005-NLR-NLR-V-54-SANMUGAMAppellants-and-BADULLA-CO-OPERATIVE-STORES-UNIONLTD-Respondent.pdf
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GTJNASfiiiARA J—Sanmugam v. BadzUla Co-operative
Stores Union, Ltd.
1952Present: Gratiaen J. and Gunasekara J.
SANMUGAM, Appellant, and BADULLA CO-OPERATIVESTORES UNION, LTD., Respondent
S. C. 300—D. C. Badulla, 8.434
■Co-operative Societies Ordinance (Cap. 107), s. 45 (1)—Dispute between co-operativesociety and an officer—Jurisdiction of District Court to try it.
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Section 45 (1) of the Co-operative Societies Ordinance olists the jurisdictionof the ordinary Courts over a dispute between a registered co-operative societyand any officer of the society when the dispute touches the business of thesociety.
i^_PPEAL from a judgment of the District Court, Badulla.
E. B. Wihramanayake, Q.C., with A. Nagendra, for the plaintiff.appellant.
W. Jayewardene, for the defendant respondent.
Cur. adv. vult.
-June 11, 1952. Gthstasekara J.—
The defendant-respondent is a registered co-operative society. Theplaintiff-appellant was appointed as its manager on April 7, 1946, andacted as such till May 3. He instituted this action on February 6,1947, claiming a sum of Rs. 900 as arrears of salary for a period of ninemonths from May 7, 1946 or, alternatively, as damages for wrongfuldismissal on May 3, and for a second cause of action, the return of a sumof Rs. 2,000 deposited by him “ as security for faithfully accounting tothe defendant for all monies and goods belonging to the defendant andreceived by him in his capacity as Manager of the defendant ”. Thedefendant society denied that any sum was due to the plaintiff andalleged that he had been lawfully dismissed “ on account of gross mis-management of the affairs of the society and misappropriation of cash ”,and that the sum misappropriated by him was Rs. 3,321-06. Creditinghim with the Rs. 2,000 deposited as security the defendant claimed inreconvention a sum of Rs. 1,321-06. The defendant also pleaded thatthe District Court had no jurisdiction to hear and determine the actionin view of the provisions of section 45 (i) (c) of the Co-operative SocietiesOrdinance (Cap. 107.)
The trial was laid by pending the determination of certain otherproceedings and was eventually taken up on May 15, 1950, when thedefendant’s claim in reconvention was abandoned. The issue of
GTJjSTASEKLAJRA J.—iSanmugam v. Badulla Co-operative
Stores Union, Ltd.
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jurisdiction was tried as a preliminary issue and the learned DistrictJudge dismissed the plaintiff’s action with costs, holding that the Courthad no jurisdiction to try it. The plaintiff appeals against this order.
Section 45 of the Co-operative Societies Ordinance provides, in sub-section (1), that if any dispute touching the business of a registered,society arises between the society and any officer of the society, suchdispute shall be referred to the Registrar of Co-operative Societies fordecision. Under sub-section (2), the Registrar may decide the disputehimself or refer it for disposal to an arbitrator or arbitrators, and sub-section (3) provides for an appeal from their award to him. In terms ofsub-sections (4) and (5) the decision of the Registrar, or the award of thearbitrator or arbitrators if no appeal is taken to the Registrar, “ shallbe final and shall not be called in question in any civil court ”. (Section45 of the Ordinance was amended by the Co-operative Societies (Amend-ment) Act, No. 21 of 1949, while this action was pending in the DistrictCourt, and the Co-operative Societies (Special Provisions) Act, No. 17 of1952, came into operation before the hearing of the appeal in this Court.It is not necessary for the decision of the appeal, however, to considerthe effect of these enactments.) It was contended for the appellant thatthe dispute between the parties was not one touching the business of thesociety and therefore not a dispute to which the provisions of section 45are applicable ; and that even if it was, the court had jurisdiction to trythe action if the dispute had not been the subject of a decision or awardunder that section.
Mr. Wikramanayake cited the cases of Meera Lebbe v. VannarponnaiWest Co-operative Society1 and Mohideen v. Lanka Matha Co-operativeStores Society, Ltd? as supporting a view that neither the society’s claimagainst the appellant for misappropriating its funds nor the appellant’sclaim against the society for salary or damages involved a disputetouching the business of the society. In the first of these cases a memberof a co-operative society who had functioned for some time as the managerof its stores sued the society for the return of a sum of money depositedby him as security, and the society pleaded that he had misappropriateda larger sum and it was entitled to a set-off against his claim. Thesociety also pleaded that the action was barred by the provisions of sub-section (1) of section 45 relating to disputes between a society and anyofficer of the society and similar provisions contained in the same sub-section relating to disputes between a society and a member of thesociety. It was held that there was no evidence to show what were thefunctions of the plaintiff as manager of the stores and that in the absenceof such evidence the dispute could not be regarded as a dispute betweenthe society and an officer of the society ; and that although the plaintiffwas a member of the society the dispute was not between the society andhimself in his capacity of a member. In the second case a member ofa co-operative society who had been employed by it as a watchmansued the society for arrears of salary and damages for wrongful dismissal.The only question considered was whether the dispute between theparties could be regarded as one between the society and a member of the
1 (1947) 48 N. L. R. 113.
2 (1947) 48 N. L. R. 177.
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GUNASEKAHA J.—Sarvmugam v. Badulla Co-operative
Stores Union, Ltd.
society and it was iield that it could not. In neither of these cases wasit decided that the dispute was not one touching the business of thesociety.
The defendant society in the present case is a co-operative storesunion and the plaintiff, according to his own description of his functions,was its “ chief executive officer The learned District Judge finds-upon the evidence that the plaintiff in his capacity of manager was incharge of the stock and decided what should be bought, made paymentsand purchased goods on behalf of the society, received payments madeto the society, and controlled its staff of employees, and that it was his■duty to control, direct and regulate the business of the society. Thelearned Judge also finds that by May 2, 1946, there had arisen a disputebetween the parties as regards the plaintiff’s responsibility for a shortagein the society’s cash alleged to have been discovered by an inspector ofco-operative societies on April 25. These findings are supported by theevidence and have not been canvassed. In the light of the District• Judge’s findings as to the nature of the plaintiff’s functions as the society’smanager, particularly in respect of the receipt and expenditure of itsfunds in the transaction of its business, it seems quite clear that thedispute is one touching that business and is therefore one to whichsection 45 applies. It is this dispute that the District Court was invitedto try, for it. is the decision of this dispute that must determine the■question of the society’s liability to pay the plaintiff any part of the sumclaimed by him.
The contention that section 45 of the Ordinance has not the effect ofousting the jurisdiction of the courts over the disputes referred to in■sub-section (1) is based on a view that the jurisdiction of the courtscannot be taken away except by express words. It is pointed out inMaxwell's Interpretation of Statutes, however, that it may be taken awayby implication : 1.
“ Thus, a provision that if any dispute arises between a society andany of its members it shall be lawful to refer it to arbitration ouststhe jurisdiction of the Courts over such disputes. It is obvious thatthe provision, from its nature, would be superfluous and useless, ifit did not receive a construction which made it compulsory, and notoptional, to proceed by arbitration.”
Tn the present case, the section in terms makes it compulsory to referthe disputes in question to the Registrar for decision, and further providesthat his decision or the award of the arbitrator or arbitrators, as the casemay be, “ shall be final and shall not be called in question in any civilcourt ”. It seems quite clear that the jurisdiction of the Courts isousted.
would dismiss the appeal with costs.
Gratiaen J.—I agree.
Ninth Edition pp. 136—137.
Appeal dismissed.