Supreme Court Upholds Registrar in Co-operative Societies Act Arbitration Dispute, Setting Aside High Court Order Appointing Substitute Arbitrator. High Court Erred in Holding Registrar Functus Officio and Invoking Arbitration Act Section 46; Act Provides Complete Code with Rule 178 Remedy.

Case Note & Summary

This appeal by special leave arose from a decision of a Single Judge of the Calcutta High Court dated September 24, 1991 in a dispute between a transport and handling contractor and the West Bengal State Consumers' Federation under the West Bengal Co-operative Societies Act, 1983. The contractor was appointed by the Federation, and disputes arose, leading to reference to the Registrar under the Act. The Registrar appointed an arbitrator on October 8, 1989. The arbitrator failed to make an award within the one-year period prescribed under Section 96 of the Act. The contractor then approached the High Court under Sections 5, 11 and 12 of the Arbitration Act, 1940, seeking termination of the arbitration and appointment of another arbitrator. The High Court revoked the appointment of the third respondent arbitrator and appointed a fresh one, holding that the Registrar had become functus officio and that Section 46 of the Arbitration Act applied. The Supreme Court identified three questions: whether the Registrar became functus officio and the arbitration abated after expiry of the one-year outer limit under Section 96(5) and (6); whether the party was left without remedy; and whether the civil court had jurisdiction to terminate the arbitrator's appointment and appoint another. The appellant Registrar contended that Sections 95 and 96 read with Rule 178 of the West Bengal Co-operative Societies Rules, 1987 empowered the Registrar to withdraw the arbitration and decide himself or appoint a fresh arbitrator, so the power was not exhausted. The Arbitration Act applied only to consensual arbitration; the special Act was a complete code and inconsistent with the Arbitration Act. The respondent argued that the one-year limitation was mandatory, the Registrar became functus officio, the proceedings abated, and Section 46 of the Arbitration Act provided the only remedy. The Supreme Court analyzed Sections 95, 96(5) and (6) and Rule 178. It held that although the Registrar could not extend time beyond one year, the arbitration proceeding did not abate. Rule 178 filled the gap and allowed the Registrar, on application by either party, to withdraw the reference and decide himself or appoint another arbitrator. This scheme was consistent with the appeal provision in Section 136 and the proviso empowering the State Government to extend time for disposal of appeals, indicating the Act was a complete code. The Court then examined Section 46 of the Arbitration Act, which applies statutory arbitrations unless inconsistent. It noted that Section 46 excludes Section 12, which empowers a court to appoint an arbitrator after removal, and there was no other provision like Section 21 applicable absent a pending suit. Therefore, the civil court could not appoint a substitute arbitrator. The Court concluded that the scheme of the Co-operative Societies Act was inconsistent with the Arbitration Act, and Section 46 did not apply. The Registrar was not functus officio and retained power to withdraw and decide or appoint another arbitrator. The Supreme Court held that the High Court was in error in revoking the arbitrator's appointment and appointing a fresh one. However, since the third respondent arbitrator had not made the award within one year, he ceased to have power to proceed and make an award. The first respondent was permitted to make an application to the Registrar under Rule 178 for withdrawal of the reference and fresh appointment or decision by the Registrar. The appeal was accordingly allowed.

Headnote

Issue of Consideration

Final Decision

Appeal allowed; High Court order set aside; Registrar not functus officio and retains power under Rule 178 to withdraw reference and decide or appoint fresh arbitrator; first respondent may apply to Registrar for such relief; third respondent arbitrator ceased to have power after one year but arbitration did not abate.

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