THE HON’BLE SRI JUSTICE N.V. RAMANA W.P. No. 11160 of 2009 O r d e r: Respondent No.3 appears to have obtained loan from respondent No.1-Bank under Loan Account No. 91/PTF. As he defaulted in repaying the loan amount, respondent No.1-Bank initiated proceedings under Section 71 of the A.P. Co-operative Societies Act, 1964 and obtained Sale Certificate. On the basis of Sale Certificate, respondent No.1-Bank initiated proceedings in CEP No. 12/2002-03, and petitioner No.2 was informed by respondent No.1-Bank that her property is set off against Loan Account No. 91/PTF in pursuance of the auction conducted on 21.04.2007. Questioning the proceedings, including the auction, the petitioners filed appeal in O.A. No. 45 of 2007 before the Co-operative Tribunal, Visakhapatnam, inter alia contending that the Sale Certificate obtained by respondent No.1-Bank does not contain the name of petitioner No.2, that she never stood as surety to the loan transaction in Loan Account No. 91/PTF and that the title deeds relating to her property were mortgaged in another Loan Account No. PTL/12, which she had already paid, but the documents were not returned. The Co-operative Tribunal vide orders dated 26.08.2008, set aside the entire proceedings in CEP No. 12/2002-03 and allowed the O.A. The petitioners contend that the said order attained finality as no appeal was filed against it. While the matters stood thus, the petitioners state that respondent No.1-Bank initiated arbitration proceedings in ARC No. 328 of 2008-09. The petitioners contend that since the said arbitration proceedings are barred under Order II, Rule 2 C.P.C., they filed an application under Order XIV read with Section 151 C.P.C. praying to frame and decide the question as to maintainability of the ARC proceedings as preliminary issue, but the Assistant Registrar of Co-operative Societies/Arbitrator and Sale Officer, by reason of the impugned order dated 27.04.2009, dismissed the said application. Hence, the petitioners filed the present writ petition. Heard the learned counsel for the petitioner and perused the impugned order. The order dated 26.08.2008, passed by the Co-operative Tribunal, allowing the appeal in O.A. No. 45 of 2007, filed by the petitioners, which the petitioners contend attained finality, has been passed on the technical ground that set off has been made without determining the liability of the petitioners. Though the Co-operative Tribunal allowed the O.A. filed by the petitioners, but it held that the order will not absolve the liability of the petitioners towards the loan in dispute, if proved by the respondent-Bank with appropriate material before proper forum. Since the liability of the petitioners towards the loan in dispute has not been absolved, respondent No.1-Bank initiated arbitration proceedings, to determine the liability of the petitioners, and no exception can be taken thereto. The question as to whether arbitration proceedings are barred by limitation need not be gone into at this stage, inasmuch as he present arbitration proceedings have been initiated by respondent No.1 only to ascertain the liability of the petitioners and not to recover the monies which the principal loanee is due and liable to pay to respondent No.1. However, the petitioners are at liberty to raise all the grounds, which they are entitled to under law in the arbitration proceedings, and respondent No.2, namely the Assistant Registrar/Arbitrator, shall consider them at the time of passing award. Accordingly, with the observations as above, the writ petition is dismissed. No costs. ________________ N.V. RAMANA, J. Dated: 17th June, 2009 KSR