078-NLR-NLR-V-54-W.-BARNES-DE-SILVA-Appellant-and-GALKISSA-WATTARAPPOLA-CO-OP-.STORES-SOCIETY-.pdf
326 GRATXAEN J.— W. Barnes de Silva v. Galkissa iVattarappola Co-op.
Stores Society
1953Present: Gratiaen J. and Gunasekara J.W. BARNES BE SILVA, Appellant, and GALKISSAWATTARAPPOLA CO-OP. STORES SOCIETY, Respondent
S. C. 157—D. G. Colombo, 930/X
Co-operative Societies Ordinance (Gap. 107)—Sections 45, 46 (2) (t)—Award ofarbitrator—Ultra vires—Power of Court to authorise re-reference of dispute■—-Enforcement of an award—Procedure.
Where a writ for the enforcement of a purported award under the provisionof the Co-operative Societies Ordinance is recalled by a court of law on theground that the arbitrator’s decision was ultra vires and therefore inoperative,the court has no power to make an order granting to a party to the disputeliberty to take fresh proceedings under the correct section of the Ordinance. Thequestion whether a dispute may be “ re-referred ” for arbitration depends onthe provisions of the Ordinance.
Before an award can be enforced by court, it is the duty of the person seekingto enforce it to apply either in a regular action or at least by petition andaffidavit setting out facts which prove that the pin-ported award is prima facieentitled to recognition. The court should in the latter event enter an ordernisi or interlocutory order granting the application, and notice thereof shouldbe served on the opposite party so that he may be given an opportunity ofshowing cause against the proposed enforcement of the award. Then, andonly then, would the court be justified in permitting execution proceedingsunder the Civil Procedure Code to be issued.
.^^LPPEAL from an order of the District Court, Colombo.
Colvin R. de Silva, with Ananda G. de Silva, for the defendant appellant.
H. W. Jayewardene, with D. R. P. Goonetilleke, for the plaintiffrespondent.
Cur. adv. vult.
February 18, 1953. Gbatiaen J.—
This is an appeal from an order of the District Judge of Colomborefusing to recall a writ issued for the enforcement of a purported awardunder the provisions of the Co-operative Societies Ordinance (Cap. 107),
find from certain recorded admissions hi the document'DI filed ofrecord, that the appellant had been the Treasurer of the Galkissa andWattarappola Co-operative Stores Society Ltd. (hereinafter referredto as “ the Society ”) during the period 20th August, 1944, to September,1948, and a dispute had arisen between the Society and the appellantin regard to certain claims preferred against him relating to his periodof office as Treasurer. That dispute was referred to the Registrar ofCo-operative Societies on 13th August, 1949, for his decision, and hereferred it in turn to an arbitrator named A. E. Perera for disposal.On 25th October, 1949, Perera purported to make an award directing theappellant to pay to the Society a sum of Rs. 2,210'56, and the Societyapplied in due course to the District Court of Colombo for enforcement ofthe award “ as a decree”. The application was granted ex <parte, but
,GRATIAEN J.—W. Barnes de Silva v. Oalkissa Wattarappola Co-op. 32T
'Stores Society'
the appellant later moved that the writ sh ould be recalled on the groundthat Perera’s award had been made without jurisdiction. After someargument on this issue, Counsel for the Society conceded in the lowerCourt that the arbitration proceedings were irregular and he accordinglymoved to withdraw the Society’s application for enforcement of thepurported award. The learned District Judge made an order in thefollowing terms :—
“ in view of Mr. Misso’s submissions, no execution proceedings will
be permitted in this Court. Let the writ be recalled forthwith. ”
In my opinion this part of the order is equivalent to an inter partesdecision that Perera’s purported decision was ultra vires and thereforeinoperative. That decision is binding on both the Society and theappellant.
The learned Judge then proceeded to make an order granting to theSociety “ liberty to have its dispute with (the appellant) referred toarbitration in accordance with the provisions of the Co-operative SocietiesOrdinance, provided of course such dispute can be referred to arbitration ”,With great respect, a District Judge has no power to confer such aprivilege on a party to a dispute arising under the Ordinance. The onlyfunction reserved to a District Court under the Ordinance is that ofexecuting valid decisions made by the Registrar or valid awards made byan arbitrator in regard to disputes of the kind particularised in sec. 45,The question whether a Society may have a dispute “ re-referred,Tafter a previous award has been found to be ultra vires must depend onthe provisions of the Ordinance and not on any permission granted by a-Court of law whose jurisdiction over the adjudication of disputes has 'been expressly taken away by the Legislature.
The present appeal relates to the events which occurred after thewrit for execution of Perera’s purported award had been recalled in theearlier proceedings. On 16th February, 1951, the Society’s proctormade an ex parte application to the District Court of Colombo in accor-dance with the procedure laid down in sec. 224 of the Civil ProcedureCode for the execution of judicial decrees, for the enforcement of anaward against the appellant purporting to have been made on the 27thOctober, 1950, by an arbitrator named H. E. Amarasinghe upon a re-ference purporting to have been made to him by the Assistant Registrarof Co-operative Societies, Western Province, on 26th September, 1950—i.e., 4 months after the previous award made by Perera had been declaredinvalid. It is common ground that this second award relates to theidentical dispute in respect of which Perera -had previously purportedto exercise jurisdiction.
An order for execution was made ex parte. Once again the appellantintervened with an application to have the writ recalled on the groundthat the second arbitrator had also acted without jurisdiction. Thisobjection raises mixed questions of law and fact, and I find it impossibleto decide the issue upon the material which was placed before the learnedDistrict Judge who dealt with it in the Court below. It is sufficient
328GRATIAEN J.—TV. Barnes de Silva v. Qallcissa Wattarappola Go-op.
■Stores Society'
to state that the main ground on which the objection was rejected in theLower Court is, for,.the reasons which I have already indicated, insupport-able. The learned Judge took the view that the appellant was pre-cluded from objecting to the second arbitrator’s jurisdiction becausethe Court had expressly granted “ liberty to the Society to take freshproceedings under the correct section of the Ordinance”. As I havesaid, if the Society already possessed that statutory right, the permissionof the Court was superfluous ; if it did not, such permission could notcure the defect.
In my opinion the Society’s ex parte application to enforce the award asa decree of Court was ab initio irregular. Sec. 224 lays down the pro-cedure for the execution of a decree passed by a Court of law which isthereafter empowered to execute it. The section is in my opinioninappropriate to proceedings for the enforcement of an extra-judicialdecree or award which a Court is empowered, 'upon proof of its validity,to recognise and enforce as if it were a judicial decree.
Sec. 46 (2) (t) of the Co-operative Societies Ordinance empowers theappropriate authority to make statutory rules for, inter alia, “ the en-forcement of the decisions of the Registrar or the awards of arbitrators ”.These powers have in fact been exercised by the Minister of Rood andCo-operative Undertakings who, on 22nd March, 1950, made a rule inthe following terms :—
“ A decision or an award shall on application to any civil courthaving jurisdiction in the area in which the Society carries on businessbe enforced in the same manner as a decree of such court ”. VideThe Ceylon (Government Gazette No. 10,086 of 24th March, 1950, Part ISec. I (General) p. 305.
This rule, the validity of which may be assumed for the purposesof the present appeal, does not lay down the procedure for making suchapplications, but it is the clear duty of a Court of law whose machineryas a Court of execution is invoked to satisfy itself, before allowing writto issue, that the purported decision or award is prima facie a validdecision or award made by a person duly authorised under the Ordinanceto determine a dispute which has properly arisen for the decision of anextra-judicial tribunal under the Ordinance. In that event alone wouldthe Court be justified in holding that the decision or award is entitledto recognition and capable, under the appropriate rule, of enforcementas if it were a decree of Court. To achieve that end, a person seekingto enforce an award should be required to apply either in a regular actionor at least by petition and affidavit (in proceedings by way of summaryprocedure) setting out facts which prove that the purported award isprima facie entitled to such recognition. The Court should in the latterevent enter an order nisi or interlocutory order granting the application,and notice thereof should be served on the opposite party so that hemay be given an opportunity of showing cause against the proposedenforcement of the award. Then, and only then, would the Court bejustified in permitting execution proceedings under the Civil ProcedureCode to be issued.
GRATIAEN J.—W. Barnes de Silva v. Qalkissa Wattarappola Co-op. 329
Stores Society
None of these essential steps was taken by or on Behalf of the Societyin the present case. No material of any kind was placed before the Courtin the first instance for the purpose of satisfying it that the purportedaward had been made by the arbitrator upon a proper reference underthe Ordinance for the adjudication of an outstanding dispute of a de-scription contemplated by sec. 45. It seems to me that many questions-of fact and law would need to be decided before thp validity of thepurported award could be established. For example :
(а)Had there been a proper reference of the same dispute to the original
arbitrator A. E. Perera ?
(б)If so, did A. E.^ Perera become functus officio when he made his
award which was invalid ; or did he continue thereafter to bevested with jurisdiction over the dispute 1•
In the latter event, was the Registrar entitled, under an appropriate
rule passed under the Ordinance, to withdraw Perera’s juris-diction as an arbitrator and to refer the same dispute thereafterto a different arbitrator ?
Was the reference to the new arbitrator H. E. Amarasinghe a
valid reference under the Ordinance, and if so,
was his award valid and therefore entitled to be recognised and.
enforced as a decree of Court ?
There is insufficient material on record upon which all these questionscan be decided now, and in my opinion it was the duty of the Courtrquite apart from the particular objections raised by the appellants, to recallthe writ which was prematurely issued ex parte on 31st March, 1951 rwithout proof of any of the essential facts relevant to the Court’s decisionthat its jurisdiction as a Court of execution had been properly invoked.In the subsequent proceedings, only some of the relevant matters havecome to light, while others, equally relevant, have not yet been divulged.
It must not be thought that the opinions which I have expressed arebased on technical considerations. Previous decisions of this Courthave served to demonstrate how dangerous it is to assume too lightly,and without strict proof, that'purported awards under the Co-operativeSocieties Ordin^hce have been regularly made. Vide Illangakoon v.BogaUegama1, Ekanayalce v. The Prince of Wales Co-operative Society2,Wijetunge v. Weerasinghe3 and Sirisena v. Kotaweva-Udagama Go-operativeSocieties Ltd.11. The legislature had no doubt withdrawn from Courtsof law their jurisdiction to determine disputes touching the affairs ofco-operative societies or even to scrutinise the correctness of decisions orawards made by extra-judicial tribunals properly exercising jurisdictionunder the Ordinance. But the right and the duty ’■to examine thevalidity of such decisions and awards is still vested in the courts whichare empowered to enforce them. And, unless that duty be vigilantlyperformed, there is great risk that the judicial process may be abused.In the present case, for instance, a man’s property has twice been seized.
{1948} 49 N. L. B. 403.3 {1949} 51 N. L. B. 229.
{1949) 50 N. L. B. 297.* {1949) 51 N. L. B. 262.
•330
Sreenivasam v. Sittampalam
without notice to him in execution proceedings irregularly initiatedagainst him—on the first occasion, for the enforcement of a purportedaward which was subsequently admitted to be invalid, on the second•occasion, for the enforcement of a purported award the validity of whichhas not yet been established.
I would set aside the order under appeal, and direct that the writissued against the appellant on 31st March, 1951, be recalled on the ground-that it had not been obtained upon proper material. The judgmentmust not, however, be construed as deciding that the Society is neces-sarily precluded from applying hereafter in due form for the enforcementof the purported award in its favour.
<GrTJNASEKAiiA J.—I agree.
Order set aside.