“No Provision of the Arbitration Act Would Apply”: Andhra Pradesh High Court Dismisses Appeal Against Award Passed Under Cooperative Societies Act
Isabella Mariam
The High Court of Andhra Pradesh at Amaravati dismissed a civil miscellaneous appeal filed against the order of the Principal District Judge, Rajahmundry, which had held that a petition under Section 34 of the Arbitration and Conciliation Act, 1996, was not maintainable in relation to an award passed under Section 62 of the Andhra Pradesh Cooperative Societies Act, 1964. The Division Bench comprising Justice R. Raghunandan Rao and Justice Maheswara Rao Kuncheam recorded that “once it is held that the proceedings of the Assistant Registrar are not arbitration proceedings, no provision of the Arbitration and Conciliation Act, 1996 including Section 34 would be applicable.”
The Court considered submissions on whether an award passed under the APCS Act could be challenged under the Arbitration Act, and noted the statutory framework providing an appellate remedy under Section 76 of the APCS Act. It recorded that “in view of the fact that Section 34 of the Arbitration Act was not applicable, further appeal under Section 37 of the Arbitration Act would not be maintainable before this Court also.”
The first appellant, Lakshmi Agencies, Rajahmundry, East Godavari District, had availed financial assistance from the first respondent, Aryapuram Cooperative Urban Bank Ltd., Rajahmundry. The second and third appellants stood as guarantors for the loan. The third appellant is the husband of the first appellant. Upon non-repayment of dues, the Bank initiated proceedings for recovery against appellants 1 and 2.
By that time, the husband of the second appellant had passed away. Accordingly, their son was arrayed as the third appellant in the proceedings. These proceedings were initiated under the provisions of the Andhra Pradesh Cooperative Societies Act, 1964, leading to an award being passed under Section 62 of the Act. The Court stated that “the 1st appellant had obtained financial assistance from the 1st respondent-bank. The 2nd appellant and the 3rd appellant, who is the husband of the 1st appellant, had stood as guarantors for the said loan. As the debt was not being paid, the 1st respondent-bank initiated proceedings against appellants 1 and 2”.
The award was dated 15 June 2015 in A.C. No. 19/15-16. Initially, the appellants filed an appeal before the Andhra Pradesh Cooperative Tribunal under Section 76 of the APCS Act, 1964. However, the said appeal was withdrawn. Subsequently, the appellants filed a writ petition before the High Court, which was also withdrawn. Thereafter, the appellants filed a petition before the Principal District Judge, Rajahmundry under Section 34 of the Arbitration and Conciliation Act, 1996, seeking to set aside the award.
The said petition was registered as A.O.P. No. 56 of 2015. In response, the first respondent-Bank filed I.A. No. 2458 of 2015 in A.O.P. No. 56 of 2015, questioning the maintainability of the petition. The Principal District Judge, Rajahmundry, by order dated 20 November 2015, held that the petition under Section 34 was not maintainable and allowed the interlocutory application. Consequently, the main petition was dismissed by a separate order of the same date.
Aggrieved by the order of the Principal District Judge, the appellants filed the present civil miscellaneous appeal before the High Court.
During the hearing, Smt. M.V. Ramana Kumari, appearing on behalf of Ms. M. Nikitha, counsel for the appellants, submitted that the third appellant had passed away on 27 March 2014, while the award was passed on 15 June 2015. The submission was that an award passed against a deceased person is not sustainable and should be set aside. The counsel relied on a judgment of the High Court of Kerala in W.P. (C) No. 15939 of 2016 (N) and a judgment of the Supreme Court in Civil Appeal No. 7247 of 2024. As noted by the Court, “a learned Single Judge of the High Court of Kerala, had held that an award passed against a person, who had died even before the application had been filed before the arbitrator, cannot be sustained under law.” The Supreme Court, in the referred case, had recorded that “in exceptional cases, a case could be remanded under Section 37 of the Arbitration Act.”
The counsel for the appellants argued that the facts of the present case were similar to those decided by the Kerala High Court and that the award was liable to be set aside on that basis, and the matter remitted to the arbitrator.
In reply, Sri V. Venkata Narayana, appearing for Sri T.V.S. Prabhakar Rao, Standing Counsel for the first respondent, submitted that the original petition before the Principal District Judge under Section 34 of the Arbitration Act and the current appeal were not maintainable.
It was submitted that under Section 76 of the APCS Act, 1964, an appeal lies against an order passed under Section 62. The Court recorded this argument as follows: “Section 76 of the APCS Act, 1964 provides for an appeal against any order passed under Section 62 of the APCS Act, 1964. In the present case, the award came to be passed under Section 62 of the APCS Act, 1964. In such circumstances, the only remedy, available to the appellants, was to move the A.P. Cooperative Tribunal, under Section 76 of the APCS Act, 1964.”
It was further submitted that the appellants were aware of the proper remedy and had, in fact, availed it initially by filing an appeal before the Cooperative Tribunal. However, they had withdrawn the appeal without seeking any relief. The Court noted this contention: “The appellants being aware of this fact, had moved an appeal before the A.P. Cooperative Tribunal. However, the appellants, for reasons best known to them, had chosen to withdraw the appeal without seeking any relief.”
The Bank also contended that after withdrawing the writ petition subsequently filed before the High Court, the appellants filed the impugned petition under Section 34 before the Principal District Judge, which was not maintainable. Further, it was submitted that there was no provision in the APCS Act permitting a challenge to such awards under the Arbitration Act. The Court recorded, “there is no proof for challenging the award of an arbitrator under the provisions of the APCS Act, 1964, by way of an application under Section 34 of the Arbitration Act.”
The first respondent also submitted that the order passed by the Principal District Judge was interlocutory in nature and that the actual order of dismissal was the one rendered in I.A. No. 2458 of 2015, which had not been specifically challenged. The High Court noted this contention as follows: “The actual order of dismissal was the order in I.A.No.2458 of 2015. This order has not been challenged in the appeal. In the absence of a challenge to the underlying order, the appellants could not have filed a Civil Miscellaneous Appeal challenging the consequential order, dated 20.11.2015.”
The High Court then examined Section 62 of the APCS Act, 1964. The Court outlined the three options available to the Registrar upon reference of a dispute—either to decide the dispute himself, transfer it to a designated authority, or refer it to an arbitrator. It observed: “Under this provision, the Registrar, upon reference of any dispute under Section 61, has three options.”
In this case, the dispute was decided by the Assistant Registrar. The Court noted that the description of the Assistant Registrar as “Arbitrator” and the decision being termed an “award” did not bring the proceedings within the scope of the Arbitration and Conciliation Act. The judgment stated: “The mere fact that the Assistant Registrar was described as Assistant Registrar or Arbitrator and the decision of was titled ‘award’ cannot mean that the proceedings were arbitration proceedings initiated under the provisions of the APCS Act, 1964.”
The Bench referred to the Supreme Court decision in Greater Bombay Cooperative Bank Ltd. v. United Yarn Tex. Pvt. Ltd. and Others, AIR 2007 SC 1584, and recorded that the proceedings under the APCS Act cannot be construed as arbitration proceedings governed by the Arbitration Act. The Court observed: “Once it is held that the proceedings of the Assistant Registrar are not arbitration proceedings, no provision of the Arbitration and Conciliation Act, 1996 including Section 34 would be applicable, and consequently, a petition under Section 34 would not be maintainable.”
As a corollary, the Court held that “in view of the fact that Section 34 of the Arbitration Act was not applicable, further appeal under Section 37 of the Arbitration Act would not be maintainable before this Court also.” The Bench clarified that it was not dealing with any other issue raised in the appeal, as the matter was disposed on this ground alone.
The appeal was dismissed with the following directive: “Accordingly, the Civil Miscellaneous Appeal is dismissed. There shall be no order as to costs. As a sequel, pending miscellaneous applications, if any, shall stand closed.”
Advocates Representing the Parties
For the Petitioner: Mallavolu Nikitha, Advocate
For the Respondents: T V S Prabhakara Rao, Advocate
Case Title: Lakshmi Agencies, Rjy, E.G. Dist & 2 Others v. Aryapuram Coop Urban Bank Ltd, Rjy and Others
Neutral Citation: APHC010073932016
Case Number: Civil Miscellaneous Appeal No. 620 of 2016
Bench: Justice R. Raghunandan Rao, Justice Maheswara Rao Kuncheam
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