Case Note & Summary
The Petitioner, Mr. Yusufkhan Fakhrookhan Tadvi, was a member of Respondent No.1-Bank, Konkan Mercantile Co-operative Bank Ltd., and belonged to the Tadvi Bhil community, a Scheduled Tribe. He was elected as a Member of the Board of Directors for the period 1994-2003. His caste validity certificate was cancelled, and he filed a Writ Petition which was pending before the Aurangabad High Court Bench. An earlier Arbitral Award was passed against the Petitioner directing him to repay benefits derived as a Board Member. That Award attained finality, and the Bank initiated execution proceedings. The Petitioner opposed the Bank's enhancement of membership amount on 10th September 2012, but the Bank did not reply. By letter dated 1st October 2012, the Bank intimated the Petitioner that his membership and shares of Rs.750/- were forfeited against recovery of alleged dues. The Petitioner raised a dispute under Section 84 of the Multi-State Co-operative Societies Act, 2002, which was referred to arbitration. The Sole Arbitrator, appointed by the Central Registrar, passed an Award on 22nd January 2013 dismissing the Petitioner's dispute with costs, holding that the Petitioner failed to prove the Bank's decision was illegal, malafide, discriminatory, or unwarranted, and that the Bank proved the loss of membership was a consequence of recovery action based on a final award. The Petitioner challenged this Award under Section 34 of the Arbitration and Conciliation Act, 1996, by filing the present petition on 22nd February 2013. The Bank filed a reply on 14th March 2013, and both parties filed additional affidavits. The court considered the submissions and found that the Arbitrator's findings were based on evidence and the Bank's action was a consequence of the final award. The court held that no grounds under Section 34 were made out, as the Award was not patently illegal or perverse. The petition was dismissed, and the Award was upheld.
Headnote
A) Arbitration Law - Challenge to Arbitral Award under Section 34 of Arbitration and Conciliation Act, 1996 - Scope of Interference - The court considered whether the Arbitral Award suffered from patent illegality or perversity warranting interference under Section 34. The court held that the Arbitrator's findings were based on evidence and the Bank's action was a consequence of the final award against the Petitioner. The petition was dismissed as no grounds under Section 34 were made out. (Paras 9-10) B) Co-operative Societies - Forfeiture of Membership and Shares - Multi-State Co-operative Societies Act, 2002 - Section 84 - The Petitioner challenged the Bank's decision to forfeit his membership and shares of Rs.750/- as recovery action. The Arbitrator held that the Bank proved the loss of membership was a consequence of the recovery action based on a final award. The court upheld the Arbitrator's view that the Bank's action was not illegal or malafide. (Paras 3-6) C) Natural Justice - Opportunity of Hearing - Forfeiture of Membership - The Petitioner contended that the forfeiture was without prior notice and opportunity. The court noted that the Bank had issued a letter dated 1st October 2012 intimating the forfeiture, and the Petitioner had an opportunity to raise the dispute under Section 84 of the Act of 2002. The Arbitrator considered the issue and found no violation of natural justice. (Paras 4-6)
Issue of Consideration
Whether the Arbitral Award dated 22nd January 2013, which dismissed the Petitioner's dispute regarding forfeiture of membership and shares by the Bank, is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996.
Final Decision
The court dismissed the Arbitration Petition, upholding the Arbitral Award dated 22nd January 2013. No order as to costs.
Law Points
- Arbitration and Conciliation Act
- 1996
- Section 34
- Multi-State Co-operative Societies Act
- 2002
- Section 84
- Arbitral Award
- Challenge to Award
- Forfeiture of Membership
- Natural Justice
- Opportunity of Hearing
