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Om Vir Singh v. Secretary/General Manager Ghaziabad Z.S.Bank Ltd.& Anors. - WRIT - A No. 15009 of 2001 [2001] RD-AH 1 (1 January 2001)


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Civil Misc. Writ Petition No. 15009 of 2001

Om Vir Singh … … Petitioner


Secretary/General Manager

Ghaziabad Zila Sahkari Bank Ltd. and others …  Respondents

Hon'ble Yatindra Singh, J.

1. This writ petition deals with scope and interpretation of section 70 (arbitration proceeding) of the U.P. Co-operative Societies Act, 1965 (the 1965 Act). Are disputes relating to service between a co-operative society and its employees within jurisdiction of section 70 of the Act? Or should such disputes be raised before labour or Civil Courts?

The Facts

2. The petitioner is a Guard (class IV employee) of Ghaziabad Zila Sahkari Bank Ltd., Ghaziabad (the Bank), a co-operative society registered under the Act.  The Secretary of the Bank passed an order on 10.2.2001 retiring the petitioner on 30th June 2001 as he is attaining 60 years of age in the month of June 2001. The petitioner filed a representation against the same, claiming that: his date of birth is 6.6.1944 and not 6.6.1941; he is not attaining 60 years of age in June 2001 but in June 2004. This representation was rejected by the Bank on 23/24-3-2001 maintaining the earlier order. Hence the present writ petition challenging these orders.

Preliminary Objection

3. I have heard counsel for the parties.1 The respondents have raised a preliminary objection that the writ petition should be dismissed on the ground of alternative remedy. They submit that:

The writ petition involves disputed questions of fact regarding correction of date of birth and this factual controversy can not be gone into in the writ jurisdiction;

The petitioner has an alternative remedy of raising this dispute under section 70 or 128 of the 1965 Act or before the Civil Court or the labour courts.

4. Section 70 is in Chapter IX of the 1965 Act. It is headed as SETTLEMENT OF DISPUTES. Some disputes can be referred to arbitration under section 70 of the 1965 Act; it is headed as 'Dispute, which may be referred to arbitration'. The question is if the dispute regarding correction of date of birth or dispute relating to service matters can be referred to arbitrator under section 70 of the 1965 Act? The petitioner submits that the dispute relating to date of birth of the petitioner is not envisaged under section 70 of the 1965 Act and can not be referred to an arbitrator. This is opposed by the respondents.  They have also cited following decisions in support of his submission.

(i)Deccan Merchants Co-operative Bank Ltd. vs. M/s Dalichand Jugraj jain , AIR 1969 SC 1320(Deccan Merchants case);

(ii)Co-operative Central Bank Ltd. vs. Additional Industrial Tribunal Andhra Pradesh: 1970 SCR 205 (Co-operative Central bank case);

(iii)UP Co-operative Cane Union Federation Ltd. vs. Liladhar , 1980 AllLJ 1073 SC (Liladhar case);

(iv)The Allahabad District co-operative Ltd. vs. Hanuman Dutt Tewari, 1982 UPLBEC 98 SC (Hanumand Dutt Tewari case);

(v)MF Farooqui vs. UP Industrial Co-operative Association Ltd., 1982 UPLBEC 256.

(vi)Ram Sahan Rai vs Sachiv/Samaj Prabandhak  2001(2) AWC 927 (Ram Sahan Rai case).

(vii)Agra District Co-operative Bank Ltd. vs. Prescribed Authority Labour Court, JT 2001(4) SC 382(Agra District Co-operative Bank Case).

(viii)RC Tiwari vs. MP State co-operative Marketing Federation Ltd. 1997 (5) SCC 12 SCR (Tiwari case).

Historical Background, Relevant Provisions And The Cases

5. The co-operative movement started in the 19th Century. It did not suffer from legal disabilities in the way the trade unions did. Co-operative Societies (unlike trade unions) were never banned but were not recognised for long period as a legal body.  There was no special provision to protect them against fraudulent or negligent officials or to enable them to carry on trade by entering into contracts or to sue or to be sued as collective bodies, or to enjoy any reasonable security for their funds.  It was not till middle of 19th century that provisions were made in England for meeting the needs of the Producers' and Consumers' Co-operation.

6. In India a committee was appointed in 1901 to study the question of introducing the co-operative societies. It was in pursuance of the recommendations of this committee that the Co-operative Credit Societies Act was passed in 1904(the 1904 Act), being the first of its own kind. Its objects and reasons explain its introduction,

'Legislation is called for not only in order to lay down the fundamental conditions which must be observed but also with a view to giving Co-operative Societies a corporate existence without resort to the elaborate provisions of the Companies Act; but it is thought that legislation should be confined within the narrowest possible limits.  The bill has, therefore, been drawn so as to deal only with those points which the Government considers to be essential, and its provisions have been expressed in simple and general terms, a wide rule-making power being reserved to Local (State) Governments, so that what is left to be of the nature of an experiment may be tried in each Province (State) or part of Province (State) on such lines as seem to afford most promise of success.'

7. The 1904 Act applied to Credit Co-operative Societies only.  Soon it was reaslised that this benefit be allowed all co-operative societies. In order to grant this benefit the Co-operative Societies Act 1912 (The 1912 Act) was passed.  Its objects and reasons explain the same:

' The Co-operative Credit Societies act, 1904 (Act X of 1904), applied to societies for the purpose of Co-operative Credit only and not to Co-operative Societies of other kinds, such as those established for production or distribution.  It has in practice been found that the establishment of Credit Societies has led to the founding of other classes of Co-operative Societies also, and it is advisable that the privileges extended by the Act to Co-operative Credit Societies should be extended to those other societies. It is proposed therefore that the Act as now revised should be made applicable to all classes of Co-operative Societies.

A Cardinal principle which is observed in the organisation of co-operative societies in Europe is the grouping of such societies into unions and their financing by means of Central Banks. This stage of co-operation had not been fully realised or provided for in the Act of 1904 but such grouping of societies has already been found possible in most provinces (States), and it is now considered desirable to legalise the formation of co-operative credit societies of which the members shall be other co-operative credit societies.'

8. The Lahore high Court2 and Allahabad High Court3 have held that policy of the 1912 Act was to save person from protracted, expensive and sometime ruinous litigation in Civil Courts. Section 43 of the 1912 Act permitted provincial Government to frame Rules.  Section 43(2)(l)4 provided for framing of rules relating to any dispute touching business of a co-operative society.  The State Government framed The UP Co-operative Societies Rules, 1936 (The old Rules).  Chapter XIV of these rules is headed as arbitration. Rule 1155 provided that any dispute relating to business of a registered society will be decided either by Registrar or by an arbitrator.

Liladhar Case

9. Section 43(2)(l) of the 1912 Act and rule 115 of the Old Rules provided that dispute relating to business of the society only may be referred to arbitration.  The Supreme Court interpreted these provisions of the 1912 Act in Liladhar Case6.

10. The petitioner, in Liladhar case was a godown keeper.  His services were terminated on disciplinary grounds in 1964 when the Old Act was applicable.  He filed a suit for declaration that his dismissal was bad.  The question was whether this dispute could be referred to arbitrator under the 1912 Act or not.  The Supreme Court (paragraph 12 of the report) held that:

the petitioner was not an officer of the Co-operative society

the dispute relating to termination of service does not relate to the business of the society it could not be referred to arbitration (paragraph 17 of the report).  

Dispute Between A Co-operative Society

11. The 1912 Act was replaced by the 1965 Act.   Disputes can be referred to an arbitrator under section 70 of the 1965 Act7. There are few changes in the Act.  Earlier dispute relating to business only could be referred. This included election of office bearers of a co-operative society in view of explanation 3 to the rules 115 of the old Rules. Now under section 70 of the Act all dispute regarding election, management or business of society (other than dispute regarding disciplinary action taken against servant of a society) can be referred to arbitration. Rule 134 of the Old Rules8 and now section 111 of the 1965 Act9 bars the jurisdiction of the Civil Courts.

The Deccan Merchant Case

12. The Deccan Merchant case10 is a leading case. All other cases refer to it. There was a flat, which was let out to the petitioner by the original owner who was also the Chairman of a Bank, a co-operative Society. The flat was mortgaged with the Bank.  Subsequently the original owner could not redeem the mortgage and the flat was transferred to the Bank.  The Bank addressed a letter to the petitioner to handover the possession on the ground that he was an unauthorised occupant.  On his failing to do so, this question was referred to an arbitrator under section 91 of the Maharastra Co-operative Societies Act, 1960 (the Maharastra Act).  The question in this case was whether this dispute between the petitioner (a tenant) and the Bank (a landlord after transfer) could be termed as a dispute touching business of the co-operative society.  The Supreme Court (paragraphs 23 and 25 of the report) held:

'It seems to us very doubtful that the word "dispute" would include a dispute between a landlord society and a tenant when the landlord society has not been set up for the purpose of constructing or buying and letting out houses.  In the presence of various rent Acts which give special privileges to tenants it would be difficult to say that such disputes were intended to be referred to the Registrar.  Of course, this result may also follow from the interpretation of the Rent Act and the Co-operative Societies Act by applying other principles of construction.

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 [Maharashtra] Act, it is not a dispute between a society and a member or a person claiming through a member.  

13. The supreme Court while interpreting section 91 of the Maharasthra Act stated (paragraph 17 of the report) that five kind of disputes are mentioned in section 91 and went on to say.

'…fourthly, disputes touching the management of a society; and fifthly, disputes touching the business of a society.  It is clear that the word "business" in this context does not mean affairs of a society because election of office-bearers, conduct of general meetings and management of a society would be treated as affairs of a society.  In this sub-section the word 'business' has been used in a narrower sense and it means the actual trading or commercial or other similar business activity of the society which the society is authorised to enter into under the Act and the Rules and its bye-laws.'

14. The Supreme Court in Deccan Merchant case held that word 'business' is used in narrower sense. This interpretation is confined to the word 'business'.  Neither the word 'management' was subject matter of interpretation nor it was a case of service dispute.

The Co-operative Central Bank Case

15. In the co-operative Central Bank case11 a dispute between 25 Co-operative Banks and their workmen regarding service conditions was referred to an Industrial Tribunal. The award of the Tribunal was challenged on the ground that Industrial Tribunal had no jurisdiction to adjudicate on the industrial dispute as this dispute could be referred to arbitration under section 61 of the Andhra Pradesh Co-operative Socieities Act (the Andhra Act).  The court referred to Deccan Merchant case and held that it is neither the business of the society nor this dispute to change the service conditions could be gone into as the Registrar could decide only in accordance with the bye laws.  In the words of the court,

'It is true that section 61 by itself does not contain any clear indication that the Registrar cannot entertain a dispute relating to alteration of conditions of service of the employees if a registered society; but the meaning given to the expression "touching the business of the society", in our opinion, makes it very doubtful whether a dispute in respect of alteration of conditions of service can be held to be covered by this expression.  Since the word 'business' is equated with the actual trading or commercial or other similar business activity of the society, and since it has been held that it would be difficult to subscribe to the proportion that whatever the society does or it necessarily required to do for the purpose of carrying out its objects, such as laying down the conditions of service of its employees, can be said to be a part of its business, it would appear that a dispute relating to conditions of service of the workmen employed by the society cannot be held to be a dispute touching the business of the society. Further, the position is clarified by the provisions of sub section (4) of section 62 of the Act which limit the power to be exercised by the Registrar, when dealing with a dispute referred to him under section 61, by a mandate that he shall decide the dispute in accordance with the provisions of the Act and the Rules and bye-laws.  On the face of it, the provisions of the Act, the rules and the bye-laws could not possibly permit the Registrar to change conditions of service of the workmen employed by the society.'

Hanumant Dutt Tewari Case

16. In Hanumant Dutt Tewari case12 only one question was raised. This is how Supreme Court put it.

'The only question raised in this appeal is whether the suit filed by the respondent for a declaration that the retrenchment of his services by the appellant Allahabad District Co-operative Ltd. Allahabad, a co-operative society constituted under the Uttar Pradesh Co-operative Societies Act is illegal, and barred by the provisions of Section 70 of the Act.  According to Mr. Pramod Swarup, learned counsel for the appellant, the dispute relates to the business of the co-operative society and, therefore, the suit is barred by the provisions of Section 70.'

This was repelled on the basis of Deccan Merchant Case holding that it is not business of the society.

MF Farooqui Case

17. MF Farooqui case13 is a Division Bench decision of our court.  Here plaintiff filed a suit challenging termination of his employment. It was dismissed as barred by section 70 of the Act. The division bench repelled it holding that (paragraph 11 of the report):

'As held by the aforesaid Supreme Court decisions, the dispute regarding the validity of the termination of an employees' service is not a dispute relating to the business of a co-operative society.  Hence such a dispute is not covered by section 70 of the Act and cannot be referred to arbitration as provided thereunder.  In this view, section 111 of the Act is also not attracted so as to bar the jurisdiction of the Civil Court.  The suit was, in our opinion maintainable.'

Ram Sahan Rai Case

18. Plaintiff-appellant filed a suit for declaration that his removal was bad.  This was dismissed by the high Court on the ground that suit for specific performance of contract of personal service can not be enforced.  The Supreme Court held that as its employer were state, the suit was maintainable.  The bar of section 70 of 1965 Act was neither raised nor was decided in this case.  it is not relevant for deciding the controversy in issue.

Agra District Co-operative Bank Case

19. In this case the appointment of petitioners-respondent was cancelled by the Bank.  This was challenged before the labour court. The labour court dismissed the dispute but on remand by the High Court allowed the same in favour of the petitioner-respondents. Among the three objections an objection was taken before the Supreme Court that jurisdiction of the labour court was barred by section 70 of the 1965 Act.  The Supreme Court did not go into this question that High Court did not earlier round had remanded the matter for decision on merit.  And in view of co-operative Central Bank case labour court has jurisdiction in some cases.  This case is also not relevant for deciding the controversy.

RC Tiwari Case

20. The respondents also brought to my notice a Supreme Court decision in RC Tiwari case14. The Supreme Court in this case was considering if termination of an employee of a co-operative society can be gone into by the Labour Court or not under similar law in the State of Madhya Pradesh (the MP Act). The Deputy Registrar had dismissed the dispute raised by an employee regarding termination of his service. He had successfully challenged it before the Labour Court.  The Supreme Court held:

'As regards power under Section 64 [of the MP Act],, the language is very wide, viz., "Notwithstanding anything contained in any other law for the time being in force any dispute touching the constitution management or business of a society or the liquidation of a society shall be referred to the Registry by any of the parties of the dispute."  Therefore, the dispute relating to the management or business of the society is very comprehensive as repeatedly  held by this Court.  As a consequence, special procedure has been provided under this Act. Necessarily, reference under section 10 of the Societies Act15 stands excluded.  The judgement of this Court arising under Andhra Pradesh Act has no application to the facts for the reason that under that Act the dispute did not cover the dismissal of the servants of the society for which the Act therein was amended.

Admittedly, there is a finding recorded by the Deputy Registrar upholding the misconduct of the petitioner.  That constitutes res judicata.  No doubt, Section 11 CPC does not in terms apply because it is not a court, but a tribunal, constituted under the Societies Act is given special jurisdiction.  So the principle laid down thereunder mutatis mutandis squarely applies to the procedure provided under the Act. it operates as res judicata. Thus, we find that the High Court is well justified in holding that the Labour Court has no jurisdiction to decide the dispute once over and the reference itself is bad in law.'

The Legislative Changes

21. If we compare the Old Act and the present Act under which this case has arisen we find that there are two changes.

The earlier provisions {Section 43(1) (l) and rule 115} never included word 'management'.  It has been now included.

It specifically excludes few disputes by using words 'other than a dispute regarding disciplinary action taken against a paid servant of a society'.

Is a dispute regarding correction of date of birth (service matter between a society and its employee), a dispute relating to management?   What is the purpose of excluding dispute regarding disciplinary action taken a paid servant if such dispute was not included in the first place in section 70 of the Act?

Meaning Of 'Other Than'

22. Strouds Judicial dictionary Fifth edition 3rd volume and  'Words and Phrases permanent edition' Volume 30-A page 226 says that words 'other than' creates exception16. Sri Jagdish Swarup (quoting Chawford: Statutory Construction, p. 128) in his book Legislation and Interpretation says,

'While there is considerable similarity between an exception and a proviso--each restrains the enacting clause and operates to except something which would otherwise fall within the general terms of the statute--there is a technical distinction between them, although even that is frequently ignored and the two terms are used synonymously.  The exception however operates to affirm the operation of the statute to all cases not excepted and excludes all other exceptions, that is, it exempts something which would otherwise fall within the general words of the statute.  A proviso, on the other hand, is a clause added to an enactment for the purpose of acting as restraint upon or as a qualification of the generality of the language which it follows.  Sometimes, however, as a precautionary measure it is used to explain the general words of the Act and to exclude some ground of misinterpretation which would extend it to cases not intended to be brought within its operation or purview.'

There may be technical difference between an exception and a proviso but both exempt or take out a clause that was within the main clause.  


23. Lord Halsbury in Quinn vs. Leatham 1901 AC 495 said,

'A case is only an authority for what it actually decides.  I entirely deny that it can be quoted for a proposition that may seem to follow logically from it such a mode of reasoning assumes that the law is necessarily a logical code whereas every lawyer must acknowledge that law is not always logical at all'.  

And our Supreme Court in Debu Mehto vs. The State of West Bengal{AIR 1974 SC 818 (B)}also opined,.

'The general observation in some earlier case should be confined to the fact of that case.  Any general observation can not apply in interpreting the provision of the act unless this court has applied its mind to and analysed the provision of the particular act'.

The Respondents' Submissions

24. The respondents submit that:

A dispute regarding disciplinary action against paid servant of society is an exception to the disputes that can be referred under section 70.

If the disputes regarding service matters were not included in section 70 then why was it necessary to exclude it.

In case petitioners' submissions is accepted then not only words 'other than a dispute regarding disciplinary action taken against a paid servant of a society' but also the word 'management' in section 70 of the Act will become redundant.

The fact that these words were added shows intention of legislature was to include the entire dispute between the employee and the co-operative society within the ambit of section 70.  

Liladhar case was on different provisions that included the words business only.

The other cases cited by the petitioners are authorities for the proposition that such dispute is not included in the disputes relating to business of the co-operative society but are not authority for proposition that these disputes are not included in dispute relating to management of the co-operative societies.

This dispute is included section 70 as is clear from RC Tiwari case.

25. The respondents further submit that:

The 1965 Act is a special Act.

It caters to need of co-operative movement in the State.  The authorities have specialised knowledge and difficulty faced in that regard.

There seems to be no reason for excluding this jurisdiction from their purview.

The present dispute is a dispute relating to the management of the society.  And parties can raise dispute under this section.

26. There is force in submissions raised by the respondents.  However, it is not necessary to examine it any further or to confine the cases cited by the petitioner to the interpretation of the words 'business of the society'. In this case there is an order of officer of the Bank.  Section 128 of the 1965 Act 17 permits the registrar to annual resolution or order passed by a co-operative society.  The dispute here can be gone into by him. His powers under section 128 are delegated to the Deputy registrar of the region. This question can be decided by him.  There is an alternative remedy.

A Suggestion

27. Numerous writ petitions are filed in this court alleging that the petitioners are employees of a co-operative societies but the co-operative societies are not paying their salary. Sometimes the allegations are that the co-operative societies are not permitting them to work.  And as there is no order no representation can be filed under section 128 of the Act. A dispute between a co-operative Society and its member can be referred to arbitration under section 70.  There is some doubt as to whether such dispute can be referred to arbitration or not though it is desirable that it may be gone into under section 70 of the Act.  This Act is a special Act and caters to the need of co-operatives.  The authorities here are better equipped to deal with these disputes than civil courts or labour courts. I have left this question open to be decided in an appropriate case. The answer could be either way.  This may also be time consuming and unnecessary if the legislature chooses to clarify thelaw.  This may save time.


28. My conclusions are as follows:

(a)The petitioner can raise his dispute under section 128 of the 1965 Act.  In case such a dispute is raised it may be decided at an early date.

(b)There is force in submissions raised by respondents that this dispute can be referred to arbitration under section 70 of the 1965 Act. But this may await a suitable case where there is no resolution or order of officer of the co-operative society; Or the legislature may itself clarify the law.

With these observations writ petitions is disposed of.




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