Scope of Section 69 of the Kerala Co-operative Societies Act, 1969

The Kerala High Court on 5 July 2011 in Raghavan Vs. State of Kerala, 2011 (3) KLT 500 : 2011 (3) KLJ 593, ILR 2011 (3) Ker. 650 : 2011 (3) KHC 369 held that “to attract section 69 of the Kerala Co-operative Societies Act, 1969 the dispute raised by the member of a society against that society should relate to the business, constitution, establishment or management of the society.

Justice P.N. Ravindran also held that there is no merit in the writ petition. The writ petition fails and is dismissed with the observation that the dismissal of this writ petition or the rejection of the arbitration case will not stand in the way of the petitioner from instituting a suit in the competent civil court seeking appropriate reliefs.

Section 69 of the Kerala Co-operative Societies Act, 1969

While dismissing the instant case the Court held that the claim made by the petitioner does not relate to the business, constitution, establishment or management of the third respondent society. Therefore the mere fact that the claim made by the petitioner against the society is for payment of money or the fact that the petitioner is a member of the society will not confer on the Arbitrator the jurisdiction to entertain the petition.

The allegation in the petition is that the death of the petitioner’s wife was caused by a wrongful act, neglect or default on the part of the society and its office bearers.

In short the claim is one for compensation under section 1A of the Fatal Accidents Act. Such a claim falls outside the scope of section 69 of the Act.

The Joint Registrar of Co-operative Societies was therefore perfectly right in declining to entertain the petition.

Business of the Society

Reliance is placed on the decision of a learned single Judge of the Court in Sekharan v. State of Kerala and others, 1976 KLT 137 to contend that a claim for money by a member of a society against the society is a dispute as defined in the Act, irrespective of whether it relates to the business of the society or not.

In Sekharan v. State of Kerala and others (supra) the question considered was whether a claim for damages by a society against the contractor entrusted with the construction of a building for the society, the object of which included maintenance and letting out of godowns for storage of agricultural produce of its members is a dispute touching the business of the society and can be referred to the Registrar for decision under section 69(1)(f) of the Act.

After a survey of the statutory provisions and the case law on the point, the learned Judge held as follows:-

“7. ….. The definition contained in S.2(i) of the Kerala Act is an inclusive definition. As per the definition a claim in respect of any sum payable to or by a society will also be a dispute irrespective of the fact whether it arises in a matter touching the business of the society or not. Under S.69(1)(f) of the Act if the dispute is between the society and a person other than a member of the society with whom the society has or had business transaction, the Registrar has got the power to settle the same by arbitration. Then the only question is whether the dispute in question is one which is capable of being resolved by the Registrar. The damages claimed is the actual loss incurred by the society to complete the work by another contractor. It cannot be said that this is a dispute which is not capable of being resolved by the Registrar in arbitration under the Act.”

The learned counsel for the petitioner contended, relying on the aforesaid decision, that a claim in respect of any sum payable to or by a society will also be a dispute as defined in the Act irrespective of whether it touches the business of the society or not and therefore, the claim made by the petitioner is maintainable.

From a reading of the aforesaid decision it is evident that the business of the society, which was the plaintiff in the arbitration case before the Arbitrator, was to construct buildings and to let them out to its members for use as godowns to store manure and agricultural produce. That apart, the claim was made against a person with whom the society had a business transaction and was referable to section 69(1)(f) of the Act. Therefore, the dispute in that case was one touching the business of the society.

In K.C.Varkey v. The Director of Industries and Commerce, Trivandrum & Others, ILR 1978 (2) Kerala 143, a Division Bench of High Court considered the question whether the dispute between the owner of a building and the co-operative society to which the building had been let out on rent, is a dispute as defined in the Act.

The petitioner in that case had rented out a building to the Kerala State Handicrafts Apex Co-operative Society Limited, Ernakulam, as per a lease dead dated 27.10.1965. When the rent was kept in arrears the landlord moved the Rent Control Court for an order of eviction. While the proceedings were pending the society surrendered possession of the tenanted premises.

Thereafter the society filed a claim before the Director of Industries and Commerce in his capacity as Registrar of Industrial Co-operative Societies seeking to recover from the landlord the amount, which according to the society, was wrongfully retained by the landlord from out of the advance rent deposited by the society.

The Director of Industries and Commerce transferred the case to the Senior Co-operative Inspector attached to the District Industries Office, Ernakulam, after designating him as the Arbitrator to decide the case. The landlord raised a dispute before the Arbitrator regarding the maintainability of the claim petition.

He thereafter moved High Court for an order directing the Arbitrator to forbear from proceeding with the action initiated against the society. Though the society relied on the decision of the learned single Judge in Sekharan v. State of Kerala, (supra) the Division Bench distinguished the said case on the ground that the society involved in that case was engaged in the business of constructing and letting out godowns and therefore the dispute raised in that case related to the business of the society.

In K.C.Varkey v. The Director of Industries and Commerce, Trivandrum & Others, (supra) the Division Bench held as follows:-

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