Legal provisions involved: Clause 17 of the agreement (arbitration clause), Section 70 of Karnataka Cooperative Societies Act and Section 11(6) of Arbitration and Conciliation Act, 1996. 

Judgment by: The Karnataka High Court

Judge: Justice Suraj Govindaraj

Facts

The petitioner, Sri Ramakrishna House Building Cooperative Society, entered into a contractual agreement with M/s Skill Tech Engineers and Contractors Pvt. Ltd., containing a clear arbitration clause. Upon the emergence of a dispute, the petitioner sought the appointment of a sole arbitrator under the agreement. The respondent contended that disputes involving a cooperative society fall within the exclusive jurisdiction of the Disciplinary Authority under Section 70 of the Karnataka Cooperative Societies Act and therefore arbitration could not be invoked.

Key legal provisions

• Clause 17 of the agreement (arbitration clause)
• Section 70 of Karnataka Cooperative Societies Act, 1959
• Section 11(6) of Arbitration and Conciliation Act, 1996

Issues raised

Whether a contractual arbitration clause can supersede the statutory adjudicatory mechanism prescribed under Section 70 of the Karnataka Cooperative Societies Act?

Arguments of the case

The petitioner argued that the arbitration clause constitutes a binding agreement; Section 70 regulates internal disputes and does not oust consensual arbitration; contractual autonomy must be respected. While the respondent argued that Section 70 provides an exclusive statutory forum; arbitration cannot override the statutory scheme designed for cooperative societies.

Judgement 

The court upheld the arbitration clause, noting that Section 70 does not bar arbitration and the dispute was commercial. Justice K. Sreedhar Rao was appointed sole arbitrator, reaffirming party autonomy and India’s pro-arbitration framework.

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