Syndicate Bank, Tiruchirapalli, Tiruchirappalli v. The Tiruchirappalli Automobile Spare Parts Co-operative Stores Limited
1990-09-13
ABDUL HADI
body1990
DigiLaw.ai
Judgment :- 1. Against the dismissal of O.S. No. 116 of 1978 on the file of the Subordinate Judges Court, Tiruchirappalli, the plaintiff-bank has filed this appeal. 2. The suit is for recovery of Rs. 17,496.30/with subsequent interest and costs. The relief is claimed only against defendants 1 and 3. The 1st defendant is a Co-operative Stores and it has gone into liquidation and so the liquidator thereof has been impleaded as the 3rd defendant. The suit sum represents the money borrowed by said Co-operative Stores on pledging the goods of the 1st defendant. The 2nd defen dant is the Co-operative Central Bank, to whom also the same goods were pledged for the money borrowed by the 1st defendant from it (2nd defendant). There is also a dispute as to who has got the priority, whether the plaintiff-bank or the 2nd defen dant over the above said goods pledged. That is why the 2nd defendant has been im pleaded. 3. The trial Court dismissed the suit on the ground that the suit itself is not maintainable since the plaintiff has not obtained the leave of the registrar of the Co-operative Societies before instituting the suit, as provided under Section 89 of Tamil Nadu Co-operative Societies Act. The other findings of the Court below need not be mentioned since I agree with the trial Court in holding that the suit itself is not main tainable in view of the said ‘Act as explained below. Section 89 of the said Act runs as follows: “Save in so far as is expressly provided in this Act, no civil Court shall take cognizance of any matter connected with the winding up or cancellation of registration of a rgistered society under this Act, and when a liquidator has been appointed, no suit or other legal proceeding shall lie or be proceeded with a 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,” Admittedly; the plaintiff has not obtained the leave contemplated in the above said section so far. No doubt, while, the suit was pending, the plaintiff-bank applied for the said leave from the Registrar of Co-operative Societies and has also been sending reminders to the Registrar, requesting for the granting of the said leave.
No doubt, while, the suit was pending, the plaintiff-bank applied for the said leave from the Registrar of Co-operative Societies and has also been sending reminders to the Registrar, requesting for the granting of the said leave. But, there was no reply from the Registrar at all. This is indeed very much regrettable, but, Section 89 is mandatory. 4. In the Thiruchankattankudi Tenants Co-operative Farming Society by its Liquida for v. Sri Rudrapathiswaraswami Devas-thanam, Thiruchankattankudi 1 , It has been held that the above said section 89 bars the institution or continuation of legal proceed ings against a registered society when once the society enters upon liquidation. In State Bank of India v. The Madras Fisheries Co-operative Boat Operating Society 2 also it was observed that Section 89 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 or any matter touching the affairs of the registered Society. From the very language of Section 89 of the above said Act, it is clear that this requirement of leave is a condition precedent to entertain the suit. No doubt, the learned counsel for the appellant argued that in a similar provision under the Companies Act, viz., Section 446 of the Companies Act, the Supreme Court has held in Bansidhar Shankarlal v. Mohd. Ibrahim 1 that leave from the Company Court for sanctioning prosecution of a suit against the Company in liquidation could be obtained after the institution of the suit. But, I do not think that in view of the language employed in Section 89 of the above said Act, the decision reported in Bansidhar Shankarlal v. Mhd. Ibrahim 2 could be applied to the said Section 89. In fact, under another similar provision, viz., Section 17 of the Presidency Towns Insolvency Act and S. 28 of the Provincial Insolvency Act, it has been held consistently by this Court that the leave contemplated therein has to be obtained from the insolvency Court prior to the tiling ot the suit against the insolvent. Anyway, in the present case, no leave has been obtained before the disposal of the suit and till now. So there is no scope at all for the application of the ruling in 41 Company Cases 21 referred above to the present case. 5.
Anyway, in the present case, no leave has been obtained before the disposal of the suit and till now. So there is no scope at all for the application of the ruling in 41 Company Cases 21 referred above to the present case. 5. No doubt if the Registrar was deliberately delaying the consideration of the application for grant of leave, the plaintiff could have complained to the Government or any higher authority about the Registrar or could have sought remedies in a Court, either under the Article 226 of the Constitution of India or otherwise, seeking direction against the Registrar to make him consider the application for leave and pass orders thereon, or else, the plaintifff could have straightaway filed a claim pettition before the Liquidator (3rd defendant) claiming the amount due to it. But it did not take any of these steps. Section 87(2)(c) of the above said Act empowers the Liquidator to consider such claim petitions. Anyway, in view of Section 89, unless the leave stipulated therein has been obtained, the suit will not be maintainable. 6. No doubt, the learned counsel for the appellant brought to my notice The Secretary, Sri Ramakrishna Vidhyalayam v. The State of Tamil Nadu 3 wherein the Court had to deal with the prior approval of the competent authority (Chief Educational Officer) under Section 22 of the Tamil Nadu Recognised Private Schools Regulation Act, 1973. But, there, the Court found that the approval was not given at all despite reminders, as in the present case, and the Court no doubt held that it would not be correct to say that the management of the school had to simply wait for the orders of the competent authority, however long he might take to condescend to consider the application for approval and express his approval or disapproval and that the remedy of the management in cases of inordinate delay on the part of the competent authority was to invoke the extraordinary jurisdiction of the High Court under Article 226 of the Constitution of India and pray for a mandamus directing the competent authority to dispose of the application for approval within a time to be specified by the Court. But the said decision can have no application to the present case.
But the said decision can have no application to the present case. While the said decision arose in a writ petition under Article 226 of the Constitution of India, where the writ Court will have over-riding jurisdiction since it derives authority under the Constitution of India, the present case is one of suit and Section 89 of the above said Act will certainly be a bar to a suit if the leave stipulated therein has not been obtained. 7. Then the learned counsel for the appellant argued that the suit should not be dismissed on the above said ground, but the plaint should be returned to the plaintiff for presentation before the Liquidator for disposal under Section 87(2)(c) of the above Act. For this, the learned counsel for the appellant invoked Order 7, Rule 10(1) C.P.C. which runs as follows, ‘, “Subject to the provision of the Rule 10-A, the plaint shall at any stage of the suit be returned to be presented to the Court in which the suit should have been instituted.” But the Liquidator certainly is not a court mentioned in the said Order 7, Rule 10, C.P.C. He is only an authority appointed by the Registrar of the Co-operative Societies under Section 86 and controlled by the Registrar in the liquidation proceedings. Further Order 7 Rule 10 C.P.C. cannot be applied to the present case, because it cannot be said that the present suit cannot at all be filed in the Court before which it has been filed. The only thing that can be said is that only after getting the leave contemplated under Section 89, the suit could be filed. Order 7, Rule 10, C.P.C. would apply only when a suit is instituted in a wrong Court. That is not so in the present case. Therefore, I do not think Order 7, Rule 10, C.P.C. will apply to the present case. 8. In the result, the judgment and decree of the Court below are confirmed and the appeal is dismissed. However, it is made clear that this will not prevent in any way the plaintiff-bank from fifing a claim pettition before the Liquidator and establishing its claim in accordance with law.