1. Dispute referred to arbitration under West Bengal Cooperative Societies Act — Arbitrator failed to make award within statutory limit — High Court appointed new arbitrator under Arbitration Act. (Para 2 )
Back
Next 
1995 Supreme(SC) 828
SUPREME COURT OF INDIA
BEFORE K. RAMASWAMY AND B.L. HANSARIA, JJ.
REGISTRAR, COOPERATIVE SOCIETIES, W.B.
Versus
KRISHNA KUMAR SINGHANIA AND OTHERS.
Civil Appeal No. 8183 of 1995 {From the Judgment and Order dated 24-9-1991 of the Calcutta High Court in Matter No. 686 of 1991}
Decided on 17-8-1995
Advocates appeared:
N.S. Hegde, Senior Advocate (D.N. Mukherjee, K.N. Tripathy and Sinha and Das, Advocates, with him) for the Appellant; G.S. Chatterjee and Janaranjan Das, Advocates, for the Respondents.
Advocates:
D.N.MUKHERJI, G.S.CHATTERJEE, JANARANJAN DAS, K.N.TRIPATHI, N.S.HEGDE
D.N.MUKHERJI, G.S.CHATTERJEE, JANARANJAN DAS, K.N.TRIPATHI, N.S.HEGDE
The West Bengal Cooperative Societies Act is a complete code. If an arbitrator fails to make an award within the statutory one-year limit, the Registrar is not functus officio and can withdraw the reference or appoint a new arbitrator under Rule 178, overriding the Arbitration Act, 1940.
Headnote:
West Bengal Cooperative Societies Act, 1983 - Section 96 - Section 96(5) and (6) - Section 136 - Sub-section (1) of Section 6 and Sections 7, 12, 36 and 37, - Arbitration Act, 1940 - Sections 5, 11 and 12 - Section 46 - Appointment Of An Arbitrator - First respondent was appointed as a Transport and Handling contractor by West Bengal State Consumers Federation - Certain differences and disputes arose between them - Consequently, when they approached Registrar, Registrar, by his proceedings appointed an arbitrator to decide disputes - Since arbitrator had not decided reference within one year, as envisaged - First respondent approached High Court – Held, Appointment of third respondent as arbitrator and appoint a fresh arbitrator - However, since third respondent had not made award within one year and since limitation of one year prescribed under Section 96 had expired by efflux of time, he ceased to have power to proceed with adjudication of dispute and to make an award - It would be open to first respondent to make an application to Registrar afresh either to decide dispute himself or to appoint another arbitrator - It is needless to mention that since dispute has been pending for long, Registrar or arbitrator to be appointed would decide dispute as expeditiously as possible preferably within a period of six months - First respondent would file application within one month from date of receipt of this order and Registrar is directed to withdraw dispute - In case he intends to decide 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 date of receipt of application - Arbitrator, so appointed, shall decide matter within six months of receipt of order of appointment from Registrar – Appeal Allowed.
Legal Category Hierarchy
Table of Contents
2. Whether Registrar becomes functus officio after statutory time limit expires and whether civil courts can appoint arbitrators under the Arbitration Act in statutory arbitrations. (Para 4 , 5 )
3. Rule 178 allows the Registrar to withdraw proceedings or appoint fresh arbitrators, filling the gap when the one-year extension under Section 96 expires. (Para 11 , 12 )
4. Statutory arbitration under a complete code is inconsistent with the Arbitration Act; Section 46 does not apply if the special law provides a comprehensive remedy. (Para 13 , 15 , 17 )
5. Appeal allowed — High Court order set aside — Party directed to apply to Registrar for fresh appointment or decision. (Para 18 , 19 )
6. Does the Registrar become functus officio if an arbitrator fails to make an award within the one-year limit under the West Bengal Cooperative Societies Act?
No. While the Registrar cannot extend the time beyond one year under Section 96, Rule 178 empowers the Registrar to withdraw the reference to decide the dispute himself or appoint a fresh arbitrator. (Para 12 , 13 , 17 )
7. Does Section 46 of the Arbitration Act, 1940 apply to statutory arbitrations under the West Bengal Cooperative Societies Act?
No. The West Bengal Cooperative Societies Act is a complete code with its own procedures and remedies, making it inconsistent with the Arbitration Act, thus excluding the application of Section 46. (Para 13 , 15 , 17 )
8. Can a civil court appoint a new arbitrator in a statutory arbitration when the original arbitrator fails to act within the statutory period?
No. Since the special law is a complete code and Section 12 of the Arbitration Act is excluded by Section 46, the civil court lacks jurisdiction to appoint a substitute arbitrator. (Para 15 , 16 , 17 )
9. What happens to the power of an arbitrator who fails to make an award within the one-year period prescribed by Section 96?
The arbitrator ceases to have the power to proceed with the adjudication of the dispute or make an award once the limitation period expires by efflux of time. (Para 17 )
ORDER
1. Leave granted.
2. This appeal by special leave arises from the decision of a Single Judge of the High Court of Calcutta dated 24-9-1991 in Matter No. 686 of 1991. 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 Cooperative Societies Act, 1983 (for short "the Act"), the Registrar, by his proceedings dated 8-10-1989 appointed an arbitrator to decide the disputes. Since the arbitrator had not decided the reference within one year, as envisaged under Section 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 Section 96 empowers the Registrar to extend time only up to 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 Section 46 thereof.
3. 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?
4. Shri Santosh Hegde, learned Senior Counsel for the appellant, contended that the power of the Registrar under Sections 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 Section 96, the power of the 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 Section 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 Section 46 of the Arbitration Act does not apply.
5. 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 Section 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 Section 96 is mandatory, the 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.
6. The diverse contentions give rise to the questions: (1) Whether on expiry of the outer limit of one year prescribed under Section 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 witho
