( 1 ) THESE two petitions can be disposed of by a common order as the subject matter involved is common to bqth. The petitions are directed against a common order made by the Mysore, Co-operative Appellate; Tribunal, bangalore, in appeal petition Nos. 552 and 593 of 1970 and appeal No. 50 of 1971. ( 2 ) THESE, three appeals came to, be filed in the following circumstances. The petitioners in WP. 270 of 1972 were the Directors and the petitioner in WP. 734 of 1972 was the Chairman of Yellapur Agricultural Produce co-operative Marketing Society Ltd. , (hereinafter referred to as the society ). On 1-11-1968, they participated at a meeting in which a resolution was passed granting a loan of Rs. 32,000 to one Viswanatha, Narayana bhat, on the security of a forest land situated in another taluk admeasuring 1a. 3gs. The purpose of the loan had been stated as the development of that land. In respect of the said loan Narayan Mahabala Bhat the father of the borrower stood as surety. The said loan, apart from a payment of Rs. 600, has remained unpaid even to this day. Sometime subsequent to the advance of such loan, the, Society was superseded and an administrator came to be appointed. It is the case of the Society that such administrator on an examination of the records available in the Society discovered that there was a serious irregularity committed by the Directors in granting the aforesaid loan. The irregularity in effect is a contravention of the bye-laws governing the business of the Society which had provided for the advancing of loans on the security of produce or other goods. He, therefore, lodged a, dispute before the concerned Assistant registrar of Co-operative; Societies, against the petitioners in both these petitions and the borrower and the surety. In addition, he has also made a claim against one S. M. Bhat, described as an ex-manager of the, Society. The said dispute stood referred to an arbitrator under S. 71 of the Mysore co-operative Societies Act (hereinafter referred to as the Act ). The case of the Society against these persons together had been not only based on the actual documents relating to, the borrowal but also the liability created pursuant to Bye-law 37. The said dispute stood referred to an arbitrator under S. 71 of the Mysore co-operative Societies Act (hereinafter referred to as the Act ). The case of the Society against these persons together had been not only based on the actual documents relating to, the borrowal but also the liability created pursuant to Bye-law 37. The arbitrator made an award in respect of the balance; of the amount lent and the interest that had accrued thereon till the date of the dispute, and directed the payment of the same with future interest. The said award was against all the persons impleaded as defendants or counter petitioners before the Registrar in such dispute. Aggrieved by the afqresaid award, three appeals were filed by the chairman, the Directors and the ex-manager. The appeal relative to the ex-manager was before the Mysore Co-operative Appellate Tribunal. The appeal lodged by the ex-manager is in Appeal Petition 552 of 1970. The tribunal accepted the appeal of the ex-manager and rejected the other two appeals of the Chairman and the Directors. Against the order made by the Tribunal, the present two petitions have been filed, one of them under art. 226 and the qther under Art. 227 of the Constitution. ( 3 ) IT is seen from these petitions that the ex-imanager who had nothing to do with the controversies between the petitioners on the one side and the Society and the borrower and the surety on the other, has been impleaded as a party. In my opinion, he is clearly an unnecessary party to the proceedings. The petitions therefore are dismissed as against him with costs, Counsel's fee Rs. 100 (one set ). ( 4 ) ON behalf of the petitioners the following contentions have, been urged by Sri B. V. Krishnaswamy Rao and Sri S. M. Hegde, the learned counsel appearing on their behalf. Before adverting to these contentions, it is convenient to, set out some provisions of the bye-laws governing the business of the Society which are relevant for the disposal of the contentions urged. Bye-law 2 (2) reads the objects of the Society as follows:"to advance loans to members on the, security of their produce, raw of processed. "bye-law 37 reads thus :" The member of the Board of Directors shall be personally liable for all transactions conducted in contravention of these bye-laws. Bye-law 2 (2) reads the objects of the Society as follows:"to advance loans to members on the, security of their produce, raw of processed. "bye-law 37 reads thus :" The member of the Board of Directors shall be personally liable for all transactions conducted in contravention of these bye-laws. "bye-law 42 reads thus :" Loans may be advanced on the security of produce or goods on the following terms : (1) The Board of Directors shall at the beginning of the season fix the amount of advance, indicating the per centage of the market price of the produce or goods pledged with the Society that may be granted to a member. Such limits may be fixed for different commodities and varied from time to time according to fluctuation in markets or otherwise. The advance shall not exceed 75 per cent of the market value of the produce pledged. It shall also be competent for the Bqard of Directors to call on a borrower at any time before the due date to repay a portion of the loan or advance issued or to produce additional security for the outstanding loan or advance within a time fixed by them, if in their opinion there is a fall or likely to be a fall in the market value of the produce or goods pledged. " ( 5 ) THE rest of the bye-law is not set out as unnecessary. I now revert to the contentions. The first contention is that the dispute referred, as it has been under S. 70 of the Act, would not be maintainable as in the facts and circumstances of this case, the dispute was one which has to be adjudicated only pursuant to the provisions of S. 69 of tha Act. It is further contended that once a dispute or claim falls squarely within the scope and ambit of the provisions of S. 69 of the Act, a dispute under S. 70 would be unmaintainable. It is also contended that having regard to sub-sec. (2) of Sec. 70 of the Act, this is not a dispute which falls within any of the disputes specified therein. In support of this submission, reliance was placed on the following decisions. V. Sundaram Iyer v. Dy. Regr. of Co-op. Societies AIR. 1057 Mad. 634. ; and Pentakota Sriramulu v. Co-op. Marketing Society Ltd AIR. 1965 SC. 621. (2) of Sec. 70 of the Act, this is not a dispute which falls within any of the disputes specified therein. In support of this submission, reliance was placed on the following decisions. V. Sundaram Iyer v. Dy. Regr. of Co-op. Societies AIR. 1057 Mad. 634. ; and Pentakota Sriramulu v. Co-op. Marketing Society Ltd AIR. 1965 SC. 621. The two cases cited on behalf of the petitioners relate to an interpretation of the provisions in the Madras Co-operative Societies Act which correspond, more or less, with the provisions in Ss. 69 and 70 of the Act . The sections in the Madras Act are Ss. 49 and 51 respectively. It was held therein that if a dispute were to arise in connection with the co-operatve society and its directors, members or employees falling within the scope and ambit of the provisions of the S. 49, no such dispute could be raised before the. Registrar pursuant to the provisions of S. 51 thereof, on the principle that S. 51 being a general provision and S. 49 being special provision, the special provision should prevail over the general provision. By analogy, in the Act with which we are concerned, S. 69 is the special provision and S. 70 would be the general provision. In this view, the contention urged on behalf of the petitioners that if a dispute were to fall under s. 69 it would be excluded under S. 70, is clearly right. But this is not conclusive of the question before us. It is seen that the dispute raised by the society relates to recovery of a loan advanced, and directors have been made liable pursuant to the terms of Bye-law 37. The liability of the directors arises only when the loan advanced is in transgression of any bye- law. In the instant case, the circumstance that leads to an inference that such transgression has taken place is that the loan has been advanced on the security of immoveable property which is not covered by any of the bye-laws. On the other hand, Bye-law 42 provides for loans being advanced only on the security of produce or goods and subject to the terms enumerated therein it is, therefore, clear that the loan sanctioned in favour of the borrower, referred to earlier, clearly transgressed the later part of the bye-law relative to the security of produce and goods. On the other hand, Bye-law 42 provides for loans being advanced only on the security of produce or goods and subject to the terms enumerated therein it is, therefore, clear that the loan sanctioned in favour of the borrower, referred to earlier, clearly transgressed the later part of the bye-law relative to the security of produce and goods. ( 6 ) BUT it is argued on behalf of the petitioners that it at best amounts to an irregularity in complying with the bye-law and is not an illegality as such giving rise to the liability provided for under Bye- law 37. I am not persuaded to accept this submission. It is not shown to me that any loan could be advanced by the Society without any security either under the bye-laws or the rules governing the master. The only provisions, which are not in dispute, are the bye-laws above referred to, which provide for advancing of loans on the security of produce or goods. It, therefore, follows that any person acting under the authority of the bye-laws to grant loans must comply with them in full including the condition relative to security. In this view, whether such transgression is an irregularity qr illegality would be of no materially, in the context of the applicability of Byerlaw 37 rendering the Directors responsible for the grant of such loan liable personally in regard to the amount so advanced. But the argument of Sri Krishnaswamy Rao is that such Directors have been made responsible on the basis of a discovery of this irregularity through audit report. The argument is that cnce the liability of the Directors is the result of discovery through an audit or inspection or an enquiry, it was clearly the duty of the Registrar to have held an enquiry under S. 69 of the Act, and therefore, the dispute lodged under S. 70 was incompetent. In support of this submission, he relied on a show cause notice read before me for the first time, issued to the Directors in the context of supersession of the Board. The submission is that there is a reference to this omission or irregularity in such show cause notice. ( 7 ) THAT being so the principle enunciated in the decision of Supreme Court in Sriramulu's case (2) would be attracted to the instant case. The submission is that there is a reference to this omission or irregularity in such show cause notice. ( 7 ) THAT being so the principle enunciated in the decision of Supreme Court in Sriramulu's case (2) would be attracted to the instant case. It has been held in the said case that one of the conditions precedent for instituting an enquiry under S. 49 of the Madras Act is that the act complained of must have been discovered during an audit, enquiry or inspection. It seems to me that there is no factual basis for such a contention in the instant case. Assuming that there is a reference to this circumstance in the show cause notice referred to, in order to attract the enunciation relied on in the decision of the Supreme, court it must however, be shown that such material had been placed on record in the instant case. This apart, it is seen from the order of the appellate Tribunal that there is an observation to this effect :"it is not the case of any party in these appeals, that the claim relating to the present transaction has been revealed during the course of audit, enquiry or inspection. " ( 8 ) IT is clear from this observation that it is not open to the petitioners to raise such a contention before this Court, for the first time. Quite apart from the above conclusions, this contention can be disposed of viewing from another angle. It is clear from the provsions of s. 69 of the Act that they do not at all relate to any debt as such. On the, other hand, all the circumstances enumerated therein as conditions for the exercise of power under S. 69, relate to cases of tortious acts. I am not able to see any reference to a debt in the provisions of S. 69. In the instant case, we are concerned with the debt due from a borrower and a surety, and that due by the Directors who have been expressly rendered liable by virtue of Bye-law. 37. Once it is shown that the loan has been advanced transgressing the bye-law, I am clearly of the view that the Directors would become debtors more or less. In this view, they cannot be proceeded under S. 69 of the Act. 37. Once it is shown that the loan has been advanced transgressing the bye-law, I am clearly of the view that the Directors would become debtors more or less. In this view, they cannot be proceeded under S. 69 of the Act. The only other provision that is attracted to a case of this kind is, Section 70. ( 9 ) IT is also contended that the provisions of S. 70 (2) of the Act were, more or less, exhaustive of the question of a dispute touching the management and business of the Society referred to in sub-sec. (1) of S. 70. This contention has no force. On a plain reading of sub-sec. (2) of S. 70, it is clear that it is either in the nature of an extended definition or more particularly, in the nature of constituting certain specific disputes as those failing within the scope and ambit of the expression of management and business touching the Society. I am not therefore persuaded to agree with Sri Krishnaswamy Rao on behalf of the Chairman of the Society, Sri S. M. Hegde, the learned Counsel submitted that unless a dispute relates to the management and business of Society as such, no dispute! could be raised under S. 70 of the Act. His specific argument is that a business of a Society is something which relates to any action taken pursuant to and in accordance with bye- laws and other statutory rules governing the matter On this basis, he proceeds to argue that a transgression of the bye-law cannot be brought within the scope and ambit of a dispute touching the management and business of the Society. I am not persuaded to agree with this contention also. It is clear from the bye-laws reproduced earlier, notwithstanding the submission to the contrary, that it was competent for the Society to advance loans albeit on the basis of security of produce or goods. Once the power to grant loans is conceded, it is not an act falling outside the management and business of the Society within the meaning of S. 70 of the Act. But if in so, granting a loan the condition enjoined by a bye-law is transgressed, as in the case of Bye-law 42 herein, I find great difficulty, in accepting that such an act fails outside the scape of management and business of the Society, as contended. But if in so, granting a loan the condition enjoined by a bye-law is transgressed, as in the case of Bye-law 42 herein, I find great difficulty, in accepting that such an act fails outside the scape of management and business of the Society, as contended. In support of his submission, Sri hegde relied on a certain enunciation of the Supreme Court in Deccan merchants Co-operative Bank, Ltd. v. Dalichand Jugraj Jain AIR 1969 SC. 1320 . . The enunciation reads thus :"although the nature of business which a Society does can be ascertained from the objects of the Society, it cannot be said that whatever the Society does or is necessarily required to do for the purpose of carrying out its objects is part of its business. The word 'touching' is very wide and would include, any matter which relates to or concerns the business of a Society, but it is doubtful whether the word 'affects' should also be used in defining the scope of the word 'touching'. The question whe ther a dispute touching the assets of a, Society would be a dispute touching the business of the Society would depend on the nature of the Society and the rules and bye-laws governing it. Ordinarily, if a Society owns building and lets out parts of buildings which it does not require for its own purpose it cannot be said that letting out of house parts is a part of the business of the society But it may be that it is the business of a Society to construct and buy houses and let them out to its members. In that case letting out property may be part of its business. Where the Society is a Co operative Bank it cannot ordinarily be said to be engaged in business when it lets qut properties owned by it. Therefore the dispute between a tenant and a member of the Bank in a building which has subsequently been acquired by the Bank cannot be said to be a dispute touching the business of the Bank. " ( 10 ) IT seems to me that the illustration furnished in the above enunciation, that if a Society owning buildings lets out portions therein which were unnecessary for its use, then it would not be the business of that Society, affords a clue to the contention raised by Sri Hegde. " ( 10 ) IT seems to me that the illustration furnished in the above enunciation, that if a Society owning buildings lets out portions therein which were unnecessary for its use, then it would not be the business of that Society, affords a clue to the contention raised by Sri Hegde. In the instant case, as observed earlier, the Society was competent to grant loans, and indeed, it was one of its objectives. It is not a case where a Society which was not competent to grant loans had granted it so that only the ordinary remedy available at law by way of suit would have to be resorted to by the Society in such a case. Hence, the factual basis for the contention urged by Sri Hegde is clearly lacking in this case. His contention is that the Society was not competent to grant loans and therefore it acted outside the acpoe of its authority. Hence this contention also fails. ( 11 ) THE next contention of Sri Krishnaswamy Rao is that the Bye-law 37 has no statutory force. It is no doubt true that such bye-law may not be treated as being on par with a statutory rule or law. (vide Co-operative central Bank Ltd. v. Addl. Industrial Tribunal, AP. AIR. 1970 SC. 245. . But such a conclusion is not of much assistance to the petitioners. It is well settled that such a bye-law is binding on the Society and its members as if it is a term of a contract entered into between them. In such a situation Bye- law 37 is clearly applicable to the case, of liability of the Directors who were responsible for the grant of the loan in question. I am not persuaded to accept this contention also. ( 12 ) THE next contention is that no loss has been shown to have been incurred by the society by granting such a loan, and therefore the entire dispute is premature. It is also contended that there is no cause of action for the Society. The argument is that unless some attempt has been made by the Society to recover the loan from the debtor and the surety, and there has been failure to recover the entire sum from them as such, no director can be proceeded against pursuant to Bye-law 37. The argument is that unless some attempt has been made by the Society to recover the loan from the debtor and the surety, and there has been failure to recover the entire sum from them as such, no director can be proceeded against pursuant to Bye-law 37. This contention has also no forces in view of the conclusion arrived at earlier that the Directors were equally liable with the principal debtor and the surety pursuant to the provisions of Bye-law 37. In other words, they are jointly made liable for the claim In that view, if the Society proceeds to recover the sum advanced from all these persons together, which it is entitled to do by way of recovery of the loan amount, it cannot be said that the dispute is either premature or that there is no cause of action for it the last contention is that this resolution granting loan in favour of the debtors in question has been subsequently ratified by some other directors, and on such action, those persons also ought to have been made parties to the dispute, and in the absence of such parties, the dispute, would not be maintainable. I am unable to accede to this proposition. It is not shown whether there were Directors other than those who have been proceeded against, who had participated in the passing of such a resolution. Indeed, on behalf of the Society, it is submited by Sri T. S. Ramachandrar that there were no other Directors who could be said to have involved themselves in this resolution, in the meeting held on 10-11-1968, the date on which the said resolution stood ratified. Hence all the contentions fail. ( 13 ) THE result is that these petitions deserve to fail and are, accordingly dismissed. The Society is entitled to its costs from the petitioners. Advocate's fee is Rs. 100 (one set) only in both the petitions. The award of costs is in addition to what has been awarded in favour of the ex-manager s. M. Bhat, earlier. --- *** --- .