Karashiddayya Shiddayya Bennur v. Shree Gajanan Urban Co-Operative Bank Ltd.

Broomfield, J.:—

This second appeal arises in a suit brought by the appellant-plaintiff for a declaration that an award under the Co-operative Societies Act obtained by defendant No. 1 the Shree Gajanan Urban Co-operative Bank Ltd. in 1931 and a sale of plaintiff's property in execution of the award are null and void and that defendant. No. 2 who purchased at the sale got no title thereby.

The facts are as follows. One Basangouda, who was a member of the co-operative society in question, borrowed a loan from the defendant bank. The appellant, who is not a member of the society, stood surety for him. The society took arbitration proceedings under the Act, and on January 24, 1931, the Registrar made an award for Rs. 1,100 against the appellant and presumably also against Basangouda, though we have not got the award before us. In the same year a darkhast was filed to execute the award and the half share of plaintiff and his sons in two houses was attached. The sale took place on December 12, 1931, and defendant No. 2 purchased the property for Rs. 1,400 and odd. In January 1932, plaintiff's sons applied to set aside the sale and it was set aside and the darkhast was dismissed. But ultimately this Court in revision held that the remedy of the plaintiff's sons was to bring a suit and execution was ordered to proceed. In due course the sale was confirmed in favour of defendant No. 2 and plaintiff filed this suit on April 4, 1936.

The case of defendant No. 2-respondent No. 2 is that he was a bona fide purchaser without notice of any defect in the arbitration proceedings. He has also contended that the Court had no jurisdiction, that the award was not null and void and that the suit was barred by estoppel and limitation.

The trial Court held that the award was void but that the suit was barred by estoppel, because in the execution proceedings the plaintiff had pleaded agricultural status and prayed for instalments, and was also barred by limitation. It was held further that defendant No. 2 was a bona fide purchaser and was therefore entitled to the property. The suit was therefore dismissed.

There was an appeal to the District Court which was heard by the Assistant Judge. He agreed with the trial Court that the award was null and void and that the Court had jurisdiction to determine that matter. He disagreed with the trial Court and held that there was no estoppel and no bar of limitation, but he took the view that the plaintiff had no cause of action because although the decree was bad the executing Court had jurisdiction and the auction-purchaser defendant No. 2 got a good title.

On the face of it this is a somewhat remarkable decision-The learned Judge's reasons are given as follows in a short paragraph in the judgment:—

“The last point is the most important point. In the execution proceedings defendant No. 2 purchased this property. So new rights came into existence. It is not the plaintiff's case that the executing Court had no jurisdiction to execute the award. It had this jurisdiction. There was no defect in the award which could be seen by any person on the very face of it. Under such circumstances defendant No. 2 purchased the property. His rights which thus came into existence cannot be affected by plaintiff now coming forward and proving that the award was a nullity against him. Kaunsilla v. Chandar Sen.”

Now it is quite true in a sense to say that the executing Court had jurisdiction to execute, since it could not go behind the decree. On that point I shall have something more say later on. But once a decree has been found to be a nullity it must follow as a general rule that all proceedings taken in execution of it are also null and void. Ex nihilo nihil fit. You cannot execute or give effect to a nullity. The case of Kaunsilla v. Chandar Sen, cited by the learned Assistant Judge was not a case of a void decree, and moreover the observations on which he relies at p. 379 of the case, about it not being necessary for an intending purchaser at a sale under a decree to go behind the decree to see whether the decree has been rightly made, have been disapproved in Debi Singh v. Jia Ram, which in fact overruled Kaunsilla v. Chandar Sen. There are many authorities, if authority be at all needed, to show that a decree which is a nullity is incapable of execution. I need only mention Shivaji v. Vithal, Fazal Rab v. Manzur Ahmad,(4) Jnanendra Mohan Bhaduri v. Rabindra Nath Chakravarti.(5)

It is obvious therefore that if the dismissal of the suit is to be upheld, it must be on some other ground than that relied on by the learned Assistant Judge. We must of course be satisfied that the decree is a nullity, but on that point we feel no difficulty. Both the lower Courts have so held, and we think correctly, on the ground that the plaintiff was not a member of the society and that therefore the Registrar under the Co-operative Credit Societies Act had no jurisdiction to make an award as against him. That question came before me recently in Patel Becharbhai Haribhai v. The Desai's Muwada's Co-operative Society. I pointed out there that under s. 54 of the Act the Registrar is only empowered to deal with disputes between, members or past members of a 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. No power is given to the Registrar to settle disputes between a society and a person not a member of it. Prima facie therefore, if an award is made dealing with some matter not covered by s. 54, for instance in a dispute between a society and a person like the plaintiff in the present case not a member of the society, the award would be ultra vires and a nullity and in that case the jurisdiction of the Civil Court could not be ousted by s. 57 of the Act. Various authorities on this point were discussed in my judgment, some of which, for instance Bharmakka v. Mallappa, and Ganpat Ramrao v. Krishnadas Padmanabh have been mentioned in the argument before us. In spite of this further argument, however, we see no reason to doubt the correctness of the decision in Patel Becharbhai Haribhai's case. We must therefore deal with this appeal on the footing that the award as against the plaintiff was a nullity.

Mr. Desai for respondent No. 1 drew our attention to D.S Bank Ltd. v. Benoy Bhusan, where it was held that a reference to arbitration made under r. 22 of the rules framed by the Government of Bengal under s. 43 of the Co-operative Societies Act, 1912, in a dispute between a co-operative society and a member is not void ab initio merely because a non-member is also a party to the dispute. An award given on such a reference, the Court said, will be a valid award if the non-member submits to the jurisdiction of the arbitrator and it cannot be challenged in a civil Court. That was a case under the old Act of 1912, and it seems that the decision turned partly at any rate on the provisions of a rule, the terms of which are not set out in the judgment. As to the point of the award being validated by submission to the jurisdiction of the arbitrator on the part of a non-member we may point out that though that might no doubt be the result, if the award was not a nullity, it would not be so if it was. There are some defects of jurisdiction which may be waived by submission to the jurisdiction, as held in the leading case of Ledgard v. Bull that is not so when there is an inherent want of jurisdiction, as where the tribunal in question is not under any circumstances competent to try the case or competent to try it in respect of the parties before it. The law on this subject has been discussed in Umabai Shankar v. Shankar Hari. Moreover it may be pointed out that in this case there is no evidence that the plaintiff did in fact submit to the jurisdiction of the arbitrator.

Mr. Desai said that the plaintiff must have received a notice in the arbitration proceedings. As has been mentioned, the proceedings are not before us. It seems that they have disappeared. The trial Judge on this point says that it is likely that Basangouda must have informed the plaintiff of the arbitration proceedings and it is also probable that the Registrar sent a notice to him. If anything turned upon the question whether the plaintiff had notice or not, we should have required more satisfactory proof of the fact than this. But in our view it is immaterial because, if the Registrar had no jurisdiction over the plaintiff, be could not confer jurisdiction on himself merely by sending a notice.

Then it has been contended that the question of the validity of the decree must be regarded as res judicata. It appears that in the execution proceedings, in answer to the notice then sent to him, the plaintiff merely pleaded his status as an agriculturist and asked for instalments. He did not contend that the decree was a nullity and could not be executed against him. On that point we were referred to Kashinath v. Dhondshet. In that case what had happened was that in execution proceedings between the parties certain Khoti lands were sold and purchased by the defendant at a Court sale. Afterwards the plaintiff sued to recover possession of the lands, alleging that as they were occupancy lands they could not be sold by reason of s. 9 of the Khoti Settlement Act. That section provides that the occupancy right in such lands cannot be sold without the consent of the Khot. It was held that as the execution sale decided inferentially between the plaintiff and the defendant that the lands sold were not occupancy lands, the plaintiff could not be allowed to reopen and investigate the same question of fact a second time. So that in that case there was a question of fact which it was held was inferentially decided in the execution proceedings against the plaintiff and accordingly he was barred by res judicata from raising the question again. In the case before us it is obvious that there is no such question of fact. The only question of fact which is material is the fact of plaintiff's being or not being a member of the society and it has throughout been admitted that he was not a member at the material time. This authority therefore has no direct bearing on the present case.

It is true that questions of law may also sometimes be res judicata as between the parties. But here the question of res judicata could not arise because it is quite clear that the executing Court could not have gone behind the decree and considered the question whether it was a valid decree or not. On that point we have a clear authority of our own High Court in Hari Govind v. Narsingrao Konherrao. There is also a decision of the Patna High Court in Muhammad Ismail v. Bibi Shaima. The Calcutta High Court in Gora Chand Haldar v. Prafulla Kumar Roy, has recently taken the view that when a decree is made by a Court which “apparently” had not jurisdiction to make it, the executing Court is entitled to refuse to execute it. The same High Court in a later case has construed the word “apparently” to mean that the decree appears on the face of it to have been passed by a Court which had no jurisdiction. The same view was taken in Rabindranath Chakravarti v. Jnanendra Mohan Bhaduri, which came before the Privy Council in Jnanendra Mohan Bhaduri v. Rabindra Nath Chakravarti, and though there was no discussion on the point their Lordships approved of the Calcutta view. That was a, case under the Arbitration Act under which the procedure is that an award is simply filed in Court and is enforceable as if it were a decree. There is no provision for making a decree on an award. In spite of this, however, the High Court did pass a decree upon an award, and the Subordinate Judge to whom it was sent for execution dismissed the application on the ground that the decree was nullity. As in a case of that kind there ought not to have been a decree at all, it may fairly be said that there was an apparent want of jurisdiction in the Court which passed the decree, and in view of Jnanendramohan Bhaduri v. Rabindra Nath Chakravarti we must hold that in such circumstances the executing Court is entitled to refuse to execute.

This, however, is not a case of that kind. There was nothing on the face of the award decree to indicate that it was without jurisdiction. It was only after a suit brought for the purpose and after a consideration of the provisions of the Co-operative Societies Act that it has been found to be a nullity. The case therefore is governed by the decision of our own High Court in Hari Govind v. Narsingrao Konherrao, and the validity of the decree was not a matter which the executing Court was competent to go into Clearly, therefore, it would have made no difference whether the plaintiff had raised the point in the execution proceedings or not and the argument based on the principle of res judicata falls to the ground. That disposes of the arguments on behalf of respondent No. 1.

Mr. Belvi who appears for respondent No. 2, the auction-purchaser, argued firstly that the suit is barred by limitation under article 12 of the Limitation Act, because the suit was not brought within a year of the date when the sale was confirmed. But it is settled law that this and similar articles of the limitation act have no application when the transaction in question is a nullity. In that case it is unnecessary to set it aside. If the plaintiff is entitled to bring a suit to set aside the decree—and we hold that he is—and if he succeeds in that suit, the decree being a nullity it must follow that the sale in consequence of it was a nullity also. There is therefore nothing in this point’. Nor, if the sale was a nullity, can it avail respondent No. 2 that he was a bona fide purchaser without notice of the defects in the proceedings.

It was next urged on his behalf that as the plaintiff, says in his plaint that he is the owner of one-eighth share in the houses purchased by defendant No. 2, the sale should be set aside only in respect of that share. It appears that the plaintiff owns one-eighth and his sons three-eighths, while the other half, which has not been sold, belongs to the Plaintiff's brother. But half the property, i.e, the share of plaintiff and the shares of his sons, was sold in execution of the decree against the plaintiff. That can only have been because in that litigation he was proceeded against as representing the whole family, and that being so, we think he must be said to represent the family now. We cannot see on what principle it could be held that defendant No. 2 derived a legal title to any of the property sold in execution of this void decree.

Lastly Mr. Belvi, pressed upon us that we should on equitable grounds order that respondent No. 1, the bank which brought the property to sale and received the money, should refund it to defendant No. 2. It was conceded that O. XXI, r. 93 of the Civil Procedure Code has no application, but it was argued that an order of the kind might be made under s. 151 in the Court's inherent jurisdiction. No precedent has been cited to us for such an order. The two defendants supported one another throughout the litigation up to this Court and the Courts have not been called upon to consider any question arising between them. Defendant No. 2 has his remedy by a suit and we do not consider that we should make an order of the kind suggested as between the defendants in this litigation.

In the result we allow the appeal. Plaintiff's suit must be decreed, that is to say he will get a declaration that the award is null and void, that the sale in execution of it is also null and void and that defendant No. 2 has not acquired any title in the property by that sale, and also an injunction restraining both defendants from dispossessing him. Plaintiff must get his costs throughout, to be paid by respondent No. 1.

Appeal allowed.

Y.V.D