Is it mandatory to register arbitration award if property more than Rs 100/ is transferred by said award?

IN THE HIGH COURT OF JUDICATURE AT PATNA
Miscellaneous Appeal No.592 of 2011

SRI RANJIT KUMAR SINGH,
V
DR. DILIP KUMAR SINGH

CORAM:  MR. JUSTICE ADITYA KUMAR TRIVEDI

Date: 9-02-2016

1. M.A. No.592 of 2011 wherein Ranjeet Kumar Singh is the appellant while M.A. No.594 of 2011 wherein Ajit kumar Singh is the appellant have been brought up against an order dated 23.04.2011 passed by Sub-Judge, Ist, Bhagalpur in Misc. Case No.28 of 1982 on account thereof, with the consent of the learned counsels have been heard analogously and are being decided by a common judgment. .

2. It is apparent that the learned lower court of Sub-Judge, Ist, Bhagalpur vide order dated 23.04.2011 passed in Misc. Case No.28 of 1982 accepted the award and made it rule of the court, the subject matter of these two appeals.

3. Shorn of unnecessary details, it is evident that rival parties happens to be full brother who, to have amicable partition of their ancestral property agreed for appointment of Dr. Ayodhya Prasad Singh, their maternal uncle to be the sole arbitrator and for that, having entered into a registered agreement dated 26.05.1973. The sole arbitrator, after his nomination took the issue, got partitioned the properties amongst the brothers in terms of award dated 23.11.1976 with its clarification vide dated 26.12.1976 as well as 13.05.1977 and placed it before the court as required under the Arbitration Act,1940  whereupon, these two appellants put an objection on various grounds to nullify the award which, by the order impugned, have been negativated by the learned lower court and made the award rule of the court. Hence this appeal.

4. In support of their plea, it has been submitted by the learned counsel for the appellants that the learned lower court acted against the mandate of law while brushing aside the objections raised on their behalf. The first and foremost argument happens to be that arbitrator neither happens to be witness nor a party. The award which was required to be filed in terms of Section 14(2) of the Arbitration Act, 1940, which was prevalent at the time of inception of arbitration proceeding, was only to have seal of the court by way of making it as rule of the court. While the award was filed by the arbitrator, it was drawn up on his name and further, he was examined by the Court just after filing of award before appearance of the respective parties. The aforesaid eventualities were not at all required under the statute therefore, since inception of the proceeding the learned lower court chosen a wrong path which, bound to affect the ultimate result. In its continuity, it has been submitted that once proceeding was drawn up in name of arbitrator who subsequently died, then, in that event, on account of non substitution of the party the proceeding was to abate.

5. On this score, it has also been submitted that learned lower court had wrongly interpreted that once at an earlier occasion it was observed by predecessor that proceeding was maintainable and as the same was not challenged on account thereof, met with finality, hence, the chapter was not open to challenge. Maintainability of the proceeding is a legal issue which could be taken up at any stage, at any time and the court is bound to entertain the same. Hence, as per submission made on their behalf, the proceeding lost its identity on account of illegality committed since inception of the proceeding.

6. Then it has been submitted that arbitrator had acted in partisan as well as collusive manner going to the camp of Dr. Aditya Narayan Singh and to substantiate the same so many factual aspects have been placed. In likewise manner propriety of the award has also been challenged.

7. With regard to propriety of the award, it has been submitted that award has to be filed within stipulated period of four months as per Rule-3 of Schedule-Ist of the Arbitration act while it has been filed after more than three years without having extension of period by a competent court on a prayer made on behalf of arbitrator and on account thereof, it happens to be barred by limitation whereupon the award in question became nonest in the eye of law.

8. It has also been submitted that it happens to be collusiveness of the arbitrator which makes the award inadmissible in  the eye of law because of the fact that after filing of award on 23.11.1976, the arbitrator ceased to continue as an arbitrator and on account thereof, the subsequent filing of document at his end in its continuity dated 26.12.1976 as well as 13.05.1977 made the situation worsen and further, derecognized the identity of award dated 26.05.1973, to be an award in terms of Section 2 of the Arbitration Act. Therefore, by having three conjoint awards nullified sanctity of each other hence, there was no award in terms of Section 2 of the Arbitration Act before the learned lower court and that being so, there was no question for making the award dated 23.11.1976, rule of the court as well as considering the subsequent document dated 26.12.1976 as well as 13.05.1977 to be an ancillary one.

9. It has further been submitted that learned lower court failed to construe that the award so filed by the arbitrator on account of illegality having cropped up on account of collusiveness and partisan attitude of the arbitrator, was not fit for acceptance and on account thereof, would not have declared it to be rule of the court. In likewise manner, it has also been pleaded that signature of appellant though taken in deceitful manner, did not find place over other relating document.

10. It has further been submitted that the arbitrator, as he was conducting the so-called arbitration proceeding in collusive and  partisan manner, failed to notice to either of the parties to participate during proceeding, giving an opportunity to the parties to place their grievances, also failed to identify the place of the proceeding and that happens to be reason behind that no proceeding, papers, documents were filed along with the award before the court which also happens to be in utter violation of law and on account thereof, it not only suggest and support the contention of the appellants rather also make the whole proceeding illegal.

11. It has also been submitted that no copy of award was ever served upon the parties and whatever been served that happens to be by the adversary Dr. Aditya Narayan Singh, who had no role to play.

12. Furthermore, it has been submitted that from mode of partition in terms of award, it is apparent that transfer of share of other coparceners was allowed in favour of Dr. Aditya Narayan Singh with regard to homestead land whereupon their ancestral house stands and for that, the remaining brothers were given 18000/- in lieu of price to the extent of their share and on account thereof, the award should have been registered. As the award has not been registered, therefore the award has lost its legal identity and is fit to be rejected. The learned counsel also referred AIR 1962 SC 78, AIR 1985 SC 920, AIR 1975 SC 1259, AIR 2001 SC 2062, AIR 1957 Pat. 633, AIR 1989 SC 1923, AIR 1953 SC 21, AIR 1995 SC 1927, AIR 2007Patna High Court MA No.592 of 2011 dt.09-02-2016 7. SC 2062, (2004) 5 SCC 304, AIR 1968 SC 1299.

13. On the other hand the learned counsel for the respondents repulsing the submission made on behalf of appellants submitted that all the submissions made on behalf of appellant happens to be fallacious one as, single conduct of appellants which the learned lower court also took notice, supports the whole procedure as well as genuineness of award and that happens to be during midst of the proceeding, appellants have sold away different plots allotted to their share to different persons wherein theme of partition has been incorporated. That means to say while the award was pending to be made as a rule of the court, a mere paper work as required in the eye of law, at the other end, the parties have accepted the same whereunder they began to transfer the properties having allotted to their share. The authenticity of the documents have not been denied and in the aforesaid background the vendor, appellants herein are bound by the recitals having incorporated therein. Accordingly, the grievances whatsoever may be, the objections in which form it may be, the challenge in whatever manner, all gone perished. Thus, the learned lower court rightly acted upon after brushing aside the same.

14. It has further been submitted that status of arbitrator Ayodhya Prasad Singh being maternal uncle was out of controversy and further, all the parties were knowing since before regarding his  old age, poor health and that happens to be reason behind that such kind of privilege was itself incorporated in the deed of agreement by which appointment was made. Not only this, the aforesaid registered document also shows presence of passage in favour of arbitrator in giving further relaxation over filing of subsequent part of the award even after filing of the main award, if so required and in the aforesaid background, the other ancillary event visualized vide dated 26.12.1976 as well as 13.05.1977. Hence, the objection raised on behalf of appellants that all the three are carrying independent status, is nothing but misdeem.

15. It has also been submitted that in the aforesaid background as well as relaxation having available in favour of arbitrator, none of the statutory application as referred by the learned counsel for the appellant, is applicable in the facts and circumstances of the present case, and therefore, is misemployed .

16. It has further been submitted that, that the question of registration of the award does not arise because of the fact that under the award no right has been transferred rather an adjustment has been made and in token thereof, the other co-sharers were duly compensated. Hence, the order impugned does not attracts interference. Also referred AIR 1979 Del. 97, AIR 1970 SC 833, AIR 1961 SC 1077, (1976) 3 SCC 113, AIR 1952 SC 145.

17. In Thyssen Stahlunion Gmbh v. Steel Authority of India Ltd. reported in AIR 1999 SC 3923, it has been held that once arbitral agreement was under the old Act, there would be applicability of the old Act, which is found further fortified in terms of Section 85 of the Arbitration and Conciliation Act, 1996 and further, as there happens to be no agreement amongst the parties to be governed by new Act on account thereof, there would be applicability of the old Act that means to say the Arbitration Act, 1940.

18. Now salient features of the Arbitration Act (Act before brevity) has to be seen.

Section 2(a) defines the arbitration agreement prescribing a written agreement to submit present or future differences to arbitration, whether the arbitrator is named therein or not; (b) “award” means an arbitration award;

Section 3 prescribes provisions to be applied to arbitrator agreement and further, to include the provisons disclosed under first schedule. Section 13 prescribes the power to be exercised by arbitrator during course of arbitration wherein clause (c) makes the award conditional or in the alternative; and to correct in an award any clerical mistake or error arising from any accidental slip or omission. Section 14 deals with mode of preparation of award as well  as event of filing wherein an obligation has been put over the arbitrator that after having their signature over award, they will give notice to the parties in writing and further, amount of fees and charges payable in respect of arbitrators and award has to be furnished. Sub-section (2) and (3) also prescribes an obligation upon the court to notice and upon payment of fees and charges due in respect of arbitration and award, cause the award and sign copy of it together with any depositions and documents which have been taken and proved before them, to be filed in court. Section 15 powers of Court to modify the award on the ground so mentioned therein where (a) the matter out side of reference has been dealt with, (b) happens to be is imperfect in form, or contains any obvious error which can be amended without affecting upon decision, (c) when the award contains a clerical mistake or an error arising from an accidental slip or omission. Section 16 prescribes the grounds whereupon award could be remitted to the arbitrator or comprise and Section 17 deals with the judgment in terms of award. Section 28 authorizes the court to extend the time in filing award. Section 30 prescribes the grounds for setting aside the award. Section 39 deals with event of appeal.

19. Because of the fact that appellants put an objection before the learned lower court for setting aside the award, therefore the  grounds as laid down under Section 30 of the Act is incorporated below:-

 

“30. Grounds for setting aside award:- An award shall
not be set aside except on one or more of the following
grounds, namely:-
(a) that an arbitrator or umpire has misconducted
himself or the proceedings
(b) that an award has been made after the issue of an
order by the Court superseding the arbitration or after
arbitration proceedings have become invalid under
section 35;
(c) that an award has been improperly procured or is
other- wise invalid.”
20. The first schedule in terms of Section 3 speaks regarding
implied condition of Arbitration Agreement wherein condition (III)
mandates that the arbitrator shall make their award within four
months after entering on the reference or after having called upon to
act by notice in writing from any party to the arbitration agreement or
within such extent or within such extent time as the court may allow.
21. As per Section 28 of the Act, the court has been empowered
to extend the time. Admittedly award has been filed after elaspse of
statutory period and no prayer was ever made before the learned
lower court at the end of either of the party or by the arbitrator
himself for extension of period then, in that event, it is to be seen
what kind of repercussion it has.
22. In M/s Chowdhury and Gulzar Singh, New Delhi-1, vs.
M/s Frick India Ltd. New Delhi-1 reported in AIR 1979 Del.97 it
has been held:
“14. In the case of Champalal v. Mst. Samrathbai, AIR
1960 SC 629, which was a case under the Limitation
Act (1908), it was held that Art. 178 of the Limitation
Act applies to applications made by the parties and not
to the filing of the award by the arbitration.
Corresponding Article in the Limitation Act, 1963 is
Art. 119 where the words are similar to the words of
Art. 178 of the Limitation Act, 1908. The matter came
up for consideration in this Court. In the case of Moti
Ram v. Mangal Singh ILR (1971) 2 Delhi 451, it was
held that the application moved by the arbitrator to file
the award in court 7 years after the same was made
was not barred by limitation and it was further held
that there is no provision in the Limitation Act which
is applicable to an application made by the arbitrator to
file an award under S.17 of the Arbitration Act. It is,
therefore, held that the arbitrators rightly filed the
award in court and that the filing of the award by the
arbitrators was not barred by any period of limitation.
As a matter of fact, no period of limitation is
prescribed for the arbitrator to file the award in court.
Since the award is filed in court it is for the court to
proceed with the matter to serve notice of the filing of
the award in court and to give an opportunity to the
parties to file objections and in case no objections are
filed against the award, it is the duty of the court to
make the award a rule of the Court.”
23. In Hindustan Construction Co. Ltd. v. Governor of Orissa
and others reported in AIR 1995 SC 2189, it has been held:
“9. The first schedule to the Arbitration Act
specifies the implied conditions of the arbitration
agreements. Because of Condition No. 3, the arbitrator
has to make award within four months of his entering
on the reference or after having been called upon to act
by notice in writing from any party to the arbitration
agreement or within such extended time as the court
may allow. In other words, the power to extend the
time of four months has been vested in the court,
otherwise the award after expiry may become invalid.
But that condition has to be read along with Section 28
of the Act.
“28. Power to Court only to enlarge time for
making award.— (1) The Court may, if it thinks fit,
whether the time for making the award has expired or
not and whether the award has been made or not,
enlarge from time to time, the time for making the
award.
(2) Any provision in an arbitration agreement
whereby the arbitrators or umpire may, except with the
consent of all the parties to the agreement, enlarge the
time for making the award, shall be void and of no
effect.”
Sub-section (1) of Section 28 vests power in the
Court to enlarge the time for making the award from
time to time. Sub-section (2) of Section 28 says in
clear and unambiguous terms that any provision in an
arbitration agreement whereby the arbitrators or
umpire can enlarge the time for making the award
shall be void and of no effect “except with the consent
of all the parties to the agreement”. Sub-section (2) of
Section 28 has been the subject-matter of controversy,
as to whether even if the time is extended with the
consent of both the parties, the restrictions prescribed
in sub-section (1) of Section 28 and under Condition
No. 3 of the First Schedule are contravened. In the
case of Hari Krishna Wattal v. Vaikunth Nath Pandya
(1974) 1 SCR 259, it was pointed out that under clause
3 of the Schedule to the Arbitration Act, the Arbitrator
is expected to make his award within four months
from his entering on the reference or on his being
called upon to act or within such extended time as the
Court may allow. But then it was said: (at pp. 2481-82
of AIR):-
“Sub-section (2) of Section 28, however, indicates
one exception to the above rule that the Arbitrator
cannot enlarge the time, and that is when the parties
agree to such an enlargement. The occasion for the
Arbitrator to enlarge the time occurs only after he is
called upon to proceed with the arbitration or he enters
upon the reference. Hence, it is clear that if the parties
agree to the enlargement of time after the Arbitrator
has entered on the reference, the Arbitrator has the
power to enlarge it in accordance with the mutual
agreement or consent of the parties. That such a
consent must be a post-reference consent, is also clear
from Section 28(2) which renders null and void a
provision in the original agreement to that effect. In a
sense where a provision is made in the original
agreement that the Arbitrator may enlarge the time,
such a provision always implies mutual consent for
enlargement but such mutual consent initially
expressed in the original agreement does not save the
provision from being void. It is, therefore, clear that
the Arbitrator gets the jurisdiction to enlarge the time
for making the award only in a case where after
entering on the arbitration the parties to the arbitration
agreement consent to such enlargement of time.”
Again in the case of State of Punjab v. Hardyal
(1985) 2 SCR 649, it was said: (at p.922 of AIR): –
“Sub-section (1) of Section 28 is very wide and
confers full discretion on the court to enlarge time for
making the award at any time. The direction under
sub-section (1) of Section 28 should, however, be
exercised judiciously. Sub-section (2) of Section 28
also makes it evident that the court alone has the
power to extend time. It further provides that a clause
in the arbitration agreement giving the arbitrator power
to enlarge time shall be void and of no effect except
when all the parties consent to such enlargement. It is
not open to arbitrators at their own pleasure without
consent of the parties to the agreement to enlarge time
for making the award.”
In the case of Hindustan Steel Works Construction
Ltd. v. C. Rajasekhar Rao (1987) 4 SCC 93, this Court
said:
“In this connection reference may be made to H.K.
Wattal v. V.N. Pandya (AIR 1973 SC 2479), where this
Court reiterated that sub-section (2) of Section 28
indicated one exception to the above rule that the
arbitrator could not enlarge the time, and that was
when the parties agreed to such an enlargement. It is
clear this Court reiterated that the arbitrator gets the
jurisdiction to enlarge the time for making the award
only in a case where after entering on the arbitration
the parties to the arbitration agreement consent to such
enlargement of time. In this case precisely it so
happened.”
According to us, the High Court overlooked the
provision of sub-section (2) of Section 28. After the
Special Tribunal had entered into reference, by
consent of the parties, the time for making the award
could have been extended. In the present case it is not
in dispute that the appellant and the respondent-State
both had agreed for extension of the period for making
the award after the Special Tribunal had entered into
reference. As such the award cannot be held to be
invalid on that ground.”
24. In Jatinder Nath v. Chopra Land Developers (P) Ltd.
reported in AIR 2007 SC 1401, it has been held:
“17. As stated above, one of the points raised on
behalf of the appellant herein is that ex parte award
dated 29-3-1994 was non est since it was made beyond
four months from the date when the arbitrator entered
upon the reference. We do not find any merit in this
contention. Chapter II of the Arbitration Act covers
references, in which the parties may proceed, if
nothing goes wrong, up to the stage of delivery of the
award, without the intervention of the court. This does
not mean that the court has no authority to intervene at
an early stage, should it become necessary. In the
present case, as stated above, the arbitrator entered
upon a reference pursuant to the notice given by the
appellant on 24-8-1992. The notice was given on 20-8-
1992. Therefore, Section 8 of the Act has no
application. Section 8 applies only where the parties
do not concur in the appointment. Section 8 and
Section 20 operate in different provinces. Section 20
confers power on the court to order the agreement to
be filed and to make an order of reference to the
arbitrator appointed by the parties or where they do not
agree, the court can appoint any other person of its
choice as an arbitrator. This discussion is important.
This difference between Section 8 and Section 20
shows that the reference flows from an agreement
between the parties in the cases falling under Section
8. The reference flows from the agreement in cases
falling under Chapter II of the Arbitration Act and as
long as the agreement stands, the reference remains
valid unless it is superseded by an order of the court
under Section 19. Under that section, where award
becomes void under Section 16(3) or where an award
is set aside, the court may by an order supersede the
reference and shall thereupon order that the arbitration
agreement shall cease to have effect. Therefore, till
such time as the order is passed by the court under
Section 19 superseding the reference, the same shall
remain valid till the agreement is superseded. This is
the scope of Section 8 read with Section 19 of the Act.
On the other hand, in cases falling under Section 20 of
the Act, power is conferred on the court to make an
order of reference to the arbitrator. That power is
conferred on the court which orders the agreement to
be filed before it. In a proceeding under Section 8,
disputes are presented by the parties before the
arbitrator, whereas in proceedings under Section 20,
the disputes are referred by the court. It is for this
reason that it has been repeatedly held that merely
because an arbitrator does not make an award within
the specified period of four months the court has the
power to extend the period. The award given by an
arbitrator after four months is not binding on the
parties. Such an award is vitiated as the arbitrator has
no power to make an award after four months.
However, a bare failure of an arbitrator to make an
award within the time allowed by law will not involve
the consequences of it being set aside only on that
ground. The court has ample powers in a given case to
extend the time and give life to the vitiated award by
exercising judicial discretion under Section 28 of the
Act. An application to have the award set aside on the
ground that it was made beyond time prescribed has to
be moved under the Act. No separate suit would lie for
that purpose. Section 28 is not limited only to
references to arbitration made in a suit pending before
the court. Further, the power given to the court under
Section 28 is so wide that it can extend the time even
if the award is made beyond four months from the date
of the arbitrator entering upon the reference. The only
restriction is that it must be exercised with judicial
discretion. In the present case, as stated above, the
Developer moved an application for making the award
the rule of the court on 12-4-1994. Unfortunately, the
appellant chose not to appear before the trial court. In
the circumstances, an ex parte decree came to be
passed on 31-5-2006. We have used the word
unfortunately because the appellant herein had filed
his objections before the trial court. Those objections
were dismissed as he chose to remain absent. The
appellant chose to remain absent as he had moved or
decided to move this Court in special leave petition
against the impugned judgment of the High Court on
the point of territorial jurisdiction. The judgment of the
High Court is dated 19-4-2006. The award is made the
rule of the court by the trial court on 31-5-2006 in
view of the impugned judgment of the High Court. We
have also gone through the award. We do not wish to
express any opinion on the merits, however, the fact
remains that the arbitrator entered upon the reference
on 24-8-1992. He fixed the date of hearing on 5-9-
1992. On 5-9-1992 the appellant appeared before him.
The arbitrator was absent. The award has been given
after almost fourteen months and that too after 14-10-
1993 when the appellant herein moved an application
under Section 20 of the Act for appointment of a new
arbitrator. Taking into account the above
circumstances, we set aside the ex parte order dated
31-5-2006 passed by the trial court at Faridabad
making award dated 29-3-1994 the rule of the court.
Consequently, we direct restoration of the matter to the
file of the Court of the Additional Civil Judge (Senior
Division), Faridabad in Case No. 7 instituted on 12-4-
1994 titled Chopra Land Developers (P) Ltd. v.
Jatinder Nath (Case No. 7 decided on 12-4-1994). We
may clarify that the trial court will proceed on the
basis that it has territorial jurisdiction to decide the
application made by the Developer under Sections 14
to 17 of the Act. The said application will be decided
on merits alone in accordance with law. In other
words, the trial court will re-examine the question on
merits as to whether the award given by the arbitrator
on 29-3-1994 should or should not be made the rule of
the court. The trial court will have to decide whether to
extend the period for making the award or not,
whether to supersede the reference or not. The trial
court will proceed in accordance with law. Any
observation on the merits of the case mentioned
hereinabove shall not be treated as opinion of this
Court. Further, the trial court will proceed on the basis
that it has territorial jurisdiction to decide the above
matter.”
25. In State of Punjab v. Hardyal reported in AIR 1985 SC
920, it has been held:
“8. The same points have been reiterated before
this Court. Before dealing with the points involved it
will be convenient to refer to the relevant provisions of
the Arbitration Act. Section 3 reads:
“3. An arbitration agreement, unless a different
intention is expressed therein, shall be deemed to
include the provisions set out in the First Schedule
insofar as they are applicable to the reference.”
Section 28 reads:
“28. (1) The court may, if it thinks fit, whether
the time for making the award has expired or not
and whether the award has been made or not,
enlarge from time to time, the time for making the
award.
(2) Any provision in an arbitration agreement
whereby the arbitrators or umpire may, except with
the consent of all the parties to the agreement,
enlarge the time for making the award, shall be void
and of no effect.”
Clause 3 of First Schedule provides:
“3. The arbitrators shall make their award within
four months after entering on the reference or after
having been called upon to act by notice in writing
from any party to the arbitration agreement or
within such extended time as the court may allow.”
9. A perusal of these provisions indicates that it is
open to the parties to an arbitration agreement to fix the
time within which the arbitrator must give award, but it
has to be so stated in the agreement itself. If perchance
no time has been specified by the parties in the
arbitration agreement, then by virtue of operation of
Section 3 read with clause 3 of the First Schedule the
award must be given within four months of the
arbitrator entering on the reference or after having been
called upon to act by notice in writing from any party
to the arbitration agreement or within such extended
time as the court may allow.
10. Sub-section (1) of Section 28 is very wide and
confers full discretion on the court to enlarge time for
making the award at any time. The discretion under
sub-section (1) of Section 28 should, however, be
exercised judiciously. Sub-section (2) of Section 28
also makes it evident that the court alone has the power
to extend time. It further provides that a clause in the
arbitration agreement giving the arbitrator power to
enlarge time shall be void and of no effect except when
all the parties consent to such enlargement. It is not
open to arbitrators at their own pleasure without
consent of the parties to the agreement to enlarge time
for making the award.
11. In H.K. Wattal v. V.N. Pandya (1974) 1 SCR
259 : AIR 1973 SC 2479) dealing with Section 28(1) of
the Arbitration Act this Court observed: (at p. 2481 of
AIR):
“There is no doubt that the arbitrator is expected
to make his award within four months of his
entering on the reference or on his being called
upon to act or within such extended time as the
Court may allow. Reading clause 3 of the Schedule
along with Section 28 one finds that the power to
enlarge the time is vested in the Court and not in the
arbitrator. Clause 3 and Section 28(1) exclude by
necessary implication the power of the arbitrator to
enlarge the time. This is emphasised by Section
28(2) which provides that even when such a
provision giving the arbitrator power to enlarge the
time is contained in the agreement, that provision
shall be void and of no effect. The headnote of
Section 28 brings out the force of this position in
law by providing that the power is of the Court only
to enlarge time for making the award.
Sub-section (2) of Section 28, however, indicates
one exception to the above rule that the arbitrator
cannot enlarge the time, and that is when the parties
agree to such enlargement. The occasion for the
arbitrator to enlarge the time occurs only after he is
called upon to proceed with the arbitration or he
enters upon the reference. Hence, it is clear that if
the parties agree to the enlargement of time after the
arbitrator has entered on the reference, the arbitrator
has the power to enlarge it in accordance with the
mutual agreement or consent of the parties. That
such a consent must be a post reference consent, is
also clear from Section 28(2) which renders null
and void a provision in the original agreement to
that effect. In a sense where a provision is made in
the original agreement that the arbitrator may
enlarge the time, such a provision always implies
mutual consent for enlargement but such mutual
consent initially expressed in the original agreement
does not save the provision from being void. It is,
therefore, clear that the arbitrator gets the
jurisdiction to enlarge the time for making the
award only in a case where after entering on the
arbitration the parties to the arbitration agreement
consent to such enlargement of time.”
12. The next question that crops up for
consideration is what will be the effect if a party to the
arbitration took part in the proceedings before the
arbitrator even after the expiry of four months, that is,
the period prescribed for giving the award. Some High
Courts have taken the view that in such a situation the
condition of four months? period will be deemed to
have been waived. Such a view has been taken by the
Allahabad High Court in Shambhu Nath v. Surja Devi
AIR 1961 All 180. A learned Single Judge of that High
Court observed:
“A party to an arbitration agreement who
voluntarily takes part in the arbitration proceedings
after the expiry of the period of four months will be
deemed to have waived the implied conditions as to
time.”
A similar view has been taken by the Madhya Pradesh
High Court in Shivlal v. Union of India AIR 1975
Madh Pra 40. In Ganesh Chandra v. Artatrana AIR
1965 Orissa 17 (at P.19) a Single Judge of the Orissa
High Court observed:
“If the parties, after the expiry of the four
months, submit themselves to the jurisdiction of the
arbitrators and take part in the proceeding enabling
them to pass an award, it cannot be said that the
arbitrators acted without jurisdiction. In such a
contingency, the principle of waiver and estoppel
would have full application.”
13. Once we hold that the law precludes parties
from extending time after the matter has been referred
to the arbitrator, it will be contradiction in terms to
hold that the same result can be brought about by the
conduct of the parties. The age-long established
principle is that there can be no estoppel against a
statute. It is true that the time to be fixed for making
the award was initially one of agreement between the
parties but it does not follow that in the face of a clear
prohibition by law that the time fixed under clause 3 of
the Schedule can only be extended by the court and not
by the parties at any stage, it still remains a matter of
agreement and the rule of estoppel operates. It need be
hardly emphasised that the Act has injuncted the
arbitrator to give an award within the prescribed period
of four months unless the same is extended by the
court. The arbitrator has no jurisdiction to make an
award after the fixed time. If the award made beyond
the time is invalid the parties are not estopped by their
conduct from challenging the award on the ground that
it was made beyond time merely because of their
having participated in the proceedings before the
arbitrator after the expiry of the prescribed period.
14. The policy of law seems to be that the
arbitration proceedings should not be unduly
prolonged. The arbitrator therefore has to give the
award within the time prescribed or such extended time
as the court concerned may in its discretion extend and
the court alone has been given the power to extend
time for giving the award. As observed earlier, the
court has got the power to extend time even after the
award has been given or after the expiry of the period
prescribed for the award. But the court has to exercise
its discretion in a judicial manner. The High Court in
our opinion was justified in taking the view that it did.
This power, however, can be exercised even by the
appellate court. The present appeal has remained
pending in this Court since 1970. No useful purpose
will be served in remanding the case to the trial court
for deciding whether the time should be enlarged in the
circumstances of this case. In view of the policy of law
that the arbitration proceedings should not be unduly
prolonged and in view of the fact that the parties have
been taking willing part in the proceedings before the
arbitrator without a demur, this will be a fit case, in our
opinion, for the extension of time. We accordingly
extend the time for giving the award and the award will
be deemed to have been given in time.”
26. In Hari Shanker Lal v. Shambhu Nath reported in AIR
1962 SC 78, it has been held:
“4. The answer to the question raised turns upon
the true meaning of the provisions of Rule 3 of the
First Schedule to the Act. It will be convenient at the
outset to read the relevant provisions of the Act.
Section 3 of the Act reads:
“An arbitration agreement, unless a different
intention is expressed therein, shall be deemed to
include the provisions set out in the First Schedule
insofar as they are applicable to the reference.”
Rule 3 of the First Schedule to the Act is as follows:
“The arbitrators shall make their award within
four months after entering on the reference or after
having been called upon to act by notice in writing
from any party to the arbitration agreement or
within such extended time as the court may allow.”
Section 28 says:
“(i) The court may, if it thinks fit, whether the
time for making the award has expired or not and
whether the award has been made or not, enlarge
from time to time the time for making the award.”
Section 3 of the Act makes the period prescribed in the
First Schedule for making an award a term of the
arbitration agreement. Rule 3 of the First Schedule to
the Act is couched in a mandatory form and it imposes
a duty on the arbitrators to make their award within
one or other of the three alternative periods mentioned
therein. The first construction suggested by learned
counsel for respondents is that the words “entering on
the reference” in the first clause of the rule and the
words “to act” in the second clause thereof are
synonymous and they mean the same thing. This
would make the second alternative unnecessary in
many cases, for if the words “to act” means “to enter
on the reference” there is no need for fixing two
separate periods; for, on that construction, notice
would always precede the act of entering on the
reference and, therefore, the first alternative would
serve the purpose. On that construction, the only
purpose it serves is that a party may force the pace by
calling upon the arbitrators, who are delaying to enter
on the reference, to act expeditiously. If the legislature
intended to give such a limited scope to the said rule, it
would not have used two different sets of words in the
two alternative clauses and different starting points for
computing the period of four months. The word “act”
is certainly more comprehensive than the words “enter
on the reference”. The distinction between the said two
sets of words has been brought out with clarity in
Baring-Gould v. Sharpington Combined Pick and
Shovel Syndicate (1899) 2 Ch D 80. There, on January
11, 1898, one of the parties served on the arbitrators a
notice in writing addressed to both the arbitrators
requiring them to appoint an umpire; on February 15,
1898, the arbitrators appointed an umpire; the
arbitrators did not make any award, but on April 30,
1898, the umpire made his award; it was contended
that by the notice requiring the arbitrators to appoint
an umpire, they had not been “called on to act” within
the meaning of Schedule I(c), to the Arbitration Act,
1889, and consequently the three months within which
the arbitrators were required by that clause to make
their award had not expired, and the jurisdiction of the
umpire had not arisen and his award was invalid. In
that context it became necessary to decide what the
words “called on to act” mean and whether they were
synonymous with the words “called on to enter on the
reference.” Lindley, M.R., adverting to that contention
observed at p. 91:
“The three months are to run first „after entering
on the reference’; and then, in the alternative, after
„having been called onto act’…. If they are „called
on to act’ as arbitrators, it must mean that they are
called on to do an act as arbitrators. It appears to
me that these arbitrators were „called on to act’ by
the notice to appoint an umpire; and there was very
good reason for making the period of three months
run from that time. If the arbitrators do not „enter
on the reference’, and they are „called on to act’, it
is an intimation to them that they are called on to
do the work. I cannot agree with Stirling, J. that
„called on to act’ means „called upon to enter on the
reference’. Being called on to do anything as an
arbitrator is being called on to act. That the
appointing of an umpire is an act done by the
arbitrators as arbitrators is obvious. To do that
which they could only do in the character of
arbitrators is, in my judgment, clearly within the
words, and I think it is within the sense of the
expression used in clause (c).”
No doubt in the above case, unlike in the present case,
the arbitrators were called on to act before they entered
on the reference; but that cannot make any difference
in the application of the principle, namely, that “to act”
is not the same as “to enter on the reference”, and that
the former is of a wider import than the latter. The
Allahabad High Court, in Sardar Mal Hardat Rai v.
Sheo Bakhsh Rai Sri Narain (1922) ILR 44 All 432 had
to consider the scope of Rule 3 of the First Schedule to
the Act in a different context. There, on January 14,
1919, a dispute had been referred to arbitrators; the
award was made on August 23, 1919; it was contended
that the award had not been made within three months
after the arbitrators entered on the reference, nor was it
made within three months after having been called
upon to act by notice in writing by one of the parties to
the submission. Piggott and Walsh, JJ., held that the
two clauses were alternative in the sense that when no
reference was entered upon at all then the time ran
from the notice calling upon the arbitrators to act, and
that if they had entered on the reference, they had three
months from that moment for making their award. In
that case, the notice to act was given before the
arbitrators entered upon the reference, and as the
award was made within the prescribed time from the
date of entering upon the reference, though beyond the
prescribed time from the notice asking the arbitrators
to act, they held that the award was within time on the
basis of the second alternative. In neither of the two
cases the question that now falls to be considered had
directly arisen, namely, whether, if the notice to act
was given subsequent to the arbitrators entering on the
reference, the period should be computed from the
former date or from the latter date. That question
arises in this case.
5. The said discussion leads us to the conclusion
that though entering on the reference is an act of the
arbitrators, that is not exhaustive of the content of the
word “act” in the second alternative.
6. But this wide construction, without limitation,
would defeat the purpose of Rule 3. The object of the
rule is to prescribe a time-limit in the interest of
expeditious disposal of arbitration proceedings. If
under the second alternative notice to act can be given
at any time, it would enable one of the parties to
enlarge the period of time prescribed indefinitely: not
only the time-limit prescribed would become
meaningless but one of the parties could also, without
the consent of the other, resuscitate a dead or stale
reference. This could not have been the intention of
the legislature and, therefore, a reasonable
construction should be placed upon the provision.
Such a limitation on the right of a party to reopen an
abandoned reference is implicit in the words “to act”.
A party can ask the arbitrator to act if he is legally
bound to act under the reference. If after the expiry of
four months from the date of entering on the reference
an arbitrator can no longer act, a notice given
thereafter cannot ask him to act. Realising this
difficulty, learned counsel for the respondents suggests
that an arbitrator can act even after four months,
though the award cannot be filed without getting an
extension of time from the court. But the relevant
provisions do not support this contention.
7. The third alternative in Rule 3 shows that an award
can be made within the extended time allowed by the
court. Section 28 of the Act enables the court to
extend the time for the making of the award;
extension of time may be given even after the award
has been factually made. So till the time is extended
an award cannot be made, though, when extended, the
award factually made may be treated as an award
made within the time so extended. To put it
differently, if time was not extended by court, the
document described as an award would be treated as
non est. In this view, the second alternative in Rule 3
can be invoked only in a case where a notice to act
has been given to the arbitrators either before the
arbitrators entered on the reference or after they have
entered on the reference but before the period of four
months from that date has run out.”
27. Therefore, it is found conclusively settled at rest that in case
there happens to be no extension of period as per section 28 of the
Act, the award loses its legal identity, as, after consuming the
prescribed period, it is found de-recognized in terms of condition III
of first schedule as per Section 3 of the Act. Moreover, there is no
substantive piece of material to suggest that parties have actively
participated during arbitration proceeding even after expiry of
statutory period as no proceeding has been filed by the arbitrator in
terms of Section 14(2) of the Act.
28. The second question so raised relates with legality of the
order impugned. It has been submitted that registration of the award
was necessary in the background of the event whereunder the land
having residential house standing thereupon has been allotted
exclusively to the share of Dr. Aditya Narayan Singh and in lieu
thereof, all the remaining co-sharers have been directed to receive
Rs.18,000/-. By these actions, virtually the right, title, interest and
possession of other co-sharer have been extinguished and vested to in
favour of Dr. Aditya Narayan Singh who, on account thereof,
borrowed the right, title and interest of the other co-sharer. Payment
of Rs.18,000/- in lieu thereof is suggestive of the fact that it happens
to be transfer and as it goes out of Rs.100/- therefore, as per Section
17 of the Registration Act, it has to be registered. Because of the fact
that the award is not registered one hence the learned lower court
should have rejected the award.
29. On the other hand, the learned counsel representing the
respondent submitted that arbitration agreement executed in favour of
sole arbitrator Ram Ayodhaya Singh was for partition of the joint
family property which he partitioned and happens to be in form of
award. Therefore, there happens to be no effect of transfer rather the
award happens to be mere a memorandum of partition and as such,
no registration was required.
30. In Mattapalli Chelamayya v. Mattapalli Venkataratnam
reported in (1972) 3 SCC 799 , it has been held :
“9. The contention of the appellant was that the
award is a non-testamentary instrument which purports
or operates to create and declare right title or interest
of the value of more than Rs 100 in immovable
property and hence it is compulsorily registrable under
Section 17(1)(b) of the Indian Registration Act. It is
submitted that the award not only declares the title of
the sharers in immovable property of more than rupees
hundred and upwards but also creates a charge in
immovable properties of more than that value. This
submission is only partly correct. The award so far as
it refers to the partition of immovable properties does
not purport to create or declare any interest or title in
immovable property. That is the view taken by the
High Court and we are in agreement with it. We have
already referred to the fact that the partition of the
immovable properties had been effected by the
arbitrators between May 26, 1952 and May 30, 1952
and the award merely refers to this fact in the
following terms:
“As per the partition effected by us from May
27, 1952 to May 30, 1952, of the lands, houses and
house sites belonging to your joint family and in
the possession and enjoyment of your joint family,
the lands, etc., mentioned in Schedule B (referred
to have come to you) and each of you obtained
individual and separate possession of the lands that
came to his share and you were in enjoyment
peacefully and without any disturbance or dispute.”
This recital is consistent with the parties? own
admission about the partition in Ex. A-2 namely the
second arbitration agreement, dated October 10, 1954.
The partition of the immovable properties had been
effected in about the middle of 1952 and the parties
were since then in possession of the lands, etc which
had been allotted to their share. The recital in the
award is no more than a reference to an existing fact
and does not purport to create or declare, by virtue of
the award itself, right title or interest in immovable
property. Therefore, as shown in Kashinathsa Yamosa
Kabadi, etc. v. Narsingsa Bhaskarsa Kabadi, AIR
1961 SC 1077 etc., the award cannot be regarded as
compulsorily registrable on the ground that it
embodies partition. So far as the charge is concerned it
is created for the first time by the award and it is not
disputed that the transaction of the charge would
require to be registered. On taking an account of the
funds and collections of the family the arbitrators
came to the conclusion that Chelamayya had received
Rs 14,050-7-3, in excess of his share and
Narainamurty had received Rs 8926-3-6, in excess of
his share. The arbitrators directed that they should
make good the amount which came to Rs 22,009-7-9.
This amount was distributed by the arbitrators between
Venkataratnam and Venkataswamy — the former
getting Rs 8268-11-0 and the latter Rs 14,708-15-9
and then the arbitrators directed as follows:
“We decided that for the amounts due to
Venkataratnam and Venkataswamy, Chelamayya
and Narainamurty should pay interest from August
30, 1955, till the date of award at 0-8-0 per cent per
mensem. It is decided that the amounts noted above
have to be paid on the basis of the first charge on
immovable properties that came to both and on the
basis of the personal liability.”
It will be thus seen that Chelamayya and Narainamurty
i.e. the present appellant were made liable to pay
certain amounts personally to the plaintiffsrespondents
along with interest and this amount was
made a charge on the immovable properties in the
possession of Chelamayya and Narainamurty.”
31. In M. Anasuya Devi v. M. Manik Reddy reported in (2003)
8 SCC 565, it has been held:
“4. After we heard the matter, we are of the view that
in the present case this issue was not required to be
gone into at the stage of the proceedings under Section
34 of the Act. In fact, this issue was premature at that
stage. Section 34 of the Act provides for setting aside
of the award on the grounds enumerated therein. It is
not in dispute that an application for setting aside the
award would not lie on any other ground, which is not
enumerated in Section 34 of the Act. The question as
to whether the award is required to be stamped and
registered, would be relevant only when the parties
would file the award for its enforcement under Section
36 of the Act. It is at this stage the parties can raise
objections regarding its admissibility on account of
non-registration and non-stamping under Section 17 of
the Registration Act. In that view of the matter, the
exercise undertaken to decide the said issue by the
civil court as also by the High Court was entirely an
exercise in futility. The question whether an award
requires stamping and registration is within the ambit
of Section 47 of the Code of Civil Procedure and not
covered by Section 34 of the Act.”
32. In Satish Kumar v. Surinder Kumar reported in AIR 1970
SC 833, it has been held:
“10. We may mention that an appeal was filed in
this Court against the decision of the Division Bench
of the Patna High Court, which had referred the case
of Sheonarain Lal v. Prabhu Chand ILR 37 Pat. 252
to the Full Bench for opinion on certain questions and
which decided the case in accordance with that
opinion, and the same was dismissed by this Court in
Sheonarain Lal v. Rameshwari Devi (Civil appeal
No.296 of 1960) A in which the judgment was
delivered by the same Bench which decided the case
of Uttam Singh Dugal v. Union of India (Civil Appal
no.162 of 1962). It is true that this Court in Sheonarain
Lal v. Rameshwari Devi (Civil appeal No.296 of 1960)
did not expressly rule on the validity of the answer
given by the Patna Full Bench in Sheonarain Lal v.
Prabhu Chand ILR 37 Pat. 252 that such awards did
not require registration, but decided the case on the
point whether the award in dispute in that case in fact
purported or operated to create a right, title or interest
of the value of more than Rs 100 in immovable
properties. But, after holding that the document did not
operate to create or extinguish any right in immovable
property, this Court observed:
“The position would have been otherwise if the
arbitrators had directed by the award itself that this
shop would go to Prabhu Chand without any
further document. In that case the award itself
would have created in Prabhu Chand a right to
these properties. That is not, however, the provision
in the award. In the absence of a registered
document, Prabhu Chand would get no title on the
award and Sheonarain’s title would remain in the
shop.”
In this connection we may mention two other
decisions of this Court. In Champalal v. Samarath Bai
[1960] 2 SCR 810,816 Kapur, J., speaking for the
Court, observed as follows:
“The second question that the award required
registration and would not be filed by the
arbitrators before it was registered is equally
without substance. 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. That
the award required registration was rightly admitted
by both parties.”
11. Again in Kashtinathsa Yamosa Kabadi v.
Narsingsa Bhaskarsa Kabadi [1961] 3 SCR 792,806
Shah, J., speaking for the 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 in so
far 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,
registerable under Section 17 of the Registration
Act, and would not in the absence of registration be
admissible in evidence.”
12. In view of the above decisions it is not
necessary to refute the other reasons given by both the
Full Benches, but out of respect for the learned Judges
we will deal with them. We may mention that no
comment was made in these cases on the provisions of
para 7 of Schedule 1 to the Act. This para provides:
“7. The award shall be final and binding on the
parties and persons claiming under them
respectively.”
If the award is 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.
13. We are unable to appreciate why the
conferment of exclusive jurisdiction on a court under
the Act makes an award any the less binding than it
was under the provisions of the Second Schedule of
the Code of Civil Procedure. The Punjab Full Bench
held that the registration does not in any manner add to
its efficacy or give it any added competence. We
cannot concur with these observations. If an award
affects immovable property over the value of Rs 100,
its registration does get rid of the disability created by
Section 49 of the Registration Act.
14. Regarding the difficulty pointed out by the
Punjab Full Bench that there may be many
registrations we are not called upon to decide whether
these difficulties would arise because the language of
Section 17 of the Registration Act is plain. It may be
that no such difficulties will arise because under
Section 16(2) of the Act what the arbitrator submits to
the Court is his decision and it may be that the
decision may not be registerable under Section 17 of
the Registration Act. But as we have said before we
are not called upon to decide this point.
15. In our opinion, Capoor, J., was right in
dissenting from the Patna Full Bench in Seonarain Lal
v. Prabhu Chand ILR 37 Pat. 252 and holding that the
award in dispute required registration.
16. In the result the appeal fails and is dismissed
with costs.”
33. In Lachhman Dass v. Ram Lal reported in AIR 1989 SC
1923, it has been held:
“11. The first question that requires consideration
in the instant case is whether the court could have
looked into the award for the purpose of pronouncing
judgment upon the award. In order to deal with this
question, it is necessary to refer to Section 17 of the
Act. Section 17 deals with documents of which
registration is compulsory. Section 17 of the said Act
mentions the documents which must be registered.
Section 17(1)(e), inter alia, provides:
“non-testamentary instruments transferring or
assigning any decree or order of a court or any
award when such decree or order or award purports
or operates 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 23 of the said Act provides as under:
“Subject to the provisions contained in Sections
24, 25 and 26, no document other than a will shall
be accepted for registration unless presented for
that purpose to the proper officer within four
months from the date of its execution:
Provided that a copy of a decree or order may be
presented within four months from the day on
which the decree or order was made, or where it is
appealable, within four months from the day on
which it becomes final.”
Section 25 of the said Act provides as under :
“If, owing to urgent necessity or unavoidable
accident, any document executed, or copy of a
decree or order made, in India is not presented for
registration till after the expiration of the time
hereinbefore prescribed in that behalf, the
Registrar, in cases where the delay in presentation
does not exceed four months, may direct that, on
payment of a fine not exceeding ten times the
amount of the proper registration fee, such
document shall be accepted for registration.”
Section 49 of the said Act provides as under :
“No document required by Section 17 or by any
provision 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.”
The proviso to this section deals with a suit for
specific performance with which we are not
concerned.
12. Shri Ashri contended that the document in
question was one which did not require registration.
He submitted that the High Court was right in the view
it took. He further submitted that the property in
dispute was in the joint name of the appellant and the
respondent. The dispute was whether the half of the
property held by the appellant was benami for the
respondent or a declaration to that effect could be
made by the arbitrator. Mr Ashri further submitted that
it was the case of the appellant that he was the owner
of the property in question. The award in question
recites that Shri Ajit Singh had been appointed as
arbitrator by an agreement dated March 7, 1974 by
both the parties. The award further recites that he was
appointed arbitrator to adjudicate through arbitration
“their disputes regarding property against each other”.
The arbitrator thereafter recites the steps taken and the
proceedings before him. It was further stated that the
appellant did not orally reply to the contentions of the
respondent nor did he submit his claims in writing. In
these circumstances, the award was bad. The award
stated, inter alia:
“Land of Tibbi comprising of rect. No. 13 Killa
Nos. 23(3-11), 26(1-11), 16(5-15), 17(5-14), 25(4-
4), 23/27 and 26/1 situated in Mauz Ugra Kheri,
near Chandni Bagh, which is in the joint name of
Shri Ram Lal, party 1 and Shri Lachhman Dass,
party 2. The half-ownership of Shri Lachhman
Dass shall be now owned by Shri Ram Lal in
addition to his half share owned by him in these
lands.”
The award gave certain other directions. Regarding
other claims, it was held that lands were allotted in the
names of both the brothers and in that context Rs
16,000 were spent by the respondent from his own
sources. The arbitrator stated that he admitted these
expenses at Rs 10,000 and awarded that an amount of
Rs 5000 equal to half share should be paid by the
appellant to the respondent. The other claims were also
decided by the award with which it is not necessary to
deal in the present appeal. The question is — does this
award purport or operate to create, declare or assign,
limit or extinguish any right, title or interest in
immovable property? Shri Ashri submitted that as his
client was the real owner and as Respondent 1 was
mere benamdar, and the arbitrator merely declared the
true position the award did not as such create, declare
or assign any right, title or interest in any immovable
property by the aforesaid clause in the award.
13. The Division Bench of the Madras High Court
in Ramaswamy Ayyar v. Thirupathi Naik (1904) 27
ILR Mad 43 has observed that the criterion for
purposes of registration under the Registration Act,
1877 (3 of 1877), which was in the same terms as the
provision of the present Act, was what was expressed
on the face of the document, not what incidents might
be annexed by custom to a grant of the kind.
Therefore, we have to see not what the document
intends to convey really, but what it purports to
convey. In other words, it is necessary to examine not
so much what it intends to do but what it purports to
do.
14. The real purpose of registration is to secure that
every person dealing with the property, where such
document requires registration, may rely with
confidence upon statements contained in the register as
a full and complete account of all transactions by
which title may be affected. Section 17 of the said Act
being a disabling section, must be construed strictly.
Therefore, unless a document is clearly brought within
the provisions of the section, its non-registration
would be no bar to its being admitted in evidence.
15. On a proper construction of the award, it does
appear to us that the award did create, declare or
assign a right, title and interest in the immovable
property. The award declares that half share of the
ownership of Shri Lachhman Dass shall “be now
owned by Shri Ram Lal, the respondent in addition to
his half share owned in those lands”. Therefore, the
said award declares the right of Ram Lal to the said
share of the said property mentioned in that clause. It
is not in dispute that the said property is immovable
property and it is not merely a declaration of the preexisting
right but creation of new right of the parties. It
is significant to bear in mind that the section 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.
16. Shri Ashri tried to submit that while reading the
award reasonably and fairly, it must be construed that
there was no creation or declaration of any new right
in the immovable property. What was done was only,
according to Shri Ashri, a declaration of existing right,
that is to say, Ram Lal?s full ownership of the property
in question. The section, however, enjoins registration
in respect of any document, which purports not which
intends to create a right in immovable property or
declare a right in immovable property. It is not a
question of declaration of an existing right. It is by this
award that a new right was being created in favour of
Ram Lal, the respondent herein. In that view of the
matter, in our opinion, it cannot be contended that the
award did not require registration. This question was
considered by this Court in Satish Kumar v. Surinder
Kumar (1969) 2 SCR 244. There an arbitrator
appointed by the appellants and the respondents
partitioned their immovable property exceeding the
value of Rs 100. The arbitrator applied under Section
14 of the Arbitration Act, 1940 to the court for making
the award a rule of the court. On the question whether
the award was admissible in evidence as it was not
registered it was held that the award required
registration. It was further held by Justice Sikri, as the
Chief Justice then was, and Justice Bachawat that all
claims which were the subject-matter of a reference to
arbitration merged in the award which was pronounced
in the proceedings before the arbitrator and after an
award had been pronounced, the rights and liabilities
of the parties in respect of the said claims could be
determined only on the basis of the said award. After
an award was pronounced, no action could be started
on the original claim which had been the subject
matter of the reference. The position under the
Registration Act is in no way different from what it
was before the Act came into force. Therefore, the
conferment of exclusive jurisdiction on a court under
the Arbitration Act did not make an award any less
binding than it was under the provisions of the Second
Schedule of the Code of Civil Procedure. It was
further held that the filing of an unregistered award
under Section 49 of the Act was not prohibited. What
was prohibited was that it could not be taken into
evidence so as to affect immovable property falling
under Section 17 of the Act. It was further reiterated
that it could not be said that the registration did not in
any manner add to its efficacy or give it added
competence. If an award affected immovable property
above the value of Rs 100, its registration would not
rid of the disability created by Section 49 of the Act.
The award in question was not a mere waste paper but
had some legal effect and it plainly purported to affect
or affected property within the meaning of Section
17(1)(b) of the Act. Justice Hegde gave a separate but
concurring judgment. He observed that it was one
thing to say that a right was not created, it was an
entirely different thing to say that the right created
could not be enforced without further steps. An award
did create rights in that property but those rights could
not be enforced until the award was made a decree of
the court. For the purpose of Section 17 (1)(b) of the
Act, all that had to be seen was whether the award in
question purported or operated 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. It was incorrect to state that an
award which could not be enforced was not an award
and the same did not create any right in the property
which was the subject-matter of the award. An award
whether registered or unregistered, according to
Justice Hegde, does create rights but those rights could
not be enforced until the award is made the decree of
the court. The learned Judge made it clear that for the
purpose of Section 17(1)(b) of the Act, all that had to
be seen was whether the award in question purported
or operated 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
Rs 100 and upwards in the immovable property. If it
does, it is compulsorily registrable. A document might
validly create rights but those rights might not be
enforced for various reasons. The court found that the
award in that case created right in immovable property
and it required registration.
17. This Court in Ratan Lal Sharma v. Purshottam
Harit (1974) 3 SCR 109 had to consider the question
of registration and the effect of non-registration of an
award. The appellant and the respondent therein had
set up a partnership business in the year 1962. The
parties, however, thereafter fell out. At the time the
disputes arose, the running business had a factory and
various movable and immovable properties. On 22-8-
1963, by agreement in writing, the parties referred “the
disputes of our concern” to the arbitration of two
persons and gave “the arbitrators full authority to
decide their dispute”. The arbitrators gave their award
on 10-9-1963. The award made an exclusive allotment
of the partnership assets, including the factory, and
liabilities to the appellant. He was “absolutely entitled
to the same” in consideration of a sum of Rs 17,000
plus half the amount of the realisable debts of the
business to the respondent and of the appellant?s
renouncement of the right to share in amounts already
received by the respondent. The award, stipulated that
the appellant should not run the factory unless he had
paid the awarded consideration to the respondent. The
arbitrators filed the award in the High Court on 8-11-
1963. On 10-9-1964, the respondent filed an
application for determining the validity of the
agreement and for setting aside the award. On 27-5-
1966, a learned Single Judge of the High Court
dismissed the application as time-barred. But he
declined the request of the appellant to proceed to
pronounce judgment according to the award because in
his view: (i) the award was void for uncertainty and
(ii) the award, which created rights in favour of the
appellant over immovable property worth over Rs 100
required registration and was unregistered. From this
part of the order, the appellant filed an appeal which
was dismissed as not maintainable by the Division
Bench of the High Court. The appellant preferred an
appeal by special leave to this Court against the
decision of the Single Judge declining to pronounce
judgment in accordance with the award. He also filed a
special leave petition against the judgment of the
Division Bench. In the appeal before this Court, the
appellant contended that the award was not void for
uncertainty and that the award sought to assign the
respondent?s share in the partnership to the appellant
and so did not require registration and that under
Section 17 of the Arbitration Act, the court was bound
to pronounce judgment in accordance with the award
after it had dismissed the respondent?s application for
setting it aside. It was held that the share of a partner
in the assets of the partnership, which had also
immovable properties, was movable property and the
assignment of the share did not require registration
under Section 17 of the Act. But the award in the
instant case, this Court observed, did not seek to assign
the share of the respondent to the appellant, either in
express words or by necessary implication. The award
expressly makes an 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 a
sum of Rs 17,000 plus half of the amount of Rs
1924.88 to the respondent and the appellant?s
renouncement of the right to share in the amounts
already received by the respondent. In express words
the award purported to create rights in immovable
property worth above Rs 100 in favour of the
appellant. It would require accordingly registration
under Section 17 of the Act. As the award was
unregistered, the court could not look into it. The
award being inadmissible in evidence for want of
registration the court could not pronounce judgment in
accordance with it. Section 17 of the Arbitration Act
presupposes an award which could be validly looked
into by the court. The appellant could not successfully
invoke Section 17. The award is an inseparable tangle
of several clauses and cannot be enforced as to the part
not dealing with immovable property.
18. In the instant case also, it appears to us that the
award affects immovable property over Rs 100 and as
such was required to be registered. Shri Ashri,
however, contended that the fact that the award was
unregistered had not been taken before the learned
trial Judge. Indeed, this was not urged within 30 days
and the time for filing of application for setting aside
an award under Section 30 of the Arbitration Act, was
30 days and as such this not having been taken, the
appellant was not entitled to take this point at a later
stage. It is true that in the application for making the
award a rule of the court before the learned trial Judge
this point had not been taken.”
34. In another two decisions, the first one Siromani v.
Hemkumar and others, reported in AIR 1968 SC 1299 relating to
partition amongst the members of the joint family filed a document
deed of partition having transfer of share having value of one
thousand attracts registration. In Kale v. Dy. Director of
Consolidation reported in (1976) 3 SCC 119, it has been held that
family arrangement would not attract registration and in likewise
manner mere memorandum prepared after the family arrangement
however, registration would be necessary if the terms of the family
arrangement are reduced into writing. Although, aforesaid decisions
are not on the theme of award filed by the arbitrator after conclusion
of the arbitration proceeding, but implied a condition that registration
is mandatory in all other circumstance save and except where it mere
happens to be memorandum of partition.
35. After going through the relevant judicial pronouncement
referred to above, it is apparent that the sanctity of the award has
been bifurcated in two parts. The first one with regard to identity of
the award and the other over admissibility of the award. With regard
to identity of award, it has been held that even in absence of
registration it cannot be brushed aside because of the fact that by
such award an intention of severance of joint family is found there
but so far admissibility of the award is concerned, that would not be
allowed in absence of registration when the property so involved
happens to be more than Rs.100/- and in likewise manner, whenever
question arose over its enforcement. That means to say, without
registration the award will have no teeth to bite.
36. The present controversy has been allowed to deep
furthermore in the background of plea of legal misconduct having at
the end of arbitrator while proceeding with the event of arbitration.
To substantiate the same it has been submitted at the end of the
appellants /objector that no sitting was ever made by the arbitrator
during course of proceeding with arbitration proceeding nor directed
the respective parties to furnish details and that being so, there
happens to be complete absence at the end of arbitrator while
tendering the award before the court concerned, the proceeding of the
arbitration proceeding placed before the court.
37. At the other end, the learned counsel for the respondent
submitted that the ground taken up by the appellant regarding legal
misconduct is neither persisting nor is apparent. Simply because no
proceedings has been filed by the arbitrator, it cannot be said that it
happens to be on account of legal misconduct rather it was mere
genuine lapses at the part of the arbitrator who was none else than
maternal uncle of the respective parties and further, was actively
cooperated by both the parties by way of furnishing details of the
lands possessed by the joint family, on account thereof, the event as
visualizes happens to be mere irregularity and not illegality.
38. Recently in M/s Cochin Shipyard Ltd. Vs. M/s Apeejay
Shipping Ltd. reported in 2016 (1) PLJR 92 (SC) the issue has been
taken up:
“9. In this regard, reference to a three-Judge
Bench decision in Firm Madanlal Roshanlal
Mahajan v. Hukumchand Mills Ltd., Indore AIR
1967 SC 1030 would be apposite. In the said case,
issue arose with regard to misconduct. It was
contended before this Court that the learned arbitrator
was guilty of misconduct as he had amended an issue
behind the back of the appellant. Repelling the said
submission, the Court opined :-
“Counsel then submitted that by
amending an issue behind the back of the
appellant, the arbitrator was guilty of
misconduct. This contention has no force. The
arbitrator had raised two issues. The second
issue referred to the respondent’s claim in
respect of 46-1/2 bales a claim for loss in
respect of the bales. At the time of the writing of
the award, the arbitrator corrected this issue so
as to show that the claim was for the price of the
bales. By this amendment, the appellant suffered
no prejudice. The parties well knew that the
respondent claimed the price of 46-1/2 bales and
fought the case before the arbitrator on that
footing.”
10. In the said authority, the Court referred to
the decision in Champsey Bhara Company v.
Jivraj Balloo Spinning and Weaving Company Ltd.
wherein it has been laid down :-
“An error in law on the face of the award means,
in their Lordship’s view, that you can find in the
award or a document actually incorporated
thereto, as for instance a note appended by the
arbitrator stating the reasons for his judgment,
some legal proposition which is the basis of the
award and which you can then say is
erroneous.”
Be it noted, the proposition laid down in
Champsey Bhara Company (supra) has also been
followed in Firm Madanlal Roshanlal Mahajan
(supra).
11. In K.P. Poulose (supra) while dealing with
the concept of misconduct, a three-Judge Bench was
dealing with the speaking award where the reasons had
been ascribed by the learned arbitrator. A contention
was raised that the learned arbitrator was guilty of
legal misconduct in conducting the proceedings, for
two very material documents were absolutely ignored
by the arbitrator resulting in miscarriage of justice.
The Court referred to the said two documents and took
note of the finding recorded by the arbitrator in the
award but made an observation which was inconsistent
with his conclusion that the contractor had no right to
extra
payment for the particular work. In that context, the
Court proceeded to observe as follows:-
“We now come to the award. Although
the arbitrator has held that “jetting, however, is
not an authorised extra covered by the
agreement”, he has made the following
significant observation which is inconsistent
with his conclusion that the contractor has no
right for extra payment for the jetting:-
“The Chief Engineer has rejected
the claims of the contractor on grounds of
non-inclusion of this (jetting) in the
agreement which was executed
subsequent to the direction issued by the
department to adopt jetting. The Chief
Engineer?s decision totally ignores the
next sentence in that letter „Meanwhile
you may execute the agreement?. By this
sentence the issue of extra payment for
jetting is left open even after the
execution of the agreement.”
If the above is the conclusion of the
arbitrator, rejection of the claim on the
ground that “jetting, however, is not an
authorised extra covered by the
agreement” cannot be anything but
rationally inconsistent. The award,
therefore, suffers from a manifest error
apparent ex facie.”
12. After so stating, the three-Judge Bench
opined that under Section 30(a) of the 1940 Act an
award can be set aside when an arbitrator has
misconducted himself or the proceedings and
misconduct under Section 30(a) has not a connotation
of moral lapse. It further observed that it comprises
legal misconduct which is complete if the arbitrator on
the face of the award arises at an inconsistent
conclusion even on his own finding or arrives at a
decision by ignoring the very material documents
which throw abundant light on the controversy to help
a just and fair decision. On that backdrop, the Court
opined that there was a legal misconduct.
13. In Jain Associates (supra), the Court
referred to the authority in K.P. Poulose (supra) and
Dandasi Sahu v. State of Orissa (1990 ( 1 SCC 214
and observed thus:-
“ … The arbitrator/umpire may not
be guilty of any act which can possibly be
construed as indicative of partiality or
unfairness. Misconduct is often used, in a
technical sense denoting irregularity and
not guilt of any moral turpitude, that is, in
the sense of non-application of the mind
to the relevant aspects of the dispute in its
adjudication. In K.V. George v.
Secretary to Government, Water Power
Department, Trivandrum, (1989) 4 SCC
595, this Court held that the arbitrator had
committed misconduct in the proceedings
by making an award without adjudicating
the counter-claim made by the
respondent…”
14. In this regard we may usefully refer to the
authority in Paradip Port Trust and Others v. Unique
Builders (2001) 2 SCC 680. In the said case, a
contention was raised that the award was passed in
violation of principle of natural justice inasmuch as,
certain documents were received without notice to the
Port Trust. Such a contention was raised before the
High Court and the said stand was abandoned after
perusal of the order sheet of the arbitrator which
showed that at each stage adequate opportunity was
given to both the parties.
Thereafter the court referred to the principles
stated in Jivarajbhai Ujamshi Sheth v. Chintamanrao
Balaji Puri Construction Pvt. Ltd. v. Union of India,
State of Orissa v. M/s Lall Brothers , Gujarat Water
Supply and Sewerage Board v. Unique Erectors
(Gujarat) (P) Ltd. and Another, Rajasthan State Mines
and Minerals Ltd. v. Eastern Engineering Enterprises
and Another and opined thus:-
“… It is not a case where the
arbitrator has acted arbitrarily,
irrationally, capriciously or independently
of the contract. It is difficult for us to take
a view that there has been a deliberate
departure or conscious disregard of the
contract to say that the arbitrator
misconducted himself…”
15. In the case of Ispat Engineering Foundry
Works, B.S. City, Bokaro v. Steel Authority of India
Ltd., B.S. City, Bokaro (2001) 6 SCC 347, it has been
held that reappraisal of evidence by the court is not
permissible and as a matter of fact, exercise of power
to reappraise the evidence is unknown to a proceeding
under Section 30 of the Arbitration Act. The court as a
matter of fact cannot substitute its own evaluation
and come to the conclusion that the arbitrator had
acted contrary to the bargain between the parties.”

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39. In M/s Cochin Shipyard Ltd. (supra) the Hon?ble Court also considered the jurisdiction of the court also considered the scope of Section 30 of the Arbitration Act, 1940 and further explained as follows:-

“16. At this juncture, we may refer to some other
authori ties as regards the scope of Section 30 of the
1940 Act. In Allied Constructions (supra), a threeJudge
Bench after referring to earlier judgments has
opined that an award passed by an arbitrator can be set
aside only if one or other condition contained in
Sections 30 and 33 of the 1940 Act is satisfied. The
Court further opined that the term provided
for setting aside an award under Section 30 is
restrictive in its operation and unless one or other
condition contained in Section 30 is satisfied, an award
cannot be set aside, for the arbitrator is a Judge chosen
by the parties and his decision is final. It has been
further observed that even in a case where the award
contains reasons, the interference there with would
still be not available within the jurisdiction of the court
unless, of course, the reasons are totally perverse or
the judgment is based on a wrong proposition of law
and further an error apparent on the face of the record
would not imply closer scrutiny of the merits of
documents and materials on record.

17. In Hari Om Maheshwari (supra), the Court after referring to the decisions in Arosan Enterprises Ltd. (supra) and Allied Constructions (supra) opined thus:-

 

“ From the above it is seen that the jurisdiction
of the court entertaining a petition or application for
setting aside an award under Section 30 of the Act is
extremely limited to the grounds mentioned therein
and we do not think that grant or refusal of an
adjournment by an arbitrator comes within the
parameters of Section 30 of the Act…”

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18. In Wig Brothers (supra) while dealing with the challenge under Sections 30 and 33 of the 1940 Act, the Court opined that a court while considering a challenge to an award under Sections 30 and 33 of the 1940 Act, does not sit as an appellate court and it cannot reappreciate the material on record. The Court further proceeded to state that an award is not open to challenge on the ground that the arbitrator had reached a wrong conclusion or had failed to appreciate some facts, but if there is an error apparent on the face of the award or if there is misconduct on the part of the arbitrator or legal misconduct in conducting the proceed ngs or in making the award, the court will interfere with the award. In the said case reference was made to Rajasthan State Mines and Minerals Ltd. (supra) and certain passages were quoted. We think it seemly to reproduce the said paragraphs:-

 

“22. . … The rates agreed were firm, fixed and
binding irrespective of any fall or rise in the cost of the
work covered by the contract or for any other reason
or any ground whatsoever. It is specifically agreed that
the contractor will not be entitled or justified in raising
any claim or dispute because of increase in cost of
expenses on any ground whatsoever. By ignoring the
said terms, the arbitrator has travelled beyond his
jurisdiction as his existence depends upon the
agreement and his function is to act within the limits
of the said agreement. This deliberate departure from
the contract amounts not only to manifest disregard of
the authority or misconduct on his part but it may
tantamount to mala fide action.
23. . It is settled law that the arbitrator is the
creature of the contract between the parties and hence
if he ignores the specific terms of the contract, it
would be a question of jurisdictional error which could
be corrected by the court and for that limited purpose
agreement is required to be considered. …”

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40. At the present juncture the learned counsel for the respondent drew attention towards the relevant para of the order impugned wherein the learned lower court had taken into account the effect of three sale deeds executed by Ajit Kumar Singh which is of dated 18.11.1991 and submitted that from recital of the aforesaid sale deeds it is further evident that executants had accepted oral partition having effected in the family wherein the land so detailed therein has been allotted to his share and the survey plot number enumerated therein is the survey plot number given under the share of Ajit Kumar Singh under award and so, it was not the event of oral partition rather by way of award which has been acted upon. The aforesaid event is not going to cure the melodies persisting on record, even accepting plea at the end of respondent that term of award has been substituted with oral partition.

41. After discussing and analyzing the material available on the record in consonance with the legal principle so involved as referred above, it is evident that the order impugned by which award has been made rule of the court is not at all found having legal substance, and on account thereof is set aside. Appeal is allowed. However, in the facts and circumstances of the case, parties will bear their own cost.

Patna High Court

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