Maddimsetti Ramayya vs The Liquidator of Bollanka Co-operative Credit Society, care of Deputy Registrar of Co-operative Societies and Another

Venkataramana Rao, J.—The question for decision in this second appeal is whether the plaintiff''s suit is barred by Section 48 of the Madras

Co-operative Societies Act. Both the lower Courts have dismissed the suit on the ground that it is so barred.

The question is whether this view is tenable. The facts briefly are as follows. The first defendant co-operative society obtained a decree against

the second defendant in claim No. 2235 of 1932-33 for Rs. 604-13-4 and in execution of the same brought the properties to sale. The plaintiff

preferred a claim under Rule 22 (17) (a) of the Rules made under the Madras Co-operative Societies Act on the ground that he was a purchaser

of the property under a registered sale deed dated 7th February, 1922. But the said claim was dismissed by the sale officer on 29th June, 1938.

The plaintiff thereupon filed the present suit on 16th November, 1938, within six months of the said order to set aside the said sale and to establish

his right to the property.

The view taken by both the lower Courts is that u/s 48 of the Co-operative Societies Act the plaintiff should have obtained leave of the

Registrar to institute the suit, that the said leave is a condition precedent to such institution and he having failed to do so, his suit must fail. Section

48 of the Cooperative Societies Act runs thus:

Save in so far as is expressly provided in this Act, no civil Court shall take cognizance of any matter connected with the winding up or dissolution,

of a society under this Act, and when a liquidator has been appointed no suit or other legal proceeding shall lie or be proceeded with against the

society except by leave of the Registrar and subject to such terms as he may impose.

It will be seen that the section itself saves cases which are expressly provided in the Act and it is only in cases where no such provision is made

that the condition that no suit or legal proceeding shall lie against the society except by leave of the Registrar operates, Section 65 of the Co-

operative Societies Act provides that the Local Government may make rules to carry out all or any of the purposes of this Act, and one of the

purposes provided for is the investigation of claims and objections that may be preferred against any attachment effected by the Registrar or an

officer empowered by him. In pursuance of this provision rules have been made and Section 65 (4) provides that all rules made under that section

shall be published in the Fort St. George Gazette and on such publication shall have effect as if enacted in this Act. Such rules have been published

and they take effect as if enacted in this Act and therefore form part of the Act. Rule 22(17) (a) to (c) provides for investigation of claims and

objections. Rule 22(17)(a) provides that where a claim or an objection is preferred, the sale officer should investigate the claim or objection and

dispose of it on the merits and Rule 22 (17) (c) is to the effect that where a claim or objection is preferred, the party against whom the order is

made may institute a suit within six months from the date of the order to establish his right which he claims to the property in dispute but subject to

the result of such suit, the order shall be conclusive. Therefore this clause expressly provides that a suit should be instituted within six months to set

aside the order of the sale officer to establish the claimant''s right to the property. As this suit is expressly provided for by the Act, it would come

within the saving provided in Section 48. The society itself by its liquidator was a party to the order in the claim proceedings and the suit is only a

continuation of the claim proceedings. Vide (1907) L.R. 35 I.A. 22 (Privy Council) . It is not possible to understand why, when the society itself

was a party to an order, any further leave is necessary from the Registrar. That is why no restriction is placed in Rule 22 (17) (c) that the leave of

the Registrar should be obtained before the institution of the suit. It would hardly be in the contemplation of the Legislature that leave should be

sought from the Registrar at whose instance the sale was ordered. If the Registrar should decline to give leave or delay giving leave for six months

there will be no remedy for the plaintiff and according to Rule 22 (17) (c) the order on the claim petition would be conclusive. Section 48 only

contemplates cases where proceedings have to be initiated against the society and not to cases where a society itself was a party to an order in

proceedings instituted by virtue of the Co-operative Societies Act. It seems to me therefore that the suit is maintainable. I therefore set aside the

decrees of both the lower Courts and remand the suit for disposal according to law. Two cases were relied on by Mr. Lakshmayya on behalf of

the respondent, namely, Mugi Subbayya Vs. Ravulacheruvu Thippa Reddi and Another, and Kuppu Govinda Chettiar Vs. Uttukottai Co-

operative Society, , but none of them have any bearing on the question in issue in this case.

In the result the appeal is allowed and the suit remanded to the file of the District Munsif of Ramachandrapur for disposal. The respondents will

pay the costs of the appellant throughout. The appellant will be entitled to refund of Court-fee.