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1976 DIGILAW 116 (GUJ)

RAJKOT NAGARIK SAHKARI BANK LIMITED v. RAJKOT DISTRICT CO OPERATIVE BANK LIMITED

1976-08-16

P.D.DESAI

body1976
P. D. DESAI, J. ( 1 ) THE petitioner the Rajkot Nagrik Sahakari Bank Ltd. is a co-operative society registered under the Gujarat Co-operative Societies Act 1961 (hereinafter referred to as the Act ). The first respon- dent the Rajkot District Co-operative Bank Ltd. is a federal society and it is also registered under the Act. The petitioner is a member of the first respondent and it holds 132 fully paid up shares of the first respondent By a letter dated April 5 1974 the Manager of the first respondent informed the petitioner that the petitioner was bound to hold shares to the extent specified in by-law 17 and that having regard to the fact that the share- holding of the petitioner fell short of the limit specified in the said by- law the petitioner was not entitled to exercise any of its rights as a member of the first respondent. The petitioner thereupon raised a dispute under sec. 96 of the Act and the dispute was referred by the Registrar to his nominee. The relief which the petitioner sought by raising the dispute was for a declaration that it was entitled to exercise and enjoy all the rights of a member of the first respondent without holding the shares to the extent specified in by-law 17 and for an injunction restraining the first respondent from preventing it from exercising such rights including the right to vote through its delegate at the annual general meeting of the first respondent. The nominee after hearing the parties came to the conclusion that on a true interpretation of by-law 17 which was validly enacted in the light of the relevant statutory provisions the petitioner was required to hold shares of the first respondent to the extent specified in the said by-law and that since that condition was not satisfied in the present case the petitioner was not entitled to exercise any rights as a member of the first respondent. Accordingly the nominee dismissed the case. The petitioner carried the matter in appeal to the Gujarat State Co-operative Tribunal (hereinafter referred to as the Tribunal ). A Full Bench of the Tribunal upheld the decision of the nominee and dismissed the appeal. Hence the present Writ Petition. ( 2 ) AT the hearing of the petition Mr. Accordingly the nominee dismissed the case. The petitioner carried the matter in appeal to the Gujarat State Co-operative Tribunal (hereinafter referred to as the Tribunal ). A Full Bench of the Tribunal upheld the decision of the nominee and dismissed the appeal. Hence the present Writ Petition. ( 2 ) AT the hearing of the petition Mr. D. D. Vyas learned advocate appearing on behalf of the respondents raised two preliminary contentions against the maintainability of the present Writ Petition. First that the by- laws of a co-operative society constitute a contract between the parties and that rights arising out of such contract cannot be enforced in a writ petition and secondly that there was no error apparent on the face of the record which would entitle this Court to interfere with the decision of the Tribunal in exercise of its powers under Article 227. I shall first dis- pose of these preliminary contentions. ( 3 ) IN RAJABHAI RANMAL MORI and OTHERS V. MEMBERS OF THE MANAGING COMMITTEE OF SHRI UNA TALUKA SAHAKARI KARID VECHAN SANGH LTD. and OTHERS 17 GUJARAT LAW REPORTER 583 S. H. Sheth J. expressed the view disagreeing with the decision of J. B. Mehta J. in LAMBHA VIVITH KARYAKARI SEVA SAHAKARI MANDALI LTD. AHMEDABAD AND ANR V. DISTRICT REGISTRAR CO- OPERATIVE SOCIETIES 14 GUJARAT LAW REPORTER 786 that the by-laws of a co-operative society governed by the Act have their origin in contract and that therefore they cannot be enforced by a writ of this Court. In that view of the matter the petition in that case which was filed under Article 226 to enforce the by-laws of the respondent-co-operative society was held to be not maintainable. It is upon the basis of this decision that the first preliminary contention has been raised on behalf of the respondents in the present case. Now it is not necessary in the present case to decide as to which of the two views expressed by the two learned single Judges of this Court is preferable for even assuming that the view taken by S. H. Sheth J is correct the present case does not fall within the mischief of the rule enunciated in the decision given by him. In the case before S. H. Sheth J. the petitioners who were the members of the Managing Committee of a co-operative society impugned a resolution of the Manag- ing Committee of the said society resolving that the petitioners having remained absent from three consecutive meetings of the said society their offices had become vacant and further resolving to co-opt three members in their places. It is in this context that the learned Judge held relying upon two decisions of the Supreme Court and one decision of a Division Bench of this Court that the by-laws of a co-operative society if framed under the Act are similar in nature to the Articles of Association of a Company incorporated under the Companies Act and that such by-laws could not be held to have the force of law. They merely constitute a contract bet- ween the parties and therefore a mandamus cannot lie against a non- statutory body incorporated under an Act when there is neither a statutory nor a public duty imposed upon it by a statute in respect of which enfor- cement can be sought by means of a mandamus. It would thus appear that the true ratio of the decision of S. H. Sheth J. is that it would not be open to a member of a co-operative society to approach this Court invoking its writ jurisdiction under Article 226 to enforce a by-law which has its origin in contract by a writ of mandamus for a co-operative society is not a statutory body against which a mandamus lies and the concerned member has no legal right to the performance of a legal duty by the society. What is true however in the context of a writ of mandamus in a proceeding under Article 226 would not be true in the context of a writ of certiorari in a proceeding under Article 227. In a case like the present where the aggrieved member has approached the competent authority constituted under the Act and raised a dispute and that dispute has been finally resolved by the Tribunal which is at the apex and the party aggrieved by such decision approaches the High Court and seeks a writ of certiorari in the exercise of its jurisdiction under Article 227 the considerations which are relevant for the issuance of a writ of mandamus in a proceeding under Article 226 would not be attracted. The aggrieved party is not seeking to enforce the performa- nce of a public duty or a statutory duty against a statutory body. It is merely inviting the High Court to exercise its power of judicial superintendence over the Tribunal to keep it within its bound. If the High Court is satisfied in such a case that the Tribunal has acted arbitrarily or that it has declined to do what it was legally incumbent upon it to do or that it has exceeded its jurisdiction or acted against rules of natural justice or that its finding is vitiated for want of evidence or by perversity or that its decision discloses an error of law apparent on the face of the record the High Court will have undoubted jurisdiction in the exercise of its powers of judicial superintendence to issue a writ of certiorari and to give appropriate relief to the aggrieved party. The writ is issued in such a case not against a non-statutory body to enforce the performance of a contractual right. It is directed against the decision of a Tribunal with a view to correcting it if the same has resulted in miscarriage of justice on account of any of the aforementioned failures or faults. In my opinion therefore the decision in Rajabhais case cannot assist the respondents in the present case for advancing the first prelimi- nary contention. It is well-settled that a decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in it. It is not a profitable task to extract a sentence here and there from a judgment and to build upon it. (See STATE OF ORISSA V. SUDHANSU SEKHAR MISRA AND OTHERS A. I. R. 1968 SUPREME COURT 647) The decision in Rajabhais case does not cover the cases of a writ of certiorari which is issued to correct errors of law apparent on the face of the decision of a Tribunal and the principle therein laid down cannot be invoked in such class of cases. Even S. H Sheth J. who decided that case has not said so in the body of his judgment. Even S. H Sheth J. who decided that case has not said so in the body of his judgment. The head-note of the case which proceeds to state that such by-laws of a co-operative society could not be enforced by a writ of the High Court under Article 226 or Article 257 of the Constitution does not correctly reproduce the substance of the judgment. Having regard to the aforesaid legal position in my opinion the first preliminary contention urged on behalf of the respondents is not well-founded and it must be rejected ( 4 ) AS regards the second preliminary contention the submission was that the Tribunal on an interpretation of the relevant by-laws of the first respondent has reached a particular conclusion and on that basis it has dismissed the appeal. Even if the submission made on behalf of the petitioner were to be accepted proceeded the argument at the highest the error committed by the Tribunal was one of law but it was not an error apparent on the face of the record and that under the circumstances it was not within the competence of this Court to sit in appeal over the judgment of the Tribunal and to examine meticulously the correctness or propriety of the conclusions reached by it. In the context of the facts of the present case this argument has to be stated merely to be rejected. It is now well-settled that a writ of certiorari can be issued not only in cases of illegal exercise of jurisdiction but also to correct errors of law apparent on the face of the record the other words a writ of certiorari can be used to correct such errors of law even though they do not go to jurisdiction. (See REX V. NORTHUMBERLAND COMPENSATION APPEAL TRIBUNALS (1952) 1 K. B. 338 ). An error of law which can be corrected by a writ of certiorari must of course be self-evident and as a working test for the purpose of satisfying whether the error is self-evident or not it has often been said that such error should be one which is disclosed without the need of an elaborate examination of the record. An error of law which can be corrected by a writ of certiorari must of course be self-evident and as a working test for the purpose of satisfying whether the error is self-evident or not it has often been said that such error should be one which is disclosed without the need of an elaborate examination of the record. However as pointed out in HARI VISHNU KAMATH V. AHMAD ISHAQUE A. I. R 1955 SUPREME COURT 233 AT PAGE 244 there must be cases in which even this test might break down because judicial opinions also differ and an error that may be considered by one judge as self-evident might not be so considered by another. ( 5 ) IN this context it would be instructive to refer to the decision of the Supreme Court in SHRI AMBICA MILLS CO. LTD. V. SHRI S. B. BHATT AND ANOTHER A. I. R. 1961 S. C. 970 where the question whether the High Court was justified in correcting the decision of the Appellate authority under the Payment of Wages Act 1936 by issuing a writ of certiorari came up for consideration. In that case there was an agreement between the Mill Owners Association and the Textile Labour Association regarding the wages payable to clerks. The first clause of the agreement governed all clerks employed in the local mills. A later clause governed employees who occupied the position lower than that of a full-fledged clerk but higher than that of an operative. the Appellate Authority under the Payment of Wages Act held on a construction of the two clauses that the first clause was the determinative clause and that unless an employee satisfied the requirement of the said clause he could not claim the benefit under the latter clause. In a Writ Petition directed against the said decision the High Court held that the decision was patently and manifestly erroneous in law in that it proceeded upon a misreading of the relevant clauses of the agreement. The High Court accordingly allowed the with petition and set aside the order of the competent authority. In appeal a contention similar to the one which is raised in the present case by way of the second preliminary objection on behalf of the first respondent was urged before the Supreme Court. While negativing the said challenge the Supreme Court observed at page 974:. . In appeal a contention similar to the one which is raised in the present case by way of the second preliminary objection on behalf of the first respondent was urged before the Supreme Court. While negativing the said challenge the Supreme Court observed at page 974:. . IN deciding whether the High Court should have issued the writ or not it is necessary to examine the said two clauses. On looking at the two clauses it seems to us that the conclusion is inescapable that the error committed by the appellate authority is manifest and obvious. Therefore there is no doubt that persons falling under Cl. 5 cannot fall under Cl 2 and should not therefore be expected to satisfy the test prescribed by the said clause Therefore in our opinion the error committed by the appellate authority was of such a manifest character that the high court was justified in correcting the said error by the issue of a writ of certiorari. The question involved in the decision of the dispute is not so much of construction of the document as of giving effect to the plain terms of the document. If Cl. 5 expressly provides for employees not falling under Cl 2 and if that intention is clarified by the list of designations which fall under Cl. 5 and yet the appellate authority reads that clause as subject to Cl. 2. that must be regarded as an error patent on the face of the record. It is not a case where two alternative conclusions are possible: it is a case of plain misreading of the two provisions ignoring altogether the very object with which the two separate provisions were made. In our opinion therefore the contention raised by the learned Attorney- General that by issuing the writ the High Court has exceeded its jurisdiction is not well-founded. It would thus appear that the view which the Supreme Court in that case took was that since on a plain reading of the relevant two clauses of the agreement it appeared that the former clause was not applicable in cases of the employees covered by the latter clause the contrary view taken by the competent authority disclosed an error which was of such a manifest character as to justify the issuance of a writ of certiorari. The question in such a case was not so much of construction as of giving effect to the plain terms of the relevant clauses of the agreement. If a conclusion is reached in such a case on a plain misreading of the two provisions ignoring altogether the very object with which the two separate provisions were made a writ of certiorari can certainly issue in the exercise of writ jurisdiction. If therefore on the application of these tests I come to the conclusion in the present case that the relevant by-laws of the first respondent have been plainly misread ignoring altogether the very object with which they were separately enacted and that consequently the Tribunal has failed to give effect to the relevant by-law then I would have undoubted jurisdiction to issue a writ of certiorari correcting the decision of the Tribunal. ( 6 ) IN ROHTAS INDUSTRIES LTD. AND ANOTHER V. ROHTAS INDUSTRIES STAFF UNION AND OTHERS A. I. R. 1976 S. C 425 the question with regard to the jurisdiction of the High Court to issue an appropriate writ on an error of law apparent on the face of the record being disclosed again came up for consideration. The Supreme Court cited with approval the following passage from Halsburys Laws of England to illustrate as to what would amount to an error in law apparent on the face of the record in the context of an arbitrators award:. . . In order to be a ground for setting aside the award an error in law on the face of the award must be such that there can be found in the award or in a document actually incorporated with it some legal proposition which is the basis of the award and which is erroneous. . . . If it appears on the face of the award that the arbitrator has proceeded illegally as for instance by deciding on evidence which was not admissible or on principles of construction which the law does not coun tenance there is error in law which may be ground for setting aside the award. The Supreme Court also cited from the decision of the Judicial Committee in CHAMPSEY BHARA and CO. V. JIVRAJ BALLOO SPINNING AND WEAVING COMPANY LTD. The Supreme Court also cited from the decision of the Judicial Committee in CHAMPSEY BHARA and CO. V. JIVRAJ BALLOO SPINNING AND WEAVING COMPANY LTD. A. I. R. 1923 P. C. 66 the following passage to bring out the true meaning of the expression error of law on the face of the award: an error in law on the face of the award means in their Lordships view that you can find in the award some legal proposition which is the basis of the award and which you can then say is erroneous the decision of Williams J. in the case of HODGKINSONS V FERAIE (1857) 3 CB (NS) 188 was then referred to and it was observed:in this view the enquiry by the Court before venturing to interfere is to ascertain whether an erroneous legal proposition is the basis of the award. Nay still less. Does a question of law (not even a proposition of law) necessarily arise on the award followed by a flawsome finding explicit or visibly implicit ? Then the Court can correct. The decision of Tucker J in JAMES CLARK (BRUSH MATERIALS) LIMITED V. CARTERS (MERCHANTS) LIMITED (1944) 1 K. B. 566 was then alluded to and its ratio was summarized in the following words:. . IF the award were founded on a finding which admits of only one proposition of law as its foundation and that law is erroneous on its face the Court has the power and therefore the duty to set right. While the Judge cannot explore by chasing subterranean routes of ferret out by delving deep what lies buried in the unspoken cerebration of the arbitrator and interfere with the award on the discovery of an error of law by such adventure it is within his purview to look closely at the face of the award to discern the law on which the arbitrator has acted if it is transparent even translucent but lingering between the lines or merely wearing a verbal veil. If by such an intelligent inspection of the mien of the award-which is an index of the mind of the author - an error of law forming the basis of the verdict is directly disclosed the decision is liable to judicial demolition. . . . If at its face value the award appears to be based on an erroneous finding of law alone it must fail. . . . If at its face value the award appears to be based on an erroneous finding of law alone it must fail. The clincher is that the factual conclusion involving a legal question must necessarily be wrong in point of law. Even though the award contains no statement of the legal proposition if the facts found raise a clear point of law which is erroneous on the face of it the court may rightly hold that an error of law on the face of the award exists and invalidates. It is true that these observations are made in the context of interference with an award of an arbitrator. However the guideline to be borne in mind is the same in the context of writ jurisdiction under Article 227 while issuing a writ of certiorari for there also the same test has to be applied namely whether there is an error of law apparent on the face of the record. It is in the aforesaid expanded sense as explained by the Supreme Court in Rohtas Industries case that the question about an error of law on the face of the decision has to be examined in a given case. ( 7 ) AS I shall point out in the course of my judgment there is in this case a patent or manifest error in the decision of the Tribunal. The Tribunal has proceeded upon an erroneous legal proposition which is the basis of its decision. It has also misread the two relevant by-laws and thereby failed to give effect to the said two by-laws in their respective fields. It is a case of plain misreading of the two by-laws ignoring altogether the very object with which these two by-laws were separately enacted. As a consequence of such misreading the Tribunal has deprived the petitioner of its rights as a member of the first respondent and it has also authorised the first respondent in contravention of the provisions of sec. 74 of the Act to exercise its powers and perform its duties contrary to the terms of the by-laws- In such a case in my opinion this Court will have undoubted jurisdiction to set right the manifest error by issuing a writ of certiorari in exercise of its writ jurisdiction. 74 of the Act to exercise its powers and perform its duties contrary to the terms of the by-laws- In such a case in my opinion this Court will have undoubted jurisdiction to set right the manifest error by issuing a writ of certiorari in exercise of its writ jurisdiction. ( 8 ) THE foregoing discussion would show that neither of the two preliminary contentions has any merit and that the petition cannot be thrown out on the ground that it is not maintainable. This must take me to the merits of the dispute between the parties. Petition allowed. .