Avanacherry H. Waco-op. Society v. Chellamma — 1989 DIGILAW 563 (KER)

Judgment :- 1. The 1st defendant in O.S.No. 9 of 1980 on the files of the Court of Subordinate Judge, Attingal is the appellant in this appeal. 2. The suit was for a declaration that an arbitration award was null and void and for a perpetual injunction, restraining the 1st defendant from realising from the assets of the plaintiff any sum in excess of Rs.2,000/- on the strength of the award passed in arbitration proceedings No.5 of 1973. 3. The facts leading to the filing of the suit may be summarised as follows:--The 2nd defendant is the son of the plaintiff. First defendant Society was engaged in manufacturing and selling handloom textiles and it had a depot at Neendakara. The 2nd defendant was appointed as a Salesman in the said depot. Plaintiff executed a bond in favour of the 1st defendant Society undertaking to reimburse the society any sum upto the maximum limit of Rs.2,000/-. On the ground of misappropriation, 1st defendant society terminated the service of the 2nd defendant. At the instance of the 1st defendant, a claim against the plaintiff and 2nd defendant was referred to an Arbitrator. The Arbitrator, in Arbitration Case No.5 of 1973 passed an award in favour of 1st defendant for recovery of a sum of Rs.16,721.21 from plaintiff and 2nd defendant. It appears that an appeal filed by the plaintiff and 2nd defendant was dismissed. Plaintiff also appears to have filed an Original Petition, which also ended in dismissal. It is thereafter that the plaintiff filed the above suit for a declaration that the arbitration award was null and void and also for a permanent injunction restraining the 1st defendant from realising from the plaintiff any sum in excess of Rs.2,000/- in execution of the award in the arbitration proceedings No.5 of 1973. 4. In the written statement filed by the 1st defendant Society, they contended that the suit was not maintainable. The lower court, however, held that under the bond executed by the plaintiff, the plaintiff was liable to reimburse the society to a maximum limit of Rs.2,000/- only and that therefore the award was unsustainable in so far as it granted a decree in favour of the 1st defendant to realise amounts in excess of Rs.2,000/-. 5. The lower court, however, held that under the bond executed by the plaintiff, the plaintiff was liable to reimburse the society to a maximum limit of Rs.2,000/- only and that therefore the award was unsustainable in so far as it granted a decree in favour of the 1st defendant to realise amounts in excess of Rs.2,000/-. 5. As regards the contention raised by the society that the plaintiff exhausted all the remedies available to her under the statute and also filed writ petition and that in view of the provisions contained in S.100 of the Kerala Co-operative Societies Act (hereinafter referred to as 'the Act' for short), the civil court had jurisdiction to entertain the suit, the lower court held that the award passed against the plaintiff went to the root of jurisdiction as it was in excess of Rs.2,000/- and was a nullity and therefore the civil court had got jurisdiction to entertain the civil suit notwithstanding the provisions contained in S.100 of the Act. 6. In this appeal, learned counsel for appellant vehemently contended that the court below was wrong and the suit was not maintainable in view of S.69(1) and 100 of the Act. S.69(1)(g) of the Act lays down that disputes between a society and a surety of a member, past member, deceased member, or employee or a person other than member who has been granted a loan by the society whether such a society is or is not a member of the society shall be referred to the Registrar for decision and no court shall have jurisdiction to entertain any suit or other proceeding in respect of such dispute. The dispute that arose in this case squarely falls under Clause (g) of S.69(1) of the Act. S.100 of the Act lays down that no civil or revenue court shall have any jurisdiction in respect of any matter for which provision is made in the Act. S.70(1) (c) empowers the Registrar on receipt of a reference of a dispute under S.69 to refer it for disposal to an Arbitrator appointed by the Registrar. S.82(f) of the Act provides for an appeal against the award of the Arbitrator under Sub-section (3) of S.70 to the Co-operative Tribunal. S.70(1) (c) empowers the Registrar on receipt of a reference of a dispute under S.69 to refer it for disposal to an Arbitrator appointed by the Registrar. S.82(f) of the Act provides for an appeal against the award of the Arbitrator under Sub-section (3) of S.70 to the Co-operative Tribunal. Similarly, S.84 of the Act empowers the Tribunal with power to call for and examine the record of any proceedings in which an appeal lies to it for the purpose of satisfying itself as to the legality or propriety of any decision or order passed and if in any case it shall appeal to the Tribunal that any such decision or order should be modified, annulled or revised, the Tribunal may pass such order thereon as it may deem fit. S.85 of the Act empowers the Tribunal to review its own decisions in appropriate cases. Thus we find that a complete machinery has been provided by the Act for determining the disputes referred to an Arbitrator under S.70(3) of the Act and also provided for appeal, review and revision to the Co-operative Tribunal in respect of the award. S.69(1)(h) lays down that no court shall have a jurisdiction to entertain any suit or other proceedings in respect of such dispute and S.100 says that no civil or revenue court shall have any jurisdiction in respect of any matter for which provision is made in the Act. 7. In this case, plaintiff filed appeal against the award of the Arbitrator and also challenged the award before this court by filing a writ petition. These facts have not been disputed. However, learned counsel for respondents submitted that the appeal was dismissed on a technical ground as it was filed out of time. Whatever be the reason, the fact remains that an appeal was filed and the award passed by the Arbitrator merged in the order in appeal. 8. The trial court held that the award passed by the Arbitrator in the instant case was in excess of jurisdiction and a nullity in view of the fact that the bond executed by plaintiff provided for reimbursement only to the extent of Rs.2,000/- and that the award passed against the plaintiff in the instant case is one exceeding this limit and that therefore S.69(1)(h) and 100 of the act will not be a bar to a civil suit. I am unable to agree with this contention. The bond itself has not been produced before the lower court. Even assuming that there is such a provision in the bond, that is a matter which should have been pleaded by plaintiff before the Arbitrator. If she had f ailed to raise the plea in arbitration proceedings or in appeal and the award became final, it shall operate as res judicata. (See Govindan Gopalan v. Raman Gopalan -1978 KLT 315 = AIR 1978 Kerala 217 (FB). The view taken by the lower court that since the bond provided for reimbursement only upto the limit of Rs.2,000/- the award was a nullity is also wrong. The award was passed only after giving full opportunities to the plaintiff and 2nd defendant to raise their contentions. The rules of natural justice and mandatory procedural provisions were fully complied with. That being the position, the order cannot be said to be a nullity. Nor can it be said that any illegal order passed by the Arbitrator would be a nullity or void. It would be a binding order unless it is reversed in appeal, review or revision by the Cooperative Tribunal or other appropriate proceeding provided for by law. If the plaintiff failed to raise any plea which she ought to have raised in the arbitration proceedings, that would operate as res judicata in subsequent proceedings. The fact that award provided for recovery of amounts exceeding the limit provided for in the bond would not take the effect of the bar to a civil suit created under S.69(1)(h) and 100 of the Act. 9. The lower court relied on the decisions in P. K. Pathumma Beevi and others v. Chief Secretary to Govt., Kerala and Others (1967 KLT 1089) and Ram Swarup and others v. Shikar Chand and another (AIR 1966 SC 893). However, the principles laid down by those decisions are not applicable to the facts of this case. In Ram Swarup's case, dealing with the question of exclusion of civil courts' jurisdiction, the Supreme Court held thus: "One of the points which is often treated as relevant in dealing with the question about the exclusion of civil courts jurisdiction is whether the special statute which, it is urged, excludes such jurisdiction, has used clear and unambiguous words indicating that intention. Another test which is applied is: does the said statute provide for an adequate and satisfactory alternative remedy to a party that may be aggrieved by the relevant order under its material provisions? Applying these two tests, it does appear that the words used in S.3(4) and S.16 are clear. S.16 in terms provides that the order made under this Act to which the said section applies shall not be called in question in any Court. This is an express provision excluding the civil Courts' jurisdiction. S.3(4) does not expressly exclude the jurisdiction of the civil Courts, but, in the context, the inference that the civil Courts jurisdiction is intended to be excluded, appears to be inescapable. Therefore, we are satisfied that Mr. Goyal is right in contending that the jurisdiction of the civil Courts is excluded in relation to matters covered by the orders included within the provisions of S.3(4) and S.16. This conclusion, however, does not necessarily mean that the plea against the validity of the order passed by the District Magistrate, or the Commissioner, or the State Government, can never be raised in a civil court. In our opinion, the bar created by the relevant provisions of the Act excluding the jurisdiction of the civil courts cannot operate in cases where the plea raised before the civil Court goes to the root of the matter and would, if upheld, lead to the conclusion that the impugned order is a nullity. Take for instance, the case of an order purported to have been passed by a District Magistrate in law. If it is shown by a party impeaching the validity of the order in a civil court that the order was passed by a person who was not a District Magistrate, the order in law would be a nullity, and such a plea cannot be ruled out on the ground of the exclusion of the jurisdiction of the civil court. Similarly, if an order granting permission to a landlord is passed by a District Magistrate of one District when the property in question is situated in another district outside his jurisdiction, a party would be entitled to urge before a civil Court that the permission purported to have been granted by the District Magistrate is wholly invalid and a nullity in law. Let us take another case to illustrate the position. Let us take another case to illustrate the position. If S.3 had provided that before a District Magistrate grants permission to the landlord to sue his tenant, he shall issue notice to the tenant and give him" an opportunity to represent his case before the application of the landlord is dealt with on the merits; and in the face of such a statutory provision, the District Magistrate grants permission exparte without issuing notice to the tenant, in such a case, the failure of the District Magistrate to comply with the mandatory provision prescribed in that behalf, would render the order passed by him completely invalid, and a plea that an order has been passed by the District Magistrate without complying with the mandatory provision of the Act, would be open for examination before a civil court. Likewise, in the absence of such a statutory provision, if it is held that the proceedings before the appropriate authorities contemplated by S.3 are in the nature of quasi judicial proceedings and they must be tried in accordance with the principles of natural justice, and it is shown that in a given case, an order has been passed without notice to the party affected by such order, it would be open to the said party to contend that an order passed in violation of the principles of natural justice is a nullity and its existence should be ignored by the civil court. Such a plea cannot, in our opinion, be excluded by reason of the provisions contained in S.3(4) and S.16 of the Act." In Pathumma Beevi's case (supra), a Division Bench of this court followed the decision of the Supreme Court. In that case, the plaintiff was a minor on the date of passing of the award and was not represented by guardian. In that case, the plaintiff was a minor on the date of passing of the award and was not represented by guardian. This court held that if the plaintiffs were really minors on the date of the award, it would not be binding on them as they were not represented by a guardian in the proceedings which culminated in the award, and that as the plaintiffs could not be considered to be parties in the Industrial Dispute within the meaning of S.18 of the Industrial Disputes Act, the passing of the award against the plaintiffs was in violation of the fundamental principles of natural justice and in the circumstances, the award would be a nullity and a certificate obtained under S.33C(1) of the Industrial Disputes Act, 1947 based on the award could have no binding effect on the plaintiffs in the suit. 10. However, in the instant case, as pointed out earlier, it can only be stated that the Arbitrator passed an incorrect award in so far as it did not restrict the liability of the plaintiff to Rs.2,000/-. But that cannot be considered to be a matter which goes to the root of jurisdiction or a matter which involves violations of principles of natural justice so as to term the award as a nullity. In the circumstances, I am unable to agree with the view expressed by the lower court, that the suit was not maintainable in view of the provisions contained in S.69(1)(g) and 100 of the Act. In the result, I allow the appeal, set aside the judgment and decree of the lower court and dismiss the suit. However, the parties will bear their respective costs. Allowed.