Case Note & Summary
The petitioner, Sri H.B. Shivakumar, filed a writ petition under Articles 226 and 227 of the Constitution of India seeking to quash arbitration proceedings initiated by the 1st respondent, Gokulam Chits and Finance Pvt. Company Ltd., in Arbitration Case No.843/2010 and Case No.874/2010 before the Arbitration for Central, Chennai, Chit Funds Cases Court. The petitioner was a subscriber to a chit fund conducted by the 1st respondent. Disputes arose regarding the chit, and the 1st respondent invoked an arbitration clause in the chit fund agreement and initiated arbitration proceedings. The petitioner contended that the arbitration proceedings were without jurisdiction because the Chit Fund Act, 1982 is a special statute that provides for the exclusive jurisdiction of the chit fund court under Section 64, and therefore, disputes under the chit fund agreement cannot be referred to arbitration. The court examined the provisions of the Chit Fund Act, 1982, particularly Section 64, which states that no court other than the chit fund court shall have jurisdiction to entertain any suit or proceeding in respect of matters arising out of a chit fund. The court also considered Section 2(3) of the Arbitration and Conciliation Act, 1996, which provides that the Act shall not affect any other law by virtue of which certain disputes may not be submitted to arbitration. The court held that the Chit Fund Act, 1982 is a special statute that overrides the Arbitration and Conciliation Act, 1996, and therefore, the arbitration clause in the chit fund agreement is not binding. The arbitration proceedings were initiated without jurisdiction and are liable to be quashed. The court allowed the writ petition and quashed the arbitration proceedings in Arbitration Case No.843/2010 and Case No.874/2010.
Headnote
A) Arbitration Law - Jurisdiction of Arbitral Tribunal - Chit Fund Dispute - Section 2(3) of Arbitration and Conciliation Act, 1996 read with Section 64 of Chit Fund Act, 1982 - The petitioner challenged arbitration proceedings initiated by the 1st respondent before the Arbitration for Central, Chennai, Chit Funds Cases Court. The court held that the Chit Fund Act, 1982 is a special statute that provides for exclusive jurisdiction of the chit fund court under Section 64, and therefore, disputes arising out of a chit fund agreement cannot be referred to arbitration under the Arbitration and Conciliation Act, 1996. The arbitration proceedings were quashed as without jurisdiction. (Paras 1-5)
Issue of Consideration
Whether the arbitration proceedings initiated by the 1st respondent under the Arbitration and Conciliation Act, 1996 are maintainable in respect of disputes arising out of a chit fund agreement governed by the Chit Fund Act, 1982.
Final Decision
The writ petition is allowed. The arbitration proceedings in Arbitration Case No.843/2010 and Case No.874/2010 before the Arbitration for Central, Chennai, Chit Funds Cases Court are quashed.
Law Points
- Arbitration clause in chit fund agreement is not binding
- Chit Fund Act
- 1982 overrides Arbitration and Conciliation Act
- 1996
- Section 64 of Chit Fund Act provides for exclusive jurisdiction of chit fund court
- Section 2(3) of Arbitration Act excludes matters governed by special statutes
- Writ of Certiorari lies against arbitration proceedings without jurisdiction
