Madina Dangi Multipurpose Co-operative Society Ltd. vs Rohtak Central Co-operative Bank Ltd.

M.L. Verma, J.

The circumstances leading to this appeal, may be, briefly, stated as under :

The Rohtak Central Cooperative Bank Limited (hereinafter called the Bank) had advanced loans to the Madina Dangi Multipurpose Cooperative Society Limited (hereinafter called the Society), and the latter had furnished security of land, sugar factory and its building, for payment of the same. When the Society failed to repay the loans within the prescribed time limit, the Bank applied to the Assistant Registrar, (exercising the powers of Registrar) Cooperative Societies, Rohtak (hereinafter called the Registrar), for determination of the dispute through arbitration. In the proceedings taken by the Registrar, the Bank named Captain Charan Singh (retired Assistant Registrar) as its nominee, and the Society named Mr. R.P. Chaturvedi as its nominee. The Registrar appointed Shri Baldev Singh as its nominee, and he was also nominated to act as Chairman; and the dispute respecting the recovery of the loans mentioned above, was referred for decision to the panel of the aforesaid three arbitrators. They gave award on September 24, 1961, in presence of Abhe Ram, who was President of the Society and had appeared before the arbitrators in that capacity and had further signed the award. Rati Ram, who had appeared on behalf of the Bank, had also signed the award. Execution applications for realisation of the amount of the award were twice made after observing necessary formalities in the years 1962 and 1965, and the same had been consigned to the record room in partial satisfaction of the award. On June 18, 1969, the Bank again took out execution of the award for realisation of Rs. 98, 525.39 paise, which included the balance of the decretalamount and interest thereon up to December 31, 1968 by sale of the property pledged with it, disclosing that the remaining amount of the award had been realised from the Society in the previous two execution applications. The Society raised various objections, including that the award was unenforceable because it was without jurisdiction and was not registered, and was vague and indefinite; and that requisite notices were not served by the Registrar or the arbitrators on it before making the award. The said objections were resisted by the Bank, and the same were tried on the following issues :

(1) Whether the award is unenforceable for the reasons stated in the objection petition ? OJD

(2) Whether the award is without jurisdiction ? OJD

(3) Whether the award cannot be questioned in the executing Court ? ODH

(4) Relief.

The executing Court decided issue No. 3 in favour of the Bank and finding issue Nos 1 and 2 against the Society, dismissed the objections raised by it (the Society) with costs. Aggrieved by the said result, the Society came to this Court in appeal.

The main contention advanced by Mr. S.P. Jain, the learned counsel for the appellant, is that the award was inexecutable, because :

(a) that it was compulsorily registerable but had not been registered;

(b) that it was vague and indefinite as it did not state the amount or the time during which the same was to be paid by the Society, and was not recorded on a prescribed form;

(c) that it had been made by three arbitrators, two out of whom were interested in the Bank, and the dispute which had been earlier referred to Shri Dal Chand for arbitration, could not be withdrawn; and

(d) that neither any notice as required by Rule 58 of the Punjab Cooperative Societies Rules (1956) had been served on the Society, nor any notice regarding the making of the award had been given to it.

I am of the view, for the reasons to be recorded hereinafter, that the aforesaid contention of the learned counsel for the appellant is not well founded. Since the dispute relating to recovery of loan and interest thereon was referred by the Registrar for decision to the panel of the three arbitrators in or about the month of July 1961, and the award was given by the arbitrators on September 24, 1961, the provisions which governed the case in hand are contained in section 50 of the Punjab Cooperative Societies Act, 1954 (hereinafter called the Act) and rule 58 of the Rules framed under the said Act. The provisions of the Punjab Cooperative Societies Act. 1961, are inapplicable, for the obvious reason that it came into force on October 20, 1961, i.e. after making of the award. A combined reading of section 50 of the Act, and rule 58 of the Rules makes it clear that a party to the dispute referred to in section 51 of the Act may take an application to the Registrar indicating his desire to refer the dispute to the panel of three arbitrators. The said party has to name his nominee in such an application On receipt of such an application, the Registrar has to give notice in writing to the other party calling upon him to nominate his arbitrators on the panel, within one month of the communication of that notice. The said party has to name his nominee in such an application On receipt of such an application, the Registrar has to give notice in writing to the other party calling upon him to nominate his arbitrators on the panel, within one month of the communication of that notice. When the said other party nominates his arbitrator, the Registrar will appoint him as well as the nominee of the party who had made application and he would also nominate his arbitrator who would be required to act as Chairman. The evidence present on record is sufficient to disclose that the bank had named Captain Charan Singh as its nominee, while the Society had named Mr. R.P. Chaturvedi as its nominee. While appointing them as arbitrators, the Registrar also appointed Shri Baldev Singh as the third arbitrator and he was nominated to act as Chairman. There is absolutely nothing on record to show that the said three arbitrators or anyone of them was interested in the Bank.

4A. It was represented by Mr. Prem Singh, the learned Counsel for the respondent, and he was supported from the record of the Registrar that once Shri Dal Chand was appointed as arbitrator but when the Society intimated its intention to refer the dispute for decision to a panel of three arbitrators and had nominated Mr. R.P. Chaturvedi as its arbitrator, the Registrar had to appoint a panel of three arbitrators, and it was under the provisions contained in rule 58 of the Rules read with section 50 of the Act that the Registrar had appointed the three arbitrators in supersession of the earlier appointment of Shri Dal Chand. The said act of the Registrar was perfectly legal, and does not suffer from any illegality or jurisdictional defect.

True, it is recited in para 4 of the award that on failure of the Society to pay the amount in accordance with the conditions of the award, the outstanding amount would be recoverable through sale or distress of the property given in security. In my opinion, the said recital in the award referred to a factual position that some property had been pledged by the Society with the Bank, and the Society could proceed against that property for realisation of the amount on its failure to pay the same, but it did not, by itself, create or declare any right, title or interest in the immovable property. Therefore, it did not require compulsory registration.

The statements of Shri Baldev Singh (JDW1) and Mr. R.P. Chaturvedi (JDW2) when read together, point out unmistakably that the award was recorded on the basis of compromise arrived at between the parties and was accepted by their representatives who had also signed it (the award) after hearing the same. So, the argument raised by the learned counsel for the appellant that the arbitrators did not apply their mind while making the award, is devoid of any force, for the obvious reason that when the appellant (the Society) and the respondent (the Bank) had settled the dispute mutually and the Society had agreed to pay the amount (i.e. the one mentioned in the heading of the award) outstanding against it through instalments, there remained nothing for the arbitrators to investigate or to look into the documents for determination of the amount which the appellant was liable to pay to the respondent. The rule that an award, decree; or any other document has to be construed as a whole, is wellrecognised. When the award is read as a whole, keeping in view the amounts mentioned in its heading which forms its part, there can be no escape from the conclusion that the amounts, costs and interest directed to be paid by the Society (the appellant) to the Bank (the respondent) were, as stated in its heading. Mr. R.P. Chaturvedi (JDW2) testified that the amount of claim had been mentioned in the heading of the award though the same was not recorded in the body of the award. To the similar effect is the statement of Mr. Charan Singh (JDW3) when he mentioned that the heading marked `A'' to `A1'' in award Exhibit JDW1/1 had already been written when the award was recorded. Therefore, it cannot be maintained that the said principal amount, costs and the interest which were payable by the Society to the Bank had been incorporated in the award subsequent to the making of the same. It is, thus. clear to me that the award when read as a whole in conjunction with its heading, does not suffer from any vagueness or indefiniteness with regard to the amounts which were determined as payable by the Society to the Bank as principal costs and interest, since the said amounts are clearly mentioned in the heading of the award. The dates when the instalments were to be paid by the society to the Bank, are clearly mentioned in the paras 1 and 2 of the award. The balance of the amount after payment of the instalments mentioned therein was to be paid by the society on January 31, 1965. So, the award again does not suffer from any vagueness respecting the dates when the instalments were payable by the Society. The learned counsel for the appellant was of the view that since the award had not been recorded in the form provided in Appendix `C'', the same should be ignored as nullity. I have been unable to agree with him. In my opinion, the provisions requiring recording of the award in form Appendix `C'', are merely directory and not mandatory; and as such, the award which is not recorded in that form, cannot be regarded as nullity. So, the award cannot be attacked to be invalid simply because it is not recorded on a prescribed form when the same does not suffer from lack of inherent jurisdiction.

No doubt, rule 58 of the Rules demanded issuance of notice to the Society from the Bank when the latter intended to apply for reference of the dispute through the arbitration, and also from the Registrar when he decided to act on that application, but it is a hard fact, as is evident from the statements of Mr. Baldev Singh (J.D.W.1) and Mr. R.P. Chaturvedi (J.D.W.2) that the Society had nominated Captain Charan Singh as its nominee, and he was appointed as one of the three arbitrators. The said fact, therefore, gives rise to a reasonable inference that due notice(s) had been served on the Society because it could only be after the service of the said notice(s) that it (the Society) could nominate Captain Charan Singh as its nominee and inform the Registrar for his being appointed as arbitrator. There is ample evidence to show, and Abhe Ram appearing as J.D.W. 4 admitted, that he appeared before the arbitrators on September 24, 1961, and they gave the award in his presence and he signed the same. When Abhe Ram was present on behalf of the Society being its President, and the award was made in his presence and he heard and signed it as well, there was no necessity for issuing any notice intimating about the making of the award, to the Society. Further, the fact, that the Society made appearance through its President Abhe Ram, before the arbitrators when the award was made, constitutes waiver on the part of the Society regarding nonissuance of notice, and it (the Society) is estopped from impeaching the award on the ground that no notice, referred to above, had been issued to it.

The award stands on the same footing as a decree passed by the civil Court. The executing Court derives authority from the terms of a decree sought to be executed and has to conform to its terms and cannot go behind it. There is nothing on record to show that the arbitrators lacked inherent jurisdiction to make the award. On the contrary, as indicated above, they were appointed as arbitrators by the Registrar in accordance with law then governing the case, and the award does not suffer from any infirmity indicating want of inherent jurisdiction on their part to make the award. Therefore, the award could not be disregarded by the executing Court.

Before concluding, I have yet to deal with the contention raised by the learned counsel for the appellant, that the award was bad because the arbitrators could not determine the costs at Rs. 8,0893/ and were incompetent to award future interest, or in the alternative if they could, they could not award it at a rate more than Rs. 6/ per cent per annum. There can be no quarrel with the rule laid down in Mathra Dass v. The State of Punjab and others, 1975 Revenue Law Reporter 62 (1975 P.L.J. 42), relied on by the learned counsel for the appellant that while awarding costs, an arbitrator or arbitrators appointed under the Act have to determine the expenses which have been incurred by the parties and cannot grant the costs at a flat rate, and that future interest cannot be awarded by them at a rate exceeding Rs. 6/ per cent per annum. But, as indicated in para 6 above, the award was based upon the compromise arrived at between the parties and the parties had themselves decided the amount of costs, and the appellant had agreed to pay Rs. 8,083/ as costs. Similarly, the appellant agreed to pay future interest at the rate of Rs. 5/ per cent per annum in the event of payment of the instalments on due dates and further agreed to pay interest at the rate of Rs. 7/ per cent per annum in the event of its default to pay the instalments on due dates. I do not think, there was any bar, much less legal, for the parties to decide about the quantum of costs and about the rate of future interest to be payable by the appellant to the respondent. Therefore, it is in view of the conclusion arrived at by me, that the award was based upon compromise, and the appellant had agreed to pay the aforesaid costs and also future interest at the rate mentioned above, that I see no merit in the aforesaid contention raised by the learned counsel for the appellant, and overrule the same.

It, thus, follows from the discussion above that the findings recorded by the executing Court on the issues above, are correct, so the appellant has been unable to displace the same; and the objections preferred by the appellant were rightly dismissed and, there is no substance in this appeal.

Consequently, I maintaining the impugned order, dismiss this appeal, but having regard to the peculiar circumstances of the case. I leave the parties to bear their own costs. The parties have been directed through their counsel to appear in the executing Court on November 15, 1975.