LARGE-SIZED CO-OPERATIVE SOCIETY LTD. v. H. N. RAJU
1974-01-03
K.VENKATASWAMI
body1974
DigiLaw.ai
( 1 ) THE petitioner, the Large-sized Co-operativ Society, Ltd. , Byakaravalli, saklespura Taluk, (Society for short), has challenged an order made by the Karnataka Co-operative Appellate Tribunal (Tribunal for short), in appeal petition No. 66 of 1971 on its file. ( 2 ) THE facts are: The first respondent was the Secretary of the petitioner society. The Society raised a dispute under S. 70 of the Karnataka Cooperative societies Act (Act for short), against the first respondent before the concerned Asst. Registrar of Co-operative Societies. According to the said dispute, the Society has claimed a sum of Rs. 42,070 as due from the first respondent. The dispute having been referred to an arbitrator under s. 71 of the Act, an award came to be made decreeing the claim in a sum of Rs. 26,670 with future interest at 6 per cent per annum. Aggrieved by this award, the first respondent appealed to the Tribunal. Although no ground as to the maintainability of the dispute had been raised either in the objections before the arbitrator or the memorandum of appeal before the Tribunal, the question was permitted to be raised before the tribunal on behalf of the first respondent. The Tribunal ultimately accepted the said ground and set aside the award and dismissed the claim. The other issues arising in the appeal were neither argued nor considered. The Tribunal upheld a contention. that the President of the Society was not competent to make a reference under S. 70 of the Act, and it was the Secretary alone who was competent to make it, in view of the terms of Bye-law 33 (4) framed by the Society pursuant to the power conferred under Rule 5 of the Rules framed pursuant to, the rule-making power conferred by the Act. It is not in dispute that the 1st respondent who was the Secretary of the Society had been suspended at the relevant point of time and no fresh appointment had been made to the said post. It is also not in dispute that the President had made the reference in question. The question arising for consideration is whether the reference made by the President contravenes Bye-law 33 (4) of the Society and therefore incompetent.
It is also not in dispute that the President had made the reference in question. The question arising for consideration is whether the reference made by the President contravenes Bye-law 33 (4) of the Society and therefore incompetent. After a careful examination of the matter in the light of the arguments, addressed at the Bar, I have no hesitation in holding that the answer to the question, must be in the negative and in favour of the society and consequently, the view taken by the Tribunal is erroneous. My reasons are as hereunder. ( 3 ) S. 70 of the Act does not in terms lay down as to who on behalf of a society could raise a dispute. Further what is provided for therein is that and Society, or any one competent, could raise a dispute by making a refer rence. Therein, a provision inter alia has also been made for excluding the jurisdiction of the Courts in matters falling wihin the scope and ambit of that section. From, the circumstances, it is not reasonable to postulate that the proceedings before the Registrar arising under that section could be assimilated to suits, before the Civil Courts. The provisions of Bye-law 33 (4) on which reliance has been placed, almost exclusively, in support of the conclusion of the Tribunal, under challenge herein, have to be read and interpreted in the light of the aforesaid conclusion. ( 4 ) BYE-LAW 33 (4) is in Kannada language and, when translated into english, reads as follows : " The Society can sue and be sued in the name of the Secretary. . . " (rest not set out as unnecessary) it seems to me that this provision has clearly relation to suits to be filed in Courts of law under ordinary procedure and has no reference to the proceedings in the nature of disputes referred to the Registrar for decision under S. 70 of the Act. It may be that the Secretary is also competent to refer a dispute under S. 70 of that Act. But in the light of the cincluasion I have reached earlier, such an exercise of power by him is not necessasrily relatable to Bye-law 33 (4 ).
It may be that the Secretary is also competent to refer a dispute under S. 70 of that Act. But in the light of the cincluasion I have reached earlier, such an exercise of power by him is not necessasrily relatable to Bye-law 33 (4 ). Moreover, I am inclined to think that such a provision is merely an enabling provision aad does- not, expresoly or by implieation exclude the authority of the President to act in all matters pertaining to the Society, under Bye-law 33 (2 ). What is relevant for the purpose of S. 70 of the Act is that a Society should raise a dispute and refer the matter for a decision Such a dispute could be raised in its behalf by any one competent to act as per rules of business of the society as enacted in the Act and Rules or the Bye-laws framed by the society. ( 5 ) ONE other aspect dealt with by the Tribunal, deserves to, be noticed the Bye-law in question (i. e. 33 (4)) has been framed pursuant to the power conferred by Rule 5 (2) (e) of the Rules framed under the Act. It reads thus :"5 (2)-A society may make bye-laws fox the following matters, namely : * * * * * * (e) The authorisation of an officer to sign documents and to institute and defend suits and other legal proceedings on behalf of the society" ( 6 ) IT is clear from this rule that a Bye-law framed under it can refer to "suits and other legal proceedings" only. The Bye-law (i. e -33 (4)) does not expiessly refer to any other "legal proceedings", even assuming that a dispute raised under S. 70 falls under that category. In the absence of reference to such proceedings, it can only relate to 'suits'. It seems that this expression occurring in the said Rule can have reference only to suits instituted under the ordinary procedure in Courts constituted lor the. purpose I am. therefore, of opinion that even if the Bye-law is read and interpreted in the context of Rule 5 (2) (e) of the Rules, the conclusion cannot be anything other than the one arrived at earlier on the plain language of bye-law 33 (4 ).
purpose I am. therefore, of opinion that even if the Bye-law is read and interpreted in the context of Rule 5 (2) (e) of the Rules, the conclusion cannot be anything other than the one arrived at earlier on the plain language of bye-law 33 (4 ). But the argument that has found favour with the Tribunal is that having regard to certain decisions of this Court and the Supreme Court, it is the Secretary alone that was competent to sue in accordance with Bye- law 33 (4 ). In my view all the decisions so relied on are clearly distinguishable and the enunciations rendered therein are therefore inapplicable. ( 7 ) I shall now proceed to consider briefly the decisions in question. In regard to the nature, scope and enforceable character of a bye-law framed by a Co-opcrative Society, the Supreme Courts, in the "case of Co- operalive Cen Bank Ltd v Addl. Industrial Tribunal AIR. 1970 SC 245, has observed that they are not laws; nor have they the force of law. They, therefore, cannot be equated to a statutory provision or a rule haying the force of law. A rule to have the force of law and therefore, binding on all the Citizens, must be one framed by virtue of the power delegated by the Legislature by a law made by it and within its competence, The bye-law of of a Society is not one such. The present bye-laws have all been made by the Society by virtue of the authority conferred by a rule. framed by the government, It is no doubt true that the Act contemplates such bye-lawe being framed. But as observed by the Supreme Court in the above decision, the 'act' concerned therein. which has not been shown to be different from the one concerned with the matter on hand, contemplates only bye- laws which govern the internal management, business or administration of the Society and, therefore, binding only on those as may be affected by them, in the same manner as a contract between the parties. This is not the same thing as saying that they have statutory force in the ordinary connotation of such an expression.
This is not the same thing as saying that they have statutory force in the ordinary connotation of such an expression. I must hasten to add that the fact that such a provision is termed as a 'bye-law' is not decisive of the matter, as I am aware there could be bye-laws framed by local bodies, directly pursuant to the power conferred by a statute, which may have statutory force. We are not concerned with any such bye-law in the instant case. ( 8 ) THE relevant enunciation of the Supreme Court in the above cose, occurring in para 10 of the above report, reads thus:" We are unable to accept the submission that the bye-laws of a co-operative society framed in pursuance of the provisions of the Act can be held to be law or to have the force of law. It has no doubt been held that, if a statute gives power to a Government or other authority to make rules the rules so framed have the force of statute and are to be deemed to be incorporated as a part of the statute. That principle, however, does not apply to bye-laws of the nature that a co-operative society is empowered by the Act to make. The bye-laws that are contemplated by the Act can be merely those which govern the internal management, business or administration of a society. They may be binding between the persons affected by them, but they do not have the force of a statute. In respect of bye-laws laying down conditions of service of the employees of a society, the bye-laws would be binding between the society and the employees just in the same manner as conditions of service laid down by contract between the parties. In fact, after such bye-laws laying down the conditions of service are made and any person enters the employment of a society those conditions of service will have to be treated as conditions accepted by the employee when entering the service and will thus bind him like conditions of service specifically forming part of the contract of service. The. bye-laws that can be framed by a society under the Act are similar in nature to the Articles of Association of a Company incorporated under the Companies Act and such Articles of Association have never been held to have the force of law.
The. bye-laws that can be framed by a society under the Act are similar in nature to the Articles of Association of a Company incorporated under the Companies Act and such Articles of Association have never been held to have the force of law. " ( 9 ) EXAMINED in the light of the above enunciation, all the decisions relied on behalf of the first respondent as also the Tribunal are clearly distinguishable. In all those cases the courts were concerned with the binding character of the provisions contained in an enactment or Rules having statutory force. I do not therefore prupose to consider them in any detail. The decisions so relied on are : Mangulal Chunilal v. Manilal Manganial air. 1968 SC. 822. ; K. M. Kanavi v. State of Mysore AIR. 1968 SC. 1339. ; and Group Village Panchayath committee v, Raman Gowda Anantha Gowda Patil (1971) 2 Mye. L. J. 364. . As a result of this discussion, this petition deserves to, succeed and is accordingly allowed. The order of the Tribunal, impugned herein, is hereby set aside. The matter will stand remitted to the Tribunal for a fresh disposal of the appeal on its merits and in the light of the observations made herein. All other contentions are left open. No costs. --- *** --- .