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2000 DIGILAW 64 (PAT)

Sheo Shankar Prasad v. Deputy Registrar, Cooperative Societies, Patna Division

2000-01-13

P.K.SINHA, S.N.JHA

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Judgment S.N.Jha and P.K.Sinha JJ. 1. As the point involved in these two writ petitions is same, they have been heard together and are disposed of by this common judgment. 2. In CWJC No. 1048 of 1987, the petitioner is the Ex-Secretary of Daulatpur Multi Purpose Co-operative Society Limited, now amalgamated and registered as Daulatpur Primary Agriculture Credit Society Limited in the District of Bhojpur (hereinafter called the the Daulatpur Society). In CWJC No. 1504 of 1987, the petitioner is the Ex-Secretary of Sohsa Multi Purpose Co- operative Society Limited in the district of Jehanabad (hereinafter called the Sohsa Society). The said societies are primary societies and members of the Ara Central Cooperative Bank Limited (hereinafter called the Ara Central Bank,) and Gaya- Jehanabad Central Co-operative Bank Limited (hereinafter called Gaya- Jehahabad Central Bank), respectively, as their affiliates. Both are registered co-operative societies under the Bihar Co-operative Societies Act, 1935 (in short the Act). Though it is not necessary to mention the hierarchy of the societies, it is relevant to mention here that while primary societies admit individuals as members, the Central Societies admit only registered primary societies as their members. The Central Societies provide fund to their members i.e. the primary societies which in turn is disbursed by them to their individual members, these transactions are treated as loan from one to the other. 3. In CWJC no. 1048 of 1987 the Ara Central Bank filed award case No. 489 of 1978 against the Daulatpur Society in respect of its outstanding dues under Section 48 of the Act. The Assistant Registrar, Co-operative Society, Ara Circle exercising power of the Registrar made an award for the sum of Rs. 1,69,326.31 against the said society vide his order dated 27.6.79. The amount however, was made recoverable from the debtor members mentioned in the second schedule. The petitioner who was affected by the operative part of the order challenged the award before the Registrar Co-operative Societies in award appeal no. 8/14 of 1986 which on transfer came up for disposal before the Deputy Registrar, Co-operative Societies, Patna Division. By order dated 9.1.87, the appeal was dismissed. The petitioner has come up to this Court against the said orders. 4. In the other case i.e. in CWJC No. 1054 of 1987, the Gaya- Jehanabad Central Bank filed award case no. 2/75-76 against Sohsa Society. By order dated 9.1.87, the appeal was dismissed. The petitioner has come up to this Court against the said orders. 4. In the other case i.e. in CWJC No. 1054 of 1987, the Gaya- Jehanabad Central Bank filed award case no. 2/75-76 against Sohsa Society. On 6.6.78, the Assistant Registrar, Co-operative Societies, Jehanabad Circle made an award for sum of Rs. 51,511/- against the petitioner. The order was set aside by the Joint Registrar, Co-operative Societies on 10.9.80 and the matter was remanded. On remand the Assistant Registrar dismissed the award case vide his order dated 13.12.82. The Joint Registrar again set aside the order but this time passed a decree for the aforesaid sum against the petitioner vide his order dated 21.8.85. The concerned petitioner has come to this Court challenging the validity of the said order. 5. Shri Kaushal Kumar, learned counsel for the petitioners contended that Section 48 of the Act contemplates a dispute between two Societies and in a case where such dispute is raised by the Central Society against the primary society, no award can be made against the individual members of the latter society. 6. Though the submission of the counsel is correct only in part, the writ petitions have to be allowed. Section 48 provides for resolution of disputes of the nature and between different categories of persons as mentioned therein. Clause (d), which is the relevant clause, refers to dispute between two registered societies. Rule 68 of the Bihar Co-operative Societies Rules, 1959 (The Rules in short) provides that the dispute under Section 48 shall be referred to the Registrar in writing and the reference may be made (a) by the Managing Committee of the registered Society interested in the dispute or by any party to the dispute, or (b) by any member of the Society if the dispute relates to society from a member of the Managing Committee, and, where the dispute relates to a sum due by a registered society to an affiliating society, the reference shall contain the names of the members of the Managing Committee and a list of the debtor- members of the former society along with the amounts outstanding against each of them. The provision regarding recovery of the sum found due under the award passed under Section 48 is contained in Section 54 of the Act. The provision regarding recovery of the sum found due under the award passed under Section 48 is contained in Section 54 of the Act. In view of the point involved, it would be apposite to quote the section as under: "54. Property from which sum due from a society can be recovered.All sums due from a registered society to the Government and all sums recoverable from a registered society under Sections 33, 39, 44 or 48 may be recovered firstly, from the property of the society, secondly, in the case of society, the liability of the members of which is limited, from the members, past members or estates of deceased members, or their sureties subject to the limit of their liability and thirdly, in the case of other societies from the members or estates of deceased members or their sureties to such extent or in such proportion as may be determined by the Registrar." 7. From bare reading of the above provision it is apparent that the sum found due can be recovered also from the individual members but only after the property of the society is insufficient to discharge the liability under the award. In other words, recovery is to be made at the first instance from the property of the defaulting society and only thereafter from the concerned individual members. In Md. Faizan V/s. State of Bihar, 1997 (1) PLJR 1028 on which reliance was placed on behalf of the petitioners, this Court observed : "The claim was against the Co-operative Society and, therefore, it was the Co-operative Society which could be held liable for repayment of the dues. Having regard to the provisions of Section 54 of the Act, members of the Managing Committee and the debtor-members ought to have been made opposite parties in the said dispute, which was not done in the instant case. However, the fact remains that the petitioners cannot be held personally liable for the dues which the respondent-Bank claimed from the co-operative society of which the petitioners were office bearers at the relevant time. The amount claimed by the respondent-Bank could be recovered only in accordance with Section 54 of the Act read with Rule 68. However, the fact remains that the petitioners cannot be held personally liable for the dues which the respondent-Bank claimed from the co-operative society of which the petitioners were office bearers at the relevant time. The amount claimed by the respondent-Bank could be recovered only in accordance with Section 54 of the Act read with Rule 68. Way back in 1931 a Full Bench of five Judges of this Court in Harihar Prasad V/s. Bansi Missir, AIR 1931 Patna 321, while considering analogous provisions of the Co-operative Societies Act, 1912, had observed : "Where some members of a co-operative society of unlimited liability under S.4 (2) incorporated under S.18, Co-operative Societies Act, borrow money from central Co-operative Bank also incorporated under the same Act, through their society and ultimately the society becomes indebted to the Central Bank for the amount and the Central Bank obtains an award from the registrar having the effect of the decree, execution cannot be levied against the members but must be sought against the society itself and its assets." 8. Coming to the present cases, it is not clear as to whether, besides the two societies against which the award cases had been filed, the debtor members were also made parties as required under Rule 68(2) of the Rules. The impugned orders however, contain some indication of the fact that they also figured as party. In any view of the matter, even if they figured as parties to the case the amount found due under the award could not be straightway recovered from them, such recovery is required to be made at the first instance from the properties of the societies and only thereafter from their properties. The impugned award/decree however, is just to the contrary. While in award case no. 489 of 1978 giving rise to CWJC No. 1048/87, the award was made against the society but the sum was made recoverable from the debtor-members, in award case no. 2/75-76, giving rise to CWJC No. 1504/87 not even formal award was made against the society. The impugned awards/orders to that extent cannot be said to be in accordance with law. 9. In the result the impugned award/orders contained in Annexure 1 and 2 in both the writ petitions are quashed to the extent the money is sought to be recovered from the petitioners. The impugned awards/orders to that extent cannot be said to be in accordance with law. 9. In the result the impugned award/orders contained in Annexure 1 and 2 in both the writ petitions are quashed to the extent the money is sought to be recovered from the petitioners. The matters are sent back to the concerned authorities i.e. Assistant Registrar, Co-operative Societies, Ara Circle and Assistant Registrar, Co-operative Societies, Jehanabad Circle with a direction to take steps for recovery of the amount due in accordance with law. There will be no order as to costs.