1957 (2) TMI 88 - HC - Indian Laws

Summary

Issues Involved:
1. Applicability of the Indian Limitation Act to arbitration proceedings under Section 54 of the Bombay Co-operative Societies Act.
2. Jurisdiction of the Board of Arbitrators to pass a decree on the claim made by the Society.
3. Merits of the claim made by the Society.

Detailed Analysis:

1. Applicability of the Indian Limitation Act to Arbitration Proceedings under Section 54 of the Bombay Co-operative Societies Act:
The primary issue in this case was whether the Indian Limitation Act applies to claims referred for adjudication under the procedure prescribed in Section 54 of the Bombay Co-operative Societies Act. The relevant section provides that disputes touching the business of a society shall be referred to the Registrar for decision by himself or his nominee or to arbitration of three arbitrators.

The Tribunal held that the law of limitation did not apply to arbitration proceedings under Section 54, citing a settled course of decisions that the provisions of the Indian Limitation Act were not applicable to claims adjudicated under this section. The High Court affirmed this view, stating that the Indian Limitation Act primarily applies to suits, appeals, and applications, and not to arbitration proceedings. Section 3 of the Limitation Act mandates dismissal of suits, appeals, and applications made after the prescribed period of limitation, but this does not extend to arbitration proceedings.

The Court further clarified that Section 37 of the Indian Arbitration Act, 1940, which applies the provisions of the Limitation Act to arbitrations, expressly excludes statutory arbitrations by virtue of Section 46. Therefore, the Board of Arbitrators under Section 54 of the Bombay Co-operative Societies Act is not required to apply the law of limitation to the claims made before it.

2. Jurisdiction of the Board of Arbitrators to Pass a Decree on the Claim Made by the Society:
The petitioner argued that the Board of Arbitrators had no jurisdiction to pass a decree on the claim made by the Society. However, the High Court found that the Board of Arbitrators was properly constituted under Section 54 of the Bombay Co-operative Societies Act, which provides a statutory mechanism for resolving disputes related to the business of a society. The Court noted that the arbitration under Section 54 is a statutory arbitration, and the arbitrators derive their authority from the statute itself, not from any agreement between the parties.

3. Merits of the Claim Made by the Society:
The merits of the claim were also contested by the petitioner. The petitioner contended that the claim was barred by limitation and raised other objections on the merits. However, the majority of the arbitrators, including the Registrar's nominee and the Society's nominee, found that the Society's claim was proved and not barred by limitation. The Tribunal confirmed this majority award, rejecting the petitioner's objections.

The High Court upheld the Tribunal's decision, stating that the failure to apply the law of limitation was not an objection to the legality of the award on the face of it. The Court emphasized that the right to recover payment of a debt subsists even if the remedy by way of an action is barred by limitation, and the Tribunal acted in accordance with justice, equity, and good conscience as required by Rule 35 of the Rules framed under the Bombay Co-operative Societies Act.

Conclusion:
The application of the Indian Limitation Act to arbitration proceedings under Section 54 of the Bombay Co-operative Societies Act was the central issue. The High Court concluded that the Limitation Act does not apply to such statutory arbitrations, and the Board of Arbitrators had jurisdiction to adjudicate the claim. The Tribunal's decision to uphold the majority award was affirmed, and the rule was discharged with costs.