Preet Singh & Sada Ram vs Central Co-operative Bank Ltd., Rohtak

Gurnam Singh, J.

This is an appeal under Clause X of the Letters Patent against the judgment dated December 11, 1974 of M.L. Verma, J. in E.F.A. No. 373 of 1972.

The facts of the case, briefly stated, are that Jauly Cooperative Agriculture Society Ltd. (hereinafter called the Society) raised a loan of Rs. 1,40,000/ from the Central Cooperative Bank Ltd., Rohtak (hereinafter called the Bank). When the Society failed to pay the aforesaid loan, the respondent Bank made an application to the Assistant Registrar, Cooperative Societies, Rohtak, for referring the dispute for arbitration. The Assistant Registrar, appointed Shri Chandgi Ram, Inspector, Cooperative Societies, Gohana, as Arbitrator and referred the dispute for decision to him. Shri Chandgi Ram made the award on 10.3.1971 in the following terms that :

"... ... ... Sh. Prit Singh s/o Lalji Ram and Sh. Sadha Ram s/o Lalji Ram, members of the Jauli Janta Coop. A/S Society Ltd. do pay Rs. 1,40,000/ interest at 5818/ to this date and Rs. 28,000/ costs, or Rs, 1,73,818/ in all, together with interest at the rate of 9% per annum until the realisation of the principal amt. viz. Rs. 173818/.

The above amount shall be paid by 10.5.71, if it is not so paid the amt. may be realised through a civil court, either by the sale of all property of the debtor and securities, which was specially mortgaged for satisfaction of this debt and which is shown in detail in above or any other property belonging to the debtor or security holders."

The Bank took out the execution of the aforesaid award against Preet Singh and Sada Ram. Preet Singh and Sada Ram filed objections under section 47, Civil Procedure Code, stating that the award was ex parte, that they were given no notice nor they were heard by the Arbitrator, that the Arbitrator was an interested person, that the Assistant Registrar, Cooperative Societies, Rohtak, had no jurisdiction to appoint the Arbitrator, that the award had been made against facts and that the same was void and inexecutable. The Bank resisted the objections raised by Preet Singh and Sada Ram and the following issues were framed by the Executing Court :

Whether the award in question against the judgmentdebtor is void, without jurisdiction and in executable ? OPD

Relief.

The Executive Court dismissed the objections raised by Preet Singh and Sada Ram. Aggrieved by the said order, Preet Singh and Sada Ram filed E.F.A. No. 373 of 1972 in this Court. Their appeal was dismissed by M.L. Verma, J. on 11.12.1974.

The learned counsel for the appellants contended that Rohtak Division was divided into two divisions and a separate division of Sonepat was carved out and that the Society fell in the jurisdiction of Sonepat Division having a separate Assistant Registrar and, therefore, the Assistant Registrar, Rohtak, had no jurisdiction to appoint Shri Chandgi Ram as an Arbitrator. He further pointed out that the Arbitrator had acted as a quasijudicial tribunal and his decision is a quasijudicial one and, therefore, the decision must be supported by reasons so as to show that the arbitrator had applied his mind while deciding the disputed questions and since the award in dispute is not a speaking award, it is liable to be quashed.

The learned counsel for the respondent in reply urged that there is nothing on the record to show that any Assistant Registrar Coop. Societies had been appointed for Sonepat, that the Assistant Registrar Coop. Societies, Rohtak, exercised the powers of the Registrar, under S. 56 of the Punjab Coop. Societies Act, 1961, and, therefore, Sh. Chandgi Ram was rightly appointed as Arbitrator. With regard to second objection of the learned counsel for the appellants, the learned counsel for the respondent contended that the appellants had raised no objection regarding the award before the learned Single Judge, that according to rule 79 of the Coop. Societies Rules, the award of the Arbitrator shall be in the form given in Appendix F and that the award was in the form provided by the rules and as such the same suffers from no defect.

Vide Notification No. S.A. 403/P.A. 25/61/S. 3/63 dated 12th of September, 1963, the powers of Registrars had been conferred on all Assistant Registrars in respect of Ss. 8, 9, 10, 11, 13, 25, 27(1)(b), 42, 48, 50, 51, 52, 55, 56, 57, 58, 59, 61, 63(a), 65, 66, 67, 68, 82(2) and 83 of the Punjab Coop. Societies Act. The counsel for the appellants has not been able to cite any notification vide which the powers of the Assistant Registrar of Rohtak under S. 56 of the Coop. Societies Act had been withdrawn. He has also not been able to produce any order vide which any Assistant Registrar had been appointed at Sonepat. So far no notification has been issued by the Government of Haryana superseding the notification dated September 12, 1963. Admittedly the Assistant Registrar, Cooperate Societies, Rohtak, was exercising the powers of the Registrar, Cooperative Societies for appointing the Arbitrator and to refer the dispute to him for decision. Unless and until his powers in respect of the area of Sonepat Circle are withdrawn, he will be deemed to be the Registrar of the whole of the Rohtak Circle, so far as the powers under sections 55 and 56 of the Cooperative Societies Act are concerned. Thus the contention of the learned counsel for the appellant that the Assistant Registrar, Cooperative Societies, Rohtak, had no power to appoint Sh. Chandgi Ram as Arbitrator is untenable and the learned Single Judge rightly held that Sh. Chandgi Ram admittedly had the jurisdiction and it was in exercise of that jurisdiction that he had given the award.

So far as the next point is concerned, Sh. Anand Sarup, counsel for the appellants, referred to ground No. 10 of E.F.A. No. 373 of 1972 and pointed out that he had taken the objection regarding the legality of the award and had also urged that point before the learned Single Judge. He further pointed out that the objection regarding the legality of the award being a pure question of law, can be raised at any time. In support of his argument, he relied upon Chittoori Subbanna v. Kudappa Subbanna and others, A.I.R. 1965 S.C. 1325, in which it has been observed by the Hon''ble Judges of the Supreme Court that :

"A pure question of law not dependent on the determination of any question of fact should be allowed to be raised for the first time in the grounds of appeal by the first appellate Court. Such pure question of law are allowed for the first time at later stages also."

The learned Single Judge in his judgment dated 11.12.1974 has not given any finding regarding the legality or illegality of the award. Regarding the illegality of the award, an objection had been taken by the appellants before the learned Single Judge and moreover, it is a law point and can be allowed to be raised for the first time even at a later stage. Under rule 55 of the Co operative Societies Rules, the Arbitrator is required, to hear the parties and witnesses who attend and on the basis of such evidence and after consideration of any documentary evidence that may be produced by either party, to give his award in accordance with justice, equity and good conscience. In the instant case the award given is not a speaking award. Moreover, the Arbitrator has not mentioned in the award as to whom the amount is payable. Although Preet Singh and Sada Ram had pledged their land, detailed in the award, but the Arbitrator held in the award that their all property was liable for payment of the debt. The award given under the Punjab Cooperative Societies Act is quite a different from the award under the Arbitration Act. The award under the Punjab Cooperative Societies Act becomes a decree and is otherwise executable, but an award under the Arbitration Act cannot be executed as a decree and a judgment and decree has to be obtained on its basis. Under the Coop. Societies Act an appeal is provided against the award under section 68 of the said Act as well as revision under section 69 of the Act but no appeal lies against the award under the Arbitration Act and thirdly the award of the Registrar cannot be challenged in a Civil Court but the award under the Arbitration Act can be modified, remitted or set aside by the Court. Moreover, the Arbitrator under the Punjab Cooperative Societies Act occupies quite different position from the Arbitrator appointed under Arbitration Act because under the latter Act if the Arbitrator misconducts himself in the proceedings, he can be removed under the orders of the Court under section 11(2) of the Arbitration Act but the Arbitrator appointed under the Punjab Cooperative Societies Act, cannot be removed even if he misconducts. An Arbitrator appointed under the Arbitration Act is not required to give reasons in support of his decision but since an appeal and a further revision against the award is provided under the Punjab Cooperative Societies Act, it is, therefore, necessary for an Arbitrator while deciding the dispute referred to him under the Punjab Cooperative Societies Act, to set out the items of the dispute and the decision thereon together with the reasons for those decisions. An Arbitrator appointed under the Punjab Cooperative Societies Act acts as a quasijudicial tribunal and, therefore, his decision must be supported by reasons and if it is not done, the appellate authority will not be able to know how the Arbitrator came to the decision under appeal. No doubt the rules have provided the form in Appendix F, but the decision being a quasijudicial decision it must contain some particulars, grounds or reasons on which it is based. In case The Rohtak Delhi Transport (Private) Ltd. v. Risal Singh and another, I.L.R. 1963 (Pb.) 84, it was held :

"that an arbitrator to whom an industrial dispute is referred for decision under section 10A of the Industrial Disputes Act, 1947, has to act in a quasijudicial manner and his decision will be a quasijudicial decision.

Held, that the award of an arbitrator to whom an industrial dispute is referred for decision under section 10A of the Industrial Disputes Act, 1947, being a quasijudicial decision, must contain some particulars or grounds or reasons on which it is based. In other words, such a decision can be said to be no decision in the eye of law unless the order is supported by some grounds or points indicating how the final conclusion is arrived at. In the absence of such reasons arbitrariness or partial exercise of powers or taking into consideration extraneous circumstances cannot be eliminated and neither the parties concerned nor the High Court to which the matter has been brought up under Article 226, have any means of ascertaining how the sum awarded has been arrived at. Such an award which gives no reasons or grounds of decision is liable to be struck down."

In Mathra Dass v. The State of Punjab and others, 1975 P.L.R. 157 : 1975 P.L.J. 42, B.R. Tuli, J., held that :

"An award under the Cooperative Societies Act amounts to a decree and is enforceable proprio vigor without being made a rule of the Court nor does it require any decree to be passed thereon. An arbitrator appointed under the Act has the power to award future interest just like a Court passing a decree under section 34 of the Code of Civil Procedure, for this reasons, he can award interest at the rate not exceeding 6 per cent from the date of the award till the date of realisation."

It was further held in Mathra Dass v. The State of Punjab and others, (supra), that :

"The award made by the arbitrator and upheld by the appellate authority deserves to be quashed for the reasons that it does not state the points of difference referred to the arbitrator for decision and the manner in which he arrived at the conclusion that the petitioner was liable to pay all the amount as claimed by the Cooperative Society. No form of an award to be made by an arbitrator under the Act should have been prescribed, as has been done in Appendix `F'' to the Cooperative Societies Rules, 1963, for the reason that, unlike an award under the Arbitration Act an award under the Co operative Societies Act must conform to a quasi judicial decision. It is, therefore, necessary that an arbitrator, while deciding a dispute referred to him under the Act, must set the items of the dispute and the decisions thereon together with the reasons for those decisions. It may be remembered that an arbitrator, while determining a dispute between the parties, acts as a quasi judicial tribunal and his decision is a quasijudicial one. A quasijudicial decision must be supported by reasons so that it is shown that the arbitrator has applied his mind and while deciding a disputed question the process of reasoning for coming to a particular conclusion must be evident from the discussion in the award itself."

We are in full agreement with the findings given in The Rohtak Delhi Transport (Private) Ltd. v. Risal Singh and another, and Mathra Dass v. The State of Punjab and others, (supra). Since the award given in this case, is cryptic and is in contravention of the statutory rules incorporating principles of natural justice it is, therefore, a nullity qua the appellants. This appeal is, therefore, accepted and the judgments under appeal and that of the Executing Court are set aside and the objection petition filed by the appellants is allowed. The case is sent back to the Arbitrator to pass a speaking order after hearing the parties. If due to certain reasons, the Arbitrator is unable to function, the Registrar, Cooperative Societies will appoint a fresh Arbitrator, who will decide the case in the light of aforesaid observations. The costs of this appeal will follow the events.