Dalpat Singh vs The Registrar, Co-operative Societies Punjab, Jullundur and Others

Shamsher Bahadur, J.—A writ under articles 226 and 227 of the Constitution of India has been asked for to restrain the respondent Registrar, Co-operative Societies, from enforcing an award made against the petitioner Dalpat Singh.

The petitioner Dalpat Singh who is a member of the Co-operative Thrift and Credit Society, Musapur in Tehsil Nawanshahr, District Jullundur, used to borrow moneys from it. In 1954 the Society made a demand of Rs. 654.25NP as balance of loan and Rs. 322/- as interest. The petitioner disputed the right of the Society to recover this money and the matter was ultimately referred to arbitration. The arbitrator gave an ex-parte award in favour of the Society for recovery of Rs. 978/- on 30th of November, 1954. Objections preferred against this award were upheld by the Court of the Subordinate Judge, Nawanshahr, on 18th of December, 1959. It was held by the Court that the arbitrator acted with undue haste and failed to observe elementary principles of justice in giving his award without full opportunity being given to the person concerned to place his case before him. The arbitrator, it appears, had not recorded any reasons why he was proceeding ex-parte against the petitioner and in fact there was no ground for taking such a course. No decision was given about the merits of the dispute and the award was set aside principally on the ground that the arbitrator was not justified in taking ex-parte proceedings against the judgment-debtor.

The Society again referred the dispute to the Assistant Registrar (Shri Sardara Singh Gill) who gave his award against the petitioner on 29th of June, 1960. It may be mentioned that the petitioner Dalpat Singh this time appeared before the Assistant Registrar who examined the books relating to his account. The principal plea taken up by the petitioner was that the society was barred under the principle of res judicata from re-agitating the claim after the objections of the petitioner had been accepted and the award set aside by the Subordinate Judge on 18th of December, 1959.

A revision petition preferred u/s 50(7) of the Punjab Co-operative Societies Act, 1954, having failed, the petitioner has now come to challange the validity of the execution proceedings for the enforcement of the second award given by the Assistant Registrar on 29th of June, 1960.

Mr. Bindra, for the petitioner, submits that u/s 41 of the Arbitration Act, the provisions of the CPC are applicable to the proceedings before an arbitrator. Section 47 extends the provisions of the Arbitration Act to "all arbitrations and to all proceedings thereunder." It is contended that the first award having been set aside by a Court of competent jurisdiction, the respondent Society is precluded from taking any further action on the same cause of action. Reliance has been placed on a Division Bench authority of Bachawat and Mallick JJ. in Nalini Mohan Choudhuri Vs. Malda Co-operative Urban Bank Ltd., , where it was held that "a valid award made by an arbitrator on reference u/s 86 operates to extinguish and merge the claims and disputes referred to arbitration and is final and binding upon the parties. On the making of the award the arbitrator is functus officio with regard to the disputes referred and has no jurisdiction to entertain a second reference and to make a second award in respect of the identical disputes. The second award made on a second reference of the identical disputes is without jurisdiction and is a nullity." This principle of law is unexceptionable and would be fully applicable if the first award had been given on the merits of the dispute. In order that the bar of res judicata may operate u/s 11 of the CPC it is essential that the matter should have "been heard and finally decided" by a Court of competent jurisdiction. Can it be said that the dispute inter se the petitioner and the Society had been finally determined by the order of the Subordinate Judge setting aside the award? I have made a detailed reference to the order of the Subordinate Judge and would like to repeat that the award was set aside on the ground that the arbitrator had not allowed full opportunity to the petitioner to present his case. The Court did not give countenance to the ex-parte proceedings which culminated in the award. There was actually no decision on merits between the parties. The execution of the second award cannot, therefore, be hit by the principle of res judicata.

It has next been urged that the claim for recovery of the amount is barred by time. Now in a matter of limitation, it is well settled that the expiry of period of limitation prescribed for a suit does not destroy the right to recover. Section 46 of the Arbitration Act says that all the provisions of the Arbitration Act, except those of section 6 and, sections 7, 12, 36 and 37, shall apply to every arbitrate under any other enactment Section 87 of the Act states that "all the provisions of the Indian Limitation Act, 1908, shall apply to arbitrations as they apply to proceedings in Court". Thus, the provisions of the Indian Limitation Act do not apply to arbitrations other than those conducted under the Indian Arbitration Act. A Division Bench authority of the Bombay High Court (Shah and Gokhale JJ.) in Savitra Khandu Beradi Vs. Nagar Agricultural Sale and Purchase Co-operative Society Ltd. and Others, has been cited in support of this proposition. It was observed by the Bombay High Court in this case that "it cannot, therefore, be said that in terms the provisions of the Limitation Act prevent an arbitrator from entertaining a claim which, if made in a Court of law, may be barred by limitation." Even assuming that the claim of the Society against the petitioner is barred by time, the arbitrator can still give an award in favour of the party and no challenge can be offered to it under the Arbitration Act itself.

Thus, there is no force in this petition which fails and is dismissed with costs.