Here, the facts were that two brothers, Harendra and Mukesh, were having vast businesses in USA and India. These brothers had acquired properties in both the countries. Disputes having arisen between them, they appointed an arbitrator to divide their businesses and properties, both in the USA and in India, who gave his award in New York. Some proceedings arising out of the arbitration agreement and the award were held there in the Courts, i.e., in USA. The arbitration agreement was entered into in New York where arbitration proceedings were held and the award given. Mukesh applied to the Bombay High Court, in India, under the provisions of the Foreign Awards (Recognition and Enforcement) Act, 1961 ("the Foreign Awards Act"), for enforcing theaward. The high court, after contest, ordered the award to be filed and pronounced judgment according to the award as required under section 6 of the Foreign Awards Act. Harendra, felt aggrieved by the judgment and moved the Supreme Court.

One of the issues which was raised by the appellant before the Supreme Court was that Chapter XX-C of the act had been violated and enforcement of the award in violation of the law of this country would be against public policy.

A submission made by the appellant was the award was an "agreement for transfer" within the meaning of Chapter XX-C. The award declared the right of Mukesh to immovable properties comprised in the packages selected by him and also similarly declared the rights of Harendra in respect of immovable properties included in the packages allotted to him. Both these sets of packages included a large number of immovable properties located in and outside Mumbai in India and also in the US. It was, therefore, submitted that arbitral award which declaredthe rights of the party in respect of the immovable properties was compulsorily required to be registered under the provisions of the Registration Act, 1908 and if the award was not registered, the court cannot look at such an award or pass a decree in terms thereof.

It was urged that section 269UC of Chapter XX-C of the act prohibits registration of a transfer unless the requisite NOC is obtained.In this regard the court referred to the decision in Lachhman Das vs Ram Lal, AIR 1989 SC 1923 (when an award affects immovable property of the value of over Rs 100, it requires to be registered under the Registration Act), and that of Tehmi P Sidhwa vs Shib Banerjee and Sons Pvt Ltd, AIR 1974 SC 1912 (since the award merely created a right obtained another document, it would fall u/s 17(2)(v) and not u/s 17(1)(b) of the Registration Act and would not require registration).

The court further held that settlement agreement under consideration was not a merely an agreement for transfer. The settlement agreementcovered vast businesses and properties both in India and in the US. It was a complex agreement. It also mentioned litigation between parties pending in the Supreme Court of the State of New York, Nassau County Court. After the parties had got their respective packages of the properties and businesses both in India and in the US the award required the parties to execute transfer and closing documents. There was a clause which provided as to how the documents would be executed if any party refused to execute the aforesaid transfer and closing documents. Then there were various terms regarding continuance of their obligations under the businesses and properties even though there were separation and division of assets between two different groups. The settlement agreement also stipulated certain rights of one party with respect to the asset falling to the share of the other. All these clauses, the court held, were not to be read in isolation and formed part of one composite agreement.

The court then went on tohold that the agreement showed that it was not an agreement for transfer as understood in section 269UA(a) of Chapter XX-C of the act. The settlement agreement also did not stipulate exchange of any immovable property. It rather divided equally businesses and properties between Harendra and Mukesh. Nor was it a case of "exchange" of properties. The court stated that when considering exchange of immovable properties falling within the definition of "exchange" in section 118 of the Transfer of Properties Act, both properties should be situated in India. Agreement for transfer refers to immovable property which is defined in section 269UA(d) of the act. The court negatived the submission that there was any transfer of immovable property under the settlement agreement.

Finally, the court was of the view that in the case of a foreign award, the provisions of Chapter XX-C of the act were not attracted. Under Chapter XX-C a net had been thrown wide to bring within its purview all sorts immovable properties. Butthat net was not wide enough to cover foreign awards covering businesses and properties both in India and foreign countries.

The court was also of the view that a foreign award under the Foreign Award Act did not require registration under the Registration Act. They said : "A decree or order of a court does not require registration under clause (b) of sub-section (1) of section 17 of the Registration Act. This is the effect of clause (vi) of sub-section (2) of section 17. Earlier under this clause (vi) before its amendment in 1929 even an award did not require registration. However, after omission of the words "and any award" an award creating or declaring right or interest in immovable property of the value of Rs 100 would require registration. But then that award would be an award under the Arbitration Act, 1940, and certainly not a foreign award". To sum up, (i) a settlement agreement which divides properties and businesses would not be an agreement for transfer requiring to go through the proceduralformalities of Chapter XX-C; (ii) a foreign award does not require registration under the Registration Act nor are the provisions of Chapter XX-C of the act attracted in such cases.

The author is a Mumbai-based chartered accountant