Case Note & Summary
The Saraswat Co-operative Bank Ltd. initiated arbitration proceedings under Section 84 of the Multi-State Co-operative Societies Act, 2002 against M/s. Jayant Industrial Packaging Ltd. and others, including Vijay Hargovinddas Mehta, for recovery of over Rs. 3.61 crores. During the pendency of the reference, the Bank applied under Section 96 of the Act for attachment of certain properties belonging to Mehta before the award. The property sought to be attached was not mortgaged in respect of the claim. The Arbitrator allowed the application and passed an attachment order on 5th November 2004 regarding a bungalow known as Kanchan Bunglow. Mehta challenged this order by filing a Chamber Summons. The court considered whether the Arbitrator had power under Section 96 to attach property not mortgaged to the society. The court held that Section 96 must be read with Section 84, which limits the Arbitrator's jurisdiction to disputes relating to the business of the society, including recovery of loans advanced on mortgage. Therefore, the power of attachment under Section 96 is confined to property mortgaged to the society. Since the attached property was not mortgaged, the Arbitrator acted without jurisdiction. The court quashed the attachment order and allowed the Chamber Summons.
Headnote
A) Arbitration - Attachment Before Award - Section 96 Multi-State Co-operative Societies Act, 2002 - Power of Arbitrator - The Arbitrator under Section 84 of the Act has no power to attach property not mortgaged to the society in respect of the claim under reference. Section 96 must be read with Section 84, limiting attachment to mortgaged property. The order of attachment dated 5th November 2004 was quashed. (Paras 2-3)
Issue of Consideration
Whether an Arbitrator under Section 84 of the Multi-State Co-operative Societies Act, 2002 has the power to attach property not mortgaged to the society, pending the reference, under Section 96 of the Act.
Final Decision
The Chamber Summons is allowed. The order of attachment dated 5th November 2004 passed by the Arbitrator is quashed.
Law Points
- Arbitrator's power under Section 96 of Multi-State Co-operative Societies Act
- 2002 is limited to attachment of property mortgaged to the society
- Arbitrator cannot attach property not mortgaged in respect of the claim under reference
- Section 96 must be read with Section 84 of the Act
Case Details
Chamber Summons No.1727 of 2004 in Execution Application No.405 of 2004 in Arbitration Case No.ARB/SCB/0226 of 2004
Mr. J.P. Shah with Mr. Manish Bohra i/b A.S. Khan for Applicant, Mr. Prashant Naik for Petitioners/Claimants
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Nature of Litigation
Chamber Summons challenging an order of attachment passed by an Arbitrator under Section 96 of the Multi-State Co-operative Societies Act, 2002.
Remedy Sought
The Applicant (Vijay Hargovinddas Mehta) sought to quash the attachment order dated 5th November 2004 passed by the Arbitrator.
Filing Reason
The Arbitrator attached property belonging to the Applicant which was not mortgaged in respect of the claim under reference, allegedly without jurisdiction.
Previous Decisions
The Arbitrator allowed the Bank's application under Section 96 and passed an order of attachment on 5th November 2004.
Issues
Whether the Arbitrator under Section 84 of the Multi-State Co-operative Societies Act, 2002 has the power to attach property not mortgaged to the society, pending the reference, under Section 96 of the Act.
Submissions/Arguments
The Applicant argued that the Arbitrator had no power to attach property not mortgaged to the society.
The Petitioners (Bank) contended that the Arbitrator had power under Section 96 to attach any property.
Ratio Decidendi
Section 96 of the Multi-State Co-operative Societies Act, 2002 must be read with Section 84, which limits the Arbitrator's jurisdiction to disputes relating to the business of the society, including recovery of loans advanced on mortgage. Therefore, the power of attachment under Section 96 is confined to property mortgaged to the society. Since the attached property was not mortgaged, the Arbitrator acted without jurisdiction.
Judgment Excerpts
This matter raises interesting question of law.
It is common ground that the property sought to be attached ... is not mortgaged by the Respondents or the Applicant in respect of the claim under reference for recovery of money under Section 84 of the Act.
Procedural History
The Bank initiated arbitration under Section 84 of the Multi-State Co-operative Societies Act, 2002. During the reference, the Bank applied under Section 96 for attachment of property. The Arbitrator allowed the application on 5th November 2004. The Applicant filed Chamber Summons No.1727 of 2004 challenging the attachment order.
Acts & Sections
- Multi-State Co-operative Societies Act, 2002: 84, 96
