RAMESH KUMAR & ANR. versus FURU RAM & ANR. ETC.

Citation: [2011] 10 S.C.R. 453 · Decided: 18-08-2011 · Supreme Court of India · Bench: R.V. RAVEENDRAN · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2011] 10 S.C.R. 453 
RAMESH KUMAR & ANR. 
A 
V. 
FURU RAM & ANR. ETC. 
(Civil Appeal Nos. 7085-7086 of 2011) 
AUGUST 18, 2011 
8 
[R.V. RAVEENDRAN AND A.K. PATNAIK, JJ.] 
SUIT: 
Suits for declaration that the decrees obtained in suits 
C 
filed ulss 14 and 17 of Arbitration Act were null and void as 
they were vitiated by fraud - Decreed by trial court on the 
ground that the arbitration awards were not registered - First 
appellate court and High Court dismissed the suits holding 
that the suits were filed only for declaring that the arbitration 
0 
agreements and awards were invalid and the suit for such 
declaration were not maintainable in view of ss. 32 and 33 of 
Arbitration Act - HELD: Challenge to the validity of the 
arbitration agreement and the awards was incidental to 
challenge to the order making the awards rule of the court and 
the decrees drawn in pursuance of such orders - Therefore, 
E 
ss. 32 and 33 were no bar to the suits - The decrees in suits 
uls 14 and 17 of Arbitration Act were obtaining by committing 
fraud upon the plaintiffs, the court and the State Government 
evading liability to pay stamp duty and registration charges 
- Judgment of first appellate court and High Court set aside 
F 
and judgments and decrees of trial court decreeing the suits 
restored. 
ARBITRATION ACT, 1940: 
ss. 14 and 17 - Reference agreements - Awards -
G 
Applications for making the awards rule of the court- HELD: 
The entire procedure was fraudulent as (i) there was no dispute 
between the parties, (ii) there was no reference of any dispute 
to arbitration, (iii) the reference agreements were prepared 
453 
H 
454 
SUPREME COURT REPORTS 
[2011] 10 S.C.R. 
A and executed in pursuance of a pre-existing arrangement to 
have collusive awards and (iv) the arbitrator was not required 
to decide any dispute between the parties nor was there any 
adjudication of the dispute by the arbitrator - Reference to 
arbitration was to avoid stamp duty and registration charges 
B - Obtaining sham and collusive arbitration awards when there 
was no dispute and then obtaining a nominal decree in terms 
of the said awards would be a fraud committed upon the court 
and the State Government by evading liability to pay the 
stamp duty and registration charges -
The irregularities, 
c illegalities, suppressions and misrepresentations which 
culminated in the orders making the awards the rule of the 
court and directing that the awards be made decrees of the 
court, show that the decrees in terms of the awards were 
obtained by fraud - Stamp fraud - Registration Act, 1908 -
D s. 17 - Administration of justice - Fraud committed upon 
court. 
E 
FRAUD - Connotation of - Explained. 
REGISTRATION ACT, 1908: 
ss. 17 and 49 - Compulsorily registrable documents -
Held: If the decree or order of the court is not rendered on 
merits, but expressed to be made on a compromise and 
comprises any immoveable property which was not the subject 
mater of the suit or proceeding, such order or decree is 
F compulsorily registrable - Further, clause (iv) of sub-s. (2) of 
s. 17 excludes decrees or orders but does not exclude awards 
of arbitrator- Any arbitration award which purports or operates 
to create, declare any right, title or interest in any immovable 
property of the value of more than Rs. 100 is compulsorily 
G registrable - In the instant case, the awards are clearly 
. documents which purport or operate to create and ·declare a 
right, title or interest in an immoveable property of the value 
of more than Rs. 100 which was not the subject matter of the 
dispute or reference to arbitration - Therefore, the awards were 
H compulsorily registrable, but as they were not registered they 
RAMESH KUMAR & ANR. v. FURU RAM & ANR. 
455 
ETC. 
could not be acted upon u/s 49 of the Registration Act, 1908 
A 
nor could a decree be passed in terms of such unregistered 
awards. 
CONSTITUTION OF IND/A, 1950: 
Article 136 - Scope of - Held: Normally Supreme Court 
B 
would not interfere with a finding of fact relating to fraud and 
misrepresentation - But, in the instant case, as material 
evidence produced by the plaintiffs-appellants had been 
ignored and as the courts below failed to draw proper 
inferences therefrom and had ignored a cause of fraud, the 
C 
Court is constrained to interfere with reference to a question 
of fact - When the first appellate court and High Court held 
that the decree was not null and void, the plaintiffs-appellants 
were ent

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