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1940 Supreme(SC) 43
Privy Council At Patna
M.R. Jayakar, Sir George Rankin, Lord Wright, Lord Russell of Killowen, Justice Viscount Maugham, JJ.
Upendra Nath Bose -Appellant
Versus
Lall and others -Resopndent
Privy Council Appeal No. 68 of 1938, Patna Appeal No. 2 of 1937
Decided On : 22-07-1940
T.L. Wilson and Co., Hy.S.L. Polak and Co., W. Wallach, J.M. Pringle
An arbitration award maintaining the status quo of an existing interest in immovable property does not require registration. Furthermore, reasons given by a court for declining jurisdiction do not operate as res judicata on the merits of the issues involved.
Headnote:(A) Registration Act, 1908 - Sections 17(1)(b) and 49 - Arbitration Award - Registration of documents - An award that provides that an existing contractual interest in immovable property shall not cease until a specified sum is paid does not purport to create, declare, assign, limit, or extinguish any right, title, or interest in the property - Mere use of the word "ownership" by lay arbitrators to describe an existing interest does not make the document one that requires registration if the overall effect is the maintenance of the status quo.
(B) Civil Procedure Code - Section 11 - Res Judicata - Jurisdiction - A decision by a court declining jurisdiction does not bind the parties by the reasons given for such declination - Reasons for holding a lack of jurisdiction are not decisions by a court of competent jurisdiction and cannot operate as res judicata on the merits of the construction of a document.
Facts of the case:
An appellant purchased proprietary rights in a village. A third party had a contractual option to acquire a half share, which was exercised. Following the death of the option-holder, an arbitration award was made directing the appellant to pay a sum to the heirs in lieu of transferring the property. The award specified that the heirs' interest in the property would not cease until the payment was made. The award was not properly registered. The appellant contended that the award required registration under the Registration Act and that a previous court's finding on jurisdiction regarding the award's construction acted as res judicata.
Findings of Court:
The award did not create a new interest but maintained the existing contractual status quo until payment; therefore, it did not require registration under the Registration Act. Furthermore, the reasons provided by a court for declining jurisdiction do not constitute a binding decision on the merits of the case and cannot be used to establish res judicata.
Issues: Whether the arbitration award operated to create or declare a right, title, or interest in immovable property requiring registration under Section 17(1)(b) of the Registration Act, and whether the reasons for a court's decision to decline jurisdiction operate as res judicata.
Ratio Decidendi: A document that merely provides for the continuance of an existing interest until a certain event occurs does not "create, declare, assign, limit or extinguish" an interest for the purposes of mandatory registration. Additionally, a court that declines jurisdiction is not a court of competent jurisdiction for that matter, and its reasons for doing so cannot bind the parties as res judicata.
Result: Appeal dismissed.
This is an appeal from a decree of the High Court of Judicature at Patna by which it was ordered that the award hereinafter mentioned should be filed and made a decree of the Court. The relevant facts leading up to this litigation are as follows: The appellant, one Upendra Nath Bose, had in the year 1908 purchased in execution sale the proprietary right in the village Raitar in the Patna district subject to incumbrances. In the year 1912 his friend, Ishwari Prasad, advanced to him a sum of Rs. 50,000 for the purpose of partially clearing off the incumbrances and upon the terms that he should have an option to acquire a half share in the village in lieu of the repayment of his loan. This option he exercised in or about the year 1914. No conveyance was executed; the matter continued to rest on contract, but thenceforward he enjoyed a half share of the profits of the village. This state of affairs continued until the death of Ishwari which occurred in the year 1924. He left him surviving three sons, viz., the respondents Het Lall, Debi Prasad, and Shyam Lall, and a grandson the respondent Parbhakar Prakash. On 26th April 1925, the appellant executed a document addressed to the respondents in which he set out the facts relating to Ishwari's loan, and his half interest in the village. The appellant also stated his willingness to account, and that be claimed no personal interest in more than half the estate. Cl. 6 of this document ran thus:
I also hereby agree that as soon as accounts are made up and settled I shall execute such proper instrument as you may unanimously wish, or in case of difference of opinion among you, as the person you refer may reasonably require.
Ultimately the parties referred to two arbitrators differences which had arisen, as stated in the agreement of reference, “regarding the accounts and transfer of Raitar property.” In the course of the arbitration it was suggested and agreed between the parties that a sum should be fixed upon the payment of which the respondents should have no claim to share in the village. This course was adopted by the arbitrators, who made their award on 1st August, 1930. By para. 1 thereof they dealt with the accounts between the parties, finding the amounts due and directing payment with interest. By para. 2 they dealt with “the transfer of Raitar property,” in the following terms:
(2) That Babu Upendra Nath Basu requested us that instead 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 parties to fix the sum to be so paid by the first party to the second party. We accordingly direct that the said Babu Upendra Nath Basu do pay rupees fifteen thousand, three hundred and fifty to each of the four gentlemen of the second party, that is to say a total sum of rupees sixty-one thousand and four hundred as the equivalent of the share of the second party in the said property, with interest at six per cent. per annum accruing from 1st October 1930. If the said amount is not paid by 1st October 1931, the rate of interest thereafter shall be seven and a half per cent. per annum on 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 rupees sixty-one thousand and four hundred as well as the amounts mentioned in the statement exhibit B together with interest specified in respect of both be fully paid up.
The award was registered before the sub-registrar of Beneras, and in Book 4. It is conceded that this registration was made before the official of the wrong district and entered in the wrong book, with the result (which is common ground) that the award has never been registered at all. In January 1931, the respondent Het Lall applied, under para. 20 of sch. 2, Civil P. C., to the Subordinate Judge of Benares that the award be filed in Cour
