Judgment:
R.C. Patnaik, J.
1. The simple question that has cropped up its head in this case for answer is if the members of a society, registered under the Societies Registration Act, 1860 (Central Act 21 of 1860):are individually liable and can be sued for liability of the society.
2. Messrs Cuttack Motor, Association was a society registered under the Societies Registration Act, 1860, for short 'the Act', with effect from 8-1-1972. This aspect re not in dispute in view of the statement contained in the order passed by, the Regional Provident Fund Commissioner- opp. party No. 3. Petitioner No. 1 was member of the society and its Assistant Secretary at the relevant time. Petitioner No. 2 was a member. Opp. party No. 3 raised a demand Under Section 7-A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, in the sum of Rs. 2,74,425,40 and passed an order against the society. The requisition was sent to the Certificate Officer-opp. party No. ! for initiation of a proceeding under the provisions of the Orissa Public Demands Recovery Act. The petitioners were proceded against in Certificate Case No, 35 (RF) of 1981. They denied their liability in their objection' tiled Under Section 8. They specifically pleaded that it was the society against whom an order had been passed but there was no order against them. They called upon the certificate-holder to produce the order of assessment and the records of the proceeding. They also pleaded violation of principles of natural justice. On behalf of the certificate-holder, it was contended that the certificate Court was an executing Court and it could not go behind the order of the certificate-holder. If the cetifcate-debtors were aggrieved by the order, remedies are provided under the Central Act for redressal of their grievances. The question relating to the legality or correctness of the order could not be raised. The certificate officer accepted the stand of the certificate-holder, vide Annexure-2 in appeal, it was urged on behalf of the certificate-holder that the Cuttack Motor , Association was a firm. Hence, the certificate-debtors who are partners were individually liable. The contention found favour with the appellate authority who by his judgment in Certificate Appeal No. 14 of 1984 , nagatived the contentions urged by the certificate-debtors, vide Annexure-3
3. Counsel for the petitioners have urged in this Court-that Messrs Cuttack Motor Association was a society registered under the Societies Registration Act, as stated above, and was not a firm. Though the certificate-holder was challenged before the' appellate authority to produce materials to establish the contention that the association was a firm, no material in support of the contention was produced. Nevertheless the appellate authority accepted the contention. It has also been argued by the counsel for the petitioner that both the forum; below have not approached the matter from the correct legal perspective. The question was if the petitioners who were members of the society registered under the Societies Registration Act were individually liable and could be sued for the liability of the society. The question goes to the root of the jurisdiction of the certificate-holder in submitting a requisition against them and the jurisdiction of the certificate Court to proceed against them,
4. Despite notice, there was no appearance for the certificate- holder. Section 6 of the Societies Registration Act provides that a society can sue or be sued in the name of the president, chairman, or principal, secretary, or trustees, as shall be determined by the rules and regulations of the society, and, in default of such determination, in the name of such person as shall be appointed by the governing body for the occasion. The proviso enables a person having a claim or demand against the society, to sue the president or chairman, or principal, secretary or the trustees thereof, if on application to the governing body some other officer or person is not nominated to be the defendant. The question came up for consideration before some of the High Courts. Analysing Section 6, the Patna High Court held that once a society is registered under the Act, the society enjoys the status of a legal entity apart from its members constituting the same and is capable of suing or being sued. A society registered under the Act may not be a body corporate, quite distinct from its members, yet it has got a separate existence for many purposes. It has its own identity, personality or entity which, for all purposes is not identical with that of the members constituting it. (See K. C. Thomas v. R. L. Gadeock, AIR 1970 Pat. 163).
5. A question arose in Swami Satchitanand v. The 2nd Addl. Income Tax Officer, AIR 1964 Ker. 118, if the tax imposed under the Income Tax Act on a society is a tax imposed on the members constituting it. In was observed that in the absence of any specific provision to that effect, it was not possible to fasten personal liability on the members constituting the society when the society had not discontinued its business and there had been no dissolution etc. In Ganga Sahai v. Bharat Bhan and others, AIR 1950 All. 480, a Division Bench observed :
'.........any person having a claim against it (society) must look to its property and not that of its members for satisfaction of his dues.'
6. Looking for any specific provision in the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, we came across Section 2(e) defining the expression 'employers' inter alia as meaning in relation to any other establishment other than a factory, the person who or the authority which, has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager, managing director or managing agent. Under Section 7-A the employer's liability is determined and Section 8 has made provision for recovery of money due from the employer, as recovery of money due as arrear or land revenue.
Hence, it is clear that an employer is liable under the provisions of the Act and proceeding could be initiated against him for realisation of money due. When the petitioner disputed their liability, it was obligatory on the certificate officer to determine the questions raised. Question of jurisdiction could be raised before the executive Court and, therefore, those could be raised before the certificate officer. Where the dispute raised went to the root of the jurisdiction, it is all the more important and imperative that the certificate officer determined the said question, but it did not. The appellate authority wholly went off the track by accepting the contention of the counsel for the certificate-holder that members of the registered society were like partners in a firm.
7. We have, therefore, no hesitation to quash the decisions of the certificate officer and the appellate authority as per Annexures-2 and 3. In the result, the writ application is allowed. There would be no order as to cost.
V. Gopalaswamy, J.
8. I agree.