Karnataka High Court
Shri. Abdulla A K vs Nanjarayapatna Vyavasaya Seva ... on 23 May, 2018
Equivalent citations: AIRONLINE 2018 KAR 96
Author: H.B.Prabhakara Sastry
Bench: H.B.Prabhakara Sastry
IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 23RD DAY OF MAY, 2018
BEFORE
THE HON'BLE DR.JUSTICE H.B.PRABHAKARA SASTRY
REGULAR SECOND APPEAL NO.1315/2013 (MON)
BETWEEN:
SHRI. ABDULLA A K
SON OF SHRI KUNHALLI,
AGED 46 YEARS,
RESIDING AT
NELLIHUDIKERI VILLAGE & POST,
SOMWARPET TALUK-571 202,
KODAGU DISTRICT. ... APPELLANT
(BY SRI.G.S. BHAT, ADV. AND SRI. P.T. MURALIDHAR, ADV.)
AND:
NANJARAYAPATNA
VYAVASAYA SEVA SAHAKARA BANK
NANJARAYAPATNA,
SOMWARPET TALUK-571 202,
KODAGU DISTRICT,
REPRESENTED BY ITS MANAGER. ... RESPONDENT
(BY SRI. G. CHANDRASEKHARAIAH, ADV.)
THIS RSA IS FILED UNDER SECTION 100 OF CPC.,
AGAINST THE JUDGMENT & DECREE DATED 23.03.2013
PASSED IN R.A.NO.39/2011 ON THE FILE OF THE DISTRICT
JUDGE, MADIKERI, DISMISSING THE APPEAL FILED AGAINST
THE JUDGMENT AND DECREE DATED 15.02.2011 PASSED IN
O.S.NO.99/2002 ON THE FILE OF THE SENIOR CIVIL JUDGE,
MADIKERI.
R.S.A.No.1315/2013
:2:
THIS APPEAL HAVING BEEN HEARD AND RESERVED
FOR JUDGMENT ON 26.04.2018, COMING ON FOR
PRONOUNCEMENT OF JUDGMENT, THIS DAY THE COURT
DELIVERED THE FOLLOWING:
JUDGMENT
The present appellant was defendant No.1 in the Court of the Senior Civil Judge at Madikeri, (henceforth for brevity referred to as "the Trial Court") against whom the present respondent as a plaintiff had instituted a suit in O.S.No.99/2002, for recovery of a sum of `5,00,000/- with interest thereupon at 18% per annum.
2. The summary of the case of the plaintiff in the Trial Court was that, it is a Co-operative Society. Defendant No.1 who carries on pepper business, had taken from it a sum of `11,77,500/- by pledging pepper and inspite of repeated demands and notices, he did not repay the money due. The pepper pledged by him was brought for sale through which, only a sum of `6,28,400/- was recovered. However, the suit was filed R.S.A.No.1315/2013 :3: restricting the claims to the balance amount of `5,00,000/- only. Defendant No.2 is the wife of defendant No.1. It is further alleged in the plaint that defendant No.1 in order to defraud the plaintiff has transferred his property in the name of defendant No.2, therefore, she was impleaded.
3. The case of defendant No.1, was one of the total denial. He also stated that when notice was received by him issued by the plaintiff, he approached the advocate who had not properly comprehended his instructions, but sent a reply admitting the transaction when, infact he had not borrowed any money from the plaintiff - Bank and was not due to pay any amount to it.
Defendant No.2 also filed her written statement denying every averment made in the plaint and pleading that there was no cause of action against her. R.S.A.No.1315/2013 :4:
4. Based upon the pleadings of the parties, the Trial Court framed the following issues:
1) Whether the Manager of the plaintiff-
Bank has no locus-standi to file the suit?
2) Whether there is cause of action?
3) Whether suit is not maintainable?
4) Whether the suit is bad for mis-joinder of parties?
5) Whether plaintiff is entitled to recover the suit claim amount?
6) What order or decree?
Additional Issue framed on 15.03.2010 Whether the plaintiff proves the averments made in para-5A of the plaint?
5. In support of his case, the plaintiff got himself examined as PW-1 and he got marked documents at Exs.P1 to P20. On behalf of the R.S.A.No.1315/2013 :5: defendants, defendant No.1 got examined as DW-1 and no documents were got produced.
6. The Trial Court after hearing both side and considering the material placed before it, by its judgment and decree dated 15.02.2011, decreed the suit of the plaintiff only as against defendant No.1 directing him to pay a sum of `5,00,000/- with interest at 6% per annum from the date of the suit, till the date of realization. However, it dismissed the suit against defendant No.2.
7. Being aggrieved by the judgment and decree passed by the Trial Court, defendant No.1 preferred an appeal before the Court of the District Judge at Madikeri (henceforth for brevity referred to as "the First Appellate Court") under Section 96 r/w Order XLI Rule 1 of the Code of Civil Procedure,1908 in R.A.No.39/2011. The R.S.A.No.1315/2013 :6: respondent therein appeared before the Court and contested the matter.
8. The First Appellate Court framed the following points for its consideration:
1) Whether the manager of the plaintiff bank had no authority to file this suit?
2) Has plaintiff proved that the first defendant borrowed from it a sum of `11,77,500?
3) Is the plaintiff entitled to a decree as prayed for?
4) Whether interference is called for in the judgment and decree of the trial court?
9. After hearing both side, by its judgment and decree dated 23.03.2013, it dismissed the appeal. It is against the said judgment and decree passed by the First Appellate Court, defendant No.1 has preferred this appeal.
R.S.A.No.1315/2013:7:
10. The appeal was admitted to consider the following substantials question of law:
"1. As the Bye-laws of the plaintiff Co-operative Society do not prescribe on whose name society would sue or be sued, was the suit maintainable without a resolution by the General body appointing any person to represent the society as envisaged under 15 of the Karnataka Co-operative Societies Act?
2. Are the judgment of the trial court and Appellant Court sustainable as it has failed to consider the applicability of Order 8 Rule 6 of C.P.C in view of the defence set up by the defendant"
11. In response to the notice, the respondent is being represented by his Counsel.
12. The lower Court records were called for and the same are placed before the Court.
R.S.A.No.1315/2013:8:
13. During the pendency of this appeal, the appellant filed I.A.No.1/2018 under Order XLI Rule 27 r/w Section 151 of Code of Civil Procedure, 1908 seeking permission to produce a copy of Bye-law of the respondent - Society.
14. The said I.A.No.1/2018 was heard on the very same day, when the final argument on the main appeal was heard. Considering the no objection submission made by the learned counsel for the respondent to allow the said I.A, and to permit the appellant to produce the said document and also noticing that the document sought to be produced was of some assistance in the disposal of this appeal on merit, the applicant was permitted to produce the said document. However, both side submitted that they would not prefer to lead any further evidence in the matter though the document was permitted to be produced by allowing I.A.No.1/2018. As such, the said R.S.A.No.1315/2013 :9: document which is a copy of Bye-law of respondent - Society was taken as part of the evidence.
15. Heard arguments from both sides. Perused the materials placed before this Court.
16. For the sake of convenience, the parties would be referred to with the ranks they were holding before the Trial Court respectively.
17. Even though the defence taken up by defendant No.1 / appellant herein in the trial Court was of total denial of the alleged suit transaction, however, both the Courts below by perusing the materials placed before it including both the oral and the documentary evidence have concurrently held that the plaintiff had proved the alleged suit transaction and that he was entitled to recover the suit claim together with interest thereupon. In view of the said concurrent finding of fact and in the absence of any substantial question of law R.S.A.No.1315/2013 : 10 : involved in that regard, the substantial question of law was confined only regarding maintainability of the suit which was the bone of contention from the defendant side in both the Courts below. As such, learned counsel from both side in this appeal have addressed their arguments only on the aspect of maintainability of the suit.
18. learned counsel for the appellant in his argument submitted that as per Clause 18(A)(5) of the Bye-law, it is only the Secretary who can either sue on behalf of the Society / Bank or be sued, but a Manager has got no authority or power either to sue or be sued, as such, the Society is not responsible.
19. Learned counsel further submitted that the document at Ex.P1, is only a letter of authority authorizing the Manager of the plaintiff - Bank, only to make correspondence on behalf of the plaintiff - Bank, R.S.A.No.1315/2013 : 11 : which cannot be construed as a power given to the Manager to sue or be sued on behalf of the plaintiff. The First Appellate Court, inspite of noticing the same, erroneously held that a Manager of the Bank will occupy a prominent position in the Bank, as such, he will have the authority to sue or be sued. In view of the said Manager not having any power to sue the suit of the plaintiff was not maintainable.
20. Learned counsel for the respondent in his argument submitted that since, from the year 1998, due to the introduction of the Business Development Programme by the State Government, Co-operative Societies started lending loans for non-agricultural purposes also, thus, societies became the Banks. By virtue of amendment of the Constitution of India in the year 1997, all those Vyavasaya Seva Sahakara Sangha Banks became primary agricultural credit Co-operative Societies, being represented by its Chief Executive, as R.S.A.No.1315/2013 : 12 : per Section 29-G(4) of the Karnataka Co-operative Societies Act, 1959 (henceforth for brevity referred to as "the KCS Act").
21. Further, as defined under Section 2(a-3) of the KCS Act, the Chief Executive has replaced the earlier Secretary and Manager of the Bank. As such, the representation of the plaintiff is proper and the suit is maintainable.
22. In the plaint, name of the plaintiff is shown as Nanjarayapatna Vyavasaya Seva Sahakara Bank being represented by its Manager Sri.H.B.Ramesh, however, during the pendency of the suit, the cause title was amended and the representation of the plaintiff was shown as by one Sri.K.G.Ganapathy, working as a Secretary / Manager of the plaintiff - Bank. The said Sri.K.G.Ganapathy, who was examined as PW1 has nowhere stated that he is ever worked or working as R.S.A.No.1315/2013 : 13 : Secretary of the plaintiff. On the other hand, he has stated that he is only the Manager of the plaintiff - Bank. There is no material, not even a piece of paper to show that said Sri.K.G.Ganapathy has ever been the Secretary of the plaintiff, much less, at the time when he represented the plaintiff - Bank in the suit. Therefore, it has to be considered that the said Sri.K.G.Ganapathy is only the Manager of the plaintiff - Bank, but, never has been its Secretary. Thus, the suit was filed and prosecuted is only by the Manager of the plaintiff - Bank, but not by its Secretary. Even both the Courts below have observed that the representation of the plaintiff has been made before the trial Court by its Manager only.
23. Clause 18 of the Bye-law of the plaintiff deals with the Secretary and his duties and powers. Clause 18(A)(5) thereunder, specifically mentions that the Secretary has the power to institute suit for recovery R.S.A.No.1315/2013 : 14 : due to the Society. In the entire Bye-law, such a power to sue on behalf of the Society has been given only to the Secretary and to none else. As already observed above, Sri.K.G.Ganapathy is only the Manager of the plaintiff - Bank, but, he is not the Secretary of it.
24. Learned counsel for the respondent drew the attention of the Court to Ex.P1 and submitted that the Manager of the Society has been authorized to represent the plaintiff - Bank which submission was vehemently opposed by the learned counsel for the appellant.
25. A perusal of the said document at Ex.P1 go to show that the said document is an approval of amendment to the Bye-law of the plaintiff by the Assistant Registrar of Co-operative Society, Kodagu. The said approval shows that the General Body Meeting resolution for amendment of Bye-law has been approved by the Assistant Registrar, in which amendment of Bye- R.S.A.No.1315/2013 : 15 : law, it is mentioned that on behalf of the Bank, the Manager shall carry on all the correspondences. The trial Court mistook the said amendment as an authority given to the Manager to institute the suit on behalf of the plaintiff or to represent the plaintiff in any litigation. However, the said error was observed by the First Appellate Court which observed that the said amendment would not empower the Manager to institute the litigation on behalf this plaintiff, but, the said Court also committed an error by further observing that the Manager of the plaintiff being given a prominent position in the Bank, he would be really having an authority to present the plaint. The said reasoning of the First Appellate Court is also without any basis. When the Bye-law at Clause 18(A)(5) of the plaintiff specifically mentions that it shall be the Secretary alone who shall sue on behalf of the plaintiff and in the absence of any resolution by the plaintiff authorizing the Manager to R.S.A.No.1315/2013 : 16 : institute the suit on behalf of the plaintiff, merely because a Manager works in the Bank in a prominent position, it cannot be concluded that he shall necessarily have the authority to sue on behalf of the Bank. Thus, both the Courts below have committed an error in holding that the Manager of the plaintiff had authority to institute a suit on behalf of the plaintiff in the Court of law.
26. According to learned counsel for the respondent as per Section 29-G of KCS Act, Chief Executive has the power to sue and be sued on behalf of the Co-operative Society and that as per Section 2(a-3), the Manager is the Chief Executive of the Bank and as such, he can sue on behalf plaintiff.
Section 29G(4)(j) of KCS Act reads as follows:
"29-G. Appointment of Chief Executive- (1) For every co-operative society there shall be a Chief Executive R.S.A.No.1315/2013 : 17 : who shall, be appointed and be removable by the society:
xxxx xxxxx xxxxx xxxx (4) The Chief Executive shall be the Chief Administrative Officer of the society and shall, subject to the general supervision and control of the [board] and such other conditions and restrictions as may be specified in the bye-laws-
xxxx xxxxx xxxxx xxxx
(j) sue and be sued on behalf of the co-operative society;"
27. The said power of the Chief Executive to sue or be sued on behalf of the Co-operative Society is subject to the condition / restrictions as may be specified in the law. As already observed above, the Bye-law of the plaintiff at Clause 18(a)(5) clearly mentions that it is the Secretary only who can sue on behalf of the plaintiff, as such, the Bye-law of the R.S.A.No.1315/2013 : 18 : Society restricts the power to sue only to its Secretary and to none else.
Section 2(a-3) of KCS Act defines the Chief Executive as below:
"Chief Executive" means any employee of a co-operative society by whatever designation called and includes an official of the State Government, an employee of any other institution or co-operative society who discharges the functions of a Chief Executive under the Act, Rules or the Bye-laws;
28. A reading of the said Section go to show that though any employee of the Co-operative Society irrespective of their designation can be called as Chief Executive, but, for him to be called so, it must be shown that he was discharging the functions of a Chief Executive Officer under the Act, Rules or the Bye-laws. However, neither any material has been placed nor R.S.A.No.1315/2013 : 19 : evidence has been led to the effect that the previous post of Secretary was later converted into the post of Manager of the plaintiff and the same was subsequently re-designated as Chief Executive. In the absence of any such pleading or evidence and in the presence of the Bye-law, it appears to have still retaining its Clause 18(A)(5) holding that the Secretary alone shall sue on behalf of the plaintiff, the argument of the learned counsel for the respondent that the Secretary was the Manager and himself has now designated as a Chief Executive cannot be acceptable. Consequently, the contention of the learned counsel for the appellant that the suit has instituted by the plaintiff, shown as being represented by its Manager was not maintainable as per the Bye-law of the plaintiff and in the absence of any resolution of the plaintiff in the General Body. As such, I answer the substantial question of law No.1 in the negative.
R.S.A.No.1315/2013: 20 :
29. The second substantial question of law is with respect to the sustainability of the judgments of the Courts below, in the absence of they considering the applicability of Order VIII Rule 6 of the Code of Civil Procedure, 1908.
30. However, learned counsel for both side submit that they would not press on the said substantial question of law, in view of the fact that the defendants had not pleaded any set-off in their written statement but by mistake the said substantial question of law has been framed.
31. A perusal of the pleading of the parties also go to show that defendants have not pleaded set-off in their written statement nor made any counter claim. As such, the second substantial question of law is taken as does not survive for consideration.
R.S.A.No.1315/2013: 21 :
In view of the finding that the defendants in their written statement itself has taken a specific contention that the suit was not maintainable, since the representation of the plaintiff through its Manager was bad and he had no authority to institute the suit, but, both the Courts below have given a finding holding that the suit was maintainable, and those findings, since have found to be erroneous finding, the suit has to be held as not maintainable.
Consequently, the judgment and decree of the trial Court decreeing the suit of the plaintiff, as well, the judgment and decree of the First Appellate Court confirming the judgment and decree of the trial Court deserves to be set-aside and the suit of the plaintiff requires to be dismissed as not maintainable. R.S.A.No.1315/2013 : 22 :
32. Accordingly, I proceed to pass the following;
ORDER
(i) The Regular Second Appeal is
allowed.
(ii) The judgment and decree dated
23.03.2013 passed by the District
Judge at Madikeri in R.A.No.39/2011 is set-aside.
(iii) The judgment and decree passed by the Senior Civil Judge at Madikeri in O.S.No.99/2002 dated 15.02.2011 is also set-aside.
(iv) The suit of the plaintiff is dismissed.
(v) In the circumstances of the case, there is no order as to costs.
Sd/-
JUDGE GH