7/31/22, 1:06 PM Belganda Sahakari Sakhar Karkhana Ltd. .

, Bhoras VS Keshav Rajaram Patil

This product is Licensed to : Rajendra Daundkar; Advocate

1995 2 BomCR 285; 1994 2 MhLJ 1756; 1994 0 Supreme(Bom) 365;

IN THE HIGH COURT OF BOMBAY

(AURANGABAD BENCH)
M.S. Vaidya, J.
The Belganda Sahakari Sakhar Karkhana Ltd., Bhoras..... Petitioner.
Versus
Keshav Rajaram Patil .... Respondent.
Writ Petition Nos. 3128 of 1989 1066 of 1982, decided on 26/27-7-1994.
Advocates appeared :
R.N. Dhorde, for the petitioners.
S.V. Kharde, for the respondent.

Section 9 & 20

See Maharashtra Co-operative Societies Act, 1960, Section 91.

Section 114 (a).

See Indian Penal Code, 1860-Section 379.

Section 91-Civil Procedure Code, 1908, Sections 9 and 20-Explanation

-Scope of jurisdiction of Co-operative court.

The proviso to Section 91(1) as introduced by Maharashtra Act 20 of 1986, excludes the jurisdiction of
the Co-operative Courts in respect of certain disputes, such as, the disputes under the Industrial Disputes
Act, etc. But prior to that, when this proviso was absent in the section, this Court had held in
Maharashtra Co-operative Housing Finance Society Ltd. v. V. S. Lani and another, 1984 (2) Bom CR 324,
which was relied upon by Mr. Kharde that a claim by an employee for reinstatement or for alterations of
conditions of service could not he entertained by Co-operative Court under Section 91 because, such a
dispute was not one touching the management or the business of society. In Para 22 of the report of the
judgment, the meaning of the expression "management" was considered and the submission that the
word "management" should be construed in its widest connotation should he considered, was negative on
the ground that what had been directly hidden "out of hounds for the registry by the very scheme and
object of the Act cannot he indirectly inducted by widening the connotation of expression "management".

The expression "any dispute" used in Section 91 (1) of the Act would mean a dispute arising out of the
provisions of the Act and not a dispute which could arise independently of the provisions of the Act.
Consequently there-for when the dispute has arisen between the society and a member about the matter
which does not arise out of the provisions contained in the Act, that would not fall within the jurisdiction
of the Co-operative Courts.

Now, in the facts of the present case, the right of a member to contract with the society for the
construction of a go down building is not a right created by the Act. That right is subject to the
jurisdiction of Civil Courts under common-law. If that right is sought to be excluded, there should be an
explicit provision in the statute which purports to accrue such a jurisdiction. In the present case, Section
91 does not exclude explicitly from the connotation of the term dispute the civil rights arising in favour of
a member, otherwise, than under the Act. Therefore, the expression, "any dispute" though used in the
section could not be ascribed a meaning so as to include therein the disputes regarding the rights arising
under the common law. The object of the Maharashtra Co-operative Societies Act is not to create in itself
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a complete Code for regulating all the relations between the Co-operative societies and the members but
the object is to regulate such relations only in respect of the matters which are regulated by the Act.

Thus, the Act is iutended to consolidate and amend the law relating to Co-operative societies and not
for the purpose of regulating all the transactions, whether falling within the purview of the common law
or the special statute, by the Legislation in question.

Acts Referred:
MAHARASHTRA CO-OPERATIVE SOCIETIES ACT : S.91

Cases Referred:
Shyam Co-operative Housing Society Ltd. v. Ramibai Bhagwansing Advani, A.I.R. 1952 Bom. 445.Referred
Deccan Merchants Co-operative Bank Ltd. v. Dalichand Jugraj Jain, A.I.R. 1969 S.C. 1320.Referred
Bakhtawar v. Union, A.I.R. 1983 Del. 201.
Union v. Ladulal, A.I.R. 1963 S.C. 168.
Goswami v. Gowardhan, 18 Bom. 94 P.C.Referred
Maharashtra Co-operative Housing Finance Society Ltd. v. V.S. Loni, 1984(2) Bom. C.R. 324.Referred
Allahabad District Co-op. Bank Ltd. v. Hanuman Dutt Tewari, A.I.R. 1982 S.C. 120.Referred
Ram Swarup v. Shikar Chand, A.I.R. 1966 S.C. 893.Referred
Raja Ram Kumar Bhargava v. Union of India, A.I.R. 1988 S.C. 752Referred

JUDGMENT -M.S. VAIDYA, J.:---This is a writ petition to challenge the judgment dated 23-12-1981 passed by
the President, State of Maharashtra Co-operative Appellate Court, Bombay in Revision Application No. 15 of
1981. An application raising an objection to the jurisdiction of the Judge of the Co-operative Court, to entertain
and try Case No. 689 of 1979 was rejected by the Judge of the Co-operative Court, Jalgaon, under its judgment
and order dated 26-3-1980. The same was challenged before the Appellate Tribunal and the Appellate Tribunal
had allowed the Revision Petition

2. The relevent facts may be stated as follows:-

The petitioner- Karkhana had invited tender for construction of godown and the respondent had responded
to that invitation and had submitted a tender. His tender came to be accepted and the contract was given to him
to construct the godown in 1975. Some time in July or August, 1977, the respondent stopped the construction of
the work despite the fact that the Karkhana had allegedly paid by an amount of Rs. 4,55,233.46/- and had
supplied him material worth Rs. 1,81,818.76/- When the work was obtained by the respondent, the
measurements of the work were taken jointly on 18-9-1977 and it was found that an amount of Rs. 1,70,341/-
was overpaid to the respondent and was due to the Karkhana. The respondent, incidentally, happened to be a
member of the Karkhana. Therefore, the petitioner-Karkhana filed a dispute for recovery of the amount of Rs.
3,64,711/- i.e. the principal amount of Rs. 1,70,341/- and interest calculated thereon. An objection was filed by
the respondent before the Judge of the Co-operative Court to his jurisdiction contending that as the contract in
question did not pertain to the business of the Society and as the contract was not taken by the respondent in his
capacity as a member of the said Society, the Co-operative Court had no jurisdiction to entertain and decide the
dispute. The objection was rejected by the Co-operative Court mainly for two reasons, namely, that formerly
when there was dispute between the same two parties, the respondent had filed a suit in the Co-operative Court
itself and, secondly because, construction of the godown was a part of the business of the Society and as the
present respondent was a member of the society the Co-operative Court had jurisdiction.

3. When the matter went in Revision before the Appellate Court, it was held that a dispute between the
member the society as regards the contract which fell under the common law, could not fall within jurisdiction of
the Co-operative Court. Therefore, it allowed the Revision Petition, setting aside the order passed by the Court
below and the dispute filed by the petitioner-Karkhana was dismissed for want of jurisdiction.

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4. Having felt arrived by this decision, the Karkhana preferred this writ petition contending that construction
of the godown was certainly in pursuance of the business that was being conducted by the Karkhana and that
making provision for the storage of the product (sugar) manufactured by the Karkhana by constructing a godown
was certainly in pursuance of the business of the Karkhana. Secondly, it was contended that the respondent was
a member of the said Karkhana and the question, whether or not, the contract was given to him in his capacity as
a member or otherwise, was not relevant for the purposes of deciding the jurisdiction of the Co-operative Court,
in view of the specific provision contained in section 91 of the Maharashtra Co-operative Societies Act, 1960
and the import thereof.

5. Mr. S.V. Kharde, the learned Counsel for the respondent, on the other hand, submitted that the question
whether or not, the contract was given to the respondent in his capacity as a member of the Karkhana was very
relevant for deciding the question of jurisdiction and, therefore, if the contract was given to the respondent not in
his capacity as a member of the society, the Co-operative Court had no jurisdiction to entertain the dispute of the
type that was filed by the Karkhana before it. He, therefore, supported the decision of the Co-operative
Appellate Tribunal.

6. Certain rulings were relied on by the learned Counsel for both the sides to which we will advert in the
course of the reasoning that we assign here-below.

7. It may be noted, at the outset, that in order to attract the provisions of section 91 of the Maharashtra Co-
operative Societies Act, 1960, two conditions are prescribed by the section itself. In the first place, certain
requirements are prescribed as regards the nature of the dispute and, in the second place, certain requirements
are prescribed as regards the parties to the dispute. If the conditions prescribed under both the heads are satisfied
by a particular dispute and the parties thereto, then and then only, the jurisdiction of the Civil Court would stand
ousted and the matter would be legally entertainable by the Co-operative Court for the purposes of adjudication
and decision.

8. The conditions regarding the nature of the dispute are stated to be "any dispute touching the constitution,
elections of the Committee or its officers other than the elections of the Committees of the specified societies
including its officers, conduct of general meetings, management or the business of the society....."

9. The conditions prescribed as regards the description of the parties to the dispute are described as :

"(a) a society, its committee, any past committee, any past or present officer, any past or present agent, any
past or present servant or nominee, heir or legal representative of any deceased officer, deceased agent or
deceased servant of the society, or the Liquidator of the society (or the official Assignee of a de-registered
society);

(b) a member, past member or a person claiming through a member, past member or a deceased member of
society, or a society, which is a member of the society (or a person who claims to be a member of the society);

(c) a person other than a member of the society, with whom the society, has any transactions in respect of
which any restrictions or regulations have been imposed, made or prescribed under section 43, 44 or 45 and any
other person claiming through such person ;

(d) a surety of a member, past member or deceased member, or surety of a person other than a member with
whom the society has any transactions in respect of which restrictions have been prescribed under section 45,
whether such surety or person is or is not a member of the society ;

(e) any other society, or the Liquidator of such a society (or de-registered society or the official Assignee of
such a de-registered society);"

The proviso to society 9(1) specifically excludes the jurisdiction of the Co-operative Court in respect of
certain types of litigations, such as, the disputes under the Industrial Disputes Act and certain disputes regarding
the elections. We are not very much concerned in this case, with the contents of the proviso to the sub-section.
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According to Mr. Kharde, the learned Counsel for the respondent, the dispute in question did not answer the
conditions prescribed under both the heads. He submitted that it was not the business of the Karkhana to
construct godowns though construction of a godown for storage of sugar could be for the purposes of serving the
objects with which the Karkhana was established. In respect of the second condition regarding the membership
he relied upon the decision in (Shyam Co-operative Housing society Ltd. v. Ramibai Bhagwansing Advani)1,
A.I.R. 1952 Bom. 445, which was a decision under section 54 of the Bombay Co-operative Societies Act, 1925.
It was submitted that the reasoning adopted by Chagla, C.J., in that ruling, was confirmed with approval by the
Supreme Court in (Deccan Merchants Co-operative Bank Ltd. v. Dalichand Jugraj Jain)2, A.I.R. 1969 S.C.
1320. In the Bombay case referred to above, a Co-operative Housing Society which could have borrowed
monies from the open market had, in fact, borrowed the money from one of its members and when the dispute
had arisen, the same was sought to be filed before the Civil Court. It was held that the loan was not advanced by
the member in his capacity as a member because, there was no obligation on the member to advance such loans
and that, therefore, the dispute was not one over which the jurisdiction of the Civil Court was excluded by
section 54. In the case before the Supreme Court, the matter was one arising under the Bombay Rents, Hotel and
Lodging House Rates Control Act, 1947 and it was filed before the Registrar of the Co-operative Societies. The
Assistant Registrar of the Co-operative Societies had held that it was a dispute within the meaning of section
91(1) of the Maharashtra Co-operative Societies Act and that the same should be decided by the Registrars
nominee named in the order. When this was challenged in the Courts of law and when the matter had gone to the
Supreme Court, the Supreme Court noted (in para 22 of the Report) that the nature of the business of a society
could be ascertained from the objects of the society, but it was difficult to subscribe to the proposition that
whatever the society did or whichever was necessarily required to be done for the purposes of carrying out its
object would be said to be a part of his business. In that matter, it was held that the dispute in question did not
pertain to the business of the Co-operative Bank. Secondly, the Supreme Court pointed out that the word dispute
used in section 91 covered only those dispute which were capable of being resolved by the Registrar or his
nominee, but that expression would not include a dispute between a landlord society and a tenant when the
landlord society had not been set up for the purposes of construction or buying and letting out houses. Relying
on certain English rulings and other rulings, the Supreme Court proceeded to observe, (in para 25 of the Report),

"The appeal must also fail on the ground that even if it is a dispute touching the business of the society
within the meaning of section 91(1) of the Act, it is not a dispute between a society and a member or a person
claiming through a member. It seems to us that before a person can be said to claim through a transaction or
dealing which the member entered into with the society as a member. If a member entered into a transaction with
the society not as a member but as a stranger, then he must be covered, if at all, by the provisions of section
91(1)(a) or (c) But once it is held that the original transaction was entered into by the member with the society as
a member then any person who claims rights or title through that member must come within the provisions of
section 91(1)(b)".

Relying on this observation of the Supreme Court, Mr. Kharde submitted that the Co-operative Appellate
Tribunal was right enough in allowing the Revision Application.

10. The contention of Mr. R.N. Dhorde, the learned Counsel for the petitioner, on the other hand, was that if
the objects of the Society were considered as stated in the bye-laws, it was very clear that construction of the
buildings for the purposes of production and storage of sugar was within its objects and that, therefore, it could
be said that the business of the Society to have the godown constructed. He submitted that, in any event, the
dispute did pertain to the management of the Society because, making of the contracts for construction of the
buildings, sparing money for that purpose, making payments or advances for that purposes, did amount to the
management of the business of the Society or, at least, the management of the Society itself and that, therefore,
from that point of view the dispute was of the category "business" and "management of the co-operative
society". He submitted, further, that while deciding the D.M. Co-op. Bank v. Dalichand, (supra), the arguments
do not appear to have been advanced before the Court with emphasis upon the non-obstante clause with which
the section 91 of the Maharashtra Co-operative Societies Act, commenced, as also on the expression "any" used
in the context of dispute and omission in Clause (b) of delimiting of the expression, such as, "in the capacity of
such a person as a member of the society". According to Mr. Dhorde, the main object of introducing section 91
on the statute book was, in the first place, to avoid the multiplicity of fora when the parties to the dispute were a

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society and its members, and secondly, ensuring that the society as well as its members or the persons dealing
with the societies were regulated by a judicial discipline of a single forum created exclusively for that purpose
by the statute. He submitted that whatever was not incorporated in the provisions of the statute could not be read
in those provision so as to do away the effect of the provisions contained in the section, especially when there
was no ambiguity whatsoever in the word utilised in the section or to minimise the force of the provision. In
short, his contention was that the non-obstante clause was meant for excluding the provisions of all other laws
within the State of Maharashtra for the purposes of determining the forum of disputes. Secondly, his contention
was that the expression "any dispute" could cover disputes of each and every category and not disputes which
arose out of statute itself. Thirdly, he submitted that when Clause (b) which dealt with the disputes with a
member or a past member etc. did not provide explicitly that the dispute should be such as had arisen out of a
transaction made by the member with the society in his capacity as a member of the society. He submitted that
the decisions of the Supreme Court as well as this Court relied upon by Mr. Kharde, were decisions on the
peculiar facts of those cases and, in particular, the decision of this Court in Shyam Co-operative Housing
Societys case, was a decision under section 54 of the Bombay Co-operative Societies Act, 1925. He submitted
that the position of the present law in respect of the disputes of the present category stood otherwise and that,
therefore, the Co-operative Court alone would have jurisdiction to entertain and try the dispute which was
lodged by the petitioner in the present case.

11. So far as the Civil Courts are concerned, section 3 of the Code of Civil Procedure, 1908, lays down that
for the purposes of that Code, the District Court is subordinate to the High Court, and every Civil Court or a
grade inferior to that of a District Court and every Court of Small Cases is subordinate to the High Court and
District Court. Section 4 contained certain savings with which we are not concerned in the present case. Section
6 dealt with the pecuniary jurisdiction and sections 7 and 8 speak of Provincial Small Cause Courts and
Presidency Small Cause Courts. On this background, section 9 of the Code of Civil Procedure, lays down.

"The courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of civil nature
excepting suits of which their cognizance is either expressly or impliedly barred."

Section 15 provides that every suit should be instituted in the lowest grade competent to try it. Sections 16,
17 and 18 deals with suit pertaining to immovable properties, whereas section 19 pertains to suit for
compensation for wrongs to person or movables. Section 20 which was referred to in this context, provides on
the aforesaid background that subject to the limitations contained in the earlier sections, every suit should be
instituted in a Court within the local limits of whose jurisdiction-

"(a) the defendant or each of the defendants where there are more than one at the time of the commencement
of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, or

(b) any of the defendants, where there are more than one, at the time of the commencement of the suit,
actually and voluntarily resides, or carries on business or personally works for gain, provided that in such case
either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally
work for gain, as aforesaid, acquiesce in such institution; or

(c) The cause of action, wholly or in part, arises.

The Explanation to the said section reads thus,-

"A corporation shall be deemed to carry on business at its sole or (principal office in India) or, in respect of
any cause of action arising at any place where it has also a sub-ordinate office, at such place,"

while interpreting the term "business" in the context of the aforesaid section as well as such provision in
section 12 of the Letters Patent, the courts have concluded that the expression "carries on business" is not
restricted to activity of gain or profit or what is popularly understood by business, see (Bakhtawar v. Union)3,
A.I.R. 1983 Delhi 201, and the Supreme Court held that the mere fact that the expression "carries on business"
was used along with other expressions "voluntarily resides" or "personally works for gain" does not mean that it
would apply to such person to whom the other two expressions would apply (Union v. Ladulal)4, A.I.R. 1963
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S.C. 168. In (Goswami v. Gowardhan)5, 18 Bombay 94 P.C., it was pointed out that the expression "carrying on
business" was a very elastic one and was almost incapable of definition and that, therefore, the Court must, in
each case, look to the particular circumstances, in as much as, the expression was intended to relate to the
business in which a man might contract debts and ought to be liable to be sued by persons who had business
transactions with him. Thus, according to the common law of the nation as it is incorporated in the Code of Civil
Procedure, the Civil Courts constituted under the Code of Civil Procedure, have jurisdiction to deal with every
Civil action unless the jurisdiction was explicitly or impliedly barred. It is also held that wherever it is barred
impliedly, such a result must come out of necessary implication from the terminology used in the provision
which purports to bar the jurisdiction of the Civil Court. Ouster of the jurisdiction of the Civil courts on Civil
causes of action is therefore to be looked upon jealously by the courts and the provisions which purport to bar
the jurisdiction of the Civil courts are required to be construed very strictly. The point which fell for decision in
this matter will have, therefore, to be considered bearing in mind the aforesaid position of law.

12. Mr. Dhorde, then, pointed out that before the constitution of the Co-operative courts under section 91-A
of the Maharashtra Co-operative Societies Act, 1960 which was introduced by Maharashtra Act 3 of 1974, the
jurisdiction for entertaining and deciding the disputes under section 91 vested in the Registrar appointed for the
purposes of the Act and, in course of time, the Registrar was entrusted with the power to refer such dispute to his
nominees. Thus, it was submitted and quite rightly, that, at that point of time, there was a total ouster of the
jurisdiction of the Civil Courts on the matters which could be disputes within the meaning of section 91(1) of the
Maharashtra Co-operative Societies Act. He submitted that at that point of time, it was quite in consonance with
the principles indicated above, to hold that certain disputes of civil nature where a particular transaction did not
relate to the business of the society or, where the parties did not answer the description which was contemplated
by section 91(1) of the Maharashtra Co-operative Societies Act, did not fall within the jurisdiction of the
Registrar appointed for the purposes of the Maharashtra Co-operative Societies Act (referred to hereinafter for
brevity as "the Act"). He submitted that decision in Shyam Co-op. Housing Society v. Ramibai (supra), was a
decision given in that period and it was in that context that this Court had taken a view that where the dispute
was not one in respect of the rights sought to be regulated by the Act, the Civil Courts did retain their
jurisdiction to entertain and decide such a dispute. On facts, it was held, in that case, that the member of thee
society who had advanced loan to that Co-operative Society was under no obligation under the Act to advance
the society such a loan and that the dispute was not one which arose out of the rights sought to be regulated by
the Bombay Co-operative Societies Act, 1925 which was then in force. To this extent, the contention urged by
Mr. Dhorde may probably be accepted.

13. Mr. Dhordes next contention was that the question of ouster of jurisdiction of the Civil Courts as it was
perceived for the purposes of provisions contained in section 20 of the Code of Civil Procedure, had some
significance when the ouster was of the jurisdiction of "Courts". It was submitted that true it was that when the
jurisdiction of the Civil Courts was sought to be ousted in favour of some authority other than the courts having
judicial or quasi-judicial powers, the interpretation of the relevant provisions had to be made with certain rigour.
He submitted, however, that where the statute purported to constitute the special type of courts invested with all
features of a Civil Court, and which were manned by the Judicial Officers, the rigour of the aforesaid
interpretation had not continued, with the same stinge which it had, when the ouster of the jurisdiction of the
Civil courts was in favour of a quasi-judicial authority invested with judicial powers. He submitted that after the
introduction of section 91-A in the Act by Maharashtra Act 3 of 1974, the position has considerably changed. He
pointed out that even when the Supreme Court had decided the issue in D.M. Co-op. Banks case (supra), the
matter had arisen out of a Civil Appeal bearing No,. 358 of 1967 which was decided on 29-8-1968 i.e. before the
constitution of the Co-operative Courts under section 91-A of the Act. Therefore, he submitted that the
observations made by the Supreme Court in that ruling also might not regulate the facts of the present case
where the dispute in question had arisen after the constitution of the Co-operative Courts by Maharashtra Act 3
of 1974. He pointed out that in the present case, the contract in question was entered into by the respondent with
the petitioner Karkhana in the year 1975, and the payments under the contract were made to the respondent and
the materials were supplied to the respondent when the institution of the Co-operative Courts did subsist. He
submitted that the cause of action for recovery of the amount overpaid to the respondent had arisen when the
respondent had stopped his work in July or August, 1977 and the contract was terminated by the petitioner under
the notice dated 24-2-1977. He submitted that if the cause of action for the present suit had arisen after the Co-
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operative Courts were constituted and the dispute was filed in the Co-operative Court to be decided according to
law by the Judicial Officers appointed in that Court, having all powers similar to the powers of the Civil Court,
there was no reason to suppose that the decisions given prior to the incorporation of the Co-operative Courts,
would rule the matter. According to him, even when the case was argued before the Supreme Court, the point
which he raised now were never raised. He did concede to the fact that section 91(1) of the Act was considered
by the Supreme Court in that case, was very much identical with the provisions of the aforesaid section
prevailing when the present dispute was filed in the Co-operative Court. But, he submitted that it appears from
the judgment of the Supreme Court in that case, that no emphasis was laid in the arguments advanced before the
Supreme Court on the expressions any dispute in the context of a dispute which was between the society and its
members. He submitted that the provision contained in section 91(1) as it stands now, if read in the context of
constitution of the Co-operative Courts, would amply make it clear that the intention of the legislature was to
rule out any forum other than the Co-operative Court in respect of "any dispute" between a member and the
society where the parties answer the description given in sub-clauses (a) to (e) of the Act. It was, again, his
contention that the word "business" of the society also will have to be accordingly construed with reference to
the objects for which the Society came into existence as proclaimed in the bye-laws of the said Society. In that
context, he referred to the observations in para 22 of the D.M. Co-op. Banks case (supra), which reads thus :--

"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 is necessarily required to
do for the purpose of carrying out its objects can be said to be part of its business."

He laid emphasis on the first part of the aforesaid observation and submitted that the nature of the business
of the society could be decided, even according to the observations of the Supreme Court with reference to the
objects of the society as incorporated in the bye-laws. Therefore, he referred to us the bye-laws of the society
which he placed on record in this proceeding and pointed out clauses x, p, N in particular, to show that purchase
of properties, erection of machinery, construction of building for that purpose, raising of the factory and running
it with efficiency, were the relevant objects of the Society which could indicate that the Society did have as its
business the aforesaid items. He submitted that a narrow meaning to the expression business so as to cover only
the commercial activity would not be ascribed in the circumstances of the case to the expression "business" as
used in section 91-A of the Act in the changed circumstances particularly, after the constitution of Co-operative
Courts. According to him, sugar could not be produced unless the factory building was constructed and
machinery was erected and the produce could not be dealt with efficiently unless a room was provided for
storage of the final produce. According to him, when viewed in this perspective, construction of a godown for
storage of the final produce at the factory, very much amounted to business or, at least, management of the
society. In the context of management, he referred to the provisions contained in Chapter VI and VII of the Act
and submitted that the statute itself has regulated the matters pertaining to the property and funds of the society,
the management thereof and the final authority for that purpose was, under section 72 of the Act, vested in the
general body of members in the General Meeting. He referred also to the provisions contained in section 73 in
Chapter VII of the Act which referred to the powers and functions of the Committee and submitted that the
statute had, at length, defined those powers and had indicated how the said powers should be exercised by the
Managing Committee, in accordance with the Act, the rules and the bye-laws. He referred also to the provisions
regarding the audit etc. and submitted that appropriate checks were provided by the Act to regulate the matter.
He referred to the provisions contained in sections 43, 44 and 45 which contain restrictions on borrowings,
regulation of loan making policy and restrictions on other transactions with non-members. He conceded that
though section 45 provided that the transactions of a society with persons other than members should be subject
to the restrictions, if any as may be prescribed, there were no rules and regulations made in that behalf.

With this material at hand, it was submitted that under such circumstances, the term "business" used in
section 91 deserved to be construed in a manner different than the manner in which it was interpreted in the
narrow sense of the term.

14. The argument advanced by Mr. Dhorde, appears attractive but, it is to be borne in mind that in the D.M.
Co-op. Banks case (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. One can understand that there could be

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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 there
was a godown but, then it was not the business of the society to errect such things. The business of the society is,
in fact, to manufacture the sugar and to sell it in advantageous manner. The ancillary provisions made for
facilitating the production of sugar and selling it advantageously, may be an affair 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 expression used 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-op Banks case (supra).

15. The proviso to section 91(1) as introduced by Maharashtra Act 20 of 1986, excludes the jurisdiction of
the Co-operative Courts in respect of certain disputes, such as, the disputes under the Industrial Disputes Act,
etc. But, prior to that, when this proviso was absent in the section, this Court had held in (Maharashtra Co-
operative Housing finance Society Ltd. v.V.S. Loni and another)6, 1984(2) Bom. C.R. 324, which was relied
upon by Mr. Kharde, that a claim by an employee for reinstatement or for alterations of conditions of service
could not be entertained by Co-operative Court under section 91 because, such a dispute was not one touching
the management or the business of society. In para 22 of the report of the judgment, the meaning of the
expression " management " was considered and the submission that the word "management" should be construed
in its widest connotation should be considered, was negatived on the ground that what had been directly bidden
out of bounds for the Registrar by the very Scheme and object of the Act cannot be indirectly inducted by
widening the connotation of expression "management" Mr. Kharde also pointed out the ruling in (Allahabad
District Co-op. Bank Ltd. v. Hanuman Dutt Tewari)7, A.I.R. 1982 S.C. 120, in which how the Supreme Court
had felt it difficult to subscribe to the proposition that whatever the society did or was necessarily required to do
for the purpose of carrying out its objects, could be said to be a part of its business.

16. With the advantage of the aforesaid rulings at hand, one has, therefore, to conclude that the position of
law as it boils down at present, is that the expression "any dispute" used in section 91(1) of the Act would mean
a dispute arising out of the provisions of the Act and not a dispute which could arise independently of the
provisions of the Act. Consequently, therefore, when the dispute has arisen between the society and a member
about the matter which does out arise not of the provisions contained in the Act, that would not fall within the
jurisdiction of the Co-operative Courts.

17. In (Ram Swarup v. Shikar Chand)8, A.I.R. 1966 S.C. 893, it was held that the jurisdiction of the Civil
Courts to deal with civil causes can be excluded by the Legislature by special Acts which deal with special
subject-matters; but the statutory provision must expressly provide for such exclusion, or must necessarily and
inevitably lead to that preference. The bar created by the relevant provisions of the statute excluding the
jurisdiction of the Civil Courts would not operate in cases where the plea raised before the Civil Court goes to
the root of the matter and would, if upheld, lead to the conclusion that the impugned order is a nullity. One of the
points which is often treated as relevant in dealing with the question about the exclusion of Civil Courts
jurisdiction, is whether the special statute which, it is urged excludes such jurisdiction, has used clear and
unambiguous words indicating that intention. Another test which is applied is : does the said statute provide for
an adequate and satisfactory alternative remedy to a party that may be aggrieved by the relevant order under its
material provisions.

18. In (Raja Ram Kumar Bhargava v. Union of India)9, A.I.R. 1988 S.C. 752, the Supreme Court observed,

"Generally speaking, the broad guiding considerations for determining whether Civil Court jurisdiction is
excluded are that wherever a right, not pre-existing in common law, in created by a statue and that statute itself
provided a machinery for the enforcement of the right, both the right and remedy having been created uno flatu
and a finality is intended to the result of the statutory proceedings, then, even in the absence of an exclusionary
provision the Civil Courts jurisdiction is impliedly barred. If, however , a right pre-existing in common law is
recognised by the statue and a new statutory remedy for its enforcement provided, without expressly excluding
the Civil Courts jurisdiction, then both the common-law and the statutory remedies might become concurrent
remedies leaving upon an element of election to the persons of inherence."

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7/31/22, 1:06 PM Belganda Sahakari Sakhar Karkhana Ltd. . , Bhoras VS Keshav Rajaram Patil

19. Now, in the facts of the present case, the right of a member to contract with the society for the
construction of a godown building, is not a right created by the Act. That right is subject to the jurisdiction of
Civil Courts under common-law. If that right is sought to be excluded, there should be an explicit provision in
the statute which purports to accrue such a jurisdiction. In the present case, section 91 does not exclude
explicitly from the connotation of the term dispute the civil rights arising in favour of a member, otherwise than
under the Act. Therefore, the expression "any dispute" though used in the section could not be ascribed a
meaning so as to include therein the disputes regarding the rights arising under the common-law. The object of
the Maharashtra co-operative Societies Act is not to create in itself a complete Code for regulating all the
relations between the co-operative societies and the members but the object is to regulate such relations only in
respect of the matters which are regulated by the Act. The Preamble of the Act reads thus,---

"WHEREAS, with a view to providing for the orderly development of the co-operative movement in the
State of Maharashtra in accordance with the relevant directive principles of State policy enunciated in the
Constitution of India, it is expedient to consolidate and amend the law relating to Co-operative Societies in that
State;...."

Thus the Act is intended to consolidate and amend the law relating to co-operative societies and not for the
purpose of regulating all the transactions, whether falling within the purview of the common-law or the special
statute, by the Legislation in question.

20. In view of these considerations, we do not think that the present writ petition has much substance in it.
The State of Maharashtra Co-operative Appellate Court had rightly passed an order that the dispute filed by the
petitioner-Karkhana deserved to be dismissed for want of jurisdiction to the Co-operative Court. We need not
interfere with that order. The writ petition must be accordingly dismissed. The same is, therefore, dismissed.
Rule discharged. In view of the law-points involved and raised in the matter, there shall be no order as to costs.

Petition dismissed.

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