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High Court of Judicature at Bombay
ANOOP V. MOHTA, J.
Shamrao Vithal Coop. Bank Ltd.
Versus
Inland Printers Ltd & Others
ARBITRATION PETITION NO. 195 OF 2009
Decided on : 06-02-2012
No appeal against the DRT order and/or no further challenge itself cannot be the reason to dismiss the claim of the petitioner on merits by holding it to be bound on the ground of res judicata, merely because the petitioner participated in the proceedings before the DRT and contested the same. The participation in any other form, whether jurisdiction or not, in any way is not sufficient to hold that the said Court is competent to decide the dispute of the Multi State Societies, which admittedly governed by the provisions of Multi-State Co- operative Societies Act.
The proceedings, therefore, so initiated by the petitioner-Multi- State Co-operative Bank for recovery of its dues for enforcement of securities if maintainable, there was no question of dismissing the same on the ground of res judicata, merely because the participation of the petitioner-bank in the DRT proceedings. The arbitrator is wrong in holding that the proceeding before the DRT and before the arbitrator are one and the same, by the provisions of both the Acts.
The Tribunals constituted under these Acts are empowered to deal with the subjects within its jurisdiction as provided under the Acts and not otherwise or vice-versa. The proceedings filed by respondent No. 4 and as initiated by the petitioner before the arbitrator under the respective Acts, cannot be stated to be identical and/or similar, though it was for the recovery of the dues, specifically when the petitioner’s claim against its borrowers is not maintainable before the DRT, in view of the specific provisions of both the Acts. In view of the above reasonings itself, it, is clear that the award/reasoning so made by the sole arbitrator is contrary to the provisions of law. The award is declared null and void and therefore, it is quashed and set aside.
1. The Petitioner is a Multi State Cooperative Society having a business of banking, has challenged under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act), the award dated 21 October 2008 passed by the sole Arbitrator appointed under the provisions of the Multi State Cooperative Societies Act, 1984 (for short, MCS Act1984), thereby rejected the Petitioner’s claim against Respondent Nos. 1 to 3 by holding that it is barred by resjudicata.
2. The relevant facts are-
Respondent No.1 is a company duly registered under the provisions of Companies Act, 1956, Respondent Nos. 2 and 3 are the Directors of Respondent No.1Company and also the guarantors. Respondent Nos. 1 to 3 are the members of the Petitioner Bank.
Respondent No.4Bank had a first charge on the property in respect of loan facility granted to Respondent No.1.
3. The Petitioner states that on the application made by Respondent No.1 for a loan facility, the Petitioner granted and sanctioned in April, 1996 a Cash Credit loan facility in the sum of Rs.250 lakhs to enable Respondent No.1 to use the said loan amount for its business purposes and accordingly by a letter of sanction dated 6 June 1996 informed Respondent No.1 containing terms and conditions. The Petitioner states that Respondent No.1, with a view to secure repayment of loan amount executed various documents and gave securities.
4. Respondent Nos. 2 and 3 executed a deed of guarantee dated 26 December 1996, guaranteeing repayment of loan amount.
5. The Petitioner states that under agreement dated 30 January 1997, Respondent No.1 hypothecated plant and machinery by creating a charge thereon and same has duly been registered with the Registrar of Companies. The Petitioner states that Respondent No.1 has created a second charge on it’s immovable property namely Raman Centre C18 to 21 Oshiwara Industrial Area of Link Road, Andheri (W), Mumbai53 and premises at 317, Raheja Chambers, Free Press Journal Road, Nariman Point, Mumbai21 in favour of the Petitioner whereas Respondent No.4 had first charge on the said properties in respect of it’s loan facility granted to Respondent No.1.
6. On 30 June 1999, the Petitioner filed Dispute No. 299 of 1999 under Section 91 of MCS Act, 1960 in the Cooperative Court for recovery of it’s dues of Rs.2,78,29,144.68 paise with further interest w.e.f. 1 June 1999.
7. The Debts Recovery Tribunal is established in Mumbai on or about 16 July 1999 under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, RDDBFI Act).
8. Respondent No.4 in August, 2001 filed original application bearing O.A. No. 878 of 2001 in the Mumbai Debts Recovery Tribunal (MDRT) for recovery of its dues from Respondent Nos. 1 to 3. Since the Petitioner had second charge on the immovable properties the Petitioner was joined as Respondent No.4. No reliefs were claimed against Respondent No.4.
9. The Full Bench of this Court has held that Cooperative Banks are entitled to file proceeding before the Debts Recovery Tribunal (DRT) under the RDDBFI Act. The Apex Court has set aside the said judgment.
10. In the meantime the Multi State Cooperative Societies Act 2002 (The MCS Act, 2002) came into force on or about 19 August 2002. Section 84 of the said Act provides referring of the disputes and differences by the Multi State Cooperative Society for recovery of it’s debt from it’s member, to the sole Arbitrator, to be appointed by the learned Central Registrar, as provided in the said Act.
11. The Cooperative Court by order dated 22 December 2004 returned the original proceeding to the Petitioner to enable the Petitioner to present the same before the sole Arbitrator appointed under Section 84 of the MCS Act2002. Accordingly, the Petitioner filed the Arbitration proceedings before the sole Arbitrator.
12. Before the Arbitrator, Opponent Nos. 2 and 4 (Respondent Nos. 2 and 4) were absent. Opponent Nos. 1 and 3 (Respondent Nos. 1 and
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