Shillong (Assamiya) Co-Operative Bank, Ltd. v. Chiniram Medhi
1937-02-17
body1937
DigiLaw.ai
JUDGMENT S.K. Ghose, J. - The suit out of which this appeal arises was brought under the following circumstances:-In 1921, the Plaintiff Cheni Ram Medhi was at Shillong in Government service. At that time, he was a member of the Defendant Cooperative Bank. In that capacity he stood surety for one Rajani Nath Thakur, a member of the Bank who borrowed on the 15th January, 1921, a sum of Rs. 300 with interest at Rs. 9-6-0 per cent, per annum and Gopal Chandra Das another member also stood surety. There was a stipulation that the said debtor would repay the debt in full within two years and the surety would be liable in default. It is alleged by the Plaintiff that Rajani Nath Thakur was earning a substantial salary and was capable of repaying the debt within the aforesaid period. He however died in 1930 without such repayment. In 1922, the Plaintiff left Shillong on transfer to Gauhati. According to him he ceased to be a member of the Defendant Bank as the membership was limited to residents of Shillong. The Plaintiff alleges that he did not hear anything about the debt which he honestly believed to have been repaid. But, as a matter of fact, the Bank allowed the debt to continue for nine years without attempting to recover the amount under the rules of the Bank. On the 25th August, 1931, under certain fraudulent representations the Defendant Bank applied to the Registrar for obtaining a decree against the Plaintiff without making any attempt to recover the debt still subsisting from Rajani Nath Thakur or his legal heirs. On the 17th September,1931, the Plaintiff was served with a notice from the office of the Registrar directing him to show cause by registered letter why a decision should not be given against him. Thereupon, he submitted an explanation by registered post, but he was not given any further opportunity to contest the claim of the Bank nor was he apprised of any date of hearing. On the 4th March, 1932, the Registrar decided the matter ex parte and directed Cheni Ram and the other surety Gopal Chandra to pay to the Defendant Bank the sum of Rs. 264 as principal and Rs.
On the 4th March, 1932, the Registrar decided the matter ex parte and directed Cheni Ram and the other surety Gopal Chandra to pay to the Defendant Bank the sum of Rs. 264 as principal and Rs. 74-10-3 as interest which was due on the 31st August, 1931, and further interest at the rate of 12 1/2 per cent, per annum together with all costs till the date of realisation. Against that decision the Plaintiff filed an appeal to the Local Government but it was dismissed. The Defendant Bank took out execution and Rs. 25 a month out of the salary of the Plaintiff was being attached for nine months. Altogether, a sum of Rs. 227-4-0 has been realised. The Plaintiff brought the suit for a declaration that the aforesaid decree of the Registrar was fraudulent, illegal, without jurisdiction and in abuse of his powers and as such void, invalid and inoperative, for an injunction against the Defendant Bank restraining it from executing the decree, and for an order of refund of the money already realised. The Defendant Bank traversed the facts alleged in the plaint and further pleaded that the Civil Court's jurisdiction was barred by the special provisions of the law under Rule 13 (7) framed by the Local Government under sec. 43 (1) (l) of the Co-operative Societies Act II of 1912. The Munsif gave effect to this last contention and dismissed the suit on that preliminary point. On appeal, the Special Subordinate Judge held that it was a fit case for further enquiry and remanded the case to the trial Court for disposal according to law. Against that order the present appeal has been filed by the Defendant Bank. It is contended that the Registrar made the order complained against in accordance with the rules framed by the Government under sec. 43 of the Cooperative Societies Act. It is pointed out that the Plaintiff got notice from the Registrar and submitted an explanation and further that he appealed to the Local Government and the appeal was dismissed. It is suggested that the Plaintiff should have challenged the decision of the Local Government which is the final judgment against him. This point, however, was not taken in the Courts below and the Plaintiff was not given an opportunity to amend his plaint. I do not think therefore that the appeal should fail on this point. 2.
It is suggested that the Plaintiff should have challenged the decision of the Local Government which is the final judgment against him. This point, however, was not taken in the Courts below and the Plaintiff was not given an opportunity to amend his plaint. I do not think therefore that the appeal should fail on this point. 2. It is next suggested by the Appellant that the Plaintiff is not competent to bring the suit because he submitted to the execution of the decree for nine months. This fact alone however would not oust the jurisdiction of the Civil Court as the Plaintiff did not make any voluntary payment, the money having been realised under attachment. There is therefore no substance in this contention. 3. The really important question is whether the Civil Court ha3 jurisdiction to entertain the suit. It is pointed out for the Appellant in this Court that under rule 13 (7) of the Rules framed by the Government under sec. 43 of the Act an order of a Registrar or of the Chief Commissioner in appeal under sub-r. (6) is, as between the parties to the dispute, not liable to be called into question in any Civil Court or Revenue Court and shall be, in all respects, final and conclusive. This presupposes however that the order in question is an order in accordance with the Act and the rules framed thereunder. Sir Saadulla for the Appellant has relied on the following cases:-Gopi Nath v. Ram Nath I. L. R. 47 All. 374(1924), Mathura Parsad v. Sheobalak Ram I. L. R. 40 All. 89 (1917), Ganpat Ramrao Masur v. Krishnadas Padmanabh I. L. R. 44 Bom. 582 (1919). and Somokanta Mohonta v. Sarveswar Das 31 C. W. N. 739 (1927). The first of these cases deals with the question of the validity of election of Directors under rules framed under sec. 43. The other three cases deal with the orders of liquidator under sec. 42. In all these cases, however, the question was not so much with regard to the procedure as to the inherent correctness of the order complained against. There are cases, however, where the question of jurisdiction as been raised as arising out of an alleged violation of rules and such cases have been entertained by the Civil Court.
42. In all these cases, however, the question was not so much with regard to the procedure as to the inherent correctness of the order complained against. There are cases, however, where the question of jurisdiction as been raised as arising out of an alleged violation of rules and such cases have been entertained by the Civil Court. In the case of Andrews v. Mitchell [1905] A. C. 78 in a proceeding under sec. 68 of the Friendly Societies Act, 1896, a member of a Friendly Society was duly summoned before the arbitration committee for a breach of the rules, and was in his absence expelled from the society by a resolution of the committee upon a different charge, namely, of fraud and disgraceful conduct, of which no written notice had been given to him as required by the rules; it was held that the decision was null and void. It was remarked, The decisions protected from review are constitutional decisions decisions pronounced according to the rules. 4. In the case of Liquidator, Central Cooperative Stores, Ltd. v. Santinidhan Roy 37 C. W. N. 177 (1932) which related to proceedings taken by the Liquidator under sec. 42, it is pointed out that some, evidence is required to be taken under the rules before an order under that section can be passed and where it appeared that there was no compliance with the procedure laid down in the rules the Civil Court interfered and the application for execution of the order was dismissed. In the case of The Dacca Cooperative Industrial Union, Ltd. v. Dacca Co-operative Sankha Silpa Samity, Ltd. 37 C. W. N. 843 (1933) which arose out of a reference to arbitration the Plaintiff called into question the reference, the appointment of the arbitrator, and the procedure adopted by him, and it was held that the suit was maintainable and the question raised depended on consideration of the evidence which should be gone into. Now, in the present case, the notice which was given by the Registrar to the Plaintiff expressly directed him to show cause by registered letter. The Plaintiff alleges that thereafter he received no notice of the date of hearing. Rule 13, sub-r. (4) runs as follows:- * * * * [Here the rule is set out as printed above.] This rule contemplates that the party shall be summoned to attend.
The Plaintiff alleges that thereafter he received no notice of the date of hearing. Rule 13, sub-r. (4) runs as follows:- * * * * [Here the rule is set out as printed above.] This rule contemplates that the party shall be summoned to attend. The Plaintiff alleges that this was not done in his case and so far there is nothing to show that this allegation is not correct. If so, the decision which was given against him ex parte was certainly against rules. It is further contended for the Plaintiff Respondent in this Court that the reference to the Registrar was improper, because the heirs of Rajani Nath Thakur were not made parties and the reference was against the sureties alone. It is the Plaintiff's case that he ceased to be a member when he left Shillong, although on the other side it is contended that in accordance with the bye-laws of the Society the Plaintiff continued to be a member. But in any case, the Plaintiff's contention is that he is only liable as surety and not as a principal debtor. On the other hand, in his absence the contract was varied by the increase in the rate of interest payable and therefore it is contended that the liability of the surety has ceased. It is further contended for the Plaintiff Respondent that the rules themselves are ultra vires in so far as they oust the jurisdiction of the Civil Court. It is pointed out that while sec. 42, sub-sec. (6) expressly provides for ousting the jurisdiction of the Civil Court, there is no such provision in sec. 43 under which rules are to be framed. No doubt this point was not raised in the Courts below, but it is a point of law and the Plaintiff Respondent having won in the second Court, it is open to him to take such a point while resisting the appeal in this Court. Where a question of ultra vires is raised, it is not a dispute touching the business of the Co-operative Society between members or between a member and the Society. See for instance the case of MeEllistrim v. Ballymacelligott Co-operative Agricultural and Dairy Society, Ltd. [1919] A.C. 548 and the case of Ramendra Nath Mukherji v. Balurghat Central Co-operative Bank, Ltd. ILR 59 Cal.
See for instance the case of MeEllistrim v. Ballymacelligott Co-operative Agricultural and Dairy Society, Ltd. [1919] A.C. 548 and the case of Ramendra Nath Mukherji v. Balurghat Central Co-operative Bank, Ltd. ILR 59 Cal. 1165 : s.c. 36 C.W.N. 414 (1932) and The Barisal Co-operative Central Bank, Ltd. v. Benoybhusan Gupta 38 C.W.N. 459 (1933). In these circumstances I consider that the learned Judge below has taken the right view in remanding the suit to the Court of first instance for further hearing and disposal according to law. The appeal is dismissed with costs- hearing-fee being assessed at three gold mohurs.