Informal Association Resolution Not Arbitral Award, Cannot Operate As Res Judicata: Telangana High Court

The Telangana High Court on 8 June 2026 held that an unproven resolution stated to have been passed by a trade association cannot be treated as an arbitral award and cannot operate as res judicata to bar statutory arbitration proceedings under the Arbitration and Conciliation Act, 1996.

Justice Suddala Chalapathi Rao dismissed an appeal filed by J. Srisailam Reddy and another and upheld the arbitral award in favour of Vishnu Rice Mill, affirming the order of the District Court under Section 37 of the Act. He held:

“the petitioners have not proved that the proceedings have been drawn by following the procedure under the Act to hold that the resolution Ex.R8 to be arbitral award and thus, in the considered view of this Court, the said resolution is not amply proved to be genuine to hold or as an award much less it does not operate as res judicata so to disentitle the respondents from approaching this Court under Section 11(6) of the Act.”

The dispute arose from Vishnu Rice Mill, a partnership firm constituted under a deed dated 19 January 1985. Under the arrangement, J. Srisailam Reddy and another partner contributed one acre of land at Karmanghat, Hyderabad, while the remaining partners agreed to contribute Rs. 2.5 lakh towards the venture. The parties constructed a rice mill in 1986 but did not operate it. Instead, they leased it out and shared the rental income.

Disputes later arose regarding settlement of accounts and division of partnership assets. After exchange of notices between 2003 and 2005 failed to resolve the issue, the respondents approached the High Court under Section 11(6) seeking appointment of an arbitrator. The High Court appointed a sole arbitrator by order dated 26 November 2006. The arbitrator passed an award on 17 September 2009 in favour of the respondents.

J. Srisailam Reddy and another challenged the award under Section 34 before the Additional District Judge, who dismissed the petition on 3 October 2012. The appellants then filed the present appeal under Section 37.

Before the High Court, the appellants relied on a resolution dated 29 September 1998 allegedly passed by the President of the Ranga Reddy District Rice Millers Association, claiming it had already settled the dispute and barred further arbitration. They also raised objections on limitation and alleged perversity in the arbitral findings.

The respondents submitted that no arbitral proceedings were conducted by the association, no procedure under the Act was followed, and the alleged resolution could not be treated as an arbitral award.

The High Court accepted the respondents' submissions and held that the 1998 resolution was not proved to be a valid arbitral award. It noted that the President of the Association was not examined and no material established compliance with arbitral procedure.

The Bench further held that the proceedings under Section 11(6) were within limitation and found no patent illegality or perversity in the arbitral award. It also reiterated the limited scope of interference under Section 37.

Accordingly, the High Court dismissed the appeal and upheld the award.

Appearances for appellants (J. Srisailam Reddy & another): Senior Counsel P. Vasudeva Reddy.

Appearances for respondents (K. Srisailam & others): Advocate K. Prabhakar.