Full Judgment Text
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PETITIONER:
U.P. CO-OPERATIVE CANE UNION FEDERATION LTD. & ANOTHER
Vs.
RESPONDENT:
LILADHAR & OTHERS
DATE OF JUDGMENT27/08/1980
BENCH:
DESAI, D.A.
BENCH:
DESAI, D.A.
SHINGAL, P.N.
CITATION:
1981 AIR 152 1981 SCR (1) 558
ACT:
Jurisdiction of the Civil-Court-Dispute arising out of
a disciplinary proceeding resulting in dismissal of an
employee of a Co-operative Cane Growers’ Society and the
society, whether a dispute "touching the business of the
society" within the meaning of Rule 115 of the Co-operative
Societies Rules 1936-Co-operative Societies Act, 1912,
section 2(d), 43, Co-operative Societies Rules, 1936, Rules
115 and 134 and U.P. Sugarcane (Regulation of Supplies and
Purchases) Act, 1953, Sections 28 (2n), read with U. P.
Sugarcane (Regulation of Supplies and Purchases) Rules,
1954, Rules 54, 55 and 108, scope of.
HEADNOTE:
The respondent joined service in Cane Development
Department of the U.P. State Government in 1949 and later on
transferred to District Co-operative Sugarcane Development
Society Ltd., a federating unit of the U.P. Co-operative
Cane Union Federation Ltd. He was prosecuted and convicted
for alleged embezzlement of funds, but was acquitted by the
High Court in appeal. Later as a result of departmental
disciplinary proceedings, his services were terminated.
Respondent, therefore, filed a Civil Suit in 1964 which was
decreed on May 24, 1967 rejecting the appellant’s plea of
bar of jurisdiction by the Civil Court under Rule 115 of the
Co-operative Societies Rules, 1936, made under section 43 of
the Co-operative Societies Act, 1912. The First Appellate
Court accepted the appeal and dismissed the suit holding
that the dispute was one "touching the business of the Co-
operative Society" and its employee and hence the Civil
Court is barred from entertaining the suit. However, in the
second appeal to it, the High Court reversed the First
Appellate Court’s order holding that as the respondent is
governed by U.P. Sugarcane (Regulation of Supplies and
Purchases) Act, 1953, it being both a Co-operative Society
and a Cane Growers’ Co-operative Society and in case of an
officer or servant of such Cane Growers’ Co-operative
Society any dispute between its officers and servants and
such society would be governed by Rules 54 and 55 framed
under the 1953 Act which provide for a complete machinery
for resolution of disputes and Rule 108 does not encompass
dispute arising out of a disciplinary proceeding between
such society and its officers and servants and therefore, in
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the absence of such provision for compulsory arbitration of
such dispute, the jurisdiction of the Civil Court is not
barred.
Dismissing the appeal by special leave, the Court
^
HELD: (1) On a conspectus of the High Court’s decision
and the definition of the expression "officer" both
expansive definition and its etymological sense, first
respondent a Supervisor working as a Godown Keeper could not
be styled as an officer of the Co-operative Society, he not
being either Chairman. Secretary, Treasurer, or a member of
the Committee or such other person shown to have been
empowered under the rules or the bye-laws to give directions
in regard to the business of the society. And the
legislature never intended
559
to include every employee or servant of the society within
the expression "officer". Neither any rule made under
section 43(g) of the 1912 Act refers the respondent as an
officer. [567 D, 565 G, 566 F]
Co-operative Central Bank v. Trimaak Narayan
Shinganwadikar, AIR 1945 Nagpur 183; Manjeri S. Krishna
Ayyar v. Secretary, Urban Bank Ltd. & Anr. AIR 1933 Mad.
682; Kailash Nath Halwai v. Registrar, Co-operative Society,
U.P. & ors., AIR 1960 Allahabad 194 and Abu Baker & Anr. v.
District Handloom Weavers’ Co-operative Society, Mau & Anr.,
AIR 1966 Allahabad 12, referred to.
(2) Rules 115 to 134 of the Co-operative Societies
Rules, 1936 make it clear that if the dispute is one
contemplated by Rule 115 and arises between the parties
therein envisaged it shall have to be resolved by referring
the same to the Registrar who will have to get it resolved
by arbitration either by himself or by arbitrator or
arbitrators appointed by him. Rule 134 provides that a
decision of an arbitrator or arbitrators under the rules, if
not appealed as therein provided, shall be final as between
the parties to the dispute and not liable to be called in
question in any civil or revenue court and shall in all
respects be final and conclusive. If, therefore, the 1912
Act confers power to enact rules and the rules so enacted
are statutory and if the rules provide for certain types of
disputes between certain specific parties to be resolved by
arbitration and the decision of the arbitrators is made
final and conclusive not correctible by the civil court or
unquestionable before the civil court, undoubtedly, the
jurisdiction of the civil court in respect of such specified
disputes between specified parties enumerated in Rule 114
would be wholly excluded. [567 F-568 A]
(3) In order to attract Rule 115 it must be shown (i)
that the dispute is the one touching the business of the co-
operative society; and (ii) that it is between the society
and any officer of the society. Both the conditions have to
be cumulatively fulfilled before Rule 115 is attracted which
would result in ouster of the jurisdiction of the civil
court in respect of dispute in view of the provision
contained in Rule 134. A dispute arising out of a
disciplinary proceeding resulting in dismissal of an
employee of the society cannot be said to be "a dispute
touching the business" of the society within the meaning of
the Rule 115. [568C, 569G]
Deccan Merchants Co-operative Bank Ltd v. M/s.
Dalichand Jugraj Jain & Ors.,[1969] 1 SCR 887; Co-operative
Central Bank Ltd & Ors. v. Additional Industrial Tribunal,
Andhra Pradesh & ors., [1970] 1 SCR 205 followed.
Kisanlal & ors. v. Co-operative Central Bank Ltd., AIR
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1946 Nagpur 16 approved.
(4) Section 70 of the U.P. Co-operative Societies Act,
1965 also makes it clear that while making a statutory
provision for resolution of disputes involving co-operative
societies by arbitration by the Registrar, the legislature
in terms excluded a dispute relating to disciplinary action
taken by the society against paid servants of the society
from the purview of the compulsory arbitration. What was
implicit in the 1912 Act and the rules framed thereunder
that such a dispute did not "touch the business of the
society" and was not within the purview of the compulsory
arbitration was made explicit by section 70 of the 1965 Act
(which repeal and replace 1912 Act) by expressly excluding
it from the field of compulsory arbitration. [570C, E]
560
(5) The approach of the High Court in coming to the
conclusion that the civil court will have jurisdiction to
entertain the suit, however, is not correct and totally
overlooks and ignores the provisions in 1912 Act and the
rules enacted thereunder. U.P. Sugarcane (Regulation of
Supplies and Purchases) Act, 1953 and the Co-operative
Societies Act, 1912 operate in an entirely different field
and are enacted with different objects in view. 1953 Act
neither trenches upon 1912 Act nor supersedes or supplants
any provision of it. [572 C]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 433 of
1977.
Appeal by Special Leave from the Judgment and order
dated 13th August 1975 of the Allahabad High Court in Second
Appeal No. 582/71.
A. P. S. Chauhan, Guj Raj Singh Chauhan and T. S. Arora
for the Appellant.
Indra Makwana for Respondent No. 1.
The Judgment of the Court was delivered by
DESAI, J.-How technical plea of want of jurisdiction
has pushed a petty employee from pillar to post since April
1964 and pilloried him with cost presumably unbearable by
him, is shockingly demonstrated in this case.
First respondent joined service as a petty employee in
Cane Development Department of the U.P. State Government
somewhere in 1949. On the formation of the U.P. Co-operative
Cane Union Federation Ltd. (hereinafter referred to as ’the
first appellant’), services of the first respondent stood
transferred and were put at the disposal of the appellant
and he was styled as Supervisor. At the relevant time he was
rendering service under the second appellant, District Co-
operative Sugarcane Development Society Ltd. (now designated
as Zila Sahkari Ganna Vikas Samiti Ltd.,) Budayun, a
federating unit of the first appellant and was incharge of
manure godown. He was suspended from service with effect
from October 18, 1958. A prosecution was launched against
him for embezzlement of funds of the second appellant in
that he failed to account for 293 1/2 bags of ammonium
sulphate entrusted to him as keeper of manure godown. The
case ultimately resulted in the acquittal of the first
respondent by the High Court. Disciplinary proceedings were
commenced against him on the same charge and ultimately he
was dismissed from service on April 4, 1964. First
respondent filed a suit being O.S. No. 30/64 in the Court of
Civil Judge, Budayun, inter alia, for a declaration that the
order dismissing him from service was invalid and void and
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for a further declaration that he continued to be in service
and for arrears of pay till the date of the suit. In the
written statement filed on behalf of defendants (present
appellants) number of contentions were raised but
561
only one may be noticed for the present appeal. The
contention was that the dispute involved in the suit was
between an employee of a Co-operative Cane-Growers’ Society
and the Society and, therefore, civil court had no
jurisdiction to entertain the suit but the plaintiff must
approach the Registrar of Co-operative Societies for
reference of dispute to arbitration. The trial Court decreed
the suit as per judgment dated May 24, 1967, and granted the
declaration prayed for. The appellants preferred an appeal
being Civil Appeal No. 9 of 1967 to the Court of District
Judge, Budayun, who allowed the appeal holding that the
Civil Court had no jurisdiction to entertain the suit
inasmuch as the dispute was between an officer of a Co-
operative Society and the Society and the dispute was
touching the business of the Society and, therefore, rule
115 of the Co-operative Societies Rules enacted by the U.P.
Government in exercise of the rule making power conferred by
section 43 of the Co-operative Societies Act, 1912
(hereinafter referred to as ’the 1912 Act’) in its
application to the U.P. State would be attracted and the
dispute will have to be resolved by arbitration by the
Registrar. In accordance with this finding the appeal was
allowed and the suit was dismissed. First respondent
preferred Second Appeal No. 582/71 to the High Court of
Judicature at Allahabad. The learned single Judge allowed
the appeal holding that as the first appellant is governed
by U.P. Sugarcane (Regulation of Supply and Purchases) Act,
1953 (’1953 Act’ for short), it being both a Co-operative
Society and a Cane Growers’ Co-operative Society and in case
of an officer or servant of such cane growers’ cooperative
society any dispute between its officers and servants and
such society would be governed by rules 54 and 55 framed
under 1953 Act which provide a complete machinery for
resolution of disputes and rule 108 does not encompass
dispute arising out of a disciplinary proceeding between
such society and its officers and servants and, therefore,
in the absence of such provision for compulsory arbitration
of such dispute the jurisdiction of the Civil Court is not
barred. The learned judge accordingly allowed the appeal and
remanded the suit to the first appellate court for decision
on merits. Hence this appeal by special leave by original
defendants.
The only contention that falls for consideration in
this appeal is whether the civil court has jurisdiction to
take cognizance of a suit arising out of a disciplinary
proceeding held by a Cane Growers’ Cooperative Society,
governed both by 1912 Act and 1953 Act against its employee
or such dispute falls exclusively within the jurisdiction of
the Registrar under the Co-operative Societies Act to be
resolved by arbitration alone. A brief survey of the
relevant provisions is necessary for the effective disposal
of this contention.
562
When the suit was filed in the year 1964 the Co-
operative Societies Act, 1912, as adopted and applied by
U.P. State was in force in U.P. State. The expression
’officer’ has been defined in s. 2(d) of the Act as under:
"2. Definitions-In this Act, unless there is
anything repugnant in the subject or context,-
(d) ’officer’ includes a chairman, secretary,
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treasurer, member of committee, or other person
empowered under the rules or the bye-laws to give
directions in regard to the business of the
society".
Section 43 conferred power on the Local Government to make
rules to carry out the purposes of the Act for the whole or
any part of the province, on various topics enumerated in
various sub-clauses of the section. Clause (1) of s. 43(2)
is relevant. It reads as under:
"43. Rules-(1) The State Government may, for the
whole or any part of the State and for any registered
Society or class of such societies make rules to carry
out the purposes of this Act.
(2) In particular and without prejudice to the
generality of the foregoing power, such rules may-
(1) provide that any dispute touching the
business of a society between members or past
members of the society or persons claiming through
a member or past member or between a member or
past member or persons so claiming and the
committee or any officer shall be referred to the
Registrar for decision, or if he so directs, to
arbitration, and prescribe the mode of appointing
an arbitrator or arbitrators and the procedure to
be followed in proceedings before the Registrar or
such arbitrator or arbitrators, and the
enforcement of the decisions of the Registrar or
the awards of arbitrators".
Armed with this power the U.P. State enacted what is
styled as U.P. Co-operative Societies Rules, 1936, Rule 115
of the rules reads as under:
"115. Any dispute touching the business of a
registered society (i) between members or past members
of a society or persons claiming through a member or
past member, (ii) or between a member or a past member
or persons so claiming and the society or its committee
or any officer of the society, (iii) between the
society or its committee and any officer of the
society, and (iv) between two or more registered
societies, shall be decided either by the Registrar or
by arbitration and shall for that purpose be referred
in writing to the Registrar.
563
Explanation 1.-A dispute shall include claims for
amounts due when a demand for payment is made and is
either refused or not complied with whether such claims
are admitted or not by the opposite party.
Explanation 2.-An officer shall include a person
appointed for the supervision of the society.
Explanation 3.-The business of a society includes
all matters relating to the objects of the society
mentioned in the bye-laws as also those relating to the
election of office-bearers of a society".
This rule 115 has to be interpreted in the light of rule 134
which reads as under:
"134. A decision of an arbitrator or arbitrators
under these rules if not appealed against within the
said period and an order of the Registrar shall, as
between the parties to the dispute, not be liable to be
called in question in any civil or revenue court and
shall in all respects be final and conclusive".
There is another Act which has a bearing on the topic
under discussion styled as U.P. Sugarcane (Regulation of
Supply and Purchases) Act. 1953. It is an Act enacted to
regulate the supply and Purchase of Sugarcane required for
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use in sugar factories and gur, rab or khandsari sugar
manufacturing units and matters incidental or ancillary
thereto. It contemplates setting up of a sugarcane Board and
provides for its functions and duties and the methods of
filling up vacancies and regulating its finances. Section 20
confers power on the Governor to impose by a notification a
cess not exceeding the amount prescribed in the section on
the entry of sugarcane into an area specified in such
notification for consumption, use or sale there. Section 28
confers power on the State Government to make rules for the
purpose of carrying into effect the provisions of the Act.
Clause 2(n) in this behalf is relevant. It reads as under:
"28. Power to make rule-(1) The State Government
may make rules for the purpose of carrying into effect
the provisions of this Act.
(2) Without prejudice to the generality of
foregoing power, such rules may provide for-
xxx xxx xxx
(n) the constitution, operation, management,
supervision and audit of Canegrowers’ Co-operative
Societies and Councils and the U.P. Cane Unions
Federations and conditions relating to recognition
of such societies or their federation for purposes
of this Act and Rules and control of their staff
and finances".
564
Armed with this power the U.P. Government enacted the
U.P. Sugarcane (Regulation of Supply and Purchase) Rules,
1954. The relevant rules relied upon are rules 54, 55 and
108. They may be reproduced in extenso:
"54. The power to appoint, grant leave of absence
to, punish, dismiss, transfer and control Secretaries,
Assistant Secretaries and Accountants of Cane-growers
Co-operative Societies, whether permanent or temporary,
shall be exercised by the Federation subject to the
general control of the Cane Commissioner who may
rescind or modify and order of the Federation:
Provided that the Cane Commissioner may himself
exercise any of such powers in case of emergency".
"55. Similar powers as stated in Rule 54 may be
exercised by the society in respect of the other staff,
subject to the regulations made by the Federation and
the general control of the Cane Commissioner".
"108. Any dispute touching the business of (a) a
Cane-growers’ Co-operative Society between members, or
between members and society, or between two registered
societies, or between a society and a factory, or
between a cane-grower and a factory, (b) a council and
a Cane-growers’ Co-operative Society, or between a
council and a factory or between a council and a cane
grower, regarding the payment of contribution to a
council by a society or a factory and any other dispute
relating to the business of a council, shall be
referred to the Cane Commissioner for decision. The
Cane Commissioner shall decide it himself or refer it
to arbitration. No suit shall lie in a Civil or Revenue
court in respect of any such dispute".
Having had the survey of the relevant provisions of the
Acts and the Rules attention may now be focused on the main
and the only controversy in this appeal whether in 1964 when
the first respondent as plaintiff filed the suit for a
declaration that the order dismissing him from service
passed by the first appellant is void and for a declaration
that he continues to be in service of the first appellant,
in the Civil Court at Budayun, that Court had jurisdiction
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to entertain the suit or not. First appellant is a
federation of Cane-Growers’ Co-operative Societies and
second appellant is a federating unit or first appellant. At
the relevant time first and second appellants were governed
by the 1912 Act as well as by the 1953 Act. Each as a Co-
operative Society would be governed by the 1912 Act and each
as a Cane-growers’ Co-operative Society and its federation,
for the purpose
565
of regulation of supply and purchase of sugarcane, would be
governed by the 1953 Act.
The question is whether the Civil Court would have
jurisdiction to entertain a suit in 1964 filed by an
employee of a co-operative society against the Co-operative
Society for a declaration that the order dismissing him from
service is void and for a declaration that he continued to
be in service with an alternative prayer for damages ? This
contention may be examined first, inter alia, under the
provisions of 1912 Act and the rules framed thereunder and
subsequently whether the application of the 1953 Act will
have any impact on the conclusion.
We have extracted above the definition of the
expression ’officer’ in 1912 Act. Undoubtedly, it is an
inclusive definition. If only the officers enumerated in the
definition are comprehended within the expression ’officer’,
the first respondent is not an officer in the sense that he
was neither a Chairman, Secretary, Treasurer, or a member of
the Committee. But the expression ’officer’ also embraces
such other person empowered under the rules or the bye-laws
to give directions in regard to the business of the society.
If ejusdem generis canon of construction were to be invoked
in construing the expression ’officer’ the expression ’other
persons’ must take colour from the words preceding it and
accordingly other persons therein envisaged must have some
semblance of comparison in respect of power and authority to
give directions with regard to the business of the society
with the enumerated persons such as chairman, secretary,
treasurer or member of the committee. If every employee of
the society were to be an officer it would not be necessary
for the legislature to provide that persons other than
chairman, secretary, treasurer or member of the committee
must be such who must have under the rules or the bye-laws
the power to give directions in regard to the business of
the society. First respondent was at the relevant time a
supervisor in charge of manure godown drawing a salary of
Rs. 150 p.m. Nothing has been pointed out to us by the
appellants with reference either to the rules or bye-laws
that first respondent as supervisor was empowered by any
rules or the byelaws to give directions in regard to the
business of the society. First respondent thus not being
either chairman, secretary, treasurer or member of the
committee, or such other person shown to have been empowered
under the rules or the bye-laws to give directions in regard
to the business of the society, unquestionably he was not an
officer of the society. We are conscious of the fact that
the definition of the expression ’officer’ is an inclusive
definition. An inclusive definition widens the etymological
meaning of the expression or term including therein that
which would ordinarily not be comprehended therein. Firstly,
keeping apart the expansive definition by including
566
officers who would otherwise not be comprehended in the
expression ’officer’, it may be necessary to ascertain
whether first respondent, giving the expression ’officer’
its ordinary etymological meaning, would be comprehended
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therein. It may be noticed that the legislature never
intended to include every employee or servant of the society
within the expression ’officer’. There is some element of a
right to command in the word ’officer’ with someone whose
duty it would be to obey. If there is an officer ordinarily
there will be someone subordinate to him, the officer
enjoying the power to command and give directions and
subordinate to obey or carry out directions. It may be that
even one who is to carry out directions may be an officer in
relation to his subordinates. Thus, what is implicit in the
expression ’officer’ is made explicit by the latter part of
definition which provides that such other person would also
be an officer who is empowered under the rules and bye-laws
to give directions with regard to the business of the
society. If it is contended that a particular person is an
officer because he is empowered to give directions with
regard to the business of the society, it would be a
question of fact in each case whether a particular person is
an officer or a servant or an employee. Unless the
appellants are in a position to point out that first
respondent was an officer in the sense that he had power to
command and insist on subordinates to obey his directions
with regard to business of the society, it would be
difficult to believe that a person designated as supervisor
drawing a salary of Rs. 150 and incharge of manure godown
would be an officer. In this connection it would be
advantageous to refer to s. 43(g) of the 1912 Act which
confers power on the Local Government to make rules
providing for the appointment, suspension and removal of the
members of the committee and other officer, and for the
procedure at meetings of the committee, and for the powers
to be exercised and the duties to be performed by the
Committee and other officers. No rule enacted in exercise of
this power was pointed out to us to assert that first
respondent would be such officer as contemplated in s.
43(g).
Some illustrative cases were relied upon to point out
that a godown keeper would not be an officer within the
meaning of s. 2(d). In Co-operative Central Bank v. Trimbak
Narayan Shinganwadikar, an accountant serving in a co-
operative bank was held not to be an officer of the Bank
inasmuch as he had no power to give any direction in regard
to the business of the society nor was any rule framed
empowering an accountant to give directions. He was held to
be a servant of the society falling outside the definition
of the expression ’officer’. In Manjeri S. Krishna Ayyar v.
Secretary, Urban Bank Ltd. & Anr.(2)
567
legal adviser of a co-operative society was held to be an
officer of the society within the meaning of s. 2(d). In
Kailash Nath Halwai v. Registrar, Co-operative Society, U.P.
& Ors.(1), a Division Bench of the Allahabad High Court
speaking through Raghubar Dayal, J. (as he then was), held
that a manager of a shop run by a Co-operative Society was
an officer of the society on the finding that he was in a
position to give directions in regard to the business of the
shop, a business which was included in the business of the
society. The vital contention in this matter was whether
rule 115 of the U.P. Co-operative Societies Rules, 1936, was
ultra vires, and it was so held. However, this decision was
specifically overruled by a Full Bench of the Allahabad High
Court in Abu Bakar & Anr. v. District Handloom Weavers’ Co-
operative Society, Mau & Anr.(2), in which it was
specifically held that rule 115 of the Rules framed under
the Co-operative Societies Act, 1912, is not ultra vires.
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On a conspectus of these decisions and the definition
of the expression ’officer’ both expansive definition and
its etymological sense, first respondent a supervisor
working as a godown keeper could not be styled as an
’officer’ of the Co-operative Society.
The next limb of the argument is whether rule 115
enacted in exercise of power conferred by clause (1) of sub-
s. (2) of s. 43 of the 1912 Act would be attracted. Clause
(1) of s. 43(2) confers power to make rules providing for
resolution of disputes envisaged by the clause between the
parties contemplated by the clause by the Registrar by
arbitration. In exercise of this power rules 115 and 134
have been enacted. When rules 115 and 134 are read in
juxtaposition it becomes clear that if the dispute is one
contemplated by rule 115 and arises between the parties
therein envisaged it shall have to be resolved by referring
the same to the Registrar who will have to get it resolved
by arbitration either by himself or by arbitrator or
arbitrators appointed by him. Rule 134 provides that a
decision of an arbitrator or arbitrators under the rules, if
not appealed as therein provided, shall be final as between
the parties in dispute and not liable to be called in
question in any civil or revenue court and shall in all
respects be final and conclusive. If, therefore, the 1912
Act confers power to enact rules and the rules so enacted
are statutory and if the rules provide for certain types of
disputes between certain specific parties to be resolved by
arbitration and the decision of the arbitrators is made
final and conclusive not correctible by the civil court or
unquestionable before the civil court, undoubtedly, the
jurisdiction of the civil court
568
in respect of such specified disputes between specified
parties enumerated in rule 115 would be wholly excluded.
The question boils down to this: is a dispute between
an employee other than an officer of a co-operative society
and the society arising out of a disciplinary proceeding one
which would fall within the ambit of rule 115 ? Clause (iii)
of rule 115 was relied upon by the appellant to urge that
such a dispute would be one touching the business of a
registered society and it would be one between the society
and its committee and any officer of the society. This
contention would stand disposed of in view of our finding
that the first respondent is not an officer of the society.
In order to attract rule 115 it must be shown (i) that the
dispute is the one touching the business of the co-operative
society; and (ii) that it is between the society and any
officer of the society. Both the conditions have to be
cumulatively fulfilled before rule 115 is attracted which
would result in ouster of the jurisdiction of the civil
court in respect of dispute in view of the provision
contained in rule 134.
The first question is, whether a dispute arising out of
a disciplinary proceeding resulting in dismissal of an
employee of a co-operative society is one touching the
business of the society. It is unnecessary to dilate upon
this aspect in view of the two decisions of this Court.
In Deccan Merchants Co-operative Bank Ltd. v. M/s.
Dalichand Jugraj Jain & Ors., (1) s. 91 of the Maharashtra
Co-operative Societies Act, 1968, came up for consideration
before this Court. After analysing the section and observing
that five kinds of disputes are enumerated in sub-s. (1) of
s. 91, the fifth being disputes touching the business of a
society, the Court held as under:
"It is clear that the word ’business’ in this
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context does not mean affairs of a society because
election of office-bearers, conduct of general meetings
and management of a society would be treated as affairs
of a society. In this sub-section the word ’business’
has been used in a narrower sense and it means the
actual trading or commercial or other similar business
activity of the society which the society is authorised
to enter into under the Act and the Rules and its bye-
laws".
Proceeding from this angle the Court held that the dispute
between a tenant of a member of the bank in a building which
has subsequently been acquired by the Bank cannot be said to
be a dispute touching the business of the Bank. In reaching
this conclusion, this
569
Court disapproved the view in Kisanlal & Ors. v. Co-
operative Central Bank Ltd.(1), which has relied upon before
us. Confirming the view in the Deccan Merchants Co-operative
Bank(2), this Court in Co-operative Central Bank Ltd. & Ors.
v. Additional Industrial Tribunal, Andhra Pradesh & Ors.,(3)
posed a question to itself whether the dispute between the
co-operative society and the employee touches the business
of the society in the sense explained by this Court in that
case. The Court answered the contention as under:
"Applying these tests, we have no doubt at all
that the dispute covered by the first issue referred to
the Industrial Tribunal in the present cases could not
possibly be referred for decision to the Registrar
under s. 61 of the Act. The dispute related to
alteration of a number of conditions of service of the
workmen which relief could only be granted by an
Industrial Tribunal dealing with an industrial dispute.
The Registrar, it is clear from the provisions of the
Act, could not possibly have granted the reliefs
claimed under this issue because of the limitations
placed on his powers in the Act itself. It is true that
s. 61 by itself does not contain any clear indication
that the Registrar cannot entertain a dispute relating
to alteration of conditions of service of the employees
of a registered society; but the meaning given to the
expression ’touching the business of the society’, in
our opinion, makes it very doubtful whether a dispute
in respect of alteration of conditions of service can
be held to be covered by this expression. Since the
word ’business’ is equated with the actual trading or
commercial or other similar business activity of the
society, and since it has been held that it would be
difficult to subscribe to the proposition that whatever
the society does or is necessarily required to do for
the purpose of carrying out its objects, such as laying
down the conditions of service of its employees, can be
said to be a part of its business, it would appear that
a dispute relating to conditions of service of the
workmen employed by the society cannot be held to be a
dispute touching the business of the society".
Therefore, on the strength of the aforementioned two
decisions it has to be held that a dispute arising out of a
disciplinary proceeding resulting in dismissal of an
employee of the society cannot be said to be a dispute
touching the business of the society.
To some extent this conclusion can be reinforced by
reference to the U.P. Co-operative Societies Act, 1965,
which repealed and replaced
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the Co-operative Societies Act, 1912, in its application to
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the State of U.P. Section 70 of the 1965 Act provides for
settlement of disputes. The relevant portion reads as under:
"70. Disputes which may be referred to
arbitration-(1) Notwithstanding anything contained in
any law for the time being in force, if any dispute
relating to the constitution, management or the
business of a co-operative society other than a dispute
regarding disciplinary action taken against a paid
servant of a society arises-....... ".
It will be crystal clear that while making a statutory
provision for resolution of disputes involving co-operative
societies by arbitration by the Registrar, the legislature
in terms excluded a dispute relating to disciplinary action
taken by the society against paid servants of the society
from the purview of the compulsory arbitration. It is
legislative exposition of the topic under discussion. It
must, however, be made distinctly clear that at the relevant
time 1912 Act was in force and the contention has to be
answered with reference to 1912 Act and the rules framed
thereunder. It is, however, difficult to believe that the
1965 Act which repealed and replaced the 1912 Act excluded
from the field of operation that which was already included
under the repealed Act. On the contrary it would appear that
what was implicit in the 1912 Act and the rules framed
thereunder that such a dispute did not touch as the business
of the society and was not within the purview of the
compulsory arbitration, was made explicit by expressly
excluding it from the field of compulsory arbitration.
However, we would rest this judgment on the second limb
of the submission in that not only the dispute must be one
touching the business of the society but it must be between
the co-operative society and its officer. Firstly respondent
being shown not to be one of enumerated officers of the
society nor a person empowered to give directions in regard
to the business of the society under the rules or the bye-
laws, he would not be an officer within the meaning of the
expression in 1912 Act. Any dispute between an employee not
being an officer and the society would not attract rule 115.
In that view of the matter such a dispute would fall outside
the purview of rule 115 and it being a civil dispute and
civil court will have jurisdiction to entertain and
adjudicate upon the same.
The High Court approached the matter from an entirely
different angle. The learned judge held that this case would
be governed by the 1953 Act and rules 54 and 55 enacted in
exercise of the powers conferred by s. 28 of the 1953 Act
have provided a specific forum, viz., a reference to the
Cane Commissioner and appeal to the State
571
Government and as rule 108 is not attracted the dispute is
not required to be referred to arbitration and, therefore,
the civil court will have jurisdiction to entertain the
suit. With respect, it is difficult to subscribe to this
view of the High Court. 1953 Act has been enacted to
regulate supply and purchase of sugarcane required for use
in sugar factories, gur, rab and khandsari manufacturing
units. It envisages setting up of a sugarcane board and the
board was entrusted with the function pertaining to the
regulation, supply and purchase of cane for sugar factories
and for the maintenance of healthy relation between
occupiers, managers, of factories, cane growers, co-
operative societies, etc. The Act also envisaged setting up
of a development council and its functions have been
enumerated in s. 6. On a survey of these provisions it
appears that the Act was enacted to regulate relations
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between the cane-growers on one hand and sugar factories on
the other. The expression ’cane growers’ co-operative
society’ has been defined in s. 2(f) to mean a society
registered under the Co-operative Societies Act, 1912, one
of the objects of which is to sell cane grown by its members
and includes the federation of such societies registered
under s. 8 of the said Act. The appellant is thus a co-
operative society and it being a federation of such co-
operative societies it is also included in the expression
"cane growers’ co-operative society". Section 28(2)(n) of
the Act was relied upon to show that the State Government
has power to frame rules amongst others, for the control of
the staff and finances. In exercise of this power rules 54
and 55 have been enacted. Rule 54 provides that the power to
appoint, grant leave of absence, to punish, dismiss,
transfer and control secretaries, assistant secretaries and
accountants of Cane Growers’ Co-operative Societies whether
permanent or temporary shall be exercised by the federation,
subject to the general control of the Cane Commissioner who
may rescind or modify any order of the Federation. There is
a proviso which is not relevant for the present purpose.
Rule 55 confers powers similar to those enumerated in rule
54 to be exercised by the society in respect of other staff
subject to the regulations made by the federation and the
general control of the Cane Commissioner. Shorn of
embellishment, rule 55 confers power on the Federation,
namely, the first appellant, to make regulations for
appointment, granting leave of absence, punishment,
dismissal and transfer of the staff other than those
enumerated in rule 54 and these regulations have to be made
subject to the general control of the Cane Commissioner Rule
108 provides for compulsory arbitration of disputes therein
mentioned and it is common ground that a dispute of the
present nature under examination will not be covered by rule
108. The High Court observed that rules 54 and 55 being a
complete code in itself with regard to regulation making
power for disciplinary action with a provision for
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appeal to the Cane Commissioner and rule 108 not being
attracted, the civil court will have jurisdiction to
entertain the present dispute. The High Court overlooked the
fact that 1953 Act neither repeals nor replaces 1912 Act. A
cane-grower other than a Cane-growers’ Cooperative Society
would be governed by 1953 Act but the cane grower not being
a co-operative society it would not be governed by the 1912
Act. A Cane-Growers’ Co-operative Society would be governed
with regard to the provisions for law of Co-operative
Societies by 1912 Act and in respect of its business of
growing and selling cane it would be governed by 1953 Act.
Both Acts operate in an entirely different field and are
enacted with different objects in view. 1953 Act neither
trenches upon 1912 Act nor supersedes or supplants any
provision of it. Therefore, some provisions of 1953 Act
cannot override or supersede the provisions of 1912 Act and
by mere reference to the provisions of 1953 Act the High
Court was in error in totally overlooking and ignoring the
provisions in 1912 Act and the rules enacted thereunder.
However, in view of our finding that the dispute
brought before the Civil Court in this case was not a
dispute between a society and its officer and, therefore,
one of the conditions for attracting rule 115 having not
been satisfied, the civil court will have the jurisdiction
to entertain the suit. For these reasons the decision of the
High Court is confirmed. Accordingly this appeal fails and
is dismissed with costs.
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As the dispute is very old, we hope that it would be
expeditiously disposed of by the learned district judge to
whom the matter was remanded by the High Court.
S.R. Appeal dismissed.
573