Research › Browse › Judgment

Rajasthan High Court · body

1996 DIGILAW 1369 (RAJ)

LIQUIDATOR, SHRI BHOPAL CO-OPERATIVE SOCIETY v. L. R. OF BHAGWAN

1996-12-09

BHAGABATI PRASAD BANERJEE, M.G.MUKHERJI

body1996
Judgment M. G. MUKHERJI, C. J. ( 1 ) D. B. Civil Special Appeal No. 78/95 preferred by the liquidator, Shri Bhopal Co-operative Society, Pratap Nagar, Udaipur arises out of the judgment of reversal dated September 20,1994 passed by a learned single Judge of our Court in S. B. Civil First Appeal No. 5/79 which was filed against the judgment of learned Additional District Judge, Udaipur dated 22. 8. 1978 in Civil Suit No. 31/70. ( 2 ) D. B. CIVIL Special Appeal No. 82/95 filed by the Liquidator, Shri Bhopal co-operative Society Ltd. Pratap Nagar, Udaipur impugns a judgment dated 28. 9. 1995 passed by the self-same learned single Judge in S. B. Civil First Apeal No. 1/79 reversing the judgment and decree passed by the learned Additional District judge, Udaipur dated 21. 8. 1978 in Civil Suit No. 29/70. ( 3 ) D. B. Civil Special Appeal No. 3/69 has been filed by the Liquidator, Shri bhopal Co-operative Society Ltd. Pratap Nagar, Jaipur impugning a judgment dated 20. 9. 1994 passed by the self-same learned single Judge in S. B. Civil First Appeal No. 4/79 reversing the judgment and decree passed by the learned Additional District judge, Udaipur dated 23. 8. 1978 in Civil Suit No. 18/72. ( 4 ) IN D. B. Civil Special Appeal No. 78/95, the facts inter alia were to the effect that the plaintiff Liquidator filed the suit for possession of the property and for damages at the rate of Rs. 250/- p. m. from 24. 9. 1969 upto delivery of possession for illegal use and occupation of the defendant-respondent. The original defendant respondent having died, his heirs and legal representative have been substituted in his place and stead. The suit was filed on the allegation that the plaintiffs is a registered Society and house No. 36 had been allocated to the defendant Bhagwan son of Lila Ram Hingorani and house No. 37 to Brahma, the other son of Lila Ram hingorani. The expenses of the construction were jointly incurred by the defendants no. 1 and 2 and the plaintiff Society. As per the terms of the agreement entered between the parties, it was admitted by the defendants that the amount of Rs. 9455. 54 was due to the Society. The defendants agreed to pay this amount within a period of ten years in the monthly instalments of Rs. 78. 80. 1 and 2 and the plaintiff Society. As per the terms of the agreement entered between the parties, it was admitted by the defendants that the amount of Rs. 9455. 54 was due to the Society. The defendants agreed to pay this amount within a period of ten years in the monthly instalments of Rs. 78. 80. The Society received the rent of the house and the instalments were being adjusted against the rent. The tenants vacated the premises on 23. 10. 1993 and, thereafter, there was no rent and the defendants were required to pay the instalments which they have not paid. Thereafter, by giving a notice, the house was forfeited as per the terms of the agreement. The house was in possession of the Society. The defendants No. 3 and 4 Harbux and Ram Chandra broke open the locks and trespassed into the house on 24. 9. 1969 and they denied the ownership of the house. Thereafter, the Liquidator filed the present suit. The defendants filed the written statement to the effect that the construction of the house was never made by the plaintiff-society and the house was not allotted to them by the society. The house was allotted by a different Society Shri Bhopal Co-operative society Ltd. , Udaipur. The registration of the Society was void. The liquidation proceedings were illegal. The Society had no right to file the suit in the civil Court. The trial Court decreed the suit filed by the plaintiff-Liquidator against which S. B. Civil First Appeal No. 5/79 was preferred. ( 5 ) IN D. B. Civil Special Appeal No. 82/95, the facts were to the effect that the plaintiff-Society through the Liquidator filed the suit for delivery of the suit property and for damages at the rate of Rs. 200/- p. m. starting from 15. 12. 1969 for illegal use and occupation by the defendant-Harbux. The suit was filed on the allegation that the plots No. 149 and 150 were allotted to the defendant-respondent by the Society. The residential houses were constructed on these plots. The amount of Rs. 13,428. 84 was spent by the Society in raising the construction and after some payments, the balance of Rs. 8,549. 47 remained unpaid by the defendant. The amount was to be re-paid in ten years in monthly instalments and to that effect the parties had entered into an agreement. The amount of Rs. 13,428. 84 was spent by the Society in raising the construction and after some payments, the balance of Rs. 8,549. 47 remained unpaid by the defendant. The amount was to be re-paid in ten years in monthly instalments and to that effect the parties had entered into an agreement. The terms of the agreement further stipulates that if there is four consecutive defaults in payment, the Society will have the right to forfeit the property and shall become the owner of the house. As the defendant-respondent committed default, after notice; the property in suit was forfeited and the defendant was asked to hand-over the possession of the house to the plaintiff. The defendants possession of the suit property form 15. 12. 1969 onwards was unlawful and hence, the suit was filed for possession and damages. The defendant entered appearance and filed written statement contending inter alia that the plaintiff is not a Co-operative Society registered under the Co-operative Societies Act and its registration was void. The membership of the society was denied. The allotment of the plots by the plaintiff-society was denied and it was alleged that the plots were allotted to the defendant by the Society Shribhupal Co-operative Society Ltd. , Udaipur. The execution of the agreement was admitted, but ultimately it was contended that it was executed under the mistaken understanding of the facts. The trial Court decreed the suit against which S. B. Civil First Appeal No. 1/79 was filed. ( 6 ) IN D. B. Civil Special Appeal No. 3/96, the facts inter alia were that the liquidator of Shri Bhopal Co-operative Society Limited, Udaipur filed the suit for possession of the property belonging to the Society and for damages for use and occupation of the property in suit by the defendant Bhagwan at the rate of Rs. 15/-p. m. starting from December, 1971 upto the date of delivery of possession. The suit was filed on the allegation that the defendant was member of the plaintiff- Society, the latter being a registered Co-operative Society. The plots No. 16. 17,64,65 and 66 in Class-A area in the locality Pratap Nagar, Udaipur were allotted by the Society to the defendant. The major portion of the money required for making construction was spent by the Society. It was required to be paid back by the defendant. The amount of Rs. 6,894. The plots No. 16. 17,64,65 and 66 in Class-A area in the locality Pratap Nagar, Udaipur were allotted by the Society to the defendant. The major portion of the money required for making construction was spent by the Society. It was required to be paid back by the defendant. The amount of Rs. 6,894. 17 remained unpaid to the Society. An agreement was entered in between the parties, pursuant to which the amount was required to be paid back to the Society by the defendant within a period of ten years in the monthly instalments. It was further agreed that in case of four consecutive defaults in payment of such instalments, the society should be entitled to forfeit the house. More than four instalments remained unpaid and the Society, after service of notice, forfeited the property. The plot was in possession of the Society. In the month of November, 1971, the defendant broke open the lock of the garage and trespassed upon the Society and, thereafter, the suit for possession of the property and for damages for use and occupation was failed. The defendant entered appearance and filed written statement alleging inter alia that the construction was not made by the Society. He further denied that it was allotted to the defendant by the Society. He contended that the property was allotted by different Society, namely, Shri Bhupal Co-operative Society Ltd. , Udaipur and that the registration of the plaintiff Society was void and the liquidation proceedings even were illegal. The Liquidator has no right to file the present suit and the suit was time barred. The civil Court had no jurisdiction to entertain the suit. It was further alleged that the suit could not proceed in the absence of any Court fee having been paid by the plaintiff Society. The defendant has neither led oral nor documentary evidence before the trial Court. The plaintiff examined his witnesses and the trial Court recorded the findings that the property belongs to the Society, that the funds and plots were allotted to the defendant-respondent by the plaintiff Society, that the defendant was member of the Society and that the plaintiff successfully proved the case that the amount remained outstanding towards the defendant on account of the expense incurred by the plaintiff Society in raising construction over the plots. The society had the right to forfeit the property on four consecutive defaults in payment of instalments. According to the trial Court, the defendant illegally took the possession of the suit property and that the civil Court had jurisdiction to try the suit as it was filed by the Liquidator when the Society had been dissolved and the Liquidator was appointed. It was further observed by the trial Court that Section 75 of the co-operative Societies Act, 1965 cannot be made applicable to a suit filed by the liquidator. The trial Court with these findings decreed the suit for possession and damages. Thereafter, defendant filed S. B. Civil First Appeal No. 4/79. ( 7 ) ALL these three First Appeals having been heard together the learned single judge decided S. B. Civil First Appeal No. 4/79 holding inter alia that under Section 79 (1) of the Rajasthan Co-operative Societies Act, 1965, the Registrar can appoint a Liquidator of the Society when he directs winding up of the Co-operative Society. Under Section 79 (2), the Liquidator, on his appointment takes into custody or under his control all the property, effects and actionable claims to which the Society is or appears to be entitled and he is entitled to take such steps as he may deem necessary or expedient, to prevent loss or deterioration of, or damage to, such property, effects and claims. This provision authorises the Liquidator to take steps to prevent loss, deterioration or damages to Societys properties, effects and claims, Section 80 relates to the powers of the Liquidator and lays down that on his appointment by the registrar under Section 79 of the Act, all the assets of the Society, under the order of winding up, shall vest in the Liquidator and the Liquidator has power to realize such assets by sale or otherwise. The Liquidator has also under Section 80 (2) (a) of the Act the power, subject to the control of the Registrar to institute and defend suits and other legal proceedings on behalf of the Co- operative Society by the name of his office. The learned single Judge thought that the words other legal proceedings would include the proceedings under Section 75 of the Rajasthan Co- operative societies Act. The learned single Judge thought that the words other legal proceedings would include the proceedings under Section 75 of the Rajasthan Co- operative societies Act. On the winding up order being passed by the Registrar and the liquidator being appointed, the Liquidator steps into the shoes of the Co-operative society and continues to be so until the termination of the winding up proceedings. However, the learned single Judge thought that he is merely authorised by-law to file proceedings before the Registrar under Section 75 of the Act for and on behalf of the Co-operative Society. He thought that the finding of the trial Court that the liquidator does not have any authority to take up proceedings under Section 75 and, therefore, civil suit is maintainable was not a correct proposition of law. The defendant having raised the defence that the civil Court had no jurisdiction to try the civil suit, the learned single Judge observed that the civil suit as it was filed by the liquidator of the Society in the civil Court was not maintainable on account of Section 75 read with Section 137 of the Rajasthan Co-operative Societies Act and the civil court had no jurisdiction to adjudicate and pass judgment and decree in the nature of the dispute raised in the suit. Consequently, he allowed the first appeal and set-aside the judgment of the trial Court. Following this judgment he also set-aside the judgments and decrees of the trial Court in other two suits and allowed the two other first appeals. ( 8 ) IT has been submitted before us that the learned single Judge has seriously erred in law as well as on facts in reversing the judgment and decree passed by the trial Court in each of the three cases and holding the suit filed by the appellate-Liquidator to be not maintainable in the civil Court on account of Section 75 read with Section 137 of the Rajasthan Co-operative Societies Act, 1965 (hereinafter to be referred to for the sake of brevity as the Act ). The learned single Judge has proceeded to consider and uphold the submission on the part of the defendant that the suit was not maintainable by virtue of Section 75 read with Section 137 of the Act by the Society or the Liquidator in the Civil Court mainly because the dispute was one which was a dispute touching the constitution, management or business of the society. The defendant, however, in this case has led no evidence to substantiate this plea and in the absence of any specific evidence such plea could not have been entertained. The learned single Judge has proceeded to assume the business of the society to be letting out of the houses and that itself has been considered sufficient to non-suit the plaintiff-Liquidator. ( 9 ) WE have given the matter our anxious consideration and we think that the entire approach has been from an altogether erroneous angle. The learned single judge has failed to consider that the recovery of possession of property forfeited by the Co-operative Society could by no stretch of imagination be taken to be the business of the Society nor it could be referred to the arbitration nor be placed for adjudication before the Registrar where such functionaries under Section 75 of the act could not grant a decree as such for possession and mesne profit and in any case the Liquidator could not maintain such proceedings. The learned single Judge has failed to appreciate that the Rajasthan Co-operative Societies Act no where provided for the Liquidator to refer any dispute for arbitration. The ouster of the jurisdiction of the civil Court has to be strictly considered and unless specifically barred, the jurisdiction of the civil Court is not ousted. Even if the provisions were capable of two different interpretations, the interpretation in favour of the jurisdiction of the civil Court is to be preferred to the one for its ouster. The learned single Judge has proceeded wholly contrary to the settled principles of law. He failed to appreciate that exactly similar suits of the similar nature were decree by the trial Court and the decree was maintained by this Court as well as by the Honble Supreme Court. The learned single Judge has proceeded wholly contrary to the settled principles of law. He failed to appreciate that exactly similar suits of the similar nature were decree by the trial Court and the decree was maintained by this Court as well as by the Honble Supreme Court. A bare look at Section 75 of the Act would make it clear that the provisions are applicable only to an easting running Society and by necessary implication its applicability to a Society where winding up has already taken place and a Liquidator has been appointed is clearly ruled out. The learned single Judge has failed to appreciate that once the winding up order is made and the Liquidator is appointed under Section 79 of the Act, the Liquidator has to resort to civil Court only. Moreover, when the Liquidator is seeking to recover the property or debts of the dissolved society, the same cannot be recovered through arbitration proceedings or by way of a dispute within the limited framework under Section 75 of the Act and the Liquidator has to resort to civil Court only. There are no powers on the Liquidator to make a reference for arbitration and no inherent powers could be read in the Liquidator. The impugned judgment proceeded on a wholly incorrect assumption and ran contrary to the well- established principles of law. ( 10 ) THE learned single Judge has also failed to appreciate that the suit has been filed by the Liquidator of the Society for recovery of immvoable property and mesne profit from the persons to whom houses were allotted by the Society, but who failed to pay the requisite instalments and thus, as per the agreement, the property was forfeited in favour of the Society. There was no dispute touching the constitution, management or business of the Society in this case which might be referred to arbitration or a dispute resolution framework as provided under Section 75 of the act. The suit for recovery of possession of the property forfeited could not be referred to arbitration at all within the framework of the Co-operative Societies Act. ( 11 ) LN Sabharwal Bros. v. Guna Amrit Thadani, AIR 1972 SC 1893 , it was held that letting out premises by a member to another member or by Co-operative Society to a member is not one touching the business of the society. ( 11 ) LN Sabharwal Bros. v. Guna Amrit Thadani, AIR 1972 SC 1893 , it was held that letting out premises by a member to another member or by Co-operative Society to a member is not one touching the business of the society. ( 12 ) A suit for declaration instituted by an employee of a Co- operative Society alleging the retrenchment of his services from Society to be illegal also does not relate to the business of the Society and the jurisdiction of the civil Court to try such suit is not barred under the appropriate provision of the statute akin to Section 137 of the act (Allahabad District Co-op. Ltd. v. Manumandatt Jewari, AIR 1982 SC 120 ). ( 13 ) A dispute concerning the ejectment of the tenant by the landlord is also outside the purview of the business of the Co- operative Society. Such dispute could be determined by the civil Court in accordance with the provisions of the Rent control statute. (Deccan Merchants Co-op. Banks v. Dalichand, AIR 1969 SC1320 and Y. A. Singh v. CM. Singh AIR 1970 Mani 86 ). The civil Courts jurisdiction is not ousted in such disputes (Keshava Narayan v. Mandal Co-op. Marketing Society, air 1969 SC 158 ). ( 14 ) WE have given the matter our anxious consideration twice over and we do not think that it is a dispute touching the constitution, management or business of the society. In that view of the matter, we set aside the three impugned judgments in the respective three first appeals. There has not been any hearing on the merits at all and in that view, we direct hearing of the first appeals by some other learned single Judge. ( 15 ) ALL the three special appeals stand disposed of accordingly.