MSCS Act | Disputes Between Society And Its Members Are Subject To Arbitration: Calcutta High Court Sets Aside State & District Consumer Commission Orders

Brief Facts:

The Petitioner approached the Calcutta High Court dissatisfied with the decisions rendered against them by both the State Consumer Disputes Redressal Commission, Kolkata, and the District Consumer Disputes Redressal Forum, Jalpaiguri. The Petitioner filed a revisional application seeking redressal. The dispute originated when the opposite party, a former member of the Petitioner society, lodged a complaint with the District Consumer Disputes Redressal Forum, citing non-disbursement of dues amounting to Rs. 12,608/- despite the completion of loan recoveries before his retirement. The Petitioner attributed the non-payment to overdue interests on loans and the outstanding debt of a deceased member for whom the Complainant stood as a guarantor.

In response to the complaint, the Petitioner neither contested nor provided evidence in the proceedings before the District Forum, resulting in an ex-parte order against them. Subsequently, the State Consumer Disputes Redressal Commission upheld the District Forum's decision, prompting the Petitioner to appeal, contending that the Consumer Protection Act should not apply due to their status as a Multi-State Co-operative Society under the Multi-State Co-operative Societies Act, 2002. The Petitioner argued that disputes involving such societies should be resolved through arbitration as per the provisions of Section 84 of the Act.

Contrarily, the Consumer Disputes Redressal Commission emphasized the factual assertions made by the complainant regarding the loan, its repayment, and the outstanding dues. It noted the Petitioner's failure to contest the case effectively or produce documents contradicting the complainant's claims. The Commission highlighted the absence of any notice from the Petitioner to the Complainant regarding debt clearance, which could have facilitated arbitration as mandated by the Multi-State Co-operative Societies Act, 2002. Therefore, both tribunals upheld the Complainant's claims, disregarding the Petitioner's arguments regarding jurisdiction and arbitration under the Act.

Observations by the High Court:

The High Court held that Section 84 of the Multi-State Co-operative Societies Act, 2002 stats that disputes involving members or those claiming through members, past members, or deceased members against the Multi-State Cooperative Society should be referred to arbitration. The High Court held that both the District Consumer Disputes Redressal Forum, Jalpaiguri, and the State Consumer Disputes Redressal Commission, Kolkata, failed to acknowledge this statutory provision. The High Court referred to the decision of the Supreme Court in General Manager, Telecom Vs. M. Krishnan 2009(8) SCC 481, and held that when a special law exists, it supersedes general laws. It underscored that consumer forums cannot arrogate jurisdiction that is specifically designated to special forums.

The High Court further delved the Multi-State Co-operative Societies Act, particularly Clause (b) of Sub-section (1) of Section 84. It noted that disputes concerning the management, constitution, or business of the society, between the society and its members or those claiming through them, are subject to arbitration. Therefore, the High Court held that the dispute between the Petitioner co-operative society and the opposite party, who was its member, ought to have been referred to arbitration.

Consequently, the High Court held that both the District Consumer Disputes Redressal Forum and the State Consumer Disputes Redressal Commission, West Bengal, erred in law by entertaining the application filed by the opposite party no. 1.

Case Title: The Secretary, E & NF Railway Junior Co-operative Credit Society Limited, Eastern Railway vs Sri Jyotish Chandra Sarkar & Anr.

Case Number: C.O. No. 3243 of 2013

Advocate for the Petitioner: Mr. Kishore Mukherjee. Mr. Soumyajit Mukherjee

Advocate for the Respondent: N/A.

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