Holding

The arbitrator's award is a declaration of pre‑existing rights and does not create or extinguish any right in present or future, so it need not be registered, and the appeal is maintainable despite the death of one respondent.

Summary

The father of the parties gifted three plots of his ancestral property to his three daughters, but later revoked the gift and paid each daughter Rs.10,000 in cash. After the father's death, the sons partitioned the entire property among themselves, leading the daughters to claim the gifted plots. The dispute was referred to a sole arbitrator who held that the gift was revoked, the daughters' mutation was obtained fraudulently, and the award merely declared the pre‑existing facts. The sons applied under Section 14 of the Arbitration Act, 1940 to have the award made a rule of the court, but the trial court, appellate court and High Court rejected the application on the ground that the award created or extinguished rights and therefore required registration under Section 17(1)(b) of the Registration Act, 1908. The Supreme Court held that the award was a declaration of pre‑existing rights, did not create any new right or extinguish a right in present or future, and therefore did not need registration; it also held that the appeal remained maintainable despite the death of one daughter because each daughter had a distinct share. Consequently, the Court allowed the appeal and made the arbitrator's award a rule of the court.

Issues considered

Whether the death of one respondent (Rajlakshmi) abates the appeal against the remaining respondents.
Whether the arbitrator's award creates, declares, assigns, limits or extinguishes any right, title or interest of value Rs.100 or more in immovable property, thereby requiring registration under Section 17(1)(b) of the Registration Act, 1908.

Legislation cited

Arbitration Act, 1940s. 14
Registration Act, 1908s. 17(1)(b)

Subjects

Arbitration awardRegistration ActSection 14 Arbitration ActSection 17 Registration ActAbatement of appealAncestral propertyGift deed revocationFraudulent mutationPre‑existing rights

Judgment

A N.KHOSLA •
v.
RAJLAKSHMI (DEAD) AND ORS.

MARCH 6, 2006

B [H.K. SEMA AND DR. AR. LAKSHMANAN, JJ.]

Registration Act, I 908--Section I 7(I) (b)-Arbitration Act, I 940;
Section 14--Gift of part of ancestral immoveable property to daughters by
C father-Father later revoked the gift deed and paid cash to them in lieu of
the property--Father partitioned the property among his sons-Dispute
between sons daughters regarding share of the property-Sole Arbitrator
held in favour of the sons-Sons filed an application before trial court to
make the award of the arbitrator, a Rule of the Court-Daughters raised
objections on the ground that it was not registered under the Registration
D Act-Trial Court dismissed the application filed by the sons-Appellate Court
and High Court also held against the suns {'orrectness of-Held, on facts,
the award of the Arbitrator on~y declares the pre-existing right and does not
create any right in praesenti or in fature· -Hence, the award does not require
registration and should be made a Rule of the Court-Abatement of appeal
as against deceased respondent would not abate the appeal qua surviving
E respondents as the daughters had distinct shares by metes and bounds.
One D had two sons and three daughters. D had an ancestral property.
D gifted three plots of land 011t of his ancestral property to his daughters.
Since none of the daughters took possession of the plots, D revoked the gift
F deed and resumed the plots by paying cash to each of them in lieu of it.
Thereafter, D partitioned the entire ancestral property to his two sons. After
I •
the death ofD, a dispute arose between the sons and daughters regarding the
gift deed and resumption of the gifted property. The daughters got mutation
of the gifted plots in revenue records in their names. The dispute was referred
to a sole Arbitrator. The Arbitrator in his award held that the daughters are
G not entitled to the plots in the ancestral property since D revoked the gift
deed and resumed the plots by paying cash with their consent The Arbitrator
further held that the mutation of the plots by the daughters in their favour
was obt11ined by fraud and therefore, non-est.

H 906
N. KHOSLA v. RAJLAK.SHMI (DEAD) 907
Petitioner-sons filed an application before trial court under Section 14 A
of the Arbitration Act, 1940 to make the award of the Arbitrator, a Rule of
the Court. Respondent-daughters filed objections, inter alia, contending that
the award could not be made a Rule of the Court since it was not registered
under Section 17(1) (b) of the Registration Act, 1908. The trial court
dismissed the application of the appellants. Appellate Court and High Court
also held in favour of the respondents. Hence the appeal before this Court. B
During the pendency of the appeal, one of the respondents died and an
application, filed for substitution of her legal representatives by the appellant,
was dismissed by this Court on ground of delay.

The appellant contended that the dismissal of the application for
substitution of legal heirs of deceased respondent would not abate the C
appeal as against surviving respondents-daughters since the gift deed was
· ' distinct and separate and is executable on them; and that the award of
the Arbitrator does not create any right or extinguish any right in
praesenti or in future requiring registration under section 17(1) (b) of the
Registration Act, 1908 and hence should be made a Rule of the Court. D
The respondents contended that the appeal as against surviving
respondents also gets abated since the issue is common to all of them; and
that the award of the Arbitrator created rights in favour of the sons by ·
extinguishing their rights in the immoveable property requiring
registration and hence the award cannot be made a Rule of the Court. E
Allowing the appeal, the Court

HELD: 1. The facts of the case would clearly show that each of the
daughters had a distinct and separate share by metes and bounds and also
I
.1. that each one of them had received Rs. 10,000 in lieu of the plots of land F
•' l and therefore, it cannot be held that abatement of respondent No. 1 would
abate the appeal qua the other respondents. No common issues among the
daughters arise because all the sisters had different and distinct share by
metes and bounds. The abatement of appeal in respect of the deceased
daughter would not abate the appeal qua other respondents. The appeal G
qua other respondents is maintainable. (913-A-B; 915-C, F)

·¥ Sardar Amarjit Singh Katra (Dead) by Lrs. v. Pramod Gupta (Smt.)
(Dead) hy Lrs. and Ors., (2003) 3 SCC 272 (CB) and Shahazada Bi and Ors.
v. Halimabi (since dead) by her Lrs., [2004] 7 SCC 354, relied on.
H
,
-1.

908 SUPREME COURT REPORTS (2006] 2 S.C.R.

A Badni (Dead) by Lrs. v. Siri Chand (Dead) by Lrs. and Ors., 11999) 2 •
SCC 448; Pandit Sri Chand and Ors. v. Mis Jagdish Parshad Kishan Chand
and Ors., (196613 SCR 451 and Ram Sarup and Ors. v. Munshi and Ors., AIR
(1963) SC 553, referred to.

2. The award of the Arbitrator would clearly show that by the award,
B the Arbitrator simply recorded the finding on the basis of the pre-existing
facts, namely, the Gift Deed, the revocation of the gift and the partition
of the property between his sons subsequent to the revocation of Gift Deed.
It is a declaration of pre-existing rights. It neither creates any right nor ,
extinguishes any right in praesenti or in future. The award of the
C Arbitrator is made the Rule of the Court. (918-C-DI
Capt. (Now Major) Ashok Kshyap v. Mrs. Sudha Vasisht and Anr., AIR
(1987) SC 841; Sardar Singh v. Krishna Devi (Smt.) and Anr., (199414 SCC ...
18 and Ratan Lal Sharma v. l'urshottam Harit, (197411 SCC 671, referred
to.
D 3. From the records, it is seen that the respondents fraudulently
obtained mutation showing D and one of the deceased daughters as alive. Fraud
clocks everything. Fraud avoids all judicial acts. A decree obtained by playing
fraud is a nullity and it can be challenged in any court even in collateral
proceedings. It is open to the appellant to file a suit against the legal heirs of
E the deceased daughter, whose appeal has been abated. (919-E-G)
S.P. Chenga/varaya Naidu (Dead) rep. by Lrs. v. Jagannath (Dead) by
Lrs. and Ors., (1994) 1 SCC I, relied on.

CIVIL APPELLATE JLRISDICTION: Civil Appeal No. 3280 of2002.

F From the Final Judgment and Order dated 8.1.2001 of the Punjab and ;

Haryana High Court in Civil Revision Petition No. 3064/1983. I '

C.A. Sundaram, Amitabh Chaturvedi, John Thomas and Dr. (Mrs.) Vipin
Gupta for the Appellant.

G Manish Vasisth, A.K. Thakur, K.K. Jha, S. Vasistha, Debasis Misra and
Rakhi Ray for the Respondents. ,.

The Judgment of the Court was delivered by

H.K.SEMA, J. Dewan Niranjan Prasad was ex-Minister and a retired
H
\

'"'"
N, KHOSLA v. RAJLAKSHMI (DEAD) [SEMA, J.] 909

Senior Judge of the High Court of Patiala. He had an ancestral kothi known A
as 'Nishkam' situated at 23, Bhupender Nagar Road, Patiala, Punjab. He had
two sons, namely Sh. K.J. Khosla and Sh. N. Khosla and three daughters
namely Smt. Rajlakshmi (respondent No. 1 herein whose appeal stands abated),
Smt. Nirmala and Smt. Saraswati. Since the kothi was an ancestral property,
Dewan Niranjan Prasad and his two sons were the coparceners.
B
On 14.10.1956, Dewan Niranjan Prasad had gifted three plots of land
forming part of the kothi in its rear portion to his three daughters with the
consent of his wife Smt. Amar Devi and his two sons. The said gift was duly
recorded in the family year book known as "Dussehra Bahi." The said gift was
conditional and the condition was that the beneficiaries would construct C
houses on the gifted plots and shall reside there. The said gift of plots to his
three daughters was affirmed by Dewan Niranjan Prasad through a registered
deed on 10.6.1961. However, possession was not delivered. In 1966 Smt.
Saraswati died and was survived by her husband B.S. Talwani and sons,
respondent No.3.
D
As none of the three daughters, to whom the plots were gifted, took
possession and constructed the houses, Dewan Niranjan Prasad revoked the
Gift Deed and resumed the plots with the express consent of his daughters,
Smt. Rajlakshmi, Smt. Nirmala and Sh. B.S. Talwani husband of late Smt.
Saraswati and paid Rs. 10,000/- to each of them in lieu of the said plots.
Receipt of the amount as consideration for resumption of the said plots was E
also duly acknowledged by each of the beneficiaries. Thereafter, Dewan
Niranjan Prasad partitioned the entire property "Nishkam" (including the
plots earlier gifted to his daughters and then resumed by him) by allotting
separate shares to his two sons, namely, S/Sh.K.J. Khosla and N. Khosla. The
.. oral partition was recorded in writing in the memo of partition dated 6. 12.1974. F
..-'' ) Dewan Niranjan Prasad died on 15.1.1975 leaving behind his two sons, two
daughters and legal heirs of late Smt. Saraswati.

After the death of Dewan Niranjan Prasad, a dispute arose between his
sons and daughters namely Smt. Rajlakshmi, Smt. Nirmala and legal heirs of
Smt. Saraswati regarding the rear part of the compound of the ancestral kothi G
called "Nishkam". Parties to the dispute by mutual consent and by an
Arbitration Agreement dated 27.10.1978 referred the dispute to the sole
Arbitrator, Dewan Ram Kishan Khosla, Sr. Advocate.

It appears that on 22.1.1977, the respondents fraudulently managed to
H
910 SUPREME COURT REPORTS [2006] 2 S.C.R.

A get the mutation of the portion of the property in question recorded in the '
revenue records in their favour showing Dewan Niranjan Prasad, who had
expired on 15.1.1975 and Smt. Saraswati, who had expired in 1966, as present
and witnessing the said mutation.

The Arbitrator examined the contentious issues presented from both
B sides and after threadbare discussion delivered his award on IO. 7.1979. The
Arbitrator in his award found inter-alia that the gift in question in favour of
daughters was revoked and the plots were resumed by late Dewan Niranjan
Prasad with the consent of the two daughters and Sh. B.S. Tawlani husband
of Smt. Saraswati in lieu of cash payment received by them. The Arbitrator
C also found that the mutation in favour of the respondents was obtained by
fraudulent means and therefore, non-est.

On 1.8.1979, S/Sh. K.J. Khosla and N. Khosla, the two sons of Dewan
Niranjan Prasad filed an application under Section 14 of the Arbitration Act,
1940 for making the award a Rule of the Court. It appears that on 24.5.1981,
D notice of the application was issued to the respondents who filed objections
contending inter-alia that the award dated I0. 7.1979 created, declared,
assigned, limited or extinguished right, title and interest of the value of Rs.
I00 and upwards to or in immovable property and, therefore, the award was
compulsorily registrable under Section 17( I)(b) of the Registration Act, 1908
E (hereinafter as 'the Act' ) and since the award was not registered, it could not
be made a rule of the Court. The Sub-Judge, by his order dated 25.5.1981 held
that the award purports/operates to extinguish the rights of the daughters and
create/declare rights, title and interest in the sons in immovable property, the
value of which was more than Rupees One hundred only and thus, it
compulsorily required registration under Section 17 of the Act. On this
F reasoning, the Sub-Judge declined to make the award as a rule of the Court.
Aggrieved thereby, the two sons of Dewan Niranjan Prasad filed appeal j •

before the Appellate Court, which was dismissed on 8.8.1983 holding the
same view. Thereafter. a civil reviswn, namely revision No. 3064 of 1983 was
preferred before the High Court, which was dismissed by the impugned order
G on 8.1.200 I. Hence, the present appeal.
The High Court, in our view, erroneously dismissed the Civil Revision
affirming the orders passed by the Trial court and Appellate Court. The High
Court dismissed the civil revision with the following reasoning:
--
(I) the award took away some rights from the sisters by giving a
H
/

N. KHOSLA v. RAJLAKSHMI (DEAD) [SEMA, J.] 911
declaration that the donees did not comply with the condition of
'I A
the gift and in this way, the sisters were divested of some rights
and those rights were created for the first time in favour of the
brothers by the award;

(2) as the Arbitrator observed that the mutation of the land in favour
of the daughters was of no value, it cannot be said in such a
situation that the award only declared a pre-existing right in favour
B
of the sons;

\ (3) by the award itself, an adjudication has been made by the Arbitrator
that the gift created by the father in favour of his daughters was
not enforceable because it was never accepted by the donees and
it was never acted upon as per the conditions of the gift. One of
c
the conditions was that the daughters should construct their
houses. Thus, the document of award declares and creates rights
in favour of the brothers by taking it from the sisters and when
those rights are created in praesenti, then such document/award
requires registration and such an award without registration cannot D
"\.._ be acted upon as it does not confer any right, title or interest in
; favour of the brothers;
(4) the rights were created for the first time through the award itself
and, therefore, this award required registration;
(5) the present award is a dee laration vi de which certain rights of the E
Respondents were extinguished and rights in favour of the
Petitioner (and Respondent No. 5) were created by making them
the owners of the disputed plots by rejecting the defence and
contentions of the sisters and thus the award is squarely covered
~...,
by the provisions of Section 17( I )(b) of the Registration Act." F
i
r I
During the pendency of this appeal, an application was taken out for
substitution ofrespondent No. I Smt. Rajlakshmi by her legal representatives.
This Court, on 11. 7.2005 rejected the substitution application on ground of
delay. Accordingly, the appeal stood abated as far as deceased respondent
No. I is concerned. Therefore, the question whether on abatement of the G
appeal in respect of deceased respondent No. 1, the appeal is maintainable
qua the other respondents also poses for consideration.
-r
The questions posed for determination in this appeal are:

A. Whether with abatement of appeal in respect of deceased Smt.
H
912 SUPREME COURT REPORTS (2006] 2 S.C.R.

Rajlakshmi, the whole appeal qua other respondents abated or
A •
not?
B. Whether the award of the Arbitrator dated 10.7.1999 purports or
operates to create, declare, assign, limit or extinguish in praesenti
or in future any right, title or interest of the value of one hundred
rupees and upwards to or in immovable property which requires
B registration under Section 17 (I )(b) of the Registration Act, 1908?

A. Abatement of appeal in respect of deceased Smt. Rajlakshmi &
maintainability of the appeal qua other respondents

C Mr. C.A. Sundram, learned Senior counsel, appearing on behalf of the
appellant strenuously contended that the Gift Deed in respect of the daughters,
which had been revoked, was distinct and separate and therefore, the decree
is distinctly and severally executable on the abatement of appeal in respect
of Smt. Rajlakshmi and, therefore, the appeal qua other respondents does not
abate and is maintainable. Per contra, Mr.Manish Vasisth, learned counsel
D appearing on behalf of the respondents contended that the issue is common
and when the appeal against one of the respondents abated, the whole appeal
qua other respondents also abated.

To answer this question, we may refer to the Gift Deed dated 14.10.1956
executed by Dewan Niranjan Prasad. The aforesaid Gift Deed was entered in
E the Dussera Bahi of the family. The partition portion of the Gift Deed in the
Dussera Bahi reads as under:

"On this auspicious occasion, on my behalf and on behalf of both
brothers I offer by way of present one piece of land in the rear
portion of "Nishkam" to all the three sisters, which has a breadt~ of
F three hundred feet. All three sisters will get a front of I00 feet elrch.
j •
The length will be 150-160 feet i.e. up to the contractor's hut, that is
up to the middle of the rons (walk) on which it stands. Bibi Saraswati's
plot will be towards Narrn house, Nirmal's towards Lola Atka Rao
and Raj's in the middle.''
G As already noticed, the Gift Deed was revoked by a memorandum
dated 10.5.1971 and the two daughters and husband of the deceased daughter
were paid Rs. I0,000/- each in lieu of the plots. It appears from the record that
on 2.9.1971 Smt. Rajlakshmi and Sh. B.S. Talwani, husband of Smt. Sarswati
had written a letter to Dewan Niranjan Prasad that they have received the full
H
N. KHOSLA v. RAJLAKSHMI (DEAD) [SEMA, J.] 913
.
amount of Rs. 10,000/- as their share. A
The facts, as adumbrated above, would clearly show that each of the
daughters had a distinct and separate share by metes and bounds and also
that each one of them had received Rs. 10,000/- in lieu of the plots of land
and therefore, it cannot be held that abatement of respondent No. I would
abate the appeal qua the other respondents. B
In Sardar Amarjit Singh Kalra (Dead) by LRs. (appellant) v. Pramod
Gupta (Smt.)(Dead) by LRs. & Ors., (respondents) [2003] 3 SCC 272 a
\ Constitution Bench of this Court, after considering various decisions held, at
page 305 sec, that whether an appeal partially abates on account of the death
of one or the other party on either side has to be considered depending upon C
the fact as to whether the decree obtained is a joint decree or a severable one.
It was further held that in case of a joint and inseverable decree if the appeal
abated against one or the other; the same cannot be proceeded with further
for or against the remaining parties as well. If dtherwise, the decree is a joint
and several ·Or separable one, being in substadce and reality a combination D
of many decrees, there can be no impediment for the proceedings being
\.
carried with among or against those remaining parties other than the deceased.
# Finally, this Court held in paragraph 34, at page SCC 307 as under:
;

"34. In the light of the above discussion, we hold:-
E
(!) Wherever the plaintiffs or appellants or petitioners are found to
have distinct, separate and independent rights of their own and
for purpose of convenience or otherwise, joined together in a
single litigation to vindicate their rights the decree passed by the
Court thereon is to be viewed in substance as the combination· of
several decrees in favour of the one or the other parties and not F
as a joint and inseverable decree. The same would be the position
in the case of defendants or respondents having similar rights
contesting the claims against them.
(2) Whenever different and distinct claims of more than one are sought
to be vindicated in one single proceedings as the one now before G
us, under the Land Acquisition Act or in similar nature of
proceedings and/or claims in assertion of individual rights of
parties are clubbed, consolidated and dealt with together by the
Courts concerned and a single judgment or decree has been
passed, it should be treated as a mere combination of several H
914 SUPREME COURT REPORTS (2006] 2 S.C.R.

A decrees in favour of or against one or more of the parties and not
as joint and inseparable decrees.

(3) The mere fact that the claims or rights asserted or sought to be
vindicated by more than one are similar or identical in nature or
by joining together of more than one of such claimants of a
B particular nature, by itself would not be sufficient in law to treat
them as joint claims, so as to render the judgment or decree
passed thereon a joint and inseverable one.

(4) The question as to whether in a given case the decree is joint and
inseverable or joint and severable or separable has to be decided,
c for the purposes of abatement or dismissal of the entire appeal as
not being properly and duly constituted or rendered incompetent
for being further proceeded with, requires to be determined only
with reference to the fact as to whether the judgment/decree passed
in the proceedings vis-a-vis the remaining parties would suffer
the vice of contradictory or inconsistent decrees. For that reason,
D a decree can be said to be contradictory or inconsistent with
another decree only when the two decrees are incapable of
enforcement or would be mutually self-destructive and that the
enforcement of one, would negate or render impossible the
enforcement of the other."

E In the case of Shahazada Bi and Ors. v. Halimabi (since dead) By her
LRs., (2004] 7 SCC 354, during the pendency of the suit, defendant No. 4
had died. This Court, after considering various decisions of this Court on the
provision of Order 22 Rule 4 C.P.C., held that the Rule does not provide that
by the omission to implead the legal representatives of a defendant, the suit
F is abated as a whole. This Court further held that whether the defendant
represented the entire interest or only a specific part is a fact that would
depend on the circumstances of each case. If the interests of the co-defendants
' .
are separate, as in case of co-owners, the suit will abate only as regards the
particular interest of the deceased party.

G In that case the 4th defendant, who died on 8.5.87, was in possession
of one of the seven rooms, which were let out to defendant No. 5. The trial
court found different rooms to be in possession of different defendants who
claimed to be tenants-in-common in possession of each of the seven rooms
and therefore, in those circumstances, this Court held that the death of the
4th defendant would not abate the suit qua the other defendants.
H
N. KHOSLA v. RAJLAKSHMI (DEAD) [SEMA, J.) 915
Learned counsel for the respondents relied on the decision of this Court A
in Badni (Dead) by LRs. & v. Siri Chand (Dead) by LRs. & Ors., (1999) 2
SCC 448. In that case the fact of adoption of one Ratan Singh, plaintiff was
the common issue. The High Court dismissed the appeal on the ground that
the legal heirs of one Shiv Lal, one of the appellants, were not brought on
record. The High Court was also of the view that on abatement of Shiv Lal's
appeal, other appeals also stood abated because of the common issue regarding B
the adoption of the plaintiffs pre-deceased interest (Ratan Singh). There
cannot be two conflicting decrees. The adoption issue being common and
'/"' decisive in all the appeals pending before the High Court, dismissing one
appeal alone on the ground of abatement and allowing the other appeals on
merits might result in conflicting decrees in case other appeals are accepted C
on merits. The facts of that case are not applicable to the facts of the case
at hand. Here, no common issues among the sisters arise because as already
said all the sisters had different and distinct share by metes and bounds.
Therefore, the said decision is of no assistance to the respondents.

Learned counsel for the respondents also referred to the decision in D
Pandit Sri Chand & Ors. v. Mis. Jagdish Parshad Kishan Chand & Ors.,
[ 1966] 3 SCR 451. In that case the parties agreed to the decree jointly and
severally and Basant Lal, one of the appellants died on 18. I 0.1962. The
counsel also referred the case in Ram Sarup & Ors. v. Munshi & Ors., AIR
(1963) SC 553 in which case the issue was a pre-emption decree which was
indivisible. Both these cases are not applicable to the facts of the case in E
hand.

In the facts and circumstances of the present case and the well settled
position of law, as referred to above, we are of the view that the abatement
of appeal in respect of Smt. Rajlakshmi would not abate the appeal qua other F
J. respondents. We hold that the appeal qua other respondents is maintainable .
./ '
B. Whether the award of the Arbitrator dated I 0. 7. I 999 purports or
operates to create. declare. assign, limit or extinguish in praesenti or in
future any right, title or interest of the value of one hundred rupees and
upwards to or in immovable property which requires registration- under G
.., Section I 7 (l)(b) of the Act?
--4 We may first notice the provisions of Section 17(l)(b) of the Act:

17. Documents of which registration is compulsory.-(!) The following
documents shall be registered, if the property to which they relate is H
916 SUPREME COURT REPORTS [2006) 2 S.C.R.

situate in a district in which, and if they have been executed on or
A
after the date on which, Act No.XVI of 1864, or the Indian Registration
Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration
Act, 1877, or this Act came or comes into force, namely:-

(a) ...... .
B (b) other non-testamentary instruments which purport or operate to
create, declare, assign, limit or extinguish, whether in present or in
future, any right, title or interest, whether vested or contingent, of the
value of one hundred rupees and upwards, to or in immovable
property;
c (c)-(e)......."

(emphasis supplied)

Clause (b) of Section 17( 1) enjoined registration of non-testamentary
instruments which purport or operate to create, declare, assign, limit or
D extinguish, whether in present or in future, any right, title or interest, whether
vested or contingent, of the value of one hundred rupees and upwards, to J
or in immovable property. This section speaks of creating rights or extinguishing
rights in praesenti or in future. Any right created or extinguished in the past
is conspicuously absent. The creation of any right or extinguishment of any
'
E right is expressly excluded by the Act itself.
It is contended by Mr. Sundram, learned Senior counsel for the appellant
that the award of the Arbitrator does not create any right or extinguish any
right in praesenti or in future. He further submittea that the award of the
Arbitrator n~ticed the pre-existing facts of a Gift Deed dated 14.l 0.1956
F registered on 10.6.1961 and the revocation of Gift Deed on I0.5.1971 and
payment of consideration amount received in lieu of gift of plot. He, therefore,
argued that by no stretch of imagination it can be held that the award created
any rights or extinguished any rights in praesenti or in future which would
require registration under the Act. Per contra, learned counsel for the
G respondents contended that the award created rights in favour of the sons
and extinguished the rights of the daughters in the immovable property and
therefore, the award would require registration under the Act.

To answer this question, it would be necessary to examine the award
of the Arbitrator.
H
N. KHOSLA v. RAJLAKSHMI (DEAD) [SEMA, J.] 917

1 Before we examine the award of the Arbitrator, we may at this stage A
· notice the mutual agreement entered into between the parties referring the
dispute to the Arbitrator. The dispute, which was referred to the Arbitrator
by the parties, was with regard to Gift Deed and the resumptio:1 of the
property gifted in favour of his three daughters Smt. Rajlakshmi, Smt. Ninnala
and Smt. Sarsaswati survived by her husband, B. C. Talwani. After the parties B
filed the written statements and documents in support of their respective
claims, the Arbitrator framed the following issue:

"Whether the gift of the three plots in favour of the daughters still
stand and was not revoked and the plots were not resumed by their
father?"
c
The Arbitrator, after examining the issues, came to the following
~
conclusion:

I. That the gift was made in 1956 on condition that the daughters
would build houses and settle there. No houses were built during
this long period. Even the possession was neither delivered by D
\.. the donor nor was possession taken by the donees. A document
... dated 10.05.1971, Ex. K-5 is clear.
2. That the gift was not acted upon even the Gift Deed remained in
possession of the donor, their father throughout.
E
3. That Dewan Niranjan Prasad the donor revoked the gift and .
resumed the three plots at the in~tance and with the consent of the
donees, the daughters, who agreed to the resumption of the piots
on the ground that the plots were not of any remuneration value
and agreed to convert the plots into cash. They accepted the cash
l. in lieu of the plots as mentioned in Ex. K04. and Ex. K-5 and in F
written statements.

4. Smt. Ninnala's plea that Rs. 5000/- were paid back to her on
account of the loan, advanced by her husband to Naval her brother,
has not been substantiated. She did not mention in her letter
dated 17.08.1973 Ex. K-2, that it was a loan. The other item of Rs. G
5,000/- has also not been proved that it was due to her otherwise.

5. The mutation of the land in favour of the daughters has no value.
The entries are wrong. Dewan Niranjan Prasad and Smt. Saraswati,
who are recorded as present, had died long before the mutation
was sanctioned. No notice appears to have been issued to any H
918 SUPREME COURT REPORTS [2006] 2 S.C.R.

A party. .
6. That the execution of the Memorandum of Partition, which is a
subsequent act of the Late Dewan Niranjan Prasad, impliedly
shows also that the gift to the three daughters was revoked.

I give my award in favour of Shri Krishen Jiwan and Shri Naval
B Jiwan and hold that the gift was revoked and plots were resumed by
the Late Dewan Niranjan Prasad at the instance and with the consent
of the second part in lieu of cash payment received by them."

The award of the Arbitrator, as quoted above, would clearly show that
C by the award the Arbitrator simply recorded the finding on the basis of the
pre-existing facts, namely, the Gift Deed, the revocation of the gift and the
partition of the property between his sons subsequent to the revocation of
Gift Deed. It is a declaration of pre-existing rights. It neither creates any right
nor extinguishes any right in praesenti or in future. What Section 17(l)(b) of
the Act requires is the creation of rights by decree in praesenti or in future.
D In the present case the award of the Arbitrator, as noted above, clearly
delineated the pre-existing facts, on the basis of which the award was passed.

In Capt. (Now Major) Ashok Kshyap (appellant) v. Mrs. Sudha Vasisht ••
& anr. (respondents) AIR ( 1987) SC 841, the award of the Arbitrator, though
declared the share of the parties in the property, it created a right by itSelf?
E in favour of one party to get particular sum from another party and right to
obtain the payment and on payment the obligation Qf relinquishment of right
or interest in the property. This Court held on an analysis of the award that
it did not create any right in any immovable property and as such it was not
compulsory to register it.
F This Court in the case of Sardar Singh v. Krishna Devi (Sm/.) and Anr.,
[1994] 4 SCC 18 held in paragraph 12 page 26 (SCC) as under: • •

"It is, thus, well settkd law that the unregistered award per se is not
inadmissible in evidence. It is a valid award and not a mere waste
paper. It creates rights and obligations between the parties thereto
G
and is conclusive between the parties. It can be set up as a defence
as evidence of resolving the disputes and acceptance of it by the
parties. If it is a foundation, creating right, title and interest in praesenti
or future or extinguishes the right, title or interest in immovable
property of the value of Rs. I 00 or above it is cumpulsorily registrable
H and non-registration render it inadmissible in evidence. If it contains
N. KHOSLA v. RAJLAKSHMI (DEAD) [SEMA, J.] 919
a mere declaration of a pre-existing right, it is not creating a right, A
title and interest in praesenti, in which event it is not a compulsorily
registrable instrument. It can be looked into as evidence of the
conduct of the parties of accepting the award, acting upon it that they
have pre-existing right, title or interest in the immovable property.

(emphasis supplied) B
To buttress his contention, learned counsel for the respondents has
referred to the decision of this Court in Ratan Lal Sharma v. Purshottam
'\ Harit [1974] I SCC 671. In that case the award expressly created or purported
to create rights in immovable property in favour of the appellant, which
required registration. This is not the position in the facts of the present case. C
Looking at the award of the Arbitrator and the law laid down by this
Court the arguments of learned counsel for the respondents that the award
created any right or extinguished any right in praesenti or in future which
would require registration under the Act is noted only to be rejected.
D
In the result, all the decisions of the courts below are patently erroneous .

... and are set aside. This appeal is allowed. The award of the Arbitrator is made
the Rule of the Court.

It is clear from the record that Dewan Niranjan Prasad died on 15.1.1975
and Smt. Saraswati also in 1966. The respondents fraudulently obtained E
mutation on 22.1.1977 showing Dewan Niranjan Prasad and Smt. Saraswati as
present. Fraud clocks everything.

Fraud avoids all judicial acts. A decree obtained by playing fraud is a
nullity and it can be challenged in any court, even in collateral proceedings.
(See S.P. Chengalvaraya Naidu (Dead) By LRs. v. Jagannath (Dead) by LRs. F
& Ors., [1994] I sec 1.

It is open to the appellant to file a suit against the legal heirs of Smt.
Rajlakshmi, whose appeal has been abated. If the suit is fi!ed within two
months from today, it shall not be dismissed as being barred by limitation.
With the aforesaid directions, the appeal is allowed. Parties are asked to bear G
their own costs.

B.S. Appeal allowed.