Delhi High Court
Rajesh Kumar Garg vs Delhi State Co-Operative Bank ... on 1 August, 2019
$~57
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Date of Decision: 01.08.2019
% W.P.(C.) No. 8327/2019 & CM No. 34481/2019
RAJESH KUMAR GARG ..... Petitioner
Through: Mr. Vipin Dilawari, Advocate.
Petitioner in person.
versus
DELHI STATE CO-OPERATIVE BANK LTD.
AND ANR. ..... Respondents
Through:
CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
HON'BLE MR. JUSTICE RAJNISH BHATNAGAR
VIPIN SANGHI, J. (ORAL)
1. The petitioner assails the order dated 4.7.2019 passed by the Delhi
Co-operative Tribunal in Appeal No. 90/2017 arising from Arbitration Case
No. 1623/AR/ARB/16-17 whereby the petitioner's said appeal under Section
112 of the of the Delhi-Cooperative Societies Act, 2003 against the arbitral
award dated 9.5.2017 under Section 71 of the said Act passed by the learned
Arbitrator has been rejected.
2. The petitioner was arrayed as respondent no.2 in the said arbitration
proceedings. The case of the petitioner is that he was a partner of M/s
P.P.Agro Overseas in whose name the loan had been taken from the
respondent-Delhi State Cooperative Bank Limited. The petitioner did not
appear and participate in the arbitral proceedings. The award passed by the
learned Arbitrator was as follows:-
"The Defendants shall pay jointly and severally to The Delhi
State Co-Operative Bank Ltd. The amount as follows:-
(i) Principal Amount Rs. 2,05,623.00
(ii) Interest up to 31/03/2017 Rs.5,71,843.00
(iii) Arbitration Cost @ 7.50% Rs. 58,310.00
Total Rs.8,35,776.00
Further interest @ 14%+1% p.a.= 15% on the outstanding
loan amount (Principal + intt. amount) w.e.f. 01/04/2017 the
compounded on monthly basis till realization of the entire loan
in full with up to date interest and cost shall be paid by the
Defendants."
3. The submission of learned counsel for the petitioner is that the claim
filed by the respondent was barred by limitation. He submits that though the
loan was obtained in the year 2004, the arbitration had been invoked by the
respondent only in May 2016.
4. He further submits that other partner of M/s P.P.Agro Overseas Smt.
Savitri Devi died on 6.2.2015. The respondent-bank did not initiate
arbitration during her life time. Lastly, learned counsel for the petitioner
submits that the claim of the respondent-bank was allowed in its entirety
with a high rate of interest, and the petitioner has already paid a sum of Rs.
5,99,000/- to the respondent. Learned counsel submits that the petitioner is
suffering from medical ailments, and the respondents should be called upon
to grant remission to the petitioner in the matter by computation of rate of
interest.
5. So far as the first submission of the learned counsel for the petitioner
is concerned, we do not find any merit therein. The petitioner, admittedly,
did not participate in the arbitral proceedings, and did not take any plea of
limitation before the arbitral Tribunal. Limitation is a mixed question of fact
and law. If the said objection would have been raised by the petitioner, the
respondent-bank would have had the opportunity of meeting the same. By
not participating in the arbitration proceedings and allowing the arbitral
Tribunal to proceed to adjudicate the claim, in our view, the said objection
of limitation could not have been raised before the Tribunal for the first
time. Even otherwise, we do not find any merit in the said objection of the
petitioner. The claim made by the respondent related to recovery of sum of
money including interest. Section 70 of the Act provides the mechanism for
resolution of disputes to arbitration. Clause 4 of Section 70 deals with the
aspect of limitation. The same is relevant and reproduced herein below:-
"(4) (a) Notwithstanding anything contained in the
Limitation Act, 1963 (36 of 1963), but subject to the
specific provisions made in this Act, the period of
limitation in the case of a dispute referred to the
Registrar under sub-section (1) shall -
(i) when the dispute relates to the recovery of any sum
including interest thereon due to a co-operative
society by a member thereof, be computed from the
date on which such member dies or ceases to be
member of the co-operative society, be three years;
(ii) save as otherwise provided in sub-clause (iii), when
the dispute relates to any act or omission on the part of
any of the parties referred to in clause (b) or clause (c)
of sub-section (1), be six years from the date on which
the act or omission with reference to which the dispute
arose or took place;
(iii) when the disputes relates to a co-operative society
which has been ordered to be wound up under section
95 or section 96 or section 97 or in respect of which an
administrator has been appointed under section 37, be
six years from the date of the order issued under
section 95 or section 96 or section 97 or section 37, as
the case may be; and
(iv) when the dispute is in respect of an election of an
officer of a co-operative society be thirty days from the
date of the declaration of the result of the election.
(b) The period of limitation in the case of any other
dispute except those mentioned in the foregoing clause
which are required to be referred to the Registrar shall
be regulated by the provisions of the Limitation Act,
1963 (36 of 1963), as if the dispute was a suit and the
Registrar a civil court.
(c) Notwithstanding anything contained in clauses (a)
and (b), the Registrar may admit a dispute after the
expiry of the period of limitation, if the applicant
satisfies the Registrar that he had sufficient cause for
not referring the dispute within such period and the
dispute so admitted shall be a dispute which shall not
be barred on the ground that the period of limitation
has expired." (emphasis supplied)
6. The aforesaid clause shows that the same overrides the limitation
prescribed under the Limitation Act. It goes on to lay down the period of
limitation for different kinds of disputes that may arise under the Act. In so
far as the disputes relating to recovery of any sum including interest thereon
due to Co-operative Societies by member thereof is concerned, the
limitation for to be computed "from the date on which such member dies or
ceases to be member of the co-operative society". For such claims, the
period of limitation is prescribed to be three years. Thus, in a case where a
co-operative society seeks to recover any sum of money including interest
from a member, the time begins to run only when such member dies or
ceases to be a member, and from the said date of death or ceasure of the
membership, the period of limitation is three years. The limitation does not
begin to run either from the date the amount became due and payable, or
from the date of default.
7. In the present case, admittedly, one of the members of the respondent-
society namely Smt. Savitri Devi died only on 6.2.2015. She was a partner
of the firm M/s P.P Agro Overseas. Therefore, the period of limitation
started to run from the said date only, and the claim was preferred by the
respondent within a period of three years from the said date. It is not the
petitioner's case that either Smt. Savitri Devi, or the petitioner, ceased to be
a member of the respondent-bank at any earlier point of time.
8. Counsel for the petitioner has sought to place reliance on a Division
Bench judgment of this Court in the case of Vardhman Co-Operative H/B
Society Ltd. Vs. Anil Kumar Jain , W.P.(C) 1359/2012, decided on
27.9.2012. In our view, reliance placed on this decision is completely
misplaced, since the same does not relate to recovery of any sum including
interest by the Co-Operative Society. In fact, a perusal of this judgment
shows that Clause (i) of Section 70(4) (a) was not even considered by the
Court. The first submission of the petitioner is, therefore, rejected.
9. Considering the fact that award had been made for the amount of
Rs.8,35,776/- on 9.5.2017, which included the principal amount of
Rs.2,05,623/-, and the petitioner claims were already paid by 5,99,000/- only
with a view to consider the aspect of remission of interest, we issue notice
to the respondents, returnable on 23.9.2019.
VIPIN SANGHI, J
RAJNISH BHATNAGAR, J
AUGUST 01, 2019
ib/jitender
