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Prithi Chand Vs. Registrar, Co-operative Societies and anr. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtHimachal Pradesh High Court
Decided On
Case NumberCivil Writ Petn. No. 9 of 1958
Judge
Reported inAIR1959HP1
ActsConstitution of India - Article 226; ;Himachal Pradesh Co-operative Societies Act, 1956 - Sections 88 and 112
AppellantPrithi Chand
RespondentRegistrar, Co-operative Societies and anr.
Appellant Advocate M.L. Aukta, Adv.
Respondent Advocate Thakar Dass, Adv. for Respondents 1 and 2
DispositionPetition allowed
Cases ReferredT.K. Gopala Chetty v. Director of Public Instruction
Excerpt:
trusts and societies - appellant elected as one of directors of bank - one of shareholder of bank questioned validity of appellant election as director - registrar referred dispute to arbitrator - arbitrator held election of appellant as invalid - appellant filed petition to issue writ of certiorari questioning order of registrar and award of arbitrator - appellant possessed shares in his individual capacity - whether appellant was in default or not immaterial as he was elected as director and not as representative of society or union -- under bye laws 59 an individual holding ordinary shares is not disqualified from seeking election to directorship unless he is in default of bank - mere fact that he was in default to society would not defer him from seeking election. - .....petitioner shri prithi chand was elected as one of the directors of the himachal pradesh state co-operative bank ltd. in accordance with the bye-laws of that bank. by means of an application dated 12-1-1957 a. d., addressed to the registrar, co-operative societies, himachal pradesh, one shri chet ram chandel, a shareholder of the above bank, questioned the validity of shri prithi chand's election as a director, the registrar, purporting, to exercise the powers, conferred upon him by s. 88 of the himachal pradesh co-operative societies act, 1956 referred the dispute to the arbitration of shri nand lal, district audit officer, mahasu.on 18-7-1957, the arbitrator made an award, holding that the election of shri prithi chand was invalid. against that award, prithi chand filed an appeal to.....
Judgment:
ORDER

T. Ramabhadran, J.C.

1. This petition, under Article 226 of the Constitution, arises under the following circumstances.

2. On 4-10-1956 A. D., petitioner Shri Prithi Chand was elected as one of the Directors of the Himachal Pradesh State Co-operative Bank Ltd. in accordance with the bye-laws of that Bank. By means of an application dated 12-1-1957 A. D., addressed to the Registrar, Co-operative Societies, Himachal Pradesh, one Shri Chet Ram Chandel, a shareholder of the above Bank, questioned the validity of Shri Prithi Chand's election as a Director, The Registrar, purporting, to exercise the powers, conferred upon him by S. 88 of the Himachal Pradesh Co-operative Societies Act, 1956 referred the dispute to the arbitration of Shri Nand Lal, District Audit Officer, Mahasu.

On 18-7-1957, the arbitrator made an award, holding that the election of Shri Prithi Chand was invalid. Against that award, Prithi Chand filed an appeal to the Registrar, Co-operative Societies, under Section 113 of the Himachal Pradesh Co-opera tive Societies Act, read with the Second Schedule thereto. On 17-1-1958, the appeal was dismissed by the Registrar. Hence, this writ petition by Prithi Chand, wherein I am requested to issue a writ of certiorari, quashing the orders of the Registrar (in appeal) and the award of the arbitrator.

3. This petition was admitted by this Court on 5-4-1958 mainly on the ground that the Registrar had wrongly interpreted bye-law 59(v) of the Bank.

4. A written-statement was filed by the respondent No. 1 (Registrar, Co-operative Societies, H. P.) and the same has been adopted by respondent No. 2 (Shri Chet Ram Chandel). On 27-6-1958, I heard the arguments of the learned counsel for the parties on the preliminary objections, raised by the respondents and set forth in the opening portion of their written-statement. On 30-6-1958, I indicated that the preliminary objections could not be sustained, although the grounds for corning to that conclusion were reserved. On the 17th instant, I heard arguments on the merits of the petition. I now proceed to deliver judgment.

5. First of all, I take up the preliminary objections, raised by the respondents to the competency of this writ petition. Mr. Thakar Dass for the respondents submitted firstly that the petitioner had suppressed certain material facts and made false averments in his petition and, therefore, could not invoke the writ jurisdiction of this Court. In the second place he argued that disputed questions of fact had to be gone into and, therefore, the proper course for the petitioner was to file a regular civil suit. He invited my attention to the provisions of S. 112 of the Himachal Pradesh Co-operative Societies Aet, 1956, and pointed out that under sub-s. (3) thereof, when an order, decision or award under the Act was challenged on the ground of want of jurisdiction, a civil suit would not be barred. Learned counsel further cited, inter alia,

(a) Sati Nath v. Suresh Chandra, AIR 1941 Cal 136 (A). There, Ameer Ali, J., indicated that:

'A suit by A to establish the rights by declaration and injunction of B, C, D and E does not lie. A suit, challenging the position of a particular board of directors and to remove the directors from the directorate is wrongly constituted. But a suit for a declaration, that the plaintiff is a director and for the protection of his rights qua director, is competent.' (b) Shyamapada v. Abani Mohan, AIR 1951 Cal 420 (B). There, Bose, J., observed that:

'Recourse ought not to be allowed to an extraordinary remedy when it is not really needed, and a mandamus will never be granted to enforce the general law of the land, which may be enforced, by action. In the case of Informations or Writs in the nature of a Quo Warranto such Informations or Writs are not issued as a matter of course where there is an alternative remedy which is equally appropriate and effective. Under Article 226, the power of the Court is not confined to the power to issue Writs in the nature of Mandamus and other writs mentioned therein. Under the Article the Court has wider powers. But the power of the Court is discretionary and the proceedings under Article 226 being of a summary and coercive nature the powers under the Article should be sparingly used and only in those clear cases, where the rights of person have been seriously infringed and he has no other adequate and specific remedy available to him.' (c) K.S. Rashid and Son v. Income-Tax Investigation Commission, AIR 1954 SC 207 (C). Therein, their Lordships, while dealing with a case arising out of the Taxation of Income (Investigation Commission) Act, 1947, were pleased to hold that : 'The remedy, provided for in Article 226 of the Constitution, is a discretionary remedy and the High Court has always the discretion to refuse to grant any writ, if it is satisfied, that the aggrieved party can have an adequate or suitable relief, elsewhere. Where the petitioners have already availed themselves of the remedy, provided for in S. 8(5) of the Taxation of Income (Investigation Commission) Act and a reference has been made to the High Court, in terms of that provision which is awaiting decision, it would not be proper to allow the petitioners to invoke the discretionary jurisdiction under Article 226 of the Constitution at this stage. In case the proceeding occasions a gross miscarriage of justice, there is always the jurisdiction in the Supreme Court, to interfere by way of special leave.'

6. On these premises, I was requested to dismiss this writ petition and to direct the petitioner to seek his remedy by way of regular suit, if so advised.

6a. Mr. M. L. Aukta for the petitioner, on the other hand, pointed out that neither of the two Calcutta rulings, (quoted above) referred to by Mr. Thakar Dass, related to cases arising out of disputes under the Co-operative Societies Aet. The Supreme Court decision, as already pointed out, arose out of an income-tax case. Mr. Aukta further submitted that no inquiry into disputed facts was necessary in the present case, because the factum of the election of his client (Shri Prithi Chand) as a Director of the Bank was not disputed. The only point to be decided here is whether the Registrar and the Arbitrator have erred in interpreting bye-law 59(v) of the said Bank to the petitioner's detriment. Learned counsel contended that once this Court comes to the conclusion that the bye-law has been misinterpreted, no further inquiry was necessary and a writ has to issue.

7. As was pointed out in T.K. Gopala Chetty v. Director of Public Instruction in Mysore, (S) AIR 1955 Mys 81 (D):

'The powers of the High Court under Article 226 are wide and not limited to cases for safeguarding fundamental rights as implied from the words 'for any other purpose''.

8. Since, in my opinion, for reasons to be stated shortly, the Registrar and the Arbitrator have misinterpreted bye-law 59(v), resulting in a miscarriage of justice, this is a fit case where this Court should exercise its powers, conferred by Article 226 and not drive the petitioner to the necessity of filing a regular civil suit. The petitioner may have a right of suit, but, under the circumstances of the case, I would not consider it as an equally efficacious remedy.

9. It was for these reasons that on 30-6-1958 I overruled the preliminary objections, raised by the respondents, and decided to hear the petition on its merits.

10. Coming to the merits of this petition, two points were urged by the learned counsel for the petitioner: (1) The Registrar had no jurisdiction to refer the matter to the arbitration of Shri Nand Lal because there was no dispute as contemplated by S. 88 of the Himachal Pradesh Co-operative Societies Aet, 1956. Consequently it was urged that the proceedings before the Arbitrator and the award made by him were without jurisdiction. (2) Both the Arbitrator and the Registrar (in appeal) have totally misconstrued bye-law 59(v) of the Bank.

11. Since I find that bye-law 59(v) has not only been misinterpreted but also misquoted by the Registrar, thereby resulting in a miscarriage of justice, it does not appear necessary to go into the first question. Let us take up bye-law 59(v). It runs as follows:

'No individual holding ordinary shares or a representative of society or institution is eligible for election to the Board, if

.....

.....

(v) he is in default to the Bank or to his Society or the Society represented by him is in default to the Bank.'

The bye-law has been very clumsily worded. It relates to three categories of persons: (i) an individual holding ordinary shares; (ii) a representative of a society and (iii) a representative of an institution. Bye-law 59 (v) refers to all the three categories inone sentence. We have, therefore, to see carefully which part of this bye-law refers to which category. The expression 'if he is in default to the Bank', obviously, applies to an individual holding ordinary shares. Similarly, the expression 'if he is in default to his society' applies, not to an individual holding ordinary shares, but to a representative of a society. The Registrar in the course of his appellate order has misquoted bye-law 59(v). His rendering of this bye-law runs as follows:

'No individual holding ordinary shares or a representative of Society, or institution is eligible for election to the Board, if, ..... (v) he is in default to the Bank or to a Society or the Society represented by him is in default to the Bank.'

The bye-law refers to 'his' society and not to 'a' society, as the Registrar seems to think. This, probably, accounts for the Registrar's conclusion that if an individual holding ordinary shares is in default to any society, he would be ineligible for election of the Board of Bank's directors. I am constrained to remark that the Registrar has not read the relevant bye-law carefully; otherwise, he would not have arrived at this wrong conclusion.

The petitioner, Shri Prithi Chand, admittedly holds 10 shares in the Bank, in his individual capacity, and, therefore, would be eligible for election as Director, vide bye-law 59 (vii). It is no body's case that the petitioner has incurred any of the disabilities, set forth in bye-law 60, which would entail the cessation of his directorship. He was elected as a Director in that capacity and not a representative of a society or institution. Consequently, it is, immaterial if Shri Prithi Chand was in default to the Theog Co-operative Multi-purpose Society or not. Mr. Thakar Dass for the respondents suggested that it was highly undesirable that an individual, who is in default to a Co-operative Society should function as Director of the State Co-operative Bank.

It may be desirable that the Directors of the Bank should not be in default to the Bank or any Co-operative Society. But bye-law 59, as it stands, merely does not prohibit the election of an individual holding ordinary shares to the office of a Director, unless he is indebted to the Bank. Consequently, unless bye-law 59 is amended, an individual holding ordinary shares, is not disqualified from seeking election to the directorship, unless he is in default to the Bank. The mere fact that he is in default to a Society would not debar him from seeking election.

I am afraid that the legal position has not been correctly understood by the Registrar or the Arbitrator with the result that there has been a miscarriage of justice. I am, therefore, clearly of the opinion that this is a fit case where this Court should exercise its powers conferred by Article 226 of the Constitution.

12. It is unnecessary, under the circumstances, to go into the question as to whether there was a dispute within the scope of Sec. 88 of the Himachal Pradesh Co-operative Societies Act, 1956, which could be referred by the Registrar to an Arbitrator.

13.


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