Inder Singh v. Additional Secretary (Cooperation), Punjab
2014-07-10
PARAMJEET SINGH
body2014
DigiLaw.ai
Judgment Paramjeet Singh, J. The above mentioned 13 Civil Writ Petitions i.e. CWP Nos. 1843, 2670 to 2673, 3162 to 3169 of 2000 have been listed together for hearing. All the above mentioned 13 writ petitions are being disposed of by this common judgment. Learned counsel for the petitioner has referred to the facts in CWP No. 1843 of 2000. Therefore, for the sake of convenience, facts are taken from this case. Instant writ petition has been filed under Articles 226 and 227 of the Constitution of India for issuance of a writ in the nature of certiorari for quashing of impugned award dated 06.09.1993 (Annexure P/1) passed by respondent no.3, appellate order dated 27.12.1995 (Annexure P/2) passed by respondent no.2 and revisional order dated 07.10.1999 (Annexure P/4) passed by respondent no.1. Brief facts of the case are that petitioner was an ex-Secretary of respondent No.4 which is a society registered under the Punjab Cooperative Societies Act, 1961 (hereinafter referred to as the “Act”). In the year 1992, respondent no.4 – society raised an arbitration dispute under Sections 55/56 of the Act against respondent no.5 – Sohan Singh son of Karam Singh, member of respondent no.4 – society for recovery of an amount of Rs.19,216/- (principal) + Rs.7,693/- (interest) and Rs. 260/- (cost), totalling Rs.27,159/- before respondent no.2, who vide his order dated 20.08.1992, appointed respondent no.3 as an Arbitrator to decide the arbitration dispute under Section 55 of the Act. Respondent no.3 impleaded the petitioner as a party at the instance of respondent no.2, although there was no arbitration dispute against the petitioner by respondent no.4 – Society for the alleged amount of arbitration dispute. The petitioner was impleaded as a party on the ground that respondent no.5, who as a member of respondent no.4 – Society alleged that he has returned the loan amount to the petitioner which has not been accounted for by the petitioner in his loan account. Ultimately arbitrator vide his award dated 06.09.1993 (Annexure P/1) awarded the amount of loan taken by respondent no.5 against the petitioner. Against that award (Annexure P/1), the petitioner preferred an appeal which has been dismissed by respondent no.2 vide order dated 27.12.1995 (Annexure P/2). Thereafter, the petitioner preferred a revision before respondent no.1, which has also been dismissed vide order dated 07.10.1999 (Annexure P/4). Hence, this writ petition.
Against that award (Annexure P/1), the petitioner preferred an appeal which has been dismissed by respondent no.2 vide order dated 27.12.1995 (Annexure P/2). Thereafter, the petitioner preferred a revision before respondent no.1, which has also been dismissed vide order dated 07.10.1999 (Annexure P/4). Hence, this writ petition. I have heard learned counsel for the parties and perused the record. Learned counsel for the petitioner vehemently contended that award against the petitioner is without jurisdiction since there was no reference of the dispute against the petitioner by the respondent-Society. There is no resolution of the society for making reference against the petitioner. The Arbitrator has no jurisdiction to add the party regarding whom arbitration reference has not been made by the respondent society after passing a due resolution. It was further alleged that this was contrary to Rule 74 of the Punjab Cooperative Societies Rules, 1963 (hereinafter referred to as the “Rules”). The award is not based on evidence on record. No notice has been issued to the petitioner on the application for condonation of delay. Arbitration award is non-speaking, mala fide and without assigning any reason. All the authorities below have not considered legal position. Learned counsel for the petitioner referred to judgment of this Court in Shamsher Singh and others vs. The State of Haryana, 1986, Punjab Legal Reports and Statutes, 110, to contend that arbitrator has no authority to add party. The arbitrator has to decide the dispute between the parties regarding whom reference has been made. Learned counsel also referred to judgment of this Court in Swaran Lal vs. State of Punjab and others, 1999(1) AIJ 332. Learned counsel for the petitioner also referred to judgment of this Court in Brij Kishore Arora vs. The Administrator, U.T., Chandigarh, 1994 PLJ 68 that resolution is necessary for making reference of dispute to arbitration. Per contra, learned counsel for the respondents vehemently contended that the award has been rightly passed. Due opportunity was afforded to the petitioner and all the authorities concurrently found against the petitioner that he was the responsible person as he did not account for the money deposited by the member in his loan account. I have considered the contentions raised by the learned counsel for the parties. It would be appropriate to reproduce Sections 55 and 56 of the Act, which read as under: “55.
I have considered the contentions raised by the learned counsel for the parties. It would be appropriate to reproduce Sections 55 and 56 of the Act, which read as under: “55. Disputes which may be referred to arbitration – (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 Cooperative Society arises through a member, past member or deceased member and the society, its committee or any officer, agent or employee of the society or liquidation, past or present; or (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 (c) between the society or its committees 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 cooperative Society, between a society and liquidator of another society or between the liquidator of one society and the liquidator of another society; such dispute 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.
(2) For the purposes of subsection (1), the following shall be deemed to be disputes touching the constitution, management or the business of a Cooperative 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 surety 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 any officer of the society (3) If any question arises whether a dispute referred to the Registrar under this section is or is not a dispute touching the constitution, management or the business of a Cooperative Society, the decision thereon of the Registrar shall be final and shall not be called in question in any Court. 56. Reference of disputes to arbitration – (1) The Registrar may, on receipt of the reference of dispute under Section 55 (a) decide the dispute himself; or (b) transfer it for disposal to any person who has been invested by the Government with powers in that behalf; or (c) refer it for disposal to one arbitrator. (2) The Registrar may withdraw any reference transferred under clause (b) of subsection (1) or referred under clause (c) of that subsection and decide it himself or refer the same to another arbitrator for decision. (3) The Registrar or any other person to whom a dispute is referred for decision under this section may pending the decision of the dispute, make such interlocutory orders as he may deem necessary in the interest of Justice.” Perusal of Section 56 of the Act shows that an Arbitrator assumes jurisdiction to decide a dispute between a society and its constituent, which includes members and servant, on the basis of reference made by the Registrar. In the absence of a reference, he has no jurisdiction to implead any party to the arbitration proceedings, therefore, the proceedings against the petitioner regarding whom no reference was made, cannot be initiated nor under the provisions of the Act, arbitrator is competent to add a party.
In the absence of a reference, he has no jurisdiction to implead any party to the arbitration proceedings, therefore, the proceedings against the petitioner regarding whom no reference was made, cannot be initiated nor under the provisions of the Act, arbitrator is competent to add a party. Learned counsel for the respondents has failed to show that any resolution was passed on the basis of which reference could have been made against the petitioner. Arbitration dispute referred to the arbitrator was with respect to respondent no.5 – Sohan Singh, member who is alleged defaulter of the society. A Division Bench of this Court in Shamsher Singh's case (supra) has also held to the above effect. In the case of Brij Kishore Arora (supra), a Division Bench of this Court has categorically held that in absence of a valid resolution of the Cooperative Society, no reference under Sections 55 and 56 of the Act can be initiated. Absence of a valid resolution is not an empty formality, rather the same is sine qua non for initiation of proceedings under Sections 55 and 56 of the Act. No authority can be conferred with any power in absence of resolution. Since there was no valid resolution against the petitioner, the Division Bench judgment in above cited case, set aside the award. It would be appropriate to reproduce para 5 of the judgment which reads as under: “5. Mr. Khoji, learned counsel for the petitioner also appears to be right when he submits that the passing of a resolution is not an empty formality so that in the absence of a valid resolution of a committee, no reference under Sections 55 or 56 of the Act can be initiated. The two cases cited by him do support his case. In Vice Chancellor Utkal University's case (supra), it was observed as under: "The reason for the stricter rule laid down in the cases cited before us is that though an incorporated body like an university is a legal entity it has neither a living mind nor voice. It can only express its will in a formal Way by a formal resolution and so can only act in its corporate capacity by resolution properly considered, carried and duly recorded in the manner laid down by its constitution.
It can only express its will in a formal Way by a formal resolution and so can only act in its corporate capacity by resolution properly considered, carried and duly recorded in the manner laid down by its constitution. If its rules require such resolutions to be moved and passed in a meeting called for the purpose, then every member of the body entitled to take part in the meeting must be given notice so that he can attend and express his views. Individual assents given separately cannot be regarded as equivalent to the assent of a meeting because the incorporated body is different from the persons of which it is composed. Hence, an omission to give proper notice even to a single member 'in these circumstances' would invalidate the meeting and that in turn would invalidate resolutions which purport to have been passed by it. But this is only when such inflexible rigidity is imposed by the incorporating constitution. "The judgment of the High Court is much to the same effect and it was held that Cooperative Society being a body corporate having succession and a common seal as envisaged under Section 30 of the Act, is to act by passing a resolution authorising its Chairman or Officers to act on its behalf and in the absence of any such resolution, no valid authority can be conferred on any person to do so. We are, therefore, of the considered view that on November 3, 1987, the date of the resolution Annexure P6, the Administrator having lived out his maximum period of appointment, could not pass a valid resolution and in the absence a resolution, the arbitration proceedings initiated of such thereunder, were equally void.” In view of above, I hereby set aside the impugned award and orders. Since it is alleged that the petitioner is liable for not depositing the amount received from the defaulter member of the society in his loan account, it shall be open to the Society to pass resolution and make an application to the competent authority with a prayer that dispute, if any, amongst the society, petitioner and the defaulter member of the cooperative Society be referred to the arbitrator for decision in accordance with Sections 55 and 56 of the Act. The competent authority shall pass appropriate order, if such an application is made in accordance with law.
The competent authority shall pass appropriate order, if such an application is made in accordance with law. All the aforementioned 13 writ petitions are disposed of in the above terms.