State Bank of India, Madras Main Branch v. The Madras Fisheries Co-operative Boat Operating Society
1980-02-01
RATNAM
body1980
DigiLaw.ai
Judgment :- 1. The plaintiff Bank is the petitioner in all these Civil Revision Petitions, which arise out of orders dismissing the applications filed by the Bank to implead the Assistant Director of Fisheries, Madras, as the third defendant to the suits. The suits had been instituted by the Bank for the recovery of money due from the first defendant in the suits, who are members of the second defendant Co-operative Society. According to the case of the petitioner Bank, amounts were advanced to the first defendant in the suits, who had created a lien in favour of the petitioner-Bank over his share in the second defendant Co-operative Society. Thus, defendants 1 and 2 are sought to be made liable for the recovery of the amounts advanced and the suits were instituted for this purpose. During the pendency of the suits, the second defendant, viz. The Madras Fisheries Co-operative Boat Operating Society went into liquidation and the Assistant Director of Fisheries, Madras, had been appointed as the Official Liquidator. Since he was the person competent to represent the Co-operative Society in liquidation, the petitioner-Bank took out application in the respective suits to implead the Official Liquidator of the second defendant-society as the third defendant to the suit. 2. Those applications were resisted on the ground that under S. 65 of the Tamil Nadu Co-operative Societies Act, 1961 (hereinafter referred to as the Act), an elaborate enquiry in relation to the affairs of the second defendant society was made by the officers and a report was submitted to the Registrar of Fisheries Co-operative Societies recommending the winding up of the Society under S. 85 (1) and by proceedings, dated 7th February, 1978, orders were passed by the Registrar of Co-operative Societies winding up the said Co-operative Society under S. 86 of the Tamil Nadu Co-operative Societies Act, 1961 and the Assistant Director of Fisheries, Madras was appointed as Official Liquidator. According to the respondents, as per S. 89 of the Act, suits and other legal proceedings shall not lie or be continued against the Liquidator as such, except by the leave of the Registrar and subject to such terms as he may impose and since the petitioner Bank had not obtained any such leave for filing the applications, the applications were unsustainable and are liable to be dismissed. 3.
3. The learned 9th Assistant Judge, City Civil Court, Madras who enquired into the applications, held that though the suit is not filed challenging the order of winding up or cancellation of the registration, yet, it relates to the “affairs” of the society and therefore, the provisions of S. 89 of the Act will be a bar, especially in the absence of leave granted by the Registrar. Consequent to these conclusions, the applications filed by the petitioner-Bank were dismissed. 4. The learned counsel for the petitioner contends that inasmuch as the activities or the affairs of the Co-operative Society are not the subject matter of the suits which have been filed for the recovery of money only, the bar under S. 89 of the Act cannot apply to the instant case. The further submission is that S. 73 of the Act provides for the adjudication of every conceviable dispute which may arise in relation to a co-operative society and that provision being exhaustive, there is no scope in the present case for the applicability of S. 89 of the Act. In other words, the learned counsel for the petitioner contends that the present dispute does not touch the affairs of the registered society on any matter and therefore, no leave of the Registrar is necessary. 5. Before proceeding to consider these submissions, it is necessary to notice S. 89 of the Act which runs thus: “89. Bar of legal proceedings:—Save in so far as is expressly provided in this Act, no civil Court shall take cognizance of any matter connected with winding up or cancellation of the registration of a registered society under this Act, and when a liquidator has been appointed, no, suit or other legal proceeding shall lie or be proceeded with against the liquidator as such or against the society or any member thereof on any matter touching the affairs of the registered society, except by leave of the Registrar and subject to such terms as he may impose,” It is at once apparent that on the facts of the present case, the first portion of the section is inapplicable. The second portion of the section contemplates a case where a liquidator has been appointed pursuant to the provisions of the Act.
The second portion of the section contemplates a case where a liquidator has been appointed pursuant to the provisions of the Act. In such a case, the section enacts a bar against the institution and the continuation of legal proceedings against the liquidator as such or against the society or any member thereof on any matter touching the affairs of the registered society. If the proceeding has to be either instituted or proceeded with against the liquidator or against the society or any member of a society in respect of which a liquidator has been so appointed, leave of the Registrar has to be obtained and it is open to the Registrar to impose such terms as he thinks fit under the circumstances. There is no bar against the institution as such in the instant cases, as the suits themselves had been instituted prior to the liquidation of the second defendant society and the question is only whether the suits already instituted can be proceeded with against the society by impleading the liquidator who has since been appointed. The words “touching the affairs of the registered society” occurring in S. 89 of the Act have been used in other enactments relating to the organisation and administration of co-operative societies in this country. The object of introducing a provision similar to S. 8 9 of the Act is to resolve, as far as possible, all disputes by utilising the hierarchical machinery provided under the Act itself without resort to Court. S. 89 of the Act is such a provision. The use of the words “in matters touching the affairs of the registered society” is indicative of the very wide amplitude of the coverage of matter pertaining to a registered society. The object of the legislation which brought forth these co-operative societies for a definite or specific purpose was not only to secure autonomy in the matter of internal administration, but to provide a scheme to include forums for settlement of dispute without interference by ordinary Courts of the land. The word “touching” means in reference or ‘in relation to, respecting, regarding or concerning’ and this indicates that the dispute need not directly arise out of the business of the society, but it would suffice if it related to or it is as regards or concerning the business of the society.
The word “touching” means in reference or ‘in relation to, respecting, regarding or concerning’ and this indicates that the dispute need not directly arise out of the business of the society, but it would suffice if it related to or it is as regards or concerning the business of the society. Further, the word used in S.89 of the Act is not “business” but “affairs”. The ordinary meaning of that word is “transactions in general, ordinary pursuits, etc.” The use of this word indicates that matters contemplated as falling within the scope of S. 89 of the Act are not restricted to matters arising from and out of the business of the society only, but extend as well to matters which are in some manner related to or connected with the transaction of the society. Even if the word “affairs” can be construed to have been used in an interchangeable sense for the word “business”, the claim in the present suits woul d be a claim against or the liability of the liquidated society at the instance of the petitioner, a creditor and a stranger to the society, arising out of its affairs. It must also be stated that the adjudication of such a claim is not within the scope of S. 73 (1) of the Act, But under S. 87 the liquidator appointed, as in the present case, has been invested with the power to investigate all claims against the registered society, which would also take in the claim in these suits made by the petitioner against the second respondent. It is therefore, not possible to accept the contention of the learned counsel for the petitioner that S. 73 is exhaustive of all cases of disputes arising under the Act. That even a claim like the one made by the petitioner as against a society in liquidation ought to be investigated and settled by the liquidator appointed by the Registrar under S, 86, is the true purport and intendment of S. 87 (2) of the Act. The petitioner could not have straightway proceeded as agains t the party sought to be impleaded as the third defendant to the suits without obtaining the leave of the Registrar as stated in S. 89 of the Act.
The petitioner could not have straightway proceeded as agains t the party sought to be impleaded as the third defendant to the suits without obtaining the leave of the Registrar as stated in S. 89 of the Act. As stated already in the instant case, the disputes between the parties would be one “touching the affairs of the registered society”, and therefore, the suits instituted by the petitioner against defendants 1 and 2 cannot be proceeded with against the third defendant, who cannot also be impleaded, unless the Registrar grants leave to that effect. Indeed, a s ituation almost similar to the one in the instant case was dealt with by Veeraswami, J. (as he then was) in The Thiruchankattankudi Tenants Co-operative Farming Society by its Liquidator v. Sri Rudrapathiswaraswami Devasthanam. Tiruchankattankudi by its Hereditary Managing Trustee 1 . In that case, the suit was for recovery of a large sum of money as arrears of rent for faslis 1373 to 1374 instituted by the Devasthanam. The Co-operative Farming Society which figured as the defendant raised the plea that the suit did not lie without the leave of the Registrar and S. 89 of the Act was relied on in this connection. The learned Subordinate Judge held that the words “affairs of the society” in S. 89 would comprehend domestic affairs and would not include the claim made in that suit. Dea ling with the scope of S. 89 of the Act, Veeraswami, J. (as he then was) observed thus: “S. 89 provides for bar of legal proceedings when a society enters upon liquidations and the policy behind the sections is the same as the one behind similar provisions in the Companies Act or in the insolvency legislation. A claim made or which is pending where a society is wound up cannot be proceeded within a Civil Court. S. 48 of the old Act of 1932 contained a similar provision. The affairs of the society, in my view, will certainly embrace a claim or liability against the society”. With respect, I am in entire agreement with the view expressed above.
S. 48 of the old Act of 1932 contained a similar provision. The affairs of the society, in my view, will certainly embrace a claim or liability against the society”. With respect, I am in entire agreement with the view expressed above. In this view, it is unnecessary either to refer or to deal with the other decisions on which reliance was placed by the learned counsel for the petitioner in support of the submission that only a claim arising out of the “business” activities of a registered society, would fall within the scope of S. 89 and no more. The result is, the order of the Court below is perfectly correct and does not merit any interference. The Civil Revision Petitions fail and are dismissed. No costs. 5. However, the dismissal of these Civil Revision Petitions will not in any manner preclude the petitioner from applying to the Registrar of Co-operative Societies for leave to pursue the suits as against the proposed third defendant and if such leave is granted, the suits will be thereafter appropriately dealt with by the Court below.