Ram Kumar Sharma & Ors. v. The Rohtak Central Cooperative Bank & Ors.

execution of the award has called upon the plaintiff-respondent Shish Ram to pay the amount of loan, therefore, defendant-respondent be restrained from executing the award dated 16.4.1971 for Rs.22,515/- against the plaintiff. The present appeal has been instituted by the legal representatives of plaintiff. Hence, they will be hereinafter called as plaintiff-appellants. In response to the issuance of notice, written statement was filed by the defendant-respondent wherein they took a specific plea that the award passed by the Arbitrator cannot be challenged before the Civil Court. RSA No.2942 of 1988 -: 2 :- Case set out by the plaintiff was that his predecessor-in-interest Sardara had executed khilafatnama and his property was mortgaged by Jahangirpur Cooperative Joint Farming Society, Jahangirpur (in short the Society) in favour of the Rohtak Central Cooperative Bank, Rohtak in consideration of loan amount of Rs.18,000/- granted by the Jahangirpur Society. The award passed by the Arbitrator is Ex.P3. The relevant portion of the award reads as under:- “Now, therefore, I Risal Singh having duly considered the matter hereby direct that the Jahangirpur Cooperative Joint Farming Society Ltd. through the President and the property given above of Shri Chandgi Ram s/o Kanhia, Shri Sardara, Shri Bhagwana Ss/o Shri Ramji Lal, Shri Manphul s/o Shri Alha, smt. Derkana do pay to the Rohtak Central Cooperative Bank Rohtak interest at 9.5% to this date, and Rs.3520/- costs or Rs.22518/- in all, together with interest at the rate of 9.5% per annum until the realization of the principal amount: viz Rs.17600/-. The above amount shall be paid by 15.5.71 if it is not so paid, the amount may be realized through a civil court, either by the sale of all property of the debtor and his sureties, which was specifically mortgaged for the satisfaction of this debt and which is shown in detail in the schedule attached to this award, or of any other property belongs to the debtor, or both or by arrest of the debtor.” The trial Court on issue No.1, returned a finding that by virtue of revenue record, the plaintiff has become owner in possession of 1/3rd land described in para 1 of the plaint. On issues No.2 & 3, the trial court held that the award Ex.P-3 was not binding upon the plaintiff and decided issues No.2 and 3 against the defendants. On issue No.4, the Court held that the plaintiff has every locus standi to institute a suit. On issue No.5, the court RSA No.2942 of 1988 -: 3 :- held that even though the jurisdiction of the civil court is barred under Section 32 of the Arbitration Act, 1940 since the award was illegal, the plaintiff could challenge the award in civil court. Thus, the suit filed by the plaintiff was decreed. Defendant-respondent filed an appeal. The lower appellate court held that Sardara, who was the President of the Jahangirpur Society, was instrumental in passing of various resolutions from time to time. The Society under the presidentship of Sardara had obtained a loan of Rs.18,000/- from the Bank and had, vide resolution Ex.DW1/B had given an authority to Chandagi Ram to execute the mortgage deed on behalf of the Society. After considering the entire gamut, the lower appellate court held as under:- “10. ... I fail to understand how the liability can be put on the remaining members of the society. A complete go by has been given to the provisions of Punjab Cooperative Societies Act while deciding these two issues. Section 30 of the Punjab Cooperative Societies Act, 1961 says that a cooperative society formed under this Act will be a body corporate having perpetual succession. It means that the cooperative society is uneffected by the death of its members when he read the provisions of Section 30 with the provisions of Section 21 of the said Act. Section 21 of the Punjab Cooperative Societies Act, 1961 says that on the death of a member, cooperative society may transfer the share of interest of the deceased member to a person nominated in accordance with the rules and if there is no person so nominated to such person as may appear RSA No.2942 of 1988 -: 4 :- to the Committee to be the heir of legal representative of the deceased member, or pay to such nominee, heir or legal representative, as the case may be, a sum representing the value of such member's share or interest as ascertained in accordance with the rules or by-laws. The provisions of Section 21 of the said Act regarding the transfer of the share of a deceased member to his heir goes to show that by death rights of the members do not come to an end in the society. The moment Sardara died, his heir, the plaintiff, became the member in his place and he is bound by the act of the society done as a whole through its treasurer Chandgi ram. There is nothing on record to suggest that Sis Ram ever indicated to the society that he would not continue as a member nor there is any evidence to show that the society ever assessed the value of the share of Sardara deceased and that the value of such share was actually paid to the heirs of Sardara deceased. The only conclusion, which follows from the provisions of Punjab Cooperative Societies Act, 1961, and the evidence on record of the case is that the moment Sardara died, Sis Ram, his heir became the member of the society and still continues to hold such status. The terms and conditions embodied in the deed of membership Ex.P1 also need a reference at this stage. ...” Therefore, the findings returned by the trial court on issues no.2 and 3 were reversed by the lower appellate court. The lower appellate court further rightly held that in view of Sections 55 and 82 of the Punjab Cooperative Societies Act, 1961, jurisdiction of the civil court was barred, RSA No.2942 of 1988 -: 5 :- the trial court had committed a grave error in not considering Sections 55 and 82 of the aforesaid Act and had wrongly relied upon Section 32 of the Arbitration Act, 1940. Section 55 of the Punjab Cooperative Societies Act, 1961, which was prevalent at that time, reads as under:- “55. Disputes which may be referred to arbitration – (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 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 committee or any officer, agent or employee of the society or liquidator, past or present; or (c) between the society or its committee and past committee, any officer, agent or employee, or any past officer, agent or past employee or the nominee, heirs or 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, between a society and liquidator of another society or between the liquidator of one society and the liquidator of another society. Such disputes shall be referred to the Registrar for the decision and no court shall have jurisdiction to entertain any suit or other proceeding in respect of such dispute. (2) For the purpose of sub-section (1) , the following be RSA No.2942 of 1988 -: 6 :- deemed to be disputes touching the constitution, management or the business of cooperative society, namely- (a) a claim by the society for any debt or demand due to it form 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 society 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; (c) any dispute arising in connection with the election of any Officer of the society. (3) if any question arises whether a dispute referred to the registrar under this section is or not 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.” Section 82 of the Punjab Cooperative Societies Act, 1961 specifically bars the jurisdiction of the Civil Court. Section 82 of the Punjab Cooperative Societies Act, 1961 reads as under:- “82. Bar of jurisdiction of Court:- (1)Save as provided in the Act, no civil or revenue Court shall have any jurisdiction in respect of- (a) the registration of a co-operative society or its bye-laws or of any amendment of a bye-law; (b) the removal of a committee; RSA No.2942 of 1988 -: 7 :- (c) any dispute required under Section 55 to be referred to the Registrar; and (d) any matter concerning the winding up and the dissolution of a co-operative society, (2) While a 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 . (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.” On 1.12.2010, the matter was adjourned for today to enable the Counsel for the appellants to find case law from which this Court could deduce that the Civil Court has jurisdiction to try the suit. No judgment in support of the contention, that Civil Court can try the suit where the award is palpably wrong, has been brought to the notice of this Court. Therefore, this Court has no option except to affirm the findings recorded by the lower appellate Court that according to Sections 55 and 82 of the Punjab Cooperative Societies Act, 1961, which at that time were in operation in Haryana, Civil Court had no jurisdiction. At this stage, Counsel for the appellants has stated that the award was passed in favour of Rohtak Central Cooperative Bank and Sardara had nothing to do with the said Bank as he was not a member of the Bank, therefore Section 55 will not come into play. Sardara was President of the Jahangirpur Cooperative Joint Farming Society and the said Society, for obtaining loan, had mortgaged the property of its President in pursuance RSA No.2942 of 1988 -: 8 :- of the resolution passed, therefore, the Society was in dispute with the Cooperative Bank. Sardara was member of the Society, therefore, interest of Sardara and the society cannot be considered in isolation in view of the provisions of Section 55 of the Punjab Cooperative Societies Act, 1961 and resolution passed to this effect. Another argument raised is that when Khilafatnama was executed, Sardara had died. This aspect has been rightly considered by the appellate court by stating that Sardara was President and in a meeting being presided over by him, two resolutions Ex.DW1/A and DW1/B were passed and an authority was given to the Society to mortgage the property. The appellate court had considered the provisions of Section 30 read with Section 21 of the Punjab Cooperative Societies Act, 1961 and the finding which has been reproduced in earlier part of the judgment, where it rightly held that after death of member, rights and liability do not come to an end.therefore, argument which has been simply repeated before this Court, cannot be given credence especially when no provision of law or case law has been brought to the notice of this Court to fortify this submission. I am in agreement with the finding returned by the lower appellate Court. Hence no interference is warranted. No substantial question of law has been formulated or urged. The present appeal is dismissed. December 2, 2010. kadyan [Kanwaljit Singh Ahluwalia] Judge