Judgment S.S.SANDHAWALIA, J. 1. Whether S.40 of the Bihar and Orissa Co-operative Societies Act, 1935 is at all attracted or applicable to a reference under S.48 of the said Act by a Society against its officer, agent or servant for defalcation of its fund, is the significant question necessitating this reference to the Full Bench. Equally at issue is the correctness of the earlier Division Bench Judgment in Uma Shankar Sharan Shrivastava V/s. Bihar State Co-operative Marketing Union Ltd., Pat 1984 BBCJ (HC) 905 : ( AIR 1985 Pat 46 ). 2. The facts lie in a narrow compass and are not in serious dispute. The Kinjer Vyapar Mandal Sahyog Samiti Ltd. the petitioner is a Registered-Co-operative Society under the Bihar and Orissa Co-operative Societies Act, 1935 (hereinafter referred to as the Act) in the district of Gaya. Respondent No. 2 Sri Chandramani Sharma was the Manager of the said Society appointed by the Registrar of Co-operative Societies, Bihar in the relevant period. The petitioner Society raised a dispute against respondent No.2 for defalcating a huge amount of its funds under S.48 of the Act. The matter was thereafter referred to respondent 3, the Assistant Registrar, Co-operative Societies, Jehanabad. The said respondent in Award Case No.7 of 1976-77 passed a decree against respondent 2 to the tune of Rs.61,439/- as the principal amount and Rs.12,990.00 as interest up to 30th June, 1976 besides costs and future interest thereon vide Annexure-3 to the writ petition. Respondent No. 2 for fixing the financial liability on respondent No. 3 referred to and relied on the audit report of the Society for the years 1973-74 and 1974-75. Aggrieved by the award decree, respondent No. 2 filed C.W.J.C. No. 3244 of 1978 primarily on the ground that the said award was made ex parte against him without any notice and was violative of the principle of natural justice. The petitioner appeared as respondent in the said writ petition and hotly contested the alleged ground of lack of notice. However, respondent No. 2 also filed an appeal against the award decree under S. 48(6) of the Act. The Deputy Registrar, Co-operative Societies, respondent No. 1 heard the appeal ex parte on the 23rd July, 1979 and reserved order. Later the petitioner received a communication dt. the 11th Feb. However, respondent No. 2 also filed an appeal against the award decree under S. 48(6) of the Act. The Deputy Registrar, Co-operative Societies, respondent No. 1 heard the appeal ex parte on the 23rd July, 1979 and reserved order. Later the petitioner received a communication dt. the 11th Feb. 1980 communicating to them that respondent No. 1 vide Annexure 1 had allowed the appeal on the ground that no notice was served on respondent 2 before passing the award decree. The petitioner then filed a review petition in the said appeal which, however, was rejected on the 25th Feb., 1980. The petitioner then preferred the present writ petition to challenge Annexure 1, the appellate order of the Deputy Registrar, Co-operative Societies and the subsequent rejection of the review application. 3. This case originally came up before my learned brother S. Shamsul Hasan, J. sitting singly. Before him the firm stand taken on behalf of the respondent was that no order can be passed in regard to the claim of the petitioner Society in view of the provisions of S.40 of the Act which was directly attracted and, therefore, no dispute could even be raised under S. 48 of the Act by the Society against the respondents. Reliance for this proposition was basically placed on the decision reported in 1984 BBCJ (HC) 905 : ( AIR 1985 Pat 46 ) (supra). Because of the significance of the matter and expressing some doubt about the correctness of the aforesaid judgment the case was referred for hearing by a Division Bench. Before the Division Bench as well the stand of Mr. Bose, learned counsel for the respondent No.2 was that the proceeding under S.48 of the Act cannot be initiated at the instance of the Society in relation to the matters in which the Registrar could initiate action under Cls. (a) to (d) of S.40 of the Act. In sum, the stand was that in such situation a reference under S.48 of the Act by the Society would be barred altogether on behalf of the petitioner a firm challenge was laid to the correctness of the view in the decision reported in 1984 BBCJ (HC) 905 : (AIR 1985 Patna 46) (supra), and consequently the matter was referred to Full Bench and that is how it is before us now. 4. 4. Inevitably the controversy herein must turn on the provisions of the two rival sections and the relevant parts of Ss.40 and 48 of the Act may be noticed at the outset. "40. Surcharge.- (1) Where as the result of an audit under sec. 33 or an inquiry ; under S.35, or an inspection under S.34, S.36, or sec. 37, or the winding up of a society, it appears to the Registrar that any person who : has taken part in the organisation or management of the society or any past or present officer of the society has - (a) made any payment which is contrary to law or to the rules or laws of the society or is against the directions or instructions of the financing bank for which the society is acting as agent under sub-sec.(3) of S.16, or (b) by reason of his culpable negligence or misconduct, involved the society, or the financing bank for which it is acting as agent under sub-sec. (3) of S.16, in any loss or deficiency, or (c) failed to bring into account any sum which ought to have been brought into account, or (d) misappropriated or fraudulently retained any property of the society or of the financing bank for which it is acting as agent under sub-sec. (3) of S.16, the Registrar may inquire into the conduct of such person, or officer and after giving such person or officer an opportunity of being, heard make an order requiring him to contribute sum to the assets of the society or of the financing bank as the case may be, by way of compensation in respect of such payment or loss of sum, or to restore such property as the Registrar thinks fit, together with such sum as the Registrar may fix to meet the cost of the proceedings under this section. Provided that, before any order requiring such person or officer to contribute is passed in respect of a payment referred to in cl.(a), reasonable time shall be given to such person or officer to recover the amount of such payment from the payee and credit it to the funds of the society, or, as the case may be, of the financing bank; Provided further that no order shall be passed under this sub-section in respect of any act or omission mentioned in cl.(a), (b), (c) or (d) except within six years of the date on which such act or omission occurred, (2) This section shall apply notwithstanding that such person or officer may have incurred criminal liability under this Act or under any other law. (3) An appeal shall lie from an order of the Registrar under sub-sec.(1) to the State Government on application made by the person or officer against whom such order was passed within three months from the date of the communication to him of such order. The order of the State Government on appeal, and subject to the result of such appeal, if any, the order of the Registrar, shall be final." "48. Disputes - (1) If any dispute touching the business of a registered society (other than a dispute regarding disciplinary action taken by the Society or its managing committee against a paid servant of society) arises - (a) amongst members, past members, persons claiming through members, past members or deceased members, and sureties of members, past members or deceased members, whether such sureties are members or non-members; or (b) between a member, past member, persons claiming through a member, past member or deceased member, or sureties of members, past members or deceased member, whether such sureties are members or non-members, and the society, its managing committee or any officer, agent or servant of the society; or (c) between the society or its managing committee and any past or present officer, agent or servant of the society; or XX XX XX such dispute shall be referred to the Registrar." 5 Before one proceeds to analyse the specific language of the. aforesaid provisions, the larger scheme of the statute herein calls for pointed notice. Sec. 40 is laid out in Chapter V of the Act and as its very heading indicates it pertains to Audit and Inspection. aforesaid provisions, the larger scheme of the statute herein calls for pointed notice. Sec. 40 is laid out in Chapter V of the Act and as its very heading indicates it pertains to Audit and Inspection. The very opening S.33 of this Chapter lays a duty on the Registrar to audit or cause to be audited the accounts of every registered society at least once in every year. Sec.34 confers a power of inspection on the Registrar over any registered society which he may perform either himself or by any other person by general or special order in his discretion. The succeeding S.35 confers a power of enquiry upon the Registrar either suo motu or on the request of the Collector or on the application of a majority of the managing committee or of not less than one-third of the members to hold an enquiry into the constitution, working and financial conditions of a registered Society. Further, Ss.36 and 37 confer powers of inspection of books of the Society by the Registrar or by a financing bank, respectively. The remaining two Ss.38 and 39 are procedural with regard to the power to call for documents, to issue summons, and with regard to cost of enquiry and inspection. It is in the context of the aforesaid provisions that S.40 comes as the last section in Chapter V under the heading of "Surcharge". Therefore, it is in this mosaic of the earlier sections that the provisions of S.40 have to be correctly construed. 6. On the other hand, S.48 is laid out in Chap. VII pertaining to penalties and procedure. As the very heading of the section indicates, it pertains to disputes and their reference to the Registrar for resolution. The section is couched in the widest amplitude and covers each and every dispute touching the business of a registered Society within the widely spelt out clauses (a), (b), (c), (d) and (e) of sub-sec.(1). The whole idea underlying this is that the inevitable disputes arising in the Co-operative field may first be referred to the Registrar and be decided either by himself or by any person exercising the powers of a Registrar in this behalf or by an arbitrator according to the rules. Sec. 48 does not envisage any technical limits to its wide ranging scope. Sec. 48 does not envisage any technical limits to its wide ranging scope. In particular a reference to sub-sec.(1)(c) would indicate that any dispute touching the business of a Society which arises between the Society and any past or present officer, agent or servant of the Society would squarely be within its scheme. It is not to be easily cut down and eroded into. 7. Now apart from the fact that the two Ss.40 and 48 lie in different Chapters they present an altogether different arena and field in which each of them has application. As noticed earlier, S.40 pertains to Surcharge whilst S.48 pertains to wide ranging disputes. Under S.40 only the Registrar is empowered to take action and if conditions in Cls.(a), (b), c) and (d) of sub-sec.(1) thereof are satisfied, he may enquire into the matter and fix the quantum of the surcharge by way of compensation. On the other hand, under S. 48 it is only the parties to the dispute who can move and initiate action for the reference of such a dispute to the Registrar. In a way S. 40 pertains to the administrative power of the Registrar stemming from the result of an audit or an enquiry or an inspection etc. It is a vested power to penalise for misconduct and negligence on the one hand, in order to compensate the Society by way of surcharge therefor, on the other, it has nothing to do with inter se disputes which may rise under the five sub-clauses of sub-sec.(1) of S.48. In a limited way the two sections can be said to be mutually exclusive and operating in altogether different fields. 8. In particular it must be noticed that if the construction canvassed on behalf of the respondent has to be accepted, it would result in denying and denuding a registered Society of a legal remedy expressly provided by S.48(1)(c) against any defalcating and misconducting officer, agent or servant of the Society. Sec. 48(1)(c) confers a specific remedy by way of reference in case of such a dispute. If it were to be held that sec. 48 is excluded then the matter would fall purely in the discretion of the Registrar to enquire or not to enquire into such misconduct by any officer, agent or servant of the Society. The Society would lose a specific remedy provided by the Act. If it were to be held that sec. 48 is excluded then the matter would fall purely in the discretion of the Registrar to enquire or not to enquire into such misconduct by any officer, agent or servant of the Society. The Society would lose a specific remedy provided by the Act. Such a construction has therefore, to be avoided. 9. Yet, again, it must be noticed that the pre-requisite for any action under S. 40 is that it must be preceded by a proceeding under Ss.33 to 37 of the Act. It is only after the result of an audit, an inquiry, an inspection or a winding up of the society that the Registrar gets vested with the power to inquire into the conduct of a person and to levy a surcharge in order to compensate the society. On the other hand, S.48 envisages no such pre-requisite or pre-conditions for its coming into operation. No audit, inquiry or inspection etc. need precede a dispute with regard to which a reference may be made under S.48. As already noticed, its provisions are in no way hedged by any such pre-conditions or limitations. 10. On the larger scheme, therefore, it must be held that Ss.40 and 48 are independent provisions in different chapters, having no direct nexus with each other, and operate in separate fields. As already noticed, one pertains to the administrative power of the Registrar resulting from an audit, inquiry or inspection etc. whilst the other relates to the vested right of parties to raise a dispute for reference and settlement by the Registrar. 11. Inevitably adverting now to the decision in Uma Shankar Sharan Shrivastav V/s. Bihar State Co-operative Marketing Union Ltd., Patna, 1985 Pat LJR 19 : (AIR 1985 Patna 46) (which has necessitated this reference), it would call for pointed notice that therein the very opening and material part of sub-sec.(1) of S.40 seems to have been altogether missed. Whilst quoting the said section in the judgment, the main opening part of sub-sec. (1) was not even quoted and reference was made only to the four cls.(a), (b), (c) and (d) thereof. To my mind, it is this which has led to the basic error in the case. The very pre-conditions for the exercise of the powers spelt out in sub-sec. (1), namely, the results of an audit, inquiry or inspection, etc. were thus wholly ignored. To my mind, it is this which has led to the basic error in the case. The very pre-conditions for the exercise of the powers spelt out in sub-sec. (1), namely, the results of an audit, inquiry or inspection, etc. were thus wholly ignored. It bears repetition that it is only as a result thereof that the Registrar is empowered to inquire and levy surcharge and not otherwise. 12. Yet, again, the judgment, though it quoted a part of S. 48, it missed to advert to its wide ranging amplitude and in particular to cl.(c) of sub-sec.(1) which expressly refers to a dispute betwixt the society and any past or present officer, agent or servant of the said society. Instead it was observed that the only clause which speaks of a dispute touching the case of a servant of the society is cl.(b). This, with deep respect, would be erroneous in face of the specific provisions of clause (cl Reliance has then been sought to be placed on 1963 BLJR 969 (Purnea Ministerial Government Officers Co-operative Society Ltd. V/s. Abdul Quddus). However, that was a case in which S. 40 did not even remotely come in for consideration. As the Bench itself noticed the only point that arose for consideration in the said case was whether the claim of the society was barred at the time of reference to the Assistant Registrar and if so, whether the Assistant Registrar had any jurisdiction to give the award. Their Lordships in second appeal, whilst affirming the judgments of the courts below, held that on the face there was no dispute in existence at the time of the reference to the Assistant Registrar and as such the Assistant Registrar had no jurisdiction to enter into the reference and make the award. To my mind, the said judgment is wholly distinguishable and has no relevance to the question with regard to the scope and applicability of Ss. 40 and 48 respectively of the Act. With respect, reliance on the said judgment was consequently uncalled for. 13. Equally C.W.J.C. No. 82 of 1979 Madhav Prasad Singh V/s. Assistant Registrar, Co-operative Societies, Biharsharif Circle, decided on the 6th of July, 1984, which was relied upon, seems to have no relevance on the questions at issue. 40 and 48 respectively of the Act. With respect, reliance on the said judgment was consequently uncalled for. 13. Equally C.W.J.C. No. 82 of 1979 Madhav Prasad Singh V/s. Assistant Registrar, Co-operative Societies, Biharsharif Circle, decided on the 6th of July, 1984, which was relied upon, seems to have no relevance on the questions at issue. As the Division Bench therein itself noticed, the short question was that the entire proceedings had been disposed of without proper notice to the petitioner under S. 40 of the Act. The Bench held that in fact there was no proper service of notice on the petitioner and inevitably the proceedings were hit by the rule of natural justice and were struck down. Even on facts it was found that the matter was untenable and was beyond the period of limitation prescribed under S. 40 of the Act With respect, this case has no direct bearing on the issue involved. 14. Yet, again, in Uma Shankar Sharan Shrivastava V/s. Bihar State Co-operative Marketing Union Ltd, Patna (AIR 1985 Patna 46) (supra) the larger aspect that S. 40 pertains to the administrative power of the Registrar flowing only as a pre-condition from the results of an audit, inquiry, inspection or winding up seems to have not been highlighted before the Bench. The anomalous results that would flow from the view in so far as an express statutory remedy to raise a dispute by the society against misconducting or defalcating manager, agent or servant would be obliterated was equally lost sight of. With the deepest deference, Uma Shankar Sharan Shrivastava V/s. Bihar State Co-operative Marketing Union Ltd., Patna does not lay down the law correctly and is hereby overruled. 15. To finally conclude, the answer to the question posed at the very outset is rendered in the negative and it is held that S. 40 of the Act is not attracted or applicable to a reference of a dispute under S. 48 of the said Act by a society against its officer, agent or servant for defalcation of its funds. 16. Once it is held as above, it could not be seriously disputed before us that respondent No. 2 admittedly having been a former manager of the petitioner society, he would come squarely within cl.(c) of sub-sec. (1) of S.48 of the Act. 16. Once it is held as above, it could not be seriously disputed before us that respondent No. 2 admittedly having been a former manager of the petitioner society, he would come squarely within cl.(c) of sub-sec. (1) of S.48 of the Act. The reference of the dispute to the Registrar by the petitioner society was thus validly made. However, on merits it would seem that the lower appellate Court of the Deputy Registrar (vide annexure-1) came to the conclusion that respondent No. 2 was nor, given adequate notice of the proceeding. On the other hand, the petitioner societys grievance is that the appeal was decided ex parte without giving adequate opportunity to the petitioner to represent its case. Equally it is pointed out that the said award simultaneously was the subject of challenge in this very Court in C.W.J.C. No. 3244 of 1978. Consequently, the Deputy Registrar had no jurisdiction to deal with the same or in any case was ill-advised to do so during the pendency of the said writ petition. In view of these inherent infirmities, we quash annexure-1 and direct the Deputy Registrar to decide the appeal afresh after giving adequate opportunity to both the sides to present their case. 17. The writ petition is allowed in these terms without any order as to cost. 18. Before parting with this judgment, it may be noticed that it had been directed that this case shall be heard with the analogous case - C. W. J. C. 3244 of 1978. That case, however, stands dismissed for default due to non-compliance with the Courts order dt. 20th of May, 1985. S.K.CHOUDHURI, J. 19 I agree. S.SHAMSUL HASAN, J. 20 I agree.Petition allowed