The main legal point established in the judgment is the interpretation and application of Section 156 of the Co-operative Societies Act, which determines the jurisdiction of the Civil Court in disputes falling under the Act.

JUDGMENT :

G. JAYACHANDRAN, J.

Prayer: Second Appeal is filed under Section 100 of C.P.C. praying against the judgment and decree in A.S. No. 2 of 2005 on the file of the Principal Subordinate Judge, Villupuram dated 09.12.2005 in confirming the judgment and decree in O.S. No. 350 of 2003 on the file of the I Additional District Munsif, Thirukoilur dated 25.07.2004.

1. This Second Appeal is filed by the plaintiffs, who lost their suit for recovery of money in the Courts below.

2. The Appellants herein are the plaintiffs and the respondents herein are the defendants in the suit. The parties are referred as per their ranking and status shown in the plaint, for the sake of convenience.

3. The plaint averment in short:

The plaintiffs 1 and 2 and the second defendant are the registered members of the first defendant Co-operative Sugar Mill. The second defendant had obtained seed loan of Rs. 6077.61 from the second defendant on 02.04.1994. The second defendant through notice dated 18.11.2002 informed the plaintiffs that Rs. 4715.62 from the first plaintiff and Rs. 8215.66 from the second plaintiff is recovered, from the money payable to them for the supply of sugarcane to the first defendant, for the failure to repay the seed loan availed by the second defendant. The plaintiffs did not act as surety for the loan availed by the second defendant, but in the notice of the first defendant, it is stated that the money is recovered from them since they stood surety for the defaulted principle borrower namely the second defendant. Therefore, suit was laid for recovery of the said money from the second defendant on the ground that, the first defendant ought to have proceeded against the principle borrower namely the second defendant, who is a man of wealth owning 10 acres of cultivable land and a rice mill. Instead, without taking any steps to recover from the second defendant, who is the principal borrower, the first defendant had recovered the due from the plaintiffs alleging that they stood surety to the second defendant. The loan due of the year 1994, is barred by limitation. The time bar debt had been unlawfully recovered from the plaintiffs from the money payable to them for supply of sugarcane. Hence, the suit for recovery of Rs. 4715.62 and Rs. 8215.66 due to the plaintiffs 1 and 2 respectively, with interest.

4. Averment in the written statement of the first defendant:

The Civil Court lack jurisdiction to entertain suit against Co-operative Society under Sections 156 and 90 of the Co-operative Societies Act. The Act specifically bar the jurisdiction of the Civil Court. Therefore, the suit is not maintainable. On facts, the 2nd defendant borrowed sugarcane seed for Rs. 6,240/- and executed an agreement and surety bond on 01.04.1994 agreeing to pay the money within one year with 18% interest. If not paid within one year, the interest at 21% chargeable. In the surety bond, the plaintiffs have stood as surety and agreed for deduction from the proceeds of the cane supply. Prior to recovery proceedings, several notices were sent to the principle borrower and the surety, namely the plaintiffs. Since they did not come forward to clear the debt, a sum of Rs. 4715.62 and Rs. 8215.66 was recovered from the plaintiffs on 20.05.2002, which the first defendant is lawfully entitled.

5. Averment in the written statement of the second defendant:

This defendant admits his borrowing from the first defendant and the surety stood by the plaintiffs for his borrowing. However, claims that the suit is barred by limitation and not maintainable on law and facts. When the plaintiffs showed him the notice of the first defendant, he paid the money to the plaintiffs and the plaintiffs alone are liable to settle the dues to the first defendant. As there was scarcity of water, he allowed the plaintiffs to cultivate sugarcane seeds borrowed from the first defendant and harvest and supply it to the first defendant. The plaintiffs did not supply the sugarcane to the first def