- (1.) THIS is an appeal by the plaintiff against the judgment and decree dated 22nd February, 1955 of the learned Civil Judge, Jhunjhunu in a suit for recovery of Rs. 5991/11/9.
(2.) THE plaintiff is a Cooperative Society registered under the Jaipur Cooperative Societies Act (No. 26 of 1943, hereinafter called the Act ). Defendant was the Secretary of the Society. THE suit was for recovery of amounts advanced to the defendant on various occasions for the purchase of goods for the Society and for the price of articles given on credit. Defendant denied his liability and raised a number of pleas which are not necessary to be mentioned for the purposes of this appeal. The suit has been dismissed solely on the ground that its cognisance by the civil courts was impliedly barred. The learned Civil Judge did not give findings on the issues framed in the case in view of his above conclusion. The sole question therefore, to be decided in this appeal is whether the present suit was not triable by the civil courts. Learned counsel for the appellant contends chat sec. 54 of the Act has no application to a dispute of the nature involved in the present suit. He further contends that the Act neither expressly nor impliedly bars the jurisdiction of the civil courts to entertain such suits and the provisions of sec. 54 of the Act only amount to an agreement between the parties to refer all disputes of the nature mentioned in this section to arbitration and the respondent could only have moved the court under sec. 34 of the Jaipur Arbitration Act, 1943 (No. 15 of 1943) to stay the proceedings in the suit. It is well settled that every presumption should be made in favour of the jurisdiction of a civil court and the exclusion of jurisdiction is not readily inferred unless such exclusion is explicitly expressed or clearly implied. It is also an established principle that the onus is on the defendant to show that the jurisdiction of the civil courts is barred or that some other court has exclusive jurisdiction to entertain the suit. It remains to be determined in the light of these principles whether the rule of exclusion is applicable to the present suit instituted by the appellant in the court below. Sec. 9 C. P. C. provides that "the courts shall subject to the provisions herein contained have jurisdiction to try all suits of the civil nature excepting suit of which the cognisance is either expressly or impliedly barred. " Respondent does not dispute the position that the cognisance of the suit is not "expressly barred" by any provision of the Act. He however, submits that it is impliedly barred. The term "impliedly barred" means barred by general principles of law or on ground of public policy. There is no dispute either that the suit was instituted at the time when the Act was in force and therefore, would be governed by its provisions. The preamble of the Act is as follows - "whereas it is expedient to provide for the formation of co-operative societies in the Jaipur State for the promotion of thrift, self-help and mutual aid among agriculturists, artisans and other persons with common economic needs so as to bring about better living, better business and better methods of production. It is hereby enacted as follows - Chapter VIII deals with liquidation and arbitration. It is in this Chapter that sec. 54 and other relevant sections occur. Sec. 54 provides - "if any dispute touching the business of a society arises between members or past members of the society or persons claiming through a member or past member or between members or past members or persons so claiming and any officer, agent, or servant of the society or between the society or its committee, and any officer, agent, member or Servant of the society, it shall be referred to the Registrar for decision by himself or his nominee, or if either of the parties so desires, to arbitration of three arbitrators who shall be the Registrar or his nominee and two persons of whom one shall be nominated by each of the parties concerned; A dispute shall include claims by a society for debts or demands due to it from a member or past member or the heirs or assets of a past member whether such debts or demands be admitted or not; Provided that if the question at issue between a society and a claimant, or between different claimants, is one involving complicated questions of law and fact, the Registrar may, if he thinks fit, suspend proceedings in the matter until the question has been tried by a regular suit instituted by one of the parties or by the society. If no such suit is instituted within six months of the Registrars order suspending proceedings the Registrar shall take action as laid down in paragraph 1 of this section. " Sec. 54 A deals with the Registrar's power to set aside the award or to refer it back to arbitration. Sec. 55 contains provisions for conditional attachment of property before award. Sec. 56 contains provisions for appeal against award of arbitrator. Sec. 58 empowers the Registrar to enforce attendance of the witnesses and the production of documents, in the manner provided in Jaipur Code of Civil Procedure. Sec. 57 provides that - "an order passed in appeal under sec. 56 shall be final and conclusive. The award of the arbitrators or a decision by the Registrar or his nominee under sec. 54 or 54a shall not be liable to be called in question in any civil or revenue court. " Sec. 59 provides the procedure for the enforcement of the award. It will thus appear from these provisions that if any dispute such as is referred to in sec. 54 arises between the society and any member or servant of the society it shall be referred to the Registrar for decision by himself or his nominee or if either of the parties so desire to arbitration of three arbitrators who shall be the Registrar or his nominee and two persons of whom one shall he nominated by each of the parties concerned. There is a provision for attachment of the property before award for setting aside and issuing an award for appeal against the award of arbitrator, for holding an enquiry and for the execution of the award. There is a further provision that the award of the arbitrators for a decision by the Registrar or his nominee shall not be called in question in any civil or revenue court and an order passed in appeal under sec. 56 shall be final and conclusive. There is thus a complete machinery provided un|der the Act for the determination of the disputes of the nature referred to in sec. 54 of the Act and these decisions cannot be called in question in a civil court. Reference to the Registrar of the disputes covered by sec. 54 is compulsory. The Act provides a simple and speedy method of resolving the disputes which are often likely to arise in societies and the intention of the law could not have been to leave it at the option of the parties to have recourse to civil courts for settlement of their disputes. Co-operative Societies are to a large extent aggregation of persons of small means. The policy of the Act is of furthering their efforts by freeing their operation from all unnecessary expenses. The provision for arbitration is made with this object so that there may be economical settlement of disputes without recourse to civil courts. If the disputes arising inter se between the society and its members or between the members themselves were allowed to be decided by the civil courts, it would defeat the object of the Act as laid down in its preamble. Procedure in civil litigations is comparatively lengthy, inconvenient and expensive and cannot serve the purpose intended under the Act. In this connection it will be useful to refer to some cases in point. In Dacca Co-operative Industrial Union Ltd. vs. Dacca Co-operative Sankhya Silpa Samity Ltd. , (1) it was observed that: "the intention clearly is that when the Registrar gives directions for 'arbitration' the parties would have no right to have recourse to any alternative proceeding, less to the compera-tively expensive procedure of legislature in the Civil Courts. The use of the word 'award' to mean the adjudication of a special tribunal or a special Judge, in the selection of which the parties or any of them may have had no hand, is not unknown in Indian legislation (e. g. the Land Acquisition Act), and we" think; that the words 'arbitration' and 'award' in Sec. 43 (2), Cl. (1) have been used merely to signify a special tribunal and the order of a special tribunal, as contra-distinguished from a Civil Court and the decree of Civil Court respectively. That special tribunal may conform to the characteristic of an arbitration tribunal strictly so called. The conferment of a right of appeal from the decision of such a tribunal does not involve any inherent inconsistency. If, as we hold, it is within the objects of the Act to set up a special tribunal for the decision of disputes, the power to create such a tribunal in oar opinion includes the power to set up an appellate authority, which would create more confidence and a greater sense of security in the disputants. Cl. (s) of sec. 43 (2) in our judgment is not the only provision giving rule making power to set up a tribunal of appeal. As the Local Government has been given power to create by rules a special tribunal to decide disputes of the nature and between the parties mentioned in sec. 43 (2), Cl.- (l), the jurisdiction of such special tribunal, would in our own opinion be exclusive. Cl. (1) gives that indication, when it says that the Registrar, if he so chooses, may direct that the dispute shall be referred to arbitration. In giving by sub-r 6 of r. 22 a finality to the decision of the special tribunal the Local Government did not in our opinion transgress its powers, but carried out the implications of Cl. (1) as well as of general law. " The Zamindar Bank, Sherpur Kalan Vs. Suba (2) was a case under the Co-operative Societies Act and the rules framed by the Panjab Government were analogous to the provisions of the Act, and it was held that : "by the substitutional remedy provided under r. 18 in the shape of a reference to the Registrar in the matter of a dispute between a member and a society the common law remedy by an action in a Civil Court has by necessary implication been taken away. The object of the Act is to encourage thrift, self help and cooperation among agriculturists, artisans and persons of limited means and it will be impossible to attain these objects if these people for the settlement of their disputes have necessarily to undergo all the troubles and worries of an expensive and protracted litigation. " This case was followed in Dhanpat Vs. Anjuman Dahi Ali Mahar (3) although in that case the award was impugned. In Mohammad Khan Vs. Co-operative Society, Khawaspur (4) learned single Judge though disagreed with the view taken in the Zamindar Bank's case (2) felt himself bound to follow the case. In Gopinath Vs. Ramnath (5) it was held that: "having regard to the very wide form in which sec. 43 and the rules made under it are couched, it should be held that the word 'business' was not intended to be confined to money business. The election of its officer is certainly a part of the business of the society and the intention of the act was that this and any dispute of a similar character should be referred for the decision of the Registrar or the arbitrator appointed by him in accordance with the rules made under sec. 43 and not to the Civil Court. " In Norton Vs. Counties Conservative Permanent Benefit Building Society (6), it was held that: "the rules of a building society provided that disputes between the society and the members should be settled by arbitration; that five arbitrators should be elected by the board of directors; and that in each case of dispute the matters in difference should be decided by three of such arbitrators, to be selected by lot. The High Court had no power to decide such disputes as fell within the rules, and would stay proceedings in an action brought by a member, even though the prescribed number of arbitrators had not been elected at the date of the commencement of the action. " It was further held that: "arbitrators might be appointed by the society after the dispute had arisen, and that, if the society neglected to appoint arbitrators in accordance with their rules, the proper course for the member was to apply for a mandamus to compel them to do so. " In District Co-operative Society Ltd. Mandi Vs. Khem Chand (7) it was held that: "where certain members of a cooperative society sue for a declaration that the proceedings of the annual general meeting and their removal from membership were illegal and mala fide and that they still continued by r. 18 (a) and the suit is not maintainable in Civil Court. " A contrary view was taken in Bengal Nath Co-operative Society Ltd. Vs. Kali Kumar Nath (8), and it was held that: "there is nothing in the Burma Co-operative Societies Act and the rules framed thereunder or for the matter of that in R. 15 to indicate that the jurisdiction of the Civil Court is barred to try a suit by the society for the recovery of a loan advanced to one of its members. R. 15 does not show what is to happen if a dispute is not referred to the Registrar. " But the question whether the jurisdiction of the civil court was impliedly barred or not was not considered in this case. In view of these decisions and the aforesaid considerations viz. , that the object of the Act will be defeated, I am inclined with due respect to agree with the view that the jurisdiction of the civil courts to take cognisance of cases involving disputes as are referred to in sec. 54, is impliedly barred. Learned counsel contends that the provisions of arbitration appear in Chapter VIII of the Act which also contains provisions relating to the winding up of the Co-operative Societies and in sec. 51 it is provided that: "save in so far as is expressly provided in this Act no civil court shall take cognizance of any matter connected with the winding up or dissolution of a society under this Act and when a winding up order has been made no suit or other legal proceeding shall lie or be proceeded with against the society except by leave of the Registrar and subject to such terms as he may impose. " On the basis of this provision learned counsel argues that if the legislature intended to bar the jurisdiction of the civil courts regarding disputes mentioned in sec. 54 it could have done so expressly as it has done in the case of winding up and dissolution matters. He further draws my attention to the proviso under sec. 54 and urges that the jurisdiction of the civil courts is not altogether barred and if there is a complicated question of law and fact involved in such disputes the Registrar himself may suspend the proceedings until the question has been decided by a regular suit. Merely because the provisions relating to liquidation and arbitration appear in one chapter the provisions relating arbitration cannot be interpreted in the manner suggested by the learned counsel. In other States rules for the settlement of disputes had been framed under sec. 43 (2) (i) of Act No. 11 of 1912 while the provisions for dissolution and winding up were contained in sec. 39-42 of the Act itself and sec. 42 (6) was in terms similar to sec. 51 of the Act. We have therefore, to interpret the provisions relating to arbitration! independently of the provisions dealing with the question of liquidation. Under the proviso to sec. 54 the Registrar is not bound to suspend the proceedings. The matter is entirely left at his discretion. At any rate the civil courts have jurisdiction to determine such disputes only in the circumstances mentioned in the proviso and not otherwise. To my mind the proviso under sec. 54 and the provisions of sec. 51 do not lead to this inference that the jurisdiction of the civil courts to try such disputes is not barred. I have not the slightest doubt that the dispute involved in the present suit is of the nature mentioned in sec. 54 of the Act and is concerning the business of the society. Coming to the next question it is necessary to advert to the provisions of sec. 46 of the Jaipur Arbitration Act. This section runs as follows: - "the provisions off this Act except sub-sec. (1) of Sec. 6 and Sec. 7, 12 and 37, shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, expect in so far as this Act is inconsistent with that other enactment or with any rules made thereunder. " This section extends with certain exceptions the provisions of Jaipur Arbitration Act to what may be called statutory arbitrations unless the rules regulating the latter are inconsistent with those of the Jaipur Arbitration Act. Sec. 34 runs as under: - "where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending so stay the proceedings, and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings. " This section applies only in those cases where the civil court has jurisdiction to decide the case. If the jurisdiction of the civil court itself is barred Sec. 34 has no application. Sec. 34 provides an | excepting to the general law relating to the procedure. It empowers the court which has jurisdiction to decide the dispute, to refuse to do so in cases where there is an arbitration agreement between the parties. But in order that this provision may apply it is necessary that the court should have jurisdiction to entertain the suit. Apart from that and assuming that Sec. 46 of the Jaipur Arbitration Act is applicable the provision of the Act itself are inconsistent with Sec. 34. Sec. 54 is in mandatory terms and the dispute has to be referred to the Registrar for decision. While Sec. 34 of the Jaipur Arbitration Act invests a civil court, with a discretion either to stay proceedings or to continue with the suit. In that view of the matter also Sec. 34 has no application. See, South Indian Co-operative Insurance Society Ltd. , Madras Vs. Bapi Raju (a ).
(3.) ONE more contention was raised by the learned counsel and that was that as the defendant submitted to the jurisdiction of the court and did not take any objection for staying the proceedings in the civil court, it had jurisdiction to determine the suit. There is no substance in this contention. As observed already the jurisdiction of the civil court was barred and submission by the defendant to the jurisdiction of that court would not vest it with such jurisdiction. The result therefore, is that this appeal fails and is dismissed with costs. .;