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Judgment
Horace Owen Compton Beasley, Kt., C.J.—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 1932-33 on
the file of the Deputy Registrar of Co-operative Societies, Calicut.
The appellant who is a legal practitioner was and is a member of the Calicut Co-operative 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. filed a suit u/s 51 of the Madras Co-operative Societies Act (VI of 1932) against the appellant claiming a sum of Rs. 6,017-7-1. That
amount is made up as follows:
Rs. A. P.
(a) Out of pocket expenses charged by the
Appellant .. 1,007 1 0
b) 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 collections from the Bank''s
borrowers 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
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 11th April, 1932. As a result of this investigation, the Directors of the Bank requested the Deputy Registrar of Co-
operative 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 (&) 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 u/s 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 Co-operative
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 Directors of the Society and was an
Officer"" of the Society, that the business concerning which the present dispute has arisen was a 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 defined 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 or the by-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 by-law No. 41 of the By-laws of the Society and, this Board of Directors form 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.
By-law 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 six 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 five 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 (l)
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.
By-law 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.
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
(c) 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, whether such debt or demand be admitted or not, is a dispute touching the business of the Society within the meaning of this
sub-section.
It will be seen that Section 51(1) of the Act of 1932 is wider in its terms than the earlier Act. The Bank claims to make a reference to the
Registrar under the later Act contending that this question comes within either Sub-clause (b) 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 u/s 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 done by the appellant
in his capacity as 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 the 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.
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.
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.
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, page 436,
paragraph 829, which deals with Building Societies and Halsbury''s Lazvs of England (First Edition), Vol. 15, page 177, paragraph 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-time 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 cases as 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 is 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?"" 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 remuneration 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.
The result is that this Letters Patent Appeal is allowed and an order is made directing the issue of a 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 Co-operative 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.
I agree.