Shri Jang Bahadur Chaube v. Collector Jaunpur — 1957 DIGILAW 318 (ALL)

JUDGMENT Srivastava, J. - This special appeal has been preferred against an order of a learned Single Judge, by which he dismissed this Appellant's petition under Article 226 of the Constitution. In that petition, the Appellant had prayed for a writ of mandamus prohibition requiring the Respondents not to take any coercive measures against the Appellant and his properties for realising that dues under an award given by one Sri H.H. Deo. Co-operative officer, Jaunpur, 2. The facts leading up to the writ petition may be shortly stated. There is a Co-operative Society in village Dudhauna district Jaunpur which is known as Sahakars Growth Samiti Ltd. (hereinafter it will be referred to as the Samiti). The Society is registered under the U.P. Co-operative Societies Act, 1912. There is another larger Society in the district of Jaunpur which is known as Sahakari Gram Sewa Mandal, Bahim (hereinafter it will be referred to as the Mandal). The Samiti is a member of the Mandal and when it needs money it borrows it from the Mandal. The Samiti in its own turn advances money to its members. There in however, no direct relationship between the Mandal and the members of the Samiti. It is alleged, though it is not admitted, that the Appellant is a member of the Samiti He needed some money and approached the Samiti for a loan of Rs. 2,200 in the years 1949. The Samiti was not able to advance the money and referred the master for the Mandal. The Mandal it in alleged advanced Rs. 2,200 to the Appellant and obtained from him a promissory note for the amount The Appellant disputes this fact too He denies that he borrowed any money from the Mandal or that he validly executed any promissory note. It is also alleged that the Mandal did sot advance the money directly to the Appellant. The amount was advanced to him through the Samiti. When the loan was not repaid by the Appellant, the Mandal claimed the amount from him. He disputed his liability and the Mandal had the matter referred to arbitrations under the U.P. Cooperative Societies Rules. The arbitrator held that as the Appellant was not a member of the Mandal, the Mandal could not advance any money to him and that under the Co-operative Societies Rules, no dispute between the Mandal and a non-member could be decided by arbitration. The arbitrator held that as the Appellant was not a member of the Mandal, the Mandal could not advance any money to him and that under the Co-operative Societies Rules, no dispute between the Mandal and a non-member could be decided by arbitration. Accordingly, the arbitrator rejected the claim of the Mandal against the Appellant. The Mandal then claimed the amount advanced by it from the Samiti and this dispute was also referred to arbitration under the Cooperative Societies Rules. The arbitrator pointed out certain irregularities which had been committed in connection with the advance of the loan but held that the Mandal could realise the amount from the Samiti and passed a decree in favour of the Mandal against the Samiti. In the award he also remarked that the Mandal could realise the amount from the assets of the Samiti which included the amount realisable by the Samiti from the Appellant. The Samiti submitted to this award and did not question it in appeal. The Appellant was, however no party to this arbitration proceeding and the award which was made against the Samiti has not an award made against the Appellant. After obtaining the award, the Man-(sic)moved the Collector of the district u/s 137(1) of the U.P. Co-operative Societies Rules and requested that the amount realised from the Appellant. The Collector has proceeded to issue coercive processes (sic) the Appellant and ordered the attach-(sic) of his properties for the realisation of (sic) uut. The Appellant then filed the (sic) ition which has given rise to this (sic) and prayed that the opposite parties (sic) ained from taking coercive measures against him and his properties for the realisation of the amount. 3. The main ground on which the Appellant based his petition was that as he was not a party to the award which was sought to be enforced the amount could not be re-covered from him or from his properties' as the land revenue. The Mandal in reply contended that it had obtained an award against the Samiti and under Rule 128 of he U.P. Co-operative Societies Rules, it could realise this amount from the assets of the Samiti. According to the Explanation appended to that rule, the assets of the Samiti included the amount owed by the members of the Samiti to it. It was therefore, open to the Mandal to realise the amount from the Appellant. According to the Explanation appended to that rule, the assets of the Samiti included the amount owed by the members of the Samiti to it. It was therefore, open to the Mandal to realise the amount from the Appellant. The learned Single Judge who heard the writ petition accepted the Mandal's contention in preference to that of the Appellant. He held that the Appellant having taken the Loan through the Samiti was the debtor of the Samiti to the extent of the loan and the amount of the loan could be considered to be an asset in the hands of the Samiti. It was therefore, open to the Mandal to realise the amount directly from the Appellant by means of coercive processes. 4. It is urged on behalf of the Appellant in appeal that the Appellant denied that he was a member of the Samiti or that he had borrowed any money either from the Samiti or from the Mandal. As he was not a party to the arbitration proceedings, he was not bound by any thing said in the award. The findings that he was a member of the Samiti and that the money had been advanced to him through the Samiti were of no effect against him, as he had never been-allowed an opportunity of being heard and proving his case. The learned Judge was. therefore, not justified in his opinion that he owed any money to the Samiti or that on that account the amount in dispute was included in the assets of the Samiti. The alternative contention is that even if it be conceded for the sake of argument that the Appellant was a member of the Samiti and that he had borrowed the money from or through the Samiti, simply by getting the award against the Samiti without impleading him (the Appellant), it was not open to the Mandal to proceed against him directly for the realisation of the amount. On no ground, it was argued, could the amount be held to be realisable as land revenue from him and there was, therefore, no justification for the view of the learned Single Judge that coercive processes could be issued by the Collector against the Appellant for the realisation of the amount. 5. The alternative contention of the learned Counsel for the Appellant appears to us to be well founded. 5. The alternative contention of the learned Counsel for the Appellant appears to us to be well founded. It is, therefore, unnecessary for us to consider the question whether the Appellant was in fact a member of the Samiti (Sahakari Gram Samiti Ltd.) or whether he had really borrowed the money in question from or through the Samiti. Assuming both these facts against the Appellant, the question is whether the amount could be realised by the Mandal directly from the Appellant by means of coercive processes. 6. Under Clause (1) of Rule 137 of the UP Co-operative Societies Rules, "On a requisition to the Collector of the district made by the Registrar, all sums recoverable under the award or decision, shall be recovered as if they were arrears of land revenue." The powers of the Collector for realising any money as arrears of land revenue are to be found u/s 279 of the UP ZA and LR Act. Under that section, "An arrear of land revenue may be recovered by any one or more of the following processes: (a) by serving a writ of demand or a citation to appear on any defaulter, (b) by arrest and detention of his person, (c) by attachment and sale of his movable property including produce, (d) by attachment of the holding in respect of which the arrear is due, (e) by sale of the holding in respect of which the arrear is due. (f) by attachment and sale of other immovable property of the defaulter. 7. These provisions show two things beyond all doubt. Firstly, what is realisable as arrears of land revenue is the amount recoverable under the award or decision. Secondly, the processes contemplated by Section 279 can be issued only against the person who is liable to pay the amount which can be considered as an arrear of land revenue. 8. The amount that is sought to be recovered from the Appellant cannot by any means be considered to be an amount recoverable under the award or decision. This is obvious as the Appellant was no party to the award and the award could not fasten any liability on him. 8. The amount that is sought to be recovered from the Appellant cannot by any means be considered to be an amount recoverable under the award or decision. This is obvious as the Appellant was no party to the award and the award could not fasten any liability on him. It is true that the arbitrator made an observation in the award that "the dues should, however, be realised from the Society assets recoverable from Sri Jang Bahadur Chaubey as far as possible," This observation cannot, however, be of any value against the Appellant and cannot make the amount realisable from the Appellant under the award. An award can be made only against the parties to arbitration proceedings. No. liability can be created by an award against a person who is not a party to it. Therefore, so far as the Appellant is concerned, he is entitled to say that the sum which is sought to be recovered from him is not recoverable from him under the award. That being so, it could not be considerable to be arrears of land revenue due from him. No process u/s 279 of the ZA and LR Act could be issued against the Appellant when no amount was due from him as arrears of land revenue. The award being only against the Samiti, the amount due under it could be considered arrears of land revenue only so far as the Samiti was concerned. For the realisation of the amount, the processes contemplated by Section 279 of the aforesaid Act could therefore be issued only against the Samiti. In the case of an ordinary Bhumidhar, if he is in arrears of land revenue, the Collector can realise the amount from him alone. He cannot proceed directly against a person who owes money to the Bhumidhar and attach the properties of that person for the realisation of the arrears of land revenue. How then can the Collector proceed against the Appellant an alleged debtor of the samiti when the amount to be realised is due under the award from Samiti only. 9. Rule 123 of the UP Co-cooperative Societies Rules lays down, "When an award has been obtained against a society, it shall not be executed except against assets in its hands. Explanation -Assets of a society incl(sic) among others, amounts owed to the soc(sic) by members." 10. 9. Rule 123 of the UP Co-cooperative Societies Rules lays down, "When an award has been obtained against a society, it shall not be executed except against assets in its hands. Explanation -Assets of a society incl(sic) among others, amounts owed to the soc(sic) by members." 10. A society being a corporate body is(sic) be distinguished from its members. (sic) liability of the members is limited to (sic) shares contributed by them to the cap(sic) of the society. The debts of the society (sic) therefore, be realised only from the assets (sic) the society and not from the properties owned by its members. This appears to be the principle enacted by Rule 126. The rule on its explanation cannot, therefore, be used for making the members of the society liable personally for its debts. Nor can they enable a creditor of the society to proceed directly against the member for the realisation of his debt due from the society. If any member really owes any money to the society the amount so owed can certainly be considered to be included in the assets of t(sic) society. The creditor of the society (sic) therefore, proceed against this asset also (sic) the realisation of his money. The ar(sic) so owed by the members of the society (sic) will stand on the footing of an action claim. An actionable claim can be att(sic) and sold. The amount which it fetc(sic) the sale can be taken by the creditor. (sic) purchaser at the sale will then have (sic) force the liability of the member in (sic) proceedings and the member in tha(sic) proceeding will be entitled to challenge th(sic) against him and to show that no (sic) is really due from him. Without a(sic) this opportunity to the member, the cre(sic) of the society cannot obviously be allo(sic) to realise any amount from the member s(sic) ply because the society alleges that the m(sic) member owes the amount to it. On the basis of the explanation of Rule 128 of the UP Co-operative Societies Rules, therefore, it is not open to Mandal to realise any amount from the Appellant sought to be a member of the Samiti simply because the Samiti alleges that the amount to be recovered is due from the Appellant to it. 11. Under Rule 137 of the Co-operative Societies Rules, the Mandal had two alternative remedies. 11. Under Rule 137 of the Co-operative Societies Rules, the Mandal had two alternative remedies. It could either make a requisition to the Collector for the amount due to it from the Samiti to be realised as land revenue or it could apply to the Civil Court having jurisdiction to enforce the award. Had the Mandal followed the latter course, it could have started execution proceedings against the Samiti in the proper civil court. As the Appellant was not a party to the award, no execution could have been issued against him simply on the ground that it (sic)alleged that the Appellant owed some (sic)iey to the judgment-debtor (Samiti). In (sic) case either the debt alleged to be due (sic) him would have been attached and (sic) as an actionable claim or garnishee proceedings would have been started against (sic). In either case, before the alleged liability could be enforced against the Appellant, (sic) would have got an opportunity to put forward his case and to establish that no amount was really due from him. Simply because the Mandal instead of moving the Civil Court took the other alternative course of making a requisition to the Collector, it could not claim to have become entitled to deprive the Appellant of the right of proving that the claim against him was without foundation and that really no liability rested upon him. 12. It, therefore, appears to us that it was (sic)t open to the opposite parties to realise (sic) amount in dispute from the Appellant (sic) means of coercive processes u/s 279 of UPZA and LR Act. The Appellant was, (sic) entitled to the relief which he (sic). The appeal, therefore, succeeds. (sic) prohibition shall issue restraining (sic) parties from taking coercive (sic) against the Appellant and his pro-(sic) the realisation of dues under the (sic) by Sri H.H. Deo Co-operative (sic) Officer, Jaunpur in case No. 7/J of (sic) of district Jaunpur dated 14-2-1952 (sic) case of Sahkari Gram Seva Mandal Ltd. Jaunpur v. Sahkari Gram Samiti Didhaura. The Appellant will get his (sic)s of the petition as well as this appeal.