The Nashik Merchant'S Co.Op Bank Ltd.Thr. Swale Sanjay Vilas (Authorised Signatory) vs Shri. Dinkar Ranganath Trymbake And Ors.

CNR No : HCBM010533902015

2026:BHC-AS:45004
4-ARA-2-2016
Digitally
signed by
VAIBHAV
NAMDEV
BARE
Date:
2026.11.04
19:03:03
+0530
VAIBHAV
NAMDEV
BARE

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
ARBITRATION APPEAL NO. 2 OF 2016

The Nashik Merchant’s Co.Op Bank Ltd.
Through Sawale Sanjay Vilas …Appellant
Versus
Shri. Dinkar Ranganath Trymbake and Others …Respondents
_______
Mr. Girish Agrawal, a/w. Ms. Chitra Darekar for Appellant.
Ms. Rashmi S. Tondulkar, AGP for Respondent-State.
_______

CORAM : ARIF S. DOCTOR, J.
th
RESERVED ON : 12 OCTOBER, 2026.
nd
PRONOUNCED ON : 2 NOVEMBER, 2026.
JUDGMENT:


1. This present Appeal is filed under the provisions of Section 37 of the
Arbitration and Conciliation Act, 1996 (“ Arbitration Act ”), and challenges
th
an Order dated 15 September 2015 (“ the impugned order ”), passed by the
Principal District Judge, Nashik, under the provisions of Section 34 of the
th
Arbitration Act. The captioned Appeal also challenges the award dated 30

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the impugned award
December 2010, (“ ”) passed by the Arbitrator under the

provisions of Section 84 of the Multi-State Co-operative Societies Act, 2002,
(“ MSCS Act ”).

2. By the impugned order, the District Court dismissed the Appellant’s petition
under Section 34 and affirmed the impugned award, which directed the
Appellant to pay Rs. 2,01,233/- towards medical expenses incurred by
Respondent No. 1 while he was on deputation with the Appellant Bank.

3. Hence the present Appeal.
Submissions on behalf of the Appellant:

4. Mr. Agarwal, learned counsel appearing on behalf of the Appellant, at the
outset, pointed out the following facts, none of which he submitted were
disputed, viz.
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i. On 4 March 1999, the Divisional Joint Registrar of Co-operative Societies,
Nashik, i.e., Respondent No. 4, transferred Respondent No. 1 to the
Appellant Bank on deputation.

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ii. During the period of deputation, Respondent No. 1 suffered a heart attack
and incurred medical expenses of Rs. 2,01,233/- towards his treatment.
iii. Respondent No. 1 thereafter approached the Maharashtra Administrative
Tribunal (“ MAT ”) by filing O.A. No. 951 of 2005, seeking
reimbursement of the entire amount incurred towards his medical
treatment from Respondent Nos. 2 to 4, viz. the State of Maharashtra
through Secretary of Co-operative Department, Commissioner for Co-
operation and Registrar of Co-operative Societies, Pune and Divisional
th
Joint Registrar, Co-operative Societies, Nashik. On 25 November 2005,
MAT directed Respondent No. 3 to deposit an amount of Rs. 2,01,233/-
with the MAT.
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iv. On 9 March 2006, the said Original Application was disposed of by MAT
in view of the statement made by Respondent No. 3, that the grievance of
Respondent No. 1 regarding reimbursement could be considered by the
Arbitrator already appointed for that purpose. The O.A. filed by
Respondent No. 1 was disposed of as follows, viz.

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“ On 25th of November 2005 I passed an order directing the

Commissioner of Co-operative Societies, Maharashtra State, Pune to
deposit an amount of Rs. 2,01,233/- in this Tribunal. In response to the
order the Respondent No. 2 has deposited the amount. Thus in my
judgment on the principle of equity and law the Tribunal and the
Respondent No. 2 and 3 will proceed against the bank to recover that said
amount. As I noted earlier that the Arbitrator is already appointed in
connection with this dispute it is not necessary for me to make any further
observation. Thus I make it clear that any observation made and finding
recorded by me in this order shall not be used by any the parties at the
Arbitration and it is still open for the respondents to raise the contention
and substantiate the stand that the applicant’s service with the Bank was
a foreign service. The present order is passed only on the ground that the
applicant will not be in a position to face the litigation with the Bank and
more particularly the applicant to face the litigation with the bank and
more particularly the applicant is a retired government servant and he
may not be in a position to spent for that litigation. Even otherwise also
the co-operative Department can still proceed to recover the amount,
which the applicant has received on the basis of this order from the Bank
which is a Co-operative Bank under the control of Co-operative
Department.” (emphasis supplied)


5. Mr. Agarwal submitted that, while disposing of the Original Application on
the basis of the statement made by Respondent No. 3 that the grievance of
Respondent No. 1 regarding reimbursement could be considered by the
Arbitrator, MAT had left it to the Arbitrator to determine the question of the

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amount, if any, to be reimbursed by the Appellant. At the same time, MAT
permitted Respondent No. 1 to withdraw the amount of Rs. 2,01,233/- lying
with the MAT, which had been deposited by the present Respondent No. 3.

6. Mr. Agarwal then submitted that, on 24th September 2007, Respondent No.
3, i.e., the Commissioner for Co-operation and Registrar, Co-operative
Societies, issued an order under Section 84(4) of the MSCS Act, appointing
the Officer on Special Duty (Project), Mumbai Metropolitan Region
Development Authority, Bandra, as an Arbitrator to decide the dispute
pertaining to the reimbursement of the medical expenses of Respondent No.
1, at the time of deputation.

7. He submitted that the Appellant had, at the outset, raised an objection to the
maintainability of the arbitration proceedings by addressing a letter dated 23rd
June 2010 to the Learned Arbitrator. He submitted that the Appellant had in
the said letter contended that the dispute did not fall within the scope of
Section 84 of the MSCS Act, since no application for the appointment of an

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arbitrator had been made in accordance with the provisions of Section 84 of
the MSCS Act, nor had any evidence been led in that regard.

8. Mr. Agarwal submitted that in spite of the Appellant having raised the
objection pertaining to the appointment of Arbitrator, an Award came to be
passed on 30th December 2010, directing the Appellant to deposit an amount
of Rs. 2,01,233/- with the State of Maharashtra, together with interest at the
th
rate of 15% from 20 January 2006.

9. He submitted that being aggrieved by the impugned award, the Appellant filed
Arbitration Case No. 1 of 2011 under the provisions of Section 34 of the
Arbitration Act. The said proceedings were dismissed by the District Judge,
Nashik, vide the impugned order.

10. The Appellant has, therefore, preferred the present Appeal under Section 37
of the Arbitration Act.

11. Mr. Agarwal submitted that the impugned award did not adequately consider
the objection raised by the Appellant regarding the appointment of the
Arbitrator to adjudicate the dispute concerning reimbursement of the medical

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expenses incurred by Respondent No. 1. He invited my attention to paragraph
15 of the impugned award, which he pointed out read as follows:
“15. Considering the order dated 09/03/2006 passed by the Hon'ble
Maharashtra Administrative Tribunal, Mumbai and as well as the powers
vested with the Hon'ble Commissioner for Cooperation and Registrar,
Cooperative Societies, Maharashtra State, Pune who has appointed me and
arbitrator in the present case. Therefore all other contentions as raised by
learned advocate Mr. S. G. Sonawane for the Nashik Merchants' Cooperative
Bank Limited, Nashik that this authority has no powers to entertain the
present arbitration proceedings and can not seat as Judge in the present
matter can not be accepted, since all the contentions as raised by learned
advocate for the bank are baseless and without any foundation. Therefore,
this authority has entertained the present arbitration proceedings as ordered
by the Hon'ble Commissioner for Cooperation and Registrar, Cooperative
Societies, Maharashtra State, Pune on 24th September 2007.”


12. Mr. Agarwal submitted that the Arbitrator had neither furnished adequate
reasons for rejecting the Appellant’s objection to his appointment nor
assigned any reasons for allowing the claim of Respondents directing the
Appellant to pay an amount of Rs. 2,01,233/- towards reimbursement of
Respondent No. 1. He also pointed out that while passing the impugned order,
the District Court had also failed to adequately consider the Appellant’s

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objection regarding the appointment of the Arbitrator. He then invited my
attention to paragraphs 10 and 11 of the impugned order, to point out that the
District Court had, inter alia , observed as follows:

i. The Appellant’s contention that arbitration could be initiated only upon
an application by a party was rejected on the basis of Section 84 of the
MSCS Act;

ii. Section 84(1)(c) provides for the reference to arbitration in respect of
disputes between a co-operative society and its past officers, agents,
employees, or their heirs or legal representatives;

iii. The Appellant was originally liable to reimburse Respondent No. 1, since
medical expenses formed part of the “allowances” payable to an
employee; and

iv. The Appellant was liable to reimburse Respondent Nos. 2 and 4, who
had paid the medical expenses of Respondent No. 1 pursuant to the
order passed by the MAT, since the ultimate liability to reimburse
Respondent No. 1 rested with the Appellant.

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13. Mr. Agarwal further submitted that the claim of Respondent No. 1 for

reimbursement of medical expenses had already been dealt with by the MAT,
and, therefore, Respondent No. 1 had no independent right to pursue a claim
before the Arbitrator under Section 84 of the MSCS Act, against the Appellant
Bank.

14. He submitted that the Appellant had also initiated proceedings before the
Commissioner for Co-operation and Registrar of Co-operative Societies under
Section 154 of the Maharashtra Co-operative Societies Act, 1960, and that the
dispute concerning reimbursement of Respondent No. 1’s medical expenses
was sub judice before that authority.

15. Mr. Agarwal thus submitted that the District Court had failed to properly
consider the scope and applicability of Section 84 of the MSCS Act. He
submitted that the provision contemplated arbitration of disputes arising
between a multi-state co-operative society and its members, past members, or
persons claiming through such members, as well as disputes involving its
officers, agents or employees, in the circumstances contemplated by the

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provision. Respondent No. 1, however, was admittedly on deputation with the
Appellant and continued to be an employee of Respondent No. 4, his parent
department. He therefore submitted that Respondent No. 1 could not be
treated as an employee of the Appellant for the purposes of the reimbursement
claim.

16. In support of his contentions, Mr. Agarwal placed reliance upon the decision
of the Hon’ble Supreme Court in State of Punjab and Ors. v. Inder Singh
1
and Ors. , to submit that an employee on deputation remains an employee of
the parent department and is transferred to another establishment only for a
temporary period, upon expiry of which the employee is required to return to
the parent department.

17. Mr. Agarwal submitted that this aspect of the matter, namely, the status of
Respondent No. 1 as an employee on deputation, had not been adequately
considered by the District Court. He therefore submitted that the present

1
(1997) 8 SCC 372.

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Appeal ought to be allowed and that both the impugned award and the
impugned order deserved to be set aside.
Submissions on behalf of Respondent No. 2 to 4:

18. Ms. Tondulkar, the Learned Counsel appearing on behalf of Respondent Nos.
2 to 4, at the outset submitted that, when an employee is on deputation, the
borrowing department or foreign department in which the employee is serving
is responsible for payment of the employee’s salary and other service benefits,
including expenses incurred during the period of deputation.

19. She submitted that, in the present case, it was an admitted position that
Respondent No. 1 was on deputation with the Appellant Bank at the time when
Respondent No. 1 underwent heart surgery. She therefore submitted that the
Appellant was liable to bear the medical expenses incurred by Respondent
No. 1. This, she pointed out, had been so held by both the Learned Arbitrator
and the Learned District Court.

20. Ms. Tondulkar then submitted that Section 40 of the Maharashtra Civil
Services (Joining Time, Foreign Service and Payments during Suspension,

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Maharashtra Civil Services Rules
Dismissal and Removal) Rules, 1981 (“ ”),

made Appendix II applicable to the terms and conditions governing the
deputation of Government employees. She invited my attention to Clause 14
of Appendix II, which reads thus viz.
(14) Medical concessions - The Government servant shall be entitled to
“
medical facilities not inferior to those admissible under the Maharashtra
Civil Services (Medical Attendance) Rules, 1961 and the cost of that account
shall be borne by the foreign employer.
”

Basis the above, she submitted that the Maharashtra Civil Services Rules
therefore expressly provide that the foreign employer, which in the present
case was the Appellant, was required to bear the medical expenses of a
Government employee deputed to its establishment.

21. Ms. Tondulkar then drew my attention to paragraph 17 of the impugned
award, to point out that the Arbitrator had given cogent reasons for applying
the Maharashtra Civil Services Rules to Respondent No. 1, who was serving
with the Appellant Bank on deputation. She submitted that the Arbitrator had
also adequately considered the applicable rules and had sufficiently explained

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the basis for directing the Appellant to bear the medical expenses of
Respondent No. 1.

22. She also pointed out from paragraph 9 of the impugned order that the District
Court had also considered the applicability of Clause 14 of Appendix II of the
Maharashtra Civil Services Rules to the present case. She therefore submitted
that both the impugned award and the impugned order contained sufficient
reasons for allowing Respondent No. 1’s claim and directing the Appellant to
reimburse his medical expenses.

23.
Ms. Tondulkar submitted that the Appellant’s contention that Section 84 of
the MSCS Act, did not apply to the present dispute and that the order
appointing the Arbitrator was consequently void, was without merit. She
submitted that Section 84 expressly provides for the reference of specified
disputes to arbitration. She invited my attention to Section 84(1)(c), which
reads as follows:
“(c) between the multi-State co-operative society or its board and any past
board, any officer, agent or employee, or any past officer, past agent or past

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employee, heirs or legal representatives of any deceased officer, deceased
agent or deceased employee of the multi-State co-operative society”


24. She submitted that the dispute in the present case was between the Appellant,
i.e., a Multi-State Co-operative Society, and Respondent No. 1, who was its
employee during the relevant period, and therefore submitted that the dispute
fell squarely within the scope of Section 84(1)(c) of the MSCS Act, and was
accordingly amenable to arbitration.

25. Ms. Tondulkar further submitted that the Appellant’s objection to the
jurisdiction and authority of the Arbitrator had been duly considered and dealt
with by the Arbitrator in paragraph 15 of the impugned award. She then also
pointed out that in paragraphs 10 and 11 of the impugned order, the District
Court had also considered the Appellant’s challenge to the jurisdiction of the
Arbitrator and had adequately recorded its reasons for holding that the dispute
was to be referred to arbitration under Section 84 of the MSCS Act.

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26. She therefore submitted that the Appellant had failed to make out any ground

warranting interference with either the impugned award or the impugned
order and that the present Appeal ought to be dismissed.
Reasons and Conclusions:

27. After having heard the learned counsel for the parties and having considered
the material upon which reliance has been placed, I find that the Appeal must
succeed. I say so for the following reasons:

A. There is hardly any room for doubt that the ultimate obligation to bear
the medical expenses incurred by Respondent No. 1 would lie with the
Appellant. The limited question that falls for determination in the present
Appeal is whether Respondent No. 3 could have unilaterally appointed
an Arbitrator under the provisions of Section 84 of the MSCS Act inter
alia (i) to seek recovery of the amount Respondent No. 3 had deposited
in MAT towards medical expenses of Respondent No. 1 and (ii) to
adjudicate the question of who was liable to bear those medical expenses,
namely, whether the Appellant-Bank or the Respondent-State.

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B. It is not in dispute that Respondent No. 3, pursuant to the Order of MAT

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dated 9 March 2006, had infact deposited the entire amount of medical
expenses incurred by Respondent No. 1, which was since utilised by
Respondent No. 1. Therefore, the claim of Respondent No. 1 stood
satisfied. Respondent No. 3 then invoked arbitration under the provisions
of Section 84(1)(c) of the MSCS Act, seeking to recover the said medical
expenses from the Appellant. Section 84(1)(c) of the MSCS Act,
however, provides as follows, viz.
“(c) between the multi-State co-operative society or its board and any past
board, any officer, agent or employee, or any past officer, past agent or past
employee, heirs or legal representatives of any deceased officer, deceased

agent or deceased employee of the multi-State co-operative society”
Hence, on the face of it, the dispute in respect of which Respondent No. 3
had sought the appointment of an arbitrator does not fall within the ambit
of Section 84(1)(c) of the MSCS Act and was, therefore, not arbitrable
under the provisions of Section 84 of the MSCS Act.

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C. Also, it is not in dispute that the Appellant-Bank was not a party to the

proceedings before MAT, which came to be disposed of, inter alia , on
the basis of a statement made by Respondent No. 3, i.e., the
Commissioner for Co-operation and Registrar, Co-operative Societies
that the issue concerning payment of Respondent No. 1’s medical
expenses was arbitrable.
th

D. Crucially, MAT, vide its Order 9 March 2006, disposed of the
Application filed by Respondent No. 1 seeking reimbursement, inter alia
observing that an Arbitrator had already been appointed. However, the
material on record indicates beyond the pale of doubt that the Arbitrator
was appointed well after a year from the date on which MAT had
disposed of the Application filed by Respondent No. 1, i.e., pursuant to
th
a letter dated 24 September 2007 issued by Respondent No. 3.

E. The Appellant-Bank had expressly objected to the appointment of the
Arbitrator and to the maintainability of the arbitral proceedings by its
rd
letter dated 23 June 2010. In the said letter, the Appellant-Bank

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specifically contended that the dispute did not fall within the scope of
Section 84 of the MSCS Act and that no application had been made by
Respondent No. 1 to submit any dispute to arbitration under the
provisions of the MSCS Act or otherwise.

F. A perusal of the impugned award shows that the said objection was not
considered by the Arbitral Tribunal, nor was any independent Order
passed, determining the question of maintainability. Instead, in paragraph
15 of the Arbitral Award, the Tribunal relied entirely upon the Order of
MAT, which granted liberty to Respondent Nos. 2 to 4 to initiate
appropriate action to recover the amount as the basis for directing the
Appellant-Bank to reimburse the medical expenses of Respondent No. 1.
Hence, the arbitrator neither considered nor sufficiently dealt with the
fundamental objection as to the very maintainability of the arbitral
proceedings.

G. Equally, the impugned order passed by the District Court also does not
adequately address the question of arbitrability and simply placed

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reliance upon Section 84 of the MSCS Act and the Maharashtra Civil
Services Rules and, on that basis, directs the Appellant-Bank to
reimburse an amount of Rs. 2,01,233/- towards the medical expenses of
Respondent No. 1 to Respondent No. 3. However, the Order does not set
out sufficient reasons for concluding that the dispute was arbitrable under
Section 84 of the MSCS Act and also does not consider whether
Respondent No. 1 had made any application for reference of the dispute
to arbitration in accordance with the requirements of the said provision.
28. Thus, for the reasons stated above, I find that the impugned award, as well as
the impugned order, cannot be sustained and deserve to be set aside. Hence, I
pass the following order:
ORDER
i. The captioned Appeal is allowed.
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ii. The Award dated 30 December 2010 and Order dated 15 September
2015 are hereby quashed and set aside.

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iii. This, however, shall not preclude Respondent Nos. 2 to 4 from
recovering, in accordance with law, the amount of Rs. 2,01,233/-
expended by them towards the medical treatment of Respondent No.
1 during the period when he was serving on deputation.
iv. There shall be no orders as to costs.


[ARIF S. DOCTOR, J.]

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