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2008 DIGILAW 172 (KAR)

Suresh v. The Managing Director, Karnataka Milk Federation

2008-03-10

D.V.SHYLENDRA KUMAR

body2008
JUDGMENT Shylendra Kumar, J. This second appeal involves a short but interesting question viz., whether the plaintiff, who was admittedly an agent of the respondents-defendants, a society, and whose agency had been terminated, could maintain a suit for recovery of the deposit amount of Rs 2,000/-, which had been deposited at the time of award of agency in favour of plaintiff and can be recovered with interest on the termination of the agency and on the assumption that the termination was bad in law, notwithstanding the provisions of Section 70 of the Karnataka Co-operative Societies Act, 1959 [for short, the Act. 2. The trial Court as well as the first appellate Court having non-suited the plaintiff only on the ground that such a suit was not tenable in the light of the provisions of Section 70 of the Act, to get over such judgments and to get a decree for this amount, the present second appeal. At the time of admission the following substantial question of law had formulated as arising for determination in this second appeal: 1) Whether the suit filed by the appellant is barred under Section 70 of the Karnataka Co-operative Societies Act? 3. The material facts leading to this second appeal are not in dispute viz., that the plaintiff had been appointed an agent of the defendants-milk federation, a co-operative society, to market/supply its products of milk under Nandini brand to consumers on commission basis. It appears the defendants terminated the agency being of the view that the plaintiff had violated the terms of the agency, as according to the defendant-society, the plaintiff was found to be marketing milk other than Nandini brand also. Though the justification for termination of the agency on this ground has been found against the defendant-society, the Courts below, nevertheless, dismissed the suit only on the premise that a civil suit of the nature as filed by the plaintiff was not maintainable, particularly due to the bar provided under Section 70 of the Act. Section 70 of the Act reads as under: 70. Section 70 of the Act reads as under: 70. Disputes which may be referred to Registrar for decision: (1) Notwithstanding anything contained in any law for the time being in force, if any dispute touching the constitution, management, or the business of a co-operative society arises (a) among members, past members and persons claiming through .members, past members and deceased members, or (b) between a member, past member or person claiming through a member, past member or deceased member and the society, its committee or any officer, agent or employee of the society, or (c) between the society or its committee and any past committee, any officer, agent or employee, or any past officer, past agent or past employee or the nominee, heirs, or legal representatives of any deceased officer, deceased agent, or deceased employee of the society, or (d) between the society and any other co-operative society or a credit agency such dispute shall be referred to the Registrar for decision, and no Court or labour or revenue Court or Industrial Tribunal shall have jurisdiction to entertain any suit or other proceeding in respect of such dispute. (2) For the purpose of sub-section (1), the following shall be deemed to be disputes touching the constitution, management or the business of a o-operative society, namely - (a) a claim by the society for any debt or demand due to it from a member or the nominee, heirs or legal representatives of a deceased member, whether such debt or demand be admitted or not; (b) a claim by a society against the principal debtor where the society has recovered from the surety any amount in respect of any debt or demand due to it from the principal debtor, as a result of the default of the principal debtor whether such debt or demand is admitted or not; (c) any dispute arising in connection with the election of a President, Vice-President, Chairman, Vice-Chairman, Secretary, Treasurer or Member of Committee of the society; (d) any dispute between a co-operative society and its employees or past employees or heirs or legal representatives of a deceased employee, including a dispute regarding the terms of employment, working conditions and disciplinary action taken by a co-operative society notwithstanding anything contrary contained in the Industrial Disputes Act, 1947 (Central Act 14 of 1947); (e) a claim by a co-operative society for any deficiency caused in the assets of the co-operative society by member, past member, deceased member or deceased officer, past agent or deceased agent or by any servant, past servant or decease servant or by its committee, past or present whether such loss be admitted or not. (3) If any question arises whether a dispute referred to the Registrar under this section is a dispute touching the constitution, management or the business of a co-operative society, the decision thereon of the Registrar shall be final and shall not be called in question in any Court. 4. A relevant issue though had been framed as to maintainability of the suit in the light of provisions of clause (c) of sub-section (1) of Section 70 of the Act, has been erroneously indicated as one arising due to clauses (b) and (d) of sub-section (1) of Section 70 of the Act. 4. A relevant issue though had been framed as to maintainability of the suit in the light of provisions of clause (c) of sub-section (1) of Section 70 of the Act, has been erroneously indicated as one arising due to clauses (b) and (d) of sub-section (1) of Section 70 of the Act. Nevertheless, this issue was answered against the plaintiff and in favour of the defendant-society and the lower appellate Court having corrected this issue to be one arising in the light of the provisions of clause ( c) of sub-section (1) of Section 70 of the Act and having affirmed the answer in respect of this issue to be in favour of the defendant and against the plaintiff and having dismissed the appeal, the present second appeal by the plaintiff. 5. Appearing on behalf of the appellant-plaintiff, Sri S. B. Hebballi, learned Counsel, has raised two contentions. It is firstly contended that the suit was very much maintainable as what are the disputes touching upon the constitution, management or business of a co-operative society which are excluded from being agitated before a Civil Court, are all enumerated in sub-section (2) of Section 70 of the Act and a suit of the present nature i.e. a suit by an agent as against the society for recovery of deposit amount being not a type of suit figuring in any of the clauses (a) to (e) in sub-section (2) of Section 70 of the Act and as it is specifically recited in sub-section (2) that for the purpose of sub-section (1), the disputes mentioned are required to be taken into consideration and the dispute raised by the plaintiff being not one such, the bar of clause (c) of sub-section (1) of Section 70 of the Act did not operate against the present suit and the Courts below were in error in answering this question against the plaintiff for non-suiting the plaintiff. Learned Counsel submits that it is only such disputes as are enumerated in clauses (a) to (e) of sub-section (2) of Section 70 of the Act which are tenable and not the other types of suit and therefore the suit was very much maintainable. 6. Learned Counsel submits that it is only such disputes as are enumerated in clauses (a) to (e) of sub-section (2) of Section 70 of the Act which are tenable and not the other types of suit and therefore the suit was very much maintainable. 6. The alternative contention urged by Sri Hebballi is that assuming for arguments’ sake that clause (c) of sub-section (1) of Section 70 of the Act does mention about a dispute touching the constitution, management or business of a co-operative society between the society and its agent, the nature of disputes viz., a suit for recovery of deposit sum of Rs 2,000/-, which the plaintiff had deposited at the time of awarding the agency was not a dispute touching upon the business of the Society, in the sense, on the termination of the agency, the plaintiff did not carryon any business nor continued any business with the defendants and therefore the present suit was outside the purview of clause (c) of sub-section (1) of Section 70 of the Act. It is submitted in this regard that even if the relationship of principal and the agent continued to exist between the parties, if a civil suit was to be avoided by the society, it was for the society to plead and prove that the disputes in the context of which the suit had been filed had specifically arisen touching upon the constitution, management or business of the society and the burden was on the society to make good such stand and the society neither having specifically pleaded that the dispute arose in the context of any business transactions between the society and the plaintiff not having made good such stand, it was not open to the Courts below to have recorded a finding that the suit was not maintainable in law and therefore submits that the judgments and decrees of the Courts below should be set aside and the suit decreed as prayed for. 7. In support of such submission, learned Counsel for the appellant -plaintiff would place reliance on a single bench decision of this Court in the case of Asaktha Poshaka Sangha Vs. 7. In support of such submission, learned Counsel for the appellant -plaintiff would place reliance on a single bench decision of this Court in the case of Asaktha Poshaka Sangha Vs. Vishwakarma Co-operative Society, XXII ILT (1973) Mysore 235, wherein it had been held that a suit for recovery ‘of rent to be paid by a lessee in respect of a premises leased to the society as lessee, was not a suit touching upon any business activity of the society and that though the question arises in the context of requirement to comply with Section 125 or otherwise and this Court reversing the view taken by the trial Court that notice in terms of Section 125 of the Act was necessary, does not correct it, has thrown light as to what activity constitute business activity as between the society and its agent and therefore submits that the Courts below were in error in concluding that the suit claim arose in the context of transaction touching upon the business of the society. Learned Counsel would therefore urge that the Courts below should have held that the suit was very much maintainable particularly having answered issue as to the validity of the termination of the agency and when once it was found that the society’ had not followed requisite procedure for terminating the agency should have necessarily decreed the suit, which is a simple suit for mere refund of deposit amount, which the society could not have withheld or forfeited and the suit should have been decreed. 8. 8. On the other hand, Sri Sangamesh G. Patil, learned Counsel for the respondents-defendants would submit that the Courts below are very right in concluding that the suit was hit by the provisions of clause ( c) of sub-section (1) of Section 70 of the Act; that the provisions of clause (c) of sub-section (1) of Section 70 of the Act are clearly attracted to the present case; that the dispute arises only in the context of business of the society, such as marketing its products - Nandini brand milk - the society had appointed the plaintiff as an agent, which is very much a business transaction; that the refund or non-refund was in the context of that business connection and even assuming that the Courts below have taken the view that the termination of the agency and forfeiture of is not correct or proper, nevertheless, for the recovery of amount, the plaintiff could have only raised a dispute in terms of Section 70 of the Act, could not have maintained a suit and the Courts below are fully justified in dismissing the suit as not maintainable, in view of the provisions of clause (c) of sub-section (1) of Section 70 of the Act and therefore the appeal should be dismissed. 9. 9. With regard to the other submission as to whether the situation being not any of the situations contemplated in one of the clauses of sub-section (2) of Section 70 of the Act and therefore the suit was not maintainable, the learned Counsel would submit that the bar clearly applies in the light of the provisions of clause ( c) of sub-section (1) of Section 70 of the Act and the bar operates in terms of the situation referred to in clauses (a) to (d) in sub-section (1) of Section 70 of the Act and the bar operates in terms of the situation referred to in clauses (a) to (d) of sub-section (1) of Section 70 of the Act and therefore the provisions of sub-section (2) do not take the situation from out of the bar contemplated in clause (c) of sub-section (1) of Section 70 of the Act, but on the other hand the situations illustrated in sub-section (2) are all to be taken as situations covered under sub-section (1), even by fiction of law i.e. non-mentioning of a situation, which otherwise could be brought into the scope of anyone of the clauses (a) to (d) in sub-section (1) of Section 70 of the Act does not make any different to the operation of the bar for maintaining a civil suit in respect of a dispute touching upon any of the aspects covered under clauses (a) to (d) and therefore urges the appeal should be dismissed. 10. The question is as to whether the bar operates or not? There is no dispute that the relationship at the beginning was one of principal and agent as between the defendant-society and the plaintiff. That is necessarily a business connection. The amount sought to be recovered was a security deposit or some other deposit which was made in the context of award of agency is definitely a deposit in the context of the business relationship between the principal and the agent. Though the relationship of principal and the agent in itself may also not be termed as a business relationship basically, it is an activity touching upon the business of the society as the agent is employed only for the business of the society. The agent comes into picture in the context of the business of the principal. Though the relationship of principal and the agent in itself may also not be termed as a business relationship basically, it is an activity touching upon the business of the society as the agent is employed only for the business of the society. The agent comes into picture in the context of the business of the principal. Clause (c) of sub-section (1) of Section 70 of the Act not only includes current agent but also past agent and therefore it makes little difference as to whether the agency had been terminated or not. There cannot be any two opinion that independent of sub-section (2) by operation of sub-section (1) of Section 70 of the Act, a suit o~ the present nature was not maintainable. 11. In the light of the arguments addressed by the learned Counsel for the appellant-plaintiff, the next question as to whether the provisions of sub-section (2) of Section 70 can take out the situation other than those contemplated in sub-section (2) from out of the scope of operation of the bar as provided for under sub-section (1) of Section 70 of the Act. A perusal of the contents of sub-section (2) indicates that the situations covered by clauses (a) to (e) of this sub-section which are all situations arising in the context of a claim put forth by the society, particularly for recovery [of amount] etc., are all deemed by fiction to be a dispute for the purpose of sub-section (1) of the Act. That means, the situations figure in clauses (a) to (e) of sub-section (2) are all fiction of law taken to be situations automatically covered by the bar indicated in sub-section (1). It is so achieved by fiction. 12. It is a common practice and well understood in legal parlance that a fiction is employed to rope in a situation not otherwise within the contemplation of a particular provision, also to be brought within a particular provision or situation and some times even to take out a situation beyond the scope of any controversy or ambiguity. 12. It is a common practice and well understood in legal parlance that a fiction is employed to rope in a situation not otherwise within the contemplation of a particular provision, also to be brought within a particular provision or situation and some times even to take out a situation beyond the scope of any controversy or ambiguity. A proper reading of sub-sections (1) and (2) together would actually indicate that the fiction employed in sub-section (2) in respect of five situations covered under clauses (a) to (e) is only for the purpose of ensuring that these situations necessarily and inevitably come within the scope of the bar enumerated in sub-section (1) of Section 70 and not that a situation not covered under clauses (a) to (e) or to be taken out of the bar which operates under sub-section (1). It should be noticed that the bar under sub-section (1) regarding Civil Court not having jurisdiction to entertain a suit in respect of a dispute touching upon the aspects and amongst the persons figure in clauses (a) to (d) to sub-section (1) is complete and achieved within sub-section (1) of Section 70 itself and if the object of sub-section (2) was to restrict the scope of operation, the legislature would not have employed any deemed provision to indicate as to what are the disputes touching upon the constitutional management or business of a co-operative society by employing a fiction, it could have simple said that the following alone shall be disputes contemplated under the bar for the purpose of subsection (1). Such is not the language employed. Therefore, the fiction employed in sub-section (2) should be taken to be one to rope in a situation covered under clauses (a) to (e) in sub-section (2) of Section 70 within the bar provided under sub-section (1) of Section 70 of the Act and not to leave any ambiguity about it later to exclude as not contemplated in clauses (a) to (e) to sub-section (2) of Section 70 of the Act. 13. 13. The Courts below are right in answering the question that the suit for recovery of amount deposited by the plaintiff while he was an agent of the defendant -society is a claim arising in the context of a dispute between the agent and the society and touching upon the business activities of the society and therefore it is clearly hit by the bar provided under sub-section (1) of Section 70 of the Act. 14. The suit claim though perhaps could have succeeded if the suit was maintainable, the suit itself having been held to be not maintainable, there is no way of the civil Court decreeing such a suit for the claim of some amount, however justifiable the claim would have been and only for want of jurisdiction, the suit has to be dismissed and has been rightly done so by the Courts below. No scope for interference in second appeal. Appeal is accordingly dismissed.