Case Note & Summary
The appellant, Prakash Vrundavan Thakkar, challenged the judgment and order dated 8th November 2012 passed by the learned Principal District Judge at Nagpur in Misc. Civil Application No. 121/2007, which dismissed his application under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside an arbitral award. The appellant was a guarantor for a loan taken by respondent no. 3 from respondent no. 1, The Nagpur Nagrik Sahakari Bank Ltd., a multi-state cooperative bank. Due to default in repayment, the bank referred the dispute to arbitration under Section 84 of the Multi-State Cooperative Societies Act, 2002. The appellant contended that the arbitral tribunal lacked jurisdiction because he was not a member of the society. In an earlier round of litigation, the High Court had remanded the matter to the District Judge to decide the issue of membership. On remand, the District Judge relied on Form 'k' signed by the appellant, which contained the terms of the loan and an arbitration clause, and held that the tribunal had jurisdiction. The High Court upheld this finding, noting that the appellant had signed the form and agreed to the terms, and thus the arbitral tribunal had jurisdiction over him as a guarantor. The appeal was dismissed.
Headnote
A) Arbitration - Jurisdiction - Guarantor - Section 84 Multi-State Cooperative Societies Act, 2002 - Section 34 Arbitration and Conciliation Act, 1996 - The issue was whether the arbitral tribunal had jurisdiction to entertain a dispute against a guarantor who was not a member of the society. The court held that the guarantor, by signing Form 'k', agreed to the terms of the loan and the arbitration clause, and thus the tribunal had jurisdiction. (Paras 3-5)
Issue of Consideration
Whether the arbitral tribunal under Section 84 of the Multi-State Cooperative Societies Act, 2002 has jurisdiction over a guarantor who is not a member of the cooperative society.
Final Decision
The appeal is dismissed. The judgment and order dated 8th November 2012 passed by the learned Principal District Judge at Nagpur in Misc. Civil Application No. 121/2007 is upheld.
Law Points
- Arbitration
- Jurisdiction
- Guarantor
- Membership
- Cooperative Society
- Section 84 Multi-State Cooperative Societies Act
- 2002
- Section 34 Arbitration and Conciliation Act
- 1996
Case Details
2014 LawText (BOM) (01) 132
Arbitration Appeal No. 4/2013
M.R. Joharapurkar for Appellant, G.B. Soni for Respondent No.1
Prakash Vrundavan Thakkar
The Nagpur Nagrik Sahakari Bank Ltd., Nagpur; Raj Pandurang Rajwansh; Harshad Shantilal Thakkar
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Nature of Litigation
Appeal against order dismissing application under Section 34 of Arbitration and Conciliation Act, 1996 to set aside arbitral award.
Remedy Sought
Appellant sought to set aside the arbitral award to the extent it operated against him.
Filing Reason
Appellant challenged the jurisdiction of the arbitral tribunal on the ground that he was not a member of the cooperative society.
Previous Decisions
Earlier, the High Court had set aside the District Judge's order dismissing the Section 34 application and remanded the matter to decide the issue of membership.
Issues
Whether the arbitral tribunal under Section 84 of the Multi-State Cooperative Societies Act, 2002 has jurisdiction over a guarantor who is not a member of the society.
Submissions/Arguments
Appellant argued that the arbitral tribunal lacked jurisdiction because he was not a member of the society.
Respondent bank argued that the appellant had signed Form 'k' and agreed to the terms, including arbitration.
Ratio Decidendi
A guarantor who signs a loan document containing an arbitration clause is bound by the arbitration agreement, and the arbitral tribunal under Section 84 of the Multi-State Cooperative Societies Act, 2002 has jurisdiction over such guarantor even if he is not a member of the society.
Judgment Excerpts
The question involved before the learned Principal District Judge in the application under Section 34 of the said Act was regarding the jurisdiction of the arbitral tribunal to entertain, try and decide the dispute referred to it under Section 84 of the MultiState Cooperative Societies Act, 2002.
In the judgment and order impugned in this appeal, the learned Principal District Judge has relied upon Form 'k' signed by the petitioner and tendered to the...
Procedural History
The bank referred the dispute to arbitration under Section 84 of the Multi-State Cooperative Societies Act, 2002. The appellant filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the award. The District Judge initially dismissed the application. The High Court set aside that order and remanded the matter to decide the issue of membership. On remand, the District Judge dismissed the application again, leading to the present appeal.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 34
- Multi-State Cooperative Societies Act, 2002: Section 84
