GWALIOR DUGDHA SANGH SAHAKARI LTD.versusG.M. GOVT. MILK SCHEME, NAGPUR AND ORS.

             GWALIOR DUGDHA SANGH SAHAKARJ LTD.                              A
                                v.
            G.M. GOVT. MILK SCHEME, NAGPUR AND ORS.

                            AUGUST 21, 2003

                  [V.N. KHARE, CJ. AND S.B. SINHA, J.l                       B

      Madhya Pradesh Co-operative Societies Act, 1960:

       S. 64-Applicability of to arbitration clause in agreement relating to C
 inter-state transaction-Agreement between parties for supply of milk by
 appellant to respondent-Arbitration clause providing that disputes between
parties would be referred to arbitrator, i.e. Dairy Development Commissioner,
Bombay-Subsequent application by appellant for quashing the arbitration
clause-Allowed by District Judge as in his opinion in view of s.64 the
condition in agreement was erroneous-High Court setting aside the order D
holding that since the agreements were entered into beyond the territorial
jurisdiction of appellant, i.e. outside the State of Madhya Pradesh, s.64 of the
Act was inapplicable~Held, agreements were entered into and executed at
Nagpur which is outside the territorial jurisdiction of State of Madhya
Pradesh-Section 1 of the Act provides that the provisions of the Act would
 be applicable to the whole of Madhya Pradesh-Since the operation of the E
Act is intra-State and cannot be applied beyond the territory of State of
 Madhya Pradesh, and the agreements were entered into and executed in the
State of Maharashtra, s.64 is not applicable and, therefore, the view taken
 by the High Court was correct-Arbitration Act, 1940-s.33.
                                                                             F
    T.K. Sundaram v. The Co-operative Sugars Ltd Chittoor, AIR (1988)
Madras 167 approved.

      CIV~L APPELLATE JURISDICTION: Civil Appeal No. 2732of1997.


     From the Judgment and Order dated 5.11.96 of the Madhya Pradesh G
High Court in M.A. No. 354 and 355 of 1995.

     S.S. Khanduja, Yash Pal Dhingra and Baldev Kishan Satija for the
Appellant.
                                    839                                      H
    840                     SUPREME COURT REPORTS [2003) SUPP. 2 S.C.R.

A         Niraj Shanna and Krishnanand Pandeya for the Respondents.

          The following Order of the Court was delivered :

           The appellant herein is a society registered under the Madhya Pradesh
    Co-operative Societies Act, 1960 (hereinafter referred to as "the Act"). On
B   17.12.1993 and 8.2.1994, the appellant herein entered into agreements with the
    General Manager, Government Mille Scheme, Nagpur/Ako la for supply of milk.
    These agreements were executed at Nagpur. Condition No.19 of the said
    agreements provided that the disputes between the parties shall be referred
    to an arbitrator, i.e. the Dairy Development Commissioner, Bombay, Maharashtra.
C   Subsequently, the appellant-Society moved an application under Section 33
    of the Arbitration Act, 1940 for quashing condition No. 19 whereby the
    arbitration was to be done by the Dairy Development Commissioner, Bombay,
    Maharashtra. The learned District Judge was of the opinion that in view of
    Section 64 ofthe Act, condition No. 19 of the agreement was erroneous and,
    therefore, the same was set aside and the application was allowed. Aggrieved,
D   the respondents filed an appeal before the High Court. The High Court was,
    inter alia, of the view that since the agreements were entered into beyond
    the territorial jurisdiction of the appellant, that is outside the State of Madhya
    Pradesh, Section 64 of the Act was inapplicable and, therefore, the High Court
    set aside the order of the learned District Judge and allowed the appeal. It
    is against the said judgment, the appellant is in appeal before us.
E
          Learned counsel appearing for the appellant urged that the view taken
    by the High Court was erroneous. We do not find any merit in this contention.

          It is not disputed that the agreements were entered into and executed
    at Nagpur which is outside the territorial jurisdiction of the State of Madhya
F   Pradesh Section 1 of the Act provides that the provisions of the Act would
    be applicable to the whole of Madhya Pradesh Since the operation of the Act
    is intra-State and cannot be applied beyond the territory of the State of
    Madhya Pradesh, it must be held that Section 64 of the Act is not applicable.

G        In T.K. Sundaram v. The Co-operative, Sugars Ltd., Chittoor, AIR
    (1988) Madras 167, it was held thus:

            "8. The next question raised on behalf of the appellant is that the suit
            is barred under the provisions of the Ketala Co-operative Societies
            Act, and as such the suit ought to have been dismissed. This argument
H           is based upon the arbitration provision contained in the Kerala Co-
       GWALIOR DUGDHA SANGH SHAKARI LTD. v. G.M. GOVT. MILK SCHEME            84}

        operative Societies Act. But the contract has been entered into in           A
        Tamil Nadu and the same is enforceable in Tamil Nadu. As such with
        reference to the contract entered into the Tamil Nadu, and enforceable
        in Tamil Nadu provisions of the Kerala Co-operative Societies Act
        cannot be applied. Under the circumstances, both the courts below
        are rights in negativing the contention, relating to jurisdiction.
                                                                                     B
       Applying the principle laid down above, we find that since the
agreements in the present case were entered into ancl executed in the State
of Maharashtra, Section 64 of the Act is n')t applicable and, therefore, the
view taken by the High Court was correct. We find no merit in the appeal.
It is, accordingly, dismissed. No costs.
                                                                                     c
      Learned counsel appearing for the arbitrator (respondent No. 3 herein)
furnished before us a copy of the award in a sealed cover. Since we have
already disposed of the matter, it ~ill be open to the arbitrator to file the same
before the appropriate court.

RP.·                                                       Appeal disposed of.