Kisan Sahkari Chini Mills Limited v. Sumac International Limited
2022-04-25
NEERAJ TIWARI
body2022
DigiLaw.ai
JUDGMENT : 1. Heard Sri Ravindra Singh, learned counsel for the petitioners through video conferencing and Sri Shashi Nandan, learned senior counsel assisted by Sri Ashish Malhotra, learned counsel for the respondent. 2. Present petition has been filed challenging the impugned order dated 08.03.2022 passed by Civil Judge (Senior Division), Bulandshahar in Misc. Case No. 151 of 2021, arising out of OS No. 827 of 1993. 3. Learned counsel for the petitioners submitted that there was an agreement between the petitioners and opposite party dated 18.04.1990 for certain work. The said agreement was also having arbitration clause and ultimately, some dispute arose and under provisions of Section 8 and 9 of Arbitration Act, 1940, as then it was applicable (hereinafter referred to as “Act, 1940”), Mr. Justice B.L. Loomba (Retired) was appointed as sole arbitrator in Arbitration Case No. 827 of 1993 (M/s Sumac International Limited Vs. State of U.P. and others) vide order dated 24.01.2000. He died on 03.05.2000 and thereafter, Hon'ble Mr. Justice Pradeep Kant (Retired) was appointed sole arbitrator under section 446(2) of the Company Act, 1956 (hereinafter referred to as “Act, 1956”). However, his appointment was set aside by this Court vide order dated 14.01.2016 passed in Special Appeal Defective No. 583 of 2015. Thereafter, Justice Vijay Manohar Sahai (Retired) was appointed as sole Arbitrator under Sections 8 and 9 of Act, 1940 and he also died on 11.05.2021. He next submitted that after his death, vide impugned order dated 08.03.2022, Justice R.N. Kakkar (Retired) was appointed as sole Arbitrator under Sections 8 and 9 of Act, 1940. 4. Learned counsel for the petitioners assailing the impugned order on three grounds; first ground is that Section 8 of Act, 1940 provides for notice to other side as well as opportunity to provide proposed list of Arbitrator, which has never been provided. Further, Justice R.N. Kakkar (Retired) has been appointed without his consent. About second ground, he next submitted that Section 70 of U.P. Cooperative Societies Act, 1965 (hereinafter referred to as “Act, 1965”) provides for disputes, which may be referred to arbitration. The present matter is pertaining to cooperative societies, therefore, Arbitrator would have been appointed under provisions of Act, 1965. He next submitted that as it is legal submission, therefore, it can be raised at any stage of proceeding.
The present matter is pertaining to cooperative societies, therefore, Arbitrator would have been appointed under provisions of Act, 1965. He next submitted that as it is legal submission, therefore, it can be raised at any stage of proceeding. For third ground, he submitted that appointment of Justice Vijay Manohar Sahai (Retired) as Arbitrator has also been obtained by playing fraud for which criminal case is pending and in light of judgement of Apex Court in the matter of Abdul Kadir Shamsuddin Bubere Vs. Madhav Prabhakar Oak. 1962; AIR SC 406, no Arbitrator should have been appointed in such matters. Lastly, he submitted that under such facts and circumstances, impugned order is bad and liable to be set aside. 5. Sri Shashi Nandan, learned senior counsel opposed the submissions raised by learned counsel for the petitioners and submitted that so far as first ground of challenging the impugned order is concerned, after death of Justice Vijay Manohar Sahai (Retired), opposite party has filed Arbitration Case No. 151 of 2021 before Civil Judge (Senior Division), Bulandshahar for appointment of Arbitrator giving three names of proposed Arbitrator having name of Justice R.N. Kakkar (Retired) at Serial No. 1. Upon which, petitioners have filed detail objection and never raised any objection against the proposed Arbitrators. Case was heard on 4.3.2022 in presence of counsel for both sides and telephonic consent was taken from Hon'ble Mr. Justice R.N. Kakkar (Retired) on mobile phone. Further, time was granted to provide list of Arbitrator as provided in Sections 8 and 9 of Act, 1940 and date of 7.3.2022 was fixed. As petitioners have never provided any list, therefore, Court proceeded to pass impugned order appointing Mr. Justice R.N. Kakkar (Retired) as Arbitrator, therefore, ground of notice as well as opportunity to provide list is not sustainable. He next submitted that so far as second ground with regard to applicability of Section 70 of Act, 1965 is concerned, that would be applicable to the only member, past member, person claiming through a member, deceased member and society through its Committee of Management etc. There is no dispute on the point that opposite party is never a member of Cooperative Society, therefore, Section 70 of Act, 1965 would not be applicable.
There is no dispute on the point that opposite party is never a member of Cooperative Society, therefore, Section 70 of Act, 1965 would not be applicable. So far as third ground with regard to appointment of Justice Vijay Manohar Sahai (Retired) by playing fraud is concerned, till date, matter is sub judice before the Court in which no adverse order has been passed against the opposite party, therefore, that is having no relevance as on date while deciding the present controversy. Lastly, he submitted that under such facts and circumstances, there is no illegality or infirmity in the impugned order and petition is liable to be dismissed with costs. 6. I have considered the rival submissions raised by learned counsel for the parties and perused the record. Undisputed facts of the case are that agreement dated 18.04.1990 was signed between the parties having arbitration clause and exercising the same, earlier Mr. Justice B.L. Loomba (Retired) was appointed as sole arbitrator. After his death, Hon'ble Mr. Justice Pradeep Kant (Retired) was appointed as sole arbitrator under section 446(2) of the Company Act, 1956 and his appointment was set aside by this Court vide order dated 14.01.2016 passed in Special Appeal Defective No. 583 of 2015. Thereafter, Justice Vijay Manohar Sahai (Retired) was appointed as sole Arbitrator under Sections 8 and 9 of Act, 1940 and he died on 11.05.2021. After his death, vide impugned order dated 08.03.2022, Justice R.N. Kakkar (Retired) was appointed as sole Arbitrator under Sections 8 and 9 of Act, 1940. For appointment of Mr. Justice R.N. Kakkar (Retired), it is also not disputed that opposite party has filed Misc. Case No. 151 of 2021 upon which objection was filed by the petitioners and they have never raised any objection about the name of proposed Arbitrator. So far as consent of Mr. Justice R.N. Kakkar (Retired) as well as opportunity to provide name of list is concerned, from perusal of order sheet of Misc. Case No. 151 of 2021 dated 4.3.2022, it is apparent that in presence of counsel for both sides, consent was obtained from Mr. Justice R.N. Kakkar (Retired) on mobile phone. Further, time was granted to provide list, but petitioners have not provided any list, therefore, under such facts and circumstances, first ground taken by counsel for the petitioners with regard to notice and non providing opportunity to submit list are not sustainable. 7.
Justice R.N. Kakkar (Retired) on mobile phone. Further, time was granted to provide list, but petitioners have not provided any list, therefore, under such facts and circumstances, first ground taken by counsel for the petitioners with regard to notice and non providing opportunity to submit list are not sustainable. 7. Now, second ground with regard to applicability of Section 70 of Act, 1965 is concerned, it is useful to reproduce the same; “70. Disputes which may be referred to arbitration.
7. Now, second ground with regard to applicability of Section 70 of Act, 1965 is concerned, it is useful to reproduce the same; “70. Disputes which may be referred to arbitration. -(1) Notwithstanding anything contained in any law for the time being in force, if any dispute relating to the constitution, management of the business of a co-operative society other than a dispute regarding disciplinary action taken against a paid servant of a society arises- (a) among members, past members and persons claiming through members, past members and deceased members; or (b) between a member, past member or any person claiming through, a member, past member or deceased member, and the society, its committee or management of any officer, agent or employee of the society, including any past officer, agent or employee; (c) between the society or its committee and any past committee, any officer, agent or employee or any past officer, past agent or past employee or the nominee, heir or legal representative of any deceased officer, deceased agent, or deceased employee of the society; or (d) between a co-operative society and any other co-operative society or societies: such dispute shall be referred to the Registrar for action in accordance with the provisions of this Act and the rules and no court shall have jurisdiction to entertain any suit or other proceeding in respect of any such dispute: [Provided that a dispute relating to an election under the provisions of this Act or rules made thereunder shall not be referred to the Registrar until after the declaration of the result of such election] (2) For the purpose of sub-section (1), the following shall be deemed to be included in dispute relating to the constitution, management or the business of a co-operative society, namely - (a) claims for amounts due when demand for payment is made is either refused or not complied with whether such claims are admitted or not by the opposite party; (b) a claim by a surety against the principal debtor where the society has recovered from the surety any amount in respect of any debt or demand due to it from the principal debtor as a result of the default of the principal debtor, whether such debt or demand is admitted or not; (c) a claim by a society for any loss caused to it by a member, officer, agent, or employee including pas' or deceased member, officer, agent, or employee, whether individually or collectively and whether such loss be admitted or not; and (d) all matters relating to the objects of the society mentioned in the bye-laws as also those relating to the election of office-bearers.
(3) If any question arises whether a dispute referred to the Registrar under this section is a dispute relating to the constitution, management or the business of co-operative society, decision thereon of the Registrar shall be final and shall not be called in question in any court.” 8. From the perusal of section 70 of Act, 1965, it is also clear that it would be applicable only to the member or other person of committee given in Section 70 of Act, 1965 and undisputedly, opposite party is neither earlier nor as on date, a member of any cooperative society, therefore, this Act would not be applicable, while appointing Arbitrator in present case and it shall be governed by the provisions of Sections 8 and 9 of Act, 1940. Therefore, second ground is also not sustainable. 9. So far as third ground is concerned, there is no dispute on the point that till date, no order of conviction or adverse order has been passed by any Court of law with regard to appointment of Mr. Justice Vijay Manohar Sahai (Retired) as arbitrator. Therefore, this ground as well as judgement of Apex Court in the matter of Abdul Kadir Shamsuddin Bubere (supra) is having no relevance in the present case. 10. Therefore, under such facts of the case, no case is made out for interference of this Court under Article 227 of Constitution of India. 11. Accordingly, petition lacks merit and is dismissed. 12. No order as to costs.