VERY IMPORTANT POINT
An arbitration award by which residue assets of partnership firm are distributed amongst the partners on dissolution of the partnership firm does not require registration under Section 17 of the Registration Act, 1908 before making it rule of the Court.

JUDGMENT

Arun Kumar, J.-These appeals involve a pure question of law as to whether an award by which residue assets of a partnership firm are distributed amongst the partners on dissolution of the partnership firm requires registration under Section 17 of the Registration Act, 1908 ?

2. Briefly the facts are that a partnership firm was constituted comprising of four persons belonging to the same family. Disputes and differences arose between the partners which were ultimately referred to arbitration. The arbitrators made an award on 2nd October, 1972. The award was challenged by way of objections filed under Section 30 of the Arbitration Act, 1940 by some of the partners. The objection petition was contested by the other partners who prayed that the award be made a rule of the Court. The grounds of challenge to the award included misconduct on the part of the arbitrators as well as another ground that the award required registration under Section 17 of the Registration Act. The trial Court accepted both the objections holding that there was misconduct on the part of the arbitrators as also that the award was required to be compulsorily registered and since it was not registered it was inadmissible in evidence. This decision of the trial court was challenged before the High Court by way of a Civil Revision filed under Section 115 of the Code of Civil Procedure. The High Court found that in the facts and circumstances of the case it could not be said that there was any legal misconduct on the part of the arbitrators. Thus the first ground of attack against the award was found to be unsustainable. However, the High Court accepted the finding of the trial Court on the second ground, that is, the award was required to be compulsorily registered. Since the award was unregistered, it could not be made a rule of the Court. Hence the present appeals.

3. We have carefully perused the award in question. By the award the arbitrators have distributed the assets of the dissolved firm between the partners in accordance with their respective shares in the partnership. The real question for consideration is whether such an award amounts to creation of or transfer of any fresh rights in movable or immovable properties so as to bring it within the ambit of Section 17 of the Registration Act? A perusal of the award shows that it is simply a case of distribution of assets of the dissolved firm amongst the partners themselves. A partnership firm is not an independent legal entity, the partners are the real owners of the assets of the partnership firm. Actually the firm name is only a compendious name given to the partnership for sake of convenience. The assets of the partnership belong to and are owned by the partners of the firm. So long as partnership continues each partner is interested in all the assets of the partnership firm as each partner is owner of the assets to the extent of his share in the partnership. On dissolution of the partnership firm, accounts are settled amongst the partners and the assets of the partnership are distributed amongst the partners as per their respective shares in the partnership firm. Thus, on dissolution of a partnership firm, the allotment of assets to individual partner is not a case of transfer of any assets of the firm. The assets which hereinbefore belonged to each partner, will after dissolution of the firm stand allotted to the partners individually. There is no transfer or assignment of ownership in any of the assets. This is the legal consequence of distribution of assets on dissolution of a partnership firm. The distribution of assets may be done either by way of an arbitration award or by mutual settlement between the partners themselves. The document which records the settlement in this case is an award which does not require registration under Section 17 of the Registration Act since the document does not transfer or assign interest in any asset. This question stands concluded by a decision of th