N. KHADERVALI SAHEB (DEAD) BY LRS. AND ANR. versus N. GURUSAHIB (DEAD) AND ORS.

Citation: [2003] 1 S.C.R. 868 · Decided: 05-02-2003 · Supreme Court of India · Bench: M.B. SHAH · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
N. KHADERVALI SAI-IEB (DEAD) BY LRS. AND ANR. 
v. 
N. GURUSAHIB (DEAD) AND ORS. 
FEBRUARY 5, 2003 
B 
fM.8. SHAH, ASHOK BHAN AND ARUN KUMAR, JJ.] 
Registration Act, 1908-Section 17-Award distributing assets on 
dissolution of partnership-Registration of award-Requirement for -Held, 
C award does not require registration, since the award does not transfer or 
assign interest in any asset. 
On dissolution of a partnership firm, the assets were allotted between 
the partners by way of an arbitration award. The question for 
consideration in these cases was whether such an award amounts to 
D creation of or transfer of any fresh rights in movable or immovable 
properties so as to bring it with'in the ambit of Section 17 of the 
Registration Act, 1908. 
Allowing the appeals, the Court 
E .. 
HELD: 1. 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 
F 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 
G 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. (870-D, E, Fl 
H 
2. Jn the present case, the award seeks to distribute the residue after 
settlement of accounts on dissolution, while distributing their residue·the 
868 
. ;. 
N. KHADERVALI SAHEB >. N. GURUSAHIB [ARUN KUMAR. J.) 
869 
arbitrators allocated the properties to the partners. The award in such A 
circumstances did not require registration under Section 17 (I) of the 
Registration Act. 1871-CI 
S. V. Chandra Pandian and Ors. v. S. V. Sivalinga Nadar and Ors., 119931 
I sec 589, relied on. 
Ratan la/ Sharma v. Purshottam Harit, 11974) I SCC 671, distinguished. 
CIVIL APP ELLA TE JURISDICTION : Civil Appeal Nos. 5680-
568 I of I 994. 
B 
From the Judgment and Order dated 29.6.1993 of the High Court of C 
A.P. in C.R.P. No. 2250/89 and CMA 1859/89. 
A.T.M. Sampath and V. Balaji, for the Appellants. 
K. Ram Kumar and B. Sridhar, for the Respondents. 
The Judgment of the Court was delivered by 
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 
D 
registration under Section 17 of the Registration Act, 1908? 
E 
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, I 972. The award was challenged 
by way of objections filed under Section 30 of the Arbitration Act, I 940 by F 
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 I 7 
of the Registration Act. The trial Court accepted both the objections holding G 
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 I I 5 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 H 
870 
SUPREME COURT REPORTS 
[2003] I S.C.R. 
A 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 C
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