Central Registrar of Cooperative Societies may choose an arbitrator in accordance with Section 84 of the Multi State Cooperative Societies Act, 2002: Delhi High Court
Case Name: Appolo Handloom Manufacturing Co-Op Society Ltd v. All India Handloom Fabrics Society and Ors
Case No.: ARB.P. 1261/2023
Dated: April 8, 2024
Quorum: Justice Pratibha M Singh
FACTS OF THE CASE:
For more than thirty years, Apollo Handloom Manufacturing Co-Op. Society Limited, the petitioner, has been a member of the All-India Handloom Fabric Society. The Petitioner filed a petition seeking the appointment of an arbitrator by the Central Registrar of Co-operative Societies, Ministry of Cooperation.
In order to have an arbitrator appointed by the Ministry of Cooperation’s Central Registrar of Cooperative Societies, the petitioner submitted a petition. Among the disagreements the petitioner brought up are issues, including but not limited to monetary dues, unlawful election of office bearers, and other issues brought up by the respondents.
Section 84 of the Multi State Cooperative Societies Act, 2002 was cited by the petitioner as the basis for the Arbitration Clause. On May 26, 2023, the petitioner requested the appointment of an arbitrator; however, the Central Registrar did not do so as required by Section 84 of the Act.
Disappointed by this, the petitioner filed an application under Section 11(6) of the Arbitration and Conciliation Act (A&C Act) requesting the appointment of an arbitrator through the intervention of the court. According to the Court’s ruling, the Central Registrar may be directed to nominate the arbitrator even though it is not permitted to do so itself.
Apollo Handloom Manufacturing Co-op. Society Limited, the petitioner, complained that the Central Registrar had not appointed an arbitrator in spite of their request. The petitioner was dissatisfied with this inaction and looked for another way to settle the problem.
The Central Registrar is required by Section 84(4) to designate the arbitrator; but, in the event that the Registrar is unable to do so, the aggrieved party may petition the High Court for guidance. This was clarified by the Court.
CONTENTIONS OF THE PETITIONER:
The petitioner’s position is that, as a member of respondent, it has a number of disagreements with how respondent operates, including the unpaid balance of certain of the petitioner’s financial obligations. Furthermore, the Attorney maintains that Respondent No. 1’s office bearers were elected in a way that was illegitimate and forbidden.
A request for the appointment of an arbitrator with another respondent, in the form of a representation, was filed on May 26, 2023. This request pertained to other disputes pertaining to the constituent of Respondent No. 1, for which it had invoked the Arbitration Clause in terms of Section 84 of the Multi State Cooperative Societies Act, 2002 (hereinafter, “the Act”). Moreover, the Petitioner asserts that it has additionally submitted a request for the appointment of an arbitrator on Respondent No. 6-Central Registrar’s website.
The petitioner claims that because the Central Registrar did not appoint an arbitrator, this court’s jurisdiction is invoked under Section 11(6) of the Arbitration and Conciliation Act, 1996, and a petition has been filed seeking the appointment of an arbitrator in accordance with Section 84 of the Act.
By way of representation, the petitioner claims that on May 26, 2023, a request was made for the appointment of an arbitrator alongside another respondent. In accordance with Section 84 of the Multi State Cooperative Societies Act, 2002 (hereinafter, “the Act”), Respondent No. 1 had invoked the Arbitration Clause in relation to various conflicts involving its constituent under consideration. In addition, Petitioner also states that it has also filed a request on Respondent No. 6-Central Registrar’s website for the appointment of an arbitrator.
Under Section 84 of the Act of 2002, the disputes were addressed. Section 84(5) requires the appointment of an arbitrator, which the Central Registrar, as the appointing authority, failed to accomplish. In the absence of an arbitrator, the petitioner was left with no option except to request the appointment through the court.
CONTENTIONS OF THE RESPONDENTS:
First, the argument is made that the claims and conflicts that need to be sent to arbitration are unclear. The Counsel for Respondent No. 1 further argues that the Petitioner did not provide the Respondent with any notice pursuant to Section 21 of the Arbitration and Conciliation Act, 1996.
In support of Respondent Nos. 2 through 4, it is argued that an office bearer’s election may only be contested within 30 days and not after that. A petition under Section 11 of the Arbitration Act may also be contested as unmaintainable in light of Section 84(5) of the Act. Respondent Nos. 2 to 4’s legal counsel argues that the petition itself cannot be maintained in light of the Supreme Court’s decision in a precedent-setting ruling that is currently before the highest court.
The petition’s maintainability was contested by the respondent for the following reasons: It is purported that the petitioner did not supply enough information on the parties’ disagreement. Prior to submitting the application, no notification under Section 21 of the A&C Act was given. The petition under Section 11(6), according to the respondent, could not be maintained because the Central Registrar alone had the authority to appoint.
LEGAL PROVISIONS:
- Section 84 of the Multi State Cooperative Societies Act, 2002: This provision, which addresses arbitration in cooperative groups, was cited by the petitioner. It offers a way for conflicts in these kinds of communities to be settled through arbitration.
- Section 11(6) of the Arbitration and Conciliation Act (A&C Act): An application under this section was filed by the petitioner. It gives the court the ability to step in and appoint an arbitrator in the event that the authorised authority—in this example, the Central Registrar—fails to act.
COURT’S ANALYSIS AND JUDGMENT:
Counsels representing each party were present, and the court reviewed the documentation. The provisions of the Arbitration Act would only be applicable in the absence of any additional provisions enacted under the Act, as far as maintainability under Section 84(5) of the Act is concerned.
The Central Registrar of Co-operative Societies, Ministry of Cooperation, is required by Section 84(4) of the Act to designate an arbitrator; the court noted that this need cannot be questioned. On the other hand, if the Central Registrar is unable to choose an arbitrator, the Petitioner may be left without recourse. It cannot be maintained that the Court lacks the authority to refer the case to the Central Registrar for the appointment of an arbitrator in such circumstances.
According to Section 84(5) of the Act, the court ruled that there was a clear arbitration clause. As a result, the claim that a petition under Section 11(6) of the Arbitration Act could not be maintained was dismissed. The High Court is authorised under Section 11(6) of the Arbitration Act to take the required actions to ensure the appointment of an arbitrator, particularly in cases where a person or organisation, in this instance, the Central Registrar, has neglected to take the necessary actions n accordance with the protocol outlined in Section 84 of the Act.
Regarding Respondent Nos. 2 through 4, this Court believes that they are individual office bearers of Respondent No. 1, which is a society. Thus, the primary legal relationship is that of the Petitioner and Respondent No. 6. The Central Registrar, the aforementioned respondent, has only informed the court that it will choose an arbitrator in two weeks without contesting the maintainability of the current case.
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Judgment reviewed by Riddhi S Bhora.