The Court clarified that the dispute between the plaintiff and the Committee of management was not withdrawn from the Courts by Rule 22, and the refusal to pay dividend without Registrar's sanction was justified based on the auditor's report.

JUDGMENT

B.K. Mukherjea, J. - This is an appeal on behalf of the plaintiff, and arises out of a suit commenced by him against the defendant Bank for recovery of a sum of Rs. 46 and annas odd, alleged to be due to him as dividend on certain preference shares held by him, on a declaration that a resolution of the Managing Committee dated 20th September 1934 as well as another resolution passed at an extraordinary general meeting of the share-holders, held on 30th September 1934, under which the payment of the said dividend was refused, were illegal and ultra vires. To appreciate the various points raised in the case, it is necessary to set out the material facts briefly : The defendant Bank is a Co-operative Institution which is governed by the Co-operative Societies Act of 1912. It is a mixed type of society and its members are partly other affiliated societies, registered under the Act, and partly individuals who are called preference share-holders. At an annual general meeting of the share-holders of the Bank held on 29th July 1934, it was resolved that out of the profits available for distribution for the year ending 30th June 1934 which amounted to Rs. 21,803-8-4, a sum of Rs. 3500 be carried to the Reserve fund, and out of the balance, a sum of Rupees 755-14-0 be paid as dividend to the preference share-holders. The plaintiff says, that in accordance with this resolution, the dividend payable on the 30 preference shares held by him came up to Rs. 46 odd. He asked the Secretary to pay this amount but his demand was refused. The Bank resisted payment of the dividend on the ground that the major portion of the assets shown in the auditor's report was illusory, and the real profits were not even sufficient to meet the expenses of the society. The Committee of management accordingly moved in the matter, and on the strength of its resolution passed on 20th September 1934 an extraordinary general meeting of the share-holders was held on 30th September following, which rescinded the earlier resolution passed on 29th July 1934.

2. The plaintiff challenges the legality of this subsequent meeting of the shareholders, as well as that of the previous resolution passed by the Committee of management. His allegations are, that the Committee of management, was not duly constituted according to law, inasmuch as it included persons who were not members of the Co-operative Society, and were not elected in the manner contemplated by Rule 13 (1), Co-operative Rules framed by the Local Government. It is also contended, that bye-law (28) of the defendant Bank, under which the Board of Directors purported to be constituted, was illegal and ultra vires of the Cooperative Societies Act. Lastly it is said, that the extraordinary general meeting held on 30th September 1934 was not properly convened, and its proceedings were vitiated by various irregularities and non-compliance with the provisions of law. The defence of the defendant Bank in substance was that the suit was not triable by the Civil Court, and the remedy of the plaintiff, if any, lay in filing a dispute before the Registrar under the provision of R. (22). It was urged in the next place that as the Government auditor, in his audit report, had reported that a considerable portion of the profits was not realizable, no dividend was payable without the sanction of the Registrar under Rule 28 (3) of the Government Rules. The defendant further contended that the Board of Directors was properly constituted in accordance with bye-law (28), which was neither illegal nor ultra vires, and there was no irregularity in the extraordinary general meeting of 30th September 1934, which cancelled the earlier resolution of the shareholders.

3. The trial Court negatived all these defences, and gave the plaintiff a decree. On appeal the decision was modified by the lower Appellate Court. The Sub-Judge has held inter alia that the suit was triable by a Civil Court, and the resolution passed at the annual general