Case: Dharni Dhar Bhalla Vs. District Co-Operative Bank Limited

1. This is an appeal by special leave from a judgment of the Allahabad High Court. The facts may be briefly stated : The appellant was the treasurer of Government Treasury at Lakhimpur, District Kheri, in the State of Uttar Pradesh and the respondent as a body incorporated under Section 18 of the U.P. Co-operative Societies Act, 1912 (Act II of 1912), hereinafter called the Act, carried on the business of banking at that place. According to the bylaws of the Bank an Honorary Treasurer was elected who held the office for a year. A sum of Rs. 10, 000/- was kept deposited with the Treasurer for disbursement on the Banks account. When the appellant was re-elected as Honorary Treasurer in 1946 he represented that he did not have sufficient time to carry out the responsibilities of the post himself and he could act through his nominee only. It is stated that with the concurrence of the authorities of the Bank and with their knowledge one Mool Chand was nominated to act on his behalf. It appears that a good deal of money was embezzled from the Bank and on December 12, 1952 the Managing Director lodged a report with the police. After investigation Mool Chand and Hazari Lal the Manager of the Bank were challaned. The Managing Director reported the matter to the Deputy Registrar, co-operative Societies, U.P. A meeting of the Board of Directors was called for December 18, 1952 which was attended by the Deputy Registrar Shri Pant. According to the appellant Shri Pant stated at the meeting of the Board of Directors that the appellant being a Treasurer was liable to make god the loss and in case some difficulty was felt the matter might be referred to hi according to the provisions of Rule 15 of the U.P. Co-operative Societies following day. A claim was failed with Shri Pant the same afternoon and the summons served on the appellant in the evening on the same date. It was alleged that on the following day in spite of the appellant having submitted to Shri Pant that a copy of the claim had not been served on him with the summons and that the time was too short to enter upon the defence Shri Pant made an award in the sum of Rs. 1,04,319-7-4 against the appellant2. The appellant filed a suit on January 8, 1953 for a declaration that the award, dated December 19, 1952 made by Shri Pant the Deputy Registrar, Co-operative Societies was ultra vire and therefore void. This suit was decreed by the Trial Court on August 24, 1957. When the matter came before the High Court on appeal filed by the respondent a division bench referred the question of the validity of Rule 115 of the Rules which had been canvassed to a larger bench. The full bench upheld the validity of the aforesaid Rules. The division bench by an order, dated January 18, 1966 allowed the appeal and set aside the decree passed by the first court. The result was that the appellants suit was dismissed.

Court's reasoning:
6. On a perusal of the statement of Shri Ali and Shri Pant we are satisfied that the trial judge was right in his appreciation of evidence. It is also noteworthy that the trial judge had recorded the remarks about the impression created in the witness-box in Shri AliThe post haste manner in which the award for such a large amount was given shows that Shri Pant had either made up his mind to pass a decree against the appellant even though the view formed by him might not have been actuated by mala fides. At any rate even if it be assumed that Shri Pant had not acted on any information which he had gathered at the meeting held on December 19, 1952 and had not made any such commitment, as has been alleged by the appellant, that he would pass a decree immediately in favour of the respondent, there is no doubt that the appellant was not given a proper opportunity to defend his case. According to the statement of Shri Pant when the appellant came to him on the evening of December 18, 1952 after the summons had been served on him the appellant enquired from him as to the nature of the suit and asked for a copy of the plaintIt is not possible to accept that any proper or reasonable opportunity was afforded to the appellant to present his case. It has not been contended and indeed could not be urged that the civil court did not have the jurisdiction to entertain the suit in the above circumstances. It is settled law that the exclusion of the jurisdiction of the civil courts is not to be readily inferred. Such exclusion must either be explicit, or clearly implied and further even if the jurisdiction is so excluded the civil court can examine cases where the provisions of the statute have not been complied with or the statutory tribunal has not acted in conformity with fundamental principles of judicial procedure. See Secretary of State. Represented by the Collector of South Arcot v. Mask & Company. The suit was therefore rightly decreed by the Trial Court.