Dilip Kumar Ghosh and Others vs Ashim Kumar Ghosh and Another

Ashim Kumar Banerjee, J.—Smt. Nilima Ghosh had five sons and three daughters. All five sons are alive and litigating before the Court of Law. Nilima owned and possessed premises no. 48, Hindusthan Park being the dwelling house of the Ghosh family. Nilima made a Will bequeathing the said property to her five sons Dilip, Ashok, Amal, Ashim and Anjan. She appointed her nephews Dr. Bhaskar Roy Chowdhury, former Vice Chancellor, Calcutta University and Shri Bhupendranath Dey an advocate of this Court as executors. Under her Will the property would devolve upon her five sons in equal shares. The sons would be obliged to preserve the said property and in case they were not able to do so and commercially exploited the property, her three daughters would get one flat each. In case of dispute between the brothers the dispute would be resolved by their elder sister Mayarani Dutta and one Kamal Kumar Sen, an eminent engineer, a close relation of the Ghosh family to act as arbitrator. The dispute arose when brothers fell out having three on the one side and two on the other. Ultimately, the fourth one crossed the floor. Presently, Dilip, Amal, Anjan and Asok being on the one side, Ashim became the villain of the peace. Mayarani and Kamal Kumar acted as arbitrator and ultimately published their award appearing at page 1 to 5. Ashim and Ashok did not accept the award. Hence, the majority group placed it for execution. Ultimately, Ashok crossed the floor leaving Ashim alone. The executing Court upheld the objection of Ashim, the award being an unregistered one, could not be enforced. Hence, this appeal by the majority groups. Pertinent to note, earlier Ashim applied u/s 47 of the Code of Civil Procedure. The learned Court below observed, having not challenged the award the issue could not be raised u/s 47. Ashim approached this Court. The learned single Judge dismissed the Revisional application after holding, the plea taken by the Court below although not sustainable, the merits would not deserve any interference. The order of learned single Judge being relevant herein is quoted below:-

The petitioner is aggrieved by the order passed by the learned Court below by which an application u/s 47 of the CPC at the time of implementation of an arbitral award was dismissed merely on the ground that the provisions of Section 47 of the CPC could not be invoked when an award was put into implementation.

The learned Court below has not discussed why it felt that Section 47 was not available to a judgment-debtor when an award was put under implementation merely because he had not assailed the award u/s 34 of the Arbitration and Conciliation Act, 1996.

The legal question decided by the learned Court below is thus left open for future adjudication. It, however, appears that the application u/s 47 of the CPC was otherwise unmeritorious and the order should be treated as an order passed on merits and not on the ground that the application u/s 47 was not maintainable.

The effect of this order is that the legal question answered in the order impugned is reversed but the effect of the order impugned is maintained.

The execution application was ultimately heard by the learned Judge of the Court below when the Court dismissed the execution application on the ground, the award was not a registered one. Mr. Arunendu Shekar Roy, learned counsel appearing for the appellants contended as follows:-

i) The award not having challenged and application u/s 47 having dismissed, the respondent was not entitled to raise the issue of registration.

ii) The learned Judge erroneously held that Section 17 of the old law would have application, particularly when the award was liable to be enforced under the new law u/s 36 of the Arbitration and Conciliation Act, 1996 where the award should be considered as a deemed decree.

iii) Ashim having not filed any appeal, would not be entitled to raise the plea as to the maintainability of the execution application particularly when the issue stood resolved by the learned single Judge while dismissing the revisional application.

iv) The award did not create any independent right of the parties that would require registration. Hence, mere allotment of particular portion would not attract registration of the award.

v) There being no declaration of share of the parties, neither the award nor the deemed decree would require registration.

He relied on the following decisions:-

i) All India Reporter 1943 Nag. 165 (Lakhmichand Surajmal Agarwal-VS-Biharilal Sagarmal Firm by owner Biharilal Premraj & Ors.)

ii) All India Reporter 1970 SC 833 (Satish Kumar & Ors.-VS-Surinder Kumar & Ors.)

iii) All India Reporter 1972 SC 1121 (Mattapalli Chelamayya (dead) by his legal representatives & Anr.-VS-Mattapali Venkataratnam (dead) by his legal representatives & Anr.)

iv) 2003 VIII SCC 565 (M. Anasuya Devi & Anr.-VS-M. Manik Reddy & Ors.)

v) All India Reporter 2006 SC 1249 (N. Khosla-VS-Rajlakshmi (dead) & Ors.)

vi) All India Reporter 2006 SC 2800 (Rashtriya Ispat Nigam Ltd. & Anr.-VS-M/s. Verma Transport Company)

vii) All India Reporter 2007 SC 683 (Morgan Securities & Credit Pvt. Ltd.-VS-Modi Rubber Ltd.)

viii) All India Reporter 2007 SC 465 (M/s. Pandey & Co. Builders Pct. Ltd.-VS-State of Bihar & Anr.)

ix) All India Reporter 2007 SC 1376 (India Household & Healthcare Ltd.-VS-LG Household & Healthcare Ltd.)

x) ILR 2008 Del. (Jitender Mohan Malik-VS-Ravi Bhushan Malik)

xi) 2010 IV CLJ 345 (Sundaram Brake Linings Ltd.-VS-Kotak Mahindra Bank Ltd.)

xii) 2010 XIII SCC 336 (Sant Lal Gupta & Ors.-VS-Modern Cooperative Group Housing Society Limited & Ors.)

Per contra, Mr. Santi Sekhar Mukherjee, learned counsel appearing for Ashim contended as follows:-

i) The award was in effect a preliminary decree for partition that could only be effective upon registration being made.

ii) Valuation of the property not having made the partition could not be effected.

iii) The award having rendered u/s 20 of the old law being the Arbitration Act 1940 would require registration.

iv) The respondent was entitled to point out the anomaly in the judgment and order impugned even without filing a cross appeal.

v) The appellants themselves recognized the award as a preliminary decree as would be apparent from ground V of the Memorandum of Appeal.

vi) Having the valuation of the property not being done and procedure for partition not being followed the executing Court could not go behind the decree being the award that was ineffective in absence of registration.

vii) Stamp Duty having not paid, award was not enforceable and the executing Court could not have cured such defect.

He lastly contended, the appellant should have approached the Civil Court for partition of the property. On instruction, Mr. Mukherjee informed this Court, his client would be ready and willing to sell his share on an appropriate price being paid therefor.

Mr. Chayan Gupta, learned counsel appearing for Asoke adopted the argument made by Mr. Roy and cleared his stand to the effect that his client changed his views and preferred for amicable settlement between the parties being persuaded by the Court. [Significant to note, we adjourned the matter on many occasions when we interacted with the parties in open Court and persuaded them to have an amicable solution. We however failed in our approach.] He also referred to Section 39 of the Arbitration and Conciliation Act of 1996 and contended, the executing Court was competent to entertain the application and in the event it lacked jurisdiction it would still be within its power to transfer it to the proper Court. He also informed, his client was ready and willing to pay Stamp Duty if this Court would direct so.

While replying Mr. Roy contended, the pious wish of the mother so expressed in the Will must be preserved by the parties. Hence, the question of sale of share would not arise. On the competence of the executing Court, he referred to Section 2(1)(e) of the said Act of 1996 to contend, the learned District Judge was the principal Civil Court as defined in the said Act of 1996. According to him, the issue now raised by Ashim would be hit by the principle of res judicate in view of his application for revision having been dismissed by the learned single Judge. He particularly referred to ground II of the revisional application, a Xerox copy of which have already been kept on record.

He cited the following decisions:-

i) All India Reporter 1945 Cal. 19 (Nani Bala Saha-VS-Ram Gopal Saha & Anr.)

ii) All India Reporter 1960 SC 629 (Champalal-VS-Mst. Samrathbai)

ii) All India Reporter 1962 SC 551 (Rikhabdass-VS-Ballabhdas & Ors.)

iii) All India Reporter 1971 Cal. -65 (Aditya Kumar De Chowdhury-VS-Naravandas De Chowdhury)

iv) All India Reporter 1995 SC 1211 Shankar Balwant Lokhande-VS-Chandrakant Shankar Lokhande & Anr.)

v) All India Reporter 1999 SC 3571 (Ravinder Kumar Sharma-VS-State of Assam & Ors.)

vi) 2004 XII SCC 189 (K.G. Shivalingappa (Dead) by Lrs. & Ors.-VS-G.S. Eswarappa & Ors.)

The award was rendered under the new Arbitration and Conciliation Act 1996. Section 36 of the new law did not require the award to be made a Rule of Court unlike Section 14 read with Section 17 of the old law being Arbitration Act 1940. However, Section 36, if given a close reading, would infer, the award could be enforced as a decree. It would not suggest, award would automatically amount to a decree as defined in Code of Civil Procedure. Under the old law, a formal decree was to be passed before it was put to execution. The new law expedited the process by extending the identical facility to the award holder without having the requirement of obtaining decree from a Court of Law that would shorten the process. In the case before us, question would however, arise as to whether the award would require registration. The learned Judge of the Court below held, it would attract the mischief of Section 2(15) of the Stamp Act and would require registration under Section17(1)(b) of the Registration Act. Hence, the learned Judge declined to entertain the application for execution. The learned Judge also held, the question would fall u/s 47 of the CPC in view of the Apex Court decision in the case of M. Anasuya Devi (Supra). In this decision the Apex Court observed, "the question whether an award requires stamping and registration is within the ambit of Section 47 of the CPC and not covered by Section 34 of the said Act."

Question would still remain, what would be the right procedure to raise such issue. The Apex Court already observed, the application for setting aside was not the right approach. Neither of the parties applied for setting aside. Initially, when the learned Judge of the Court below dismissed the application made u/s 47 the revisional Court held, the learned Judge was not correct to hold, the said application was not maintainable in absence of challenge to the award u/s 34. His Lordship rightly did so in view of the decision in M. Anasuya Devi (Supra). His Lordship observed as follows:-

The legal question decided by the learned Court below is thus left open for future adjudication. It, however, appears that the application u/s 47 of the CPC was otherwise unmeritorious and the order should be treated as an order passed on merits and not on the ground that the application u/s 47 was not maintainable.

Hence, the grievance of the respondent stood disposed of by the order of the revisional Court. We are told, none of the parties approached the Apex Court as against the said decision. Hence, the decision of the learned Single Judge attained finality. We asked for a copy of the revisional application. From the copy we find, identical issues were raised before His Lordship that the learned Single Judge categorically held as unmeritorious.

In this regard ground II and XI of the revisional application being relevant herein are quoted below:-

II) For that the award passed by the arbitrators under Arbitration and Conciliation Act, 1996 shall be enforced under the CPC in the same manner as if it were a decree of the Court.

XI) For that until and unless a partition award by arbitrator is registered and properly stamped under Indian Stamp Duty Act it does not assume the character of complete award and such incomplete award, it is submitted, is not enforceable by the Court U/S 36 of the Arbitration and Conciliation Act, 1996. The awards particularly private award, as in the instant case, would become enforceable only after its registration and if engrossed on requisite stamp paper.

Such decision would be squarely binding on the parties having not challenged before the Apex Court. Hence, identical issue could not have been dealt with by the learned Judge of the Court below. What would be the effect of the award in absence of registration could not be questioned before the learned Judge in view of the order of the revisional Court. The argument advanced before the learned Judge was nothing but repetition of the issues raised in the revisional application that were held to be unmeritorious. We do not wish to make any comment on the decision of the revisional court. Once the parties accepted such decision that would operate as res judicate against them. We however find support to the finding of the revisional court from the decision in the case of Mattapalli Chelamayya (Supra) wherein an almost identical situation the Apex Court observed, recital of the award was no more than a reference to an existing fact and would not purport to create or declare any share in any immovable property that would require a compulsory registration. Significant to note, the decision in the case of Mattapalli Chelamayya (Supra) was rendered under the old law that would require a formal decree to be passed. The present award under the new law did not have such difficulty.

Mr. Mukherjee''s contention that the enforcement of the award would be in effect a suit for partition that would require a preliminary decree to be passed, Commissioner of Partition appointed and ultimately the partition decree was required to be registered after being duly stamped under the Indian Stamp Act, was not tenable. As observed hereinbefore, the provision of Section 36 extending the relief of enforcement through execution would not mean, the award under the new Act was itself a decree or a deemed decree. It was nothing but an extension of the power of the executing Court to entertain an award even though no formal decree was passed by the Court of law.

The matter may be viewed from another angle. Execution would mean enforcement of the Court''s verdict and dictate. It was the Court''s power to implement its own decision. The award being a result of a domestic adjudication did not have any mechanism for enforcement unless it was made a Rule of Court. To obviate this difficulty, the new arbitration law extended such support to the award as well. Such extension would not ipso facto mean, award is a decree. Decree is a final adjudication by a Court of Law. If such adjudication would contain a mandate the same would be enforceable by a mechanism more specified in Order 21 of the Code of Civil Procedure. The legislature thought it fit to empower the Court of Law through appropriate laws including the CPC that was a complete code by itself covering initiation, adjudication and enforcement. The domestic forum did not have any such scope unless the Court of Law would intervene and recognize the said award by making it a Rule of Court and then allow enforcement. Under the new law the intermediary process was done away with. Again we say, what would be the effect of enforcement, we do not wish to know. We would definitely consider such issue in an appropriate case, if any, brought before us.

In the instant case, the shares were determined by the Will. It must have been probated upon payment of appropriate Stamp Duty. Whether the enforcement of Award would give them adequate title to the property or not in absence of registration of the award, was not a question germane herein. The question was, whether they would be entitled to enforce the award u/s 36.

We feel, the learned Judge could not have declined to enforce the award principally on two reasons:-

i) The issue raised by the respondent was no more res integra in view of the judgment and order of the revisional Court and,

ii) What would be the effect of enforcement or whether it would require registration or not, upon payment of appropriate duty, may be germane however, not at the stage when the learned Judge declined to entertain the execution application.

We do not wish to examine as to whether the parties would be obliged to pay Stamp Duty or any instrument would be necessary to be executed and registered to perfect the title of the parties after enforcement. We leave it open to be decided at the appropriate stage. We would say, such stage has not come.

We remand the issue back to the learned Judge for enforcement of the award on merit.

The appeal is disposed of without any order as to costs.

The lower Court records be sent down at once, if arrived in the meantime.

Since issue is long pending the Court below is requested to expedite the process of disposal.

Urgent photostat certified copy of this judgment, if applied for, be given to the parties on their usual undertaking.

Shukla Kabir (Sinha), J.

I agree.