Calcutta High Court: Society Member Disputes Under MSCS Act Are Subject To Arbitration

Calcutta High Court: Society Member Disputes Under MSCS Act Are Subject To Arbitration

Justice Prasenjit Biswas of the Calcutta High Court has ruled that disputes regarding the management, constitution, or operations of a society, whether between the society and its members or those representing them, fall under the purview of arbitration as outlined in Section 84 of the Multi-State Co-operative Societies Act, 2002. Consequently, it overturned the decisions of the District Consumer Disputes Redressal Forum and the State Consumer Disputes Redressal Commission for considering such complaints.

Dissatisfied with adverse rulings from both the State Consumer Disputes Redressal Commission, Kolkata, and the District Consumer Disputes Redressal Forum, Jalpaiguri, the petitioner sought recourse by filing a revision application with the Calcutta High Court. The dispute arose when the opposing party, a former member of the petitioner's society, lodged a complaint with the District Consumer Disputes Redressal Forum, alleging non-disbursement of dues totalling Rs. 12,608 despite having repaid loans prior to retirement. The petitioner attributed this non-payment to overdue loan interests and the outstanding debt of a deceased member, for whom the complainant had acted as a guarantor.

Following the complaint, the petitioner chose not to contest the case or present evidence during the proceedings before the District Forum, leading to an ex-parte ruling against him. Later, the State Consumer Disputes Redressal Commission affirmed the District Forum's judgment, prompting the petitioner to lodge an appeal. They argued that the Consumer Protection Act shouldn't be applicable to them as they were a multi-state co-operative society governed by the Multi-State Co-operative Societies Act, 2002. The petitioner contended that disputes involving such societies should be settled through arbitration in accordance with Section 84 of the Act.

However, the Consumer Disputes Redressal Commission underscored the complainant's factual assertions regarding the loan, its repayment, and the outstanding dues. It observed the petitioner's failure to effectively contest the case or provide documentation contradicting the complainant's assertions. Furthermore, the Commission highlighted the absence of any notice from the petitioner to the complainant regarding debt clearance, which could have facilitated arbitration as mandated by the Multi-State Co-operative Societies Act, 2002. Consequently, both tribunals upheld the complainant's claims, dismissing the petitioner's arguments regarding jurisdiction and arbitration under the Act.

The High Court emphasized that Section 84 of the Multi-State Co-operative Societies Act, 2002, mandates that disputes involving members, past members, deceased members, or those claiming through them against the Multi-State Co-operative Society should be resolved through arbitration. It criticized both the District Consumer Disputes Redressal Forum, Jalpaiguri, and the State Consumer Disputes Redressal Commission, Kolkata, for overlooking this statutory provision.

In its analysis, the High Court referenced the Supreme Court's ruling in General Manager, Telecom v. M. Krishnan, highlighting the principle that special laws take precedence over general laws. It stressed that consumer forums must not overstep their jurisdiction and encroach upon matters explicitly designated for special forums.

Therefore, the High Court underscored the necessity for adherence to the specific provisions outlined in the Multi-State Co-operative Societies Act and emphasized that both consumer dispute resolution bodies erred in their interpretation and application of the law.

The High Court scrutinized the Multi-State Co-operative Societies Act, focusing particularly on Clause (b) of Sub-section (1) of Section 84. It observed that disputes pertaining to the management, constitution, or business of the society, involving the society and its members or individuals claiming through them, are mandated to be resolved through arbitration. Consequently, the High Court concluded that the dispute between the petitioner co-operative society and the opposing party, a former member, should have been directed to arbitration.

The court held that, due to the specific provisions outlined in the Multi-State Co-operative Societies Act, the District Consumer Forum lacked the authority to issue any orders in the matter. Therefore, both the District Consumer Disputes Redressal Forum and the State Consumer Disputes Redressal Commission, West Bengal, committed a legal error by entertaining the application filed by the opposing party.