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Petitioner: CENTRAL CO-OPERATIVE BANK LTD. VS Respondent: MIZANUR RAHMAN CHOWDHURY
P L D 1964 Dacca 222
P L D 1964 Dacca 222
Before Sikandar Ali, J
CENTRAL CO‑OPERATIVE BANK LTD.‑Petitioner
versus
MIZANUR RAHMAN CHOWDHURY‑Opposite‑Party
Civil Revision No. 884 (S.A.) of 1954, decided on 1st August 1962.
Bengal Co‑operative Societies Act (XXI of 1940), Ss. 20 & 57 ‑‑ Grant of gratuity or honorarium to employee ‑ Within competence of General Meeting under S. 20‑S. 57 not applicable to such payment.
S. M, Habibul Huq for Petitioner. D. L. Rahman for the Opposite‑Party.
JUDGMENT
This appeal by the defendant, i.e., Central Co‑operative Bank Ltd., Serajganj, now treated as an application under section 115 of the Code of Civil Procedure, arises out of a suit instituted by the plaintiff‑opposite‑party for permanent injunction restraining the said Bank from recovering from him the sum of Rs. 880 paid to him as honorarium.
2. Briefly stated, the material facts, which are not in dispute, are as follows: The plaintiff worked as honorary Secretary of the defendant Bank for the terms 1‑4‑43 to 30‑9‑44, 1‑7‑47 to 30‑11‑48 and 1‑4‑52 to 30‑4‑57 and, on the recommendation of the Board of Directors made in consideration of his meritorious services, was granted by the General Meeting of the Bank a sum of Rs. 300 for the first term and Rs. 500 for the next two terms as honoraria. Later on 30‑10‑57 however, he received a notice from the Bank calling upon him to refund the entire amount of Rs. 800 on pain of action to effect compulsory recovery. The plaintiff, therefore, instituted the present suit. The Bank contested the suit mainly on the plea that the payments were not authorised under the relevant statute and Rules and were also illegal for want of requisite certificate of the Audit Officer and sanction of the Registrar.
3. Ultimately the learned Munsif dismissed the suit on the findings that the grant of the honoraria in dispute was unauthorised and illegal and that the suit was not maintainable. On appeal, the learned Subordinate Judge has taken a contrary view and held that the General Meeting was competent, on the recommendation of the Board of Directors, to grant the disputed honoraria which have, therefore, been rightfully cashed by the plaintiff and that the suit was also maintainable.
4. Mr. S. M. Habibul Huq, the learned counsel appearing on behalf of the defendant Bank, has urged only one point before me and it is that the disputed payments are hit by the provisions of section 57 of the Co‑operative Societies Act, 1940 (Bengal Act XXI of 1940) which provides:
"57. (1) Save as may be prescribed, no distribution of profits shall be made in the case of a Co‑operative Society with unlimit ed liability and save as provided in this section, no part of the funds of a Co‑operative Society shall be divided by way of dividend or bonus or otherwise among its members.
(2) No dividend or bonus shall be paid‑---
(a) otherwise than out of profits certified by the audit officer to have been actually realised ; or
(b) without the previous sanction of the Registrar, if the audit officer reports that any asset is bad or doubtful and also recom mends that such sanction is necessary
Provided that the audit officer shall not so recommend if such asset is adequately covered.
(3) Subject to the provisions of subsection (2), after the pro portion required by subsection (2) of section 56 has been carried to the reserve fund from the net profits of any year, the balance of such profits, together with undistributed profits of past years if any, may, to such extent and under such conditions as may be prescribed, be distributed as dividend among the members or paid as bonus or remuneration to a member or employee for any specific service rendered to the society.
(4) No contribution under section 58 shall be paid otherwise than out of profit actually realised."
5. This is a provision in bar which applies to Co‑operative Societies with unlimited liability as well as such societies in general. Under subsection (1) it prohibits (i) distribution of profits in the case of the former absolutely and (ii) division of any part of the funds by way of dividend or bonus or otherwise among the members save as otherwise provided in subsection (2) in the case of the latter. Under subsection (2) all Co‑operative Societies, whether with limited liability or otherwise, are debarred from paying any dividend or bonus (i) except out of the profits and (ii) unless such profits have been certified by the Audit Officer to have been actually realised or in the cases coming within the scope of clause (b) sanction of the Registrar has been obtained. The disputed payments in the present instance do not appear to come within the mischief of any of the aforesaid restrictions contemplated by section 57. Obviously this was not a case of division of the fund of the Society among its members nor can it be treated as payment of bonus, firstly because there was admittedly no profit out of which alone bonus might be paid, and secondly, because bonus, in my view, is not, or does not include honorarium, Bonus is an "allowance over and above the ordinary dividend of a Company either In the form of extra money payment or otherwise". . It is inextricably related to and dependent upon profits and the scheme of the relevant Act, too, appears to be "no profit, no bonus". An honorarium on the other hand, means voluntary donation either in consideration of service which admit of no compensation in money or in gratitutd for services rendered. Prima facie, it implies a gratuitous payment but it also means a fee for services rendered. In the present case the disputed payments were obviously made to an unsalaried employee or functionary as such for service rendered by him, which were, in fact, recognised as laudable and earned him thanks in the Bank's Account Report, Exh. 2. These were also made independently of profits and not out of profits, of which indisput ably there was none during the relevant period, and were thus in the nature of reward, emolument or remuneration as distinct from bonus. And I have already observed that this was not a case of division of the fund of the Society and its members. That is because the payments in question were made to an employee as such and even the fact that the employee concerned happened also to be a member, cannot, in my opinion, make any difference. Thus neither subsection (1) nor subsection (2) of section 57 of the Co‑operative Societies Act, 1940; appears to be applicable to the disputed payments made in this case.
6. The only question that remains to be seen is whether the said payments were authorised, i.e., could be made within the frame work of section 20 which precisely is the provision relied upon in that behalf. That section runs as follows:
"20. (1) The final authority of every Co‑operative Society shall vest in the general body of members in General Meeting.
Provided that, in such circumstances as may be prescribed, the final authority may vest in the delegates of such members, elected in the prescribed manner and assembled in General Meeting.
(2) The General Meeting shall be summoned and shall exercise its authority in such manner as may be prescribed."
7. Again under bye‑law 34 (I), the supreme authority on all matter relating to the administration of the Bank is the general body of members meeting periodically for the purpose of main taining a general supervision over the business of the Bank, and in particular, over the acts of the Managing Committee. The general body is also specifically declared to be "competent to take all steps that may be considered necessary in the interest of the Bank." Obviously it is in exercise of this authority that the general body of the members in their meeting accepted the recom mendation of the Board of Directors and granted the disputed honoraria on the same footing as salary is sanctioned and dis bursed to the paid staff, for which, too, no specific provision is made, in the Act, bye‑law or rules. As already found, the dis puted payments do not come within the mischief of section 57 and no other provision in any of the said enactments could be shown to stand in their way either. So where, as in this case, a statutory body is vested with supreme authority in respect of the purpose for which it is set up or of any specified matter relating thereto and does something connected with such purpose or specified matter, that act so done can be successfully impeached only if it can be shown to be hit by any provision in the statute under which it is set up or the bye‑laws or rules enacted thereunder. That is, because of the act being in excess of the power conferred but where no question of such excess is involved, the act in question must prevail as competent and valid. In my opinion, therefore, it was within the competence of the General Meeting to sanction the disputed honoraria and that in drawing the same, the defend ant‑petitioner committed no irregularity or illegality.
8. The suit appears to have thus been correctly decided by the learned Appellate Court and its decision calls for no interference.
This Revision, is, therefore, dismissed.
In the circumstances of the case, I, however, make no order as to costs.
S. Q./K. B. A. Petition dismissed.