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Natwarlal Balabhai Shah and ors. Vs. Dakor Co-operative Sale and Ginning and Pressing Society Ltd. Dakor and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtGujarat High Court
Decided On
Judge
Reported in(1961)2GLR299
AppellantNatwarlal Balabhai Shah and ors.
RespondentDakor Co-operative Sale and Ginning and Pressing Society Ltd. Dakor and ors.
Cases ReferredSupreme Court. In A.M. Allison v. B.L. Sen
Excerpt:
.....for any debts or demands due to him from the society whether demands be admitted or not: (i) the registrars nominee or the arbitrators have failed to decide the dispute within two months or such further period as may be allowed by the registrar; but we fail to see how that principle of joint and several liability can be pitch forked into a provision relating to jurisdiction of the registrar or his nominee with which alone we are concerned. the principal objection raised by them was about jurisdiction the argument here is that unless we are satisfied that any serious prejudice has been caused to the petitioners or there has been any miscarriage of justice this court should not interfere and should not issue a writ of certiorari even if this court is satisfied that there was absence of..........debts and liabilities of the firm of the siddharth factory. the question is: had the registrars nominee jurisdiction under section 54 of the act to entertain a claim against the four petitioners on the footing that the dispute touched the business of the society with them as members? the language of section 54 of the act in our opinion is sufficiently clear and the section as already mentioned rules that the dispute touching a business of the society arising between the society and any member of the society shall be referred to the registrar or to the registrars nominee for decision. in our view it is quite clear that antecedent to the exercise of the jurisdiction of the registrar or his nominee must exist a dispute between the society on the one hand and a member or members on the.....
Judgment:

S.T. Desai, C.J.

1. This petition arises out of certain proceedings which were initiated under the Bombay Co-operative Societies Act, 1925, and the question that we have primarily to answer relates to the meaning and effect of Section 54 of the Act. The first respondent is the Dakor Co-operative Cotton Sale and Ginning and Pressing Society Ltd., whose main business is to purchase cotton produce of cultivators, to get the cotton ginned and pressed and then sell the same. The work of ginning and pressing cotton into bales was done for the Society by a partnership firm, the Siddharth Ginning and Pressing Factory (hereafter to be referred to by us as the Siddharth Factory), in which the four petitioners and four others were partners Besides being partners in the firm of Siddharth Factory the four petitioners were carrying on their separate business in the firm name of Balabhai Lallubhai. There was considerable controversy as to whether the firm of Balabhai Lallubhai was a joint Hindu family are partnership firm. But it is not necessary for us to go into that question in view of one of the contentions of the petitioners which in our opinion must succeed. Two claims wore preferred by the Society one against the firm of Balabhai Lallubhai and the other against the firm of Siddharth Ginning and Pressing Factory. On this petition we arc only concerned with the claim of the Society against the latter firm. That claim related to the price of 204 bales of cotton that had been gained and pressed and stored in the godown of the Siddharth Factory. There was an agreement between the Society and the Siddharth Factory executed on 29-1-56 in respect of the work of ginning and pressing cotton to be done by the Siddharth Factory for the Society. The claim was awarded. We are not concerned on this petition with the merits of the claim.

2. Before the Registrars nominee a contention was raised that he had no jurisdiction to entertain the claim of the Society against the Siddharth Factory or any of its partners. It will be convenient to state here that at one time the Society obtained an order of attachment of the interest of the four petitioners as partners in the Siddharth Factory. The outside partners filed a suit and were successful and an order of injunction was passed against the Society restraining it from talcing any action which would affect them. The contention of Mr. Shastri before us is that the Siddharth Factory was not a member of the Society and only the firm of Balabhai Lallubhai was a member of the Society and argument has proceeded that Section 54 does not confer any jurisdiction on the Registrar or his nominee to decide a dispute between a Society and a Firm where only some of the partners of that firm can be said to be members of the Society. That section is as under:

54 (1) (a). If any dispute touching the constitution or business of society arising between members or past members of the society or persons claiming through a member or past member or between members or past members or persons so claiming and any officer agent or servant of the society past or Present or between the society or its committee and any officer agent member or servant of the society (past or present) it shall be referred to the Registrar for decision by himself or his nominee or if either of the parties so desires to arbitration of three arbitrators who shall be the Registrar or his nominee and two persons of whom one shall be nominated by each of the parties concerned.

A dispute shall include claims by a society for debts or demands due to it from a member or past member or the heirs or assets of a past member as well as claims by a member or past member or the heirs of past member for any debts or demands due to him from the society whether demands be admitted or not: Provided that if the question at issue between a society and a claimant or between different claimants is one involving complicated questions of law and fact the Registrar may if he thinks fit suspend proceedings in the matter until the question has been tried by a regular suit instituted by one of the parties or by the society. If no such suit is instituted within six months of the Registrars order suspending proceedings the Registrar shall take action as laid down in paragraph (1) of this section.

(b) Notwithstanding anything contained in Clause (a) any dispute regarding the election of any office bearer of a society may within one month from the date of declaration of the result of such election be referred by any candidate at such election or any members of the society to the registrar lor decision In himself or his nominee.

(2) Where any dispute is referred under Sub-section (1) for decision by the Registrars nominee or to arbitration of arbitrators the Registrar may at any time for reasons to be recorded in writing withdraw such dispute from his nominee or the arbitrators as the case may be and may decide the dispute himself or refer it again to any other nominee appointed by him for decision:

Provided that no such dispute shall be withdrawn except on any of the following grounds:

(i) the Registrars nominee or the arbitrators have failed to decide the dispute within two months or such further period as may be allowed by the Registrar;

(ii) the proceedings before the Registrars nominee or any of the arbitrators are vitiated in consequence of corruption or misconduct on the part of the Registrars nominee or any of the arbitrators as the case may be.

3. Mr. Shastri after indicating a number of points before us argued that assuming that a firm can become a member of a Co-operative Society the mere fact that the partners of that firm are also partners of a larger firm is no ground for holding that a dispute between the larger firm and the Society is the same thing as a dispute between the partners in lesser firm and the Society. In such a case it cannot be said that there is a dispute touching the business of the Society as arising between the Society and those partners in the lesser firm. There is in our opinion considerable force in this argument. 4. It has been argued on the other hand by Mr. V.B. Patel that dispute with any member would also mean a dispute with a firm in which that member is a partner. It will suffice says Mr. Patel that he is a member and the fact that the firm has other partners who are not members would make no difference. The Society would not be concerned with the rights and obligations of the partners inter se. The argument in our opinion is in founded. It is also urged in support of this contention that partners in a firm are jointly and severally liable and the dealing of a society with a firm are dealings of the society with the partners in the firm. We agree that a firm is not an individual or an entity in law and that it is a compendious title describing the partners. We also agree that partners in a firm are jointly and severally liable.

5. The question before us however is not whether the petitioners are as partners jointly and severally liable for the debts and liabilities of the firm of the Siddharth Factory. The question is: Had the Registrars nominee jurisdiction under Section 54 of the Act to entertain a claim against the four petitioners on the footing that the dispute touched the business of the society with them as members? The language of Section 54 of the Act in our opinion is sufficiently clear and the section as already mentioned rules that the dispute touching a business of the society arising between the society and any member of the society shall be referred to the Registrar or to the Registrars nominee for decision. In our view it is quite clear that antecedent to the exercise of the jurisdiction of the Registrar or his nominee must exist a dispute between the society on the one hand and a member or members on the other. We put to ourselves the question. If a Co-operative society has a claim against Y. and Co. consisting of X partners A B C D E F G and H in respect of business dealings with it and the dispute is in respect of those business dealings and if only E F G and H among the partners are registered members of the society can it be said that the dispute between the society on the one hand and the firm on the other is to be regarded as the same for the purpose of Section 54 of the Act as a dispute between the society and the four partners. In our opinion it would be fallacious to equate the four partners with the firm in the present context of jurisdiction to be exercised under Section 54 of the Co-operative Societies Act. of course the four partners would be liable to the society on the footing of contractual liability and that on the principle that all the partners are jointly and severally liable for the liabilities and obligations of the firm. But we fail to see how that principle of joint and several liability can be pitch forked into a provision relating to jurisdiction of the Registrar or his nominee with which alone we are concerned. It is as we have already mentioned an antecedent condition of assumption of jurisdiction by the Registrar or his nominee that the dispute must exist between the society on the one hand and a member on the other. We may state the same position in a somewhat different form. If a contract is by a society with a firm of eight partners and only four of those partners are members of the society can it be said in the context of a point of jurisdiction that the contract is with the four partners who were members? In our opinion it would be erroneous to say that the contract is with the four partners. The contract would not be with the four partners but the contract would be with all the eight partners. The nature of the liability of a partner viz. joint and several cannot be permitted to control meaning of the initial wordings of Section 54. We have to see whether in the case before us a dispute touching the business of the society can be said to have arisen between the society and the four partners. In our opinion the language of the section is clear and does not permit of any such extended meaning.

6. Having reached this view it is not necessary for us to consider the other points indicated before us by Mr. Shastri. Mr. Shastri has himself invited us to consider this question of construction of Section 54 before going into the other points.

7. Before examining the contention of the petitioners which we have dealt with above we might have considered two preliminary objections which were raised before us by Mr. Patel. The first contention urged is a bar in limine is that the petitioners had an alternative remedy by a suit for the purpose of challenging the award. Now it is rather difficult to appreciate this point. The contention of the petitioners all along was that the Registrars nominee had no jurisdiction to determine the dispute raised by the Society. We do not see how it can be said with any justification that after the Registrars nominee had made his award and after the appeal against the award had been dismissed the petitioners should have filed a suit instead of approaching this Court on this petition under Articles 226 and 227 of the Constitution of India.

The other contention of the nature of a preliminary objection is that before the Registrars nominee the petitioners had not disputed the claim of the society and therefore they should be deemed to have admitted the same. It is true that the petitioners had not raised before the Registrars nominee any contention about the merits of the claim preferred by the society. The principal objection raised by them was about jurisdiction The argument here is that unless we are satisfied that any serious prejudice has been caused to the petitioners or there has been any miscarriage of justice this Court should not interfere and should not issue a writ of certiorari even if this Court is satisfied that there was absence of jurisdiction.

8. In support of his argument Mr. Patel has leaned heavily on two decisions their Lordships of the Supreme Court. In A.M. Allison v. B.L. Sen : (1957)ILLJ472SC their Lordships of the Supreme Court pointed out that proceedings by way of certiorari under Article 226 were not of course. It was observed in that case that the High Court has the power to refuse a writ if it is satisfied that there was no failure of justice. Now the case we are considering is one of patent lack of jurisdiction. There are no observations of their Lordships which would justify the reading of that decision to mean that in a case where there is patent lack of jurisdiction the High Court would immediately refuse the right of certiorari if it was satisfied that there was no failure of justice on the merits of the case. The other decision to which our attention is drawn by Mr. Patel is reported in 1959 (2) L.L.J. 837. There is nothing in the judgment in that case also to suggest that where there is patent lack of jurisdiction the High Court can issue a writ of certiorari only if it is satisfied that there is failure of justice. The issuance of a writ under Article 226 of the Constitution is always a matter discretion it cannot he said that where there is lack of jurisdiction a writ would issue as a matter of right or as a matter of course. But in our judgment where there is patent lack of jurisdiction or to put it differently where there is a case of clear absence of jurisdiction a writ of certiorari can issue though not of right nor as a matter of course but almost as a matter of course. It is in the light of these brief observations that we have to examine the position in the case before us. So considered and having regard to the facts of this case we do not think we would be justified in saying that in the exercise of our discretion we should refuse to interfere in this petition although it is abundantly clear that under Section 54 of the Act the Registrars nominee had no jurisdiction. The present objection must therefore be negatived.

9. It was lastly urged by Mr. Patel that in any case the Siddharth Factory was acting as an agent of the society and therefore apart from the question of membership the Registrars nominee had jurisdiction to entertain the claim. We may mention that it is true that the Registrars nominee had taken the view that the Siddharth Factory was the agent of the society in the matter of the dealings the subject matter of the reference to the Registrars nominee. But the Tribunal in appeal has recorded a contrary finding and that finding is that the Siddharth Factory could not be regarded as having acted as the agent of the society. Mr. Patel has read out before us the whole agreement between the society and the Siddharth Factory. We have allowed him to do so although the agreement is not owl the record of this petition. After considering the agreement we are satisfied that the Tribunal was right in the conclusion reached by it on this aspect. In our opinion there is little substance in this contention and it must be rejected.

10. In the result the petition succeeds. A writ of certiorari will issue quashing the award of the Registrars nominee and setting aside the orders passed by respondents Nos. 2 and 3. Rule will be made absolute. The first respondent Society will pay the petitioners costs of this petition.


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