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Judgment
P. Venkatarama Reddi, J.—The Award dated 4-6-1988 passed by the 3rd respondent acting as Arbitrator u/s 62 of the Andhra Pradesh Co-operative Societies Act, 1964 (hereinafter, referred to as ''the Act'') has been question in this writ petition. By that Award, the Co-operative Industrial Estate Ltd., Balanagar, Hyderabad (2nd respondent herein) was directed to take over the plot of 6,000 sq.ft. in B-l unit which was in possession and enjoyment of the first respondent since 7-8-1979 and to allot the same to the 1st respondent under Clause 24 of the deed of Agreement of lease-cum-sale.
The relevant facts are these : The petitioner herein, M/s. Hyderabad Sheet Metal & Allied Industries was allotted plot No. B-l of an extent of 2620 sq. meters in the Co-operative Industrial Estate, Balanagar for the establishment of its factory under a deed of agreement of lease-cum-sale dated 19-6-1973. After setting up its factory, the petitioner let out a portion of the said plot admeasuring 6000 sq. ft. to the 1st respondent under a lease-deed dated 15-9-1979 for a period of three years. On 1-2-1983, it appears, there was an extension of lease. The 1st respondent became an associate member of the Co-operative Industrial Estate Ltd. in the year 1983. Thereafter, a Tripartite agreement was entered into between the Co-operative Industrial Estate (R2) M/s. Hyderabad Sheet Metal & Allied Industries (petitioner) and M/s. Industrial Packages (R1). It is stated in that agreement that the petitioner leased out with the approval of the 2nd respondent a portion of the Unit to the 1st respondent on a rent of Rs. 700/- per month to run a registered small scale industry for a period of eleven months commencing from 1-2-1983. It was stipulated in that agreement that the petitioner and the 1st respondent shall be jointly and severally liable to pay to the 2nd respondent servicing charges at 2 1/2% of rent per month subject to a minimum of Rs. 25/- per month. R1 undertook to pay the monthly rent to the Industrial Estate in case the petitioner defaults in the payment of rent to the Industrial Estate. It appears that in or about the year 1985, the petitioner called upon R1 to hand over the possession of the plot and on her refusal to do so, there has. been civil litigation between the parties. It is not relevant to refer to those details. R1 became full-fledged member of the Co-operative Industrial Estate on 19-9-1987. It appears from the material papers filed by the Counsel for R1 that R1 filed an application before R2 on 9-10-1987 for the allotment of plot of 6000 sq. ft. which was in her possession. A few days thereafter, R1 submitted a representation on 16-10-1987 to the Commissioner of Industries. The contents of this representation are not known. However, on the basis of this representation, the Commissioner of Industries, by his communication dated 21-10-1987, advised R1 to file an arbitration case against the petitioner u/s 61 of the Act before the General Manager, District Industries Centre, Rangareddy District/Registrar of the District and obtain an interlocutory order under S. 62(4) of the Act against any dislocation of the unit. On the same day, the Commissioner of Industries addressed a letter to the Chairman of the Cooperative Industrial Estate Ltd. While referring to the representation of R1, the Commissioner requested the Chairman to take necessary action to see that no disturbance or dislocation was caused to the Industrial Unit of R1 ''till her case is disposed of by the Government.'' A day earlier, R1 filed an arbitration petition before the General Manager, District Industrial Centre (R4) u/s 61 of the Act. By proceedings dated 19-1-1988, R4 appointed Sri G. V. Raghavaiah, Manager (VI & T) District Industries Centre, R. R. District (R3) in purported exercise of power u/s 62 (1)(c) of the Act. R3 issued a notice on 29-1-1988 calling upon the petitioner and R2 to file counters together with supporting documents on or before 8-2-1988. The first hearing was fixed on 12-2-1988. After hearing the parties, the impugned Award was passed on 4-6-1988. In the Award, the 3rd respondent observed that the petitioner allowed three other industrial units to come up in B-1 plot allotted to him contrary to the objects of the Cooperative Industrial Estate and the provisions of the Agreement of lease-cum-sale. The Arbitrator commented that R2 should not have permitted the petitioner to provide accommodation to three associate members to establish their units in the plot. The Tripartite agreement was held to be illegal on the ground that the petitioner did not have any transferable leasehold right over B-1 unit. In the penultimate para, the Arbitrator observed :
M/s. Industrial Packages who has been in possession and enjoyment of 6000 sq. feet plot in B-1 unit allotted to Respondent No.1 through the illegal lease deed executed on 15-9-1979 without the knowledge of Respondent No. 2 and the Tripartite agreement, from 1-2-83 to date with the approval of Respondent No. 2 and who is successfully running her industrial unit and regularly paying the service and water charges to Respondent No. 2, having power connection in the name of Industrial Packages, having paid the non-agricultural tax to the revenue authorities for the portion of 6000 sq. ft. occupied by her, obtained the Gram Panchayat licence and Sales-Tax authorities for the unit in B-l plot, should be treated on par with any other member who is allotted a plot in the C.I.E.
Ultimately, he gave the following direction :
The Co-op. Industrial Estate, Balanagar is hereby directed to take over the plot of 6000 sq. ft. of land in B-l unit that was in possession and enjoyment of M/s. Industrial Packages from 1-8-1979 to date as per Cl. 14 of the Deed of Agreement of lease-cum-sale for the reasons mentioned above and allot the same to M/s. Industrial Packages under Cl. 24 of the Deed of Agreement of lease-cum-sale to meet the demands of justice and fair play.
The Award of the Arbitrator is challenged by the learned Counsel for the petitioner on various grounds. The learned Counsel contended that the Award in question was passed beyond the time prescribed by the Registrar and hence it is a nullity. It is contended that the provisions of the Arbitration Act equally applies to arbitration under the Andhra Pradesh Co-operative Societies Act. I am not inclined to entertain this objection for the reasons that never before, the petitioner raised this objection. Admittedly, the petitioner participated in the proceedings even after the expiry of time limit, without any demur. Even in the affidavit filed in support of the writ petition, this contention has not been raised.
The learned Counsel for the petitioner then contended that there was no dispute as between R1 and R2 with regard to allotment of plot in question which could be taken cognizance of u/s 61 of the Act. As a corollary thereto, it is submitted that the direction to the Society to take over 6000 sq. ft. of land in B-1 unit and to allot the same to R1, is without jurisdiction. It is also submitted that the direction given in the Award to R2 to allot the particular plot of land to R1 is beyond the scope of authority of R3 as an Arbitrator. I see force in these contentions of the learned Counsel.
u/s 61 of the Act, any dispute touching the constitution, management or the business of a society arising between the members and the members and the society, the dispute shall be referred to the Registrar for decision. Section 62 lays down that the Registrar may, on receipt of the reference of a dispute u/s 61, elect to decide the dispute himself, or transfer it for disposal to any person who has been invested by the Government with power in that behalf or refer it for disposal to an Arbitrator. The Registrar, such person authorised by the Government or the Arbitrator shall decide the dispute in accordance with the provisions of the Act, Rules and Bye-laws (Vide Section 62 (4)). It is implicit therefore that the decision given by the Arbitrator shall be a referable and strictly confined to the scope of dispute raised before the Registrar u/s 61. The Arbitrator is strictly bound by the terms of reference or if there are no specific terms of reference, by the dispute or controversy raised u/s 61 by a member against the concerned member or the society, as the case may be. It is only with respect to the disputed matters that the Arbitrator can proceed to give his award and he cannot go beyond the scope of dispute that could be said to arise out of the application filed before the Registrar. The closely allied aspect to be noticed is that the existence of a dispute as between a member and the Society or other persons mentioned in Section 61 is a sine qua non for the exercise of powers u/s 61 read with Section 62 At best, he can only decide the dispute between R1 and petitioner. In the light of this legal position, let me now analyse the facts of this case.
In the counter-affidavit filed by the 4th respondent, it is stated that the petitioner and the 1st respondent are members of the 2nd respondent-Society and that the dispute raised by the 1st respondent pertains to the allotment of land of the Society and therefore Registrar has got the right to decide the dispute between the member and the society. It is difficult to accept this plea. On the admitted and indisputable facts of the case, it cannot be said that there was at any time a dispute between the 1st respondent and the 2nd respondent (Co-op. Industrial Estate hereinafter referred to as ''Society'') with regard to allotment of the portion of land in B-l unit. As already noticed, R1 submitted an application to the Society on 9-10-1987 soon after she became a member of the Society. Such application was not rejected by the Society by the time R1 filed a petition for arbitration on 20-10-87. In fact, within his limited time, there could hardly be any occasion for the Society either to reject or sanction the application. It is also not the case of R1 that the Society (R2) failed to allot the land despite the request made to it or that the Society ought to have allotted the land to her much earlier. On the other hand, it is clear from the contents of arbitration petition that the complaint was directed against the petitioner only. Not a word was said about the obligation of the Society to allot the plot to R1 or about the inaction or refusal of the Society to allot the plot. The entire grievance was aired against the petitioner and none else. R1 accused the petitioner of harassing her by terminating the lease agreement and threatening to demolish the shed constructed by her on B1 unit. The same was the complaint made before the Commissioner of Industries. Thus, the real and actual dispute raised before the Registrar u/s 61 was only the; dispute between R1 and the petitioner. By the time the arbitration application was filed on 20-10-1987 i.e., one day before the Commissioner advised R1 to file ''an arbitration case'', there was no controversy or dispute even remotely between R1 and the Society as regards the allotment of plot. Notwithstanding that, in the prayer portion of the arbitration petition, an order was sought to direct allotment of the plot of 6000 sq. ft. in B-1 unit by collecting the lease-amount as fixed by the Government. By merely seeking this relief in the arbitration petition filed just 10 days after the request for allotment was made to the Society, it cannot be said that any dispute had arisen between R1 and the Society. R3 acting as an Arbitrator, therefore, exceeded his authority in directing allotment of plot to R1 after taking it over from the petitioner.
The learned Counsel for R1 Mr. Pratap Reddy has argued that R1 approached the Arbitrator as per the advice of the Commissioner of Industries who is in over all control of the Industrial Estate. I do not think that this fact makes any material difference. The advice given by the Commissioner who is not an authority designated under the A.P. Co-operative Societies Act does not have the effect of arming the Arbitrator with more powers than what he has in law. Moreover, the Commissioner never said in his communication that the dispute could be raised against the Society as well: Hence the contention advanced by the learned Counsel has no merit.
Apart from the above legal infirmity, the impugned award is also vitiated by error of law apparent on the face of record. The reasoning given by the learned Arbitrator that the sub-lease was illegal and that the Society should not have entered into the Tripartite Agreement dated 19-3-1983 does not fit into the direction given by the Arbitrator to allot the land to the sub-lessee (R1). In a way, the ultimate direction given contradicts the reasoning or finding in the Award. Another obvious error in the Award is that the Arbitrator failed to see that until and unless the plot was resumed by the Society from the petitioner after following the due procedure, the question of allotment of the plot of 6,000 sq. ft. to R1 does not arise. Indisputably, the allotment still stands in the name of the petitioner. If the petitioner had committed, breach of the conditions of the lease or Agreement, the Society could only take steps to resume the land after giving a show cause notice and affording opportunity of hearing to the petitioner. The Society could not have straightaway allotted that plot to R1. What the Society itself could not do in the normal course, it cannot profess to do by virtue of the directions given by the Arbitrator. Thus, viewed from any angle, the impugned Award is liable to be set aside. Accordingly, I quash the impugned Award.
However, I would like to make it clear that nothing said herein amounts to approval of the action taken by the petitioner in inducting the third parties into possession of the premises belonging to the Society. Prima facie, the action of the petitioner constitutes breach of terms of the Agreement. It is open to the Society (R2) to initiate action to resume the land after giving opportunity to the petitioner to state its case. As and when the Society resumes the land, the Society shall consider the request of R1 for allotment of plot on its own merits keeping in view all the relevant facts and circumstances.
Before closing the case, I would like to refer to an argument advanced by the learned Counsel for the petitioner that R4 (General Manager, District Industries Centre, RR District) has not been legally conferred with the power to discharge the functions of the Registrar under Sections 61 and 62 of the Act and therefore the reference to arbitration itself is invalid. The learned Counsel submits that the notification issued in G.O.Ms. 971, Industries and Commerce, dated 12-12-1978 relied upon by the respondents is of no avail to them. According to the preamble to the said G.O., certain administrative power were delegated to the Joint Director/Deputy Director/Asst. Director of Industries (District Industries Centres). Para 4 of the Notification reads as follows :
Powers delegated under the Andhra Pradesh Co-operative Society Act and Rules :
i) Joint Director of Industrie''s (District Industries Centres)--
All powers excepting those under Sections (in respect of primary Societies and District Level Societies) : 18, 30 (i) (b) : 50, 53, 76(2) in respect of Appeals under Sections 34 (i), 64, 116A.
Section 61 of the Act contemplates the reference of dispute to the Registrar. ''Registrar'' means, Registrar of Co-operative Societies appointed u/s 4(1) and includes any other person on whom all or any of the powers of the Registrar under the Act are conferred, (Vide Sec. 2(n)). Thus, the powers of the Registrar should be specifically conferred by the Government on a particular person or authority. Assuming that the General Manager, District Industries Centre is none other than the Joint Director of Industries, the further question that arises is whether the powers of Registrar as such were conferred by the aforementioned G.O. on the Joint Director/General Manager, District Industries Centre. Prima facie, it does not appear from the notification that the joint Director/General Manager was entrusted with the powers of the Registrar under various sections of the Act including Section 61 . The word ''Registrar'' does not occur in the notification at all. Prima facie, it appears that the G.O. was inartistically drafted. I therefore find considerable force in the argument of the learned Counsel for petitioner in this behalf. However, in the view I have taken, it is not necessary for me to dilate further on this aspect and express a final view. I have only pointed out this aspect to make the authorities concerned to realise the lacunae in the G.O. so that remedial steps may be taken to rectify the same with a view to avoid unnecessary controversies that might crop up in the future.
In the result, the writ petition is allowed subject to the observations made in the judgment. No costs.
Petition allowed.