IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD.
FIRST APPEAL NO.47 OF 1995
Rameshchandra Ramkishan Sarda, ]..Appellant
Age. 42 years, Occ. Business,
and Contractor,
R/o. Lohar Galli, Nanded,
Proprietor of the concern
"Ramkrupa" Constructions,
Nanded.
VERSUS
1. Shri Shankarrao Chavan ]..Respondents
P.V.C. Pipe Utpadak Sanstha
Maryadit,
A Co-operative Society at Hingoli,
Dist. Parbhani, through its Chairman
Shri Inderchand s/o. Premraj Soni,
Age.55 years, Occ. Business,
R/o. Hingoli, Dist. Parbhani.
2. The Manager
Shri R. Shakeel,
Age. 38 years, Occ. Service at
P.V.C. Pipe Factory,
R/o. Hingoli, Dist. Parbhani.
Shri B.A. Darak, Advocate for the appellant.
Shri P.S. Agarwal, Advocate for the respondents.
CORAM : P.R. BORKAR, J.
RESERVED ON : 04.03.2009
PRONOUNCED ON : 16.03.2009
J U D G M E N T :-
. This is an appeal preferred by the original
plaintiff whose suit bearing Special Civil Suit No.104
of 1991 for recovery of Rs.4,12,000/- was dismissed by
2nd Jt. Civil Judge, Senior Division, Nanded on
::: Downloaded on – 09/06/2013 14:25:15 :::
( 2 )
14.07.1994 on the ground that the suit is not
maintainable for want of notice under Section 164 of
the Maharashtra Co-operative Societies Act,1960.
2. Brief facts giving rise to this appeal may be
stated as below:-
. The respondents are Chairman and Manager of a
factory run by Shri Shankarrao Chavan P.V.C. Pipe
Utpadak Sanstha Maryadit, a co-operative society
registered
Societies Act,
under
1960.
the
The
Maharashtra Co-operative
plaintiff/appellant has
approached the Court with a case that he had agreed to
carry out construction of excavation, brick lying,
plastering, concreting, carpentry, joinder of steel
and iron work, drainage work, water supply, sanitary
fitting etc. of factory building and other
constructions at the site of the defendant factory.
An advance of Rs.5,00,000/- was paid by the defendant
– Co-operative Society to the plaintiff for above said
construction work and said amount was to be adjusted
towards bill of work done. According to the
plaintiff, defendant did not co-operate in performance
of the work and the work could not be completed.
Defendant - Co-operative Society illegally withdrew
::: Downloaded on - 09/06/2013 14:25:15 :::
( 3 )
the work from the plaintiff. Due to the withdrawal of
work, the plaintiff appellant suffered loss and
therefore the suit is filed for recovery of amount of
Rs. 4,12,000/-.
3. The defendant/respondent Society filed written
statement at Exh.32 and amongst other contentions, it
objected to the tenability of the suit stating that
since the defendant is a Co-operative Society
registered under the Maharashtra Co-operative
Societies Act,
ig 1960, the suit without
Section 164 of the said Act is barred.
notice under
4. The learned Civil Judge framed preliminary
issue whether the suit is maintainable for want of
notice under Section 164 of the Maharashtra
Co-operative Societies Act, 1960, and the answer was
in the negative. Since it is held that the suit is
not maintainable, it is dismissed. It is this order
which is challenged in this appeal The only point
which arises for our consideration is as under:-
“Whether the suit is not maintainable without
Notice under Section 164 of the Maharashtra
Co-operative Societies Act, 1960?”
5. Heard Adv.Shri B.A. Darak for the appellant
::: Downloaded on – 09/06/2013 14:25:15 :::
( 4 )
and Adv.Shri P.S. Agarwal for the respondents.
Section 164 of the Maharashtra Co-operative Societies
Act, 1960, hereinafter referred to as “the Act” is as
follows:-
“164.
164. Notice necessary in suits : No suit
shall be instituted against a society, or anyof its officers, in respect of any act
touching 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 ofresidence of the plaintiff and the relief
which he claims, and the plaintiff shallcontain a statement that such notice has been
so delivered or left.”
6. The words “touching the business of the
society” also appear in Section 91 of the Act, wherein
phrase used is “in dispute touching business of
society”. Section 91 (1) is as follows:-
“91.
91. Disputes (1) Notwithstanding anything
contained in any other law for the time being
in force, any dispute touching theconstitution, elections of the committee or
its officers other than the elections of
committees of the specified societies
including its officers, conduct of general
meetings, management or business of a society
shall be referred by any of the parties to the
dispute, or by a federal society to which thesociety is affiliated or by a credit of the
society, to a Co-operative Court if both the
parties thereto are one or other of the
following:-
(a) ............... "
::: Downloaded on - 09/06/2013 14:25:15 :::
( 5 )
7. Both sides cited several authorities. The
earliest case cited is Farkhundali Nannhay V/s.
V.B.Potdar and another, AIR 1962 BOMBAY 162. The Full
Bench of this Court was considering Section 54 of the
Bombay Co-operative Societies Act, 1925 and phrase
“touching the business of society” was considered. It
was observed that nature of business, which a society
does, is to be ascertained from the objects of the
society. But whatever the society does or is
its objects
necessarily required to do for the purpose of carrying
out can be said to be part of its
business. The word “touching” is also very wide and
would include any matter which relates to, concerns or
affects the business of the society. In that case it
is held that payment of wages of any sum due to
employees under law is therefore part of the business
of the society. The copy of object or bye-laws of the
defendant – Society is not produced in this case to
know what is scope of business of the society.
8. In the present case business of
defendant/society, as its name discloses, can be said
to be production and sale of P.V.C. pipes. In para 7
of the Trial Court’s judgment while dealing with this
::: Downloaded on – 09/06/2013 14:25:15 :::
( 6 )
aspect, it is observed that the contract of
defendant/society with the appellant/plaintiff was
regarding construction of shed for the factory and
other construction work. Same cannot be said to be
business of the society as it is not business of the
society to do construction of sheds and other
structures. In para 9 of the Trial Court’s judgment
it is observed that undisputedly the construction work
in question was entrusted by the defendant society to
the plaintiff for construction and erection of shed,
for
business
installing
of
ig machinery and starting
the society and therefore he
factory
held
and
that
notice under Section 164 of the Act was required.
However, agreement at Exh.4/1 relates to only
construction of factory building and other structures.
It nowhere speaks of installation of machinery or
starting of factory or business. The contract
strictly relates to work of building and construction.
9. Second case cited is Deccan Merchants
Co-operative Bank Ltd. V/s. M/s. Dalichand Jugraj
Jain and others, AIR 1969S.C.1320. Said case is under
Section 91 of the Maharashtra Co-operative Societies
Act. In that case it is observed in para 17, 18 & 22
as under:-
::: Downloaded on – 09/06/2013 14:25:15 :::
( 7 )
“17. ……………………………….
It is clear that the word “business” in this
context does not mean affairs of a society
because election of office-bearers, conduct of
general meetings and management of a society
would be treated as affairs of a society. In
this sub-section the word “business” has been
used in a narrower sense and it means the
actual trading or commercial or other similar
business activity of the society which the
society is authorised to enter into under the
Act and the Rules and its bye-laws.
18. The question arises whether the
dispute touching the assets of a society would
be a dispute touching the business of a
society. This would depend on the nature of
the society and the rules and bye-laws
governing it. Ordinarily, if a society owns
buildings and lets out parts of buildings
which it does not require for its own purpose
it cannot be said that letting out of those
parts is a part of the business of the
society. But it may be that it is the
business of a society to construct and buy
houses and let them out to its members. In
that case letting out property may be part of
its business. In this case, the society is a
co-operative bank and ordinarily a
co-operative bank cannot be said to be engaged
in business when it lets out properties owned
by it. ………………………………
22. While we agree that the nature of
business which a society does can be
ascertained from the objects of the society,
it is difficult to subscribe to the
proposition that whatever the society does or
it necessarily required to do for the purpose
of carrying out its objects can be said to be
part of its business. We however, agree that
the word “touching” is very wide and would
include any matter which relates to or
concerns the business of a society but we are
doubtful whether the word “affects” should
also be used in defining the scope of the word
“touching”.”
::: Downloaded on – 09/06/2013 14:25:15 :::
( 8 )
10. Third case cited is Satpalsingh Arora V/s.
Santdas Prabhudas Malkani, 1973 Mh.L.J.292.
Mh.L.J.292 In that
case it is observed that by-laws of a society can be
referred to ascertain object of the society. In paras
12 and 13 it is mentioned that the word “business” has
been used in a narrower sense and it means the actual
trading or commercial or other similar business
activity of the society which the society is
authorised to enter into under the Act and the Rules
and its bye-laws. There is nothing on record to show
that the
construction
present respondent society has business
activity or construction of factory
of
building and other structures.
11. The next case cited is of our High Court. In
Kalawati Ramchand Malani V/s. Shankar Rao Patil and
Others, 1974 Mh.L.J.908,
Mh.L.J.908 a housing society was formed
with the object of constructing buildings and
allotting them to members. The member allowing
licensee to occupy allotted building. Dispute in
their member and licensee after termination of license
is held to be one not touching business of the society
and it is held that the dispute is covered by Section
91 though it may ultimately “affect” business of the
Society if license is given in contravention of rules
::: Downloaded on – 09/06/2013 14:25:15 :::
( 9 )
or bye laws of Society.
12. In the case of Mohan Meakin Limited, Bombay
V/s. The Pravara Sahakari Sakhar Karkhana Ltd.,
Pravaranagar, Ahmednagar, 1987 Mh.L.J.503,
Mh.L.J.503 there was
question of violation of Trademark and it was observed
that one of the objects of the Society in addition to
manufacturer of sugar was the manufacture of
complementary products and in that behalf to erect the
necessary machinery. The alcoholic products
manufactured
co-operative
ig out of molasses
society was a complementary product
by the defendant
and
the said business fairly and squarely fell within the
ambit of the Bye-laws of the society. Therefore, it
is held that when suit is filed under Section 105 of
the Trade and Merchandise Marks Act for violation of
Trademark “Black Knight”, notice under Section 164 of
the Act is mandatory and in absence of such notice,
suit is not maintainable. It is the case of society
which runs business of manufacture of liquor and to
sell it. Dispute was touching the business of the
society.
13. In the case of Belganda Sahakari Sakhar
Karkhana Ltd., Bhoras V/s. Keshav Rajaram Patil, 1994
::: Downloaded on - 09/06/2013 14:25:15 :::
( 10 )
Mh.L.J.1756,
Mh.L.J.1756 the sugar factory invited tenders for
construction of godown. On certain disputes arising
between the sugar factory and the contractor-member,
the factory filed dispute in the Co-operative Court
under Section 91 of the Act for recovery of an amount
of Rs.3,64,711/-. The contractor-member filed
objection contending that the Co-operative Court had
no jurisdiction to entertain the dispute, as the
contract had not been taken by him in his capacity as
a member of the society. The Co-operative Court
rejected
Court upheld
the objection but in Revision, the Appellate
the objection on the ground that the
dispute as regards the contract fell under common law.
The Single Bench of this Court held that such dispute
does not fall within jurisdiction of the Co-operative
Court and Civil Court has jurisdiction. The Court
referred to the case of D.M.Co-op.Bank (supra). In
para 14 following observations are made:-
“14. The argument advanced by Mr. Dhorde,
appears attractive but, it is to be borne in
mind that in the D.M.Co-operative Bank’s case
(supra),
(supra) the Supreme Court had made a
distinction between works done to serve the
object of the society and works done in
pursuance of the business of the Society. Onecan understand that there could be no
manufacture of sugar if there was no factory
building and no place for machinery. It can
also be appreciated that the business of
manufacturing sugar and selling it at an
advantageous price could not be done unless::: Downloaded on – 09/06/2013 14:25:15 :::
( 11 )there was a godown but, then, it was not the
business of the society to erect such things.
The business of the society is, in fact, to
manufacture the sugar, to sell it inadvantageous manner. The ancillary provisions
made for facilitating the production of sugar
and selling it advantageously, may be anaffair relating to the management of the
society, but it is neither the business of the
society and it may not, probably, amount to
even the management of the society nor it is
business for the purposes of the expressionused in Section 91(1) of the Act. In any
event, such a view has been taken by the
Supreme Court in the D.M.Co-operative Bank’s
case (supra).
14. In the case of Suprabhat Co-operative Housing
Society
2002(3)
Ltd.
Mh.L.J.837,
Mh.L.J.837
and anr.
this
V/s.
Court
Span Builders and anr.,
has occasion to
consider Section 164 of the Act. In that case the
object of the Co-operative Housing Society was to
construct flats on plot in question taken on lease,
for allotment to members of society for their
authorised use. The original plaintiffs who
instituted Special Civil Suit for the recovery of an
amount of Rs.11,97,117/- together with interest
adverted to the two agreements dated 12th September,
1997 and 30th December, 1998 by which the contract for
the construction of the flats was awarded to the
respondents. The case of the respondent was that the
bills which were raised by them upon the society for
the work of construction were kept pending and the
::: Downloaded on – 09/06/2013 14:25:15 :::
( 12 )
payment of the bills was unduly delayed. The
respondents stated that in the circumstances, it had
become impossible for them to complete the contractual
work and that they had in fact decided to abandon the
contracts. Considering object of the Co-operative
Society, which was to construct flat, it was held that
the dispute was touching the business of the society.
In this case, as initially stated, business of the
respondent Society is not to construct factory and
other structures, contract of which was given to the
plaintiff
appellant. It is observed in para 8
the expression “touching the business of the society”,
that
which is employed in section 164 has also been used in
Section 91 of the Act. Section 91, it would be
material to note falls in Chapter IX of the Act, which
is entitled “Statement of Disputes”. After referring
to the case of D.M. Co-operative Bank (supra), in
para 9 it is observed that the basic principle which
has been formulated by the Supreme Court is whether a
particular dispute touches the business of the society
would depend upon the nature of the society and the
rules and bye-laws governing it. So, ultimately it is
nature of the society as evidenced by its object and
bye-laws which have to be taken into consideration.
::: Downloaded on – 09/06/2013 14:25:15 :::
( 13 )
15. In the case of Solapur Taluka Khadi Gramodyog
Utpadak Sahakari Society V/s. Dattatraya Shankarrao
Kondewar and others, 2005 (1) Mh.L.J.24,
Mh.L.J.24 the suit
filed against the Society on the ground of bona fide
requirement and default by its landlord. The society
was carrying out business of trading in the shop
premises in question. It was held that no notice
under Section 164 of the Co-operative Societies Act is
required, as the suit cannot be said to be suit in
respect of an act touching business of the society.
The case of D.M.
were
ig Co-op. Bank (Supra) and other cases
referred to and in para 7 it is observed that it
cannot be doubted that everything that a society does
for the purpose of achieving its objects cannot be
regarded as its business. Taking a premises on rent
by a society for the purpose of attaining its objects
and carrying its business cannot per se be regarded as
a business of the society. On similar lines it can be
said that though object and business of the society
was to manufacture P.V.C. pipes and sell them, it
cannot be said that construction of factory for
manufacturing of P.V.C. pipes or making allied
construction is the business of the respondent
society.
::: Downloaded on – 09/06/2013 14:25:15 :::
( 14 )
16. So relying law laid down in cases of Solapur
Taluka Khadi Gramodyog and Belganda Sahakari Sakhar
Karkhana (Supra) and considering observations made by
the Supreme Court in various authorities as referred
to above, in my opinion, the Trial Court has committed
error in holding that the suit is bad for non-issuance
of notice under Section 164 of the Maharashtra
Co-operative Societies Act. The suit is maintainable
in absence of such notice and therefore this appeal is
allowed.
17. In the
igresult the appeal is allowed. The
judgment and decree passed by the learned II Jt.
Civil Judge, Senior Division, Nanded, is set aside.
Said Court is directed to restore the suit to file,
frame all issues and proceed to decide the suit
according to law.
[P.R. BORKAR, J.]
snk/2009/MAR09/fa47.95
::: Downloaded on - 09/06/2013 14:25:15 :::