Sri Harendra Singh vs Sri Vimal Kumar And Another

Sudhanshu Dhulia, J.

This is an appeal from order preferred under Section 37 of the Arbitration and Conciliation Act, 1996 (from hereinafter referred to as the "Act") against the order dated 11.04.2014 passed by the learned District Judge, Dehradun who has allowed the application of the respondent no.1 for setting aside the award under Section 34 of the Act.

Brief Facts of the case are that the respondent no.1 had entered into an agreement to sell of a piece of land on 03.01.2005, which is admittedly not a registered agreement for sale. As per the agreement, the sale deed was to take place within a period of three months. The agreement also had an arbitration clause.

According to the appellant, since the respondent no.1 was not ready and willing to execute the sale deed, the appellant invoked the arbitration clause, and moved an application under Section 11(6) of the Act for appointment of Arbitrator in the matter before this Court. Consequently, this Court, vide order dated 22.09.2007, appointed the Arbitrator in the matter who finally gave its award in favour of the appellant on 12.06.2008 directing the respondent no.1 to execute the sale deed in favour of the appellant. Inter alia, this award was challenged by the respondent no.1 on the ground that the award is against the public policy and against the settled laws in India, inasmuch as, a Suit for Specific Performance cannot be filed on the basis of an un-registered agreement for sale, in view of Section 17(1)(b) read with Section 49 of the Registration Act, 1908. Section 17(1)(b) as well as Section 49 of the Registration Act, 1908 read as under:-

"Section 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)....

(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, to or in immovable property;

Section 49. Effect of non-registration of documents required to be registered.- No document required by Section 17 or by any provision of the Transfer or Property Act, 1882 (Act No.4 of 1882) or of any other law for the time being in force to be registered shall-

(a)affect any immovable property comprised therein, or

(b)confer any power or create any right or relationship, or

(c)be received as evidence of any transaction affecting such property or conferring such power or creating such right or relationship 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 or as evidence of any collateral transaction not required to be effected by registered instrument."

It is true that a suit for specific performance cannot be filed on the basis of an unregistered agreement for sale. That being the position of law, the award was definitely in violation of the public policy and therefore, it has rightly been set aside by the learned District Judge by invoking its powers under Section 34 of the Act. Section 34(2)(b) of the Act gives power to the Court to set aside the award "if the arbitral award is in conflict with the public policy in India". Aggrieved by the said order, the appellant has filed the present appeal before this Court under Section 37 of the Act.

Powers under Section 37 have to be read along with Section 34 of the Act, wherein the 'extreme limitation' is cast upon the court to examine the matter.

All this Court has to see is, whether the court below has rightly exercised its power in setting aside or in refusing to set aside the arbitral award? The award, which is in favour of the appellant, is definitely against the public policy and the laws in force in India, inasmuch as, the suit for specific performance can only be given effect to, if the agreement for sale is registered. In the present case, it was not a registered agreement for sale. Moreover, this was also the specific objection of the respondent no.1 before the court below.

At this stage, the learned Senior Counsel for the appellant submits that the learned Arbitrator, while deciding the Issue No. 5, has also dwelled upon the Issue of giving compensation to the appellant. The learned Arbitrator has held that in addition to an amount, which the appellant has already given to the vendor/ respondent no.1 i.e. Rs.4,50,000/- (Rupees Four Lakhs Fifty Thousand Only), he is also entitled to get the compensation amounting to Rs.20,00,000/- (Rupees Twenty Lakhs Only).

However, this amount of compensation never came in the actual final award. The direction was for specific performance. Moreover, on an application moved by the respondent no.1 for setting aside the award, where a clear averment has been made that the learned Arbitrator could not give the directions for specific performance, there is no rebuttal on behalf of the appellant, in the form, that the Award, in any way, was in the alternative so as to give some other award.

In any case, correction, if any, has to be made or interpretation of the award has to be done within thirty days in accordance with Section 33 of the Act. Section 33 of the Act reads as under:-

"Section 33. Correction and interpretation of award; additional award.- (1) Within thirty days from the receipt of the arbitral award, unless another period of time has been agreed upon by the parties-

(a) a party, with notice to the other party, may request the arbitral tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award;

(b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award.

(2) If the arbitral tribunal considers the request made under sub-section (1) to be justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form part of the arbitral award.

(3) The arbitral tribunal may correct any error of the type referred to in clause (a) of sub-section (1), on its own initiative, within thirty days from the date of the arbitral award.

(4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award.

(5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request.

(6) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, give an interpretation or make an additional arbitral award under sub-section (2) or sub-section (5).

(7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional arbitral award made under this section."

Since Section 33 of the Act has never been invoked by the appellant. The appeal fails and it is hereby dismissed.