Co-Operative Society Of Debts vs Nandlal

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 12 October 1950

Coram: M.C. Mahajan

In this case, the Court noted that the appeal concerned execution proceedings that originated from a decree issued by an arbitrator pursuant to the Co-operative Credit Societies Act. The appeal had initially been presented to the Judicial Committee of the State, and it now came before the Supreme Court of India under article 374 (4) of the Constitution. The record showed that Raja Nandlal was both a member of the decree-holding society and a debtor to that society. A dispute arose between the debtor and the society, and, in accordance with the rules governing such societies, the matter was referred to arbitration. The arbitrator rendered a decree on the nineteenth day of Meher in the year 1352 F., ordering the debtor to pay a sum of eight thousand one hundred rupees, to be discharged in six equal monthly instalments at six per cent interest, with the first instalment due at the close of the month of Azur 1353 F. On the second day of Dai 1353 F., the decree was transmitted for execution to the civil court under section 42, clause (d), of the Co-operative Societies Act, accompanied by a certificate signed by Moulvi Mohammed Hasan, who held the office of Madadgar Nazim. The certificate specified that the principal amount recoverable was eight thousand one hundred rupees and the interest due amounted to six hundred sixty-six rupees, nine annas and zero paise. On that same day, the decree-holder filed an application for execution before the Civil Court at Balda, claiming a total recovery of ten thousand three hundred thirty-nine rupees, fourteen annas and nine paise. The application asserted that because the debtor had defaulted on the first instalment scheduled for the month of Azur 1353 F., the entire decretal sum had become immediately recoverable, and it prayed that the property described in the application be attached. On the third day of Dai 1353 F., a day after the execution application was presented, the judgment debtor deposited one thousand rupees in the office of the Registrar of Co-operative Societies, stating his willingness to pay any further amount required for that instalment. The Nazim’s office responded that, owing to the debtor’s default on the first instalment, the whole decree had become due and therefore the one thousand-rupee deposit could not be accepted. Nevertheless, on the fifth day of Dai 1353 F., a letter from Mohammed Aihsan, who was the Assistant Madadgar Nazim, was sent to the Civil Court at Balda, indicating that one thousand thirty-four rupees had been deposited in the office of the Nizamat Co-operative Credit Societies and requesting that the execution proceedings be stayed or adjourned. Upon receipt of this letter, the decree-holder objected, arguing that the Registrar lacked jurisdiction to stay execution because he was not an executing court. The civil court overruled this objection and held that, under the provisions of section 42 of the Co-operative Credit Societies Act, the Registrar retained the power to stay execution of the award decree even after issuing his certificate. Consequently, the execution proceedings were stayed.

In the case, the execution proceedings were initially stayed by an order of the Registrar. An appeal against that order was filed before the Sadar Adalat. The Sadar Adalat allowed the appeal in part, holding that to the extent the amount of the first instalment had been deposited, the decree could not be executed against that portion, but it could be executed for the remaining instalments as they became due. The Adalat further observed that the default clause contained in the decree was deemed to have been waived by the deposit of the first instalment in the Registrar’s office. The decree-holder then filed a second appeal before the High Court, but obtained no material relief. The High Court affirmed that a default had occurred in respect of the first instalment, and consequently the decree-holder possessed the right to enforce the whole decree. The Court also ruled that neither the Registrar nor the court executing the decree could deprive the decree-holder of that right. Nevertheless, the High Court accepted that the Registrar retained the authority to adjourn the execution proceedings. The judgment-debtor’s objection that the certificate issued by a Madadgar Nazim was invalid was rejected. The Court held that the Madadgar Nazim had been lawfully delegated the power to issue such certificates, and that any defect was cured by the issuance of a fresh certificate signed by the Nazim himself. Accordingly, the High Court upheld the decision of the executing court to adjourn the execution proceedings.

The principal issue for consideration on appeal concerned the jurisdiction of the Registrar, who operates under the Co-operative Credit Societies Act, to intervene in the execution of decrees. The answer to that issue depended upon the interpretation of section 42, clause (d), of the Co-operative Credit Societies Act, 1340 F., as amended, which provides: “If an award given by the Registrar or by a person nominated by him, or by a committee of arbitrators is not acted upon, then the Registrar can have it enforced – (a) through a civil court on a certificate issued by him. The civil court will treat the award in the same way as its own decree; (b) through a Revenue Court or officer by issuing a certificate to that court or officer.” The language of this provision did not place the Registrar on the same footing as a court that passes a decree under the Civil Procedure Code. Under that Code a civil court that passes a decree also acts as the executing court, possessing a dual capacity: first, as the court that makes the decree, and second, as the court that executes it. By contrast, the Registrar appeared to have only the first capacity. The only authority conferred on the Registrar was the power to issue a certificate, and on the basis of that certificate to transmit the decree either to a civil court or to a revenue officer. The Registrar was not, by the terms of the statute, constituted as an executing court, nor was he given any execution powers comparable to those of a civil court. Consequently, the question arose whether, given this construction of the section, the Registrar could lawfully intervene in execution proceedings that were already pending in a civil court on the ground of the certificate he had issued.

The Registrar is empowered only to issue a certificate that may be sent either to a civil court or to a revenue officer. After a certificate has been issued, the Registrar may, if necessary, cancel that certificate, issue a new one, or withdraw the certificate so that execution is transferred from a civil court to a revenue court, or the reverse. The language of the provision, however, makes clear that the Registrar is not designated as an executing court and that no execution-related powers over the award decree are conferred on him. The issue that then arises for determination is whether, given this construction, the Registrar could lawfully intervene in execution proceedings that were already pending before a civil court on the basis of a certificate that he himself had granted. To answer this, the Court examined the Registrar’s actual conduct in the present matter. After the judgment debtor defaulted on the payment of the first instalment, the entire decree debt became due and execution was initiated to recover the amount. The Registrar then accepted the first instalment and directed the executing court to halt further proceedings. The Court held that the Registrar’s act of accepting the instalment amounted to a clear intrusion upon the duties of the executing court, because only the executing court may receive payment toward satisfaction of a decree that has already been subject to execution, unless the decree-issuing court also possesses authority to execute the decree. Since the Registrar does not have such jurisdiction, his request to the executing court to stop the execution and his acceptance of the instalment exceeded the powers granted to him, and the executing court was justified in disregarding his intervention. Moreover, the Registrar had no authority to alter or amend the Arbitrator’s decree at that stage.

The lower courts had interpreted the provision to mean that the Registrar, as the court that passes the decree, enjoys the same powers as the court that executes it. The Court could not accept that view because the provision’s language is unequivocal. The analogy with decisions concerning civil courts does not apply to the interpretation of this Act. Under the Civil Procedure Code, the parent court that passes a decree retains jurisdiction to execute that decree even when execution is transferred to other courts for practical reasons. The primary function of the decree-passing court remains the execution of the decree, and the Code only permits the parent court to refer execution to another court when it is unable to do so effectively. Such provisions do not diminish or remove the original court’s jurisdiction to execute the decree, and therefore they cannot be used to expand the Registrar’s powers beyond those expressly conferred by the statute.

In this matter the Court observed that, unlike a court which may at any time transfer the execution of a decree to another court without losing its own authority over the case, the Registrar occupied a wholly separate position. The Registrar had not been granted any power to execute a decree that he himself had issued. His statutory role was limited to obtaining execution of the decree through a civil court or a revenue court, and the only authority he possessed was to issue a certificate authorising such execution. The Court noted that the High Court’s decision in the present case was inconsistent with its own findings. The High Court had held that the first appellate court erred in concluding that the default clause in the decree was waived when the judgment debtor paid the first instalment at the Registrar’s office. Moreover, the High Court had positively determined that once a default occurred the Registrar lacked jurisdiction to condone it, and that the holder of the decree was entitled to enforce the entire amount of the decree together with interest. Despite reaching that conclusion, the High Court nevertheless upheld the orders of the two lower courts that had adjourned the execution proceedings. The logical implication of that judgment was that the certificate issued by the Registrar remained valid, the application for execution had been properly made, and the decree-holder was therefore entitled to the relief claimed. Nevertheless, the High Court also held that the Registrar could stay the proceedings, a view that the Court found to be an unwarranted intrusion into the powers of the executing court and an excess of the Registrar’s statutory authority, and therefore should have been disregarded by the courts. The Court further stated that because a fresh certificate had been issued by the Nazim to remedy any defect that might have existed in the original certificate – a defect alleged to arise from the fact that it had been sent by the Madadgar Nazim – there was no need to consider the counsel’s contention that the certificate was improper and that the execution proceedings were consequently without jurisdiction. Accordingly, the Court allowed the appeal, set aside the decisions of all three lower courts, and directed the executing court to continue with the execution of the decree from the point at which it had been interrupted by the Registrar’s correspondence. The Court declined to make any order as to costs throughout the proceedings. The appeal was thus allowed.