IN THE HIGH COURT OF JUDICATURE AT MADRAS
Mr. P.V. Rajamannar, Chief Justice and Mr. Justice Somasundaram
The Vegetols Ltd., Chittoor, by its Managing Agent, C.P. Sarathy Mudaliar, High Road, Chittoor
Versus
The Wholesale Co-operative Stores Ltd., Chittoor
W.A. No. 72 of 1954.
Decided On : 21 April 1955
"The Sole Selling Agent (the 1st respondent) shall advance a sum of Rs. 50,000 to the Company (1st appellant) and the Managing Agents (2nd appellant) and one of the representatives of the Company shall execute a Security Bond for the said sum of Rs. 50,000 on behalf of the Company to the Sole Selling Agent"
"The said advance of Rs. 50,000 to be paid by the Sole Selling Agent to the Company shall not carry any interest."
"The Company shall pay the Sole Selling Agent a commission of 1 per cent, on the gross sales-turnover of the groundnut oil and cake."
In pursuance of this agreement, on 10th July, 1952, a security bond was executed by the 2nd appellant in favour of the 1st respondent acknowledging receipt of Rs. 50,000 and agreeing to indemnify the 1st respondent against any sum that may be found due at the expiry of the contract. In addition to this sum of Rs. 50,000 a further sura of Rs. 50,000 was also advanced by the 1st Respondent on 30th August, 1952. A second indemnity bond was executed by the 2nd appellant on 29th August, 1952. The 2nd appellant also executed a promissory note for Rs. ,00,000 with interest payable at 6 percent, per annum though the amount actually advanced was Rs. 50,000. The contract appears to have been acted upon by both parties for some time, but subsequently the Registrar of Co-operative Societies appears to have taken exception to the advances made by the 1st respondent to the 1st appellant on the terms contained in the above agreement and directed that the money should be called back. There upon the 1st respondent filed a claim for Rs. 99,450-15-8 against the 1st appellant on nth April, 1953, before the Deputy Registrar of Co-operative Societies, Chittoor, after sending a notice that the Registrar had advised that the agreement should be cancelled and that the advance of Rs. 1,00,000 should be recovered. The claim was filed under section 51 of the Madras Co-operative Societies Act.
From the record, it appears that on the date of the execution of the agreement that is, on 7th July, 1952, the 1st appellant company was not a member of the 1st respondent society. But the 2nd appellant individually was a member. The 1st appellant was actually admitted as a member only on 4th October, 1952. The 1st appellant filed a written statement, in which it pleaded inter alia that the Deputy Registrar of Co-operative Societies had no jurisdiction under section 51 of the Act to entertain the claim, because the 1st appellant as a limited liability company could not, under the by-laws of the society be admitted as a member of the society. On 16th June, 1953, the Deputy Registrar passed an order overruling this objection, and holding that he had jurisdiction to entertain the claim. A revision petition was filed against this order by the appellants to the Registrar. That petition was disposed of by the Additional Joint Registrar by his order, dated 24th August, 1953. Before him, in addition t
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