Proceedings Before Registrar U/S 62 Of AP Cooperative Societies Act Not Arbitration, Provisions Of A&C Act Will Not Apply: Andhra Pradesh HC
The division bench of Andhra Pradesh High Court consisting of Justices R Raghunandan Rao and Maheswara Rao Kuncheam has observed that when proceedings are held before the Registrar under A.P. Cooperative Societies Act, 1964, such proceedings cannot be termed as arbitral proceedings.
Accordingly, it was held that no provision of the Arbitration and Conciliation Act, 1996 including Section 34 would be applicable to them. The appropriate remedy in such a case would be an appeal before the A.P. Cooperative Tribunal, under Section 76 of the APCS Act, 1964.
Background facts
The 1st Appellant had obtained financial assistance from the 1st Respondent – Bank. The 2nd Appellant and 3rd Appellant, who is the husband of the 1st Appellant, had stood as guarantors for the said loan. As the debt was not being paid, the 1st Respondent – Bank initiated proceedings against Appellants 1 and 2. Proceedings were initiated under the provisions of the A.P. Cooperative Societies Act, 1964 (“APCS, 1964”). Aggrieved by the award passed in the said proceedings, the Appellants initially filed an appeal before the A.P. Cooperative Tribunal.
However, the said appeal was withdrawn and a writ petition came to be filed before this Court. After sometime, this writ petition was also withdrawn and a petition under Section 34, Arbitration and Conciliation Act, 1996 came to be filed before the District Judge, Rajahmundry for setting aside the award dated 15.06.2015. The Principal District Judge, Rajahmundry by order dated 20.11.2015 dismissed the petition. Aggrieved by this order, the Appellants have moved the present appeal before this Court.
Contentions
The Counsel for the Respondent contended that the petition before the Principal District Judge, Rajahmundry under Section 34 of the Arbitration and Conciliation Act, 1996 as well as the present appeal are not maintainable.
The Counsel further submitted that Section 76 of the APCS Act, 1964 provides for an appeal against any order passed under Section 62 of the APCS Act, 1964. In the present case, the award came to be passed under Section 62 of the APCS Act, 1964. In such circumstances, the only remedy, available to the appellants, was to move the A.P. Cooperative Tribunal, under Section 76 of the APCS Act, 1964. The Appellants being aware of this fact, had moved an appeal before the A.P. Cooperative Tribunal. However, the Appellants, for reasons best known to them, had chosen to withdraw the appeal without seeking any relief. The Counsel submitted that the Appellants having chosen to withdraw the appeal had allowed the award to become final.
It was further contended that there is no provision for challenging the award of an arbitrator under the provisions of the APCS Act, 1964, by way of an application under Section 34 of the Arbitration Act. The only appeal available against the award passed under Section 62 of the APCS Act, 1964, is before the A.P. Cooperative Tribunal under Section 76 of the APCS Act, 1964.
Observations
The Court noted that under Section 62 of the APCS Act, 1964, the Registrar, upon reference of any dispute under Section 61, has three options. Under the first option, he may decide the dispute himself; under the second option, he may transfer it for disposal by any other person, who has been invested by the Government to decide such disputes; or under the third option, he can refer it to an arbitrator for disposal.
In the present case, the Assistant Registrar had decided the dispute by passing an award. As had been held by the Principal District Judge, Rajahmundry in her order dated 20.11.2015, the mere fact that the Assistant Registrar was described as Assistant Registrar or Arbitrator and the decision of was titled “award” could not mean that the proceedings were arbitration proceedings initiated under the provisions of the APCS Act, 1964. This would also mean that the provisions of the Arbitration Act, including Section 34 of the Arbitration Act would not be applicable.
The fact that Section 76 of the APCS Act, 1964 itself provides a remedy of appeal, against the order under Section 62 of the APCS Act, 1964, would make it amply clear that the order passed by the Assistant Registrar cannot be treated to be an award in arbitration proceedings. The Court referred the decision of the Apex Court in Greater Bombay Cooperative Bank Ltd. v. M/s United Yarn Tex. Pvt. Ltd and Ors. AIR 2007 SC 1584 in this regard.
The Court concluded that once it was held that the proceedings of the Assistant Registrar were not arbitration proceedings, no provision of the Arbitration and Conciliation Act, 1996 including Section 34 would be applicable and consequently, a petition under Section 34 would not be maintainable. Accordingly, the Court dismissed the present Civil Miscellaneous Appeal.
Case Title: Lakshmi Agencies v. Aryapuram Coop Bank Ltd.
Case Number: Civil Miscellaneous Appeal 620/2016
Appearance:
Petitioner – Mallavolu Nikitha, Advocate
Respondent – TVS Prabhakara Rao
Date: 21.03.2025