Arbitrator's Powers Limited to Property in Arbitration

The Court held that the Arbitrator's powers under section 96 of the Multi-State Co-operative Societies Act, 2002 are limited to property connected to the arbitration proceedings, unlike the broader powers of a Civil Court. The Court emphasized that the Arbitrator cannot exceed the Act's scope, ruling that the attachment order was invalid as it was not related to the mortgage property or pending reference proceedings. The Chamber Summons was allowed, setting aside the attachment order and awarding costs to the Applicant, with directions to maintain the status quo on the subject property for potential appeal proceedings.

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Issues:
Interpretation of section 96 of the Multi-State Co-operative Societies Act, 2002 regarding the power of attachment before Award by the Arbitrator.

Analysis:
The case involved a Chamber Summons challenging an order of attachment passed by an Arbitrator under section 96 of the Multi-State Co-operative Societies Act, 2002. The petitioners sought recovery of a sum of over Rs. 3.61 crores from the respondents and the applicant. The key argument presented was that the power of attachment before Award under section 96 of the Act is limited and can only be invoked in relation to property connected to the reference proceedings pending before the Arbitrator. The petitioners, however, contended that the language of section 96 is similar to Order XXXVIII rule 5 of the Code of Civil Procedure, suggesting broader powers for the Arbitrator akin to those of a Civil Court.

Upon considering the submissions, the Court opined that the powers of the Arbitrator under section 96 are circumscribed and not as extensive as those of a Civil Court. While the language of section 96 may bear resemblance to Order XXXVIII rule 5, the Court highlighted a crucial distinction in scope. Unlike the Civil Court's wide authority to attach any property of the defendant, the Arbitrator's power is limited to property relevant to the arbitration proceedings. The Court emphasized that unless expressly provided, the Arbitrator cannot assume powers beyond the scope of the Act, even with a liberal interpretation.

The Court also addressed the petitioner's reliance on two High Court decisions related to the Code of Civil Procedure, emphasizing that the Civil Court's powers extend to properties not mortgaged but owned by the defendant. However, in the context of the Act of 2002, there is no indication that the Arbitrator can exercise similar powers as the Civil Court for attachment before passing a decree, especially concerning property outside the arbitration proceedings' scope.

Ultimately, the Court found merit in the Applicant's argument that the attachment order for the property in question was not valid as it was not related to the mortgage property or the pending reference proceedings. Consequently, the Chamber Summons was allowed, setting aside the attachment order with costs awarded to the Applicant. Additionally, the Court directed the parties to maintain the status quo regarding the subject property for any potential appeal proceedings.

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