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Judgment
K. Lahiri, J.—We propose to dispose of the Civil Rules by a common judgment as they involve common questions of law and fact.
Time after time, we have outlined the societal and individual disadvantages in not providing speedy trial and urged all to help deliver swift but deliberate justice and dispense with slow motion justice and Long distance litigation in the name of Society, Constitution and human Knights. However, we find darkness beneath "the lump" which exposed so much and so strongly about the necessity of speedy trial. These are simple matters which pended in this High Court since 1974, without any plausible reason. The Petitioner has drawn rich dividends as he obtained stay orders of the Bakijai proceedings under the Public Demands Recovery Act on 20.12.74, almost about nine years ago. The recovery proceedings have been stayed and 2 tiny Co-operative Society, Respondent No. 6 has suffered most, expended time, money and energy hoping to get their dues for a decade. The cases involve interpretation of the provisions of the Assam Co-operative Societies Act, 1949, "the Act" for brevity, and The Assam Co-operative Societies Rules, 1953, for short "the Rules".
The Petitioner was a member of ''Ward No. IV Jorhat Consumers'' Co-operative Societies Store Ltd.", for short "the Co-operative Stores" which was registered in 1963, and he was elected Secretary of the Stores; but resigned on 6.11.70. The provisions of "the Act" and "the Rules" are applicable to "the Co-operative Stores". There arose a dispute touching the business of the Co-operative Stores, between the Committee members and the Petitioner. The Co-operative Stores alleged that the Petitioner was to pay, in all, Rs. 7848.88, in both cases Rs. 3048.44 in the case wherefrom stems Civil Rule No. 685 of 1974 and Rs. 4800.00 in the case culminating in Civil Rule No. 686 of 1974. The claims of the Committee members wore based on the audit reports. As required under "the Act", the said disputes between "the Cooperative Stores" and the Petitioner were referred to the Registrar u/s 63 of ''''the Act". The Assistant Registrar of the Co-operative Societies, Jorhat acted as the Arbitrator. The references of the disputes wore made in terms of the provisions of Rule 85 of "the Rules", The Committee paid the requisite fees and made appropriate applications. The Arbitrator issued notices to the Petitioner, in both the cases, to show cause why decisions should not be given against him as applied for and claimed by "the Co-operative Stores". The Petitioner showed causes and the Arbitrator made his awards against the Petitioner in both the cases. After the award had been made in Case No. CAJ.I/71.72 from which stems Civil Rule No. 686/74, the Petitioner made an application under Rule 90 of "the Rules" for withdrawal of the other arbitration case from the Arbitrator and to appoint another Arbitrator on the ground that Arbitrator was biased against him "which was noticed from time to time regarding these references", meaning thereby, that during the proceedings of the references the arbitrator had shown bias against the Petitioner, however, no action was taken on the application. Awards were made in both the cases. The Petitioner preferred appeals against the awards made in both the cases. However, they were heard by the Registrar without giving any intimation to the Petitioner. Be that as it may, the Petitioner filed review applications u/s 80(2) of "the Act" and the Registrar heard and rejected them. The awards made were sent for due execution. The Petitioner has preferred these applications under Article 226 of the Constitution of India.
Mr. A. Sarma, learned Counsel for the Petitioner submits that the appeals were dismissed without giving the Petitioner-Appellant any opportunity to represent his case before the appellate authority, that the application of the Petitioner made under Rule 90 for withdrawal of the case from the Arbitrator in respect of the Arbitration proceedings culminating in Civil Rule No. 685/74 was never considered and disposed by the Arbitrator, and, that the Arbitration had personal bias against the Petitioner. However, we do not propose to consider these contentions as we have decided to remit the matters to the Registrar for appointing afresh an Arbitrator or Arbitrator to decide the disputes in accordance with to provisions of law. We find that the most robust contention of the Petitioner is that the Arbitrator, a statutory authority, who was to decide the dispute between the two contending parties, violated the provisions of Rule 88 of the "Rules" as well as breached the principles of Natural Justice and/or "fair play",
For settling disputes between a Co-operative Society and its members, past or present, the Registrar and/or his nominee is to act as "Arbitrator" and decide disputes between the contending parties in conformity with the provisions of "the Act" and "the Rules". The procedure for hearing of arbitration case has been statutorily laid down. So, the Arbitrator is not the master to evolve procedure d'' horse "the Rules". Apart from calling upon the Petitioner to show cause why the claims of the Co-operative Stores should not be awarded in their favor, the other procedure laid down under Rule 88 of the Rules was breached, We extract the relevant provisions of Rule 88:
Procedure for disposal of dispute-(1) In such proceeding, the Registrar or his nominee or the arbitrator appointed under Sub-section (1)(b) of Section 64 shall fix the date, hour and the place of the hearing of the dispute and issue notices to the parties concerned in form as set forth in the Schedule, The arbitrator shall have power to appoint or remove guardians and next friends.
(2) The arbitrator may issue summons or notice at least fifteen days before the date fixed for the bearing of the dispute requiring-
(i) the attendance of the parties concerned and of witnesses; and
(ii) the production of all books and documents relating to the matter in dispute; and
(iii) shall have the power to administer oaths to all parties concerned.
(3) * * *
* * *
(9) In these proceedings neither party shall be represented by any legal practitioner.
It is thus seen that an Arbitration proceeding is a dispute settling machinery between two contestants, liabilities are imposed and they are summarily recoverable from the party liable to pay the amount. It will be seen that the statutory provisions have been made providing that the Arbitrator, upon bit appointment shall fix the date, hour and place of the dispute. That apart he must issue notice informing the party against whom the claim is lodged to show cause why a decision should not be given against him. It is also seen that the provisions are there to enable the parties to examine witnesses, produce books and documents in support of their claims. Interestingly in such proceeding neither party is entitled to be represented by any legal practitioner-Vide Sub-rule (9). It is a proceeding where lawyer''s presence is impermissible. In the instant case, admittedly the Arbitrator decided the case with-out giving the Petitioner any information about the date, hour and the place of hearing of the cases nor did he inform the Petitioner that he could produce witnesses and documents on a particular date. We are of the opinion that the Arbitrator appointed u/s 64(1) of "the Act" must, at first fix the date, hour and the place of hearing of the disputes. He is also required to issue notice to show cause. In the instant case admittedly no date, hour or the place of hearing of the disputes were informed to the Petitioner nor was he asked to produce his witnesses or the documents. As such, it was out and out ''exparte'' bearing. The case of the Respondents in their affidavit is that there is no necessity of fixing the date, hour and the place of hearing of the dispute and it was not obligatory to adduce evidence at the hearing.
In our opinion in such proceedings there cannot be dispensation of natural justice or legal justice, unless the parties are informed about their legal right to adduce evidence on the date of bearing or if the disputes are disposed of behind their back. Violation of the principles of natural justice amounts to ''abuse of power'' which transgress the conditions which the Legislature always presumed to have intended. There would be no "decision" within the meaning of the statute if there were any-thing of that sort done contrary to the essence of justice. Even administrative justice must be done in terms of the natural justice and breach of which undoubtedly entails declaration that the proceedings are void. It is to be implied, unless contrary appears, that Legislature does not authorize by the Act the exercise of powers in breach of the principles of natural justice, and that Legislature does by the Act requires, in the particular procedure, compliance with those principles. The rules of natural justice operate as implied mandatory requirements, non-observance of which invalidates the exercise of the powers,
It is fundamental to fair procedure that both sides should be heard. It is not a new proposition as it originated from the age-old legal maxim "audi alteram partem" which means "hear the other side". In the instant case admittedly the Arbitrator had taken into consideration the documents produced by the Co-operative Stores, used them in the impugned award. Without affording any opportunity to the Petitioner to produce his evidence or document in support of his cases. Did the Arbitrator afford the right of "fair hearing" to the Petitioner? We answer the question in the negative and extract what Lord Morris said about the right of fair hearing in Ridge v. Baldwin (1964) AC 40 (114):
My Lords, here is something which is basic to our system: the importance of upholding it far transcends the significance of any particular case.
In that case hearing was given to the Solicitor but the Constable war not given the personal hearing. The authority was an administrative authority. We are tempted to quote the observations of Lord Denning, M.R. who pithily summed up the necessity of right of hearing in administrative proceedings in R. v. Gaming Board for Great Britain, ex. p. Benan and Khaida (1970) B QB 417 (430) thus:
At one time it was said that the principles (sc. of natural justice ) only apply to judicial proceedings and not to administrative proceedings. That heresy was scotched in Ridge v. Baldwin (1964) AC 40. At another time it was said that the principles do not apply to the grant or revocation of licenses. That too is wrong. R. v. Metropolitan Police Commissioner Experts Parker (1953) 1 WLR 1150 and Nakkuda Ali v. Jayaratne (1951) AC 61 are no longer authority for any such proposition,
Even more concisely ruled the Privy Council in A.G. v. Ryan (1980) AC 718.:
...The Minister was a person having legal authority to determine a question affecting the rights of individuals. This being so it is a necessary implication that he is required to observe the principles of natural justice when exercising that authority; and if he fails to do so, his, purported decision is a nullity.
Therefore, a decision reached by an administrative authority affecting the right of a person is a nullity if the right of hearing was denied to a party. There is another governing principle which has been enunciated by Lord Parker in re: H.K. Infant (1967) 2 QB 617 (630);
Good administration and honest or bona fide decision must, as it seems to me, require not merely impartiality, nor merely bringing one''s mind to bear on the problem, but acting fairly; and to the limited extent that the circumstances of any particular case allow, and within the legislative framework within which the administrator is working, only to that limited extent do the so-called rules of natural justice apply, which in a case such as this is merely a duty to act fairly. (Emphasis added)
It is undoubtedly true that the phrase "acting fairly" is one having wide implication even in administrative proceedings where a civil right of another is affected. However, we are concerned with quasi judicial proceedings where two contesting parties fight out their claims and the Arbitrator is to decide the rights of the parties. He is not the master of the procedure to be followed. We find that fair procedure has been laid down by "the Rules" to inform the parties as to the date, time and place of hearing. As such, the fairest thing for the Arbitrator was to intimate the Petitioner the three basic things required to be informed by virtue of the mandatory provision of Rule 88(1) of "the Rules".
It has been contended by the State that the Arbitrator is only to record the date, hour and place of hearing of the depute in its proceedings and there is no necessity of informing the Petitioner. We are of the firm opinion that Rule 88(1) not only enjoins that Arbitrator must fix the date, hour and place of bearing, but it also enjoined the duty to inform the parties to the dispute about them. He cannot evolve a procedure on his own and abdicate the procedure laid down in Rule 88. He is not the master of his own procedure. In our opinion, the provisions of Rule 88(2) are mandatory. The expressions "may", shall" or "''must" do not always correctly depict the intention of the law makers as to whether a particular provision is mandatory and directory. We are to scan the whole scheme of the Rule and then to find out as to the intention of the another. On perusal of the entire scheme of the Rules governing disposal of the disputes by Arbitrator, we come to the conclusion that the provisions of Rule 88(2) are also mandatory, in any view of the matter, in the instant case, admittedly the Arbitrator had violated the statutory right of the Petitioner under Rule 88(1) of "the Rules" in not informing the Petitioner his statutory right to be informed about the date, hour and place of trial. As such, the mandatory provision was breached, rendering the decisions of the Arbitrator illegal and void. We have carefully examined the appellate order well as the orders in review but we do not find that the authority ever considered this aspect of the case although the Petitioner had consistently and persistently urged before the authorities that his rights under Rule 88(1) and (2) were breached by the Arbitrator and the by-product of the Arbitrator proceedings, namely, the awards should not be acted upon.
We hold, therefore, that in the instant cases the principles of natural justice were violated. We also hold that the provisions of Rule 88(1) were violated. We also hold that Rule 88(2) is mandatory and the provisions thereof have been breached in consequence thereof we declare the impugned orders as void and ultravires. We set them aside and the follow up orders in the appeals and reviews and direct the Registrar to take upon himself the Arbitration proceeding OF appoint a nominee or an Arbitrator or Arbitrators in accordance with the provisions of ''the Act'' and ''the Rule''. The matters have been unnecessarily delayed at this end. Therefore, we direct the Arbitrator, to be appointed to issue prompt but appropriate notices of the date, hour and place of hearing of the disputes, immediately on being nominated or appointed and call upon both the parties, the Petitioner as well as Respondent No. 6. to produce evidence, oral or documentary, hear both the patties and make the Awards in accordance with the provisions of the law. The proceedings should be completed within a period of one month from the date of appointment of the Arbitrator. We also desire that the appellate and/or the reviewing authority should promptly hear and dispose of the appeal and review as early as possible.
In the result, the application is allowed to the extent indicated above. In fitness of things the Petitioner should deposit the amount admitted by him in the proceeding within a month from to-day. On such deposit, Respondent No. 6 shall be entitled to receive the same without prejudice.