The Commissioner of Cooperative Development v. Jayaratne
THE COMMISSIONER OF CO-OPERATIVE DEVELOPMENT
JAYARATNE peiris and OTHERS
SHARVANANDA, J„ WANASUNDERA. J.. WIMALARATNE, J.. COLIN-THOME. J.
AND ABDUL CADER, J.
S.C. APPEAL No. 63/82 – C.A. APPLICATION No.1656/79. WITH S.C. APPEAL -No. 12/83 – C.A. APPLICATION No. 1656/79.
FEBRUARY 14, 1984.
Co-operative Societies Law, No. 5 of 1972. Seotion 58 – Rule 49(1) of theCo-operative Societies Rules, 1973- Reference of dispute between the Co-operativeSociety and Us employee to the Commissioner of Co-operative■ Development byCommittee of Management – Commissioner's reference of the dispute to an arbitrator- Whether references valid.
The petitioner P. Jayaratne Peiris (1st respondent in both appeals) was employed asManager by the Moratuwa Multt-Purpos& Co-operative Society Ltd. (3rd respondent inS.C. No. 63/82 and appellant in S.C. No. 12/83) in four of its branches from 22.8.73until his interdiction on 28.4.78. On a shortage of goods being discovered which thepetitioner 1st .respondent failed to make .good the Committee, of Management undersection 58 (1) of the Co-operative Societies Law, No. 5 of 1972, referred the matter tothe Commissioner of Co-operative Development (appellant in S.C. No. 63/82 and 3rdrespondent in S.C. No. 12/83] who under section 58 (2) of the same law referred thedispute for disposal to an arbitrator (second respondent in both appeals). Thepetitioner-1 st respondent moved the Court of Appeal for a writ of prohibition on theground that there had been no reference by him or by the Co-operative Society of anymatter in dispute to the Registrar (the Commissioner exercises the powers of theRegistrar) 8nd therefore the arbitrator had no jurisdiction to hear the dispute. The Courtof Appeal issued a writ of prohibition on the ground that fhe dispute being between thesociety and orie of its employees the reference of the dispute to the Registrar by theCommittee of Management was not a valid reference. The Court drew a distinctionbetween disputes by the employee with the Society and disputes with the Committeeand took the view that the Committee was empowered to refer only disputes betweenitself and the employee. From this decision the Commissioner of Co-operativeDevelopment lodged appeal No. S.C. 63/82 and the Moratuwa Multi-PurposeCo-operative Society Ltd. appeal No. S.C. 12/83 to the Supreme Court. Leave toappeal was granted in respect of both appeals.
The reference to the Registrar may be made in any one of the modes Set out in Rule49 (1) of the Co-operative Societies Rules, 1973. A Co-operative Society by resolutionat a general meeting or its Committee of Management is empowered to refer a disputebetween the Society and any of its employees to the Registrar. Hence the reference bythe Committee of Management was valid.
Sri Lanka Law Reports
[1984} 1 Sri LR.
Cases referred to
Ranaweera v. Muddanayake (C.A. (S C.) No. 506/73 – C.A. Minutes of 21.2.1980)not followed.
APPEALS from the Court of Appeal.
Douglas Premaratne, Deputy Solicitor-General, with K. C. Kamalasabayson. SeniorState Counsel, for appellant in S.C. No. 63/82 and for 3rd respondent in S.C. No.12/83.
Nimaf Senanayake, Senior Attorney, with L V. P. Wettasinghe, Kithsiri P. Gunaratne.Miss S. M. Senaratne. Karunatilleke de Silva and Saliya Mathew for the petitioner— 1-strespondent in both appeals.
Chula de Silva with Miss S. Mivanapalana for 3rd respondent in S.C. No. 63/82 andappellant in S.C. No. 12/83.
Cur. adv. vult.
March 2. 1984.
The petitioner-respondent, P. Jayaratne Peiris, was employed asmanager by the Moratuwa Multi-Purpose^Co-operative Society Ltd.(hereinafter referred to as the Society} in'four of its branches from22.8.73 up to the date of his interdiction on 28.4.78. The Committeeof Management of the Society recorded at a meeting held on 4.12.78that there was a shortage of goods to the value of Rs. 32,471.26during the petitioner's tenure as manager, and resolved to demandfrom the petitioner payment of this sum ; and that on failure to makepayment, to take steps in terms of section 58 of the Co-operativeSocieties Law, No. 5 of 1972. Accordingly the Society wrote to thepetitioner on 11.12.78 giving the details of the shortage at eachbranch, and requested him to make good the loss. The petitionerfailed to do so, and the Society made a reference to the Commissionerof Co-operative Development seeking a decision of the dispute interms of section 58 (1} of the Law, which provides that-
'If any dispute touching the business of the Society arises-
m ■ •
between the society or its committee and any officer or
employee of the society
such dispute shall be referred to the Registrar for decision '
The Commissioner of Cooperative Development v. Jayaratne (Wimalaraine. J.f169
The Commissioner of Co-operative Development (who exercisesthe powers of the Registrar) by virtue of powers vested in him undersection 58 (2) referred this dispute for disposal to an arbitrator,who is the 1st respondent-respondent in both appeals. Thearbitrator summoned the petitioner for inquiry into this reference. Arequest by the petitioner for legal representation was turned downby the arbitrator who fixed the inquiry for 20.8.79, but beforeinquiry could commence the petitioner instituted these proceedingsin the Court of Appeal seeking a writ of prohibition against thearbitrator, pleading, inter alia, that' there had been no reference ofa dispute by the petitioner or by the Rawattawatte Multi-PurposeCo-operative Society of any matter in dispute to the Registrar, andhence the arbitrator had no jurisdiction to proceed to inquiry underthe provisions of the Co-operative Societies Law". As the petitioner'semployer was the Moratuwa Multi-Purpose Co-operative SocietyLtd. it is difficult to understand the reference to Rawattawatte,which was only a branch societyand the alleged shortages were infour branches of the main society.
The Court of Appeal has allowed the petitioner's application andhas issued a writ of prohibition on the ground that as the disputewas between the Society and one of its employees, the referenceof the dispute to the Registrar by the committee of managementwas not a valid reference. A valid reference could only have beenmade by the Society on a resolution passed at a general meeting ofthe Society. The Court drew a distinction between disputes by anemployee with the Society and disputes with the committee andthought that the committee was empowered to refer only disputesbetween itself and the employee. For this view the Court reliedupon Rule 49 (1) of the Co-operative Societies Rules. 1973, madeby the Minister by virtue of powers vested in him under section 61of the Law, which is in these terms
“ Rule 49 (1) Where a dispute has to be referred to the Registrarfor decision under section 58 of the Co-operative SocietiesLaw such reference may be made by-
la) the committee of management of the registered society ,or
the registered society by a resolution passed at a generalmeeting of the society ; or
any party to the dispute ; or
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(1984) 1 SriLR.
(d) any member of the registered society if the disputeconcerns a sum due from a member of the committee ofmanagement or other officer of the registered societyThis same interpretation had been placed by that Court in theearlier decision in K. K. F. B. Ranaweera v. P. B. Muddanayake et. alm Application No. C.A. (S.C.) No. 506/73 (C.A, Minutes of21.2.80). That was an application by an employee of theKurunegala District Co-operative Textile Societies Union Ltd. for awrit of certiorari seeking to quash the award of the arbitrator towhom a similar reference had been made by the Registrar, acting inpursuance of a reference made to him by the committee ofmanagement of the society in terms of section 53 (1) (c) of therepealed Co-operative Societies Ordinance (Cap. 124) whichsection is in almost identical terms as section 58 (1) (c) of the Lawunder which the present reference had been made, The Rulecorresponding to the present Rule 49 (1) was Rule 38 (1) of theCo-operative Societies Rules 1950. Ratwatte, J. in that caseexpressed the view of the Court thus : ' Section 53 (1) (c) of theOrdinance clearly provides for disputes where the Committee is oneof the disputants^ or- for a case where the society is one of thedisputants, the other disputant being an officer or employee of thesociety. Therefore if the dispute is one between the society and oneof its employees the reference must be made in terms of Rule38(1) (b), by the Society by a resolution passed at a generalmeeting of the Society": The reason given for taking this view isthat if the committee is empowered to refer even disputes betweena Society and an employee to the Registrar, then there is nonecessity for Rule 38 (1) (f>) and the legislature could not haveintended to enact provisions which are redundant.
The Court of Appeal in the instant case has relied mainly on thedecision in Ranaweera's case. Both the Commissioner ofCo-operative Development and the Society have obtained leave toappeal to this Court on the following ground as appearing in theorder of the Court of Appeal dated 19.11.82
” Whether the Court of Appeal erred in holding that there wasno valid reference to arbitration by the 3rd respondent Society interms of the Co-operative Societies Law, No. 5 of 1972, readwith the regulations framed thereunder, in that a disputebetween the society and an employee of the society should havebeen referred to arbitration by the society itself'
The Commissioner of Co-operative Development v. Jayaratne (Wimelaratne. J.)171
It has been argued before us by the learned DeputySolicitor-General, as well as by learned Counsel for the Society, thaton a plain construction of Rule 49 (1) it is clear that not only theSociety by resolution at a general meeting, but also the committeeof management, is empowered to refer a dispute between theSociety and any of its employees to the Registrar for decision undersection 58 (1} of the Law. There are no limitations or restrictions inrespect of such a reference either in section 58 (1) of the Law or inRule 49 of the Rules, and in the absence of such limitations orrestrictions it is not open for the Court to read into the sections orrules, limitations or restrictions which are not in the Statute.Furthermore, the words ' may * and * or * appearing in Rule 49 (1)clearly denote that the reference can be made in any one of themodes set out in that Rule.
Learned Counsel for the petitioner on the other hand referred usto the difference in the functions of the Committee as distinct fromthe Society, and stressed the fact that section 58 of the Lawenvisages two types of disputes – one between the Society and anemployee, and the other between the committee and anemployee.: and that it would be wrong to treat the two types ofdisputes as being synonymous.
There could be no doubt that the committee of management of aregistered Co-operative Society is vested with wide powers by theCo-operative Societies Law, by the Co-operative Societies Rules,and by the by-laws of the Society. The Committee is the governingbody of the Society to whom the management of the affairs of thesociety is entrusted. The committee may be likened to the Board ofDirectors of a company. This position has been recognised insection 75 of the Law which defines * Committee ” to mean “ thegoverning body of a registered society to whom the management of
its affairs is entrusted" Then again Rule 23 provides
that' The committee of management of a registered society shall,subject to any regulations or restrictions1 duly laid down by thesociety at any general meeting or in its by-laws exercise all thepowers of that society, except such powers as are reserved for thegenera! meeting of that society The duties and liabilities of theCommittee are set out in Rules 24, 25, 26, 27 ; whilst theresponsibility for the maintenance of accounts and submittingbalance sheets is stipulated in Rules 37 and 39. When we look atthe by-laws (which were marked before the Court of Appeal as
Sri Lenka Law Reports
 1 SriL.R
document 3R4) we see that by-law 60 (x) gives the committee theauthority to institute and defend actions in the name of the Societyand to compromise and withdraw suits.
All these powers have been vested in the committee for theobvious reason that the general membership is an unwieldy bodyand the work of the society would be extremely difficult if before anyadministrative action, however trivial it be. is taken the Society hasto meet to authorise it. I am unable to see how if the committee hasthe power to refer a dispute, even in cases where the Society is aparty. Rule 49 (1) (b) becomes redundant because there may arisesituations where the committee refuses to act for some ulteriormotive. Or a situation can arise when the Registrar, by virtue of thepowers vested in him under section 48 (1}, dissolves thecommittee and appoints a suitable person to manage andadminister the affairs of the Society ; the person so appointed willnot have the power, under Rule 49 (1} to refer the dispute, and thatwould be an occasion for the Society to act.
In the instant case Ranasinghe, J. has also taken the view that asRule 23 only empowers the committee to exercise the powers ofthe Society except such powers as are reserved for the generalmeeting of that Society, and as the power to make a reference of adispute to the Registrar is a power vested by Rule 49 (1) (b) in theSociety at a general meeting, the committee has therefore nopower to refer a dispute between the Society and an employee tothe Registrar for decision. It seems to me that ' the powersreserved for the general meeting of the Society' in Rule 23 arethose powers stipulated in Rule 17 ; they are the powers providedin the by-laws of the society for the disposal of the necessarybusiness of the society including the several matters specified inthat Rule. The power to refer disputes between the Society and anemployee is not" a power reserved for the general meeting of theSociety ’ by the by-laws ; hence that power is not a “ reservedpower' within the meaning of Rule 23.
For these reasons I am of the opinion that the committee ofmanagement of the Moratuwa Multi Purpose Co-operative SocietyLtd. had the power to refer the dispute between the Society andthe petitioner to the Registrar for decision under section 58 of theCo-operative Societies Law. The Court of Appeal has thus erred inholding that the committee had no such power. The writ ofprohibition should not, therefore, have been issued.
Edirisinghe v. Wderaratne
The judgment of the Court of Appeal in Application No. 1656/79is accordingly set aside, and Appeals Nos. S.C. 63/82 and 12/83are allowed, with costs in a sum of Rs. 525 payable by thepetitioner-respondent to each of the appellants.
SHARVANANDA, J.-l agree.
WANASUNDERA, J.-l agree.
COLIN-THOMfc J.-l agree.
ABDUL CADER, J.-l agree.
COMMISSIONER OF CO-OPERATIVE DEVELOPMENT v. JAYARATNE PERIS AND OTHERS