Harvinder Singh v. Saharayn Universal Multipurpose Society Ltd.

1. The present petition under Section 11(6) of the Arbitration and Conciliation Act,1996,seeks appointment ofa Sole Arbitrator to adjudicate the disputes that have arisen between the parties. The Petitioners are individuals, who have invested their income under different financial schemes ofRespondentNo.1,asocietyregistered underthe Multi-State Co operative Societies Act,2002(hereinafterreferred to"the MSCS Act").The contention of the Petitioners is that on the representation, persuasion and assurances given by RespondentNo.1 through its associates,the Petitioners took membership with the society and made investments/ deposits oftheir ARB.P.729/2020&connectedmatters ^ * hard-earned money in their various schemes. On some occasions, Respondent No. 1 paid the deposit money in time but, in respect of the deposits that are subject matter ofthe present petitions,the Respondent No.l has not allowed the Petitioners to prematurely withdraw/encash the amounts thereunder.Legal notice dated 5^*^ August,2020 was also sentto Respondent No. 1 demanding payment,butto no avail.

2. The Petitioners, in ARB.P. Nos. 729/2020 & 730/2020 and in ARB. P. Nos. 731/2020 & 732/2020, issued legal notices dated 22"^^ September, 2020 and 5"^ October, 2020 respectively whereby, the Petitioners invoked Arbitration and requested the competent authority i.e.. Respondent No.2to appoint the Arbitrator. However,till date, despite service ofthe said notice, the competent authority has failed to make the appointment. In these circumstances the Petitioners have approached this Courtfor appointment of a Sole Arbitrator.

3. Petitioners contend that since premature withdrawal has not been granted, the dispute has to be resolved in terms of the Section 84 of the MSGS Act,which reads as under:- "84. Reference of disputes.—(1) Notwithstanding anything contained in any other law for the time being in force, ifany dispute[other than a dispute regarding disciplinary action taken by a multi-State co-operativesociety againstitspaid employee or an industrial dispute as defined in clause(k)ofsection 2ofthe Industrial Disputes Act, 1947 (14 of 1947)] touching the constitution, management or business of a multi-State co operative society arises— (a)amongmembers,pastmembersandpersonsclaimingthrough members,pastmembersanddeceased members,or ARB.P.729/2020&connectedmatters ^ ^ (b) between a member, past members 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 ofthe multi-State co-operative society or liquidator, past orpresent, 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 ofthe 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 ofone multi-State co operative society and the liquidator ofanother multi-State co operative,society,such disputeshallbe referred to arbitration. (2)For the purposes ofsub-section (1), thefollowing shall be deemed to be disputes touching the constitution, management or business ofa multi-State co-operativesociety, namely:— (a)a claim by the multi-State co-operativesocietyforany debtor demand due to itfrom 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 recoveredfrom the surety any amountin respect ofany debt or demand due to itfrom the principaldebtorasa resultofthe defaultoftheprincipaldebtor, whethersuch debtor demand is admitted or not;

(c) any dispute arising in connection with the election ofany officer ofa multi-State co-operativesociety. ARB.P. 729/2020& connected matters f3J 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 ofthe arbitrator shall be finalandshall not be called in question in any court. (4) Where a dispute has been referred to arbitration under sub section (1), the sameshall be settled or decided by the arbitrator to be appointed by the CentralRegistrar. (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 ifthe proceedingsfor arbitration were referredfor settlement or decision under the provisions ofthe Arbitration and Conciliation Act, 1996."

4. The counsel for Respondent No. 1 submits that the terms and conditions ofthe deposits do not permit premature withdrawal/encashment. The amounts can only be disbursed on the date of maturity which is yet to occur. In this view of this matter it cannot be said that there is a dispute between the parties. The present petitions are premature, without cause of action and are thus misconceived. Mr.Anurag Ahluwalia,learned CGSCfor the Respondent No.2 submits that in terms ofthe notification dated 24^ February,2003,in exercise ofthe powers under sub-section(2)ofSection[4] of the MSGS Act, the Central Government has directed that the powers exercisable bythe CentralRegistrarunder Section 84 ofthe MSGS Actshall also be exercisable by the Registrar of the Co-operative Societies of the States/U.Ts, in respect of the Societies located in their respective jurisdictions.He submits thatin case the Petitioners were to make arequest to the Registrar of Co-operative Society of the concerned State, the appointmentofthe Arbitratorshallbe madeintermsofthe Section84ofthe ARB.P.729/2020&connectedmatters ^"I^ "I MSGS Act.

5. Having considered the submissions ofthe parties, the Court is ofthe opinion thatsince the existence ofthe FDRsis notin dispute,the Arbitration Agreement between the parties is clearly established. Having regard to the terms and conditions of the deposits, the contention of Respondent No. 1 that disputes have not arisen is clearly devoid of merit. The refusal on the part ofRespondentNo. 1 in not allowing premature withdrawal/encashment ofthe FDRs would certainly be a dispute that would require adjudication. Merely because the terms and conditions of the deposit do not permit premature withdrawal, it cannot be held that Petitioners have no cause of action to make a claim contrary to the alleged terms and conditions.Whether the withdrawal is permissible or not is an aspect that would have to be examined by the Arbitral Tribunal as the same falls within the ambit ofthe Arbitration Agreement.

6. Further, since the Petitioner has already made a request to the competent authority for making the appointment and there has been no response to the said communication, there is no need to relegate the Petitioner to making a request for appointment of an arbitrator all over again, to the Registrar, Co-operative Societies of the concerned State. Further,RespondentNo.1 is a Multi-State Co-operative Society.

7. In view of the above, the present petitions are allowed. Mr. O.P. Gupta(Retd.),Districtand Sessions Judge[ContactNo:+91 9910384645]is appointed as the Sole Arbitrator to adjudicate upon the disputes that have ariseninrespectofeach ofthe following deposits: ARB.P.729/2020& connectedmatters ^ ^ I® P' 729/2020 (Harvinder Sinsh vs. Saharvn Universal Multipurpose SocietyLtd.& Am.V Certificate no. 795000507326 bearing Receipt NO. 34019274996with Membership No.918046001573 ARB. P. 730/2020 (Harvinder Kaur vs Saharavn Universal Multipurpose Society Ltd.& Anr.)- Certificate no., 795000507327bearingReceiptNo. 34019274997with Membership No.918046001574. ARB. P. 731/2020 (Harvinder Kaur vs. Sahara credit Cooperative Society Ltd. & Anr.)a) Certificate no. 914000358806 bearing hologram no. ""992295467464, Receipt No. 80384611330, Membership No. 18041400532 issued by the then WestDelhiRegional office ofthe Respondent No. 1 at Rajouri Garden, New Delhi. b) Certificate No. 925009970122 bearing hologram 992893429795, Receipt No. 80829487544, Membership No. 18041400532 issued by the then WestDelhi Regional office ofthe Respondent No. 1 at Rajouri Garden Sector, New Delhi. c) Recurring deposit savings bank account NO. 18043100261 Membership No.18041400532 ARB. P. 732/2020 (Harvinder Kaur vs. Sahara Credit Cooperative Society Ltd.& Anr.)a) Certificate no. 914000358801 bearing hologram NO. 992295467360, Receipt No. 80384611223, Membership No. 18041400531 issued by the then WetDelhi Regional office ofthe Respondent No. 1 at Rajouri Garden, New Delhi. b) Certificate No. 925009970111 bearing hologi'am NO. 992893428909, Receipt No. 80829486848, Membership No.18041600571 issued by the then WestDelhi Regional ARB.P. 729/2020& connected matters ^ u office ofthe Respondent No. 1 at Rajouri Garden Sector, New Delhi. c) Recurring deposit savings bank account NO. 18043100260Membership No.18041400531. "

8. The parties are directed to appear before the learned Sole Arbitrator as and when notified. This is subject to the Arbitrator making the necessary disclosure under Section 12(1) of the Act and not being ineligible under Section 12(5)ofthe Act.

9. The learned Arbitrator will be paid his fee in terms ofthe provisions ofthe Fourth Schedule appended to the Act.

10. At this stage, the learned counsel for Respondent No. 1 submits that there is a possibility ofan amicable solution in respect ofthe disputes arising out ofFDR certificates in ARB.P.Nos.731/2020 and 732/2020.

11. Accordingly, it is made clear that the reference of disputes to the Arbitral Tribunal qua the said petitions would be kept in abeyance for a period oftwo weeksfrom todayto enablethe partiesto settle the disputes in respectofthe said receipts.It is made clear thatin the eventthe disputes are notsettled,the Arbitrator will proceed to adjudicatethe disputes.

12. The petitions stand disposed ofin the aforesaid terms.