Substantial compliance with procedural rules in arbitration cases suffices to validate proceedings, so long as parties have actual knowledge of ongoing proceedings.

JUDGMENT :

C.Jayachandran, J.

Twelve writ petitions espousing similar cause, with similar reliefs were dismissed with cost by a common judgment dated 16.08.2023, which is under challenge in the afore captioned Writ Appeals.

2. The appellants herein (petitioners in the Writ Petitions) are relatives, who availed credit facility from the 2nd respondent/Service Co-operative Bank. Upon committing default, the Society took recourse to Section 69 of the Kerala Co-operative Societies Act, 1969 ('the Act' for short). In the Arbitration proceedings, the appellants were set ex-parte and Awards were passed. The subject writ petitions were filed, when execution proceedings were initiated, essentially on the following grounds:

1. The Award was not communicated to the appellants – the defendants in the Arbitration proceedings – in accord with Rule 68 of the Kerala Co-operative Societies Rules ('the Rules' for short). The Award was communicated, not by the Arbitrator, but by the 2nd respondent/Society, thus violating the mandate of Rule 68 of the Rules.

2. The notice in execution proceedings were claimed to have been served, not on the defaulter, but on an adult member of the family, violating Rule 74(3) of the Rules, thus vitiating the proceedings, rendering the award illegal.

3. Even to serve summons on the adult member of the family, an order of the court is required satisfying the statutory parameters of Order V Rule 15 of the Code of Civil Procedure, which requirement is not satisfied in the instant facts.

3. The learned Single Judge found that the proceedings cannot be held to be vitiated for reason of the Award being communicated by the 2nd respondent/Society, instead of the Arbitrator. Interpreting the provision, it was held that Rule 68 is only directory, and not mandatory. The learned Single Judge also found that the facts at hand is fully justified by the doctrine of substantial compliance. The learned Single Judge went on to hold that the petitioners were fully aware of the proceedings and that the averments in the writ petitions to the contrary were false; intended to mislead the court and accordingly, writ petitions were dismissed with a cost of Rs.25,000/- each.

4. Heard Sri.N.N.Sugunapalan, learned Senior Counsel on behalf of appellants and Sri.George Poonthottam, learned Senior Counsel on behalf of the respondents. Perused the records.

5. The first contention pertains to the alleged non-compliance of Rule 68. Rule 68 is extracted here below:

“68. Mode of Communication of orders and decisions in deciding Disputes:-An award, decision or order passed by the Co-op. Arbitration Court or Registrar or any other person deciding the dispute or the Arbitrator referred under S.70 of the Act, shall be sent to the applicant by the Court or Registrar, as the case may be, with his seal affixed thereon, by registered post. One copy of the award, decision or order shall be retained in the file concerned and same kept in tact for a period of 12 years. The copy of the award/order shall be communicated to the defendants also by registered post.”

6. A close scrutiny of Rule 68 reveals the following aspects:

a) Rule 68 in its former part contemplates the Award/Decision/ Order (thereby meaning its original) to be sent by registered post only to the applicant; whereas in its latter part, the rule envisages a copy of the Award/Order to be communicated to the defendants also, by registered post.

b) In the case of communication of the Award to the ap