Disputes regarding employee liability in cooperatives can be adjudicated under cooperative statutes, limiting civil court jurisdiction.

JUDGMENT

The plaintiff in O.S. No. 943 of 2001 on the file of the Court of the Principal Munsiff-II, Kozhikode is the appellant in this Second Appeal. The said suit was originally one for a perpetual injunction restraining the Kozhikode District Co- operative Bank from effecting recovery of an amount of Rs. 2 lakhs at the rate of Rs. 2,000/- per month from the appellant and three others pursuant to Ext.A1 memo dated 20-09-2001. Subsequently, the suit was amended so as to incorporate a prayer for declaration that the decision dated 17-4-2003 taken by the Board of Directors of the said Society dismissing the plaintiff's appeal is null and void.

2. Both the courts below dismissed the suit holding inter alia that the jurisdiction of the Civil Court is ousted by virtue of Sec. 69 (1) ( c) read with Sec. 100 of the Kerala Co-

operative Societies Act, 1969 (“the Act” for short).

3. The facts which have been concurrently held are the following:-

One P.P. Bharathan was engaged by the defendant/Society which is a financial institution as its collection agent for mobilising deposits on daily collection basis. The said Bharathan had misappropriated a sum of Rs. 2,49,282/-. The defendant/Society thereupon conducted a domestic enquiry by appointing an advocate as the Enquiry Officer. The plaintiff who was the Senior Accountant and three other employees of the defendant Society were found guilty of dereliction of their duty facilitating for the misappropriation of the money by P.P. Bharathan. Thereupon, the Bank initiated steps for realisation of the said amount with interest from the plaintiff and three others. Eventhough the plaintiff had preferred an appeal before the Board of Directors of the defendant Society the said appeal was dismissed. Thereupon the plaintiff filed the present suit originally for a perpetual injunction. Subsequently, she got the plaint amended by incorporating an additional prayer for declaration. Both the courts have held that the dispute is one falling under Sec. 69 (1)(c) of the Act and therefore arbitrable under the said Section and, that, by virtue of the ouster of jurisdiction under Sec. 100 of the said Act, the Civil Court would have no jurisdiction to entertain a suit of this nature.

Hence, this Second Appeal.

4. The following are the substantial questions of law formulated in the memorandum of Second Appeal:-

i) Was the Court below right in holding that the suit is hit by Sec. 69 of the Co-operative Societies Act when a dispute between an employer and an employee of the Co-operative Society was not brought within the ambit of the Section ?

ii) Was the Courts below correct in refusing the prayer for declaration even in the absence of a denial by the opposite party in that regard ?

iii) Was the courts below correct in refusing a perpetual order of injunction in favour of the appellant ?

5. The learned counsel appearing for the appellant/plaintiff made the following further submissions in support of the appeal :-

The finding of the courts below that the subject matter of the suit falls within the scope of Sec. 69 (1) (c ) of the Act is erroneous. Actually, the dispute falls only under Sec. 69 (2) (d) which came into force only with effect from 2-9-2003 whereas dispute in this case had originated much earlier at a time when Sec. 69 (2) (d) was not there in the statute and therefore the embargo under the Section will not operate so as to oust the jurisdiction of the civil court.

6. I am afraid that I cannot agree with the above submissions. This is a case in which the Society is recovering the loss sustained by it due to the dereliction of duty by four of the employees including the plaintiff and all of whom are joint tortfeasors. Their liability is joint and several. The nature of the dispute is one which which squarely falls under Sec. 2 (i) read with Sec. 69 (1)(c) of the Act and, therefore, arbitrable under the said provision read with Sec. 70 of the Act. The ouster of jurisdiction under Sec. 100 of the Act is squarely