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

Citation: [2003] SUPP. 2 S.C.R. 839 · Decided: 21-08-2003 · Supreme Court of India · Bench: V.N. KHARE, S.B. SINHA · Disposal: Disposed off

Judgment (excerpt)

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. 
T.K. Sundaram v. The Co-operative Sugars Ltd Chittoor, AIR (1988) 
Madras 167 approved. 
CIV~L APPELLATE JURISDICTION: Civil Appeal No. 2732of1997. 
F 
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} 
operati

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