Manohar Lall, J.:— This is an appeal by a defendant who is aggrieved by the order of the Additional Subordinate Judge of Hazaribagh, dated the 23rd July, 1945, by which he has granted a modified decree to the respondents on the basis of an award made without the intervention of the court.
A number of objections were taken on behalf of the appellant in the court below as to the validity of the award including the objection that the award could not be enforced as it was not registered. The Subordinate Judge has overruled all these objections, and the only objection which has been seriously pressed before us by Mr. B.C De on behalf of the appellant is as to the non-registration of the award.
The learned Subordinate Judge dealt with this objection in order no. 18 which he passed on the 9th of July, 1945 wherein he says that by section 32 of the Arbitration Act of 1940 the award is receivable in evidence and that the provisions of the Registration Act cannot apply, otherwise how could the court consider whether or not the award was validly made?
Section 17(1)(b) of the Registration Act ordains that all 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, shall be registered. In the present case, the award admittedly purports to create, declare, assign, limit and extinguish in present the right, title or interest to immovable property over the value of Rs. 100 and, therefore, prima facie should have been registered.
Before the amendment by section 10 of the Transfer of Property (Amendment) Supplementary Act, 1929 (Act XXI of 1929), section 17(2)(b) made an exception in favour of any decree or order of a Court and any award. But the words ‘and any award’ have now been deleted from that section of the Registration Act by the amendment of 1929. The result of this, in my opinion, is clear that an award is no longer exempt from registration and if it amounts to a non-testamentary instrument purporting to create, declare, assign, etc., any interest of the value of over Rs. 100 in immovable property, it must be registered. This view was taken by the Allahabad High Court in Ch. Bachchan Lal. Sulaiman, C.J drew attention in that case to the provision of section 49 of the Registration Act which enacts that a document which is compulsorily registrable, if not registered, cannot be received as evidence of any transaction affecting such property and accordingly the learned Subordinate Judge should not have acted upon the award and should not have accepted it in evidence; the appeal was allowed from the decision of the Subordinate Judge by which he had passed an order that the award should be filed.
The Calcutta High Court has taken the same view in Jitendra Nath De.
The Bombay High. Court in Chimanlal Girdhar Chanchi followed the Allahabad and Calcutta view and held that an award which comes under section 17(1)(b) is compulsorily registrable and if the court files such an award which has not been registered and makes it a decree of the court, it acts contrary to the provisions of section 49 of the Registration Act.
A Division Bench of this Court consisting of Courtney Terrell, C.J, and Fazl Ali, J. (as he then was) also came to the same conclusion in Badri Chaudhuri.
See also the recent decision of the Madras High Court in Chavakula Yanadamma.
Mr. Lalnarain Sinha did not contest the correctness of these decisions, but he advanced an ingenious argument. He argued that these decisions undoubtedly laid down the then law correctly, but section 32 of the Arbitration Act of 1940 in his submission, has altered the position completely. Section 32 states that:
“notwithstanding any law for the time being in force, no suit shall be on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act”.
He argued by drawing attention to this provision that the objection as to want of registration in an award is no longer tenable. He also drew attention to the provisions of sections 14, 15 and 16 of the Arbitration Act which enable the Court at the request of any party to the arbitration agreement to cause an award to be filed into court, and after the filing the court has the power to modify or correct the award and to remit the award to the arbitrators for reconsideration. He laid stress on the submission that the old distinction which was pointed out by the Calcutta High Court between an award through the intervention of the court (which does not require registration) and an award without the intervention of the court has now disappeared, as in his submission the award in either case is only valuable where a decree has been pronounced in accordance with the award by the proper court.
Having considered the various provisions of the Arbitration Act and the Registration Act, I am unable to agree with this argument.
It will be observed in the first place that the provisions of section 49 of the Registration Act have never been amended so as to exclude a private award. The reason why an award made through the intervention of the court was not compulsorily registrable is that the award by the arbitration in that case is a part of the proceedings of the court.
Mr. Lalnarain Sinha did not refer to the provisions of section 33 of the Arbitration Act which enable the party to an arbitration agreement to have the effect of the award determined by making an application to the court which can decide the question on affidavits or after taking evidence. This section does not refer to the procedure for the filing of an award laid down in section 31 read with sections 14, 15, 16 and 17, but it enables a party to an arbitration agreement or a person claiming under him, if he likes, to ask the court to decide the question as to the existence or validity of an arbitration agreement or award or to determine the effect of the agreement or the award. Now, the court can decide the question by affidavit or otherwise only if he can receive the award in evidence, otherwise how can he look at it? There is a clear prohibition under section 49 of the Registration Act preventing the court from receiving the award in evidence.
The matter may be looked at from another point of view. Supposing the parties to an award are satisfied with it and enter into possession of the property respectively awarded to them and the value is over Rs. 100 and he dispute arises between them, they are not bound to go to court under the provisions of the Arbitration Act. They are satisfied with the award and they do not want any court to pronounce a decree in accordance with the award. Has title to the property passed to the parties without the award being registered so that such a party can transfer the title to a third party by sale, gift or otherwise? In my opinion, the answer is clear that no title to immovable property of the value of above Rs. 100 can pass by the award—it is a non-testamentary instrument—without the document being registered.
It was also argued that how could the arbitrators be directed to file an award under section 14(2) if the award has been registered and made over to the parties? The answer to this contention is to be found in section 14(2) itself. Where the party makes an application that the award should be filed in court, it will be presumed that the award is with the arbitrator, but a special clause also provides that either the award or a signed copy of it may be filed in court.
To repeat any conclusions, I would only observe that section 32, merely provides that no court can entertain any independent suit for a decision that a certain award exists or is valid, or to set aside, amend or modify or affect the award in any way otherwise than as provided in the Arbitration Act. But this does not mean that the provisions of section 49 of the Registration Act have been abrogated. The objection as to the non-registration in the present case is being taken in the course, of a proceeding under the Arbitration Act itself. That objection is fatal to the success of the plaintiff because the court is prevented from even looking at the document as it is not registered and, therefore, cannot be received in evidence.
For these reasons, the objection of the appellant is well founded and must prevail. The decision of the learned Subordinate Judge is, however, affirmed regarding the invalidity of the other objections raised by the appellant. But this is of no assistance to the respondent.
The result is that the appeal is allowed and the decision of the learned Subordinate Judge is set aside. In the circumstances each party will bear his own costs in all the Courts.
Mukharji, J.:— I agree.
K.D
Appeal allowed.
section 17(1)(b)