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1988 DIGILAW 147 (KER)

Parameswaran Pillai v. Special Sale Officer

1988-03-16

G.VISWANATHA.IYER

body1988
Judgment :- 1. The petitioners are husband and wife. They are members of the third respondent which is a Co-operative Society registered under the Kerala Co-operative Societies Act, 1969 (for short, the Act). They had taken loans from the third responding of Rs.1800/- and Rs.1850/- respectively on January 29,1976 repayable in equal monthly instalments, in one year, with interest at 12.5% per annum, and with additional interest of 4% in case the amounts were not repaid within the time fixed. The loans were secured by hypothecation of the standing crops in their property. 2. The loans were not repaid, with the result the third respondent initiated proceedings under S.69 of the Act for recovery of the amounts due, with future interest, and additional interest, from the date of the proceedings till recovery, and costs of the proceedings. These cases were referred to the Unit Inspector of Co-operative Societies, Koovapady, as arbitrator under S.70(1)(c) of the Act. The petitioners remained ex parte, and the arbitrator passed awards Exts.P1 and P1(a) on April 12,1978 directing payment of the amounts claimed with future interest at 12.5% per annum, and additional interest at 4% per annum till realisation. The awards were not taken up in appeal to the Cooperative Tribunal, under S.82 of the Act, and they became final. 3. The petitioners did not pay the amounts due under the awards. The third respondent therefore issued notice dated September 9,1986 calling upon them to pay an amount of Rs.10207.90. Their movables were attached in proceedings in execution. The petitioners thereupon filed writ petition O.P.No. 6628 of 1986 in this Court, to quash the demand, and for directions restraining disposal of the attached movables. The original petition was disposed of at the preliminary stage, on September 29, 1986, by the judgment Ext.P2, with the observation that since the question of the petitioners' liability had become final, the questions raised were better decided under the Act and the Rules framed thereunder, and not in proceedings under Art.226. The petitioners had already filed representations before the Assistant Registrar of Co-operative Societies setting forth their grievances in the matter. This court therefore directed the Assistant Registrar to dispose of the said representations as expeditiously as possible. It was also observed that if substantial amounts were paid by the petitioners, the Assistant Registrar may consider whether the movables attached may not be returned to them. 4. This court therefore directed the Assistant Registrar to dispose of the said representations as expeditiously as possible. It was also observed that if substantial amounts were paid by the petitioners, the Assistant Registrar may consider whether the movables attached may not be returned to them. 4. The movables attached were sold on 7-10-1986, since no amount was paid by that time. The petitioners subsequently paid an amount of Rs.2500/- towards their dues. The Assistant Registrar then considered and disposed of the representations, by his proceedings Ext.P3 dated November 28,1986. The representations were rejected. 5. The contention strenuously urged before the Assistant Registrar was that the awards Exts.P1 and P1(a) were contrary to S.34 of the Code of Civil Procedure, 1908, in that they had allowed future interest in excess of 6% per annum. The awards were therefore stated to be without jurisdiction. This was infact the main plea raised before the Assistant Registrar. The latter, however, pointed out that he had no appellate or revisional jurisdiction over the awards of the arbitrator, and was therefore unable to entertain the petitioners' pleas. 6. Another grievance voiced before the Assistant Registrar was that despite this court's order in the writ petition, the movables were sold on 7-10-1986. This was stated to be illegal. The Assistant Registrar pointed out that the petitioners had not complied with the direction contained in the judgment for payment of a substantial amount and that was the reason why the sale took place. 7. The relief claimed in the original petition is primarily to quash this order of the Assistant Registrar, as also the sale of the movables that took place on 7-10-1986. Incidentally, there is a further prayer that the respondents should make good the loss sustained by the petitioners as a result of the "fraudulent auction sale" and to return the entire amount of interest appropriated on such sale. The original petition was subsequently amended seeking a declaration that R.67(7)(b) of the Kerala Co-operative Societies Rules (the Rules, for short) was ultra vires the Act. I shall refer to this rule later. 8. The contention raised and pressed before me by counsel for the petitioners was that the arbitrator excising jurisdiction under S.70(1)(c) of the Act had no jurisdiction to award future interest from the date of institution of the arbitration proceedings. I shall refer to this rule later. 8. The contention raised and pressed before me by counsel for the petitioners was that the arbitrator excising jurisdiction under S.70(1)(c) of the Act had no jurisdiction to award future interest from the date of institution of the arbitration proceedings. When R.67(7)(b) of the rules was pointed out by the respondents in answer to this contention, the petitioners got the original petition amended by seeking a declaration that the said rule was ultra vires the Act. 9. The petitioners' basic contention is that in the absence of a provision in the Act, akin to S.34 of the C.P.C., the authority exercising jurisdiction under S.70(1) has no jurisdiction to award future interest. R.67(7)(b) which enables award of such interest is void as it is beyond the rule making power of Government under S.109(2)(xxix) of the Act, which empowers Government to provide by rules the procedure for the recovery of amounts due or payable to a Society. 10. S.69(1)(b) of the Act provides that any dispute between a member and the Society shall be referred to the Registrar for decision. S.69(2)(a) deems a claim, by a Society, for any debt due from a member, as a dispute for purposes of sub-clause (1). When such dispute is referred to the Registrar for decision, S.70 enables him either to decide the dispute himself, or to transfer it to any other person authorised, or to refer it for disposal to an arbitrator appointed by him. It is under this latter provision that the disputes in question were referred to the Unit Inspector for arbitration. Sub-clause 3 of S.70 states that the dispute shall be decided, or the arbitrator shall pass award, in accordance with the provisions of the Act, and the Rules and bye-laws, and such decision or award shall, subject to the provisions of S.82, be final. Sub-section (1)ofS.109 enables the Government to frame rules to carry out the purposes of the Act. Sub-section (2) of that section enumerates various matters which may be provided for by the Rules, without prejudice to the generality of the rule making power under sub-section (1). Sub-section 2(xxix) as stated earlier, refer to the procedure to be followed by the Registrar or the arbitrator in the matter of recovery of amounts due to a Society. Sub-section (2) of that section enumerates various matters which may be provided for by the Rules, without prejudice to the generality of the rule making power under sub-section (1). Sub-section 2(xxix) as stated earlier, refer to the procedure to be followed by the Registrar or the arbitrator in the matter of recovery of amounts due to a Society. R.67(7)(b) is a rule framed by the Government under S.109 and confers power on the arbitrator inter alia to direct payment of costs, and interest from date of suit till realisation of the amount, subject to the limitation that the interest awarded shall not exceed the contract rate of interest. The rule reads as under: "The Registrar or such other person deciding the dispute or the arbitrator shall have power to direct any party to the dispute to pay the costs of the other party with interest in appropriate cases and the interest awarded on the amounts decreed shall not exceed the contract rate from the date of the suit to the date of realisation of the amount." 11. The petitioners' contention is that the rule is null and void, being ultravires S.109 of the Act. The petitioners refer to Union of India v. Talsi Ram Patel, 1985 (3) SCC. 398, Indian Express Newspapers v. Union of India, 1985(1) S.C.C.641 and State of Karnataka v. Ganesh Kamath, AIR 1983 SC 550 for the principles governing the validity of subordinate legislation vis-a-vis the Act. 12. The question whether R.67(7)(b) is ultra vires is essentially one of interpretation of the rule making power, namely S.109, as also of the other substantive provision governing decision of such disputes namely S.70. S.109(1) confers on Government plenary power of making rules to carry out the purposes of the Act. The various matters specified in sub-section (2) are only enumerative of the powers so conferred generally on Government and are not exhaustive of the same. In fact the enumeration is without prejudice to the generality of the power conferred by sub-section (1). S.70(3) requires the arbitrator to decide the dispute in accordance with the Act, and the rules and the bye-laws. The section therefore posits the framing of rules and a decision in accordance therewith of the dispute between the parties. In fact the enumeration is without prejudice to the generality of the power conferred by sub-section (1). S.70(3) requires the arbitrator to decide the dispute in accordance with the Act, and the rules and the bye-laws. The section therefore posits the framing of rules and a decision in accordance therewith of the dispute between the parties. No limitations have been placed on the power of Government to frame rules, either by S.109(1) or by S.70(3) as to the matters which may be covered or dealt with by the rules. Whether interest should be awarded, and if so, for what period and at what rate, are all matters which directly arise for decision in a proceeding under Ss.69 and 70. In the absence of any fetters on the rule making power and in the light of the mandate to decide the dispute in accordance with the Rules and the bye-laws, it has to be held that R.67(7)(b) is well within the powers of Government. It is not necessary to pigeon hole the rule into or other of the matters enumerated in sub-section (2) of S.109 as it is referable to the general overriding power under sub-section (1) of S.109 read with S.70(3). I therefore hold that Government has not exceeded its rule making power in framing R.67(7)(b). 13. Though not necessary in the view which I have taken, I shall refer to a decision of the Full Bench of the Punjab and Haryana High Court in State of Punjab v. Ajith Singh, AIR 1971 Punjab & Haryana 1979 wherein in analogous proceedings under the Punjab Co-operative Societies Act, the court held that the arbitrator had jurisdiction to grant future interest on the amount awarded till the date of its realisation. The purport of the decision is that even without a provision like R.67(7)(b) the arbitrator has jurisdiction to award future interest. It is not however necessary for me to pronounce on this question in view which I have taken about the validity of R.67(7)(b). 14. I am also of the opinion that the petitioners are not entitled to question the award of interest by Exts.P1 and P1(a) at this distance of time or at the stage of the execution proceedings. Exts.P1 and P1(a) are dated April 12,1978. They were not challenged in appeal and they have become final. 14. I am also of the opinion that the petitioners are not entitled to question the award of interest by Exts.P1 and P1(a) at this distance of time or at the stage of the execution proceedings. Exts.P1 and P1(a) are dated April 12,1978. They were not challenged in appeal and they have become final. S.70(3) states that the awards are not liable to challenge except in the manner provided by the Act. The award of interest even if it is not warranted by the Act or the Rules will not render the awards without jurisdiction. The petitioners should, if they were aggrieved, have challenged the awards by way of appeal before the Tribunal. They cannot challenge them collaterally in the execution proceedings. The executing authority cannot go behind the awards unless they were ab initio void or had ben passed by an authority without jurisdiction, as stated by the Madras High Court in Sambandam v. Sirkali Co-operative Urban Bank Ltd., AIR 1983 Mad. 36. The grant of interest does not render the awards void even assuming that such grant was without authority. I am in respectful agreement with the decision of the Madras High Court, and held that the petitioners are not entitled to challenge the validity of the award of future interest by Exts.P1 and P1 (a) at the execution stage. I must also observe that there is no specific prayer in the original petition to quash Exts.P1 and P1 (a). 15. There are some other minor contentions raised. One is that the order Ext.P3 is not in conformity with the directions contained in this court's judgment Ext.P2. I do not think it necessary to deal with these points as the representations filed by the petitioners were not referable to any provision of the Act or the Rules. When the awards have become final, it is not open to the Assistant Registrar to grant any relief, when he does not possess any supervisory powers. I decline to go into any of these contentions. 16. No other contentions are raised in the original petition. It is accordingly dismissed, without however any order as to costs. Issue photo copy of the judgment on usual terms.