Shri H.S. Sur vs National Federation Of ...
2002 Latest Caselaw 387 Del

JUDGMENT

Dalveer Bhandari, J.

1. This appeal is directed against the judgment of the learned Single Judge dated 22nd August, 1988 by which the appellant's application under Order 7 Rule 11 rad with Section 151 Code of Civil Procedure was dismissed.

2. The respondent (plaintiff in the suit) filed a suit for recovery or s. 1,17,492.68 on the allegation that the appellant (defendant in the suit) was the Managing Director of the respondent from 1st May, 1982 to 31st December, 1985 and as such the Chief Executive of the respondent Cooperatives Ltd for general control over the administration in conformity with the Act, Rules and Bye-Laws.

3. The respondent allowed advances of various sums and purchased air tickets and other accessories from 29.6.1982 to 3.6.1985 onwards for the foreign and inland travels. The appellant was required to submit the adjustment bills for these advances within three months of the completion of the tour in accordance with the Accounts Code. The appellant had performed the foreign and domestic trips as per Annexure-I to the plaint. The Annexure-I is reproduced hereinbelow:

THE NATIONAL FEDERATION OF INDUSTRIAL COOPERATIVE LIMITED

NEW DELHI

STATEMENT SHOWING THE AMOUNT ADVANCED TO SH.H.S.SUR

AND THE TA/DA BILLS SUBMITTED BY HIM DURING 29.6.82

TO 3.6.85.

--------------------------------------------------------------------------------

Journey      performed              Purpose                    Amount Advanced
From         to

--------------------------------------------------------------------------------

29.6.82      10.7.82                Foreign tour               29,021.96
23.10.82     1.12.82                Foreign tour               79,309.72
10.3.83      13.3.93                Ludhiana tour                 840.00
24.8.83      25.8.83                Calcutta tour               2,192.00
26.6.84      29.6.84                Ludhiana tour               1,090.00
6.10.84      8.10.84                Ludhiana tour                 890.00
10.4.85      14.4.85                Calcutta tour               2,643.00
3.6.85       3.6.85                 Ahmedabad tour              1,506.00
                                                            --------------------
                                                             1,17,492.68
                                                            --------------------
 

 

4. It is undisputed that the appellant had visited the various foreign countries and places in India on official tours.

5. Annexure-II of the plaint indicates that the appellant had participated as the Chief Executive of the Federation in the Third International Cooperative Trade Conference held from 1st to 3rd November, 1982 along with the Chairman and claimed payment of US$ 500 paid towards subscription for participation in the said conference. The said amount was paid by the appellant from his traveller's cheque. He had requested that the said amount be included in the expenses for the said tour.

6. Annexure-III to the plaint is the office note sent by the appellant showing that he had claimed reimbursement of the amount of excess baggage paid on his trip to Rome-Pisa-Rome-London from 29.6.1982 to 9.7.1982. In the plaint it is mentioned that the appellant submitted the belated claims beyond permissible limits and he had forfeited his right of reimbursement under the rules. it is also mentioned that the respondent, Cooperatives Ltd is not liable to reimburse these amounts because the appellant had forfeited his claim of TA/DA for the tours.

7. On receiving court's summons, the appellant filed an application under Order 7 Rule 11 read with Section 151 CPC for rejection of the plaint. The learned Single Judge after hearing the learned counsel for the parties dismissed the application of the appellant on the ground that the matter does not relate to the constitution, management or business of the society and the question of ouster of the jurisdiction of the civil court under Section 74 of the Act does not arise.

8. The appellant aggrieved by the order of the learned Single Judge preferred this appeal before this Court. It is submitted that the learned Single Judge erred in arriving at the conclusion that the disputes raised by the respondent-plaintiff in the plaint did not relate to the business or management of the cooperative society. It is mentioned in the appeal that the suit was for recovery of the amounts alleged to have been paid to the appellant in connection with the official tours undertaken by him in connection with the business and management of the respondent society.

9. It is further submitted that the appellant was an employee and an officer of the respondent society and the amounts, recovery whereof was sought by the respondent, were claimed to have been advances by the respondent to the appellant for the purposes and in connection with the management or business of the respondent society.

10. It is also mentioned in the appeal that the disputes raised by the respondent (plaintiff) in the suit were such as are required to be referred to the Central Registrar for decision and no court has any jurisdiction to entertain any suit or other proceedings in respect of such disputes. It is also mentioned that the learned Single Judge ought to have dismissed the suit as the same was barred by the provisions of Section 74, 105 and 101 of The Multi-State Cooperative Societies Act, 1984.

11. Section 74 of The Multi-State Cooperative Societies Act, 1984 reads as under:

Section 742

(1) Notwithstanding anything contained in any other law for the time being in force, if any dispute (other than a dispute regarding disciplinary action taken by a multi-State cooperative society against its paid employee or an industrial dispute as defined in Clause (k) of Section 2 of the Industrial Disputes Act, 1947) touching the constitution, management or business of a multi-State cooperative society arises-

(a) among members, past members and persons claiming through members, past members and deceased members, or

(b) between a member, past member of a person claiming through a member, past member or deceased member and the multi-State cooperative society, its board or any officer, agent or employee of the multi-State cooperative society or liquidator, past or present, or

(c) between the multi-State cooperative society or its board and any past board, any officer, agent or employee, or any past officer, past agent or past employee or the nominee, heirs or legal representatives of any deceased officer, deceased agent, or deceased employee of the multi-State cooperative society, or

(d) between a multi-State cooperative society and liquidator of another multi-State cooperative society or between the liquidator of one multi-State cooperative society and the liquidator of another multi-State cooperative society,

such disputes shall be referred to the Central Registrar for decision and no court shall have jurisdiction to entertain any suit or other proceedings in respect of such dispute:

Provided that all disputes in which a national cooperative society is a party shall be referred to the Central Registrar or any officer empowered to exercise the powers of the Central Registrar.

12. According to the learned counsel for the appellant, the amount which the respondent society wants to recover from the appellant pertains to the official tour/trips which the appellant had undertaken in connection with the management and business of the society. According to Section 74, if any dispute touching the constitution, management or business of a Multi-State Cooperative Society arises then the said dispute shall be referred to the Central Registrar for decision and no court shall have jurisdiction to entertain any suit or other proceedings in respect of such dispute. Even according to the annexures filed with the plaint, it is absolutely clear that the appellant had undertaken foreign and domestic tours in connection with the management or business of the respondent, clearly touching the constitution, management and business of a Multi-State Cooperative Society.

13. The appellant had gone to attend the 'Third International Cooperative Trade Conference' as the General Manager of the National Federation of Industrial Cooperation Ltd. The domestic travels and trips abroad were directly in connection with the management and business of a Multi-State Cooperative Society. The trips had certainly touched the management and business of a Multi-State Cooperative Society. According to Section 74(1) of the Multi-State Cooperative Society Act, all disputes in which a National Cooperative Society is a party shall be referred to Central Registrar or any other officer empowered to exercise the powers of the Central Registrar and no court shall have the jurisdiction to entertain any suit or other proceedings in respect of such disputes.

14. The learned counsel for the appellant to strengthen his submission has placed reliance on the Full bench judgment of the Madras High Court M.S. Madhava Rao and Ors.

v. D.V.K. Surya Rao . 'In the said judgment the expression "dispute touching the business of a registered society" has been elaborated. The words "touching the business of a society" must be given their full import. The court should bear in mind the object of the legislation, which brought into existence these corporations for a definite purpose, was not only to confer complete autonomy on them in matters of internal administration but as part and parcel of the same scheme to set up a forum to settle what may be generally referred to as their internal disputes finally and without interference by the ordinary Court of the land. The word "touching" does not present much difficulty, as its dictionary meaning is "in reference or relation to, respecting, regarding or concerning" thus indicating that the disputes need not directly arise out of the business of the society; but that it is enough that it should have reference or relation to or concern the business of the society. The word "touching" was clearly not intended to restrict the meaning of the word "business"; it was designed to enlarge its scope. The disputes were not to be restricted to matters arising from and out of the business of the society, but were also extended to matters which are in some way concerned or related to the business of the society. The word "business" is used in difference senses in different contexts. The dictionary meaning of the word includes "activity, occupation, function and a person's business includes the work to be done on his behalf."

15. In G.I.P. Railway Employee Cooperative Bank v. 'Bhijaki Merwanji', AIR 1943 Bom 341, Chagla J. (as he then was) expressed the opinion that the word "business" was a very wide term & was not synonymous with the objects of the society, and that the expression "touching the business of a society" would mean affecting the business of a society or relating to the business of a society, and that it cannot be said that when a company employees or dismisses a servant, it does not do something which relates to its business. it is true that it is not one of the objects of the company to employee or dismiss servants; but it is something which it does in the ordinary course of business, and whatever is done in the ordinary course of business certainly relates to or affects the business.

16. In another leading case of the Madras High Court P. Dasaratha Rao v. C. Subbarao, AIR 1923 Madras 481(P), the Hon'ble Judges observed that "touching the business of a society" need not be confined to a dispute regarding the internal management of the affairs of a society or disputes in regard to the principles which would regulate the conduct of the business. Even a transaction which arises in the course of the business of the society is within the expression "touching the business of a society".

17. Learned counsel for the appellant has also placed reliance on the Supreme Court judgment in Naygarh Cooperative Central Bank Ltd. v. Narayana Rath and Ors., . In this case the appellant was a Cooperative Bank. Its as registered as a Cooperative Society under the Act and had among its objects, raising funds for financial cooperative societies registered under the Act affiliated to it besides carrying on the general business of a bank. Three such cooperative societies had applied to the appellant Bank for loans and on the recommendation of the first respondent who at the relevant time was employed as Secretary of the Bank, various sums were advanced to these cooperative societies. Attempts to recover the loan advanced to the aforesaid societies having failed, the appellant Bank referred the disputes concerning the said transactions to arbitration under Section 68 of the Act praying for an award in each case for the sum advanced with interest; the claim was made in each case, against the indebted society, its office-bearers and the first respondent jointly and severally.

18. Their Lordships of the Supreme Court were satisfied that the reference under Section 68(1) was valid and the order of the High Court quashing the same was illegal. According to Section 68(4) a dispute referred to the Registrar under this section is a dispute touching the constitution, management or the business of a society, the decision thereon of the Registrar shall be final and shall not be called in question in any court.

19. The court observed that in view of the provisions of Section 68(4) which is pair materia with Section 74 of The Multi-State Cooperative Societies Act, 1984, the Registrar must decide before the writ jurisdiction of the High Court is allowed to be invoked.

20. Learned counsel for the appellant also placed reliance on the judgment of the Supreme court in Prem Jeet Kumar v. Surender Gandotra and Ors., 45 (1991) DLT 210. In this case their Lordships of the Supreme Court delate with Section 60(1)(c) of Delhi Cooperative Societies Act, 1978 According to which if any dispute touching the constitution, management or business of a cooperative society arises between the society or its committee and any past committee, any officer, agent or employee or any past officer of the society, the dispute shall be referred to arbitration.

21. Their Lordships of the Supreme Court relied on the judgment passed in Pentakota Srirakulu v. The Cooperative Marketing Society Ltd., . This decision was rendered with reference to the Madras Cooperative Societies Act, 1932 wherein Section 51 relating to the settlement of disputes by arbitration was the provision corresponding to Section 60 of the Delhi Act. Clause (c) of Sub-section (1) of Section 51 of the Madras Act was substantially the same as Clause (c) of Sub-section (1) of Section 60 of the Delhi Act. The explanation in Sub-section (1) of Section 51 of the Madras Act was substantially similar to Clause (a) of Sub-section (2) of Section 60 of the Delhi Act.

22. In Srirakulu also the facts disclosed in the inquiry that certain loss was caused to the society by the acts of past Managing Committee and, therefore, a special officer appointed to look into the affairs of the society made a claim under Section 51 of the Madras Act before the Registrar against the past President of the Society. It was held that the Registrar's order under Section 51 of the Madras Act could not be challenged. The court observed that no significant difference between the provisions of the Madras Act which form the basis of this Court's decision in Srirakulu and Sections 59 and 60 of the Delhi Act with which we are concerned to justify taking a different view.

23. In the present case, as it is earlier indicated, Section 68 is akin to Section 74 of the Multi-State Cooperative Societies Act, 1984. According to Section 74 of the Multi-State Cooperative Societies Act, 1984 if any dispute touching the constitution, management or business of a Multi-State Cooperative Society arises, then the said dispute shall be referred to the Central Registrar and no Court shall have jurisdiction to entertain any suit or Proceedings in respect of such dispute.

24. The TA and DA bills of the appellant pertained to foreign and domestic trips undertaken for the business and management of the respondent cooperative society. Therefore, such disputes have to be referred to the Central Registrar for decision under Section 74 of the Multi-State Cooperative Societies Act and the Courts shall have no jurisdiction to entertain any suit or other proceedings in respect of such dispute.

25. This appeal is allowed and the order of the learned Single Judge is set aside. Consequently, the plaint be returned for presentation before the Central Registrar or any other Tribunal or forum which has jurisdiction to deal with the plaint. The parties are directed to bear their own costs.