STATE BANK OF PATIALA Vs. STATE OF H.P.
LAWS(HPH)-1997-5-24
HIGH COURT OF HIMACHAL PRADESH
Decided on May 28,1997

STATE BANK OF PATIALA Appellant
VERSUS
STATE OF H.P. Respondents




JUDGEMENT

M.SRINIVASAN, J. - (1.)The petitioner stood guarantee for due per - formance of an agreement between respondents No. 4 and 5. The agreement was for lifting offish from leading centres of Govind Sagar in the District of Bilaspur, Himachal Pradesh. The petitioner gave a bank guarantee in the sum of rupees five lakhs in favour of respondent No. 4. There appears to have been a failure on the part of the fifth respondent to perform the agreement and the petitioner was called upon to honour the bank guarantee and pay the amount of Rs. three lakhs after deducting a sum of rupees two lakhs already invoked. The petitioner did not choose to respond inspite of several reminders by the 4th respondent Thereafter the matter was referred to arbitration under the provisions of section 72 of the Cooperative Societies Act to the District Cooperative and Supplies Officer (Special). The order appointing the said officer as an arbitrator was passed by the Registrar, Cooperative Societies on 9.1.1984. The arbitrator issued notice after entering on reference on 17.5.1984 and passed the award on 17.9.1984. Before the arbitrator the petitioner did not make any appearance; nor did the principal debtor, the respondent No. 5 herein make appearance before the arbitrator. The award of the arbitrator held that the fifth respondent was liable to pay Rs.8, 88,492.12 with future interest at the rate of 18 percent per annum on the principal amount till final payment. As against the petitioner the award was for Rs.3,91,500/ -comprising Rs.300,000/ - being the principal, Rs.76,500/ - being interest and Rs.15,000/ - being expenses. The arbitrator has stated in the award that as the petitioner failed to honour the bank guarantee given on 16.4.1982, it shall pay future interest at the rate of 18 percent per annum till the date of final payment
(2.)The petitioner filed an appeal under section 93(h) of the Himachal Pradesh Cooperative Societies Act, 1968 (hereinafter referred to as the Act) before the Joint Registrar (Development) Cooperative Societies, Himachal Pradesh. The appellate authority after considering all the contentions urged by the petitioner passed an order on 3.8.1987, dismissing the appeal. It should be mentioned that the principal debtor did not choose to file any appeal or challenge the award of (he arbitrator in any manner.
(3.)Aggrieved by the appellate order, the petitioner has filed this writ petition to quash the award of the arbitrator as well as the order of the appellate authority. Before us, the learned counsel for the petitioner has raised as many as six contentions. The first contention is that the award was passed after the expiry of a period of four months prescribed by the rules and it is therefore a nullity. Learned counsel submits that the order of the registrar appointing the arbitrator on 9.1.1984 must have been served on the arbitrator on 10.1.1984 and limitation will commence from that date. Reliance is placed upon the order of the Registrar which directs the arbitrator to decided the dispute within a period of four months from the date of issue of the order as required under rule 91 (2) of the Himachal Pradesh Cooperative Societies Rules, 1971 (hereinafter referred to as the Rules). Our attention is also drawn to the judgment of this court in C.S. No. 132 of 1992 dated 4.3.1994. It is contended that the view expressed by this court in that judgment is to the effect that the award passed beyond the period of four months is a nullity.


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