Statutory arbitration under the Multi-State Cooperative Societies Act governs disputes between cooperatives and members, with a 6-year limitation period applying, overriding general limitation laws.

ORDER :

Baljinder Singh Sandhu, J.

1. The present appeal under Section 37 in The Arbitration And Conciliation Act, 1996 (hereinafter referred to as ‘Act of 1996’) has been preferred by the appellant Adarsh cooperative Bank limited (hereinafter referred to as ‘the Bank’) assailing the order dated 12.10.2023 passed by the commercial Court No.1, Jaipur Metropolitan-II, Jaipur by which the objection application under section 34 of the Act of 1996 filed by the respondent has been allowed and the award dated 11.12.2016 passed by arbitrator has been set aside.

2. The brief facts giving rise to the present miscellaneous appeal are that the appellant Bank which is a multi-state cooperative Bank sanctioned a home renovation loan to the tune of Rs.91,000/- to the respondent Prem Singh Vaidya on 07.11.2007.

3. A term loan agreement dated 12.11.2017 was also executed between the parties and the loan was to be paid in sixty installments at the prevalent interest rates. The respondent defaulted in the payment of loan and the last installment was paid on 09.09.2009 and thereafter, the account was declared as non performing asset (NPA). Since, the appellant Bank is a cooperative bank and the respondent is the member of the bank therefore, in view of the terms of section 84 of he multi-state cooperative societies Act, 2002 (hereinafter referred to as the ‘Act of 2002’), the appellant invoked the statutory mechanism for arbitration provided under the section, which states that if any dispute arises between the cooperative society and the members there of, such disputes shall be referred to the arbitration to be appointed by the central registrar. The dispute was raised and the same was referred to the sole arbitrator by the central registrar on 01.09.2015, while exercising the power under section 84 of the Act of 2002. The appellant Bank also served a final notice on 04.09.2015, informing the reference of the dispute and appointment of the sole arbitrator by the central registrar. The respondent chose to remain absent and an ex-party order was passed by the sole arbitrator on 11.03.2016 and an award of Rs.5,20,870/- was passed against the respondent with an interest at the prevalent rate for the period from 09.09.2015 till the date of recovery and expenses of Rs.11,000/- to be paid to the Bank.

4. Nearly 5 years thereafter, the respondent approached the commercial Court under Section 34 of the Act of 1996 stating that proceedings initiated by the appellant were null and void since there was no arbitration agreement between the parties and it was further stated that the arbitration proceedings are also hit by Section 12 (5) of the Act of 1996 as per the new amendment and therefore the appointment of the sole arbitrator was not justified and the arbitrator was in ineligible to be appointed as an arbitrator. The objection was further raised that the limitation for raising the claim was only 3 years and hence, as the claim was raised after a span of almost 6 years from 09.09.2009 therefore, the same was barred by limitation. The learned commercial Court while condoning the delay set aside the award vide order dated 12.10.2023, on the ground that the claim was time barred and the same being contrary to the provisions of 12(5) of the Act of 1996.

5. Hence, aggrieved by the order date