Case: Operative Cane Union Federation Limited Vs. U.P. Co-Liladhar and Others

2. First respondent joined service was a petty employee in Cane Development Department of the U.P. State Government somewhere in 1949. On the formation of the U.P. Co-operative Cane Union Federation Ltd. (hereinafter referred to as "the first appellant"), services of the first respondent stood transferred and were put at the disposal of the appellant and he was styled as Supervisor. At the relevant time he was rendering service under the second appellant, District Co-operative Sugarcane Development Society Ltd. (now designated as Zilla Sahkari Ganna Vikas Samiti Ltd., ) Budayun, a federating unit of the first appellant and was incharge of manure godown. He was suspended from service with effect from October 18, 1958. A prosecution was launched against him for embezzlement of funds of the second appellant in that he failed to account for 293 1/2 bags of ammonium sulphate entrusted to him as keeper of manure godown. The case ultimately resulted in the acquittal of the first respondent by the High Court. Disciplinary proceedings were commenced against him on the same charge and ultimately he was dismissed from service on April 4, 1964. First respondent filed a suit being O.S. No. 30/64 in the Court of Civil Judge, Budayun, inter alia, for a declaration that the order dismissing him from service was invalid and void and for a further declaration that he continued to be in service and for arrears of pay till the date of the suit. In the written statement filed on behalf of defendants (present appellants) number of contentions were raised but only one may be noticed for the present appeal. The contention was that the dispute involved in the suit was between an employee of a Co-operative Cane-Growers Society and the Society and, therefore, civil Court had no jurisdiction to entertain the suit but the plaintiff must approach the Registrar of Co-operative Society for reference of dispute to arbitration. The trial Court decreed the suit as per judgment dated May 24, 1967, and granted the declaration prayed for. The appellants preferred an appeal being Civil Appeal No. 9 of 1967 to the Court of District Judge, Budayun, who allowed the appeal holding that the civil Court had no jurisdiction to entertain the suit inasmuch as the dispute was between an officer of a Co-operative Society and the Society and the dispute was touching the business of the Society and therefore, Rule 115 of the Co-operative Societies Rules enacted by the U.P. Government in exercise of the rule-making power conferred by S.43 of the Co-operative Societies Act, 1912 (hereinafter referred to as "the 1912 Act") in its application to the U.P. State would be attracted and the dispute will have to be resolved by arbitration by the Registrar. In accordance with this finding the appeal was allowed and the suit was dismissed. First respondent preferred Second Appeal No. 582/71 to the High Court of Judicature at Allahabad. The learned single Judge allowed the appeal holding that as the first appellant is governed by U.P. Sugarcane (Regulation of Supply and Purchases) Act, 1953 ("1953 Act") for short, it being both a Co-operative Society and a Cane Growers Co-operative Society and in case of an officer or servant of such cane growers co-operative society and dispute between its officers and servants and such society would be governed by Rules 54 and 55 framed under 1953 Act which provide a complete machinery for resolution of disputes and Rule 108 does not encompass dispute arising out of a disciplinary proceeding between such society and its officers and servants and, therefore, in the absence of such provision for compulsory arbitration of such dispute the jurisdiction of the civil Court is not barred. The learned Judge accordingly allowed the appeal and remanded the suit to the first appellate Court for decision on merits. Hence this appeal by special leave by original defendants.

Reasoning:
First appellant is a federation of Cane-Growers Co-operative Societies and second appellant is a federating unit of the first appellant. At the relevant time first and second appellants were governed by the 1912 Act as well as by the 1953 Act. Each as a Co-operative Society would be governed by the 1912 Act and each as a Cane-growers Co-operative Society and its federation, for the purpose of regulation of supply and purchase of sugarcane, would be governed by the 1953are conscious of the fact that the definition of the expression "officer" is an inclusive definition. An inclusive definition widens the etymological meaning of the expression or term including therein that which would ordinarily not be comprehended therein. Firstly, keeping apart the expansive definition by including officers who would otherwise not be comprehended in the expression "officer", it may be necessary to ascertain whether first respondent, giving the expression "officer" its ordinary etymological meaning, would be comprehended therein. It may be noticed that the Legislature never intended to include every employee or servant of the society within the expression "officer". There is some element of a right to command in the word "officer" with someone whose duty it would be to obey. If there is an officer ordinarily there will be someone subordinate to him, the officer enjoying the power to command and give directions and subordinate to obey or carry out directions. It may be that even one who is to carry out directions may be an officer in relation to his subordinates. Thus, what is implicit in the expression "officer" is made explicit by the latter part of definition which provides that such other person would also be an officer who is empowered under the rules and bye-laws to give directions with regard to the business of the society. If it is contended that a particular person is an officer because he is empowered to give directions with regard to the business of the society, it would be a question of act in each case whether a particular person is an officer or a servant or an employee. Unless the appellants are in a position to point out that first respondent was an officer in the sense that he had power to command and insist or subordinate to obey his directions with regard to business of the society, it would be difficult to believe that a person designated as supervisor drawing a salary of Rs. 150 and incharge of manure godown would be an officer. In this connection it would be advantageous to refer to S.43(g) of the 1912 Act which confers powers on the Local Government to make rules providing for the appointment, suspension and removal of the members of the Committee and other officer, and for the procedure at meetings of the Committee, and for the powers to be exercised and the duties to be performed by the Committee and the officers. No rule enacted in exercise of this power was pointed out to us to assert that first respondent would be such officer as contemplated in S.therefore, the 1912 Act confers power to enact rules and the rules so enacted are statutory and if the rules provide for certain types of disputes between certain specific parties to be resolved by arbitration and the decision of the arbitrators is made final and conclusive not correctible by the Civil Court or unquestionable before the civil Court, undoubtedly, the jurisdiction of the civil court in respect of such specified disputes between specified parties enumerated in Rule 115 would be whollycontention would stand disposed of in view of our finding that the first respondent is not an officer of the society. In order to attract Rule 115 it must be shown (i) that the dispute is the one touching the business of the co-operative society; and (ii) that it is between the society and any officer of the society. Both the conditions have to be cummulatively fulfilled before Rule 115 is attracted which would result in ouster of the jurisdiction of the civil Court in respect of dispute in view of the provision contained in Ruleis unnecessary to dilate upon this aspect in view of the two decisions of this Court.Therefore, on the strength of the aforementioned two decisions it has to be held that a dispute arising out of a disciplinary proceeding resulting in dismissal of an employee of the society cannot be said to be a dispute touching the business of the society.It will be crystal clear that while making a statutory provision for resolution of disputes involving co-operative societies by arbitration by the Registrar, the Legislature in terms excluded a dispute relating to disciplinary action taken by the society against paid servants of the society from the purview of the compulsory arbitration. It is legislative exposition of the topic under discussion. It must, however, be made distinctly clear that at the relevant time 1912 Act was in force and the contention has to be answered with reference to 1912 Act and the rules framed thereunder. It is, however difficult to believe that the 1965 Act which repealed and replaced the 1912 Act excluded from the field of operation that which was already included under the repealed Act. On the contrary it would appear that what was implicit in the 1912 Act and the rules framed thereunder that such a dispute did not touch the business of the society and was not within the purview of the compulsory arbitration, was made explicit by expressly excluding it from the field of compulsory arbitration.20. However, we would rest this judgment on the second limb of the submission in that not only the dispute must be one touching the business of the society but it must be between the co-operative society and its officer. Firstly, respondent being shown not to be one of enumerated officers of the society nor a person empowered to give directions in regard to the business of the society under the rules or the bye-laws, he would not be an officer within the meaning of the expression in 1912 Act. Any dispute between an employee not being an officer and the society would not attract Rule 115. In that view of the matter such a dispute would fall outside the purview of Rule 115 and it being a civil dispute the civil Court will have jurisdiction to entertain and adjudicate upon thea survey of these provisions it appears that the Act was enacted to regulate relations between the cane-growers on one hand and sugar factories on the other. The expression cane growers "co-operative society" has been defined in S. 2(f) to mean a society registered under the Co-operative Societies Act, 1912, one of the objects of which is to sell cane grown by its members and includes the federation of such societies registered under S.8 of the said Act. The appellant is thus a co-operative society and it being a federation of such co-operative societies it is also included in the expression "cane growers" co-operative society. "Section 28(2)(n) of the Act was relied upon to show that the State Government has power to frame rules amongst others, for the control of the staff and finances. In exercise of this power Rules 54 and 55 have been enacted. Rule 54 provides that the power to appoint, grant leave of absence, to punish, dismiss, transfer and control secretaries, assistant secretaries and accountants of Cane Growers Co-operative Societies whether permanent or temporary shall be exercised by the federation, subject to the general control of the Cane Commissioner who may rescind or modify and order of the Federation. There is a proviso which is not relevant for the present purpose. Rule 55 confers powers similar to those enumerated in Rule 54 to be exercised by the society in respect of other staff subject to the regulations made by the federation and the general control of the Cane Commissioner. Shorn of embellishment, Rule 55 confers power on the Federation, namely, the first appellant, to make regulations for appointment, granting leave of absence, punishment, dismissal and transfer of the staff other than those enumerated in Rule 54 and these regulations have to be made subject to the general control of the Cane Commissioner Rule 108 provides for compulsory arbitration of disputes therein mentioned and it is common ground that a dispute of the present nature under examination will not be covered by Rule 108. The High Court observed that Rules 54 and 55 being a complete code in itself with regard to regulation making power for disciplinary action with a provision for appeal to the Cane Commissioner and Rule 108 not being attracted, the civil Court will have jurisdiction to entertain the present dispute. The High Court overlooked the fact that 1953 Act neither repeals nor replaces 1912 Act. A cane grower other than a Cane-growers Co-operative Society would be governed by 1953 Act but the cane grower not being a co-operative society it would not be governed by the 1912 Act. A cane-Growers Co-operative Society would be governed with regard to the provisions for law of Co-operative Societies by 1912 Act and in respect of its business of growing and selling cane it would be governed by 1953 Act. Both Acts operate in an entirely different field and are enacted with different objects in view. 1953 Act neither trenches upon 1912 Act nor supersedes or supplants any provisions of it. Therefore, some provisions of 1953 Act cannot override or supersede the provisions of 1912 Act and by mere reference to the provisions of 1953 Act the High Court was in error in totally overlooking and ignoring the provisions in 1912 Act and the rules enacted thereunder.22. However, in view of our finding that the dispute brought before the civil Court in this case was not a dispute between a society and its officer and, therefore, one of the conditions for attracting Rule 115 having not been satisfied, the civil Court will have the jurisdiction to entertain the suit.There is another Act which has a bearing on the topic under discussion styled as U.P. Sugarcane (regulation of Supply and Purchase) Act, 1953. It is an Act enacted to regulate the supply and purchase of sugar cane required for use in sugar factories, and gur rab or khandsari sugar manufacturing units and matters incidental or ancillary thereto. It contemplates setting up of a Sugarcane Board and provides for its functions and duties and the methods of filling up vacancies and regulating its finances. Section 20 confers power on the Governor to impose by a notification a cess not exceeding the amount prescribed in the section on the entry of sugarcane into an area specified in such notification for consumption, use or sale there. Section 28 confers power on the State Government to make rules for the purpose of carrying into effect the provisions of the Act.