IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA C.S. No. 13 of 2001. Reserved on: 15.5.2008. Date of decision: 20.06.2008. Smt. Seema Sood & Ors. … Plaintiffs Versus Hateshwari Maa Van Sharamik Kalyan Samiti & Ors. … Defendants Coram : The Hon’ble Mr. Justice V.K. Ahuja, Judge. Whether approved for reporting?1 No. For the plaintiffs : Mr. Debender Ghosh, vice counsel for the plaintiffs. For the defendants : Mr. Rakesh Dhaulta, vice counsel for defendants No. 1 to 4, 6,8,10, 16 to 18, 20,21, 23 to 25 and 28 to 30. Mr. Suneet Goel, counsel for defendant No. 5. Mr. Harish Dod and Mr. Lalit Sehgal, counsel for defendants No. 7 and 22. V.K. Ahuja, J. : Suit for recovery of Rs. 12,55,000/-. This is a suit for recovery of the amount filed by Ajay Kumar Sood, predecessor-in-interest of the present plaintiffs for recovery of the amount from the defendants. It was alleged by the plaintiff that the plaintiff and defendants are contractors by profession and had been taking contracts with the H.P. State Forest Corporation for felling of trees, converting the same into timber and providing the labour and mates etc. to the Corporation for the said purpose. It was alleged that in the month of January, 1997, the defendants suggested to the plaintiff and other 1Whether reporters of Local Papers may be allowed to see the judgment? Yes. 2 contractors to form a society and to take future contracts with the H.P. State Forest Corporation in the name of the society so that there is no competition amongst the contractors. The plaintiff and other contractors agreed to the suggestion of the defendants and they formed a society in the name and style of defendant No. 1. Defendant No. 4 was appointed as President of the said society who was required to get the society registered under the Societies Registration Act, in order to take contracts with the Forest Corporation. It was further alleged that at present, defendant No. 2 is the President and defendant No. 3 is the Vice President of defendant No. 1 society, while the plaintiff and defendants No. 5 to 30 are members of the society besides defendants No. 2 to 4 and plaintiff. It was alleged that no meeting was called by defendants No. 2 to 4 and the society remained only on papers. It was further averred that defendants No. 2 to 4 suggested that shelter/Huts should be constructed for the labourers/mates which they would be keeping for the execution of the contracts with the Forest Corporation. However, defendant No. 1 society was not possessed of sufficient funds to construct the said shelter/huts and defendants No. 2 to 4 requested the plaintiff to advance a temporary loan to defendant No.1 society for the said purpose and assured that the same would be paid out of the profits which the society would earn from the contracts taken with the H.P. State Forest Corporation. It was further alleged that believing the words of defendants No. 2 to 4, the plaintiff advanced a temporary loan of Rupees Nine Lac from his bank account for the said purpose, about which, a cheque was issued in favour of defendant No. 1 society and was duly encashed by defendants No. 2 to 4 by depositing the same in the account of defendant No. 1 society. It was further alleged that out of temporary loan of Rupees Nine Lac advanced by the plaintiff to defendant No. 1, defendants No. 2 to 4 3 invested a sum of Rupees Eight Lac in the fixed deposit in the name of defendant No.1 on 2.4.1998. The remaining amount of Rupees One Lac as also the interest on the FDR of Rupees Eight Lac was misappropriated by defendants No. 2 to 4 for their personal use. It was further alleged that no such huts etc. were constructed nor the money was returned to the plaintiff, hence the suit for recovery of the principal amount of Rupees Nine Lac alongwith interest at the rate of 12% per annum from the date of filing of the suit filed by the plaintiff as against the defendants. Defendants No. 1 to 4, 6, 8, 10, 16 to 18, 20, 21, 23 to 25 and 28 to 30, took up preliminary objection that since defendant No. 1 was an unregistered body and was not a legal entity and as such, it cannot be sued in its name. Defendants admitted that plaintiff and defendants are contractors by profession and had been taking contracts with the H.P. State Forest Corporation, but they pleaded that defendant No. 1 society was formed in the year 1997 for the welfare of forest labourers and for performing various, social, cultural and religious activities. It was alleged that saving bank account of the said society is in operation since 1997. However, it was denied that this society was formed to earn more profit. It was further pleaded that the contractors contributed money and made liberal donations to the said society so that funds are available with it for performing various activities in respect of welfare of forest labourers. It was denied that defendant No. 4 was appointed as President but defendant No. 4 was already President of the society since its formation and it was admitted that defendant No. 3 was Vice President of the Society. It was further pleaded that there was no occasion to construct shelters/huts for the labourers/mates since the labourers go on shifting from one forest to another and the society was not owning any land anywhere on which the shelters/huts were proposed to be constructed. Defendants 4 No. 2 to 4 denied having requested the plaintiff to advance loan at any time or to pay back the amount out of the profits of the society. However, it was admitted that the plaintiff gave a cheque of Rupees Nine Lac in favour of defendant No. 1 society, which was given as a donation to the society and other contractors had also made donations which were received by defendant No. 1 society against proper receipt. The amount was deposited in the saving bank account of defendant No. 1 society and this donation was given by the plaintiff since he had earned profit of more than Rs.60,00,000/- from private sale of forest trees. It was further alleged that a criminal complaint was also filed by the plaintiff against the members of the society and defendant No. 4 which was found to be false. The amount of Rupees Eight Lac was invested by the society in the fixed deposit in its name and it was denied that the interest amount was misappropriated by the defendants. Similar written statement was also filed by defendants No. 7 and 22. Replication was filed. On the pleadings of the parties, the following issues were framed by this Court on 13.8.2002: 1. Whether the defendants had suggested to the plaintiff and other contractors to form the society and to take future contracts with the H.P. State Forest Corporation in the name of Society so that there is no competition amongst the contractors as alleged? O.P.P. 2. Whether the defendant No.4 was appointed President of the society who was required to get the society registered under Societies Registration Act in order to take contracts with the Forest Corporation as alleged? O.P.P. 3. Whether after the formation of the society, defendants 2 to 4 also suggested that a shelter/huts should also be constructed for labourers/mates as alleged? O.P.P. 4. Whether defendants 2 to 4 requested the plaintiff to advance a temporary loan to the defendant No.1 society for the 5 construction of the shelter/huts for the labourers and mates as alleged? O.P.P. 5. Whether plaintiff advanced a temporary loan of Rs.9,00,000/- to the society defendant No.1 for the construction of the shelter/huts for the labourers and mates, as alleged? O.P.P. 6. Whether the defendants 2 to 4 have misappropriated the amount of the society, as alleged? O.P.P. 7. Whether the plaintiff is entitled to recover the amount of Rs.12,55,000/- from the defendants, as claimed? O.P.P. 8. Whether the plaintiff is entitled to interest as claimed? O.P.P. 9. Whether the suit is not maintainable in the present form, as alleged? O.P.D. 10. Whether the suit is bad for mis-joinder of parties, as alleged? O.P.D. 11. Relief. To substantiate their case, the plaintiffs examined PW-1 Seema Sood only. Defendants examined six witnesses. I have heard learned counsel for the parties and have gone through the record. My findings on these issues are as under:- Issue No. 1: PW-1 Seema Sood, plaintiff No.1, has only appeared in the witness box and she has no where stated that the society was formed on suggestion of the defendants to the plaintiff and other contractors to take future contracts with the H.P. State Forest Corporation. There is no other documentary proof on record that any meeting of the plaintiff and other forest contractors was held and such a decision was taken and accordingly, the society was formed for this purpose. DW-5 Shamsher Singh, defendant No. 4 has not stated anything in this regard. He has simply stated that this society was constituted in January, 1997 for the welfare of the members in social and religious matters. In cross-examination, it was suggested to him and he admitted the suggestion as correct that the society was formed for 6 the welfare of the labour and labour supply mates engaged in the forest work. Thus, from the above discussion it is very much clear that the plaintiffs have failed to prove that the society was formed for taking future contracts with the H.P. State Forest Corporation and as such, this issue is accordingly decided as against the plaintiffs and in favour of the defendants. Issue No. 2: PW-1 Seema Sood, plaintiff No.1, the only witness, examined by the plaintiffs has no where stated that the society was required to be got registered under the Societies Registration Act or defendant No. 4 was appointed as President of the society to get the same registered. She has simply stated that defendant No. 2 is the President, defendant No.3 is the Vice President, while defendant No. 4 is the Ex. President. However, she has no where stated that after the society was formed for taking future contracts, defendant No.4 was appointed as President. No documents have been proved on record in regard to the proceedings of any such meeting in which such a decision was taken and as such, the plaintiffs have failed to prove this issue, which is accordingly decided as against the plaintiffs and in favour of the defendants. Issue Nos. 3 and 4: PW-1 Seema Sood has stated that her husband had advanced this loan for the purpose of construction of labour huts and shelter. She denied her knowledge if in the past any labourer shelters/huts were constructed. She also denied her knowledge if only temporary sheds are made for the labourers during the execution of the work. She also denied her knowledge that if no necessity was felt for construction of huts/shelters for the labourers since forest work is carried out at different places. She did not produce any minutes of the meeting in which such a decision was 7 taken and any decision was taken to ask the plaintiff to advance a temporary loan to defendant No. 1 society for construction of the shelters/huts. DW-5 Shamsher Singh, defendant No. 4 has denied that the society was to construct any sheds in the jungle since the work was of temporary nature. No other witness has been examined by the plaintiffs who may have participated in any such meeting in which such decisions were taken for construction purpose or for seeking loan from the plaintiff for this purpose. The solitary statement of the plaintiff as PW-1 was not sufficient to prove these issues and as such, both these issues are decided as against the plaintiffs and in favour of the defendants. Issues No. 5 and 6: I have already held above that the plaintiffs have failed to prove that sum of Rupees Nine Lac was advanced to defendant No. 1 society for construction of shelters/huts. PW-1 Seema Sood never stated that she participated in the said meeting and she simply stated that this amount was given as a temporary loan. However, DW-5 Shamsher Singh, defendant No. 4, has clearly stated that no sheds were required to be constructed and the amount was given as a donation by the original plaintiff to the society. He also stated that similar donations were received from others which were duly deposited in the account of the society. The original plaintiff himself had alleged and defendants have not denied that part of the amount was deposited in the fixed deposit of the society, which clearly shows that it has not been misappropriated by the defendants. The statement of DW-5 Shamsher Singh also shows that this amount is utilized for organizing games, Bhandaras and for other social purpose and as such, the plaintiffs have failed to prove that this amount was advanced as a loan for construction purpose. The defendants have clearly admitted the fact 8 that out of this amount sum of Rupees Eight Lacs was invested in the name of the society in the F.D.R., which clearly shows that the amount is lying there in deposit and has not been misappropriated by defendants No. 2 to 4. Both these issues are decided as against the plaintiffs and in favour of the defendants. Issue Nos. 7 and 8: The plaintiffs were required to prove that the amount was given as loan to the society by the original plaintiff in which the plaintiffs have failed as held under the above issues. The original plaintiff allegedly was a forest contractor and he must be aware of the fact that once such a society is formed a resolution is passed, bye laws are framed and the society has to be got registered before it starts its actual work i.e. of taking contracts from Forest Corporation a alleged by him. However, no such resolution of any meeting was placed on record and it is surprising that the plaintiff agreed to advance the loan to the society without there being any request made to him in writing or without having any resolution having been passed in this regard and before the society was got registered. This clearly shows that the plea taken by the plaintiff that it was a loan given to the defendants society has not been substantiated and there is substance in the plea taken by the defendants as substantiated by DW-5 Shamsher Singh, defendant No.4, that this society was formed for the welfare of the labourers and the amounts were given as donations which are being utilized for social purpose including organizing games and Bhandaras and for giving the amount in the Chief Minister’s relief fund. Statement of DW-1 Virender Rajta is only to this aspect that an Inspector of Enforcement had stayed in the Rest House during the period stated by him. DW-2 Dev Raj Sharma has simply stated that no huts are constructed by the Forest Corporation or forest labour contractor for use by the labourers. He stated 9 that temporary shelters are constructed by the labourers from the felled trees. DW-3 Bhajan Dev Negi, Inspector, had only gone to the spot and verified the facts and has submitted his inquiry report which was not on the basis of any complaint but on the basis of some source report which does not substantiate the case of the plaintiffs and rather it substantiate the plea of the defendants that inquiry was conducted and it was not found that the defendants have misappropriated any amount. To the similar effect is the statement of DW-4 Rajinder Prasad. DW-6 Jaisi Ram, Pradhan of defendant No.1 society has also stated that the amount is lying in the bank account and is spent by the society for the social and religious purposes and in organizing the games From above discussion, it is clear that the plaintiffs have failed to prove that the original plaintiff advanced the amount as a loan to defendant No. 1 society and it was payable to him on demand. Once the evidence of the defendants suggests that it was given as a donation to the society for welfare purpose, the plaintiff is not entitled to the refund of the amount and accordingly, the plaintiff is not entitled to any interest. Both these issues are decided as against the plaintiffs and in favour of the defendants. Issue No. 9: There is nothing on record to show that as to how the suit is not maintainable in the present form. The plaintiff has based his claim on the assertions that he had advanced amount defendant No. 1 as loan and as such, the suit for recovery of amount was maintainable. This issue is accordingly decided in favour of the plaintiffs and as against the defendants. Issue No. 10: The defendants have alleged that the suit is bad for misjoiner of parties. The plaintiff had not alleged as to how other defendants No. 5 to 10 30 were necessary parties to the suit since he did not allege as to how they are liable to pay the amount once the society is not registered and they were not members of any registered society, therefore, it can be said that the suit is bad for misjoinder of parties. The issue is accordingly decided as against the plaintiffs and in favour of the defendants. Relief: In view of my findings on Issues No. 1 to 10 being against the plaintiffs and in favour of the defendants, the suit of the plaintiffs is dismissed. However, the parties are left to bear their own costs. Decree sheet be prepared accordingly. In view of the final disposal of the main suit, all the pending Misc. Applications, if any, shall stand disposed of. ( V.K. Ahuja ) June 20, 2008 Judge (BSS)