C.V. Nagarjuna Reddy, J.
1. These Writ Appeals are filed against common order dated 25-8-2000 passed by the learned Single Judge in Writ Petition Nos. 26590, 26591, 26592, 26598 and 26603 of 1999. While Writ Appeal Nos. 1670, 1691 and 1713 of 2000 and 9 of 2001 were filed by the Deputy Registrar of Co-operative Societies/OSD/Arbitrator (for short 'the Arbitrator'), the other Writ Appeals were filed by the Charminar Co-operative Urban Bank Limited, Hyderabad (for short 'the Bank').
2. Respondent No. 1 in each of these appeals is either a company incorporated under the Companies Act, 1956 or a partnership firm registered under the provisions of the Indian Partnership Act, 1932. They are admittedly members of the Bank. Respondent No. 1 in each of these appeals borrowed huge amounts as loans from the Bank and failed to repay the same. Therefore, the Bank approached the Arbitrator with claim statements for passing of awards under Section 61 of the Andhra Pradesh Co-operative Societies Act, 1964 (for short 'the Act'). When the Arbitrator had entered reference and given notices to respondent No. 1, they filed Writ Petition Nos. 26590, 26591, 26592, 26598 and 26603 of 1999 in this Court for a Writ of Prohibition to prohibit the Arbitrator from proceeding with the arbitration proceedings. The main plank on which the said Writ Petitions were filed was that respondent No. 1, being either companies or partnership firms, are not eligible to be members of the Bank under the provisions of the Act and, therefore, they are not amenable to the jurisdiction of the Arbitrator under Section 61 of the Act and afortiori the Arbitrator is denuded of the jurisdiction to decide any dispute between respondent No. 1 and the Bank. Another question which was raised by respondent No. 1 was that since the Charminar Co-operative Urban Bank Limited, Hyderabad, being a Bank, the provisions of the Act have no application and that proceedings under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 alone are liable to be initiated for recovery of the loans.
3. The learned single Judge having gone into the first question referred to above and decided in favour of respondent No. 1 and having regard to the decision on the said question, the learned single Judge felt it unnecessary to deal with the second question. The learned single Judge allowed the said Writ Petitions and granted a Writ of Prohibition, as prayed for, by respondent No. 1. Feeling aggrieved by the said order, the Bank and the Arbitrator filed these Writ Appeals.
4. At the hearing, Sri P.S. Raja Sekhar, learned Counsel for the Bank, submitted that the learned single Judge committed a serious error in issuing the Writ of Prohibition on the premise that under Section 19 of the Act the firms and companies are not eligible to become members and, therefore, they are not amenable to the jurisdiction of the Arbitrator under Section 61 of the Act. The learned Counsel submitted that the fact that respondent No. 1, in all these Writ Appeals, were admitted as members of the Bank and that they continued as such without being removed by following the provisions of the Act and obtained loans as members of the Bank is not in dispute. He contends that irrespective of whether respondent No. 1 were eligible or not, as they continued to be the members of the Bank, the Bank is entitled to raise a dispute against them under Section 61 of the Act.
5. Initially appearance was entered by a learned Counsel on behalf of respondent No. 1 in each of these Writ Appeals. As the Counsel reported no instructions, at the hearing, fresh notices were ordered on 10-6-2009. Personal notices were served by the Bank. The learned Counsel appearing for the Bank submitted a memo along with acknowledgments showing proof of service on respondent No. 1 in these Writ Appeals. Despite service of notices, no one appeared for respondent No. 1.
6. We have carefully considered the submissions of the learned Counsel for the appellants and perused the record.
7. Section 19 of the Act prescribes eligibility for membership in a Co-operative Society. Under this provision, three classes of persons are entitled to become members, viz., an individual, a society registered or deemed to be registered under the Act or the Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995, and the Government.
8. Under Section 21 of the Act the grounds of disqualification for membership of society are enumerated. One of the grounds for such disqualification is that if a person is not eligible for membership under Section 19 of the Act. Under Sub-section (3) of Section 21, where any person, who is not eligible for being admitted as a member has been admitted as a member or whether a member, who is disqualified as such is continued as a member, he shall be removed by the General Body on its own motion or on a representation made to it by any member of the Society or its federal society or its financing Bank. The proviso to the said provision envisages a notice and an opportunity of making a representation against the proposed action of removal from the membership.
9. Section 61 of the Act provides for settlement of disputes by the Registrar, inter alia, between a member, past member or person claiming through a member, past member or deceased member and the Society, its committee or any officer, agent or employee of the society.
10. A careful perusal of the order of the learned single Judge reveals that Section 19 of the Act is made the sole basis for granting the relief in favour of respondent No. 1. The learned single Judge was of the view that since respondent No. 1 does not fall in any of the three categories of persons, who are eligible to become members of a Society, they cannot be treated as members and, consequently, they fall outside the scope of Section 61 of the Act. In our considered view, this reasoning of the learned single Judge cannot be sustained for the reason that it is an admitted fact that irrespective of whether respondent No. 1 were eligible to become members or not, they were not only admitted as members, but were continued as such. It is not the case of respondent. No. 1 that the provisions of Section 21(3) of the Act were invoked and they were expelled from membership of the Bank at any point of time. As members of the Bank, they applied for and availed loans and failed to repay the same. Therefore, so long as they continued to be the members, they are amenable to the jurisdiction of the Registrar under Section 61 of the Act.
11. These crucial aspects were not considered by the learned single Judge. The legislative object behind Section 61 of the Act is to provide for an in house mechanism for settlement of disputes touching the constitution, management or the business of a Society, other than a dispute regarding disciplinary action taken by the Society or its committee against a paid employee of the Society. Such an object cannot be allowed to render otiose by accepting a technical plea such as the one raised by respondent No. 1. In our view, this is an eminently fit case where the maxim ut res magis valeat quam pereat must be made applicable. In Standard Chartered Bank v. Directorate of Enforcement : 2005 (4) SCJ 645 : 2005 (2) ALT (Crl.) 296 (SC) : AIR 2005 SC 2622 : 2005 (5) ALT 22.2 (DNSC), the Apex Court, while dealing with the said maxim, held that the duty of the Court is to construe the enactment in such a way so as to implement rather than to defeat the legislative purpose. Therefore, in the peculiar fact-situation existing in these cases and applying the aforesaid maxim, we are of the opinion that the Registrar cannot be denuded of his jurisdiction under Section 61 of the Act to decide the disputes raised by the Bank.
12. Another reason which should have weighed with the learned Judge was that the conduct of respondent No. 1 dis-entitles them from invoking the jurisdiction of this Court. The law is well settled that the jurisdiction of this Court under Article 226 of the Constitution is essentially discretionary and a person who approaches this Court with unclean hands is not entitled to be granted any relief. Even assuming that respondent No. 1 made out a legal case, this Court need not grant relief in their favour, for, having become members, availed loans and committed default, it lies ill in their mouth to turn round and plead mat they cannot be treated as members. The doors of this Court are always shut for such litigants who are dishonest and having malicious intention to defraud the creditors. In this view of the matter, the order under appeals cannot be sustained.
13. As regards the issue that was raised, but not decided, viz., that whether the provisions of the Act can be invoked by the Bank for recovery of loans, though the learned single Judge has not given a finding thereon in view of his finding on question No. 1, this question is no longer res integra in view of the judgment of the Supreme Court in Greater Bombay Co-op Bank Ltd. v. United Yarn Tex (P) Ltd. : 2007 (3) ALT 1 (SC) : 2007 (3) SCJ 415 : (2007) 6 SCC 236, wherein the Apex Court held that the Co-operative Banks are entitled to invoke the provisions of their respective Co-operative Societies Acts for recovery of loans.
14. For the above-mentioned reasons, the Writ Appeals are allowed and the impugned order is set aside. The Arbitrator is entitled to proceed with the arbitration proceedings from the stage where they were stopped by the intervention of this Court.