Full Judgment Text
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PETITIONER:
REGISTRAR, CO-OPERATIVE SOCIETIES,WEST BENGAL
Vs.
RESPONDENT:
KRISHNA KUMAR SINGHANIA AND OTHERS
DATE OF JUDGMENT17/08/1995
BENCH:
RAMASWAMY, K.
BENCH:
RAMASWAMY, K.
HANSARIA B.L. (J)
CITATION:
1995 SCC (6) 482 JT 1995 (6) 408
1995 SCALE (5)240
ACT:
HEADNOTE:
JUDGMENT:
O R D E R
Leave granted.
This appeal by special leave arises from the decision
of a Single Judge of the High Court of Calcutta dated the
September 24, 1991 in matter No.686/91. The first respondent
was appointed as a Transport and Handling contractor by the
West Bengal State Consumers’ Federation. Certain differences
and disputes arose between them. Consequently, when they
approached the Registrar under the West Bengal Co-operative
Societies Act, 1983 (for short, ‘the Act’), the Registrar,
by his proceedings dated October 8, 1989, appointed an
arbitrator to decide the disputes. Since the arbitrator had
not decided the reference within one year, as envisaged
under s.96 of the Act, the first respondent approached the
High Court under Sections 5, 11 and 12 of the Arbitration
Act, 1940 for termination of the arbitration and appointment
of another arbitrator. After revoking the appointment of the
third respondent Devi Prasad Lehari as an arbitrator, the
High Court appointed another arbitrator by the impugned
order. The learned Single Judge proceeded on the premise
that since s.96 empowers the Registrar to extend time only
upto one year to enable an arbitrator to make the award, and
the arbitrator had failed to make the award within the
extended one year period, the Registrar became functus
officio to extend further time. So, the arbitrator was left
with no power to make the award. Resultantly, the first
respondent was entitled to invoke the provisions of the
Arbitration Act, 1940, by operation of s.46 thereof.
The question is whether the view of the High Court is
correct and the arbitration proceedings before the third
respondent stood abated and whether the civil court has
power to terminate his nomination and to appoint in his
place another arbitrator?
Shri Santosh Hegde, learned senior counsel for the
appellant, contended that the power of the registrar under
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Ss.95 and 96 of the Act should be read with the rules made
under the Act. Rule 178 empowers the Registrar to withdraw
the arbitration proceedings to decide himself or to appoint
any other arbitrator, which would indicate that on expiry of
the period of one year prescribed under s.96, the power of
Registrar is not exhausted and the first respondent was not
left without any remedy. The provisions of the Arbitration
Act would be applicable only when the parties have agreed
for such a reference. Since the agreement does not provide
for such an option, appointment made under s.46 of
Arbitration Act is illegal. The Act is a special law which
provided a complete procedure including right of appeal
which is inconsistent with the Arbitration Act. So. s.46 of
the Arbitration Act does not apply.
It is contended for the respondent that the view of the
High Court is sustainable from a reading of the provisions
of the Act and the scheme under the Arbitration Act. Though
the contract does not expressly empower the appointment of
an arbitrator by the civil court under the Arbitration Act,
by necessary implication and by operation of s.46 of the
Arbitration Act, the statutory arbitration became
operational. The arbitrator appointed by the Registrar
having failed to make the award within one year, he became
non-functional. Since the limitation prescribed under s.96
is mandatory, Registrar is left with no power to extend
further time. The Registrar, thereby, became functus
officio. Consequently, the arbitration proceedings before
the third respondent stood abated. The party cannot be left
without a remedy. The only remedy is as provided under the
Arbitration Act.
The diverse contentions gives rise to the questions:
(1) whether on expiry of the outer limit of one year
prescribed under s.96(5) and (6) of the Act, the Registrar
became functus officio to deal with the dispute and
consequently the third respondent ceased to have any power
to arbitrate the dispute or the said proceedings stood
abated? (2) Whether the party is left without a remedy? (3)
Whether civil court gets jurisdiction to terminate the
appointment of third respondent and to appoint another
arbitrator in his place to arbitrate the dispute?
To satisfactorily resolve these questions, it is
necessary to read the relevant provisions of the Act and the
Rules vis-a-vis, the provisions of the Arbitration Act.
Section 95 of the Act is as follows :-
"(1) Any disputer concerning the
business of a co-operative society
capable of being the subject of civil
litigation or any dispute relating to
the affairs of a co-operative society
(other than a dispute relating to the
disciplinary action taken by a co-
operative society or the terms and
conditions of service of the paid
employees of the co-operative society or
the terms and conditions of the service
of the paid employees of the co-
operative Society) shall be referred in
the prescribed manner to the Registrar,
if the parties thereto are among the
following :-
(a) A co-operative society or its
board or an officer (past or present)
agent, employee or liquidator of a co-
operative society: or
(b) A member of a past member or a
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person claiming through a member or a
past member or on behalf of a deceased
member of a co-operative society or a
financing bank of a co-operative
society: or
(c) A surety of a member of a past
member or deceased member of a co-
operative society, whether such surety
is or is not a member of the co-
operative society: or
(d) Any other co-operative or any
person including any financing bank
having transaction with co-operative
society or any liquidation of a co-
operative society:
Section 96 (5) and (6) of the Act:
(5) A dispute referred to the
Registrar under sub-section (1) of s.95
or transferred or referred to any person
or arbitrator or arbitrators or the
Court of Arbitrators, as the case may
be, under sub-section (1) of s.96 shall
be decided within six months from the
date of receipt thereof by the
Registrar.
(6) If the Registrar or the person or
the arbitrator of arbitrators or the
court of Arbitrators fails to decide the
dispute within the period specified in
sub-section (5), he shall submit a
report to his or its appointing
authority stating reasons for such
failure at least fifteen days before the
expiry of the said period and such
authority shall allow further time not
exceeding six months for disposal of the
dispute.
Rule 178 of the West Bengal Co-operative Societies Rule,
1987 states as under :
"178 with drawl of reference by the
Registrar- the Registrar may be :
a) on the application by any party to
an arbitrator proceeding pending before
an arbitrator or arbitrators; or
b) on the application of an
arbitrator, other than a Government
officer; or
c) Where a Government officer is an
arbitrator in case or resignation,
transfer suspension or dismissal of the
arbitrator or any of the arbitrators,
withdraw the reference from the
arbitrator or board of arbitrators and
may decide the dispute himself if by an
award or may make fresh appointment of
arbitrator or arbitrators."
(Emphasis supplied)
A conjoint reading of ss.95, 96 and Rule 178 clearly
indicates the gamut of the power of the Registrar. As soon
as an application for reference is made, the Registrar may
decide the dispute himself or may appoint an arbitrator or a
panel of arbitrators to decide the dispute. Under sub-
section (5) of s.96, the arbitrator so appointed should
decide the dispute within six months from the date of the
receipt of his appointment order from the Registrar. In case
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he cannot make the award within six months, he should submit
a report to Registrar at least 15 days before its expiry for
further extension giving reasons for his failure to make the
award. Thereon, the Registrar is empowered to allow further
time not exceeding six months for disposal of the dispute.
In a situation like the facts in this case, the
question would be whether the Registrar has any power to
make further extension or can he withdraw the dispute for
himself for decision or appoint a fresh arbitrator, when he
finds that the arbitrator had not decided the dispute within
one year prescribed under s.96(5) and (6) read together. A
conjoint reading of these provisions shows that the
Registrar is left with no power to extend time to make the
award beyond one year, However, his power to deal with the
situation is not totally denuded. Rule 178 fills the gap,
which provides the power and procedure to deal with the
situation.. It envisages that on an application made by
either party to an arbitration proceeding pending before an
arbitrator or board of arbitrators, the Registrar may either
withdraw the reference to himself for deciding the dispute
or he may appoint another arbitrator or board of arbitrators
to decide the dispute or make a fresh appointment of
arbitrator or board of arbitrators for deciding the dispute.
This scheme is consistent with the right of appeal provided
against the award of the arbitrator under s.136 of the Act,
read with the Schedule I of the Act. If the Tribunal does
not dispose of the appeal within time, by operation of the
proviso to s.136, the State Government is empowered to
extend the time for its disposal.
It would thus be clear that the Act is a complete code
in deciding the disputes by the arbitrator or board of
arbitrators appointed by the Registrar under ss.95 and 96 of
the Act. The arbitration proceeding does not get abated
after the expiry of one year from the date of the
appointment of arbitrator under s.95. The Registrar, on an
application by either party to the proceedings, may withdraw
the proceedings before himself and may decide the dispute or
appoint another arbitrator or board of arbitrators, as the
case may be.
The next question is whether the provisions of the
Arbitration Act stand attracted by deeming fiction of s.46
of the Act. It reads thus :
"46. Application of Act to statutory
arbitrations. - The provisions of this
Act except sub-section (1) of Section 6
and Sections 7, 12, 36 and 37, shall
apply to every arbitration under any
other enactment for the time being in
force, as if the arbitrations were
pursuant to an arbitration agreement and
if that other enactment were an
arbitration agreement, except in so far
as this Act is inconsistent with that
other enactment or with any rules made
thereunder."
Arbitration agreement signed by the parties is the
foundation for reference under the Arbitration Act to an
arbitrator appointed by the court to decide dispute arising
under the contract as per its terms. In case of failure of
arbitration under any other enactment, Section 46 of the
Arbitration Act seeks to step in and effectuates arbitration
of the dispute referred under the statute. However, it would
be subject to the provisions of the special law and the
exceptions envisaged in s.46 itself. Section 46 clearly
shows that when a statutory arbitration has become
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unworkable, introduces a fiction that the arbitration under
the statute stands substituted by a deeming agreement
between the parties, as if it is a bilateral agreement for
reference under Arbitration Act. The provisions of the
Arbitration Act would then apply, except those excluded by
s.46 itself. One of the excluded sections in s.12 of the
Arbitration Act, which gives power to the Court, after
removal of the arbitrators, to appoint an arbitrator or
umpire. The condition precedent for applying s.46 is that
there should not exist any inconsistency between the special
law and the Arbitration Act. It would thus be seen that for
revocation of the appointment of an arbitrator made by the
Registrar under s.95 of the Act, there must exist conditions
like misconduct etc. as required by s.11 of the Arbitration
Act and on proof thereof only the court gets power to remove
the arbitrator and exercising power under s.12 of the
Arbitration Act, the court would appoint another arbitrator.
But then by operation of s.46, s.12 stands excluded.
From where then the court gets power to appoint another
arbitrator? There is no power under any other provision of
the Arbitration Act to appoint an arbitrator by the court in
place of arbitrator appointed under s.95 of the Act. The
only other provision is one under s.21 of the Arbitration
Act. Since there is no suit pending in a Civil Court, the
question of appointment of an arbitrator under s.21 also
does not arise. Would the party then be left without any
remedy to have the dispute decided by an arbitration, except
to go to a Civil Court? That would not be the intendment of
either the Act or the Arbitration Act.
Thus considered, the scheme of the Act is inconsistent
with the provisions of the Arbitration Act. Section 46 of
the Arbitration Act does not get attracted to the disputes
arising under the Act. The Registrar under the Act,
therefore, did not become functus officio nor he is denuded
of the power to withdraw the dispute from the arbitrator and
to decide himself or to appoint another arbitrator to decide
the dispute between the parties. The High Court, therefore,
was clearly in error in revoking the appointment of the
third respondent as arbitrator and appoint a fresh
arbitrator. However, since the third respondent had not made
the award within one year and since the limitation of one
year prescribed under s.96 had expired by efflux of time, he
ceased to have power to proceed with the adjudication of the
dispute and to make an award.
Under the aforesaid circumstances, it would be open to
the first respondent to make an application to the Registrar
afresh either to decide the dispute himself or to appoint
another arbitrator. It is needless to mention that since the
dispute is pending for long, the Registrar or the arbitrator
to be appointed would decide the dispute as expeditiously as
possible preferably within a period of six months. The first
respondent would file the application within one month from
the date of the receipt of this order and the Registrar is
directed to withdraw the dispute. In case he intends to
decide the matter himself, it would be open to him to do so
and he would do so within six months. If he considers
appointment of an arbitrator afresh, then he should appoint
arbitrator within one month from the date of the receipt of
the application. The arbitrator, so appointed, shall decide
the matter within six months of the receipt of the order of
appointment from the Registrar.
The appeal is accordingly allowed but in the
circumstances without costs.
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