1. The facts necessary for a proper appreciation of the question referred to us are that the suit was filed for possession of certain property and the title the plaintiff relied upon was an award dated March 1, 1925, under which the arbitrator partitioned certain properties. The trial Court dismissed the suit on the ground that as it was not filed within six years of the making of the award the plaintiff's claim was out of time and the lower appellate Court also taking the same view dismissed the plaintiff's appeal. The matter came before Mr. Justice Macklin and my learned brother Bavdekar, and it was sought to be argued before them that the proper article of the Indian Limitation Act that applied was not Article 120 but Article 144. It was contended that the plaintiff's suit was not to enforce the award but a suit for possession of property on the strength of the award and it fell not under Article 120 but Article 144, upon which Mr. Justice Macklin and my learned brother Bavdekar referred this question to a full bench.
Is an award which purports to create an interest in immoveable property capable of so creating an interest if it has not been enforced by a suit or followed by a decree under the summary procedure ?
Therefore, the question we have to decide is whether an award which on the face of it creates an interest in immoveable property in law does not create such an interest until it has been enforced by a decree under the summary procedure or a proper suit being filed on it. Considerable reliance is placed by Mr. J.C. Shah on the statement of law to be found on this question in Russell on Arbitration, at p. 2, 13th edition. It is stated that an award of itself is not sufficient to transfer real or personal property from one person to another, and at p. 420 it is stated that
an arbitrator cannot by his award transfer an interest in lands from one to another, whether the submission is by deed or not; nor can he effect a partition of land between tenants-in-common by his award for the land will not pass by it, but he must direct the parties to execute conveyances to each other of the allotted portions.
2. Our attention has been drawn by Mr. S.M. Shah to Johnson v. Wilson (1741) Willes 248 one of the cases on which this statement of the law is based. In that case the objection to the award was that it had not directed by what deeds the partition should be completed. To that the answer given was that the award itself was a partition and it sufficiently vested the estates and interest in the different parties without any further conveyances, and that argument was rejected on the ground that by the Statute of Frauds no interest in property could be created without a proper deed. Therefore, as the law stands in England, an interest in land or real estate cannot be created without a deed. That was the position under the Statute of Frauds and that is the position now under Section 52 of the Law of Property Act, But when we turn to the law in India, there is no disability which prevents the arbitrator from creating an interest in land by means of his award. Parties may refer their disputes to an arbitrator; instead of going to a Court of law they go to a domestic tribunal. The Court of law gives its decision and it is enforced by means of a decree. A domestic tribunal gives its decision by means of an award. If the arbitrator had jurisdiction and the award is otherwise valid, then it has the same binding-effect as a decree of the Court. In our opinion, in every case what we have to consider is, what was the authority of the arbitrator and what were the terms of the award If the arbitrator had authority to create an interest in property and if the terms of the award make it clear that in fact he has created such interest, there is no reason under the Indian law why such interest cannot be created by means of an award. Before the Transfer of Property Amendment Supplementary Act of 1929, the position was that any non-testamentary documents which created an interest in an immoveable property-of the value of Rs. 100 and upwards had to be compulsorily registered under Section 17 of the Act, but to this provision an exception; was made in the case of a decree or order of a Court and in the case of an award. To my mind this presupposes and implies that the Legislature when enacting the Indian Registration Act assumed that an interest in property could be created by an award, otherwise there was no reason why an award along with a decree or order of a Court should have been exempted from the provisions of Section 17 of the Indian Registration Act.
3. Both the Madras and Calcutta High Courts have taken the view that an award creating an interest in immoveable property gives rise to a title in that property and a suit can be filed for possession of that property on the strength of that award and the period of limitation is Article 144 and not Article 120. In Sornavalli Animal v. Muthayya Sastrigal I.L.R.(1900) Mad. 593 by the award the plaintiffs were held to be entitled to certain immoveable property and the suit was filed to enforce that award. The contention was that the suit was barred as it was for specific performance of a contract. The Court held that the suit was not barred as the article applicable was Article 144. In the-judgment it was stated (p. 596):-
No doubt, an award springs out of an agreement to submit to arbitration, but the award itself is a decision of the arbitrator binding upon the parties as a decision.
4. In Bhajahari Saha Banikya v. Behari Lal Basak I.L.R.(1906) Cal. 881 the suit was for recovery of possession of land on declaration of the plaintiff's right thereto on the basis of an award. There, too, it was contended that the suit was for specific performance of a contract. That contention was rejected and the Court held that the suit fell under Article 144, taking the view that a valid award was operative even though neither party had sought to enforce it by suit or under the summary procedure.
5. Mr. J.C. Shah has further argued that the award transfers property in a manner not provided by the Transfer of Property Act. The Transfer of Property Act deals with transfers of property by acts of parties and it cannot be said that when an arbitrator by his award transfers property the transfer is by an act of parties: it is the result of a decision of a tribunal. Even if Mr. Shah is right that this is a transfer by an act of parties, the Transfer of Property Act is not exhaustive; it only deals with certain kinds of transfers, and an award is not one of the transfers dealt with by the statute.
6. In our opinion, therefore, in order to determine whether an award is capable of creating an interest in property we have to consider both the terms of the award itself and the authority of the arbitrator who made the award. If the arbitrator had the necessary authority and by the terms of the award an interest is created, then such an award is capable of creating an interest in property.