Law: Co-operative Societies Registration Act, 1912

Section: 43

(a) Co-operative Societies Act (II of 1912), S. 43 (2) (i) and Co-operative Societies Rules, r. 18 (a), (j)-Dispute with Committee of Society or with one of its members regarding business of Society-Dispute with Society-Rule 18 ousts jurisdiction of civil Courts in regard to disputes covered by it-Civil Procedure Code (V of 1908), S. 9. Some persons, who were members of a Co-operative Bank, executed a deed of hypothecation in favour of the Bank whereby a piece of land and two trucks belonging to them were pledged for the discharge of their debt amounting to about one lac of rupees. The Registrar, Co-operative Societies appointed an arbitrator for settlement of the dispute between them and the Bank. The arbitrator gave his award in favour of the Bank. The members instituted a civil suit against the Bank for cancellation of the deed of hypothecation and some other documents on the allegation that those documents were with­out consideration and were executed by them under coercion. They challenged the validity of reference to arbitration and the award. It was pleaded in the suit inter alia that the reference and the award were hit by sections 34 and 35 of the Arbitration Act, 1940, and the case did not fall within rule 18 of the Co­operative Societies Rules. The question that required determination in the case, therefore, was whether in view of rule 18 of the Co­operative Societies Rules, the civil Court had no jurisdiction to entertain the suit filed by the members for the cancellation of the documents and whether a dispute to which rule 18 of the Co-opera­tive Societies Rules is applicable can be agitated in the civil Court. The Supreme Court held that rule 18 ousted the jurisdiction of the civil Courts in regard to dispute covered by it and that the dispute in the case fell within purview of rule 18. The Supreme Court observed: "The rule requires that the dispute must relate to the business of a Co-operative Society and it must be a dispute between members or past members of the Society or persons claiming through them or between a member or past member or persons so claiming and the committee or any officer of the society. It cannot be disputed that the…

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