MUKESHBABU SECURITIES LTD Vs. PRAFUL HARSH

JUDGEMENT

(1.) BY way of these petitions, the petitioners have prayed to quash and set aside the orders dated 02.06.2004 passed by the respondent no. 1 whereby the applications raising preliminary contention regarding jurisdiction of respondent no. 1 in Arbitration Suits No. H/98, H/99, H/101, H/104 and H/108 of 2003 were rejected.

(2.) THE facts in brief leading to the filing of the present petition could be set out as under: 2.1 The respondent no. 2 filed a suit before the Arbitrator for recovery of certain amounts from the petitioners. The petitioner no. 1 companies along with petitioners 2 to 5 as directors filed applications before the Arbitrator under section 16 of the Arbitration Act (hereinafter referred to as 'the Act ' for the sake of convenience) raising objection with respect to the jurisdiction of the Arbitrator in entertaining the arbitration suit filed by the respondent no. 2 on the ground that the petitioner company and other petitioners are neither the members of the respondent no. 2 nor its offices or servants and that therefore the arbitration suit cannot be tried by the Arbitrator. 2.2 During the course of hearing, the petitioners produced documentary evidence in support of the claim that the petitioners never became members of the respondent no. 2 society. The respondent no. 1 rejected the applications of the petitioners vide orders dated 02.06.2004. Being aggrieved by the same, the petitioners have preferred these petitions.

(3.) MR . K.G. Vakharia, learned Senior Counsel for the respondents has submitted that the petitioner had filed an application seeking the membership of the respondent co - operative society and the same came to be taken in the board meeting on 19.06.1998 pursuant to which the petitioner came to be admitted as member as per the rules and regulations and allotted the shares. Accordingly the names of the petitioner came to be entered in the share register. 4.1 Mr. Vakharia has also submitted that some of the petitioners were also paid dividend to the tune of Rs. 71,250/ - on 08.10.1999 for the year 1998 -99 and dividend of Rs. 1,00,000/ - on 08.08.2000 for the year 1999 -2000. The petitioners had accepted the said amount of dividend which was payable to them on their shares in capacity as members of the respondent co -operative bank. The petitioners were aware of the membership status with the bank since the petitioners reflected the shares of Madhavpura Mercantile Cooperative Bank in their balance sheet as on 31st March 2001 under the heading investments. 19/7/2014 Page 130 4.2 Mr. Vakharia has also submitted that Section 16 of the Arbitration Act permits Arbitral Tribunal to rule on its own jurisdiction on any of the objection which may be raised by the party before filing written statement and therefore no interference is called for in the present petitions. 4.3 Mr. Vakharia has submitted that further more the arbitrator has not rejected the application in toto but has kept open the question of membership to be decided at the stage of hearing. It will always be open to the parties to adduce evidence at the time of final hearing and not at preliminary stage. 4.3 Mr. Vakharia has relied upon a ration compounded by the Apex Court in the case of Maharshi Dayanand University V/s. Anand Coop. L/C Society Ltd and another reported in 2007(5) SCC 295, more particularly paras 12 and 13 and submitted that thus this court may not exercise jurisdiction in the present case at this stage. 4.4 Mr. Vakharia has also made an endeavour to submit that the amount of Rs. 5,00,001/ - given by the petitioners is deposited by the bank on 26.05.1998 and the application was considered in the Board meeting on 19.06.1998 and therefore the action is within the statutory period of four months as contemplated under section 25(4) of the Societies Act. He has submitted that the petitioners were also orally communicated about the same by the bank and the petitioner also received dividend which means that they have accepted the fact of being members and the present stand is just an afterthought by the petitioners.