M. K. INDRAJEET SINHJI COTTON P.LTD.versusNARMADA COTTON COOP. SPG. MILLS LTD. & ORS.

                                 [2016] 2 S.C.R. 357



                  M. K. INDRAJEET SINHJI COTTON P.LTD.                             A
                                          v.
            NARMADA COTTON COOP. SPG. MILLS LTD. & ORS.
                                   '
                     (Civil Appeal No. 766of2016)
                                   APRIL 26, 2016                                  B

                    [S. A. BOBDE AND AMITAVA ROY, JJ.]
              Gujarat Co-operative Societies Act, 1961 - ss.112 and 167 -
        Whether the Registrar, Cooperative Societies, in exercise of its power
        uls 112, can decide the tenability of a suit filed before civil court on   c
        the ground of non-issuance of notice uls 167 - Held: Decision as
        to tenability of a suit is judicial in nature -Such decision is purely
        within the jurisdiction and competence of the civil court and outside
'   -   the scope of Registrars power - In the present case, order of
        Registrar deciding about the tenability ·of the suit is without
        jurisdiction.                                                              D

              Allowing the appeal, the Court
               HELD: 1. Section 167 of Gujarat Co-operative Societies
        Act, 1961 is preceded by Section 166 of the Act which bars the
        jurisdiction of Courts in any matter concerned with the winding
                                                                                   E
        up and dissolution of the Society, vide Section 166 (l)(c). The
        clear intention of the legislature is to bar a civil court from
        entertaining any matter concerned with the winding up and
        dissolution of the society. In order to give effect to this provision,
        the legislature has enacted Section 167 which makes it mandatory
        for a plaintiff who intends to institute a suit against a society or       F
        any of its officers in respect of an act touching the business of the
        society to give a clear notice of bis intention to sue. The Section
        prohibits a plaintiff from instituting a suit until the expiration of
        two months after notice in writing bas been delivered to the
        Registrar. The question whether Section 167 is attracted to a
        particular suit or not depends upon an inquiry into the nature of          G
        the suit, in particular whether it affects the business of the society
         and the parties to the suit. Such a decision is obviously within the
         jurisdiction and competence of the civil court where the suit is
         instituted and must therefore be regarded as judicial. [para 9]
         (361-D-G]                                                                 H
                                          357
358             SUPREME COURT REPORTS                   (2016] 2 S.C.R.



A         2. Section 112 bars a Civil Court from taking coguizauce of
   any matter connected with winding up of a society. It further
   confer. the power on the Registrar to grant or refuse leave to
   institute a suit against such society or the liquidator where a
   winding up order has been made against the sociely. Such power
   is conferred 011 the Registrar to consider whether a suit should
13
   be filed against a society which is under liquidation. The obvious
   considerations that must be taken into account are whether the
   suit would have the effect of dissipating the properties or diverting
   the properties of the society in liquidation towards one creditor
   i.e. the plaintiff instead of being equitably distributed amongst
c the whole body of creditors as contemplated by the provisions
   for winding up of the society. The Registrar is not concerned
   with the merits or the tenability of the suit which is, in any case
   not before him, and indeed cannot be because such a snit can
   only be tried and conclusively decided by a Civil Court. Naturally
   it is the Civil Court which can alone decide whether the suit is
D
   triable and tenable. It would thus be outside the scope of the
   Registrar's power to take into account the factor whether the
   suit is tenable in law or not. The question of tenability being
   judicial is purely within the jurisdiction and competence of the
   court where the suit is pending. Ther~fore, a question whether a
E suit is tenable under Section 167 of the Co-operative Societies
   Act for want of notice under the said provision is a question within
   the exclusive competence of a Civil Court. In the present case
   the Registrar having refused leave to continue the suit on the
   ground that the suit pending before the Court is not preceded by
   a notice under Section 167 of the Act has acted without
 F
   jurisdiction. (paras 11 and 12] (362-B-F, H; 363-A(
             CIVIL APPELLATE JURISDICTION : Civil Appeal No. 766 of
      2016
           From the Judgment and Order dated 24.02.2011 of the Division
 G    Bench of the High Court of Gujarati t Ahmedabad in Letters Patent
      Appeal No. I 065 of20 I 0
            Abhijat P. Medh, Rauf Rahim, Poulami Das, Advs., for the
      Appellant.
           Ms. Hemantika Wahi. Ms. Jesal Wahi, Shiv Man gal Shanna, Vivek
 H    R. Mohanty,Ankit Shah, Puneet Parihar, Ms. Sharmila Upadhyay,Advs.,
  M. K. INDRAJEET SINHJI COTTON P. LTD. v. NARMADA                                 359
            COTTON COOP. SPG. MILLS LTD.

for the Respondents.                                                                A
      The Judgment of the Court was delivered by
      S. A. BOBDE, J 1. Leave granted.
       2. This appeal is preferred by a Company which has been refused
permission to continue the suit filed by it before the City Civil Court,
                                                                                    B
Ahmedabad by the Registrar of Co-operative Societies on the ground
that the suit is not tenable because notice of its institution required by
Section 167 of the Gujarat Co-operative Societies Act, l 96 l (hereinafter
referred to as the Co-operative Societies Act).
      3. The appellant, a Private Limited Company entered into a lease
agreement dated l -10-1998. Under the agreement it took on lease the
                                                                                    c
mill of the respondent Cooperative Society for a period of five years.
Disputes having arisen. the appellant filed a suit against the respondent
society on 26-4-2000 before the City Civil Court at Ahmedabad. The
appellant sought recovery of Rs.2,51,89.606.79/- (Rupees Two Crores,
Fifty One Lakhs, Eighty Nine Thousand, Six Hundred Six and Paise                    D
Seven Nine only) with interest at the rate of2 l % per annum.
       4. Within a year of filing the suit, the defendant Society, the
respondent herein, was wound up by an Order dated 19-4-2001 passed
by the Commissioner, Cottage and Village Industries, Gujarat. Since the
suit had been filed prior to the winding up order, the appellant was obliged        E
to apply for leave to continue the suit by virtue of Section l 12 of the Co-
operative Societies Act. That Section reads as follows:-
      "112.Bar of suit in winding up and dissolution matters
      "Save as expressly provided in this Act, no Civil Court shall take
      cognizance of any matter connected with the winding up or                     F
      dissolution of a society under this Act; and when a winding up
      order has been made no suit or other legal proceedings shall lie Q!:
      be proceeded with against the society or the liquidator. except
      by leave of the Registrar, and subject to such terms as he may
      impose:
         Provided that where the winding up order is cancelled. the                 G
       provisions of this section shall cease to operate so far as the liability
       of the society and of the members thereof to be sued is concerned,
       but they shall continue to apply to the person who acted as
       liquidator."
                                                         (emphasis supplied)        H
360              SUPREME COURT REPORTS                            [2016] 2 S.C.R.


A            5. The controversy is: whether the Registrar, while considering
      whether feave should be granted can hold thatthe suit itself is not tenable
      for want of notice. Initially the Registrar passed a non-speaking order
      dated 6-6-2003 refusing permission to continue the suit. On 28-11-2005,
      however, the Registrar passed a speaking order refusing permission to
      continue the suit. It is this order that has given rise to the present
 B
      controversy. The main reason why the Registrar refused permission to
      continue the suit for recovery of money against the respondents is that
      according to the Registrar, Section 167 ofthe Co-operative Societies
      Act requires a plaintiff to give notice to the Registrar stating the cause
      of action and the relief which the plaintiff claims. Such a notice not
c     having been given by the appellant, the appellant is not entitled for leave
      to continue the suit against the defendant. In other words, according to
      the Registrar, the plaintiff's suit is not tenable for want of notice under
      Section 167 and, therefore, leave to continue such a suit is liable to be
      refused under Section 112 of the Co-operative Societies Act. Section
      167 reads as under:
 D
            "167. Notice necessary in suits
             Save as otherwise provided in this Act, no suit shall be instituted
             against a society, or any of its officers, in respect of any act touching
             the business of the society, until the expiration of two months next
 E           after notice in writing has been delivered to the Registrar or left
             at his office, stating the cause of action, the name, description and
             place ofresidence of the plaintiff and the relief which he claims,
             and the plaint shall contain a statement that such notice has been
             so delivered or left."

 F           6. In view of such refusal, the appellant's suit became untenable.
      The appellant, therefore, challenged the order of the Registrar refusing
      leave before the learned Single Judge of the Gujarat High Court. The
      learned Single Judge allowed the writ petition and quashed the Registrar's
      Order. The learned Single Judge held that the question whether a notice
      under Section 167 was necessary in a given case could only be decided
 G    by a competent civil court since such a decision required an inquiry and
      a decision whether the suit was in respect ofany acttouching the business
      of the society and generally whether Section 167 applied to such a suit.
      The learned Single Judge also held that Section 112 of the Act casts a
      duty on the Registrar to grant or refuse leave and only such an
      administrative decision can be taken by the Registrar. Further, such a
 H
  M. K. INDRAJEET SINHJI COTTON P. LTD. v. NARMADA                                361
     COTTON COOP. SPG. MILLS LTD. [S. A. BOBDE, J]

limited administrative decision can be taken by the Registrar only on              A
considerations germane to the grant or refusal of the leave and not on
considerations which were within the jurisdiction of a competent city
civil court.
       7. Aggrieved, the respondents preferred an appeal before a
Division Bench of the Gujarat High Court. The Division Bench has                   B
allowed the appeal and thus upheld the order of the Registrar refusing
leave to continue the suit on the ground that the suit is not tenable by
virtue of failure to give notice under Section 167 of the Co-operative
Societies Act. The appellant is thus in appeal.
       8. We have heard the learned counsel for the parties.                       c
         9. A decision regarding the correctness or otherwise of the view
 of the Division Bench must be taken with regard to the relevant provisions
 of the Co-operative Societies Act. It is also necessary to ask if the decision
 that the suit is not tenable if notice is not given is judicial in nature.
 Section 167 is preceded by Section 166 which bars the jurisdiction of             D
 Courts in any matter concerned with the winding up and dissolution of
 the Society, vi de Section 166 (I)( c). The clear intention of the legislature
 is to bar a civil court from entertaining any matter concerned with the
 winding up and dissolution of the society. In order to give effect to this
 provision, the legislature has enacted Section 167 which makes it
 mandatory for a plaintiff who intends to institute a suit against a society        E
 or any of its officers in respect of an act touching the business of the
 society to give a clearnotice of his intention to sue. The Section prohibits
 a plaintiff from instituting a suit until the expiration of two months after
  notice· in writing has been delivered to the Registrar. There seems little
 doubt that this Section imposes a mandatory requirement that if the                F
 conditions prescribed by it exist, that is to say if the suit proposed to be
 filed is against a society or any of its officers and is in respect ofany act
 touching the business of the society then it must be preceded by a notice
 of two months. It is obvious that the question whether Section 167 is
.attracted to a particular suit or not depends upon an inquiry into the
 nature of the suit, in particular whether it affects the business of the           G
 society and the parties to the suit. Such a decision is obviously within the
  jurisdiction and competence of the civil court where the suit is instituted
  and must therefore be regarded as judicial.
      I 0. The question that thus arises is whether a Registrar who is
 empowered by Section 112 to decide the limited question whether leave              H
362              SUPREME COURT REPORTS                          [2016] 2 S.C.R.


A     should be granted or refused to institute or to continue a suit against a
      society in liquidation is competent to take into account whether a suit is
      tenable for want ofnotice under Section 167 of the Co-operative Societies
      Act and on that basis refuse permission to institute or continue a suit, if
      he finds it untenable.
 B           11. It is therefore necessary to examine the scope of the two
      provisions. Section 112 bars a Civil Court from taking cognizance of
      any matter connected with winding up of a society. It further confers
      the power on the Registrar to grant or refuse leave to institute a suit
      against such society or the liquidator where a winding up order has been
      made against the society. We are concerned here with the nature and
c     scope of the power conferred on the Registrar. Such power is conferred
      on the Registrar to consider whether a suit should be filed against a
      society which is under liquidation. The obvious considerations that must
      be taken into account are whether the suit would have the effect of
      dissipating the properties or diverting the properties of the society in
 D    liquidation towards one creditor i.e. the plaintiff instead of being equitably
      distributed amongst the whole body of creditors as contemplated by the
      provisions for winding up of the society. The Registrar is not concerned
      with the merits or the tenability of the suit which is, in any case not
      before him, and indeed cani1ot be because such a suit can only be tried
      and conclusively decided by a Civil Court. Naturally it is the Civil Court
 E    which can alone decide whether the suit is triable and tenable. It would
      thus be outside the scope of the Registrar's power to take into account
      the factor whether the suit is tenable in law or not. The question of
      tenability beingjudicial is purely within the jurisdiction and competence
      of the court where the suit is pending. This must be left entirely to the
 F    Civil Court as intended by the Legislature. There is no doubt that a
      question whether a suit is tenable under Section 167 of the Co-operative
       Societies Act for want of notice under the said provision is a question
      within the exclusive competence of a Civil Court, as indeed all questions
      of tenability are. Thus, the Registrar cannot look into the question whether
      the suit is tenable for want ofnotice and decide the question directly or
 G     impliedly and thereby decide whether leave to institute or continue a suit
      could be granted or withheld.
             I 2. In the present case the Registrar having refused leave to
      continue the suit on the ground that the suit pending before the Court is
      not preceded by a notice under Section 167 of the Act has acted without
 H
  M. K. INDRAJEET SINHJI COTTON P. LTD. v. NARMADA                               363
     COTTON COOP. SPG. MILLS LTD. [S. A. BOBDE, J]

jurisdiction; having taken into account a factor which he was not                 A
competent to take into account and determine the grant of leave to
proceed with the suit. As a matter of law the decision to hold that the
suit is not tenable is a decision which conclusively determines the suit
and beingjudicial can be taken by the Civil Court alone. The Registrar
cannot hold the suit to be untenable even for the purpose of considering
                                                                                  B
grant ofleave. In other words, the Registrar has no jurisdiction to hold
that the suit is not tenable.
       13. We thus have no doubt that the order of the Registrar dated
28-11-2005 refusing leave to the appellant on the ground that the notice
under Section 167 has not been issued therefore the suit is not tenable, is
liable to be set aside. It is not possible to agree with the view of the
                                                                                  c
Division Bench that the Registrar must be allowed to consider whether
notice has been given or not and, therefore, whether the suit is
maintainable or not because if such power is not conceded to the
Registrar, it would result in the civil cornt taking cognizance of a matter
which it would have no power to take cognizance of. This argument is              D
completely untenable where the question is one of leave to continue a
suit as distinct from leave to institute a suit. It is only in the latter case
that this reasoning would have any relevance. In any case, it is not the
business of the Registrar to consider the merits and in particular the
tenability of a pending suit and hold it to be untenable and thereupon
                                                                                  E
refuse leave to continue the suit. The Civil Court is perfectly competent
to decide whether the suit before it is tenable or not.
       14. In the result, the appeal succeeds and is hereby allowed. The
Registrar shall decide the question of permission to continue the suit,
afresh.
                                                                                  F
Kalpana K. Tripathy                                           Appeal allowed.