1995 (8) TMI 330 - SC - Insolvency and Bankruptcy

Issues Involved:
1. Whether the Registrar became functus officio after the expiry of one year as per Section 96(5) and (6) of the West Bengal Co-operative Societies Act, 1983.
2. Whether the arbitration proceedings before the third respondent stood abated.
3. Whether the civil court has the power to terminate the appointment of the third respondent and appoint another arbitrator.

Issue-wise Detailed Analysis:

1. Whether the Registrar became functus officio after the expiry of one year as per Section 96(5) and (6) of the West Bengal Co-operative Societies Act, 1983:

Section 96(5) of the Act mandates that a dispute referred to the Registrar must be decided within six months. Section 96(6) allows for an extension of up to six additional months. The High Court held that the Registrar became functus officio after this period, meaning he no longer had the authority to extend the time or take further action. However, Rule 178 of the West Bengal Co-operative Societies Rules, 1987, provides that the Registrar can withdraw the reference from the arbitrator and either decide the dispute himself or appoint another arbitrator. Thus, the Supreme Court concluded that the Registrar's power is not exhausted after one year, and he retains the authority to withdraw the dispute and appoint a new arbitrator or decide the dispute himself.

2. Whether the arbitration proceedings before the third respondent stood abated:

The High Court's view that the arbitration proceedings stood abated after one year was based on the assumption that the Registrar's powers were exhausted. However, the Supreme Court clarified that the arbitration proceedings do not abate after one year. Rule 178 allows the Registrar to withdraw the dispute from the arbitrator and either decide it himself or appoint another arbitrator. Therefore, the arbitration proceedings before the third respondent did not stand abated; instead, the Registrar could take further action to ensure the dispute is resolved.

3. Whether the civil court has the power to terminate the appointment of the third respondent and appoint another arbitrator:

The High Court had appointed a new arbitrator under the Arbitration Act, 1940, after revoking the appointment of the third respondent. The Supreme Court examined Section 46 of the Arbitration Act, which applies to statutory arbitrations unless inconsistent with the special law. The Court found that the West Bengal Co-operative Societies Act is a complete code for arbitration, and its provisions are inconsistent with the Arbitration Act. Specifically, Section 12 of the Arbitration Act, which allows the court to appoint a new arbitrator, is excluded by Section 46. Therefore, the civil court does not have the jurisdiction to terminate the appointment of the third respondent and appoint another arbitrator. The Registrar retains the authority to take necessary actions under the West Bengal Co-operative Societies Act.

Conclusion:

The Supreme Court held that the Registrar did not become functus officio after one year and retained the power to withdraw the dispute and appoint a new arbitrator or decide the dispute himself. The arbitration proceedings before the third respondent did not abate, and the civil court did not have the jurisdiction to appoint another arbitrator. The first respondent was directed to make an application to the Registrar to either decide the dispute himself or appoint another arbitrator. The Registrar was instructed to ensure the dispute is resolved expeditiously, preferably within six months.

Order:

The appeal was allowed, and the High Court's order was set aside. The Registrar was directed to take necessary actions to resolve the dispute within the specified time frame. No costs were awarded.

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