THE PUNJAB STATE COOPERATIVE SUPPLY AND MARKETING FEDERATION LTD., CHANDIGARH Vs. THE JAGRAON COOPERATIVE MARKETING-CUM-PROCESSING SOCIETY LIMITED, JAGRAON AND OTHERS

JUDGEMENT

(1.) The petitioner Markfed challenges the decision taken by the Authorities under the Cooperative Societies Act while adjudicating on the dispute raised by the petitioner Markfed for its alleged entitlement to the cost of repairs and the penal interest on the loan raised for construction of godowns. There had been an agreement entered into between the Cooperative Society and Markfed under the terms of which the Society was required to produce its own resources in the name of Markfed for construction of the godown and where the land had already been purchased in the name of the Society it should be transferred in the name of Markfed. The agreement provided that the Cooperative Society would make available the margin money upto 25% of the cost of construction which would be treated as a first advance and the consideration for transferring the godown to the Society would be on the basis of actual cost. The terms included the arrangement for necessary funds for construction of godowns either from its own resources or by raising loan from the Punjab State Cooperative Bank or the Agricultural Finance Corporation or from any other source. It specifically provided that the cost of godown should be repaid by the Society to the Federation in instalments as may be decided by the federation. The rent that would accrue as a result of the utilisation of the godown by the Society or the Federation has to be realised by the Society and credited or adjusted against instalments due to the federation. Clauses 6 and 7 which have been applied against the petitioner Federation or it is the interpretation of these clauses which have resulted in denial of the claims of the petitioner. Clauses 6 and 7 are as under:

(2.) The Authorities had found that in terms of clause 6 referred to above, it was the duty of the federation to maintain the building and undertake the necessary repairs and hence the said amounts could not be debited to the Society as payment towards the cost of construction. The authorities also found that the liability to interest for the amounts availed by the Federation from any financial institution for construction of the go-downs could be recovered from the society but any penal interest suffered by the Federation cannot be claimed through the Society.

(3.) The learned counsel argues that in terms of the principle of Section 70 of the Contract Act the Society which takes the benefit of a building in a state of repair by the fact that Markfed has suffered a detriment which was not intended to be done gratuitously, the same was liable to be recovered from the Society.