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Civil Revision Petition No. 45 of 1956, decided on 21st July 1956 under section 115, Civil P. C. fob revision of the order of Ata Ullah Additional District Judge, Gujrat dated the 24th January 1956, affirming that of Muhammad Saleem, Senior Civil Judge, Gujranwala dated the 19th October 1955.
Rule 18 re: arbitration‑Excludes jurisdiction of Civil Courts " Business of a co‑operative society"‑Dispute as to membership not covered by the word "business"‑c7urisdiction of Civil Court.
Reading Rule 18 as a whole, the intention is clear that the dispute covered by the Rule is to be adjudicated upon only in the manner provided in the Rule.
Held, therefore, that Rule 18 excluded the jurisdiction of Civil Courts.
When, however, the question involved was one of status of a person‑Whether he was or was not a member of the society:
Held that, although the word "business" was to be inter preted in a wide sense, the question was not covered by the phrase "business of a Co‑operative Society" occurring in Rule 18, and jurisdiction of the Civil Courts to determine the question was therefore not barred.
The Zamindara Bank, Sherpur Katan v. Suba A I R 1924 Lah. 418, Gopi Nath v. Ram Nath A I R 1925 All. 356, Dasaratha Roy v. Subba Rao A I R 1923 Mad. 481 and District Co‑operative Society Ltd. v. Khem Chand A I R 1954 Himachal Paradesh 63 ref.
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" Balance of and convenience"‑Means really "balance of incon venience"‑Plaintiff to suffer if inconvenience equal‑Onus to prove inconvenience on plaintiff.
The meaning of balance of convenience being in favour of the plaintiff is: If an injunction is not granted and the suit is ultimately decided in favour of the plaintiffs, the inconvenience caused to the plaintiff would be greater than would be caused to the defendants if an injunction is granted but the suit is ultimately dismissed. Although it is called balance of convenience, it is really the balance of inconvenience, and it is for the plaintiffs to show that the inconvenience, caused to them would be greater than that which may be caused to the defendants. Should the incon venience be equal, it is the plaintiffs who suffer.
Mahmood Ali and Atta Ullah Sajjad for Petitioner.
Ghias Muhammad, Zahur Ahmad and Muhammad Nadir for Respondent.
Dates of hearing: 17th, 18th and 24th May 1956.
This is a revision petition against the order of the learned District Judge Gujranwala, affirming an order of the Additional District Judge, Gujranwala, granting a temporary injunction.
The dispute in the suit out of which this revision petition arises relates to the election of the managing committee Hafizabad Co‑operative Transport Society which carried on the business of plying motor vehicles for hire. It appears that there are two parties amongst the members of this society, each of which is trying to get control over the management. An election of the managing committee of the society took place on the 14th of March 1954. The Chairman of the committee having subsequently resigned there was, on the 10th of September 1954, an election of the president alone. The person who was elected president was Muhammad Suleman defendant No. 37, who was already the vice‑president and as his seat was vacated, there was an election of the vice‑president too. Muhammad Sultan plaintiff was elected as the vice‑president. It appears that at these elections the same party remained in power. The neat election took place on the 24th of March 1954 as a result of which several members of the old committee were eliminated. Objec tion to this election was taken by Muhammad Sultan plaintiff and some others before the Registrar of Co‑operative Societies. As a result of an enquiry a new election was ordered by the Registrar, and this election was held on the 18th of August 1955. In this election too the party which had been elected on the 24th of March 1955 remained in power. The present suit was filed on the 1st of October 1955 by three adult and two minor members of the society, impeaching the election of the managing committee on the 18th of August 1955. The defen dants to the suit are persons who were regarded by the Registrar as members of the society and were in consequence served with a notice of the meeting of the 18th of August 1955. Defendants Nos. 1 to 22 are the contesting defendants, defendants Nos. 23 to 37 being those who supported the plaintiffs' case. The grounds for impeaching the election are:‑
(1) That Shah Muhammad defendant No. 20, who presided over the meeting in which the election was held was not entitled to so preside in view of the fact that Muhammad Sultan plaintiff was the regular president of the society and should, according to the bye‑laws of the Society, have been in the chair.
(2) That defendants Nos. 18 to 22 were not members of the society at all.
(3) That Muhammad Ishaq, defendant No. 4, was a minor and, therefore, he was not entitled to vote.
The relief claimed is a declaration that the proceedings of the meeting of the 18th of August 1955 were illegal and ultra vires and an injunction that the defendants should be prohibited from taking any proceedings on the basis of the meeting. Along with the plaint was put in au application praying for the grant of a temporary injunction restraining the defendants from taking any action in pursuance of the proceedings of the meeting of ‑the 18th of August 1955. It appears that although by the meeting of the 24th of March 1955 the party of the contesting defendants had been elected to the managing committee that managing committee which was already in existence by virture of the elections of the year 1954, had continued in management and the prayer was that the status quo be maintained.
The learned Senior Civil judge came to the conclusion that Abdul Majid, Inayat Ullah and Shah Muhammad, defendants Nos. 18 to 20, were in fact members and prima facie the objection relating to them has no force, but that as regards defendants Nos. 21 and 22 and the minor defendant Muhammad Ishaq, the contention of the plaintiffs was a matter for consideration. Without going into the question as to what would be the position on merits on the basis of its prima facie finding the trial Court granted an injunction. On appeal, the Additional District judge came to the conclusion, that the objections of the plaintiffs were prima facie neither, absurd, nor untenable and that there were chances of success, in favour of the petitioners. With respect o to the balance of convenience, the learned Judge was of the opinion that if an injunction was refused and it was ultimately found that the former president was entitled to continue in office, it will, be, difficult, to assess the damage in terms of money which the former president would suffer on account of loss of his office and of reputation. It was proper therefore, to uphold the injunction.
On behalf of the defendants the application for temporary injunction had been contested on the grounds firstly, that the Civil Courts had no jurisdiction to try the suit at all, and, secondly, that the plaintiffs had riot made out a case for the grant bf an injunction. It has been urged before us too that the jurisdiction of the Civil Courts is excluded by virture of Rule 18 of the Rules framed under the Co‑operative Societies Act. It has also been contended that even on the prima facie findings of the trial Court, it was apparent that the suit was liable to be dismissed. It is urged further that the learned Additional District judge has not properly appreciated the question of balance of convenience.
This case has been referred to a Division Bench .for an authoritative pronouncement on the question whether this suit related to the business of the society within the meaning of Rule 18 of the Rules mentioned‑above. The Hafizabad Transport Co‑operative Society is a Society registered under the Co‑operative Societies Act, 1912. The Provincial Government is authorised by virtue of subsection(1) of section 43 to frame rules for carrying out the purposes of the Act, It is further provided under subsection (2) of section 43 of the Act that without prejudice to the generality of power granted by subsection (1) such rules may provide for the matters enumerated in clauses (a) to (t) of subsec tion (2) and clause (b) provides for decision of disputes by arbitration. Under section 43 rules had been framed by the Provincial Government, of which Rule 18, which relates to arbitration in case of disputes, runs thus:‑
(a) Any dispute concerning the business of a co‑opera tive society 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 shall be referred to the Registrar. Reference may be made by the committee or by the society by resolution in general meeting or by any party to the dispute or if the dispute concerns a sum due from a member of the committee to the society, by any member of the society.
(b) The Registrar may either decide the dispute himself, or appoint an arbitrator, or refer the dispute to three arbitrators, of whom one shall be nominated by each of the parties and the third shall be nominated by the Registrar and shall act as Chairman.
(c) When a dispute is referred to three arbitrators, if any party to the dispute fails to nominate an arbitrator within 15 days, the Registrar may make the nomination instead. If an arbitrator nominated by one of the parties dies, or refuses or neglects to act, or, by absence or other wise, becomes incapable of acting the Registrar shall call upon the party concerned to nominate a fresh arbitrator within 15 days, and no arbitrator is nominated accordingly, he may nominate one himself and if such arbitrator was nominated by himself he shall nominate a free one in his place.
(d) No legal practitioner may be nominated as arbitrator by any party to a dispute.
(e) In all arbitration proceedings under this rule the Registrar or arbitrators shall have power to administer oaths, to require the attendance of the parties and witnesses and to require the production of all necessary books and documents by a summons delivered orally or sent by hand or by registered post or through the nearest Civil Court having jurisdiction in the area in which the society operates and shall further have power to order the expenses incurred in determining the dispute to be paid either out of the funds of the society or by such party or parties to the dispute as he or they may think fit. Persons not attending in accordance with such summons or making any other default or refusing to give evidence or guilty of any contempt to an arbitrator during the investigation of the matter referred, shall be subject by order of the Registrar on the represen tation of the arbitrator or arbitrators, as the case may be, to such disadvantages, penalties and punish ments as they would incur for the same offences if committ ed in suits tried before a Civil Court.
(f) The Registrar or arbitrator shall hear the evidence of the parties and witnesses who attend, and upon that evi dence and after consideration of any documentary evidence produce by either side a decision or award shall be given in accordance with justice, equity and good conscience and shall be reduced to writing announced to the parties and handed over to the successful party. When neither party is entirely successful the award shall be deposited with the Registrar who will issue a copy of it to any party that applied for it.
(g) In the absence of any party duly summoned to attend, the dispute may be decided ex‑parte.
(h) When three arbitrators are appointed, the opinion of the majority shall prevail.
(i) Any party aggrieved by an award of an arbitrator may appeal to the Registrar in person or by agent within one month of the date of the award.
(j) An arbitrator's award, if no appeal has been made within a month or a decision of the Registrar originally or in appeal, shall not, as between the parties to the dispute, be liable to be called in question, in any civil or revenue Court, and shall be in all respect final and conclusive, except on proof of the receipt of a corrupt gratification by the arbitrator.
(k) A decision or award shall on application to a Civil Court having jurisdiction in the area in which the society operates be enforced in the same manner as a decree of such Court.
(l) In proceedings before the Registrar or an arbitrator no party shall be represented by a legal practitioner.
The first question for decision is whether this Rule is merely an arbitration clause or whether it excludes the juris diction of the Civil Courts with respect to the disputes which are covered by this Rule.
A Division Bench of the Lahore High Court has held in The Zamindara Bank, Sherpur Kalan v. Suba (A I R 1924 Lah, 418) that the jurisdiction of Civil Courts is barred with respect to such disputes, and after taking into consideration the object of the Co‑operative Societies Act, we see no reason to differ from what was held in that case. It is true that there are no ex press words in Rule 18 taking away the jurisdiction of the Civil Courts in a case where there has not been an adjudication by arbitrator or the Registrar. The express provision is only to the effect that when an award has been given, it shall not be called in question in any Court, but in the earlier part of Rule 18 it has been stated that every such dispute shall be referred to Registrar. Reading the Rule as a whole, the intention is clear that the dispute is to be adjudicated upon only in the manner provided in the Rule. As pointed out by the learned Judges in The Zamindara Bank, Sherpur Kalan v. Suba the object of the Co‑operative Societies Act will not be served if disputes of the nature mentioned in this rule are allowed to go to Court. If we hold that this is only an arbitration clause, then that part of the Rule which says that the award or order on appeal shall not be called in question in any Court, may be rendered almost nugatory by the opposite party filing a suit with respect to the matter which has been referred to arbitration we hold, therefore, that Rule 18 does exclude the jurisdiction of the Civil Courts.
The next question to consider is whether the dispute in the present case falls within Rule 18. The decision on this question depends upon the interpretation of the word "business" in Rule 18. A number of authorities have been cited before us in which it has been held that the word "business" in this rule is to be interpreted in a wide sense. In Gopi Nath v. Ram Nath (A I R 1925 All. 356) it was held that the word "Business" in this Rule was not used in any restricted Fense and it included the elections of the officers of the society In Dasaratha Row v. Subba Rao (A I R 1923 Mad. 481) the argument put forward on behalf of the plaintiff was that business' referred only to internal management and could not refer to a dispute which related to a particular transaction entered into by the society. It was held that the word "business" was not restricted to internal management. District Co‑operative Society Ltd. v. Khem Chand (A I R 1954 Himachal Paradesh 63) is a case relating to elections like Gopi Nath v. Ram Nath. In this case too it was held that the word "business" does include an election.
On behalf of the respondents two cases had been cited, Dacca Co‑operative Industrial Union Ltd. v. Dacca Co‑operative Sankhya Slipa Samity Ltd. (A I R 1938 Cal. 327) and Dr. Savitri Bali etc. and others v. Gutti Thotappa (.A I R 1951 Mad. 425). It was held in both these cases that the question whether the Society was legally constituted was not one excluded from the jurisdiction of the Civil Courts.
It appears to us that the question involved in the present suit is not one of business but of status. So far as the question of membership is concerned, it has been held and in fact there is no contest on this point, that a decision on that question is not excluded from the jurisdiction of Civil Courts. It is for the Civil Courts to determine whether a person is or is not a member of the Co‑operative Society. Under Rule 18 the arbitrator has not been granted any jurisdiction to convert a member into a non‑member or a non‑member into a member. Similar, we consider, is the position with respect to office bearers. Suppose a person who claimed to be the president were to file a declaratory suit claiming that he was the properly elected president and the need for this suit has arisen because he was not recognised as such by the Registrar or the managing committee and not in connection with any business of the society. Could it be argued that a mere declaration as to his being a president involved any question of the business of the society While we do not intend to place any restricted interpretation on the word "business", we are unable to hold that the word D includes questions relating to the status of a person. It may also be observed that in the present case the grounds of relief include that some of the defendants were not members at all and, therefore, not entitled to vote. Now, if a separate suit was brought for a declaration as to whether these persons are members or not members and a finding is given, then, if we hold that in connection with the validity of the election this matter could be gone into by the arbitrator there would be a clash of jurisdiction between the arbitrator and the Civil Court and we do not presume that this clash was intend ed. We are of the opinion, therefore, that the jurisdiction of the Civil Courts in the present suit is not barred.
While we hold that the Civil Courts had jurisdiction to try the suit, we are of the opinion that the learned Additional District judge's approach to the question of balance of con venience was not proper. He is affected by the considera tion that if an injunction was not granted and ultimately it was found that the former president was unable to continue, then he would suffer in reputation and this loss could not be assessed in terms of money. The learned judge has failed to consider that the same argument could be put forward on behalf of the other party, viz., that if an injunction is granted and it is ultimately found that the election was valid, the president elected in the meeting in dispute would suffer in reputation. The meaning of there being a balance of con venience in favour of the plaintiff is this: If an injunction is not granted and the suit is ultimately decided in favour of the plaintiffs, the inconvenience caused to the plaintiff would be greater than would be caused to the defendants if an v injunction is granted but the suit is ultimately dismissed. Although it is called balance of convenience, it is really the balance of inconvenience, and it is for the plaintiffs to show that the inconvenience caused to them would be greater than that which may be caused to the defendants. Should the inconvenience be equal, it is the plaintiffs who suffer. This is the normal rule to be kept in mind in deciding whether temporary injunction should be granted. It is also a matter of some importance that the former president or the former managing committee have not themselves filed any suit. The plaintiffs have filed the suit as members of the society and relief is asked for on the ground that the meeting is illegal.
The learned Additional District judge while he gave a finding that there was a bona fide dispute between the parties did not consider as to what was the position as to; the validity of the proceedings at the impugned meeting on the basis of the prima facie findings of the trial Court. The trial Court had found that the objection with respect to Inayat Ullah, Abdul Hamid and Shah Muhammad was without force. The result of this finding would be that whereas there would be eighteen members of the society on the side of the plaintiffs, there would be at least nineteen on the other side.
This revision petition is accepted and the order granting an injunction is set aside. The parties shall bear their own costs in all Courts.
A. H. Petition accepted.
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