1. This is an appeal by two preference share-holders in the Muttra District Co-operative Bank. The appellants were the plaintiffs in the trial Court. They brought a suit against four defendants for a declaration that the latter had not been legally elected Directors of the Bank and for an injunction to restrain them from acting as such. The Directors were elected for a period of three years. Owing to the delay which has taken place in the hearing of the appeal, that period has now expired and it may be for this reason that the three surviving defendants are not now represented before us. The fourth defendant died while the suit was pending.
2. The facts of the case are briefly these:
A meeting was held on 21st September, 1921 for the appointment of four Directors under the bye-laws of the Society. The society was one constituted under the Co-operative Societies Act of 1912. The meeting was a disorderly one and about 4 p.m. it was adjourned by the Chairman. It was adjourned on the ground that the meeting could not be concluded by daylight, but the Subordinate Judge also finds that the meeting was so disorderly that from the very beginning of the meeting, the Chairman, who was the Collector of the district, was unable to make himself heard except by means of a megaphone. After the Chairman had left, the party of B. Ganga Prasad, which was opposed to the candidates favoured by the Chairman, continued the meeting on their own account and proceeded to elect certain persons as Directors.
3. The Chairman had originally adjourned the meeting until the next day, September 22nd, 1921. On that day, finding that a number of supporters of the defendants had gone away under the impression that the proceedings were finished, he further adjourned the meeting till October the 4th. On 4th October a resolution was proposed by B. Ganga Prasad's party urging that an election had already taken place and no election remained to be carried out. This resolution was disallowed by the Chairman. B. Ganga Prasad's party then left the meeting in a body, and the persons remaining proceeded to elect the four defendants as Directors.
4. It is clearly proved that the Chairman acted both at the meeting of October the 4th and previously as a partisan. He was strongly opposed to the candidature of the persons favoured by B. Ganga Prasad's party and desired to prevent their election if possible. The point which we have to determine, however, is in the first place, whether the suit filed by the plaintiffs lies in law. The question depends on the interpretation of rules framed by the Local Government under Section 43 of the Act. The Act is in many ways a skeleton Act and leaves very many important matters to be determined by rules. The rule-making power is contained in Section 43 and is framed in the widest possible manner. It gives the Local Government a general power to make rules to carry out the purposes of the Act, and then proceeds to enumerate twenty particular points in respect of which rules may be made. The enumeration of these points is preceded by the words ' in particular and without prejudice to the generality of the foregoing power.' Among the special points mentioned in Clause (1) is 'any dispute touching the business of a society between members or past members of the society.' The section lays down that such rules may provide for any dispute being referred to the Registrar for decision, or, if he so directs, to an arbitrator or arbitrators. Any rules made under this section are to be published in the local Official Gazette and on such publication are to have the effect of law. Rules have been made under this section and were published in the United Provinces Gazette of December 6th, 1919 Part I, page 1763. They provide, among other matters, that any dispute of the nature specified in Clause (1) of Section 43 shall be referred to the Registrar, who may either decide it himself or refer it for decision to a single arbitrator appointed by him or to three arbitrators of whom he shall appoint the chairman. The Registrar or the arbitrators are given the powers of a Civil Court for the purpose of summoning witnesses and it is laid down that their award shall be enforceable by a Civil Court in the same manner as if it were a decree passed by such a Court. It is also provided that no such award shall be called in question in any Civil or Revenue Court.
5. It has been contended before us as it was contended in the Courts below, that the word 'business' in the Act and in these rules is confined to money business such as the giving of loans to members and the settlement of money claims. Having regard to the very wide form in which Section 43 and the rules made under it are couched, we think that the word 'business' was not intended to be understood in any such restricted sense. The election of its officers was certainly a part of the business of the society and' we think that the intention of the Act was that this and any dispute of a similar character should be referred for the decision of the Registrar or the arbitrators appointed by him is accordance with the rules made under Section 43 and not to the Civil Court. It is further contended before us that a reference was made to the Registrar after the suit had been filed. The parties agreed to refer it to arbitration and named the Registrar of Co-operative Societies as arbitrator. On a reference being made to him, he declined to act. This was a reference to arbitration under the provisions of the second schedule of the Civil Procedure Code and is entirely distinct from the procedure contemplated by Rule 20 of the Rules of 3rd September, 1919. In a reference to arbitration under the Civil Procedure Code an arbitrator has full discretion either to act or to decline to act whereas if the dispute had been referred to the Registrar under the rules, he would have been legally bound either to decide it himself or to refer it for decision in accordance with the rules.
6. For these reasons we think that the Court below was right in holding that the suit was not maintainable. We, therefore, dismiss the appeal but without costs as the respondents are not represented.