Case Note & Summary
The petitioner, Mr. Ratansi R. Gada, a principal borrower from Abhyudaya Cooperative Bank Ltd., challenged an arbitral award passed by an arbitrator appointed under Section 84 of the Multi-State Co-operative Societies Act, 2002 (MSCS Act). The arbitrator had directed the petitioner's employer to recover the bank's dues as arrears of land revenue and appointed the Manager of the Recovery Department of the Bank as a Receiver under Order XL Rule 1 of the Code of Civil Procedure, 1908 (CPC) to attach and sell hypothecated properties. The petitioner did not appear before the Court, but the respondent bank's counsel stated that the matter had been settled. The Court examined the award and found that the arbitrator had exceeded his jurisdiction. It noted that neither the MSCS Act nor the Arbitration and Conciliation Act, 1996 contains any provision empowering the arbitrator to issue directions against an employer for recovery of dues or to appoint a Receiver in such a manner. The Court held that such directions are impermissible and beyond the arbitrator's authority. Consequently, the Court set aside the directions contained in clauses 3, 4, and 5 of the award, while leaving the rest of the award intact. The petition was disposed of accordingly.
Headnote
A) Arbitration Law - Jurisdiction of Arbitrator - Directions Against Employer - Multi-State Co-operative Societies Act, 2002, Sections 83, 84, 96; Arbitration and Conciliation Act, 1996 - The arbitrator directed the employer of the borrower to recover dues as arrears of land revenue and appointed a Receiver under Order XL Rule 1 CPC. The Court held that there is no provision under the MSCS Act or the Arbitration Act empowering the arbitrator to issue such directions against the employer or to appoint a Receiver in such manner. Such directions are beyond the arbitrator's jurisdiction and impermissible. (Paras 4-5) B) Arbitration Law - Appointment of Receiver - Order XL Rule 1 CPC - Multi-State Co-operative Societies Act, 2002; Arbitration and Conciliation Act, 1996 - The arbitrator appointed the Manager of Recovery Department of the Bank as Receiver with powers under Order XL Rule 1 CPC to attach and sell hypothecated properties. The Court held that such appointment at the stage of passing the award is impermissible and beyond the arbitrator's jurisdiction. (Para 4)
Issue of Consideration
Whether an arbitrator appointed under Section 84 of the Multi-State Co-operative Societies Act, 2002 can issue directions against the employer of the borrower to recover dues as arrears of land revenue and appoint a Receiver under Order XL Rule 1 CPC while passing the award.
Final Decision
The Court set aside clauses 3, 4, and 5 of the arbitral award, which directed the employer to recover dues and appointed a Receiver. The rest of the award was upheld. The petition was disposed of.
Law Points
- Arbitrator cannot issue directions against employer for recovery of dues
- Arbitrator cannot appoint Receiver under Order XL Rule 1 CPC at award stage
- Arbitrator's powers are limited to the Arbitration Act and MSCS Act
