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1971 DIGILAW 350 (KAR)

TULJANASA NARAYANASA HABIB v. S. S. K. CO-OPERATIVE BANK LTD

1971-11-30

DATAR

body1971
( 1 ) THIS appeal raises only one suestion of law as to whether the suit filed by the plaintiffssk. Co-operative Bank Ltd. , Dajibanpeth, Hubli (hereinafter called the Bank) against the defendants is maintainable in the Civil Court having regard to the provisions of S. 70 of the Mysore Co-operative societies Act. It arises in this way. The plaintiff is a Bank registered under the provisions of the Bombay co-operative Societies Act and is transacting banking musiness at Dajibanpeth, hubli. Defendant No. 1 is a firm carrying on business in partnership at Hubli with defendants 2 to 8 as its partners. It is stated that defendant No. 1the firm and its partners defendants 2 to 8 are carrying on business as timber merchants at Victoria Road, Hubli. The allegation in the plaint is that defendant No. 1 the firm opened a current account with the plaintiffthe Bank and defendants 2, 4 and 6 as partners of the defendant no. 1the firm and for and on behalf of the firm have entered into dealings and transactions in the account of the defendant No. 1the firm with the plaintiff-Bank in the usual and ordinary course of the business of the partnership of the defendant No. 1-firm. In the course of the partnership dealings of defendant No. 1-the firm, its partner defendant No. 6 on the express and implied authority of all its partners, so as to make it binding on the firm and all partners, as partner of the defendant No. 1-the firm and for and on behalf of the defendant No. 1-the firm and in the usual course of the partnership business drew a hundi for Rs. 5,775 on the plaintiff the Bank in favour of Sha Timber Co. , Merchants and Commission agents YMCA. (Cross), Calicut and received valuable consideration in cash of Rs. 5,775. It was further alleged that Defendant No. 6 as partner of defendant No. 1-the firm and for and on behalf of defendant No. 1-the firm is the drawer of the above stated Hundi and the plaintiff Bank is the payee. As the defendant No. 1-the firm did not pay the amount even after notice, the suit was filed for recovering the amount from the defendants. As the defendant No. 1-the firm did not pay the amount even after notice, the suit was filed for recovering the amount from the defendants. It is necessary to note that the entire plaint is based upon the allegation that defendant No. 1 is a firm, of which defendants 2 to 8 are partners and further the transaction is done by some of the partners for and on behalf of the partnership firm and it is in these circumstances the suit was filed in the Civil Court. It is also an undisputed fact that defendant No. 1-the firm and defendant 8 one of the partners of the firm are not share-holders or members of the plaintiff-Bank. ( 2 ) EVEN though several allegations as regards the existence of the firm, relationship of partners interse were made in the plaint, defendants in their written statement did not deny the allegations made therein. In a perfunctory written statement filed before the Court which contains hardly 5 paragraphs, two contentions were made, first the Court has no jurisdiction to entertain and try the suit without even stating as to why the suit is not maintainable. Further it was stated that without prejudice to the contention, if the Court finds that the suit is tenable and if a decree were to be passed easy instalments may be granted. ( 3 ) THE trial Court upheld the claim of the plaintiff Bank against defendant 8 only and decreed the suit against him. But, so far as the suit against other defendants (defendants 2 to 7) is concerned, it was dismissed as being barred under the provisions of S. 70 (b) of the Mysore Co-operative societies Act, 1959. ( 4 ) IN the appeal filed by the plaintiff-Bank challenging the dismissal of the suit against defendants 1 to 7 before the Court of the Civil Judge at Hubli, the plaintiff-Bank succeeded. The appellate Court passed a decree against all the defendants (defendants 1 to 8) and that is how the defendants 1 to 8 have come up with the present second appeal. ( 5 ) SRI R. U. Goulay, learned Counsel appearing for the appellants, urges that as defendants 2 to 7 who were partners were numbers of the plaintiff-Bank, the suit filed in the Civil Court was not maintainable having regard to the provisions of S. 70 of the Mysore Co-operative Societies act. ( 5 ) SRI R. U. Goulay, learned Counsel appearing for the appellants, urges that as defendants 2 to 7 who were partners were numbers of the plaintiff-Bank, the suit filed in the Civil Court was not maintainable having regard to the provisions of S. 70 of the Mysore Co-operative Societies act. He further submits that even otherwise, upon the allegations made in the plaint, the suit was primarily based against defendant 6 and hence the suit is untenable. As regards this contention, it can be disposed of without much discussion. I have already pointed out the several allegations made in the plaint and pointed out that the defendant did not dispute any one of the allegations made in the plaint, with the result, that at this stage of the second appeal, it is not open to the defendants to say that the suit is only against defendant 6. The suit is primarily filed by the plaintiff-Bank for recovery of money against the partnership firm represented by the partners. Therefore, it would not be right to say that the suit is against defendant 6 only and others are incidentally roped in. That would not be the correct way of understanding the allegations made in the plaint. ( 6 ) THE next question for consideration is as to whether the suit filed against defendants 1 to 8 in the Civil Court is maintainable having regard to the provisions of S. 70 of the Mysore Co-operative Societies Act. In that connection, it is necessary to recall the facts which are either admitted or held proved by the Court below. The suit was filed by the plaintiff alleging that the transaction is with defendant 1 which is a firm and for and on behalf of this firm, with the consent of all the partners, the transaction had been entered into by defendant 6. Therefore, the liability is sought to be put on defendant-firm and its partners defendants 2 to 8, defendant 1 firm and defendant 8 one of its partners are admittedly not members of the plaintiff-Bank. In such circumstances, the question is as to whether the liability can be enforced against defendants 1 to 8 in the Civil Court or as to whether different steps have to be taken one against the members under S. 70 of the Mysore Co-operative Societies Act and another against non-members before the Civil Court. In such circumstances, the question is as to whether the liability can be enforced against defendants 1 to 8 in the Civil Court or as to whether different steps have to be taken one against the members under S. 70 of the Mysore Co-operative Societies Act and another against non-members before the Civil Court. This Court had occasion to consider the scope of S. 70 of the Act in the case of Jyotiba yellappa Jadhav v. Hubli Co-operative Cotton Sale Society Ltd. , (1970) 2 Mys. L. J. 344. In that case, what this Court decided was about right of non-members after the award was passed. Still several observations made by a Bench of this court are useful and will assist the Court in determining the questions that arise in the present case. In that case also, out of the four brothers, who were conducting business, two were members of a Co-operative society. In respect of the said society, they became indebted in large sums and the society filed a claim and got an award passed against them. When the properties were brought to sale, two other brothers, who were not members put up claims that the properties sought to be sold did not belong to the judgment-debtors, and they cannot be sold for satisfaction of the award and having lost the claim before the Sale Officer, they filed writ petitions. The relevant portions which are at pages 346 and 347 are set out below :"the Co-operative Societies Act makes a special provision for adjudication of disputes touching the constitution, management or the business of the Co-operative Societies registered under the Act and to the extent such provision is made it excludes the jurisdiction of ordinary Civil Courts to deal with such disputes. The basic section is s. 70 according to which notwithstanding anything contained in any law for the time being in force, if any dispute touching the constitution, management or the business of a Co-operative Society arises among or between the parties enumerated in clauses (a), (b), (c) and (d) of sub-sec. (1) of that section, such dispute shall be referred to the Registrar for decision and no court shall have jurisdiction to entertain any suit or other proceeding in respect of such disputes. (1) of that section, such dispute shall be referred to the Registrar for decision and no court shall have jurisdiction to entertain any suit or other proceeding in respect of such disputes. * * * * in examining the provisions of any statute excluding or abridging the jurisdiction of Civil Courts, the principle that is always applied is that exclusion of jurisdiction is not to be readily accepted and that the nature and extent of the exclusion must be limited to the wording of the statute providing for such exclusion. If a matter does not come within the scope or ambit of the limiting provision of the statute then it remains within the scope of the general jurisdiction of the Civil courts. ***** hence, the exclusion of Civil Court's jurisdiction under the Co-operative societies Act in the light of the provisions already referred to must be limited to the extent of the matters expressly placed within the jurisdiction of special Tribunal or authorities created under the statute; for which purpose, we have to read S. 70, which shows that a dispute to which one of the parties is a person who is not a member of any co-operative society cannot be brought within the scope of S. 70 or be submitted for adjudication by the special authorities under the statute. That such is the intention cf the statute is also clear from the provisions of Sub-sec. (4) of S. 71 as well as the enumeration of the three different modes for execution of the awards in S. 101 of the act. . . . . "this Court, it is in connection with the facts enumerated above, made the observations to which reference is made earlier. It is thus clear that, as held by this Court, the exclusion of the Civil Court's jurisdiction under the act is limited by S. 70, which shows that a dispute to which one of the parties is not a member of any co-operative society cannot be brought within the scope of S. 70 or be submitted for adjudication to the special authorities under the Statute. ( 7 ) THE former High Court of Mysore had occasion to consider the question of jurisdiction of the Registrar to entertain a dispute in the case of Munivenkatappa v. Kudugere Co-operative Society, (1955) 33 Mys. L. J. 163. ( 7 ) THE former High Court of Mysore had occasion to consider the question of jurisdiction of the Registrar to entertain a dispute in the case of Munivenkatappa v. Kudugere Co-operative Society, (1955) 33 Mys. L. J. 163. Mallappa J. in that case followed the judgment in the case of Haridasin Ghosh v. Co-operative Society, AIR 1931 Nag. 48, wherein it was laid down as follows :"it is only members and persons claiming through members against whom the Registrar can pronounce a decision which can be executed as a Civil Court decree. The Society must enforce in the regular course any claim which it may have against outsiders. The decision of the Registrar, so far as it affects a stranger, is a nullity as being made without jurisdiction. "similar view was taken by the High Court of Bombay in the case Karashiddayya shidayya Bennur v. Gajanan Urban Co-operative Bank Ltd. , AIR 1943 Bom. 288, where it was laid down as follows :"under S. 54 the Registrar is only empowered to deal with disputes between members or past members of a society or persons claiming through a member or past membber or between members or past members or persons so claiming and any officer, agent or servant of the society, or between the society or its committee and any officer, agent, member or servant of the society. No power is given to the registrar to settle disputes between a society and a person not a member of it. Prima facie, therefore if an award is made dealing with some matter not covered by S. 54, for instance in a dispute between a society and a person not a member of the society the award would be ultra vires and a nullity and in that case the jurisdiction of the civil Court could not be ousted by S. 57, of the Act. " ( 8 ) A case raising a question simliar to the one has come up before the high Court of Gujarat in the case of Natwarlal Balabhai Shah v. Dakor co-operative Sale and Ginning and Pressing Society Ltd. , (1961)2 Guj. L. R. 299. The provisiona of S. 54 of the Bombay Co-operative Societies Act which are similar to the provisions of S. 70 of the Mysore Co-operative Societies Act were considered in that case. L. R. 299. The provisiona of S. 54 of the Bombay Co-operative Societies Act which are similar to the provisions of S. 70 of the Mysore Co-operative Societies Act were considered in that case. The main business of the respondent-Society in that case was to purchase cotton produce of cultivators, to get the cotton ginned and pressed and then sell the same. The work of ginning and pressing cotton into bales was done for the society by a partnership firm, the siddharth Ginning and Pressing Facty. , in which the'4 petitioners and 4 others were partners. Two claims were preferred by the society one against the firm of Balabhai Lallubhai and the other against the firm of Siddharth ginning and Pressing Factory. The claim relatfd to the price of 204 bales of cotton that had been ginned and pressed. The claim was raised before the Registrar and he awarded the same. The correctness of the decision was challenged before the High Court by a writ petition filed by the petitioners. The contention raised was that the Siddharth Factory was nota member of the society and S. 54 of the Act does not confer any jurisdiction on the Registrar or his nominee to decide a dispute between a society and a firm where only some of the partners of that firm can be said to be the members of the society The contention raised was that the mere fact that some of the partners of the firm arc members does not mean that the firm is a member of the co-operative society. In that connection, the High Court of Gujarat held as follows :". . . . The question is: Had the Registrar's nominee jurisdiction under S. 54 of the Act to entertain a claim against the four petitioners on the footing that the dispute touched the business of the society with them as members? The language of S. 54 of the Act, in our opinion, is sufficiently clear, and the section, as already mentioned, rules that the dispute touching a business of the society arising between the society and any member of the society shall be referred to the Registrar or to the Registrar's nominee for decision. The language of S. 54 of the Act, in our opinion, is sufficiently clear, and the section, as already mentioned, rules that the dispute touching a business of the society arising between the society and any member of the society shall be referred to the Registrar or to the Registrar's nominee for decision. In our view, it is quite clear that antecedent to the exercise of the jurisdiction of the Registrar or his nominee must exist a dispute between the society on the one hand and a member or members on the other. We put to ourselves the question: if a Co-operative Society has a claim against Y and Co. , consisting of 8 partners, A, B, C, D. E, F, G ant H, in respect of business dealings with it and the dispute is in respect of those business dealings, and if only E, F, G and H among the partners are registered members of the society, can it be said that the dispute between the society on the one hand and the firm on the other is to be regarded as the same for the purpose of S. 54 of the Act as a dispute between the society and the four partners. In our opinion, it would be fallacious to equate the four partners with the firm in the present context of jurisdiction to be exercised under S. 54 of the Co-operative Societies Act. Of course, the four partners would be liable to the society on the footing of contractual liability and that on the principle that all the partners are jointly and severally liable for the liabilities and obligations of the firm. But, we fail to see how that principle of joint and several liability can be pitchforked into a provision relating to jurisdiction of the Registrar or his nominee with which alone we are concerned. It is, as we have already mentioned, an antecedent condition of assumption of jurisdiction by the Registrar or his nominee that the dispute must exist between the society on the one hand and a member on the other. We may state the same position in a somewhat different form. It is, as we have already mentioned, an antecedent condition of assumption of jurisdiction by the Registrar or his nominee that the dispute must exist between the society on the one hand and a member on the other. We may state the same position in a somewhat different form. If a contract is by a society with a firm of eight partners and only four of those partners are members of the society, can it be said in the context of a point of jurisdiction that the contract is with the four partners who were members? In our opinion, it would be erroneous to say that the contract is with the four partners. The contract would not be with the four partners, but the contract would be with all the eight partners. The nature of the liability of a partner, viz. , joint and several cannot be permitted to control the meaning of the initial wordings of S. 54. We have to see whether in the case before us a dispute touching the business of the society can be said to have arisen between the society and the four partners. In our opinion, the language of the section is clear and does not permit of any such extended meaning. "the clear view expressed by the Gujarat High Court is that if a contract is by a society with a firm, to which only some partners are the members of the society, it would be fallacious to equate some of the partners of the firm as the firm itself to enable the Registrar to exercise his jurisdiction. Therefore, in my view, upon the admitted fact that defendant No. 1 the firm and defendant 8 one of the partners are not the members of the co-operative Bank, the suit filed in the Civil Court for recovery of money against the firm and other partners the jurisdiction of the Civil Court to entertain the suit is not excluded. The suit filed by the plaintiff, therefore, was rightly decreed in full by the appellate Court. ( 9 ) IN the result, this appeal fails and the same is dismissed. No costs. --- *** --- .