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2013 (4) TMI 413 - HC - Companies LawArbitration and Conciliation - petitioners seeks to challenge the awards made by the learned arbitrator under section 84 of the Multi State Cooperative Societies Act, 2002 allowing the claims made by the first respondent - first petitioner in Arbitration Petition is a private limited company. One of the Director of first petitioner Mr. Abdul Latif Mahmood Dadan expired leaving petitioner no. 3 to 6 as his legal heirs - It was the case of the first respondent that the first petitioner committed default in making payment of the various amounts towards the term loan, cash credit, over draft and over drawn/adjustment accounts. According to the first respondent, guarantors were also jointly and severally liable to the first respondent in respect of the said facilities - whether the learned arbitrator did not have jurisdiction to entertain the dispute in view of the position that section 91 of the Maharashtra Cooperative Societies Act was applicable to respondent no.1 bank when the dispute was filed by the first respondent before the cooperative court - Held that:- On perusal of the award as well as interim order passed by the learned arbitrator it is clear that though the plea of the legal heirs claiming the property in question to be self acquired property and not having been inherited the same from the borrowers and/or guarantors and though such plea not having been controverted by the applicant, the learned arbitrator could not have overlooked these facts and could not have confirmed the order of warrant of attachment on the properties of the legal heirs. The award shows patent illegality committed by the learned arbitrator in the impugned award on this issue. The learned arbitrator ought to have clarified in the impugned award that the legal heirs were liable only to the extent they had inherited any property from the estate of the deceased borrowers and/or guarantors. Not be accepted the submission made by the learned counsel appearing for the bank that the issue as to whether the properties in question which were attached by an order passed by the learned arbitrator were inherited by the legal heirs or not from the borrowers and/or guarantors has to be decided only in the execution proceedings and were not to be decided by the learned arbitrator. The learned arbitrator ought to have considered section 96 of the Multi State Act, 2002 with sections 35 and 36 of the Arbitration and Conciliation Act, 1996 and section 52 of the Code of Civil Procedure, 1908 in the impugned award while attaching the properties. Section 96 of the Multi State Cooperative Societies Act, 2002 cannot be read in isolation. A legal heirs and representatives are entitled to raise an issue that the deceased has left no assets, or that they were not in a possession of any property left by the deceased or the same was not available to them in the arbitration proceedings itself. In my view, the learned arbitrator is bound to decide the said issue in the impugned award itself after considering the material facts and documents into consideration. Perusal of the impugned award indicates that the learned arbitrator has considered all other aspects in the matter on merits and have rendered a finding of fact against the borrowers and the guarantors which findings are not perverse and thus no interference is warranted with such finding of facts. The learned arbitrator was right in passing a decree against the borrowers and the guarantors and was right in directing the legal heirs to pay the amount directed to be paid by the borrower/guarantor whose legal heirs they were. The learned arbitrator however was bound to decide the issue whether properties sought to be attached were inherited by the legal heirs from the debtors or not. The award by which the personal properties of the legal heirs are attached and the attachment order having been allowed to continue till recovery of the entire amount by the bank from the parties is perverse and patently illegal and that part of the award deserves to be set aside. Resultantly part of the award and order of warrant of attachment directing that the attachment of the properties described in schedule of the properties is set aside. The order of attachment of the properties passed by the learned arbitrator attaching the properties is set aside and remitted back to the learned arbitrator for disposal in accordance with law. Arbitrator shall decide whether properties in question were inherited by the legal heirs of the deceased debtors/guarantors and to what extent they are liable expeditiously and not later than six months from today. During the pendency of the proceedings before the learned arbitrator, petitioners shall not sell, alienate, encumber, part with possession or create any third party rights in respect of the properties which were subject matter of attachment.
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