IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMAN & THE HONOURABLE MR. JUSTICE P.BHAVADASAN FRIDAY, THE 7TH AUGUST 2009 / 16TH SRAVANA 1931 FAO.No. 251 of 2008() --------------------- AGAINST THE ORDER DATED 22/08/2008 IN IA 7741/06 IN OS.681/2005 of PRL.SUB COURT,THRISSUR .................... APPELLANT ----------------------------- SRI.KRISHNANKUTTY, AGED 66, S/O.KALLUVETTIKKAL PONNAN, NAIKKANAL DESOM, TRICHUR TALUK, TRICHUR DISTRICT. BY ADV. SRI.K.P.SREEKUMAR SRI.N.O.JOHN RESPONDENT(S): --------------- 1. PUTHUR SERVICE CO-OPERATIVE BANK LTD NO.345, PUTHUR VILLAGE, TRICHUR TALUK-14 REPRESENTED BY ITS SECRETARY. 2. THE PRESIDENT PUTHUR SERVICE CO-OP.BANK LTD NO.345 PUTHUR VILLAGE, TRICHUR TALUK-14 . ADV. SRI.C.E.UNNIKRISHNAN FOR R1 THIS FIRST APPEAL FROM ORDERS HAVING BEEN FINALLY HEARD ON 07/08/2009, ALONG WITH FAO NO.252 OF 2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: P.R.RAMAN & P.BHAVADASAN, JJ. -------------------------------------------------------- FAO NOS.251 & 252 OF 2008 -------------------------------------------------------- Dated 7th August 2009 Judgment BHAVADASAN, J. Two interlocutory applications, namely, IA No.7741/06 and 7742/06 in OS No.681/05 and OS No.683/05 respectively before the Sub Court, Thrissur were disposed of by a common order, upholding the contention of the 9th and 10th defendants that the suits are not maintainable. The said order is assailed in this appeal. The parties and exhibits are referred to in this Judgment as they are available before the court below. 2. The plaintiffs executed two agreements with the first defendant for selling their property for a sum of Rs.10 lakhs and Rs.8 lakhs respectively. While so, the first defendant introduced the second defendant to the plaintiffs. The second defendant agreed to purchase the property for a total consideration of Rs.20 lakhs. For procuring the balance consideration, the plaintiffs executed two power of attornies in respect of their properties in the name of the first defendant, authorising him to FAO 251 & 252 OF 2008 2 alienate or mortgage the properties with any financial institutions for and on behalf of the plaintiffs. Later, the plaintiffs came to know that the power of attorneys have been misused by the first defendant and that he has mortgaged the properties as a security for the loans availed of by defendants 2 to 8. According to the plaintiffs, the loans are to be raised for their benefit and not for third parties' benefits. Seeking to set aside the mortgages created by the 1st respondent with the society and for a declaration that the mortgages created by the first defendant are not binding on the plaintiffs, the suits were laid. 3. The 9th and 10th defendants entered appearance and thereafter, filed the aforementioned interlocutory applications, pointing out that the suits were not maintainable in view of S.69 read with S.100 of the Co-operative Societies Act (hereinafter referred to as the Act). They took the contention that the plaintiffs were past members of the society and therefore, they fell within the ambit of S.69 of the Act. Therefore, the suits are barred in view of S.100 of the Act. 4. The plaintiffs on the other hand, inter alia contended that FAO 251 & 252 OF 2008 3 they had never been members of the Society and had no transaction with the Society at all. It is pointed out that they have not availed any loan from the society and the first defendant in excess of the authority, mortgaged the properties with the society as a security for the loans availed by defendants 2 to 8. It is also contended by the plaintiffs that the nature of the reliefs sought is such that it cannot be granted by the Registrar or the Arbitrator under S.69 of the Act. 5. For the purpose of the interlocutory applications, the court below had Exts.B1 to B28 marked. On a consideration of the materials before it, the court below upheld the contention of the 9th and 10th defendants and held that the suit was not maintainable in view of S.69 read with S.100 of the Act. 6. The short question that arises for consideration is whether in view of S.69 read with S.100 of the Act, the finding of the court below that the suits are not maintainable, is justified in law. 7. The definite stand taken by the plaintiffs in the suits is that the power of attorney granted by them to the first defendant in the respective suits have been misused and he has acted in excess of FAO 251 & 252 OF 2008 4 the power granted to him. They would point out that they have not availed of any loan from the society or had any transaction with the society so as to bring them under the purview of S.69 of the Act. 8. Defendants 9 and 10 who are respectively the Secretary and President of the Society would contend that the plaintiffs are past members and therefore, they come within the ambit of S.69 of the Act. 9. The question, therefore, would be whether the plaintiffs and suits are covered by S.69 and S.100 of the Act. S.69 of the Co-operative Societies Act reads as follows : “Disputes to be decided by Co-operative Arbitration Court and Registrar -(1) Notwithstanding anything contained in any law for the time being in force, if a dispute 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, a past member or deceased member and the society, its committee or any officer, agent or employee of the society ; or FAO 251 & 252 OF 2008 5 (c) between the society or its committee and any past committee, any officer, agent or employee or any past officer, past agent or past employee or the nominee, heirs or legal representative of any deceased officer, deceased agent or deceased employee of the society ; or (d) between the society and any other society ; or (e) between a society and a person, other than a member of the society affiliated to it ; or (f) between the society and a person, other than a member of the society, who has been granted a loan by the society or with whom the society has or had business transactions or any person claiming through such a person ; or (g) between the society and a surety of a member, past member, deceased member or employee or a person, other than a member, who has been granted a loan by the society, whether such a surety is or is not a member of the society; or (h) between the society and a creditor of the society; such dispute shall be referred to the Co-operative Arbitration Court constituted under Sec.70A, in the case of non-monetary disputes and to the Registrar, in the case of monetary disputes and the Arbitration Court, or the Registrar, as the case may be, shall decide such dispute and no other court or other authority shall have jurisdiction to entertain any suit or other proceedings in respect of such dispute. (2) For the purposes of sub-section (1) the following shall also be deemed to be disputes, namely :- FAO 251 & 252 OF 2008 6 (a) a claim by the society for any debt or demand due to it from a member or the nominee, heirs or legal representative 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) any dispute arising in connection with the election of the Board of Management or any Officer of the society ; Explanation :- A dispute arising at any stage of an election commencing from the convening of the general body meeting for the election shall be deemed to be a dispute arising in connection with the election ; (d) any dispute arising in connection with employment of officers and servants of the different classes of societies specified in sub-section (1) of Sec.80, including their promotion and inter se seniority. (3) No dispute arising in connection with the election of the Board of Management or an officer of the society shall be entertained by the Co-operative Arbitration Court unless it is referred to it within one month from the date of the election.” There are several limbs to S.69. The court below was of the opinion that the plaintiffs fell within the ambit of S.69(1)(f)(g) read FAO 251 & 252 OF 2008 7 with S.2(1)(i) of the Act. The provision envisages disputes between the members, past members and legal representatives of deceased members with the society. The question is as to whether the plaintiffs will come within the ambit of S.69 of the Act. 10. One may at once notice that even the Society has no case that the plaintiffs have availed of any loan from it. The stand taken by the society is that the security given by the first defendant for the loans availed by defendants 2 to 8 is binding on the plaintiffs and also that they are members of the society. S.100 of the Co-operative Societies Act reads as follows : “Bar of jurisdiction of Courts : No civil or revenue court shall have any jurisdiction in respect of any matter for which provision is made in this Act.” On going through S.2(1)(i), namely, definition of 'dispute', it can be said that the issue thrown up for consideration in these suits is covered by it. But, that by itself is not sufficient. The persons involved must be those falling under S.69 of the Act. A reading of the above provisions would clearly reveal that the jurisdiction of the civil court is ousted in relation to matters for which provisions are made in the Act. Therefore, one has to refer FAO 251 & 252 OF 2008 8 to S.69 of the Act, which deals with disputes and also the definition of 'dispute' contained in S.2(1)(i) of the Act. The reliefs sought for in the plaint relate to the act committed by the first defendant in excess of the power of attorney given to him by the plaintiffs. The main prayer is against the first defendant. Here, one may refer to the prayers made in the plaint. The main prayer sought for is to declare that the mortgage deed said to have been executed by the first defendant in favour of the society is without consideration and is not binding on the plaintiffs and is vitiated by fraud. Of course, there is a prayer for injunction as against defendants 9 and 10, not to proceed with the enforcement of the mortgage deeds involved in the suits. By no stretch of imagination, it is possible to bring the dispute as between persons within the ambit of S.69 of the Act. 11. The learned counsel for the appellants referred to the decisions reported in Mannur Service Co-operative Bank Ltd. v. Alvi Haji (1975 KLT 363), Ponnuswamy v. Nambeesan (1978 KLT 836) and Ishar Singh v. National Fertilizers (AIR 1991 SC 1546). In the decision reported in Mannur Service Co-operative FAO 251 & 252 OF 2008 9 Bank's case (supra), it was observed that unless the dispute is one coming under the purview of S.69 and S.2(1)(i) of the Act, the jurisdiction of the civil court cannot be taken as barred by virtue of S.100 of the Act. In the decision reported in Ponnuswamy v. Nambeesan (supra), it was held that if the subject matter of the case is a dispute with regard to the title to an immovable property, the bar under the Co-operative Societies Act has no application. 12. In the decision reported in Ishar Singh v. National Fertilizers (supra), it was held that if for part of the reliefs the suit is maintainable in the forum where it has been laid, it is not open to the forum to shut out its doors to the suitor. The learned counsel for the appellants pointed out that in view of the above decisions, the reliefs sought for in the plaint fell within the exclusive jurisdiction of the civil court and it is one, which cannot be resolved by taking recourse to S.69 of the Act. It was urged that the reliance placed by defendants 9 and 10 before the court below on S.69 of the Act has no substance. According to the learned counsel for the appellants, it is true, S.69 contemplates a dispute between the FAO 251 & 252 OF 2008 10 society and a person other than a member of the society. According to the learned counsel, even assuming that the plaintiffs are not members of the Society, they may fall within the ambit of the provision, if it is further shown that they have availed of any loan from the society or had business transactions with the society. 13. On going through the plaint, it is not seen that the plaintiffs in the respective suits had availed of any loan from the society nor did they have any business transaction with the society. The society, though contended that the plaintiff were members of the society, did not feel it necessary to prima facie prove that fact. The plaintiffs had specifically denied that they were members of the society. On going through the plaint, a copy of which was given for perusal and which is not disputed, the main reliefs are directed against the 1st defendant. After alleging the misdeeds of the first defendant and his misuse of the power of attorney executed in favour of the plaintiffs, they sought reliefs against him. The relief against the society was consequent on that relief. It is very clear that the reliefs against the society is only an FAO 251 & 252 OF 2008 11 ancillary one. It is not independent of the main prayer. 14. One cannot omit to note yet another significant fact. It is brought to the notice of this court that IA Nos.7741/06 and 7744/06 for considering the maintainability as a preliminary issue, were filed on 18.12.2006 by defendants 9 and 10. It is interesting to note that the arbitration proceedings commenced only on 15.01.2008. It is evident from the records that at the time when the arbitration proceedings were initiated, defendants 9 and 10 were fully aware of the contentions taken by the plaintiffs in the respective suits. If as a matter of fact, the Society had any contention that the dispute fell within the ambit of S.69 of the Act, obviously, the Society would have made them parties in the arbitration proceedings. That has not been done and the award has been passed without the plaintiffs on the party array. 15. The learned counsel for the contesting respondents contended that the terms of the power of attorney are very clear to show that the property belonging to the plaintiffs shall be offered as security. Interpretation of the term 'power of attorney' is not in issue at present, for the simple reason that now we are concerned FAO 251 & 252 OF 2008 12 only with the question as to whether the suits are maintainable or not in view of S.69 read with S.2(1)(i) and S.100 of the Act. The plaintiffs had assailed the mortgages created by the first defendant as that was far in excess and contrary to the terms of the power of attorney granted to him and the mortgages do not bind them. 16. The learned counsel appearing for the respondent Society in these appeals was not in a position to show that the reliefs sought for could be granted by the Arbitration Tribunal. Merely because there is an ancillary relief against the society, it will not fall within the ambit of S.69 of the Act. Further, as already stated, the society has not produced even a scrap of paper to show that the plaintiffs were members of the society. There is also nothing to show that the plaintiffs had any business transactions with the society. It is not the case of the society, that the plaintiffs at any point of time stood as sureties/guarantors for the loans availed by defendants 2 to 8. 17. The real issue that may arise for consideration is whether the mortgages created by the first defendant are binding on the plaintiffs in the suits. This issue is not one which can be FAO 251 & 252 OF 2008 13 determined by the arbitrator under the Act. Therefore, the principles contained in the decisions relied on by the appellants squarely apply to the facts of the present case. 18. As already stated, there is nothing to show that the plaintiffs were members of the Society. It has also been found that S.69 of the Act is not attracted. Therefore, S.100 does not apply and the prohibition also does not apply. If that be so, the court below was certainly in error in holding that the suits are not maintainable. 19. Accordingly, these appeals are allowed. The impugned orders are set aside. The court below shall take back the plaints on file and proceed to decide the case in accordance with law. There will be no order as to costs. P.R.RAMAN, JUDGE P.BHAVADASAN, JUDGE FAO 251 & 252 OF 2008 14 sta FAO 251 & 252 OF 2008 15