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Liquidator of Dhabaleshwar Co-operative Society Vs. Hadibandhu Behera and anr. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtOrissa High Court
Decided On
Case NumberSecond Appeal No. 369 of 1948
Judge
Reported inAIR1953Ori300
ActsBihar and Orissa Co-operative Societies Act, 1935 - Sections 31(2), 32, 44(3) and 57; Code of Civil Procedure (CPC) , 1908 - Sections 9; Bengal Public Demands Recovery Act, 1880 - Sections 43 and 44
AppellantLiquidator of Dhabaleshwar Co-operative Society
RespondentHadibandhu Behera and anr.
Appellant AdvocateB. Mohapatra, Adv.
Respondent AdvocateM.S. Rao, Adv.
DispositionAppeal allowed
Cases ReferredBhagabat Charan v. Ram Nayaran
Excerpt:
- motor vehicles act, 1988 [c.a. no. 59/1988]section 173(1) proviso; [d. biswas, amitava roy & i.a.ansari, jj] appeal without statutory deposit but within limitation/or extended period of limitation maintainability - held, if the provision of a statute speaks of entertainment of appeal, it denotes that the appeal cannot be admitted to consideration unless other requirements are complied with. the provision of sub-section (1) of section 173 permits filing of an appeal against an award within 90 days with a rider in the first proviso that such appeal filed cannot be entertained unless the statutory deposit is made. the period of limitation is applicable only to the filing of the appeal and not to the deposit to be made. it, therefore, appears that an appeal filed under section 173 cannot.....panigrahi, j.1. the appeal arises out of a suit filed by respondent 1 for a declaration that a contribution order passed against mm by the appellant, as the liquidator of the dhabaleswar co-operative society, is ultra vires and illegal, and for a perpetual injunction restraining the liquidator (who was defendant 1 in the suit) from executing the same against the plaintiff.2. the allegations of the plaintiff are that he and his elder brother lokenath behera (defendant 5) joined the said society in june 1922 and borrowed different sums of money for financing a partnership business; that in april 1923 the partnership was dissolved and that he transferred his interest in the business to his elder brother; and that on 3-4-23 the managing committee of the society passed a resolution.....
Judgment:

Panigrahi, J.

1. The appeal arises out of a suit filed by respondent 1 for a declaration that a contribution order passed against Mm by the appellant, as the Liquidator of the Dhabaleswar Co-operative Society, is ultra vires and illegal, and for a perpetual injunction restraining the Liquidator (who was defendant 1 in the suit) from executing the same against the plaintiff.

2. The allegations of the plaintiff are that he and his elder brother Lokenath Behera (defendant 5) joined the said society in June 1922 and borrowed different sums of money for financing a partnership business; that in April 1923 the partnership was dissolved and that he transferred his interest in the business to his elder brother; and that on 3-4-23 the managing committee of the society passed a resolution transferring the liability of the plaintiff to his elder brother as Karta of the family; and that accordingly he (the plaintiff) ceased to be a member of the society. The plaintiff further alleged that he had been divided from his brother ever since 1917 and that consequently Lokenath Behera was not competent to represent him as the manager of the joint family consisting of himself and his brother. The Liquidator passed an order ot contribution in the first instance on Lokenath Behera, defendant 5, and as the entire amount due from him was not realised he passed a second order of contribution against the plain- till for realization of the balance on the basis that he and his brother formed a joint family and that the joint family as such was a member of the society. This order was sought to be executed by certificate proceedings under the Public Demands Recovery Act. The plaintiff preferred an objection but that was overruled by the Certificate Officer, and hence the present suit was filed under Section 43, Public Demands Recovery Act.

3. Defendants 1 to 3 are the Liquidators appointed from time to time to wind up the affairs of the society which was liquidated in the year 1939. Defendant 4 is the Secretary of the Central Co-operative Bank to which the society was affiliated. Defendants 2 to 4 were not made parties to this appeal as no relief was claimed against them. The plaintiff and his brother defendant 5 are respondents 1 and 2 respectively in this appeal.

4. The case put forward for the society is that the plaintiff and his brother were members of an undivided Hindu family of which defendant 5, Lokenath was the Karta. It is alleged that the plaintiff was enlisted as a member in his individual capacity contrary to the bye-laws of the society and that when this was discovered defendant 5 took over the liability for the amounts due to the society, as Karta of the family at a meeting of the Pun- chayet, and that this was done with the knowledge and consent of the plaintiff. It is, therefore, urged for the society that the entire family assets are liable for the discharge of the amount due to the society. The appellant society further contends that the suit is not maintainable without the leave of the Registrar of Co-operative Societies as provided in Section 57, Bihar and Orissa Co-operative Societies Act, (Act 6 of 1935) and in the absence of notice under Section 80, Civil P. C.

5. The Courts below have concurrently held that the plaintiff and defendant 5 were not members of a joint family on the dates of the loans. But curiously enough they have also held that the plaintiff's membership of the society was void as according to the contention of the society he was a member of a co-parcenary. They have also held that the plaintiff ceased to be a member when the Managing Committee passed its resolution on 8-4-23 transferring to defendant 5 the loan incurred by the plaintiff. They have accordingly come to the conclusion that the liability of the plaintiff, if any, ceased in 1925, two years after the date of the said resolution, as laid down in Section 32, and that the order of the Liquidator holding the plaintiff liable for contribution should be declared ultra vires and illegal, as, in their view, the plaintiff was not liable as a past member. They have further held that neither Section 80, Civil P. C. nor Section 57, Bihar & Orissa Cooperative Societies Act, is a bar to the maintainability of the suit as, in their opinion, the order of the Liquidator suffers from an initial lack of jurisdiction. These findings of the courts below are challenged before us by learned counsel for the appellant chiefly on the ground of maintainability of the plaintiff's suit.

6. It is necessary to advert to a few facts in order to appreciate the points raised in the controversy between the Parties. The plaintiff, along with his brother Lokenath, was one of ten applicants for regis-tration of the society. The society was registered by the Registrar on 23-6-22, and the first meeting of the society was held on 26-6-22 in the presence of the Honorary Organizer, Sri J. C. Chakravarty. The plaintiff was elected as the Accountant Secretary of the society and his brother was elected as the President of the same. Each one of them was sanctioned a loan of Rs. 700/- individually. On 11-7-22 they executed and registered a mortgage bond, jointly mortgaging their properties as security for the loans. On 21-7-22 the plaintiff borrowed Rs. 500/- :from the society & his brother borrowed Rs. 290/- as would appear from Ext. B the minutes recorded by the society. On 8-4-23, the first annual meeting of the Committee was held and at that meeting a resolution was recorded, pointing out that the plaintiff had defaulted in payment of instalments due from him to the society and defendant 5 was elected as the Accountant-Punch in place of the plaintiff. Resolution No. 34 was passed at this meeting which reads as follows and on which the Courts below have relied :

'Members L. N. Behera and H. B. Behera are undivided brothers living in a joint family. Therefore, under the bye-laws both of them cannot remain as members. As L. N. Behera is liable to discharge the loan due from Hadibandhu Behera, and as it is agreed to, it is resolved that the aforesaid loan be written in the name of Lokenath and that Hadibandhu Behera be surety for it.'

This meeting was held in the presence of the Inspector who pointed out the irregularity of both the brothers becoming members as that would offend against the bye-laws. Admittedly, the plaintiff was present at the meeting but his explanation is that he did not agree to this resolution and, therefore, did not sign the minutes. The Courts below have held, relying on this resolution, that the membership of the plaintiff ceased from this date as the society agreed to transfer his liability to defendant 5 . and exonerate him from future liability. They have also assumed that the plaintiff's membership was void in limine as being contrary to the bye-laws on the assumption that he was a member of an undivided Hindu family of which defendant 5, the Karta, was another member. A reference to the bye-laws at this stage would elucidate the point at issue. Bye-law No. 4 says that one can become a member if he is not a co-parcener of another member aonstituting an undivided family. Bye-law No. 9 prescribes how a member can renounce his membership and says that

'a member can resign his membership three years after his admission by giving notice to the committee'

but if he is a debtor to the society he cannot do so. I am unable to gather from these bye-laws that the membership of the plaintiff can be deemed to be void even assuming that he was undivided from defendant 5. All that the bye-law says is that he is not competent to become a member, but if he is, as a matter of fact, admitted as a member, the bye-law does not say that his membership shall be void. As a member he had contracted the loan and it would be strange if the bye-law should be so interpreted as to render his membership void with the necessary consequence of his being exempted from the liability to pay the loan. This is, at the most, an irregularity which was sought to be rectified by the Inspector. Resolution No. 34 dated 8-4-23 does not say that his membership shall be void and that the plaintiff shall be exempt from liability for the loan. In positive language it lays down that Lokenath Behera should take over the loan as Karta of the family. It cannot, therefore, ba said that the plaintiff ceased to be a member by reason of the resolution of the Managing Committee. He could not, in fact, resign his membership as he was still indebted to the society and three years had not elapsed from the date of his admission to the society. The resolution passed by the Managing Committee does not purport to bring about a cessation of his membership and it would have been contrary to bye-law No. 9 if it had done so.

7a. The only evidence adduced by the plaintiff in support of his case of divided status from his brother is his own evidence. The Courts below were conscious of the weakness of the evidence on the side of the plaintiff and, therefore, recorded a finding to the effect that though there was no evidence of a division of their properties by metes and bounds, there was a disruption of the joint family status prior to 1922. The plaintiff further alleged that he was a partner with defendant 5 in the business carried on by them jointly, namely running a motor launch. He says that he transferred his interest in the business, lock, stock and barrel to defendant 5. But of this there is no evidence beyond his uncorroborated statement. The plaintiff takes his stand upon the resolution of the Committee and claims exemption from liability for the loan. The plaintiff had not proved that he actually paid the amount of the loan to his brother in consideration of which the latter undertook liability to the society. There is no evidence that the share capital of the plaintiff was transferred, and this could only be done in accordance with Section 31, Co-operative Societies Act. Section 31(2) lays down that a member of a society, registered with unlimited liability, shall not transfer any share held by him, or his interest in the capital or property of the society, or any part thereof, unless he has held such share or interest for not less than one year and the transfer or charge is to the society or to a member of the society. There is no evidence that he transferred his share capital to his brother and he could not obviously have done so because the resolution was passed within less than one year of his becoming a member.

7b. Even if we were to assume that the liability for the loan was transferred to defendant 5 by reason of the resolution passed by the managing committee, the plaintiff still continued as a member so long as his interest in the capital of the society remained unaffected. Admittedly, the Dhabaleswar Co-operative Society was one, the liability of whose members was unlimited. All members and past members are liable jointly and severally, on liquidation, for all its obligations, subject of course to the provision in Section 32 which limits the liability of a past member to continue for a period of two years from the date of his ceasing to be a member. On the findings of the Courts below, therefore, two points emerge. In the first place if the plaintiff was a divided member, nis membership continued till the date of liquidation in 1938 and his membership did not cease at any time. If on the other hand he was joint with his brother the loan contracted by him was converted into a family loan, and as a member of a joint family he became liable for the discharge of that loan although he could not individually be a member of the society. It is unnecessary to determine whether the one or the other version is correct, for, in either view the plaintiff continued to be a member of the society. I am, therefore, unable to accept the finding of the Courts below that the membership was void at its inception, or that it ceased at any time.

8a. Let me now examine the applicability of Section 57, Co-operative Societies Act, which creates a bar to the jurisdiction of the Civil Court. This Section lays down that no Civil Court or revenue court shah have any jurisdiction in respect of any matter concerned with the winding up or dissolution of a registered society or of any dispute under Section 48. Section 57(2) makes a special provision in respect of a society under liquidation and says that no suit or other legal proceeding shall be proceeded with or instituted against the Liquidator as such, or against the society or any member thereof, or in a matter touching the affairs of the society, except by leave of the Registrar and subject to such terms as he may impose. Section 57 (3) runs as follows :

'57(3) -- No order of the Local Government, District Judge, Registrar, a person appointed to assist the Registrar, Liquidator, or an arbitrator or arbitrators purporting to be one which under any provision of this Act is declared to be final, shall be liable to be challenged, set aside, modified revised, or declared void in any Court, upon merits, or upon any ground whatsoever, except want of jurisdiction.'

8b. As I read this Section, the general rule is that no order which is declared to be final under the Act is liable to be challenged in any Court upon any ground whatever except want of jurisdiction. In other words, want of jurisdiction is only ground on which an order passed in liquidation proceedings can be challenged under Section 57(3). Section 57(2) creates another bar in requiring the leave of the Registrar before the suit against the liquidator can be instituted or proceeded with. The policy of the law is that any matter arising in liquidation proceedings should be kept out of the purview of the civil court and should be disposed of by the authorities of the co-operative Department. The liquidator is an officer appointed by the Registrar arid is vested with extensive powers under Section 44 of the Act. Clauses (b) and (c) of Sub-section (3) of Section 44 empower him to determine and realise all sums due to a society from any person and to determine the contribution to be made by members, past and present. In acting within the powers vested in him he is competent, indeed it is his duty, to find out whether any person was a member, past-member, or a surely, and whether his membership ceased at any time. The exercise of this power is subject to the Registrar's power of control and revision. The liquidator has, therefore, been specifically empowered to determine the liability of a member to make a contribution to the assets of the society and incidentally to determine whether such a person was a member or a past member, or otherwise liable to make a contribution. There is, therefore, not only no initial lack of jurisdiction on the part of the Liquidator to determine the liability of a member, but he has also the power to decide the preliminary fact of a certain person being a member or a past member.

8c. Before he decides that a person is liable to the society he is required by the proviso to Sub-section (3) of Section 44 to give an opportunity to that person of being heard. Against an order , passed by the Liquidator an appeal lies to the Court of the District Judge, with the special leave of the Registrar under Section 44(5). Section 44(6) declares that the order of the Liquidator subject to any order of the Registrar, in revision) or to any order of the District Judge, on appeal if any, shall be final. It is, therefore, clear that the person aggrieved by an order of the Liquidator has the right to go upto the Registrar in revision or to the District Judge by way of appeal. Admittedly, the plaintiff did not have recourse to any of these remedies provided under the Act. He had been served with a notice of the order of the Liquidator, both in 1939 (when defendant 2 passed an order of contribution) and later, in September 1942 (when defendant 3 passed a second order of contribution). The plaintiff was served with a notice Ext. G dated 24-2-40 to show cause against the order passed by the plaintiff. The postal acknowledgment and the registered cover which was returned as refused have been exhibited as Ext. G-1. This is the only mode of communication prescribed in Section 44(5). It is immaterial whether the plaintiff received it or not as the Section says that an appeal is to be preferred within three months from the date of communication by registered post of the order of the Liquidator. The plaintiff not having pursued the remedy provided by the Act cannot invoke the jurisdiction of the civil court which has been expressly excluded by the Act.

8d. The Act creates a special jurisdiction in the Registrar and in the liquidator to decide disputes relating to the affairs of a co-operative society, and the questions whether a person who had some concern with the society was a member and whether he ceased to be a member are questions falling exclusively within the special jurisdiction created by the Act. In such cases it is futile to complain that the jurisdiction of the Cvil Court to decide those questions is not taken away. A denial of liability on the ground of cessation of membership can be made in the winding up proceed- ings before the Liquidator. If there is a dispute it can be decided by the Registrar whose order shall be final. If, on the other hand, the objector prefers to go to a Civil Court he can appeal to the District Judge, with the special leave of the Registrar, and order of the District Judge on such appeal is declared to be final. Thus, there is a specific machinery provided in the Act itself by which a member can bring the matter before the Court and he cannot contend that there is no specific or adequate remedy.

8e. The language of Section 44(3) would appear to indicate that the prohibition against resort to civil courts applies equally to a person who complains that he was not a member or ceased to be a member, as to one who contends that the order complained of is excessive or suffers from other infirmities of a trivial nature. The brothers could be regarded as constituting a joint family for the purpose of borrowing under the Co-operative Societies Act and if they have availed themselves of the provisions of the Act for borrowing, the Liquidator can decide whether they borrowed individually or jointly as a family. As has been laid down in --'Queen v. Income Tax Commrs. for Special Purposes', (1888) 21 QBD 313 (A).

'But there is another state of things ..... The Legislature may entrust the tribunal or body with jurisdiction to determine whether the preliminary state of facts exists, as well as the jurisdiction -- on finding that it does exist -- to proceed further and do something more. It is an erroneous application of the formula to say that the tribunal cannot give themselves jurisdiction by wrongly deciding certain facts because the Legislature gave them jurisdiction to determine all the facts, including the preliminary facts, on which the further exercise of this jurisdiction depends.'

8f. In a later case --'King v. Bloomsbury Income-tax Commrs.', (1951) 3 KB 768 (B), Lord Reading C. J. referring to the above case observed.

'In my judgment, this dictum states accurately the principle applicable to such cases ..... The scheme of the Legislature is to entrust the decision of facts to a tribunal of persons specially selected in the locality and reserve always to the individual the right to have the Commissioner's decision on points of law reviewed by the Courts. The obligation is placed, for reasons of expediency, upon the person assessed, to appeal to the Commissioner if he wishes to rid himself of an assessment which, in his view, is based on wrong conclusions of fact.'

8g. The case of the --'Colonial Bank of Australia v. William', (1874) 5 PC 417 (C), is an interesting case to which reference may be made in connection with the facts of the case before us. In that case the Supreme Court of Victoria quashed an order made by a Court of Mines established under a statute called! the Mining Statute, The Court of Mines ordered that a certain company should be wound up under the provisions of the Mining Companies Limited Liability Act, on the ground that the company owed the Colonial Bank a larger sum of money. The Supreme Court rescinded the order on the ground that it was made without jurisdiction as the company was not indebted to the Bank, which again depended upon the question whether the debt was incurred in accordance with the authority of the officers of the Company. The Judicial Committee held that the question of the existance of the debt was a question which the Court of Mines was competent -- in fact bound -- to decide, and that the Supreme Court could not come to the opposite conclusion, except as a Court sitting in appeal, which was inadmissible. Their Lordships observed,

'An objection that the Judge has erroneously found a fact, which, though essential to the validity of his order, he was competent to try, assumes that, having general jurisdiction over the subject matter, he properly entered upon an enquiry but miscarried in the course of it. The Supreme Court cannot quash an adjudication upon such an objection without assuming the functions of a Court of Appeal and the power to re-try a question which the Judge was competent to decide'.

8h. It is, of course, well settled that the exclusion of the jurisdiction of the Civil court is not to be readily inferred and that such exclusion must either be expressly stated or clearly implied in a particular statute. It is also well settled that even if jurisdiction is so excluded, the civil courts still have jurisdiction to examine cases where provisions of the statute have not been complied with, or where the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure; see --'Secretary of State v. Mask & Co.', AIR 1940 PC 105 (D). But where a statute creates a special liability not existing in common law and also provides a particular remedy for enforcing it, it has always been held that the party must adopt the form of remedy given by the statute --'Neville v. London Express Newspapers Ltd.', (1919) App Cas 368 (E).

8i. It is established in this case that the Liquidator had jurisdiction to decide the question of the liability of a member or a past member and to determine, and realise all sums due to the society from any person. It is also proved that he follow-ed the procedure indicated in the Act. The remedies provided to an aggrieved member are laid down in Section 44(6) Bihar and Orissa Co-operative Societies Act. The plaintiff having failed to have recourse to these remedies can have no general right to ventilate his grivances by a suit in the civil Court. It is such classes of suits that are prohibited and in such cases the jurisdiction of the Civil Courts is excluded by Section 57. The policy of the law is that matters of detail relating to the affairs of a society should be disposed of by those who are competent to decide them like the Registrar of Co-operative Societies. The Liquidator appointed by the Registrar should not be dragged into Court to explain the reasons for his decisions nor should the winding up proceedings be held up by prolonged litigation in the civil court. The Act expressly provides a safeguard by laying down that if there is a genuine grievance, the Registrar should be approached and his leave obtained before seeking remedy in a civil court. The Registrar is usually a senior and responsible officer who knows how societies are formed and run by persons who are mostly village folk unfamiliar with rules and laws. The ob-ject of co-operation can easily be defeated if every matter concerning a society were to be brought up before a Court. The Legislature has, therefore, provided that a civil court shall have no jurisdiction to try questions which can be better decided by a special tribunal. That, in my opinion, is the intendment of Section 57. I am, therefore, satisfied that the present suit which has been instituted, admittedly without the leave of the Registrar, is incompetent and must fail. It is, therefore, unnecessary to consider the applicability of Section 80, Civil P. C, to the present case.

9. The plaintiff claims a right of suit under Section 43, Public Demands Recovery Act. On a close examination of the provisions of the Act, however, I am satisfied that he docs not get independent right of suit apart from the provisions of the Co-operative Societies Act. Section 4.4, Public Demands Recovery Act, provides that no certificate duly filed under the Act shall be cancelled by a Civil Court, except on one of three grounds, namely : (a) that the amount stated in the certificate was actually paid or discharged; (b) that no part of the amount stated in the certificate was due by the certificate debtor to the certificate holder, and (c) that the proceedings of the officer who issued the certificate were in substantial conformity with provisions of law and that in consequence the debtor suffered substantial injury from some error, defect or irregularity, in such proceedings. It is admitted that the plaintiff did not discharge the loan contracted by him from the society. He has not been able to establish that the proceedings were irregular or that he suffered any substantial injury from any such irregularity. The only ground, therefore, on which he can ask for cancellation of the certificate is that mentioned in ground (b) above, namely, that no part of the amount stated in the certificate was due from the certificate debtor to the certificate holder. That is a question which, as I have already pointed out, is within the exclusive jurisdiction of the Liquidator to decide, subject of course to control and revision by the Registrar whose order is declared to be final by the Act. There is accordingly no substance in the contention raised under Section 44, Public Demands Recovery Act.

10. This appeal must, therefore, succeed and the plaintiff's suit should stand dismissed. On a reference to the Minutes Book I find that by a resolution dated 25-1-24 the managing committee approved of the appointment of the plaintiff as Accountant Member in place of defendant 5 Lokanath Behara as the latter had to leave for Shambalpur to join some service. The plaintiff, therefore, attended the meetings from 27-2-24 and took part in the affairs of the society. This conduct on the part of the plaintiff can only be explained on the footing that the jt :int family of the plaintiff and his brother Lokanath was treated as a member of the society and that the plaintiff represented his elder brother, defendant 5, during his absence from town. This fact, however, does not appear to have been brought to the notice of the Trial Court by those who were in charge of the co-operative society. Had this been done, the Courts below would not have held that the plaintiff had been divided from his brother and that the joint family was not a member of the society. I am, therefore, led to hold that the society is partly responsible for this prolonged litigation and I would accordingly deprive it of all costs.

11. In the result the appeal is allowed but each party shall bear its own costs throughout.

Jagannadhadas, C.J.

12. I agree with the order proposed by my learned brother, but on grounds somewhat different from his.

13. The facts that have given rise to this litigation have been set out in my learned brother's judgment and it is unnecessary to repeat the same. The question of fact which arises on the merits of the case is whether the plaintiff is a member of Co-operative Society under liquidation against whom the order of contribution under challenge, in this suit, could have been legally passed. According to the plaintiff, he was at one time a member of the society in his own individual capacity but ceased to be such long ago, i.e., much more than two years prior to the order of contribution now under challenge in the present suit. His contention, therefore, is that there is no subsisting liability against him by virtue of S.32 of the Act and that the contribution order is ultra vires. The case on behalf of the liquidator is that the plaintiff's brother, Lokanath, was a member as the Manager of the plaintiff's joint family and that the plaintiff is a member through the manager and is, therefore, liable to contribute. Learned counsel for the appellant also raised the contention before us that the very proceedings on which the plaintiff relies to show his cessation of individual membership, would also show that the cessation was agreed to on the footing that he was a member of the same family. He urges that if the contention of the plaintiff that he was not a member of the joint family is to be upheld, it follows that there is no cessation of his membership at all. The above are the questions of fact on the merits that have been rais- ed in this litigation.

14. It is one of the main contentions of the learned counsel for the appellant that the decision of the courts below on the merits as regards these facts is erroneous and discloses such a wrong approach that we ought to interfere in second appeal, even against their concurrent findings of fact. In addition, however, to this attack on the findings of fact, three important questions of law have been raised by learned counsel for the appellant. (1) The question whether an individual against whom an order of contribution has been passed is a past member either directly or through the membership of the joint family manager as such, is one that is exclusively within the jurisdiction of the li- quidator to decide and that question is not open to challenge in the civil courts. (2) The present suit which though in substance a suit for declaration that the liquidator's order is illegal, is also in terms a suit for an injunction against the liquidator himself, and in the course of the winding up proceedings, is not maintainable by virtue of Section 57 (2), Bihar and Orissa Co-operative Societies Act, since admittedly no leave of the Registrar has been applied for or obtained for the filing of the suit, (3) The liquidator is a public officer within the meaning of Section 80, C. P. C, and therefore the present suit brought against him in respect of an act purporting to have been done by him in his official capacity is not maintainable inasmuch as admittedly no notice of the suit has been given to him, as provided in the said section.

15. Point (1) above may be taken up first for consideration, and for that purpose, the relevant provisions of the Bihar and Orissa Co-operative Societies Act (hereinafter referred to as the Act) have to be noticed. Under Section 42 of the Act the Registrar may order the winding up of a registered soc.ety if certain conditions specified therein are satisfied. Section 43 provides for an appeal to the Local Government, against the order for winding up, passed by the Registrar. Under Section 44 the Registrar after passing the order for winding up shall appoint a person or persons to be the liquidator of the Society. The powers of the liquidator to enter on his duties, and to carry on the business of the society with all the rights, duties, assets and liabilities, of the society vested in him are provided for in Sub-section (2) of Section 44. Sub-section (3) of the same section vests in him quite a large number of quasi-judicial powers specified! in Sub-clauses, (b), (c), (d), (e), (g) and (h) thereof, as opposed to the administrative powers vested in him under Sub-section (2). (The powers under Sub-clauses, (a) and (f) may be taken to be additions to the administrative powers given in Sub-section (2) ). These quasi-judicial powers are subject to the proviso that no such order is to be passed against any person, unless he has been given an opportunity of being heard. They are subject also to further safeguards, viz., (1) that, with special sanction of the Registrar, an appeal lies to the Court of the District Judge within three months from the date of the communication of the order. (2) They are subject to the Registrar's powers of control and revision. Subject as above provided the orders of the liquidator are final by virtue of Clause (6) of Sub-section (3) of Section 44.

16. The contention of learned counsel for the appellant is that in exercise of these quasi-judicial powers, the liquidator can determine finally not only the quantum of contribution, and the method and manner of its realisation, but also the persons against whom the contribution is to be made. He relies for this purpose on Clauses (b) and (c) of Sub-section (3) of Section 44. There can be no doubt that a person in the position of a liquidator who has various quasi-judicial powers specified in Sub-section (3) of Section 44, has the power at least incidentally, to determine whether a person against whom he proposes to make the order is a person who falls within the category of persons against whom an order for contribution can be legally made. In the normal course, he examines the records of the society, and other available material and makes up his mind tentatively against whom he proposes to proceed. He then gives notice to the person against whom he wishes to make the order of contribution, and gives him an opportunity of showing cause. It is obvious that the liquidator has prima facie jurisdiction at least to this extent that on cause being shown & on objection being raised, he is to consider the question so raised. (Subject to the obligation, if any, to refer the dispute to the Registrar under Section 48).

17. Where a tribunal or a statutory authority is given the power to pass certain orders or exercise certain powers, provided certain preliminary facts exist, it is obvious that such tribunal or statutory authority has the power incidentally to determine those preliminary facts; for otherwise the very functioning would be impeded, if the preliminary facts are challenged before it. It does not, however, follow that such incidental determination of preliminary facts would be conclusive. If the preliminary facts which are the foundation of the exercise of the powers do not exist as a fact, it is well-settled that a tribunal or statutory authority of limited jurisdiction or power cannot give itself jurisdiction or power by wrong assumption or decision of those preliminary facts. But as pointed out in my learned brother's judgment, the well-known formula that an inferior court or tribunal cannot give itself jurisdiction by a wrong decision on facts js sometimes misleading in its application. It has been laid down in '(1888) 21 QBD 313 at p. 316 (A)' that

'When an inferior court or tribunal or body, which has to exercise the power of deciding facts, is first established (by legislature) the legislature has to consider what powers it will give that tribunal or body. It may in effect say that, if a certain state of facts exists and is shewn to such tribunal or body before it proceeds to do certain things it shall have jurisdiction to do such things, but not otherwise. There, it is for them conclusively to decide whether that state of facts exists, and if they exercise the jurisdiction without its existence, what they do may be questioned, and it will be held that they have acted without jurisdiction. But there is another state of things which may exist. The legislature may entrust the tribunal or body with a jurisdiction, which includes the jurisdiction to determine whether the preliminary state of facts exists as well as the jurisdiction, on finding that it does exist, to proceed further or da something more. When the legislature are establishing such a tribunal or body with a limited jurisdiction, they also have to consider, whatever jurisdiction they give them, where there shall be any appeal from their decision, for otherwise there will be none. In the second of the two cases I have mentioned, it is an erroneous application of the formula to say that the tribunal cannot give themselves jurisdiction by wrongly deciding certain facts to exist, because the legislature gave them jurisdiction to determine all the facts, including the existence of the preliminary facts on which the further exercise of their jurisdiction depends.'

18. In the present case therefore, the question that has to be decided is whether the liquidator has the power under the Act to determine finally who are the persons by way of members, against whom the contribution order is to be made if that is challenged. Learned counsel for the appellant relied on the wording of Clauses (b) and (c) of Sub-section (3) of Section 44. He laid stress upon Clause (b) which gives the liquidator the power to determine the sums due to the society from any person. I am not sure whether this clause applies to an order of contribution made against a person on the footing that he is a past or present member. Clause (c) appears to be more appropriate to the present case. Even so, learned counsel for the appellant contend that, that clause necessarily gives the jurisdiction to the liquidator to determine whether a person is present member or a past member with a continuing liability. I am not prepared to agree with this contention. While no doubt the liquidator has to determine that question incidentally as already stated above this clause by itself, does not appear to me to be enough to clothe the liquidator with the power finally to determine who are the present or past members with continuing liability to contribute so as to preclude the jurisdiction of the civil courts to determine the true state of facts. As pointed out in -- 'Vaikunta Bhat v. Sarvo-thama Rao', AIR 1936 Mad 574 at p. 576 (F), if the legislature meant to vest in the liquidator as such the power also to determine finally who are the members past and present liable to contribute the legislature would have said specifically in Clause (c)

'to determine which members and past members of the society shall contribute to tha assets thereof.'

and

'further to determine from time to time subject to the provision of Section 32, the contribution to be made or remaining to be made by such members or past members etc. etc.'

It appears to me therefore, that the liquidator has no power to determine such a question finally.

19. The point at issue, however, does not end there. Some further provisions of the Act and the scheme underlying the same have to be considered. The liquidator before making the order for contribution against any person has to give him notice as already pointed out. When the notice is received and that person appears before the liquidator and challenges the assumption made by him, viz., that he is a person against whom an order of contribution can be made, then the question arises as to whether the liquidator can decide the objection and what the effect of it is. It is necessary to notice the provisions of Section 48 of the Act in this context. The relevant portion thereof, in Sub-section (1) taken with Clause (b) runs as follows :

'If any dispute touching the business of a registered society arises, between a member, or past member of the society and the society, such dispute shall be referred to the Registrar.'

The wording of Section 48 is very wide and applies as much to a society functioning normally, as to a society under liquidation. A dispute bet-ween a member and the liquidator, would be one between a member and society because liquidator represents the society by virtue of Section 44(2), whereby all the rights etc. of the society vest in him. Further, orders of contribution are as much matters 'touching the business of the society' when the Society is under liquidation. Explanation (2) to Section 48(1) shows that

'The question whether a person is or was a member of a registered society or not, shall be a dispute within the meaning of this subsection.'

Sub-section (9) of the same section shows that the decision of such a dispute by the appropriate authority on reference, shall be final subject to the safeguards in Sub-sections 6, 7 and] Section 57(1) shows that no civil court has any jurisdiction in respect of any dispute required by Section 48 to be referred to the Registrar. It appears to me, therefore, having regard to these provisions that if the person against whom a contribution order is proposed by the liquidator appears in response to the notice of the liquidator and raises an objection that he is not a member legally liable that is a dispute which under the terms of Section 48, the liquidator is bound to refer to the Registrar and the decision of that dispute on reference is final and no civil court can take, cognizance of that dispute. I am conscious that the orders of the liquidator are open to appeal and revision under Sub-section (5) & Sub-section (3) (sic) opening part of Section 44, but I see no incongruity between his orders in general being open to appeal or revision and his obligation to refer the dispute as to ' membership to the Registrar.

20. In the present case, however, the plaintiff does not appear in fact to have appeared before the liquidator and raised any such objaction. The question, therefore, that has to be considered, is whether by his not having so appeared, he is now entitled to challenge the finality of the incidental decision made by the liquidator, that he is the person liable to contribute. It appears to me that having regard to the entire scheme and purpose of the Act, it is not reasonable to think that a person against whom an order of contribution is proposed by the liquidator, can, by not appearing in response to the notice and by not putting forward his objection, obtain the facility of challenging the validity of the liquidator's order on the ground that he is not in fact a member liable to contribute. True, there is no express provision in the Act compelling a person to whom notice is issued by the liquidator to appear before him and show cause against the proposed order. But it appears to me that to imply from such an omission that the person to whom notice has been issued, has the option of raising the objection before' the liquidator or, not appearing before him at all and reserving his objection for challenging in the civil court, would defeat the policy on which the very stringent provisions of the Co-operative Societies Act are based.

21. The provisions of the Act and the history of Co-operative legislation in the country show that it is the policy of the legislature that the progress of the Co-operative movement should not be impeded by dilatory and expensive litigation in courts as regards disputes relating to the affairs of the Co-operative societies and in particular those that arise during liquidation. This is clear from the provisions of Sections 48 and 57, Bihar & Orissa Act. The policy was given effect to even by Section 42(6) of the parent Act, viz., Central Act, 2 of 1912. The various local Acts which were passed later on, in some of the provinces, in substitution of the Central Act revsal that the provisions in this behalf have in fact been made more stringent, vide Section 51 of Bombay Act, 7 of 1925, Section 48 of the Madras Act, 6 of 1932, Section 87 of the Bihar & Orissa Act, 5 of 1935, and Section 133 of Bengal Act, 21 of 1940. It is also to be noticed that in the Bombay, Madras and in Bengal Acts, there is no provision corresponding to Explanation 2 of Section 48 of the Bihar & Orissa Act. This shows that this local Act is more stringent and wants to keep even the question whether a person is a member or not, outside the purview of the civil courts to that extent overruling certain previous decisions to the contrary under the Central Act and Local Acts.

22. Further, it is a well-established proposition that in certain classes of cases, where the legislature provides a special machinery for redress of the grievances of the aggrieved person, that person has no remedy except that of invoking that special statutory machinery, vide -- 'AIR 1940 PC 105 at p. 110 (D)', quoting the celebrated dictum of Willes J. in -- 'Wolverhampton New Waterworks Co. v. Hawkesford', (1859) 6 CB (NS) 336 (G), as follows :

'Where a liability not existing at common law is enacted by a statute, which at the same time gives a special and particular remedy to enforce it with respect to that class, it has always been held that the party must adopt the form of remedy given by the statute.'

Within the terms of this rule, as so laid down, the rights and liabilities of the past and present members of the Co-operative Society are rights and liabilities which may be considered to have been created by statute, and therefore the aggrieved person has to avail himself of the remedy provided by the statute itself, that is, in this case, his right to appear in response to the notice issued by the liquidator and to raise the objection before him and to submit to the decision made on a reference under Section 48. Of course, if in fact, no notice has been issued at all by the liquidator and the order for contribution has been passed in disregard of the mandatory statutory provision in this behalf, the validity of the order may be open to challenge in the civil court on that ground. But that is quite a different matter.

23. I may mention in this connection that the case in--'Bhagabat Charan v. Ram Nayaran', AIR 1951 Orissa 271 (H), has been brought to our notice. In that case, it has been held that an award passed by the Registrar of the Cooperative Societies on a reference under Section 48 of the Act, making other members of a joint Mitakshara family liable in his individual capacity, on the ground that the other members have been benefited by the loan, is without jurisdiction and not binding on the other members of the family. That decision does not help the respondent in the present case. The contribution order in this case is made not on the footing that the plaintiff as a member of the joint family is liable for the individual debt of the person who happens to be the manager on the ground that the plaintiff has benefited thereby. The question here is whether the plaintiff's brother was not throughout a member of the society only in his capacity as the manager, and whether therefore the plaintiff is also not a member through him and hence liable.

24. In the case above noticed, my Lord the then C. J. has referred to the definition of the word 'member' and Explanation (2) of Section 48 and has stated that the explanation conveys nothing more or nothing less than that the Registrar can decide the question as to whether the person joined in the application for registration in the Society or admitted to the membership after registration in accordance with the rules and bye-laws of the Society and any question as to liability of somebody other than the recorded member is foreign to this explanation and also to anything as dispute within the meaning of Section 48. I am not sure whether his Lordship meant to lay down in the above passage that if it is the contention of the Society that 'A' 4s a member of a Society as the manager of a joint family and that 'B' who is the member of the joint family is consequently liable as a member, while 'B' contends either that 'A' was member in his individual capacity or that the joint family had become disrupted and hence 'B' is not liable, such a question is not within the purview of the Registrar under Section 48 and the Explanation thereto. I would respectfully point out that the definition of the word 'member' in the Act is an inclusive and not an exhaustive one.

25. It is unnecessary, however, to decide that point in this case, because, even if it can be said that such a question is not covered by Section 48(2) I have no doubt, that, on the facts of this case, if the notice contemplated by Section 44 had been given to the plaintilf, his only remedy was to have appeared before the liquidator. For if he did appear and raise the objection, it would have been open to the liquidator to scrutinise the facts more carefully afresh than what he did at the time when the provisional order of contribution was passed. He might then have seen that the facts showed that the plaintiff had claimed not to be a member at all as has in fact been contended before us for the appellant. If that view was . plausible, that would be a dispute which would necessarily have to be referred to the Registrar under Section 43. I am therefore of the opinion on the facts of this case that the plaintiff not having availed himself of the remedy provided for him in the statute, the civil court has no jurisdiction to go into the merits of the contentions of fact raised by him.

26. I ought to notice that the plaintiff in his plaint para 17 alleges that he had no notice of the liquidator's order dated 5-1-39 which is now being challenged and that he was not given any opportunity of being heard. This was answered by paras 16 and 24 of the written statement of the 1st defendant-liquidator as follows :

'The plaintiff's allegation that the liquidator passed the contribution order dated 5-1-39 against the plaintiff without giving any opportunity to the plaintiff before passing the contribution order is absolutely false.'

and then again

'after framing the contribution order D-3 gave notice thereof by registered post to the plaintiff as provided in Section 44, Bihar & Orissa Cooperative Societies Act and the same was duly served on the plaintiff on 25-9-42. But as the plaintiff did not pursue his further remedy as provided in Section 44 of the Act, though he acknowledged receipt of the notice, the order of the liquidator is final and this court has no jurisdiction to reopen that question.'

27. Of course, as already stated, if no notice had been issued at all, the order may have been liable to challenge. But the issue of notice having been denied on one side and asserted on the other in the course of the suit, this question, if the plaintiff was serious about it, should have been made the subject-matter of a specific issue. But not only is there no issue covering this objection by the plaintiff but when in the evidence he denied receipt of any such notice and was confronted with the registered acknowledgment of a letter Ext. E. he was obliged to admit his signature thereon and could not state what the contents inside the letter were. On the other hand various further proceedings taken by the plaintiff before the liquidator after the date of the provisional order of contribution, and exhibited in the case seem to indicate that he must have had knowledge of the passing of the order of contribution. It is however unnecessary to pursue this aspect, because as already stated, no issue has been taken before the courts below as to non-receipt of the statutory notice, and there is no indication in the judgment of the courts below of any such question having been canvassed before it, nor has the question been seriously urged before us. I would, therefore, hold that it was not open to the plaintiff in the present suit to challenge the validity of the liquidator's order on its merits as to facts and that his remedy, if any, was to obtain the leave of the Registrar before filing the present suit in order to do so.

28. In this view of the matter, I do not consider it necessary to decide the points raised in the case bearing on the construction of Section 57 (3), Bihar & Orissa Co-operative Societies Act or under Section 80, C. P. C. It is also needless to add that no question relating to the merits of the disputed facts raised by the plaintiff can be taken to have been decided by the proceedings in the courts.

29. At a late stage of the arguments before us it was suggested that the plaintiff gets an independent right of suit under Section 43 Public Demands Recovery Act, since the contribution order is being enforced through certificate proceedings. I do not see how if by a special Act the jurisdiction of the civil courts in this behalf is barred, that bar can be said to have been removed merely because the machinery of the Public Demands Recovery Act is resorted. I do not, however, propose to deal with this matter and decide it as the point has been raised at a very late stage and has not been sufficiently canvassed before us.


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