Karnataka High Court
Mrs. Anitha Jesuman vs The Central Arecanut And Cocoa on 19 February, 2025
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WP No. 4839 of 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF FEBRUARY, 2025
BEFORE
THE HON'BLE MRS JUSTICE K.S. HEMALEKHA
WRIT PETITION NO. 4839 OF 2025 (CS-RES)
BETWEEN:
MRS. ANITHA JESUMAN
W/O ANAND, AGED ABOUT 59 YEARS
R/AT VISHAL VILLA KARKERA COMPOUND,
BOLAR, MANGALORE - 575 001.
...PETITIONER
(BY SRI. SACHIN B.S., ADVOCATE)
AND:
1. THE CENTRAL ARECANUT AND COCOA
MARKETING AND PROCESSING CO-OPERATIVE
LIMITED, (CAMPCO)
A MULTI STATE CO-OPERATIVE SOCIETY,
HAVING ITS REGISTERED OFFICE SITUATED AT
VARANASHI TOWERS, MISSION STREET,
MANGALORE - 575 001, D.K.DISTRICT
REP BY ITS MANAGING DIRECTOR
Digitally signed by
MAHALAKSHMI B M 2. THE REGISTRAR OF CO-OPERATIVE
Location: HIGH SOCIETIES, ALI ASKAR ROAD,
COURT OF BANGALORE
KARNATAKA REP BY HONBLE ARBITRATOR
UDUPI - 576 101.
...RESPONDENTS
(BY SRI.K. RAVISHANKAR, ADVOCATE FOR C/R1)
THIS W.P. IS FILED UNDER ARTICLES 226 & 227 OF THE
CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED
ORDER DTD. 13.12.2024 IN NO. CAMPCO/ARB/01/2024-25 PASSED
ON I.A.NO.V AS PER ANNX-A ISSUED BY R-2 AND ALLOW THE
I.A.NO.V AS PRAYED FOR IN THE INTEREST OF JUSTICE AND
EQUITY.
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WP No. 4839 of 2025
THIS PETITION, COMING ON FOR FRESH MATTERS, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MRS JUSTICE K.S. HEMALEKHA
ORAL ORDER
The petitioner has called in question the order dated
13.12.2024 passed on IA.No.V by respondent No.2-Arbitrator,
by the impugned order, the application-IA.No.V filed by the
petitioner under Order VII Rule 11(d) of CPC read with Section
84 of the Multi State Co-operative Societies Act, 2002 ('Act' for
short) was rejected with cost of Rs.2,500/-.
2. The petitioner was dismissed from service as per
resolution dated 04.03.2024 and order dated 06.03.2024, with
an order to make good loss to the Society to a tune of
Rs.1,08,74,286/-. The claim petition was filed by respondent
No.1 invoking the provisions of the Act, by an order dated
07.08.2024, respondent No.2 under Section 84 (1) of the Act,
appointed the Arbitrator to decide the claim filed by the
Society.
3. The petitioner filed an application-I.A.No.V under
Order VII Rule 11(d) of CPC read with Section 84 of the Act
seeking rejection of the plaint on the ground that the claim of
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respondent No.1-Society is without any jurisdiction.
Respondent No.2 - Arbitrator by the impugned order rejected
the application-I.A.No.V filed by the petitioner with cost of
Rs.2,500/-.
4. When the matter stood thus, the petitioner
approached this Court in W.P.No.34278/2024 calling in
question the order dated 07.08.2024 passed by respondent
No.2-Registrar of Co-operative Societies appointing an
Arbitrator to decide the claim of the Society. This Court by an
order dated 25.01.2025 dismissed the writ petition. Now the
present writ petition is filed challenging the order passed on
I.A.No.V by the Arbitrator on 13.12.2024.
5. Heard the learned counsel appearing for the
petitioner and the learned counsel appearing for the respondent
No.1-Society and the learned AGA for respondent No.2.
6. Learned counsel for the petitioner taking this Court
to Section 84 of the Act, submits that in terms of Section 84,
there is an exception that disputes cannot be raised with regard
to the disciplinary action taken by the Society against its paid
employee. It is submitted that the impugned order passed by
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respondent No.2 invoking Section 84 of the Act appointing the
Arbitrator to decide the claim made by the Society is without
jurisdiction.
7. Per contra, learned counsel appearing for
respondent No.1 drawing the attention of this Court to Section
84 of the Act and the Arbitration and Conciliation Act, 1996,
('Arbitration Act' for short), submits that the arbitration
proceedings is pending before the Arbitrator, the impugned
order is an interlocutory order, the order on interlocutory order
passed by the Arbitrator cannot be called in question and the
said proposition is well settled in light of the decision of the
Apex Court in the case of SBP & Co., vs. Patel Engineering
Ltd., and another1 (SBP & Co.,) and the latest decision of the
Apex Court in the case of P.C.Babu vs. Sandeep B and
others2 ( P.C.Babu).
8. Before adverting to the rival contentions, it is
necessary to refer Section 84 of the Act, which reads as under:
"84. Reference of disputes.--
(1) Notwithstanding anything contained in any other law
for the time being in force, if any dispute other than a
(2005) 8 SCC 618
2018 SCC Online KAR 2151
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dispute regarding disciplinary action taken by a Multi-
State Co-operative Society against its paid employee or
an industrial dispute as defined in clause (k) of Section 2
of the Industrial Disputes Act, 1947 (14 of 1947) touching
the constitution, management or business of a Multi-State
Co-operative Society arises--
(a) among members, past members and persons
claiming through members, past members and deceased
members, or
(b) between a member, past member and persons
claiming through a member, past member or deceased
member and the Multi-State Co-operative Society, its
board or any officer, agent or employee of the Multi-State
Co-Operative Society or liquidator, past or present, or
(c) between the Multi-State Co-operative Society or
its board and any past board, any officer, agent or
employee, or any past officer, past agent or past
employee, heirs or legal representatives of any deceased
officer, deceased agent or deceased employee of the
Multi-State Co-Operative Society, or
(d) between the Multi-State Co-operative Society
and any other Multi-State Co-operative Society, between
a Multi-State Co-Operative Society and liquidator of
another Multi-State Co-Operative Society or between the
liquidator of one Multi-State Co-Operative Society and the
liquidator of another Multi-State Co-Operative Society,
such dispute shall be referred to arbitration.
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(2) For the purposes of sub-section (1), the
following shall be deemed to be disputes touching the
constitution, management or business of a Multi-State
Co-Operative Society, namely:--
(a) a claim by the Multi-State Co-Operative Society
for any debt or demand due to it from a member or the
nominee, heirs or legal representatives of a deceased
member, whether such debt or demand be admitted or
not;
(b) a claim by a surety against the principal debtor
where the Multi-State Co-Operative Society has recovered
from the surety any amount in respect of any debt or
demand due to it from the principal debtor as a result of
the default of the principal debtor, whether such debt or
demand is admitted or not;
(c) any dispute arising in connection with the
election of any officer of a Multi-State Co-Operative
Society.
(3) If any question arises whether a dispute
referred to arbitration under this section is or is not a
dispute touching the constitution, management or
business of a Multi-State Co-Operative Society, the
decision thereon of the arbitrator shall be final and shall
not be called in question in any court.
(4) Where a dispute has been referred to
arbitration under sub-section (1), the same shall be
settled or decided by the arbitrator to be appointed by the
Central Registrar.
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(5) Save as otherwise provided under this Act, the
provisions of the Arbitration and Conciliation Act, 1996
(26 of 1996) shall apply to all arbitration under this Act as
if the proceedings for arbitration were referred for
settlement or decision under the provisions of the
Arbitration and Conciliation Act, 1996".
9. A plain reading of the aforesaid provisions clearly
indicates that all disputes under Section 84 would be referred
to the Arbitrator and the same would par take the nature of the
Arbitration proceedings under the Act of 1996. The Co-Ordinate
Bench of this Court in the case of The General Insurance
Credit Company Limited Vs. The Registrar of
Co-Operative Society3 (The General Insurance Credit
Company Limited) held at paragraph No.5 as under:
"5. A plain reading of the aforesaid provisions
will clearly indicate that all disputes under Section 84 of
the MSCS Act will get referred to Arbitration and the same
would partake the nature of arbitration proceedings under
the said Act of 1996. In other words, all proceedings
under Section 84 of the MSCS Act are nothing but
arbitration proceedings governed by the provisions of the
said Act of 1996. A conspectus of the provisions of
Section 84 r/w Rule 30 of the MSCS Act and Rules and
the provisions of the said Act of 1996 will lead to the
following conclusions:-
WP No.4742/2024. D.D 16.08.2022.
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(i) Interim orders passed by the
Arbitrator/Registrar of Co-operative Societies in
proceedings under Section 84 of the MSCS Act which are
appealable would have to be challenged by way of an
appeal permissible under Section 37 of the said Act of
1996.
(ii) Interim orders which are not appealable under
the said Act of 1996 would necessarily have to be
challenged- 8 -the arbitral award under Section 34 of the
said Act of 1996.
(iii) Final orders / arbitral awards passed in
proceedings under Section 84 of the MSCS Act would also
necessarily have to be challenged only under Section 34
of the said Act of 1996."
10. The Apex Court in the case of SBP & Co., stated
supra held at para Nos.45 to 47 as under:
"45. It is seen that some High Courts have
proceeded on the basis that any order passed by an
Arbitral Tribunal during arbitration, would be
capable of being challenged under Article 226 or
227 of the Constitution. We see no warrant for such
an approach. Section 37 makes certain orders of
the Arbitral Tribunal appealable. Under Section 34,
the aggrieved Party has an avenue for ventilating
its grievances against the award including any in-
between orders that might have been passed by
the Arbitral Tribunal acting under Section 16 of the
Act. The Party aggrieved by any order of the
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Arbitral Tribunal, unless has a right of appeal under
Section 37 of the Act, has to wait until the award is
passed by the Tribunal. This appears to be the
scheme of the Act. The Arbitral Tribunal is, after all,
a creature of a contract between the Parties, the
arbitration agreement, even though, if the occasion
arises, the Chief Justice may constitute it based on
the contract between the Parties. But that would
not alter the status of the Arbitral Tribunal. It will
still be a forum chosen by the Parties by
agreement. We, therefore, disapprove of the stand
adopted by some of the High Courts that any order
passed the Arbitral Tribunal is capable of being
corrected by the High Court under Article 226 or
227 of the Constitution. Such an intervention by the
High Courts is not permissible.
"46. The object of minimizing judicial intervention
while the matter is in the process of being
arbitrated upon, will certainly be defeated if the
High Court could be approached under Article 227
or under Article 226 of the Constitution against
every order made by the Arbitral Tribunal.
Therefore, it is necessary to indicate that once the
arbitration has commenced in the Arbitral Tribunal,
Parties have to wait until the award is pronounced
unless, of course, a right of appeal is available to
them under Section 37 of the Act even at an earlier
stage.
"47. We, therefore, sum up our conclusions as
follows:
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(i) to (v) xxxxxxxxxxx
(vi) Once the matter reaches the Arbitral
Tribunal or the sole arbitrator, the High Court
would not interfere with the orders passed by
the arbitrator or the Arbitral Tribunal during
the course of the arbitration proceedings and
the Parties could approach the Court only in
terms of Section 37 of the Act or in terms of
Section 34 of the Act."
11. The Apex Court in the case of SBP & Co., stated
supra has held that the party aggrieved by an order of Arbitral
Tribunal has to wait until the award is made by the Tribunal.
The Apex Court in clear terms held that, once the matter
reaches the Arbitral Tribunal, the High Court could not interfere
with the orders passé by the arbitrator or the arbitral tribunal
during the course of the arbitration proceedings.
12. It is observed by the Apex Court that the object of
minimizing judicial intervention while the matter is in the
process of being arbitrated upon will certainly be defeated if the
High Court could be approached under Articles 226 or 227 of
the Constitution against every order made by the Arbitral
Tribunal and it was observed that once the arbitration has
commenced in the Arbitral Tribunal, parties have to wait until
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the award is pronounced, unless, of course a right of appeal is
available to them under Section 37 of the Arbitration Act, 1996
even at an earlier stage.
13. In the given note in the proceedings before
respondent No.2, petitioner has filed objections and I.A.No.V
was contested. The application has been rejected and the
matter is pending before the Arbitrator. The petitioner having
participated in the proceedings and now at this stage wants to
contend that the petition/claim made by the Society before the
arbitrator is not maintainable.
14. The Co-Ordinate Bench of this Court in the case of
P.C.Babu stated supra while dealing with the petition
challenging the order passed by the Arbitrator has held at
paragraph No.5, 6, 7, 8 and 9 as under:
"5. It is noted that the first respondent herein
has exercised jurisdiction as an arbitrator in respect of
the claim made by the third respondent having regard
to Section 84 of the Multi-State Co-operative Societies
Act, 2002, which is applicable in the present case. Sub-
section (5) of Section 84 reads as under:
"84. Reference of disputes.- (5) Save as
otherwise provided under this Act, the provisions of the
Arbitration and Conciliation Act, 1996 (26 of 1996)
shall apply to all arbitration under this Act as if the
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proceedings for arbitration were referred for settlement
or decision under the provisions of the Arbitration and
Conciliation Act, 1996."
6. Therefore, the arbitration proceedings under
the provisions of the aforesaid Act are subject to
Arbitration and Conciliation Act, 1996. Under Section
17 of the Arbitration and Conciliation Act, 1996, the
arbitrator has the jurisdiction to pass interim measures
of protection as may appear to the arbitrator just and
convenient [Section 17(1)(ii)(e)). If any person is
aggrieved by any interim order passed by the Arbitral
Tribunal, the remedy lies under Section 37(2) of the
Arbitration and Conciliation Act, 1996. The remedy is
by way of an appeal to a Court from an order of the
Arbitral Tribunal granting or refusing to grant an
interim measure under Section 17. Therefore, the
petitioner herein has an alternative and efficacious
remedy of an appeal under Section 17(2) of the
Arbitration and Conciliation Act, 1996. In the
circumstances, the writ petition is dismissed as not
maintainable.
7. In this regard reliance is placed on a decision
of the Hon'ble Supreme Court in the case of SBP &
Company v. Pate I Engineering Limited [(2005) 8 SCC
618], wherein at Paragraph Nos. 45, 46 and 47, it has
been observed as under:
"45. It is seen that some High Courts have
proceeded on the basis that any order passed by an
Arbitral Tribunal during arbitration, would be capable of
being challenged under Article 226 or 227 of the
Constitution. We see no warrant for such an approach.
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Section 37 makes certain orders of the Arbitral Tribunal
appealable. Under Section 34, the aggrieved Party has
an avenue for ventilating its grievances against the
award including any in-between orders that might have
been passed by the Arbitral Tribunal acting under
Section 16 of the Act. The Party aggrieved by any order
of the Arbitral Tribunal, unless has a right of appeal
under Section 37 of the Act, has-to-wait until the
award is passed by the Tribunal. This appears to be the
scheme of the Act. The Arbitral Tribunal is, after all, a
creature of a contract-between the Parties, the
arbitration agreement, even though, if the occasion
arises, the Chief Justice may constitute it based on the
contract between the Parties. But that would not alter
the status of the Arbitral Tribunal. It will still be a
forum chosen by the Parties by agreement. We,
therefore, disapprove of the stand adopted by some of
the High Courts that any order passed the Arbitral
Tribunal is capable of being corrected by the High Court
under Article 226 or 227 of the Constitution. Such an
intervention by the High Courts is not permissible.
"46. The object of minimizing judicial intervention
while the matter is in the process of being arbitrated
upon, will certainly be defeated if the High Court could
be approached under Article 227 or under Article 226
of the Constitution against every order made by the
Arbitral Tribunal. Therefore, it is necessary to indicate
that once the arbitration has commenced in the Arbitral
Tribunal, Parties have to wait until the award is
pronounced unless, of course, a right of appeal-is
available to them under Section 37 of the Act even at
an earlier stage.
"47. We, therefore, sum up our conclusions as
follows:
(i) to (v) xxxxxXXXXXX
(vi) Once the matter reaches the Arbitral Tribunal or
the sole arbitrator, the High Court would not interfere
with the orders passed by the arbitrator or the Arbitral
Tribunal during the course of the arbitration
proceedings and the Parties could approach the Court
only in terms of Section 37 of the Act or in terms of
Section 34 of the Act."
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8. The Hon'ble Supreme Court has strongly
disapproved intervention of the Huh Court? by
exercising jurisdiction under Article 226 and 227 of the
Constitution of India by entertaining writ petitions filed
against interim orders passed by the Arbitral Tribunal.
9. Further, this Court, in the case of K. Satish
Kumar v. Rohan Associates (W.P. No. 37175/2013
disposed on 23/01/2014) by following the dictum of
the Hon'ble Supreme Court, has dismissed the writ
petition assailing the order passed by an Arbitrator on
the ground of maintainability. The said order is also
squarely applicable to the present case, In the
circumstances, writ petition is dismissed as not
maintainable reserving liberty to the petitioner herein
to avail the alternative and efficacious statutory
remedy, if so advised."
(Emphasis supplied)
15. The Division Bench of this Court in case of
K. Satish Kumar Vs. Rohan Associates4 (K. Satish Kumar)
observed that there is no manner of doubt that the High Courts
are ordained not to exercise their power under Article 226 and
227 of the Constitution of India, since the party aggrieved by
an order of Arbitral Tribunal has to wait until the award is made
by the Tribunal. There is clear injunction by the Apex Court in
WP No.37175/2013. D.D 23.01.2014.
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para No.47 (vi) in SBP & Co., stated supra of the judgment
that, once the matter reaches the Arbitral Tribunal, the High
Court would not interfere with the orders passed by the
Arbitrator or the Arbitral Tribunal during the course of
arbitration proceedings.
16. Therefore, in light of the constitutional mandate and
clear directions / injunction issued by the Apex Court in SBP &
Co., stated supra, by the Division Bench of this Court of
K. Satish Kumar stated supra, and the Co-Ordinate Bench of
this Court in the case of P.C.Babu and The General
Insurance Employees Credit Society Limited stated supra,
it is no more res integra that the orders passed by the
Arbitrator or the Arbitral Tribunal during the course of
arbitration proceedings cannot be interfered by the High Court
and the aggrieved party has to wait until the award is made by
the Tribunal / Arbitrator.
17. For the foregoing reasons, this Court pass the
following:
ORDER
I. Writ petition is dismissed as devoid of merits.
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II. It is needless to observe that all contentions are kept
open to be urged before the Arbitrator.
Sd/-
____________________
JUSTICE K.S. HEMALEKHA
PSG
