Case: S.V. Chandra Pandian &amp; Others Vs. S. V. Sivalinga Nadar &amp; Others

The four appellants and respondents 1 and 2 are brothers. They were carrying on business in partnership in the name and style of Messrs. Sivalinga Nadar & Brothers and S.V.S. Oil Mills, both partnership being registered under the Partnership Act, 1932. Most of the properties were acquired by the firm of Sivalinga Nadar & Brothers. The firm of Messrs. S.V.S. Oil Mills merely had leasehold rights in the parcel of land belonging to the first - named firm on which the superstructure of the oil mill stood. Both the partnerships were of fixed durations. Disputes arose between the six brothers in regard to the business carried on in partnership in the aforesaid two names. For the resolution of theses disputes the six brothers entered into an arbitration agreement dated October 8, 1981, which was asare carrying on business in partnership together with other partners under several partnership names. We are also holding shares and managing the Public Limited Company, namely, the Madras Vanaspati Ltd., at Villupuram. Disputes have arisen among us with respect to the several business concerns, immovable and movable properties standing in our names as well as other relativesWe are hereby referring all our disputes, the details of which would be given by us shortly to you, namely, Sri B. B. Naidu, Sri K. R. Ramamani and Sri SeetharamanWe agree to abide by your award as to our disputes."the three arbitrators were fairly well-conversant with the business carried on in different names by the aforesaid two partnership firms; the first two being their Tax Consultants and the third being their Chartered Accountant. The parties, therefore, had complete faith and trust in their objectivity and impartiality2. The arbitrators accepted and entered upon the reference and after giving the disputants full and complete opportunity to place their rival points of view before the, circulated a draft award and after considering the response and reaction of the disputants thereon made their final award on July 9, 1984. The concluding part of the award reads ashereby direct that each of the parties be allotted the schedule of properties mentioned in the various Schedules A to F annexed to this award1. S. V. Sivalinga Nadar - Schedule A2. S. V. Harikrishnan - Schedule B3. S. V. Chandrapandian - Schedule C4. S. V. Kailingam - Schedule D5. S. V. Ramchandran - Schedule E6. S. V. Natesan. - Schedule FWe direct that the firms of M/s. Sivalinga Nadar & Bros., and M/s. S.V.S. Oil Mills and also the joint house property Rent Account be dissolved as at the close of business on July 14,arbitrators then proceed to set out the properties belonging to or claimed to belong to the aforesaid two firms in paragraphs 6 to 24 of their award. Paragraph 25 is a residuary clause which says that any asset left out or realised hereafter or any liability found due other than those reflected in the account books, shall, likewise, be divided and /or borne equally among the disputants. Paragraphs 26 and 27 deal with the use of the firm names. Paragraph 28 refers to the claim of Smt. C. Kanthimathy, sister of the six partners, with which we are not concerned in these appeals. Paragraph 29 refers to the business carried on by the relatives of the disputants in the names of Sri Brahmasakthi Agency and Srimagal Finance Corporation. The arbitrators have recognised the fact that even though the said business is not carried on by the disputants it would be desirable to dissolve the said firms also w.e.f. July 24, 1984 in the larger interest of peace and amity among the disputants and their relatives. Paragraph 30 refers to the properties standing in the name of the father of the six disputants i.e., partners of the two firms in question. It is stated that although initially the disputants had shown an inclination to refer the dispute concerning the properties owned by their father to the arbitration of the three arbitrators but when it was noticed that the deceased had left a will disposing of the properties the need for resolution of the dispute through arbitration did not survive. In paragraph 31 the arbitrators have determined their fees and have directed the disputants to bear them equally. At the end of the award the properties falling to the share of the disputants have been set out in detail in Schedules A to F referred to earlier3. After the award was made on July 9, 1984, O.P. No. 230 of 1984 was filed by S. V. Chandrapandian and others for a direction to the arbitrators to file their award in Court which was done. Thereupon, the applicants, S. V. Chandrapandian and others filed a Miscellaneous Application Non. 3503 of 1984 requesting the Court to pass a decree in terms of the award. Before orders could be passed on that application, O. P. Nos. 247 and 275 of 1984 were filed by S. V. Sivalinga Nadar and S. V. Harikrishnan respectively under Section 30 of the Arbitration Act to set aside the award. The said applications came up for hearing before a learned Single Judge of the High Court. Various points were raised and decided by the learned Single Judge but it would be sufficient for our purpose to refer to the on which we are called upon to decide in these group of appeals. That is to be found in paragraph 71 of the judgment of the learned Single Judge. The contention urged was that having regard to the allotment of partnership properties under the award, it was incumbent that the award should have been registered as required by Section 17(1) of the Registration Act and since it lacked registration, the court had no jurisdiction to make it the rule of the Court and grant a decree in terms thereof4. The learned Single Judge answered the aforesaid contention in paragraph 72 of his judgment aslearned counsel for the respondents also contended that the award falls under Schedule I Article 12 of the Stamp Act and the allocation of properties owned by partnership firm on dissolution to the erstwhile partners is not partition of immovable properties. In this connection, learned counsel for the respondents placed reliance on the decision reported in Addanki Narayanappa v. Bhaskara Krishtappa 1959 AIR(AP) 380 : 1959 Andh LT 377 :(1959) 1 AWR 300 (FB)] which decision has been confirmed in Addanki Narayanappa v. Bhaskara Krishtappa. It was submitted by the learned counsel for the respondents that the contentions with regard to stamp and registration put forward by the petitioner cannot be accepted. It is to be pointed out that the award has been submitted for registration long ago on October 27, 2984 itself and it is stamped and if there is any deficiency, the registering authority could direct proper stamp to be affixed and therefore I feel there could be no impediment for the award being made a rule of the Court and a decree being passed in terms of the award as contended by the learned counsel for the respondents."learned Single Judge thereafter proceeded to make the final order in paragraph 78 of the judgment in the followingon a careful consideration of the material available and the contentions of either side it has to be decided that Application Non. 3505 of 1984 in O.P. No. 230 of 11984, filed by the petitioners therein praying for a decree in terms of the arbitration award dated July 9, 1984 has to be allowed and O.P. No. 247 and 275 of 1984 and the application filed in those two petitions, i.e., Application Nos. 3474, 3476, 5030, 5031, 5032, 2827, 2828, 3773, 3762, 3874, of 1984 and 4886 4887 of 1985, are dismissed. The petitioner in O.P. No. 230 of 1984 and the applicants in Application No. 3505 of 1984 are directed to take steps for getting the award registered. The parties in all these proceedings are directed to bear their own costs."It may here be mentioned that after the making of the award one of the arbitrators Shri. B. B. Naidu passe way on October 20, 1984. At the request of some of the parties the surviving arbitrators presented the award before the District Registrar, Madras, for registration on October 27, 1984. Even though the signature of the deceased arbitrator was identified by the surviving arbitrators the document was kept pending for registration. In the meantime, on January 23, 1987, advocate for Sivalinga Nadar served notice on the Registrar not to register the document and threatened to take proceeding in Court if the document was registered. It will thus be seen that the registration of the document was blocked by one of the disputants Sivalinga Nadar on the premise that the High Court had in O.P. No. 247 of 1984 granted a stay against the operation of the award on September 5, 19846. Against the judgment of the learned Single Judge, the matter was carried in appeal to a Division bench of the High Court of Madras. The Division Bench of the High Court reversed the aforesaid finding recorded by the learned Single Judge and came to the conclusion that the award required registration under Section 17(1) of the Registration Act. In this view that it took, it did not think it necessary to go into the other contentions dealt with by the learned Single Judge. It held that since the award required registration and was in fact not registered no proceeding for making the award the rule of the Court could be entertained because in the absence of a valid award the Court had no jurisdiction to grant a decree in terms of the award. It, however, took note of the fact that the award was presented for registration but on account of the conduct of one of the disputants it could not be registered as the registering authority was threatened with civil consequences. The correspondence in this behalf was sought to be placed on record as additional evidence but the Division Bench thought that would not alter the situation since the fact remained that the award was not registered even on the date of its judgment. It, therefore, made the following observation in paragraph 46 of thehowever, does not mean that if the award is validly registered and presented to be made a rule of the Court in accordance with law, the Court cannot entertain the same."this view of the matte the Division Bench allowed the appeal and set aside the impugned judgment of the learned Single Judge and held that as the award was not registered it could not be made the rule of the Court. It made no order as to costs. It is against this decision of the Division Bench of the High Court that the present appeals by special leave (we also grant special leave in SLP No. 9408 of 1992) have been filed

Court's reasoning:
18. In the present case, the Division Bench of the High Court concluded that the award required registration because of an erroneous reading of the award. The Division Bench after extensively reproducing from the Schedules A to F of the award proceeded to state in paragraph 39 that the allotments are exclusive to the brothers and they get independent rights of their own under the award in the properties allotted under the schedule and hence it is not a case purely of assignment of the share in the partnership but it confers exclusive rights to the allottees. On this line of reasoning it concluded that the award required registration. The court next pointed out in paragraph 42 of the judgment that the award also partitions certain immovable properties jointly owned by the disputants. In this connection it has placed reliance on paragraph 10(c) of the award which reads asOther Lands and Buildings and House properties belonging to S. V. Sivalinga Nadar & Bros., standing in the name of the firms and/or otherwise jointly owned by the disputants. These have been allotted by us to one or other or jointly to some of the disputants as per schedules annexedreasons which weighted with the Division Bench of the High Court ion concluding that the award requires registration appear to be based on an erroneous reading of the award. We have carefully read the award and it is manifest therefrom that the Arbitrators had confined themselves to the properties belonging to the two firms in question and scrupulously avoided dealing with the properties not belonging to the firm. This is manifest from paragraph 15 to 18 of the award. However, properties standing in the names of disputants, individually or jointly, and others as benamidars but belonging to the firm also came to be included in the distribution of the surplus partnership asset under the award. That is the purport of paragraph 10(c) extracted hereinabove. When on settlement of accounts the residue is required to be divided amount the partners in proportions in which they entitled to share profits under sub-clause (iv) of clause (b) of Section 48, the properties will have to be allocated to the partners as falling to their share on the distribution of the residue and, therefore, the Arbitrators indicated in the schedules the properties falling to the share of each brother. Mere statements that a certain property will now exclusively belong to one partner or the other, as the case may be, cannot change the character of the document or the nature of assignment because that would in any case be the affect on the distribution of the residue. The property falling to the share of the partner on the distribution of the residue would natural then belong to him exclusively but so long as in the eye of law it is money and not immovable property there is no question of registration under Section 17 of the Registration Act. Besides, as stated earlier, even if one looks at the award as allocating certain immovable property since there is no transfer, no partition or extinguishment of any right therein there is no question of application of Section 17(1) of the Registration act. The reference to other land and buildings and house properties jointly owned by the disputants in clause (c) of paragraph 10 of the award merely indicates that certain properties belonging to the firm stood in the names of individual partners or in their joint names but they belonged to the firm and, therefore, they were taken into account for the purpose of settlement of accounts under Section 48 of the Partnership Act and distributed on the determination of the residue. The award read as a whole makes it absolutely clear that the Arbitrators had confined themselves to the properties belonging to the two firms and had scrupulously avoid other properties in regard to which they did not reach the conclusion that they belonged to the firm. On a correct reading of the award, we are satisfied that the award seeks to distribute the residue after settlement of accounts on dissolution. While distributing the residue the Arbitrators allocated the properties to the partners and showed them in the scheduled them in the schedules appended to the award. We are, therefore, of the opinion that on a true reading of the award as a whole, there is no doubt that it essentially deals with the distribution of the surplus properties belonging to the dissolved firms. The award, therefore, did not require registration under Section 17(1) of the Registration Act