NATIONAL CO-OPERATIVE CONSUMERS FEDERATION OF INDIA LTD. v. STATE OF KERALA

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **MONDAY, THE 1ST DAY OF AUGUST 2016/10TH SRAVANA, 1938** **WP(C).No. 12041 of 2010 (E)** **------------------------------------------** **PETITIONER(S) : -------------------------** **NATIONAL CO-OPERATIVE CONSUMERS FEDERATION OF INDIA LTD., 3-SIRI INSTITUTIONAL, AREA, NEW DELHI, REPRESENTED BY ITS BRANCH MANAGER, XL/1016, HOSPITAL ROAD, ERNAKULAM, KOCHI-682 011.** **BY ADVS. SRI.K.JAJU BABU SMT.M.U.VIJAYALAKSHMI SRI.BRIJESH MOHAN SRI.T.R.SADEESAN SRI.T.S.SHYAM PRASANTH** **RESPONDENT(S) : ----------------------------** **1. STATE OF KERALA, REPRESENTED BY SECRETARY TO GOVERNMENT, CO-OPERATIVE DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM.** **2. THE REGISTRAR OF CO-OPERATIVE SOCIETIES, THIRUVANANTHAPURAM, KERALA.** **3. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, ERNAKULAM.** **4. THE KERALA CO-OPERATIVE TRIBUNAL, THIRUVANANTHAPURAM, REPRESENTED BY ITS SECRETARY.** **5. THE TRIVANDRUM CO-OPERATIVE DISTRICT WHOLESALE SOCIETY LTD., REPRESENTED BY ITS MANAGING DIRECTOR, NO.4, PUTHAN CHANTHAI,THIRUVANANTHAPURAM.** - **R1 TO R3 BY SR. GOVERNMENT PLEADER SRI.PAUL VARGHESE R5 BY ADV. SRI.V.G.ARUN, S.C** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 01-08-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** Msd. **WP(C).No. 12041 of 2010 (E)** **------------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS :** **EXHIBIT P1: TRUE COPY OF ARC NO.2/1992 FIELD BY THE PETITIONER BEFORE THE 2ND RESPONDENT AGAINST 5TH RESPONDENT.** ## **EXHIBIT P1(A): TRUE COPY OF PRELIMINARY OBJECTION TO** - **THE MAINTAINABILITY OF ARBITRATION PROCEEDINGS FILED BY THE 5TH RESPONDENT IN ARC NO.2/1992 DATED 18.04.1992.** - **EXHIBIT P2: TRUE COPY OF INTERIM ORDER DATED 20.09.2003 PASSED BY THE 3RD RESPONDENT IN ARC NO.2/1992.** - **EXHIBIT P3: TRUE COPY OF AWARD DATED 19.06.1998 IN ARC NO.2/1992 PASSED BY THE 3RD RESPONDENT.** - **EXHIBIT P4: TRUE COPY OF R.P.NO.116/1998 DATED 15.10.1998 FILED BY THE 5TH RESPONDENT BEFORE THE 4TH RESPONDENT.** - **EXHIBIT P5: TRUE COPY OF THE ORDER DATED 19.04.2001 PASSED BY THE 4TH RESPONDENT IN R.P.NO.116/1998.** - **EXHIBIT P6: TRUE COPY OF JUDGMENT DATED 30.11.2006 IN W.P(C).NO.35422/2001 OF THIS HON'BLE COURT.** - **EXHIBIT P7: TRUE COPY OF THE ORDER DATED 29.08.2009 PASSED BY THE 4TH RESPONDENT IN R.P.NO.116/1998.** ## **RESPONDENT(S)' EXHIBITS :** ## **NIL** **//TRUE COPY//** ## **P.S.TO JUDGE.** Msd. ## **SHAJI P. CHALY, J.** -------------------------------------------------- ## **W.P.(C) No.12041 of 2010 ----------------------------------------------Dated this the 1[st] day of August, 2016** ## **JUDGMENT** This writ petition is filed by the petitioner Federation, seeking to quash Ext.P7 order passed by the 4[th] respondent Tribunal, whereby the Tribunal has set aside the award passed in A.R.C No.2/1992 passed by the 3[rd] respondent and remanded the matter for fresh consideration. Material facts for the disposal of the writ petition are thus: 2. Petitioner filed A.R.C No.2/1992 before the 2[nd] respondent under Sec.69 of the Kerala Co-operative Societies Act read with Rule 67 of the Kerala Co-operative Societies Rules, 1969 [hereinafter called 'the Act and the Rules'], seeking an award against the 5[th] respondent society for an amount of Rs.7,42,556.36 together with future interest at the rate of 17½% per annum. Fifth respondent has filed a preliminary objection with respect to the maintainability of the Arbitration Proceedings contending that the Kerala Cooperative Societies Act is not applicable to the petitioner and therefore the arbitration proceedings cannot be maintained 2 **W.P.(C) No.12041 of 2010** under law. The 3[rd] respondent, Joint Registrar of Co-operative Societies, Ernakulam, to whom the case has been transferred by the 2[nd] respondent, as per the interim order dated 29.09.1993 rejected the preliminary objection and held that the arbitration proceedings is maintainable, after holding that a dispute between the creditor and a society can be referred to arbitration for realization of the dues of the society from the 5[th] respondent. However, no objection was raised by the 5[th] respondent with respect to the merits of the claim raised by the petitioner. 3. Thereafter, the 3[rd] respondent passed an award, directing the 1[st] respondent to pay to the petitioner an amount of Rs.5,01,428.27 together with a sum of Rs.500/- towards cost of arbitration, with future interest. The 5[th] respondent did not file any appeal from the said award and thus the award became legally enforceable. Thereafter, the 5[th] respondent filed a petition purported to be a revision before the 4[th] respondent Tribunal as R.P.No.116 of 1998. The Tribunal by Ext.P5 order dated 19.04.2001 allowed the Revision Petition and set aside the award of the Joint Registrar and dismissed A.R.C No.2/1992 filed by the petitioner. The Tribunal held that 3 **W.P.(C) No.12041 of 2010** under Sec.74(1) of the Multi-State Co-operative Societies Act, 1984, all disputes in which a National Co-operative Society is a party should be referred to Central Registrar or any other officer empowered to exercise the powers of the Central Registrar, and the claim instituted under Sec.69 of the Act is not maintainable in law. 4. Aggrieved by Ext.P5 judgment, petitioner filed W.P. (C) No.35422 of 2001 before this Court and this Court quashed Ext.P5, as per judgment dated 30.11.2006 and held that the dispute is maintainable under the provisions of the Act and remanded the matter for fresh consideration on merits, to the Tribunal. Thereafter, the Revision Petition was heard by the 4[th] respondent and has passed the impugned order, Ext.P7 dated 29.08.2009, whereby A.R.C No.2/1992 is remanded to the Arbitrator for fresh disposal. It is thus aggrieved by Ext.P7, petitioner has approached this Court. 5. Heard respective counsel on either side and perused the pleadings and documents on record. 6. Learned counsel for the petitioner reiterated the contentions raised in the writ petition. The paramount contention put forth is that, the 5[th] respondent did not care to 4 **W.P.(C) No.12041 of 2010** contest the proceedings by filing a written statement and cross-examining the witnesses and assailing the documents. 7. _Per contra_ , learned counsel for the 5[th] respondent contended that, the reliance placed by the 3[rd] respondent on the documents produced by the petitioner is not sustainable under law, since the petitioner has not produced the books of accounts with respect to the business transacted by the petitioner and the 5[th] respondent. The mere statement of accounts produced by the petitioner could not have been accepted in evidence by virtue of Sec.34 of the Indian Evidence Act. Learned counsel has also relied on the judgment of the Apex Court in _**'Ishwar Dass Jain v. Sohan Lal'**_ [AIR 2000 SC 426] to canvass the said proposition. 8. Even though learned counsel for the 5[th] respondent has placed heavy reliance on the judgment in ' _**Ishwar Dass'**_ supra, the factual circumstances and the documents produced were entirely different. There, the proceedings were contested by the opposite party and the document was extracts of the amounts due from the defendant to the plaintiff from the account book. It was in that context, Apex Court has held that the extracts produced without account books is not a proof **W.P.(C) No.12041 of 2010** 5 under Sec.34 of the Evidence Act. But here, the case is entirely different. No contest was raised by the 5[th] respondent, at any point of time, against the pleadings with respect to the claim and the documents produced by the petitioner. 9. The question to be decided in this case is whether any interference is required in Ext.P7 order passed by the 4[th] respondent Tribunal since the Tribunal has ordered a remand in order to consider the matter afresh, after providing opportunity to the 5[th] respondent society. In order to understand the proceedings, a reference to Ext.P3 award passed by the 3[rd] respondent in A.R.C No.2/1992 is relevant. As stated above, the 5[th] respondent society filed a preliminary objection with respect to the maintainability of the arbitration case, Ext.P1. The objection did not contain anything with respect to the merits of the claim raised by the petitioner in Ext.P1 claim petition. A preliminary objection was filed solely contending that the petitioner Federation registered under the Multi-State Co-operative Societies Act, 1984 did not have the power to make a claim as provided under Sec.69 of the Act. The objection raised by the 5[th] respondent is discernible from Ext.P1(a). Ext.P1(a) does not contain anything with respect to **W.P.(C) No.12041 of 2010** 6 the merits of the claim. The 3[rd] respondent after considering the rival submissions made by the petitioner and the 5[th] respondent, passed Ext.P2 order, where also, the sole question considered was, whether the Arbitration proceedings is maintainable under law, and held that Sec.69 of the Act entitles a creditor to make a claim against the society registered under the Act. 10. It is also important to note that at no point of time, 5[th] respondent filed a written statement disputing the claims raised by the petitioner in Ext.P1. On a perusal of Ext.P3 award passed by the 3[rd] respondent, it is categoric and clear that petitioner has examined witnesses and proved its case. The Tribunal has marked the documents produced by the petitioner and held that an amount of Rs.5,01,428.27 towards loan, Rs.500/- towards cost of the arbitration proceedings and future interest from the 5[th] respondent is entitled to be recovered from the 5[th] respondent. It is important to note that, 5[th] respondent has not cared to cross-examine the witnesses of the petitioner nor has assailed the documents produced by the petitioner. It was in this background, award was passed by the 3[rd] respondent. **W.P.(C) No.12041 of 2010** 7 11. However, 5[th] respondent has preferred Ext.P4 revision petition challenging Ext.P3 award, again advancing the argument that the arbitration proceedings is not maintainable as the petitioner is not a member of the respondent society, and therefore the 2[nd] respondent Registrar of Co-operative Societies had no jurisdiction to entertain Ext.P1 claim and refer the same to the 3[rd] respondent for consideration. In the Revision Petition, the amount awarded was disputed by stating that dispute with respect to the same was not considered by the 3[rd] respondent and further that, according to the 5[th] respondent, as per the books of accounts of the 5[th] respondent, the outstanding balance was only Rs.90,227.92. It was also contended that, 3[rd] respondent ought to have ventured to settle the accounts by looking and verifying the books of accounts of both parties and therefore there is no reconciliation of books of accounts and its genuineness. It was also contended that the 3[rd] respondent has simply relied on the statement of accounts produced by the petitioner, whereas the 5[th] respondent has denied the statement of accounts produced by the petitioner, and therefore it was contended that since the amount as per the books of accounts is seriously disputed, the **W.P.(C) No.12041 of 2010** 8 Arbitrator should have found that a statement of accounts is absolutely necessary between the parties regarding the correct amount payable by the 5[th] respondent to the petitioner. It is also contended that the petitioner has failed to produce reliable and admissible documents at the time of evidence to prove their claim and the documents produced is inadmissible as per the Kerala Co-operative Societies Act, 1969. 12. On a perusal of Ext.P3 award, it is categoric and clear that as per Ext.P1, petitioner was entitled to get an amount of Rs.5,01,928.27. None of the documents produced by the petitioner was disputed by the 5[th] respondent either by filing a written statement or cross-examining the witnesses of the petitioner and assailing the documents produced, or disputed the claim put forth. 13. However, the 4[th] respondent Tribunal, even though did not interfere with the findings with respect to the jurisdiction of the Arbitrator to entertain the claim of the petitioner, entered into a finding that petitioner did not produce books of accounts, bills or vouchers to prove the supply of goods to the petitioner. No statements of witnesses recorded as per Rule 67 of the Rules. It was also held that no **W.P.(C) No.12041 of 2010** 9 books of accounts are produced as contemplated under Sec.34 of the Indian Evidence Act, kept in the regular course of business. That apart, it is found that the 5[th] respondent did not file written statement and therefore the award was passed without proper pleadings and on the basis of the objections filed by the counsel. It is also found that though the award contains a passing reference of the deposition of plaintiff, their evidentiary value was not discussed and not recorded properly and the relevancy of the records produced also not referred to and it was accordingly that the subject matter was remanded to the 3[rd] respondent for fresh consideration. Respondent has not filed any counter affidavit/objection in the writ petition. 14. Taking into account the rival submissions made across the Bar and on perusal of the pleadings, the paramount point for consideration is whether the Tribunal was right in remanding the matter for fresh consideration. As discussed above, it is clear from Ext.P3 award that no written statement was filed by the 5[th] respondent nor the 5[th] respondent has cared to cross-examine the witnesses of the petitioner. Therefore, apparently, what is discernible is that, plaint averments as well as the documents produced by the **W.P.(C) No.12041 of 2010** 10 petitioner were not under challenge at all. The 5[th] respondent only filed a preliminary objection with respect to the maintainability without traversing through the merits of the claim raised by the petitioner. 15. On a perusal of Ext.P3 award, it is categoric and clear that the subject matter was considered by the 3[rd] respondent by taking into account not only the pleadings put forth, but also verifying the books of accounts of the petitioner, and thereafter only reached the conclusive finding that the amount is due from the 5[th] respondent to the petitioner. That apart, even during the course of final arguments, the 5[th] respondent was only objecting the maintainability of the claim raised by the petitioner. It did not have a case, at any point of time, objecting the claim raised by the petitioner before the arbitrator. Therefore, on an evaluation of the fact situations, and on the basis of the documents produced not only by the petitioner but by the 5[th] respondent, the 3[rd] respondent has passed the award. However, the Tribunal has chosen to remand the matter on the ground that the 5[th] respondent did not file a written statement and therefore the award was passed without proper pleadings, 11 **W.P.(C) No.12041 of 2010** and on the basis of only an objection filed by the counsel for the 5[th] respondent. In my considered opinion, the Tribunal was carried away by the contentions raised by the 5[th] respondent that the 5[th] respondent did not file a written statement and therefore entitled to file the same and contest the proceedings. Such a course adopted by the 4[th] respondent Tribunal, in my view, cannot be sustained under law. It is clear from Ext.P3 award that the 5[th] respondent has participated in the proceedings and conducted the final hearing also, but only raised the objection of maintainability of the claim petition, even though a preliminary order was passed regarding the same. Therefore, it can only be viewed that the 5[th] respondent did not have any serious dispute with respect to the claim raised by the petitioner. If the 5[th] respondent society was serious in the nature of dispute raised in the revision petition with respect to the claim raised by the petitioner, it ought to have filed a written statement and contested the proceedings by cross-examining the witnesses of the petitioner and assailing the documents produced. 12 **W.P.(C) No.12041 of 2010** 16. That apart, without examining the witnesses and assailing the documents produced, challenging the award by filing a revision, can only be viewed as a delaying tactics on the part of the 5[th] respondent, without any merits. So also, from Ext.P3 award, it is categoric and clear that 5[th] respondent has produced certain documents before the arbitrator, but however, the 5[th] respondent has not cared to adduce evidence and prove the same. Therefore, the contention raised by the 5[th] respondent that, 5[th] respondent was liable to pay only an amount of Rs.90,227.92 as per the books of accounts, cannot be sustained under law. The attendant facts and circumstances discussed above will clearly establish that the 5[th] respondent failed to assail the claim raised by the petitioner and establish the case put forth in the revision petition. If the 5[th] respondent was seriously disputing the huge claim raised by the petitioner, it had the responsibility to contest the proceedings with all seriousness. Since the 5[th] respondent has failed to take any legal steps with respect to the claim raised by the petitioner before the primary authority, I am of the considered opinion that the Tribunal was not justified in remanding the matter for fresh consideration by giving an 13 **W.P.(C) No.12041 of 2010** opportunity to the 5[th] respondent to file written statement and contest the proceedings after a period of eight years. 17. In the result, petitioner succeeds, accordingly I set aside Ext.P7 order of the 4[th] respondent Tribunal and restore Ext.P3 award passed by the 3[rd] respondent. The writ petition is allowed accordingly. Sd/- **SHAJI P. CHALY JUDGE** //true copy// P.S. to Judge St/03.08.2016