Case Note & Summary
The petitioner, Nazim H. Kazi, was a member of the respondent, Kokan Mercantile Cooperative Bank Ltd., since 1986 and served as its Chairman from 25th November 2000 to March 2008. In February 2008, he was again elected as a director. In a meeting of the respondent bank, it was decided to appoint M/s. Choksi and Choksi, Chartered Accountants, to conduct an enquiry into alleged irregularities in some accounts. The Chartered Accountants submitted a report on 28th March 2009, which opined that there were irregularities in credit facilities and that the team led by the chairman (the petitioner) had failed in those fronts. The petitioner was not heard or called for any discussion during the enquiry. The report was tabled in the Board meeting on 2nd April 2009. The petitioner contended that he was not given an opportunity to be heard before the report was submitted. He filed a dispute under Section 84 of the Multi State Co-operative Societies Act, 2002, which was dismissed by the Arbitral Tribunal. The petitioner then challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996. The court examined whether the principles of natural justice were violated. The court noted that the petitioner was given an opportunity to respond after the report was placed before the Board. The court held that the principles of natural justice do not require a hearing before the preparation of an enquiry report; it is sufficient if the affected party is heard before any adverse action is taken. The court found no merit in the petition and dismissed it, upholding the arbitral award.
Headnote
A) Arbitration Law - Challenge to Arbitral Award - Section 34 Arbitration and Conciliation Act, 1996 - Limited Grounds - The court considered whether the arbitral award could be set aside on the ground that the petitioner was not heard before the enquiry report was tabled. Held that the petitioner was given an opportunity to respond after the report was placed before the Board, and thus no violation of natural justice occurred. (Paras 2-5) B) Cooperative Societies - Enquiry Report - Multi State Co-operative Societies Act, 2002, Section 84 - Opportunity of Hearing - The petitioner, a former chairman, alleged that he was not heard before the report of M/s. Choksi and Choksi was submitted. The court held that the principles of natural justice do not require a hearing before the report is prepared; it is sufficient if the affected party is heard before any adverse action is taken. (Paras 3-5)
Issue of Consideration
Whether the Arbitral Tribunal erred in dismissing the petitioner's dispute under Section 84 of the Multi State Co-operative Societies Act, 2002, and whether the award is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on the ground of violation of natural justice.
Final Decision
The court dismissed the petition, upholding the arbitral award dated 15th February, 2011. The court held that there was no violation of natural justice as the petitioner was given an opportunity to respond after the report was placed before the Board.
Law Points
- Arbitration and Conciliation Act
- 1996
- Section 34
- Multi State Co-operative Societies Act
- 2002
- Section 84
- Natural Justice
- Opportunity of Hearing
- Enquiry Report
- Arbitral Award
- Challenge to Award
- Limited Grounds of Challenge
