Appointment of an arbitrator from an empanelled list maintained by a statutory authority (like the Registrar of Societies) under the MSCS Act does not constitute a prohibited unilateral appointment, as the selection is governed by statute and not by the party's whim.

ORDER

The present Petition has been filed to terminate the mandate of the 3rd Respondent and consequently appoint a new independent Sole Arbitrator in place of the 3rd Respondent to adjudicate the alleged disputes between the petitioner and 1st respondent.

2. Heard Mr.Selvaraj K, learned counsel for the petitioners and Mr.P.H.Arvindh Pandian, learned Senior Counsel for Mr.A.Ilangovan, learned counsel appearing on behalf of the respondents.

3. The learned counsel appearing for the petitioner would submit that the husband of the first petitioner had availed a loan of Rs.50,00,000/- from the respondent bank and had executed a loan agreement and also agreement relating to deposit of title deeds in favour of the first respondent. He would submit that the same was taken to provide a hand-loan to a third party. Thereafter, the first petitioner's husband became seriously ill and had died on 11.02.2023. The first petitioner had also filed a private complaint against the said third party which is also pending before the Judicial Magistrate-II at Erode. After the death of the borrower, the officials of the third respondent had come to the house of the petitioner and obtained the signature of the petitioner and the second respondent in various bank papers and forms. Even though, the petitioners sought to settle the loan account by way of a one time settlement, in spite of the same, the first respondent by letter dated 10.03.2025 had unilaterally appointed the third respondent as a sole Arbitrator to resolve the dispute arising out of the loan agreement. The first respondent had also surreptitiously obtained a consent letter from the petitioners under threat and coercion. Immediately, thereafter, the petitioners have sent a legal notice withdrawing their consent as being obtained by threat and coercion. The petitioners have also claimed the appointment of the Arbitrator is wholly unilateral which is against the contours of the law laid down particularly even under the statutory contract, the authorities cannot appoint a sole Arbitrator unilaterally from their empanelled Arbitrators.

4. In that context, he had also relied upon the judgment of the Hon'ble Apex Court in the case of Central Organisation for Railway Electrification Vs ECI SPIC SMO MCML (JV) a Joint Venture Company reported in 2024 SCC Online SC 3654. Hence, he seeks indulgence of the Court to terminate the mandate of the third respondent and appoint an independent sole Arbitrator.

5. Countering his arguments, learned Senior Counsel appearing for the first respondent would submit that the petitioners having given consent for appointment of the Arbitrator by the first respondent, but by an afterthought, withdrew the consent. The learned Senior Counsel further relying upon Section 84 of the Multi State Co-operative Societies Act (hereinafter referred as 'the Act') would submit that the Arbitrator has been nominated only as per the procedure contemplated under the said Provision and would further submit that the choice of the Arbitrator was not by the first respondent and was only from the empanelled list of the Arbitrators as provided by the Competent Authority under the said Provisions and in that regard, he would submit that the judgment of the Hon'ble Apex Court as relied upon by the learned counsel appearing for the petitioner would not be applicable to the facts of the case. The powers vested under the Central Registrar under Section 84 of the Act was also extended to the Registrar of the Co-operative Societies of the respective States and Union Territories in respect of appointment of Arbitrators to resolve the disputes arising out of the Act as adumbrated in Section 84 of the Act. He would submit that the proceedings of the Registrar of Co-operative Societies dated 27.11.2024, the third respondent was also empanelled as an Arbitrator in respect of disputes that arise out of an agreement under the Act with regard to the first respondent. Only from the said list, the Arbitrator ha