Wali Mohammad and others v. Pano and others, Opposite party

ORDER

K. Ahmad, J.

1. Both these applications in revision arise out of the same suit and are directed against a common order dated the 16th December. 1957. The application No. 2 of 1958 is by the plaintiffs while the other, namely, one bearing No. 280 of 1958, is by the defendants.

2. The suit giving rise to these petitions is one for partition, both of movable and immovable properties which are at present said to be jointly owned and possessed by the members of a common family governed under the Muhammadan Law. The facts of this case, to a large extent, barring a few here and there are admitted and the controversy at present before me is exclusively confined to one point only which the court below has at present disposed of at the instance of the defendants as a preliminary issue in the case.

3. It appears that some time in the early part of 3953 there was some difference among the members of the family over the possession of the properties jointly owned by them. That led to a reference to arbitration outside Court on 2-5-1953, to a body of 3 arbitrators: (1) Haji Muhammad Tahir, (2) Hussain Mian and (3) Haji Shamsuddin alias Karu. That was both for the settlement of their entire controversy as also for the partition of the properties jointly owned and possessed by them.

Now so far as the immovable was concerned that, as it appears from the facts on the record, included only a few houses, but the movable covered three items (a) grains, (b) utensils and (c) ornaments worth Rs. 32,000/-. The arbitrators having heard the parties gave a written award which is dated 4-5-1953, but that is signed only by two of the arbitrators namely, (1) Hussain Mian and (2) Haji Shamsuddin alias Karu. That means the award did not bear the signature of the third arbitrator, namely, Haji Muhammad Tahir. Perhaps this was due to the fact that there was among them some difference over the partition of ornaments with the result that the award, instead of resolving the dispute, aggravated it and the parties, in order to vindicate their rights, first went to the criminal Court.

But the Criminal Court did nothing more than taking over the custody of those ornaments in its own possession through police, and thereafter it dropped the proceeding on the ground that the controversy as raised between the parties was of a civil nature. Accordingly, as a first step towards the adjudication of this matter in the Civil Court the plaintiffs in the first instance on 16-11-1953, put in an application in the Court below under section 8(1) of the Arbitration Act, 1940, for the appointment of a third arbitrator in place of Haji Shamsuddin alias Karu on the ground that he was guilty of misconduct.

That application was registered as Miscellaneous No. 45 of 1953, but ultimately on 17-11-1953, it was dismissed. Having thus failed in their first attempt the plaintiffs thereafter on 24-5-1954, filed another application before the Court. That was under sections 14, 16 and 33 of the arbitration act and therein the main allegation made was that so far the arbitrators had not effected the partition of the ornaments so they should be directed to get that part of the partition also completed.

This was numbered as Miscellaneous Case No. 15 of 1954 and it was disposed of by an order dated 23-12-1954, wherein the Court held, as is stated in the order under revision, that

"the award was incomplete and directed the arbitrators to partition the ornaments and directed further that after completing the award the arbitrators shall give notice to the parties in writing of the making and signing of the award and shall file the award in Court in 3 months."

As against this order there was an appeal taken to this High Court on 14-1-1955, which was numbered here as Miscellaneous Appeal No. 9 of 1955. This was disposed of by the order dated 21-3-1956, whereby this Court set aside the order and judgment of the Court below passed on 23-12-1954, and held that the application filed in Miscellaneous Case No. 15 of 1954 was barred by time as provided under article 178 of the limitation act.

Thus the plaintiffs, in spite of all efforts, failed to get any relief under the provisions of the Arbitration Act, 1940, and accordingly on 12-4-1956, filed the present suit has given rise to these applications under revision. In this suit the prayer has been made for the partition of both movables and immovables, which were the subject-matter of arbitration under the reference dated 2-5-1953, and the cause of action therein, as stated in the order under revision, is said

"to have arisen on "25-4-53'' when the list of properties to be partitioned by the proposed arbitrators was signed by the parties, on "2-5-53" when the agreement for reference to arbitration was executed, on "21-3-56" when the High Court set aside the order of this Court directing the arbitrators to divide the ornaments and on "8-4-56" when the plaintiffs asked the defendants to partition the ornaments and other properties in suit amicably".

Tin's the defendants challenged by a written statement which was filed on 21-8-1956. Therein one of the pleas raised was that the suit as constituted was barred by sections 32 and 33 of the arbitration act, 1940; and at the trial there was a specific prayer made by the defendants that this question as a preliminary issue should be taken up first in the case. The trial Court has, accordingly, in the first instance, disposed of only that issue alone, and it is that order which is now under revision before me.

By this order the Court has accepted the defence contention in terms that "it cannot be said that the suit is not one to determine the validity or otherwise of the award and the effect thereof" and has accordingly held that but for the fact that the award given in this case was not a registered award, the suit giving rise to this application would have been in ordinary course hit by the mischief of sections 32 and 33 of the arbitration act. Here, however, as already stated the award covered not only moveables but immovables as well and the latter admittedly were of value not less than Rs. 100/-.

Therefore, the Court, acting on the view that such an award in law amounts to a non testamentary instrument purporting to create, declare assign, etc. an interest in Immovable property, has held that the same is compulsorily registrable under section 17, sub-section 1, clause (b) of the indian registration act; and as in the present case the award relied upon is not a registered award, it is hit by section 49 of the registration act, Therefore, to the extent to which it covers Immovable property the award has been held to be inadmissible in evidence. Accordingly, the final conclusion arrived at by the trial Court is

"that the award in question is admissible into evidence for the purpose of showing validity or otherwise of the same so far as moveable properties are concerned. Of course, with respect to Immovable properties, the award is inadmissible into evidence. The plaintiffs, therefore, cannot challenge, the validity of the award in the present suit so far as the partition of the moveables is concerned, and the plaintiffs cannot claim repartition thereof in this suit. section 32 of the arbitration act is a bar to such a claim. In other words, the present suit for partition of moveable properties is not maintainable. So the present suit for partition is maintainable only with respect to Immovable properties i.e., house properties and is not maintainable with respect to grains, utensils and ornaments."

4. Thus, in the result the preliminary issue as referred to above has been decided by the Court below partly in favour of the defendants and partly in favour of the plaintiffs. Accordingly, now the revision as against that order is on behalf of both, though each has attacked it only to the extent to which it is against its interest.

The contention raised on behalf of the plaintiffs is that the suit as framed here is not susceptible to any mischief of sections 32 and 33 of the Arbitration Act, 1940, and is as such maintainable as a whole, that is, with regard to both moveables and immovables; while the plea advanced on behalf of the defendants in support of their application is that the trial Court is wrong to hold that an award covering Immovable property worth Rs. 100/- or upwards is compulsorily registrable as contemplated by section 17 of the registration act. In other words their contention is that the Court in accepting the plea in bar as contemplated by sections 32 and 33 of the arbitration act should not have made any distinction on the ground that the property covered under an award is moveable or Immovable or both.

5. Now, in my opinion, so far as the question of registration of an award in such a case is concerned, that as now accepted by a Full Bench of this Court in Sheonarain Lal v. Prabhu Chand ( AIR 1958 Pat 252) : 1958 Pat LR 39, is not at all compulsory; and, therefore, instead of going into the authorities cited at the Bar for and against it I should better rest the matter here on the decision given in that Full Bench decision which has noticed practically all the important authorities on the point. Therein Sinha, J. (as he then was) with whom his other learned colleagues agree, has finally concluded the discussion on this point, in these words:

"What I have said above, therefore, is sufficient to show that an award, as such, does 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, to or in Immovable property' (Section 17(1)(b) of the Registration Act), and, therefore, an award, even though it be in respect of Immovable property worth one hundred rupees and upwards, does not require registration."

Accordingly that part of the order wherein the trial Court has held that the award in this case so far as it relates to Immovable property is in-admissible in evidence for the reason of section 49 of the registration act has to be set aside, and to that extent the relief sought by the defendants in their application has to be allowed.

6. But that does not dispose of what the plaintiffs have asserted here in support of their application. That in effect is still more fundamental and of a far-reaching effect. In short, their contention is that, independent of the fact whether an award given on reference without the intervention of the Court is compulsorily registrable or not, it has in no case in the eye of law any value or existence whatsoever unless that is got made the rule of the Court as provided in section 17 of the arbitration act.

That means, so long as it has not been made to receive and has not received the imprimatur of the Court as the law provides it is for all legal purposes nothing but a waste paper and not in the least capable of upholding any right or obligation as comprehended thereunder; in other words in such a case an award is clothed with legal character only when a judgment has been pronounced on its basis and a decree given in accordance with that judgment. As such the mere existence of such an award by itself can be of no avail even by way of defence.

Otherwise it is argued that an aggrieved party even without having an opportunity of challenging that award, or scrutinising that what has been done is in accordance with law may sometimes as here find himself perilously placed because of that award; and that for no fault of his, rather exclusively due to the neglect or strategy on the part of the other side, which law in any case as far as possible cannot allow to have any premium as. against what is just and proper.

7. Now here it is not denied that what has been relied upon by the defendants as a plea in bar to the present suit is not a registered award, but a non-registered one. Therefore the decision of the point raised by the plaintiffs in this case rests solely on the consideration whether the proposition of law as formulated above on their behalf is true or not.

8. This point, however, also does not seem to be altogether free from difficulty. There are some decisions which have been brought to my notice and suggest that in certain circumstances such an award, even when not made a rule of the Court can be set up by way of defence as a plea in bar in any subsequent suit dealing with the same subject-matter. They are P. Suryanarayana Reddy v. R. Venkata Reddi AIR 1948 Mad 436; Sayyaparaju Surayya v. Nekkanti Anandayya AIR 1951 Mad 525. In both of them the principle of law as laid down therein is that

"a party to an award is not precluded by the provisions of the arbitration act from putting forward an award which has been fully performed by him, but which was not filed under Section 14 and according to which a judgment was not pronounced or a decree given under Section 17, in answer to the other party's claim which was the subject-matter of the reference and the award."

In holding this view their Lordships in the course of discussion have put the question for decision whether the inhibition in Section 32 is not confined merely to a plaint by which such decision is sought and then answered that question by holding: "We are inclined to think that it is so confined." Accordingly, they came to the conclusion as stated above.

In my opinion, if I may say so with all respect to the learned Judges who decided these cases, that the point in issue in this connection does not rest solely on the construction or interpretation of Section 32 alone. It rather invites the consideration of the entire scheme under the Act as provided therein. It cannot be denied

"that before the coming into force of the Arbitration Act, 1940, a valid award was operative even though neither party sought to enforce it by suit or by an application under the appropriate provision in the Code of Civil Procedure and that after the giving of such an award, no party could fall back on the cause of action which was tha subject-matter of the reference to arbitration and which was merged in and extinguished by the award."

But to me it seems that now after the coming into force of the Arbitration Act the position has completely altered. Thereunder as I read the Act it appears that an award given on reference without the intervention of Court, unless made a rule of the Court, has in law no operative effect, and in this view, I am fully supported by the decisions of this Court in Babul S.K Kuer v. B.N Sinha* AIR 1953 Pat 42; Lachhuman v. Makar* AIR 1954 Pat 27; and ( AIR 1958 Pat 252) : AIR 1954 Pat 27 , already referred to above. In AIR 1953 Pat 42 one of the questions mooted was: "Whether the suit as regards the properties in Schedules B and C is barred by reason of the award made by the arbitrators". There the award had not been made a rule of the Court. Accordingly, plaintiff claimed that it could not, as such, be pleaded even by way of defence. In answer thereto Reuben, C. J. has discussed this question elaborately and, after discussing some of the decisions on the subject, has at one place observed:

"The decisions to which I have referred illustrate the state of the law previous to the coming into force of the Arbitration Act, 1940. A valid award was an operative award by itself and there were two ways in which it could be enforced. It might be made a rule of the Court by an application under the Civil Procedure Code or under the Arbitration Act, 1899, as the case might be, or the party might be, or the party might treat it as an independent source of title and enforce it by suit. In either case it was open to the opposite party to challenge the validity of the award. The remedy by suit was taken away by section 32 of the arbitration act, 1940."

and, therefore, according to the learned Chief Justice, now on the present state of law "the award only becomes operative when it is made a rule of the Court". To the same effect is the view taken by Das, J. has he then was) in the case of AIR 1954 Pat 27. Therein the learned Judge, after an elaborate discussion of the matter, observed :

''If the scheme of the Arbitration Act, 1940, is to prevent the parties to an arbitration agitating a question relating to the arbitration in any manner other than that provided by the Act, then the appellant cannot be in a better position than the plaintiffs-respondents. If the plaintiffs-respondents could not bring a suit to set aside an award, the appellant could not also plead existence of an award by way of defence in a suit when he had taken any steps under the indian arbitration act to file the award."

Likewise, Sinha, J. (as he then was), in ( AIR 1958 Pat 252) : 1958 Pat LR 39, already referred to above, in agreement with the aforesaid two decisions of this Court has observed:

"If the only way to challenge the validity or otherwise of an award is by filing the award in Court under the Act and taking a decision upon it in terms of the award, then the matter cannot be agitated even by way of defence in a proceeding other than a proceeding envisaged by the Act itself."

Therefore, in the face of these authorities the matter now at least so far as this Court is concerned seems to have been finally settled and as such binding on me that an award given on reference without the intervention of Court has no legal existence, nor is capable of upholding any right or title as comprehended thereunder unless it is made a rule of the Court within the meaning of the Arbitration Act itself. It follows, therefore, that the objection taken by the defendants in this case as to the maintainability of the suit on the ground of the existence of a previous award which is not a registered one, has to fail and to that extent the application filed by the plaintiffs has to be allowed.

9. In the result, therefore, the applications are disposed of in terms as stated above. In the circumstances of this case, there will be no order as to costs.

10. Now therefore, the suit has to proceed to trial on other issues raised in the case.