P L D 1967 Karachi 508 (PLP)

"(vi) any decree or order of a Court except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject matter of the suit or proceeding." Before the said amendment which was introduced by section 10 of the Transfer of Property (Amendment) Supplementary Act, 1929, the aforesaid clause (vi) had provided that nothing in clauses (b) and (c) of subsection (I) applies to any decree or order of a Court and any award. The effect of non‑registration of documents required to be registered is contained in section 49 which. as it stood before the amendment made to it by Registration (Amendment) Ordinance (XLV of 1962), read as follows: "

49. No document required by section 17 or by any provision of the Transfer of Property Act, 1582 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: Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882, to be registered may be received as evidence of a contract in a suit for specific performance under Chapter 11 of the Specific Relief Act, 1877, or as evidence of part performance of a contract for the purpose of section 53‑A of the Transfer of Property Act, 1882, or as evidence of any Collateral transaction not requited to be effected by registered instrument." However, by the said amending Ordinance this section was recast and it now reads‑.‑‑ "

49. No document required to be registered under this Act or under any earlier law providing for or relating to registration of document shall‑ (a) operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title, or interest, whether vested or contingent, to or in immovable property, or (b) confer any power to adopt, unless it has been registered." It may be mentioned here that the award in this case was made in 1963 and it is the amended section 49 which would apply in the present case.

11. The cases to which I am now going to refer are all Indian decisions and, of course, they do not take into note the effect of the amendment to section

49. I may also state that before the enactment of the Arbitration Act of 1940 the matter was governed by the Second Schedule to the Civil Procedure Code. It is pertinent to refer to this fact because in some of the decisions the view has been taken that after the coming into force of the Arbitration Act of 1940 the position with regard to the arbitration awards has been materially changed.

12. I shall first deal with the question without reference to the amendment to section 49 as shown above. The view taken in a number of cases is that the elect of the amendment to sub‑clause (vi) of subsection (2) of section 17 of the Registration Act is that an award which embodies a transaction under section 17(1)(6) is no longer exempt from registration and that such an award must be registered otherwise it is invalid. A distinction, however, has been made in cases of an award made upon a reference by the Court under the former provision contained in para. 17 of the Second Schedule to the C. P. Code which is analogous to section 20 of the Arbitration Act and also where a reference has been made in a pending suit. It has been held that an award upon such reference in either of the two instances would be a part of the judicial proceedings and the exemption contained even in the amended sub‑clause (vi) of. sub section (2) of section 17 would be applicable. Let me now proceed to examine some of the decided cases. In the case of Jitendra Nath De v. Nagendra Nath De (A I R 1934 Cal. 815), a Division Bench of the Calcutta High Court brought out the distinction between an award made upon the reference by the Court and a private award It was contended before their Lordships that the effect of the 1929 amendment to section 17(2)(vi) whereby the words "and any award" had been deleted was not to make the registration of private awards compulsory but to place them on the same footing as awards of arbitrators made through the intervention of Courts because in neither case the award would be operative without a decree passed on it. In repelling this contention their Lordships held: "The answer to this argument is that whereas an award made by arbitrators under orders of the Court his no force until a decree is passed on it a private award, if it is valid, is operative even though neither party has sought to enforce it by a regular suit. A private award therefore falls within the class of documents specified in section 17(1)(6), Registration Act, whereas an award of the other class does not, by the amendment the exception having been removed the award in the present case, satisfying as it does the requirement as to value, is compulsorily registerable. Section 49 of the Act would rule it out if it is sought to use it as evidence of a transaction affecting the property." In a later decision a Division Bench of the same Court in the case of Nani Bala Saha v. Ram Gopal Saha (A I R 1945 Cal. 19), held that a private award is a non‑testamentary instrument and would require registration if it comes within section 17(1)(6). If it is not registered‑it must to taken that the award does not exist and no question of cither setting it aside or remitting it to the arbitrator, therefore, can arise. It was pointed out that section 49(c) of the Registration Act prevents the party from adducing such an award in support of an application for filing it in Court with a view to get a decree on it. Their Lordships referred to the earlier decision of that Court which has been reproduced above, where the distinction between a private award and award made upon an order by the Court had been brought put and observed as follows :‑ "It is not necessary for us to consider whether the view expressed in I L R 62 Cal. 201 (equivalent to A I R 1934 Cal. 815) that an award made in pursuance of a submission in a suit would not require registration is correct or not, as in the case before u: the award is not of that character."

13. A Full Bench of the Judicial Commissioner's Court of Sind in the case of Hassanand v. Judhomal (A I R 1936 Sind 79.), held that an award made in pursuance of a reference filed in Court under para. 17, Schedule 2, C. P. C. purporting to create a mortgage or lien over immovable property of the value of Rs. 100 or upwards is not compulsorily registerable but an award made without the intervention of Court does require registration. The reason for this distinction given was that an award in a suit being a part of a judicial proceeding does not require registration on the principle laid down by the Privy Council in I L R 20 All.

171. In that case the Privy Council had held that section 17 of the Registration Act does not apply to proper judicial proceeding whether consisting of pleadings filed by the parties or orders made by the Court. Bindesri Naik v. Ganga Saran Sahu (I L R 20 All. 171).

14. The same question was also the subject‑matter of consideration before a Full Bench of the Nagpur High Court in the case of Muhammad Azizullah Khan v. Muhammad Noorullah Khan (A I R 1939 Nag. 233). Their Lordships in that case were considering an appeal arising out of a suit under para. 20, Schedule 2, C. P. C. which is equivalent to the present section 14 of the Arbitration Act. In this case, an award had been made without the intervention of the Court. Their Lordships dealing with the question of the validity of the award which was unregistered posed the question thus: "The question then resolves itself into this does the award have to be proved under para. 20, and if so, does section 49, Registration Act, shut it out when it is not registered and when it relates to property of the requisite value?" They, however, went on to add: "We wish to make it clear that we are not dealing with a case such as may arise where the arbitration is on a suit where the award is a step in the course of a suit. To such case different considerations apply. The filing in such a case is by the arbitrators and no contest is contemplated. On the other hand, where the arbitration is without the intervention of the Court the award is filed by a party. Para. 20 makes provision for an application to file. That application initiates a contest. That contest has an essential part of the proof of the award." Dealing with the argument in the case with reference to section 49 of the Registration Act that when a person applies to have an award filed in Court he is nut endeavouring to affect the property in it; he is only asking that a piece of paper be tiled in Court, their Lordships observed; "This contention, though ingenious, has, we think, been negatived by their Lordships of the Privy Council in 33 C W N 1150 (James R. R. Skinner v. Robert Hercules Skinner). That was a case in which a plaintiff who had obtained a sale‑deed which required registration and which therefore he was unable to enforce, brought a suit for specific performance and endeavoured to use the deed, not for the purpose of enforcing the sale, but in proof of an agreement to sell. Their Lordships declined to countenance such a subterfuge. They stated at page 1155 that an instrument which requires registration cannot be used in any legal proceedings to bring abut indirectly the effect which it would have had if registered. It is not to 'affect' the property and it is not to be received as evidence of any transaction 'affecting' the property." In this view of the matter their Lordships of the Full Bench upheld the decision of the lower Court which had declined to file the award.

15. We may now pause to consider the salient points of these decisions. These may be broadly summaries thus: (1) An award affecting immovable property of the requisite value if mace with the intervention of the Court, that is either in a pending suit or upon an agreement having been filed in Court, does not require registration as the award is a part of the judicial proceeding. (2) An award in such a case made without the intervention of the Court affects immovable property and requires to be registered and if not registered it is inadmissible having regard to the provisions of section 49 of the Registration Act. (3) A private award made without the intervention of the Court is operative by itself."

16. I shall stow refer to two decisions in which the contrary view has been taken: The first of these is a judgment by a Division Bench of the Patna High Court in the case of Sia Kishori v. Bhairvi Nandan (A I R 1953 Pat. 42). The learned Chief Justice with whom the other Judge agreed after referring to the Privy Council decision in the case of Muhammad Niwaz Khan (18 Cal. 414 (P C)), went on to observe thus: "The decisions to which I have referred illustrate the state of the law previous to the coming into force of the Arbitration Act, 1940. A valid award was an operative by itself and there were two ways in which it could be enforced. It might be made a rule of the Court by an application under the Civil Procedure Code or under the Arbitration Act, 1899, as the case may be, or the party might be, or the party might treat it as an independent source of title and enforce it by suit. In either case it was open to the opposite‑party to challenge the validity of the award. The remedy by suit was taken away by section 32 of the Arbitration Act, 1940." His Lordship then after review in a large number of decisions in which the effect of section 32 of the Arbitration Act had been considered, went on to hold as follows: "After the coming into force of the Arbitration Act, 1940, the remedy by suit is taken away by section 32 of the Act, further, the Act insists that within vie time limited by Art. 178, Limitation Act, 1903, an application must be made in Court for the filing of the award. And the award becomes operative only when it is made a rule of the Court. Thus, the legal affect of the award as a decree finally determining the right of the parties does not remain unless the procedure prescribed by the Act is followed and a judgment is pronounced followed by a decree of the Court under section 16."

17. The second case is a Full Bench decision of the Patna High Court Seonarain v. Prubhuchand (A I R 1958 Pat. 252). In this case the Full Bench after considering at length the whole scheme of the Arbitration Act of 1940 and its various provisions recorded its conclusion thus: "It is apparent from a review of the sections of the Arbitration Act of 1940 that, once a reference has been male to arbitration even without the intervention of the Court, the Court under the Act, has got exclusive jurisdiction in regard to the validity, effect or existence of the reference and toe award, and the jurisdiction‑of all other Courts is ousted. Further, section 17 of the Arbitration Act shows in unmistakable terms that an award, though given without the intervention of the Court, has to be made a rule of the Court, and the Court will pronounce judgment on the basis of the award, and a decree shall follow that is to sly, the award by itself is of no effect. It follows that an award as such, does not purport or operate to create any right, title or interest in the property dealt with by it within the meaning of section 17(1)(b) of the Registration Act, and therefore an award even though it be in respect of immovable property worth one hundred rupees and upwards, does not require registration. Looked at from another point of view, namely, that an award is only effective when a decree follows the judgment upon the award, such an award may be covered by the exception mentioned in section 17(2)(vi) (any decree or order of a Court) of the Registration Act. Such an award, even if not registered, can be enforced so as to enable the Court to pronounce the judgment according to it under section 17 of the Arbitration Act."

18. There is considerable force in the two decisions of the Patna High Court noted above in view of the provisions of the Arbitration Act, 1940 which have been fully brought out in the Full Bench decision and which I do not propose to repeat. Considering that even in a private arbitration the proceedings are subject to control of the Court under the provisions of the Act at all its stages and the award to be enforceable has to be made a rule of the Court as defined by the Act and also considering the bar contained in section 32 of the Act, the conclusion becomes difficult to resist that there is any good reason for distinguishing between an award made upon a private reference and an award made after the arbitration agreement had been filed into Court. If an unregistered award affecting immovable property is held to be non‑existent it is difficult to see how such an award, though made after' the intervention of Court, can be made the basis of a decree. But this is what was held in the two Full Bench cases of the Nagpur High Court and the Sind J. C.'s Court quoted above. But my task has been lightened by the amendment to section 49 of the Registration Act by the amending Ordinance of 1962, the effect of which I shall now proceed to examine.

19. I have quoted the section as it stood before the amendment as well as the amended section. One of the effects of the amendment is that a document which is compulsorily registerable under section 17 of the Registration Act is no longer inadmissible in evidence. This result has been achieved by the omission of the former clause (c) of section

49. We then come to the former clause (a) which barred an unregistered document from affecting any immovable property comprised therein. This has been substituted by a new clause (a) whereby an unregistered document (required to be registered under the Act or any earlier law) does not operate to create, declare, assign. limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, to or in immovable property. It would, therefore, be noticed that the broader expression contained in the former clause (a) to section 49, that is "affect any immovable property comprised therein" has been substituted by specific words which bar the operation of the un registered document for purposes stated therein. Now, the question is does an award which has been made the rule of the Court operate to create, declare, etc., any right, title or interest to or in immovable property. I am inclined to the view that it can so operate only when it is made the rule of the Court. It may we be that after an award bas been made on a private reference the parties may by an agreement accept it and if it affect immovable property have it registered and act upon it, but that in my opinion would not be by operation of the award itself. It would be the result of agreement between the parties who decided to act upon it. Such a result can be achieved even without an award. For example, there are frequently cases of private partition of immovable property by consent of parties. The award, therefore, does not become effective and operate in the manner provided by the section until it has been filed. In Court and made the rule of the Court. It would be noticed from the decisions which have been cited above and according to which a private award affecting immovable property is required to be registered before it is filed in Court, that the main difficulty in the way of holding otherwise was felt to have been caused by reason of the bar contained in the former section 49 of the Registration Act; whereby an unregistered document could not be received as evidence of any transaction affecting such property. Again and again it has been pointed out that because of this bar the Court cannot look at the document. That bar is now removed. The document, therefore, becomes admissible. That being so, once it is filed in Court it becomes the duty of the Court to deal with it under the provisions of the Arbitration Act.

20. For the reasons given my conclusion is that the Court is not precluded from dealing with the award under section 17 of the Arbitration Act for want of registration. I, therefore, reject this last contention as well of Mr. Brohi. In the result the objections are over‑ruled and the award is made the rule of the Court. Considering the close relationship between the parties I make no order as to costs. K. B. A. Award made rule of Court.