Companies Act Section 378ZO

Companies Act, Section 378ZO: Resolution of Disputes Involving Producer Companies

1. Scope and Applicability of Disputes

Under this section, any dispute that arises in connection with the formation, management, or business operations of a Producer Company shall be subject to a specific method of resolution. These disputes may occur between various parties involved with the Producer Company and shall be addressed through conciliation or arbitration in accordance with the Arbitration and Conciliation Act, 1996.

2. Parties Among Whom Disputes May Arise

Disputes may arise in the following contexts and between the following parties:

(a) Among Members and Related Persons

Between current members of the Producer Company, between former members and current members, between individuals claiming to be members, between nominees of deceased members and the Producer Company, or other members.
(b) Between Individual Members and the Producer Company

A current or former member, a claimant to membership, or a nominee of a deceased member may be in dispute with:
The Producer Company, its Board of Directors, any office-bearer, and the liquidator (present or past) of the Producer Company.
(c) Between the Company and Directors or Office-Bearers

Disputes may also arise between:
The Producer Company or its Board, and any director, former director, office-bearer, or their legal heirs or representatives.
In all such cases, the dispute shall be mandatorily resolved through conciliation or arbitration. This process shall be governed by the provisions of the Arbitration and Conciliation Act, 1996, and it shall be deemed that all parties involved have provided written consent to resolve their disputes under the said Act. Hence, all procedures and principles applicable under the Arbitration Act shall apply to such Producer Company disputes.

3. Types of Disputes Covered- Explanation

For the purposes of clarity, the law also defines what kinds of disagreements or contentions qualify as "disputes" under this section. These include, but are not limited to, the following specific claims:

(a) Claims for Monetary Dues

Any claim relating to recovery of debt or any sum of money owed by one party to another.
(b) Claims by Surety Against Principal Debtor

If the Producer Company has recovered money from a surety (guarantor) regarding an unpaid debt owed by a principal debtor, the surety can file a claim against the principal debtor.
This holds true whether or not the principal debtor acknowledges the debt or amount due.
(c) Non-Delivery of Produce by a Member

A claim filed by the Producer Company against a member who has failed to deliver or supply produce or goods that they were contractually or otherwise obligated to provide.
(d) Refusal to Accept Goods from Member

A claim filed by a member against the Producer Company if the company refuses to accept goods or produce that the member has supplied.
4. Final Determination on Whether a Dispute Falls Within Scope

In case any uncertainty or doubt arises as to whether a particular disagreement or matter qualifies as a dispute relating to the formation, management, or business of the Producer Company, such a question shall be:

Referred to the arbitrator, who is appointed under the arbitration process. The arbitrator’s decision on this specific question shall be final and binding on all parties involved.