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2005 DIGILAW 477 (KAR)

MALINI v. PAI VS STATE OF KARNATAKA

2005-07-22

N.K.PATIL

body2005
( 1 ) THOUGH this matter is listed in orders list, with the consent of learned counsel for petitioner and learned Counsel for respondents, the same is taken up for hearing and is disposed of as follows: ( 2 ) PETITIONER, questioning the legality and validity of the order dated 28th September, 2004, on the file of the Karnataka Appellate Tribunal in Appeal No. 171 of 2002 and the order dated 28th November, 2001 in dispute No. 436 of 2001-02 on the file of the second respondent vide annexures-A and F respectively, has presented the instant writ petition. Further, petitioner has sought for a direction, directing the second respondent to dispose of the matter afresh after affording an opportunity to engage the services of an Advocate. ( 3 ) THE grievance of the petitioner in the instant case is that, petitioner is the widow of late Sri K. Vasudev Pai, who died in the year 1992. It is her strong case that, she is neither a member of third respondent-Abhyudaya Credit Co-operative Society Limited ('society' for short) nor has she mortgaged any property in favour of third respondent. But, inspite of the same, petitioner and fifth respondent are shown as guarantors to loan availed by fourth respondent. The fourth respondent is the principal borrower who availed the loan from the third respondent-Society. When the fourth respondent has committed default in payment of necessary instalments, the third respondent was constrained to raise a dispute under Section 70 of the Karnataka co-operative Societies Act, 1959 ('act' for short), before the Competent authority and the Competent Authority in turn has referred the matter to the Arbitrator and the Arbitrator in turn on evaluation of the oral and documentary evidence, has passed the award dated 28th November, 2001 vide Annexure-F. Being aggrieved by the award passed by arbitrator, petitioner has filed the appeal on the file of the Karnataka appellate Tribunal, Bangalore in Appeal No. 171 of 2002. The appeal filed by petitioner has been dismissed, confirming the award passed by arbitrator. Being aggrieved by both the impugned orders vide annexures-A and F, referred above, and consequently for other directions, stated above, petitioner felt necessitated to present the instant writ petition. ( 4 ) THE principal submission canvassed by learned Counsel for petitioner is three-fold. The appeal filed by petitioner has been dismissed, confirming the award passed by arbitrator. Being aggrieved by both the impugned orders vide annexures-A and F, referred above, and consequently for other directions, stated above, petitioner felt necessitated to present the instant writ petition. ( 4 ) THE principal submission canvassed by learned Counsel for petitioner is three-fold. Firstly, the dispute raised by third respondent against the petitioner is not maintainable on the ground that, she is not a member of third respondent-Society; Secondly, petitioner has filed the application and requested to permit her to avail the services of an advocate and the said request has not at all been considered by both authorities nor any finding as such has been recorded by both authorities with regard to the said aspect; Thirdly, the Competent authority, has referred the matter to the Honorary Arbitrator instead of official Arbitrator and the same is one without jurisdiction. Therefore, he submitted that, the dispute raised by third respondent against the petitioner is not sustainable. To substantiate the said submission, he quickly produced the circular issued by Government and pointed out that, if the amount due from the party is more than a sum of Rs. 50,000. 00 to the Bank or to the Society, the Competent Authority as envisaged under the relevant provisions of the Act and Rules to decide the dispute is, the Official Arbitrator and not the Honorary Arbitrator. In the instant case, he submitted that, the dispute has been referred to the Honorary Arbitrator even though the amount in dispute is more than Rs. 50,000. 00. Further, he submitted that, she has taken specific ground before both the authorities below stating that, the petitioner intends to avail the services of an Advocate on the ground that, respondents 3 and 4 have colluded with each other in committing the fraud and have stated that, petitioner has mortgaged the property as guarantor for availing the loan by fourth respondent from the third respondent-Society. In view of the same, the services of an Advocate is a must to substantiate her case and to that effect, appropriate proceedings have already been initiated and the same is pending adjudication. Therefore, he submitted that, these vital points raised by petitioner are neither considered nor any finding is recorded on those aspects by both the authorities. Therefore, both the impugned orders are liable to vitiate. Therefore, he submitted that, these vital points raised by petitioner are neither considered nor any finding is recorded on those aspects by both the authorities. Therefore, both the impugned orders are liable to vitiate. ( 5 ) PER contra, learned Counsel for third respondent-Society, inter alia, contended and substantiated the impugned orders passed by both the authorities. To substantiate his submission, he has taken me through the order passed by Arbitrator vide Annexure-F and pointed out that, there is a specific finding given by the Arbitrator stating that, the signatures in the relevant deeds and loan application and the signature of petitioner in the registered notice receipt and specimen signatures in the Savings Account tally with each other and petitioner has not denied anything regarding this aspect nor has made any submission in that regard. Therefore, he submitted that, in view of non-denial of signature by the petitioner before the Arbitrator, the Arbitrator has rightly proceeded and passed the impugned award after evaluation of the oral and documentary evidence available before the said authority and no error or illegality as such has been committed by the said authority. Therefore, he submitted that, both the authorities have not committed any error of law nor petitioner has made out any good grounds to interfere in the instant writ petition. ( 6 ) AFTER hearing learned Counsel appearing for petitioner and learned counsel for respondents and after considering the rival contentions urged by both the parties, the only question that arise for consideration is as to: whether the impugned orders passed by both the authorities are sustainable in law? as rightly pointed out by learned Counsel for petitioner, in the instant case, it is a fact that, petitioner has raised a preliminary objection regarding maintainability of the dispute against her on the ground that, she is not a member of the third respondent-Society. The arbitrator, instead of considering the aspect on preliminary objection and pass appropriate order, has referred at paragraph 7 of the award that, when the petitioner was shown that, her signature in the loan application, agreement and the specimen signature put by her in her savings Bank Account and the receipt of the registered notice sent by society tally with each other, she has not denied the same but has kept silent. However, it is significant to note that, at ink page 31, internal page 4 of the award passed by the Arbitrator, the Arbitrator has observed as follows. From the above, it can be seen that, the words observed by the Arbitrator prove beyond all reasonable doubts that, the arbitrator himself was not satisfied or sure regarding the stand taken by petitioner and has not given any specific finding with regard to the signature of petitioner with cogent reasons. He has not critically examined the disputed signatures in the documents. He has stated that, 'the signatures tally at one sight' i. e. , However, it is duty cast on the concerned authority that, whenever there is ambiguity or controversy, the Competent Authority has to go into the matter in detail and give specific finding along with cogent reasons and thereafter pass a speaking order. In the instant case, the Arbitrator has not given any finding as to why he has not accepted the defence taken by petitioner. Secondly, the Competent Authority has also committed an error in referring the dispute to Honorary Arbitrator for deciding the dispute between the petitioner and respondents 4 and 5. In the instant case, the alleged amount due from the petitioner is more than a sum of rupees seven lakhs and as per the mandatory provisions of the Act and the Karnataka Co-operative Societies Rules, 1960, the Competent authority is bound to refer the matter to the Official Arbitrator to decide the dispute. The Competent Authority, without verification of the mandatory provisions of the Act and Rules and without reference to the notification issued by Government wherein it is stated that, when the amount involved is more than Rs. 50,000. 00, the matter should be referred only to the Official Arbitrator and not to the Honorary arbitrator, has referred the matter to the Honorary Arbitrator. In my view, there is some substance in the third submission made by learned counsel for petitioner. After careful perusal of the circular made available to the Court and the relevant provisions of the Act and Rules, it is a fact that, the Competent Authority has committed a grave error in referring the matter to the Honorary Arbitrator for deciding the dispute which involved more than Rs. 50,000. After careful perusal of the circular made available to the Court and the relevant provisions of the Act and Rules, it is a fact that, the Competent Authority has committed a grave error in referring the matter to the Honorary Arbitrator for deciding the dispute which involved more than Rs. 50,000. 00 and both the authorities have referred regarding the stand taken by petitioner, but, both have failed to consider the stand taken by petitioner and have given a finding to the effect that, the records available on the file of the third respondent-Society reveal that, petitioner is a member of the third respondent-Society and the signature put by her in the loan application and agreement tally with the signatures in the acknowledgement of the registered notice sent by Society and the specimen signatures in the savings Bank Account of petitioner. The petitioner has specifically pleaded that, she has not, she has not signed the mortgage property documents as a guarantor to the loan availed by the fourth respondent and to that effect, she has stated that, she has already initiated necessary proceedings. Inspite of this, both the authorities have proceeded on the basis of tallying the signatures put by petitioner in the documents produced by third respondent-Society and have not given specific finding to that effect. Therefore, without considering all these aspects, both the authorities have proceeded to pass the impugned orders. In my considered view, both the orders cannot be sustained and the same are liable to be set aside and the matter requires reconsideration afresh and to take appropriate decision in accordance with law, after affording an opportunity to petitioner and respondents 3, 4 and 5. ( 7 ) HAVING regard to the facts and circumstances of the case, as stated above and taking into consideration the totality of the case on hand, the impugned orders passed by both the authorities cannot be sustained. ( 8 ) THEREFORE, the writ petition filed by petitioner stands disposed of with the following directions.- (i) The writ petition filed by petitioner is allowed; (ii) The impugned order dated 28th September, 2004 on the file of the Karnataka Appellate Tribunal in Appeal No. 171 of 2002 and the order dated 28th November, 2001 in Dispute no. ( 8 ) THEREFORE, the writ petition filed by petitioner stands disposed of with the following directions.- (i) The writ petition filed by petitioner is allowed; (ii) The impugned order dated 28th September, 2004 on the file of the Karnataka Appellate Tribunal in Appeal No. 171 of 2002 and the order dated 28th November, 2001 in Dispute no. 436 of 2001-02 on the file of the second respondent vide annexures-A and F respectively are hereby set aside and the matter stands remitted back to second respondent for reconsideration afresh in accordance with law and to take appropriate decision in accordance with the mandatory provisions of the Act and Rules, after affording an opportunity to petitioner and respondents 3, 4 and 5; (iii) Further, the second respondent herein is directed to refer the matter to the Official Arbitrator as envisaged under the mandatory provisions of the Act and Rules as well as the circular issued by Government in the regard and to proceed with the matter in accordance with law and dispose of the same, as expeditiously as possible, within an outer limit of six months from the date of receipt of a copy of this order. ( 9 ) WITH these observations, the writ petition filed by petitioner stands disposed of. --- *** --- .