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Barisal Co-operative Central Bank Ltd. Vs. Benoy Bhusan Gupta and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtKolkata
Decided On
Reported inAIR1934Cal537
AppellantBarisal Co-operative Central Bank Ltd.
RespondentBenoy Bhusan Gupta and anr.
Cases ReferredRamendra Nath v. Balurghat Central Co
Excerpt:
- .....nominee, heir or legal representative, as the case may be, a sum representing the value of such member's share or interest, as ascertained in accordance with the rules or bye-laws.5. proviso (ii), section 22 is material as it affects the case of a society with limited liability and the present bank is a society with a limited liability. proviso (ii) runs in these words:in the case of a society with limited liability, the society shall transfer the share or interest of the deceased member to such nominee, heir or legal representative as the case may be, being qualified in accordance with the rules and bye-laws for membership of the society, or on his application within one month of the death of the deceased member to any person specified in the application who is so qualified.6. the.....
Judgment:

Mitter, J.

1. This is an appeal on behalf of the Barisal Co-operative Central Bank Limited, the defendant in the suit brought by the plaintiffs Who seek for substitution of their names as members and holders of one hundred preference shares in the register of the defendant society in place of their deceased brother on declaration of their rights to be so substituted. The Subordinate Judge has decreed the suit of the plaintiffs and hence the present appeal by the defendant society.

2. It is not necessary to re-state the facts as they have been stated with sufficient fullness in the judgment of the learned Subordinate Judge. Reference must however be made to the salient ones on which the questions of law, which are in controversy in the present appeal, really turn. It appears that some time in July 1913 an application was made by Mr. N. Gupta who was a well known barrister of this Court for 40 preference shares in the defendant bank on the terms of the Bye-laws of the said bank. The application is printed at page 1, part. 2, of the paper book. In September 1916 the nomination paper was filed by Mr. Gupta by which he nominated his brothers Benoy Bhusan Gupta and Indu Bhusan Gupta who are plaintiffs-respondents to the present appeal as the persons to whom shall be transferred the property of the nominator in the society with reference to the loans, shares, or deposits on his; death. Mr. Gupta died on 27th February 1930. He died leaving behind him a will appointing his two brothers as executors. Probate of the said will was granted to his brothers the plaintiffs-respondents, by this Court on 3rd April 1930: vide p. 31, part 2 of the paper book. On 28th May the plaintiffs-respondents wrote to the Secretary of the defendant bank requesting him to substitute their names as executors in the register of the company in place of Mr. Gupta.

3. On 1st June 1930 there was a resolution of the working committee of the appellant bank on the above application by which the bank authorities refused the application for substitution but asked the plaintiffs-respondents to take back the paid up share, money and the dividend, if any, as executors. On 23rd June 1933 the plaintiffs again wrote to the Secretary of the bank for re-consideration of the matter of substitution: but on 24th August 1930 when the working committee met to consider the said application for reconsideration in addition to other applications for substitution from different persons they refused to re-consider them, as in their opinion it was in the best interest of the co-operative movement that on the death of a particular member his share should be paid up; and they further repeated their request to the plaintiffs to take back their share money. On 25th August 1930 the above resolution of the Working Committee was forwarded to the plaintiffs-respondents. On 26th August the plaintiffs-respondents wrote again to the secretary of the bank a letter in which they characterised the resolution as ultra vires and they refused to accept the decision of the Working Committee and further asked for a re-consideration of their case. On 13th September 1930 the bank secretary wrote to the respondents and demanded reasons on which the re-consideration of their claim might be based. On 17th September 1930 the plaintiffs-respondents wrote back to the Secretary in reply and they gave certain reasons as to why the previous decisions of the bank should be re-considered. On 29th October 1930 there was a letter from Mr. Donovan informing the plaintiffs that he had enquired about their case and intimating further that the matter would be referred to the Registrar of Co-operative Societies and possibly to Government for orders. On receipt of this letter the plaintiffs by their letter Ex. E which is to be found at p. 42, part 2 of the paper book, wrote to the Registrar that they understood that the matter had been referred to him for his consideration and final decision and that they had placed for his consideration a large number of grounds in support of their claim to be substituted in place of their deceased brother. After a consideration of the same it appears that the registrar came to a conclusion adverse to the present plaintiffs by an order which is dated 28th February 1931. Subsequent to that the plaintiffs filed the present suit on 7th March 1931 basing their cause of action on the fact of the society's refusing to substitute the plaintiffs in place of the said Mr. Nalini Bhusan Gupta by the proceedings of 1st June 1930. The Subordinate Judge after taking the evidence on both sides has given judgment for the plaintiffs. This decision has been impeached on behalf of the defendant on several grounds.

4. One of the reasons which have been given by the Subordinate Judge was that a certain rule or a certain bye-law is in contravention of the provisions of Section 22, Act 2 of 1912. The question in controversy in the appeal therefore turns on a consideration of the provisions of Section 22 read with the bye-laws which were in force at the time when Mr. Gupta took his preference shares in the defendant bank. It is contended before us on behalf of the appellant bank that the Subordinate Judge was clearly in error in coming to the conclusion that the bye-law No. 17(b) is in contravention of Section 22 of the Act. It becomes necessary therefore to consider the provisions of Section 22(1) which run as follows:

On the death of a member a registered society may transfer the share or interest of the deceased member to the person nominated in accordance with the rules made in this behalf, or, if there is no person so nominated, to such person as may appear to the Committee ;' to be the heir or legal representative of the deceased member, or pay to 'such nominee, heir or legal representative, as the case may be, a sum representing the value of such member's share or interest, as ascertained in accordance with the rules or bye-laws.

5. Proviso (ii), Section 22 is material as it affects the case of a society with limited liability and the present bank is a society with a limited liability. Proviso (ii) runs in these words:

In the case of a society with limited liability, the society shall transfer the share or interest of the deceased member to such nominee, heir or legal representative as the case may be, being qualified in accordance with the rules and bye-laws for membership of the society, or on his application within one month of the death of the deceased member to any person specified in the application who is so qualified.

6. The Subordinate Judge has referred to bye-law No. 17 of the society which is printed on the paper book and is to be found at pp. 55 to 60, part 2. Bye-law 17(b) runs as follows:

In the case of the death of a preference shareholder, his shares may be transferred to his heir or nominee if he or she is eligible for membership and is duly elected as such. . . .

7. It is not necessary to quote the other part. Under Section 22, Co-operative Societies Act, on the death of member, it appears to us that the share or interest of the deceased member shall be transferred to his nominee or to his legal representative who may be qualified in accordance with the rules or bye-laws of the society. The qualifications of the members of the society are given in Section 6 of the Bye-laws of the Society. Section 6 runs as follows:

The following are eligible for membership of the Association: (a) Persons or individuals above the age of 18 years residing or holding property in the District of Backergunj; (b) Co-operative Societies duly registered under the Co-operative Societies Act situated within the District of Backergunj.

8. We are concerned with Clause (a), Bye-law 6. It is admitted that the plaintiffs are persons or individuals above the age of 18 years and reside in the District of Backergunj. These two persons fulfil the requirements of eligibility or qualification for the membership of the society as is contemplated by Rule 6 of the Bye-law. Rule 17(b) is as follows:

In the case of the death of a preference shareholder his shares may be transferred to his heir or nominee if he or she is eligible for membership and is duly elected as such.

9. These words 'and is duly elected as such' do not occur in the statute and it has been rightly contended on behalf of the respondents and that is the view which has been taken by the learned Subordinate Judge in that Bye-law 17(b) is really in excess of the provisions of Section 22, Proviso (ii), Co-operative Societies Act. It is a well recognized principle of interpretation of statutes that if the rules framed under the statute, or bye-laws framed under the rule, are in excess of the provisions of the statute or are in contravention of or inconsistent with such provisions then these provisions must be regarded as ultra vires of the statute and cannot be given effect to. Mr. Chakraburty who appeared for the appellant has strenuously contended that the qualifications of the members are contained not only in Section 6 of the Bye-laws but also in Section 7. Section 7 states among other things the qualifications for being Members of the Association and in Clause (a) of the said section it is enacted that persons or individuals qualified in accordance with Rule 6, who have joined in the application for registration, or who may hereafter be elected according to the rules, shall be Members of the Association. It is difficult to accede to the contention of the appellant for the qualifications of the members are contained in Section 6; and if it were the intention of the legislators that in order to be qualified to get the interest of the share on the death of a deceased member Pearsons should also be elected as members, there was nothing to prevent the Legislature from saying so.

10. There is a lack of such words in the statute. It has been further contended that the whole scheme of the Co-operative Societies Act is that on the death of a preference share holder the share may be transferred to the other shareholders of the society to create a sort of federation of society. Whatever the intention of the legislator may be we have to construe the statute according as it is expressed and the intention has to be gathered from what is contained in the clear words of the statute and it is not permissible to construe the statute with reference to the underlying intention while the language of the statute gives rise to a different construction. In this view we are of opinion that the contention of the appellant on this ground must fail.

11. It may further be added that if the intention of the legislator was that the transfer of shares of a deceased member would be to a person who had actually been elected as a member, there was nothing to prevent the Bye-laws being so framed and in the section which deals with the eligibility of the members of the Association it might have been stated that the qualifications for such eligibility would be that be must have joined in the application for registration that he might be elected a member according to the rules. Even then the Bye-laws have not been so framed. It is next contended with regard to the application that having regard to the application, which was made by Mr. Nalini Bhusan Gupta when he made this application for preference share and which is to be found at p. 1, part 2 of the paper book wherein it was distinctly stated that he was requesting the bank to allot 40 preference shares of Rs. 50 each on the terms of the Bye-laws of the Bank, his representatives are now estopped from contending that the rules or the Bye-laws are ultra vires of the statute. It is well established that there can be no estopped against the statute, and the same principle must be applied to the present case. Mr. Chakraburty has sought to differentiate this case on the footing that it was really a case of contract, that this contract was entered into with the society which is a creature of the statute and that any rule or Bye-law which was in excess of the statute must be ultra vires of the statute and would not certainly bind a person with the Association which is a creature of the statute. This contention must also fail.

12. The next contention which has been raised is that the question as to whether the persons are representatives who are entitled to be substituted in place of the late Mr. Nalini Bhusan Gupta is a question which relates to the business of the society and consequently the decision of the registrar to whom a reference was made in this case must be taken to be final; and reference must be made in this connexion to the; rules and Bye-laws in particular to Buy-law No. 30 and Bye-law No. 57 and to Rule 22, Clause (1) of the Rules of 1912. The Subordinate Judge however has come to the conclusion that the question as to whether these persons as legal representatives of Mr. N. Gupta are entitled to have share in the bank and to be registered as share holders in the bank in place of the late Mr. N. Gupta is a question which does not relate to the business of the company. The duties of the Board of Directors are mentioned in Section 30 of the Bye-laws. It has been sought on behalf of the appellant to bring this case within Section 30(1) and (9) of the Bye-laws. Clause (1) refers to the Board's duties to deal with application for membership and to allot shares. Clause (9) refers to the Board's duties to transact all other business incidental to the management of the Association. So far as Clause (1) is concerned we are clearly of opinion that this application was not an application for membership and for allotment of shares. Nor are we satisfied that this application relates to any other business incidental to the management to the Association. As has been pointed out recently in a judgment of this Court by Sir George Claus Rankin, C.J., with reference to this Act:

The terms of the Indian Act and of the Bengal Rule there under are certainly somewhat different from the enactments considered in these cases.

13. The learned Chief Justice continued and remarked this:

But I cannot regard a question whether the plaintiff is or is not a share holder 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: vide the case of Ramendra Nath v. Balurghat Central Co-operative Bank Ltd. AIR 1982 Cal 317.

14. We are in entire agreement with this view and we are of opinion that this is not a matter which should have been referred to the registrar. It was next contended that Under Section 57 of the Bye-laws any dispute which cannot be decided by the General Meeting or by arbitration shall be referred to the registrar whose decision shall be final. In the first place it has not been shown to us that this was a dispute which was not decided by the General Meeting or by the arbitrators. Nothing has been placed before us which can show that the matter ever came before the General Meeting and that the members of the General Meeting said that they could not decide it. On the other hand from the proceedings of the Annual General Meeting which was held about three months after the institution of the suit it would appear that they rather confirmed the proceedings of the Working Committee at an earlier date. The Working Committee dealt with this question on 1st June 1930: see p. 19, part 2 of the paper book, and it was confirmed by the Board of Directors later on: see p. 28 of the same part of the paper book. Then a reference was made from the Secretary of the Bank to the Registrar of the Co-operative Societies of Bengal on 8th November 1930: see p. 40 of the same part of the paper book, and the general meeting was held as has been pointed out, on 21st July 1931, nearly three months after the institution of the suit when they confirmed the proceedings in substance of 1st June 1930. A question has been raised on behalf of the respondents as to the irregularity or otherwise of the reference. It is unnecessary to deal with that question in the view that we have taken of the matter. The allocation of the shares to the nominee or legal representatives of the deceased is not a business within the meaning of the Bye-laws or rules of the Society. All the grounds in this appeal having failed the appeal is dismissed with costs.

McNair, J.

15. I agree.


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