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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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