Arbitration of disputes involving disciplinary action requires adherence to statutory procedures; improper convening of a board meeting renders decisions null and void.

JUDGMENT (Oral)

O.M.P. 2/2022 and I.A.3988/2022 (stay), I.A.3989/2022 (Section 151 CPC for exemption), I.A.3990/2022 (Section 151 CPC for exemption) and I.A.4023/2022 (Section 151 CPC for exemption)

1. The 141st meeting of the Board of Directors of the National Labour Cooperative Federation of India Limited (NLCF, hereinafter), convened pursuant to an agenda notice dated 20th November, 2021, was called into question by the respondent in arbitral proceedings, as the respondent's services were discontinued pursuant to a decision taken at the said meeting. The impugned award holds the 141st board meeting dated 3rd December, 2021 not to have been convened in accordance with law and, consequently, declares the business transacted at the said meeting, including the decision to discontinue the services of the respondent as null and void. The respondent has, therefore, been held to be continuing as Managing Director of the petitioner society, and has also been awarded arrears of salary.

2. The NLCF, aggrieved thereby, has sought to challenge the award under Section 34 of the Arbitration and Conciliation Act, 1996 ("the 1996 Act").

3. The respondent was appointed Managing Director of the NLCF on 10th April, 2021. It is not in dispute that the Managing Director of the NLCF is its Chief Executive.

4. On 1st December, 2021, the respondent came to know that an agenda notice dated 20th November, 2021 had been issued by the Vice Chairman of the NLCF ("the VC", hereinafter), for conducting a meeting of the Board of the NLCF on 3rd December, 2021. The respondent objected to this proposed board meeting vide representation dated 2nd December, 2021, in which it was pointed out, inter alia, that the VC did not have any authority to convene a board meeting. On 4th December, 2021, the respondent was informed by the Chairman (I-C) of the NLCF that his services stood discontinued w.e.f. 4th December, 2021.

5. The respondent, in the circumstances, sought reference of the disputes to arbitration under Section 84(1) of the Multi-State Cooperative Societies Act, 2002 ("the MSCS Act"). Arbitral proceedings that ensued have culminated in the award impugned in the present petition.

6. A preliminary objection was taken by NLCF, before the learned arbitrator, regarding the arbitrability of the dispute. Placing reliance on Section 84(1) of the MSCS Act, it was contended that the dispute, being between the NLCF and one of its employees, was not arbitrable. This contention has also been advanced, before me, by Mr. Ankur Arora, learned counsel for the petitioner-NLCF, who relied, for the said purpose, on the judgment of the Supreme Court in The Maharashtra State Cooperative Housing Finance Corporation Ltd. v. Prabhakar Sitaram Bhadange, (2017) 5 SCC 623.

7. The objection thus raised was rejected by the learned arbitrator and, in my opinion, rightly. Section 84(1) excludes disputes between a multi state cooperative society and its paid employee "regarding disciplinary action taken by" the society against the employee. Disciplinary action, it has been settled times without number, commences with the issuance of a charge sheet to an employee. Reference may be made in this context to UOI v. K.V. Jankiraman, (1991) 4 SCC 109 and UCO Bank v. Rajinder Lal Capoor, (2007) 6 SCC 694.

8. Mr. Arora does not dispute the fact that no charge sheet was ever issued to the respondent and he was never even placed under suspension. Clearly, therefore, the present case is not one of disciplinary action being taken by the multi state cooperative society against its employee.

9. Maharashtra S