Karnataka High Court
Suresh vs The Managing Director Karnataka Milk ... on 10 March, 2008
Author: D.V.Shylendra Kumar
Bench: D.V.Shylendra Kumar
LIIMIHREHIQIL §9!.!B.'!;;9
A -Dated thiathc 1°'",day orMMwh'%émsEE%E
"mfl: M _ '_ V
mm aomnm MR Jun:-mEnp+EvEE
SU-RESH
s/o SHIDRAMAPPA ZINGAFDE E M_
AGE: MAJOR, an-'smEss" M '
R/Og!AINPETH=:_
BAGA-LKQT._. . 2 ...APPELLAN'1'
F' an at-Mam, Adm]
1. ='rI:m MANA£}iNC+~DIREC'I'0R
KARMPAKAAMiL.K_;9'EpERA11oN
1 _ SHEPARD HALL, 9 3 ROAD E
zBIJAPURV
i"".E:ET?iEE.GENEEAL MANAGER
- T 'KARNATAKA MILK mnmnmon
' 'A "£NDUES'PRIAL ESTATE '
M 'escmxm RESPONDENTS
J [By Sri sangamesh G=Pa1;11.TAdEv]_ -
"THIS RSA IS FILED u/_s zoo OF"GPC'_AG._AINS'I' THE
_ I E;H._IDGMENT AND DEGREE DATED' 23. 1.2002_?:PA8_S'EIA) E-IN -RA NO' _44
"OF 9001. ON THE FILE OF THE"! ADDL CIVIL JUDGE" (SR. .DN:),
BAGALKOT. DISMISSING THE APPEA-L"AND CQNFIRMING THE
JUDGMENT AND DECREE"_DT;A1-5i.6.20O1:'PAS§'ED_I_N OSNO 8:0-FOF
1999, ON THE FILE OF THE ADDL CIVIL JUDGE IJR"-DN].
BAGALKCYI'.
fit'-'4
THIS APPEAL, COMING on FOR HEARING 131-its'-..1f5AY, THE
COURT osuveasowas FOLLOWINo:- ._
This second appeal I_nvol\ies:_'af.vshott V' V
question viz., whether 'the who an
agent of the respondents-defendants;-afsociety; whose
agency had been a suit for
recovery of the deposit ----'2,000/-, which had
been the of agency in favour of
with interest on the
on the assumption that the
texmirialtion in law, notwithstanding the
,p§rovisions"'oiTV::S'ect.ion 70 of the Karnataka Co-operative
«."S;ociet1es:'Act, 1959 [for short, the Act[.
it court as well as the first appellate court
AA non-suited the plaintifl' only on the ground that
V " «..such a suit was not tenable in the light of the provisions of
E Section 70 of the Act, to get over such judgments and to
get a decree for this amount, the present second appeal.
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At the time of admission the following substantieiquesiion
of law had formulated as arising for this
second appeal: _ 2 Vv _'
1) Whether the suit irtihe
barred under Section TFO 'ofthe_VKaina!;:1Jta-..
Co-operative A. *
3. The material zfaots "to second appeal are
not in dispute viz.had been appointed
an agent of« ifecie-ration, a co-operative
society; products of milk under
"Eon commission basis. It
tenninated the agency being of the
that the' violated the terms of the agency,
it 'to'"'the defendant-society, the plaintiff was
V marketing milk other than Nandini brand
A-a1so__i.~ the justiflcation for termination of the
AL I pageney on this ground has been found against the
~».riefendant-society, the courts below, nevertheless,
E dismissed the suit only on the premise that a civil suit of
the nature as filed by the plaintifi' was not maintainable,
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particularly due to the bar provided under Section 70 of
the Act. Section 70 of the Act reads as "
70. Disputes which may id _
I
(1) Notwithstanding
any raw for tlw,tivne'l?eina mfwve. tree
dispute touching the "conetittltiort,
management, o'r=._the ef a co-
operattteegaociety
(a) among' ntetnbere,-~ members and
members.
past, _ and deceased
:_ past member or
3"fpereon- through a member,
or deceased member
* society, its committee or any
'_ agent or employee of the
society, or
(cllwwlietween the society or its committee
and any past committee, any oflicer,
agent or employee, or any past
oflicer, past agent or past employee
or the nominee, heirs, or legal
representatives of any deceased
omoer, deceased agent, or deceased
employee of the society, or
(d) between the society and any other
co-operative society or a credit
"Q9109
$/a
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such dispute shall be referred ta': the
Registrar for decision, and no Vor
labour or revenue court or V.
Tribunal shall have jurisdiction _ to entertaira. 1'
any suit or other of. K
such dispute. "
(2) For the purpose of s_tlb#secti6n' {1}}
following shalt be deemed tobe fdispifttes
touching the aanetialticn, managetnerit or '
the business o'_f,a gsociety,
namely"-.,.
(a) a clairn by the for any debt or
due_to"it fem a member or
the Z. nominee,' ' heirs or legal
representatites "of a deceased
such debt or
____ H 3:; 'demand be admitted or not;
* by a society against the
~ debtor where the society
' _ " 'recovered from the surety any
amount in respect of any debt or
" _ demand due to it from the principal
as a result of the default of
the principal debtor whether such
debt or demand is admitted or not;
(c) any dispute arising in connection
with the election of a President, Vice-
President, Chairman, Vice Chairman,
Secretary, Ireasurer or Member of
Committee of the society;
(at) any dispute between a co-operative
society and its employees or past
employees or heirs or legal
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representatives of a deceased
employee, including a _. dispute
regarding the terms of employment" 3
working conditions and
action taken by a co--ope_ratiueiVsociety.. K '
notwithstanding ._ "
contained in the
Act, 1947 (Cen.tral_Act 14 of 194%. if
(e) a claim co-operative jbr '
any the assets
of, . the V,--~co4cp'erative' by
grnember, deceased
member *.or ;de_ceese:i ofiicer, past
agentcr deceaseciietgent or by any
servan_i;.: sent-ant or decease
51*' _. or'i:ay"its***z*3ommittee, past or
_ "whether such loss be
H admittedor not.
(3) question arises whether a dispute
. referretis_to~-the Registrar under this section
~ is" auiispute touching -the constitution,
or the business of a co-
operative society, the decision thereon of
E V. z the Viéegistrar shall be final and shall not be
--,_*~-.cai1ed in question in any court.
issue though had been framed as to
AA ymointainability of the suit in the light of provisions of
i " (c) of sub-Section (1) of Section 70 of the Act, has
been erroneously indicated as one arising due to clauses
('b) and (d) of sub-Section (1) of Section 70 of the Act.
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Nevertheless, this issue was answered against theplaintilf
and in favour of the defendant-society lower
appellate court having corrected this one
arising in the light of the twp
Section (1) of Section 70 Vofthe A
answer in respect of iss:.1e of the
defendant and dismissed
the appeal, the presezit the plaintiff.
5. Apip'e'sfin"g"5V'on appellant-plaintiff, Srl s
B flebballig, raised two contentions.
It is. firstly that the suit was very much
as the disputes touching upon the
it -A A "constitution, lnianagernent or business of a co-operative
are excluded lrom being agitated before a
A all enumerated in sub-Section (2) of Section
up _70.et;tt11e Act and a suit of the present nature i.e. a suit by
l " agent as against the society for recovery of deposit
amount being not a type of suit figuring in any of the
clauses (a) to (e) in sub--Sectlon (2) of Section 70 of the Act
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and as it is specifically recited in s_ub--sect_ion for
the purpose of sub-section (1), the are
required to be taken into consideration
raised by the plainfifl'
clause (c) of subsection: A
not operate against the beiow
were in error in against the
plaintiif for g.non-suiting Learned counsel
submits otizlyi as are enumerated in
clauses (a)':te:".;{e) of Section '70 of the Act
which --n'otWthe other types of suit and
therefore much maintainable.
V' ._ A »:'I'he contention urged by Sri I-Iebballi is
V for arguments' sake that clause (c) of sub-
A of Section 70 of the Act does mention about a
Ag gdispute touching the constitution, management or
it " «..hi1siness of a co-operative society between the society and
it agent, the nature of disputes viz., a suit for recovery of
deposit sum of Ts 2,000/-, which the plaintiff 'had
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deposited at the time of awarding the agency was not a
dispute touching upon the business Bf the
sense, on the termination of the u
not carry on any business
with the defendants and it 'Was A
outside the purview of (cf (lid of
Section 70 of the g regard that
even if the, and the agent
continuedft if a civil suit was to
be for the society to plead
in the context of which the
suit Jspecifically arisen touching upon
constitution, niariagement or business of the society
.A Lburden was on the society to make good such
'- the society neither having specifically pleaded
dispute arose in the context of any business
» At 'T itxfansactions between the society and the plaintiff not
made good such stand, it was not open to the
courts below to have recorded a finding that the suit was
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not maintainable in law and therefore submits the
_ judgments and decrees of the courts set
aside and the suit decreed as prayed fo_I.f._, ' 1:./.11' l
7. In support of such subriiiseion, J
the appellant--p1aintifi' onla single
bench decision arses gee:-:%tu1d.i%the "caset..»of Asuttmm
posmxa -. coopnmnve
socmrr wherein it had
been held rent to be paid by a
leased to the society as
1ess"ee,: upon any business activity
ofthe Vlsoolety:Vand_sthat though the question arises in the
V' . or requirement to comply with Section 125 or
V this court reversing the view taken by the
i' that notice in terms of Section 125 of the Act '
AA Jwolstiecessaxy, does not correct it, has thrown light as to
activity constitute business activity as between the
society and its agent and therefore submit that the courts
below were in error in concluding that the suit claim arose
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in the context of transaction touching upon flit?-DUSIHCSS
of the society. Learned counsel would
the courts below should have held
much maintainable
to the validity of the tenmnaadnyldi the
once it was found that follovlred
requisite pIt)cedure_.":i'o1A~ tile agency should
have necessarily i a simple suit
for which the society
couldnot. ildlétdrfelted and the suit should
halls been.. ' 5
8,1, podtljeotnelv hand, Sri Sangamesh G Patil, learned
.. .. _ pp "coufi'seI"for theV'i*espondents~defendants would submit that
helow are very right in concluding that the suit
A wasilittlie provisions of clause (c) of sub-Section (1) of
.. Vt Section 70 of the Act; that the provisions of clause (c) of
" «sub-Section (1) of Section '70 of the Act are clearly
F attracted to the present case; that the dispute arises only
in the context of business of the society, such as
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marketing its product --- Nandini milk --- the society
had appointed the plaintlil' as an
much a business transaction; that
refund was in the context of
even assuming that the
that the termination of of is not
correct or proper, the of amount,
the plaintiff could Zhavieiionli 'dispute in terms of
section._70i, maintained a suit
and jusunea in dismissing the
sL1it__ as * in View of the provisions of
cnausagcy orisubesseasfi (1) of Section 70 of the Act and
should be dismissed.
.,i9.'«' to the other submission as to whether
A the situaflon being not any of the situations contemplated
A: I in one of the clauses of sub-Section ('2) of Section 70 of the
and therefore the suit was not maintainable, the
learned counsel would submit that the bar clearly applies
in the light of the provisions of clause (c) of sub--Section (1)
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of Section 70 of the Act and the bar operates itttenns of
the situation referred to in clauses _(a_) to (a)p;nin
(1) of Section 70 of the Act and the_
of the situation referred to (njito
Section (1) of Section moor the i
provision of sub-section not situation from
out of the bar oontsinpioiiod sub-Section (1)
of Section 7.0 of other hand the
situations (2) are all to be taken
as siibssecuon (1), even by \fiction
of of a situation, which otherwise
could scope of any one of the clauses
_{si_]: {(1) in (1) of Section 70 of the Act does
' not different to the operation of the bar for
u * civil suit respect of a dispute touching
of the aspects covered under clauses (a) to (d)
it in I and therefore urges the appeal should be dismissed;
E 10. The question is as to "whether the bar operates or
not?. There is no dispute that the relationship at the
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beginning was one of principal and agent as between the
defendant-society and the plaintifli That. is a
business connection. The
recovered was a security
which was made in the conteittcf his
definitely a deposit in 1 of business
relationship bemecsjimg agent. Though
the relationship in itself may
also not basically, it
is ('business of the society as
for the business of the society.
The »-- picture in the context of the
btisiness principal. Clause (c) of sub--Section (1) of
of the Act not only includes current agent but
'-- AVi'also"Vpast and therefore it makes little difference as
to .. ttzhether the agency had been terminated or not.
» ' cannot be any two opinion that independent of sub-
section (2) by operation of sub-section (1) of Section '70 of
the Act, a suit of the present nature was not maintainable.
fig,/t
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11. In the light of the arguments addressetl_:'.by the
learned counsel for the appeflantgplajgitiftjl
question as to whether the proyfislons of (2)
Section 70 can take out »1.t_hose'~. is
contemplated in sub-section. V_('2)V2 the 'of
operation of the baras jfpr s1ib-Section (1)
of Section 70 of the _contents of sub-
section covered by clauses
(a) to (e}' of: all situations arising
in [men forth by the society,
[of amount] etc., are all deemed
by. fiction to be'v~aAdis'piV1te for the purpose of sub-section (1)
A Act. xThatVmeans, the situations figure in clauses
V __T(aj= sub-section (2) are all fiction of law taken to be
it automatically covered by the bar indicated in
AA psula-asection (1). It is so achieved by llction.
It is a common practice and well understood in legal
parlance that a flction is employed to rope in a situation
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not otherwise within the contemplation of aV)')"particular
provision, also to be brought within a
or situation and some times even to
beyond the scope of any or
proper reading of sub-seetionsA'(1_)'and A
actually indicate that the (sub-section
('2) in respect of clauses (a) to
(e) is only forpthe purpose these situations
necessatilét the scope of the
bar of Section 70 and not
a clauses (a) to (e) or to
be vvhich operates under sub--section
It shoulti noticed that the bar under sub-section
) civil court not having jurisdiction to entertain
= of a dispute touching upon the aspects
amongst the persons figure in clauses (a) to (d) to
it ' subssection (1) is complete and achieved within sub-
section (1) of Section 70 itself and if the object of sub-
section (2) was to restrict the scope of operation, the
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legislature would not have employed any deemed" ggrqvision
to indicate as to what are the disputes the
constitutional management or
society by a
that the following alone
under the bar for the of' ' Such is
not the language the fiction
employed in Asub--secti:onV to be one to
rope in a' (a) to (e) in sub-
section: (2) the bar provided under
of the Act and not to leave
any 'A it later to exclude as not
clauses (a) to (e) to sub-section (2) of
1 - of the Act.
it 'courts below are right in answering the question
A the suit for recovery of amount deposited by the
it * while he was an agent of the_defe_ndant--society is
a claim arising in the context' of a dispute between the
agent and the society and touching upon the business
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activities of the ociety and therefore it is clearly 111: by the bar provided under subsection (1) er éjes%er% the Act.
14. The suit claim ':
succeeded if the suit vsas" itself having been held to_be is no way of the civil court deepeeixagieeueeeeeesent for the claim of some mnqunf, claim would have been arid the suit has to be dismisseei done so by the courts belcw. " 'Ne icte1'ference in second appeal. Appeal is dismissed.
Sd/-Q I 1116.923