Dismissed

The General Insurance Employees v. the Registar of

Karnataka HC16 Aug 2022WP/4742/2020

Case brief

AI extract

What is this about?

The Karnataka High Court dismissed the writ petition challenging an order by the co-operative society registrar acting as arbitrator, holding that remedies under the Arbitration and Conciliation Act, 1996 are available.

What did the court decide?

The writ petition was dismissed as not maintainable, reserving liberty to the petitioner to avail alternative statutory remedies.

The General Insurance Employees Vs the Registar of — Cooperative Societies | Karnataka HC (2022)

¶1

¶2

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

¶3

DATED THIS THE 16^TH DAY OF AUGUST, 2022

¶4

BEFORE

¶5

THE HON’BLE MR. JUSTICE S.R.KRISHNA KUMAR

¶6

WRIT PETITION NO.4742/2020(CS-RES)

¶7

BETWEEN:

¶8

THE GENERAL INSURANCE EMPLOYEES CREDIT SOCIETY LIMITED AJJARKAD, COURT BACK ROAD, UDUPI-576101. REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER AND SECRETARY

¶9

MR. RAMADAS SHETTIGAR S/O ANAND SHETTIGAR, PRESIDENT, THE GENERAL INSURANCE EMPLOYEES CREDIT SOCIETY LIMITED, AJJARKAD, COURT BACK ROAD, UDUPI-576101.

¶10

MRS.BHARATHI HANDE W/O MR. SHARATH KUMAR, SECRETARY, THE GENERAL INSURANCE EMPLOYEES CREDIT SOCIETY LIMITED, AJJARKAD, COURT BACK ROAD, UDUPI-576101.

¶11

...PETITIONERS

¶12

(BY SRI. S. RAJASHEKAR, ADVOCATE)

¶13

AND

¶14

THE REGISTRAR OF CO-OPERATIVE SOCIETY, KARNATAKA STATE, OFFICE OF REGISTRAR OF

¶15

¶16

CO-OPERATIVE SOCIETIES(DISPUTE) ALI ASKAR ROAD, BENGALURU-560001.

¶17

MR.PRABHKAR K.S. S/O SUNDAR DEVADIGA, AGED 45 YEARS, VATSALYA HOUSE, KORANGARAPADI, KORANGARAPADI POST, UDUPI-57418. ...RESPONDENTS

¶18

(BY SMT.KAVITHA H.C., HCGP FOR R1; BY SRI. PROFESSOR RAVIVARMA KUMAR, SENIOR ADVOCATE FOR SRI.BELLE RAVIVARMA FOR R2)

¶19

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 07.02.2020 PASSED BY THE FIRST RESPONDENT VIDE ANNEXURE A AND ETC.

¶20

THIS WRIT PETITION COMING ON FOR ORDERS , THIS DAY, THE COURT MADE THE FOLLOWING:

¶21

O R D E R

¶22

In this petition, petitioner seeks quashing of the impugned order at Annexure-A dated 07.02.2020 passed by the 1^st respondent and for other reliefs.

¶23

Heard learned counsel for the petitioners and

¶24

learned Senior counsel for 2^nd respondent and learned AGA for 1^st respondent and perused the material on record.

¶25

¶26

The material on record discloses that pursuant

¶27

to the various events that occurred and took place as borne out from the material on record, that the 2^nd respondent was suspended from the petitioner – Society vide order dated 27.11.2018 passed by the Enquiry officer of the petitioner – society. The said suspension order was challenged by the petitioner by raising a dispute dated 03.04.2019 vide Annexure-Z under Section 84(1)(c) of the Multi – State Co-operative Societies Act, 2002 (for short ‘ the MSCS Act’), before the 1^st respondent – Registrar. Prior to raising the said dispute, the 2^nd respondent addressed a communication dated 18.01.2019 to the Co-operation Ministry, Central Government, which replied to 2^nd respondent vide Annexure-R3 dated 19.03.2019 intimating him that the dispute has to be referred to Arbitration under Section 84 of the MSCS Act by filing the dispute before the Registrar of Co-operative Societies. Accordingly, the 1^st respondent – Registrar to whom the dispute was referred to under Section 84 entered upon reference and conducted the proceedings in accordance with the

¶28

¶29

Arbitration and Conciliation Act, 1996 (for short ‘the said Act of 1996’) r/w Section 84(5) of the MSCS Act.

¶30

3.1 The petitioner – society entered appearance in the said Arbitration Dispute and contested the same by filing its objections. By the impugned order, the 1^st respondent allowed the said Dispute and set aside the order of suspension, aggrieved by which, the petitioner – society is before this Court by way of the present petition.

¶31

Before adverting to the rival contentions, it is necessary to refer to Section 84 of the MSCS Act, which reads as under:-

¶32

84. Reference of disputes :-

¶33

(1) Notwithstanding anything contained in any other law for the time being in force, if any dispute [other than a dispute regarding disciplinary action taken by a multi-state cooperative society against its paid employee or an industrial dispute as defined in clause (k) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947)] touching the constitution, management or business of a multi-state cooperative society arises –

¶34

(a) among members, past members and persons claiming through members, past members and deceased members, or

¶35

¶36

(b) between a member, past members and persons claiming through a member, past member or deceased member and the 55 multi-state cooperative society, its board or any officer, agent or employee of the multi-state cooperative society or liquidator, past or present, or

¶37

(c) between the multi-state cooperative society or its board and any past board, any officer, agent or employee, or any past officer, past agent or past employee, heirs or legal representatives of any deceased officer, deceased agent or deceased employee of the multi-state cooperative society, or

¶38

(d) between the multi-state cooperative society and any other multi � state cooperative society, between a multi-state cooperative society and liquidator of another multi-state cooperative society or between the liquidator of one multi-state cooperative society and the liquidator of another multi-state cooperative society, such dispute shall be referred to arbitration.

¶39

(2) For the purposes of sub-section (1), the following shall be deemed to be disputes touching the constitution, management or business of a multi-state cooperative society, namely:-

¶40

(a) a claim by the multi-state cooperative society for any debt or demand due to it from a member or the nominee, heirs or legal representatives of a deceased member, whether such debt or demand be admitted or not;

¶41

(b) a claim by a surety against the principal debtor where the multi � state cooperative society has recovered from the surety any amount in respect of any debt or demand due to it from the principal debtor

¶42

¶43

as a result of the default of the principal debtor, whether such debt or demand is admitted or not;

¶44

(c) any dispute arising in connection with the election of any officer of a multi-state cooperative society.

¶45

(3) If any question arises whether a dispute referred to arbitration under this section is or is not a dispute touching the constitution, management or business of a multi-state cooperative society, the decision thereon of the arbitrator shall be final and shall not be called in question in any court.

¶46

(4) Where a dispute has been referred to arbitration under sub-section (1), the same shall be settled or decided by the arbitrator to be appointed by the Central Registrar.

¶47

(5) Save as otherwise provided under this Act, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to all arbitration under this Act as if the proceedings for arbitration were referred for settlement or decision under the provisions of the Arbitration and Conciliation Act, 1996.

¶48

Rule – 30 of MSCS Rules also reads as under:-

¶49

30. Disputes

¶50

(1) For the purposes of sub-section (4) of section 84 of the Act, the Central Registrar may appoint and fix the fee of the arbitrators subject to the provisions of Arbitration and Conciliation Act, 1996.

¶51

(2) Save as otherwise provided under this Act, the provisions of the Arbitration and Conciliation Act, 1996 shall apply to all arbitration under this Act as if the proceedings for arbitration were referred for

¶52

¶53

settlement or decision under the provisions of the Arbitration and Conciliation Act, 1996.

¶54

A plain reading of the aforesaid provisions will

¶55

clearly indicate that all disputes under Section 84 of the MSCS Act will get referred to Arbitration and the same would partake the nature of arbitration proceedings under the said Act of 1996. In other words, all proceedings under Section 84 of the MSCS Act are nothing but arbitration proceedings governed by the provisions of the said Act of 1996. A conspectus of the provisions of Section 84 r/w Rule 30 of the MSCS Act and Rules and the provisions of the said Act of 1996 will lead to the following conclusions:-

¶56

(i) Interim orders passed by the Arbitrator / Registrar of Co-operative Societies in proceedings under Section 84 of the MSCS Act which are appealable would have to be challenged by way of an appeal permissible under Section 37 of the said Act of 1996.

¶57

(ii) Interim orders which are not appealable under the said Act of 1996 would necessarily have to be challenged by the aggrieved parties while challenging

¶58

¶59

the arbitral award under Section 34 of the said Act of 1996.

¶60

(iii) Final orders / arbitral awards passed in proceedings under Section 84 of the MSCS Act would also necessarily have to be challenged only under Section 34 of the said Act of 1996.

¶61

In the case of P.C.Babu vs. Sandeep B. and

¶62

others – 2018 SCC Online KAR 2151, while dealing with a petition challenging an interim order passed by the arbitrator in proceedings under Section 84 of the MSCS Act, the co-ordinate Bench of this Court held as

¶63

under:-

¶64

“5. It is noted that the first respondent herein has exercised jurisdiction as an arbitrator in respect of the claim made by the third respondent having regard to Section 84 of the Multi-State Co-operative Societies Act, 2002, which is applicable in the present case. Subsection (5) of Section 84 reads as under:

¶65

“84. Reference of disputes.- (5) Save as otherwise provided under this Act, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to all arbitration under this Act as if the proceedings for arbitration were referred for settlement or decision under the provisions of the Arbitration and Conciliation Act, 1996.”

¶66

¶67

6. Therefore, the arbitration proceedings under the provisions of the aforesaid Act are subject to Arbitration and Conciliation Act, 1996. Under Section 17 of the Arbitration and Conciliation Act, 1996, the arbitrator has the jurisdiction to pass interim measures of protection as may appear to the arbitrator just and convenient [Section 17(1)(ii)(e)]. If any person is aggrieved by any interim order passed by the Arbitral Tribunal, the remedy lies under Section 37(2) of the Arbitration and Conciliation Act, 1996. The remedy is by way of an appeal to a Court from an order of the Arbitral Tribunal granting or refusing to grant an interim measure under Section 17. Therefore, the petitioner herein has an alternative and efficacious remedy of an appeal under Section 17(2) of the Arbitration and Conciliation Act, 1996. In the circumstances, the writ petition is dismissed as not maintainable.

¶68

7. In this regard reliance is placed on a decision of the Hon'ble Supreme Court in the case of SBP & Company v. Pate I Engineering Limited [(2005) 8 SCC 618], wherein at Paragraph Nos. 45, 46 and 47, it has been observed as under:

¶69

“45. It is seen that some High Courts have proceeded on the basis that any order passed by an Arbitral Tribunal during arbitration, would be capable of being challenged under Article 226 or 227 of the Constitution. We see no warrant for such an approach. Section 37 makes certain orders of the Arbitral Tribunal appealable. Under Section 34, the aggrieved Party has an avenue for ventilating its grievances against the award including any in-between orders that might have

¶70

10 -

¶71

been passed by the Arbitral Tribunal acting under Section 16 of the Act. The Party aggrieved by any order of the Arbitral Tribunal, unless has a right of appeal under Section 37 of the Act, has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act. The Arbitral Tribunal is, after all, a creature of a contract between the Parties, the arbitration agreement, even though, if the occasion arises, the Chief Justice may constitute it based on the contract between the Parties. But that would not alter the status of the Arbitral Tribunal. It will still be a forum chosen by the Parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed the Arbitral Tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution. Such an intervention by the High Courts is not permissible.

¶72

“46. The object of minimizing judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated if the High Court could be approached under Article 227 or under Article 226 of the Constitution against every order made by the Arbitral Tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the Arbitral Tribunal, Parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage.

¶73

“47. We, therefore, sum up our conclusions as follows:

¶74

(i) to (v) xxxxxxxxxxx

¶75

(vi) Once the matter reaches the Arbitral Tribunal or the sole arbitrator, the High Court would not interfere with the orders passed by the arbitrator or the Arbitral Tribunal during the course of the arbitration proceedings and the Parties could approach the Court only in terms of Section 37 of the Act or in terms of Section 34 of the Act.”

¶76

11 -

¶77

8. The Hon'ble Supreme Court has strongly disapproved intervention of the Huh Court? by exercising jurisdiction under Article 226 and 227 of the Constitution of India by entertaining writ petitions filed against interim orders passed by the Arbitral Tribunal.

¶78

9. Further, this Court, in the case of K. Satish Kumar v. Rohan Associates (W.P. No. 37175/2013 disposed on 23/01/2014) by following the dictum of the Hon'ble Supreme Court, has dismissed the writ petition assailing the order passed by an Arbitrator on the ground of maintainability. The said order is also squarely applicable to the present case, In the circumstances, writ petition is dismissed as not maintainable reserving liberty to the petitioner herein to avail the alternative and efficacious statutory remedy, if so advised.”

¶79

The aforesaid statutory provisions and the undisputed facts and circumstances obtaining in the instant case are sufficient to show that the impugned order / arbitral award at Annexure-A dated 07.02.2020 passed by the 1^st respondent – Registrar / Arbitrator in proceedings under Section 84(1)(c) of the MSCS Act can

¶80

12 -

¶81

be challenged only by way of a petition / suit under Section 34 of the said Act of 1996.

¶82

Insofar as the contention of the petitionersociety that the 1^st respondent – Registrar did not have jurisdiction to adjudicate the dispute and that the only option available to him was to refer the dispute raised by the 2^nd respondent to arbitration and that the impugned order is vitiated on this ground is concerned, it is relevant to state that as can be seen from the communication at Annexure-R3 dated 19.03.2019, the 2^nd respondent was informed that he had to raise a dispute by seeking reference to arbitration under Section 84 of the MSCS Act before the 1^st respondent – Registrar / Arbitrator. Undisputedly, the 2^nd respondent acted upon the said communication and raised a dispute before the 1^st respondent who entered into reference of the dispute / arbitration proceedings which were governed by Section 84 of the MSCS Act and consequently, it cannot be said that the 1^st respondent who entered upon reference as a statutory arbitrator did

¶83

13 -

¶84

not have jurisdiction or authority of law to adjudicate upon the dispute.

¶85

It is also significant to note that in the proceedings before the 1^st respondent, the petitionersociety filed objections and contested the proceedings; however, the petitioner-society did not contend at any stage of the proceedings that the 1^st respondent did not have jurisdiction or authority of law to adjudicate upon the matter and having participated in the proceedings without raising the objection / question of lack of jurisdiction on the part of the 1^st respondent coupled with the fact that the proceedings were undisputedly arbitration proceedings in terms of Section 84 of the MSCS Act, it cannot be said that 1^st respondent did not have jurisdiction to adjudicate upon the proceedings and on this ground also, the said contention of the petitioner-society cannot be accepted.

¶86

Under these circumstances, in view of availability of equally efficacious and alternative statutory remedy in favour of the petitioner - society,

¶87

14 -

¶88

though several contentions have been urged by both sides in support of their respective claims, without expressing any opinion on the merits / demerits of the rival contentions, I deem it just and appropriate to dismiss the petition without interfering with the impugned order and reserving liberty in favour of the petitioner-society to take recourse to such remedies as available in law.

¶89

Subject to the aforesaid directions, petition stands dismissed.

¶90

Sd/JUDGE

¶91

JS/SRL

The General Insurance Employees v. the Registar of

Case brief

What is this about?

What did the court decide?

The General Insurance Employees v. the Registar of

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

M/S. Mangalore Chemicals and Fertilizers Ltd., Vs the Principal Commissioner of Income Tax

Edgeverve Systems Limited Vs Additional/Joint/Deputy/Assistant Commissioner

The Sirsi Urban Sahakari Bank Ltd. Vs the Commissioner of Income Tax (Tds)

Kirloskar Electric Company Employees' Vs the State of Karnataka

Mr N Irfath Ahmed Vs Inspector of Central Tax (Preventive)

South Western Railway Employees Vs Joint Registrar of