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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

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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. 

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Empowerment of Private School Employees is a Constitutional Right- Justice Manmeet Singh Arora

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Case Name: Social Jurist v. Government of NCT of Delhi & Ors 

Case No.: W.P.(C) 888/2024 

Dated: April 29, 2024 

Quorum: Justice Manmeet Pritam Singh Arora 

 

FACTS OF THE CASE: 

The facts of the case revolve around The Right of Children to Free and Compulsory Education Act, 2009 (the “RTE Act”), read with the Delhi School Education Act, 1973 and the Delhi Right of Children to Free and Compulsory Education Rules, 2011 (the “RTE Rules”), has been filed as a public interest lawsuit (PIL) to draw attention to the fact that 2,69,488 students enrolled in schools run by the Directorate of Education, GNCTD, and 3,83,203 students enrolled in schools run by the Municipal Corporation of Delhi (MCD) are being denied access to the statutory benefits like uniform, writing materials, books, stationery items, school bags, scholarships, etc.  

The Fundamental Right to Education, which is protected to pupils under Article 21-A of the Constitution, is violated when GNCTD and MCD fail to provide the students with the aforementioned statutory advantages in a timely manner. This failure is arbitrary and unethical.  

It is mentioned that all students attending GNCTD and MCD-run schools have the right to free textbooks, writing supplies, and uniforms under Rule 8 of the RTE Rules. Nevertheless, it is claimed that instead of giving away free text books, writing supplies, and uniforms, GNCTD and MCD are paying students directly from their bank accounts.  

3,83,203 pupils enrolled in MCD-run schools have been denied these statutory benefits due to a lack of bank accounts from the 2016–17 academic year to the 2022–23 academic year, according to the Chief Auditor, MCD, in his Audit Memo of November 14, 2023. In a similar vein, the Directorate of Education, GNCTD (the “DoE”) letter dated December 29, 2023 notes that 2,69,488 kids enrolled in schools managed by the GNCTD have likewise been denied statutory financial advantages due to the lack of active bank accounts.  

When GNCTD and MCD neglect to promptly supply the students with the aforementioned statutory advantages, they are infringing upon their constitutionally guaranteed Fundamental Right to Education (Article 21-A). This is an inequitable and arbitrary failure. 

A civil rights organisation is the petitioner, Social Jurist. Nearly 10,000 unregistered and unrecognised schools in various Delhi neighbourhoods are at issue in this case. NGOs, institutions, and private persons manage these schools. These schools educate about 600,000 students in a range of classes from LKG to 12th grade, who are between the ages of 2 and 18.  

CONTENTIONS OF THE PETITIONER: 

The petitioners strongly contended that the reply to affidavit of the DoE dated March 23, 2023, filed in has been cited by Mr. Ashok Aggarwal, the petitioner’s learned counsel. He said that the GNCTD has testified in this affidavit before this Court that all students in government-run schools in classes “preschool” through “VIII” receive a full set of textbooks at no cost to them after having them printed by the Delhi Bureau of Textbooks, along with workbooks and other supplementary materials were provided. 

The petitioners further contend that GNCTD has represented that writing supplies (notebooks and stationery) will be given “in kind” to students starting with the academic year 2023–2024. In this regard, the heads of the school(s) in question have been given permission to buy writing supplies and give them to the students enrolled in the aforementioned schools starting in the academic year 2023–2024. In addition, the GNCTD has announced that starting with the academic year 2024–2025, the Head of School(s) will have the authority to purchase uniforms and provide them to the students; in the interim, pupils will get payment in cash for the academic year 2023–2024. 

Therefore, thye conteded, it is essential that the MCD immediately provide its students with the statutory benefits “in kind” in lieu of cash, pending the resolution of the bank account opening issue. This will ensure that the students’ Fundamental Rights are protected and they receive the statutory guaranteed uniforms, note books, stationery items, school bags, etc. for the current academic session of 2024–2025. 

He said that the current petitioner has also brought attention to the issue of the lack of infrastructure in the form of dilapidated buildings, classrooms, etc. in the schools of GNCTD and MCD, and this Court is taking it into consideration. He said that there are schools that are set up and operated fully in a tin shed, and that the summer months are difficult for the pupils and teachers who work there, respectively. According to him, there are schools where there is no furniture and students attend classes while sitting on the floor. He declared that the problem of damaged chairs and desks in classrooms is an urgent one that affects every school.  

 

CONTENTIONS OF THE RESPONDENTS: 

The respondent’s counsel acknowledged that they are required to give statutory benefits, such as school bags, note books, stationery, uniforms, etc., to the students “in kind” rather than in cash. For the 2022–2023 academic year, these statutory benefits were given “in kind” to the students enrolled in MCD schools. It is said that, however, due to procurement difficulties, these statutory advantages could not be given to students “in kind” for the academic year 2023–2024. As a result, students with bank accounts received payment for these benefits in cash.  

 

The absence of bank accounts is acknowledged as the reason 2,73,346 students were not able to receive the required benefits under the RTE Rules during the 2023–2024 academic year. 

The respondent, who joined the proceedings via video conference on April 23, 2024, informed this court that the Standing Committee of MCD, which does have the necessary financial power, is non-functional, and that it is not possible for him to provide the students with “in kind” benefits for the academic year 2023–2024 because neither he nor the Commissioner have the necessary financial power to award contracts for the procurement of these statutory items. 

The respondents further acknowledged that, in a similar vein, MCD has not been able to award contracts for the procurement of the aforementioned items because it lacks the necessary financial power, and as a result, has not been able to obtain the statutory benefits for the current academic session of 2024–2025, such as uniforms, note books and stationery items, school bags, etc. for distribution “in kind” to the students. According to the Commissioner, contracts over the financial limit of INR Five crores can only be awarded by the Standing Committee, which also has the authority to do so. As a result, he acknowledged that he was unable to fulfil his legal duties to the students.  

 

LEGAL PROVISIONS: 

Section 10(1) of the Delhi School Education Act, 1973 (DSE Act): The petitioner requested that the recommendations of the 7th Pay Commission be applied to the salaries of teaching and non-teaching staff at Delhi’s independent private schools. The argument was founded on DSE Act Section 10(1), which deals with the salary, perks, and allowances of staff members working in private schools. 

7th Pay Commission Recommendations: Employees of private schools that operate independently should be covered by these guidelines, according to the petitioner. Whether the DSE Act required these suggestions to be implemented was a question the court addressed. 

Article 21 of the Constitution of India: The petitioner claimed that it was a violation of their fundamental rights to deny access to specific medical facilities to individuals who were not Delhi residents. The right to personal liberty and life is guaranteed by Article 21. 

 

COURT’S ANALYSIS AND JUDGMENT: 

The non-constitution of the Standing Committee of the MCD since 2023 is a matter of record, and this court would like to note that the non-procurement and its effect of not providing the statutory benefits of uniforms, note books and stationery items, school bags, etc. to the students studying in the MCD schools, first for the academic session of 2023–24 and now 2024–2025, is an undesirable and regrettable state of affairs. 

The MCD Commissioner further acknowledged that as GNCTD is still in the process of producing and acquiring the textbooks, kids in MCD schools have not yet gotten any from the organisation. School will be closed for summer vacation starting on May 10, 2024, and the current academic session began on April 1, 2024. For this reason, the first session has practically ended without the students’ use of textbooks, notepads, writing supplies, stationery, etc. Taking into account the previously mentioned details, this Court finds it difficult to envision the inadequate level of instruction provided to the pupils during this inaugural session without these essential resources, to which they are legally and constitutionally entitled.  

In order to fill the void left by the Standing Committee’s unconstitutionality, the Court expressed a preliminary opinion that the Commissioner, MCD, should be given more financial authority by a suitable GNCTD authority. This will allow the Commissioner to grant contracts for the purchase of these statutory benefits for the MCD schools’ students.  

The court noted that there was potential for regulation of the right to establish an educational institution. However, these regulations did not go so far as to impose a strict tuition schedule, prescribe the structure and makeup of the governing body, or require private school employees and instructors to be nominated. 

 

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Judgment reviewed by Riddhi S Bhora. 

 

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