Case: Ratan Lal Sharma Vs. Purshottam Harit

Dwivedi, J.1. Before us there is this associate litigation the civil appeal and the special leave petition for admission. Its history runs thus: There is the New Bengal Engineering Works. It has a factory and various movable and immovable properties. It is a running business. The business was set up by the appellant and the respondent as partners in December, 1962. As usual with many partnerships, the partners did not march in step for long. Within six months they fell out. On August 22, 1963, they could, however, agree to refer their disputes to the arbitration of two persons, Sri R. N. Sharma, and Sri C. M. Sharma. The agreement is in writing. It referred "the disputes of our concern" and gave "the arbitrators full authority to decide our dispute". The arbitrators gave their award on September 20, 1963. They filed the award in the High Court on November, 9, 1963. On September, 10, 1964 the respondent filed an application for determining the validity of the agreement and for setting aside the award. On May 27, 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. From this part of the order the appellant filed an appeal, but the appeal was dismissed as unmaintainable by a Division Bench. The appellant has now preferred the present appeal against the decision of the Single Judge declining to pronounce judgment in accordance with the award. He has also filed the special leave petition against the judgment of the Division Bench.2. We shall first take up the civil appeal. The Special Leave Petition will become infructuous or anaemic after our decision for or against the appellant. The learned Single Judge refused to pronounce judgment in accordance with the award because (1) according to him the award was void for uncertainty, and (2) the award, which created rights in favour of the appellant over immovable property worth over Rs. 100/- required registration and was unregistered. Counsel for the appellant has advanced three arguments: (1) the award is not void for uncertainty; (2) the award seeks to assign the respondents share in the partnership to the appellant and so does not require registration; and (3) under Section 17 of the Arbitration Act, the Court was bound to pronounce judgment in accordance with the award after it had dismissed the respondents application for setting it aside.3. It is not necessary to express any opinion on the first argument as we are of opinion that the award requires registration and, not being registered is inadmissible in evidence for the purpose of pronouncing judgment in accordance with it. So we pass on to the remaining two arguments of the appellant.4. It is well settled now that the share of a partner in the assets of the partnership which has also immovable properties is movable property and the assignment of the share does not require registration under Section 17, Registration Act. (see Ajudhia Pershad Ram Pershad v. Sham Sunder AIR 1947 Lah 13 at p. 20 (FB); Narayanappa v. Bhaskara Krishnappa, (1966) 3 SCR 400 at pp. 406 and 407 = (AIR 1966 SC 1300 ) and Commr. of Income-tax, West Bengal, Calcutta v. Juggilal Kamalapet) (1967) 1 SCR 784 at p. 790 = (AIR 1967 SC 401 ). But the award with which we are concerned does not seek to assign the share of the respondent to the appellant either in express words or by necessary implication. We set out the relevant portion of the award:"(We) make our award as follows:(1) The factory and all assets and properties of New Bengal Engineering Works are exclusively allotted to Dr. Ratan Lal Sharma, who is absolutely entitled to the same. He will pay all liabilities of the factory.(2) Dr. Ratan Lal Sharma shall have no claim for the receipts signed by Sri Purushottam Harit.(3) Payment of all cheques issued by Dr. Ratal Lal Sharma on behalf of Modern Processors to Shri Purshottam Harit shall be treated valid.(4) Dr. Ratan Lal Sharma shall pay Rs. 17,000/- (Rupees seventeen thousand only) to Shri Purshottam Hari.(5) Shri Purushottam Harit shall render all assistance to Dr. Ratan Lal Sharma for realising all the dues of the said firm as and when necessary and for transfer of tenancy right of the Factory in favour of Dr. Ratan Lal Sharma.(6) All papers and documents in respect of the said business shall be made over to Dr. Ratan Lal Sharma.(7) The following sums when realised shall be divided equally between Dr. Ratan Lal Sharma and Shri Purushottam Harit.Name of DebtorsAmount1.Associated Engineering Corpn.Rs. 284.172.Link Machinery Ltd.Rs.1079.283.Clendent ProductsRs. 47.254.Minerva Engineering WorksRs. 514.18TotalRs.1924.88N. B. (8) The factory should not be run by Dr. Ratan Lal Sharma until and unless the payment of the award is not made to Shri Purushottam Harit".5. The word "not" is slip here. The parties conceded before the learned Single Judge that the award deals with immovable property worth above Rs. 100/-. So if it is found by us that the award purports to create rights in the appellant over immovable property, it would require registration under Section 17, Registration Act. (See Satish Kumar v. Surinder Kumar, (1969) 2 SCR 244 at pp. 251-252 = (AIR 1970 SC 833 ). On the dissolution of the partnership or with the retirement of a partner from the partnership the share of the partner in the partnership assets is equal to the value of his share in the net partnership assets after deduction of all liabilities and prior charges. Even during the subsistence of the partnership, he may assign his share to another partner. In that event the assignee partner would get only the right to receive the share of profits of the assignor. (See Narayanappa (supra) at p. 407 (of 1966-3SCR 400 = AIR 1966 SC 1300 )).6.Now the award does not transfer the share of the respondent, interpreted in the aforesaid sense, to the appellant in express words. Nor such is the necessary intendment of the award. It expressly makes an exclusive allotment of the partnership assets including the factory and liabilities to the appellant. It goes further and makes him "absolutely entitled to the same" in consideration of a sum of Rs. 17000/- (See clause 4) plus half of the amount of Rs. 1924-88 to the respondent and the appellants renouncement of the right to share in the amounts already received by the respondent. So in express words it purports to create rights in immovable property worth above Rs. 100/- in favour of the appellant. It would accordingly require registration under S. 17, Registration Act. As it is unregistered, the Court could not look into it. If the Court could not, as we hold, look into it, the Court not pronounce judgment in accordance with it. Sec. 17, Arbitration Act presupposes an award which can be validly looked into by the Court. The appellant cannot successfully invoke Section 17.7.The award is an inseparable tangle of several clauses and cannot be enforced as to the part not dealing with immovable property. As already stated, various other relevant clauses constitute consideration for clause (1), that is, for the creation of absolute rights in the factory and other properties in favour of the appellant. This is perfectly clear from the note of the arbitrators appended to the award as clause 8. The appellant is not given a right to run the factory unless he has paid the awarded consideration to the respondent.8. For the reasons already discussed, we agree with the learned Single Judge that the award requires registration and not being registered, no judgment could be pronounced upon it. In the view that we have taken, the special leave petition cannot be admitted.

Decision:
0[ds]2. We shall first take up the civil appeal. The Special Leave Petition will become infructuous or anaemic after our decision for or against the appellant.It is not necessary to express any opinion on the first argument as we are of opinion that the award requires registration and, not being registered is inadmissible in evidence for the purpose of pronouncing judgment in accordance with it. So we pass on to the remaining two arguments of the appellant.4. It is well settled now that the share of a partner in the assets of the partnership which has also immovable properties is movable property and the assignment of the share does not require registration under Section 17, Registration Act. (see Ajudhia Pershad Ram Pershad v. Sham Sunder AIR 1947 Lah 13 at p. 20 (FB); Narayanappa v. Bhaskara Krishnappa, (1966) 3 SCR 400     at pp. 406 and 407 = (AIR 1966 SC 1300  ) and Commr. ofWest Bengal, Calcutta v. Juggilal Kamalapet) (1967) 1 SCR 784     at p. 790 = (AIR 1967 SC 401  ). But the award with which we are concerned does not seek to assign the share of the respondent to the appellant either in express words or by necessary implication.The word "not" is slip here. The parties conceded before the learned Single Judge that the award deals with immovable property worth above Rs.So if it is found by us that the award purports to create rights in the appellant over immovable property, it would require registration under Section 17, Registration Act. (See Satish Kumar v. Surinder Kumar, (1969) 2 SCR 244     at pp.= (AIR 1970 SC 833  ). On the dissolution of the partnership or with the retirement of a partner from the partnership the share of the partner in the partnership assets is equal to the value of his share in the net partnership assets after deduction of all liabilities and prior charges. Even during the subsistence of the partnership, he may assign his share to another partner. In that event the assignee partner would get only the right to receive the share of profits of the assignor. (See Narayanappa (supra) at p. 407 (of400 = AIR 1966 SC 1300  )).6.Now the award does not transfer the share of the respondent, interpreted in the aforesaid sense, to the appellant in express words. Nor such is the necessary intendment of the award. It expressly makes an exclusive allotment of the partnership assets including the factory and liabilities to the appellant. It goes further and makes him "absolutely entitled to the same" in consideration of a sum of Rs. 17000/(See clause 4) plus half of the amount of Rs.to the respondent and the appellants renouncement of the right to share in the amounts already received by the respondent. So in express words it purports to create rights in immovable property worth above Rs. 100/in favour of the appellant. It would accordingly require registration under S. 17, Registration Act. As it is unregistered, the Court could not look into it. If the Court could not, as we hold, look into it, the Court not pronounce judgment in accordance with it. Sec. 17, Arbitration Act presupposes an award which can be validly looked into by the Court. The appellant cannot successfully invoke Section 17.7.The award is an inseparable tangle of several clauses and cannot be enforced as to the part not dealing with immovable property. As already stated, various other relevant clauses constitute consideration for clause (1), that is, for the creation of absolute rights in the factory and other properties in favour of the appellant. This is perfectly clear from the note of the arbitrators appended to the award as clause 8. The appellant is not given a right to run the factory unless he has paid the awarded consideration to the respondent.