1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION ARBITRATION APPEAL NO.25 OF 2008 Madhya Pradesh State Cooperative Oil Seeds Grower Federation Ltd. .. Appellant Versus Shirke Structural Pvt.Ltd. And Anr. .. Respondents Mr.S.K.Verma with V.S.Thakur for appellant Mr.S.U.Kamdar, Senior Advocate with V.B.Naik for respondent No.1 Ms.Jui Kanade for respondent No.3 CORAM : S.C.DHARMADHIKARI, J. DATE : 26June 2009. P.C.: 1] This Arbitration Appeal under Section 37 of the Arbitration & Conciliation Act, 1996 (Act for short) challenges an order passed by the learned Dist.Judge VII, dated 7th April 2008 in Misc.Application No.705 of 2004. 2] This application was filed by the Appellants original petitioners to set aside the Award made by the Arbitrator under Arbitration and 1 Conciliation Act, 1996. 3] Therefore, it is clear that the Appellants invoked section 34 of the said Act. 4] Two contentions have been urged before me in support of the prayer to set aside the Award. The first contention is that the Dist.Judge failed to appreciate and fell in clear error in not setting aside the Award in question because the Arbitrator had no jurisdiction to entertain and take cognisance of the claim. The claim of respondents arises out of work under a Works Contract in Chindwara District, Madhya Pradesh. The work was performed for a Cooperative society which is governed by the Madhya Pradesh Coop.Societies Act. In these circumstances, section 64 of the said Act providing for Arbitration of the disputes to which the society is a party, would apply. That being the position, the Arbitrator had no jurisdiction to pass any Award. The issue was whether there is anything in the Arbitration & Conciliation Act which rules out the applicability of the M.P.Coop. Societies Act. There being nothing therein, merely on the strength of the statements made by the appellants that they are ready and willing to go for arbitration would not mean that the Arbitrator derives and gets jurisdiction. Therefore, the Award was clearly 1 vitiated and ought to have been set aside. 5] It was then contended that although the earlier decisions of the Supreme Court holding that the power under section 11 of the Arbitration Act is administrative and not judicial, have been set aside and over-ruled, yet, it has been amply clarified that all objections which are already raised would remain in-tact and permitted to be raised in the proceedings before the Arbitral Tribunal. In these circumstances, the Arbitrator erred in holding that he had the jurisdiction to pass the Award. For all these reasons, the Award in question ought to have been set aside. Refusal to do so is bad in law and is required to be interfered with in this Court’s jurisdiction under Section 37 of the Act. 6] On the other hand, Mr.Kamdar, learned Senior Counsel appearing for respondents invited my attention to the order passed by this Court in Arbitration Petition No.36 of 2003 dated 21st November 2003. He further contended that the respondents herein had filed a civil suit against the appellants in the Civil Court, Pune. In that suit, appellants appeared and filed an application under section 8 of the Act in which they themselves contended that they are ready and willing to go for Arbitration. In these circumstances, the Civil Court appointed the Arbitrator. That Arbitrator 1 resigned and a substitute had to be appointed for which application came to be filed in this Court and in terms of the above order of this Court, Mr.R.M.Bapat, retired Judge of this Court and the Andhra Pradesh High Court, residing at Pune was appointed as an Arbitrator. Now, the appellants are estopped from challenging the appointment of the Arbitrator and questioning his jurisdiction. 7] Mr.Kamdar submits that section 64 of the M.P.Coop. Societies Act would not apply inasmuch as the dispute between the parties did not touch the business of the appellant society. The business of the Appellant society is distinct from that of the respondents. The respondents on the other hand are undertaking specialised job of erection and running of plants and, therefore, there is no question of the dispute between them arising out of such a contract, touching the business of appellant society. That apart, according to Mr.Kamdar, the M.P.Act would have no application to disputes and parties outside the State of M.P. The Act has limited application as held by the Supreme Court in (2003) 7 S.C.C. 529 (Gwalior Dudh Sangh Vs. Gen.Manager, Milk Scheme, Nagpur & Ors). 8] With the able assistance of the Counsel appearing for parties, I have perused the impugned order and the relevant part of the Award. As I 1 have heard parties at length, I have also permitted them to rely upon certain decisions. 9] There is no dispute that clause 37 of the Subject Contract is an Arbitration Clause. There is no dispute atleast before me that both sides were willing to have the matters resolved by resorting to Arbitration. Before me, in the Appeal Memo itself, it is stated that the first respondent was assigned the work of designing, manufacturing, supply, delivery, erection and Commissioning of machinery and equipment for the bulk Silo Storage Module for 2000 Tonnes per day Soyabin Commercial Complex at Palatwar, Dist.Chindwara, M.P. The appellants themselves have stated that this Agreement was entered into at Pune. It is not in further dispute that the Agreement was with respondent No.2 to this appeal also. Second respondent executed the agreement on behalf of the appellant as it was appointed as Project Manager – Consultant for the appellant under the Agreement. 10] Admittedly, dispute arose during the course of contract and the first respondent filed the Special Civil Suit No.1378 of 1996 in the Court of Civil Judge, Senior Division, Pune claiming decree in the sum of Rs.15 lakhs and odd. There was an application filed contending that the Civil 1 Court would have no jurisdiction in the matter because there is an arbitration agreement. The first respondent moved an application under section 11 of the Arbitration Act seeking appointment of sole Arbitrator and the Court was pleased to appoint sole Arbitrator. Later on, the Arbitrator came to be substituted by this Court. 11] Arbitrator made an Award dated 29th July 2004 and before the Arbitrator all contentions were specifically urged. The Arbitrator dealt with them and made an Award in the sum of Rs.10,00,300/- as principal amount and directed that the appellant should pay the same with interest as determined by the learned Arbitrator. He also awarded costs. 12] The contention with regard to applicability of Section 64 of the Act was raised and it was held that the said Act and section 64 therein will have no application because there is no dispute between a Member of the Society or Members inter se. 13] This very contention has been repeated before the learned Dist.Judge who has referred to the relevant statutory provisions and held that in the light of the peculiar facts of this case and filing of the suit in the Court at Pune, the Agreement being executed at Pune, Arbitration must be in terms of Clause 37 and the Venue of the same also was at 1 Pune. These matters were raised by the appellants themselves and, therefore, relying upon the decisions of the Supreme Court, the learned Judge concluded that appointment of Arbitral Tribunal has not been challenged by the appellants and, therefore, their objection to the jurisdiction of the Arbitral Tribunal cannot be accepted. 14] Having perused copies of the application made in the Civil Court, the order of the Civil Court appointing Arbitrator and this Court exercising its powers under Section 11 and substituting the Arbitrator, all of which having gained finality, I do not see how the appellants can now raise any objection to the appointment of the Arbitrator or the jurisdiction of the Arbitral Tribunal. Their contention based upon applicability of Section 64 of the M.P. Coop.Act is also without any substance. In the peculiar facts of this case, the appellants having themselves shown their readiness and willingness to go for arbitration under the 1996 Act and when they did not question any orders of appointment of Arbitral Tribunal as per the Agreement, which was executed with the appellants at Pune, then, in these peculiar facts, they could not have raised the issue of the disputes being resolved under the M.P.Act. That apart, there appears to be some substance in the contentions of Mr.Kamdar that for 1 applicability of Section 64 the conditions that are prescribed therein have to be satisfied. 15] Reliance is placed by Mr.Verma upon Section 64(1)(c) to contend that the dispute is covered by the said provisions. I am afraid that the contention is not well founded The pre-condition being that, parties to the dispute have to be a person other than a Member of the Society which has been granted loan by the society and which admittedly is not the factual position, the latter para of Section 64(1)(c) is dealing with a case of a person other than a Member of the society with whom the society has or had business transactions and any such person claiming through him. However, the dispute must touch the Constitution, management or business of a society. In this case, it is not necessary for me to go into the larger question as to whether the dispute touches the business of society. Once, the appellants themselves have moved in and sought reference of their disputes to arbitration and submitted themselves to the provisions of the Arbitration & Conciliation Act, 1996, then, all such matters including applicability of Section 64 of M.P.Coop.Act are really academic. Further there is some substance in the contention that applicability of M.P.Act itself is in dispute or doubt. As held by the Supreme Court, this is an Act 1 having application within the State of M.P. Reliance upon the decision of the Supreme Court in Gwalior Dudh Sangh’s case (supra) would demonstrate that it is not as if the said provisions and said Act would apply to all disputes and to all parties, even if, they are located outside the State of M.P. Merely because they have some dealings with the cooperative societies in M.P.,the Act, without anything more, cannot be made applicable straight away. 16] Therefore, these matters having been specifically referred to the Arbitral Tribunal and the Tribunal having taken a view which does not seem to be vitiated as contemplated by section 34 of the Arbitration Act, then, there is no reason to interfere with the Award. The ingredients and essential requirements of Section 34 having not been fulfilled, refusal on the part of the learned Dist.Judge cannot be said to be such as would require interference in my jurisdiction under section 37 of the Arbitration Act. 17] In the result, the appeal fails and is dismissed. No costs. In the view that I have taken, it is not necessary to refer to the decisions relied upon by the Appellants on the point as to whether by virtue of Article 254 of the Constitution of India, M.P. Act and more particularly Chapter therein 1 of Reference of Disputes and Arbitration would prevail over the Arbitration and Conciliation Act or not. That is a matter which can be decided in an appropriate case. No costs. (S.C.DHARMADHIKARI, J)