent’s petition only on the question of registrability of the award which is negatived by me, the matter is remanded back to the trial court for consideration of grounds (a) to (d) in the respondents’ said petition for setting aside the award and to dispose of the same.
30. Respondents to pay petitioner’s costs of the appeal.
31. Appeal allowed.