Het Lall vs Upendra Nath Basu and Others

Madan, J.—This is an appeal by the plaintiff Babu Het Lall against an order of the Additional Subordinate Judge of Patna refusing to make a private award dated 1st October 1930, a rule of the Court and to pass a decree thereon. The relevant facts are that the plaintiff, defendant 2 and defendant 3 are the sons, and defendant 4 is the grandson of one Rai Sahib Ishwari Prasad, who was resident in Benares City where defendant 1, Babu Upendra Nath Basu, also lives. In the year 1908 defendant 1 bought at a Court sale the proprietary right in village Raitar which is in the Bihar Sub-division of the Patna District. The property was subject to heavy encumbrances, and in the year 1912 defendant 1 borrowed from Ishwari Prasad, who is said to have been his close friend, a sum of Rs. 50,000 for paying off part of the encumbrances. No document was executed in favour of Ishwari Prasad, but there was an oral agreement that if the money was not repaid, Ishwari Prasad should become a half-sharer in the property. In the year 1914 there was a further oral agreement, whereby Ishwari Prasad was recognized as half owner of the property which was valued at the sum of Rs. 1,34,000. The management remained with defendant 1, but thereafter Ishwari Prasad appeared as co-sharer in the zemindari papers first in his own name and then in that of Raghunathji, his family deity.

In the year 1924 Ishwari Prasad died, and a dispute arose between the plaintiff and defendants 2 to 4 over the division of his estate. The dispute was referred to the arbitration of Babu Chintamani Mukerji and Rai Sahib Jwala Prasad, and by their award, which is of February 1926, the arbitrators divided the property into four parts, and their award was made a decree of the Court. By this award Raitar was divided equally between the plaintiff and defendants 2 to 4. As they had no title deed in respect of this property, these persons approached defendant 1 who, on 25th April 1925, made a written declaration to the effect that he had purchased the property in the year 1908 while it was heavily encumbered, that Ishwari Prasad had lent him the sum of Rs. 50,000 at six per cent. interest with the option of taking over a half-share in the property, and that in the year 1924 the property had been divided accordingly. Defendant 1 expressed his willingness, after accounts had been made up, to execute such proper instrument as the plaintiff and defendants 2 to 4 might unanimously wish, or in the event of difference between them such as might be reasonably required by an arbitrator appointed by them. Meanwhile the property was to remain with defendant 1. On 28th December 1927, defendant 1 executed a draft sale deed in respect of one-quarter of the half, share in favour of the plaintiff alone. It was recited therein that the annual income of the half-share was Rs. 3,000 and that the plaintiff had agreed to accept a portion yielding an income of Rs. 750 as his own share together with the sum of Rs. 2,000 paid in cash. This sale deed, however, was never formally executed probably because of further differences that arose between the heirs. The result of these differences was that on 3rd April 1928, there was an agreement between the parties to refer the matter to the same arbitrators who had decided the former dispute. The reference was in the following terms:

Whereas differences have arisen between us and the two parts aforenamed regarding the accounts and transfer of Raitar property in the District of Patna by Babu Upendra Nath Basu of the first part, we hereby of both the parties of our free will and accord refer our dispute to the arbitration of Rai Sahib Jwala Prasad, Chief Engineer, Irrigation, U.P., and Shrijut Babu Chintamani Mukerjee, Sonarpura, Benares, and faithfully promise and bind ourselves hereby to abide by any award they may make in respect of the said dispute and to abide by their decisions; and we further authorize them to adopt whatever procedure they may deem fit and proper in order to settle our dispute.

On 1st August 1930, the arbitrators submitted their award which was registered before the Sub-Registrar of Benares, and, as the terms of this award have given rise to the present controversy, I quote them in full:

Know all men to whom it may concern that we ... give our award as follows:

(1) That the amounts specified in the statement of accounts passed by us attached hereto and marked as Ex. B should be paid with interest at eight annas per cent, per month within three months of to-day after which period the rate of interest shall be ten annas per cent, per month on any balance unpaid till the amounts are fully paid up.

(2) That Babu Upendra Nath Basu requested us that in respect of transferring the above said Raitar property to the second party he may be allowed to pay any sum fixed by us in lieu thereof so as to save the property from being ruined, and we were asked by the party to fix the sum to be so paid by the first party to the second party. We accordingly directed that the said Babu Upendra Nath Basu do pay Rs. 15, 350 to each of the four gentlemen of the second party, that is to say, a total sum of Rs. 61,400 as the equivalent of the share of the second party in the said property with interest at six per cent, par annum accruing from 1st October 1930. If the said amount is not paid by 1st October 1931, the rate of interest thereafter shall be 7� per cent, per annum on the whole or any balance left unpaid.

The ownership of the second party in one-half of Raitar property shall not cease till after the above sum of Rs. 61,400 as well as the amounts mentioned in the statement Ex. B, together with interest specified in respect of both be fully paid up.

Thereafter the plaintiff applied to the Subordinate Judge of Benares under Para. 20, Schedule 2, Civil P.C., for filing the award in Court and passing a decree thereon. Defendant 1 resisted the application on various grounds, one of which was that the Subordinate Judge of Benares had no jurisdiction over the subject matter of the award. The Subordinate Judge held that as the heirs of Ishwari Prasad were not at that time the legal owners of the half-share in the property, and as the effect of the award was merely to grant certain sums of money to the applicant and his co-heirs, he had jurisdiction over the matter, and he, therefore, ordered the award to be made a rule of the Court, excepting the portion dealing with the ownership of the Raitar property which portion he treated as a nullity. On appeal the Allahabad High Court held that the award did determine that the heirs of Ishwari Prasad had a legal title to a half-share in the Raitar property and that they were entitled to retain their ownership until they have received certain sums of money from the appellant.

Their Lordships observed that the arbitrators in effect gave Ishwari Prasad''s heirs a charge over the Immovable property until the specified sums were paid to them, and they allowed the appeal holding that the order of the Subordinate Judge of Benares was without jurisdiction. This decision is reported in B. Upendra Nath Basu Vs. B. Het Lal and Others . The plaintiff accordingly re-filed his application in the Court of the Subordinate Judge of Patna with a further prayer that a mistake in the calculation of the arbitrators should be corrected, and that he and his co-heirs should be declared to be entitled to receive the sum of Rs. 16,800 each in place of the sum of Rs. 15,350 each awarded to them. This claim which was disallowed by the learned Subordinate Judge was not pressed before us. Defendant 1 again opposed the application on various grounds, and mainly because the arbitrators had failed to determine the most important question at issue between the parties, namely what was the effect of a will said to have been executed by Ishwari Prasad in the year 1923. He also claimed that the award, inasmuch as it purported to create title in favour of himself in respect of Immovable property, required to be registered, and its registration by the Sub-Registrar of Benares was without jurisdiction. The learned Subordinate Judge rejected the contention of defendant 1 regarding the will but upheld it on the ground of non-registration and he, therefore, rejected the application. The plaintiff has now filed this appeal which has been contested by defendants 1 and 4.

Three points have been argued before us in this appeal: (1) Whether or not the sub paragraph to Clause 2 of the award required to be registered; (2) whether in that case it was open to the Court to separate the sub-paragraph from the rest of the award and to pass a decree on the good portion of the award; (3) whether the whole award is bad as not determining the question of the will. On the first point Mr. S.N. Bose for defendant 1 contended that the award did require registration because it created or at any rate declared title in Immovable property worth more than Rs. 100. Now it is clear that at the time of the award the heirs of Ishwari Prasad had no legal title in the property inasmuch as there was no existing title deed in their favour. Their legal position was that of a party to a contract for sale in default of repayment of the money lent by Iswari Prasad. A contract for sale does not require registration nor did the award, regarded as a release from the contract, require to be registered. The award does refer to the continuance of the ''ownership'' of the plaintiff and his co-heirs, but a document of this character cannot be treated exactly as though it were a formal instrument drawn up under the advice of lawyers who are expected to understand the exact legal position of the parties.

The question before us is whether the arbitrators intended their award to operate as an instrument of title changing the status of the parties, or whether their intention was to reserve the existing right of the heirs, namely, the right to a conveyance of a half-share in the property if their dues were not paid. In my opinion the language of the award itself, directing that the ownership of the heirs should "not cease" until the money had been paid, supports the latter alternative. It is not surprising if the arbitrators, seeing that the heirs were admittedly in possession of half of the property, described them as owners although actually they were not so, and the use of this word in the award must, I am satisfied, be ascribed to a defect in drafting on the part of the arbitrators, and not to an intention on their part to confer legal ownership on the heirs by changing the statue of the parties. The position would have been different, had the arbitrators fixed a time limit for the payment of the money, on the expiry of which the heirs of Ishwari Prasad were to become the absolute owners of the property. In that case the award would have become a document of title requiring registration. In the absence of a time limit the arbitrators left it to the heirs to take action themselves for recovery of the money due in default of payment, or for obtaining a transfer of the property. For these purposes the award was not a document of title.

In my opinion the observation of their Lordships of the Allahabad High Court that the award did in effect create a charge on the property must be construed in the light of the above observations, which are based on a consideration of the true legal position of the parties. In reality the award recognized an existing right, which did in effect amount to a charge on the property. It was argued for defendant 1 that the award still required to be registered as it did declare the existing title of the heirs in the property. This point arose in AIR 1932 55 (Privy Council) , where it was held that Section 17, Registration Act, does not apply to cases where, as in the present case, a document is merely an acknowledgment of a pre-existing right. In Imperial Bank of India Vs. Bengal National Bank Ltd., , the word "operate" in Section 17 has been held to refer to the immediate intention of the instrument in question, and not to its ultimate consequences or collateral effects. It is only where there is an immediate intention to create, declare or assign title, that the document requires registration. In my opinion the award in this case did not create, assign or declare title, and it did not, therefore, require to be registered.

The question whether, assuming that the sub-paragraph in the award required to be registered, it was still open to the Court to separate that sub-paragraph from the rest of the award and proceed to pass a decree was also argued at length before us. Mr. Agarwala for the plaintiff referred to Russell on Arbitration, Edn. 11, p. 240, where cases are collected in which the English Courts have held that the bad portion of an award is separable from the good portion. In Selby v. Whitbread & Co., (1917) 1 KB 736 there is a discussion on the same point and the same principle is affirmed. The matter also came before the Privy Council in the Oudh case, Amir Begam v. Badruddin, AIR 1914 PC 105 which was a case arising from a private award: their Lordships, holding in that case that a portion of the award bad for want of jurisdiction could be separated, observed at p. 342:

It is well recognised law that when a separable portion of an award is bad, the remainder of the award, if good, can be maintained.

The same principle was followed in Muhammad Khalil v. Abdul Rahim AIR 1925 Pat 810, which was also a case where the arbitrators had exceeded their jurisdiction, Mr. S.N. Bose contended that this principle applies only to cases where the arbitrators had exceeded their authority such as are referred to in para. 14, Schedule 2 of the Code, and not to cases where the arbitrators had not gone beyond the terms of the reference. This point does not appear to have been dealt with in any reported decision of this Court, but it was raised in the Oudh case, Mata Badal Singh v. Sheo Mangal Singh AIR 1936 Oudh 72. In that case King, C.J. and Smith, J. observed with reference to the Privy Council decision, quoted above, that the dictum of their Lordships was couched in quite general terms and did not limit the applicability of the proposition enunciated by them to any particular set of facts and circumstances. I do not, however, find it necessary to decide the somewhat difficult question whether or not the award in, this case is capable of being divided, in view of my finding already arrived at that the award did not require to be registered.

Lastly, there is the argument that the whole award is bad as it does not deal with the question of the will. Admittedly there is in existence a document purporting to be a will executed by Iswari Prasad in the year 1923. The will not having been probated or attested is inadmissible in evidence in this case so far as it relates to the Raitar property, which is in this province. According to defendant 1 and defendant 4, whose case was argued before us by Mr. Bankim Chandra De, the question of the validity of the will was uppermost in the minds of the parties at the time of the reference to arbitration. In that case it is remarkable that the reference itself contains no mention of the will, nor do I find any passage from which it can reasonably be inferred that the question of will was to come before the arbitrators. The only matter for their decision was the dispute about the transfer of the property to the heirs of Ishwari Prasad and in Ex. 7, a letter written by defendant 1 shortly before the reference, defendant 1 admitted his liability to execute a deed of relinquishment in favour of the heirs. Ex. D is another letter written by defendant 1 to the arbitrators on 19th October 1928 with reference to the will, but the letter itself shows that the will was not part of the subject matter of the reference. It is to the effect that defendant 1 had found that Ishwari Prasad had executed a will, and he, therefore, asked, as a matter of justice to the parties, that the arbitrators should refer the question of the validity of the will to the Allahabad High Court (although no such procedure is known to the law) before proceeding to determine the matters referred to them. This clearly implies that at that time defendant 1 himself did not consider that the will was part of the reference to the arbitrators.

The result of the letter was that the arbitrators did devote some consideration to the will and examined one Kishan Chandra, co-executor with defendant 4 under the will, but the arbitrators did not decide about the will as it was beyond the scope of their reference. This appears from the evidence of Rai Bahadur Jwala Prasad, one of the arbitrators, who has explained that the arbitrators did not decide about the will as it was not in their terms of reference nor were they authorized to do so. In fact the arbitrators were not in a position to decide the matter at all, as Kishun Chandra, one of the executors was not a party to the proceedings before them, a fact which defendant 1, who is a qualified lawyer, should have been fully able to appreciate. Again, on 9th January 1931, defendant 1 wrote a postcard which is Ex. 17/C, to defendant 2, wherein he urged defendant 2, as having accepted the award, to get it filed in Court without further delay. The postcard shows that at that time defendant 1 himself accepted the award as complete and final between the parties. Under the Succession Act a will executed in the United Provinces in the year 1923 did not require either probate or attestation in respect of properties situated in that province; but it is remarkable that in spite of this no step was taken in support of the will for a period of more than twelve years. Defendant 4 in his evidence admitted that he himself had done nothing about it, nor was he aware that anything had been done by his co-executor. The will is said to have been in favour of an institution called the Tulsi Technical Institute, but from the evidence of defendant 1 it appears to be doubtful whether any such institution really exists, and it is clear that the will was disregarded by all the parties concerned. The evidence shows conclusively that, the matter of the will was not referred to arbitrators, nor were the arbitrators competent to decide it.

The learned advocate for the plaintiff suggested that defendant 1, in collusion with defendant 4, has changed his attitude towards the will as since the year 1928, the time of the reference, the value of landed property has fallen and defendant 1 is now anxious to surrender the half-share instead of paying the money. It is the case of defendant 1 that at the time of the arbitration he was really in doubt as to the effect of the will, but admittedly defendant 1 has since executed a sale deed in respect of a half-share of the property in favour of defendant 4, ignoring the rest of the heirs. The learned advocate for defendant 1 found it difficult to defend this action of his client in turning round and supporting the will against the legal heirs. The result has been unfortunate as Mr. Agarwala suggested that the plaintiff would still have been willing to settle the matter and take his share in the property in lieu of payment, had defendant 1 not put himself out of Court in executing the sale deed, the bona fides of which are open to serious question. Since the award the plaintiff and defendants 1 and 2 have filed a suit against the remaining defendants and the executors for the decision of all the matters in dispute between the parties including the question of the will, but Mr. Agarwala explained that the suit was filed as a matter of precaution, in view of the result of the present proceeding in the lower Court and in order to save limitation. The filing of this suit is no obstacle to the plaintiff''s success in this appeal the result of which is that both the objections taken to the award must fail. I would, therefore, allow this appeal and direct that the award be filed and made a decree of the Court. The plaintiff is entitled to costs of both Courts against defendants 1 and 4.

Mohamad Noor, J.

I agree.