This is the fifth article in a series where we are exploring the interplay between different statutes providing for dispute resolution through arbitration and the Arbitration Act. We have already analyzed the intersection between the Electricity Act and Arbitration Act, the MSMED Act and Arbitration Act, the National Highways Act and Arbitration Act and the Madhya Pradesh Madhyastham Adhikaran Adhiniyam and the Arbitration Act. In this article, we will explore the connection between the UP Cooperative Societies Act, 1965 (Cooperative Act) and the Arbitration and Conciliation Act, 1996 (the “Arbitration Act”).
The Cooperative Act was enacted to address the gaps in the previous Act of 1913, aligning it with the enhanced focus on and policy shift towards cooperation in developmental activities. The Act establishes a mechanism for resolving disputes arising under its provisions. These disputes can either be resolved by the Registrar directly or referred by him to an arbitrator or a board of arbitrators. This aspect will be the focus of the present article.
Statutory Scheme
Section 2(a) of the Cooperative Act defines an “Arbitrator” as a person appointed under the Act to resolve disputes referred by the Registrar, while Section 2(10)(b) extends this definition to include a “Board of Arbitrators,” a panel specifically constituted for this purpose.
The scope of disputes that fall under the purview of the Cooperative Act is provided in Section 70, which covers a wide array of issues related to the constitution, management, and operations of a co-operative society. These disputes may arise among members, between members and the society, or even between different societies. It is clear from a bare perusal of the above section that such disputes must be referred to the Registrar for resolution. Section 71 of the Act further states that the disputes referred to the Registrar under Section 70 of the Act may either be adjudicated by the Registrar himself or referred to an arbitrator or a board of arbitrators upon a written request made in this regard by the parties.
Further reinforcing the special nature of the Cooperative Act, the Registrar has also been empowered to withdraw cases from the appointed arbitrators or boards and reassign them as necessary. Moreover, the decisions passed either by the Registrar, the arbitrators, or the boards, as the case may be, in pursuance of such references, are deemed awards subject to the procedure prescribed under the Act.
The special nature of the statute is further fortified by Section 111 of the Cooperative Act which prohibits any civil or revenue court from entertaining suits pertaining to matters falling within the purview of the Act.
Distinction Between the Cooperative Societies Act and Arbitration Act- Is There Any Inconsistency Between Their Provisions?
A perusal of the provisions of the Cooperative Act and the relevant rules makes it clear that a comprehensive mechanism has been provided under the Act for resolving disputes through arbitration. The rules made under this Act comprehensively address the manner in which a reference is to be made, the appointment of arbitrators, appeals against the decision of the arbitrator, second appeals against the decision of the appellate authority, and the execution of arbitration awards passed by the Registrar, arbitrators, or boards of arbitrators, as the case may be.
Since every aspect of the arbitration proceedings to be conducted by the concerned authorities has been outlined in the Act itself, it is unfathomable which provisions of the Arbitration Act would be applicable to the proceedings conducted under the Act for resolving disputes that arise.
Moreover, Section 2(4) of the Arbitration Act provides that the provisions of the Arbitration Act will not apply if there is an inconsistency between its provisions and those of other enactments in force that provide a separate mechanism for dispute resolution.
The issue arises as to whether there is any inconsistency between the Arbitration Act and the Cooperative Act. This question was considered by the Allahabad High Court in Motilal & Sons, Through Partner Rahul Rastogi Vs. M.D. U.P. Cooperative Sugar Factories Federation Ltd1, where the court analyzed the differences between the two statutes.
Under the Arbitration Act, an arbitration agreement is a prerequisite for invoking its provisions, whereas such a requirement is dispensed with under the Cooperative Act. In the latter, matters relating to the constitution, management, or business of cooperative societies can be resolved through arbitration even in the absence of an arbitration agreement.
Another distinction lies in the scheme of the two statutes. The term “Arbitral Tribunal,” as defined under Section 2(1)(d) of the Arbitration Act, refers to a sole arbitrator or a panel of arbitrators. In contrast, under the Cooperative Act, all disputes are referred to the Registrar, who may either decide the matter himself or delegate it to arbitrators. Notably, under the UP Act, the parties have no choice regarding the constitution of the Arbitral Tribunal.
Having discussed the schemes of both statutes, it is evident that the Cooperative Act will prevail over the Arbitration Act by virtue of Section 2(4) of the Arbitration Act.
Conclusion
It can be concluded that the applicability of the Arbitration Act is excluded by virtue of the special mechanism provided under the Cooperative Act. The Registrar is empowered to resolve disputes arising under the Act or have them adjudicated by an arbitrator appointed by him, thereby effectively discharging the role of an arbitral tribunal under the Arbitration Act.
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