This appeal is filed against the order dated 24.02.2021 passed by the XXVI Additional Chief Judge, City Civil Court, at Hyderabad, in I.A.No.45 of 2021 in S.O.P.No.26 of 2020.
Heard the learned counsel for the appellants, and the learned counsel for the respondent.
The entire controversy in the present case revolves around the issue of whether an application filed under Section 8 of the Arbitration and Conciliation Act, 1996 is maintainable when there is admittedly no arbitration clause incorporated in the bye-laws.
It may be noted that the OP was filed before the Court below seeking the following reliefs:
(a) To declare the actions of the respondents in extending the incumbent International Executive Council of the Association of the respondent No.1 society beyond the term of one fiscal year i.e., for the year 2021 purported to be resolved through an “Special Extraordinary International Executive Council Meeting” dated 29.11.2020, as illegal and arbitrary and null and void.
(b) To appoint an Advocate Commissioner to conduct the affairs of the respondent No.1 society until a new International Executive Council of the Association of the respondent No.1 is elected for the Fiscal year 2021 according to the Constitution and bye-laws of the respondent No.1.
(c) To direct the respondents to furnish the books of accounts as well as the balance sheets of the respondent No.1 society for the year 2020.
(d) To direct respondents to furnish the details of the member and their Zoom IDs who have attended the EGM dated 06.12.2020.
(e) To direct the respondents to furnish the minutes of the meetings in respect of the EGM dated 06.12.2020.
(f) To appoint an Advocate Commissioner for conducting the elections for the post of International President of the respondent No.1 Society for the fiscal year 2021 in a democratic and fair manner.
(g) To consequentially grant a relief of Perpetual Injunction in favour of the petitioner and against respondent No.2 from continuing as an International President of the Respondent No.1 society for the second time i.e., for the fiscal / annual year 2021.
(h) To grant such other relief or reliefs as this Hon’ ble Court may deem fit and proper in the circumstances of the case and such other order in the interest of justice.
The respondent who is the Member of one of the Associated Clubs sought certain clarifications and also addressed a letter dated 17.11.2020 to the Chairman, Legal, Disciplinary, Arbitration Committees, not being satisfied with the response received for her earlier letters. In the said letter, she had asserted that on earlier occasion, she had asked for arbitration and that she was not responded to. Thereafter, she had instituted the OP invoking Section 23 of the Societies Registration Act, 2001.
The respondents having received notices in the OP, and before filing their counter affidavit, have filed the I.A.No.45 of 2021 invoking Section 8 of the Arbitration and Conciliation Act, seeking a direction to the parties to invoke arbitration proceedings for resolution of the alleged disputes between the petitioner and the respondents, and the said I.A. came to be dismissed by the impugned order.
Learned counsel Sri K.S.Murthy appearing for the appellants, by making reference to Clause 6 of the bye-laws, would contend that the finding of the trial Court that there is no Arbitration Clause in the byelaws is erroneous inasmuch as the Clause 6 refers to Arbitration as it impliedly sets out the consequences of not following the procedure agreed to under Clause 6. It is the further contention of the learned counsel that inasmuch as the respondent initially having invoked the arbitration clause is aware of the procedure and conscious of the Societies Registration Act that it is convenient to refer the dispute for arbitration and only such disputes which are unresolved would be litigated before the Court. Learned counsel would further contend that under Section 23 of the Societies Registration Act, a Member of the Society may proceed with the dispute under the provisions of the Arbitration and Conciliation Act or may approach the District Court concerned. It is also contended that while there is a choice for Members of the Society to seek resolution of disputes either through arbitration or by approaching the Court, in the present case on hand, the respondents having invoked the arbitration clause seeking to appoint an arbitrator by approaching the arbitration committee would be barred from approaching the Civil Court invoking Section 23 of the Societies Registration Act. Learned counsel would further contend that the arbitration clause has to be read into the terms of Section 23 of the Societies Registration Act for which he would place reliance on the judgment of the learned single Judge of this Court in Dr. Ganta Noble v. V. Paul Himamsu (2009 (6) ALD 711). Yet another contention of the learned counsel for the appellants is that the finding of the learned District Judge that election disputes are not arbitrable is not correct.
On the other hand, learned counsel A. Venkatesh, would resist the appeal and would contend that the jurisdiction in relation to arbitrations would arise only if there is an arbitration agreement between the parties. He would further contend that neither the byelaws nor by way of any correspondence, there is an agreement at any point of time with respect to the arbitration. Addressing a letter in ignorance seeking to refer the matter for arbitration before a nonexistent arbitration committee, does not debar the respondent from seeking justice from appropriate Court of law. He would further contend that Section 8 of the Arbitration and Conciliation Act has no application to the facts of the present case, and the reliefs claimed in the OP are in fact the reliefs which cannot be granted in the arbitration proceedings, and therefore the learned counsel for the respondent prays for dismissal of the appeal.
Having regard to the respective submissions, from the facts of the present case, one aspect is clear that there is no dispute that the bye-laws by themselves do not contain or contemplate any arbitration clause. The word ‘arbitration’ was only referred in Clause 6.
At the outset, so far as Section 23 of Societies Registration Act is concerned, as contended by the learned counsel for the appellant, provides for a choice to resolve their disputes either through arbitration or by approaching the Court. However, for invoking of arbitration proceedings, what is essential is existence of an arbitration agreement i.e., mandate under Section 7 of the Arbitration and Conciliation Act, 1996. In a given case, an arbitration clause may be provided by way of statute. The dispute resolution mechanism as provided under Section 23 of the Societies Registration Act which provides a choice for dispute resolution cannot be read into the byelaws of the Society or as forming part of bye-laws, as it only provides a choice of forum for dispute resolution i.e., either by arbitration or by approaching the Court concerned. Section 23 of the Societies Registration Act cannot be read as an Article or Clause of Society’s bye-laws. Section 23 would have to be read, in a given case, where there is a provision made in the bye-laws of Society for reference to arbitration, the same are required to be referred to arbitration; and in all other cases, recourse is required to be had to the provisions of Civil Court.
So far as the judgment of the learned single judge of this Court in Dr. Ganta Noble (1 supra) is concerned, in the said judgment, proceedings were initiated in the District Court where applications were made for appointment of arbitrator and, as a matter of fact, arbitrator was appointed and in such a factual situation an argument was advanced stating that there was no arbitration agreement in the said case.
A careful reading of paragraph 8 of the judgment in Dr. Ganta Noble (1 supra) would disclose that the learned single Judge had held that “existence of an arbitration agreement either independently or otherwise is an essential requirement for the purposes of entertaining the application under the Arbitration and Conciliation Act without an arbitration agreement the parties cannot seek intervention of the Chief Justice or his designate for constituting the Arbitral Tribunal for securing resolution of their disputes”. Therefore, it is clear that when there is no clause for referring the disputes to arbitration, the question of invoking Section 8 of Arbitration and Conciliation Act does not arise.
The judgment of the Supreme Court in Visa International Limited v. Continental Resources (USA) Limited (2009) 2 SCC 55), is distinguishable on facts and therefore not applicable to the present case on hand. A careful reading of the above judgment discloses that as a matter of fact there was a clause providing for arbitration in the event of failure to settle the disputes amicably. The same is evident from a reading of paragraph 12 of Visa International (2 supra).
Though it is the contention of the learned counsel for the appellants that arbitration clause is presumed to have existed in the light of Clause 6 of the bye-laws of the Society, such a contention is liable to be rejected in view of there being no other foundation wherein the parties have resolved to refer their disputes to arbitration. Further, a careful reading of Clause 6 discloses that what all it provides for is that in the event of any member of any affiliated club or any affiliated club goes to the court of Law without arbitrations with the Association, their Membership/Affiliation will be ceased by the Association.
In the present case, the grievance of the respondents is not that the respondents are being removed from affiliated club or affiliated club removing them from the membership of apex club i.e., the 1st appellant herein
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. Prima facie, the reliefs of the nature which the respondents claim in the OP are not the reliefs which would be granted through any other mechanism except providing for declaratory reliefs even assuming that such reliefs could be granted in the arbitration proceedings. So far as the reference to the judgment of the Delhi High Court in G.S.Mander v. Indian Olympic Association (1995 (32) DRJ), at the outset, it may be noted that in the said judgment, as a matter of fact, there was an arbitration clause and further the said judgment was arising under the proceedings of Arbitration Act, 1940. The judgment itself is of the year 1995. In those circumstances, the reliance on the said judgment is misconceived. In the circumstances of the present case, this Court does not find any merit in the appeal and, accordingly, the appeal is dismissed. No costs. In view of the request made by both the parties, there shall be a direction to the learned trial Judge to dispose the S.O.P. in accordance with law, as expeditiously as possible. Miscellaneous petitions, if any pending, shall also stand dismissed.