Janak Raj v. Lower Lohara Cooperative Cho Reclamation And Soil Conservation Society
2018-11-26
AJAY MOHAN GOEL
body2018
DigiLaw.ai
JUDGMENT Ajay Mohan Goel, J. - By way of this petition, the petitioner has prayed for the following reliefs: "It is therefore respectfully prayed that in view of the facts and circumstances mentioned hereinabove, this petition may kindly be allowed and the order dated 27.03.2018, passed by the Ld. Addl. District Judge (1) Una, District Una, H.P. in Civil Misc. Appeal No. 4/2018 and order dated 2.12.2017 passed by the Ld. Civil Judge, Court No. III, Amb, District Una H.P. passed in C.S. No. 337/2010 may kindly be set aside and the application under Order 7 Rule 10 read with Section 9 CPC of the petitioner may kindly be allowed and the plaint of the respondent/plaintiff may kindly be returned/rejected in the interest of justice. Any other order which this Hon''ble Court deems fit may kindly also be passed in favour of petitioner." 2. The case of the petitioner is that respondentLower Lohara Cooperative Cho Reclamation and Soil Conservation Society filed a suit for recovery of Rs. 1,00,000/ against him in the Court of learned Civil Judge (Junior Division), Amb, District Una, Himachal Pradesh. The suit for recovery was filed by the present respondent/plaintiff (hereinafter referred to as ''the plaintiff'') against the present petitioner/defendant (hereinafter referred to as ''the defendant'') on the ground that defendant was Secretary of erstwhile Upper Lohara Cooperative Cho Reclamation and Soil Conservation Society and was the custodian of the property of the said Society, as also records thereof. The above mentioned Society was amalgamated in the plaintiff''s Society by the Registrar, Cooperative Societies vide order dated 14.09.2007, passed under Section 14A of the Himachal Pradesh Cooperative Societies Act, 1968. Further as per the plaintiff, pursuant to cancellation of the registration of Upper Lohara Cooperative Society, the defendant became an employee of the plaintiff Society, but he did not join the plaintiffSociety and remained absent without any prior notice from his duty since 11.06.2006 despite various notices. In these circumstances, plaintiffSociety placed him under suspension w.e.f. 28.06.3009. As per the plaintiffSociety, defendant did not hand over the record and property of the erstwhile Society to the plaintiffSociety and thus, caused heavy loss to the plaintiffSociety. Proceedings stood initiated against the defendant under Section 38 of the Himachal Pradesh Cooperative Societies Act for securing the records, as also the property of the erstwhile Society.
As per the plaintiffSociety, defendant did not hand over the record and property of the erstwhile Society to the plaintiffSociety and thus, caused heavy loss to the plaintiffSociety. Proceedings stood initiated against the defendant under Section 38 of the Himachal Pradesh Cooperative Societies Act for securing the records, as also the property of the erstwhile Society. On the directions passed by the Executive Magistrate, Amb on 04.09.2010, the office of erstwhile Society was searched by SHO, Police Station, Chintpurni on 11.11.2010, but except a few items of furniture etc., no Books of Accounts or record were found either from the office or house of the defendant which was also searched on the same day. In these circumstances, plaintiff was constrained to file criminal proceedings against the defendant. It was further the case of the plaintiff that on account of unlawful acts of the defendant of retaining Account Books, as also other records, defendant has caused loss to the tune of Rs. 1,00,000/ to the plaintiffSociety, as detailed in the plaintiff and on these basis, suit for recovery was instituted. 3. Pursuant to institution of the said suit, defendant filed an application under Order 7 Rule 10 of the Code of Civil Procedure for return of plaint, inter alia, on the ground that filing of the suit was expressly barred by the provisions of Section 72 of the Cooperative Societies Act. According to the defendant, dispute which stood raised by the plaintiff by way of the Civil Suit, was referable for arbitration under Section 72 of the Act and there was an express bar in the Act itself against the institution of suit on the cause pleaded in the plaint. Said application was resisted by the plaintiff, which took the stand that the issue, subject matter of the suit, was not barred for being agitated by way of filing of a Civil Suit under the Act. 4.
Said application was resisted by the plaintiff, which took the stand that the issue, subject matter of the suit, was not barred for being agitated by way of filing of a Civil Suit under the Act. 4. Vide order dated 02.12.2017, the application filed by the defendant under Order 7 Rule 10 of the Code of Civil Procedure was dismissed by the Court of learned Civil Judge (II), Amb by holding that as the suit filed by the plaintiffSociety was for recovery of loss caused to the plaintiff by the act of the defendant, therefore, said dispute was not a dispute touching the Constitution, Management or Business of the Cooperative Society, as disputes envisaged would mean disputes relating to "any debt or demand only and and does not include within its ambit suit for recovery." 5. Feeling aggrieved by the said Order, defendant filed an appeal, which also stands rejected by the Court of learned Additional District Judge (I), Una, District Una vide judgment dated 27.03.2018 passed in Civil Misc. Appeal No. 4 of 2018. Learned Appellate Court also interpreted the provisions of Section 72(2) of the Act to mean that the only disputes referable for arbitration were those envisaged under Section 72(2)(a) to (c) and that the dispute in hand did not fall in the category of the said disputes. 6. Feeling aggrieved, the defendant has filed the present petition. 7. I have heard the learned counsel for the parties and have also perused the pleadings appended with the petition, as also the Orders passed by both the learned Courts below. 8. The Himachal Pradesh Cooperative Societies Act, 1968 (hereinafter referred to as ''the 1968 Act'') was enacted to consolidate and amend the law relating to Cooperative Societies in Himachal Pradesh. Chapter IX of the same deals with settlement of disputes. Section 72 describes the disputes which may be referred to arbitration. Section 92, which is found in ChapterXII of the 1968 Act, (which deals with jurisdiction, appeal and review, inter alia, provides that save as provided in the Act), no civil or revenue Court shall have any jurisdiction in respect of any dispute required under Section 72 to be referred to the Registrar. In other words, the Act provides for bar of jurisdiction of a Civil or Revenue Court qua those disputes which are referable for arbitration under Section 72 of the same. 9.
In other words, the Act provides for bar of jurisdiction of a Civil or Revenue Court qua those disputes which are referable for arbitration under Section 72 of the same. 9. SubSection (1) of Section 72 starts with a non obstante Clause that 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 between the parties, as are envisaged in this Subsection, then such a dispute shall be referred to the Registrar for decision and no Civil Court shall have jurisdiction to entertain any suit or other proceedings in respect of such dispute. 10. Thus, it is evident that in addition to the provisions of Section 92, Section 72 also prohibits a Civil Court to entertain a suit or any other proceeding in respect of a dispute which is referable to Arbitration under Section 72. This Section, for ready reference, is being quoted hereinbelow: "72.
10. Thus, it is evident that in addition to the provisions of Section 92, Section 72 also prohibits a Civil Court to entertain a suit or any other proceeding in respect of a dispute which is referable to Arbitration under Section 72. This Section, for ready reference, is being quoted hereinbelow: "72. Dispute which may be referred: (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: (a) among members, past members and persons claiming through a member, past member or deceased member and the society, its committee or any officer, agent or employee of the society or liquidator, past or present; or (b) between 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 liquidator, past or present; 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; (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; or (e) a surety of a member, past member of a deceased member or a person other than a member who has been granted a loan by the society under section 58 whether such surety is or is not a member of the 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 any employee or the nominee, heir or legal representatives of a deceased member or an employee, 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 a surety any amount in respect of any debt or demand due to it from the Principal debtor as a result of 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 or 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, decision, thereon, of the Registrar shall be final and shall not be called in question in any court. The section lays down provision regarding settlement of disputes in cooperative societies by reference to arbitration by the Registrar. Settlement of disputes by cooperative societies through arbitration only is essential to save them from prolonged and expensive litigation, in civil courts. As such it is specifically provided that no court has jurisdiction, to entertain any suit or other proceedings in respect of any dispute, touching the constitution, management or the business of the cooperative societies. The Registrar has been vested with the power to decide whether any dispute is a dispute falling within the preview of this section or not. His ruling is final in such issues." 11. A perusal of said Section clearly demonstrates that inter alia, any dispute touching the Constitution, Management or the Business of a Cooperative Society between its employee or past employee is referable for arbitration.
His ruling is final in such issues." 11. A perusal of said Section clearly demonstrates that inter alia, any dispute touching the Constitution, Management or the Business of a Cooperative Society between its employee or past employee is referable for arbitration. Subsection (2) of the same provides that the disputes referred therein "shall be deemed to be disputes touching the constitution, management or the business of a Cooperative Society." Similarly, Subsection (3) of Section 72 provides that if any question arises whether a dispute referred to the Registrar under the said Section is or is not a dispute touching the Constitution, Management or Business of a Cooperative Society, then decision thereupon of the Registrar shall be final. 12. Coming to the facts of this case, both the learned Courts below have held that a dispute pertaining to a Cooperative Society and its employee/past employee for recovery of dues is not referable to the Arbitrator, as only those disputes can be referred for arbitration, which are envisaged in subsection (2) of Section 72. In other words, learned Courts have held that as the suit filed by the Society against the present petitioner is for recovery, therefore, the same not being a dispute relating to "any debt or demand", it is not included within the ambit of Section 72. In other words, learned Courts below have held that only those disputes are referable for arbitration which are provided in Section 72 (2)(a to c). 13. In my considered view, the view so taken by both the Courts below is completely perverse and not sustainable in law. Both the learned Courts below have erred in not appreciating that Subsection (2) of Section 72 is only illustrative and not exhaustive. In other words, Subsection (2) contemplates that the disputes which have been referred therein shall be deemed to be arbitrable disputes. This Subsection no where mentions that only those disputes between a Society and its employee/former employee which are referred to therein are arbitrable. This extremely important aspect of the matter has been ignored by the learned Courts below. They have erred in not appreciating that in case there is a dispute which is covered under Subsection (2), then there will be a deemed fiction that such like disputes are arbitrable and the factum of such disputes being arbitrable or not cannot be raised by a party. 14.
They have erred in not appreciating that in case there is a dispute which is covered under Subsection (2), then there will be a deemed fiction that such like disputes are arbitrable and the factum of such disputes being arbitrable or not cannot be raised by a party. 14. In the present case, undisputedly, the issue is with regard to certain recoveries which the Society intends to make from the petitioner who was serving as defendant of erstwhile Upper Lohara Cooperative Cho Reclamation and Soil Conservation Society, which stood amalgamated with the respondentSociety. It is admitted case of the present respondent that after the cancellation of registration of erstwhile Upper Lohara Cooperative Society, the present petitioner became an employee of the respondentSociety. The alleged recovery is in lieu of purportedly unlawful retention of the Account Books and records by the petitioner, which allegedly has caused loss of more than rupees one lakh to the respondentSociety, as the said Society has not been able to manage the land and carry on business for about two years. Be that as it may, as the same undoubtedly is a dispute which touches the Business of a Cooperative Society and has arisen between the Society and its employees, the same, in my considered view, is referable to arbitration under Section 72(1)(c) of the 1968 Act. That being the case, the jurisdiction of a Civil Court to entertain a suit in this regard is barred both under the provisions of Subsection (1) of Section 72 as also Section 92 of the 1968 Act. 15. Much stress has been laid by the learned counsel for the respondent on a judgment passed by the Hon''ble High Court of Delhi in Chander Nagar Cooperative House Building Society Ltd. and another Vs. Ashok Ohri , (1976) AIR Delhi 299, wherein learned Single Judge while interpreting the words "the following shall be deemed to be disputes touching the constitution, management or the business of a cooperative society", has held that the legislature has left no doubt that these are the only disputes which can be said to be touching the constitution, management or the business of a cooperative Society.
I with respect disagree with the findings so returned by the learned Single Judge in the above mentioned judgment, because in my reading of the statutory provisions of Section 72 of the 1968 Act, the disputes referred in Subsection (2) of Section 72 thereof are only illustrative and not exhaustive, because otherwise legislature could very well have avoided the words "deemed to be". 16. In view of the reasonings assigned hereinabove, this petition is allowed. The impugned judgment dated 27.03.2018, passed by the Court of learned Additional District Judge (I), Una in Civil Miscellaneous Appeal No. 4 of 2018 and order dated 02.12.2017, passed by the Court of learned Civil Judge, Court No. II, Amb in CMA No. 296/2017 in Civil Suit No. 337 of 2010 are set aside as both the impugned orders suffer from perversity. It is held that the suit filed by the respondent/plaintiff against the petitioner/defendant, i.e, Civil Suit No. 337/2010, titled as The Lower Lohara Cooperative Cho Reclamation and Soil Conservation Society Vs. Shri Janak Raj pending in the Court of learned Civil Judge (II), Amb is not maintainable in view of the bar contemplated and contained in Section 72 as also Section 92 of the Himachal Pradesh Cooperative Societies Act, 1968. Consequences to follow.