K. Sreedhar Rao, J.
1. The appeal arises out of the judgment and decree passed in R.A. No. 76 of 1996 on the file of Additional Civil Judge (Senior Division), Bagalkot, arising out of judgment and decree passed by the Munsiff Court, Hungund in O.S. No. 22 of 1990. The appellants herein are the legal representatives of the plaintiff. One G.B. Bhandaragal, plaintiff filed a suit for recovery of a sum of Rs. 9,996.2 ps. with costs and interest from the respondents. The material facts leading to the appeal are stated thus.
2. The deceased plaintiff G.B. Bhandaragal was the Chairman of Vyvasaya Seva Sahakara Sangha Niyamitha (in short 'VSSSN'), Ilkal, for the period 1981-1983. It is said that the respondents 3 to 11, who are the Directors of the VSSSN, Ilkal manipulated the records showing the utilisation of funds of the Society by the plaintiffs and got initiated the proceedings under Section 70 of the Co-operative Societies Act and eventually an award came to be passed against the plaintiff in ABN. 13-1-1994 to pay a sum of Rs. 4,928.2 ps. with costs and interest. Ultimately, a sum of Rs. 6,618.2 ps. was paid by the plaintiff. Subsequent thereto in the course of audit, another set of cashbooks came to be traced and it was also found that duplicate cashbooks were manipulated. As per the cashbooks traced, it is found that the plaintiff had not misappropriated any funds and he had properly accounted the payment and valid receipts have been issued. In view of such categorical exculpatory material, the plaintiff filed the suit against the defendants for reimbursement of the amount he paid with costs and interest, holding the defendant personally responsible for the same and not claiming any amount from the Society towards reimbursement. The first defendant is the Assistant Registrar of the Co-operative Society, Bagalkot and the second defendant is the Secretary of the Society. Respondents 3 to 11 are the Directors of the Society. It is alleged that all the defendants together created false records to show misappropriation of funds by the plaintiff and got the arbitration proceedings initiated. The plaintiff has filed the suit holding the defendant responsible in their personal capacity for foisting a false and concocted liability.
3. The Trial Court decreed the suit holding that false accounts have been manipulated by the defendants to fasten the liability on the plaintiff. In that regard, the Trial Court relied on the entries in cashbooks at Exs. P. 6 and P. 7 and also taken note of the fact that in the subsequent Audit, 2 sets of cashbooks were traced. One was original and another was duplicate. According to the Audit report the plaintiff was found to be innocent and has not committed misappropriation of the funds of the Society. Hence, the Trial Court directed payment of amount claimed by the plaintiff with cost and interest.
4. In the appeal, the judgment and decree of the Trial Court is set aside and the suit came to be dismissed on the ground that in view of the provision of Section 70 of the Co-operative Societies Act, suit is not maintainable and that the remedy available to the plaintiff was only to approach for arbitration under Section 70. Being aggrieved by the said judgment and decree, the present appeal is filed.
5. In this appeal, the following questions of law have been formulated for consideration.--
1. Whether the first Appellate Court is right in holding that the suit was not maintainable in view of Section 9 of the CPC and also there was a bar under Section 70 of the Co-operative Societies Act?
2. Whether the first Appellate Court was right in holding that the Trial Court could not have decreed the suit against defendants 2 to 11 in person as the amount recovered was in pursuance of the Co-operative Societies Act as provided under Sections 70 and 108-C, when the suit was against the defendants in person for causing loss to the plaintiff?
6. The salient features of provision of Section 70 debars the jurisdiction of the Civil Court in the matters relating to the constitution, management or the business of the Co-operative Society, arising between,
(a) the members inter se and its past members and also the persons claiming through the deceased members or the past members. The convert of the word 'member' rightly covers the concurrent member, a past member and the legal representatives of a deceased member;
(b) between the member and Society or its Committee or any officer, agent or employee of the Society; the word 'Society' is given an amplified meaning to include the members of the Committee, the officers and the employees of the Society;
(c) between one Society or other Society;
(d) between the Society of its Committee and in past Committee;
(e) between the Society or any other Co-operative Society.
7. It is imperative that disputes have to be arbitrated only under Section 70 of the Act in all the envisaged situations. In the present case, the dispute is between the member of the Society and the members of the Committee of the Society. Therefore, the dispute squarely tails within the ambit of Clause (b) of Section 70(1).
8. The Counsel for the appellant contends that in view of the misappropriation, there is a deemed expulsion of the plaintiff from the membership and as such provision of Section 70 of the Act do not apply. I do not find any merit in the contention. The scope and ambit of the word 'member' under Section 70(1) in different clauses has been defined with an amplified meaning to include concurrent members, past members or any persons claiming through the members or the past members. In the instant case, obviously the plaintiff is a member. There is no provision of law in the Act to suggest deemed expulsion. Even otherwise a past member also comes within the definition of the word 'member'. The dispute regarding misappropriation, evidently is the one touching the business/management of the Society. Therefore, it is appropriate for the plaintiff to vindicate his rights only through the forum under Section 70 of the Act and not by the suit. Even now it is permissible for the plaintiff to raise a dispute under Section 70 and the prosecution of the proceedings before this Court may be shown as a valid excuse for condonation of delay, while seeking arbitration under Section 70.
9. The Counsel for the appellant relied on the unreported ruling of this Court in the case of Smt. Shaila Nabar Nee Kelkar v. K.V. Subhadramma and Ors, R.F.A. no. 253 of 1991 (Kar.).. In the said decision, fraudulent execution of a void sale deed by the Society was challenged by way of a suit. An objection was taken about the maintainability of the suit in the absence of notice under Section 125 of the Co-operative Societies Act. Under the provisions of Section 125, issuance of notice is a condition precedent to file a suit against the Co-operative Society if the subject-matter is in respect of any act touching the constitution, management or the business of the Society.
10. The Supreme Court while interpreting the words 'touching the business of the Society' occurring in Section 91(1) of the Maharashtra Co-operative Societies Act in the case of Deccan Merchants Co-operative Bank Limited v. Dalichand Jugraj Jain and Ors., : [1969]1SCR887 held that the impugned acts, if they do not fall within the purview of the contemplated objects of the Society, such acts cannot be interpreted that it touches the business of the Society.
11. The Counsel for the petitioner submits that the word 'business' occurring under Section 125 is a pari materia with the word 'business' employed in Section 70. Therefore, any illegal act or omission committed by the officer of the Society, if it does not relate to the constitution, management or the business of the Society and if their actions are distinct from the Society, notice under Section 125 is not necessary and so also Section 70 would not apply, would not be a bar for maintaining the suit.
12. After carefully going through the decision cited at the Bar, I find the ratio laid down has no application in the present case. It is alleged that the funds of the Society were misappropriated by the plaintiff in the capacity of Director of the Society. Later on, arbitration proceeding was initiated and amount has been recovered. The facts alleged clearly come within the purview of ambit of the words 'business' or 'management of the Society'. In that view of the matter, point 1 is answered in affirmative.
13. The finding of the Appellate Court that the amounts were recovered from the plaintiff pursuant to an award under Sections 70 and 108-C of the Co-operative Societies Act, therefore individually the defendants 2 to 11 cannot become liable is untenable. It is the specific case of the plaintiff that by deliberate dishonest actions of defendants 2 to 11, the documents have been concocted to fasten false liability on the plaintiff. Based on the concocted documents if it is proved that the award is made against the plaintiff, it is open to the plaintiff to get the award passed against him set aside and individually the defendants 2 to 11 could be held responsible if the allegations made against them are substantiated and restitution of the money paid to the plaintiff by the defendants 2 to 11 could be directed. Accordingly, point 2 is answered in negative.
14. Accordingly, the petition is dismissed.