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(Shri) M.G Patel & Co. v. (Shri) Alka Co-Operative Housing Society Ltd. .
Factual and Procedural Background
This opinion addresses the propriety of a suit filed by M.G Patel & Co. against a co-operative society concerning a claim for unpaid consideration related to the society's purchase of land. The society's business, as per its Certificate of Registration, includes activities such as constructing buildings, purchasing, selling, and developing lands to benefit its members. The plaintiff's claim arose from a dispute over payment for land purchased by the society. The procedural context involves the plaintiff's failure to comply with the mandatory notice requirement under section 167 of the Gujarat Co-operative Societies Act before instituting the suit. The suit was challenged on the grounds of non-compliance with this statutory notice and on limitation grounds. The matter proceeded through initial proceedings before the Registrar and subsequent civil litigation, including a first appeal.
Legal Issues Presented
- Whether the claim for unpaid consideration in the suit "touches the business of the society" within the meaning of section 167 of the Gujarat Co-operative Societies Act, thereby necessitating prior notice to the Registrar before filing suit.
- Whether the plaint filed before the Registrar (exhibit 75) can be treated as a valid notice under section 167 of the Act.
- Whether the time spent prosecuting proceedings before the Registrar can be excluded from the period of limitation under section 14 of the Indian Limitation Act.
- Whether the suit is barred by limitation despite the proceedings before the Registrar.
- Whether the plaint should be rejected under Order 7 Rule 11 of the Civil Procedure Code for non-compliance with statutory notice requirements.
Arguments of the Parties
Appellant's Arguments
- Section 167 of the Gujarat Co-operative Societies Act does not apply because the claim does not touch the business of the society.
- The society’s business involves land transactions, so any claim arising from land purchase concerns the society’s business.
- The plaint filed before the Registrar (exhibit 75) should be considered as a notice under section 167, fulfilling the statutory requirement.
Respondent's Arguments
- The plaint before the Registrar does not amount to a statutory notice under section 167 as it does not clearly invoke the Registrar’s supervisory jurisdiction.
- The claim for unpaid consideration is directly connected to the business of the society and thus section 167 applies.
- The suit was filed prematurely without waiting the mandatory two months after notice, warranting rejection of the plaint under Order 7 Rule 11 CPC.
- The time spent before the Registrar qualifies as prosecution of a civil proceeding and hence can be excluded under section 14 of the Indian Limitation Act.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Rangalal Rameshwar Lal v. Utkal Rastrabhasa Prachar Co-op. Press & Publishers Society Ltd., A.I.R 1975 Orissa 137 | Interpretation of a similar provision (sec. 127 Orissa Co-operative Societies Act) regarding suits touching the business of a society. | The Court respectfully disagreed with this precedent, holding that the claim for unpaid consideration does touch the business of the society and thus section 167 applies. |
Court's Reasoning and Analysis
The Court analyzed the scope of section 167 of the Gujarat Co-operative Societies Act, emphasizing that the phrase "touching the business of the society" should be understood in its common sense as "concerning." Since the society's business includes purchasing land, a claim related to unpaid consideration on land purchase directly concerns the society’s business. The Court rejected the appellant’s plea that the subject matter did not touch the society’s business, finding it too expansive and technical.
The Court examined the previous plaint filed before the Registrar (exhibit 75) and concluded it could not be treated as a statutory notice under section 167. The rationale was that the plaint did not clearly invoke the Registrar’s supervisory jurisdiction, which is the primary purpose of the notice—to enable the Registrar to attempt to avert litigation. Mere presentation of a plaint without explicit notice does not fulfill this statutory function.
Regarding limitation, the Court held that prosecution of proceedings before the Registrar under the Co-operative Societies Act constitutes a civil proceeding. Therefore, the time spent in such proceedings can be excluded from the limitation period under section 14 of the Indian Limitation Act.
Consequently, the Court found that the plaintiff failed to comply with the mandatory notice and waiting period under section 167. This non-compliance required rejection of the plaint under Order 7 Rule 11 of the Civil Procedure Code. The Court allowed the first appeal on this technical ground, clarifying that the rejection was procedural and did not address the substantive merits of the claim.
Holding and Implications
The Court’s final decision was to allow the first appeal and reject the plaint under Order 7 Rule 11 of the Civil Procedure Code due to non-compliance with the mandatory notice requirement under section 167 of the Gujarat Co-operative Societies Act.
The direct effect is the dismissal of the suit filed by M.G Patel & Co. on procedural grounds without adjudicating the substantive claim. The Court noted the plaintiff’s failure to wait the full statutory period after notice as fatal. No new precedent was established beyond the Court’s interpretation of the phrase "touching the business of the society" and the application of procedural requirements. The Court expressed sympathy for the plaintiff but emphasized adherence to statutory mandates.
Bhatt, J.:—
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14. Mr. R.N Shah, the learned advocate for the appellant M.G Patel & Co., however, had two-fold submissions to be made in this connection. He firstly stated that sec. 167 of the Act would not be attracted at all because the claim for money was not ‘touching the business of the society’. The business of the society, as could be gathered from the Certificate of Registration, ex. 107, was to construct buildings on co-operative basis, to purchase lands, to sell lands, to hire lands, to develop lands and to prosecute other objects, which would ultimately ameliorate the physical, education and cultural well-being of its members. The purchase of land is one of the main objects of the society. Any cause of action that has got a direct bearing with the purchase of land has to be said as touching the business of the society. The word ‘touching’ from its common sense connotation is suggestive of ‘concerning’. The plaintiffs claim for the unpaid amount of consideration is directly rooted in the defendant-society's purchase of land. The question of payment of consideration arose because the society was out to purchase the land in prosecution of its objects. So the question of consideration, its payment or non-payment. Is invariably associated with the purchase of land by this defendant-society. In our view, therefore. It is too spacious a plea to be urged that the present subject matter of the suit is not touching the business of the society. It vitally concerns itself with the business of the society as we are almost compelled to hold, despite our dislike for the rejection of an otherwise tenable claim, only on a technical plea.
15. Mr. Shah, however, in this connection invited our attention to certain authorities which we are required to deal with at this stage. The authorities referred to are A.I.R 1969 S.C 1320, A.I.R 1972 S.C 1983, A.I.R 1967 Bombay 21 (sic) and this High Court's judgment reported in 20 G.L.R 71. In our opinion, they are not germane to the case on hand and so we do not propose to burden this judgment by referring to those authorities. We however, would like to say that one judgment of the Orissa High Court reported at A.I.R 1975 Orissa page 137 (Rangalal Rameshwar Lal v. Utkal Rastrabhasa Prachar Co-op. Press & Publishers Society Ltd.) clearly helps Mr. Shah and the plaintiff of the civil suit no. 33/63 M.G Patel & Co. It is the judgment of a Single Judge of that court. The respondent-co-operative society was running a press on co-operative basis and had purchased certain papers the essential material for carrying out the purpose of the society. A suit was filed by the plaintiffs there against the society for the balance of the purchase price. There is the Orissa Co-operative Societies Act, 1962 having sec. 127, which we would like to reproduce here. Said section 127 reads as follows:—
“127. No suit shall be instituted against a society or any of its officers in respect of any act touching the constitutions, management or the business of the society until the expiration of two months after notice in writing has been delivered to the Registrar, or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims and the plaint shall contain a statement that such notice has been so delivered or left.”
16. In that case, the learned Judge held that the suit was not one in respect of an act touching the business of the society within the meaning of the section. Said section 127 quoted above is almost idential with sec. 167 of the Gujarat Co-operative societies Act. We, however, feel constrained to record our respectful disagreement with the view expressed by the learned Single Judge of the Orissa High Court. We have already stated above that the word ‘touching’ is synonymous with ‘concerning’ and whatever is directly concerned with the business of the society is the cause of action touching the business of the society. Payment of money by the society is pursuant to its fulfilment of its object. Non-payment is the other side of that coin and will be equally associated with or touching the business of the society. We, therefore, hold that the present suit is the suit toching the business of the society and so a notice under sec. 167 of the Act was compulsory and after service of the notice, waiting for the period of full two months was the mandate of the legislature which the plaintiff unfortunately failed to comply with, due to hurry of one day.
17. The next submission of Mr. Shah, however, in this connection was that on the earlier occasion before the very Registrar of fullfledged plaint ex. 75, dated 31-8-67 was there and so he was apprised of a dispute between the plaintiff and the defendant-society. According to Mr. Shah, the purpose of sec. 167 of the Act is to apprise the Registrar of the pendency of such a dispute, so that he may exercise his supervisory jurisdiction and bring an end to the threatened action. According to Mr. Shah, the plaint, ex. 75, therefore, should be interpreted to be a notice under sec. 167 of the Act. It is difficult for us to agree. When the plaint, ex. 75, was presented to the Registrar, it would not be evident to his mind that his supervisory jurisdiction, is invoked. It would not put him to notice that it is one of his public duties to see that an impending civil litigation is averted. The only attention which would be focussed at him on receipt of ex. 75 is to decide whether there is a dispute or not and the moment he finds that the dispute is not within his cognizance, he would take his hands off the matter. The paramount idea underlying the provisions of section 167 of the Act is to pointedly bring to the notice of the Registrar, a public functionary, that he is under a legal duty to see that a litigation between a co-operative society on one hand and a private party on the other hand is averted so as far as possible by exercise of his supervisory powers. Unless his pointed attention is drawn to this duty of his by means of notice, which would clearly purport to be one under sec. 167 of the Act, though it may not specifically bear that label, he will not be prompted or inspired to invoke his supervisory jurisdiction and intervane to arrest the future filing of the litigation. It is possible that a party who unsuccessfully presents a ‘dispute’ to the Registrar under sec. 96 of the Act may not be prompted to pursue the matter in the civil court for a variety of possible reasons like limitation. Despite our sympathies for the plaintiff, which we have already indicated above, we feel that the plaint ex. 75, cannot be interpreted as a notice under sec. 167 of the Act.
18. The outcome of this finding would be that the plaint filed by M.G Patel & Co., registered as the special civil suit no. 33/68, would be required to be rejected as per Order 7 Rule 11 of the Civil Procedure Code. Therefore, the First Appeal no. 332 of 1974 will be required to be technically allowed and instead of dismissal of that suit, an order rejecting the plaint under Order 7 Rule 11 of the Civil Procedure Code will be required to be passed. What practical utility of this rejection of the plaint will be, is a matter of concern to the plaintiff, and it is not for us to advice this piff. In this regard.
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33. Mr. Oza had then urged that both the suits were barred by limitation and section 14 of the Indian Limitation Act did not intervene to save their being dismissed as time-barred. Mr. Oza urged that the Registrar acting under sec. 96 of nine Co-operative Societies Act, is not a Court and, therefore, the time spent by these plaintiffs in prosecuting their remedy before the Registrar cannot be excluded by recourse to sec. 14 of the Indian Limitation Act. We do not agree. What sec. 14 requires is that the plaintiff must be prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant. The proceedings prosecuted by the plaintiff before the Registrar's Nominee was a civil proceeding. They do not say that the civil proceedings must have been prosecuted in a court as such.
34. All that sec. 14 says is that a civil proceeding, whether it is prosecuted in the original forum or in appellate or revisional forum, is a proceeding, the time taken to prosecute which, will be excluded from computing the period of limitation. We agree with the reasoning of the learned trial Judge on this score and adopt the same.
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(I.S.S)
36. Appeal Allowed.
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