POORAN CHAND Vs. SUDARSHAN KUMAR AND OTHERS

JUDGEMENT

(1.) THIS is a revision under Section 115 C. P.C. by Seth Puran Chand defendant against the order dated 27 -4 -1963 of the Civil Judge of Saharanpur confirming the report of the Inspector of Stamps and thereby holding that for purposes of the Stamp Act the Arbitration agreement was an instrument of partition and it was insufficiently stamped to the extent of Rs. 2,666.56. The defendant was thereupon directed to pay the deficiency in stamp duty and also penalty to the extent of 10 times the deficiency, i.e. Rs. 29,332.16 in all.

(2.) "Instrument of partition" has been defined in Section 2(15) of the Stamp Act to mean "any instrument whereby co -owners of any property divide or agree to divide such property in severalty, and includes also a final order for effecting a partition passed by any Revenue authority or any Civil Court and an award by an arbitrator directing a partition." The words "divide or agree to divide" used in the above definition are of great significance and make it clear that for purposes of the Stamp Act an agreement to divide the property is also an instrument of partition Stamp duty as on an instrument of partition shall thus be payable not only on an instrument actually dividing the property among the co -owners of but also on an instrument containing an agreement among the co -owners to divide such property.

(3.) AFTER the execution of an arbitration agreement parties do not have the right to seek their remedy before the courts of law, nor can they have the matter amicably settled except by arbitration in accordance with the terms and conditions of the arbitration agreement. It is true that the parties have the right to waive the arbitration clause, by the defendant not raising any objection to the entertainment of the suit by the court of law. But in practice, I may say, invariably, the effect of an arbitration agreement is to restrict the right of the parties to enforce their legal rights. In other words, as a result of the arbitration agreement the right of the parties is limited though the right so limited is the right to seek remedy before the courts of law or to have the dispute emicably settled by other means. An arbitration agreement is, therefore, an instrument and if the instrument contains an agreement among the co -owners of the property to divide the property in severalty it would be an "instrument of partition for purposes of the Stamp Act.