1968 (9) TMI 119 - SC - Indian Laws

Summary

Issues Involved:

1. Requirement of registration for an arbitration award under Section 17(1)(b) of the Indian Registration Act, 1908.
2. Admissibility of an unregistered and insufficiently stamped arbitration award in evidence.
3. Legal effect and enforceability of an arbitration award before it is made a rule of the court.

Issue-wise Detailed Analysis:

1. Requirement of Registration for an Arbitration Award:

The primary question before the court was whether an arbitration award under the Indian Arbitration Act, 1940, requires registration under Section 17(1)(b) of the Indian Registration Act, 1908, if it effects partition of immovable property exceeding the value of Rs. 100. The High Court of Punjab at Chandigarh held that such an award does require registration, dissenting from the Patna High Court's decision in Seonarain Lal v. Prabhu Chand. The Patna Full Bench had reasoned that an award does not require registration because it has no legal effect unless a decree is passed in terms of the award. However, this reasoning was found contrary to the Supreme Court's unreported decision in M/s. Uttam Singh Dugal & Co. v. The Union of India, which established that an award has legal force and is not a mere waste paper. The Supreme Court concluded that an award affecting immovable property over Rs. 100 must be registered to be admissible in evidence.

2. Admissibility of an Unregistered and Insufficiently Stamped Arbitration Award:

The court addressed the objection that the award dated October 21, 1956, was inadmissible in evidence due to insufficient stamping and lack of registration. The Subordinate Judge and the Additional District Judge upheld this objection, leading to the dismissal of the application to make the award a rule of the court. The Supreme Court reaffirmed that an unregistered award affecting immovable property cannot be admitted in evidence, aligning with previous decisions in Champalal v. Mst. Samarath Bai and Kashinathsa Yamosa Kabadi v. Narsinghsa Bhaskarsa Kabadi. These cases emphasized that while an unregistered award can be filed, it cannot be used to affect immovable property unless registered.

3. Legal Effect and Enforceability of an Arbitration Award:

The Supreme Court clarified that an award is final and binding on the parties as per Paragraph 7 of the First Schedule to the Arbitration Act. The court disagreed with the Full Bench decisions of the Patna and Punjab High Courts, which had held that an unregistered award has no legal effect. The Supreme Court emphasized that an award creates rights in property, although these rights cannot be enforced until the award is made a decree of the court. The court distinguished between the creation of rights and their enforceability, stating that Section 17 of the Registration Act concerns the creation of rights, not their enforcement.

The court concluded that the award in question, which purported to create rights in immovable property of value exceeding Rs. 100, was compulsorily registerable. The appeal was dismissed, affirming that the award required registration to be admissible in evidence and enforceable.

Conclusion:

The Supreme Court upheld the requirement for registration of an arbitration award affecting immovable property exceeding Rs. 100 under Section 17(1)(b) of the Indian Registration Act, 1908. The court emphasized that an unregistered award is inadmissible in evidence and cannot create enforceable rights. The appeal was dismissed, reinforcing the necessity of registration for the legal effect and enforceability of arbitration awards.