SUNDER SINGH Vs. CENTRAL CO-OPERATIVE BANK LTD

JUDGEMENT

(1.) ON the request of Ladwa Hira Goods Transport Co-operative Society, Ladwa, district, Karnal, hereinafter referred to as the Society, the Central Co-operative bank, Karnal, hereinafter called the Bank, agreed to advance a loan up to the limit of Rs. 30,000/- to the Society on the condition that it should execute a hypothecation deed together with a surety bond in favour of the Bank and thereby mortgage the movable and immovable property of the sureties and also of the society. The Society desired to have a loan of Rs. 27,000/-for the time being, out of which Rs. 5,000/- had already been taken by it and the remaining amount of rupees 22,000/= was to be received later on. It was said that the balance of Rs. 3,000/- would be got from the Bank when required. In order to get this loan, the society executed a registered hypothecation deed, dated 18th April 1956, through its President Piara Singh. In the said document, Piara Singh as well as two other sureties, who were also the members of the Society, mortgaged without possession their properties specified in the deed, which was also signed by them. With regard to the property of the Society, which had to be hypothecated, it was stated that-

(2.) AFTER the taking of the loan on the basis of the hypothecation deed, it appears that some payments towards the loan were made by the Society to the Bank, but later on nothing else was received from the Society. A dispute, therefore, arose between the Society and the Bank and it was referred for determination to an arbitrator by the Registrar of the Co-operative Societies vide his order dated 25th october, 1960, obviously under section 55 of the Punjab Co-operative Societies act, 1961, hereinafter called the Act. On 22nd December, 1961, the Arbitrator gave the following award:-

(3.) BUT before the said award was given, on 30th April, 1959, Kartar Singh, and mohinder Singh, the members of the Society, who had signed the deed, transferred their shares to Giani Maan Singh and others and it is that their names were, therefore, removed from the Membership of the Society. On 26th December, 1962, the bank filed the first application for the execution of the award in the Civil court, because under the provisions of the Act, an award made by an Arbitrator amounted to a decree. The same was, however, consigned to the record room. The bank then filed the second application for the same purpose in February, 1964 and on 11th March, 1964, the society went into liquidation. During the execution, it is said that the property hypothecated by the deed dated 18th April, 1956, was attached in the decree of the Bank against the society. In July, 1964, Kartar singh, Sunder Singh and Mohinder Singh filed objections under Section 47 read with Section 60 of the Code of Civil Procedure, against the execution of award having been taken out against them, saying that their property was not liable to be attached or sold as the decree was not executable against them. Their objections into alia were that they had ceased to be the members of the Society with effect from 30th April, 1959, i. e. two years prior to the award, an d no dispute thereafter between them and the decree-holder could be referred to arbitration and, therefore, they were not liable to pay any thing to the Bank. It was also said that they were not made parties to the arbitration proceedings and the same were taken behind their back. They had no notice even regarding the appointment of the Arbitrator. In fact, the dispute between them and the Bank could not be referred to arbitration. From 30th April, 1959, where the Society passed the resolution, under which Sunder Singh, Mohinder Singh and Kartar singh had transferred their shares, the transferees had taken upon themselves the entire liability for the re-payment of the debt due from the Society. It was further submitted that since the Society had gone into liquidation and a Liquidator had been appointed, no execution could be taken against them.