Hon'ble Dr. Vijay Laxmi,J.
Heard Sri Sanjay Kumar Srivastava, learned Counsel for the petitioner and Dr. L. P. Misra for the respondent Nos.5 and 6.
The issue raised in this petition by the petitioners regarding an election dispute is that the respondent No.2 has passed an order assuming the powers of an Arbitrator, which he could not do in view of the notification dated 24.2.2003, whereby the Registrar of Co-operative Societies of U.P. stood notified as the Arbitrator by the Central Government in exercise of powers under Section 4 (2) of the Multi-State Co-operative Societies Act, 2002. Sri Srivastava submits that the decision taken is erroneous on a total misinterpretation of the provisions that are applicable, hence the impugned order deserves to be quashed.
It is then submitted that the directions issued by this Court on 23.5.2016 did not confer the power of arbitration on the Central Registrar and since the Registrar, Co-operative Societies, U.P., had already been notified, there was no occasion for the Central Registrar to have withdrawn the file for adjudication of the dispute before him. It is therefore urged that the exercise of powers by the Central Registrar amounts to transgressing on the powers of the Central Government to notify any other officer as envisaged under Section 4 (2) of the 2002 Act. He has also referred to certain mala fides and he contends that in the absence of any defect in the authority to arbitrate in the matter by the respondent No.3, the withdrawal of the said dispute by the respondent No.2 is an erroneous exercise of power.
Refuting the aforesaid submissions, Dr. L. P. Misra submits that the Central Registrar enjoys the power to arbitrate by virtue of the notification dated 24.2.2003 and in addition thereto, the Central Registrar also has the statutory authority to appoint an Arbitrator under Sub-Section (4) of Section 84 of the 2002 Act. Dr. Misra submits that the power of the Central Registrar to arbitrate himself is in addition to the Officer notified under Section 4 (2) of the 2002 Act. He therefore submits that the Central Registrar was well within his authority to have passed the impugned order and no de-notification is required for the said purpose as the Registrar, Co-operative Societies, U.P. is not the exclusive authority to enter upon arbitration in a dispute as involved in the present case.
We have considered the rival submissions and what we find is that this Court on the issue having been raised by the respondent No.6 in Writ Petition No.11428 (MB) of 2016, a direction was issued to the Central Registrar to decide the matter vide judgment dated 23.5.2016. The said judgment is extracted hereunder:-
"Heard Dr. L.P. Misra, learned counsel for the petitioner and also perused the supplementary affidavit filed today that is taken on record. Sri Sandeep Dixit has put in appearance for respondent no. 5 and Sri Brijendra Vikram Singh on behalf of first and second respondent. Learned Additional Chief Standing Counsel Sri Abdul Moin has appeared on behalf of the respondent no. 3.
It is not necessary to issue notice to the fourth respondent as he is only a formal party.
The stand taken by Sri Sandeep Dixit for the respondent no. 5 also appears to be that of the respondents no. 6, 7 and 8.
This petition has been filed for quashing the very appointment of the respondent no. 4 by the respondent no. 3 as an Arbitrator on the complaint of the respondents no. 5 to 8.
The contention of Dr. L.P. Misra on the legal plane is to the effect that the fourth respondent cannot assume the jurisdiction of an Arbitrator inasmuch as the Director, Cooperative, Ministry of Agriculture and Farmers Welfare, Government of India has already issued a letter on 19.5.2016 in the capacity of Central Registrar, Cooperative Societies commanding the Registrar, Cooperative Societies, U.P. to annul the order of appointment of the respondent no. 5 as an Arbitrator in an election dispute between the parties.
The said contention is being raised on the ground that the Central Registrar has the power to issue such directions keeping in view the provisions of Section 4 of the Multi State Cooperative Societies Act, 2002 read with the notification dated 24.2.2003.
Section 4 of the Act aforesaid is extracted hereinunder:
"4. Central Registrar.-(1) The Central Government may appoint a person to be the Central Registrar of Co-operative Societies and may appoint such other persons as it may think fit to assist the Central Registrar.
(2) The Central Government may, by notification, direct that any power exercisable by the Central Registrar under this Act (other than the power of registration of a multi-State co-operative society) shall, in relation to such society, and such matters a may be specified in the notification, be exercisable also by any other officer of the Central Government or of a State Government as may be authorised by the Central Government subject to such conditions as may be specified therein:
Provided that no officer of a State Government shall be empowered to exercise such power in relation to a national co-operative society."
The notification dated 24.2.2003 is also extracted hereinunder:
THE GAZETTE OF INDIA EXTRAORDINARY MINISTRY OF AGRICULTURE (Department of Agriculture and Co-operation) NOTIFICATION New Delhi, the 24th February, 2003 S.O.216(E) - In exercise of the powers conferred by Sub-section(2) of Section 4 of the Multi-State Co-operative Societies Act, 2002 (39 of 2002), the Central Government hereby directs that the powers exercisable by the Central Registrar under Section 84 of the Act shall also be exercisable by Registrar of Co-operative Societies of the States/UTs in respect of the societies located in their respective jurisdiction, subject to the following guidelines and conditions, that :-
1. Such powers in relation to a National Co-operative Society shall not be exercisable by these officers.
2. The officers shall comply with the directions (other than court cases) as may be given by the Central Registrar, appointed under Sub-section (1) of Section 4 of this Act, from time to time.
3. Appointment of arbitrators by the State Registrar of co-operative societies shall be subject to following guidelines:
(a) In case of disputes relating to organizational and legal mattes, arbitrators should either be a practicing Advocate or retired member of Judicial/Civil Services or officers at least of the level of Deputy Registrar and above of co-operative department retired not more than two years prior to the date of appointment.
(b) In case of disputes relating to financial and banking matters including recovery disputes, person having financial and accounting background like Chartered Accountants/ICWAs/retired bank officers (retired not earlier than two years) may also be considered for appointment in addition to the persons listed in clause 3(a).
4. The list of approved arbitrators shall be submitted to the Central Registrar within 15 days of approval. The updated list of all the approved arbitrators should be sent to the Central Registrar on quarterly basis.
Dr. L.P. Misra, on the strength of the aforesaid provisions contends that once a direction has been issued on 19.5.2016, then the Arbitrator cannot now proceed keeping in view the past transactions referred to therein.
The said argument has been opposed by the learned counsel for the respondent no. 5 Sri Sandeep Dixit and by the learned Standing Counsel for the respondent no. 3 on the ground that the authorisation which flows from the notification dated 24.2.2003 has already been executed with the issuance of an office memorandum dated 4.5.2016 whereby the respondent no. 4 Naveen Kumar Garg has been appointed as the Arbitrator. This authorisation, according to the respondents, is complete in all respects and, therefore, the said respondent no. 4 has rightly assumed the functioning of an Arbitrator between the parties.
Having considered the aforesaid submissions, we find that the controlling power with the Central Registrar, Cooperative Societies emanates from Section 4 (1) read with Clause 2 of the notification dated 24.2.2003 that have already been extracted hereinabove.
In such a situation, the Central Registrar does not appear to have noticed any appointment of the Arbitrator by the Registrar, Cooperative Societies, U.P., which the respondents allege to have already been done on 4.5.2016. The letter dated 19.5.2016, therefore, is being disputed by the respondents on the ground that once the Arbitrator had already been appointed and an approved list had already been forwarded under the notification dated 24.2.2003, there was no occasion for issuance of the order dated 19.5.2016. The question, therefore, which falls for consideration is as to whether there is a valid appointment of an arbitrator in terms of Section 4 (1) read with the notification dated 24.2.2003 or not, and whether the respondent no. 4 has the authority to proceed accordingly.
Keeping in view the powers that are conferred on the Central Registrar as mentioned hereinabove, we are of the opinion that the final word in the matter has to be pronounced by the Central Registrar himself. Consequently, it will not be appropriate for the Arbitrator to proceed with the Arbitration so long as the Central Registrar does not pass an order keeping in view the contentions which have been raised by the respondents as a whole including the letter dated 4.5.2016.
We dispose of this writ petition with a direction that the respondent no. 2 shall take into account all the aforesaid facts and then proceed to pass an appropriate order in accordance with law within two weeks from today. Till such orders are passed by the Central Registrar, the respondent no. 4 shall not proceed with the dispute sent for arbitration before him between the parties.
Disposed of with the said directions."
A perusal of the provisions of Section 4(2) reveals that the Central Government has the power to delegate the powers of the Central Registrar to any other officer of the Central Government or the State Government to be exercised by such officer also. This clearly means that the officer so notified by the Central Government can "also exercise such powers that are conferred on the Central Registrar under the Multi-State Co-operative Societies Act, 2002, other than the power of registration of multi-State co-operative society".
The Central Government issued a notification on 24.2.2003 authorizing the Registrar of the Co-operative Societies of the States / Union Territories that were provided for under section 84 and clause 2 of the said notification prescribes that the officers so notified shall comply with the directions, other than Court cases, as may be given by the Central Registrar. The power exercisable under section 84 is as follows :
"84.Reference of disputes.-(1) Notwithstanding anything contained in any other law for the time being in force, if any dispute [other than a dispute regarding disciplinary action taken by a multi-State co-operative society against its paid employee or an industrial dispute as defined in clause (k) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947)] touching the constitution, management or business of a multi-State co-operative society arises-
(a) among members, past members and persons claiming through members, past members and deceased members, or
(b) between a member, past member and persons claiming through a member, past member or deceased member and the multi- State co-operative society, its board or any officer, agent or employee of the multi-State co- operative society or liquidator, past or present, or
(c) between the multi-State co-operative society or its board and any past board, any officer, agent or employee or any past officer, past agent or past employee, heirs or legal representatives of any deceaed officer, deceased agent or deceased employee of the multi-State co-operative society, or
(d) between the multi-State co-operative society and any other multi-State co-operative society, between a multi-State co-operative society and liquidator of another multi-State co-operative society or between the liquidator of one multi- State co-operative society and the liquidator of another multi-State co-operative society, such dispute shall be referred to arbitration.
(2) For the purposes of sub-section (1), the following shall be deemed to be disputes touching the constitution, management or business of a multi-State co-operative society, namely:-
(a) a claim by the multi-State co-operative society for any debt or demand due to it from a member or the nominee, heirs or legal representatives of a deceased member, whether such debt or demand be admitted or not;
(b) a claim by a surety against the principal debtor where the multi-State co-operative society has recovered from the surety any amount in respect of any debt or demand due to it from the principal debtor as a result of the default of the principal debtor, whether such debt or demand is admitted or not;
(c) any dispute arising in connection with the election of any officer of a multi-State co- operative society.
(3) If any question arises whether a dispute referred to arbitration under this section is or is not a dispute touching the constitution, management or business of a multi-State co-operative society, the decision thereon of the arbitrator shall be final and shall not be called in question in any court.
(4) Where a dispute has been referred to arbitration under sub-section (1), the same shall be settled or decided by the arbitrator to be appointed by the Central Registrar.
(5) Save as otherwise provided under this Act, the provisions of the Arbitration and Conciliation act, 1996 (26 of 1996) shall apply to all arbitration under this Act as if the proceedings for arbitration were referred for settlement or decision under the provisions of the Arbitration and Conciliation Act, 1996."
The aforesaid section has been introduced for reference and resolution of disputes. Upon a reference of a dispute the Arbitrator is to enter upon the same and according to sub-section (4) the said arbitral power has been conferred on the Arbitrator to be appointed by the Central Registrar. Thus, the Central Registrar has been authorized under sub-section (4) of section 84 to appoint the Arbitrator.
The aforesaid power stood delegated to the Registrar of co-operative societies of the respective State. This delegation of the notification dated 24.2.2003 does not appear to have been withdrawn by the Central Government.
In the instant case the Central Registrar issued an order on 11.4.2016 extracted herein under:
"Most Immediate.
By Speed Post No. R-11017/82/2015-L&M Government of India Ministry of Agriculture and Cooperation Department of Agriculture, Cooperation and Farmers' Welfare (Office of Central Registrar of Cooperative Societies) Krishi Bhawan, New Delhi Dated 11th April, 2016 To, The Registrar of Cooperative Societies & Commissioner, Government of Uttar Pradesh, 14, Vidhan Sabha Marg, Lucknow-226027, Uttar Pradesh, Sub: Conduct of election to the Committee of Management of Uttar Pradesh Upbhokta Sahakari Sangh Ltd., Upbhokta Bhavan, Balakadar Road, Lucknow-Appointment of Arbitrator for adjudication of dispute u/s 84 of the MSCS Act, 2002-reg.
Sir, I am directed to refer to the above mentioned subject and to say that Chairman, Uttar Pradesh Upbhokta Sahakari Sangh Ltd., Lucknow vide letter dated 5.4.2016 addressed to the Central Registrar (copy enclosed) has objected to adjudication of dispute for arbitration by the Registrar of Cooperative Societies, Government of Uttar Pradesh filed against the conduct of election of the above society.
2. For natural of justice, it has been decided with the approval of competent authority that if any dispute is filed for conduct of election to the BoD of the above society before the Registrar of Cooperative Societies for arbitration, the same be sent to Central Registrar to take further action for appointment of an arbitrator.
3. This issues with the approval of Central Registrar of Cooperative Societies.
Yours faithfully sd/-
On 4.5.2016 the Registrar Cooperative Societies, U.P. in exercise of the powers under the Notification dated 24.2.2003 proceeded to appoint Sri Naveen Garg as the Arbitrator in the dispute relating to the society with which the petitioners are concerned. Thus, the power was being exercised by the Registrar, Cooperative Societies of U.P. delegated under the Notification dated 24.2.3003 whereby the said authority could appoint an Arbitrator under section 84 (4) of the 2002 Act.
On 19.5.2016 the Central Registrar passed the following order :
"Immediate.
By Speed Post No. R-11017/82/2015-L&M Government of India Ministry of Agriculture and Cooperation Department of Agriculture, Cooperation and Farmers' Welfare (Office of Central Registrar of Cooperative Societies) Krishi Bhawan, New Delhi Dated 19th May, 2016 To, The Commissioner for Cooperation and Registrar if Cooperative Societies, Government of Uttar Pradesh, 14, Vidhan Sabha Marg, Lucknow-2260001, (UP) Sub: Election to the Committee of Management of Uttar Pradesh Upbhokta Sahakari Sangh Ltd. Upbhokta Bhavan, Balakadar Road, Lucknow-Appointment of Arbitrator for adjudication of dispute u/s 84 of the MSCS Act, 2002 reg.
Sir, I am directed to refer to this Department's letter of even number dated 11.04.2016 on the above mentioned subject and to say that in the above said letter of this Department it has been directed that if any dispute is filed for conduct of election to the BoD of the above society under section 84 of the MSCS Act, 2002, before your authority, the same be sent to this Department for taking further action by the Central Registrar to refer the same for adjudication for appointment of an Arbitrator in this case.
2. Since the Chairman of the society objected for appointment of Arbitrator by your authority, for natural of justice, the above decision was taken by the competent authority. Whereas, Shri Praksah Dwivedi, Chairman of the above society has brought to the notice of this Department vide his letter dated 13th May 2016 that Shri Navin Kumar Garg was appointed as an Arbitrator in the above case and the Arbitrator called for hearing on 23rd May 2016.
3. Since directions have already been given in the above case, it is requested that the dispute filed in this regard be sent to this Department for taking further action and the order for appointment of Arbitrator appointed by yourself be cancelled immediately in the interest of natural of justice.
4. This issues with the approval of Central Registrar of Cooperative Societies (CRCS) Yours faithfully sd/-
Encl.: As above ( P. Sampath) Director(Co-operation) 23886268 Copy to: 1) Shri Prakash Dwivedi, Chairman, Uttar Pradesh Upbhokta Sahakari Sangh (UPSS) Ltd. Upbhokta Bhawan, Bulakadar Road, Lucknow, Uttar Pradesh.
2) Shri Navin Kumar Garg, Arbitrator, C/o Registrar of Cooperative Societies, Government of Uttar Pradesh, 14, Vidhan Sabha Marg, Lucknow-226001 (UP)."
The aforesaid orders were taken shelter of by the respondents no. 5 and 6 and Writ Petition No. 11428(MB) 2016 was filed contending that the Registrar, Cooperative Societies, U.P. could not proceed in the matter. The said writ petition was disposed of by a Division Bench on 23.5.2016, the judgment whereof has already been extracted herein above.
Consequently the Arbitrator appointed by the Registrar, Cooperative Societies, U.P. did not proceed with the decision of the dispute in the aforesaid background.
The Central Registrar after the directions of the Division Bench aforesaid has now passed an order on 8.6.2016 holding that since the power has been delegated to the Registrar, Cooperative Societies U.P. that are also exercisable in terms of section 4(2) of the 2002 Act and the Notification dated 24.2.2003, the same does not amount to denuding the powers of the Central Registrar but retains overriding powers over the delegated powers of the Registrar, Cooperative Societies, U.P. The Central Registrar also held that in view of the letter dated 11.4.2016 the Registrar, Cooperative Societies, U.P. should not have proceeded to appoint an Arbitrator. Consequently a direction has been issued, presumably in exercise of powers under clause 2 of the notification dated 24.2.2003 to the Registrar, Cooperative Societies, U.P. to annul the appointment of Arbitrator dated 4.5.2016.
The petitioners have come up questioning the correctness of the order dated 8.6.2016 passed by the Central Registrar contending that the Notification dated 24.2.2003 is intact and the Registrar, Cooperative Societies U.P. was empowered to appoint an Arbitrator. Any order of restraint dated 11.4.2016 amounts to overriding the notification dated 24.2.2003 issued by the Central Government which is impermissible in law and, therefore, the order dated 19.5.2016 as well as the order dated 8.6.2016 passed by the Central Registrar are without jurisdiction as he does not exercise any such overriding powers.
The question is as to whether once the Central Government has issued a notification delegating the powers of Registrar, Cooperative Societies, U.P. to concurrently exercise powers of appointment of an Arbitrator under section 84(4) of the 2002 Act, then can the Central Registrar under the exercise of powers under section 84(4) read with the clause 2 of the notification dated 24.2.2003 assume overriding powers over such delegation by the Central Government so as to annul the action of the Registrar, Cooperative Societies, U.P. to appoint an Arbitrator.
Prima-facie, what we find is that once the power had been delegated on the Registrar, Cooperative Societies, U.P. to appoint an Arbitrator then this power flows from the authority of the notification dated 24.2.2003 issued by the Central Government. This delegation of power is not by the Central Registrar but by the Central Government. The respondents contend that by virtue of clause 2 of the notification dated 24.2.2003 the Registrar, Cooperative Societies, U.P. is bound by any direction issued by the Central Registrar including the direction not to appoint an Arbitrator in any such dispute. This in our prima-facie opinion may amount to as assumption of the powers of the Central Government in the hands of the Central Registrar, which power of notification to delegate is exclusively with the Central Government, and not with the Central Registrar.
Having considered the submissions raised, we find that the Central Registrar will have to explain as to under what authority can he restrain the exercise of authority by the Registrar, Cooperative Societies, U.P. of appointing an Arbitrator which has been directly delegated u/s 4(2) of the 2002 Act by the Central Government under the garb of a direction under clause (2) of the same notification. The power to issue a direction in our opinion may not include the power to dissolve the very delegation of power by the Central Government or the Registrar, Cooperative Societies, U.P. which is exclusively within its control under section 4(2) of the 2002 Act.
We, therefore, provide three weeks time to the respondent no. 1 to file a counter affidavit as the said respondent is the authority of the Central Government and can explain the aforesaid position of delegation.
The learned Standing Counsel has accepted notice for the respondent no. 3 who may also file a counter affidavit.
Issue notice to respondent no. 2 returnable at an early date. Steps within a week.
The matter shall come up immediately after three weeks. The Central Registrar as well as the respondent no. 3 shall not issue any further directions to the respondent no. 4 to restrain him or to arbitrate the dispute or appoint any other Arbitrator.
Order Date :- 25.7.2016 lakshman/Om [Dr. Vijay Laxmi, J.] [Amreshwar Pratap Sahi, J.]