S.V. CHANDRA PANDIAN AND ORS. versus S.V. SIVALINGA NADAR AND ORS.

Citation: [1993] 1 S.C.R. 58 · Decided: 11-01-1993 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
S.V. CHANDRA PANDIAN AND ORS. 
v. 
r:.: 
S.V. SIVALINGA NADAR AND ORS. 
· JANUARY 11, 1993 
B 
(A.M. AHMADI, M.M. PUNCHHI AND K. RAMASW~, JJ.) 
Arbitration Act 1940: 
-~ 
Sections 14, 17, 30 and 33-Arbitration Award-Assests of pa11nership 
c fimi allocated to partners on disso/utiorr-Assets comprising of immovable 
properties-Whether award to be registered under the Registration Act. 
-
Indian Partnership Ac4 1932: 
Sections 18, 22, 29 and 48-Partnership-Disso/ution of-Settlement of 
D accounts-Distribution of residue to partners-Assets comprising of immov-
able properties-Whether attracts Section 17 of Registration Act. 
Six brothers, viz. the four appellants and respondents 1 and 2, were 
carrying on the business in partnership. Disputes arose between the six 
E 
brothers in regard to the business run by them. They entered into an 
arbitration agreement to resolve the disputes and referred the disputes to. 
three arbitrators. The arbitrators entered upon the reference and after 
giving opportunity or hearing to the parties, circulated a draft award. 
After considering the reaction or the disputants, final award was made by 
the arbitrators by which various properties were allotted to each or the six 
F 
brothers. 
Some or the disputants filed a petition praying for a direction to the 
..,,--
arbitrators to Ille their award in court. They also filed another petition 
requesting the court to pass a· decree in terms or the award. Two other 
G 
disputants filed a petition under Section 30 or the Arbitration Act to set 
aside the award. A Single Judge heard these matters. It was contended 
before him that having regard to the allotment or partnership properties 
including immovable properties under the award, it was incumbent that 
the award should have been registered as required by Section 17(1) or the 
_,---
I 
Registration Act and since it lacked registration, the Court had no Juris-
H diction to make it the rule or the Court and grant a decree In terms 
58 
-
CHANDRA PAND!AN v. SIVALINGA NADAR 
59 
thereof. The Single Judge directed taking steps for getting the award A 
registered. 
In the meantime, one of me arbitrators passed away. At the request 
of some of the parties, the surviving arbitrator:s presented the award to 
the Registrar for registration. Thereupon one of the brothers served a 
notice on the Registrar not to register the document. 
Against the order of the Single Judge, an appeal was preferred to 
Division Bench and it reversed the finding of the Single J.udge. It held that 
the award required registration under section 17(1) of the Registration 
B 
Act; and in the absence of registration there was no valid award and the C 
Court had no jurisdiction to grant a decree in terms of the award. Being 
aggrieved by this order, the present appeals were filed by four of the six 
brothers. 
- ---! 
On the question whether the award required registration under 
section 17(1) of the Registration Act: 
D 
Allowing the appeals, this Court 
HELD : 1.1. When a dissolution of a partnership takes place and the 
residue is distributed among the partners after settlement of accounts 
there is no partition, transfer or extinguishment of, _interest attracting 
section 17 of the Registration Act. [79F,G] 
1.2. Regardless of its character the property brought into the stock 
of a firm or acquired by a firm during its subsistence for the purposes and 
in the course of its business shall constitute the property of the rmn 
unless the contract between the partners provides otherwise. On the dis-
solution of the firm each partner becomes entitled to his share in the 
profits, if any, after the accounts are settled in accordance with section 48 
of the Partnership Act. In the entire asset of the firm all the partners have 
E 
F 
an interest, albeit in proportion to their share and the residue, if any, after 
the settlement of accounts on dissolution would have to be divided among G 
the partners in the same praportion in which they were entitled to a share 
lo the profit. Thus during the subsistence of the partnership a partner 
would be entitled to a share in the profits and after its dissolution to a 
share in the residue, if any, on settlement of accounts. The mode of 
settlement of accounts is clearly set out in section 48. It is obvious that the H 
60 
SUPREME COURT REPORTS 
[1993] 1 S.C.R. 
A residue would in the eye of law be movable property i.e. cash, and hence 
distribution of the residue among the partners in pro

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