Prajwal Kantilal Mithawala v. Buldhana Urban Co Operative Credit Society Limited And Others

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

BENCH AT AURANGABAD WRIT PETITION NO. 3689 OF 2021 Prajwal s/o Kantilal Mithawala Age : 58 yrs., Occ :- Business R/o. Plot No. M-17, Sahyadri Hill, Shivaji Nagar Road, Garkheda, Aurangabad ...Petitioner

Versus

1. Buldana Urban Co-operative Credit Society Limited. Buldana Multistate Reg. No. 267, Branch : Aurangabad Through It's Authorised officer Prashant Suresh Kulkarni

2. Shri S.S.Bhutada appointed as Sole Arbitrator for Buldhana Urban Co-operative Credit Society Ltd.

Branch at Aurangabad Having it's office address at Beside Head office of Buldana Urban Co-operative Credit Society Ltd.

Buldana Hutatma Gore Road, Buldana.

3. Milind Yashwantrao Paranjape Age : Major, Occ : Business R/o. R.H.No. 45 Sahyadri Hill, Bagdiya Nagar, Garkheda, Aurangabad.

4. Sau. Jui Milind Paranjape Age : Major, Occ : Business, R/o Same as above 1.

...Respondents

.......

Mr. S.G.Dodya, Advocate for Petitioner Mrs. Minakshi L. Sangit, Advocate for Respondent No. 1 .......

CORAM :

MANGESH S. PATIL, J.

DATE :

24-09-2021.

2 965 wp-3689-21 ORAL JUDGMENT :

01.

Heard learned Advocate for the petitioner and respondent No. 1.

02.

Rule. Rule is made returnable forthwith. With the consent of the parties matter is heard finally at the stage of admission.

03.

Petitioner is the guarantor in a dispute raised by the respondent No. 1 under Section 84 of the MultiState Co-operative Societies Act, 2004 against the borrowers and the petitioner. Pursuant to the clause in the agreement, the parties are before the Arbitrator, respondent No. 2. By submitting application Exh. 42, the petitioner raised an issue of he being not a member of the respondent No. 1 and the learned Arbitrator has no jurisdiction. He requested to frame a preliminary issue as to if he was a member or otherwise of the Society and by the impugned order the Arbitrator has rejected the application holding that there is no provision in the Arbitration and Conciliation Act for framing preliminary issue and its decision and observed that it can be decided only after going into the merits.

3 965 wp-3689-21 04.

Learned Advocate for the petitioner by referring to the decision in the case of Kvaerner Cementation India V/s Bajranglal Agarwal, 2001 DGLS(SC) 476, submits that the Arbitration Tribunal has jurisdiction to rule on its own jurisdiction. When by virtue of the provisions of the Multi-State Co-operative Societies Act it is a pre condition that the petitioner should be a member without which the arbitration proceeding itself would be without jurisdiction, Arbitrator ought to have decided the issue as a preliminary issue as it goes to the root jurisdiction.

05.

Learned Advocate for the respondent No. 1 submits that in the dispute itself it has been specifically averred in para No. 3 that the petitioner is a member of the disputed society. In view of such specific stand of the respondent No. 1, the matter needs to be allowed to be proceeded with and the issue being raised can finally be decided with the main proceeding before the Arbitrator.

06.

I have carefully considered the rival submissions and perused the decision in the case of Kvaerner Cementation India (Supra). There cannot be a

4 965 wp-3689-21 dispute about the fact that whether petitioner is a member of the disputed society or not is an issue which would go to the root of the jurisdiction of the Arbitrator. 07.

As laid down by the Supreme Court in the case of Kvaerner Cementation India (Supra) the Arbitration Tribunal has the jurisdiction to rule on its own jurisdiction by virtue of the provisions of Section 16. If that be so, one cannot comprehend as to whether the learned Arbitration Tribunal could have refused to decide and rule on the issue being raised by the petitioner. Merely because the respondent society in its dispute has averred that the petitioner is its member that would not suffice. It is indeed an issue which goes to the root of the jurisdiction and calls for a decision as a preliminary issue. The Tribunal seems to have got swayed by the fact that there is no specific provision to enable him to adopt such procedure.

08.

In any case, the issue being raised by the petitioner in his application Exh. 42 being an issue which goes to the root of the jurisdiction, it would be appropriate for the Arbitration Tribunal to go into it and decide it as a preliminary issue.

5 965 wp-3689-21 09.

Apart from the pleadings the respondent ought to have produced some material to atleast draw some prima facie inference of the petitioner being its member. In the absence of such material it would be an exercise in futility if the entire Arbitration is allowed to be proceeded with.

10.

The impugned order passed on the application (Exh. 42) is quashed and set aside. The Tribunal may now frame the issue and decided it as a preliminary one. 11.

Simultaneously, the petitioner is also impugning the order as the application (Exh. 39) filed by someone else that is respondent No. 3 borrower. Obviously, since the application (Exh. 39) was not moved by the petitioner, he has no locus to challenge the order. The Writ Petition is partly allowed. The impugned order as the application (Exh. 42) is quashed and set aside.

12.

The writ petition to the extent of challenge to the order passed on the application (Exh. 39) is dismissed.

6 965 wp-3689-21 13.

Rule is made absolute in above terms.

[MANGESH S. PATIL] JUDGE Dahibhate/-