Karnataka High Court
The Branch Manager vs Prabhu Trading Corporation on 27 November, 2024
-1-
NC: 2024:KHC-D:17406
CRP No. 100054 of 2023
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 27TH DAY OF NOVEMBER, 2024
BEFORE
THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI
CIVIL REVISION PETITION NO.100054 OF 2023
®
BETWEEN:
THE BRANCH MANAGER,
KARNATAKA R/O: KARNATAKA STATE
CO-OPERATIVE CONSUMER'S FEDERATION LTD.,
ASHOK KOTRENNAVAR,
AGE: 55 YEARS,
OCC: BRANCH MANAGER,
R/O: KARNATAKA STATE CO-OPERATIVE
CONSUMER'S FEDERATION LTD.,
SECTOR NO.25, OPP. POLICE STATION
NAVANAGAR, BAGALKOT-587 101.
...PETITIONER
(BY SRI. T.M. NADAF, ADVOCATE)
AND:
1. PRABHU TRADING CORPORATION
PLOT NO. APMC YARD,
Digitally signed
by V N BADIGER
NAVANAGAR BAGALKOT,
VN
Location: HIGH
COURT OF
REPRESENTED BY ITS PROPRIETOR,
KARNATAKA
BADIGER DHARWAD SHRI. PROMOD
BENCH
Date: 2024.12.20
15:39:35 +0530
S/O SHARANABASAVARAJ JIGAJINNI,
AGE: 40 YEARS, OCC: BUSINESS,
R/O: BAGALKOT-587 101.
2. ASHOK KOTRENNAVAR,
AGE: 55 YEARS,
OCC: BRANCH MANAGER,
R/O: KARNATAKA STATE CO-OPERATIVE
CONSUMER'S FEDERATION LTD.,
SECTOR NO.25, OPP. POLICE STATION
NAVANAGAR, BAGALKOT-587 101.
-2-
NC: 2024:KHC-D:17406
CRP No. 100054 of 2023
3. THE MANAGING DIRECTOR,
R/O: KARNATAKA STATE CO-OPERATIVE
CONSUMER'S FEDERATION LTD.,
NO.4, PAMPAMAHAKAVI ROAD,
CHAMARAJPET, BENGALURU-530 068.
...RESPONDENTS
(BY SRI. V.M. SHEELAVANT, ADVOCATE FOR SRI. SHIVA
SHIRUR, ADVOCATE FOR C/R1)
(R2-SERVED)
THIS CRP IS FILED U/S 115 OF CPC, PRAYING TO SET
ASIDE THE ORDER DATED 21.03.2023 PASSED BY THE 1ST
ADDITIONAL SENIOR CIVIL JUDGE AND JUDICIAL MAGISTRATE
FIRST CLASS, BAGALKOT IN O.S.NO.194/2020, ON I.A. NO.5
FILED BY THE DEFENDANT NO.3 UNDER ORDER VII RULE 11(D)
OF C.P.C. R/W SEC 125 OF KARNATAKA STATE CO-OPERATIVE
SOCIETIES ACT 1959, AND CONSEQUENTLY ALLOW THE
APPLICATION.
THIS PETITION IS COMING ON FOR HEARING, THIS DAY,
THE COURT MADE THE FOLLOWING:
CORAM: THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI
ORAL ORDER
Aggrieved by the order dated 21.03.2023 passed in O.S. No.194/2020 by the I Additional Senior Civil Judge and JMFC, Bagalkot, defendant No.3 is before the Court.
2. Respondent No.1 herein, who is the plaintiff before the Trial Court, filed the suit seeking an amount of Rs.2,00,00,000/- as damages to be recovered from -3- NC: 2024:KHC-D:17406 CRP No. 100054 of 2023 defendants No.1 to 3 along with interest at 18% per annum from the date of the suit till the date of payment to the plaintiff firm. The plaintiff also sought for the relief of permanent injunction restraining the defendants from writing, publishing or circulating any false or defamatory statements and objections about the plaintiff firm either before any government departments, business circles, friends and relatives, either through written objection or through news papers. The plaintiff further sought for a mandatory injunction directing the defendants to tender an unconditional written apology to the plaintiff firm and to publish the same in the first page of daily news paper or in some prominent place.
3. The case of the plaintiff is that it is a licensed trader and a proprietary concern running the business in the name and style of "M/s Prabhu Trading Corporation" at Bagalkot. Defendant No.2 is a Co-operative Society registered under the Co-operative Societies Act, and defendants No.2 & 3 are engaged in the business of supply of food materials/consumables to various government departments after procuring materials from its members. Defendant No.3 -4- NC: 2024:KHC-D:17406 CRP No. 100054 of 2023 procured food materials from the plaintiff from 2013-14 to 2016-17. From 2017 onwards, the plaintiff did not subscribe to his annual membership and as such plaintiff ceased to be member of defendant No.2-Federation. Plaintiff had supplied food material to defendant No.3 from 2013-14 to 2016-17 and hence he sought for Satisfaction and Experience Certificate from defendant No.3 and Defendant No.1, being Branch Manager of defendant No.3, issued the Satisfaction and Experience Certificate on 25.07.2018.
4. It is the case of the plaintiff that the Deputy Commissioner, Bagalkot, initiated the tender process for procurement of food materials for Social Welfare Department, Bagalkot in the year 2018. The plaintiff for supplying the same, participated in the tender process by enclosing the Satisfaction & Experience Certificate issued by defendant No.1. Defendant No.3 also participated in the tender proceedings. Defendants No.1 to 3 became hostile and, with a mala fide intention to dislodge the plaintiff from the tender, made false allegations against the plaintiff in objections statement dated 11.02.2019 before the Deputy -5- NC: 2024:KHC-D:17406 CRP No. 100054 of 2023 Commissioner, Bagalkot, stating that the Satisfaction & Experience Certificate enclosed by the plaintiff is fake and forged and sought to cancel plaintiff's tender. Defendants No.1 to 3 and Members of defendant No.3, in order to eliminate the plaintiff from the field of contracting the supply of food materials to government institutions, went ahead to blacklist the plaintiff on 28.02.2019. The Forensic Experts from Truth Lab, Bengaluru after due and thorough verification opined that the seal and signatures over the Satisfaction & Experience Certificate are genuine. Thereafter, the plaintiff had approached this Court by filing W.P. No.20854/2019. This Court stayed the order dated 28.02.2019 by interim order dated 03.05.2019. It is the case of the plaintiff that the defendants have published false and defamatory statements before the procurement authorities and defamed the plaintiff; and that the false and defamatory statement published by defendant No.1 on 27.02.2020 in 'Praja Vani' Kannada daily news paper, which is widely circulated in Bagalkot District and other parts of Karnataka, has destroyed the credibility of plaintiff's business amongst the members of civil society, -6- NC: 2024:KHC-D:17406 CRP No. 100054 of 2023 friends, relatives, various authorities of government departments and members of business community. The cause of action to file the suit arose when the defendants started submitting false and defamatory statements before the procurement authority and also on 27.02.2020 when defendant No.1 published defamatory and false statement against the plaintiff firm in 'Paja Vani'. Accordingly came up with the suit seeking damages and other reliefs.
5. In the suit, the defendant No.3 filed an application i.e. I.A. No.5 under Order VII Rule 11(d) of the Code of Civil Procedure, 1959. It is the case of defendant No.3 that the suit is not maintainable. It is their case that, Section 125 of the Karnataka Co-operative Societies Act, 1959 (for short, 'the Act') contemplates mandatory statutory notice before instituting a suit against the Co-operative Societies or its Officers and, according to the defendant No.3, plaintiff has failed to follow the same and as such, the plaint needs to be rejected.
6. The Trial Court, by the order impugned, has dismissed the application. While dismissing the application, -7- NC: 2024:KHC-D:17406 CRP No. 100054 of 2023 the Court has observed that the plaintiff has not filed the suit against the defendants with respect to the management or the business of the society, but has filed the suit against the defendants to claim the damages with respect to the defamatory statement and false allegations made by the defendants and therefore, Section 125 of the Act is not applicable. Two months' notice as required is not a ground for rejection of the plaint or it is barred by any law and accordingly, dismissed the application. Aggrieved thereby, the present petition is filed.
7. The learned counsel for the petitioner has drawn the attention of this Court to Section 125 of the Act and, basing on that, he submits that, according to the plaintiff a defamatory statement is made. It is only a statement made in the process of their business. In that case, it mandates issuance of notice and the plaintiff has failed to comply with the mandatory provision. He has relied on the Full Bench judgment of this Court in the case of Krishi Mattu Ksheera Utpadaka Vividhoddesha Sahakari Sangh Niyamit Vs. -8- NC: 2024:KHC-D:17406 CRP No. 100054 of 2023 Sohanlal1, wherein it is held that a notice under Section 125 of the Act is mandatory where the act in question is with reference to the Society, such notice is also necessary if the act in question is with reference to the Officer of the Society and the act or omission complained off relates to the constitution, management or business of the society. Notice is also mandatory where the act in question covers both the society and the Officer. The expression "any act" referred to in sub-Section 125 of the Act is not confined to illegal omission alone but also covers mere omission simpliciter. Learned counsel for the petitioner submits that issuance of notice under Section 125 of the Act is mandatory and in this case as the plaintiff has failed to issue the notice, the plaint is liable to be rejected. He relied on a Division Bench decision of this Court in the case of The Karnataka Handloom Development Corporation Limited Vs. Mandya District Central Co-operative Bank Ltd.2, wherein the Division Bench has observed that where the dispute is one touching the business of the society, notice under Section 125 of the Act is mandatory before the 1 ILR 1992 KAR 3587 2 ILR 2009 KAR 3838 -9- NC: 2024:KHC-D:17406 CRP No. 100054 of 2023 institution of the suit and the Division Bench has upheld the order of the Trial Court in rejecting the plaint. Relying on these judgments, learned counsel submits that the plaint needs to be rejected.
8. Learned counsel appearing for the respondent submits that the act of the defendants do not fall within the scope of Section 125 as it is not in the course of business or any of the classification as per Section 125 and as such, issuance of mandatory notice is not required. Learned counsel has drawn the attention of this Court to Section 70 of Act and he submits that what are the disputes touching the constitution, management or the business of a co-operative Society are enumerated in sub-section (2) and, in this case, the dispute between the plaintiff and the defendants do not fall under Section 70 of the Act and as such, no notice under Section 125 of the Act is required to be issued. He relied on a judgment of Co-ordinate Bench of this Court in the case of
- 10 -
NC: 2024:KHC-D:17406 CRP No. 100054 of 2023 Rudrappa and Another Vs. Basawaraj3, particularly on paragraphs 10 to 12.
"10. Learned trial judge has examined this contention with reference to the provisions of the Act and with reference to the authorities relied upon by the learned counsel for the plaintiff before the trial court. Learned trial judge has discussed that the suit is essentially in the nature of a suit for damages filed against the defendants in their personal capacity and not in respect of any of their official function; that the Supreme Court had occasion to examine the maintainability of a suit of such nature before the civil court and had opined that a suit filed against a superior officer by an inferior official, both being officials of the government and in respect of service disputes, then such a matter need not go before the administrative tribunal, in view of Section 14 of the Administrative Tribunals Act, and having held that such suits are not barred, as a suit for damages against a superior officer in his personal capacity cannot be subject matter for decision by an administrative tribunal and therefore the suit having been held to be maintainable, has applied the ratio of this judgment to answer the preliminary issue No. 4 regarding the maintainability and therefore rejected the contention raised on behalf of the defendants.
11. While the line of reasoning indicated in the impugned order by the learned trial judge is sound and applying the ratio laid down by the Supreme Court to the facts of the case is also very appropriate, I find that even if the petitioners are taken to be officers of the society being secretary and the president of the society, the provisions of Section 70 does not act as a bar for civil court to entertain a suit of present nature, as such a situation is not contemplated in any one of the clauses mentioned in Section 70 of the Act.
12. The plea in para-25 of the written statement does not bring the dispute between the respondents and the petitioner within the scope of any one of the clauses mentioned in Section 70, though Sri Basavaraj Kareddy, learned counsel for the petitioners, would submit that the officials of the society, particularly the office bearers should be treated on par with the society and it should be construed that the suit is virtually against the society, 3 ILR 2007 KAR 4720
- 11 -
NC: 2024:KHC-D:17406 CRP No. 100054 of 2023 such a submission cannot be accepted for the simple reason that the suit, in the first instance, is not against the society and secondly, on the ratio of the decision rendered by the Supreme Court in the case referred to above and relied upon by the trial court, such a submission cannot be accepted. In matters of ousting jurisdiction of civil courts, it is settled principle that the ouster provision should be strictly construed and there is no scope for expansion of the ouster clause by way of interpretation. Submission of learned counsel for the petitioners being to extend the bar on the jurisdiction of civil court by way of interpretation by treating the officers or office bearers of the society to be on par with the society, such a submission cannot be accepted on the principle of strict interpretation of an ouster clause. The rule and principle is always to presume the jurisdiction of civil court in terms of Section 9 of Code of Civil Procedure, until and unless it is expressly and precisely mentioned in any other statutory provision that the jurisdiction is ousted. Such is not the case either under Section 70 of the Act or on the facts as pleaded by the defendants."
Placing reliance on the same, learned counsel submits that the Trial Court has rightly rejected the application filed by defendant No.3 seeking rejection of the plaint.
9. Having heard the learned counsel on either side, perused the entire material on record.
10. The plaintiff has filed the suit claiming damages for the defamatory statement made by the defendants. As per the plaint, defendant has issued the Satisfaction and Experience Certificate on 25.07.2018. When both the plaintiff and defendants participated in the tender process initiated by the
- 12 -
NC: 2024:KHC-D:17406 CRP No. 100054 of 2023 Deputy Commissioner, Bagalkot and in that they have enclosed the Certificate dated 25.07.2018 and the same was denied by the defendants as fake and forged, the plaintiff was blacklisted. He had questioned the blacklisting by filing the writ petition and the said writ petition came to be allowed. This Court has perused the averments in the plaint and a bare perusal of the same discloses that the whole basis for the suit is the Certificate dated 25.07.2018 which is issued by the defendants during the course of their business which is later denied by them as being forged. At this juncture, it is appropriate to look at Section 125 of the Act, which reads as under:
"125. Notice necessary in suits.- No suit shall be instituted against a cooperative society or any of its officers in respect of any act touching the constitution, management or the business of the society until the expiration of two months next after notice in writing has been delivered to the Registrar, or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims; and the plaint shall contain a statement that such notice has been so delivered or left."
- 13 -
NC: 2024:KHC-D:17406 CRP No. 100054 of 2023 The provision makes it clear that, when the act complained is touching the business of the Co-operative Society, a mandatory notice of two months is required to be issued. Learned counsel for the respondent is relying on Section 70 of the Act. It is appropriate to look at Section 70 of the Act, which reads as under:
"70. Disputes which may be referred to Registrar for decision.- (1) Notwithstanding anything contained in any law for the time being in force, if any dispute touching the constitution, management, or the business of a cooperative society arises,--
(a) among members, past members and persons claiming through members, past members and deceased members, or
(b) between a member, past member or person claiming through a member, past member or deceased member and the society, its board or any officer, agent or employee of the society, or
(c) between the society or its board and any past board, any officer, agent or employee, or any past officer, past agent or past employee or the nominee, heirs, or legal representatives of any deceased officer, deceased agent, or deceased employee of the society, or
(d) between the society and any other co-
operative society, or a credit agency such dispute shall be referred to the Registrar for decision and no civil or labour or revenue court or Industrial Tribunal shall have jurisdiction to entertain any suit or other proceeding in respect of such dispute.
- 14 -
NC: 2024:KHC-D:17406 CRP No. 100054 of 2023 (2) For the purposes of sub-section (1), the following shall be deemed to be disputes touching the constitution, management or the business of a cooperative society, namely:--
(a) a claim by the society for any debt or demand due to it from a member or the nominee, heirs or legal representatives of a deceased member, whether such debt or demand be admitted or not;
(b) a claim by a surety against the principal debtor where the society has recovered from the surety any amount in respect of any debt or demand due to it from the principal debtor, as a result of the default of the principal debtor whether such debt or demand is admitted or not;
(c) ............. 2 [XXX] 2 1
(d) any dispute between a co-operative society and its employees or past employees or heirs or legal representatives of a deceased employee, including a dispute regarding the terms of employment, working conditions and disciplinary action taken by a co-operative society notwithstanding anything contrary contained in the Industrial Disputes Act, 1947 (Central Act 14 of 1947);
(e) a claim by a co-operative society for any deficiency caused in the assets of the co-operative society by a member, past member, deceased member or deceased officer, past agent or deceased agent or by any servant, past servant or deceased servant or by its board, past or present whether such loss be admitted or not.
(3) If any question arises whether a dispute referred to the Registrar under this section is a dispute touching the constitution, management or the business of a co-operative society, the decision thereon of the Registrar shall be final and shall not be called in question in any court."
- 15 -
NC: 2024:KHC-D:17406 CRP No. 100054 of 2023 Section 70 of the Act deals with the disputes which may have to be referred to the Registrar for decision and that provision enumerates about what are the disputes that falls within the meaning of disputes touching the constitution, management or the business of a co-operative society, and the disputes that have to be resolved by the Registrar. The reliance placed by the petitioner on the said provision and the judgment that is referred to in Rudrappa's case (supra) do not apply to the facts and circumstances of the case. The matter which have to be referred to the Registrar or on what issues the Registrar is having the power do not conclusively define what is the course of business of the Co-operative Society. In the considered opinion of this Court, the plaintiff has filed the suit with the allegations touching upon the business of the Co-operative Society and it requires notice under Section 125 of the Act. When the Act contemplates notice, which is mandatory in nature cannot be waived or dispensed with. In the light of the Full Bench judgment referred to above and in the light of the settled law, as the suit is filed without issuing a mandatory notice as required under Section 125 of the Act, the plaint
- 16 -
NC: 2024:KHC-D:17406 CRP No. 100054 of 2023 needs to be rejected. Learned counsel for the respondent submits that liberty may be given to take appropriate steps. Accordingly, this Court is passing the following:
ORDER
i) Accordingly, the writ petition is allowed. The order dated 21.03.2023 passed on I.A. No.5 passed in O.S. No.194/2020 by the I Additional Senior Civil Judge and JMFC, Bagalkot, is set aside and consequently, I.A. No.5 in O.S. No.194/2020 is allowed and the plaint is rejected.
ii) Respondent-plaintiff is at liberty to avail appropriate remedy if it is in accordance with law, particularly, the law of limitation.
iii) All pending I.As., in this petition shall stand closed.
Registry is directed to transmit the records to the Trial Court forthwith.
Sd/-
JUSTICE LALITHA KANNEGANTI KMS CT:BCK LIST NO.: 1 SL NO.: 42