Karnataka High Court
Sulochana W/O Umapathi Salimath vs Chief Executive Officer on 12 December, 2023
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RSA No. 100617 of 2022
IN THE HIGH COURT OF KARNATAKA DHARWAD
BENCH
DATED THIS THE 12TH DAY OF DECEMBER, 2023
BEFORE
THE HON'BLE MRS JUSTICE K.S.HEMALEKHA
REGULAR SECOND APPEAL NO.100617 OF 2022 (DEC/INJ)
BETWEEN:
1. SULOCHANA W/O. UMAPATHI SALIMATH
AGE. 54 YEARS, OCC. HOUSEHOLD
R/O. CHALAGERA, TQ. KUSTAGI
DIST. KOPPAL.
2. RAJASHEKHAR S/O UMAPATHI SALIMATH
AGE. 34 YEARS, OCC. AGRI.,
R/O. CHALAGERA, TQ. KUSTAGI
DIST. KOPPAL.
...APPELLANTS
(BY SRI. SANTOSH D.NARAGUND, ADVOCATE)
AND:
1. CHIEF EXECUTIVE OFFICER,
HANUMASAGAR URBAN CO-OP BANK LTD.,
SRINIVAS COMPLEX, I FLOOR,
COLLEGE ROAD, HANUMASAGAR
TQ. KUSTAGI, DIST. KOPPAL.
Digitally signed
by VISHAL
NINGAPPA
2. UMAPATHI S/O PANCHAKSARAYYA SALIMATH
VISHAL PATTIHAL
NINGAPPA Date: AGE. 64 YEARS, OCC. AGRI.,
PATTIHAL 2023.12.21 R/O. CHALAGERA, TQ. KUSTAGI
15:03:34
+0530 DIST. KOPPAL.
...RESPONDENTS
(BY SRI. SHIVANAND MALASHETTI, ADVOCATE FOR
SRI. SHIVARAJ P. MUDHOL, ADVOCATE FOR R1;
NOTICE TO R2 IS SERVED)
THIS REGULAR SECOND APPEAL IS FILED UNDER SECTION 100 OF
THE CODE OF CIVIL PROCEDURE, 1908, AGAINST THE JUDGMENT AND
DECREE DATED 01.10.2021 PASSED IN R.A.NO.06/2017 ON THE FILE OF
THE SENIOR CIVIL JUDGE, KUSHTAGI, DISMISSING THE APPEAL AND
CONFIRMING THE JUDGMENT AND DECREE DATED 09.01.2017, PASSED IN
O.S. NO.292/2013 ON THE FILE OF THE CIVIL JUDGE AND JUDICIAL
MAGISTRATE FIRST CLASS, KUSHTAGI, DISMISSING THE SUIT FILED FOR
DECLARATION AND INJUNCTION.
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RSA No. 100617 of 2022
THIS REGULAR SECOND APPEAL, COMING ON FOR ORDERS,
THIS DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
The present second appeal by the plaintiffs against
the concurrent findings of the Courts below, whereby, suit
for declaration and injunction came to be dismissed as not
maintainable under Section 118 of the Karnataka
Cooperative Societies Act, 1959 (hereinafter referred to as
'the Act' for short).
2. This Court while admitting the appeal on
07.04.2022 has framed the following substantial question
of law:
"1. Whether both courts are justified in
dismissing suit of plaintiffs on preliminary issue
where clear mixed questions of facts and law
are involved and trial is necessary to decide
such issues?"
3. Sri Santosh D. Nargund, learned counsel for the
appellants and Sri Shivanand Malashetti, learned counsel
for Sri Shivaraj P. Mudhol, learned counsel appearing for
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the respondents have been heard on the substantial
question of law framed by this Court.
4. Learned counsel for the appellants would
contend that the plaintiffs have been declared as the
owners of the suit property by virtue of the Judgment and
decree dated 19.09.2006 in OS No.181/2006 passed by
the Civil Judge, Kushtagi. It is further contended that
defendant No.1 has extended the loan to defendant No.2-
the father of plaintiff No.2 and husband of plaintiff No.1.
Learned counsel would contend that though defendant
No.2 had obtained a loan in respect of the suit schedule
property, the plaintiffs are neither the guarantor to the
said loan alleged, nor the suit property has been
mortgaged for such a loan and the action of defendant
No.1 in recovering the alleged loan amount of defendant
No.2 from the properties of the appellants-plaintiffs, is
absolutely illegal.
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5. Learned counsel would contend that the
plaintiffs are not parties before the JRCS and the Courts
below have erroneously held that the suit is not
maintainable under Section 118 of the Act and is highly
unjustifiable. Learned counsel would contend that the
substantial question of law raised by this Court needs to
be answered in favour of the appellants.
6. Per contra, learned counsel for the respondent
No.1 would justify the Judgment and decree of the trial
Court and would contend that defendant No.2 has availed
a loan from the Bank for a security purpose by mortgaging
the suit schedule property and subsequently, by entering
into a compromise between his family members in OS
No.181/2006, the suit schedule property was allotted to
the share of plaintiff No.1. Learned counsel would contend
that the action/conduct of the plaintiffs in filing the suit is
to defraud the Bank from recovering the suit property
against defendant No.2.
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7. This Court has carefully considered the rival
contentions urged by the learned counsel appearing for
the parties and perused the materials on record.
8. The undisputed fact is that defendant No.2 had
obtained a loan from defendant No.1-Bank, for security
purpose he had mortgaged the suit schedule property. OS
No.181/2006 was filed by the plaintiffs against defendant
No.2, a collusive decree was obtained by way of
compromise and the suit schedule property stood allotted
to the share of the plaintiffs and the present suit was filed
by the plaintiffs seeking for declaration and injunction on
the basis of a collusive decree between the plaintiffs and
defendant No.2 in OS No.181/2006.
9. The trial court, on the basis of the pleadings,
oral and documentary evidence, held that the suit of the
plaintiffs is not maintainable before the Civil Court. The
first appellate court, being the last fact-finding court, has
re-assessed and re-appreciated the entire oral and
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documentary evidence and has arrived at a conclusion,
holding that the suit of the plaintiffs is not maintainable
and is barred before the Civil Court. In order to answer the
substantial question of law framed by this Court, the
necessary provisions of the Act need to be looked into.
Section 70 of the Act reads as under:
"70. Disputes which may be referred to
Registrar for decision. --
(1) Notwithstanding anything contained in any law
for the time being in force, if any dispute touching
the constitution, management, or the business of a
co-operative society 2[XXXX] arises,--
(a) among members, past members and
persons claiming through members, past
members and deceased members, or
(b) between a member, past member or
person claiming through a member, past
member or deceased member and the
society, its [board] or any officer, agent or
employee of the society, or
(c) between the society or its 4[board] and
any past [board], any officer, agent or
employee, or any past officer, past agent or
past employee or the nominee, heirs, or
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legal representatives of any deceased
officer, deceased agent, or deceased
employee of the society, or
(d) between the society and any other co-
operative society, 6[or a credit agency]
such dispute shall be referred to the
Registrar for decision and [no civil or
Labour or Revenue Court or Industrial
Tribunal] shall have jurisdiction to entertain
any suit or other proceeding in respect of
such dispute.
(2) For the purposes of sub-section (1), the following
shall be deemed to be disputes touching the
constitution, management or the business of a
cooperative society, namely,--
(a) a claim by the society for any debt or
demand due to it from a member or the
nominee, heirs or legal representatives of a
deceased member, whether such debt or
demand be admitted or not;
(b) a claim by a surety against the principal
debtor where the society has recovered
from the surety any amount in respect of
any debt or demand due to it from the
principal debtor, as a result of the default of
the principal debtor whether such debt or
demand is admitted or not;
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[(c) any dispute arising in connection with
the election of a President, Vice-President or
any office-bearer or Member of board of the
society;]
[(d) any dispute between a co-operative
society and its employees or past
employees or heirs or legal representatives
of a deceased employee, including a dispute
regarding the terms of employment,
working conditions and disciplinary action
taken by a co-operative society
[notwithstanding anything contrary
contained in the Industrial Disputes Act,
1947 (Central Act 14 of 1947)];
(e) a claim by a co-operative society for any
deficiency caused in the assets of the co-
operative society by a member, past
member, deceased member or deceased
officer, past agent or deceased agent or by
any servant, past servant or deceased
servant or by its 1[board], past or present
whether such loss be admitted or not.]
(3) If any question arises whether a dispute referred
to the Registrar under this section is a dispute
touching the constitution, management or the
business of a co-operative society, the decision
thereon of the Registrar shall be final and shall not
be called in question in any court.
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[(4)XXXXX.
(5) XXXXX.]"
10. The supporting provisions is Section 118 of the
Act, which reads as under:
"118. Bar of jurisdiction of Courts.-(1) Save as
provided in this Act, no 1[Civil, Labour or Revenue
Court or Industrial Tribunal] shall have jurisdiction in
respect of,-
(a) the registration of a co-operative
society or bye-laws or of an amendment of
a bye-law;
(b) the removal of a member or the
removal and disqualification of a director or
the removal of a board;
(c) any surcharge application required
under Section 69 or any dispute required
under Section 70 to be referred to the
Registrar or the recovery of moneys under
Section 100 or the execution of any award
or order referred to the Registrar for
execution under Section 101.]
(d) any matter concerning the winding
up and the dissolution of a co-operative
society.
(2) While co-operative society is being wound up, no
suit or other legal proceedings relating to the
business of such society shall be proceeded with, or
instituted against, the Liquidator as such or against
the society or any member thereof, except by leave
of the Registrar and subject to such terms as he may
impose.
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(3) Save as provided in this Act, no order, decision
or award made under this Act shall be questioned in
any Court on any ground whatsoever."
11. A conjoint reading of the above provision, it
clearly discloses that when the dispute is between the
members, past members and persons claiming through
members, past members and deceased members and
between the society or its any officer, agent or employee
or any past officer, past agent or past employee or
nominee, heirs or legal representatives of any deceased
officer, deceased agent, or deceased employee of the
society or between the society and any other Co-Operative
Society or a credit agency and if the dispute falls under
Section 70 of the Co-Operative Societies Act, Civil Courts
have no jurisdiction to entertain any suit. In the present
case, the plaintiffs are claiming through defendant No.2,
who is the member and it touches the business of the Co-
Operative Society as envisaged under Section 70 (2) (a) to
(d) of the Co-Operative Societies Act and goes without
saying that the dispute relates to the business of the Co-
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Operative Societies to attract Section 70 and barring the
suit under Section 118 of the Act.
12. The Trial Court treated issue No.1 as
preliminary issue, which reads as under:
"Whether the suit is maintainable in view of bar
under Section 118 (3) of the Karnataka State Co-
Operative Societies Act, 1959?"
13. The trial Court dismissed the suit on preliminary
issue and held that the Civil Court was barred from
entertaining the suit under Section 118 (3) of the Act. The
said order of the trial Court was confirmed by the first
appellate Court. The Courts below have rightly arrived at a
conclusion that the suit of the plaintiffs is expressly barred
as per Section 118 (3) of the Act. The manner in which,
the Courts below have considered the entire oral and
documentary evidence and the law laid down in respect of
the Civil Courts jurisdiction being barred by any law,
where it appears from the statement in the plaint as
envisaged under Order VII Rule 11 (b) CPC and the trial
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Court was right in dismissing the suit on preliminary issue,
as the preliminary issue raised regarding bar of the suit
before the Civil Court involves question of law and the trial
Court need not decide the said issue and this Court is of
the considered view that the substantial question of law
framed by this Court needs to be answered against the
appellant. Accordingly, this Court pass the following:
ORDER
i) The regular second appeal is hereby
dismissed.
ii) The Judgment and decree of the Courts
below stands confirmed.
Sd/-
JUDGE
PJ, CT: UMD
