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G. Subramania Ayyar Vs. Secretary, Devakottai Co-operative Urban Bank Ltd., Devakottai and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtChennai High Court
Decided On
Case NumberWrit Petn. No. 79 of 1953
Judge
Reported inAIR1955Mad41
ActsConstitution of India - Article 226; Madras Co-operative Societies Act, 1932 - Sections 51
AppellantG. Subramania Ayyar
RespondentSecretary, Devakottai Co-operative Urban Bank Ltd., Devakottai and ors.
Appellant AdvocateK.N. Subramaniam, Adv.
Respondent AdvocateSpecial Government Pleader and ;R. Venkatachalam, Adv.
DispositionPetition allowed
Excerpt:
trust and societies - jurisdiction - section 51 of madras co-operative societies act, 1932 and article 226 of constitution of india - petitioner-secretary of society obtained honorarium for his services - dy. registrar of society issued notice to pay back honorarium received - writ petition challenging notice of dy. registrar - whether writ court capable of calling upon decision of dy. registrar - decision of dy. registrar of society quasi judicial decision - writ court competent to entertain dispute. - - the government recommended to the cooperative banks under their control, modification-in their rules and bye-laws by which these institutions were directed to have a whole time paid secretary. 6. but before dealing with the legality of this order, i might as well complete the..........in this writ petition seeks for the issue of a writ of certiorari to call for the orders of the deputy registrar of co-operative societies, ramanathapuram, at madurai and to quash the proceedings directing recovery of a sum of rs. 200 from the petitioner which was paid to him by the devakottai co-operative urban bank ltd.2. the facts giving rise to this writ petition are as follows: the petitioner was the honorary secretary of the devakottai co-operative urban bank ltd., who is the first respondent in this-writ petition, during the period 3-12-1842 and 19-2-1944. the bye-laws of the bank which were in force till 10-11-1943 made provision for the post of an honorary secretary to whom an honorarium based on a percentage of the profits was to be paid. the government recommended to the.....
Judgment:
ORDER

Rajagopala Ayyangar, J.

1. The petitioner In this writ petition seeks for the issue of a writ of certiorari to call for the orders of the Deputy Registrar of Co-operative Societies, Ramanathapuram, at Madurai and to quash the proceedings directing recovery of a sum of Rs. 200 from the petitioner which was paid to him by the Devakottai Co-operative Urban Bank Ltd.

2. The facts giving rise to this writ petition are as follows: The petitioner was the Honorary Secretary of the Devakottai Co-operative Urban Bank Ltd., who is the first respondent in this-writ petition, during the period 3-12-1842 and 19-2-1944. The bye-laws of the Bank which were in force till 10-11-1943 made provision for the post of an Honorary Secretary to whom an honorarium based on a percentage of the profits was to be paid. The Government recommended to the Cooperative Banks under their control, modification-in their rules and bye-laws by which these institutions were directed to have a whole time paid secretary. In conformity with these recommendations the bye-laws of the first respondent 'bank-were amended at a general body meeting held on 17-10-1943 and the proposed amendments were-registered by the Deputy Registrar on 10-11-1843.

A paid Secretary, however, was appointed only on 4-2-1944, the petitioner having intimated to-the bank that he was not willing to act as secretary except on the basis of the earlier bye-laws and desiring to be relieved of his duties as secretary in view of the amended bye-laws. The paid secretary did not enter on his duties immediately and the Board, therefore, requested the petitioner, by a resolution to continue in office as secretary-till the paid secretary took charge and so he continued till 19-2-1944.

3. For the period during which the petitioner had functioned as secretary under the old bye-laws, i. e., till 10-11-1943 he was entitled to a honorarium of Rs. 200, the bye-laws providing for payment of 75 per cent, of residuary net profits or Rs. 200 whichever is lower but this honorarium was not paid to him for very long. A general body meeting of the shareholders of the bank was held on 10-9-1944 which was to consider the appropriation and distribution of profits of the preceding year. An objection appears to have been taken to the payment of the honorarium earned-by the petitioner on the ground that as on the date when the meeting was held and profits were being appropriated there was no bye-law authorising the payment of the honorarium to the secretary it was not legal for the bank to make the payment, notwithstanding that the petitioner had been employed under a bye-law which provided for remuneration and he had earned it by service during the period when this was in force. The bank referred the matter to the Deputy Registrar for advice and it is stated that this officer advised the bank to take into consideration only the bye-law in force when the appropriation was made and not to rely upon the old bye-law which had been superseded before that date.

4. The petitioner thereupon wrote a letter to the Board of Directors of the Bank on 27-1-1845-drawing the Board's attention to the fact that by service rendered to the bank at a time when the bye-law permitted his employment on terms of payment of honorarium he had obtained a vested right to the sum of Rs. 200 and that the bank could not rely upon an amendment of the bye-law to deny him his earned remuneration. The bank then made a reference to the Registrar of Co-operative Societies on 6-5-1945 and the Registrar by his reply dated 28-8-1945 confirmed the view held by the Deputy Registrar that a reamneration of Rs. 200 to the petitioner need not be paid. The petitioner then caused a notice to be issued through a lawyer to the secretary of the bank and intimated to the bank that in the event of his claim not being met the petitioner would be instituting legal proceedings for the recovery of the sum due to him.

5. The contents of the notice and the prospect of litigation were considered at a meeting of the general body of the bank on 28-10-1945 and the following resolution was passed at the said meet-ing unanimously :

'This general body unanimously resolves that inasmuch as the honorarium claimed has already been earned by the ex-honorary secretary before the amendment of bye-law 55 on 17-11-1943 which has and could have no retrospective effect, the bank is legally bound to pay the same. Eye-law 55 which has been subsequently amended will not in any way affect the payment of honorarium due. As the general body is strongly of the opinion that the claim for honorarium is just, legal, proper and in order and that unnecessary litigation involving expenditure and loss of prestige to the bank must be avoided, this general body hereby unanimously sanctions the immediate payment and disbursement of the honorarium.'

The secretary of the bank acting on this resolution requested the sanction of the Board of Directors for payment on 29-10-1945. One of the directors feeling his position difficult by reason of the attitude taken by the Registrar and the Deputy Registrar of Co-operative Societies in the matter requested the secretary to place the resolution of the general body and the suit notice before those officers for their consideration. The matter was, therefore, again brought before the Board of Directors on 30-10-1945 and it was resolved at this meeting that as the general body had unamimously decided to make the payment of honorarium to the ex-fiecretary it could not form the subject of further consideration at the meeting of the Board of Directors. The amount of Rs. 200 was paid by the bank .to the petitioner on 31-10-1945.

Though the controversy ended for the time being in 1945 the matter was revived by the Deputy Registrar of Co-operative Societies of Ramanathapuram sending a communication on 15-2-1951 whereby he required the secretary of the bank to furnish him with copies of the bank's communication to the Registrar of Co-operative Societies dated 6-3-1945 and his orders thereon. When the bank sent him the correspondence referred to, the Deputy Registrar issued on 18-9-1951 the following direction to the president of the bank :

'Please refer to the Registrar's reference cited. You are requested to collect the sum of Rs. 200 paid to the Ex-Secretary Sri G. Subramania Iyer, as the honorarium and report the fact to this office.

Copy to the S. I. Auditor, Devakottai. He should see that the amount is recovered at once and entries fire passed in the account books of the bank and a reply sent.'

It is this direction of the Deputy Registrar that has been responsible for the subsequent proceedings which have been taken against the petitioner for the recovery of the sum of Rs. 200 paid to him in 'October 1945, and it is this order of the Deputy Registrar that is now challenged as illegal and 'ultra vires' in the present writ, petition by the petitioner.

6. But before dealing with the legality of this order, I might as well complete the narrative and bring it upto the facts which have immediately led up to the filing of this petition for the issue of a writ of certiorari. The communication from the Deputy Registrar dated 18-9-1951 was placed before a meeting of the first respondent Board on 4-10-1951 and a resolution was passed to issue a notice to the petitioner requesting him to repay the amount within a week and informing him that in default, the matter would be referred to arbitration. In pursuance of this a notice was issued on 13-10-1951 to which the petitioner sent a reply through an advocate in which he contested the legality of the claim for refund but in spite of this, the secretary referred the matter for arbitration to the Special Development Officer of Co-operative Societies, Ramanathapuram who is the third respondent herein, in A. R. C. No. 1033/51-52 and the petitioner received summons directing him to appear before the arbitral for on 17-2-1953.

It is in these circumstances that the petitioner has filed the writ petition for quashing the proceedings for the recovery of the honorarium paid to Mm in October 1945. To this writ petition, the secretary of the bank has been impleaded as the first -respondent. After setting out the facts as narrated above, the position taken by the bank is

'that the reference to arbitration was made only under the directions and under the pressure of the superior officers. The bank is in readiness to abide by any directions which this Honourable Court deems fit to issue.'

The second respondent who is the Deputy Registrar of Co-operative Societies and the Special Development Officer of Co-operative Societies, Ramanathapuram, who is the arbitrator and to whom the matter, has been referred for arbitration under Section 51, Co-operative Societies Act and who is the third respondent in this petition are the main contesting respondents.

7. The objections taken to the writ petition are really not on the merits but are merely of a technical character, denying the jurisdiction of this Court to issue a writ of certiorari. So far as merits of the case are concerned, the Special Government Pleader who appeared on behalf of the two respondents did not attempt to justify the position that the sum of Rs. 200 was not due to the petitioner. If the amount was really due there cannot be any doubt that the payment of this sum of Rs. 200 was not illegal and if so the proceedings for its recovery cannot be justified on their merits.

It has further to be noticed that under Rule 15. Sub-rule (1-A) of the Rules framed under the Madras Co-operative Societies Act, 1932, 'The period of limitation for referring a dispute touching the business of a registered society to the Registrar under Sub-section (1) of Section 51 of the Act shall be regulated by the provisions of the Indian Limitation Act, 1908, as if the dispute were a suit and the Registrar a civil court.'

Obviously the payment made to the petitioner in 1945 cannot be recovered in 1953 by a resort to the provisions of Section 51, of the Madras Co-operative Societies Act. It appears to me, therefore, that there are no merits in these proceedings against the petitioner.

8. What is urged on behalf of the respondents is that the merits of the claim against the petitioner would be gone into by the arbitrator and that this Court should not interfere at this stage by taking the matter out of his hands. It is also contended that the order or direction of the Deputy Registrar dated 18-9-1951 on the basis of which the proceedings were drawn up is really of an advisory and administrative character and therefore was not one which this Court could quash by issuing a writ of certiorari.

9. I am not able to agree with either of the contentions raised on behalf of the respondents. When an officer issues a direction which the Board of Directors of the bank have perforce to carry out it would be an abuse of language to call such a direction an advice. I have extracted the text of this order and it is clear to me that it is not in the nature of any advice but a direction which has compelling force, for the Deputy Registrar by another communication to the bank dated 13-12-1951 addressed to the president as follows:

'It is hereby Informed that you will be held personally responsible if no action is taken to recover the sum of Rs. 200 paid as honorarium to the Ex-Secretary, Sri G. Subramania Iyer against the bye-laws.'

In these circumstances, it will be a misnomer to call the order of the Deputy Registrar an advice which Was tendered to the Board of Directors of the bank by him. In my opinion, it is a quasi-judicial order which is capable of being called in question and quashed by the issue of a writ of certiorari.

10. It was by virtue of this order and not by reason of any dispute which the society had with its Ex-Secretary that proceedings under Section 51 were launched. The provisions of Section 51 are attracted only when there is a dispute between the Society and its ex-officer or other persons mentioned in the two Sub-clauses (1) (b) and (c) of Section 51 but in the present case there was no dispute and no difference between the society and its Ex-Secretary, the present petitioner. The sum of Rs. 200 had been demanded as remuneration by a lawyer's notice for the services rendered and the payment had been sanctioned by a unanimous resolution of the general body in October 1945 and since then, the society had stuck to the view that the payment was regular, authorised and justly due. So far as the Society is concerned there was no dispute between it and its ex-secretary.

The dispute, if any, was between the Deputy Registrar of Co-operative Societies on the one hand and the petitioner on the other. In the peculiar circumstances of the case, I am clearly of opinion that there was no dispute touching the business of the society between the society, and its ex-secretary such as is capable of being referred to arbitration under Section 51, Madras Co-operative Societies Act. In this view, if I were not convinced that the order of the Deputy Registrar of Co-operative Societies dated 18-9-1951 was either of on advisory character or of an administrative nature such as could not be called in question by the issue of a writ of certiorari, I would be disposed to grant a writ of mandamus directing the Deputy Registrar and the Registrar to forbear from taking any action against the society in respect of the claim against the petitioner or to issue a writ of prohibition against the third respondent and quash the proceedings in A. R. C. No. 1033 of 1951-52 before him after getting the petition amended for the purpose. In my judgment the writ petition succeeds and the petitioner is entitled to an order quashing the order of the Deputy Registrar of Co-operative Societies dated 18-9-1851 and the proceedings in A. R. C. No. 1033 of 1951-52 pending before the third respondent as beyond their jurisdiction.

11. I cannot part with this case without expressing my feelings that this exemplifies an abuse of statutory powers to correct which Article 226 of the Constitution has been designed and that is exactly the reason why I have interfered, though the amount involved is comparatively trifling.

12. The petitioner would be entitled to hiscosts against the respondents 2 and 3 which Ifix at Rs. 100.


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