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1957 Supreme(Bom) 22

HIGH COURT OF BOMBAY
SHAH, GOKHALE, JJ.
Savitra Khandu Beradi
Versus
Nagar Agricultural Sale and Purchase Co-operative Society Ltd., Ahmednagar
Special Civil Appln. No. 2681 of 1956
Decided On : 04-02-1957

Advocates:
V.M. Tarkunde with M.A. Rane, for Petitioner; Y.V. Chandrachud, for Respondent No. 1.

The provisions of the Indian Limitation Act, 1908, do not apply to arbitration proceedings under S. 54 of the Bombay Co-operative Societies Act, 1925, because S. 37 of the Indian Arbitration Act, 1940, which makes the provisions of the Limitation Act applicable to arbitrations, is expressly excluded from applying to statutory arbitrations by S. 46 of the Arbitration Act.

Headnote:

ARBITRATION - LIMITATION - APPLICABILITY OF LIMITATION ACT TO STATUTORY ARBITRATION - BOMBAY CO-OPERATIVE SOCIETIES ACT, 1925, S. 54 - INDIAN LIMITATION ACT, 1908, S. 3 - INDIAN ARBITRATION ACT, 1940, SS. 37, 46.

Fact of the Case:

The petitioner, a member and former Honorary Secretary of the Nagar Agricultural Sale and Purchase Co-operative Society, was found liable to pay Rs. 1,051-5-6 to the Society for business conducted through a third party. Despite partial payments, a balance of Rs. 611-5-6 remained outstanding. The Society applied for an order of payment under S. 54 of the Bombay Co-operative Societies Act, leading to arbitration proceedings. The petitioner claimed the claim was barred by limitation. The Board of Arbitrators and the Bombay Co-operative Tribunal rejected this argument, holding that the Limitation Act did not apply to arbitration proceedings under S. 54.

Finding of the Court:

The Court held that the provisions of the Indian Limitation Act, 1908, do not apply to arbitration proceedings under S. 54 of the Bombay Co-operative Societies Act, 1925. The Court reasoned that S. 37 of the Indian Arbitration Act, 1940, which makes the provisions of the Limitation Act applicable to arbitrations, is expressly excluded from applying to statutory arbitrations by S. 46 of the Arbitration Act.

Issues: Whether the provisions of the Indian Limitation Act, 1908, apply to arbitration proceedings under S. 54 of the Bombay Co-operative Societies Act, 1925.

Ratio Decidendi: The Court held that the provisions of the Indian Limitation Act, 1908, do not apply to arbitration proceedings under S. 54 of the Bombay Co-operative Societies Act, 1925, because: * S. 3 of the Limitation Act, which bars suits, appeals, and applications filed after the prescribed limitation period, does not apply to arbitration proceedings. * S. 37 of the Indian Arbitration Act, 1940, which makes the provisions of the Limitation Act applicable to arbitrations, is expressly excluded from applying to statutory arbitrations by S. 46 of the Arbitration Act. * The basis of a reference to arbitration under a statutory provision, such as S. 54 of the Bombay Co-operative Societies Act, is different from that of a reference under a commercial contract. In a statutory arbitration, a condition that the arbitrators must apply the law of limitation cannot be implied unless the statute itself so provides.

Final Decision: The Court dismissed the petitioner's application under Art. 227 of the Constitution, holding that the Bombay Co-operative Tribunal was correct in rejecting the petitioner's argument that the claim was barred by limitation.

Judgement

SHAH, J. :- The Nagar Agricultural Sale and Purchase Co-operative Society, which we will hereafter refer to as "the Society", is registered under the Bombay Co-operative Societies Act. The Society carries on business in fruits on commission basis. Savitra Khandu Berad, whom we will hereafter refer to as "the petitioner", was a member of the Society and was also an Honorary Secretary of the Society from March 1947 to September 1947. As an office bearer the petitioner could not undertake any business of the Society in his own name. He, however, carried on the business of the Society in the name of one Pawle. This Pawle purchased fruits from the Society and sold them at Bombay for and on behalf of the petitioner. The petitioner then passed an agreement on 15th September 1948, whereby he covenanted to pay Rs. 1,051/5/6 which were found due from Pawle. On 21st and 22nd February. 1949, the petitioner paid Rs. 240/- and Rs. 200/- respectively in part satisfaction of his liability, and the balance of Rs. 611/5/6 with interest thereon remained due. As the petitioner did not pay the amount, the Society applied on 29th November. 1952 to the Assistant Registrar of Co-operative Societies, Ahmednagar, for an order for payment of the amount due by the petitioner. The dispute between the Society and the petitioner was referred to a Board of Arbitrators under S. 54 of the Bombay Co-operative Societies Act.

2. The petitioner by his written statement contended inter alia that the claim made before the Assistant Registrar by the Society was barred by the law of limitation, not having been filed within three years from the date on which the cause of action arose.

3. The Registrars nominee and the nominee for the Society held that the Societys claim was proved and that it was not barred by the law of limitation. The nominee of the petitioner held that the claim made by the Society in the form in which it was made was not maintainable and that in any event it was barred by the law of limitation. A majority award was then directed to be drawn up.

4. Against that award a revision application was filed before the Bombay Co-operative Tribunal. It was urged on behalf of the petitioner in support of the application that the claim made by the Society was barred by the law of limitation and that the Board of Arbitrators had no jurisdiction to pass a decree on that claim. Objections were also raised on the merits of the claim made by the Society. The Tribunal held that to proceedings in arbitration, under S. 54 of the Co-operative Societies Act, the law of limitation did not apply. They observed that there was a settled course of decisions of the Tribunal in which it was held that the provisions of the Indian Limitation Act were not applicable to claims made and adjudicated upon under S. 54 of the Co-operative Societies Act. The Tribunal also rejected the other objections raised by the petitioner and confirmed the majority award of the Board of Arbitrators. Against that order this application under Art. 227 of the Constitution has been filed.

5. The question which falls to be determined in this application is whether the Indian Limitation Act applies to claims referred for adjudication under the procedure prescribed in S. 54 of the Bombay Co-operative Societies Act. That section, in so far as it is material, provides :

"If any dispute touching the .... business of a society arises between the Society.....and any officer, agent, member or servant of the Society, ......it shall be referred to the Registrar for decision by himself or his nominee or if either of the parties so desires, to arbitration of three arbitrators who shall be the Registrar or his nominee and two persons of whom one shall be nominated by each of the parties concerned."

Under S. 54-A power is conferred upon the Tribunal, on the application of any of the parties to the award, to modify or set aside the award and remand the case back to the arbitrators or to pass such other order as it d





























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