SHIKHARCHAND JAIN

I'.

DJ GAMBER JAIN PRABAND KAR!NI SABHA AND OTHERS

Jan11a1J' 11, 1974. [P. JAGANMOHAN REDDY, S.N. Dw1vEDI AND P.K. Gosw."11, JJ.]

Civil Procedure Code-Amend111ent of the written shUe1ne11t during pe11d1:11cy of the appeal-Whether Appellate Court can order amend111e11t of the written statement in l'ieft' of cltange of circwnstances not co11te111plated at the time of i11stitu1ioJt of the suit.

The respondent no.1, Digamber Jain Praband Karini Sabha instituted a suit agJinst the appellant for recovery of possession of certain agricnltllral land, Respondent Smt. Rajrani was the malik maqbooza of the land who, in 1954, gifted the land by a registered gift deed in favour of respondent no. 1. The third and fourth rspondcnts were cultivating the land. Respondent no. 1 sued them for possession but they pleaded that the appellant had sub-let the land to them. The suit was decreed.

Their appeals \verc disnlisscd. The appellant thereafter had filed a suit against respondent no. l for a declaration that the gift made by the 5th respondent in favour of the 1st respondent was void; but the suit was dismissed for default.

The suit from which the present appeal arose, was filed and all the defendants except Smt. Rajrani filed their written statement. The trial court decreed the suit in favour of respondent no. 1. On appeal, the first appellate court allowed the appeal but on a second appeal, the High Court reversed the decree of the appllate court and restored the decree of the trial court and hence the present appeal before this Court.

Remanding the case to the trial court,

HELD : (1) In his written statement, the appellant had admitted Smt. Rajrani's ownership of the land. But he had pleaded that he became the owner of the land by adverse possession for more than 12 years from 1937. The khasra entries from 1937- 38 to 1941-42 and 1943-44 to 1951·52 are all in favour of Smt. Rajrani. Further, assuming that the appellants• adverse possession started in 1937 and continued till

1949, he becan1e the owner of the land in dispute in 1950. -Nevertheless, he did not move the appropriate revenue authority to correct the entries in the record of rights. Again one of his own witnesses, has admitted that the appellant had been paying rent of the disputed land on behalf of Smt. Rajrani till 1958-59. Had he became an owner by adverse possession in 1950, he would never have paid rent on bcha1f of Smt. Rajrani.

Maharaja Srischandra Nandy v. &ajna1h Jugal Kishore 62, Indian Appeals 40; Deity Paltabhiramaswanzy v. S. H::inym1yya, A.LR. 1959 S. C. 57 and H. R.

Raniacha11dra11 Ayyar v. Ramalingani Clzettiar, [1963) 3 S.C.R. 604, referred to.

(2) During pendency of the appeal, as Smt. Rajrani died in 1968, the appeallant filed an application for substitution of himself as her legal representative in place of Smt. Rajrani. No order has yet been made on this application. Now he has made another application in the course of hearing seeking amendment of his written statement in view of the changed circumstances to the effect that as the limited owner

Smt. Rajrani died, he is entitled to the disputed property as the sole reversioner and respondent no. 1 and no right in the said lands.

lt is, therefore open to the Court, including a court of appeal to take notice of events which have happened afrer the institution of the suit and afford relief to the parties.

Rai Charan lv/amlal and 01101/ier \', Bisll'anath 111andal and others A.LR. 1915 Cal. I 03, referred to.

(3) Under .the circumstances, since the death of Smt. Rajrani creates a fresh [cause of action to the appellant who claims to be her next reversioner, it will be just and proper to allow the amendment. Therefore, the amendment is allo\\'ed and

the case will go back to the trial court and the trial court will give reasonable time to the respondent to file a reply to the amended written statement. The trial Court will then record its findings and the new plea raised by the appellant and shall forward them to this Court through High Court within 4 months of the receipts of the record.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1598 of 1967.

Appeal by special leave from the judgment and decree dated October 17, 1966 of the Madhya Pradesh High Court in Second Appeal No. 521 of 1962. V. M. Tarkunde, S. L. Jain and M. S. Gupta, for the appellant.

M. C. Chagla, S. K. Bagga, S. Bagga, Yash Bagga and Rani 4rora, for the respondents.

The Judgment of the Court was delivered by

DWIVEDI, J.-Jt is the defendant's appeal. The plaintiff Digamber Jain Praband Karini Sabha, Panagar, instituted a suit against the defendant Shikharchand Jain for recovery of possession over certain agricultural lands situate in mauza Jmlai. Smt. Rajrani, fifth defendant (now dead) was the proprietor of a Patti in mauza Imlai. The land in dispute fell in that Patti. It was her sir. The area of the land is 12 86 acres. Smt. Rajrani became malik maqbooza of the land on the abolition of the proprietary rights in the State in 1951. On Janua1y 18, 1954, she gifted the land by a registered gift deed in favour of the plaintiff (which is registered under the Madhya Pradesh Public Trust Act, 1951). Ram Das and Ballu, the third and fourth defendants, were cultivating the land. The plaintiff instituted a suit against them on July 15, 1954. In the said suit they pleaded that Shikharchand had sub-let the land to them. The suit was decreed. Their appeals were dismissed on May 4, 1957. Shikharchand also instituted a suit on November 3, 1955 against the plaintiff and Smt. Rajrani for a declaration that the gift made by her would be void after her death.

We are told that the suit has been dismissed in default. As the aforesaid defendants are disputing the plaintiff's title, the suit was instituted. All the defendants except Smt. Rajrani filed a joint written statement. They denied the plaintiff's title to the land. Smt. Rajrani held a limited estate in the land and the gift deed would be ineffective after her death. She could not gift the entire property.

Shikbarchand has been in possession over the land since 1937 as an owner thereof and has acquired rights of an owner by adverse possession for more than 12 year!. Smt. Rajrani filed a separate written statement. She has supported the case of the plaintiff. The trial court framed a number of issues. Of them, only two now survive for consideration. '.fhey are issues Nos. I and 4.

Issue No. 1 is :

"l(a) Whether the defendant No. 5 Smt. Rajrani was the owner of the suit fields till 18-1-1954?

(b) whether she was also in possession of the suit fields till 18-1-1954 ?

4. (a) whether defendant No. 1 (Shikharchand) has been in exclusive, continuous and uninterrupted possession of the suit

A fields since 1937 adversely t() the defendant N(). 5 and the plaintiff?

"(b) whether, therefore, the defendant N(). I has p>rfected his title by adverse possessi()n ?

Issue No. 1 was answered in fav()ur ()f the plaintiff. Issue N(). 4 was answered against Shikharchand. The trial court held that he was in possession for and on behalf of Smt. Rajrani and n()t in bis own right. The trial court granted a decree for possessi()n to the plaintiff.

Defendants Nos. 1 to 4 went in appeal. The first appellate court all()wed the appeal and set aside the decree of the trial court and dismissed the suit, The plaintiff then filed a second appeal in the High Court of Madhya Pradesh. The High Court has reversod the decree of the first appellate court and restored that of the trial court. Hence this apj:Jeal by Shikharchand.

The first appellate court has held that Shikharchand was in possession over the disputed land since 1937 and has become the ()Wfter

thereof by adverse possession before Smt. Rajrani transferred the land to the plaintiff. Sri Tarkunde, counsel for Shikharchand, says that it is a finding .of fact and that accordingly the High Court could not interfere with it in second appeal. It appears that the High Court was aware that it was interfering with a finding of fact in a second appeal. So the High Court has explained. "(Defendants 1 to 4) clearly failed to establish by positive evidence the adverse possession of (Shikbarchand) for more than twelve years at any point of time so as to rebut the statutory presumption of possession arising in favour of the appellant and its predecessor-in-title Smt. Rajrani. Therefore, with due respect to the learned appellate Judge, I might say that the question has been absolutely misconceived by him and he has not approached the que, tion in a proper and legal manner with a view to apply the law to the facts found established from the record. In this view, the decree passed by the first appellate court cannot be sustained either on facts or law." So according to the High Court the finding recorded by the first appellate court was arrived at by overlooking the statutory presumption of possession in favour of the plaintiff and Smt. Rajrani and his apprc>ach to the issue. before him was not proper and legal. In other words, the High Court intervened under cl. (c) of s. 100(1) of the Code of Civil Procedure. According to the High Court, the finding of the first appellate court suffered from a "substantial error or defect in the procedure provided ...• by any other law for the time being in force, which may possibly have produced error or defect in the decision of the case upon the merits."

It is now to be seen whether the first appellate court's finding really falls within the grip of s. IOO(!Xc) of the Code of Civil Prc>ce dure. In his written statement Shikbarchand has admitted Smt.

H Rajrani's ownership of the land. But he has pleaded that he has become the owner of the land on account 'of adverse possession for more than 12 years from 1937. The burden of proving the acquisition of ownership by adverse possession lay on him. The Khasra

entries from 1937-38 to 1941-42 and 1943-44 to 1951-52 arc all in A favour of Smt. Rajrani. They show that she was in possession Over the land during those years. Khasra is a record of right according to s. 45(2) of the Central Province• Land Revenue Act, 1917. Section 80(3) of that Act provides that entries in a record of risgt shall be presumed to be correct unless the contrary is shown. Tuts providon raises a pre•umption cf correctnes• of the aforesaid Khasra entries.

The burden of proving adve1•e posses!ion acco1dinqly Will a heavy B one. The judgment of the fhst appellate couit shows that it has not kept in mind this aspect while examining the evidence. In the ti-st step, it has proceeded to assess the evidence adduced by Shikharchand.

After discussing' that evidence, it has recorded a finding that he was in possession. Thereafter, in the second step, it has proceeded to take the view that no reliance can be placed on Khasra entries. It has summed up the discussion thus : C

"(A) II these witnesses (of Shikharchand) have stated that the 'possession of the fields was with Shikhatchand. Their statements are further supported by documentary evidence and, therefore, there is no room for any doubt that the possession was not with Shikharchand. It is ttue that in Patwari papers Mst.

Rajrani's name appears and that the dues were deposited on behalf of Mst. Rajrani. But in my opinion the entries in.

Khasra and the fact that the receipts we1 e issued in the naine of Mst. Rajrani would not by themselves establish the fact of pbssession. Tt is settled law that entries in Khasra have only presumptive value, and it is difficult to conclude from these entries that the possession was with Mst. Rajrani. The falsity of the entries in Khasra is clear from the fact that fr9m 1937 to 1947 the name ofMst. Raj1ani appeared iiilhe Khasra Panchsala and yet Mst. Rajrani's admission in D/1. shows that she was . not in possession. This fact is enough to show that no reliance could be plaeed on the Khura entries."

As already pointed out, this passage shows that the first appeUate court proceeded in the reverse order. Moreover, the Kh11Sra entries have been discarded solely for the reason that Smt. Rajrani has admited in Ex. D/I that she was not in possession. But Ex. D/l has been entirely misunderstood by the first appellate court. Exhibit D/I is a 'copy of the plaint filed by Smt. Rajrani in a suit for profits against Shikharchand. Shikharchand was Lambardar of the muhal in which the Patti belonging to Smt. Rajrani was situate~ Jn the first paragraph of her plaint she has mentioned this fact. Thereafter she went on to say that she was entitled "to get her share of profits from the defendant." In paragraph 2 she has said : "That the defendant is in possession of all the sir and khudkasht land of her full ...... patti of the village ...... that as the defendant did not render an account, nor paid any thing in spite of repeated demands and a notice by the plaintiff, he is liable to pay interest by way of damages at the rate of -/8/- per cent per month" and the amount detailed in the schedule of accounts attached to the plaint. In the schedule she has sllown the amount of rent recovered by Shikharchand from the tenonts. 1 She has also shown the estimated income from sir and

khudkasht land belonging to her. After making certain deductions, a total amount of Rs. 318/7 /- was claimed from Shikharchand. The suit was filed in July 1942. The suit for profits related to a period between 1938-39 and 1940-4!. We do not think that paragraph 2 of the plaint can be read in the manner it has been read by the first appellate court. It was a suit for profits by a co-sharer against the Lambardar. It was not a suit for mesnc profits which an owner of land may claim from a trespasser. It was really a suit for accm111ts from the Lambardar. So it is not possible to spell out from paragraph 2 an admission from Smt. Rajrani that Shikharchand was Jl1 adverse possession over her sir land. Further Shikharchand did n?t

file a copy of his own written statement, nor a copy of the judgment m the suit. If he had denied his possession over her sir land, the suit for profits from sir land would have been dismissed. If he had pleaded adverse possession, over her sir, then also her suit for profits from sir land would have been dismissed. If, on the other hand, the suit for profits of sir land were decreed, it would follow that Shikharchand was held to be in permissive possession and not in adverse possession.

Jn the result, we are of opinion that the first appellate court was wholly wrong in discarding the Khasra entries on the solitary statement m paragraph 2 of her plaint. The High Court could, therefore, interfere with its finding under s. lOO(l)(c).

The High Court has considered afresh the entire evidence on record and bas held that Shikharchand has failed to establish by poSltive evidence his adverse possession for more than 12 years. The appellant could not show to us that the finding is not ustainable on the evidence on record. It is not necessary for us to reappraise that evidence again, but we may point out two circumstances which heavily tell against the appellant. Assuming that his adverse possession started in 1937 and continued till 1949, he became the owner of the land in dispute in 1950. Nevertheless he did .not move the appropriate revenue authority for the correction of the entries in the record of rights. He did not get the name of Smt. Rajrani expunged from the record and his name entered therein. Again, Beni Ram, one of his witnesses, has admitted that Shikharchand had been paying rent of the sir land of Smt. Rajrani on behalf of Smt. Rajrani until 1958-

59. Had he become an owner by adverse possession in 1950, he would never have paid rent on behalf of Smt. Rajrani.

Counsel for the appellant has referred us to Maharaja Srischandra Nandy

v. Baijnath Juga/ Kishore,(1) Deity Pattabhiramaswamy \'.

S. Hanymayya(2) and R. Ramachandran Ayyar v. Rama/ingam Chettiar(3) But none of these cases help the appellant on the facts of this case.

In the last case this Court said : "(l)f in dealing with a question of fact .the fir_st appellat~ court has placed the onus on a wrong party and its findmg of fact 1s the result, substantially of this wrong appro ach, that my be regarded as a defect in procedure under s. IOO(l)(c)." The same view has been expressed in Ladli Prasad Jais val. v. Kamal

Distillery Co. Ltd.(4) In this case the High Court has ut a finding

(I) 62 Indian Appeals 40.

(3) (1963]

3 S. C. R. 604.

(2) A. I. R. 1959 S.C. 51.

(4) [1964( 1 S. C. R. 270.

of fact recorded by the lower apJ>l'llate court inter alia on the ground that the burden of proof was wrongly placed on the plaintiff. Shah J., while affirming the judgment of the High Court, said: "A decision of the first appellate court reached after placing the onus wrongly .... is not conclusive and a second appeal lies to the High Court against that decision."

In Jai Krishna v. Babu. (1) it was held that possession of a nonowner after partition is adverse. No exception may be taken to this preposition. But we fail to understand how this case will assist the appellant.

We now pass on to another aspect of the case. During pendency of this appeal Smt. Rajrani died on December 5, 1965. The appellant first filed C.M.P. No. 1377 of 1969 for his substitution in place of Smt. Rajrani, the fifth respondent, as her legal representative. No order has yet been made on this application. Now he has made another application in the course of hearing. By this application he seeks to amend his written statement. He wants to make this addition to the written statement :

"12(a) that the gift deed dated 18-1-1954 was executed by Smt.

Rajrani who was a limited owner having a widow's estate on the date of the execution of the gift deed. Assuming though not admitting the said gift deed was valid it is submitted that the above gift could at most enure for the life of the defendant No. 5.

The plaintiff cannot have any rights in the suit lands after the death of Smt. Rajrani and the defendant as the sole surviving reversioner becomes the owner of the lands and resist. the claim of the plaintiff.

(b) that the geneology of the family is as under :

Dakhandji (died issuelcss)

Bihari Lal .

Bhagwan'dasji

Nathulalji (died issue1ess, husband of defandant l No.2)

MonLlalji (died issueless)

Shrichandji

Kaplhandji

Shikharchld

(plaintiff) "12(c) that the deceased Smt. Rajrani could not transfer the suit property even for the religious and charitable purposes as it was the entire property she had and such a transfer is not binding on the defendant after her death."

(1) A.I.R. 1933 Nagpur 112.

s. JAIN v. PRABAND SABHA (Dwivedi,, J.) 107

He also prays for the renumbering of present paragraph 12 as paragraph 13 of the written statement. Sri Tarkunde has submitted that if the assertions made in the new paragraph 12 are accepted by the Court, the respondent's suit will have to be dismissed.

I_t is also said that the new situation arising on the death of Smt. Rajrani during pendency of the appeal can be considered by the Court in order to mould the decree in the suit out of which this appeal has arisen. In our view, Mr. Tarkunde, is right in this submission. Ordinarily, a snit is tried in all its stages on the cause of action as it existed on the date of its institution. But it is open to a Court (including a court of appeal) to take notice of events which have happened after the institution of the suit and afford relief to the parties in the changed circumstances where it is shown that the relief claimed originally has (I) by reason of subsequent change of circumstances become inappropriate, or (2) where it is necessary to take notice of the changed circumstances in order to shorten the litigation, or (3) to do complete justice between the parties (See Rai Charan Manda/ and another v.

Biswanath Manda/ and others)(').

Sri Chagla, counsel for the respondent, has submitted that the application for amendment of the written statement should not be allowed. It is said that the appellant has alleged in his written statement that Smt. Rajrani could not transfer the disputed land as she was a limited owner having a widow's estate. The trial court had framed specific issue on this aspect and recorded a finding against the appellant. The trial court said : "(Smt. Rajrani) is a jain widow and therefore she is competent to transfer the suit lands for rcligioas and charitable purposes." The trial court decreed the suit. The appellant filed an appeal. The appeal was allowed and the decree of the trial court was set aside. The respondent then filed a second appeal in the High Court. M already stated, the High Court set aside the decree of the first appellate court and restored the decree of the trial court. It is said by Sri Chagla that as the appellant did not challenge the validity of the gift either in the first appellate court or in. the High Court, he should not be allowed to challenge it now by an amendment of his written statement. We find it difficult to accept this submission of Sri Chagla, Even if the assertions made in the application for amendment of the written statement are found to ht" true, the appellant could not have non-suited the respondent during the life time of Smt. Rajrani. The gift was valid during her life time ..

Her death gives a fresh cause of action to the appellant who claims. to be her next reversioner. It appears to us that it will be just and proper to allow the amendment sought for. It will shorten litiga-- t1on.

S~ Chagla has also pointed out that the respondent has acquired! new nghts under the Land reform measures passed by the Madhya Pradesh Legislature. It will be open to the respondent to file a reply to the amendment when the case goes back to the trial court and raise an~ plea which according to it is likely to defeat the appellant's new claim.

(I) A.J.R. 1915 Cal. 103

So we allow the application for amendment of the written statement on payment of Rs. 200 as costs to the respondent. The case will now go back to the trial court. The trial court will allow reasonable time to the resp:indent to file a reply to the amended written

tatement. Thereafter the trial court will record evidence on the

new plea raised by the appellant by his amendment and by the respondent in its reply. The trial court will then record its findings and forward them to this Court through the High Court. The trial , court should send the findings within four months of the receipt of the record from this Court. C.M.P. No. 1377 of 1969 is dismissed as infructuous on receipt of findings, the appeal will be listed for hearing before the Court.

s.c.

Case Remanded.

• •

SHIKHARCHAND JAIN

DIGAMBER JAIN PRABAND KARINI SABHA AND OTHERS

P. JAGANMOHAN REDDY

Civil Procedure Code

Rajrani

[1963) 3 S.C.R. 604

October 17, 1966

Madhya Pradesh High Court

V. M. Tarkunde

S. L. Jain

M. S. Gupta

M. C. Chagla

S. K. Bagga

S. Bagga

Yash Bagga

Rani 4rora

DWIVEDI

Shikharchand Jain

Janua1y 18, 1954

Madhya Pradesh Public Trust Act, 1951

Ram Das

Ballu

July 15, 1954

Shikharchand

May 4, 1957

November 3, 1955

Shikbarchand

Shikharchand

High Court of Madhya Pradesh

Tarkunde

s. 100(1)

the Code of Civil Procedure

H Rajrani

s. 45(2)

Land Revenue Act, 1917

Section 80(3)

Shikharchand

Shikhatchand

Khasra

Lambardar

Beni Ram

(1963]

3 S. C. R. 604

Shah

December 5, 1965

Chagla

Chagla


RATAN LAL SHARMA

PURSHOITAM HARIT January 11, 1974

[P. JAGANMOHAN REDDY, S. N. DWIVEDI

AND P. K. GOSWAMI, JJ.]

1 O!)

Arbitratinn Act. 1940, Sec. 11-Award-Whether, one assig11ing share in partnership or one creating rights in i11m1ovable propetty worth more than Rs. 100/·.

Registration Act 1908-Requireme11t of registration under Sec. 17.

Held, court cannot pronounce judg111en1 in tern:s of uwegistered award creatii1g rights in in1111ovable property ll'orth abo~'e Rs. 100/·

The appellant and the respondent set up a _partnership business in December,

1962. The partners soon fell out. At the time the disputes arose, the running busi~ ncss had a factory and various movable and immovable properties. On August '.!2, 1963, by agreement in wriling, the parties referred "the disputes of our concern" to the arbitration of two persons and &ave .. the arbitrators full authority to decide our dispute". The arbitrators gave their award on September IO, 1963.

The award made an exclusive allotment of the partnership assets, inclu~ ding 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 rea~ Usable debts of the business to the respcndent and of the appellants renouncement of the right to share in the amounts already received by the respondent. The award, stipulated that the appclfant should not run the factory unless he has paid the awarded consideration to the respondent. The arbitTators filed the award in the High Court on November 8, 1963. On September 10, 1964, the respondent filed an application for dctennining 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 decUned 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.

unrgistered. 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. In this Court, the appeUant ?referred an appeal by special leave against the decision of the sing]e Judge declining to pronounce judgement in accordance with the award. He also filed a special Jea"ve petition against the judgement of the DiVision Bench. In the appeal before this Court, the appellant contended : (i) that the award.is not void for uncertainty; (ii) that the award seeks to assign the respondent's share in the part~ nerhsip to the appellant and so does not require registration; (iii) that under sec. 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.

Dismissing both the appeal and the special leave petition,

HELD : (i) The share of a partner in the assets of the partnership, which has also inuno\'able properties, is movable property and the assignment of the share does not require registration under Sec. 17 of the Registration Act. But the award in the instant case does not seek to assign the share of the respondent to the appellant, either in express words or by necessary iaiplication. The award expressly makes an exclusive allotment of the partnership assets including the factory and liabilities to the

ppellant. It gees further and makes him "absolutely entitled to the same''. in consideration of a sun1 of Rs. 17000/- plus hair of the amount of Rs. 1924 88P. to the respondent and the appeUant's renouncement of the right to share in the amounts already received by the respondent. In express words the award purports to create rights in immovable. property worth above Rs. lOOJ in favour of the appellant. It would accordingly require registration under Sec. 17 of the Registration· Act. [111D; 112F]

Aiudhia Parshad Ram Porshad v. Sha111 Sunder and Ors. A. I. R. 1947, Labore 13 A at p. 20, Addanki Narayan v. Bhaskara Krishtappti, [1966]3 S.C.R. 400 at pp 406 and 407 and Commissioner of lncon1e Tax v. West Bengal, Calcutta v. J11ggi!al Ka111alapat !19671 S.C.R. 784at p. 790referred to.

Sotish Kumar and Others v. Surinder Kumar and others [1969] 2 S.C.R. 244 at pp. 251-252 applied.

(ii) As the award is unregistered, the Court could not look into it. The award being inadmissible in evidence for want of registration the Court couJd not

:Q' pronounce judgment in accordance with it. Sec. 17 of the Arbitration Act preiiuppose an award which can be validly looked into by the Court. The appellant cannot successfully invoke sec. 17. The award is an inseparable tangle of several clauses and cannot be enforced as to the part not dealing with immovable property. {112Hl

CIVIL APPELLATE JURISDICTION : CIVIL Appeal No. 1625 of 1967.

Appeal by Special leave from the judgment and order dated the C 27th May, 1966 of the Calcutta High Court in Award Case No. 320

1963.

S. K. Mehta, K.R. Nagaraja, M. Qamaruddin and Vinod Dhawan, for the appellant and petitioner.

B.P. Maheshwari, Suresh Sethi and R. K. Maheshwari, for the respondent.

D The Judgment of the Court was delivered by

DWJVEDI, J.,-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 E partners in December 1962. As usual with many partnerships, the partner 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.

F They filed the award in the high Court on November, 1963. On September I 0, 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 judgement according to the award. From this

part of the order the appellant filed an appeal, but the appeal was G 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 judgementin accordance with the award. He has also filed the special leave petition against the judgment of the Division Bench. .

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 (I) ai:cording to

R. L. SHARMA Y. P. HARIT (Dwivedi, J.) 111

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 : (l) the award is not void for uncertainty; (2) the award seeks to assign the respondent's share in the partnership to the appellant and so does not require regi•tration; and (3) under s. 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 is not necessary to express any opinion on the first argument as we arc 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.

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 bf the share does not require registration under s. 17 Registration Act. (See Ajudhia Parshad Ram Parshad v.

Sham Sunder and others (I) Addanki Narayanappal v. Bhaskara Kristappa(') and Commissioner of Income-tax, west Bengal Calcutta v. Juggila/

Kamalapal (3). But the award with which we are ;:oncerned docs 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 :

(I) The factory and all assets and propert; es 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 \he factory.

(2) Dr. Ratan Lal Sharma shall have no claim for the re ccipts assigned by Sri Purushottam Harit.

(3) Payment of all cheques issued by Dr. Ratan Lal

harma on behalf of Modern Processors to Shri Purushottam Harit shall be treated invalid_

(4) Dr. Ratan Lal Sharma shall pay Rs. 17,000/-(Rupee• seventeen thousand only) to Shri Purushottam Harit.

(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.

(I) A. I. R. 1947 Lahore 13 at p. 20.

(2) [1966] 3 S. C.R. 400 at pp, 406 and 407.

(3) [1967) r s. c. R. 784 at p. 790.

(7) The following sums when realised shall be divided A equally between Dr. Ratan Lal Sharma and Shri Purushottam Harit.

NRme of Debtors

I. Associated Engineering Co, rporation

2. Link Machinery Ltd.

3. Clendent Products

4. Minerva Engineering Works

Total

Amount

Rs. 284·17 Rs. 1079·28 Rs. 47·25 Rs. 514·18

Rs. 1924·88

N.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".

The word "not" is a slip here. The patties conceded before the learned Single Judge that the award deals with immovable property worth above Rs. JOO/-. So if it is found by us that_ the award purports to croate rigl1ts in the appellant over immovable property, it would require registration under s. 17 Registration _Act. (See Satish Kumar and othPl's v. Surinder Kumar and others (I).

On_ the dissolution of the partnership or with the retirement of a partner frofu 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 subsistance 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 assigner. (See Narayanappa (supra) at p. 407).

Now the award does not transfer the share of th~ 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 p. to the respondent and the appellant's 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 ; nto it. If the Court could not, as we held, look in to it, the Court could not pronounce judgment in accordance with it. Sections 17 Arbitration Act presupposes an award which can be validly looked into by the Court. The appellant cannot successfully invoke s. 17.

(I) [196912 S. C.R. 244 al pp. 251-252.

R. L. SHARMA v. P. l!ARIT (Dwivedi, /.) 113

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. cla use(!), that is, for the creation ofabsolute 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 had paid the awarded consideration to the respondent.

For the reasons a'ready discussed, we agree with the learned sintfe Judge that the award requires repistration and not being registered, no judgment could be pronounced upon it. Jn the view that we have taken, the special leave petition cannot be admitted.

The appeal as well as the special leave petition are accordingly dismissed. The respondent shall ger his costs in the appeal.

S.B.W.

Appeal and }Jftitio'n disn1iss£'d.

9.,-M852 Sup. Cl/74

RATAN LAL SHARMA

PURSHOITAM HARIT

P. JAGANMOHAN REDDY

S. N. DWIVEDI

P. K. GOSWAMI, JJ.

Sec. 11

Registration Act 1908

Sec. 17

August '.!2, 1963

September IO, 1963

November 8, 1963

September 10, 1964

May 27, 1966

sec. 17

Sec. 17

Registration Act

Sec. 17

[1969] 2 S.C.R. 244

Sec. 17

sec. 17

S. K. Mehta

K.R. Nagaraja

M. Qamaruddin

Vinod Dhawan

B.P. Maheshwari

Suresh Sethi

R. K. Maheshwari

DWJVEDI

New Bengal Engineering Works

August 22, 1963

R.N. Sharma

C.M. Sharma

September 20, 1963

September I 0, 1964

R. L. SHARMA Y. P. HARIT

Dwivedi

s. 17

s. 17

Registration Act

Ratan Lal Sharma

Ratan Lal Sharma

Purushottam Harit

Ratan Lal

harma

Ratan Lal Sharma

[1966] 3 S. C.R. 400

Link Machinery Ltd.

Clendent Products

Minerva Engineering Works

Ratan Lal

Sharma

s. 17

Narayanappa

clause 4

S. 17

Registration Act

Sections 17

s. 17

clause 8