122-NLR-NLR-V-59-PUNCHINONA-Appellant-and-GONAGALA-CO-OPERATIVE-STORES-SOCIETY-LTD.-Responde.pdf
562
Punchinona v. Gonagala Co-operative Stores Society, Ltd.
1958Present :Weerasooriya, J., and Sansoni, J.
PUNCHINONA, Appellant, and GONAGALA CO-OPERATIVESTORES SOCIETY, LTD., Respondent
S. C. 2S—D. C. {Inly.) Balagritiya, 60 Special
Co-operative Societies—Dispute between a Society and heirs oj a deceased officer—Deference to arbitration—Deference under ride 20 framed under s. 3T (2) ofOrdinance Xo. 31 of 1021—Enforceability of award—Ordinance Xo. 1G of1936 (Gap. 107), ss. 45, 46, 52 (2)—Act A o. 21 of 1919—Act Xo. 17 of 1952.
A dispute between a co-operative society Mid an heir or legal representativeof a deceased officer or employee was not roferahlo to arbitration under Rule 29of the iulcs framed under section 37 (2) of the Co-operative Societies Ordinance,ATo. 34 of 1921. Such n reference is not rendered valid by the provisions ofsection -15 of the Co-opeiv.tive Societies Ordinance, No. 16 of 1939 (Cap. 107),as amended by Acts No. 21 of 1949 and No. 17 of 1952.
Whero a reference p-nd award which purport to havo been made under Rule29 of tlio rules framed under section 37 (2) of tho Co-oporativo Societies Ordi-nance No. 3-1 of 1921 arc shown to be ultra vires of that rule, it is not open totlio party sccldiig to cnforco tho award to biing it under section 4-5 of thoCo-operative Societies Ordinan e, No. 16 of 1936 (Cap. 107). Tlio enforcementof such an award, therefore, docs not fall under tho ruling of tho majority oftho Court in The Pinikahana Kahatluwa Co-operative Society I. Id. v. Her nth(1957) 59 N. L. R. 1-15.
.jA-PPEAL from an order of the District Court, Balapitiya.
H. TI' Juyciuardene, Q.C., with P. RanasingJie, for respondent-appellant.Edmund J. Cooray, with E, B. Vannilamby, for petitioner-respondent.
Cur. adv. vult.
W'EERASOORIVA, J.—Punchinonn v. Gonagala Co-op. Stores Society, Ltd. 563
April 29, 195S. Weekasooriya, J.—~
This is an appeal from the order of the District Judge of Balapitiyaallowing an application by the Gonagala Co-operative Stores SocietyLimited (hereinafter referred to as " the Society ”) for execution as adecree of Court of an arbitration award in its favour for the pajuicut ofa sum of Its. 3,275.38 by the appellant. The respondent to theappeal is the President of llie Society.
The appellant is the widow of D. X. Punchihewa who at the time of hisdeath on the 5th September, 1947, was the Treasurer of the Society.Letters of administration in respect of the estate left by Punchihcwaissued to the appellant on the -J-tli March, 1949. The heirs of the deceasedarc the appellant- and five minor children.
According to the affidavit filed by flic Secretary of the Society, a sumof 11s. 3,275.3S belonging to the Society was in the hands of Punchihcwaat the time of his death, and this sum the Society claimed from theappellant. The appellant having repudiated liability, the dispute wasreferred to arbitration. The document by which the reference was madeis P2 in which the authority cited for the reference is “ Pule 29 of therules made by the Governor under section 37 of the Co-operative SocietiesOrdinar.cc, Xo. 34 of 1921 ”. The award of the arbitrator also purportsto have been made under the same Pule 29 and is dated the Gth March,j 94S.
The Co-operative Societies Ordinance, Xo. 34 of 1921, under which therules referred to in P2 were made, was repealed by the Co-operativeSocieties Ordinance, Xo. 16 of 193G (Chapter 107), which is the ordinancenow i;i force. Section -1G of that ordinance provides for the making ofsuch rules as may be necessary for t lie purposes of the ordinance. Section52 (2) provides that until such rules are made all rules made under therepealed ordinance (Xo. 34 of 1921) and in force at the time of thecommencement of the later ordinan.ee shall, in so far as they arc notinconsistent with the provisions of that ordinance, continue in force.
The repealed ordinance did not contain provision for settlement ofdisputes, but rule 29 of the rules made under section 37 (2) of that ordinanceprovided for reference of certain specified disputes to the Registrarof Co-operative Societies, who was thereupon empowered either to decideit himself or refer it to arbitration. Rule 29 provided, in addition, forvarious procedural matters connected with the reference such as the nomi-nation of arbitrators and the manner in which proceedings before theRegistrar or the arbitrators shall be conducted. A right of appeal to theRegistrar from an arbitration award was given. The decision or awardby the Registrar was declared final. The rule also provided that nodecision of an arbitrator shall be set- aside by a Court except on the groundof corruption or misconduct on the part of the arbitrator, and for theenforcement of a decision or award as a decree of Court-. It is clear thatRule 29. was intended to be of a comprehensive nature dealing with mostof, if not all, the matters arising out of a reference of a dispute to theRegistrar.
564 WEERASOORIYA, J.—Punchinona v. Gonagala Co-op. Stores Society, Ltd.
' Section 45 of Chapter 107 contains provision for many of the mattersdealt •with in Rule 29. But the section is silent as regards certain othermatters such as the manner in which the reference is to be made, thenomination of arbitrators, the manner in which proceedings before theRegistrar or the arbitrators shall be conducted, the enforcement of adecision or award, and in respect of which matters provision was containedin Rule 29. Until rules providing for these matters were made undersection 46 of Chapter 107, Rule 29 would have continued in force by virtueof section 52 (2). The question whether the entirety of Rule 29 continuedin force, or only such portions of it as dealt with matters not providedfor in section 45, is not free from difficulty but need not be decided in thepresent case. –
lb might be stated here that only in 1950 were rules made under section46 providing for those very matters in respect of which section 45 wassilent, as indicated earlier. Those rules were published in GovernmentGazette ISfo. 10,086 of the 24tlx March, 1950. Rule 29 ceased to be in forcewith the coming into operation of those rules. But at the time when thereference P2 was made Rule 29 continued in force, whether in whole or. in part.'-
P2 does not state on what basis the dispute that arose between theSociety and the appellant was referred to arbitration “ under the autho-rity given in Rule 29 ”. Mr. Cooray who appeared for the Society sub-mitted, however, that the reference must have been made on the basisthat the appellant was an heir of the deceased and also his legal repre-sentative. At the time of the reference the appellant was, no doubt,an heir of the deceased, but she was not the legal representative as herappointment as administratrix was made only on the 4th March, 1949,which is nearly one year after the arbitration award was given. Evenif the reference was on the basis as submitted by Mr. Cooray he freelyconceded that neither under Rule 29, nor under section 45 of Chapter107 (as it then stood), was a dispute between the Society and an heiror legal representative of a deceased officer or employee referable toarbitration.
Section 45 of Chapter 107 was subsequently amended by Act 3STo. 21of 1949 so as to bring within the category of referable disputes anydispute, inter alia, touching the business of a registered society between thesociety and “ any heir or legal representative of any deceased officer oremployee ”. By Act No. 17 of 1952 special provision was made in regardto the retrospective operation of section 45 as amended by Act No. 21of 1949. Mr. Cooray submitted that the combined effect of these twopieces of legislation is to render valid and effectual the reference P2as well as all subsequent proceedings including the arbitration award.But the various arguments which Mr. Cooray addressed to us in thatconnection were themselves based on the contention that the referenceto arbitration in tho present case must be deemed to be under section 45although P2, in express terms, states that the reference' is made under .Rule 29. This anxiety to demonstrate that “things are not what theyseem to be ” is understandable since it is only by such a process couldlie have hoped to remove the taint of illegality which vitiated the
WKERASOORIVA, J.—Punchinona v. Gonagala Co op. Stores Society, Ltd. 5G5
arbitration proceedings from their very inception. It Avas also on thobasis that the reference must be deemed to have been made under section45 of Chapter 107 that Mr. Cooray relied on the ruling of tho majorityof the Court in The Pinikahana Kahaduivci Co-operative Society Ltd. v.Ilcrath 1 that if an award is cx facie regular tho Court in which it is soughtto execute it has no jurisdiction to test its -alidity in view of tho provisionsof section 45 (4).
In lllangakoon v. Bogallagama et al. 3 the contention Avas put forwardthat an aAvard AA-hich purported toJiavc been made under Rule 29 should bodeemed to haA-e been made under section 45 of Chapter 107. This Avasrejected by Gratiacn, J., Avho stated that he failed to'see Iioav any personwho pmported to exercise extraordinary powers under one provision ofthe laAv can subsequently bo heard to claim that he had some alternativejurisdiction to act in terms of a different provision of the laAV. InEkanayake v. Prince of Woles Co-opcralive Society Ltd. 3 the questionAvas whether an aAvard Avliicli on the face of it purported to haA o beenmade under Rule 29 could be deemed to haA-e been made on a referenceunder section. 40 of Chapter 107. Windham, J., stated that one reason forholding against such a au'cav Avas that the award did not on tho face of itpurport to haA-o been made upon a reference under section 40. In Wije-tunga v. 1 Veerasinghe 4 the same Judge obsem-ed that Avhere a referencoand aAvard Avliicli purport to have been made under Rule 29 are shownto be 'ultra vires that rule, it is not open to the party seeking to enforcethe aAvard to bring it under section 45 of. Chajrter 107. The last tAvocases referred to are decisions of a bench of tA-o Judges. .
It is clear from these authorities that the Society cannot be heard toargue that the reference to arbitration and the aAvard Avere made undersection 45 of Chapter 107. It is, therefore, not necessary to considerAvhat the legal position Avould haA-e been had they been so made. SinceRule 29 did not empower a reference of this dispute to arbitration, thearbitration proceedings held thereon were bad for Arant of jurisdictionand the oAvard itself is a nullity. This being a case AA'licre there Avas apatent lack of jurisdiction in the arbitrator it is the duty of the Court,-as pointed out in Ekanayake v. Prince of Wales Co-operative Society Ltd.{supra)i Avhcrc a party seeks to rely on such an arvard, to,declare it nulland A'oid or at least to decline to act on it and lcaTe tire party to bringan action on it. Sec also Canayasabai v. Kondavil Co-operaliove StoresLtd. and the Indian case of Madhava Pao v. Surya Pao e x'eferred to inthe judgment of 1113' brother Sansoni in Kandy Omnibus Co., Ltd. v.Jiobcrts 7.
The order appealed from is set aside and the application of the Societ3’Avill stand dismissed Avith costs here and in the Court below.•
Sansoni, J.—I agree.
Appeal allowed.
1 (1967) 50 N. L. R. 146 at 110..4 11040) 51 27. L. Ft. 229.
3 (1943) J9 K. L. R. 403..» {1949) 50 27. L. 11. 405.
3 (1949) 50 27. L. 11. 297.« (1951) A. T. R. Madras 103.
7 (1954) 56 27. L. R. 293 at 303.