| SooperKanoon Citation | sooperkanoon.com/379266 |
| Subject | Arbitration |
| Court | Karnataka High Court |
| Decided On | Apr-17-2003 |
| Case Number | Writ Petition Nos. 1502-1503/2003 |
| Judge | H. Rangavittalachar, J. |
| Reported in | ILR2003KAR2385 |
| Acts | National Council for Teachers Education Act, 1993 - Sections 14; Arbitration and Conciliation Act, 1996 - Sections 34, 35 and 36; Constitution of India - Articles 226 and 227 |
| Appellant | Afza Teachers Training Institute, by Its Secretary and anr. |
| Respondent | Regional Director and ors. |
| Appellant Advocate | V. Tarakaram, Sr. Adv. for ;M.G. Javad Ahmed Khan, Adv. |
| Respondent Advocate | N. Devadas, Adv. for R1, ;B. Manohar, AGA for R2-5 and ;Yoganarasimha, Adv. for R6 |
| Disposition | Petition allowed |
Rangavittalachar, J.
1. The Afza Teachers Training Institute represented by Mr. Siraj Ahmed Shareef and his wife Smt. Roohi Afza, claiming to be the Secretary and President of the Society respectively have filed these two petitions with a prayer for quashing the order of the National Council for Teachers Education (hereinafter referred to as NCTE) dated 30.12.2002 granting recognition for running the Afza Teachers Training Institute represented by one Smt. Noor Afza Banu.
2. The facts leading to the filing of the present petition as found from the records, are as under:
A Society called as Afza Education Society was registered before the Registrar of Societies in Karnataka under the Karnataka Societies Registration Act in Regn. No. 34/84-85 dated 23rd July 1984 at Kolar. This society established a Teachers Training Institute under the name of 'Afza Teachers Training Institute' in a rented premises belonging to one Lakshmidevamma at Municipal Katha No. 4272 in Gandhinagar Area, Bangarpet Town. Smt. Noor Afza was the Founder President and her brother Siraj Ahmed was the Secretary of the Society. The Society started imparting education in teachers training which is a two years training course from the time of establishment, under the recognition granted and renewed every year. With the appointing of Smt. Noor Afza as a Government Servant in the State Libraries Department, disputes arose between the brother and sister regarding the right to manage the Society and as time progressed, the bitterness between the two parties increased by degrees. As a result of the disputes, several civil suits came to be filed against each other and interim orders were obtained. After the coming into force of the NOTE Act, 1996 with effect from 17.8.1995, the group led by Siraj Ahmed claiming the right to represent the Society made an application for renewal of recognition to run the Teachers Training Institute. The group led by Noor Afza Banu also had independently made a similar application to the NCTE. The NCTE inspected both the institutional and found that the institute managed by the group fed by Siraj Ahmed had the necessary infra structure while the institute alleged to have been run by Noor Afza Banu was not functioning during the year 1995-1996 but, did not take any final decision in the matter; because of this inaction several Writ Petition were filed in W.Ps. 30242/98 and 30642-701/98, 32124/98 and 32808-67/98, 1996/98, 30756/97, 2606-2624/98, 3425/98, 38385-38389/98 and 710-712/99. All the petitions were disposed of by the learned Single Judge of this Court by his order dated 1.4.1999. Learned Judge on the right of which of the rival groups to manage held - 'it would thus appear that not only the authorities but even this Court over the past few years accepted the institute at Gandhinagar under the managerial control of Siraj Ahmed and his group as the real institute entitled to make admissions. Candidates admitted to the said institute have been allowed to appear for the examination and even declared to have completed the course', and allowed the petition on the following terms.W.P. 38385-38389/98 and 710-712/99 are allowed but only to the extent that the Southern Regional Committee of the National Council for Teachers Education shall consider the application for recognition received on behalf of the Afza Education Society for its Teachers' Training Institute at Bangarpet and pass appropriate orders on the same expeditiously and a far as possible within 4 months from today. The Committee need not while considering the applications go into the question as to which out of the two groups is in actual managing control of the affairs of the Society. The Council shall however be entitled to independently determine whether the Institution established by the Society was in existence before the coming into force of the NCTE Act and if so, whether the same deserves to be recognised having regard to the norms prescribed for such recognition.
3. This Court noting with anguish the interests of a public institution being subordinated to the personal rivalry of brother and sister unmindful of the interests of education and students felt that this is a fit case where the State Government should exercise its power by appointing a Receiver by observing at paragraph 7 as follows:
Pending determination of the issues by the Civil Courts seized of the matter, the State Government shall consider the question of appointment of an Administrator for the Society under Section 27A of the Karnataka Societies Registration Act and pass appropriate orders on the subject after notice to both the groups keeping in view the observations made in the body of his order. Notices to be served upon Noor Afza Banu and Siraj Ahmed Shareef only with liberty to all others claiming to be members and/or office bearers to the objections to the same if so advised. Needful to be done within 3 months from today. If appointed the Administration shall hold office subject to any further direction that the Civil Court may issue as regards the management of the affairs of the Society and its institution.
4. This order of the learned Single Judge came to be challenged by filing an appeal before the Division Bench of this Court. The Division Bench dismissed the appeal summarily. Against the said order, a special leave petition was filed in CA 17826 and 17364/99. The Hon'ble Supreme Court set aside the order of the Division Bench on the ground that the order did not contain the reasons for dismissal and remanded the matter with a direction to rehear after notice to the parties.
5. After remand, with the Division Bench took up the matter for hearing, it felt that having regard to the close relationship of the two parties and also keeping in view the interests of the students, the matter should be referred to arbitration for resolving the disputes. The parties accepted the proposal and also voluntarily agreed for some interim arrangement regarding the management of the Institute in the following terms:
Till such a decision is taken by the Arbitrator, with a view to avoid any hardship to the students, the 1st petitioner in WPs 23997/2000 and 32472-532/2000 i.e., Afza Teachers Training Institute represented by its Secretary Siraj Ahmed Shareef may be granted provisional recognition for the academic year till 2001 to 2002 and the students admitted by the said institution may be permitted to continue their studies, however, subject to the decision that may be rendered by the Arbitrator with regard to the composition and the right to manage the Education Society. They submitted that the benefit of the provisional recognition to be given to Afza Education Society represented by Sri Siraj Ahmed Shareef should be made available to the successful party before the Arbitrator and on that basis the NCTE, Southern Region may be directed to consider the claim of the successful party before the Arbitrator.
6. The Division Bench also noted the submission of the group represented by Noor Afza Banu viz.,
Sri Yoganarasimha and Sri Rajendra Kumar Sungay also submitted that their clients would withdraw all the proceedings instituted against each other before the Civil Court, all authorities, this Court and the Supreme Court and they will abide by the decision of the Arbitrator as stated above, subject to the provisions of the Arbitration and Conciliation Act. Sri Yoganarasimha also submitted that the 1st appellant has no objection to give provisional recognition to the institution run by Sri Siraj Ahmed Shareef till the academic year 2001-2002 and to regularise the admission of students made all these years. and referred the matter to arbitration before Hon'ble K. Shivashankar Bhat former Judge of this Court.
7. The Arbitration proceedings were conducted by the Hon'ble Judge Mr. Shivashankar Bhat and by an award dated 8.7.2002 -Annexure M, has awarded as follows:
'1. The alleged termination from the membership of the claimants 2 to 8 and 1st respondent and presidentship of 2nd claimant from the Society is void and shall not have any effect. All of them shall be considered as continuing to be the members of the Society with second claimant as the president of the Society. The case of the respondents 2 and 3 in this regard is sham and false.
2. The purported induction of new members as alleged by the respondents 2 and 3 is illegal because it was not done by a legally constituted society.
3. The result is that claimants 2 to 8 and respondents 1 and 2 shall continue to be the members of the Society and constitute the Managing Committee of the Society called Afza Education Society in Bangarget town.
4. The rival institutions set up by the two sides by themselves cannot be considered as an Institute belonging to the Society. Since both institutions are run in the name of the Society, they shall be integrated and merged into one with immediate effect.
5. In case any one of the parties before me has burdened the Society with any financial transaction the said burden shall not be binding on the Society unless it is shown that the said transaction would be beneficial to the Society when the integration of the two institutions takes place as above.'
8. This arbitration award has been challenged by the petitioners herein by filing an arbitration suit 44/2002 on the file of the 6th Addl.C.J., Bangalore on 29.1.2002. The said suit is pending.
9. After the passing of the Award and on its basis the NCTE, Southern Regional Committee by an order dated 30.12.2002 -Annexure W in exercise of its power under Section 14(3)(a) of the NCTE Act has granted recognition to Afza Teachers Training Institute, Bangarpet run by Smt. Noor Afza Banu for two years duration fixing the intake of students at 60. It is this order that is being questioned in these two Writ Petitions among other grounds, as being passed without notice to the petitioners, and without regard to the filing of the civil suit challenging the award of the Arbitrator which has the effect of staying the award.
10. Detailed objections have been filed by the 6th respondent herein.
11. On behalf of the petitioners Sri V Tarakaram, learned Senior Counsel firstly submitted that when an arbitration award is challenged by a party to an arbitration proceedings by filing a suit, and having regard to language of Section 36 of the Arbitration Act, the award gets statutorily stayed. The judgment of the learned Single Judge in WP 30642-70/1998 and connected cases, continues to hold the field and if so held, the society run by the petitioner - Siraj Ahmed is the only society entitled to run the education Institution.
12. It was also submitted, at any rate, NCTE could not have passed the order without notifying the petitioner herein and lastly, it was submitted that when the matter is seized by the Civil Court, NCTE could not have acted upon the award of the Arbitrator.
13. In reply to the said contention. Sri Yoganarasimha, appearing for 6th respondent submitted that the writ petitioners herein had not made any application before the NCTE for grant of recognition to the Afza Teachers Training Institute and the NCTE considered the only application of 'Afza Education Society' filed by 6th respondent. Petitioners cannot claim to be rival applicants to Afza Education Society. Therefore, they are not entitled to be heard before granting recognition. In the same context, it was submitted that since the recognition has been granted to Afza Education Society and not to individual person, in the Scheme of the NCTE Act there is no provision under which petitioners could claim a right of hearing.
14. On merits, it was submitted by him that since an award has been passed by the Arbitrator and until the same is set aside, prima facie the declaration made in the award should be held as binding and the NCTE has only acted on the said premise.
15. Nextly, it was submitted that the petitioners cannot claim exclusive right to manage the affairs of the Afza Education Society.
16. Lastly, he submitted a right of appeal is provided against the orders of NCTE. Petitioners have not exhausted the same. Therefore, petition is not maintainable.
17. Sri Devdas, learned Counsel for the NCTE defended the order.
18. Having regard to the rival submissions and the facts of this case the question is.
1. What is the effect of filing a civil suit challenging the award of an Arbitrator?
2. Whether the Writ Petitioners were entitled to be heard before granting recognition vide Annexure W?
19. On other contentions advanced on merits, since the matter is seized by the Civil Court, I do not propose to deal with the same.
20. On the first question: The Arbitration and Conciliation Act of 1996 (hereinafter referred to as Act) came into force on 16.8.1996, repealing the Arbitration Act of 1940.
21. By the provisions of Section 35 of the Act, every award passed by an Arbitrator, subject to the other provisions of Part I is declared to be 'final and binding'. Under Section 34 of the Act, any party to the award may challenge the same by approaching a Civil Court. Section 36 of the Act which has a vital bearing on the question provides for enforcement of an arbitration award. It reads:
Section 36: Enforcement:
Where the time for making an application to set aside the arbitral award under Section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (V of 1908) in the same manner as if it were a decree of the Court.
22. By a plain reading of the section it is manifest, the award becomes capable of enforcement only when no civil suit is filed within the period of limitation or the suit is dismissed. Expressed differently, when a civil suit is filed in time and is pending without attaining finality, the award loses its efficacy and during the said period cannot be relied in any collateral or other proceedings regarding the rights declared by the Arbitrator.
23. In the facts of this case, there is no dispute that the petitioners has filed a civil suit in AS 44/2002 challenging the award of the Arbitrator and the suit is not disposed of. During the pendency of the said suit, the award of the Arbitrator becomes non-enforceable. Neither of the parties to the arbitration proceedings can claim any rights on the basis of the award till the suit is decided. So also no authority can pass any orders on the basis of the award during the pendency of the civil suit.
24. On the second question: Every person who wants to impart education in Teachers Training has to first seek recognition under the provisions of NCTE Act, 1993 by making an application to the Regional Committee under Section 14 of the Act. If the committee is satisfied that the applicant fulfils the requirements under Section 14(3)(c) of the Act, it may grant recognition, otherwise, may refuse but before refusing, must provide a reasonable opportunity to the concerned institutions. But the Act is silent as to the procedure to be followed where rival groups claim right of management of the same institution, or Society in the name of which Institution or Society recognition is sought. In the instant case, it was a different matter if the NCTE had granted recognition to 'Afza Teachers Training Institution, Bangarpet' without saying more. But the impugned order does not stop there. It states 'Afza Teachers Training Institute, Bangarpet 563114, Kolar District' run by Smt. Noor Afza Banu, President, Afza Education Society, Bangarpet. In other words, it is recognizing the right of one group to manage the institution, when the said question is yet to be decided by the Civil Court and, without even issuing a notice to the petitioners. It cannot be said in the back drop of what has been stated in the decision in WP 30242/98 and connected matters, and certain findings of Arbitrator extracted above, the petitioners are total strangers to the affairs of society as not even entitled for any notice. It is too well recognised principle of law that any action of a statutory authority, administrative or quasi judicial, which involves civil consequences or affects the rights of person has to be preceded by a notice even when the statute is silent in that regard and if an order is passed in violation of such an order, the same is void. Admittedly, no such notice was issued to the petitioners by the NCTE before passing the impugned order.
25. On the first objection raised by Sri Yoga Narasimha that the petitioner had not made any application for grant of recognition, and the recognition has been granted only to Society, true this contention could have been accepted if the NCTE had granted recognition to 'Roohi Afza Education Society' without mentioning further 'run by Noor Afza Banu'. By mentioning the later phrase it has declared petitioner has no right to manage the Society, without even a notice to the petitioners. Therefore, the contention has no merit.
26. On the second objection, regarding the declaration made by the Arbitrator, I have already held in view of the civil suit filed, it cannot be considered.
27. On the last objection about the right of appeal available to petitioner, it is well known where the order is violative of principles of natural justice, alternative remedy is no bar.
28. In the result, these Writ Petitions are allowed. The impugned order at Annexure W is quashed. The matter is remitted to the NCTE* with a direction to notify the writ petitioners and the 6th respondent before consideration for grant of recognition to Afza Education Society to run the Teachers Training Institute for the academic year 2003-2004. The NCTE shall decide the question within three months from the date of receipt of the order.