The court affirmed that statutory arbitration procedures were followed, and the appellants could not challenge the arbitrator's appointment after agreeing to arbitration in the loan agreement.

JUDGMENT :

(PER : HONOURABLE MR. JUSTICE PRANAV TRIVEDI)

[1] The present Letters Patent Appeal under Clause 15 of the Letters Patent is filed by the appellants – original petitioners assailing the correctness and validity of the judgment and order dated 12.09.2024 passed by the learned Single Judge in Special Civil Application No.12142 of 2024.

[2] The prayers made by the appellants - original petitioners in the writ petition before the learned Single Judge was to declare that respondent No.2 has not been eligible to act as an Arbitrator under Section 84(5) of the Multi State Cooperative Societies Act, 2002 (hereinafter referred as to "the Act, 2002") and Section 12 of the Arbitration and Conciliation Act, 1996 (hereinafter referred as to "the Act, 1996"). It was also prayed by the petitioners to set aside the order dated 01.08.2024 passed by the respondent No.2.

[3] Learned Single Judge after considering the averments as well as the contentions raised by both the sides was pleased to dismiss the writ petition by impugned order dated 12.09.2024 observing that no interference was required in order dated 01.08.2024 passed by the respondent No.2. However, liberty was reserved in favour of the original petitioners to avail appropriate remedy in accordance with law. It is this order dated 12.09.2024 passed by learned Single Judge, which is impugned in the present Letters Patent Appeal.

[4] The factual matrix which has led to filing of the writ petition is that petitioner No.1 is a company dealing in steam coal in bulk of Indonesia origin. Respondent No.1 (hereinafter referred to as "the respondent") is a Multi State Cooperative Bank and respondent No.2 is the Arbitrator appointed by the respondent No.3 at the instance of respondent No.1 purportedly under Section 84 of the Act, 2002. Petitioner had availed several financial assistance from the respondent from 2018 to 2023. Respondent had sanctioned Rs.6,400/- lakhs financial assistance in favour of the petitioner vide letter dated 13.10.2023. Such financial assistance was against the securities of equitable mortgage. Subsequently, the petitioner for the purpose of importing coal had requested to the respondent for buyers credit under bill of landing for various dates.

[4.1] It was the case of the petitioner that the respondent had wrongly treated the expiry of credit of 120 days and had appropriated the fixed deposit given by the petitioner which was to the tune of Rs.10,63,67,737/- as margin amount. It was the case of the petitioner that he had deposited the amount from time to time, however, the respondent had demanded of Rs.7,65,93,186.20/-. According to the respondent, the petitioner was a defaulter.

[4.2] In wake of dispute between the parties, the respondent filed Arbitration Case No.27 of 2024 before respondent No.2 who was appointed as an Arbitrator under Section 84 of the Act, 2002. It was the case of the petitioner that the arbitration case was filed without any notice being provided. It is the case of the petitioner that respondent No.2 passed order under Section 17 of the Act, 1996 granting interim relief to the petitioner which resulted into freezing of 17 bank accounts of the petitioners who were the borrowers as well as guarantors. Pursuant to the order passed by the respondent No.2, the petitioner preferred writ petition being Special Civil Application No.12142 of 2024 which came to be dismissed by the learned Single Judge by way of order dated 12.09.2024 which is now impugned in the present Letters Patent Appeal.

[5] Heard Mr. Manish R. Bhatt, learned senior advocate assisted by Mr. Yuvraj G. Thakore, learned advocate appearing for the appellants and Mr. Saurabh N. Soparkar, learned senior advocate assisted by Mr. J.B.Dastoor, learned advocate appearing for the respondent.

[6] Mr. Manish R. Bhatt, learned senior advocate for the appellants has submitted that the respondent No.2 is appointed in violations of Clause No.22 of Schedule V of the Act, 1996 which is applicable to t