Jitender Mohan Malik vs Ravi Bhushan Malik
2008 Latest Caselaw 888 Del

           THE HIGH COURT OF DELHI AT NEW DELHI

%                                   Judgment delivered on: 02.07.2008

+             EA 133/2008 in Ex. P. 196/2007

JITENDER MOHAN MALIK                              ... Decree Holder

                                  - versus -

RAVI BHUSHAN MALIK                  ... Judgment Debtor/Applicant

Advocates who appeared in this case:
For the Decree Holder : Mr M. Qayam-ud-din
For the Judgment Debtor : Mr A. K. Singla, Sr Advocate with Mr Pankaj Gupta

CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED

      1.

Whether Reporters of local papers may be allowed to see the judgment ? YES

2. To be referred to the Reporter or not ? YES

3. Whether the judgment should be reported in Digest ? YES

BADAR DURREZ AHMED, J

1. This application has been filed on behalf of the judgment

debtor under Section 47 read with Section 151 of the Code of Civil

Procedure, 1908 for dismissal of the execution petition on the ground

that the Award dated 25.05.2006 is not executable. It has been

contended on behalf of the judgment debtor that the arbitration

Award dated 25.05.2006 cannot be executed inasmuch as it is not

registered under the Registration Act, 1908. According to the

judgment debtor the Award brings about a partition of immovable

property by deciding upon a dispute between family members and by

valuing the interest of the family members in money terms and

requiring one member to compensate the other after allotting portions

of the property to them. It is contended that such an Award requires

compulsory registration under Section 17(1)(b) of the Registration

Act, 1908.

2. It is also contended on the part of the judgment debtor that

since the Award in question seeks to partition immovable property,

such an Award would fall under Section 2(15) of the Indian Stamp

Act, 1899 and consequently would have to be stamped in accordance

with Article 12 read with Article 45 of Schedule I to the said Act.

The Award has been prepared on non-judicial stamp of Rs 100/- only

and, therefore, the same is insufficiently stamped. Consequently, the

Award cannot be admitted in evidence and is liable to be impounded.

3. It is also contended on behalf of the judgment debtor that

the said Award cannot now be registered even if parties sought to

have it registered in view of the fact that the period prescribed under

Section 23 of the Registration Act, 1908 as also the extended period

stipulated in Section 25 of the Act, has elapsed.

4. Lastly and without prejudice to the above, it was contended

on behalf of the judgment debtor that the Award prescribes a

prohibitive rate of interest in case there is a delay in the payment of

the difference (Rs 15,20,000/-) of the cost of land allotted to the

parties. The stipulations by way of interest contained in the Award

are to the effect that no interest would be payable for a period of 120

days. However, after the expiry of 120 days, interest at the rate of

18% p.a. is payable by the judgment debtor to the decree holder. If

the delay in making the payment of the said sum of Rs 15,20,000/-

extends beyond 240 days, then the interest rate applicable would be

24% p. a. and in case the delay extends beyond 360 days, in addition

to the interest at the rate of 24% p.a., the judgment debtor would also

be liable to pay damages at the rate of Rs 10,000/- per day.

According to the judgment debtor, these stipulations are opposed to

public policy and would be void in view of the provisions of Sections

23, 24 and the principles as set out in Sections 73 and 74 of the

Indian Contract Act, 1872.

5. The Award in question has been made by the consent of

both the parties. The said Award is as under:-

"ARBITRATION AWARD

I, Dharam Bir Malik, S/o: Late Shri Uttam Chand Malik, R/o: 15/41, West Punjabi Bagh, New Delhi-110026 passed the present Award at New Delhi on this 25th day of May, 2006.

Shri Jitender Mohan Malik and Shri Ravi Bhushan Malik, Partners of M/s. S.M.D. (Regd.), 41, Rama Road, Najafgarh Road, Industrial Area, New Delhi-110015 appointed me as Sole Arbitrator to resolve all the disputes.

After considering all the facts and circumstances of both the parties, I come to the following conclusion:-

1. That the land of Plot No.41, Rama Road, Najafgarh Road, Industrial Area, New Delhi-110015 may be divided between Shri Jitender Mohan Malik and Shri Ravi Bhushan Malik, Partners of M/s. S.M.D. (Regd.), 41, Rama Road, Najafgarh Road, Industrial Area, New Delhi-110015. The portion marked „Red‟ shall go to Shri Jitender Mohan Malik and portion marked „Green‟ shall go to Shri Ravi Bhushan Malik subject to that Shri Ravi Bhushan Malik shall pay Rs. 15,20,000/- (Rupees Fifteen Lakhs Twenty Thousand only) to Shri Jitender Mohan towards the difference of the cost of land divided among both them. The settled amount shall be paid within 120 days by Shri Ravi Bhushan Malik to Shri Jitender Mohan Malik and in case Shri Ravi Bhushan Malik fails to pay the settled amount within 120 days, he shall pay interest @ 18% per annum and in case he delays more than 120 days, he shall pay interest @ 24% per annum for other 120 days and in case of further delay he shall pay the damages @ Rs.10,000/- (Rupees Ten Thousand only) per day apart from interest @ 24% per annum.

2. That the possession shall also be set according to the site plan within 15 days from the date of Award.

3. Both the parties are further liable to pay Rs.5,000/-

(Rupees Five Thousand only) towards the cost of Arbitration proceedings which include the cost of maps and typing expenses and both the parties shall pay the amount in the ratio of 50:50. After the implementation of this Award, the firm M/s. S.M.D. (Regd.) stands dissolved and all the accounts are stand settled. This Award is made with the consent of both the parties.

4. This Award is passed and signed by me with the consent of both the parties. Both the parties have signed the Award and site plan in token of their consent and received the copies of same on the date, month and year mentioned above.

ARBITRATOR"

6. Several decisions were relied upon by Mr A. K. Singla,

Senior Advocate, on behalf of the judgment debtor. The first

decision relied upon was the case of Union of India v. Jagat Ram

Trehan and Sons: 61 (1996) DLT 779 (DB) for the proposition that

Section 47 CPC is attracted and applicable to execution proceedings

in respect of an Award. A Division Bench of this Court considered

the question as to whether a plea that an Award is void could be

raised in execution proceedings. The Division Bench took the view

that Section 47 applies to execution proceedings taken pursuant to a

decree making an Award a rule of the Court and it was open to the

executing court under Section 47 to declare that the Award has been

passed without jurisdiction and that the decree passed thereupon is

also null and void and is not executable. In M. Anasuya Devi v. M.

Manik Reddy: 2003 (9) SCALE 12, the Supreme Court observed that

the question as to whether an Award is required to be stamped and

registered, would be relevant only when the parties would file the

Award for its enforcement under Section 36 of the Arbitration and

Conciliation Act, 1996. It is at this stage that the parties could raise

objections regarding its admissibility on account of non-registration

and non-stamping under Section 17 of the Registration Act. The

Supreme Court clearly observed that the question whether an Award

required stamping and registration is within the ambit of Section 47

of the Code of Civil Procedure and is not covered by Section 34 of

the Arbitration and Conciliation Act, 1996.

7. Mr Singla then referred to the decision of a learned Single

Judge of this Court in the case of Anurag Malik v. Amit Malik &

Anr: 126 (2006) DLT 114. However, I am of the view that the said

decision does not advance the case of the judgment debtor. One of

the issues considered in that decision was the question of the Award

being insufficiently stamped and consequently whether such an

Award required to be impounded under Section 33 of the Indian

Stamp Act, 1899. Construing Section 2 (15) of the Indian Stamp Act,

the learned Single Judge was of the view that an instrument of

partition means an instrument whereby co-owners of any property

divide or agree to divide such property in severalty, and includes also

a final order for effecting a partition passed by any revenue authority

or any civil court and is also inclusive of an Award by an arbitrator

directing a partition. It was further observed that in the case of such a

document, as per Article 45 of Schedule-I, the stamp duty payable on

such instrument would be the same as is payable on a bond for the

amount of the value of the separated share or shares of the properties

and the largest share remaining after the property is partitioned shall

be deemed to be that from which the other shares are separated. The

Award in that case, to the extent relevant, reads as under:-

"PROPERTY BEARING No. A/20, MAHINDERO ENCLAVE, NEW DELHI

11. Smt. Kamlesh Malik shall execute necessary documents of transfer in favour of Sh. Anurag Malik in respect of the basement, first and second floor with roof except ground floor which shall remain in the possession of Smt. Kamlesh Malik.

12. Similarly Sh. Amit Malik and Sh. Anurag Malik shall execute documents of transfer in favour of Smt. Kamlesh Malik in respect to the Godwon at Sadar Bazar and also the flat at Apna Villa.

SHOP AT SADAR BAZAR M/S MALIK LIGHT HOUSE

13. Similarly Smt. Kamlesh Malik and Sh. Anurag Malik shall execute documents of transfer in favour of Sh. Amit Malik.

14. Further the value of assets, stock, creditors, cash in hand in respect of Ms. Malik Light House, Export firm in India and abroad along with debtors, loans, interest to be paid shall be divided equally amongst the three partners on the finalisation and distribution."

The learned Single Judge construed the Award as one which

indicated the entitlement of each party and specified what would

devolve on each of the parties. According to the learned Single Judge

the Award envisaged that the transfer would take place on documents

being executed by the respective parties in favour of other parties and

that such documents would naturally be liable to be registered since

they would convey immovable property. Such documents would

also be required to be stamped in accordance with law. But, the

learned Single Judge was of the view that it is not as if the said

Award itself had apportioned the properties. On the contrary the

Award had directed certain documents to be executed which in turn

would convey title to the property in question. In this context it was

observed that if anything more was required to be done other than

rely on the partition deed, then there would be force in the submission

of the learned counsel of the judgment debtor that the document was

not properly stamped. But, that was not the position.

8. Mr Singla referred to the decision in the case of Harish

Chander Sharma v. Smt. Priti Sharma: ILR (1976) I Delhi 142

wherein another learned Single Judge of this Court had construed the

provisions of Section 2(15) of the Indian Stamp Act, which defines

"instrument of partition". The Court observed that an Award given

by an arbitrator directing a partition becomes an instrument of

partition chargeable with stamp duty, irrespective of the fact whether

it was made in pursuance of an order of reference under Section 23

(1) of the Arbitration Act, 1940 or made without the intervention of

the Court. It was held that as soon as an Award is made it is liable to

stamp duty and there is no question of deferring the payment of stamp

duty after the Award is upheld in the Court of law. The executant of

the award being the arbitrator, it was his duty to direct the parties to

provide him with the necessary stamp paper and then should have

made and published his award. Although that was a case decided

under the Arbitration Act, 1940 and the issues were slightly different,

the position in law is clear that an Award directing a partition

becomes an instrument of partition chargeable with stamp duty. If

such an Award is not sufficiently stamped, the same is liable to be

impounded and sent to the Collector under Section 38 (2) of the

Indian Stamp Act. The Collector in turn has to follow the procedure

as specified in Section 40 and other provisions of the said Act and

after the Collector has dealt with it as provided in the said Act, the

original instrument is required to be returned to the Court for further

proceedings.

9. In Satish Kumar v Surinder Kumar: AIR 1970 SC 833,

the question which arose before the Supreme Court was whether an

Award given under the Indian Arbitration Act, 1940 on a private

reference required registration under Section 17 (1)(b) of the Indian

Registration Act, 1908, if the Award effected partition of immovable

property exceeding the value of Rs 100. The Supreme Court relying

upon its earlier unreported decision in the case of Uttam Singh

Duggal and Company v. Union of India: Civil Appeal No. 162/1962

(decided on 11.01.1962) came to the conclusion that an Award has

some legal force and is not a mere waste paper. The Supreme Court

further observed that if the award in question was not a mere waste

paper but has some legal effect it plainly purports to or affects

property within the meaning of Section 17(1)(b) of the Registration

Act. Justice K. S. Hegde, J. in a separate but concurring opinion

observed that for the purposes of Section 17 (1) (b) of the

Registration Act all that has to be seen is whether the Award in

question purports or operates to create or declare, assign, limit or

extinguish, whether in present or future, any right, title or interest

whether vested or contingent of the value of one hundred rupees and

upwards to or in immovable property. If it does, it is compulsorily

registrable. It was also noted that a document may validly create

rights but those rights may not be enforceable for various reasons.

Section 17 does not concern itself with the enforcement of rights.

That Section is attracted as soon as its requirements are satisfied.

10. Mr Singla then placed reliance on a decision of a learned

Single Judge of this Court in the case of Tarlochan Singh Sarna v.

Mahinderpal Singh Bindra and Ors.: 42 (1990) DLT 470 for the

proposition that an Award effecting partition of immovable property

requires compulsory registration. In that case the question which

arose for consideration was whether an Award itself being a non-

testamentary instrument purports or operates to create, declare,

assign, limit or extinguish, whether in present or in future, any right,

title or interest, whether vested or contingent, of the value of one

hundred rupees and upwards, to or in immovable property and

covered by Section 17(1) (b) of the Registration Act? The Award

given by the sole arbitrator in that case was to the following effect:-

"(1) That Smt. Jasvinder Kaur Bhandari shall pay in all a sum of Rs. 1,50,000 to Shri Mahinder Pal Singh Bindra in full consideration of his share in the aforesaid house by Bank draft in my presence today ;

(2) That Shri Gurbir Singh Bindra shall pay in all a sum of Rs. 50,000 to Smt. Ushpinder Kaur Gujral in full consideration of her share in the aforesaid house by post dated cheque No. 922351 dated 5-11- 88 on Punjab National Bank. Punjabi Bagh, New Delhi, in my presence today;

(3) That Shri Mahinder Pal Singh Bindra and Smt. Ushpinder Kaur Gujral shall have no right, title or interest hereafter and the said property shall vest in Smt. Jasvinder Kaur Bhandari and Shri Gurbir Singh Bindra hereafter.

(4) That the said house shall now onwards belong to Smt. Jasvinder Kaur Bhandari and Shri Gurbir Singh Bindra accordingly to the shares indicated in the Plan annexed hereto and marked as Annexure 'A'. The snare which has allotted to Smt. Jasvinder Kaur Bhandari is shown by red boundary lines and marked as Abcd (back portion). The rest of the house (front portion) is allotted to Shri Gurbir Singh Bindra. The entry, passage and staircase will be common between both the parties and they will not use by either of them for exclusive purposes. Respective portions of the property allotted to Smt. Jasvinder Kaur Bhandarii and Sri Gurbir Singh Bindra shall vest in them exclusively and Shri Mahinder Pal Singh Bindra and Smt. Ushpinder Kaur Gujrat shall have no right, title or interest in them.

If, however, the aforesaid cheque is not encashed, on presentation, for any reason whatsoever them Smt. Ushpinder Kaur Gujral shall have the absolute and unfettered right to make such construction 'as she pleases over the front portion

allotted to Shri Gurbir Singh Binlra i.e. she will be entitled to build the second storey (First Floor). Besides, Smt.Ushpinder Kaur Gujral will also be entitled to one of the ground floor area and the buildings thereon towards the side of plot No. 8/57, adjacent to the house in question and in that case the entry, passage and as well as the staircase will be used by all of them."

The learned Single Judge, after construing the said Award in the light

of the principles of law, held the same to be an instrument of partition

and as the sole evidence of partition. In that case a reference was

made to the arbitrator for partitioning the immovable property and the

arbitrator had given the award effecting the partition of the property.

He had also valued the interest of two partners in terms of money and

required the other two partners to pay the same and had allotted

different portions of the house to the two co-owners. Consequently,

reading the Award as a whole, the Court held that the same by itself

partitioned the immovable property and extinguished the rights of co-

owners and was thus required to be registered compulsorily. Since

the same had not been registered, the Award could not be taken into

consideration by the Court and made a rule of the Court.

11. Mr Singla also relied upon a full Bench decision of the

Punjab and Haryana High Court in the case of Ran Singh v. The

Gandhar Agricultural Co-operative Service Society: AIR 1976 P &

H 94 (FB). In that decision it was held that under Section 47 of the

Code of Civil Procedure, a Court has the jurisdiction to decide all

questions relating to execution, discharge or satisfaction of the

decree. The said observation was made in the context of the

provisions of Section 63 of the Punjab Co-operative Societies Act,

1961 and the Court came to the conclusion that an executing Court

cannot be precluded from determining whether an award is "duly

passed or not", within the meaning of Section 63 of that Act. The last

decision relied upon by Mr Singla was that of Titanium Tantalum

Products Ltd. v. Shriram Alkali & Chemicals: 2006 (2) Arb. L.R.

366 (Delhi). In that decision a learned Single Judge of this Court had

taken the view that it is not open to an arbitrator to compute damages

contrary to the provisions of Sections 73 and 74 of the Indian

Contract Act, 1872. However, that decision had been rendered under

Section 34 of the Arbitration and Conciliation Act, 1996 and was not

a question which was being considered by an executing court.

12. Mr M. Qayam-ud-din, the learned counsel who appeared

on behalf of the decree holder submitted that the Award in question,

as noted in paragraphs 3 and 4 thereof, had been passed with the

consent of both the parties. In paragraph 3 of the said Award it is

noted that after the implementation of the Award the firm M/s.

S.M.D. (Regd.) would stand dissolved and all the accounts would

stand settled. He then referred to paragraph 1 of the Award and laid

stress on the expression „shall go‟. He submitted that this clearly

indicated that the Award itself did not partition the properties and

merely declared that the portion marked Red would go to Sh. Jitender

Mohan Malik (decree holder) and the portion marked Green, as per

the site plan annexed to the Award, would go to Shri Ravi Bhushan

Malik (judgment debtor). He further submitted that this was

"subject to" the judgment debtor paying the sum of Rs 15,20,000/- to

the decree holder towards the difference of the cost of land divided

amongst the two of them. The learned counsel submitted that since

the said amount of Rs 15,20,000/- had not been paid by the judgment

debtor to the decree holder, there was no question of any partition

having taken place. He submitted that the Award does not confer title

and neither the judgment debtor nor the decree holder can sell the

respective portions to which they are entitled merely on the basis of

the Award. He submitted that when a partition deed would be drawn

up the same would be liable to stamp duty. The Award, however,

does not partition the property and, therefore, cannot be regarded as

an instrument of partition. He submitted that the Award merely

identified the rights but did not confer title and, therefore, was not an

instrument of partition within the meaning of Section 2 (15) of the

Indian Stamp Act, 1899.

13. Mr Qayam-ud-din referred to a decision of a learned Single

Judge of this Court in the case of Smt. Aruna Parwal v. Cassia

Chattels (P) Ltd.: 1991 (1) (Vol. 14) 48. In that case the arbitrator

made the following Award:-

"Awarded that M/s. Cassia Chattels Pvt. Ltd. pay a sum of Rs. 1.20 crores for handing over the vacant possession of the rear portion of about 2000 sq. mtrs, of land and building thereon at No, 7, Haily Road, New Delhi, in favour of M/s. Cassia Chattels Pvt. Ltd. No fees and clearage charged."

The question that arose for decision before the Court was whether the

Award by itself declared any rights in the immovable property. After

referring to the Supreme Court decision in the case of Capt. Ashok

Kashyap v. Mrs. Sudha Vasisht & Another: 1987 (1) SCC 717, the

learned Single Judge held that the Award merely declared the right of

Smt. Aruna Parwal to obtain Rs. 1.20 crores from M/s. Cassia

Chattels Private Limited as consideration for handing over possession

of the said portion of the immovable property of the said company.

The Court held that it was only on payment of said amount that the

right would accrue to the company to get vacant possession of the

said portion of the property. The document by itself did not confer

any right in the immovable property of the said company.

Consequently, the Court held that the Award was not required to be

registered compulsorily.

14. The learned counsel referred to the provisions of Sections

35 and 36 of the Arbitration and Conciliation Act, 1996, which read

as under:-

"35. Finality of arbitral awards. -- Subject to this Part an arbitral award shall be final and binding on the parties and persons claiming under them respectively.

36. Enforcement. -- Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court."

He submitted that Section 35 clearly stipulated that the Award would

be final and binding on the parties. By virtue of Section 36, once the

period for making an application under Section 34 has expired or

such application having been made has been refused, the Award is to

be enforced under the Code of Civil Procedure in the same manner

"as if it were a decree of the Court". He submitted that in the present

case the judgment debtor has not filed any application under Section

34 seeking to set aside the Arbitral Award. The time for making such

an application has also expired. Therefore, the Award is executable

and capable of being enforced in the same manner as if it were a

decree of the Court.

15. Mr Qayam-ud-din then referred to the provisions of the

Registration Act, 1908 and in particular to Section 17 (2) (vi).

Section 17, so much as is relevant, reads as under:-

          "17. Documents           of   which     registration       is
          compulsory.-

(1) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely:-

(a) xxxx xxxx xxxx xxxx

(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees, and upwards, to or in immovable property;

                 (c)        xxxx    xxxx      xxxx       xxxx
                 (d)        xxxx    xxxx      xxxx       xxxx

(e) non-testamentary instruments transferring or assigning any decree or order of a court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property:

PROVIDED that the State Government may, by order published in the Official Gazette, exempt from the operation of this sub-section any leases executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rent reserved by which do not exceed fifty rupees.

(1A) xxxx xxxx xxxx xxxx

(2) Nothing in clauses (b) and (c) of sub-section (1) applies to-

                 (i)        xxxx   xxxx     xxxx      xxxx
                 (ii)       xxxx   xxxx     xxxx      xxxx
                 (iii)      xxxx   xxxx     xxxx      xxxx
                 (iv)       xxxx   xxxx     xxxx      xxxx
                 (v)        xxxx   xxxx     xxxx      xxxx
                 (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; or
                 (vii)      xxxx   xxxx     xxxx      xxxx
                 (viii)     xxxx   xxxx     xxxx      xxxx
                 (ix)       xxxx   xxxx     xxxx      xxxx
                 (x)        xxxx   xxxx     xxxx      xxxx
                 (xa)       xxxx   xxxx     xxxx      xxxx
                 (xi)       xxxx   xxxx     xxxx      xxxx
                 (xii)      xxxx   xxxx     xxxx      xxxx


          (3)     xxxx xxxx        xxxx     xxxx"

The learned counsel submitted that in view of Section 17(2)(vi), the

provisions of Section 17(1)(b) would not apply to any decree or order

of a Court. He submitted that the exception provided in Section

17(2)(vi) did not apply in the facts of the present case. Consequently,

he submitted that the provisions of Section 17(1)(b) would not apply

even to an Award inasmuch as it was to be enforced in the same

manner as if it were a decree of the Court.

16. He further submitted that under the Arbitration and

Conciliation Act, 1996 the requirements of the form and contents of

Arbitral Award are provided under Section 31. The only requirement

is that an Arbitral Award shall be made in writing and shall be signed

by the members of the arbitral Tribunal. There is no requirement of

any stamp duty being affixed on the Award. Referring to Section 35

of the Indian Stamp Act, 1899, the learned counsel submitted that an

instrument not duly stamped would be inadmissible in evidence. He

submitted that under the old Act (the Arbitration Act, 1940), awards,

before they became enforceable, had to be made a rule of the Court.

For that purpose awards had to be admitted in evidence and it was

necessary that they were duly stamped. However, under the new Act

(1996 Act), this requirement is no longer there and an Award by itself

becomes executable by virtue of Section 36 of the Arbitration and

Conciliation Act, 1996 in the same manner as if it were a decree of

the Court. Therefore, the question of an Award being insufficiently

stamped cannot come in the way of execution thereof inasmuch as it

is not being admitted in evidence. He further submitted with

reference to Section 36 of the Indian Stamp Act, 1899 that when an

instrument has already been admitted in evidence, such admission

would not be called in question at any stage of the same suit or

proceeding on the ground that the instrument has not been duly

stamped. He, therefore, contended that the judgment debtor cannot

now question the admission of the Award at this stage when he did

not do so earlier.

17. Referring to the Supreme Court decision in the case of

NBCC Ltd v. Lloyds Insulation India Ltd.: 2005 (Suppl.) Arb. L. R

563 (SC), he submitted that an executing court cannot go behind the

Award. The Supreme Court in that case held:-

"For the purposes of Section 36 of the Act, the court cannot be called upon to go behind the awarded amount and deal with the processes by which the amount was arrived at."

The learned counsel then referred to the Supreme Court decision in

the case of T. P. Sidhwa & Ors. v. S. B & Sons Pvt. Ltd.: AIR 1974

SC 1912. This case was relied upon for the proposition that an

Award relating to partition of immovable properties would not be

compulsorily registrable when it merely creates a right to obtain

another document which when executed would create a right to the

immovable properties. Considering the Award in that case, the

Supreme Court observed that the Award itself did not purport or

operate to create, declare, assign, limit or extinguish, whether in

present or in future any right, title or interest, whether vested or

contingent, of the value of one hundred rupees and upwards, in

respect of the immovable property, as contemplated under Section

17(1)(b) of the Registration Act. The Award merely created a right to

obtain another document which would, when executed, create,

declare, assign, limit or extinguish any such right, title or interest and

that the case before the Supreme Court clearly fell within the

provisions of Section 17(2)(v) of the Registration Act, 1908, which

exempted the application of Section 17 (1)(b).

18. Lastly, Mr Qayam-ud-din referred to the Supreme Court

decision in the case of Bachan Singh v. Kartar Singh: JT 2001 (10)

SC 64; 2002 (2) PLR 512 wherein the Supreme Court observed:-

"A consent decree passed by the Court is not required to be registered under the provisions of the Indian Registration Act and therefore, the view taken by the first Appellate Court was not legally correct and has been rightly set aside by the High Court. We are, therefore, in agreement with the view taken by the High Court."

19. In the light of the arguments advanced by the counsel for

the parties, three questions require to be dealt with:-

1) Whether the award requires compulsory registration under Section 17 (1) (b) of the Registration Act, 1908 ? If yes, whether it can be registered now, after the prescribed period under Section 23 of the Registration Act, 1908 as also the extended period stipulated in Section 25 of the Act has elapsed ?

2) Whether the award in question falls within the definition of "instrument of partition" as provided in Section 2 (15) of the Indian Stamp Act, 1899 ?

If yes, whether the award is liable to be impounded in view of insufficiency of stamp ?

3) Whether the stipulations by way of interest on the sum of Rs 15,20,000/- are void in view of Sections 23, 24 and the principles set out in Sections 73 and 74 of the Indian Contract Act, 1872 ?

20. Taking up Question No.3, it is a well-known proposition

that the executing court cannot go behind the decree. The award has

been made under the Arbitration and Conciliation Act, 1996 and by

virtue of Section 36 thereof, the award is to be enforced under the

Code of Civil Procedure, 1908 in the same manner as if it were a

decree of the court. For all intents and purposes, this court being an

executing court, would have to regard the award in question as a

decree of a court. Consequently, the issues sought to be raised by the

judgment debtor with regard to the stipulations by way of interest

cannot be gone into by this court. It is also important to remember

that the judgment debtor did not challenge the award under Section

34 of the Arbitration and Conciliation Act, 1996 which specifically

empowers the court, in case an application is made under the said

provision, to set aside an arbitral award if the same is in conflict with

the public policy of India [See: Section 34(2)(b)(ii)]. The contentions

of the judgment debtor on this aspect of the matter cannot be

examined by this court as that would amount to going behind the

decree.

21. As regards the first question, which pertains to the issue of

compulsory registration of the award under Section 17(1)(b) of the

Registration Act, 1908, it has been contended on behalf of the

judgment debtor that the award requires compulsory registration.

There was some dispute as to whether the issue of registration could

be raised at the stage of execution, however, in M. Anasuya Devi

(supra), a decision relied upon by Mr Singla, this question has been

squarely dealt with and the Supreme Court held - "the question

whether an award requires stamping and registration is within the

ambit of Section 47 of the Code of Civil Procedure and not covered

by Section 34 of the Act". All the other decisions referred to by Mr

Singla in the context of registration of an award, pertain to awards

passed under the Arbitration Act, 1940 and not under the Arbitration

and Conciliation Act, 1996. The considerations under the two Acts

are somewhat different. Under the 1940 Act, before an award

became enforceable, it had to be made a rule of the court. Therefore,

the court dealt with the award at a stage prior to the same becoming a

decree. Under the 1996 Act, the court deals with the award either on

an application under Section 34 for setting aside the same or where

no such application is made or, if made, is rejected, as an executing

court for enforcing the award as a decree in terms of Section 36 of the

1996 Act. The parameters of consideration are different. However,

these differences need not concern us at this stage because the

statutory provisions are very clear.

22. Assuming that the award falls within the ambit of Section

17(1)(b), the provisions of Section 17(2)(vi) need to be seen. This

provision, inter alia, stipulates that nothing in clause (b) of sub-

Section (1) would apply to "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. Thus, any decree or order of the

court which does not fall within the exception indicated in Section

17(2)(vi), would not require compulsory registration even if the

decree or order of the court were to be a non-testamentary instrument

covered under Section 17(1)(b). I have already indicated above that

an award made under the Arbitration and Conciliation Act, 1996

would be enforceable as a decree of a court and, therefore, the

expression "any decree or order of a court" would cover the award

made under the 1996 Act. The only thing remaining is to examine as

to whether the award in question falls within the exception provided

under Section 17(2)(vi). The exception relates to, inter alia, a decree

expressed to be made on a compromise and comprising immovable

property other than that which is the subject matter of the suit or

proceeding. The two conditions that need to be satisfied before the

exception is triggered are: (1) It must be a compromise decree; and

(2) the compromise decree must comprise of an immovable property

other than that which is the subject matter of the suit or proceeding.

Both the conditions have to be satisfied because of the use of the

conjunctive word "and". The award in question is clearly a consent

award and consequently, it would have to be regarded as a consent

decree. But, before it falls within the exception, it must also deal

with immovable property other than that which was the subject matter

of the arbitration proceedings. The admitted position is that the

arbitration was in respect of the very property in respect of which the

consent award has been made. Clearly, the consent award does not

comprise of any immovable property other than that which was the

subject matter of the arbitration proceedings. Thus, the second

condition is not satisfied. This leads to the conclusion that the award

in question would not fall within the exception indicated in Section

17(2)(vi) of the Registration Act, 1908. The ultimate conclusion

being that Section 17(1)(b) of the Registration Act, 1908 would not

apply to the award in question and, therefore, the answer to the first

question is that the award is not compulsorily registrable. The

supplementary question of whether the award can now be registered

does not arise because the award, in any event, does not require

compulsory registration.

23. The Supreme Court in the case of Bachan Singh (supra),

as indicated above, had observed that a consent decree passed by the

court is not required to be registered under the provisions of The

Registration Act, 1908. It must also be noticed that, as observed by

the Supreme Court in the case of Lachhman Dass v. Ram Lal and

Another: 1989 (3) SCC 99, the real purpose of registration is to

secure that every person dealing with property, where such document

requires registration may rely with confidence upon statements

contained in the register as a full and complete account of all

transactions, by which title may be affected. The Supreme Court

further observed that Section 17 of the Registration Act, 1908 being a

disabling section, must be construed strictly and, therefore, unless a

document is clearly brought within the provisions of the section, its

non-registration would not be a bar to its being admitted in evidence.

I may also notice a Division Bench decision of this court in the case

of P.K. Nangia v. The Land and Development Officer, New Delhi

and Another: ILR (1987) I (Delhi) 405, wherein the Division Bench,

construing a compromise decree effecting partition of immovable

property, held the same not to be compulsorily registrable inasmuch

as it did not come within the exception mentioned in Section

17(2)(vi) of the said Act because the compromise decree did not

comprise any immovable property other than that which was the

subject matter of the suit. This concludes the discussion in respect of

the first question.

24. As regards the second question, Mr Singla‟s contention

was that the award has been prepared on a non-judicial stamp paper

of Rs 100/- only and it is insufficiently stamped because stamp was

payable under the provisions of Section 2 (15) of the Indian Stamp

Act, 1899 read with Articles 12 and 45 of Schedule I to the said Act.

On the other hand, Mr Qayam-ud-din submitted that the award in

question would not fall within the expression "instrument of

partition" as defined in Section 2 (15) of the Indian Stamp Act, 1899.

Consequently, it was submitted by him, the award was not

insufficiently stamped.

25. As observed by the Supreme Court in Dr Chiranji Lal v.

Hari Das: 2005 (10) SCC 746, the Stamp Act is a fiscal statute with

the object of securing revenue for the State on certain classes of

instruments. The stringent provisions of the Act are conceived in the

interest of the revenue. Once that object is secured according to law,

the party staking his claim on the instrument will not be defeated on

the ground of initial defect in the instrument. The Supreme Court

also observed that the Stamp Act has not been enacted to arm a

litigant with a weapon of technicality to meet the case of his

opponent. In the present case, the judgment debtor is attempting to

use the Stamp Act as a weapon of technicality to delay and defeat the

execution of the decree. The present case has to be considered in the

backdrop of the observations made by the Supreme Court. The court

must ensure that the interest of the revenue does not suffer while, at

the same time, enabling the decree holder to reap the benefits of the

decree and prevent the judgment debtor from defeating the decree.

26. Section 2 (15) defines an instrument of partition to mean

any instrument whereby co-owners of any property divide or agree to

divide such property in severalty, and includes also a final order for

effecting partition passed by any revenue authority or any civil court

and an award directing a partition. It was contended on the part of

the decree holder that the award by itself does not partition the

properties and merely declares the portions of the property which

would go to the decree holder and the judgment debtor. It was also

contended that this was subject to the judgment debtor paying the

said sum of Rs 15,20,000/- to the decree holder towards the

difference of the cost of land divided amongst the two of them. He

submitted that the award merely identified the rights, but did not

confer title and, therefore, was not an instrument of partition within

the meaning of Section 2 (15) of the Indian Stamp Act, 1899. Strong

reliance was placed by Mr Qayam-ud-din on the decision of this court

in the case of Smt. Aruna Parwal (supra). However, I am of the

view that the said decision is not relevant for the purposes of

construing the provisions of Section 2 (15) of the Indian Stamp Act,

1899. The decision in Smt. Aruna Parwal (supra) has been rendered

in the context of Section 17 of the Registration Act. It is not a

decision in respect of Section 2 (15) of the Indian Stamp Act, 1899.

The two provisions in the two Acts are of different amplitude and

width. Insofar as the question of registrability under Section 17 is

concerned, that issue has already been dealt with above. What is to

be examined is not whether the award is compulsorily registrable or

not, but whether any stamp duty is to be paid on it. The liability to

pay stamp in terms of Article 45 of Schedule I to the Indian Stamp

Act, 1899 would only arise if the instrument in question fell within

the definition of "instrument of partition" as given in Section 2 (15)

of the said Act. As indicated above, any instrument whereby co-

owners of any property divide or agree to divide such property in

severalty would be an instrument of partition. It is, therefore, clear

that it is not merely the instrument whereby the property is in fact

divided by co-owners, but also an instrument whereby the said co-

owners agree to divide the property in severalty that would be

covered in the definition of "instrument of partition".

27. The award in question is a consent award. The parties have

agreed that Plot No.41, Rama Road, Najafgarh Road, Industrial Area,

New Delhi-110015 may be divided between the decree holder and the

judgment debtor who are the partners of M/s S.M.D. The award also

indicates that the parties consented that the portion marked red shall

go to Shri Jitender Mohan Malik (decree holder) and the portion

marked green shall go to Shri Ravi Bhushan Malik (judgment

debtor), subject to Shri Ravi Bhushan Malik (judgment debtor)

paying a sum of Rs. 15,20,000/- to the decree holder towards the

difference of cost of land divided among both of them. It was also

part of the consent terms that the possession shall also be set

according to the site plan within 15 days from the date of Award.

Such a consent award clearly indicates that the parties who were

admittedly co-owners of the said property "agreed to divide" such

property in severalty. It is another matter that actual division was to

take place, subject to the decree holder receiving a sum of Rs

15,20,000/- alongwith interest thereon, if any, from the judgment

debtor. I am unable to agree with the submissions made by the

learned counsel for the decree holder that such an award made with

the consent of the co-owners would not fall within the expression

"instrument of partition" as defined in Section 2 (15) of the Indian

Stamp Act.

28. I may also point out that Article 45 of Schedule I to the

said Act prescribes the appropriate stamp duty for an instrument of

partition as defined in Section 2 (15). The said Article, as applicable

to Delhi, also provides that where a final order for effecting a

partition passed by any revenue authority or any civil court, or an

award by an arbitrator directing a partition, is stamped with the stamp

required for an instrument of partition, and an instrument of partition

in pursuance of such order or award is subsequently executed, the

duty on such instrument shall not exceed ten rupees. This is also

indicative of the fact that an instrument which by itself does not effect

a partition is also liable to be stamped in accordance with the said

Article 45 and in such an eventuality, a subsequent instrument which

brings about the partition would not be required to be stamped twice

over with the same amount of stamp duty but the stamp duty on the

second instrument would be limited to ten rupees. The scheme of the

provisions appears to be that where an instrument records an

agreement to divide property, the same has to be stamped in the first

instance in accordance with Section 2 (15) read with Article 45 to

Schedule I of the In Stamp Act, 1899. Since such an instrument is

required to be followed up by another instrument where the property

is actually divided in severalty, the legislature has made it clear that

on the second instrument, the stamp duty would be limited to only

Rs10/-. These provisions completely negate Mr Qayam-ud-din‟s

argument that since the award does not confer title and the parties

cannot sell their respective portions merely on the basis of the award,

when the partition deed would be drawn up subsequently, stamp duty

thereon shall be paid in accordance with Article 45. A plain reading

of the provisions of the Stamp Act do indicate that when there are

two instruments, one which records an agreement to divide property

followed by the other which actually brings about the division of

such property, both such instruments would fall within the definition

of Section 2 (15) of the said Act. It is also apparent that stamp duty

in terms of Article 45 of Schedule I to the said Act would be payable

in the first instance on the execution of the first of the aforesaid two

documents. If it is followed up by document of the second kind, then

stamp duty would be restricted to ten rupees. Therefore, it cannot be

contended that stamp duty is not payable on the first instrument and

would be payable only at the stage of the second instrument.

29. The argument that the award is not required to be stamped

because there is no provision for paying stamp duty on an award

under the Arbitration and Conciliation Act, 1996, only needs to be

stated to be rejected. Stamp duty is provided under the Indian Stamp

Act, 1899 and not under the Arbitration and Conciliation Act, 1996.

The further argument of Mr Qayam-ud-din that though Section 35 of

the Indian Stamp Act, 1899 relates to inadmissibility in evidence of

an unstamped or an insufficiently stamped instrument, the same is not

applicable in the present case because the award in question is not

being admitted in evidence. He submitted that under the Arbitration

Act, 1940, an award had to be admitted in evidence before it was

made a rule of the court and, therefore, Section 35 of the Indian

Stamp Act, 1899 was relevant. His contention was that under the

new Act (1996 Act), Section 35 of the Indian Stamp Act became

irrelevant inasmuch as an award by itself became executable by virtue

of Section 36 of the Arbitration and Conciliation Act, 1996. This

argument, though attractive, unfortunately does not advance the case

of the decree holder. This is so because, even for the sake of

argument, if Section 35 of the Indian Stamp Act, 1899 is kept aside

for the time being, Section 33 of the said Act casts a duty upon every

person having by law or consent of parties, authority to receive

evidence, and every person in charge of a public office, except an

officer of police, before whom any instrument, chargeable, in his

opinion, with duty, is produced or comes in the performance of his

functions, to, if it appears to him that such instrument is not duly

stamped, impound the same. Therefore, de hors the question of its

admissibility in evidence, when an instrument which is not duly

stamped is produced before an authority as referred to in Section 33,

it is the duty of such authority to impound the same. It cannot be

denied that the original award has been produced before this court for

the purposes of execution. If it appears to this court that the

instrument (the award in question) is not duly stamped, then this

court is duty bound under the provisions of Section 33 of the Indian

Stamp Act, 1899 to impound the same. It has already been discussed

above that the award in question was required to be stamped in

accordance with Article 45 of Schedule I to the said Act. The award

has been made on stamp paper of only Rs 100/-. This is clearly

inadequate. Although the value of the property is not indicated, a

clue can be taken from the fact that the difference in the cost of land

divided amongst the decree holder and the judgment debtor itself has

been computed in the award as Rs 15,20,000/-. Demonstrably, the

stamp duty of Rs 100/- paid on the award is insufficient. In such a

case, the only course of action is to impound the same.

Consequently, the award is impounded.

30. As indicated in Harish Chander Sharma v. Smt. Priti

Sharma, etc.: ILR (1976) I Delhi 142, the next step for this court is

to send the impounded instrument in original to the Collector in terms

of Section 38 (2) of the Indian Stamp Act, 1899. It is ordered

accordingly. The Collector shall follow the procedure as specified in

Section 40 of the said Act and after he has dealt with it, the Collector

shall return the original instrument to this court for further

proceedings.

31. Before I conclude, it must be noted that the deficiency in

the stamp and penalty, if any, shall have to be made good by the

decree holder and the judgment debtor in equal proportion inasmuch

as the consent award indicates a division in equal shares.

With these directions, this application stands disposed of.

BADAR DURREZ AHMED (JUDGE) July 02, 2008 SR/dutt