Skytop Builders Private Limited vs The Additional Registrar of Co-Operative Societies

B.S. Patil, J.—In these writ petitions, petitioners are challenging the order of the Karnataka Appellate Tribunal refusing to grant interim stay of the proceedings before the Additional Registrar of Co-operative Societies while admitting the revision petition bearing No. 16/2014.

A revision petition has been filed by the petitioners aggrieved by the order passed by the Additional Registrar of Cooperative Societies rejecting the application filed in the dispute raised by the 2nd respondent u/s 70 of the Karnataka Co-operative Societies Act, 1959 (for short ''the Act''). The 2nd respondent has claimed a sum of Rs. 44,95,84,601/- along with interest from the petitioners in the proceedings instituted u/s 70 of the Act. These proceedings are resisted by the petitioners inter alia taking up a contention that the dispute raised u/s 70 of the Act was not maintainable. An interlocutory application was filed by the petitioners under Order VII Rule 11-D of CPC seeking rejection of the dispute contending inter alia that in view of the Arbitration clause contained in the agreement and in the light of the provisions of the Arbitration and Conciliation Act, 1996 (for short the Arbitration Act'') particularly Sections 5 and 8, the dispute u/s 70 is not maintainable, as the matter is governed by the provisions of the Arbitration Act. This application having been rejected by the Additional Registrar, the petitioners filed a revision petition.

The revision petition, as already observed above, has been admitted, but, the prayer for interim stay has been refused. In the circumstances, petitioners are before this Court challenging the refusal of the interim order.

I have heard the learned counsel for the petitioners and the learned counsel appearing for the respondents.

Placing reliance on the judgments of the Apex Court in the cases of P. Anand Gajapathi Raju and Others Vs. P.V.G. Raju (Died) and Others, and Atul Singh and Others Vs. Sunil Kumar Singh and Others, , it is contended by the learned counsel for the petitioners that in the light of the Arbitration agreement between the parties, the Additional Registrar could not have gone ahead with the proceedings and ought to have rejected the petition itself. It is urged that both the Authorities have failed to consider this question and therefore, the matter requires consideration.

Learned counsel appearing for the 2nd respondent and the learned Additional Government Advocate submit that in view of the express provision contained u/s 70 of the Act which enacts a non-obstante clause stating that notwithstanding anything contained in any law for the time being in force, if any dispute touching the business of a cooperative society arises among members, such dispute shall be referred to the Registrar for decision. Hence, question of the petitioner excluding the jurisdiction of the Registrar does not arise. Learned counsel appearing for the 2nd respondent has placed reliance on the judgment of the Apex Court in the case of Ranjit Kumar Bose and Another Vs. Anannya Chowdhury and Another, .

Upon hearing the learned counsel for both parties and on consideration of the nature of dispute raised, which squarely falls under the provisions of the Co-operative Societies Act and also noticing the fact that the agreement entered into between the parties provides for referring the matter for arbitration, it has to be stated that the Tribunal has while admitting the matter has rightly ordered for hearing of the legal question raised and has set down the matter for disposal at an early date taking note of the vexed question raised. It has no doubt rejected the interim relief sought. The Tribunal ought to have issued a direction to the Registrar not to pronounce the final judgment in the matter, particularly, because it has found that the legal question raised by the petitioners required examination. Though prima facie a dispute u/s 70 of the Act is required to be adjudicated by the Registrar within the frame work of the provisions of the Act and the jurisdiction of the Civil Court and other Courts have been excluded, the Tribunal is required to examine the contention of the petitioners regarding the effect of Section 5 of the Arbitration Act. It is for this reason, it has set down the matter for hearing.

Therefore, ends of justice will be met, if the petitioners and respondents are permitted to proceed with the case by leading their evidence with a direction to the Additional Registrar not to pronounce the order until the Tribunal passes an order in the revision petition pending before it. The Tribunal is required to expeditiously dispose of the revision petition.

Hence, I pass the-following

ORDER

(a) The revision petition is partly allowed.

(b) The Additional Registrar is directed not to pronounce the final order in the matter. He may however proceed in the matter in accordance with law regarding the evidence of the parties.

(c) The Tribunal is directed to dispose of the revision petition expeditiously, at any rate within a period of four months from the date of receipt of a copy of this order.

As the merits of the matter has not been examined, it is open to the petitioners to pursue their remedies in accordance with law in C.M.P. No. 121/2014. Participation of the petitioners in the proceedings before the Additional Registrar will be without prejudice to their contentions urged based on Sections 5 and 8 of the Arbitration Act.