T.S. Narayana Aiyar and Others vs The Co-operative Urban Bank Ltd. and Another

King, J.—This is a petition requesting issue of a writ of prohibition to the Deputy Registrar of Co-operative Societies, Tinnevelly, in the

following circumstances. A dispute arose between the Tinnevelly Co-operative Urban Bank, Ltd., and six persons who are members of the bank

and were all its directors, regarding the loss sustained by the bank owing to the negligence of these persons in sanctioning a certain loan. It may be

mentioned that of these six persons five are no longer directors of the bank though they still continue to be members and the sixth remains a

director. The dispute was referred to the Registrar of Co-operative Societies u/s 51 of the Madras Co-operative Societies Act VI of 1932, for

decision by him and it was referred by him to the Deputy Registrar.

The present petitioners who are the five ex-directors referred to, objected to the jurisdiction of the Deputy Registrar on the ground that the

dispute did not fall within the terms of Section 51 of the Act. The Deputy Registrar passed orders on this preliminary objection to the effect that he

had jurisdiction and the petitioners now wish this Court to issue a writ of prohibition against any further proceedings in the arbitration.

It is of course conceded that the dispute in question is one touching the business of the bank. The question then has to be decided whether it

comes within Clause (b) or Clause (c) of Section 51. Clause (b) refers to a dispute between a member, past member or person claiming through a

member, past member or deceased member and the society. No doubt the present petitioners are members of the society but it is quite clear that

the dispute in question concerns none of their actions or claims as members but only their actions as directors. On the authority of an English case

The Municipal Permanent Investment Building Society v. Richards (1888) 39 Ch. D. 372, it is quite clear that Clause (b) cannot be applied to the

present case. Clause (c) relates to disputes between the society or its committee and any officer, agent or servant of the society. Clearly this clause

would apply to the existing directors and the question to be decided is whether it would apply to persons who were once directors and whose

action as such directors is the subject-matter of dispute but who at the time of the reference to the Registrar are no longer directors.

Prima facie I would have been inclined to hold that Clause (c) would apply were it not for the fact that in Sections 51 and 49 specific reference

is made to past officers. In Section 49(1) for instance it is said, that:

Where in the course of an audit...it appears that any person who has taken part in the organisation or management of the society or any past or

present officer of the society has misappropriated....

the Registrar may take certain steps. In Section 51(b) which immediately precedes the clause which we are now discussing, reference is

specifically made to disputes between ""a member, past member or person claiming through a member, past member or deceased member and the

society, its committee or any officer, agent or servant of the society"". When we find these two instances of particular reference being made in the

Act itself to past officers and past-members it seems to me that if this Clause (c) was intended to apply to a dispute of this kind between the

society and its past officers specific mention would have been made of past officers in this clause also. In the absence of such specific reference

that clause cannot, I think, apply to the present dispute. The result is that the Registrar has no jurisdiction u/s 51 to decide this dispute and a writ of

prohibition must issue. The petitioners'' costs which I fix at Rs. 100 will be paid by the bank which is represented by the first respondent.