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Ramendra Nath Mukherjee Vs. Balurghat Central Co-operative Bank Ltd. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtKolkata
Decided On
Reported inAIR1932Cal317
AppellantRamendra Nath Mukherjee
RespondentBalurghat Central Co-operative Bank Ltd.
Cases ReferredMcEllistrim v. Ballymacelligott Co
Excerpt:
- .....that it had no preference shareholders, and no members other than the registered societies who held ordinary shares, let us omit all questions whether these resolutions were carried by necessary majority, whether due notice had been given to the members, whether the resolutions were in proper form. let us omit the fact that the constitution was changed before the preference shareholders had executed any transfer or received any money for these shares. is the plaintiff's cause of, action withdrawn from the courts by rule 22? in my opinion it is clearly outside that rule, the plaintiff is still a preference shareholder and as such he claims that the new constitution which knows only ordinary shares and only registered societies as members is fundamentally illegal and ultra vires. that.....
Judgment:

Rankin, C.J.

1. This Letters Patent appeal is brought by plaintiff 2 from the decision of Patterson, J., who on second appeal dismissed the suit but granted leave to appeal. The trial Court had dismissed the suit but she learned Additional District Judge had decreed it. The plaintiff's sued the Balurghat Central Cooperative Bank, a society registered under the Co-operative Societies Act (2 of 1912) for a declaration that a certain resolution passed on 20th June 1925 at a special general meeting of the Society was ultra vires and illegal and for an injunction to restrain the society from acting on it. The appellant was the holder of ten preference shares of Rs. 20 each and the effect of the resolution complained of which was worded in an obscure and unbusiness like way was that all preference shares were compulsorily taken from these holders at par value and vested in the society. This the society claimed to do by virtue of its Regulations.

2. The object of the Society was to finance Co-operative Societies' in the subdivision of Balurghat, and while the ordinary shares could be held by such societies only, the preference shares could be held only by individuals belonging to the subdivision. The two by-laws upon which the society proceeded are as follows:

(6) The nominal capital of the Bank shall be Rupees one lakh which shall be divided into 5,000 shares of the value of Rs. 20 each, half of which at first shall be preference shares and the other half ordinary shares. The capital of the Bank may be increased or the proportion, of the preference shares to ordinary shares may be varied by a resolution of a general mooting specially convened for the purpose of considering the question and at which at least three-fourths of the members shall be present in person or by proxy. Capital may be raised (1) by the issue of shares, (2) by deposits from members or non-members subject to the rules, and (3) by borrowing.

(23) The Bank may, subject to the consent of the Registrar, buy out at par preference shares from preference shareholders and re-issue them as ordinary shares.

The general meeting may by a majority prescribe the procedure to be adopted in selecting the preference shares which are to be thus bought out in any one year, and the number of prefer-once shares which are to be thus selected in any one year.

3. It seems to be clear enough that the 6th by-law would not of itself authorize the compulsory expropriation of any member's holding and the merits of the plaintiff's grievance depend upon by-law 23. In my judgment that by-law cannot be held to give compulsory powers to the Society. The word ' buy ' and the phrase buy out ' connote agreement rather than compulsion and although the 'transaction contemplated is to he at a fixed price, viz. at par, this in itself is insufficient to make the first clause mean more than that it shall be lawful for the 'Society to make a purchase. The second 'clause requires that the number of shares to be bought in any year shall be decided by a majority at a general meeting. This takes us no further. It also 'says that the general meeting may prescribe the procedure to be adopted in selecting the preference shares which are to be thus bought out. As the number of preference shares held by persons willing to sell at par might in any year exceed the number which the Society was desirous of buying, I do not think that the element of compulsion can be discerned on this provision.

4. Accordingly I am of opinion that the Society was not entitled to treat the plaintiff as being no longer a member after 20th June 1925.

5. The only other question is whether in these circumstances the plaintiff's right to have recourse to the ordinary Courts of law is taken from him by Clause (1), Section 43 of the Act and the rules made there-under for this province. Rule 22 of the rules made under the Act on 8th November 1920 by the Governor-in-Council is as follows:

22. Disputes.--(1) Any dispute touching the business of a registered 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 in writing to the Registrar.

6. The Society on 20th June 1925 not only purported to acquire all the preference shares but proceeded to so modify its Regulations as to make itself a pure type society;' that is to say, to adopt a new constitution on the footing that it had no preference shareholders, and no members other than the registered societies who held ordinary shares, Let us omit all questions whether these resolutions were carried by necessary majority, whether due notice had been given to the members, whether the resolutions were in proper form. Let us omit the fact that the constitution was changed before the preference shareholders had executed any transfer or received any money for these shares. Is the plaintiff's cause of, action withdrawn from the Courts by Rule 22? In my opinion it is clearly outside that rule, The plaintiff is still a preference shareholder and as such he claims that the new constitution which knows only ordinary shares and only registered societies as members is fundamentally illegal and ultra vires. That such a question does not come under the' rule at all is fully substantiated by the decisions under English Acts such as the Industrial and Provident Societies Act, 1893, Section 49, the Friendly Societies Act, 1896, Section 68, National Insurance Act, 1911,S.67. The decision in Heard v. Pickthorne [1913] 3 K.B. 299 was approved in the House of Lords in McEllistrim v. Ballymacelligott Co-operative Agricultural and Dairy Society Limited [1919] A.C. 548. It was applied by Eve, J., in Ruinn and National Catholic Benefit and Thrift Society's Arbitration, In re [1921] 2 Ch. 318. The terms of the Indian Act and of the Bengal Rule thereunder are certainly somewhat different from the enactments considered in these oases, but I cannot regard a question whether the plaintiff is or is not a shareholder, whether the Society's new constitution is valid or invalid, whether it is in effect of the ' mixed ' or ' pure ' type, as a mere dispute between members or between a member and an officer touching the business of the Society.' In my judgment this appeal should be allowed with costs before us and before the learned Judge. The decree of the lower appellate Court should be restored. The terms of the injunction will be

that the defendant bank be restrained from acting upon the resolution of 20th June 1925 hereinbefore declared to be ultra vires.

C.C. Ghose, J.

7. I agree.


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