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PETITIONER: PREM JEET KUMAR

       Vs.

RESPONDENT: SURENDER GANDOTRA AND ORS.

DATE OF JUDGMENT27/08/1991

BENCH: VERMA, JAGDISH SARAN (J) BENCH: VERMA, JAGDISH SARAN (J) SHARMA, L.M. (J)

CITATION:  1991 AIR 2254            1991 SCR  (3) 782  1991 SCC  Supl.  (2) 215 JT 1991 (3)   570  1991 SCALE  (2)459

ACT:     Delhi Co-Operative Societies Act, 1972. Sections 59  and 60-Dispute relating to irregularities in purchase of  build- ing materials by the past Managing Committee--Whether  falls within the ambit of Section 60.

HEADNOTE:     On a complaint made by the Managing Committee of the 6th respondent  Cooperative Housing Society, the third  respond- ent, Registrar, Cooperative Societies, referred the  dispute relating  to  irregularities  in the  purchase  of  building material for construction of flats for members of society by the past Managing Committee, of which the appellant was  the President  at the relevant time, to arbitration.  The  first respondent-Arbitrator,  gave  his  ex-parte  award,  on  the failure  of the appellant and another person to  file  their reply to the claim of the claimant society, and directed the appellant  and the other person to pay the  society  certain sum with interest thereon.     The  appellant  challenged the award before  second  re- spondent,  the Delhi Cooperative Tribunal,  which  dismissed the  same  holding that the Arbitrator’s act  of  proceeding ex-parte was justified and that the appeal had no merit. The appellant’s  writ  petition was also dismissed by  the  High Court.     In the appeal before this Court on behalf of the  appel- lant  it  was  contended that it was Sec.  59  dealing  with surchage  which was applicable to the instant case  and  not Section  60,  which pertained to settlement of  disputes  by arbitration  since  the dispute in question  was  one  which could not be referred to arbitration in terms of Section  60 of the Act.     On behalf of the contesting respondents it was submitted that it was Section 60, which was applicable and not Section 59. Dismissing the appeal, this Court, HELD:  1.1  Sub-Section (1) of Section 60 of the  Delhi  Co- operative 783 Societies Act, 1972 indicates the true scope of the  Section 60,  while sub-section (2) is merely illustrative,  and  not

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exhaustive. Clause (c) of sub-section (1) expressly provides that if any dispute touching the constitution/management  or the  business of the cooperative society arises between  the society  or its committee and any past committee. any  offi- cer,  agent or employee or any past officer of the  society, the  dispute should be referred to the  arbitration.  [787H, 788A-B, D]     1.2  In the instant case, the dispute, viz.  irregulari- ties  in the purchase of building material for  construction of  flats  for the members of the Society  by  the  previous Managing  Committee, touches the management of  the  Society and  fails  within the ambit of Section 60 of the  Act.  The third  respondent,  Registrar, Cooperative,  Societies  was, therefore,  right in referring the dispute  to  arbitration. [789D-F]     Pentakota Srirakulu v. The Cooperative Marketing Society Ltd.. [1965] 1 SCR 186, followed.     Change--  Nagar Cooperative House Building Society  Ltd. and Anr. v.Ashok Ohri, AIR 1976 63 Delhi 239, disapproved.

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 3237  of 1991.     From  the  Judgment and Order dated  10.10.1990  of  the Delhi High Court in C.W. No. 3204 of 1990.     Soli  J. Sorabjee, S.V. Deshpande and C.L.  Sahu,  Advs. for the Appellant. Dr. Y.S. Chitale, and S.K. Sinha for the Respondents. The Judgment of the Court was delivered by VERMA, J. Leave is granted.     Respondent  No.  6, Jupiter  Cooperative  Group  Housing Society Limited, was formed in 1979 for providing houses  to its 130 members including the appellant Prem Jeer Kumar. The appellant  was earlier the Secretary and then the  President of  the  Society till 1985, by which time  substantial  con- struction  had  been completed. The  members  were  allotted three-room flat for a sum of Rs. 1, 10,000. In August, 1985, Respondent  No. 3, Registrar, Delhi  Cooperative  Societies, appointed 784 an  Administrator  to look into the affairs of  the  Society since the appel. lant and other office bearers had held  the office for more than two terms. The controversy giving  rise to  this proceeding relates to the alleged  discrepancy  re- garding purchase of some building material in January, 1984, for the construction of flats for members of the Society  in Vikas  Puri at New Delhi. The New Managing Committee of  the Society formed in September, 1986, complained to the  Regis- trar,  COoperative Societies alleging irregularities by  the previous  Managing Committee of which the appellant was  the President. This matter was referred to arbitration by  order dated 12.10.1989 passed by the Joint Registrar (Arbitration) Cooperative Societies, Delhi Administration. Respondent  No, 1, Surender Gandotra was appointed the Arbitrator, who  gave his AWard on 1.5. 1990. The relevant portion of the Award is as under:                        "It  is also interesting  to  discuss               the  conduct of these two respondents of  this               case, Shri Poonam Dhand and Shri P.J. Kumar as               they  have  been  moving  applications   after               applications in this court raising vicious and               frivolous  grounds just to delay the  delivery               of  justice  in this case.  The  miscellaneous

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             applications relating to the dispute of juris-               diction  of  this court and  then  that  since               criminal  proceedings  are  pending  with  the               Delhi Police, proceedings in this Court should               be  kept  pending till final decision  in  the               criminal  proceedings. All these  applications               were  properly attended, scrutinized and  dis-               posed of legally. It is also interesting  that               despite number of chances/opportunities having               been given to the respondent to file reply  to               the  main points of the claimant society,  the               defendants  S/Shri Poonam Dhand and Shri  P.J.               Kumar  did  not file any  reply  and  followed               delaying  and dilatory tactics and  to  defeat               the  ends of justice. Even today  30th  April,               1990,  fixed  for hearing none came  from  the               side of S/Shir Poonam Dhand, P.J. Kumar either               presonally  or through Advocate. The  advocate               of the claimant society Shri Tomar argued that               ex parte proceedings may be initiated  against               the  respondents who have absented from  these               proceedings.  In view of these  cricumstances,               and  the conduct of ’respondents in this  case               0right  from the very inception of this  case,               there is no other alternative left for me  but               to  proceed ex parte against  the  respondents               S/Shri Poonam Dhand and P.J. Kumar.          Ex  parte  award is announced  with  the  following details;                                               . 785               Principal  amount  to be paid by  the  respon-               dents  to  the Jupiter  Cooperative  Societies               Limited,  Vikas  Puri,  New  Delhi.  Rs-1,46,2               10.20  Interest  at  the  rate  of  18%   from               17.4.1985 till                    all the dues are cleared by the  respond-               ents.                    Cost                              allowed               Rs.5,000.00                        With the above observations, ex parte               award is given against the respondents  S/Shri               Poonam  Dhand, P.3, Kumar who are jointly  and               severally  responsible  to  pay  the   Jupiter               Cooperative  Group  Housing  Society  Limited,               Vikas Puri, New Delhi, principal amount of Rs.               1,46,210.00   NPS  plus  18%   interest   from               17.4.1985  till all the dues are  cleared  and               costs of Rs.5,000."                     ,     The  appellant then filed an appeal under section 76  of the  Delhi  Cooperative  Societies  Act,  1972  (hereinafter referred  to  as ’the Delhi Act’) in the  Delhi  Cooperative Tribunal  (Respondent  No. 2) challenging  the  Award  dated 1.5.1990.  The  Tribunal held that the Arbitrator’s  act  of proceeding  ex parte against the appellant is justified  and taking the view that the appeal had no merit, dismissed  the same.  The appellant then filed a writ petition in the  High Court  challenging the Award and dismissal of his appeal  by the  Tribunal on 3.7.1990. The said writ petition  has  been dismissed  by the High Court on 10.10.1990. It is  in  these circumstances that the appellant assails the Award, dismiss- al  of the appeal and then the .writ petition. The  argument of Shri Sorabjee, learned counsel for the appellant, is that it  is section 59 and not section 60 of the Delhi Act  which applies to the present case. In reply, Dr. Chitale on behalf of  the  contesting respondents contended  that  section  60

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relating  to  arbitration and not section 59  pertaining  to surcharge applies to the present case. Sections59 and 60  of the Delhi Act, insofar as relevant, are quoted hereinbelow:-                         "59. Surcharge-(1) If in the  course               of an audit, inquiry, inspection or the  wind-               ing  up of a cooperative society, it is  found               that any person, who is or was entrusted  with               the organisation or management of such society               or  who is or has at any time been an  officer               or  an employee of the society, has  made  any               payment contrary to this Act, the rules or the               bye-laWs  or has caused any deficiency in  the               assets  of the society by breach of  trust  or               wilful  negligence or has  misappropriated  or               fraudulently retained any money               786               or  other property belonging to such  society,               the Registrar may, of his own motion or on the               application  of the committee,  liquidator  or               any  creditor, inquire himself or  direct  any               person  authorised  by  him, by  an  order  in               writing  in this behalf, to  inquire’into  the               conduct of such person;                        Provided  that no such inquiry  shall               be held after the expiry of six years from the               date  of  any act or omission referred  to  in               this sub-section.                        (2)  Where an inquiry is  made  under               sub-section  (1),  the  Registrar  may,  after               giving the person concerned an opportunity  of               being  heard, make an order, requiring him  to               repay or restore the money or property or  any               part  thereof, with interest at such rate,  or               to pay contribution and costs or  compensation               to such extent, as the Registrar may  consider               just and equitable."                        "60.  Disputes which may be  referred               to  arbitration(1)  Notwithstanding   anything               contained  in  any law for the time  being  in               force,  if any dispute touching the  constitu-               tion, management or the business of a coopera-               tive  society other than a  dispute  regarding               disciplinary  action taken by the  society  or               its  committee against a paid employee of  the               society 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, past  member               or  deceased member and the society, its  com-               mittee  or any officer, agent or  employee  of               the society or liquidator, past or present, or                       (c) between the society or its commit-               tee and any past committee, any officer, agent               or  employee, or any past officer, past  agent               or  past  employee or the  nominee,  heirs  or               legal representatives of any deceased officer,               deceased  agent, or deceased employee  of  the               society, or                       (d) between the society and any  other               cooperative  society,  between a  society  and               liquidator of another society               787               or between the liquidator of another society.

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             such disputes shall be referred to the  Regis-               trar for decisior                     and no court shall have jurisdiction  to               entertain  any suit other proceedings  in  re-               spect of such dispute..                        (2)  For the purposes of  sub-section               (1),  the  following  shall be  deemed  to  be               disputed touching the constitution  management               or  the  business  of  a  cooperative  society               namely--                        (a)  a claim by the society  for  any               debt or demand due to it from a member or  the               nominee, heirs or legal rep resentatives of  a               deceased  member, whether such debt of  demand               is admitted or not;                        (b)  a claim by a surety against  the               principal debtor where the society has  recov-               ered from the surety any amount in respect  of               any debt or demand due to it from the  princi-               pal  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 elec tion of any officer of a society               other than a society mentioned in  sub-section               (1) of section 31.                        (3) If any question arises whether  a               dispute  referred to the Registrar under  this               section  is or is not a dispute  touching  the               consitution,  management  or the  business  of               cooperative  society, the decision thereon  of               the  Registra shall be final and shall not  be               called in question in an court.               i               (4) ................."     In  substance the contention of the learned counsel  for the appeal lant is that the proper action to take in such  a case  is to resort to section 59 dealing with surcharge  and not to settlement of dispute by arbitration since it is  not one of the disputes which may be referred to arbitration  in terms  of  section 60 of the Delhi Act. It was  argued  that sub-section  (2) of section 60 is exhaustive and not  merely illustrative, which shows that the present dispute does  not fall  within  the ambit 0 section 60. Dr.  Chitale,  on  the other hand, asserted that it is sub 788 section (1) of section 60 which indicates the true scope  of section 60 while sub-section (2) is merely illustrative  and no  exhaustive. It was urged that clause (c) of  sub-section (1)  of  section 60 expressly provides that if  any  dispute touching  the constitution,’ management or the  business  of the  cooperative society arises between the society  or  its committee  and  any past committee, any  officer,  agent  or employee  or  any past officer of the society,  the  dispute shall be refered to arbitration.     Reliance is placed on behalf of the appellant on Chander Nagar  Cooperative House Building Society Ltd. and  Anr.  v. Ashok  Ohri, A. 1. R. 1976 63 Delhi 299 wherein the  learned Single  Judge took the view that sub-section (2) of  section 60  of the Delhi Act is exhaustive and not merely  illustra- tive. That decision overlooks the decision of this Court  in Srirakulu referred hereafter and conflicts with it.  Further consideration of the same is, therefore, not necessary.     Dr.  Chitale placed reliance in Pentakota  Srirakulu  v. The Cooperative Marketing Society Ltd., [1965] 1 SCR 186  to

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contend that this point was concluded against the appellant. In  our  opinion, the contention of Dr. Chitale  has  to  be accepted.  The decision of this Court in Srirakulu was  ren- dered  ’with reference to the Madras  Cooperative  Societies Act,  1932  (hereinafter referred to as  ’the  Madras  Act’) wherein  section  51 relating to settlement of  disputes  by arbitration was the provision corresponding to section 60 of the Delhi Act-Clause (c) of sub-section (L) of section 51 of the  Madras Act was substantially the same as clause (c)  of sub-section (1)of section 60 of the Delhi Act. The  explana- tion in sub-section (1) of section 51 of the Madras Act  was substantially  similar  to clause (a)of sub-section  (2)  of section 60 of the Delhi Act. The material part of section 51 of  the Madras Act, on the basis of which the  decision  was endered in Srirakulu quoted therein is as under--               " S. 51-               Arbitration:                        Disputes:  51.  (1)  If  any  dispute               touching the business of a registered  society               (other  than a dispute regarding  disciplinary               action  taken by the society or its  committee               against a paid servant of the society) arises-               (a)  .......................................               (b)  ....................................               789                        (c)  between the society or its  com-               mittee  and any past committee,  any  officer,               agent  or servant, or any past  officer,  past               agent  or past servant, or the nominee,  heirs               or  legal  representatives  of  any   deceased               officer,  deceased agent or deceased  servant,               of the society, or               (d) ...............................                        Explanation--A claim by a  registered               society for any debt or demand due to it  from               a member, past member or the nominee, heir  or               legal  representative  of a  deceased  member,               whether  such  debt or demand be  admitted  or               not, is a dispute touching the business of the               society  within the meaning of  this  sub-sec-               tion." In the Madras Act, section 49 was the provision  correspond- ing  to section 59 of the Delhi Act. It was,  therefore,  on the  basis  of  similar corresponding  provisions  that  the question  arose for decision of this Court in Srirakulu.  In Srirakulu  also  the  facts disclosed in  the  inquiry  that certain  loss was caused to the society by the acts of  past Managing  Committee  and, therefore, a special  officer  ap- pointed to look into the affairs of the society made a claim under  section  51 of the Madras Act  before  the  Registrar against the past President of the Society: It was held  that the  Registrar’s  order under section 51 of the  Madras  Act could  not  be challenged. We do not  find  any  significant difference  between the provisions of the Madras  Act  which form  the basis .of this Court’s decision in  Srirakulu  and sections  59 and 60 of the Delhi Act with which we are  con- cerned  to justify taking a different view as  suggested  by learned. counsel for the appellant. Following the view taken in  Srirakulu,  this  appeal must  fail.  Consequently,  the appeal is dismissed with costs quantified at Rs.5,000. N.P.V.                                         Appeal   dis- missed. 790

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