Burwan Samabaya Himghar Samity Ltd. v. State of West Bengal
1996-12-12
SATYA NARAYAN CHAKRABORTY, SATYABRATA SINHA
body1996
DigiLaw.ai
JUDGMENT Sinha. J.: These two appeals and application under Article 227 of the Constitution of India being inter related were taken up for hearing together and are being disposed of by this common judgment. 2. The fact of the matter is not much in dispute. 3. The appellant No. 1 is a Society registered under the Cooperative Societies Act. An agreement was entered into by and between the said Society and Trass Engineers Co-operative Society Limited on 12.6.1979 for construction of a cold storage. The said agreement contained an arbitration clause, which reads thus :- "That if any dispute arises between the parties in regard to execution of the work and/or any matter connected therewith as the terms hereinabove and the terms contained in the tender the dispute shall be referred to the Registrar of Co-operative Societies, West Bengal, for his arbitration and the decision of Registrar of Cooperative Societies, West Bengal, shall be final and binding upon the parties." 4. Disputes and differences having arisen by and between the said Society and its contractor, Sri R. C. Deb, Registrar, Co-operative Society was appointed as an arbitrator. On or about 8.12.83 Sri P. P. Gaosh was appointed by Sri R. C. Deb as an arbitrator who, at the relevant time, was Joint Registrar, Co-operative Societies. 5. On or about 24.6.1985 the said arbitrator wrote to the parties declaring that the award has been made and signed on 15.6.85 which was received by the Society on 2.7.85. Upon obtaining a copy of the said award the same was questioned by the Society by filing writ petition in this Court being C. O. No. 17583(W)/85. By a judgment and order dated 29.2.88 Susanta Chatterjee, J. held that the said writ petition wall not maintainable inter alia on the ground that the arbitration agreement incorporated in the aforementioned agreement dated 12.6.79 was governed by the Arbitration Act. The learned Judge relying on or on the basis of the decision of this Court in (1) Nagendra Nath Chakravarty v. State of West Bengal & Ors. reported in 90 CWN 1153 held that Arbitration Act is a complete code in itself and provides for the remedy, and, thus, the writ petition was not maintainable. 6. An appeal has been taken on the Appellate Side from that judgment which was marked as F.M.A.T. No. 640 of 1988.
reported in 90 CWN 1153 held that Arbitration Act is a complete code in itself and provides for the remedy, and, thus, the writ petition was not maintainable. 6. An appeal has been taken on the Appellate Side from that judgment which was marked as F.M.A.T. No. 640 of 1988. The Contract0rSociety also filed an application under Section 14 of the Arbitration Act in this Original Side of this Court on 19.5.88 which was registered as Matter No. 2670/88. In the mean time an appeal was preferred from the said order which was registered as F. M. A. T. No. 987 of 1988 and by an order dated 20.6.88 a division bench of this Court directed as follows:- "After hearing the learned Counsels for the parties we dispose of this application for interim order by giving liberty to the appellant to raise objections against the Award passed under the Arbitration Act including jurisdiction to pass such an order in the facts and circumstances of the case. It may be noted that Mr. Mukherjee, learned Counsel for the appellants has asked for only such an order and it appears to us that such prayer is reasonable. Let the hearing of the appeal be expedited. The application is disposed of without costs." 7. In the mean time the Society filed an application under Section 137 of the West Bengal Co operative Societies Act (hereinafter called and referred to for the sake of brevity as the 'said Act') for review of the said award and for declaring the order dated 8.12.1983 and the award dated 15.5.1985 as a nullity. By an order dated 10.3.89 on the basis of the statement made on behalf of the Contractor-Society, Matter No.2670/88 was dismissed, which under however, was modified by an order dated 15.3.89 to the effect that the said order was without prejudice to the rights and contentions of the Society that Arbitration Act is not applicable. On or about 25.7.89 this Court passed an order in Matter No. 2670/88 to the effect that pendency of the judgment in Award Matter would not prevent the Registrar of Co-operative Society from proceeding with the application for review and such an order was passed without prejudice to the rights and contentions of the parties. 8. On 24.6.89 a notice was taken out by the Contractor in terms of Section 14(2) of the Arbitration Act.
8. On 24.6.89 a notice was taken out by the Contractor in terms of Section 14(2) of the Arbitration Act. By an order dated 9.8.89 the Registrar of the Co-operative Society passed an order annulling the proceedings and the Award passed on 15.5.89 giving liberty to the parties to file claim or counter claim. In that view of the order the Society filed an application for setting aside the order and/or dismissal of the application under Section 14 (2) of the Arbitration Act. 9. The Award Case No. 403/89 was directed to be stayed upon recording an undertaking of the learned Advocate for Contractor that it would not proceed with the judgment of the Award Matter until further orders. The Contractor-Society filed a writ application in this Court questioning the aforementioned order of the Registrar of the Co-operative Societies dated 9.8.89 on 5.9.89 and the same was marked as Matter No. 2613/89. An interim order in terms of prayer (d) of the said application was also passed on that date. Against that order an appeal was preferred wherein an order of status quo was passed by the division bench on 25.1.90. The said appeal was, however, disposed of with the direction "directing the Sociely to approach the trial Court whereafter an application for vacating the interim order was filed before the trial Judge". 10. By an order dated 25.1.91 Kalyanmoy Ganguly, J. allowed the writ application filed by the Contractor-Society holding, inter alia, that the Arbitration agreement was governed by the provisions of Section 86 of 1973 Act and/or Section 95 of 1985 Act and private agreement between the parties cannot override the statutory provisions. It was held :- "Looking from that point of view it cannot be said by any stretch of imagination that the mention of the reference of a dispute to the arbitration in terms of Clause 15 of the agreement should be treated as a reference of a dispute to the arbitration of a person within the meaning of the provisions of the Arbitration Act, 1940. Clause 15 of the agreement makes explicit what is already implicit under the provisions of law as stated hereinbefore. Reference of the dispute to the arbitration of the Registrar is governed by the provisions of the statute and not by the voluntary and overt act of the parties in dispute.
Clause 15 of the agreement makes explicit what is already implicit under the provisions of law as stated hereinbefore. Reference of the dispute to the arbitration of the Registrar is governed by the provisions of the statute and not by the voluntary and overt act of the parties in dispute. If that is so then all the proceedings initiated by the parties either under Article 226 or under the provisions of the Arbitration Act, 1940 are redundant and not have the sanction of law. The entire procedure is governed by the mandatory provisions of the respective Acts of 1973 and 1987." It was further held :- "It may be noticed here the arbitration proceedings were c0ntinued before the Deputy Registrar of Co-operative Societies, the respondent No.3 never raised any objection to the continuance of such proceeding' because they knew although that was the only procedure sanctioned by law and the provisions of the Arbitration Act bas no manner of application to the facts and circumstances of the case." 11. It is admitted that no appeal was taken by any of the parties against the aforementioned judgment. However, on 28.1.91 P. K. Majumder, J. passed a decree in terms of the said Award but by an order dated 30.1.91 directed that the said decree in terms of the Award will not be drawn up until two weeks from date with liberty to the Society to make formal application. The Society thereafter preferred an appeal before the West Bengal Co-operative Tribunal in terms of Section 136 of the said Act which was marked as Appeal No. 1/91. 12. An application for condonation of delay was also moved and by an order dated 18.6.91 the delay in preferring the appeal was condoned. In the mean time by an order dated 25.2.91 Justice Majumder recalled the decree and directed that the application filed by the Society for setting aside the order to be placed for hearing at the top on 27.2.91. 13. By an order dated 6.9.91 the application filed by the Society for setting aside the Award was dismissed by P.K. Majumder. J. Appeal No. 614/91 arises against the said order. It is stated that the decree upon the said order has been passed. However, in the mean time the Contractor-Society filed an application under Article 227 of the Constitution of India questioning the aforementioned order dt.
J. Appeal No. 614/91 arises against the said order. It is stated that the decree upon the said order has been passed. However, in the mean time the Contractor-Society filed an application under Article 227 of the Constitution of India questioning the aforementioned order dt. 18.6.91 which was registered as C O No. 353/92. 14. Mr. Anindya Mitra, the learned Counsel appearing on behalf of the Society raised three contentions in support of these appeals and the application. The learned Counsel submits that in view of the judgment dated 25th January, 1991 passed by Kalyanmoy Ganguli, J (2) 95 CWN 899 to the effect that the arbitration agreement would not be governed by the Arbitration Act, must be held to be barred under the principles of res judicata. According to the learned Counsel there exists a distinction between an Award under the said Act and the Award under the Arbitration Act inasmuch as whereas in terms of Section 96(c) of the said Act the Award becomes automatically a decree but in terms of the provisions of the Arbitration Act the Award bas to be filed before a competent Court and the same has to be made a Rule of Court. It was contended that keeping in view the provision of Sections 95 and 96 of the said Act it must be held that the word 'affair' is of wide amplitude and is not confined to the business of a particular society but embraces within its fold businesses between two societies. Reliance in this connection has been placed on (3) Konnagar Samabayo Bank Ltd v. Nilmoni Banerjee & Ors. reported in 91 CWN 1112 ; (4) Anjan Choudhury v. Anandaneer Co-operative Regd. Housing Society & Ors. reported in N CWN 515 and (5) Bankura W. C. Co-op. v. W. B. E. C. S. Corporation Ltd. & Anr. reported in 1991(2) CHN 190 . 15. The learned Counsel submits that judgment of Chatterjee, J. would not take away the right of appellant society to raise its contention that the Arbitration agreement was governed under the provision of the said Act. It was submitted that in any event, the impugned judgment passed by Majumder, J. dated 6.9.91 in Award Case No. 403/89 must be held to be bad in law inasmuch as even if it assumed that the provision of the Arbitration Act is applicable to the facts and circumstances of this case.
It was submitted that in any event, the impugned judgment passed by Majumder, J. dated 6.9.91 in Award Case No. 403/89 must be held to be bad in law inasmuch as even if it assumed that the provision of the Arbitration Act is applicable to the facts and circumstances of this case. the delegation of its power by the Arbitrator being admittedly wholly without jurisdiction, the award was a nullity. The learned Counsel in this connection has relied upon (6) Govt of Andhra Pradesh v. K. Mastan Rao reported in AIR 1994 SC 490 ; (7) Bhagirathi Co-Operative Joint Farming Society v. Howrah Zilla Parishad reported in 87 CWN 981 ; (8) Union of India v. Bhattacharjee Constructions Ltd. reported in 91 CWN 928; Konnagar Samabaya Bank Ltd v. Nilmoni Banerjee & Ors. reported in 91 CWN 1112 and (9) Registrar, Cooperative Societies, W. B. v. Krishna Kumar Singhania and Ors. reported in 1995(6) SCC 482 . It is evident that in the instant case both parties proceeded on the basis that the arbitration agreement is governed by the provision of the said Act. In any event, the learned Counsel submits that the purported acquiescence could not cover a case where the award is a nullity as the same was passed wholly without jurisdiction. It was submitted that by appearing before the said Tribunal, a new jurisdiction cannot be created as the appointment of third person as an Arbitrator by the Registrar being not the choice of the petitioner. 16. Mr. B. R. Bhattacharjee, the learned Counsel appearing on behalf of the respondents. however, submits that the principles of res judicata have no application fn the facts and circumstances of this case inasmuch as the judgment of Chatterjee. J. itself was binding on Kalyanmay Ganguly, J. and thus the ratio of the said decision is not binding on his clients. The learned Counsel, however, submits that although under the Arbitration Act the Arbitrator has no jurisdiction to delegate his power, the appellant having submitted himself to the jurisdiction of the said Arbitrator is estopped and precluded from raising the question of jurisdiction. Reliance in this connection has been placed on (10) Prasun Roy v. The Calcutta Metropolitan Development Authority and Anr. reported in AIR 1988 SC 205 and (11) Sohan Singh & Ors. v. The General Manager. Ordnance Factory Khamaria Jabalpur and Ors. reported in 1981(3) SLR 342.
Reliance in this connection has been placed on (10) Prasun Roy v. The Calcutta Metropolitan Development Authority and Anr. reported in AIR 1988 SC 205 and (11) Sohan Singh & Ors. v. The General Manager. Ordnance Factory Khamaria Jabalpur and Ors. reported in 1981(3) SLR 342. In this connection our attention has also been drawn to Spencer Bower and Turner on Estoppel by Representation at pages 142 and 144 to the effect that in view of the submission made by the learned. Counsel appearing on behalf of the appellant himself in F. M. A. T. No. 987/88 it does not lis in the mouth of the appellant to state that the agreement was governed by the provision of the said Act inasmuch as only an opportunity was sought for to file an objection which they did. According to the learned Counsel, therefore, the appellant must be held to have waived his right, if any. Furthermore, according to the learned Counsel, the Deputy Registrar, filed an Award in Court in terms of Section 14(2) of the Arbitration Act and did not proceed with to execute the decree. In any event, according to the learned Counsel the decree passed in the Award Case has not been challenged. The learned Counsel contends that a writ Court is not only a Court of law but also a Court of equity and in that, view of the matter, it can refuse to grant any relief keeping in view t he public policy. 17. The main question which arises for consideration in this application is as to whether the arbitration agreement entered into by and between the parties to the lis is governed by the provision of the Arbitration Act, 1940 or West Bengal Co-operative Societies Act. 18. Admittedly an agreement had been entered into by M/s. Trass Engineers' Co. operative Society Ltd.-Contractor and M/s. Burwan Samabaya Himghar Samity Ltd.-Appellant on or about 12th June, 1979 which contained an arbitration clause as referred to hereinbefore. 19. It is not disputed that both the aforementioned Societies are Co-operative Societies registered under the West Bengal Co-operative Societies Act, 1973. 20. It further stands admitted that the aforementioned agreement' was in relation to construction of a cold storage on turn key basis under the technical supervision of BENFED. 21.
19. It is not disputed that both the aforementioned Societies are Co-operative Societies registered under the West Bengal Co-operative Societies Act, 1973. 20. It further stands admitted that the aforementioned agreement' was in relation to construction of a cold storage on turn key basis under the technical supervision of BENFED. 21. It is not the case that building of cold storage did not come within the purview of the business or affairs of the Society. In fact the Contractor was a society engaged in construction works and in that view of the matter too, the arbitration clause clearly came within the mischief of Section 95 of the Act. 22. A final bill was submitted by the Contractor and in relation thereto a dispute and difference arose during negotiations as allegedly 'BENFED' illegally and unlawfully deducted some of the claims from the bills of the Contractor. 23. Clause 15 of the said agreement dated 12th June, 1969 admittedly contains an arbitration clause in terms whereof the disputes and differences are to be referred to the Registrar of Co-operative Societies. Section 95 of the West Bengal Co-operative Society Act, 1983 which is in pari materia with Section 86 of the Act of 1973 inter alia provides that any dispute concerning the business of a Co operative Society which is capable of being the subject of civil litigation shall be referred in the prescribed manner to the Registrar, if the parties thereto are amongst others, any other Co-operative Society or any person including any financing bank having transaction with a Co-operative Society or any liquidator of a Co-operative Society. 24. There cannot, therefore, be any doubt whatsoever that in terms of provisions of Section 95 aforementioned the disputes and differences between the parties came within the mischief of the provisions of the said Act. 25. Both the Arbitration Act, 1940 and the said Act are self contained codes but under the provision of the Arbitration Act, the disputes and differences between the parties can be referred to arbitrator in terms of the agreement arrived at/by and between the parties thereto whereas the provision of the said Act provides for a statutory arbitration. 26. In case of a dispute as regards applicability of the provisions or two different statutes, in our opinion, the provisions of the statute providing for an arbitration should be preferred.
26. In case of a dispute as regards applicability of the provisions or two different statutes, in our opinion, the provisions of the statute providing for an arbitration should be preferred. The words "concerning the business" of a Co-operative Society on of wide amplitude and must be held to be wide enough to cover other spheres of the activities of the Society. Clause (d) of sub-section (1) of Section 95 of the 1983 Act widened the scope of the said provision inasmuch as the disputes and differences amongst the contesting parties need not be confined to one Co-operative Society but it brings within its mischief any transaction entered into by one Co-operative Society with any other Co-operative Society or any person including any financing bank having transaction with a Co-operative Society or any liquidator of a Co-operative Society. Furthermore, admittedly an appeal lies against an award passed under the provisions of the said Act. The right to prefer an appeal being a statutory right, no person should be deprived therefrom. The procedures laid under the two Acts are different. An Arbitration clause may either be conventional or statutory. In a statutory arbitration the provision of the arbitration Act shall not apply to the extent it is inconsistent with the provisions of the Co-operative Societies Act. 27. It is profitable to notice that even the parties to the said agreement chose the Registrar as an Arbitrator which authority is also a statutory arbitrator in terms of the provision of the said Act and the Rules framed thereunder. 28. Furthermore, it is also not in dispute that whereas in terms of the provision of the said Act and the Rules framed thereunder the Registrar has the requisite authority to delegate his power in favour of his sub-ordinates, no such power exists in an Arbitrator named by the parties by reason of an agreement arrived at by them in relation thereto. 29. In the instant case it also stands admitted that the Registrar Shri R. C. Deb appointed Shri P. P. Ghosh who at the relevant time was the Joint Registrar of the Co-operative Societies. Both the parties submitted themselves to the jurisdiction of Shri Ghosh without any demur whatsoever.
29. In the instant case it also stands admitted that the Registrar Shri R. C. Deb appointed Shri P. P. Ghosh who at the relevant time was the Joint Registrar of the Co-operative Societies. Both the parties submitted themselves to the jurisdiction of Shri Ghosh without any demur whatsoever. The conduct of the parties, therefore, clearly shows that they have been proceeding on the basis that Clause 15 of the aforementioned agreement dated 12th June, 1979 was governed by the provisions of the said Act. Having considered the question we are of the view that Clause 15 of the said agreement dated 12.6.79 was inserted ex abundanti cautela although in view of the provision of Section 96(1) (d), no such agreement was necessary inasmuch as both the parties to the dispute were Co-operative Societies and, thus, were governed by the provisions thereof It is now well settled that the conduct of the parties is a relevant factor in respect of construction of a document. 30. In Kannagar Samabaya Bank Ltd. v. Nilmoni Banerjre & Ors. reported in 91 CWN 1112, a division bench of this Court clearly held that where a dispute had arisen between a member of a Co-operative Society and the Society, the same is covered by Section 86 of 1973 Act, and, thus the Assistant District Judge, Hoogly had no jurisdiction to adjudicate the dispute between the parties in terms of the provision of the Arbitration Act. 31. In Anjan Choudhury v. Anandaneer Co-operative Regd. Housing Society & Ors. reported in 94 CWN 515, a full bench of this Court clearly held, even though the two expressions 'business' and 'affairs' occurring in Section 95(1) of the New Act may very often be used synonymously, the expression 'affairs' has a wider connotation than the expression 'business', 32. In Bankura Wholesale Consumers' Co-operative Society Ltd. v. West Bengal Essential Commodities Supply Corporation Ltd. & Anr. reported in 1991(2) Calcutta High Court Notes 190 also this Court has held :- On considering the provision of Section 95 of the Act we are of the view that it cannot but be held that the dispute for which the petitioner has filed the plaint before the Assistant Registrar of Cooperative Society is a dispute concerning the business of a Co-operative Society and also a dispute relating to the affairs of the Co-operative Society.
In view of Clause (d) of sub-section (1) of Section 95 of the Act such dispute shall have to be referred in the prescribed manner to the Registrar if the dispute is between a Co-operative Society and "any person". A Special Bench of our High Court in Anjan Choudhury v. Anandaneer Co-operative Registered Housing Society & Ors., 1990(1) CRN 404 has observed as follows :- “....................the "dispute", in order to come within the provisions of Section 86 of the Old Act and Section 95 of the New Act and thus to go out of the jurisdiction of the Civil Courts under the provisions of Section 132 of the Old and Section 134 of the New Act, must be disputes, not just concerning or involving a Co-operative Society, but concerning the business or relating to the affairs of the Society, such business or affairs which the Society is authorised to be concerned with or be involved in order to carry out its objectives under the Act and as chartered by any in its Rules and By-laws." 33. In this view of the matter we are of the opinion that the decision of Kalyanmay Ganguly, J. in the case between the parties which has since been reported in 95 CWN 899 states the correct legal position in the facts and circumstances of this case. In that view of the matter, the judgments under appeal cannot be sustained. 34. It is true that both the parties had taken different stands at different points of time as would be evident from the facts noticed hereinbefore but in our opinion the same would not operate as an estoppel in view of the decision of Ganguly, J. in a matter between the parties. 35. In this case the question of jurisdiction of the arbitrator is not involved. The only issue is what procedure should be followed for the purpose of implementing the award. 36. So far as the decision of Chatterjee, J., in C. O. No. 17583(W)/85 is concerned the learned Judge has merely proceeded on the basis that in view of Nagendra Nath Chakravarty's case (supra) the Arbitration Act is complete code in itself and, thus the writ application was not maintainable.
36. So far as the decision of Chatterjee, J., in C. O. No. 17583(W)/85 is concerned the learned Judge has merely proceeded on the basis that in view of Nagendra Nath Chakravarty's case (supra) the Arbitration Act is complete code in itself and, thus the writ application was not maintainable. No exception to the ratio of the said judgment can be taken inasmuch as the writ Court in exercise of its extra ordinary jurisdiction may refuse to entertain a writ application when there exists an alternative remedy. In this case even if the provisions of Arbitration Act, 1940 were not applicable, the provisions of the West Bengal Co-operative Societies Act applied and in that view of the matter to the writ petition could be dismissed but on different ground. However, so far as the judgment dated 6.9.91 passed by P. K. Majumdar is concerned, the same is evidently without jurisdiction. As noticed herein before when there exists an inherent lack of jurisdiction as has been held by a division bench of this Court in Konnagur Samabaya Bank Ltd'.s case (supra), the order cannot be sustained. 37. In Registrar, Co-operative Societies, W. B. v Krishna Kumar Singhania & Ors. reported in 1995 (6) SCC 482 , the apex Court has clearly held that even upon expiry of period of limitation, the Registrar has the jurisdiction to appoint another Arbitrator. The said decision has recently been followed by this bench in (12) Krishna Chowdhury, & Ors. v. State of West Bengal & Ors. reported in 1996 (2) CLJ 365 . 38. For the reasons aforementioned we are of the opinion that decision rendered by Kalyanmay Ganguly, J., is correct and, thus the appellant has rightly preferred an appeal in terms thereof. In view of the fact that we have arrived at an independent decision that the provisions of the said Act shall be applicable to the dispute raised by the parties, it is not necessary for us to advert to the question as to whether the decision of Ganguly, J, would operate as res judicata. 39. So far as the application filed by the Contractor under Article 227 is concerned, in our opinion, the same has some substance. The appellants filed the aforementioned appeal after expiry of the period of limitation.
39. So far as the application filed by the Contractor under Article 227 is concerned, in our opinion, the same has some substance. The appellants filed the aforementioned appeal after expiry of the period of limitation. On expiry of the period of limitation, the Contractor Society derived a right and, thus the delay in filing the appeal by the appellant should not have been condoned by the Tribunal without giving an opportunity of hearing to the Contractor. However, in our opinion, the objection of the Contractor as regards the question of limitation may be considered by the Tribunal at the time of hearing. The view taken by us stands fortified by a judgment of the Privy Council in (13) Krishnasami Panikondar v. Ramasami Chettiar and Ors. reported in AIR 1917 PC 179 wherein deprecating the practice of condoning the delay ex parte it was held :- "It must, therefore, in common fairness be regarded as a tacit term of an order like the present that though unqualified in expression it should be open to re-consideration at the instance of the party prejudicially affected and this view is sanctioned by the practice of the Courts in India." 40. In this view of the matter it is directed that the Tribunal shall hear the Contractor as regards the question of limitation at the time of hearing if it chases to raise the same. However, keeping in view the fact that the matter is pending for a long time, the Tribunal is hereby directed to conclude the hearing and dispose of the matter at an early date and preferably within a period of six weeks from the date of communication of this judgment. These appeals and the application are disposed of with the aforementioned observations but without any order as to costs. Chakraborty, J.; I agree.