Avadh Behari, J.
(1) This case raises an interesting question of law regarding the registration of an arbitration award made with the intervention of the court on which there is scant authority in our law books in recent years.
(2) On August 9, 1958, a partnership business was started for colonising and sale of plots. Dalip Singh, Raghbir Singh, Net Ram, Hari Shankar Bhargava, Mattu Mal Gupta and Moti Ram were the original partners. Dalip Singh separated from the partnership. Remaining partners continued the partnership business and a new deed of partnership was executed on October 9, 1958. This partnership business was known and styled as Shankar Housing Corporation.
(3) Raghbir Singh and Net Ram were the sole owners of the land which formed Shankar Garden. The land was divided in two blocks block A and B. Raghbir Singh and Net Ram agreed to transfer their rights in the said land to the partnership for purpose of its development and sale of plots.
(4) Some plots of land were sold to purchasers. The partners then experienced difficulty in the development of the remaining land. It was realised in 1964 that the development work would take not less than 3 years more. To consider the situation a meeting of the partners was held on August 28, 1964. The meeting continued on August 29, 1964. At that meeting Net Ram expressed a desire to retire from the partnership and after deliberations it was decided by other partners that Net Ram should be allowed to retire. It was agreed that profits and losses of Shankar Housing Corporation would be calculated up to August 31,1964, in accordance with certain principles which were also formulated. The decisions and the principles were recorded in writing in a document. Ex. P-24.
(5) At the stage of settlement of accounts disputes arose between Net Ram and other partners. Hari Shankar Bhargava, petitioner, tiled an application on October 28, 1964 under Section 20 of the Arbitration Act (hereinafter referred to as the Act). The partnership deed dated October 9, 1958, contained a clause regarding arbitration for the settlement of disputes. The petitioner prayed that the arbitration agreement be filed in court and the disputes be referred to an arbitrator. In the clause it was provided that the arbitrator shall be a chartered accountant.
(6) The application made by the petitioner was contested by Net Ram alone. The other partners, who are respondents I to 3 now, supported the petitioner's claim. After protracted legal proceedings Jagjit Singh J. by order dated July 22, 1969, ordered the agreement to be filed and referred the disputes between the parties to Shri H. S. Ahuja, a chartered accountant of Delhi as the sole arbitrator. The learned Judge in his order formulated the disputes which required settlement by arbitration. The disputes are :
(I)Dispute relating to transfer of the land of rectangle No. 6 (Killa No. 22/2, 23) and rectangle No. 9 (Killa No. 3/1, 8, 13, 18), situated in the area of the village Posangipur, Delhi, in favor of the firm, and
(II)Dispute regarding the amount claimed by the petitioner on the basis of the terms for determining profits and losses as agreed to by the retiring partner Net Ram.
The first dispute related to refusal to transfer the land by Net Ram in favor of the partnership. The second dispute related to the amount due from Net Ram on account of the losses of the firm. Net Ram died in 1967. He left behind five sons, three daughters and a widow. They are respondents 4 to 12 before me. The legal representatives of Net Ram preferred an appeal against the order of Jagjit Singh J. That appeal was dismissed. The sole arbitrator heard the parties. The proceedings continued for more than two years. On July 25, 1972, he made his award. On the first dispute referred to the arbitrator he held as follows:-
'In respect of the dispute relating to the transfer of land as detailed above in clause (a) being the first issue I hold that the firm known as Shankar Housing Corporation Block A & B Tilak Nagar, New Delhi had the absolute right to the transfer of land. As per the records, part of the land has already been sold and registered by Late Shri Net Ram in the name of the respective parties on the directions of the firm. The remaining land i.e. 15925 sq. yds. now remains to be transferred to Shankar Homing Corporation, Block A & B Tilak Nagar, New Delhi.'
(7) As regards the second dispute he found that a sum of Rs. 35,857.43 was due from Net Ram to the other partners. On August 3, 1972, the petitioner moved an application under Section 14(2) of the Act praying to the court that the arbitrator be directed to file the award in court. This application was registered as Suit No. 316-A of 1972. The arbitrator filed a separate application under Section 14 of the Arbitration Act on December Ii, 1972 (IA 2043 of 1972). He filed the award together with the depositions and documents taken or proved before him. Objections were filed to the award under Sections 30 and 33 of the Act by the legal representatives of deceased, Net Ram (IA 96 of 1973). They are the real contesting parties. The co-partners of the petitioner, viz., respondents 1, 2 and 3 support him. On the objections of the legal representatives I framed the following issues on January 18, 1974 :-
1. Whether the Arbitrator misconducted himself and the proceedings for the reasons given in the objection-petition ?
2.Whether the Arbitrator made an award in respect of matters outside the scope of the reference ?
3.Whether the award requires registration, if so, what is effect of its not being registered ?
Evidence was ordered to be taken on affidavits. The parties have filed their affidavits. Issue No. 3 I will first take up issue No. 3. The main question debated before me by the counsel for the legal representatives of Net Ram is that the award of the sole arbitrator was compulsorily regigtrable under Section 17(l)(b) of the Registration Act and since it was not registered the award cannot be enforced This is the main question which is to be decided and as I have said there is scant authority on this question under the Arbitration Act, 1940. Mr. Bhatia, counsel for the petitioner, has raised a three-fold argument. He says that the document does not require registration for three reasons.
(8) Firstly, it is submitted that the award does not create or declare a right in immovable property. It is, according to the counsel, a mere finding of the arbitrator. It is further submitted that the award by itself does not create a right as either execution will have to be taken out of the award or some independent proceeding will have to be launched in order to make the award effectual. I have already set out the operative portion of the award in this regard.
(9) In my opinion, the award docs create or declare a right in favor of Shankar Housing Corporation. The arbitrator has in so many words held that the Corporation 'had the absolute right to the transfer of the land' and that '15925 square yards now remains to be transferred to Shankar Housing Corporation, Block A and B.' The dispute referred to the arbitrator was in respect of 15925 square yards of. land. Net Ram refused to transfer it. It is not dispuled that this land stood in the name of Net Ram. Before the partnership could lay claim to it the dispute had to be decided. The arbitrator decided the dispute and held that the partnership was entited to the transfer of land and had an 'absolute right' to it. The arbitrator created a right in favor of the partnership or in any case he declared the right of the partnership to this land. I, thereforee, do not agree with Mr. Bhatia that the award docs not create a right and is not required to be registered.
(10) The second reason advanced by Mr. Bhatia is that this operative portion of the award at best amounts to an assignment of interest of Net Ram in favor of the partnership. He relies on Narayanappa v. Bhaskara Krishnappa Air 1965 Sc 1300 in that case it was held that a document recording the fact of refinquishment of interest by a partner in partnership assets by way of adjustment was not compulsorily registrable under Section 17(1) of the Registration Act. This is true that the interest of a partner in the partnership assets has been held to be movable property and a document evidencing . relinquishment of that interest docs not require registration. But here it cannot be said that Net Rani was relinquishing his interest in the land. The land was an asset of the partnership. The other partners wanted him to transfer the entire land to the partnership because they had already paid Rs. 15085 to Net Ram as price of the land. The dispute was regarding the ownership of a partnership asset. I do not agree that this portion of the award amounts to an assignment and, thereforee, did not require registration.
(11) Lastly, Mr. Bhatia submitted that as the award was given by an arbitrator appointed by the court in proceedings under Section 20 oil the Act the award was a part Of the judicial proceeding and, thereforee, did not require registration. Mr. R. M. Lal, counsel for the legal representatives, combats this argument by saying that the proceedings under Section 20 of the Act did not make any difference and the award was compulsorily registrable.
(12) In order to decide this last contention of Mr. Bhatia it is necessary to consider the scheme of the Arbitration Act (Act X of 1910). Broadly speaking the Act contemplates three kinds of arbitration. Chapter Ii is entitled as 'arbitration without intervention of a court'. Chapter Iii is headed as 'arbitration with intervention of a Court where there is no suit pending'. Chapter Iv has the title of 'arbitration in suits'.
(13) The three clauses of arbitration were dealt with in paras 1, 17 and 20 of Schedule Ii, Code of Civil Procedure (1908) before its repeal and thereafter in Chapters Iv, Iii and Ii of the Indian Arbitration Act respectively.
(14) In a way awards fall under two categories-awards made with the intervention of the court and awards made without the intervention of the court. Chapters Iii and Iv both deal with arbitrations with the intervention of the court. Chapter Ii deals with arbitration without intervention of the court. This means that the agreement of reference is made and the arbitration itself takes place without the intervention of the court and the assistance of the court is only sought to give effect to the award.
(15) In this case we are mainly concerned with Chapter Iii, for the petitioner started proceedings under Section 20 and in those proceedings Jagjit Singh J. ordered the arbitration agreement to be filed and referred the matter to the sole arbitrator. His judgment was upheld in appeal. Now the main question to be answered is whether an award given in pursuance of the proceedings under Section 20 of the Act requires registration or not. At this stage section 20 may be read :-
(1)Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agreement or any part of it, and where a difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter Ii, may apply to a Court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in court.
(2)The application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interested or claiming to be interested as plaintiff or plaintiffs and the remainder as defendant or defendants, if the application has been presented by all the parties, or, if otherwise between the applicant as plaintiff and the other parties as defendants.
(3)On such application being made, the Court shall direct notice thereof to be given to all parties to the agreement other than the applicants, requiring them to show cause within the 'time specified in the notice why the agreement should not be filed.
(4)WHEREno sufficient cause is shown, the Court shall order the agreement to be filed and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or, where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the Court.
(5)THEREAFTERthe arbitration shall proceed in accordance with, and shall be governed by, the other provisions of this Act so far as they can be made applicable.'
In Schedule II. Code of Civil Procedure. 1908, paragraph 17 read as under :-
(1)Where any persons agree in writing that any difference between them shall be referred to arbitration, the parties to the agreement, or any of them, may apply to any court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court.
(2)The application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interested or claiming to be interested as plaintiff or plaintiffs, and the others or other of them as defendants or defendant if the application has been presented by all the parties or, if otherwise, between the applicant as plaintiff and other parties as defendants.
(3)ONsuch application being made the Court shall direct notice thereof to be given to all the parties to the agreement, other than the applicant, requiring such parties to show cause within the time specified in the notice, why the agreement should not be filed.
(4)WHEREno sufficient cause is shown, the Court shall order the agreement to be filed, and shall make an order of reference to the arbitrator appointed in accordance with the provisions of the agreement, or if there is no such provision and the parties cannot agree, the Court may appoint an arbitrator.'
On a comparison of the two provisions it will be noticed that subsection (5) of Section 20 was a new addition made by the Legislature in 1940. Sub-section (1) was redrafted, while very little change
(16) Now it is significant to notice that Chapter Iii provides for arbitration with the intervention of acourt. Under the Chapter suit is pending but the parties can take proceedings under Section 20 for filling court the arbitration agreement and for making referee to the arbitrator. The distinction between Chapter Iii and Chapter Tv is that under Chapter Iii the parties without having recourse to legation agree to refer their differences to arbitration and it is desired Lt the agreement of reference should have the section of the court while under Chapter Iv the parties to a litigation in a pending suit desire to refer to arbitration any matters in difference between them ' in the suit. (See Ghulam Khan v. Mohd. Hasan, 29 I.A. 51. Under Chapter Iv after the matter is referred to arbitration the court does not deal with the matter in suit. (S. 23). The arbitrator them makes the award. The award is to be filed in court. Thereafter the parties have to take proceedings as laid down in Sections 14, 15, 16 and 17 of Chapter II. This is sufficiently clear from Section 25 which is as under :-
'25The provisions of the other Chapters shall, so far as they can be made applicable, apply to arbitrations under this Chapter: Provided that the Court may, in any of the circumstances mentioned in Section 8, 10, 11 and 12 instead of filling up the vacancies or making the appointments, make an order superseding the arbitration and proceed with the suit, and where the Court makes an order super- seding the arbitration under section 19, it shall proceed with the suit.'
(17) The upshot of this discussion is that Sections 14, 15, 16 and 17 are as much applicable to Chapter Iv as to Chapter III. Whether the proceedings are under Chapter Iii or Chapter Iv the procedure for filling the award, its modification, remission and making rule of the court is I the same. It appears that to a large extent the procedure in the two Chapters-Chapter Iii and Chapter IV-is very much alike as would appear from sub-section (5) of Section 20 and Section 25. If any objections are to be filed to an arbitration award whether made in pursuance of Section 20 or Section 21 the objections are to be filed under Section 30 of the Act. The only important difference between the two Chapters is that while in Chapter Iii no suit is pending in Chapter Iv the suit remains pending uptil the award is made and a decree is passed in terms thereof. The court has also been given the power to supersede the arbitration and where the court makes an order superseding the arbitration under Section 19 it proceeds with the suit. But Section 19 is equally applicable to a case falling under Section 20. (Abdul Hakim v. Chairman, Air 1950 Lah 32.
(18) The outstanding fact which emerges from this discussion is that an arbitration award made under Section 20 is made with the intervention of a court. Section 20 gives an option to a party to apply under that section instead of Chapter II. The award is in other wards, the result of judicial proceedings taken by a party under Section 20. The arbitrator derives his power and authority from the order of the court made under Section 20. H ereceives a mandate from the court empowering him to settle the dispute between the parties. Such a proceeding is a judicial proceeding and continues until such time as an award made in consequence thereof resuite in a decree or the reference is superseded or the award made thereon is set aside. The important fact to notice is that under Section 20(2) the application of a party has to be registered as a suit and the party claiming to be interested is styled as a plaintiff and the remainder of the parties are styled as defendant or defendants. Now if the award has been made in judicial proceedings then it is well settled that it does not require registration. The Privy Council has repeatedly laid down that a document which forms part of the judicial proceedings docs not require registration : See Bindesri Naik v. Gangasaran Sahu and others. (1897) 25 is 9 and Pranal Anni v. Lakshmi Acni and others, (1899) 26 is 101.
(19) In a number of decided cases under the Code of Civil Procedure of 1908 Schedule Ii it was consistently held that an awarded on a reference by the court under para 17 on an agreement to er is a pan of a judicial proceedings and does not require registration for it has no force until it is embodied in the decree : Sec Kya Hla Pru v. Ma Pan Mra Pru and others, Air 1935 Ran 16, Hassanand v. Jodhomal, Air 1936 Sind 79, Kessomal Kishnomal and another v. Gianchand Salamatrai and others, Air 1937 Sind 156 and Sher Bahadur Singh v. Ram Narain Singh, Air 1945 Oudh 1. In Hassanand (supra) Davis J. C. said :
'NOW,it appears to us that a distinction must be drawn between awards made with and award made without the intervention of the Court; that where an award is made with the intervention of the Court, the award is part of a judicial proceeding and comes within the general principle laid down by the Privy Council in 20 All 171* and does not require registration; and that an award made without the intervention of the Court does require registration.'
(20) This is also the view of Sir D. F. Mulla in his book, Indian Registration Act (8th Edition) page 113 and I do not see any reason why the same view should not be taken in respect of an award made in pursuance of the proceedings taken under Section 20 of the Act of 1940. I, thereforee, hold that the award is a part of the judicial proceedings and need not on the principle of Pranal Anni (supra) (5) be registered.
(21) Mr. R. M. Lal, counsel for the legal representatives, placed great reliance on three recent Supreme Court decisions. The first is Satish Kumar v. Surinder Kumar, : 2SCR244 . In this case the Supreme Court held that an award given under the Arbitration Act on a private reference required registration under Section 17(l)(d) of the Registration Act if the award affected partition of immovable properties exceeding the value of Rs. 100. There was conflict of opinion amongst the High Courts in India: prior to this decision. Punjab and Patna High Courts had held that the award did not require registration. Other High Courts took a contrary view. Their lordships of the Supreme Court held that the award does create rights in property even though it is not made decree of the court. In Satish Kumar (supra) (10) the Supreme Court was concerned with an award given on a private reference. It was a case under Chapter Ii of the Act. Sikri, J. who delivered the main judgment was careful to add :
'WEmay make it clear that we are dealing only with an award made on a reference by the parties without the intervention of court.'
These observations of their Lordships are entitled to great weight. In my view different principles govern an arbitration award given with the intervention of the court whether a suit is pending or not.
(22) The next case relied upon by the counsel for the legal representatives is M. Chelamayya v. M. Venkataratnam, : AIR1972SC1121 , (II). In this case also the court was dealing with an award made on a private reference. It was held that one part of the award required registration and was, thereforee, bad. The other part of the award which did not require registration was held to be severable from the part requiring registration. Their Lordships giving effect to the doctrine of seveirability made that part of the award which did not require registration a rule of the court. The third case cited by Mr. R. M. Lal is Ratan Lal v. Purshottam Harit, : 3SCR109 . This again was not a case of an award given in pursuance of the proceedings under Section 20 of the Act. The dispute between the parties in this case was referred to two arbitrators without the intervention of the court. They made the award. It was held that the award required registration and being unregistered could not be looked at and the court could not pronounce judgment in terms of the award under Section 17 of the Act. All the three cases noted above were cases of awards made on a private inference without the intervention of the court. Award in this case was given in arbitration with the intervention of the court. In my view these three decisions do not assist me in deciding the question I am called upon to answer. On issue No. 3 I would, thereforee, hold that the award does not require registration. Issue No. I I now turn to issue No. 1. In a long petition of objections under Sections 30 and 33 running into 20 pages a large number of objections have been taken to the award. The counsel for the legal representatives has, however, pressed only the following objections which I now proceed to notice.
(23) The first and the foremost objection taken to the award of the arbitrator by Mr. R. M. Lal is that the award is biased and is liable to be set aside. This objection is founded on the claim of fees made by the arbitrator for the work done by him. In an application dated March 3, 1972, the arbitrator claimed a sum of Rs. 42.000.00 on account of his fees before he could deliver the award. This application was heard by Chawla, J. On October 18, 1972, the court ordered the arbitrator to produce the proceedings and the award before the question of fees could be decided. On November 7, 1972, the learned Judge held that a sum of Rs. 3000.00 will be adequate fee for the arbitrator's labours. He also allowed a sum of Rs. 150.00 to the arbitrator for engaging a counsel. He directed the petitioner to pay the sum of Rs. 3150.00 to the arbitrator in the first instance. The petitioner paid that amount to the arbitrator. The arbitrator filed the award in court on December Ii, 1972, though he had already made the award on July 25, 1972, as already noticed.
(24) Mr. R. M. Lal contends that the arbitrator was biased against the legal representatives because of their opposition to to the fees which he claimed. The opposition to claim for extravagant fees, he says, created animosity in the mind of the arbitrator against the legal representatives and, thereforee, the award was made against them. I find no substance in this argument. The award had already been made on July 25, 1972. Chawla, J. fixed Rs. 3000.00 on November 7, 1972, as the fees of the arbitrator. How could the arbitrator's mind be prejudiced when the court reduced the fees subsequent to the making of the award.
(25) SECTION- 38 of the Arbitration Act provides that disputes as to arbitrator's remuneration are to be settled by the court. If the arbitrator refuses to deliver his award except on payment of fees demanded by him the court may, on the application in this behalf, order that the arbitrator shall deliver the award to the applicant on payment into court by the applicant of the fees demanded. Thereafter the Court holds an enquiry and finds out what ought to be the proper fees of the arbitrator. The court then makes an order that such sum be paid to the arbitrator by way of his fees as the court considers reasonable and the balance to be refunded to the applicant. This was the procedure which the arbitrator adopted. He claimed Rs. 42,000.00 . The court found that Rs. 3150.00 ought to be reasonable fees.
(26) Mr. R. M. Lal then argued that it is possible that after Chawla, J. fixed the fees on November 7, 1972, the arbitrator may have changed the award because he was piqued by the opposition. There is nothing to show that the arbitrator changed his award. There is not even an allegation of the respondents to this effect and much less any evidence. This, in my opinion, is no more than a trumpery charge against the arbitrator. I do not think it is justified.
(27) The second ground of attack was that the arbitrator went wrong in determining the rate of development charges. While arriving at the cost of the land the arbitrator also took into account the development charges spent by the firm amounting to Rs. 6,50,566.00 as that was an outlay. He calculated the development charges at Rs. 11.50 per square yard of plotting area. Net Ram himself had agreed to this rate of Rs. 11.50 in his life time when he attended the meeting dated 28th and 29th August, 1964. This was one of the agreed principles for computation which was reduced .into writing in Ex. P24.
(28) It was then argued that the arbitrator did not take into consideration the evidence adduced by the parties. I cannot read the evidence as the arbitrator has not referred to any evidence in the award. He has not given any reasons for his award. He has not invited the court to the reading of any witnesses' statement or document. I am not sitting in appeal over the award of the arbitrator.
(29) The last objection raised was that a sum of Rs. 50,000.00 was included by the arbitrator on account of expenses of whiskey, mutton, chicken and sodawater. This objection is stated to be rejected.
(30) In this connection it may be useful to set out that portion of the award which deals with the second dispute. As regards the second dispute the arbitrator said :
'In respect of , second dispute, the petitioners' original claim from the respondents was a sum of Rs. 59,951.88 which has later on been revised during the course of the arguments advanced to a figure of Rs. 41,253.43 being due from the respondents. Likewise the respondents have claimed from the petitioners a sum of Rs. 3,09,423.04. This claim of the respondents is after the adjustment of the profit that should arise to the firm on the basis of the formula agreed upon between the parties in their meeting on 29-8-64. After carefully going into the documents I hold that the profit or loss should be determined on the basis of the formula as under :
'Total sale value 9,01,261.41 Transfer charges held to form part of sale value 1,932.86 Sale value of plots A-95, A-97. A-98, A-99 held from part of the sale value 14,464.00 9,17,660.27 Amounts to be set off against ihe above sale value on the basis of the formula: (a) Cost of land 1,65,000.00 (b) Revenue Expenses 1,39,980.95 (c) Development charges 6,50,566.00 9,55,546.95 Net loss to the whole firm on the basis of the formula 37,886.68 worked out. Share of the deceased Ch. Net Ram works out to Rs. 13,260.00 To this has to be added: the amount due from Ch. Net Ram on the basis of the accounts Rs. 22,597.43 Rs. 35,857.43 I, thereforee, award that the respondents are liable to pay a sum of Rs. 35,857.43 p to the petitioners.'
(31) To me it seems it is a just award. On the principles agreed upon by Net Ram himself the arbitrator proceeded to determine the cost of the land and the sale value which was realised by the partnership firm. The arbitrator found that the partnership suffered a loss of Rs. 37,886.68 and Net Ram's share came to Rs. 13,260.00 . Net Ram was rightly held to be liable for this amount. In addition to this he also found on an examination of accounts that Rs. 22,597.43 were due from Net Ram. That also he was liable to pay. There is nothing that can be urged against the method of computation which was adopted by the arbitrator nor has anything been said to persuade me to hold that the arbitrator went wrong in his conclusion. Issue No. 2
(32) As regards this issue it is sufficient to notice that Jagjit Singh, J. in his order dated July 22, .1969 formulated two disputes and referred them to the arbitrator. The arbitrator in his award set out the two disputes verbatim and gave his findings on them. I fail to see how the arbitrator's award was in respect of matters outside the scope of reference. The court had determined the scope of reference and within the four corners of that reference the arbitrator made his award.
(33) Vin the result I dismiss the objections under Section 30 and 33 of the Act and make the award a rule of the court and pronounce judgment and decree in terms of the award. The petitioner will be entitled to costs. Counsel's fee Rs. 200.00 . The petitioner will also be entitled to realise half of the fees paid to the arbitrator from the legal representatives.