Raju @ Rajendra Manoharrao Patil v. Pandurang Yashwant Dhongade

The present appeal is filed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘A&C Act’), challenging judgment and order dated 22.10.2024passed by the learned Principal District Judge, Latur in Arbitration Case No.23/2024. The dispute in the appeal pertainsto election of member of Board of Directors of OsmanabadJanata Sahakari Bank Limited which is a multi state co-operativesociety registered under the Multi-State Co-operative SocietiesAct, 2002 (hereinafter referred to as ‘MSCS Act’). The Appellantand Respondent No.1 had contested the election for the post of Director of the Respondent No.2 against seat reserved forcandidates belonging to economically weaker section (EWScategory). The Appellant was declared elected. The election[2]

result was declared on 20.11.2021. The Respondent No.1challenged the election of Appellant by raising a dispute ascontemplated under Section 84 of the MSCS Act. The dispute waslodged before the Respondent No.4 (Arbitrator). The RespondentNo.4 set aside the election of the Appellant vide judgment andaward dated 01.01.2024. The Appellant filed a petition under Section 34 of the A&C Act, challenging the said arbitral awarddated 01.01.2024 which came to be registered as ArbitrationPetition No. 23/2024. The said petition came to be dismissed bythe learned Principal District Judge, Latur vide judgment andorder dated 22.10.2024. The said arbitral award dated01.01.2024 whereby the election of the Appellant as Member ofthe Board of Directors of Respondent No.2 from constituencyno.5 reserved for EWS category is set aside and the subsequentjudgment and order dated 22.10.2024 whereby the said award isupheld.

The elections for the Board of Directors of the RespondentNo.2/Society were held on 19.11.2021. The Appellant and Respondent No.1 contested the election for the post of Memberin the Board of Directors from constituency no.5 which wasreserved for EWS category. The results were declared on20.11.2021. The Appellant was declared elected. As statedabove, the Respondent No.1 challenged the said election by filinga dispute on 20.12.2021 before the Respondent No.4. Thecontention of the Respondent No.1 was that the Appellant wasnot eligible to contest the election from EWS category since hehad not signed declaration in the nomination form, stating that[3]

he belonged to the said category. The Appellant appeared beforethe Respondent No.4/Arbitrator and initially raised a preliminaryobjection vide Exhibit-19 questioning the authority of the Respondent No.4 to entertain the arbitration. The said objectionwas rejected by the Respondent No.4/Arbitrator vide order dated25.07.2022. This order dated 25.07.2022 was assailed by the Appellant by filing a petition before this Court being Writ PetitionNo.10028/2022. The said petition was disposed of with liberty tothe Appellant to challenge the appointment of Respondent No.4as Arbitrator at the appropriate stage in appropriate proceeding.

The Appellant contested the matter on merits. He raisedissue pertaining to limitation and appointment of RespondentNo.

Apart from these legal submissions, the matter was alsocontested on merits. 4. The contention of the Appellant is that the appointment of Arbitrator under the MSCS Act is required to be made by the Central Registrar. He contends that the appointment is made withrespect to a particular dispute. It is contended that a disputecannot be filed directly before any Arbitrator. According to thelearned Advocate for the Appellant the dispute is required to beraised before the Central Registrar who then appoints an Arbitrator for adjudication of the dispute. In the present case, the Respondent No.1 filed the dispute directly before the Respondent No.4 on 22.12.2021. The Respondent No.2 moved aproposal to the Central Registrar on 29.03.2022 for appointment[4]

of Respondent No.4 as Arbitrator for adjudication of 25 casesthat were pending before him and for adjudication of 75 newcases. The dispute raised by the Respondent No.1 is included inthe list of new cases referred in the proposal dated 29.03.2022.The Central Registrar granted approval to the said proposal on12.04.2022. According to the learned Advocate for the Appellantthe filing of the dispute itself is defective since it was filed on22.12.2021 before Respondent No.4 who was not appointed asan Arbitrator to hear and decide the said dispute on that date.

Apart from this, another contention is raised that theelection result was declared on 20.11.2021 and the dispute wasfiled on 22.12.2021 i.e. after the prescribed period of limitationof one month as per Section 85 (1)(c) of the MSCS Act. 6. As regards merits of the matter, the contention of thelearned Advocate for the Appellant is that the Election Officer hadverified the nomination form of the Appellant and had acceptedthe same as a valid nomination. He contends that oncenomination form is accepted, election cannot be set aside on theground in the alleged defect in the nomination form. 7. Per contra, the learned Senior Advocate for the RespondentNo.1 contends that the dispute was properly filed before Respondent No.4 who was already appointed as an Arbitrator foradjudication of disputes and the Section 84 of the MSCS Act foradjudication of disputes relating to the Respondent No.2/Society.[5]

The learned Senior Advocate further draws attention to theorder-sheet maintained by the Respondent No.4/Arbitrator andpoints out that although filing of the dispute was accepted on22.12.2021, the Respondent No.4 issued notice in the matterafter 12.04.2022 which is the date on which approval to theappointment of Respondent No.4 was granted by the CentralRegistrar. As regards limitation, the learned Senior Advocatestates that after the election results were declared on20.11.2021, application for certified copies of the relevantdocuments was filed on 17.12.2021 and the said documentswere received on 21.12.2021. The dispute was filed on the nextdate i.e. on 22.12.2021. The learned Senior Advocate contendsthat period from 17.12.2021 to 21.12.2021 consumed forobtaining certified copies needs to be excluded for the purpose ofcomputation of limitation. Alternatively, he contends that the Arbitrator is empowered to condone the delay in view of Section85 (3) of the MSCS Act and that the explanation offered by the Respondent No.1 for not filing the dispute before 20.12.2021 isaccepted by the Respondent No.4/Arbitrator. As regards themerits, the learned Senior Advocate contends that thenomination form of the Appellant is an undisputed document, perusal whereof will demonstrate that the Appellant had notsigned the declaration that he belongs to EWS category. It iscontended that this declaration is the part of the nomination formitself. The learned Senior Advocate further contends that theportion in the nomination form regarding declaration ofcandidates belonging to EWS category is specifically scored out. The learned Senior Advocate further states that the Appellant[6]

had not produced any document also before the Arbitrator tosubstantiate that he belonged to EWS category. 8. The appeal was ordered to be heard finally vide order dated07.05.2025. However the appeal could not be heard finally onthe said date. The matter was taken up for final hearing withconsent of the parties. 9. Heard the rival submissions as aforesaid and perused therecord of the case with the able assistance of the parties. Perusalof the nomination form of the Appellant will demonstrate that the Appellant had filled up the form for contesting election from EWScategory. For persons contesting elections against seats fallingunder reserved category, there are declarations to be madewhich are appended to the nomination form. Perusal of the saiddeclaration in the nomination form of the Appellant willdemonstrate that the Appellant has not filled up the saiddeclaration. The portion of the declaration is scored of bydrawing to vertical lines. The declaration is admittedly not signedby the Appellant. However nomination is accepted as validnomination by the Election Officer. 10. The learned Arbitrator and the learned Principal DistrictJudge have held that it was necessary for the Appellant to fill upthe declaration and sign the same in order to confirm that the Appellant is a person belonging to EWS category since he wascontesting election for the said category. Both authorities have[7]

also observed that apart from failure to sign the declaration, the Appellant did not produce any documentary evidence beforethem to establish that he belonged to EWS category. In that viewof the matter, the learned Arbitrator has set aside the election ofthe Appellant and the said order is also upheld by the learnedPrincipal District Judge while deciding the application under Section 34 of the A&C Act. No fault can be found with the findingthat Appellant did not fill up the nomination form properly. It isapparent that furnishing declaration that the Appellant belongedto EWS category was necessary to enable him to contest electionfrom the said category. Apart from the failure to sign thedeclaration in the prescribed form, the Appellant also failed toproduce any documentary evidence to demonstrate that hebelonged to EWS category. In that view of the matter, no faultcan be found with respect to the arbitral award setting aside theelection of the Appellant, as also with respect to the order passedby the learned Principal District Judge, dismissing petition filedby the Appellant challenging the arbitral award. 11. As regards the issue of limitation, Section 85 (1)(c)prescribes limitation of one year for reference of disputes relatingto election to arbitration. In the present case, the election wasdeclared on 20.11.2021 and as stated above, the dispute is filedon 22.12.2021 that is beyond the prescribed period of limitation. 12. As stated above, the contention of Respondent No.1 is thatperiod of four days from 17.12.2021 to 21.12.2021 which wasspent in obtaining certified copy of nomination form of Appellant[8]

and other documents needs to be excluded. Perusal of the Actand the Rules does not indicate that filing of certified copy ofnomination form or other documents is made mandatory forfiling dispute pertaining to the election. The said period of fivedays therefore cannot be excluded for computation of limitation. However perusal of the award passed by the Arbitratordemonstrates that the learned Arbitrator has accepted this causeas a sufficient cause for accepting filing of limitation beyond theprescribed period of limitation of one month. It will be pertinentto mention that Section 85 (3) of the MSCS Act confers authorityon the Arbitrator to admit disputes referred after the prescribedperiod of limitation if the Appellant furnishes satisfactoryexplanation for the delay. The learned Arbitrator has arrived atthe satisfaction that the delay is properly explained. Thediscretion exercised by the Arbitrator need not be and cannot beinterfered with having regard to the limited scope of interferenceunder Sections 34 and 37 of the A&C Act. The explanationoffered even otherwise appears to be plausible that for raising adispute arising due to improper nomination form it wasappropriate to file nomination form of the Appellant andtherefore application for certified copy of the same, was made bythe Respondent No.1. The contention with respect to thelimitation is therefore, liable to be rejected. 13. The other objection raised by the Appellant is pertaining tofiling of the dispute before the Respondent No.4. The contentionas pointed out above is that the dispute was filed directly beforethe Respondent No.4/Arbitrator on 22.12.2021, although his[9]

appointment for adjudication of the dispute is made on12.04.2022. The learned Advocate contends that the RespondentNo.4/Arbitrator had no jurisdiction to accept filing of the disputedirectly before him. He contends that unless a person isappointed as an Arbitrator by the Central Registrar foradjudication of a particular dispute, he has no authority to acceptfiling of the dispute. 14. The learned Senior Advocate for the Respondent No.1states that the Respondent No.4 was associated as Arbitratorappointed under Section 84 of the MSCS Act for the RespondentNo.2/Society since the year 2019. He contends that in that viewof the matter, the Respondent No.1 filed the dispute before Respondent No.4. Mr. Hon submits that although filing of disputewas accepted, notice in the matter was issued only after12.04.2022 that is the date on which Respondent No.4 wasappointed as Arbitrator for deciding the present election dispute. 15. Power to appoint Arbitrator is vested with the CentralRegistrar under Section 84 (4) of the MSCS Act. Section 84 (1)provides that dispute in relation to a society registered under theMSCS Act shall be referred to arbitration for adjudication. Perusalof Section 84(4) will demonstrate that it provides that when adispute has been referred to arbitration under subsection (1) thesame shall be settled or decided by the Arbitrator to beappointed by the Central Registrar. Perusal of Section 84(4),therefore, indicates that the appointment of the Arbitrator by[10]

Central Registrar is required to be made after a dispute isreferred to arbitrator. The learned Advocates representing rivalparties submit that there is no provision either under the Act orthe Rules, which specifically provides filing of the dispute beforeany particular person or authority. The contention of the learnedAdvocate for the Appellant is that having regard to scheme of the Act, the dispute must be filed before the Central Registrar andthereafter the Central Registrar is required to appoint Arbitratorfor adjudication of the same. However the learned SeniorAdvocate contends that since there is no specific provisionregarding filing of arbitration before a particular person orauthority, no fault can be found with the act of the RespondentNo.1 in presenting the arbitration to the Respondent No.4. Hereiterates the submission that Respondent No.4 has entertainedthe arbitration by issuing notice in the matter only after order ofappointment came to be passed on 12.04.2022. There is nodispute about the fact that the Respondent No.4 is appointed as Arbitrator by the Central Registrar for adjudication of the disputeraised by the Respondent No.1 with respect to election of the Appellant. It is undisputed that the Central Registrar hasappointed the Respondent No.4 as an Arbitrator. Likewise it isalso matter of record that the Respondent No.4 was adjudicatingdisputes in relation to the Respondent No.2/Society as an Arbitrator since the year 2019. In that view of the matter in theconsidered opinion of this Court, the objection raised by the Appellant is technical in nature. It must be stated that theobjection raised by the Appellant is taken care of by the fact, that although the Respondent No.4 accepted filing of the dispute[11]

on 22.12.2022, the dispute is actually entertained subsequent toorder dated 12.04.2022 appointing Respondent No.4 as Arbitrator. It is a matter of record that the Arbitrator has issuednotice in the matter after 12.04.2022.16.Section 84 (5) of the MSCS Act provides that arbitrationunder the provisions of the said Act, shall be governed by theprovisions of the A&C Act. The arbitral award passed under theA&C Act can be challenged in filing the petition under Section 34of the said Act. The MSCS Act also does not provide for anyseparate appeal or other remedy to challenge the arbitral award. The only remedy to a person aggrieved by an arbitral award is tofile objection under Section 34 of the A&C Act. The grounds forinterference under Section 34 of the A&C Act, are very limited. An arbitral award can be set aside only if one of thecontingencies enumerated under Section 34 (2) is /are satisfied. The Appellant has contended that the arbitral award is not inaccordance with law and therefore is in conflict with public policyof India. The contention of the Appellant is liable to be rejected. The term ‘public policy of India’ is in view of Explanation 1 to Section 34 (2). It states that an award can be said to be inconflict with public policy of India only if the making of award isinduced by fraud or corruption or in violation of Section 75 or 81or in contravention with fundamental policy of Indian law or inconflict with basic notions of morality or justice. The contentionof the learned Advocate for the Appellant is that the award is inconflict with public policy of India. The said contention cannot beaccepted. Only because the award may not be strictly in[12]

accordance with law will not mean that it is not in accordancewith public policy of India. In the present case, two principalobjections are raised, first with respect to limitation and secondwith respect to direct filing of dispute before RespondentNo.4/Arbitrator before he was so appointed. As regards theaspect of limitation, there is a power to condone the delay. Thedelay is only of two days. It is explained by stating that timespent in obtaining certified copies must be excluded. The learnedArbitrator has accepted the explanation. Therefore on this count, the award cannot be said to be in conflict with public policy of India. 17. As regards filing of the dispute before the Respondent No.4,it is undisputed that the Respondent No.4 was subsequentlyappointed as an Arbitrator and that he has started theproceedings after his appointment as such. Therefore even onthis count, the award cannot be said to be in conflict with publicpolicy of India, assuming that the dispute was wrongly directlyfiled before the Respondent No.4. It may be reiterated that Respondent No.4 was already associated with RespondentNo.2/Society as an Arbitrator. In peculiar facts, mistake, if any, infiling dispute before Respondent No.4 will not mean that theaward is in conflict with public policy of India. 18. As regards merits, the contention raised by the Appellant isthat once the nomination is accepted, defect in nomination formcannot be a ground to set aside the election. The learnedArbitrator/Respondent No.4 and the learned Principal District[13]

Judge have not accepted the said contention. Both authoritieshave held that the portion in the nomination form with respect todeclaration of candidate belonging to EWS category, isspecifically scored out by the Appellant. The Appellant has notsigned the declaration. Despite this, his nomination waserroneously accepted for candidate belonging to EWS category. The authorities have also held that the Appellant had failed tobring any material on record to establish that he belonged toEWS category during the course of hearing before that. In thatview of the matter, even on merits this Court does not find thatany error is committed by the Respondent No.4/Arbitrator andthe learned Principal District Judge in upsetting the election ofthe Appellant. It must be stated that if a person who does notbelong to a particular category contests election from thatcategory and is declared elected, it will be a necessary obligationby the competent authority dealing with election disputes to setaside election of such candidate. In that view of the matter, evenon merits, no fault can be found with the impugned award andorder passed by the learned Arbitrator/Respondent No.4 andlearned Principal District Judge. It may be stated that the Appellant has filed an additional affidavit in the present appealalongwith which EWS certificate for the relevant period is to beused. However in a proceeding under Section 34 or an appealarising under Section 37 of the A&C Act, such material cannot belooked into. The said document which is produced before this Court for the first time, is liable to be discarded. [14]