The court ruled that the Special Referee exceeded authority by failing to comply with procedural requirements, leading to a nullification of the report due to lack of legal evidence.

1. I have before me two motions relating to the final report made by an Advocate of this Court as Special Referee. An application for confirmation of the report has been made by the plaintiff Jaiswal Coal Company. Another application has been made by the defendant Fatehganj Co - operative Marketing Society Limited for setting aside the report or declaring the report as null and void.

2. The applications have been made under the facts and circumstances as hereunder.

3. Jaiswal Coal Company (I shall shortly call 'the firm') is a partnership firm, duly registered under the Indian Partnership Act , 1932. The firm carries on business at Gandhi House at No. 16, Ganesh Chandra Avenue, Calcutta.

4. Fatehganj Co - operative Marketing Society Limited (I shall shortly call 'the society') is a co - operative society with limited liability within the meaning of Uttar Pradesh Co - operative Societies Act , 1965 having its registered office and carrying on business at Fatehganj Galamandir, Lal Bag, Faizabad in the State of Uttar Pradesh.

5. On September 12, 1964, by an agreement in writing between the firm and the society, the firm agreed to supply coal to the society and the society agreed to act as selling agent of the firm in the district of Faizabad, inter alia, on certain terms and conditions. In respect of the coal supplied to Faizabad, the society will pay the railway freight, unloading, loading, transport and stacking charges upto the place of stacking. The coal will be sold to the consumers by the society at such rate as fixed by the firm. The society will realise the sale proceeds of coal on behalf of the firm. From the sale proceeds the society will deduct the investment In respect of the railway freight, unloading, administrative charges and will pay the surplus to the firm. The firm will pay Rs. 1.50 paise per tonne as commission on the sale proceeds of the coal to the society.

6. In September 1964, it was agreed that the firm would pay to the society as commission at the rate of Re. 0.50 paise per tonne which the society would deduct from the sale proceeds of the coal payable to the firm and the society will be entitled to realise the balance of commission at the rate of Re. 1/- per tonne directly from the consumers.

7. Between January 19, 1965 and March 31, 1967, pursuant to the aforesaid agreement, the firm supplied 35,152 tonnes and 5 quintals of coal, the sale proceeds of which at the rate fixed by the firm was Rupees 8,50,615.18 paise. The society paid to the firm Rs. 8,30,822.80 paise.

8. On March 2, 1970, the firm instituted this suit against the society