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Issues involved: Dispute over membership and allotment of plot in a cooperative society governed by Delhi Cooperative Societies Act, 1972; Challenge to appointment of arbitrator; Validity of civil court's restraint order on arbitration proceedings; Legality of ex-parte award and subsequent proceedings.
Dispute over Membership and Allotment: A dispute arose between a member of a cooperative society and the society regarding the allotment of a plot. The matter was referred to an arbitrator, but the society challenged the appointment of the arbitrator in a civil suit. The civil court issued a restraint order on the arbitration proceedings, leading to the arbitrator proceeding ex-parte and making an award in favor of the member. Validity of Civil Court's Restraint Order: The High Court set aside the ex-parte award, deeming it vitiated due to the civil court's restraint order. However, the Division Bench held that the civil court lacked jurisdiction to issue the restraint order, rendering it a nullity. The Division Bench emphasized that the society's non-appearance before the arbitrator post-restraint order was justified, and a new arbitrator was appointed to adjudicate the dispute. Legality of Ex-Parte Award: The Supreme Court opined that the civil court's restraint order did not automatically invalidate the arbitration proceedings. It highlighted the importance of parties acting in good faith and respecting judicial orders. The Court clarified that while the ex-parte proceedings were to be set aside, the new arbitrator would continue from where the previous one left off, subject to any injunction order by the civil court. In conclusion, the Supreme Court dismissed the appeal, maintaining the Division Bench's order with the clarification regarding the continuation of arbitration proceedings. The Court emphasized the importance of parties respecting judicial orders and highlighted the need for proper legal procedures to challenge court orders rather than unilaterally disregarding them.
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