Ganapathi Kini vs Udupi Taluka Agricultural Produce Co-operative Marketing Society Ltd. and Others

The petitioner has suffered an award made in a dispute raised under Sec. 70 of the Karnataka Co-operative Societies Act, 1959, (hereinafter referred to as the Act). The award has been made by the 2nd respondent-Honorary Arbitrator, Dakshina Kannada District, Mangalore, in dispute No. 92/73-74. The dispute was raised by the 1st respondent-Udupi Taluka Agricultural Produce Co-operative Marketing Society Ltd., Udupi, D.K. It demanded payment of Rs. 69,826-10 with interest at 12 per cent per annum from 1-11-1973 and costs of arbitration. The claim amount comprised of Rs. 56,995-00 being the cost of 227 quintals 98 kgs of lice at Rs. 250/- per quintal, Rs. 2,220/- being the costs of 1110 empty gunny bags at Rs. 2/- per gunny bag, Rs. 10,608-60 as interest at 12 per cent upto 31-10-1973 and notice charges of Rs. 2-50. It was pleaded by the 1st respondent-Society that pursuant to an agreement dated 1st April, 1970 entered into by the Co-operative Society with the petitioner and also agreement of 1st April, 1972, between the Co-operative Society and the petitioner, the petitioner did not return the quantity of rice which he was required to supply to the Society after hulling the paddy entrusted to him and wherefore he was found due the sum of monies mentioned above by virtue of clause-14 of the agreement as decided by the Committee of Management. On his failure to pay the same the dispute was asked to be referred under Sec. 70 of the Act.

The petitioner entered appearance before the Honorary Arbitrator and filed his written statement. Several witnesses were examined and several documents were marked. The petitioner was represented by his Counsel. The Arbitrator by a lengthy order came to the conclusion that the plaint claim was proved and therefore he decreed with interest at 12 per cent per annum of Rs. 59,215-50 the principal amount due and a sum of Rs. 55/- towards cost of arbitration. Aggrieved by that award, the petitioner filed an appeal to the Karnataka Appellate Tribunal, Bangalore, in Appeal No. 314/1977. Inter alia the petitioner contended that the dispute was not referable under Sec. 70 of the Act. The appeal came to be dismissed. Therefore, the present writ petition under Art. 226 of the Constitution contending that the dispute was not maintainable or referable under Sec. 70 of the Act because the agreement entered into was not a matter which touched upon the business of the 1st respondent-Co-operative Society in relation to the membership of the petitioner and therefore it was not a dispute between a member and the society in a matter touching upon the Society''s business.

The thrust of the argument is that the society''s agreement with the member was in the normal course, of business with a mill-owner and any amount due by the mill-owner with reference to the two agreements should have been collected in the ordinary course through the civil Court and not by reference of the cause of action as a dispute under this Act.

The learned Counsel for the petitioner placed a reliance on the decision of the Supreme Court in the case of Deccan Merchants Co-operative Bank Ltd v M/s Dalichand Jugraj Jain and others [A.I.R. 1969 S.C. 1320]. In that decision, the Supreme Court has laid down on the facts of that case as to the meaning of the expression "touching upon the business of the Co-operative Society" occurring in Sec. 54(1) of the Bombay Co-operative Societies Act. Whether that decision helps the petitioner need not be examined by me in the context of the difference in the language between Sec. 54(1) of the Bombay Act that fell for consideration and sub-secs. 2(a) and (e) of Sec. 70 of the Karnataka Act.

A dispute referable under Sec. 70 of the Act is defined in two parts. Sub-sec. (1) of that section, defines disputes which are very similar to the disputes referred in sub-sec. (1) of Sec. 54 of the Bombay Act. But in sub-sec. (2) of Sec. 70 of the Karnataka Act, a definition of ''deemed disputes'' is given. Clauses (a) and (e) of sub-sec. (2) of Sec. 70 of the Act is as follows:

"''(2) For the purpose of sub-section (1), the following shall be deemed to be disputes touching the constitution, management or the business of a co-operative 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;

xx xx xx (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 committee, past or present whether such loss be admitted or not."

That there was a demand by the society is not in dispute It is not necessary that the demand of the payment of the debt from a member should be admitted by that member. Clause(a) of sub-sec. (2) of Sec. 70 of the Act makes it imperative that irrespective of the admission or denial of the debt or demand; the claim shall be deemed to be a dispute touching the constitution and management or the business of a co-operative Society. Similarly clause (e) of sub-sec. (2) of Sec. 70 of the Act refers to a claim by the Society for deficiencies caused to the assets of the Society by a member. That pursuant to the agreement, so many quintals of paddy was entrusted to the petitioner-member is not in dispute in this Court. Therefore, as long as the membership of the Society is not denied by the petitioner then the loss caused by a member of the assets of the Society would fall clearly within clause (e) of sub-sec. (2) of Sec. 70 of the Act. It cannot be disputed that the paddy entrusted to the petitioner was part of the assets of the 1st respondent-Co-operative Society.

Therefore, I am satisfied even on the bald assertion that the dispute was not referable under Sec. 70 of the Act, it is clear that the case of the petitioner falls within the ''deemed disputes'' for the reasons I have given above as it was in the course of the business of the Society that the transaction under the agreements were entered into and the loss sustained or debt contracted.

In that view of the matter, the cause of action in question was referable under Sec. 70 of the Act and the finding is against the petitioner on facts with which this Court is not seriously concerned as it does not act as a Court of further appeal while exercising jurisdiction under Art. 226 of the Constitution.

The petition is therefore rejected agreeing with the conclusions reached by the Tribunal before whom the question of jurisdiction does not appear to have been argued though vaguely pleaded. The petition is rejected.