# Ma,ch l·l. S04 SUPREME COURT H.EPOHTs [i962] SUPP. THE SUGAULI SUGAli WORK') (PltIVATE) LTD v. THE ASSTT. HEGISTRAl1, 00-0PERATJ\'E SOCIETIES

- **Citation:** [1962] Supp. 3 S.C.R. 804
- **Court:** Supreme Court of India
- **Decided:** 1961-10-30
- **Case number:** Civil Appeal No. 100 of 1962
- **Bench:** B. P. Sinha, K. Subba Rao, N. IiAJAOOl, A AYYAJSOAit, J. l{. MuDHOLitAit
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ma-ch-l-l-s04-supreme-court-h-epohts-i962-supp-the-sugauli-sugali-work-pltivate-2496
- **Pages:** 11

## Headnote

VE:SKATARAMA AIYAR, JJ.)
(}o-operatii·e Society-R,,fercnce_:._Juri.vdt"ction of /(eyist,-cir
-If can entertain claim f,y registered society ayainJi non-1uernfxr
-Bilzar and Orisu1 Co-operative Socielies Act, 1935(/J. & 0. Ii
iof WJ!i), a.s amenrlcd l1y Jlihar Co-operatiuc Societie• (. l me nrlmc11t) Act, 19·18 (llihar W of 1948), ss.48 (1), 16(1) ,,,,,/
2(c).
The point for ~etennination in the appeal was wl~hcr
the Registrar of Co-opcrati\'C Sr1cieties under the Bihar nnJ
Orissa Co-operative Societies Act, 1935, as amended by Act
16 of 1948, had the jurisdiction under s. 48(1) of the Act to
hear and decide a reference made by a registered society
against a non-member. The appellant company, incorporated
under the Indian Companies J\ct, with its registered office
at Calcutta, 1nanufacturcd s11gar in Dihar. 'fhe second respondent the Union of Cn-operative Societies, registered under
the Co-operative Societies Act, mad,c a reference under s. tB
of the Act, against the appellant claiming the sum of
Rs. 1,20,809/- odd as co1nmission and interest for supplying
sugarcane in 1950-60.
The first respondent, the 1\ssistant
Registrar of Co-operative Societies registered the reference and
issued notice to the appellant.
The appellant took the preliminary objection that the 1\ssistant Registrar ha<l no juris·
diction under the 1\ct to entertain the reference.
'fhat objcc·
tion was overruled by the Assistant Registrar relying on a
decision of the High Court and the High Court upheld that
order by dismissing in limine the appellant's petition under
Arts. 226 and 227 of the Constitution.
Held, that the High C'.ourt had taken a wrong view of
the law.
Althoush under s. ·18 of the Act the claim by a financing
bank again.~t a non-1nen1.ber to whon~ it had 1n~cle ~n advance
either in cash or kind, \Ylth lhe s~nctlon of the ReglStrar under
s. 16( I), could l?e entertained l~y the Registrar_, that did not
mean that a c\a11n not nf the kind referred to 111 s, lfi( I), read
3 S.C.R.
SDPREME COURT REPORTS
805
withs. 2(c), made by a registered society against a nonmember, who was not an agriculturist, was \Vithin the purview
of s 48(1), read with the Explanation!. The addition of the
word 'non-member' by the amending Act of 1948 to the
Explanation I, did not enlarge the scope of the main section
so as to make all kinds of dispute between a registered society
and a non-member cognizable by the Registrar.
Since in the present case, the second respondent was not
a financing bank nor was the appellant an" agriculturist,
s. 48(l)(e) and the Explanation I could have no application.
Union of India v. Registrar, Co-operative Societies, Patna,
(1961) I.L.R. 40 Pat. 7, overruled.
·

## Text

Ma,ch l·l.
..
S04 SUPREME COURT H.EPOHTs [i962] SUPP.
THE SUGAULI SUGAli WORK') (PltIVATE) LTD.
v.
THE ASSTT. HEGISTRAl1, 00-0PERATJ\'E
SOCIETIES
(B. P. SINHA, c. J., K. SUBBA RAO, N. IiAJAOOl',\J,A
AYYAJSOAit, J. l{. MuDHOLitAit and T.J,.
VE:SKATARAMA AIYAR, JJ.)
(}o-operatii·e Society-R,,fercnce_:._Juri.vdt"ction of /(eyist,-cir
-If can entertain claim f,y registered society ayainJi non-1uernfxr
-Bilzar and Orisu1 Co-operative Socielies Act, 1935(/J. & 0. Ii
iof WJ!i), a.s amenrlcd l1y Jlihar Co-operatiuc Societie• (. l me nrlmc11t) Act, 19·18 (llihar W of 1948), ss.48 (1), 16(1) ,,,,,/
2(c).
The point for ~etennination in the appeal was wl~hcr
the Registrar of Co-opcrati\'C Sr1cieties under the Bihar nnJ
Orissa Co-operative Societies Act, 1935, as amended by Act
16 of 1948, had the jurisdiction under s. 48(1) of the Act to
hear and decide a reference made by a registered society
against a non-member. The appellant company, incorporated
under the Indian Companies J\ct, with its registered office
at Calcutta, 1nanufacturcd s11gar in Dihar. 'fhe second respondent the Union of Cn-operative Societies, registered under
the Co-operative Societies Act, mad,c a reference under s. tB
of the Act, against the appellant claiming the sum of
Rs. 1,20,809/- odd as co1nmission and interest for supplying
sugarcane in 1950-60.
The first respondent, the 1\ssistant
Registrar of Co-operative Societies registered the reference and
issued notice to the appellant.
The appellant took the preliminary objection that the 1\ssistant Registrar ha<l no juris·
diction under the 1\ct to entertain the reference.
'fhat objcc·
tion was overruled by the Assistant Registrar relying on a
decision of the High Court and the High Court upheld that
order by dismissing in limine the appellant's petition under
Arts. 226 and 227 of the Constitution.
Held, that the High C'.ourt had taken a wrong view of
the law.
Althoush under s. ·18 of the Act the claim by a financing
bank again.~t a non-1nen1.ber to whon~ it had 1n~cle ~n advance
either in cash or kind, \Ylth lhe s~nctlon of the ReglStrar under
s. 16( I), could l?e entertained l~y the Registrar_, that did not
mean that a c\a11n not nf the kind referred to 111 s, lfi( I), read
3 S.C.R.
SDPREME COURT REPORTS
805
withs. 2(c), made by a registered society against a nonmember, who was not an agriculturist, was \Vithin the purview
of s 48(1), read with the Explanation!. The addition of the
word 'non-member' by the amending Act of 1948 to the
Explanation I, did not enlarge the scope of the main section
so as to make all kinds of dispute between a registered society
and a non-member cognizable by the Registrar.
Since in the present case, the second respondent was not
a financing bank nor was the appellant an" agriculturist,
s. 48(l)(e) and the Explanation I could have no application.
Union of India v. Registrar, Co-operative Societies, Patna,
(1961) I.L.R. 40 Pat. 7, overruled.
·
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 100 of 1962.
Appeal by special leave from the judgment
and- ordilr dated October 30, 1961, of the Patna
High Court in M.J.C. No. 954 of 1961.
A. N. Sinha, A. K. Nag and P. ](. Mulche1jee,
for appellant ..
0. K. D~phf£!ry, Soliciwr General of India and
S. P. Varma, for respondent No. 2.
L. K . .fh'J and S. P, Varma, for respondent
No. 3.
1962. March 14. The Judgment of the Court
was delivered by
SINHA, C. J.-This appeal, by special leave, is
directed again~t the order of a Division Bench of the
Patna High Court, dated October 30, 1961, dismissing in limine the appellant's petition dated October
24, 1961, under Arts. 226 and 227 of the Constitution, being Miscellaneous Judicial Case No. 954 of
1961, for a writ of Prohibition directing the first
respondent not to· proceed with the A ward Case
No. IOI of 1961, and a writ of Certiomri for quash- ·
ing the order of the said respondent, dat~d September · 29, l!l6 I. The appellant is a private limited
compa.ny, incorporated under the Indian Companies
Act, with its registered offlce · at
Oajcuttq. H
1962
T1i1 Sug"uli Sug'"
JJ'o1ks (Prival1}-l1d. ·.
••
Tiu Asstt. R1gistf'tar
Co-optrative 5o.;ittits.
Sinh• C.J.
1962
Tilt Sug1uli Suga'
Works ".Privak; l.1d.
v.
Tltt A uJI. Btgistrar.
f~llt" SuriltuJ.
Si1ha C.J.
806 SUPREME COURT REPORTS [1962] SUPP.
carries on the business of manufacturing sugar in
its factory at Sugauli in the district of Champ>iran,
in Bihar. The fir8t respondent is tho Assistant
Registrar, Co operative Societies, :\Totihari Circle,
~lot!httri, in the Stat.c of Bihar; the sncond respon.
dent is the Union of Co-operative Societies, and is
registered unc;!er the Ribar and Orissa Co-operative
Societies Act ( B. & O.
Act VI of I !135) (to he
referred to hereinaftl•r a~ the Act); the third respondent is the State of Bihar.
On August 14, 1961, respondent No. 2 made a
reference under s.48 of the Act, against the appellant, claiming the sum of Rs. I,~0,809;'- odd, as
commission and interest for supply of sug11rcane
during the crushing season I 9ii\J-fi0.
The said
reference W'.!B registered by the first respondent as
Award Caso Xo. IOI of l9fH, on August 17, 1961.
~ otice of the said reference was issued to tho
appellant. On Septcmbor 26, 19fil, the 1Lppellant
took a pr .. liminary objoetion to the jurisdiction of
the first respondent. to entert1iin the reference and
to adjudicate upon
it, and
prayed that the
reference be
reject erl.
The
fir8t
respondent,
following a decision nf the P:itna High Court,
reported in Union of hulia v. Rertistmr, Co-operative
Sor.ieries, Pril.na ('), overrule<! the appellant'~ preliminary objection by his order ll<ttcd Sept.,mber
29, 19 •l.
Against that order, the appellant movod
its application aforesai<1 before the High Court of
Patna., The High Court, following its previous d'oeision aforesaid, sumruarily dismissed tho application.
The appellant moved this Court aud obtained
special leave to appeal from the order of the High
Court,
dismis~ing his
application.
This Court
granted the special kave on December 4, 19til.
The appellant movecl this Cuurt for stay, which was
finally heard on ,Jn,nuu.ry I I, I !Hi2, and the Court
directed that the appr"tl
be
h1~ar<l peremptorily
on February Iii, this year.
That is Jiow
tho
(1) (1961) 1.L.R. 40 Patna 7.
:1 S.C.R.
SCJPRIDM:ID CJCJRr RIDPOR. TS
807
matter comes before 'us for hearing of the main
appeal.
The only question for determination in
this
appeal
is
whether
under
the
provisions
of the Act, the first respondent
had
jurisdiction to hear and determine the dispute
referred to him at the instance of the second
respondent. The answer to the question raised in
this appeal must depend upon the interpretation of
the provisions of the Aot.
Before examining the provisions of the Act, as
it stands at present, it is necessary to set out the
legislative history of the law on the subject. When
the co-opocative movement was set up in the
beginning of this century, the law governing cooperative societies was enacted as The Co-operative
Societies Act (II of 1912), by the Indian Legislature. That Central Act continued in force in Bihar
and Orissa until it was repealed by the Bihar and
Orissa Legislative Council by the Bihar & Orissa
Co-operative Societies Act (B. & 0. Act VI of 1935),
after obtaining the
previous sanction of the
Governor-General, under sub-s. 3 of s. 80-A of the
Government of India Act. The Act of l 035 was
enacted with a view to consolidate and amend the
law relating to co- operative societies in tLc Province
of Bihar and Orissa, as it then was. As it displaced
the Co-operative Societies Act of 1912, so far as the
Province of Bihar and Orissa was concerned, s.5
enacted that all references to the Co-operative
Societies Act, 1912, occurring in any enactment
made by any authority in British India, and for
the time being in :force in the Province, shall be
construed as references to the new Act. Under
s. 7, a society, which has as its object the promo·
tion of tho common interest.a of its members in
accordance
with
co-operative
principles, or a
society established with the object of facilitating
j;he o:peration of sqch a society, ma.y be re~istered
1961
The 8ugouli Sugar
Works( Private) Ltd.
.
v.
The A••lt. Registrar c
Co"Optrative Socitties.
Sinha C.J.
T ht Su!}<Juli Sugar
lfvrA1 (1'1i.~ai1) !.td.
v.
Tiu A uCt ntjiJt1 ·Jr,
Cu-vp1ralil'f
~·n:ir.fitl.
--
808 SUPREME COURT REPORTS [l!l62] SUPP.
under the Act.
On .such registration, the Society
h~c·om"~ n
ho<ly
rorporntc with
perpetual
"1wces;;ion ancl a commo11
~Pal, llll!] with power
t11 ae(juirn
and
hold
property,
to enter into
""ntracb,
to
institute>
an.d
clcfend suits, etc.
under s. 15, a
registered socioty shall rcceh·o
deposits and Joano from members and non-members
onlv to such extent and under such conditions as
may be prcscribc<l.
Under s. 16,
ordinarily a
registered society shall not make a loan to any
IJ('rso11 other than a member, except with the
general or spl'cial sanction of the Registrar, and
su bjcct to sud1 re8tl'ictions as he may impose.
Section l 'i further provides for such prohibitions
and restrictio11s, in ·r<'~pect of the transactions of a
registered society with persons other than members,
as the Provincial
GovernmP.nt
ma.v
by rules
prescribe.
Section 48 makes it obligatory that any
dispute toud1ing the business of a rt•gistered society,
among mcmhPrA, past members, pcrRons claiming
through membern,
past members or
deceased
momhers and sureties of membern, past members
or deceased membcers. whether such sureties are
mombcrs, or non-members, or between them and
t.he re"isterecl society, shall
be rcforrecl to tho
"
..
gcgistra:'. . By virt.ue of Ex:planation (I) to the
section, a claim hy 11 rcgistcre<l sooiety for any debt
or demand clue to it from a mt•mber or a past
member or his h•Jir or leg,iJ rqiresentativc, or from
Rurntics, whether they are memhers or non-mem·
bers, shall be a dispnk wit.hin tho meaning of the
main section, c\·en though such debt or <leman<l is
admitted and the onl.v point at issue is the ability
tn pay or the manner of onforecment of payment.
It. will thus he seen that the Act is limited in
its operation to regist.c,,nl sor>ict.ies
and
their
memht'rs
in
thnir <lralini;>i with one m10thor.
Jt
is only in exceptional casps
of borrowing
3 S.C.R.
SUPREME COURT REPORTS
SOJ
by a
registered
society
from
non-members,
in accordance with the
rules
and · bye-laws
prescribed by the comp)tont authority, or in case
of loan to a non-member under the provisions
of s. 16, that there could be dealings between
registered societies and non-members, keeping aside
the cases of sureties of members, who may be nonmembers, but who also come within the purview of
dealings between a society and its members.
Such were the relevant provisions of the Act
when it was amended by the Bihar Co-operative
Societies (Amendment) Act, 1942, and the Bihar
Co-operative Societies (Amendment) Act,
194!,
enacted by the Governor of Bihar in exercise of
the powers assumed to himself by the Proclamation
dated November 3, 1939, issued by him under s. 93
of the Government of India Act, 1935.
For our
purposes, it is only necessary to notice some of the
amendments made by the amending Act of l 944
(Bihar Act X of 19H). By s. 2, cl. (c) of s. 2 of
the Act of 1935 was substituted in these terms :
"(c) 'financing bank' means a registered
society the main object of which is to make
advances in cash or kind to other registered
societies or to agriculturists who are. not
members of registered societies or to both
such societies and agriculturists."
Bys. 3, s. 16 of the Act of 1935 was amended by
adding su b-s. (3) to s. 16, as under :
"(3) Where the Registrar has accorded
sanction to a financing bank under the provis~ons _of sub-section (l), a registered society
whwh 1s a member of such financing bank
may, subject to the terms of the sanction and
such other terms and conditions as may be
prescribed by the R.egistrar, act as agent for
the fi';lancing bank and as such agent carry
out, with or without any eomillission, al\ or
1111
The Sugauli SuglV
IV or ks( Private( Ltd .
••
The Asstl, Registr.1r,
Co--operative Societie1.
Sinha C.J.
1962
Thi Sug01'1i Su1cr
w.,qp,;,.,,) Lid.
v.
·rne A•Jtt. R1gi.1tto1
Co-opertltiot Societies:
Si,1ha C.J.
810 SUPREME COURT REPORTS [1962) SUPP.
any transactions
oonnected with loans or
advances made or to he made by the financing bank."
A consequential change was made in s. 23 of tho
Act of rn:J5, by inserting s. 2:J.A, so as to make a
debt or an outstanding demand to a rocristorod
society from a non-member a first charg; on the
property of the non-member. The most import.ant
amendment .was made bys. r., in s. 48 of the main
Act as follows :
"6. In sub-section (I) of section 48 of
the said Act-
(a) after clause (d), the word "shall be
inserted and theroafter the following clause
shall he inserted, namely :-
"(e) between a financing bank authorised
under the provisions of sub-soetiou (I) of
section 16 and a porson who is not. a member
of a registered society;" and
(b) in E~planation (1), after the words
"from a mcmher," t.he word "non-member"
shall be inserted and after tho words "of a
deceased member" t.he words "or non-member"
shall be inserted .
. It is not necessary to refer to the other consequential amendment3' made and the addition of a
now chapter 7 A, relating to the manner of recovery.
The amendments effected by the amending Act of
1944. had been enact~d by the Governor of Bihar in
exorcise of his spodal powers aforesaid. The pro·
visions of those amendmentR were re-enacted as
Act XVf of 1948.
We would,
therefore refer
hereinafter to the amendments in q1wst.ion as the
amendment.~ of I !l48.
As already indicated, 1t Division Bench oft.hi·
Patna High Court bas laid it down, in the ease of
3 S.C.R.
SUPREME COURT REPORTS
SU
Union of India v Registrar, Co-operative Societies.
Patna (') that the Explanation to s. 48( l) of the Act
covers a claim by a registered society for any debt
or demand from a non-member, and that, therefore,
the claim of a registered society against the railway
company for compensation for short supply is a
dispute within the ambit of s. 48 of the Act, and
that, therefore, the AsBistant Registrar, Co-operative
Societies, had jurisdiction to determine · the dispute
under s. 48{2) of the Act. Relying upon that
decisi:on, the High Court dismissed the appellant's
petition under arts. 226 and 227 of the Constitution,
in limine.
The appellant has questioned the correctness of that decision. The question, therefore,
is whether the High Court has taken a correct view
of the provisions of s. 48, the relevant portions of
which are as follows:
"48 ( 1) If any dispute touching the business of a registered society ... arises-
( a) amongst members .. past members,
persons
claiming
through members, past
'members or deceased members, and sureties
of members, past members or deceased members whether such sureties are members or
non-members; or
(b) between a member, past member,
persons claiming thrflugh a member, past
member or deceased member or sureties of
members, past members or decea·sed members,
whether such sureties are members or nonmembers, and the society, its managing committee ·or any officer, agent or servant of the
society; or
(c) ....................... .
(d) ....................... .
( e) between a financing bank authorised
under the provisions of sub-section (1) of
\!) (1961) I.L.R. 40Pat. 7.
1962
The Sueauli Sugar
Works (Private) Ltd,
. ..
The Ass tt. Registrar
Co-operative Societies.
Sinha C.J.
J96Z
7h1 Suga"H S11gar
lfor1·.t(Pri1 1olt) I.Id.
v.
Tht Asltl. ll1gis11~'•
Jo.op1raJit't Socittits.
1'-Jinha c .. J.
812 SUPRR\IE COURT REPORTS [1962] SUPP.
section 16 and a person who is not a member
of a registered Hociety ;
811ch disputes sh!i-ll be referrrcl to tho Regis·
trar.
Explanation I -A claim by a ro2ister<>d
society for any debt or demand due to it from
a member, non-membor, past member or the
nominee, heir or legal representative of a
deceased member or non-member or from
sureties of members,
past members
or
deceased members, whether- such surctie~ aro
members or non-members, shall be a dispute
touching tho business of the society within the
meaning of this sub-section even in case such
debt or demand is admitted and the only point
at issue is the ability to pay or tho manner of
enforcement of payment .
.. . . . . . . . . . . . . .
(H) Save as expressly provided in this
section, a decision, of the H.cgist.rar under
this seotion, anrl subject to the orders of the
Registrar on appeal of review, 11 dec:ision
given in a <lisput<J
tramferred or referred
under clause (b) or (c) of suh·sect.ion (2), 8hall
ho final."
From tho provisions of tlw Act, set out above,
it is manifest that the act created a special trihmial,
namely, the registrar of Co-operative Societies, to
deal with certain disputes spec:ifie<l in· s. 48(1)(a)
to (e).
This special tribun:il WUH createcl with a
view to shortening litigation and providing spe<'dy
relief to registerod societies and t.heir mrmbers in
thoir disputes int.er sc in respect of tho busine~s of
the society.
Befor.., tho amendments introducer!
by the Act of 1!148, the dispute~ which could be
entertained by the Registrar were disputos amongst
'I
3s.d.R.
scf PREME <.Jou.RT REPORTS
members, past members or their heirs or their sure·
1962
ties, or between a society and other registered . The Sugauli Su;ar
societies (without meaning to exhaust all the cate.
Work•(Private} Ltd.
gories.)
But, before the amendments, one who was
·rh, Asst1~
0
R•gistrar,
not a member of a society or was not claiming
Co..,,p1ra1ive soc;.1;,..
through a member or a past member or a deceased
member, or was not a surety of a member or a
deceased member, was not subject to the jurisdiction
of the Registrar under s. 48.
That is to say, any
dispute between a society or its members, past
members or deceased members or surities of such
members on the one hand and non·members on
the other, was not within the purview of the section
so that the appellant company, which is not a re.
gistered society, or a member of a registered society,
could not have its claim, or a claim against it by a
registered society, referred to the Registrar for
decision, under this section. Such a dispute by a
society or its members against a non·member had to
b3 taken to the ordinary courts for decision.
In our opinion, the contention raised on behalf of the appellant is correct. By the amending
Act of 1948, the aforesaid relevant and important
amendments were introduced into the Act. The
effect of these amendments is that a claim by a
financing bank against a non·member to whom
the former may have made an advance in cash or
kind with the sanction of the Registrar s. 16(1),
would be entertainable by the Registrar, on a reference. But that does not mean that a claim which
is not of the description referred to in s. 16( 1 ), read
with s. 2(c), by a registered sodety against any.
non.member,. who is not an agriculturist, is
within the purview of s. 48( I). read with the Explanation. The Explanation cannot be read as adding
a new head to the categories (a) to (.e)
under
s. 48 ( l ), of disputes which may be referred to the
· Registrar. Originally, the Exp Jana ti on had been
added only to make it clear that even if a debt or
Sinha C. J.
•
1962
Ile Su~auli Sugai
TYorks (Priv7tt) lid.
v.
Tho ~.ull. RegiJtrttr,
c~μ,atiVt Socielier.
Sinlia CJ.
814 ·suPitIDrlE COURT REPoRTS cioo21 SUPP.
a demnn<l is admitted and the only point at issue is
the ability to pay or the manner of enforcement of
P'.1-Yment., ·the di~1mt-0 would come within the purview of the mam s. 48(1 ).
The addition of the
word 'non-member'; by the amending Act of 1948,
to the first Explanation has not t>nlarged the scope
of the main s. 48( I) so as to make all kinds of disputes between a registered society and a non-mt>mber cognizable by the Hegistra.r. thue excluding the
jurisdiction of the ordinary courts.
In the instant case, it is manifest that the disput-0 is between a registered society, the second respondent, and the appellant, a non·member, in respect of the claim for commiBBion a.nd interest the~e
on for supply of sugarcane, and the appellant
alleges that it has a counter-claim of a lakh and
fifty thousand rupees for short and irregular supply
of sugarcane against that respondent. These are
matters which, in our view, are wholly beyond the
purview of s. 48 of the Act, when it is remembered
that the second respondent is not a financing bank
and that the appellant is not an agriculturist to
whom any advances in ca.~h or kin<l had been made
or could have been made so as to. bring the appal·
!ant within the purview of s.48 (I) (e), and consequentially of Explanation I. The decision of the
Patna High Court to the contrary is, therefore, not
correct.
·
In the result, the appeal is allowed with costs,
and it is directed that the Hegistrar should not
entertain the reference, and should not adjudicate
upon the disputo, and not make an award. The
main contesting parties must be left to their remedies in the ordinary oourts.
Appe.al allowed.