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1979 DIGILAW 655 (ALL)

H. D. Mukerji v. R. Sarup

1979-07-03

K.C.AGRAWAL, K.M.DAYAL

body1979
JUDGMENT K.C. Agrawal, J. - This is a petition under Art. 226 of the Constitution for quashing the notice dated 16-1-74. (Annexure T to the petition). 2. The facts necessary to appreciate the controversy are these. The petitioner No. 1 is the President and petitioner No. 2 is the Managing Director of the Ayudyogik Kalakar Sahakari Saniiti Ltd. On 16-1-1974 the Assistant Registrar, Co-operative Societies, Aligarh sent a notice to the petitioners Nos.1 and 2 calling upon, to show cause within one month as to why action be not taken against them under Section 91 of the U. P. Co-operative Societies Act for recovering a sum of Rs. 98,832.88p. as arrears of land revenue through Collector, Aligarh. 3. The basis of the aforesaid notice was that the petitioners Nos. 1 and 2 had misappropriated the funds of the Sahkari Samiti and as such were liable to refund the same. The petitioners filed an objection to the aforesaid notice on 12-2-1974. Amongst others, one of the pleas raised was that the Assistant Registrar had no authority to recover the amount under Section 91 of the U. P. Co-operative Societies Act. 4. On 7-4-1974 the petitioners Nos. 1 and 2 filed an application for staying the recovery proceedings pending the disposal of their objections. The Assistant Registrar refused to accede to the request of the petitioners. Consequently, the petitioners filed the present writ petition challenging the recovery. 5. It may, however, be pointed out that die objection filed by the petitioner was dismissed on 8-4-1974 on the ground that Section 91 was applicable. The view taken was that the words debt and outstanding demand cover the amount which were intended to be recovered from the petitioners Nos. 1 and 2. 6. According to the Society, the petitioners Nos. 1 and 2 were liable for the following amounts : "I. Sundry Debtors. - Rs. 51,515.23. According to the balance-sheet of the Society for the year 1969-70 aforesaid amount has been shown by you to be due to sundry debtors but no details are either available in balance-sheet or in records of the society. The amount must have been misappropriated by you. 2. Stocks worth Rs. 10,696.48 had been misappropriated. 3. Illegal withdrawal of Rs. 6,636.17 from A/c. No. 1067 of society in Central Bank, Aligarh. 4. Rs. 186.19 interest to be realised as shown. 5. Loss of Rs. The amount must have been misappropriated by you. 2. Stocks worth Rs. 10,696.48 had been misappropriated. 3. Illegal withdrawal of Rs. 6,636.17 from A/c. No. 1067 of society in Central Bank, Aligarh. 4. Rs. 186.19 interest to be realised as shown. 5. Loss of Rs. 401.72 of sales tax made by the petitioners 1 and 2 due to their illegal act. 6. False deposit of Rs. 6,000/- shown in the balance-sheet. 7. Remington Typewriter for Rupees 1227/- not returned." 7. The question now is as to whether the recovery could be done under Section 91. Section 91 of the Co-operative Societies Act deals with enforcement of charge. It provides that on the application of a cooperative society and on being satisfied of the existence of the debt or outstanding demand, the officer concerned may make an order directing the payment of such debt or outstanding demand due lo the society by any member, by sale of the property or any interest therein, which is subject to a charge under Section 39 of the Co-operative Societies Act. 8. It would appear that under Section 91, a property which has been a subject-matter of charge that can be proceeded with and sold for realisation of debt or outstanding demand. A debt, which remains undischarged, unpaid or uncollected is an outstanding demand. If, therefore, a property is not subject to a charge, Section 91 will not apply. 9. When a property of one person is, by act of parties or operation of law, made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have charge on the property. In the instant case, the charge has not been created by the volition of the parties, but as the result of a legal obligation. 10. At this place reference may also be made to Section 39. Under Section 39 the debt or outstanding demand is a first charge provided the requirement of any of the cls. (a) to (g) has been established. Each of these cls., viz, (a) to (g), creates a charge on the properties mentioned therein. This charge is in respect of the amount of debt taken hv a member of the society. This was done to facilitate the recovery of the debt due to a society taken from it on loan. 11. (a) to (g) has been established. Each of these cls., viz, (a) to (g), creates a charge on the properties mentioned therein. This charge is in respect of the amount of debt taken hv a member of the society. This was done to facilitate the recovery of the debt due to a society taken from it on loan. 11. In the instant case, the petitioners 1 and 2 had not taken any debt; further, this demand of the amount made against them was also not of the nature of a debt. No doubt, the expression demand is of wider import than debt and embraces rights of action belonging to the debtor beyond those which could appropriately be called debt. But in the context, it will not include the amount, fraudulently mis-appropriated by an office bearer, entrusted to him. The word demand is preceded by the expression out-standing. Reading the two together, it means the debt, which remains undischarged. Furthermore, Cls. (a) to (g) also do not justify the giving of a wide meaning. These clauses limit the demand for the recovery of which, a charge has been created. 12. Sri M. S. Negi, counsel appearing for the respondent also conceded that Section 39 was not applicable to the present case. He, however, argued that the right of the society to sell and dispose of the properties conferred by Section 91, is independent of the charge, which is created under Section 39. In other words, his submission was whether a property had been subject to a charge or not, a society has the right to proceed against the property of a member for recovering the amount due to it. The amount may not necessarily be a debt. 13. The submission made is devoid of merit. Reading Section 91 as a whole, it is apparent that a property liable to be sold must have been subject to a charge under Section 39. The last sentence which is a subject to a charge clearly makes out that only a property which has been a subject matter of charge that can be proceeded with under Section 91. The word which is a pronoun. The essence of a pronoun is to do two things to play the part of a noun in a sentence and to convert that sentence into a subordinate clause. The word which is a pronoun. The essence of a pronoun is to do two things to play the part of a noun in a sentence and to convert that sentence into a subordinate clause. Interpreting the word which in the aforesaid sense, no other view is possible, excepting that it refers to the property, which is subject to a charge. Section 91 does not confer any right on a co-operative society to recover the amount by sale of the property, which has not been subject to a. charge. The section being only for the enforcement of charge, the submission of the learned counsel for the respondent cannot be accepted. 14. Counsel for the parties pointed out that the society has started proceedings against the petitioners 1 and 2 under Section 68 of the U. P. Co-operative Societies Act. The decision of this writ petition will not affect the right of the society to pursue the said proceedings. 15. In the result, the writ petition succeeds and is allowed, The notice dated 16-1-1974 as well as recovery proceedings started in pursuance of the said notice are quashed. In the circumstances of the case, the parties shall bear their own costs.