Karnataka High Court
B.H. Inamdar vs B.F. Swamy on 28 August, 1990
Equivalent citations: ILR1991KAR1654
Author: B.P. Singh
Bench: B.P. Singh
JUDGMENT B.P. Singh, J.
1. This Regular Second Appeal has been preferred by Sri B.H. Inamdar, Secretary, Karnataka Grama Seva Sangha, Workhead Office, at Raichur. The suit filed by the Appellant-plaintiff was dismissed by the trial Court as well as the First Appellate Court holding that the appellant-plaintiff had no right to file the suit and the suit was not properly instituted on behalf of the Sangha.
2. The appellant-plaintiff filed a suit being O.S.No.40/1973 in the Court of the Principal Munsiff at Gulbarga, claiming a decree for a sum of Rs. 4,200/- and interest thereon at 9% per annum from the defendant. It was alleged that the defendant had purchased old furniture from the Karnataka Grama Seva Sangha and had failed to pay the sale price. It is not disputed that the Karnataka Grama Seva Sangha is a registered Society under the Hyderabad Societies Registration Act, and by virtue of the provisions of Section 31 of the Karnataka Societies Registration Act (hereinafter referred to as 'the Act'), it is deemed to be a Society registered under the said Act. It is therefore governed by the provisions of the Karnataka Societies Registration Act, 1960. The sole ground on which the suit as well as the appeal have been dismissed is that the suit had not been properly instituted by Sri B.H. Inamdar on behalf of the Karnataka Grama Seva Sangha, a Society under the Act.
3. As has been observed earlier, the suit had been filed by Sri B.H. Inamdar, claiming to be the Secretary of the said Sangha or Society. It is claimed by the plaintiff that under the Act, Bye-laws and Rules of the Society, the Secretary is empowered to institute and defend suits. It is not urged before me that the Secretary was specially authorised by the Board of Trustees of the Society to institute the suit.
4. Sri C.M. Desai, learned Counsel for the Appellant-plaintiff submitted that where a valid decision is taken to institute a suit, Article 17 of the Memorandum of Association must be understood to mean that the Secretary of the Association for the time being or any other person authorised by the Board in that behalf can represent the Society in such legal proceeding instituted by the Society. It is unnecessary to go into that question, because in the instant case, there is no decision of the Board to institute a suit. In my view, in the absence of anything to the contrary in the resolution authorising the filing of a suit, the Secretary may under Article 17 derive power to represent the Society in such a suit.
5. Learned Counsel appearing for the parties have relied upon the same provisions of law and the Articles of Memorandum of Association. Section 15 of the Karnataka Societies Registration Act, reads as follows:-
"15. Suits by and against Society:- Every Society registered under this Act may sue or be sued in the name of the President, Chairman, or principal Secretary or the trustees as shall be determined by the rules and regulations of the Society, and in default, of such determination, in the name of such persons as shall be appointed by the governing body for the occasion.
Provided that, it shall be competent for any person having a claim or demand against the Society to sue the President, or Chairman or Principal Secretary or the Trustees thereof if, on an application to the governing body, some other officers or person be not nominated to be the defendant."
6. The learned Counsels have submitted before me that the Articles of the Memorandum of Association, may be considered to be the Rules and Regulations under Section 15 of the Karnataka Societies Registration Act. Reliance is placed upon Articles 10(g) and 17 of the said Memorandum of Association which read as follows:-
"10. The Board shall administer the affairs and conduct the activities of the Association and in particular.
(a) to (1).....
(g) File or defend suits and take or defend all other proceedings on behalf of the association.
17. The Secretary of the Association for the time being or any other person authorised by the Board in that behalf shall represent the Association in any legal proceeding that may be instituted by or against the Association."
7. Section 15 of the Karnataka Societies Registration Act, provides that every Society registered under this Act may sue or be sued in the name of the President, Chairman, or Principal Secretary or the Trustees as shall be determined by the Rules and Regulations of the Society. Section 15 clearly enables a registered Society to determine by Rules and Regulations in whose name the Society may sue or be sued. The Rules and Regulations may determine whether the Society may sue or be sued in the name of President, Chairman or Principal Secretary or the Trustees. Once the Rules and Regulations so determine the Society may sue or be sued only in the name of that designated authority or person. Where the rules and regulations do' not so determine, it enables the governing body of the Society to appoint a person for the occasion. The learned Counsel for the plaintiff/appellant submitted that Section 15 of the Act, must be read to mean that the Society can always sue or be sued in the name of the President, Chairman, Principal Secretary or the trustees. It is not possible to accept that submission because of the clear language employed in Section 15 of the Act clearly providing that the rules and regulations must determine in whose name the Society may sue or be sued. Under the rules and regulations the determination must be made in favour of the President, Chairman, Principal Secretary or the Trustees, and no one else. In the absence of such general determination by the rules and regulations, for every occasion the governing body is required to nominate a person in whose name the Society may sue or be sued. The proviso to Section 15 also supports this interpretation by providing that in the absence of any general determination by the rules and regulations, any person having a claim or demand against the Society may sue it in the name of the President, Chairman, or Principal Secretary or the Trustees thereof, provided the governing body on an application made by the claimant fails to nominated any other officer or person to defend.
8. In a nutshell, Section 15 of the Act enables every registered Society to determine by rules and regulations the person or persons in whose name the Society may sue or be sued. If the rules and regulations are silent on this aspect of the matter, the Society may sue or be sued in the name of such person as shall be appointed by the governing body for the occasion. Under the proviso it shall be competent for any person having a claim against the Society to sue the President, or Chairman or Principal Secretary or the Trustees thereof, if upon his application the governing body fails to nominate any other officer or person to defend. It has now to be seen whether under the rules and regulations, the Society may sue or be sued in the name of its Secretary.
9. Article 10 of the Memorandum of Association provides that the Board shall administer the affairs and conduct the activities of the association and in particular, Article 10(g) provides that the Board shall file or defend suits and take or defend all other proceedings on behalf of the association. To my mind there can be no doubt that the decision to file or defend suits must be taken by the Board itself. Once such a decision is taken, the question then arises as to who is authorised to file a suit, or in other words, in whose name the Society may sue.
10. Article 17 of the Memorandum of Association provides that the Secretary of the Association for the time being or any other person authorised by the Board in that behalf shall represent the Association in any legal proceeding that may be instituted by or against the Association. Article 17 therefore deals with a situation where a decision has already been taken to file or defend a suit. Once the suit is properly instituted, Article 17 authorises the Secretary to represent the Society in that suit. The authority to file a suit is quite different from the authority to represent the Society in a suit which has been validly instituted. In my view, Articles 10 and 17 read together do not substantiate the plea that the Secretary has been authorised to institute suits on behalf of the Society. The decision to file or defend suits must be taken by the Board itself since the power to administer the affairs and conduct the activities of the association vests in the Board. It is important that power to institute or defend suits must vest in the Board, it is open to the Secretary or President or Principal Secretary to flle or not to file a suit resulting in abuse of power. Where the Society has a just claim, the Secretary may not file a suit. Conversely, where the Society has a sound defence, the Secretary may concede the claim in Court. With a view to avoid such eventualities Article 10 of the Memorandum of Association vests power in the Board itself to file or defend suits. In my view, therefore, unless the Board by a resolution authorises the filing of a suit, the Secretary on his own cannot institute a suit against any person.
11. In the instant case, no resolution has been brought on record authorising the filing of a suit. The Secretary therefore had no authority to file a suit on behalf of the Society. The Courts below, therefore, were justified in holding that the suit filed by the plaintiff was not properly instituted in the absence of a resolution passed by the Board authorising him to file such a suit.
12. The Appellate Court has referred to some of the decisions cited at the Bar. I find that most of those decisions have taken the view That Section 6 of the Societies Registration Act (1860), which is in the same terms as Section 15 of the Karnataka Act, is only an enabling provision which enables the Society by rules and regulations to determine in whose name the Society may sue or be sued. I may however refer to the decision of the Punjab High Court in the case of PATIALA AVIATION CLUB, PATIALA v. THE PRESIDING OFFICER, LABOUR COURT, LUDHIANA AND ORS., . In that decision, an appeal was filed by the Manager of the Club. He was clearly incompetent to file the suit, because the Manager was not the President, Chairman, Principal Secretary or the Trustees of the club. There was also no special authorisation in favour of the Manager. In that view of the matter, I have no doubt that in view of Article 10 of the Memorandum of Association the decision to file a suit must be that of the Board, In the instant case, there is nothing to show that under the rules and regulations it has been determined as to in whose name the Society may sue or be sued and that does not prevent the governing body to nominate a person in that behalf. But even if such determination were to be made under the rules and regulations that would only determine in whose name the Society may sue or be sued. The power however to file or defend suits shall vest in the board and unless the board by a resolution so authorises no suit can be filed even by a person in whose name the Society may sue or be used, The Courts below have taken a correct view of law. Therefore, I find no merit in this Regular Second Appeal and it is accordingly dismissed. There will be no order as to costs.