115-NLR-NLR-V-50-CANAGASABAI-Appellant-and-KONDAVIL-CO-OPERATIVE-STORES-Respondent.pdf
Ganagasabai v. fCondavil Go-operative Stores
465
1949Present.: Wijeyewardene C.J. and Dias J.
CAJSTAGASABAI, Appellant, and KONDAVXLCO-OPERATIVE STORES, Respondent
S. C. 110—D. C. Jaffna, 5,638
Go-operative Societies Ordinance—Shortage of cash in hands of manager—Dispute referred to arbitration—Crucial date—Is manager an “ officer ” ?—Power to give directions under rules—Chapter 107—Section 45 Rule 29-The manager of a co-operative society is an officer within the meaningof section 54 of the Co-operative Societies Ordinance.
Where on the date the Committee refers a dispute to the Registrarunder section 45 the officer concerned is still in the employ of the societythe reference is regular and the arbitrator has jurisdiction to make anaward.
466
DIAS J–—Canagasabai v. Kondavil Co-operative Stores
Appeal from a-judgment of the District Judge, Jaffna.
S. Nadesan, with C. Renganathan, for the second defendant appellant.
Shammtganayagam, for plaintiff respondent.
Cur. adv. vult.
March 11, 1949. Dias J.—
The appellant who was the Manager of the Kondavil Co-operativeStores Society (the respondent) appeals against the order of the DistrictJudge of Jaffna who dismissed the appellant’s application to stayexecution of an award dated September 12, 1947, made by an arbitratornominated under the Co-operative Societies Ordinance (Chapter 107),and which in terms of Rule 29 (k) of the rules governing Co-operativeSocieties (Subsidiary Legislation, Volume I, page 569) was submitted tothe District Court of Jaffna for execution by the issue of a writ againstthe appellant to recover a sum of Rs. 1,200 with interest at 6 per cent.
The appellant had previously preferred an appeal to the Registrar ofCo-operative Societies against the award. That appeal was dismissed.Section 45 (4) of the Co-operative Societies Ordinance provides that adecision of the Registrar in appeal shall be final, and shall not be calledin question in any civil Court. Section 45 (5) enacts that the award ofan arbitrator shall, if no appeal is preferred to the Registrar, or if anysuch appeal is abandoned or withdrawn, be final and shall not be calledin question in any civil Court. Of course, if the appellant can show thatthe award was made without jurisdiction, or that some fatal irregularityattaches to the proceedings preceding the application to the Court forexecution, these presumptions would not apply. In such cases it wouldbe open for the District Court and for this Court to grant relief x. Theappellant’s submission is that the award was made without jurisdiction,and that the reference to arbitration was illegal. In order to appreciatethe submissions made it is necessary that the facts should be stated.
The Kondavil Co-operative Stores Societies, Ltd., is a co-operativesociety duly registered under the Co-operative Societies Ordinance(Chapter 107). The second defendant appellant was the manager ofthe Society. The indenture P3 dated June 29, 1945, shows that theappellant had been appointed the manager of the Society retrospectivelyas from August 21, 1944, on a monthly salary.
By P3 the appellant agreed to attend to his duties during the usualhours prescribed therefor by the rules of the Society. He undertookto carry out those duties in accordance with the directions and orders,written or verbal, given by the President of the Society, or such officerduly authorized in that behalf. He was to be in eharge of and to beresponsible for the stocks in his charge, and keep or cause to be kept theDay Book relating to sales, the Cash Book and other books as he may becalled upon to keep and to see that they were up to date. He undertookto collect the daily takings at the end of each day, &c.
1 See Ohani v. Anjuman-i-Imad Qarza Shawm. Chah (1942) A. I. R. Lahore237 and Ekanayaka v. Prince of Wales Co-op. Society Ltd. (1949) SO N.L. R.297 .
DIAS J.—Canagasabai v. Kondavil Co-operative Stores
467
In case of any dispute or difference arising between the two con-tracting parties it was agreed that every such dispute or differenceshould be referred to the arbitration of the Registrar who may decide thedispute himself or appoint a nominee for the purpose, and the decisionand award of the said Registrar or his nominee was to be final andconclusive between the parties.
The rules of the Society referred to in the agreement P3 is the exhibitP4. These rules must be deemed to be part and parcel of the agreementP2 because the appellant undertook in P2 to attend to his duties asprescribed by the rules of the Society.
The rules indicate who the chief officers of the respondent Society axeand what books each officer is responsible for. The Secretary is en-joined to give to the Manager in writing a list of the latter’s duties. Theduties of the Manager are further enumerated in Clause 4 of the rules.It is, however, clear that clause 4 is not exhaustive of the duties of theManager. He has also “ to put into effect all matters and acts conveyedby the Secretary in writing personally, or as the decisions of the executivecommittee”. Furthermore, under clause 8 (3) the salesmen are placed“ under the charge of the manager.” Obviously the duty of a manageris ‘‘to manage”, i.e., to control, direct and regulate the business of theSociety. The official in charge of such work is called ‘‘ The Manager ”.
It is clear that sometime early in 1947, a shortage of Rs. 4,417, allegedto be cash in the hands of the Treasurer and the Manager (appellant), wasdiscovered. On March 10, 1947, the Executive (Managing) Committeeof the respondent Society met. At this date the appellant was themanager of the Society and the minutes (P5) clearly show that he attendedthat meeting. At one stage of the meeting the appellant left the meetingand the minutes record that fact. The relevant passage in the minutesreads—
“ After the Manager walked out and after a short consideration thefollowing resolution, proposed by Mr. Thilliampalam and secondedby Mr. S. Ponnuthorai, was passed : As a sum of Rs. 4,417 being thecash in hand up-to-date is in the hands of the Treasurer and in the handsof the Manager, and as the same has not been accounted for in thismeeting on this March 10, 1947, this Society submits the matter to thearbitration of the Assistant Registrar, Co-operative Stores Societies, torecover and hand over the same ”.
It is clear that on March 10, 1947, the appellant was the Manager of therespondent Society. No proof has been led to show exactly when heceased to be the manager. The appellant himself vaguely says “ Iceased to be Manager in 1947.” The evidence taken as a whole indicatesthat he ceased to be the Manager after the Executive (Managing) Com-mittee had referred the matter for arbitration. The Assistant Registraron August 27, 1947., referred the matter for arbitration, and the arbitrator,Mr. Gumaraswamy, after holding an inquiry on September 12, 1947,and having obtained the document P2 signed by the appellant in thepresence of two witnesses admitting liability in a sum of Rs. 1,450, madehis award. I may note in passing that the date on P2 is December 91947. This is clearly a mistake for “ September 12, 1947,” which is the
468
tDIAS T.—Oanagasabai v. Kondavil Co-operative Stores
date on which the arbitrator held the inquiry. It cannot be December9, 1947, for P2 was written on the day when the award was made, viz.,September 12, 1947. In spite of his admission of liability and despitethe award, the appellant appealed to the Registrar, Co-operative Societies,Colombo, who by his letter PI dated November 19, 1947, dismissed theappeal.
Thereafter, in accordance with Rule 29 (k), the respondent Societyfiled the award in the District Court of Jaffna and moved for writ ofexecution to recover the amount of the award.
The appellant showed cause against the application for the writ. Therespondent filed counter objections. After inquiry the District Judgeover-ruled the appellant’s objection and ordered that writ should issue.The appellant appeals from that order.
Before cpnsidering the various submissions made on behalf of theappellant it is necessary to consider the scope and effect of rule 29. TheEditor of the Revised Legislative Enactments at the head of the rules, ofwhich rule 29 forms part, states that they are—“ Rules made undersection 37 of The Co-operative Societies Ordinance, No. 34 of 1921, andcontinuing in force by virtue of the provisions of section 52 ”: i.e., of thepresent Ordinance No. 16 of 1936 (Chapter 107). Section 52 (2) ofChapter 107 enacts : “ All rules made under any Ordinance repealed bythis Ordinance and in force at the time of the commencement of thisOrdinance shall, in so far as they are not inconsistent with the provisionsof this Ordinance, be deemed to have been made under this Ordinance,and shall continue in force until new rules are made under section 46 insubstitution for those rules.” It is common ground that no new ruleshave been made. Therefore, the old rules of which rule 29 is a partremain in force, but only in so far as they are not inconsistent with theprovisions of Chapter 107. In case of any inconsistency, the rules mustgive way to the provisions of the main Ordinance. Section 52 says soexpressly.
Bearing this in mind, when one examines the provisions of Rule 29 (a)and the statute law contained in section 45 (1) of the main Ordinance,it is manifest that Rule 29 (a) is in certain respects inconsistent with theprovisions of section 45 (1). For example, section 45 (1) (c) enacts that“ If any dispute touching the business of a registered Society arises…. between the Society or its Committee and any officer of the
Society …. such disputes shall be referred to the Registrarfor decision”. That provision is not to be found in Rule 29 (a). There-fore, should a dispute arise between a Society or its Committee on theone hand, and any Officer of the Society on the other, touching thebusiness of the Society, it must be referred to the Registrar for decision.
Section 45 (2) of the Ordinance provides that the Registrar may, onreceipt of a reference under sub-section (1) (a), decide the dispute himself,or refer it for disposal to an arbitrator or arbitrators. Turning to rule29 (&), it is there stated that the Registrar, if he does not decide the disputehimself, must refer it to “ three arbitrators, one of whom shall benominated by each of the parties and the third shall be nominated bythe Registrar and shall act as Chairman ”. It will be seen that rule 29 (6)
DIAS J.—Canagasabai v. Kondavil Co-operative Stores
469
is inconsistent with, the provisions of section 45 (2) (6) of the mainOrdinance as regards the number of arbitrators. It is because theAssistant Registrar was acting under the provisions of section 45 (2) (6)that the dispute was referred to a single arbitrator.
The recent judgment of my brothers Windham and Hagalingam JJ'.1has been cited. There is nothing in that decision which conflicts withthe view I have formed in the present case. In that case, the defendantwas the President of a Co-operative Society, the registration of whichwas cancelled on March 27, 1947. Therefore, on that day the Societyceased to exist, and the defendant ceased to be a member or the Presidentof the Society. On April 8, 1947, the Liquidator of'the Society served anotice on the defendant to pay a large sum of money which it was allegedthe defendant had not accounted for. On his refusal to pay, the matterwas referred to arbitration, and an award was filed in Court. Whenthe defendant was served with a notice under section 219 of the CivilProcedure Code to be examined in regard to his assets liable for seizure,he contended that the award was made ultra vires and was bad, and thatit was not binding on him. The two points which had to be decided inappeal were : (a) Was the alleged award a valid award at all ? and (6)If not, whether the Court had power to go behind it and refuse to treat itas an award. The first question was answered in the negative on thefacts, and the second question was answered in the affirmative. In thecourse of the judgment the applicability of sections 41 (h) and 40 (1) (d)of Chapter 107 was considered. Those two sections which refer toliquidators have no application to the present case. Windham J. furtherheld that as the dispute was between the liquidator on the one hand andthe defendant who was not a member or the President on the other, theprovisions of rule 29 (a) or {b) could not apply. With respect I agree.The only relevance that case has to the present is, that it lays down thatthe party against whom an award has been made is entitled to show theexecution Court that it is a nullity and that no rights flow from it, andthat it is open to the Court to go behind the award and decide for itselfwhether the award is in accordance with the law.
It is quite clear from the evidence that on March 10, 1947, a disputetouching the business of the respondent Society had arisen between theCommittee on the one hand, and the appellant on the other. It isequally plain that on that, day the appellant was the Manager of therespondent Society.
It is argued that the appellant was not an “ officer ” within the meaningof section 54 which defines the word to include “ a chairman, secretary,treasurer, member of committee or other person empowered under therules or by-laws to give directions in regard to the business of the Society.”It is urged that the appellant is not a person who was empowered bythe rules or by-laws of this Soeiety to give directions in regard to thebusiness of the Society. In my opinion the evidence makes it abundantlyclear that the appellant was “ an officer ”, and that by hia agreementP3 and under the rules of the Society P4 it was his, duty as manager togive “ directions in regard to the business of the Society.” Therefore,this objection fails.
(1949) SO 1V. L. S. 297.
470
DIAS J. —Canagasabai v. Kondavil Go-operative Stores
It was next argued that the reference to the Assistant Registrar isirregular and that j consequently, the reference by the Assistant Registrarto the arbitrator is irregular, and the award was therefore made withoutjurisdiction. The document PI shows that the Registrar of Co-operativeSocities is Mr. E. J. Cooray whose headquarters are at Colombo. In theCeylon Government Gazette No. 9,581 of July 19, 1946, at page 1281, thereappears an Order dated July 8,1946, made by His Excellency the Governorunder section 2 of Chapter 107 which confers on the persons mentionedin the Schedule to that Order who are designated “ persons appointedto assist the Registrar of Co-operative Societies, the following powers ofthe Registrar under that Ordinance.” Amongst the powers conferredis—
“7. The power under section 45 to decide any dispute or to refer
any dispute for disposal to an arbitrator or arbitrators.”
Amongst the persons so appointed to be Assistant Registrars of Co-operative Societies is Mr. Prank Arthur Sandrasagara. Reference to theSociety’s Rules P4 shows that those rules were approved by E. A.Sandrasagara, “ A. R. C. S. N. P. ”, which I take to mean “ AssistantRegistrar, Co-operative Societies, Northern Province, ”. I am entitled totake judicial notice of this order made under section 2 (2)1. Therefore,when on March 10, 1947, the Committee referred this dispute to the“ Assistant Registrar, Co-operative Stores Society ”, they were referringthe matter correctly to the person who was well known to everyonepresent to be the Assistant Registrar, Co-operative Societies, NorthernProvince, viz., Mr. Sandrasagara who had been duly appointed by theGovernor to assist the Registrar, and who was expressly empowered tohave disputes referred to him, to deal with such disputes himself, or torefer them to an arbitrator for disposal. No doubt, all these matterscould and should have heen made plain on the record when the evidencewas led, but I think it is beyond question or doubt that the matter wasproperly referred to arbitration and that there exists no illegality or irre-gularity in the action taken by the Assistant Registrar, and that thearbitrator had jurisdiction to act. What is more, the appellant admittedliability in a written statement. He appealed to the Registrar inColombo. There is no proof that he then took any of the points nowmade by his counsel in appeal. In my opinion this objection fails.
No doubt, the cases of two persons—that of the Treasurer and theappellant—were referred to arbitration. I do not see how that affectsthe case of this appellant. We do not know whether the case againstthe other person was inquired into or whether any award was made. Itis idle for the appellant to suggest that he does not know what the disputewas. He says in his evidence that the arbitrator, Mr. Cumaraswamy, heldan inquiry and that he recorded statements. What is more the appellantgave a writing admitting liability. It is impossible to hold that theappellant did not know what the inquiry was about.
It is also argued that at the date the award was made the appellanthad ceased to be the manager of the respondent Society, and that theaward against him offends both rule 29 (a) and section 45 (1) (c) of theOrdinance. In my opinion the crucial date is the one on which the1 Sivasampu v. Juan Appu (1937) 38 N. L. R. at p. 371 (Div. Ct.)
BASNAYAKE J.-—Ghelliah Kurukhal v. Vengadaaalam
471
Committee referred the matter to the Assistant Registrar, viz., March10, 1947 1. On that date the appellant was the manager. The case ofIUangakoon v. BogoUagama2 is distinguishable on the facts. In that casethe manager was not a member of the Society and he had ceased to be themanager long before the matter was referred to the Registrar. In thepresent case, when the committee referred the matter to the AssistantRegistrar the appellant was the manager of the Society. The disputebetween the appellant and the Society arose from transactions resultingfrom his being an officer of the Society. Meera Lebbe v. VannarponnaiWest Co-operative Society 3 can also he distinguished from the facts of thepresent case. In that case there was no evidence'to show what thefunctions of the manager were. Therefore, it was held that section45 (1) (c) could not apply. In the present case there is ample evidenceto show that the appellant was “ an officer ” of the Society within themeaning of section 54 of Chapter 107.
The appeal is dismissed with costs.
Wijeyewabdene C.J.—I agree.
Appeal dismissed.