Registrar of Cooperative Societies has no jurisdiction to decide on tenability of suit against societies: SC [Read Judgment]

It is not the business of the Registrar to consider the merits and in particular the tenability of a pending suit and hold it to be untenable and thereupon refuse leave to continue the suit. The Civil Court is perfectly competent to decide whether the suit before it is tenable or not, the Bench said.

The Supreme Court M.K. Indrajeet Sinhji Cotton Pvt Ltd. Vs. Narmada Cotto Coop. Spg. Mills Ld. & Ors has held that Registrar of Cooperative Societies has no jurisdiction to decide whether the suit is tenable for want of notice or not. Apex Court Bench comprising of Justices S.A. Bobde and Amitava Roy observed that that a question whether a suit is tenable under Section 167 of the Co-operative Societies Act for want of notice under the said provision is a question within the exclusive competence of a Civil Court.

A company was refused permission to continue the suit filed by it before the City Civil Court, Ahmedabad by the Registrar of Co-operative Societies on the ground that the suit is not tenable because notice of its institution required by Section 167 of the Gujarat Co-operative Societies Act, 1961. Though the Single Bench of the High Court quashed the order of Registrar, the Division Bench on appeal restored that order. The company approached Apex Court.

The court observed that Registrar who is empowered by Section 112 to decide the limited question whether leave should be granted or refused to institute or to continue a suit against a society in liquidation is not competent to take into account whether a suit is tenable for want of notice under Section 167 of the Co-operative Societies Act.

The Court observed that to decide whether to grant or refuse leave to institute or continue the suit, the registrar needs to take into account only the question whether the suit would have the effect of dissipating the properties or diverting the properties of the society in liquidation towards one creditor.

The Court further observed “The Registrar is not concerned with the merits or the tenability of the suit which is, in any case not before him, and indeed cannot be because such a suit can only be tried and conclusively decided by a Civil Court. Naturally it is the Civil Court which can alone decide whether the suit is triable and tenable. It would thus be outside the scope of the Registrar’s power to take into account the factor whether the suit is tenable in law or not. The question of tenability being judicial is purely within the jurisdiction and competence of the court where the suit is pending. This must be left entirely to the Civil Court as intended by the Legislature. There is no doubt that a question whether a suit is tenable under Section 167 of the Co-operative Societies Act for want of notice under the said provision is a question within the exclusive competence of a Civil Court, as indeed all questions of tenability are. Thus, the Registrar cannot look into the question whether the suit is tenable for want of notice and decide the question directly or impliedly and thereby decide whether leave to institute or continue a suit could be granted or withheld.”

Directing the registrar to decide the question afresh, the court said “it is not the business of the Registrar to consider the merits and in particular the tenability of a pending suit and hold it to be untenable and thereupon refuse leave to continue the suit. The Civil Court is perfectly competent to decide whether the suit before it is tenable or not.”

Read the Judgment here.