JOHN Vs. NALUMAKKAL SERVICE CO OPERATIVE BANK LTD

JUDGEMENT

(1.) THIS writ appeal is against the judgement in O. P. 883/89 by which the learned Single Judge held that the provision of Rule 67 (1) of the kerala Co-operative Societies Rules, 1969 in so far as it requires the production of a certified copy of the resolution of the Board of directors of the Co-operative Society along with the application for reference of dispute for arbitration is only directory and, therefore, the Tribunal went wrong in dismissing the application on the ground of non-production of the certified copy of the resolution. The appellant, who was an attender under the first respondent society was sought to be made liable by the society for misappropriation of certain amount and hence the first respondent filed A. R. C. 100/84 seeking relief against the appellant and respondents 2 and 3. Along with the application for reference of dispute to the Joint Registrar, the 1st respondent society did not produce the certified copy of the resolution adopted by the committee resolving to file the arbitration petition. The appellant contended that in the absence of certified copy of the resolution mentioned in rule 67 of the Co-operative Societies Rules, the Arbitrator had no jurisdiction to try the dispute. The Arbitrator inspite of the objection, on the basis of oral and documentary evidence passed an award dated 18-3-1986 imposing joint and several liability on the appellant and respondents 2 and 3. Aggrieved by the award, the appellant, along with respondents 2 and 3, filed R. P. 6/87 before the Co-operative Tribunal, the 4th respondent. The Tribunal found that the failure to produce the certified copy of the resolution as required by Rule 67 of the Co-operative Societies Rules is fatal to the arbitration case and, therefore, the Tribunal set aside the award of the arbitrator dated 1-11-1988. In view of this, the Tribunal did not examine the merit of the case. The society filed O. P. 883/89 challenging the appellate order of the Tribunal which was allowed by judgment dated 8-11-1990. It is against the said judgment this writ appeal is filed. The contention raised on behalf of the appellant before us is that non production of the copy of the resolution of the committee of the society is fatal to the maintainability of the claim. It is in evidence that the Arbitrator, who perused the records ,has made a mention in the award that he came across a resolution passed by the Board to file suit against the respondents. Thus the resolution was before the arbitrator,,. though certified copy of the resolution was not produced along with the application filed under s. 69 of the Act. The rule, of course, says that the application shall be accompanied by a list of relevant records on which the dispute is based and a receipted challan evidencing payment of the fees fixed for deciding the dispute. The rule further provides that "in the case of an application filed for and/or on behalf of a society a certified copy of the resolution adopted by the committee resolving to file the application, shall also be filed". Because the word "shall" has been used in the rule, it is contended that the rule requiring the production of certified copy of the resolution is a mandatory provision. After referring the Supreme Court decisions reported in R. B. Sugar Co. v. Rampur Municipality, AIR 1965 SC 895, state of U. P. v. Manbodhan Lai, AIR 1957 SC 912 and Govindlal v. Agr. P. M. committee, AIR 1976 SC 263, the learned Single Judge held that the use of the word "shall" or "may" is not conclusive on the question whether a particular requirement of law is mandatory or directory. It will depend upon the provisions of a particular Act, the setting in which the expression appears, the object for which the direction is given, the consequences that would flow from the infringement of the direction etc. Reference was made to the decision in Khub Chand v. State of Rajasthan , AIR 1967 SC 1074 and Haridwar singh v. Bagun Sumbrui, AIR 1972 SC 1242. The learned single judge observed that the requirement of production of the document was intended only to ensure that no individual officer of the society files any such application for and on behalf of the society without obtaining sanction. It is only a safeguard against filing arbitration application on behalf of the society without adverting the relevant facts. If there is dispute as to whether the committee passed resolution, it is open to the Registrar to require the parties or the society to produce a certified copy of the resolution. On a careful consideration of the rule and especially the circumstances that no provision is made in the rule relating to consequence for non-production of certified copy of the resolution, the learned single judge came to the conclusion that the provision relating to production of certified copy of the resolution authorising the Society to file an application under Section 69 of the Act is only a directory provision. Hence, it was held that the Tribunal went wrong in not examining the revision petition. The Arbitrator was satisfied that there was resolution and, in that view of the matter, the learned single judge directed to dispose of the revision, in so far as it concerns the appellant, afresh on merit. 3. In S. Surjit Singh Kalra The Union of India, JT 1991 (1) SC 417, the Supreme Court held that a purposive interpretation has to be given to the words occuring in the section and the wooden interpretation should be avoided. Interpretation must be contextual to advance the purpose of the Act and Rule and that should not be rigid. In Pushpadevi v. Milkhiram (1990)2 SCC134, the Supreme Court held that: "great artistry on the bench as elsewhere is, therefore, needed be fore we accept, reject or modify any theory or principle. Law as creative response should be so interpreted to meet the different fact situations coming before the court. For, Acts of Parliament were not drafted with divine prescience and perfect clarity. It is not possible for the legislators to foresee the manifold sets of facts and controversies which may arise while giving effect to a particular provision. Indeed, the legislators do not deal with the specific controversies. When conflicting interests arise or defect appears from the language of the statute, the court by consideration of the legislative intent must supplement the written word with'force and life'. See, the observation of Lord denning in Seaford Court Estate Ltd. v. asher. " 4. Counsel on behalf of the petitioner referred to a decision in M. N. Gopala-krishna Panicker and Another v. State, 1990 (2) KLT 495=1991 (1) KLJ 75 to show the word "shall" in the rule should be interpreted as mandatory. In that case the learned Single Judge was considering the question of the validity of an election petition. Proper fee payable under rule 67 (7) (a)II (ii)was not paid by the applicant. The application was also was not affixed with a court fee stamp of Rs. 2/. The election petition, therefore, did not conform to the requirement of rule 67 (7) (a)ii (ii) and the note appended thereto. In that context the learned Single Judge observed: "it has been the settled law that formalities relating to election petitions have to be complied with strictly, and that any deviation therefrom will prove fatal to the very maintainability of the petition itself. THIS is because the right to challenge an election is not a common law right, but a special right which has to be specifically conferred by statute and therefore, the terms of the statute conferring the right have to be complied with before the petition can be maintained and entertained. See Charan lai Sahu v. Nandkishore Bhatt, AIR 1973 SC 2464. Public interest requires an expeditious culmination of the election process. (Satya Narain v. Dhuja Ram, air 1974 SCI 185 ). Rule 154 (3) provides only for a short period of thirty days for the filing of an election petition regarding the State Union. Expeditious finality to the election process is thus sought to be achieved by the fixation of such a short period of time for raising the dispute. The delay if any, in the disposal of an election petition should be minimal, once it is filed. It is an equally important facet of the election law that frivolous challenges to elections are discouraged and discountenanced. The process by which the verdict of the electorate has been given is a sacrosanct one, liable to be honoured and not lightly to be set at naught. " It is in the light of object, scheme and the provision of rule 154 the learned judge held that the condition prescribed in R. 67 (7) is mandatory. 5. The arbitration in the present case was concerned as to whether the petitioner is liable to make good the deficit of Rs. 83,293. 87 found out by the audit report and whether the appellant could be fastened with liability. It is to realise the said amount the arbitration petition was filed by the society and the society resolved to file arbitration-petition. The entire resolution was before the Arbitrator. In such a case, the mere fact that certified copy of the resolution was not produced will not vitiate the arbitration proceedings. 6. Section 69 of the Co-operative Societies Act, among others, states that if a dispute arises between the society and a surety of a member, past member, deceased member, or employee or a person other than member who has been granted a loan by the society; or between the society and a creditor of the society, such dispute, shall be referred to the Registrar for decision, and no court shall have jurisdiction to entertain any suit or other proceeding in respect of such dispute. Though the section says that dispute shall be referred, there is no duty to refer without an application. rule 67 of the Co-operative Societies Rules provides for the procedure to be complied with. We are concerned in this case with Rule 67 (1) which reads as under: 1. The reference of any dispute to the Registrar under section 69 of the Act shall be in writing. The application shall be accompanied by a list of relevant records on which the dispute is based and a receipted chalan to evidence payment of the fees fixed under clause (a) of sub rule (7)for deciding" the dispute. In the case of an application filed for and on behalf of a society a certified copy of the resolution adopted by the committee, resolving to file the application, shall also be filed. Sufficient copies of the application for service on the defendant or defendants shall also be filed. Whenever necessary, the Registrar may require the party referring the dispute to him to produce a certified copy of the records on which the dispute is based and such other statements or records as may be required by him before proceeding with the consideration of such reference. " There is no dispute that sub Rule (7) has not been complied with in this case. The only case is that the application is filed for and on behalf of the society and, therefore, the certified copy of the resolution ought to have been produced. The wording is "in the case of an application filed for and on behalf of the society a certified copy of the resolution adopted by the committee, resolving to file the application shall also be filed. " Since the word "shall" has been used, it is urged that it is a mandatory provision, the non-compliance of which will vitiate the entire proceedings. In M/s. Rubber House v. Mis. E. N. Industries Pvt. Ltd. , AIR 1986 SC 1160, the Supreme Court held that even though the word "shall" in its ordinary import is obligatory whether the word has to be interpreted as mandatory will depend upon the purpose which the legislature intended to achieve as disclosed by the object, design, purpose and scope of the statute. In that case the Supreme Court had to interpret the word "shall" occurring in rule 4 (c) of the Haryana Urban (Control of Rent and Eviction) Rules, 1976 which said that the application for eviction should contain "the amount of arrears due and the period of the default". In so far as the amount of arrears has not been mentioned in the application it was contended that the non-compliance of the rule would amount to violation of the mandatory provision and, therefore, the application for ejectment had to be thrown out. After examining the principle of interpretation the Supreme Court held that Rules 4 (c), 5 (1) and 6 are not mandatory but only directory. The principles followed by the Supreme Court is quoted in para. 31 under: "the word "shall" in its ordinary import is obligatory. Nevertheless, the word "shall" need not be given that connotation in each and every case and the provisions can be interpreted as directory instead of mandatory depending upon the purpose which the legislature intended to achieve as disclosed by the object, design, purpose and scope of the statute. While interpreting the concerned provisions, regard must be had to the context, subject matter and object of the statute in question. " Thus it will be seen that the use of the word "shall" in the rule by itself is not a decisive factor to come to the conclusion that the requirement is mandatory, non-compliance of which will result in invalidity. The consequence of non-compliance has not been provided in the rule and, therefore, the matter had to be decided according to the principles aforesaid by the court. In Owners & Parties Interested in "m. V. Vali Pero" v. Femandeo Lopez & Ors. , 1990-1-Law Weekly 520, the Supreme Court had to interpret a rule which provided that the deposition of witness shall be signed by the witness and the question was whether the deposition which was not signed is invalid. The word used was "shall" and the Supreme Court construed the same as directory and not a mandatory provision. Therefore, the question is what is the purpose of Rule 67 (1)providing for the production of a certified copy of the resolution when application for reference under Section 69 read with Rule 67 is filed by a co-operative Society. The purpose as will be seen from the object is only to see that the society is not dragged into unnecessary legal proceedings. If the society has taken a decision and the Arbitrator was satisfied after going through the file that the decision has been taken by the society, it is immaterial whether certified copy has been filed or not. Rule 4 of Chapter 22-0 of the Calcutta High Court rules, 1940 providing that the deposition to be read over, signed etc. reads as follows: "after the deposition of any witness shall have been taken down, and before it is signed by him, it shall be distinctly read over, and where necessary, translated to the witnesses in order that mistakes or omissions may be rectified. The deposition shall be signed by the witness and left with the Commissioner who shall subscribe his name and date of the examination". The question was whether the omission of the signature of witness renders the deposition incomplete. The Supreme Court held that: "the Rules of procedure are not by themselves an end but the means to achieve the ends of justice. Rules of procedure are tools forged to achieve justice and are not hurdles to obstruct the pathway to justice. Construction of a rule of procedure which promotes justice and prevents its miscarriage by enabling the court to do justice in myriad situations, all of which cannot be envisaged, acting within the limits of the permissible construction must be preferred to that which is rigid and negatives the cause of justice. The reason is obvious. Procedure is meant to subserve and not rule the cause of justice. " The Supreme Court also noted the fact that the consequence of failure to comply with the requirement of Rule 4 was not provided by the statute itself and, thereafter, held that: "if the word 'shall' used in this expression is construed as mandatory, non-compliance of which nullifies the deposition, drastic consequence of miscarriage of justice would ensure even where omission of the witness" signature is by inadvertence and correctness of the deposition as well as its authenticity is undisputed. On the other hand, if the word 'shall' used in this expression is treated as directory, the court will have power to prevent miscarriage of justice where the omission does not cause any prejudice and the defect is only technical. The object of the provision being merely to obtain acceptance of the witness to the correctness of the deposition, that object would be advanced by taking this view and thereby empowering the Court to avoid the drastic consequence or nullifying the deposition where the correctness and authenticity is undisputed. In a case where the correctness and authenticity is undisputed. In a case where the correctness has been disputed it would be permissible for the Court to examine the effect of omission of the witness signature and to reject the deposition only if it does not accept the correctness and authenticity thereof on the available material. " The Supreme Court thus interpreted the word "shall" occurring in the expression 'deposition shall be signed by the witness' in Rule 4 as directory and the mere omission will not render the deposition invalid and incapable of being read as evidence. We hold that the requirement of production of certified copy is only a procedural formality to ascertain whether the arbitration petition is a frivolous one or whether it is legally authorised by the society. We further hold that the learned Single Judge rightly came to the conclusion that the provision relating to the production of certified copy of the resolution is only directory and non-production of the same will not vitiate the arbitration proceedings. We find no ground to admit this writ appeal. The tribunal is, therefore, directed to take on file R. P. 6/1987 in so far as it concerns the appellant and dispose of the same on merit. The Writ Appeal is, therefore, dismissed. . .