Andhra HC (Pre-Telangana)
P. Sadananda Reddy vs C. Venkata Ratnam And Others on 27 March, 2000
Equivalent citations: 2000(3)ALD385, 2000(3)ALT229, 2000 A I H C 2749, (2000) 2 ARBILR 409, (2000) 3 ANDHLD 385, (2000) 3 ANDH LT 229
JUDGMENT
1. The CRP is filed against the Orders passed by the learned I Senior Civil Judge, City Civil Court, Hyderabad in OP No.1 of 1997.
2. The petitioner is the 1st respondent in the OP. It was filed by C. Venkat Ratnam and others, who are respondents in this revision and petitioners in OP seeking to make the award of the Arbitrators dated 1-4-1994 Rule of the Court.
3. Certain events leading to the filing of the OP may be stated succinctly:
The parties as arrayed in the OP are referred to herein for the purpose of convenient disposal. The petitioners entered into an agreement of sale with the respondents on 5-8-1993 wherein the petitioners agreed to sell and part with the Company under the name and style of M/s. Ideal Industrial Explosives (P) Limited, registered under the Companies Act and the respondents agreed to purchase the same under a Memorandum of Understanding. Certain disputes arose out of the said agreement and the matter was referred to private Arbitrators namely Mr. A. Narsinga Rao and Mr. Ravi S. Advocates. The Arbitrators after hearing parties has passed the consent award on 1-1-1994. The said award was filed by the Arbitrators in the Court on 23-4-1994 and the Court also issued notice to the parties on 17-5-1994. No objections were filed by the opposite party and neither party questioned the correctness of the award within 30 days. But, however, the Court did not pass the judgment and decree. Therefore, the petitioners filed a OP for making the Rule of Court. The learned Judge after hearing the parties allowed the OP and made the award the Rule of Court by an order dated 30-4-1999. The said award is assailed. In this regard, it is also brought out before this Court that in pursuance of the decree having been passed by the Court in terms of the Award, the respondents herein filed EP before the Court for recovery of a sum of Rs.9,33,778/- and the said EP is pending before the Court for further enquiry. The learned senior Counsel Mr. Subramanya Reddy, appearing for the revision petitioner raised the following substantial contentions:
The lower Court committed a gross irregularity in receiving the award, which is required to be compulsorily registered under Section 17 of the Registration Act. The lower Court also gravely erred in receiving the unregistered award in evidence contrary to Section 49 of the said Act.
4. On the other hand, the learned senior Counsel appearing for the respondent Mr. Ramana Reddy submits that the award need not be registered as ingredients as contained in Section 17(1)(b) are not present in the Award.
5. Secondly, it is an award by consent and therefore petitioners cannot challenge the same even assuming that it is a unregistered award. He also submits that on the directions of the Court requisite stamp fee was affixed.
6. He lastly contends that even if the Arbitrators are precluded from receiving the award in evidence, yet, it cannot be discarded and that it is still binding as far as the matters relating to the items other than the immovable property having value of more thanRs.100/-.
7. Arguments were advanced in extenso by the learned Counsel on the issue.
8. The issue that arises for consideration is whether an unregistered award can be received by the Court in evidence and the decree can be passed, (b) Whether the award can be severable in respect of movable and immovable properties if so what is the effect? (c) Whether the CRP is maintainable when an award is passed with the consent of parties?
9. The undisputed facts in this case are that a Private Limited Company under the name and style of Industrial Explosives Private Limited, a company registered under the provisions of the Companies Act and a running company was sold to another party under an agreement dated: 5-8-1993. Various terms were enumerated in the agreement as to the method and manner of payment and take over process. Since some disputes arose in respect of the said agreement, both the parties jointly referred the matter to the private arbitrators. Accordingly, the private arbitrators after giving an opportunity to the parties passed a consent award on 1-1-1994. It was stated in the said award that terms and conditions agreed between the parties dated 5-8-1993 shall stand valid subject to the modifications and conditions incorporated in the award. The said award was filed into the Court and no objections were filed by either of the parties. The sellers filed an application before the Court to make the award the Rule of the Court. The learned Judge has passed orders making the award dated 1-1-1994 Rule of the Court, which is assailed in this revision by the purchasers.
10. For proper appreciation of the matter, the relevant provisions of the Registration Act namely Sections 17 and 49 are necessary to be kept in view. Sections 17 and 49 of the Registration Act reads thus:
"17. Documents of which registration is compulsory--(1) The following documents shall be registered, if the property to which they relate is situated in a district in which, and if they have been executed on or after the date on which, Act No.XVI of 1864, or Indian Registration Act, 1866 (20 of 1866), or the Indian Registration Act, 1871 (8 of 1871), or the Indian Registration Act, 1877 (3 of 1877), or this Act came or comes into force, namely:
(a) .....
(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 immovable property;
(c) to (e).....
(2) Nothing in clauses (b) and (c) of subsection (1) applies to-
(I) .....
(II) any instrument relating to shares in a Joint Stock Company, notwithstanding that the assets of such company consist in whole or in part of immovable property; or (III) & (IV).....
(v) any document not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another document which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest, or
(vi) to (xii)..... "
"49. Effect of non-registration of documents required to be registered-- No document required by Section 17 or by any provisions of the Transfer of Property Act, 1882 (4 of 1882) to be registered shall-
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power unless it has been registered:
Provided that an unregistered document affecting immovable property and required by this Act, or the Transfer of Property Act, 1882 (4 of 1882) to be registered may be received as evidence of a- contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (1 of 1877), or as evidence of Part performance of a contract for the purposes of Section 53-A of the Transfer of Property Act, 1882 (4 of 1882) or as evidence of any collateral transaction not required to be effected by registered instrument."
11. Section 17(1)(b) of the Registration Act enjoins that every 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 Rs.100/- and upwards, to or in immovable property should be registered.
12. Under Section 49 of the Registration Act, the Court can receive the document if it is duly registered under Section 17 of the Registration Act.
13. The questions that arise for consideration in this revision are:
(a) Whether the document purported to create or declare or extinguish any right in the immovable property worth more than Rs.100/- so as to attract the provision of Section 17(l)(b) of the Registration Act?
(b) Whether the civil Court has jurisdiction to receive the un-registered award and pass judgment and decree for the purpose of enforceability of the award?
(c) Whether a consent award can be challenged by the party to the award?
14. The learned senior Counsel appearing for both the parties extensively argued the matter and cited enormous case law on the subject both for and against. Therefore, it is necessary to refer to some of the judgments which have a bearing on the subject.
15. In Rajangam Ayyar v. Rajangam Ayyar, AIR 1922 PC 266, the Judicial Committee observed that document was not a document by itself creating, declaring, assigning, limiting or extinguishing any right, title or interest in the immovable property. It merely creates a right to obtain another document which will, when executed, create a right in the person claiming the relief. There was a memorandum of agreement which specified the shares and provided for a further deed effectuating the partition. It was held that it did not require to be registered.
16. In R.N. Samuvier v. R.B.N. Ramasubbier, AIR 1931 Mad. 580, it was held by the Division Bench that the agreement between the parties was intended by parties to be instrument of dissolution and was what the parties considered to be the only repository and appropriate evidence of their agreement and under Section 91 could alone be looked at for the terms of it. That the interest in the partnership assets which the agreement purported to assign was an interest in the immovable property and therefore, the document being unregistered was not receivable in evidence of any transaction affecting the property.
17. The Court further observed that there was no true analogy between the partners in a firm and shareholders in a Joint Stock Company because whereas a company is a judicial person and its identity is unaffected by the transfer of its shares, a partnership is legally speaking, only an aggregate of individuals and changes with every change of personnel (See: Asworth v. Munn, 15 Ch. D. 363).
18. In Alasyam Ramappa v. Panyam Thirwnalappa, AIR 1939 Mad. 884, it was held that where there was a declaration in a document made on the dissolution of the partnership that the person who had constituted the partnership had equal rights in the properties which had been purchased out of the profits, the instrument is one which declare the rights in the properties from the date of the dissolution of the partnership and therefore, should be registered.
19. In Upendra Nath Bose v. Lall, AIR 1940 PC 222, similar issue arose. There the document recited that the ownership of the second party in one half of the Raitar would not come till after the payment of a sum of Rupees sixty-one thousand and four hundred as well as the amounts mentioned in the statement Exhibit B together with interest specified in respect of both be fully paid up. The question before the Judicial Committee was whether the last sentence of para 2 of the Award purported to confer upon "the second party" a right, title or interest which commenced with the Award and came to an end when the sum of Rs.61,400/-with interest was paid or whether it intended merely to provide that the interest which arose from the exercise of the option should remain unaltered until Rs.61,400/-and interest had been paid or whether they intended merely to provide that the status quo should remain unaltered (i.e., the contractual interest which arose from the exercise of the option would remain unaltered) until Rs.61,400/- and interest had been paid. The Judicial Committee was of the view that the latter was the true view. The sentence was not framed as one which purports to create or confer any interest.
20. The Court in the unreported judgment in the case of Sheo Narain Lal v. Rameshwari Devi, CA No.296 of 1960, had also to deal with a similar situation. There fifth clause of the Award was as follows:
"Shri Shero 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 will pay only costs of stamp etc."
21. The Supreme Court had to deal with this clause and to consider the question whether this clause purported or created or declared or assigned, limited or extinguished any right. The Court held that the award merely provided that some right could be created in future by means of a document to be executed. Therefore, it was of the view that it did not require registration.
22. In Champalal v. MST. Samarath Bai, AIR 1960 SC 629, the Supreme Court held thus:
'The filing of an unregistered award under Section 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 Section 17 of the Act."
23. In Kashinathsa Yamosa Kabadi v. Narsingsa Bhaskarsa Kabadi, AIR 1961 SC 1077, on a question where the award made in Arbitration out of Court and accepted by the parties in the absence of registration, could be pleaded in defence as a binding decision on the parties. The Supreme Court held thus:
"It may be sufficient to observe that where an award made in arbitration out of Court is accepted by the parties and it is acted upon voluntarily and a suit is thereafter sought to be filed by one of the parties ignoring the acts done in pursuance of the acceptance of the award, the defence that the suit is not maintainable is not founded on the plea that there is an award which bars the suit but that the parties have by mutual agreement settled the dispute, and that the agreement and the subsequent actings of the parties are binding. By setting up a defence in the present case that there has been a division of the property and the parties have entered into possession of the properties allotted, defendant No. 1 is not seeking to obtain a decision upon the existence, effect or validity of an award. He is merely seeking to set up a plea that the property was divided by consent of parties. Such a plea is in our judgment not precluded by anything contained in the Arbitration Act."
24. This principle has no application to the facts of the case on hand as the award itself was sought to be made the Rule of the Court and no suit was filed ignoring the consent award. But, however, dealing with the part relating to the division of the joint family properties by the arbitrator, the Supreme 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 insofar 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 registrable under Section 17 of the Registration Act, and would not in the absence of registration be admissible in evidence. But in our judgment, the true effect of what are called awards is not by their own force to create any interest in immovable property; they recorded divisions already made and on the facts proved in this case, their validity depends upon the acceptance by the parties. The records made by the Panchas were documents which merely acknowledged partitions already made and were not by law required to be registered."
25. In M. Chalamayya v. M. Venkataratnam, AIR 1972 SC 1121, it was a case where the members of the joint family partitioned their properties through the process of arbitration. When a suit was filed for making the award the Rule of the Court, a contention was raised that the unregistered award cannot be received in evidence. The Full Bench of this Court held that the award was not inadmissible on the ground that it embodies a partition. It held that the award was admissible in evidence so far as it did not affect immoveable property. It further held that a decree could be passed in terms of that part of the award which was severable from any other part of it which was invalid for any reason. On appeal by Special Leave, the Supreme Court upheld the decision of the Full Bench. It summed up the principal parts of the award as (1) Reference to the partition of the immovable properties made between 27-5-1952 and 3-5-1952, (2) A finding with regard to the amount in excess of their share recovered by Chelamayya and Narainamurty and their liability to account for the same to the other two parties namely Venkataratnam and Venkataswamy, and (3) Creation of a charge on the immovable properties of Chelamayya and Narainamurty for the payment of the amount found due and payable to Venkataratnam and Venkataswamy.
26. The Supreme Court observed that the recitals in the award was no more than a reference to an existing fact and did not purport to create or declare by virtue of the award itself, right title or interest in the immovable property. Therefore, it need not be compulsorily registered. But so far as the charge was concerned, it was created for the first time and therefore, it required registration. In this regard, the Supreme Court observed in Para 10 as follows:
"So far as the direction to pay a sum of money by one party to another is concerned there can be no difficulty at all because that creates a personal liability. After accounts were taken it was found that the appellants had received money in excess of their shares from the family funds and they are liable to make good the same to the respondents. An award containing such a direction does not require to be registered. The contention, however, is that since the award creates a charge also for the payment of this amount on immovable properties the whole transaction must be regarded as one and unseverable and since the charge requires to be registered, the instrument cannot be read in evidence for want of registration. This contention has been rejected by the High Court and, in our opinion, rightly, Section 49 of the Registration Act deals with the effect of non-registration of documents required to be registered. It provides:
"No document required by Section 17 or by any provision of the Transfer of Property Act, 1882, to be registered shall-
(a) affect any immovable property comprised therein, or
(c) Be received as evidence of any transaction affecting such property.....
unless it has been registered.
Since the charge was not registered it will be correct to say that the document will not affect the immovable properties of the appellants sought to be charged. It will not also be received as evidence of any transaction affecting such property that is to say, in this case, as evidence of the charge. It should be noted that the section does not say that the document cannot be received in evidence at all. All that h says that the document cannot be received as evidence of any transaction affecting such property. If under the Evidence Act the document is receivable in evidence for a collateral purpose, Section 49 is of no bar. This construction of the provision which was accepted for a long time by the High Courts has been duly recognised by the Amending Act 21 of 1929 which added a proviso to the section. The proviso clearly empowers the Courts to admit any unregistered document as evidence of a collateral transaction not required to be registered."
Explaining the scope of severability of two transactions, the Supreme Court said:
"The direction to pay a sum of money which has been held due and payable by the appellants to the respondents is a direction giving effect to a liability which already existed. It does not create the liability for the first time but merely works out the liability. But, the same thing cannot be said about the charge. The charge is created for the first time. The case, therefore, involves two distinct matters-one is a personal liability to pay a certain amount and the second is an additional relief to recover that amount from the immovable property of the appellants, should they fail to pay as ordered. It is, therefore, clear that the two do not form one transaction but two severable transactions. As pointed out Song ago by Muttusami Ayyar, J., in Sambayya v. Gangayya, (1890) ILR 13 Mad.308atp.311: 'The test, therefore, is whether the transaction evidenced by the particular instrument is single and indivisible or whether it really evidences two transactions which can be served from each other, the one as creating an independent personal obligation and the other as merely strengthening it by adding a right to proceed against immovable property. But, it should be remembered that it is not enough that there is an obligation to pay a sum of money, but that it is also necessary that the obligation should have an independent existence, and be in no way contingent or conditional on the breach of some obligation relating to immovable property created by the same instrument, for the contingency or the condition and the obligation would then be parts of one indivisible transaction." In the present case, the document evidences two transactions which can be severed from each other. One transaction creates an independent personal obligation to pay a certain sum of money and the other transaction namely the charge merely strengthens the first transaction by adding a right to proceed against the charged property. In our opinion the High Court was right in directing tat the second transaction with regard to the charge being a severable transaction can be validly ignored and to the extent that it declares the personal obligation to pay the transaction, not being required to be compulsorily registered, the award was admissible in evidence.
It was further contended for the appellants that an award is one and indivisible and to direct that effect be given to a part of the award and not to the whole of the award would amount to modifying the award and that was impermissible. We do not think that there is any substance in this contention also. Where a severable part of an award cannot be given effect to for a lawful reason, there is no bar to enforce the part to which effect could be justly given. See Month. Amir Begam v. Badr-ud-din Hussain, AIR 1914 PC 105, where as a general principle it is laid down that when a separable portion of an award is bad, the remainder of the award, if good, can be maintained. By giving effect to a part of the award in this case no prejudice is caused to the appellants. In fact they stand to benefit. As the award stands, the appellants would have been responsible not only to pay the amounts personally, but also from the property which was charged. Since the charge part is eliminated for want of registration, they are freed from the additional liability. It is true that judgment should be pronounced according to the award, but that does not bar giving effect to the severable part of the award if it cold be justly done. Departure from the award or a part of the award is barred only in those cases where the award or a severable part of it is lawful and capable of being given effect to."
27. In Addanki Narayanappa v. Bhaskara Krishnappa, AIR 1966 SC 1300, the Supreme Court held thus:
"This Court held that a document of dissolution only records the fact that the partnership had come to an end. It cannot be said to convey any immovable property by a partner to another expressly or by necessary implication, nor is there any implication. It was held that such a deed was not compulsorily regisierable under Section 17(1)(b) of Registration Act."
28. In Commissioner of Income-Tax, West Bengal, Calcutta v. Juggilal Kamalapet, , it was held that the partners relinquishing their individual interests in the immovable and movable assets of the partnership in favour of new persons by deed of relinquishment without registering it, it was held that deed did not require registration and assuming that it required registration, still it is a valid atleast in respect of immovable properties. Distinguishing the deed of relinquishment and deed of gift, the Supreme Court held that a deed of relinquishment is in the nature of a deed of gift, where various properties dealt with are always separable and the invalidity of the deed of gift in respect of one item cannot affects its validity in respect of another. A deed of relinquishment or a deed of gift differs from a deed of partition for which it is not possible to hold that the partition is valid in respect of some properties and not in respect of others because, the rights of the persons being partitioned are adjusted with reference to the properties subject to partition as a whole.
29. In Satish Kumar v. Surinder Kumar, , the question before the Supreme Court was whether the award under the Arbitration Act on a private reference required registration under Section 17(1)(b) of the Registration Act? The Supreme Court held that such an award is required to register if it affects partition of the immovable property exceeding Rs. 1OO/-.
30. Hegde, J., in concurring judgment observed:
"For the purpose of Section 17(l)(b) of 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.....
There is no gainswaying the fact that the award with which we arc concerned in this case, at any rate, purported to create rights in immovable property of the value of rupees more than one hundred. Hence it is compulsorily registerable."
31. The Supreme Court finally held that the award in that case fell under Section 17(2)(v) and therefore, it was not compulsorily registerable.
32. In Ratan Lal Sharma v. Purshottam Harit, , it was a case of assignment of share of partnership to another with express stipulation of allotment of immovable property. It was held that the document is compulsorily registerable. The Supreme Court in Para 4 observed as follows;
"It is well settled now that the share of 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 Section 17, Registration Act, (See 1947 Lah 13 at P.20 (FB)); Narayanappa v. Bhaskara Krishnappa, and Commissioner of Income-tax West Bengal Calcutta v. Juggilal Kamalapet, ."
The relevant portion of the award was as follows:
"(We) make our award as follows:
(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 receipts signed 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. Rattan Lal Sharma shall pay Rs.17,000/- (Rupees Seventeen thousand only) to Shri Purshottam 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 receipt of the said business shall be made over to Dr. Ratan Lal Sharma. (7) The following sums when realised shall be divided equally between Dr. Ratan Lal Sharma and Shri Purushottam Harit.
Name of the Debtors. Amount
1. Associated Engineering Corporation. Rs. Rs.28417
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 Supreme Court observed that the award expressly made a exclusive allotment of the partnership assets including the factory and liabilities to the appellant. It went further and made him (absolutely entitled to the same) in consideration of sum of Rs.17,000/- making the appellant to renounce the right to share in respect of the business. Thus, the Supreme Court found that the award in express words purported to create rights in immoveable property in favour of the appellant and accordingly it required registration. It further found "as it is unregistered, the Court could not looked into. If the Court could not, as we hold, look into it, the Court could not pronounced the judgment in accordance with it. Section 17 of the Arbitration Act presupposes an Award which can be validly looked into by the Court. The appellant cannot successfully invoke Section 17. It also observed "the award is a inseparable tangle of several classes and cannot be enforced as to part not dealing with immovable property."
33. In Mrs. Tehmi P. Sidhwa v. Shiba Banerjee & Sons Private Limited, , it was a case where the award directed that Mr. Banerjee & Sons Private Limited shall pay to Tehmi P. Sidhwa and others certain shares of the rents and profits of the property. It was also stated that Shib Banerjee & Sons Private Limited shall execute a documents as may be necessary for declaring l/4th 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 transferring the said property and the lease from the Delhi Improvement Trust. Interpreting such an award the Supreme Court held that 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 or contingent, of the value of one hundred rupees and upwards, in respect of the immovable property, as contemplated under Section 17(l)(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 Limited 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 Section 17(2)(v) of the Registration Act.
34. In Capt. (Now Major) Ashok Kashyap v. Mrs. Sudha Vasisht, , the Supreme Court observed thus:
"Where the award of the Arbitrator, though declared the share of the parties in the property, it created a right by itself, in favour of one party to get particular sum from another party and right to obtain the payment and on payment the obligation of relinquishment of right or interest in the property. It was held that such an award did not create any right in any immovable property and as such it is not compulsory to register it."
The contention in that case was that the award could not be made a Rule of the Court because it affected the partition of the immovable property and consequently the rights in the immovable property were also affected. The Supreme Court held that the award certainly declared the share of the parties in property, but it obligated that it is only on payment of Rs.40,800/- Mr. Vasisht would vacate the house. It further enjoined that she will be entitled to reside in the house in the portion occupied by her till the full payment of Rs.40,800/-is made to her and she will not be liable to pay any rent for the occupation of the portion and on the said payment, she will not have any right and also no interest left in the said property. So her right in the said property and her interest in the property ceases on payment of the amount of Rs.40,800/- and not otherwise, not by the operation of document itself. The document itself creates a right by itself to get Rs.40,800/- and right to obtain the payment and on payment the obligation of relinquishment of her right or interest in the property. In the award, it was stated that Kashyap should pay Rs.40,800/- to Mrs. Sudha Vasisht and upon payment, Mrs. Sudha Vasisht would vacate the house. Interpreting the such a provision, the Supreme Court held that the document could not create any right by itself and it was subject to obtaining the payment.
35. In Lachman Dass v. Ram Lal, , the Supreme Court held thus:
"Where a party to an arbitration proceeding claims that 1/2 share in the disputed immovable property is held by the opposite party as benamidar for him and that he is the real owner of the entire property and the Arbitrator passes an award accordingly, the award does create, declare or assign a right, title and interest in the immovable property. The award declares that 1/2 share of the ownership of the opposite party shall be owned by the first party. Therefore, the award declares the right of first party to the said share of the said property mentioned in that clause. The property is immovable property and it is not merely a declaration of the pre-existing right, but creation of new right of the parties. It could not be said that the award merely declared the existing right and did not create any new right. Section 17 enjoins registration wherever the award "purports or operates to create, declare, assign, limit or extinguish" whether in present or in future any right, title or interest of the value of Rs.100/- or upwards In immovable property."
The Supreme Court further held thus:
"An award affecting immovable property of the value of more than Rs.100/- cannot be looked into by the Court for pronouncement upon the award on the application under Section 14 of the Arbitration Act unless the award is registered. Section 14 enjoins that when an award of an arbitrator has been tiled, the Court should give notice to the parties and thereupon the Court shall pronounce the judgment upon the award and make it a rule of the Court. But in order to do so, the Court must be competent to look into the award. Section 49 of the Registration Act enjoins that the award cannot be received as evidence of any transaction affecting immovable property or conferring power to adopt, unless it is registered. In that view of the matter, no judgment upon the award can be pronounced upon the unregistered award. Therefore, though it may not be possible to take the point that the award is bad because it is unregistered as such it could not be taken into consideration in a proceeding under Section 30 or 33 of the Arbitration Act, but can be taken in the proceedings under Section 14 of the Arbitration Act when the award is sought to be filed in the Court and the Court is called upon to pass a decree in accordance with the award. As the Court, as mentioned hereinbefore, could not look into the award, there is no question of the Court passing a decree in accordance with the award and that point can also be taken when the award is sought to be enforced as the rule of the Court."
36. In Sardar Singh v. Smt. Krishna Devi, , it was a case where the award was passed declaring that Sri Sardar Singh was the owner of the half house situated in Karolbagh, New Delhi from 7-4-1959 as he paid Rs. 18,000/-to Sri Kartarlai in the share of Claim Bonds and cash towards the purchase price of the said house. The award was made Rule of the Court and thereafter Sardar Singh laid proceedings before the Rent Controller for eviction of their tenant for personal occupation. Mr. Kartarlal entered into a contract of sale of the entire property with Mr. Jogindranath and received part consideration. That led to filing of a suit by the vendee against Mr. Kartarlai, Sunder Singh having come to know about the sale, and pending the suit got impleaded as a 2nd defendant. The trial Court decreed the suit and the High Court confirmed the decree. The question before the Supreme Court arose as to whether the award on the facts and circumstances was compulsorily registerable under Section 17. The Supreme Court held as follows:
"It is, thus, well settled law that the unregistered award per se is not inadmissible in evidence. It is a valid award and not a mere waste paper. It creates rights and obligations between the parties thereto and in conclusive @page SC 496 between the parties. It can be set up as a defence as evidence of resolving the disputes and acceptance of it by the parties. If it is a foundation, creating right, title and interest in praesenti or future or extinguishes the right, title or interest in immovable property of the value of Rs.100 or above it is compulsorily registrable and nonregistration render it inadmissible in evidence. If it contains a mere declaration of a pre-existing right, it is not creating a right, title and interest in praesenti, in which event it is not a compulsorily registrable instrument. It can be looked into as evidence of the conduct of the parties of accepting the award, acting upon it that they have pre-existing right, title or interest in the immovable property.
11. In the light of above conclusion and of the contents of the award referred to hereinbefore, the necessary conclusion is that the award did not create any right, title or interest in the appellant for the first time, but it declared the preexisting factum, namely the appellant and Kartar Lal purchased the property jointly and that Kartar Lal was the benamidar and that both of the brothers had half share in the house with a right to enjoyment of the property in equal moiety. Thus the award is not compulsorily registrable. The contention of the Counsel for the respondent is that if the unregistered award is accepted as a foundation and received in evidence effecting interest in immovable property, there is possibility of avoiding registration and by indirect process title gets conferred, defeating the mandate of Section 17 and Section 49 of the Registration Act. Each case must be considered from its own facts and circumstances; the pre-existing relationship of the parties; the rights inter vivos and the interest or rights they claimed and decided in the award and the legal consequences. On the facts of this case we hold that the appellant and Kartar Lal being tenants in common, migrants from Pakistan after partition, the appellant being Government servant, obviously, his brother Kartar Lal purchased the property for their benefit as coparceners or co-owners. In that view it must be held that the award does not have the effect of creating any right in praesenti, nor is it an attempt to avoid law. The award was made rule of the Court a decade earlier to the date of the initial agreement of sale."
37. Thus, the Supreme Court was categoric that though the document is compulsorily registerable and prohibited from receiving as evidence, it can be looked into as evidence of conduct of parties of accepting the award, acting upon it that they have pre-existing right, title and interest in the immovable property.
Thus from the survey of various decisions on the subject the following principles would emerge:
(1) If an award including the one on a private reference, is the foundation purporting to create, right, title or interest in praesenti or future or extinguishes any right, title or interest in any immovable property in the value of Rs.100/- or upwards is required to be registered under the provisions of Section 17(l)(b) of the Registration Act and non-registration renders it inadmissible in evidence. Consequently, no judgment can be pronounced upon such an award.
(2) If the award merely declares the preexisting right of title or interest or reiterates past events under which the right, title interest etc., in immovable property already stood transferred, it should be treated as a mere reference of an existing fact and did not purport to create or declare by virtue of the award itself.
Such an award is not compulsorily registerable.
(3) Even when a charge is created in the award for discharge of monetary liability, the award requires registration.
(4) In case where the award contains several transactions some requiring registration and others not requiring registration, and the transactions are independent and severable, the unregistered award is available in evidence to the extent of' severed transaction which did not require registration and other transactions are inadmissible. It has to be assured that the transactions should be independent and severable. But if the transactions are inextricably interlinked and inseparable the award in it entirety is inadmissible in evidence and it cannot be validly looked into.
(5) In case of un-registered award, a part of it only requires registration can be affected to in respect of that part which does not require registration provided later part is severable or severable from the former or if the two are inseparable, such an award can be enforced.
(6) There is no prohibition for receiving the unregistered award in evidence under Section 49 of the Registration Act, but such document shall not validly affect any immovable property covered by the award and that it can be received in evidence for collateral purpose. It can be set up as a defence as evidence of resolving the disputes and acceptance it by the parties.
(7) The award whether requires registration depends upon the nature of the transaction in respect of immovable property. No general principles can be carved out to ascertain the real and substantial rights, title or interest etc., as set out in Section 17(l)(b) of the Act. Each case has to be decided on its own merits and demerits.
38. Applying these principles to the facts of the case, it has to be remembered that by virtue or an agreement dated 5-8-1993, the ongoing undertaking, a Private Limited Company registered under the Companies Act was taken over by the petitioners under the same name and style of the company. Various terms were mentioned with regard to payment. It is to be noted that the assets both movable and immovable are owned by the Company. It is not a case, where the company is transferring certain immovable property to outsiders. It is a case of wholesale transfer of liabilities and assets of an ongoing undertaking and it is specifically mentioned in the agreement that the take over of the undertaking was by means of transfer of shares. Therefore, the transfer of shares is the relevant criteria to be considered to decide whether the award is compulsorily registerable or not. By means of transfer of shares, on payment of certain sums as indicated in the award, the management of the company vested with the Purchasers. Clause 3 of the agreement reads thus:
"The parties hereto have agreed that the mode of takenover/purchasers by the purchaser, 'the Company and the Undertaking', is by way of purchase of shares of the Seller company from its share holders. And the Seller Company and its Directors Chinta Venkata Krishna and Chinta Ravi Prakash hereby undertake to arrange for transfer of such shares in terms of this agreement. But, there are some shares which are Hypothecated to APSFC that C. Venkata Krishna and C. Ravi Prakash are hereby undertake to transfer such shares also on and when they are released by APSFC. If APSFC agrees to transfer the shares on the name of Purchaser and his associates immediately then the Seller has to do the same as soon as they receive total sale consideration."
Therefore, what was sold in effect are shares even though by virtue of transfer of shares, the ownership of the Company vested with the Purchasers, the Company was having the movables and immovable and they continued to vest in the Company only, but the shares are transferred from one person to another. The shares in a Private Limited Company cannot be treated as immovable property. The transfer of shares from one person to another person is only a transfer of interest in the shares and it does not effect any transfer of immovable property held by the company. Clause (ii) of sub-section (2) of Section 17 of the Act is very clear on this issue, which reads thus:
"any instrument relating to share in a Joint Stock Company, notwithstanding that the assets of such company consist in whole or in part of immovable property."
Thus the shares in the Joint stock company fall in the excluded category of company registerable documents. Therefore, keeping in view the principles which emerged from various decisions referred to above, and the provision Section 17(2)(ii) of the Act, I am of the considered view that the award did not fall within the category of instruments stipulated in Section 17(1)(b) of the Act. Hence, the award is not compulsorily registerable.
39. However, the learned Counsel for the petitioner makes an attempt to submit that apart from the property it was owned by the Company, another property was also vested in favour of the purchasers by virtue of the award. Therefore, in effect, it amounted to transfer of the land other than the land owned by the Company. This transaction is independent transaction and it is severable. Therefore, to this extent the award is required to be compulsorily registered.
40. The learned Counsel for the respondent Mr. Ramana Reddy submits that the decision of the Arbitrator did not create any right or title in the property and it is subject to registration by the outsiders in favour of the Company and therefore, it falls under excluded category under Section 17(2)(v). It is true that the land which is sought to be registered in favour of the Company over an extent of about 7 acres which belong to Chinta Ramakrishnamma and Chintha Nagaraju who were not the share holders of the company did not belong to this company, yet this land is also included in the award of the arbitrators. As can be seen from this clause that the land should be transferred by the seller in favour of the company and the cost of stamp duty and registration shall be born by the company or purchasers. Therefore, the right, title and interest in the property did not vest by virtue of the award, but it is subject to execution of the sale deed in favour of the purchasers or the company. Hence, vesting of the title is contingent upon execution of the sale deed. Hence, Section 17(2)(v) fully attracted this case and thus it did not require registration.
41. The learned Counsel for the respondent Mr. Ramana Reddy, however, fairly submits that the stipulation with regard to the transfer of the land as mentioned in the agreement having an extent of about 7 acres of land, the sellers are ready to execute the sale deed in favour of the purchasers provided they bear the stamp duty.
42. Lastly it is to be considered whether the concerned award can be challenged by the parties. The learned Counsel for the petitioners Mr. Subrahmanya Reddy submits that the consent of award is also an award in the eye of law. Merely because the award was passed in tune with the wishes of the parties, it stands (sic 'does not stand') on a different footing. He refers to the decisions of the Calcutta High Court reported in Sricharau Bhandari v. Makhan Lal Bhandari, AIR 1919 Cal. 42; Ramu Naidu v. Nayanappa, AIR 1925 Mad. 56 and Narbadabhai v. Natverlal, .
43. I have perused a!! the decisions and cumulative effect of the decision is that if an award is passed by the domestic Tribunal, where by consent or in invitum, it is an award and it has to be treated as an award and it has all the characteristics of an award. Such an award is binding on the parties, but it cannot be enforced as a decree of the Court unless judgment is pronounced and the decree is passed thereon. When once the award is incapable of being received in evidence, having not been registered as required under Section 17 of the Act, it is always open for the party opposing passing of the decree to contend that the award was inadmissible in evidence apart from other objections that are available under law. Merely because it was a consent decree, he did not take away right of the contesting party to plead all the possible defences available under law.
44. The learned Counsel for the petitioner, however, further submits that a EP was filed for realisation of Rs.9,33,778/-by the Sellers on the ground that the subsidy which fell due prior to 30th June, 1993 was retained by the purchasers and that it was claimed in the EP together with interest @ 36 per cent per annum from July, 1998 to June, 1999 and such a claim is not maintainable as the Arbitrators can only grant interest from the date of the award to the date of the decree and not from the date of realisation. He relied on the decision of Delhi High Court reported in Miss. Mohinder Kaur Kochhar v. Punjab National Bank Limited, New Delhi, AIR 1981 Del. 106, wherein it was held that the arbitrator can only grant interest from the date of the decree and not till the date of realisation. But, where the award of the Arbitrator directing to pay interest till the date of realisation was made a Rule of the Court, it could not be said to be illegal thereon, as the Court can grant interest on the property amount from the date of the decree to the date of realisation. Para 14 is relevant, which is extracted below:
"The next objection was that the arbitrator had directed the payment of the interest till realisation which was beyond his power. It is incorrect that the arbitrator has authority only to grant interest from the date of award to the date of decree (See: ) and, therefore, the direction in the award to pay interest till the date of realisation was technically beyond his power. The same would, therefore, have been normally severed by us. But as practical measure it is not necessary to do so because the learned single Judge has made the award rule of the Court and Section 29 of the Act provides that insofar as an award is for the payment of money the Court may in the decree order interest from the date of the decree at such rate as the Court deems reasonable to be paid on the principal sum as adjudged by the award and confirmed by the decree. Thus the Court could grant interest on the amount of Rs.5,60,709-40 (the printed amount) from the date of the decree that is 7-11-1974 to the date of realisation. Thus the direction to pay the interest on the principal sum from the date of the decree onwards is legal as the Court has put imprint on this direction, and it will be treated to its direction, we would, therefore, clarify and direct that so far as payment of interest is concerned, it will be as follows:
(a) from 12-6-1968 to the date of decree i.e., 7-11-1974 interest will be paid on Rs.5,60,709-40,
(b) on the principal amount of Rs.5,60,709-40, interest at 9 1/2% will be paid from the date of decree i.e., 7-11-1974 till the realisation."
This aspect need not be gone into by this Court as it is always open for the revision petitioner to oppose the execution petition. I am not dealing with the validity or otherwise of the maintainability of the execution petition, therefore, I leave it open for the parties concerned to raise such of the objections as are available to them under the law.
45. For the foregoing reasons, I do not find any infirmity or irregularity in the judgment of the Court below.
46. Accordingly, the CRP is dismissed. No costs.