Court Decrees, Orders and Arbitration Awards: Section 17(2)(vi), the Compromise Decree, and the Registration of an Award

A decree of a court is exempt from compulsory registration. The reason is not indulgence but redundancy: a decree is already a public and authenticated record, made after enquiry, and the objects of registration, publicity and the prevention of fraud, are achieved by the record of the court itself. Section 17(2)(vi) states the exemption and carves out one class from it, the compromise decree comprising property outside the subject matter of the suit. An arbitration award is in a different position altogether, because an arbitrator is not a court, and the exemption in clause (vi) does not reach him.

The exemption for decrees, the compromise exception, and where the arbitration award stands

1. The Exemption

• The exemption is from clauses (b) and (c) of Section 17(1) only. It does not touch clause (a), gifts, or clause (d), leases, but those are not the form a decree takes.
• "Decree or order of a court" is wide. It covers a preliminary decree, a final decree, an appellate decree, and an order having the effect of declaring or adjusting rights in immovable property.
• A contested decree is always exempt, whatever property it comprises. The rights are declared by the adjudication, and the decree records that adjudication.
• The exception is confined to compromise decrees, and within that class, only to so much of the decree as comprises immovable property other than the subject matter of the suit.
• A decree exempted under Section 17(2)(vi) is nonetheless within Section 48, and takes effect from its own date.

2. Why the Compromise Decree Is Treated Differently

A compromise decree is a hybrid. Its substance is an agreement between the parties; the court does no more than put its seal on what they have settled. Where the compromise deals with the property that was in suit, the court was already seised of the dispute about it, and the decree resolves what it was there to resolve. Where the compromise brings in property that was never in issue, the parties are using the court as a conveyancing office, and Section 17(2)(vi) withdraws the exemption so that the ordinary rule applies.

1. First ask whether the decree is on a compromise. If it is contested, the exemption applies without more.

2. Then ask what property it comprises. So far as it comprises property outside the subject matter of the suit, the express exception applies and registration is compulsory.

3. Then ask, even as to the property in suit, whether the decree declares or creates. On Bhoop Singh, a decree that creates a right in praesenti for the first time requires registration.

4. A decree recognising a pre existing right is exempt, and that is the ordinary case where the plaintiff's claim was founded on a title he already had, and the compromise simply acknowledged it.

5. A compromise that goes outside the suit is also governed by Order XXIII Rule 3 of the Code of Civil Procedure, which permits the court to record a compromise relating to the suit, and the decree operates only so far as it relates to the suit, the rest taking effect as a contract between the parties.

3. The Consent Decree

A consent decree and a compromise decree are, for the purposes of Section 17(2)(vi), the same thing. The words of the clause are "expressed to be made on a compromise", and a decree passed on the consent of the parties is a decree so expressed. What matters is not the label but whether the court adjudicated or merely recorded what the parties agreed.

• A consent decree derives its binding force from the agreement, with the command of the court superadded.
• It may be set aside on grounds on which the underlying agreement could be avoided, such as fraud, misrepresentation or mistake, and the remedy lies in the court that passed it under the proviso to Order XXIII Rule 3.
• It is not an adjudication on the merits and, on the general principle, does not operate as res judicata in the same way as a contested decree, though it binds the parties by estoppel.
• The registration question is decided on the Bhoop Singh test, as with any compromise decree.

4. The Document Executed in Pursuance of a Decree

A decree is exempt; a document executed to carry out a decree is not the decree. This distinction is easy to state and constantly missed. Where a court decrees specific performance and a conveyance is executed in obedience to that decree, whether by the defendant or, under Section 28 of the Specific Relief Act, 1963, by an officer of the court on his behalf, the document so executed is an ordinary sale deed. It creates the interest, and it must be registered.

5. Assignment or Transfer of a Decree

• A money decree is movable property, and its assignment raises no question under Section 17.
• A decree for immovable property is different. Where the decree directs delivery of immovable property or declares a title to it, an instrument assigning that decree transfers an interest in immovable property and falls within Section 17(1)(b).
• The transferee must apply for execution under Order XXI Rule 16 of the Code of Civil Procedure, and the court gives notice to the transferor and the judgment debtor before allowing execution.
• Section 17(2)(xiv) should be noted alongside: it exempts certain orders and certificates relating to execution sales, and Section 89 requires copies of court sale certificates to be sent to the registering officer.

6. The Court Sale Certificate

• The certificate does not create the title. The sale creates it, and the certificate is granted to evidence what the sale has already done. That is why registration would add nothing, and why the exemption is unqualified.
• Title passes on confirmation of the sale, and relates back to the date of the sale, under Section 65 of the Code of Civil Procedure.
• The publicity that registration would have given is supplied by Section 89(4), which puts a copy on the register in Book 1, so that a search discloses the transaction.
• The exemption covers a sale by a Civil or Revenue Officer at public auction. A private sale by a receiver, or a sale by a person other than such an officer, is not within clause (xii).
• Stamp duty is a separate question, governed by the State schedule, and the certificate is ordinarily chargeable.

7. The Arbitration Award

An arbitral tribunal is not a court, and Section 17(2)(vi) exempts only a decree or order of a court. It follows that an award which creates, declares, assigns, limits or extinguishes a right in immovable property of the value of one hundred rupees or more falls squarely within Section 17(1)(b) and must be registered.

1. An award that merely declares a pre existing right in immovable property, without creating anything, stands on the same footing as a declaratory decree and does not require registration.

2. An award that partitions property, allots shares, or transfers an interest creates rights and must be registered.

3. An award in a money claim raises no question under Section 17, whatever the sums involved.

4. The time for presentation runs under Sections 23 to 26 from the date of the award, and an award presented late is liable to be refused, subject to the powers under Sections 25 and 34.

5. Under the 1996 Act, an award is enforced as if it were a decree of the court under Section 36, but it does not thereby become a decree for the purposes of Section 17(2)(vi). The fiction is for enforcement, not for registration.

8. Decree, Award and Instrument Compared

9. The Position Stated Shortly

1. Any decree or order of a court is exempt from compulsory registration under Section 17(2)(vi).

2. The exception is a decree expressed to be made on a compromise and comprising immovable property other than the subject matter of the suit; that part must be registered.

3. Even as to property in suit, a compromise decree that creates a right in praesenti for the first time requires registration, Bhoop Singh v. Ram Singh Major.

4. A decree that merely recognises or declares a pre existing right is exempt.

5. A consent decree is a compromise decree for this purpose, and is tested the same way.

6. A conveyance executed in pursuance of a decree is not the decree, and must be registered.

7. An assignment of a decree relating to immovable property is registrable, and execution by the transferee is governed by Order XXI Rule 16 of the Code of Civil Procedure.

8. A certificate of sale granted to the purchaser at a public auction by a Civil or Revenue Officer is exempt under Section 17(2)(xii), and a copy is filed in Book 1 under Section 89.

9. An arbitration award is not a decree of a court, and an award creating rights in immovable property worth one hundred rupees or more must be registered, Satish Kumar v. Surinder Kumar.

10. Want of registration or stamp is not a ground under Section 34 of the Arbitration and Conciliation Act, 1996; it arises at the stage of enforcement under Section 36, M. Anasuya Devi v. M. Manik Reddy.