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2000 DIGILAW 87 (KAR)

M. Mohan Nayak v. M. S. Ibrahim

2000-01-28

B.N.MALLIKARJUNA

body2000
ORDER B.N. Mallikarjuna, J.—Heard. Perused the papers. 2. This revision under Section 115 of the Code of Civil Procedure is directed against the order of the Principal Civil Judge (Senior Division), Mangalore dated 15.12.1993 in A.C. No. 3/1991. Revision Petitioner is the second Respondent in the arbitration proceedings. Respondents herein are the first Respondent and the Petitioner respectively before the trial Court. Hereinafter I shall refer to them as they are shown in the arbitration proceedings A.C. No. 3/1991. 3. Briefly stated the facts are: The first Respondent-M.S. Ibrahim possessed certain landed property in T.S. No. 610/2 admeasuring 10.5 cents of Kodialbail village in Mangalore taluk. He wanted to put up certain construction on the said land and therefore, entered into a contract with construction company called "M/s. Samrat Constructions". It would appear that the said construction company did not complete the constructions and therefore, after rescinding the said contract, entered into a fresh contract with the second Respondent (revision Petitioner herein), an agreement dated 12th December, 1998 was drawn up in between the parties and one of the terms and conditions, viz., condition No. 9 provided for referring the matter to an Arbitrator in the event of any dispute between the Respondents-1 and 2. Accordingly, the second Respondent executed the work but certain disputes arose between the parties and therefore, these two by consent/agreement appointed the Petitioner as Arbitrator to settle the dispute. Accordingly, the Petitioner held arbitral proceedings and on 15.4.1991 prepared the award. The award directed the first Respondent to pay a sum of Rs. 2,96,660.06 on or before 22.4.1991 and alternatively it provided that in case first Respondent was unable to pay the said amount, to hand over the building measuring 856.26 Sq.ft. constructed on land measuring 3.5 cents forming eastern wing of the building and also to pay a sum of Rs. 1,11,306.20, direction was that it should be paid on or before 22.4.1991. Since the terms of the award were not complied, on 23.9.1991 the Arbitrator-Petitioner filed the award in Court with an application under Section 14 of the Arbitration Act, 1940 requesting the Court to pass decree in terms of the award. It is, thereafter, notices were issued to the Respondents. First Respondent resisted the proceedings contending interalia that the arbitration award is not even written on a stamp paper and not registered as required under Section 17 of the Registration Act. It is, thereafter, notices were issued to the Respondents. First Respondent resisted the proceedings contending interalia that the arbitration award is not even written on a stamp paper and not registered as required under Section 17 of the Registration Act. Therefore the said award cannot be received in evidence. The second Respondent admitted the award and contended that it did not require registration in view of Section 49 of the Registration Act. The learned trial Judge after hearing both the parties and considering the material made available, by the order dated 15.12.1993 declared that the award is inadmissible and accordingly, dismissed the application. 4. Thereafter and in view of the said order, the first Respondent instituted a suit in the Court of the Civil Judge at Mangalore in O.S. No. 1/1994. The Defendant in the suit is the first Respondent in A.C. No. 3/1991. He contested the suit contending interalia that the suit is not maintainable. On 9.12.1998, the learned Civil Judge dismissed the suit as not maintainable. It is, thereafter, on 3.3.1999, the present revision is filed challenging the order dated 15.12.1993 in A.C. No. 3/91. Along with the revision, application I.A. I is filed under Section 5 of the Limitation Act to condone the delay of 1013 days on the ground that the Petitioner was litigating bonafide in a Civil suit and on the advice of the Counsel and as such he is not negligent and in the circumstances, the delay needs to be condoned. This application is also opposed. 5. Sri Sripathy, learned Counsel contended that in view of the fact that the Plaintiff was litigating in another court by filing a suit on the advice given by his Counsel and under the impression that it is the correct position, the cause shown is sufficient to condone the delay. In support of his arguments, he relied on two decisions of the Supreme Court, one in The State of West Bengal Vs. The Administrator, Howrah Municipality and Others, AIR 1972 SC 749 and the other in N. Balakrishnan Vs. M. Krishnamurthy, (1998) 7 SCC 123 . In Balakrishnan's case, suit of the Plaintiff was decreed exparte on 28.10.1991. In support of his arguments, he relied on two decisions of the Supreme Court, one in The State of West Bengal Vs. The Administrator, Howrah Municipality and Others, AIR 1972 SC 749 and the other in N. Balakrishnan Vs. M. Krishnamurthy, (1998) 7 SCC 123 . In Balakrishnan's case, suit of the Plaintiff was decreed exparte on 28.10.1991. Defendant made an application for setting aside and that application was dismissed on 17.2.1993 and no action was taken thereafter It would appear that the Plaintiff sued out execution of the decree and in the execution proceedings, notice was served on the Defendant on 5.7.1995 and thereafter on 19.8.1995, he made an application for setting aside the exparte decree dated 17.2.1993. The delay in filing the application was about 883 days. The ground on which the defendant sought for condoning the delay was that after the dismissal of the application on 17.2.1993, the learned Counsel who appeared for him did not inform him and after receipt of notice on 5.7.1995 when he approached his Advocate, he collected another sum of Rs. 2,000/- (Two thousand) assuring him that no adverse order is passed and he would take appropriate steps in the matter. But he did not do anything thereafter and the execution warrant was issued and the Defendant suspected the conduct of his Advocate and rushed to the Court with an application. In those circumstances, the Court held that the delay having occurred on account of inaction of the learned Counsel in not informing his party on time, it requires to be condoned as no negligence can be attributed to him. In The State of West Bengal vs. The Administrator, Howrah Municipality referred to supra, the Apex Court has said that the expression "sufficient cause". should receive a liberal construction so as to advance substantial justice when no negligence or inaction or want of bona fide is imputable to a party. In the instant case, the narration of facts would demonstrate that in fact the revision Petitioner instituted a suit in A.S.1/94 immediately after the order dated 15.12.1993 in A.C.1/94 and within three months from the date of order in A.S.1/94, he has approached this Court. In the instant case, the narration of facts would demonstrate that in fact the revision Petitioner instituted a suit in A.S.1/94 immediately after the order dated 15.12.1993 in A.C.1/94 and within three months from the date of order in A.S.1/94, he has approached this Court. It would thus make it clear that he has acted on the advice of his Counsel and no negligence can be attributed and therefore, whatever the delay may be, that needs to be condoned and accordingly, delay condoned. I.A.I is allowed. 6. Now coming to the merits of the matter, it admits of no doubt that a document which creates a right in any of the parties needs to be registered under Section 17 of the Registration Act. The thrust of argument of Sri. Sripathy, learned Counsel is that the terms contained in the award are separable and in exercise of the power under Section 15 of the Arbitration Act, 1940, whatever term that is not permissible in law can be ignored and the Court can proceed with the other matter. In support of his arguments, he relied on the decision of Gujarat High Court in Ichharam Damodardas Vs. Kantilal Nathubhai and Another, AIR 1963 Guj 28 . Sri Ram Bhat, learned Counsel for the first Respondent on the other hand contended that the award directs the first Respondent to pay certain amount and alternatively provides for handing over certain constructed area in addition to certain sum and the cost of the constructed area being more than Rs. 100/- it requires registration. He also contended that the award not being drawn upon Stamp Paper and there being no registration, it cannot be admitted in evidence and in these circumstances, the order calls for no interference. In support of his arguments, he relied on the decision of the Apex Court in Lachhman Dass Vs. Ram Lal and Another, AIR 1989 SC 1923 . 7. I have considered the rival contentions urged by both the learned Counsel. A close look at the arbitration award admits of no doubt that it purports to create certain right in the Immovable property the value of which exceeds Rs. 100/- and therefore, the award require registration. To that extent, there is no dispute. But the terms of the award are as under: 1. Mr. M.S. Ibrahim shall pay to Mr. Mohan Nayak, a sum of Rs. 100/- and therefore, the award require registration. To that extent, there is no dispute. But the terms of the award are as under: 1. Mr. M.S. Ibrahim shall pay to Mr. Mohan Nayak, a sum of Rs. 2,96,660.06 (Rupees two lakh ninety six thousand six hundred sixty and paise six only) on or before 22nd April, 1991 towards the balance payable in full settlement of claims and considerations towards execution of works carried out so far; and obtain acknowledgement from Mr. Mohan Nayak. 2. Mr. M. Mohan Nayak shall hand over all the original documents in respect of the premises and also the entire premises back to Mr. M.S. Ibrahim on receiving the balance considerations as in Clause 1 above. 3. In case the payment is delayed for any reason beyond the stipulated date the balance consideration shall bear interest at 18% per annum from the 22nd April, 1991. 4. In case the First Party is not able to make payments fully in cash, alternatively the Eastern Wing of the building measuring 856.26 sq.ft. in plinth along with the land measuring 3.5 cents thereof shall be transferred and registered in favour of the Second Party on or before 22nd April, 1991 and in addition shall make a further payment to the Second party of a sum of Rs. 1,11,306.20 (Rupees one lakh eleven thousand three hundred six and paise twenty only) as per Clause 30 of the observations. 8. A close reading of the award makes it clear that the direction is that the first Respondent shall pay a sum of Rs. 2,96,660.06 on or before 22nd April, 1991 towards the full settlement of the claim. Further it directs that if for any reason the payment is delayed, it shall be paid together with interest at 18% per annum from 22nd April, 1991. It is only as an alternate proposal it states that in case of failure, to pay certain constructed area and a sum of Rs. 1,11,306.20 shall be paid. Thus two things drawn up in the award are clearly separatable, it does not merely show as pointed out by the learned Judge that the amount shall be paid and in the alternative, certain constructed area shall be handed over. 1,11,306.20 shall be paid. Thus two things drawn up in the award are clearly separatable, it does not merely show as pointed out by the learned Judge that the amount shall be paid and in the alternative, certain constructed area shall be handed over. The award provides for payment of certain sum within a particular time and if there is default, the contractor could recover the amount together with 18% per annum and therefore, it is clear that the two conditions in the award are clearly separable. Section 15 of the Arbitration Act, 1940 empowers the Court to ignore such portion of the award which is imperfect in form or contains any obvious error. Here in the instant case, the second part of the award can be ignored by the Court and proceed to consider the other thing, viz., payment of amount together with interest. In the facts and circumstances of the case, it may also be difficult to say that the Arbitrator has ever stepped or exceeded his power for the reason that one of the terms of the contract provided for gifting certain constructed area to the contractor. At any rate having regard to the clear terms in the award, that portion which requires to be registered can be ignored and the court can proceed to consider the other term which did not require registration. 9. In this context, it would be useful to refer to the observation made by the Gujarat High Court in Ichharam Damodardas vs. Kantilal Nathubhai and Another, AIR 1963 Guj 28 : 4. Even in the case of an ordinary sale deed of Immovable property, it cannot be enforced without filing a suit, but that does not mean that the sale deed has no effect by itself. Similarly, an award under the Act is not enforceable unless it is filed in a court and followed by a judgment and decree of the Court. But, that does not mean that the award itself has no effect. It is final and binding between the parties to the arbitration agreement, and it has, therefore, great effect to that extent. I, therefore, hold that under the Arbitration Act of 1940, if an award creates a charge on Immovable property worth Rs. 100/- or more, it would require registration. To take any other view would result in making easy evasion of the provisions of the Registration Act. 5. I, therefore, hold that under the Arbitration Act of 1940, if an award creates a charge on Immovable property worth Rs. 100/- or more, it would require registration. To take any other view would result in making easy evasion of the provisions of the Registration Act. 5. But in this case the award provided for two things: 1) the payment of Rs. 8,000/- and 2) the creation of charge on Immovable property. So far as the award created a charge on the Immovable property, it requires registration and to that extent the award is defective. But so far as the award related to the payment of Rs. 8,000/- there was no defect in the award. Section 15 of the Act provides that the Court may by order modify or correct an award where the award is imperfect in form or contains any obvious error which can be amended without affecting the decision on the matter referred. In my opinion, the non-registration of that part of the award which relates to a charge on the Immovable property would be a defect in form which could be modified and corrected by the Court. In this case, the award relating to the payment of Rs. 8,000/- is separable from that part of the award which creates a charge on the Immovable property. The award which is binding on parties to the arbitration agreement does not cease to have that effect merely because in law an award cannot be enforced unless followed by a judgment and decree. (Underlining is supplied) 10. In the instant case, the award relating to the payment of Rs. 2,96,660.06 is separable from that part of the award which directs the other party to pay certain amount in addition to certain constructed area. The Court could as well ignore the second part of the award and proceed to consider the first part on merits and in accordance with law. Therefore, the order under challenge is not sustainable in law. 11. In the result and for the reasons hereinabove stated, the revision is allowed. Order dated 15.12.1993 is hereby set aside. The learned Principal Civil Judge (Senior Division), Mangalore is directed to restore the matter A.C. 3 of 1991 in its original number and proceed to dispose it of on merits after collecting the duty and penalty as is necessary and permitted in law. 12. No costs.