Calcutta High Court
Society Limited vs Iris Health Services Limited on 11 September, 2024
Author: Sabyasachi Bhattacharyya
Bench: Sabyasachi Bhattacharyya
ODC-12
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
[Commercial Division]
AP-COM/716/2024
THE SECRETARY GANAUDYOG BAZAR UNNAYAN AND SERVICE CO-OPERATIVE
SOCIETY LIMITED
VS
IRIS HEALTH SERVICES LIMITED
BEFORE:
The Hon'ble JUSTICE SABYASACHI BHATTACHARYYA
Date : 11th September, 2024
Appearance:
Mr. Arup Nath Bhattacharyya, Adv.
Ms. Sreetama Biswas, Adv.
...for petitioner.
Mr. Abhrajit Mitra, Sr. Adv.
Ms. Radhika Singh, Adv.
Mr. Sourojit Dasgupta, Adv.
...for respondent.
The Court:- Heard learned Counsel for the parties. A question has arisen
as to whether the present application under Section 11 of the Arbitration and
Conciliation Act 1996 and the prior notice under Section 21 of the said Act, on
the premise of which the present application has been filed, are maintainable in
their present form.
Learned Senior Counsel appearing for the respondents has taken an
objection as to maintainability, primarily on the ground that the agreement in
question was not entered into between the respondent and the petitioner, who is
only the Secretary of the Ganaudyog Bazar Unnayan & Service Cooperative
Society limited, which is a registered Cooperative society, being a separate entity
in its own right, but between the present respondent and the said society itself.
However, both in the present application and the preceding Section 21 notice, it
is the Secretary who has espoused the cause of the separate juristic entity/
Society.
Learned Senior Counsel cites a Coordinate Bench unreported judgment of
this Court in the matter of Secretary, Pragati Engineers Cooperative Society
Limited versus The State of West Bengal and others [WP No. 20212(W) of 2007] for
the proposition that in view of the provisions in Section 23 of the West Bengal
Cooperative Societies Act, 1983, a writ petition taken out by the Secretary of a
cooperative society on behalf of the society is not maintainable. It was held that
the Secretary is not competent to institute proceedings on behalf of the
cooperative society, a body corporate and as such being required to sue in its
own name.
Learned Senior Counsel appearing for the respondent also takes the Court
through the Section 21 notice. It is argued that in the self-same notice, the
present petitioner has sought to club several distinct and different agreements/
documents. However, the parties to the said documents/agreements are different
from each other. Only a few of the said agreements are exclusively between the
present petitioner and the respondent. In the others, either the present
respondent is not a party or there is also an additional third party apart from the
present petitioner and respondent. It is argued that such disparate causes of
action cannot be joined together in the same notice under Section 21 or in the
self-same arbitral proceeding.
Learned Senior Counsel for the respondent further reiterates that in terms
of Section 17 of the West Bengal Cooperative Societies Act, a society is a
separate juristic entity having its own stamp and seal and is required to sue and
be sued in its own name.
As such, it is contended that the present application ought to be
dismissed.
Learned Counsel appearing for the petitioner, while controverting the
objection as to maintainability, cites Purushottam Umedbhai and Co. vs. M/s.
Manilal And Sons reported at (AIR 1961 SC 325). It is argued that in the said
judgment, the Supreme Court went on to hold that if under some
misapprehension, persons doing business as partners outside India do file a
plaint in the name of their firm, they are mis-describing themselves as the suit
instituted is by them, they being known collectively as a firm. Thus, it is argued
that in case of a mis-description, the same is merely to be treated as a technical
objection and is required to be permitted to be cured. It is contended that a
liberal approach is required to be taken by the Court in respect of such technical
objections.
Learned Counsel further argues that even in the notice under Section 21
of the 1996 Act issued in the instant case, separate agreements having the
underlying same dispute have been joined.
Learned Counsel seeks to place the contents of some of the agreements to
argue that although third parties have been joined, they did not have any
effective role to play in the context of the agreements.
It is further pointed out that in the notice itself, the learned advocate
issuing the notice has mentioned the cooperative society as his client. Although
the client has been mentioned to be the Secretary of the said Cooperative Society,
the repeated reference to the properties of the society as belonging to the client
clearly indicates that it was intended that the society itself is to be treated as the
client and not its Secretary.
Upon hearing learned Counsel for the parties, the Court comes to the
following conclusions:
Insofar as the present application under Section 11 is concerned, the same
has, in unambiguous terms, been filed by the Secretary of the society as the
petitioner. There is not a single phrase in the cause title to indicate that the
Secretary intended to file it on behalf of the Society. Even in the affidavit, the
concerned Secretary has described herself as the petitioner in the present
application.
Thus, there is no scope of construing that the Secretary has filed the
application on behalf of the society. Accordingly, there is doubt as to whether the
very premise of the application can be permitted to be altered merely by way of
amendment. It is well-settled that by amendments, the very basis and premise
of the original case of an applicant cannot be permitted to be altered. The defect,
as such, is not merely technical but touches the merits of the matter, all the
more so, since a cooperative society is a separate juristic entity in its own right
and can at best be represented by its Secretary but it cannot be that the
Secretary describes herself as the petitioner.
The reliance of learned Counsel for the petitioner on sub-clauses (47) and
(64) of Section 4 of the West Bengal Cooperative Societies Act is misplaced. The
description of officer in Section 4(47), although includes a secretary, the officer is
only empowered, as provided in Section 4(64), to manage the affairs of the
cooperative society.
However, in the present case, it is not that the Secretary has managed the
affairs of the society by filing the present application on behalf of the society, but
the Secretary describes herself to be the petitioner and attributes the cause of
action for the petition to herself, which is de hors the law since a registered co-
operative society is a juristic entity in its own right.
The petitioner's case worsens when we move on to the Section 21 notice.
Insofar as the said notice is concerned, the caption thereof clearly mentions in
no uncertain terms that the client of the learned advocate issuing the notice is
not the society but the Secretary of the society. The very first sentence of the
said notice mentions that the same was issued under instruction from and on
behalf of (emphasis supplied) the client, which has been previously described to
be the Secretary.
Throughout the said notice, the client has been mentioned to be the owner
of the properties of the society. However, such mistake by itself cannot be read
into the notice so as to cure the incurable defect therein, which is that the notice
was issued not only by the Secretary but on behalf of the Secretary as well, as
opposed to the society, as per the very first sentence of the notice and its caption.
Moreover, a perusal of the several agreements which have been mentioned
for a composite reference to arbitration in the Section 21 notice goes on to show
that the parties thereto are different from each other. Although in some of the
said agreements, in particular two, only the petitioner and the respondent are
the parties, in the others, either the respondent is not a party or, in addition to
the petitioner and the respondent, there is a third party signatory to the said
agreement.
Such disparate causes of action cannot be joined. Joining the said dispute
would be as absurd as clubbing together in the hotchpot of a partition suit
separate properties owned by different persons, either severally, jointly or
individually.
For example, in a dispute arising out of the tripartite agreement between
the petitioner, the respondent and the third party juristic entity, the third party
would be a necessary party to the arbitration as well as the preceding Section 11
application. However, the case would be different in respect of the agreement
where only the petitioner and the respondent are parties, where they and only
they are required to be included in the arbitral proceeding and in all connected
proceedings and applications. Thus, joining the two would hit at the very root of
party autonomy as well as confidentiality, which are two basic tenets of the
concept of arbitration. Induction of a third party in the arbitral proceeding
between the present parties, who is not a signatory to the agreements between
the petitioner and the respondent, would be not only absurd but the very
antithesis of the concept of alternative dispute resolution by way of arbitration
as contemplated in the 1996 Act. Doing so would contravene concepts of privity.
Also, at least two of the said agreements, regarding which a composite
reference has been sought by the petitioner, envisage a three member arbitral
tribunal as the first choice of the parties. The same militates against the
modality of sole arbitrator chosen by the present petitioner and the respondent
in the other agreements. Thus, the confusion and conflict is not restricted to the
subject matters of the agreements and the parties, but also touches upon the
very constitution of the arbitral tribunal.
The said discrepancies are irreconcilable and as such, a composite
reference as sought in the present Section 21 notice is also impossible. Thus, the
very basis of the present application, that is, the notice invoking the arbitration
clauses, is also vitiated in law and on facts, and cannot be a valid basis of the
present application.
Insofar as the judgment cited by the petitioner is concerned, the facts of
the same are patently not applicable to the present case. There, the issue before
the Supreme Court was that a partnership firm, which was the propounder of
the action, was represented by its partners, the latter having filed the proceeding
in their own name.
However, in case of a partnership firm, the very concept and premise is
that the partners have joint and several liability and a partnership is merely a
façade of the individual interests of the partners, when joined together. In the
reported case, all the partners themselves had filed the suit in their names
instead of in the name of the partnership firm and, as such, the Supreme Court
penetrated such facade and held that the defect was curable.
As opposed to the same, in the present case, a society registered under the
West Bengal Cooperative Societies Act is not a mere illusory façade of indivduals
but is a separate and concrete juristic entity in itself, having a separate artificial
juristic existence in the eye of law which is completely severable from its
Secretary. A Secretary, as defined in the Act, is not even a stakeholder in the
cooperative society as such, but is merely a functionary and an employee of the
society.
Thus, no line of equation can be drawn between the judgment cited by the
petitioner and the present case at all.
Rather, the judgment of the coordinate Bench cited on behalf of the
respondent is apt in the context of the present case. Since only the Secretary of
the Society and not the Society itself has initiated the present proceeding and
the proceeding is preceded by a Section 21 notice [which is a mandate under
Section 11(3) in the sense that an appointment of arbitration had to be sought
and refused prior to 30 days of making the application under Section 11] also by
the Secretary, the present proceeding is bad in law and in its present form.
Accordingly, on the grounds as indicated above, AP-COM/716/2024 is
dismissed on contest. However, it is made clear that nothing in this order takes
away the right of the petitioner, if otherwise available, to invoke the arbitration
clause in any of the agreements between the parties and to initiate de novo
proceedings from the pre-Section 11 stage by a notice as contemplated in
Section 11(3) and/or Section 21 of the 1996 Act.
No order as to costs.
(SABYASACHI BHATTACHARYYA, J.)
SK.
