Statutory Remedy Under Cooperative Societies Act Inapplicable When Arbitration Clause Exists: Karnataka High Court

The Karnataka High Court has reiterated that if an arbitration clause were to exist in an agreement between the parties and the dispute were required to be adjudicated by way of arbitration, then the statutory requirement under the Cooperative Societies Act would not apply.Justice Suraj Govindaraj said this while allowing the petition filed by Ramakrishna House Building, which had approached the court for the appointment of a sole arbitrator. An agreement having been entered into between the petitioners and respondents M/S Skill Tech Engineers and Contractors Pvt Ltd, the said agreement was governed by an arbitration clause in terms of clause (17). The respondent contended that the petitioner being a Cooperative Society, no arbitration proceedings could be initiated, and any dispute would have to be referred to the Disciplinary Authority under Section 70 of the Karnataka Cooperative Societies Act, 1959. The petitioner submitted that since the Arbitration and Conciliation Act was a Special Enactment, where the agreement was to be governed by an arbitration clause, the statutory dispute resolution under Section 70 of the Karnataka Cooperative Societies Act, 1959, would not be applicable.The bench said, “The Hon'ble Apex Court having categorically held that if an arbitration clause were to exist in an agreement between the parties and the dispute were required to be adjudicated by way of arbitration, then the statutory requirement under the Cooperative Societies Act would not apply. As such, the contention of the learned counsel for the respondent would stand rebutted.”Allowing the petition, the court appointed Justice K. Sreedhar Rao, former Acting Chief Justice of the High Court of Gauhati, as a sole arbitrator. Appearance: Advocate Y K Narayana Sharma for Petitioner.Advocate Umesh B N for RespondentCitation No: 2025 LiveLaw (Kar) 414Case Title: SRI. RAMAKRISHNA HOUSE BUILDING CO OPERATIVE SOCIETY AND M/S SKILLETCH ENGINEERS AND CONTACTORS PVT LTD. Case No: CIVIL MISC. PETITION NO. 4 OF 2025 C/W CIVIL MISC. PETITION NO. 5 OF 2025 CIVIL MISC. PETITION NO. 6 OF 2025.Click Here To Read/Download Order

Statutory Remedy Under Cooperative Societies Act Inapplicable When Arbitration Clause Exists: Karnataka High Court

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