Holding

Section 46 of the Arbitration Act does not apply; the Registrar is not functus officio and may, under Rule 178, withdraw the reference and appoint another arbitrator, though the original arbitrator loses the power to award after one year.

Summary

The Registrar of Co-operative Societies, West Bengal, appointed an arbitrator under the West Bengal Cooperative Societies Act, 1983 to resolve a dispute with a transport contractor. The arbitrator failed to render an award within the one‑year period prescribed by s.96(5)&(6). The contractor approached the Calcutta High Court under the Arbitration Act, 1940 seeking termination of the arbitration and appointment of a new arbitrator, arguing that the Registrar had become functus officio. The High Court revoked the arbitrator’s appointment and appointed a fresh arbitrator, relying on s.46 of the Arbitration Act. On appeal, the Supreme Court held that s.46 does not apply to disputes governed by the special West Bengal Act, and that the Registrar is not functus officio; under Rule 178 he may withdraw the reference and appoint another arbitrator. However, the arbitrator who exceeded the one‑year limit lost the power to make an award. Consequently, the appeal was allowed, setting aside the High Court’s order, but no costs were awarded.

Issues considered

Whether the Registrar becomes functus officio on expiry of the one‑year period under s.96(5)&(6) of the West Bengal Cooperative Societies Act.
Whether arbitration proceedings under the Act stand abated after the one‑year limit is exceeded.
Whether Section 46 of the Arbitration Act, 1940 applies to statutory arbitrations under the West Bengal Cooperative Societies Act.
Whether a civil court can terminate the appointment of an arbitrator made under the Act and appoint a new arbitrator.
Whether the parties are left without any remedy after the arbitrator’s failure to award within the prescribed time.

Legislation cited

Arbitration Act, 1940s. 11, s. 12, s. 136, s. 21, s. 46, s. 5
West Bengal Cooperative Societies Act, 1983s. 95, s. 96(5), s. 96(6)
West Bengal Cooperative Societies Rules, 1987s. Rule 178

Subjects

statutory arbitrationWest Bengal Cooperative Societies ActArbitration Act 1940Section 46functus officioRule 178appointment of arbitratortime limit for award

Judgment

,....
A REGISTRAR, CO-OPERATIVE SOCIETIES, WEST BENGAL
v
KRISHNA KUMAR SINGHANIA AND ORS.

AUGUST 17, 1995

B [K. RAMASWAMY AND B.L. HANSARIA, JJ.]

West Bengal Cooperative Societies Act, 1983: Sections 95, 96(5) and
(6).

c West Bengal Cooperative Societies Rules, 1987 : Rule 178.

Arbitrato-,.-Appointment by Registrar-Failure to decide reference
within one year-Effect of-After expiry of period of six months Registrar can
extend period for further six months-But on failure to decide dispute within
one year time cannot be extended for further period-In such a case Registrar
D does not become functus officio-Arbitration proceedings does not get abated
on expiry of one year-Section 46 of the Arbitration Act held inapplicable. -(_

.,,__
Arbitration Act, 1940:

Section 46--Applicability to arbitration under a Special Act-Necessary
E conditions for.

The first respondent was appointed as a Transport and Handling ·
contractor by the West Bengal State Consumers' Federation. Dispute
having arisen between the parties the Registrar appointed an Arbitrator
F under the West Bengal Cooperative Societies Act, 1983 to decide the
disputes. On Arbitrator's failure to decide the reference within one year,
as envisaged under section 96 of the Act, the first respondent approached
the High Court for termination of the arbitration and appointment of
another arbitrator under the Arbitration Act, 1940. The High Court
revoked the appointment of the third respondent and appointed another
G arbitrator. It proceeded on the premises that since section 96 empowers
the Registrar to extend time only upto one year to enable the 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. Therefore, the arbitrator was left with no power to make the
H award.
824
REGISTRAR CO-OP. SOCY. v. KK SINGHANIA 825

In appeal to this Court it was contended for the appellant that (i) A
the power of the Registrar under Sections 95 and 96 of the West Bengal
Cooperative Societies Act read with rule 178 of the West Bengal Coopera-
tive Societies Rules would indicate that on expiry of the period of one year
prescribed under section 96 the power of Registrar is not exhausted; (ii)
the provisions of the Arbitration Act would be applicable only when the
parties have agreed for such a reference; since the agreement does not
B
provide for such an option, appointment made under section 46 of the
Arbitration Act was illegal; and (iii) Section 46 of the Arbitration Act was
not applicable.

Allowing the appeal, this Court c
HELD : 1. The scheme of the West Bengal Cooperative Societies Act
is inconsistent with the provisions of the Arbitration Act. Section 46 of the
Arbitration Act does not get attracted to the disputes arising u.nder the
Act. The Registrar under the Act, therefore, did not become functus officio D
nor he is denuded of the power to withdraw the dispute from the arbitrator
and to decide himself or to appoint another arbitrator to decide the
dispute between the parties. The ·High Court, therefore, was clearly in error
in revoking the appointment of the third respondent as arbitrator and
appoint as fresh arbitrator. However, since the third respondent had not
made the award within one year and since the limitation of one year E
prescribed under section 96 had expired by effiux of time, he ceased to have
power to proceed with the adjudication of the dispute and to make an
award. It would be open to first respondent to make an application to the
Registrar afresh either to decide the dispute himself or to appoint another
arbitrator. (832-E-H] F

2. A conjoint reading of sections 95 and 96 of the West Bengal
Cooperative Societies Act and Rule 178 clearly indicates the gamut of the
power of the Registrar. As soon as an application for reference is made, the
Registrar may decide the dispute himself or may appoint an arbitrator or a
panel of arbitrators to decide the dispute. Under sub-section (5) of section G
96, the arbitrator so appointed should decide the dispute within six months
from the date of the receipt of his appointment order from the Registrar. In
case he cannot make the award within six months, he should submit a
report to Registrar at least 15 days before its expiry for further extension
giving reasons for his failure to make the award. Thereon, the Registrar is H
826 SUPREME COURT REPORTS [1995] SUPP. 2 S.C.R.

A empowered to allow further time not exceeding six months for disposal of r
the disputll!. But the Registrar is left with no power to extend time to make
the award beyond one year. However, his power to deal with the situation is
not totally denuded. Rule 178 fills the gap, which provides the power and
procedure to deal with the situation. It envisages that on an application
made by either party to an arbitration proceeding pending before an ar-
B bitrator or board of arbitrators, the Registrar may either withdraw the
reference to himself for deciding the dispute or he may appoint another
arbitrator or board of arbitrators to decide the dispute or make a fresh
appointment of arbitrator or board of arbitrators for deciding the dispute.
-This scheme is consistent with the right of appeal provided against the
c award of the arbitrator under section 136 of the Act, read with Schedule 1 of
the Act. If the Tribunal does not dispose of the appeal within time, by
operation of the proviso to section 136, the State Government is empowered
to extend the time for its disposal. [830-D-F; G-H; 831-A-B]

3. Arbitration agreement signed by the parties the foundation for
D reference under the Arbitration Act to an arbitrator appointed by the
Court to decide dispute arising under the contract as per its terms. In case ·(
of failure of arbitration under any other enactment, Section 46 of the
Arbitration Act seeks to step in and effectuates arbitration of the dispute
referred under the statute. However, it would be subject to the provisions
E of the special law and the exceptions envisaged in section 46 itself. The
condition precedent for applying section 46 is that there should not exist
any inconsistency between the special law and the Arbitration Act. Thus
for revocation of the appointment of an arbitrator made by the Registrar
under section 95 of the Act, there must exist conditions like misconduct
etc. as required by section 11 of the A}"bitration Act and on proof thereof
F only the court gets power to remove the arbitrator and exercising power ...
under,section 12 of the Arbitration Act, the Court would appoint another
arbitrator. (831-F-G; 832-A-C]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8183 of
G 1995.
From the Judgment and Order dated 24.9.91 of the Calcutta High
Court in Matter No. 686 of 1991.

N.S. Hegde, D.N. Mukherjee, K.N. Tripathy, Sinha and Das for the
H Appellants.
REGISTRAR CO-OP.SOCY. v. K.K.SINGHANIA 827

G.S. Chatterjee and Janaranjan Das for the Respondents. A
The following Order of the Court was delivered :

Leave granted.

This appeal by special leave arises from the decision of a Single B
Judge of the High Court of Calcutta dated the September 24, 1991 in
matter No.686/91. 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 Co-operative C
Societies Act, 1983 (for short, 'the Act'), the Registrar, by his proceedings
dated October 8, 1989, appointed an arbitrator to decide the disputes.
Since the arbitrator had not decided the reference within one year, as
envisaged under s.96 of the Act, the first respondent approached the High
Court under Sections 5, 11 and 12 of the Arbitration Act, 1940 for termina-
tion of the arbitration and appointment of another arbitrator. After revok- D
ing 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 s.96
empowers the Registrar to extend time only upto one year to enable an
arbitrator to make the award, and the arbitrator had failed to make the E
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 s.46 thereof.

The question is whether the view of the High Court is correct and F
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?

Shri Santosh Hegde, learned senior counsel for the appellant, con-
tended that the power of the registrar under Ss. 95 and 96 of the Act should G
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 s.96, the power of Registrar is not
exhausted and the first respondent was not left without any remedy. The H
828 SUPREME COURT REPORTS [1995] SUPP. 2 S.C.R.
'r
A 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 s.46 of Arbitration Act is
illegal. The Act is a special law which provided a complete procedure
including rights of appeal which is inconsistent with the arbitration Act. So,
s.46 of the Arbitration Act does not apply.
B
It is cont:::nded 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 em-
power the appointment of an arbitrator by the civil court under the
c Arbitration Act, by necessary implication and by operation of s.46 of the
arbitration Act, the statutory arbitration became operational. The ar-
hitrator appointed by the Registrar having failed to make the award within
one year, he become non-functional. Since the limitation prescribed under
s.96 is mandatory, Registrar is left with no power to extend further time.
The Registrar, thereby, became functus officio. Consequently, the arbitra-
D tion proeeedings before the third respondent stood abated. The party
cannot be left without a remedy. The only remedy is as provided under the
Arbitration Act.

The diverse contentions gives rise to the question: (1) whether on
E expiry of the outer limit of one year prescribed under s.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 p6'wer to arbitrate
the dispute or the said proceedings stood abated? (2) whether the party is
left without a remedy? (3) whether civil court gets jurisdiction to terminate
the appointment of third respondent and to appoint another arbitrator in
~
F his place to arbitrate the dispute?

To satisfactorily resolve ·these que1itions, it is necessary to read the ~.

relevant provisions of the Act and the Rules vis-a-vis, the provisions of the
Arbitration Act.
G Section 95 of the Act is as follows :

"(1) Any disputer concerning the business of a co-operative society )-

capable of being the subject of civil litigation or any dispute relating
to the affairs of a co-operative society (other than a dispute relating
H to the disciplinary action taken. by a co-operative society or the
REGISTRAR CO-OP. SOCY. v. KK SINGHANIA 829

' -- terms and conditions of service of the paid employees of the co- A
operative society or the terms and conditions of the service of the
paid employees of the co-operative Society) shall be referred in
the prescribed manner to the Registrar, if the parties thereto are
among the following :

(a) A co-operative society or its board or an officer (past or B
present) agent, employee or liquidator of a co- operative society;
or

(b) A member of a past member or a person claiming through a
member or a past member or on behalf of a deceased member of C
a co-operative society or a financing bank of a co-operative society;
or

(c) A surety of a member or past member or deceased member
of a co-operative society, whether such surety is or is not a member
of the co-operative society; or D
(d) Any other co-operative or any person including any financing
bank having transaction with co-operative society or any liquida-
tion of a co-operative society;

Sections 96(5) and (6) of the Act E
(5) A dispute referred to the Registrar under sub-section (1) of
s.95 or transferred or referred to any person or arbitrator or
arbitrators or the Court of Arbitrators, as the cased may be, under
sub-section (1) of s.96 shall be decided within six months from the
date of receipt thereof by the Registrar. F

(6) If the Registrar or the person or the arbitrator of arbitrators
or the court of Arbitrators fails to decide the dispute within the
period specified in sub-section (5), he shall submit a report to his
or its appointing authority stating reasons for such failure at least G
fifteen days before the expiry of the said period and such authority
shall allow further time not exceeding six months for disposal of
the dispute.

Rule 178 of the West Bengal Co-operative Societies Rule, 1987 states
~un~: H
830' SUPREME COURT REPORTS [1995) SUPP. 2 S.C.R.

A "178 Withdraw! of reference by the Registrar-i:he Registrar may
be:

(a) on the application by any party to an arbitrator proceeding
pending before an arbitrator or arbitrators; or

B (b) on the application of an arbitrator, other than a Government
officer; or

(c) Where a Government officer is an arbitrator is case or resig-
nation, transfer suspension or dismissal of the arbitrator or any of
the arbitrators, withdraw the reference from the arbitrator or board
c of arbitrators and may decide the dispute himself if by an award or
may make fresh appointment of arbitrator or, arbitrators."

(Emphasis supplied)

D A conjoint reading of ss. 95, 96 and Rule 178 clearly indicates the
gamut of the power of the Registrar. As soon as an application for·
reference is made, the Registrar may decide the dispute himself or may
appoint an arbitrator or a panel of arbitrators to decide the dispute. Under t;-
sub-section (5) of s.96, the arbitrator so appointed should decide the
dispute within six months from the date of the receipt of his appointment
E order from the Registrar. In case he cannot make the award within six
months, he should submit .a report to Registrar at least 15 days before its
expiry for furtlier extention gives reasons for his failure to make the award.
Thereon, the Registrar is empowered to allow further time not exceeding
six months for disposal of the dispute.
F
In a situation like the facts in this case, the question would be r
whether the Registrar has any power to make further extension or can he
withdraw the dispute for himself for decision or appoint a fresh.arbitrator,
when he finds that the arbitrator had not decided the dispute within one
G year prescribed under s. 96(5) and (6) read together. A conjoint reading
of these provisions shows that the Registrar is left with no power to extend
time to make the ~ward beyond one year, However, his power to deal with
the situation is not totally denuded. Rule 178 fills the gap, which provides
the power and procedure to deal with the situation. It envisages that on an
application made by either party to ati arbitiatio!1.proceeding pending
H before an arbitrator or board of arbitrators, the Registrar may either
REGISTRAR CO-OP. SOCY. v. KK SINGHANIA 831

withdraw the reference .to himself for deciding the dispute or he may A
appoint another arbitrator or board of arbitrators to decide the dispute or
make a fresh appointment of arbitrator or board of arbitrators for deciding
the dispute. This scheme is consistent with the right of appeal provided
against the award of the arbitrator under s.136 of the Act, read with the
Schedule I of the Act. If the Tribunal does not dispose of the appeal within B
time, by operation of the proviso to s.136, the State Government is em-
powered to extend the time for its disposal.

It would thus be clear that the Act is a complete code in deciding
the disputes by the arbitrator or board of arbitrators appointed by the
Registrar under ss.95 and 96 of the Act. The arbitration proceeding does c
not get abated after the expiry of one year from the date of the appoint-
ment of arbitrator under s.95. The Registrar, on an application by either
party to the proceedings, may withdraw the proceedings before himself and
may decide the dispute oi: appoint another arbitrator or board of ar-
bitrators, as the case may be:
D
The next question is whether the provisions of the Arbitration Act
stand attracted by deeming fiction of s.46 of the Act. It reads thus :

"46. Application of Act to statutory arbitrations. - The provisions of
this Act except sub-section (1) of Section 6 and Sections 7, 12, 36 E
and 37, shall apply to every arbitration under any other enactment
for the time being in force, as if the arbitrations were pursuant to
an arbitration agreement and if that other enactment were an
arbitration agreement, except in so far as this Act is inconsistent
with that other enactment or with any rules made thereunder."
F
Arbitration agreement signed by the parties is the foundation for
reference under the Arbitration Act to an arbitrator appointed by the
court to decide dispute arising under the contract as per its terms. In case
of failure of arbitration under any other enactment, Section 46 of the
Arbitration Act seeks to step in and effectuates arbitration of the dispute G
referred under the statute. However, it would be subject to the provisions
of the special law and the exceptions envisaged in s.46 itself. Section 46
clearly shows that when a statutory arbitration has become unworkable,
introduces a fiction that the arbitration under the statute stands substituted
by a deeming agreement between the parties, as if it is a bilateral agree-
ment for reference under Arbitration Act. The provisions of the Arbitra- H
832 SUPREME COURT REPORTS (1995) SUPP. 2 S.C.R.

A tion Act would then apply, except those excluded by s. 46 itself. One of the
excluded sections in s.12 of the Arbitration Act, which gives power to the
Court, after removal of the arbitrators, to appoint an arbitrator or umpire.
The condition precedent for applying s.46 is that there should not exist any
inconsistency between the special law and the Arbitration Act. It would
thus be seen that for revocation of the appointment of an arbitrator made
B by the Registrar under s.95 of the Act, there must exist conditions like
misconduct etc. as required by s.11 of the Arbitration Act and on proof
thereof only the court gets power to remove the arbitrator and exercising
power under s.12 of the Arbitration Act, the Court would appoint another
arbitrator.
c
But then by operation of s.46, s.12 stands excluded. From where then
the court gets power to appoint another arbitrator? There is no power
under any other provision of the Arbitration Act to appoint an arbitrator
by the court in place of arbitrator appointed under s.95 of the Act. The
D only other provision is one under s.21 of the Arbitration Act. Since there
is no suit pending in a Civil Court, the question of appointment of an
arbitrator under s.21 also does not arise. Would the party then be left
without any remedy to have to dispute decided by an arbitration, except to
go to a Civil Court? That would not be the intendment of either the Act
or the Arbitration Act.
E
Thus considered, the scheme of the Act is inconsistent with the·
provisions of the Arbitration Act. Section 46 of the Arbitration Act does
not get attracted to the disputes arising under the Act. The Registrar under
the Act, therefore, did not become ftmctus officio nor he is denuded of the
F power to withdraw the dispute from the arbitrator and to decide himself
or to appoint another arbitrator to decide the dispute between the parties.
The High Court, therefore, was clearly in error in revoking the appoint-
ment of the third respondent as arbitrator and appoint a fresh arbitrator.
Ho.wever, since the third respondent had not made the award within the
one year and since the limitation of one year prescribed under s.96 had
G expired by efflux of time, he ceased to have power to proceed with the
adjudication of the dispute and to make an award.
....
Under t!1e aforesaid circumstances, it would be open to the first '
respondent to make an application to the Registrar afresh either to· decide
H the dispute himself or to appoint another arbitrator. It is needless to
REGISTRAR CO-OP. SOCY. v. K.K. SINGHANIA 833

-· mention that since the dispute is pending for long, the Registrar or the
arbitrator to be appointed would decide the dispute as expeditiously as
A

possible preferably within a period of six months. The first respondent
would file the application within one month from the date of the receipt
of this order and the Registrar is directed to withdraw the dispute. In case
he intends to decide the 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 B
arbitrator afresh, then he should appoint arbitrator within one month from
the date of the receipt of the application. The arbitrator, so appointed,
shall decide the matter within six months of the receipt of the order of
appointment from the Registrar.

The appeal is accordingly allowed but in the circumstances without
costs. c
T.N.A. Appeal allowed.