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HIGH COURT OF NAGPUR
R Kaushalendra Rao, Bhutt
RAJDARKHAN JABBARKHAN – Appellant
Versus
RAMBHAU NARAYAN AND OTHERS – Respondent
Second Appeal No. 269 of 1947
Decided on : 18-11-1954
CO-OPERATIVE SOCIETIES ACT - SECTION 23, 24, 42 - LIQUIDATOR'S ORDER - NOTICE TO MEMBER - VALIDITY - LIABILITY OF MEMBER - PAYMENT BY THIRD PARTY - RIGHT TO REIMBURSEMENT.
Fact of the Case:
The plaintiff purchased a field from the first defendant, who represented that the field belonged exclusively to him and that there were no debts or incumbrances. The field was later attached and sold in execution of a contributory order passed by the liquidator of the Malkhed Co-operative Society, of which the first defendant was a member. The plaintiff paid the amount due to the society to protect his interest and filed a suit for reimbursement from the defendants.
Finding of the Court:
The court held that the liquidator's order was not binding on the first defendant because he was not noticed and heard before the order was passed. The court also held that the first defendant was not bound in law to pay the amount as ordered, and that no benefit accrued to him by the payment made by the plaintiff.
Issues: 1. Whether the liquidator's order was binding on the first defendant. 2. Whether the first defendant was bound in law to pay the amount as ordered. 3. Whether any benefit accrued to the first defendant by the payment made by the plaintiff.
Ratio Decidendi: 1. The power conferred on the liquidator under S. 42(2) (b) of the Co-operative Societies Act is to be exercised judicially. 2. A party is not to suffer in person or in purse without an opportunity of being heard. 3. The requirement as to notice cannot, in the absence of any provision to the contrary, be made to turn on the presence of a provision to that effect in the statute or the rules but on the nature of the act in question.
Final Decision: The decree of the lower court was affirmed, but for reasons different from those given by the learned appeal Judge. The appeal was dismissed with costs, subject to the condition that respondent 6 shall bear its own costs of the appeal.
1. This appeal is by the plaintiff. The plaintiff instituted the suit against six defendant on the following allegations. The sixth defendant is the Malkhed Co-operative Society (hereinafter called the co-operative Society) represented by the liquidator, the Central Bank Ltd., Morsi. The first five defendants formed a joint Hindu family. Defendants 1 and 5 and their father Narayan were members of the Co-operative Society. The Society went into liquidation and the liquidator passed a contributory order (Ex. P-5) dated 2-3-1943 and sent a certificate to the Court of the Sub-Judge. 2nd class, Morsi. Field No. 37, area 15 acres 17 gunthas, rental Rs. 30 of 'mauza' Malkhed was attached and sold in execution of the contributory order on 26-6-1944.
2. The plaintiff had purchased field No. 37 under a deed of conveyance executed by the first defendant on 11-5-1943. The vendor had represented to the plaintiff that the field belonged to him exclusively by virtue of a partition between him and his father and brother and had expressly contracted that none else had any claim or interest in the field, that there were no debts or incumbrances and that he and his brother's estate would be liable for any damages toe plaintiff might suffer on account of such claim or contract.
The plaintiff's case was that he did not know of the debts owed to the Co-operative Society at the time of his sale deed; nor had he any knowledge about the same till after the auction sale, i.e., till 26-6-1944. The plaintiff averred that in order to protect his own interest he had to pay and deposit Rs. 2,100/- in Court on 18-7-1944 and because of this payment the auction was cancelled by the Court. The Co-operative Society withdrew the amount plus Rs. 100/- as purchaser's comission totalling Rs. 1,998/1/-.
According to the plaintiff, the five defendants were bound to pay the claim of the Co-operative Society. Because they did not discharge that liability, the plaintiff had to pay that amount in order to avoid a substantial loss to himself. The suit was consequently brought for reimbursement from defendants 1 to 5. In the alternative, the plaintiff claimed that in case the debt was not binding on the defendants he was bound to get a refund of the amount from the Co-operative Society.
The defendants asserted that the order passed by the liquidator was void as contrary to S. 24, Co-operative Societies Act. The defendants denied, that they were bound in law to pay the amount as alleged or that they were in any way benefited by the plaintiff's payment. They pleaded 'inter alia' that the order of contribution was in contravention of the statute and void because the order could not he passed by Mr. Melag who purported to act as the liquidator and in any case after the cessation of membership of Narayan, the father of defendants 1 and 5.
3. The suit was decreed by the learned trial Judge against defendants 1 and 5. But in appeal the learned appeal Judge upheld the contention that the liability of the property of Narayan or his sons terminated with the expiry of two years from the date of their ceasing to be members of the Society on 27-2-1934. That being so, the liquidator could not enforce any liability against them under S. 23, Co-operative Societies Act.
Without deciding the other points decided by the learned trial Judge, the learned appeal Judge modified the decree of the trial Court by decreeing the claim against the Co-operative Society alone.
4. The Society has not preferred an appeal against the decree. The appeal is, however, preferred by the plaintiff for modifying the appellate decree so as to make defendants 1 and 2 liable for the claim in suit.
5. The case against the second defendant who is the wife of the first defendant is easily decided. The contributory order was not passed against her. As observed by the learned trial Judge, it is not shown how she benefited in any way by the payment made; by the plaintiff. Such being the case, the plaintiff can have no ligh
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