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Manjeri S. Krishna Ayyar Vs. the Secretary, Urban Bank Ltd., Calicut and anr. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported inAIR1933Mad682; 145Ind.Cas.438
AppellantManjeri S. Krishna Ayyar
RespondentThe Secretary, Urban Bank Ltd., Calicut and anr.
Excerpt:
.....made under that act could be referred to the registrar for decision. it is argued, (1) that the appellant was not engaged in the business of the society, (2) that it is not a dispute between a member of the society and the committee or any officer and the society, (3) that the acts complained of were not one by the appellant in his capacity as a member of the society but as its vakil and (4) that even if the act of 1932 is of application, the appellant as the society's vakil was not an officer, agent or servant of the society. the appellant as the vakil engaged by the society to do so was clearly engaged in the business of the society. 10. the next two contentions, namely, that this is not a dispute between a member of the society and the committee or any officer and the society and..........this matter has got to be considered from the standpoint only of a vakil engaged in the society's legal business.8. the fact, that he may at the same time occupy the other positions already specified in the society, however irregular his conduct may be in occupying them, cannot in the least degree affect this question.9. as regards the appellant's first contention, namely, that the appellant was not engaged in the business of the society, in my view, the appellant was. in the course of 'the society's business members of the society incur debts and it is the business of the society to recover from its members the sums of money owed by them to the society and if necessary to take legal proceedings for their recovery. the appellant as the vakil engaged by the society to do so was clearly.....
Judgment:

Beasley, J.

1. This is a Letters Patent Appeal from an order of Burn, J., dismissing the appellant's petition for the issue by the High Court of a writ of prohibition prohibiting the respondents from proceeding with the trial of Suit No. 179 of 1932-1933 on the file of the Deputy Registrar of Co-operative Societies, Calicut.

2. The appellant who is a legal practitioner -was and is a member of the Calicut Cooperative Bank Ltd. He was a director of the bank from November, 1919, to December, 1929, and then again from October, 1930, to January, 1932. He was also the legal adviser of the bank from September, 1922, to December, 1929, and he was also the Vakil of the bank from July 1922, to March, 1932. The Secretary of the Calicut Urban Bank Ltd., tiled a suit under Section 51 of the Madras Co-operative Societies Act (VI of 1932) against the appellant claiming a sum of Rs. 6,017-7-1.

3. That amount is made up as follows:

Rs. A. P.

(a) Out of pocket expenses charged

by the appellant ... 1,007 1 0

(6) Extra fees charged by him for

which there is no sanction of

the Directors ... 892 12 0

(c) Aggregate of amounts paid in by

him to the bank out of collec-

tion from the bank's borrower

which are not found entered

in the cash book of the bank

and for which the appellant

holds no valid receipts ... 4,117 10 1

4. The accounts of the appellant with the bank as its Vakil were the subject of an investigation by a special sub-committee of the Committee of Depositors appointed on the April 11, 1932. As a result of this investigation, the directors of the bank requested the Deputy Registrar of Cooperative Societies, Calicut, to cause the accounts to be audited and accordingly the acting Senior Inspector of Co-operative Societies conducted an audit and in his report he observed inter alia that items (a) and (b) were exorbitant and inadmissible. The appellant was accordingly called upon to pay the sum of Rs. 6,017-7-1 to the bank in default of which it was stated that a suit would be filed against him. He declined to pay and accordingly a reference was made under Section 51 of the Madras Co-operative Societies Act (VI of 1932) and a decree against him was asked for. The appellant raised the point that the Registrar had no jurisdiction to entertain this reference on the grounds that the matters complained of related to the conduct of the appellant in his capacity of Vakil conducting litigation on behalf of the bank and that the dispute did not touch the business of the Society. He accordingly moved for the issue of a writ of prohibition. Burn, J., dismissed that petition holding that under both the Coperative Societies Act (Act II of 1912) and the Act of 1932 there was a dispute between the petitioner and the Society which fell to be decided by the Registrar on the ground that the appellant was a member, the legal adviser and a member of the board of doctors of the Society and was an 'Officer' of the Society, that the business concerning which the present dispute has arisen was business which came to him as legal adviser and that it was his position as legal adviser that made him a member of the board of directors. It is, in my opinion, not correct to say that the business of the society with, which the present dispute is concerned came to the appellant as its legal adviser because it is the appellant's case and this is conceded also by the bank that the dispute arises out of matters relating to the appellant's acts as the bank's Vakil; and it is important to keep in mind the distinction between the two capacities of bank's legal adviser and bank's Vakil, In my opinion Burn, J., was right in holding that in the capacity of legal adviser to the bank the appellant was an 'Officer' of the Society as denned by Section 2 of the Act which by Clause (d) includes 'a chairman, secretary, treasurer, member of committee, or other person empowered under the rules of the bye-laws to give directions in regard to the business of the Society.' There is no committee in this Society but there is a board of directors in whom the management of the affairs of the society is vested by bye-law No. 41 of the bye-laws of the society and, this board of directors from the Committee as defined in Section 2 (b) of the Act of 1912. The same definition of officer appears in the Act of 1932 in Section 2 (e) except that two or three other persons are included. Bye-law No. 41 (a) of the Society says that 'the affairs of the Society shall be managed by a board of directors consisting of a President, a Vice President, a Secretary, an Assistant Secretary, a Legal Adviser, a Treasurer, and not more than 6 other members. The members of the board of directors shall be elected once in two years by general assembly from among the members holding not less than live shares each. The directors shall elect from among themselves the President, Vice President, Secretary and Assistant Secretary, Treasurer and Legal Adviser'. In my opinion, therefore, the Legal Adviser of the bank is an 'Officer' of the bank. I must now consider the rules under both Acts. Under the Act of 1912 by Section 43 (1) the Local Government is empowered to make rules to carry out the purpose of the Act and by (2) such rules may (1) provide that any dispute touching the business of Society between members or past members of the Society or persons claiming through a member or past member or between a member or past member or persons so claiming and the committee or any officer shall be referred to the Registrar for decision etc.

5. Bye-law No. 68 of the Society is as follows:

If any dispute arises touching the business of the Society between members or past members of the Society or persons claiming through a member or past member or between a member or a past member or persons so claiming and the board of directors the party or parties concerned may refer the matter in writing to the Registrar. Similarly in the case of a dispute relating to a debt due to the society by a member or past member or persons claiming through a member or past member a reference in writing may be made by either party to the Registrar.

6. The decision of the Registrar or the arbitrator appointed by him is to be final. The Act of 1932 provides by Section 51 (1) that 'if any dispute touching the business of a registered society (other than a dispute regarding disciplinary action taken by the Society or its committee against a paid servant of the Society) arises (a) among members, past members, and persons claiming through members, past members and deceased members or (b) between a member, past member or persons claiming through a member, past member or deceased member and the Society, its committee or any officer, agent or servant of the Society or (b) between the Society or its committee and any officer, agent or servant of the Society or (d) between the Society and any other registered society, such dispute shall be referred to the Registrar for decision. There is an explanation which reads as follows:

A claim by a registered society for any debt or demand due to it from a member, past member or the nominee, heir or legal representative of a deceased member, which such debt or demand be admitted or not, is a dispute touching the business of the Society within the meaning of this sub-section.

7. It will be seen that the Section 51 (1) of Act of 1932 is wider in its terms than the earlier Act. The bank claims to make a reference to the Registrar under the latter Act contending that this question comes within either Sub-clause (6) or (c) to sub-section (1) of Section 51 or both, It is further contended that if it should be held that the Act of 1932 does not apply to the case but that the procedure laid down by the Act of 1912 is to be followed, the rules made under Section 43 of that Act apply equally to this case. It is contended on behalf of the appellant that the Act of 1932 is of no retrospective effect and that as the matters complained of were matters which occurred before the passing of the new Act, the dispute with regard to them was not one which under the rules made under that Act could be referred to the Registrar for decision. It is argued, (1) that the appellant was not engaged in the business of the Society, (2) that it is not a dispute between a member of the Society and the committee or any officer and the society, (3) that the acts complained of were not one by the appellant in his capacity as a member of the Society but as its Vakil and (4) that even if the Act of 1932 is of application, the appellant as the Society's Vakil was not an Officer, agent or servant of the Society. As before stated, no question arises here with regard to any acts of appellant in his capacity of legal adviser but only as the bank's Vakil. It is quite true that he is a member of the Society, that he was a director of the Society and that he was the legal adviser of the society. But does that in any way affect his position as Vakil? It seems to me that this matter has got to be considered from the standpoint only of a Vakil engaged in the Society's legal business.

8. The fact, that he may at the same time occupy the other positions already specified in the society, however irregular his conduct may be in occupying them, cannot in the least degree affect this question.

9. As regards the appellant's first contention, namely, that the appellant was not engaged in the business of the Society, in my view, the appellant was. In the course of 'the Society's business members of the Society incur debts and it is the business of the Society to recover from its members the sums of money owed by them to the Society and if necessary to take legal proceedings for their recovery. The appellant as the Vakil engaged by the Society to do so was clearly engaged in the business of the Society.

10. The next two contentions, namely, that this is not a dispute between a member of the Society and the committee or any officer and the Society and that the acts complained of were not done by the appellant in his capacity as member of the Society but as its Vakil, may be considered together. This is a dispute between the Society's Vakil and the Society and the acts complained of were done by the appellant in his capacity of the Society's Vakil. Had this been a dispute between the Society and the appellant as its legal adviser, then under the Act of 1932 it might be a dispute between the Society and one of its officers, namely, its legal adviser. But even assuming that this case is governed by the Act of 1932, in my view, the appellant was not an officer, agent or servant of the Society and what he did was not done in his capacity as a member of the Society at all. I think it is clear that both under the Building Societies Act and the Friendly Societies Act in England which contain somewhat similar provisions as regards the settlement of disputes within the Society by the Registrar that in order that such a dispute can be dealt with by the Registrar it must be a dispute between the Society and a member in his capacity as member; See Halsbury's Laws of England (Second Edition) Vol. 3 p. 436 para. 829 which deals with Building Societies and Halsbury's Laws of England (First Edition) Vol. 15 p. 177 para. 370 which deals with Friendly Societies where it is stated that disputes between a society and a member not in his capacity as member e. g. a claim by a Society against one of its officers for misappropriation of funds are not disputes to which the Act applies and Consequently they are determinable by ordinary legal methods. Viewed in this light, this dispute is not a dispute within the provisions of the Act of 1912 and unless the appellant when acting as the Society's Vakil was doing so as an officer, agent or servant of the Society, the Act of 1932 is also not of application. It is, however, contended that the appellant was the agent of the Society as its Vakil within the provisions of Section 51 of the Act of 1932. With this contention I am unable to agree. In acting in litigation as the Society's Vakil he was not the agent of the Society but he occupied merely the position of a Vakil to his client. Different considerations altogether may arise where the Vakil is a whole-lime Vakil of a Society or a company and receives as his remuneration a fixed salary. It may be stated here that the Registrar of Co-operative Societies is not anxious to clutch at a jurisdiction which he does not possess. The position he takes up here is that he desires only to know whether in such C9.S68 3.S this he does possess jurisdiction. In my view, he does not. Here the position is that of Vakil and client, the Vakil appearing in each case for a fee. Mr. T. R. Venkatarama Sastri stated that the question before us was one of considerable importance to members of the bar and put to us the question:

What is the position of a member of the Bar who is a member of a Co-operative Society and who is instructed by the Society of which he is a member to engage in legal proceedings on their behalf?

11. It seems to me that the answer to this question must be that, merely because a legal practitioner is a member of a Society he is not prevented by any rule of professional etiquette from accepting instructions from the Society of which he is a member. There can, in my view, be no impropriety in his doing so provided that his engagement is not directly due to his being a member. The Madras Bar Council have recently ruled that it is improper for a member of the Bar who is a director of a company or a Society to appear for remuneration for that company or Society in its legal business. This rule follows that of the English Bar. That the appellant's conduct in legally advising the Society and appearing as its Vakil in both capacities for remunerations whilst being a director was without question most improper but so far as the case before us is concerned we have only to consider him in his capacity of Vakil to the Society. That being so, this dispute is not a dispute to which either the Act of 1912 or the Act of 1932 applies and it is therefore unnecessary to consider the further question raised as to which Act this dispute falls to be decided under.

12. The result is that this Letters Patent Appeal is allowed and an order is made directing the issue of the writ of prohibition sought for by the appellant. With regard to costs, in my view the proper order will be to direct the appellant and the respondents to bear their own costs. It is improbable that the Registrar of Cooperative Societies would have thought that he had jurisdiction to deal with the matter if the appellant had not been also a director, the paid legal adviser of the Society and at the same time its Vakil.

Bardswell, J.

13. I agree.


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