The Registrar Co-operative Societies and Others vs Raghubir Ram and Others

Mukharji, J.—This is defendants'' second appeal against a judgment of reversal. The plaintiff, Raghubir Ram, respondent 1 in this second appeal, brought a suit against the Registrar of Co-operative Societies and others for a declaration that a certain award obtained by defendant 4 who was a liquidator was illegal, ineffective and liable to be set aside. There was an alternative prayer that the property belonging to the plaintiff and sold by the liquidator might be returned to the plaintiff on payment of Rupees 297/5/- for which the property had been sold.

The case of the plaintiff-respondent may be briefly stated us follows: There was a Central Co-operative Bank at Buxar and this had gone under liquidation. Defendant 1 the Registrar of Co-operative Societies in Bihar, appointed defendants 2 and 3 the Official Liquidators for the discharge'' of the duties of the Bank. Under the said Central Co-operative Bank there was a Co-operative Society in Bekion, thana Nawanagar. The Official Liquidators took possession of the assets of this Society. Defendant was the liquidator for this Society at the beginning, but defendants 2 and 8 subsequently took charge from him. One Yusuf Mia was a member of the aforementioned Belaon Co-operative Society. He had taken a loan from the Society and the name of the plaintiff appears in the books of the Society as surety for this Yusuf Mian although as a matter of fact he did not offer himself as such. Defendant is as liquidator determined the contribution payable by the plaintiff without giving the plaintiff the notice to which he was entitled. Rs. 297/5 was the contribution thus fixed. Later on the order of the liquidator was executed and the property of the plaintiff was put up for sale. Having come to know of the impending sale and in order to save his property worth Rs. 3000 the plaintiff approached the registrar and offered to pay the amount of Rs. 297/5 to the department. The Cooperative department allowed the matter to drag on until at last the property of the plaintiff was sold and it was purchased by the liquidator. After the sale defendant 1 the registrar, agreed to return the property to the plaintiff if the latter made full payments of all his dues to the Cooperative department. The plaintiff was all along willing to pay the amount, but the defendants backed out of the contract and did not restore the property to the plaintiff. Failing to obtain any remedy at the hands of the defendants, the plaintiff served a notice on them u/s 80, Civil P.C. Cause of action according to the plaintiff accrued for the first time on 24th-January 1940 when the award was prepared.

The suit brought by the plaintiff-respondent was contested by all the defendants who filed separate written statements. It was denied that the plaintiff had any cause of action. The allegation in the plaint that the name of the plaintiff was fraudulently inserted in the loan register of the Society was denied. It was further case of the defendants that the liquidator determined the question of contribution after giving full opportunity to all persons concerned. It was also the defence case that there was no completed contract for the return of the property sold at the instance of the liquidator. Upon the pleadings of the parties the learned Munsif who tried the suit framed three issues of which the first was whether the award dated 24th January 1940 is illegal and liable to be set aside. The second issue was whether the plaintiff is entitled to ''get back the properties in suit after payment of Rs. 297/5. The last issue was whether the plain, tiffs are entitled to any reliefs.

The learned Munsif came to the conclusion that notice was served on the plaintiff and that he was given an opportunity of being'' heard before the award was passed. So far as the question of recovery of possession of the property in suit was concerned, the position was like this. On the date the suit was taken up for hearing the plaintiff filed an amendment petition to the effect that a decree for recovery of possession as also a decree for mesne profits might be passed after realizing proper court fees. It was found that the value of the property in question came to Rs. 3000 to Rs. 4000. If the suit was to be valued at Rs. 3000 or Rs. 4000 then the learned Mucsif could not try it because in that case it would have been beyond his pecuniary jurisdiction. The plaintiff thought it best not to press his prayer for amendment and so the question of any amendment of the plaint ended there. In '' the result, the learned Munsif dismissed the suit of the plaintiff with costs. The plaintiff there-after filed an appeal which was heard by the second Subordinate Judge of Arrah. The learned Subordinate Judge held that the suit was maintainable. It was argued before him that in view of the provisions of Section 57(2), Bihar and Orissa Co-operative Societies Act, the suit could not be maintained. This contention was negatived. As for the question as to whether there was a completed contract or not, the learned Subordinate Judge found against the plaintiff. The learned first lower appellate Court also found that no notice was served on the plaintiff in the award proceedings and for this reason he held that the liquidator had no jurisdiction to pass the award in question. Point No. 3 before the learned Subordinate Judge was whether the plaintiff stood surety for Yusuf Mian for the repayment of the loan taken by the latter. The finding is in favour of the plaintiff. The learned Subordinate Judge allowed the appeal with costs: Hence this second appeal.

At the time of the hearing of the appeal a registered post card was produced to show that notice as contemplated by Section (3)(8), Bihar and Orissa Co-operative Societies Act, was actually issued, but that the same was refused by the addressee. In the absence of the evidence of the postal peon the registered post card cannot be accepted in evidence to show that it was actually refused.

The learned Advocate for the appellants took his stand on Section 57 of the Act and contended that under Sub-section (2) of that section a suit could, be brought only by leave of the Registrar and subject to such terms as he might impose. The learned Advocate for the respondents, on the other hand, relied on sub Section (3) of Section 57. Sub-section (1) of Section 57 provides that:

Save in so far as is expressly provided in this Act, no Civil or Revenue Court shall have any jurisdiction in respect of any matter concerned with the winding up or dissolution of a registered society under this Act, or of any dispute required by Section 48 to be referred to the registrar.

Then comes Sub-section (2) which reads as follows:

While a society is in liquidation no suit or other legal proceeding shall be proceeded with or instituted against the liquidator as such or against the society or any member thereof on any matter touching the affairs of the society, except by leave of the Registrar and subject to such terms as he may impose." In the present case respondent Raghubir Ram instituted a suit against the liquidator appointed by the Registrar and the suit was against the liquidator as such. Further, it was a suit in which there was a prayer for a declaration that a certain award passed by the liquidator was; ultra vires and ineffective. The award was to the effect that respondent Ragbubir Earn who was a surety for one of the members of the society under liquidation was liable for the amount for which he was a surety. Thus all the requirements of Sub-section (2) of Section 57 are there and therefore one would think that the leave of the is Registrar was necessary. Let me now turn to Sub-section (3) of Section 57 to see whether according to-the provisions of this Sub-section it was not incumbent upon Raghubar Ram to apply for the-leave of the Registrar. Sub-section (3) may also be quoted in full:

No order of the local Government, District Judge Registrar, a person appointed to assist the Registrar, liquidator, or an arbitrator or arbitrators purporting to. be one, which under any provision of this Act is declared to be final, shall be liable to be challenged, set aside, modified, revised, or declared void in any Court, upon merits or upon any ground whatsoever except want of jurisdiction.

The argument that has been advanced on behalf of the respondents is that where an order passed : by a liquidator is challenged on the ground that; it was passed without jurisdiction, no leave of the Registrar is necessary. I do not think Sub-section (3) of Section 57 can bear an interpretation like this. This Sub-section merely says that certain orders passed by certain authorities including a-liquidator cannot be challenged on any other ground except that such an order was passed without jurisdiction. Sub-section (3) merely restricts the scope of the legal proceeding that maybe taken to avoid the effect of certain orders-passed by certain authorities including a liquidator. Sub-section (2) clearly lays down that no-suit or legal proceeding is to be proceeded with or instituted against the liquidator as such on. any matter touching the affairs of the society under liquidation except by leave of the Registrar and subject to such terms as he may impose. Sub-section (3) refers to certain orders which under the Act itself have been declared to be final. Section 44(6) provides that the orders of the liquidator, subject to any order of the District Judge on appeal shall be final. Similarly Section 48 which deals with disputes provides in Sub-section (9) as follows:

Save as expressly provided in this section, a decision, of the Registrar under this section, and subject to the-orders of the Registrar on appeal or review, a decisions given in a dispute transferred or referred under Clause (b) or (c) of Sub-section (2), shall be final.

All that Sub-section (8) of Section 57 lays down is that orders which are declared to be final under the Co-operative Societies Act can be challenged only on the ground of want of jurisdiction. Sub-section (2) of Section 57 refers to any suit or legal proceeding that can be instituted against the liquidator as such. Reading Sub-sections (2) and (3) together it is not difficult to see that whatever may be the scope of the suit or legal proceeding that may be instituted against a liquidator as such the leave of the Registrar will be necessary. If leave is refused no suit or legal proceeding can be instituted. In Shamji Lire v. Central Co-operative Bank Ltd. 1944 P.W.N. 172, during the pendency of an appeal against a Co-operative Bank the latter went into liquidation and the liquidator was made party respondent and the appellant applied to the Registrar u/s 57(2), Bihar and Orissa Co-operative Societies Act for leave to proceed with the appeal; but the permission was not given. It was held that the appeal was not maintainable. In the reported case the plaintiff, who was a contractor, sued for money which according to him was due to him from the Central Co-operative Bank Ltd. of Sitamarhi. When the suit was brought there was no question of any liquidator, but it was during the pendency of the appeal that the Bank went under liquidation and a liquidator was appointed. The circumstances of the present case are of course different from those of the reported case, but for the reasons already given, I am inclined to think that Sub-section (2) of Section 57 has full application to the facts of the present case Permission of the Registrar was necessary. Sub-section (3) of Section 57 can be of no avail to the plaintiff-respondent. In this view of the matter, the suit of the plaintiff was not maintainable and it should have been dismissed.

The appeal is allowed and the judgment and decree of the learned first appellate Court are set aside. The plaintiff''s suit stands dismissed. In the special circumstances of the case, how-ever, the parties will bear their costs throughout.

Sinha J.

The crucial question upon which the decision of the appeal hinges is whether the suit giving rise to this appeal, instituted without the leave of the Registrar of Co-operative Societies, is maintainable in view of the provisions of Section 57, Bihar and Orissa Co-operative Societies Act, 6 [VI] of 1935. As there are no precedents to guide us in the determination of this question, it is necessary to examine in detail the relevant provisions of the Act in order to appreciate the position. u/s 40 of the Act, the Registrar is empowered to determine whether any person, who had taken any part in the organization or management of a society governed by the Act, shall be liable to compensate the society in circumstances contemplated by that section. Such determination by the Registrar is declared to be final subject to the result of an appeal to the Provincial Government, and the orders of the Provincial Government on an appeal from the Registrar''s orders are also declared to be final. In chap. 6, relating to supersession of managing committees and dissolution of registered societies, the Registrar has been empowered by Section 41 to dissolve the managing committee of a society, and such an order has been declared final subject to the result of an appeal to the Provincial Government, and the orders of the Provincial Government on an appeal from the Registrar''s order have also been declared to be final. By Section 42, the Registrar has been empower, ed to order the winding up of a registered society. His orders u/s 42 are liable to an appeal to the Provincial Government u/s 43, and, subject to the result of such an appeal, his orders are declared to be final, and in the event of an appeal to the Provincial Government, their orders are declared to be final. u/s 44, the Registrar has been empowered to appoint a liquidator after he has passed an order for the winding up of a registered society. Such a liquidator has been vested with very wide powers of disposal of the assets of the society, of liquidation of its liabilities, of instituting and defending suits on behalf of the society, as also of doing such other acts as may be necessary for deter, mining the assets and liabilities of the society. Under Sub-section (5) of Section 44, an appeal may lie to the Court of the District Judge from certain orders of the liquidator, enumerated therein, with the special sanction of the Registrar. The Registrar has also been given powers of revision in respect of order passed by the liquidator of a registered society. The orders of the liquidator unless revised by the Registrar, and of the Registrar passed in his revisional jurisdiction, and of the District Judge in the event of an appeal as aforesaid have been declared to be final by Sub-section (6) of Section 44. Section 48 contains provisions for the reference to the Registrar of any disputes amongst members, past members or their representatives-in-interest or between them on the one hand and the society, its managing committee or any officer, agent or servant of the society on the other, or between the society and any other registered society. On such a reference, it is open to the Registrar to decide the dispute himself or to transfer the case for decision by any other officer exercising the powers of a Registrar in that behalf or to an arbitrator or arbitrators. By Sub-section. (5) of Section 48, the tribunal deciding the matter is authorized to pass "a mortgage award which shall have the same force as a mortgage decree of a competent civil Court," and, by Sub-section (6) of that section, provision is made for an appeal to the Registrar from the decision of the arbitrator or arbitrators or of the authority to whom the Registrar may have transferred the case. The Registrar is also vested with inherent jurisdiction to review orders passed by him or by other authorities on a reference by him. By Sub-section (8) of the section, the Registrar is empowered to state a case, and refer it to the District Judge for decision, and the decision of the District Judge, on such a reference, is declared to be final. Similarly, by Sub-section (9) of the section, the decision of the arbitrators or of the tribunal, to whom the Registrar may have transferred the case for disposal, is declared to be final subject to the orders of the Registrar on appeal or review which, in its turn, is declared to be final subject to the orders of the Registrar on appeal or review which, in its turn, is declared to be final. For the purposes o� determining the matters within their respective jurisdictions, the liquidator, the arbitrators, or any other authority exercising the powers of a Registrar, and the Registrar himself have been vested with the powers of a civil Court to summon and enforce the attendance of witnesses and parties concerned, and to examine them upon oath, and to compel the production of any books, documents, etc., as if they were civil Courts functioning under the Civil Procedure Code.

It will thus appear that the liquidator, the arbitrator or arbitrators, the Registrar or an officer discharging his functions, and ultimately, the Court of the District Judge have been vested with wide powers of determining the assets and liabilities of the society in question, and, in doing so, of determining the liabilities of members or of past members or their legal representatives to the society, and their decisions have been declared to be final subject, as aforesaid, to the result of an appeal provided by the Act itself. Similarly, certain orders of the Registrar in the matter of supersession of managing committees or of dissolution of registered societies or of the amount of compensation to be paid by the servants or agents of the society have been declared to be final subject to the result of an appeal to the Provincial Government whose orders are ultimately declared to be final. It would, therefore, appear that the Legislature has intended to provide for a special machinery which should deal with matters of civil nature speedily and finally--matters which would ordinarily be entertain able by the ordinary civil Courts in accordance with the elaborate procedure laid down in the Civil Procedure Code. It is settled by decisions of this Court and of the Judicial Committee of the Privy Council that, where a special machinery has been provided for adjudication of certain civil disputes, and the decision of that tribunal has been declared to be final, the jurisdiction of the civil Courts is barred: vide Secy. of State v. Kameshwar Singh AIR 1396 Pat. 87. The sections of the Act discussed so far make it clear beyond doubt that the decision of the tribunals created by the Act was intended to be final; but the Legislature. has provided further and enacted Section 57 relating to the bar of jurisdiction of the civil Courts. Sub-section (1) of Section 57 lays down an absolute bar in respect of matters specifically referred to in that Sub-section. Sub-section (2) of that section lays down a conditional bar to the institution of suits against the society, or any member thereof, or against the liquidator as such, during the pendency of the liquidation proceedings'' in respect of any matter touching the affairs of the society, "except by leave of the Registrar and subject to such terms as he may impose." In the present case it is not claimed that the leave of the Registrar has been obtained On the other hand, the indications in the record are that such a leave was prayed for and refused. But it is contended on behalf of the plaintiff-respondent in this Court that Sub-section (3) of Section 57 comes to his rescue, The question is whether Sub-section (3) of Section 57 permits a suit against the liquidator of the registered society to be instituted without the leave of the Registrar, because it is alleged in the plaint that the award of the liquidator against the plaintiff was without jurisdiction, the ground alleged being that the plaintiff had not been given notice of the proceedings. The learned Munsif, who tried the suit in the first instance, came to the conclusion that the plain, tiff had such a notice." The lower appellate Court has come to the contrary conclusion. The appellants have offered to adduce additional evidence to substantiate there allegation that the plaintiff had been given the usual notices as required by the Act. But, in my opinion, the question of admitting additional evidence at this stage need not be gone into, though, in my opinion, there are grounds worth considering for taking such a course. In the view I take of the legal position, it is not necessary to go into that question.

In my opinion, Sub-section. (3) does not control the provisions of Sub-section (2) of Section 57 Sub-section (2) prohibits a suit or legal proceeding against the liquidator, or the society, or any member thereof, on any matter touching the affairs of the society unless the leave of the Registrar has been obtained for the institution of such a suit or proceeding. On the other hand, Sub-section (3) declares again. the finality and conclusiveness of the order of the Provincial Government, the District Judge, the Registrar, the liquidator and other tribunals created by the Act, which have been declared final according to the provisions of Sections 40 to 44 and 48, as the case may be, and sets out one single ground, namely, "want of jurisdiction" on which such an order may be "set aside, modified, revised, or declared void in any Court." In other words Sub-section (3) restricts the grounds on which such final orders of the authorities created by the Act as aforesaid may be challenged, not in limine but subject to the restriction as regards the leave of the Registrar in such cases as are within the purview of Sub-section (2) of Section 57. It is clear, therefore, that the two Sub-sections deal with entirely different matters, on laying down the necessity of the leave of the Registrar in certain specified cases (like the present), while the other declaring the single ground on which the final orders of the authorities created by the Act may be challenged. Hence, it is true to say that a suit brought with the leave of the Registrar as contemplated in Sub-section (2) may fail if the ground of "want of jurisdiction" is not made out. But a suit in which that ground is made out will fail on the ground of maintainability, in the absence of the necessary leave of the Registrar.

In this view of the matter, it is not necessary to consider the further question whether non-service of notice on the plaintiff (assuming that the finding of the lower appellate Court that there was no notice to the plaintiff is correct) can come within the purview of Sub-section (3) of Section 57. If notice is issued but note served either by the negligence of the serving peon or on account of mistaken identity, that circumstance may not attract the provisions of Sub-section (3). In my opinion, it is only in cases where the statutory notice is not issued at all that the question of "want of jurisdiction" can arise. But this matter need not be pursued further in view of the conclusion I have already arrived at in agreement with my learned brother that the absence of the necessary leave of the Registrar vitiates the entire proceedings in this suit, which must be dismissed, on that ground alone. On these grounds, I agree with my learned brother that the appeal should be allowed and the suit dismissed but without costs in the circumstances.