TMI Blog2009 (4) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... ber? 3. The facts of the case in a narrow compass may be briefly stated thus: The petitioner is a nationalised bank and the respondent No. 1 is a Multi State Cooperative Bank. Mr. Dinesh Rupasri, the respondent No. 2 herein is a member of the respondent No. 1. He was sanctioned bill discounting facility by the respondent No. 1. The respondent No. 2 allegedly sold certain goods to the respondent No. 3 who is a constituent of the petitioner bank. The respondent No. 2 drew bills of exchange/hundies in three sets between 6th October 2000 and 2nd February 2001 for the price of the goods sold by him to the respondent No. 3. The bills were accepted by the respondent No. 3 and coaccepted by the petitioner as a banker of the respondent No. 3. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the other hand to arbitration under the Act. The arbitrator had no jurisdiction to arbitrate upon the dispute and pass an award under Section 84 of Act. 5. Per contra, learned Counsel for the respondent No. 1 submitted that the dispute was covered by Clause (b) of Sub-section (1) of Section 84 of the Act and, therefore, the Central Registrar was right in referring the dispute to arbitration; the arbitrator had the jurisdiction to entertain and try the dispute. He submitted that under Clause (b) of Sub-section (1) of Section 84 of the Act, a dispute between a multistate cooperative society on the one hand and its member or even a person claiming through or under a member could be referred to arbitration. Since the respondent Nos. 3 and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society, its board or any officer, agent or employee on the other hand touching the management, constitution or business of the society would be referred to arbitration. There can therefore be no dispute that the dispute between the respondent No. 1 cooperative bank on the one hand and the respondent No. 2, who is its member, concerns the business of the respondent No. 1 and consequently could be referred to arbitration. Similarly, if the respondent No. 3 and the petitioner are held to be claiming under the respondent No. 2 member, the dispute between the respondent No. 1 on the one hand and the respondent No. 3 and the petitioner on the other would also have to be referred to arbitration. The learned arbitrator has held that they claim and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 37 of the Act speaks about the liability of the maker, drawer and acceptor of a bill of exchange and reads thus: 37. Maker, drawer and acceptor principals.(1) The maker of a promissory note or cheque, the drawer of a bill of exchange until acceptance, and the acceptor are, in the absence of a contract to the contrary, respectively liable thereon as principal debtors, and the other parties thereto are liable thereon as sureties for the maker, drawer or acceptor, as the case may be. A bare reading of Section 37 of the Negotiable Instruments Act shows that in respect of a bill of exchange the drawer of the bill of exchange until acceptance is the principal debtor. In other words, the drawer of the bill is primarily liable to the holder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or liable under the respondent No. 2. They are liable as principal debtors and the respondent No. 2 is liable as a surety. 11. In my view, as the respondent No. 3 and the petitioner are liable to the respondent No. 1 cooperative bank as principal debtors, and not under the respondent No. 2, it cannot be said that the respondent No. 3 and the petitioner were claiming through or liable under the respondent No. 2. The very foundation of the jurisdiction of the Central Registrar to refer the dispute between the respondent No. 1 cooperative bank on the one hand and the respondent No. 3 and the petitioner on the other hand was based upon an assumption that the respondent No. 3 and the petitioner were claiming through or liable under the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r cannot be prevented from raising the dispute of jurisdiction for the first time in this Court. 13. Learned Counsel for respondent No. 1 stated that Section 84 of the Act only applies in respect of reference of a dispute and once the dispute is referred, the arbitrator gets the jurisdiction to decide. The submission is misconceived. The Central Registrar did not have the jurisdiction to refer the dispute between the respondent No. 1 and the nonmembers to the arbitration. The arbitrator lacked the jurisdiction and could not have passed the award against the respondent No. 3 or the petitioner. 14. For these reasons, the petition succeeds. The impugned award is set aside. In the facts and circumstances, the parties shall bear and pay their ow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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