Dispute Resolution Under Madhya Pradesh Co-operative Societies Act, 1960

Q.1. Which are the important Rules under the enactment?

Ans.It has been provided under s.98 of Act of 1960 that the State government would make relevant & important rules from time to time, primarily which are as follows:

  • M.P. Co-operative Societies Rules, 1962
  • M.P. Co-operative Societies Tribunal Regulations, 2000
  • M.P. Fishermen's Co-operative Federations (Financial Assistance) Rules, 1969
  • M.P. Fishermen's Co-operative Societies (Loans and Subsidies) Rules, 1972
  • M.P. Co-operative Societies (Loans and Subsidies for Irrigation Purposes) Rules, 1961.

For the purposes of this article, the primary focus would be ss.55 & 64 which provide as a code for dispute resolution under the Act of 1960.

Q.2. What are the disputes which fall under 'business of society'?

Ans. It has been specifically provided under s.64 of the Act of 1960 that any dispute which pertains to business of society would be adjudicated upon by the Registrar, or other authorities. So, the primary issue which requires detailed attention is that what encompasses in the term, business of society.

The scope of this term varies from case to case, depending upon facts, and accordingly, it is important to determine the primarily objective of formation of society & its primary business. The said expression has to be narrowly construed and it means actual trading or similar business activity of the society which it is authorized to undertake in terms of the Act, Rules and bye-laws.

Contract: It has been provided u/s.64 of Act of 1960 disputes pertaining to transactions of the Society would fall within its domain. Question thus arises when there is a singular contract of a non-member with the society, whether the dispute therein would fall within the ambit of Act of 1960? In the case which involved contract for sale of marribulam (harra), wherein in spite of non-performance of the contract the society did not refund the earnest money deposited by the non-member, wherein the latter filed a suit for refund of the same. It was held that since one contract can have multiple transactions, therefore the said dispute fell within the domain of Act of 1960.

Similarly the suit filed seeking damages against the cooperative society when a non-member was required to rescind the contract due to actions of the society, then also it was held that since the dispute touches upon the 'business of society', therefore due to bar contained u/s.82 of the Act of 1960, the dispute could only be adjudicated by the Registrar u/s.64 of the said enactment.

Property dispute: In a case where the primary purpose of the society was purchase of land and sell the land after plotting. As the society sold the same plot of land to two persons, the dispute arose between them as regards ownership, and accordingly, a civil suit was filed. A preliminary objection was raised regarding maintainability of the dispute in as much as the business of society was purchase & sale of land, accordingly, the dispute fell in the domain of s.64 of Act of1960. It was held by the Court that in the instant case as the business of society culminated with the execution of sale-deed, therefore the dispute between two purchasers would not fall within the domain of s.64, and accordingly civil suit was maintainable.

This would further become clear from the proposition that any proceeding which is in continuation of the dispute which fell under the ambit of s.64 would continue to remain within the said ambit, however, when the dispute had been culminated in the proceedings, then any further action would not fall within the said ambit. For example, execution of the decree would fall within the four corners of dispute, however, execution of sale deed in pursuance of the decision would not. This case was with respect to interpretation of the notification which exempted court fees in matters falling under the ambit of s.64 of Act of 1960.

Q.3. Generally, elections are deeply contested matters. Where does election disputes get adjudicated?

Ans. High Court would not interfere in the election dispute with respect to the co-operative society unless there it is shown that the election process is so vitiated that it cannot be held that the election was according to due process of law. However, High Court would interfere in the dispute when there is a dispute with respect to jurisdiction of the authorities itself.

Accordingly, when there is a dispute regarding the voter list prepared by the Election Officer or about the election programme or election of representatives or similar matters, considering the language incorporated in s.64 of the enactment, i.e., "any matters touching upon..", it was held that all such disputes could have been raised before the Registrar under the statutory provision.

Disqualifications: It has been further held that the disqualification which has been provided under the statute with respect to the elections is that attached to the person in his individual capacity and not as representative of the society. Accordingly, when the representative of the defaulting society was debarred from standing from elections of the Central Society, and that too without affording any opportunity of hearing, than the said decision was held as illegal. It was further held that the proper remedy for the Central Society was to file dispute before the Registrar u/s.64 of the Act of 1960.

Reservations: When the challenge was made after the elections as regards the policy of reservation as well as manner thereof, then such disputes also fall within the domain of s.64 of Act of 1960. In the instant case the dispute was with respect to the manner in which reservation had been implemented in the concerned society, which would have required adducing of evidence.

Writ petition: However, when there are undisputed question of fact which are presented before the Court during the writ proceedings under Article 226 of Constitution of India, then determination thereof is not debarred. Accordingly, when the dispute was whether an employee who had been a convict under the Indian Penal Code would be permitted to stand for election & become member of the Board was involved, then merely because neither objection was taken at the time of filing of nomination papers nor dispute was raised u/s.64, it was held that such person could not contest the elections in view of bar contained u/s.17AA of Act of 1960.

Similarly, when the nomination paper is rejected by the authority concerned, and the election programme is said to have commenced wherein u/s.64(2) of Act of 1960, the Registrar is debarred from entertaining the dispute, then writ petition cannot be dismissed on ground of alternate remedy alone.

Similarly when the election process was brought to halt on the premises of certain orders passed by higher authorities, then same was directly challenged before the Hon'ble High Court, and it was decided that since it is settled law that once the election process is commenced, the same cannot be brought to halt for any ulterior reasons. Accordingly, the writ petition was allowed by the Court.

Q.4. What about the recovery of dues which the society has to make from its members?

Ans. Civil Courts:

However, it has been further provided that such award of the Registrar for purposes of recovery of dues is not directly maintainable before the Civil Court for purposes of execution. Towards this, the matter is required to be transferred from the Registrar, wherein the award would be treated as decree, and would accordingly be executed.

A question further arose when the co-operative society takes over the possession of the property which was given as security for purposes of recovery of loan, and thereafter sells the same for auction, then whether the suit for declaration of title would be maintainable? It was held that such a suit would be maintainable only after decision is given by the Registrar under the Act of 1960 finally deciding the dispute with respect to amount of debt, and whether it has been repaid or not. Further held that as the decision of charge over the land necessarily falls within the domain of business of society, it would be the jurisdiction under Act of 1960.

Recovery certificates:

When certain amount of money is due towards the societies, be it may from the members or others, then the same can be recovered according to the provisions contained in s.64 read with s.84-A & 85 of the Act of 1960. It has been provided under the latter provision that the amount may be recovered in the same manner as decree of the Civil Court or with due process of law or by the Registrar through mechanism of attachment of property & sale or sale without any such attachment. Accordingly, when the party from which the amount is due fails to remit the amount within the prescribed period, then the options are available with the societies. Thus, when the choice is made for recovery of the amount as decree of the Court, then the execution would take place as if it were a decree of the Court, and the remedy would not lie u/s.64 of the enactment.

Q.5. Where does the employee related disputes get decided under the Act of 1960?

Ans. Specific provisions have been framed u/s.55 for dealing with service disputes of the employees, accordingly, disputes cannot be raised u/s.64 to agitate the service matters of the employees. There are issues which may strictly pertain to the service matter falling u/s.55 & other disputes for which dispute may be raised u/s.64 of the Act of 1960. In the matter regarding the termination of service without holding disciplinary enquiry on the issue of non-collection of surcharge by the salesman, than it was held that correctness of collection of surcharge could have been raised as a dispute independent of termination of service u/s.55 under Act of 1960. Further, when the employee was not found guilty of non-collection of surcharge, then subsequent action of termination of services automatically stood negated.

In the matter involving less payment of salary as well as seniority, it was held that the dispute fell within four corners of s.55, and accordingly, the period of limitation has to be computed accordingly.

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