Six brothers operated two partnerships, "Messers Sivalinga Nadar & Brothers" and "S.V.S. Oil Mills," both registered under the Partnership Act, 1932.
Majority of properties were owned by "Sivalinga Nadar & Brothers," while "S.V.S. Oil Mills" had leasehold rights on land belonging to the former.
Disputes arose among the brothers regarding the business conducted under these partnerships and other shared properties.
To resolve these disputes, the brothers entered into an arbitration agreement on October 8, 1981.
The arbitrators directed the dissolution of both partnerships and the joint house property rent account, effective July 14, 1984.
The arbitration award listed the properties and liabilities of the partnerships and provided for the division of any omitted assets or liabilities.
It also addressed the use of firm names and the businesses operated by the relatives of the disputants.
After the award was made, certain parties filed applications in court to either enforce or set aside the award.
ISSUE
The main issue is whether the award related to the dissolution requires registration under Section 17(1) of the Registration Act.
JUDGEMENT
The court determined that the award did not require registration under Section 17(1) of the Registration Act. Therefore, the appeals were allowed, and the impugned orders of the Division Bench were set aside.
LEGAL ANALYSIS
The court carefully examined the contents of the award to understand its nature accurately.
It noted that the arbitrators focused on properties belonging to the dissolved firms and avoided dealing with properties not belonging to the firms.
The award primarily aimed at distributing surplus properties among the partners after settling accounts on dissolution.
The court emphasised that the document's nature is crucial in determining whether registration under Section 17(1) of the Registration Act is necessary.
Mere statements about certain properties exclusively belonging to specific partners do not alter the document's character.
The document primarily focuses on the distribution of residue after settling accounts, indicating its nature as a dissolution agreement rather than an assignment of rights.
Even if certain properties were exclusively allocated to specific partners, it did not constitute a transfer or partition requiring registration under the Registration Act.
Court highlighted the principle that a partner's share in partnership assets, including immovable properties, is movable property and does not require registration under Section 17(1) of the Registration Act.