Writ Petition No. 2360 of 2020 · The High Court
Case Details
- 1 - NC: 2025:KHC:11573 WP No. 2360 of 2020 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 2360 OF 2020 (APMC) BETWEEN: M/S DARSHAN TRADERS MALEBENNURU, ITS OWNER, SRI H S VEERABHADRAIAH, S/O LATE H S SHANMUKHAIAH, AGED ABOUT 41 YEARS, R/O. MALEBENNURU, HARIHARA TALUK, DAVANAGERE - 577601. …PETITIONER (BY SRI. PRASAD B S., ADVOCATE) AND: 1. STATE OF KARNATAKA DEPARTMENT OF AGRICULTURAL MARKET, NO.1, 2ND RAJ BHAVAN ROAD, POST BOX NO.5309, BANGALORE-560001. REP. BY ITS SECRETARY. 2. AGRICULTURAL PRODUCE MARKET COMMITTEE HARIHARA, DAVANAGERE-577601, REPRESENTED BY ITS SECRETARY. 3. AGRICULTURAL PRODUCE MARKET COMMITTEE DISPUTE SETTLEMENT COMMITTEE, HARIHARA, Digitally signed by VANAMALA N Location: High Court of Karnataka - 2 - NC: 2025:KHC:11573 WP No. 2360 of 2020 DAVANAGERE-577601. BY ITS COMMITTEE CHAIRMAN. 4. M/S S K RICE INDUSTRIES NO.4021, MASJID ROAD, MALEBENNURU HARIHARA TALUK, REP BY PARTNER SRI. SYED ALTHAFAHMED M, S/O SYED KASIM .M AGED ABOUT 46 YEARS, MALEBENNURU, HARIHARA TALUK, DAVANAGERE-577601. 5. M/S S.K. HITESH INDUSTRIES S K MANSION, JIGLE ROAD MALEBENNURU HARIHARA TALUK REP BY PARTNER SRI. SYED JAMIL S/O SYED KHALEEL AGED ABOUT 46 YEARS PARTNER, R/O 53/1 KHADAR MANSION OPP. VINAYAKA PARK SHIMOGA - 577 201. …RESPONDENTS
Legal Reasoning
(BY SMT.VAHEEDA., AGA FOR R1; SRI. T. SWAROOP, ADVOCATE FOR R2 & R3; SRI. M. VINAY KEERTHY, ADVOCATE FOR R4 & R5) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO- QUASH THE IMPUGNED ORDERS DATED 21.12.2018 ISSUED BY R-2 AS FOUND AT ANNEXURE-A AND B. - 3 - NC: 2025:KHC:11573 WP No. 2360 of 2020 THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE B M SHYAM PRASAD ORAL ORDER The petitioner, a Licensed Trader with the second respondent, has filed this petition impugning the second respondent's orders dated 21.12.2018 [Annexures-A and B]. The second respondent has issued the impugned orders calling upon the petitioner to pay a certain amount within thirty [30] days. The second respondent has issued these orders after the Disputes Committee’s decision dated 13.12.2018. The undisputed fact is that both the petitioner and the fourth respondent are Licensed Traders, and the fourth respondent has raised a dispute alleging that the petitioner has not paid for the produce purchased. 2. If there is any dispute between the traders in relation to the payment for any produce transacted in the market yard/sub-market yard, the Market Committee must enable adjudication by arbitration or constitute a - 4 - NC: 2025:KHC:11573 WP No. 2360 of 2020 Disputes Committee for adjudication of the dispute. The second respondent has a panel of arbitrators, and the Disputes Committee is constituted. The empanelment of the arbitrators and constitution of the Disputes Committee is under Section 84 of the Karnataka Agricultural Produce Marketing [Regulation and Development] Act, 19661. The procedure for the reference 1 84. Provision for settlement of disputes.- (1) For the purpose of settling disputes between producers, buyers and sellers, or their agents, including any disputes regarding the quality or weight of, or payment for, any agricultural produce, or any matter in relation to the regulation of marketing of agricultural produce in the [market yard, market sub yard or sub market-yard, as the case may be] the market committee of that area shall appoint a panel of arbitrators periodically consisting of agriculturists, traders and commission agents, and constitute a Disputes Committee its members in such manner as may be prescribed. from among (2) Rules shall be made regulating the procedure for settlement of disputes, the authority or authorities for settling the disputes and appeals from the decisions of such authorities, payment of fees by parties for settlement of disputes, by an arbitrator or arbitrators and all other matters connected with such settlement including the extent to which the provisions of the Arbitration Act, 1940, shall be applicable to arbitrations under this section. (3) Subject to the rules made under sub-section (2), a market committee may make bye-laws regulating the details in respect of settlement of disputes relating to transactions in notified agricultural produce in the market area. - 5 - NC: 2025:KHC:11573 WP No. 2360 of 2020 to the arbitrator or the dispute to the Disputes Committee is under Rule 55 of the Karnataka Agricultural Produce Marketing [Regulation and Development] Rules, 1968 [for short, 'the APMC Rules']. Generally stated, if the parties select an arbitrator, the adjudication of the dispute will be by such arbitral tribunal, and the second respondent refers the dispute to the Disputes Committee even if one of the parties to the dispute cannot select an arbitrator. 3. Mr. B. S. Prasad, the learned counsel for the petitioner, canvasses three grounds in support of the petitioner's grievance with the second respondent's orders dated 21.12.2018; the first ground relates to the jurisdiction of the Disputes Committee to enter reference of the dispute; the second ground relates to the failure to comply with the provisions of the relevant rules and principles of natural justice and the third ground is about bias. (4) Notwithstanding anything contained in any law, no suit or other legal proceeding shall be entertained by any Court in respect of disputes referred to in sub-section (1), without the market the previous sanction of committee. - 6 - NC: 2025:KHC:11573 WP No. 2360 of 2020 3.1 On the first ground. Mr. B. S. Prasad elaborates that whenever there is a dispute between two traders about payment for agricultural produce sold within a market yard/sub-market yard, the dispute must be referred to arbitration with the contingence reference to the Disputes Committee. The fourth respondent has not selected an arbitrator under Rule 55 of the APMC Rules, and if the fourth respondent has failed to select an arbitrator within a time specified, the claim must be rejected because of the provisions of Rule 55(3)(iv)(a) of the APMC Rules. Instead, the second respondent, having recourse to the provisions of Rule 55(3)(vii)(a) of the APMC Rules, has referred to the Disputes Committee. 3.2 On the ground of violation of due opportunity and principal of natural justice. Sri. B. S. Prasad submits that the petitioner has not received the second respondent's Communication dated 09.07.2018 and if the petitioner has not been served with this Communication, no inference could be drawn without notice of the communication under Rule 55(3)(iv)(b) of the APMC Rules or recourse be had to Rule 55(3)(vii)(a) of the APMC Rules. - 7 - NC: 2025:KHC:11573 WP No. 2360 of 2020 The learned counsel also submits that there is a violation of principles of natural justice because the Disputes Committee did not furnish copies of the documents despite the specific request. 3.3 On bias. Mr. B. S. Prasad submits that the fourth respondent is a member of the Disputes Committee and though the records indicate that he has stayed away from the proceedings of the Committee, his influence in the decision making would be undeniable. If a member of a Disputes Committee is a party to the dispute or is interested in the parties to the dispute before the Disputes Committee, not only should such member recuse, but a substitute member should also be appointed to the Disputes Committee for adjudication of such dispute. 4. In rebuttal, Sri T. Swaroop, the learned counsel for the second and third respondents, who is supported by Sri. M. Vinay Keerthy, the learned counsel for the fourth and fifth respondents, invites this Court's attention to the provision of Rule 55 (3)(iv) and Clause (vii) of the APMC Rules and contends that the second - 8 - NC: 2025:KHC:11573 WP No. 2360 of 2020 respondent could not have rejected the fourth respondent’s claim because the fourth respondent [as envisaged under Rule 55 (3) (iv)/ Clause (vii) of the APMC Rules] has communicated on 12.07.2018 that he is unable to select an arbitrator and it is only because of this Communication, and with the petitioner not nominating an arbitrator, the dispute is referred to the Disputes Committee under Rule 55(3)(vii)(a) of the APMC Rules. 5. On the petitioner's grievance of the Disputes Committee not furnishing the petitioner with the documents despite the request and the appointment of another member of the Disputes Committee because the fourth respondent is a party to the dispute, the learned counsels submit that they will have to secure further instructions. However, this Court must opine that the outcome of this petition must turn on the petitioner's grievance that it is not served with notice dated 09.07.2018. - 9 - NC: 2025:KHC:11573 WP No. 2360 of 2020 6. The Rule 55(3)(iv) and Clause(vii) of the APMC Rules read as under: "55(3)(iv) - Save as provided in clause (vii) if one party to the dispute fails to select an arbitrator, either originally or by way of substitution as aforesaid within the time specified for the purpose in the bye-laws.- (a) if such party happens to be the complaining party, his claim shall be deemed to have been rejected; (b) if such party happens to be the opposing party and the complaining party has selected the arbitrator within the time specified for the purpose in the bye-laws, the arbitrator selected by the complaining party shall act as sole arbitrator and his award shall be binding on both parties as if he had been appointed by consent." 55(3)(vii) - A dispute shall be referred to the Disputes Committee by the Secretary if. - (a) either of the disputants reports to the Secretary within the time specified in the bye-laws for the selection of arbitrators, that he is unable to select an arbitrator who is ready and willing to act as such; or - 10 - NC: 2025:KHC:11573 WP No. 2360 of 2020 (b) if the arbitrators fail to make an award within the time specified in the bye-laws; or (c) if the arbitrators inform the secretary in writing that they cannot agree." 7. It flows from these provisions that if the parties to whom the Communication is addressed by the concerned Secretary under 55(3)(ii)2 of the APMC Rules do not select an arbitrator within the time specified, separate consequences follow depending on who is in failure. If the complainant party does not select the arbitrator, his claim will be deemed to be rejected, and if the opposing party does not select an arbitrator, the arbitrator selected by the complainant party will act as the sole arbitrator and his award will be binding. Even if one disputant reports to the 2 (ii) If the parties cannot mutually arrive at a settlement, the complaining party shall credit to the committee such fee, within such period after the date of service of notice by the Secretary in that regard, as may be specified in the bye- laws. If he fails to credit the fees within the specified time his claim shall be deemed to have been rejected. As soon as the fee is paid, the Secretary shall require the parties to the dispute by a notice in writing to select within such time as may be specified in the bye-laws one arbitrator each from the panel of arbitrators who is and willing to act as such. - 11 - NC: 2025:KHC:11573 WP No. 2360 of 2020 Secretary that it cannot select an arbitrator, the Secretary must refer the dispute to the Disputes Committee. 8. This Court must observe that if the opposing party [the petitioner] has not selected an arbitrator and the claiming party [the fourth respondent] informs the Secretary concerned that it cannot select an arbitrator, no exception can be taken with the second respondent referring the dispute to the Disputes Committee. As earlier observed, the outcome of this petition must turn on whether the petitioner is served with the second respondent's Communication dated 09.07.2018, which would have afforded it an opportunity to select an arbitrator. 9. Indeed, it is canvassed on behalf of the fourth respondent that the petitioner is served with the Communication dated 09.07.2018 calling upon him to select an arbitrator, but he has failed to select. - 12 - NC: 2025:KHC:11573 WP No. 2360 of 2020 The petitioner denies the assertion that he is served with the Communication. This Court, given the consequences which results from the adjudication and certain haziness in the Disputes Committee not furnishing the documents despite a request from the petitioner and the appointment of another member of the Committee in place of the fourth respondent, opines that there must be interference with the second respondent's impugned orders restoring the proceedings to the stage where both the petitioner and the fourth/fifth respondents can select an arbitrator from the Panel of Arbitrators. This brings about an adjudication that invites civil consequences, but after due opportunity. Hence, the following:-
Decision
ORDER i. The petition is allowed in-part quashing the second respondent's orders dated 21.12.2018 [Annexures - A and B] but restoring the proceedings to the stage of the Rule 55(3)(ii) of the APMC Rules. - 13 - NC: 2025:KHC:11573 WP No. 2360 of 2020 ii. The petitioner and the fourth/fifth respondents are reserved with liberty, in terms of the second respondent’s Communication dated 09.07.2018 and this Court's present order, to select an arbitrator as contemplated under 55(3)(iv) of the APMC Rules within two [2] weeks from the date of receipt of a certified copy of this order. iii. If there is failure despite this opportunity, the consequences that must ensue in terms of the APMC Rules shall be. Sd/- (B M SHYAM PRASAD) JUDGE SA, RB