ALLAHABAD HIGH COURT
ANJANI KUMAR MISHRA, JAYANT BANERJI, JJ.
Ramesh Chandra Yadav - Petitioner
Versus
Registrar Fisheries Co-Operative Society and Another - Respondents
Civil Misc. Writ Petition No. 25244 of 2017
Decided On : 10-01-2024
Arbitration - Dispute Resolution - U.P. Cooperative Societies Act Sections 70, 71, 229 - The court found that the arbitrator misapplied Section 70 of the U.P. Cooperative Societies Act, as it only applies to members, and directed arbitration under the Arbitration and Conciliation Act instead.
Fact of the Case:
The petitioner challenged an arbitration award claiming it was improperly invoked under the U.P. Cooperative Societies Act, as he was not a member of the cooperative society involved.
Finding of the Court:
The court concluded that the arbitrator incorrectly applied Section 70 of the U.P. Cooperative Societies Act, which does not apply to non-members, and that the arbitration should proceed under the Arbitration and Conciliation Act.
Issues: Whether the arbitrator's reliance on Section 70 of the U.P. Cooperative Societies Act was justified given the petitioner's non-member status.
Ratio Decidendi: The court held that Section 70 applies only to disputes involving members of cooperative societies, and thus the arbitration should be governed by the Arbitration and Conciliation Act.
Result: The court set aside the arbitration award and directed the appointment of a new arbitrator under the Arbitration and Conciliation Act.
JUDGMENT :
Heard learned counsel for the petitioner, Mr. Aijaz Ahmad Khan, learned counsel for the fourth respondent and learned Standing Counsel for the State.
2. Challenge in the writ petition is to the order dated 6.2.2017 passed by the third respondent in a dispute which was referred for arbitration, consequent to an arbitration clause in the agreement, entered into between the petitioner and fourth respondent as also consequent to order dated 11.9.2015 passed by this Court in Writ C No. 48497 of 2015 Ramesh Chandra Yadav v. Managing Director Matsya Jivi Sahkari Samiti and three others.
3. It appears that an application was filed by the petitioner seeking a reference for arbitration and for appointment of an arbitrator relying upon para graph 26 of the agreement between the parties aforesaid, as also Sections 71 of the U.P. Cooperative Societies Act read with Section 229 of the U.P. Cooperative Societies Rules, 1968.
4. The arbitrator by his Award held that the arbitration itself was not maintainable in view of Section 70 of the U.P. Cooperative Societies Act, 1965 as he was admittedly not a member of the cooperative societies.
5. The issue that arises for consideration before this Court is as to whether invocation of Section 70 of the U.P. Cooperative Societies Act, 1965 by the arbitrator was justified. There is nothing in the arbitration agreement which provides that the arbitration clause was to be invoked in accordance with the provisions of the U.P. Cooperative Societies Act. In the absence of such stipulation any arbitration between the petitioner who is admittedly not a member of co-operative society and would necessarily be governed by the provisions of Arbitration and Conciliation Act, 1996.
6. The other illegality pointed out by learned counsel for the petitioner is that under Clause 36 of the agreement of the parties, which is the arbitration clause, the arbitrator was required to be appointed by the Registrar, Matsya Zivi Sahkari Sangh, Lucknow. The arbitration has been resorted to by the third respondent officiating Director Fisheries, ostensibly relying upon Section 23 of the U.P. Cooperative Societies Act which provides for delegation of the authorities of the Registrar of the Cooperative Societies Act for State. Moreover, the term Registrar is defined in Section 2 sub-section (r) of the Act which reads as follows:
7. The contract between the parties which contains the arbitration clause has been entered into between the petitioner and the fourth respondent and that the very same authority has acted as the arbitrator.
8. This argument prima facie does not appear to be correct because the arbitration agreement has been signed by the Manager, U.P. Matsya Zivi Sahkari Sangh, Lucknow and the agreement itself does not stipulate as to whether the manager was acting on behalf of any statutory authority.
9. The litigation between the parties appears to be a long drawn out litigation. Initially, the petitioner would come up before this Court by means of Writ Petition No. 48497 of 2015 which petition was dismissed on the ground of an alternative remedy relegating the petitioner to approach the arbitrator in view of Clause 36 of the agreement between the parties.
10. These arbitration initiated after the order of the Court proceedings have been culminated in the order impugned.
11. The petition itself is of the year 2017 has remained pending before this Court for 05 years at least, the litigation from its inception being more than 09 years old.
12. Under the circumstances, we do not consider it appropriate to relegate the petitioner to the alternative remedy of Section 97 of the Act for two reasons. First, due to the long drawn out litigation which has a
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