BIHTA CO-OPERATIVE DEVELOPMENT CANE MARKETING UNION LTD., AND ANOTHER versus THE BANK OF BIHAR & ORS.

Citation: [1967] 1 S.C.R. 848 · Decided: 12-10-1966 · Supreme Court of India · Bench: K.N. WANCHOO · Disposal: Appeal(s) allowed

Cited by 4 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

BIHTA CO-OPERATIVE DEVELOPMENT CANE MARKET-
A 
ING UNION LTD., AND ANOTHER 
v. 
THE BANK OF BIHAR & ORS. 
October 12, 1966 
(K. N. WANCHOO, J. M. SHELAT AND G. K. MITTER, JJ.] 
Blhar and Orlssa Co-operative Societies Act (6 of 1935). s. 48 as 
amended by Bihar Act 16 of 1948 and s. 57- Dispui• between registered 
society and rwn-ml!mber-Jurisdictlon of Civil Court, when ousted. 
The first plaintiff was a Society registered under the Bihar and Orissa 
Co-Operative Societies Act, 1935, and the second plaintiff was its Secretary. 
The Society had an account with the first defendant Bank. The 6th and 
the 7th defendwts were the joint secretary and treasurer of the Society 
respectively, who were jointly authorised to operate on the account. A sum 
of Rs. 11,000 was withdrawn from the account by means of a 
cheque 
which did not come out of the cheque book of the Society but which was 
a loose cheque form surrendered by an ex-<:onstituent of the Bank. The 
apurious cheque bore the signature of the 7th defendant and the forged 
signature of the 6th defendant The suit against the Bank, its manager 
(the 2nd defendant) its employees (the 3rd, 4th and 5th defendants) and 
defendants 6 and 7 was decreed against defendants I, 2, 4, 5 and 7 joint-
ly. On appeal by the 1st and 2nd defendants, the High Coun found in 
favour of the plaintiffs on the merits of the case, but dismissed the suit on 
the ground that the jurisdiction of the civil court was ousted by the com-
bined operation of ss. 48(9) and 57 of the Act. 
On appeal to this Court, the defendants sought to suppon the judgment 
of the High Court on the ground that the words in Explanation (I) to s. 
48( I) of the Act must be understood in their wideot amplitude. so that, 
even if a dispute between a registered society and a non-member did not 
fall within any of the categories 48(1)(a) to (e), it would still be within 
the purview of the section by reason of the Explanation. 
HELD : The judgment of the High Court should be ~t aside. [858 A] 
(i) The scheme of s. 48(1) is that certain disputes touching the busi-
ness of a r~istered society should be referred to the Registrar and not be 
taken to civil courts and made the subject matter of prolonged litigation. 
Before the Act was amended by Bihar Act 16 of 1948 disputes in which a 
Society might be involved with non-members (except as sureties) were not 
within the section. 
Therefore, the Explanation to the section as it then 
stood, made no mention of non-members as such and only served to clear 
up the doubt as to whether a dispute was referable to the Registrar when 
the debt or demand was admitted and the only point at issue was the ability 
to pay or the manner of enforcement of payment. 
The amendment 
in 
1948. introduced cl. (e) in •· 48(1) by which a dispute in which one of 
the disputants was not a member of a socie¢y was also covered by the sec-
tion. 
But only those non-members who had disputes with a financing bank 
were made amenable to the jurisdiction of the Registrar, and in th~ present 
case the Society was not a financing bank. Therefore cl. (e) would not 
apply. Nor would the amended Explanation apply, because the Explana-
tion had to include non-members after the insertion of category ( e) 
in 
a. 48( I), but. by such inclusion, the Explanation did not widen the scope 
of s. 48(1) so as to include 'claims by societies against all non.members 
even if they were not included in cl. (e). The Explanation cannot be read 
B 
c 
D 
• 
r 
G 
H 
A 
B 
c 
D 
E 
f 
G 
11 
BIHTA MARKETING UNION v. BANK OF BIHAR (Mitter, 1.) 849 
as adding a new head to the categories under s. 48(1)(a) t-o (e} of dis-
putes which rttay be referred to tile Registrar. It must be read only so as 
to harmonise with and clear up any ambiguity in the main section. [854 B, 
E-H; 855 A-Cl 
Sagauli Sugar Works (Pv'(.) Ltd. v. Asstt, 
Registrar, 
Co-operative 
Societies, Motihari, [1962] Supp. 3 S.C.R. 804, followed. · 
(ii) Because the signature of the 6th defendant was forged, there never 
was any mandate by the Society to the Bank. Therefore, there was no 
neg!:gence on the part of the Society. On the Contrary, there was negli-
gence on the part of the Bank in n.ot ascertaining whether the signatures on 
the cheque were genuine, and the circumstances. attending the encasbment 
of the cheque showed conclusively that the Bank was negligent and some of 
its officers fraudulent. 
[857 B-0) 
I.,ondon Joint Stock Bank, Ltd. v. Macmillan, [1918]

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