Allahabad High Court Passes Split Verdict On Single Judge's Stay Of Arbitrator's Orders In Cooperative Society Election Dispute

A division bench of the Lucknow Bench of the Allahabad High Court delivered a split verdict against challenge to an order of the Single Judge whereby it had stayed the order of the Sub-Divisional Magistrate, who was acting as an arbitrator, by which election result of the Bahujan Nirbal Varg Sahkari Grih Nirman Samiti Ltd. (Petitioner) under the Uttar Pradesh Cooperative Societies Act 1965 was stayed.The bench of Justice Rajan Roy and Justice Prashant Kumar differed on the exercise of jurisdiction by the Single Judge in dealing with the case. In 2023, the term of the elected Committee of Management of the Petitioner Society had ended. Thereafter, Interim Committee took charge and new election program was published in the newspaper. After public notice for change in resolution, final voter list was published. Elections took place, results were declared, and the new Committee resumed its duties/ charge. Appellant no.2 executed a fraudulent sale deed, selling prime land of the society and syphoned the entire sale consideration. Later, it was discovered that 98 such deed were executed by him and to cover up his deeds, appellants initiated arbitration proceeding/election petition under Section 70 of U.P. Cooperative Societies Act, 1965 read with Rule 50 of U.P. Cooperative Society Rules, 2014. An arbitrator was appointed who, without issuing notice to the Committee of Management and the Society, passed an order dated 12.05.2023 restraining the elected management from discharging its functions and duties. Thereafter, upon inaction of the arbitrator, the respondents approached the High Court. Pursuant to the direction of the writ Court to conclude the proceedings within 4 months, the Arbitrator, (Sub Divisional Magistrate, Tehsil Sadar, District Lucknow) passed an order on 10.03.2025 confirming its earlier ex-parte restraining order. Against both these orders, the Society and Committee of Management approached the writ Court. The matter was listed before a Single Judge who stayed both orders of the Arbitrator-SDM and observed that the State was in the process of registering FIRs. It called for the status report on the steps taken in pursuance of the FIRs and also gave liberty to the police authorities to audit the society regarding its land and sale deeds executed in the last 10 years. It was also directed that entire investigation in pursuance to the FIR shall be supervised by the officer of the level of Superintendent of Police. This order of the Single Judge was challenged by the appellants who had initiated the proceedings before the Arbitrator. Senior Judge, Justice Rajan Roy observed that since arbitration proceedings for a cooperative society were under challenge, the writ petition could not have been entertained by a Single Judge and the case ought to have been posted before the Division Bench which had the roster of dealing with disputes regarding cooperative societies. Noting that the Single Judge did not have criminal jurisdiction to deal with the FIR and issue directions pertaining to criminal proceedings, Justice Roy observed“One could understand that learned Single Judge for some reason felt that those aspects also required to be considered but then in that case the course of action open for him was to refer the matter to the Bench which has jurisdiction in the matter whether on criminal or civil side but it is unfathomable as to how in view of the scope of the writ petition and the jurisdiction assigned to him, learned Single Judge could have issued such extensive directions preceded by conclusive observations as to validity of certain transactions that too at the interim stage pertaining to the criminal law when he had no criminal jurisdiction assigned to him.”Calling for explanation from the Joint Registrar (Listing) regarding listing of the writ petition before Single Judge, Justice Roy admitted the Special Appeal, stayed the order of the Single Judge and issued directions regarding interim committee to be formed till conclusion of arbitral proceedings. Differing from this decision, Justice Prashant Kumar observed that the Single Judge had the extraordinary jurisdiction under Article 226 of the Constitution of India to deal with such a case and 'mold relief' and direct initiation of criminal proceedings where serious fraud is detected and local authorities have failed to act. “As per the law laid down by the Hon'ble supreme Court, in the aforesaid judgments, this Court is of the considered view that so far as “moulding of relief” is concerned, even when there is no such specific prayer been made in the writ petitions, the Court can in the interest of justice grant such relief to meet the ends of justice. The principle of moulding of relief has been rightly been invoked by the learned Single Judge because when there is an apparent fraud the court can't close its eyes and allow it to perpetuate on the ground of technicalities, that no relief was sought for in the writ petition.”Further, Justice...

Allahabad High Court Passes Split Verdict On Single Judge's Stay Of Arbitrator's Orders In Cooperative Society Election Dispute

Upasna Agrawal

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