High Court U/S 11(6) Of A&C Act Can Direct 'Central Registrar' Of Co-Operative Societies To Appoint Arbitrator U/S 84 Multi State Cooperative Societies Act, 2002: Delhi High Court

The High Court of Delhi has held that a petition under Section 11(6) of the A&C Act can be entertained by the High Court to direct the 'Central Registrar' of Co-operative Societies to appoint an arbitrator under Section 84 of Multi State Cooperative Societies Act, 2002 after it fails to act on the request of the party.

The Bench of Justice Prathiba M. Singh held that as per Section 84(4), the arbitrator is to be appointed by the 'Central Registrar' only, however, once it fails to act on the request of the party, the aggrieved party can approach the High Court for directions to him. It held that the Court cannot act as the appointing authority but it can direct the 'Central Registrar' to appoint the arbitrator.

Facts

The Petitioner, Apollo Handloom Manufacturing Co-op. Society Limited, a member of All India Handloom Fabric Society for over 30 years, filed a petition seeking the appointment of an arbitrator by the Central Registrar of Co-operative Societies, Ministry of Cooperation.

The Petitioner raised disputes regarding monetary dues, the unlawful election of office bearers, and other issues within Respondent No. 1, invoking the Arbitration Clause under Section 84 of the Multi State Cooperative Societies Act, 2002.

The Petitioner filed a request for an arbitrator's appointment on 26.05.2023, with the Central Registrar, however, it failed to appoint the arbitrator as required under Section 84 of the Act of 2002. Aggrieved thereby, the petitioner filed an application under Section 11(6) of the A&C Act seeking appointment of the Arbitrator.

Submissions by the Parties

The petitioner made the following submissions:

• That it had various disputes with Respondent No. 1, including unpaid monetary dues and unlawful election of office bearers which are covered under Section 84 of the Act of 2002.
• That the Central Registrar, being the appointing authority, has failed to appoint the arbitrator as required under Section 84(5) of the Act of 2002.
• Since no arbitrator was appointed by the Central Registrar, it had no other option but to file the present petition seeking the Court's intervention for an arbitrator's appointment.

The respondent objected to the maintainability of the petition on the following grounds:

• That petitioner has failed to provide details of the dispute between the parties.
• That no notice under Section 21 of the A&C Act has been issued before filing the application.
• That petition under Section 11(6) is not maintainable as the appointing power is vested with the 'Central Registrar' only.
• Central Registrar (Respondent No.6) did not object to the maintainability of the petition.

Analysis by the Court

The Court observed that the appointment of an arbitrator under Section 84(4) of the Act is the responsibility of the Central Registrar of Co-operative Societies. However, in case the Central Registrar fails to appoint an arbitrator, the Court cannot be deemed powerless to refer the matter to the Central Registrar for appointment of an arbitrator.

The Court rejected the argument that a petition under Section 11(6) of the Arbitration Act is not maintainable in this case. It held that Section 11(6) empowers the High Court to secure the appointment of an arbitrator when a person or institution, in this case, the Central Registrar, fails to act as required under the procedure specified in the Act.

The Court referred to a decision of a co-ordinate bench in D Narasimha Rao & Ors v. Revanta Multi State CGHS Ltd & Anr., 2023 LiveLaw (Del) 171, where it was held that referring a dispute related to a multi-state cooperative society to arbitration under Section 84 of the Act, following the initiation of proceedings for appointment of an arbitrator under Section 11(6) of the Arbitration Act, after issuing notice to the Central Registrar, did not involve any manifest illegality.

Accordingly, the Court allowed the application and directed respondent No. 6, the Central Registrar, to appoint an arbitrator within three weeks.

Case Title: Appolo Handloom Manufacturing Co-Op Society Ltd v. All India Handloom Fabrics Society

Citation: 2024 LiveLaw (Del) 512

Date: 08.04.2024

Counsel for the Petitioner: Ms. Rashmi Singh, Advocate

Counsel for the Respondent: Ms. Monika Arora, CGSC with Mr. Subhrodeep Saha, Advocates for UOI, Mr. Sandeep Khurana, Mr. Shiven Khurana and Mr. Manjit Singh, Advocate for R-1 and 5, Mr. S. Kaushik Ramaswamy and Mr. Siva Krishnamurti, Advocates for R-2 to 4

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