1. This petition has been filed for quashing of the Award dated 07.06.2005 passed by the Arbitrator /the Additional Registrar/Managing Director, U.P. Labour and Construction Federation Limited, Lucknow, and the order dated 09.08.2007 passed by the U.P. Cooperative Tribunal.
2. The petitioner's case is that it is an Apex Level Cooperative Society the UPPCF entered into an agreement with the opposite party no.2, Lakhimpur Bhikha Sadhan Sahkari Samiti Ltd., Rampur, for purchasing Paddy on behalf of the UPPCF in the year 2000-01. A copy of the agreement dated 16.11.2000 has been filed as Annexue-1 to the writ petition.
3. Opposite party no.2 being a Primary Level Cooperative Society, it was also made a nominal member of the UPPCF and acted as its agent in buying the paddy from the farmers and transporting it to the rice mill for custom hulling of rice. It is the case of the petitioner that opposite party no.2 did not purchase paddy in accordance with the agreement and purchased only 3038.90 quintals of paddy and delivered the same to M/s. India Rice Mill, Kaneri, for hulling. It claimed to have purchased 3878.90 quintals of paddy @ 510/- per quintals from the farmers and transported the same to the mill and raised a bill of Rs.19,78,239/-. As against this, the UPPCF acknowledged the purchase and transportation of 3038.90 quintals of rice only. It made payment of Rs.15,70,000/- to the opposite party no.2 as advance for the supply of paddy worth Rs.15,49,839/- alongwith commission of opposite party no.2.
4. A dispute having arisen, the matter was referred to the Arbitrator by the District Assistant Registrar. After notices were sent to the District Manager of PCF, Rampur, one S.D. Shukla, he also appeared before the Arbitrator. The Arbitrator, however, directed impleadment PCF, Rampur through its District Manager as a party. The PCF thereafter filed a written statement on 16.12.2002 stating the fact of not receiving 840 quintals of paddy. The petitioner in the written statement also referred to the enquiry report prepared by the Regional Food Controller who had verified the delivery of 3038.90 quintals of paddy only to M/s India Rice Mill, Kaneri. It was also mentioned in the written statement that the opposite party no.2 could not show any document to the Enquiry Committee relating to purchase of 840 quintals of paddy or relating to the delivery made to the mill. It was also mentioned in the written statement that the delivery of 840 quintals of paddy on a single day by Challan No.2833, 2834, 3835 and 2836 relating to Truck No.U.P.-21-3435 appeared to be doubtful as the distance from the Lakhimpur Bhikha via Rampur to M/s India Rice Mill, Kaneri, is about 56 kms. and at that time the bridge over Bilokha river was damaged. It was not possible for one single truck to make four trips in a day including time for loading and unloading required for it to carry 210 quintals per trip for a total of 840 quintals.
5. It has been submitted that nevertheless the Arbitrator passed the Award on 07.06.2005 decreeing the claim of the opposite party no.2 and accepting that opposite party no.2 had made purchase of 4169.66 quintals of paddy upto 02.01.2001 and it was delivered to M/s India Rice Mill, Kaneri. M/s India Rice Mill, Kaneri rejected 210 quintals paddy on it being sub-standard but accepted the receipt of 3878.98 quintals of paddy from the opposite party no.2. The PCF was found to have paid Rs.4,08,000/- less to the opposite party no.2 and a direction was issued to pay the same.
6. The Arbitrator in giving his reasons for making the Award dated 07.06.2005 has mentioned that PCF did not dispute the receipt of 3878.90 quintals of paddy by M/s India Rice Mill, Kaneri, nor did it produce documentary evidence including the report of the Regional Food Controller said to be in favour of PCF.
7. Aggrieved by the Award dated 07.06.2005 the petitioner preferred an Appeal before the Tribunal, which Appeal was rejected on 09.08.2007 by observing that documentary evidence viz the statement of the owner of the truck who had disputed to have carried 840 quintals of paddy in his truck or the Inquiry Report of Regional Food Controller were not filed alongwith the appeal. Therefore, in the absence of any documentary evidence produced by PCF to substantiate its claim, the Award of the Arbitrator could not be said to be vitiated.
8. Sri Shireesh Kumar while arguing the writ petition has challenged the Award and the appellate order on certain grounds; firstly it has been argued that the Arbitrator could not have impleaded PCF in the arbitration claim as when the said claim was filed by the opposite party no.2 only the District Manager PCF Rampur in his personal capacity had been impleaded. It has been submitted that in the written statement filed before the Arbitrator a preliminary objection as to the maintainability of the claim of the opposite party no.2 was raised which was ignored by the Arbitrator.
9. Secondly, it has been argued that under Section 117 of the Cooperative Societies Act no suit or any other legal proceeding could be filed against a Cooperative Society without prior notice to said Society.
10. Thirdly, it has been argued that the District Assistant Registrar could not have referred the dispute raised by the opposite party no.2 to the Arbitrator as he was not competent to do the same. Under Section 70 of the Act only Registrar can refer the dispute.
11. With regard to first ground of challenge raised by Sri Shireesh Kumar he has placed reliance upon the judgment rendered in Shish Ram Vs. Assistant Registrar, Co-operative Societies, 1986 U.P.L.B.E.C. 257 where a Division Bench of this Court had observed that an Arbitrator under Section 70 of the Co-operative Societies Act is entitled to decide only such dispute as is referred to him under the provisions of the Act.
12. Sri Rakesh Srivastava, who appears for the opposite party no.2 has argued that the preliminary objections that are being raised now as to the maintainability of the arbitration claim were never raised before the Arbitrator and even in the writ petition no such grounds as are being argued by the learned counsel for the petitioner have been taken. It has been submitted that although in the written statement filed by the PCF certain objections were raised with regard to impleadment of PCF they were not argued before the Arbitrator and therefore, not considered by him. This fact of abandonment of argument can be also gleaned from the memo of appeal filed by the petitioner. No objections regarding maintainability of the arbitration petition had been raised, in the memo of the appeal also. The limited grounds raised in the memo of appeal related to the merits of the dispute regarding purchase and supply of paddy as claimed by the opposite party no.2.
13. It has been argued that impleadment of PCF was done in the presence of District Manager, Rampur, PCF and when the written statement was filed in December by PCF it did not object to this impleadment. Moreover, once argument was raised as to the maintainability of the claim before the Arbitrator in the preliminary objections filed by PCF but the same is not pressed before the Arbitrator it shall be treated to have been abandoned.
14. Learned counsel for the opposite party no.2 has referred to certain judgments of the Supreme Court which lay down the law, that if party raised a ground, which ground is not pressed at the time of argument and not considered, it will be treated as abandoned. These judgments are ''AIR 1985 Supreme Court 973, Daman Singh & Others V. State of Punjab & Others paragraph 13 AIR 1996 Supreme Court 869 Dr. Mahesh Chand Sharma V. Smt. Raj Kumari Sharma and Others paragraph 32, (1994) 2 SCC 41 Chaya and Others V. Bapusaheb and Others, paragraph 11 and 12.
15. It has also been argued by Sri Rakesh Srivastava, that by a notification dated 24.06.1969 published in the Uttar Pradesh on 05.07.1969 the Additional Registrar was given the power to decide a claim or to refer the same power which was initially only bestowed on the Registrar. The said notification dated 24.06.1969 has also been referred to in a judgment of this Court in the case of Som Dutt and Others V. State of Uttar Pradesh and Others reported in 1971 A.L.J. 1339. A copy of the said judgment has been produced before this Court and paragraph nos. 6 and 8 of the judgment have been read out by Sri Rakesh Srivastava.
16. With regard to the third argument raised by the learned counsel for the petitioner Sri Rakesh Srivastava, has argued that under Section 117 of the Act a notice is envisaged only in a case of suit proceedings filed against a Society by a non-member. Reference has been made to the judgment rendered by a Co-ordinate Bench of this Court in the case of Sripal and another Vs. U.P. Rajya Sahkari Vikas Bank and Others reported in 1996 (3) UJPLBEC 1766 and paragraph nos. 26 & 27 have been read out. It has been submitted that the arbitration proceeding is clearly in the nature of a civil suit and had the legislature intended that under Section 117 of Arbitration proceedings be included as well, it would have referred to arbitration proceeding also in the language of the said section, which was consciously not done. Since the Legislature consciously did not use the word Arbitration Proceedings under Section 117, as it did in Section 70, while drafting Section 117, this should be taken as a sign by this Court that arbitration cases do not fall within the ambit of Section 117.
17. Learned counsel for the respondents has also argued that Shish Ram Vs. Assistant Registrar, Co-operative Societies, Meerut and Others reported in 1986 U.P.L.B.E.C. 257 is not an authority on the issue that no impleadment can be done by the Arbitrator during the course of the proceedings, even if the Arbitrator finds that it is necessary to implead a party to the proceedings for a proper adjudication of the case and that the Society had filed the Arbitration claim against a wrong person. Initially the claim was filed against the District Manager, PCF, Rampur, when the Arbitrator noticed that the PCF through District Manager was not impleaded, he directed the Society to implead the PCF through District Manager and it could not be said that this kind of impleadment is impermissible.
18. It has also been argued by Sri Rakesh Srivastava, that since Co-operative Societies Act and Rules bar the Advocates from appearing before the Arbitrator and it is only the employees, who appear and file claims and argue the matter before the Arbitrator, legal technicalities have to be dealt with by the Arbitrator on his own and if he finds such non-impleadment to be fatal to the adjudication he may require a party to implead a person who was earlier not impleaded.
19. On the merits of the case regarding receipt or otherwise of 840 quintals of paddy by Ms. India Rice Mill, it has been argued by Sri Rakesh Srivastava, that the Arbitrator and the Tribunal are statutory forum and should be treated as first courts of facts. This Court should ordinarily not interfere in a concurrent findings of fact recorded by the Arbitrator and the Tribunal.
20. Shri Shireesh Kumar in rejoinder has argued that ignorance of law is no excuse, if there is a statutory provision it has to be followed to the letter. He has referred to Section 117(1)(c) which bars the institution of a civil suit against a Cooperative Society and also referred to Section 70 under which claims regarding the business or management of a Society have to be referred to an Arbitrator. In such a matter where suit is completely barred by statutory remedy of Arbitration being available the word "suit" under Section 117 should be read as a claim petition before the the Arbitrator. He has also referred to the fact that in the objections that were filed before the Arbitrator it was specifically stated that the Arbitration was not maintainable as under the agreement entered into between the PCF and the Society, the Society was nominally made a member of PCF and in any claim raised by the one member against another Section 70 forbids instituting of a suit. It has been pointed out that in the objection it was said clearly stated that resolution made by the Society was against Shri S.D. Shukla, the District Manager and not against the PCF and therefore, the Arbitrator was bound to first consider whether arbitration claim was at all maintainable.
21. Shri Shireesh Kumar has also argued that even if the argument raised by the learned counsel for the respondents is taken to be correct although it is seriously disputed, that the objections that were made in the written statement before the Arbitrator were later abandoned still the question of jurisdiction and the question of limitation are to be considered by any quasi judicial authority like Arbitrator or the Tribunal at the first instance, even though they are not raised as consent does not confer jurisdiction and any order passed without jurisdiction can be challenged at any stage and set aside on the ground of being passed by corum non-judis.
22. Learned counsel for the petitioner has also argued on the merits of the Award and Appellate Order to show that only 3038.90 quintals of paddy was purchased for custom hulling for which Rupees fifteen lacs and seventy thousands were paid to the Society as transportation charges and its commission. He has read out the report of the Regional Food Controller and also the Arbitration Award to show that there was collusion of the Miller and the Society for claiming transportation of 840 extra quintals of rice which were never purchased or transported by the Society. It has been submitted that even documentary evidence has been consciously ignored and Arbitration award has been passed in favour of the Society. Shri Shireesh Kumar has argued that since the claim of Rs.4,08,239/- that was made by the Society is in the nature of a money claim and therefore are in the nature of suit proceedings and section 117 of the Act ought to have been followed before the claim was entertained.
23. Having heard the submissions, this Court has carefully perused the record. The preliminary objections regarding maintainability of the claim before the Arbitrator, in so far as the impleadment of PCF through its District Manager is concerned, and the enlargement of the scope of reference of the claim to include PCF through its District Manager were made before the Arbitrator. Similarly, a preliminary objection was raised regarding reference of the claim by District Assistant Registrar to the Arbitrator. A preliminary objection was raised regarding Section 117 and no proper notice being given to the PCF by the opposite party no.2 before raising the dispute. However, none of these objections were pressed at the time of the arguments before the Arbitrator. Had they been pressed, and the Arbitrator would not have considered the same, then certainly in the Memo of Appeal filed before the Tribunal, the PCF could have pointed out that preliminary objections were raised regarding maintainability of the claim, they were all ignored by the Arbitrator.
24. In the Memo of Appeal there are no grounds regarding preliminary objection raised but not considered. The Constitution Bench decision in Daman Singh and Other Vs. State of Punjab and Others (Supra) has observed that "it is not unusual for parties and counsel to raise innumerable grounds in the petitions and innumerable grounds in the petitions and memoranda of appeal etc., but, later, confine themselves, in the course of argument to a few only of those grounds, obviously because the rest of the grounds are considered even by them to be untenable. No party or counsel is thereafter entitled to make a grievance that the grounds although argued were not considered. If indeed any ground which was argued was not considered it would be open to the party aggrieved to draw the attention of the Court making the order to it by filing a proper application for review or clarification. The time of the superior courts is not to be wasted in inquiring into the question whether a certain ground to which no reference is found in the judgment of the subordinate court was argued before that court or not?"
25. Similar observations have been made by the Hon'ble Supreme Court in the case of Chaya and Others (supra) and in the case of Mahesh Chand Sharma (Supra) where it has been observed thus "a party who abandons a particular plea at a particular stage, cannot be allowed to agitate the same appeal."
26. This Court has also considered the observations made by a Division Bench in Shish Ram Vs. Assistant Registrar, Co-operative Societies, Meerut and Others (supra). It is apparent from perusal of the judgment that Shish Ram was the cashier of a Primary Co-operative Credit Society. The private respondents had applied for a loan from the Society and subsequently, the controversy arose as to whether or not the said respondents had repaid the amount borrowed by them. Four references were made under Section 70 of the Act for adjudication. It was the case of the private respondents that they had paid entire amount of loan to the petitioner who was cashier of the Society and they filed receipts obtained from the petitioner in support of their respective cases. Shish Ram gave evidence that he had neither received any amount nor did he issue any receipt. The Arbitrator accepted the statement made by Shish Ram and rejected the claim made by the borrowers. Aggrieved by the same, the borrowers went in appeal before the Assistant Registrar Cooperative Societies. There was some dispute raised with regard to the receipts and their replacement in the original record of the Arbitrator by forged documents. The debtors said that Shish Ram had admitted his signatures before the Arbitrator, on the receipts filed by the debtors, but these receipts had been surreptitiously removed from the record and substituted by forged documents. The Assistant Registrar concluded that debtors had paid the entire amount and the same had been embezzled by Shish Ram and directed the recovery to be made from Shish Ram. Aggrieved by the same Shish Ram approached this Court. This Court held that no dispute regarding recovery of any amount by the Cooperative Society from Shish Ram had been referred for arbitration and therefore, observed that it was not necessary for either the Arbitrator or the Assistant Registrar to have expressed any opinion on the question whether Shish Ram had embezzled the amount and direct recovery of the same. The facts as were considered by this Court in Shish Ram's case do not apply to the controversy raised in this writ petition.
27. This Court has also perused the judgment rendered in Som Dutt and Others Vs. State of U.P. (Supra) where the provisions of Section 70 and 71 of the Cooperative Societies Act and Rules 229 and 230 of the U.P. Cooperative Rules has been considered by a Co-ordinate Bench. Relying upon the notification issued by the State Government on 24.06.1969 it was observed that power had been delegated by the Government for reference of a dispute for decision to an Arbitrator or a Board of Arbitrator to Additional and Assistant Registrar as well.
28. The preliminary objections raised regarding maintainability of the claim before the Arbitrator on their merits also do not appear to be convincing to this Court.
29. With regard to the merits of the claim made by opposite party no.2 and the serious dispute regarding the receipt or otherwise of 840 quintals of Paddy by the Ms. India Rice Mill, Kaneri, this Court has carefully gone through the statements filed before the Arbitrator and the Appeal and the affidavits filed before the Tribunal. It is clear from the same that documentary evidence was filed by the PCF disputing the claim of purchase and delivery of 840 quintals of Paddy to Ms. India Rice Mill, Kaneri. The challan nos.2833 to 2836 having been issued on the same day i.e. 03.01.2001 by the mill owner were seriously disputed and it was mentioned that the Truck No.U.P. 21-3435 was a "S" model truck which could accommodate only 300 bags of rice at one time i.e. a total 210 quintals. The rice mill was at a distance of 54 kilometers. It was impossible to load 300 bags of rice on the truck and then to unload the same to enable the truck to transport the rice in four trips to the Mill in a Single day. Moreover, the truck owner, one Chhatrapal Singh s/o Medai Lal had deposed that his truck was incapable of carrying 300 bags, each bag having 70 kgs of rice, for distance of 54 kms. four times in the same day. The copies of the Challans that were issued by the Mill were seriously disputed by the truck owner. The report of the Regional Controller had also been filed in Appeal before the Tribunal by the PCF, which report clearly stated that there was collusion between mill owner and the Secretary of the Society.
30. Such Documentary evidence being ignored, although the same was filed before the Tribunal, this petition deserves to be partly allowed and is partly allowed and the order of the Tribunal is set aside. The matter is remanded to the Tribunal to decide afresh the Appeal No.208 of 2005. Since all evidence is already on record, the Tribunal shall decide the Appeal after giving opportunity to either side within a period of three months from the date a certified copy of this order is produced before it.