013-NLR-NLR-V-80-S.-H.-L.-MOHIDEEN-Petitioner-and-ASSISTANT-COMMISSIONER-OF-CO-OPERATIVE-DEVELOP.pdf
206
New Law Repons
(1978) Vol. 80N.LR.
1977 Present: Pathirana, J. and Gunasekera, J.
S. H. L. MOHIDEEN, Petitioner and ASSISTANT COMMISSIONER OFCO-OPERATIVE DEVELOPMENT, KALMUNAI, Respondent.
S. C. 642/75 – M. C. Kalmunai 53971
Co-operative Societies Ordinance – Certificate under section 53A (5) – Recovery of money dueon arbitrator's award – Show cause clause – Limits.
The petitioner sought to show cause urging that the inquiry before the arbitrator wasconducted without the petitioner being informed of the specific matters in dispute or the chargesalleged against him and therefore the award was ex-facie bad in law and that the amount due onthe award was not recoverable as a fine. The Magistrate held that the award cannot bequestioned in a Court of Law and imposed the sum stated in the certificate as a fine.
Held, that the only grounds that can be urged before the Magistrate are that –
the Magistrate has no jurisdiction because the last known place of business orresidence does not fall within the local jurisdiction of the Magistrate.
that he had paid the amount.
that he is not the defaulter in that he is not the person from whom the amount is due.
The Magistrate’s order was upheld:
iAkPPLICATION to revise an order made by the Magistrate’s Court of •Kalmunai.
W. Jayewardene for defendant-petitioner.
K.M. M. B. Kulatunga, D.S.G. with D. B. Gunasekera, S.S.C. and
Sithamparapillai, S.C. for the complainant-respondent.
Cur. adv. vult.
May 13, 1977. Pathirana, J. —
This is an application by the petitioner to revise the order made againsthim by the Magistrate imposing as a fine the amount due from him on anaward under the Co-operative Societies Ordinance on a certificate filed inCourt for its recovery under section 53A (5) of the Co-operative SocietiesOrdinance. The respondent to this application is the Assistant Commissionerof Co-operative Development, Kalmunai, on whom the powers of theRegistrar of Co-operative Societies had been conferred. He had issued acertificate under section 53A (5) for the recovery of a sum of Rs. 88,965/77and costs Rs. 150/- as due to the Nintavur Division 3, Multi-Purpose Co-operative Society Limited, and not paid by the petitioner, its former manager,as an award by an arbitrator.
PATH1RANA, J.— Mohideen u Assistant Commissioner of
Co-operative Development, Kalmunai
207
SC
Purporting to show cause under section 53A (5) why further proceedingsfor the recovery of the amount should not be taken against him, the petitioneramong other grounds had urged before the Magistrate that the inquiry beforethe arbitrator was conducted without the petitioner being informed of thespecific matters in dispute and or the charges alleged against him. The awardtherefore was ex facie bad in law and the amount due on the award was notrecoverable as a fine.
At the first inquiry before the Magistrate Mr. Suntharalingam, StateCounsel appearing for the respondent objected to the petitioner showingcause as the grounds urged were not within the competence of the Magistrateto inquire into under section 53A (5).
The learned Magistrate overruled the objection and permitted thepetitioner to show cause. The petitioner then gave evidence and produced anumber of documents. The inquiry was resumed on a subsequent adjourneddate before another Magistrate as the former Magistrate was transferred.State Counsel once again renewed his objection to the petitioner showingcause for the recovery of the amount. The Magistrate, Mr. Abeynayake,overruled the objection and proceeded with the inquiry at which thepetitioner and the arbitrator gave evidence. Further inquiry was put off foranother date. On this day Mr. Abeynayake ceased to hold judicial office.Before the new Magistrate Mr. Palakidnar, State Counsel once againrenewed his objection as the grounds urged were not those that could bepermitted under section 53A (5) and again objected to the petitioner showingcause. The learned Magistrate, Mr. Palakidnar, held that the award could notbe questioned in a Court of Law and imposed the sum stated in the certificateas a fine under section 53A (5). He took the view that the petitioner could notchallenge the correctness of the award, as the petitioner did not challenge theaward on the ground that he was not the defaulter or that he paid the moneyor that he lived outside the jurisdiction of the Court. Section 53A (5)therefore precluded him from showing cause for the recovery of the amountmentioned in the certificate.
The petitioner has been summoned to appear before the arbitrator first bysummons dated 13th July, 1970 and thereafter by summons dated 18th July,1970. He was asked to appear before the arbitrator for an inquiry “to settlethe dispute between you and the Nintavur Division 3, Multi-Purpose Co-operative Society.” He was requested to appear on 27th July, 1970 and bringwith him witnesses and documents, if any. He was told that if he failed toappear ex parte inquiry will be held and a decision made. Each summons,further gave particulars of the dispute aforementioned as follows :
“As stated in the letter dated 29.4.69 sent to you by the Society.”
208
New Law Reports
(1978) Vol. SO N.L.R.
By letter dated 22.1 .IQ, the petitioner acknowledged receipt of the twosummonses. Referring, however, to the letter dated 29.4.69 sent to him bythe Society which was alleged to contain the particulars of the dispute, thepetitioner stated. “This letter does not appear to have been received by me.”
He further requested that a copy of this letter be sent to him and that theinquiry be fixed for a date convenient to him. The arbitrator by his letterdated 24.7.70 informed the petitioner that it was wrong for him to conductthe inquiry by correspondence and he was requested to appear before himand make his submissions and ask “Questions.”
Even assuming that the petitioner did not receive the particulars relatingto the dispute alleged to be sent by the Society by his letter dated 29.4.69, thefact remains that he did not choose to be present on any date for which thearbitrator had fixed the matter for inquiry of which he was duly informed. Ifhe chose to, he might have obtained the particulars from the arbitrator whoby his letter dated 24.7.70 had informed him that while it was improper forhim to conduct the inquiry through correspondence the petitioner couldhowever appear, make his submissions and ask questions. What happenedeventually was that the petitioner was absent on the date on which theinquiry was held of which he was informed and after ex parte inquiry anaward was made against him. One cannot therefore say that the petitionerwas not given an opportunity of ascertaining the particulars of the chargesagainst him.
Mr. Jayewardene, who appeared for the petitioner before us, confined hiscase to only one ground namely that the inquiry was conducted without thepetitioner being informed of the specific matters in dispute and or thecharges alleged against the petitioner. I shall for the purpose of this caseassume that the arbitrator in fact failed to inform the petitioner of the specificmatters or details of the charges against him, and although the defendant wassummoned for the inquiry he was absent and the award was made againsthim after ex parte inquiry. The question for decision is whether at the latestage when execution proceedings were taken under section 53A (5) thepetitioner was entitled to raise this matter before the Magistrate as a ground“why further proceedings for the recovery of the amount should not be takenagainst him.”
I shall, firstly, set out the scheme under the Co-operative SocietiesOrdinance for the recovery of the amount due from an individual on anaward by an arbitrator.
sc
PATHIRANA, J.— Mohideen v. Assistant Commissioner of
Co-operative Development, Kalmunai
209
There are three methods of recovery. Section 53A (5) sets out the firstmethod. Under this section the Magistrate may issue a certificate to specifiedofficers who are empowered and required to cause such sum, together withcosts and interest, to be recovered from the defaulter by seizure and sale ofhis movable property. This section is similar to section 110(2) of the InlandRevenue Act and section 84(2) of the Income Tax Ordinance. The secondmethod is under section 53A (4) where the Registrar is of opinion that therecovery of the amount due by means provided by the former method, that issection 53A (1) is impracticable or inexpedient or that the full amount hasnot been recovered by such means, he may issue a certificate to the DistrictCourt having jurisdiction and the Court shall thereupon direct a writ ofexecution to the Fiscal authorising and requiring him to seize and sell themovable and immovable property of the defaulter for the recovery of suchsum. This method is similar to that provided for the recovery of tax dueunder section 110(3) of the Inland Revenue Act and section 84(3) of theformer Income Tax Ordinance.
The third method is under section 53A (5) where the Registrar is ofopinion for the same reasons as set out in section 53A (4) namely that therecovery of the amount due by seizure and sale is impracticable orinexpedient or that the full amount has not been recovered by seizure andsale, he may issue a certificate to a Magistrate having the jurisdiction set outin this section. The procedure to be followed by the Magistrate is also set outin the section which I shall quote in full as submissions made in this caseturn on the construction that is sought to be put on the scope and ambit of therelevant words:
“The Magistrate shall thereupon summon such defaulter before him toshow cause why further proceedings for the recovery of the amountshould not be taken against him and in default of sufficient cause beingshown, the amount shall be deemed to be a fine imposed by a sentence ofthe Magistrate on such defaulter…”
This section corresponds to the recovery of tax under section 112 of theInland Revenue Act and section 58(1) of the former Income Tax Ordinance.It is significant that the words I have quoted on which reliance is placed forshowing cause in this case do not occur in the other two methods set out insection 53A (1) and 53A (4) and in the corresponding sections of the InlandRevenue Act and the former Income Tax Ordinance.
The other important section for consideration is section 53A (7) of theCo-operative Societies Ordinance which states:
“Nothing in this section shall authorise or require a District Court orMagistrate in any proceedings thereunder to consider, examine or decidethe correctness of any statement in the certificate of the Registrar.”
210
New Law Reports
(1978) Vol. 80 N.LR.
Although not in exact phraseology this section is substantially similar tosection 112(1)A of the Inland Revenue Act and the proviso to section 85(1)of the former Income Tax Ordinance.
Mr. Jayewardene’s argument is that the content and scope of section53A(5) are wide enough to accommodate the grounds the petitioner hadurged before the Magistrate in this case. It is a necessary corollary to thissubmission that the absence of the relevant words “to show cause whyfurther proceedings for the recovery of the amount should not be takenagainst him” in section 53A(1) and section 53A(4) can only mean that if it issought to recover the amount under section 53A(1) and section 53A(4) thisobjection could not have been raised. This appears to be so as under section53A(1) the specified officer is “required” to cause such sum to be recoveredfrom the defaulter by seizure and sale of the movable property and undersection 53A(4) the District Court shall direct a writ of execution to issue tothe Fiscal “requiring” him to seize and sell the movable and immovableproperty. Mr. Jayewardene sought to justify the show cause clause in section53A(5) on the ground that the method of recovery under this section mayresult in the defaulter being sent to prison if the fine is not paid and for thisspecific reason where the amount is sought to be recovered before theMagistrate the defaulter was permitted to show cause. Mr. Kulatunga, theDeputy Solicitor-General, appearing for the respondent on the other handcontended that the ground urged could not be taken cognizance of by theMagistrate. He relied on the decisions of this Court interpreting the relevantcorresponding provisions under taxing statutes that the only grounds thatcould be urged why the amount should not be recovered are as follows:
(1)The Magistrate has no jurisdiction because the last known place ofbusiness or residence does not fall within the local jurisdiction of theMagistrate.
(2)That he has paid the tax.
(3)That he is not a defaulter in that he is not the person assessed.
M.E. de Silva v. Commissioner of Income Tax' and Guillain v.Commissioner of Income Tax,1 2 3 The learned Magistrate has relied on thesedecisions and on section 53A(7) to overrule the objection raised on behalf ofthe petitioner. He states that he is precluded under section 53A(7) fromconsidering, examining or deciding the correctness of any statement of thecertificate of the Registrar.
(1951)53 N.L.R. 280.
1 (1953) 55 N.L.R. 473.
sc
PATHIRANA, J.— Mohideen v. Assistant Commissioner of
Co-operative Development, Kalmunai
211
Mr. Jayewardene’s case, however, is that he is not challenging in any way ■the correctness of the amount awarded as stated in the certificate. Hisobjection is of a fundamental character. He submits that as the petitioner wasentitled to have more details and particulars of the charges against him, thefailure on the part of the arbitrator to give these details etc. was a denial ofthe principles of natural justice which rendered the award a nullity ab initio.
I shall firstly deal with the question whether section 53A(7) by itself issufficient to justify overruling the objection. As I remarked earlier under ourtaxing statutes similar provisions exist. Section 53A(7) precludes the Courtfrom considering, examining or deciding the correctness of any statement ofthe certificate of the Registrar. As to what should be contained in thestatement of the certificate of the Registrar is found in section 53A(5) whichstates that the Registrar may issue a certificate.
“containing particulars of the amount due and the name and last known
place of business or residence of the defaulter”.
Beyond this there is no statutory obligation to state anything more. In thisconnection it may be mentioned that the decisions of this Court inconsidering the corresponding provision of the Income Tax statutes havetaken the view that this provision refers only to the correctness of theassessment made, i.e. the correctness of the amount specified in thecertificate. See Mendis v. Commissioner of Income Tax3 and Nilaweera v.Commissioner of Inland RevenueSection 53A(7) therefore restricts thepetitioner from questioning the correctness of the amount due which is setout in the certificate. In order to decide whether the objection raised by thepetitioner can be entertained by the Magistrate I have to go outside section53A(7) and construe the words ‘to show cause why further proceedings forthe recovery of the amount should not be taken against him,’ in relation tothe entire scheme of the section relating to the recovery of the amount due.
The jurisdiction of the District Court or the Magistrate’s Court is ajurisdiction of an execution simpliciter and not that of an appellate tribunal.See M. S. de Silva v. Commissioner of Income Tax (supra). The petitioner inthis case had a right of appeal against the award of the arbitrator undersection 53A(3) of the Co-operative Societies Ordinance but he had chosennot to appeal against this order. When the award was made by the arbitratorthe petitioner could have come before this Court to have the award quashedby way of an appropriate writ if he could have satisfied this court that therehad been a failure to observe the rules of natural justice on the part of the
J (1959) N.L.R. 95.
(1962) 63 N.L.R. 485.
212
Mt>v Law Reports
(1978) Vol. 80N.LR.
arbitrator. This too the petitioner had not chosen to do. It cannot therefore besaid that the petitioner was not without a remedy to have his contentionexamined by an appropriate tribunal. He waits till the execution jurisdictionof the Magistrate’s Court is invoked to take up this point. As I remarkedearlier, if recourse was had to the other two methods namely, section 53A(1)and 54A(4), the award was beyond challenge even on the ground urged bythe petitioner even assuming it to be a valid ground. It must therefore followthat had the Registrar sought to recover the amount under section 53A(1) or53A(4), this same award was beyond challenge and could have beenenforced and the amount recovered. If I were to accept Mr. Jayewardene’sargument we have the paradoxical situation that if the award was sought tobe enforced in the Magistrate’s Court this same award may turn out to be onMr. Jayewardene’s contention a nullity. Or take another situation. Undersection 53A(5) the amount could be recovered in the Magistrate’s Court ifthe full amount has not been recovered by seizure and sale under the twoother methods. If the submission of Mr. Jayewardene was upheld it wouldresult in a situation where a part of the amount due on the award could havebeen recovered under section 53A(1) or under section 53A(4) as the awardwas valid and beyond challenge, while when it comes for the recovery of thebalance amount under the same award under section 53A(5) by resort to theMagistrate the award could be challenged and if the grounds urged are validthe award could be declared a nullity. If this construction is accepted to usethe words of H. N. G. Fernando, C.J. in another context in Arnolis v.Hendrick.5:—
“It will lead to absurdities which Parliament could not have intended or
tolerated.”
There is therefore much significance in the use of the words “furtherproceedings” in the phrase “to show cause why further proceedings for therecovery of the amount should not be taken against him” in section 53A(5).By necessary implication these words shut out showing cause in relation toproceedings prior to that before the Magistrate for recovery of the amountdue.
I am therefore, of the view that the only grounds that can be urged beforethe magistrate are that, 1 2
(1)the Magistrate has no jurisdiction because his last known place ofbusiness or residence does not fall within the local jurisdiction of theMagistrate.
(2)that he had paid the amount.
1 (1972) 75 N.L.R. 532 at 533.
sc
PATHIRANA, J.— Mohideen v. Assistant Commissioner of
Co-operative Development, Kalmunai
213
that he is not the defaulter in that he is not the person from whom theamount is due.
The learned Magistrate was right in refusing to hear the petitioner on theground that adequate details of the allegations against him were not madeavailable to the petitioner by the arbitrator so that he could have met thecharges against him.
The application is, therefore, dismissed.
GUNASEKERA, J. — I agree.
Application dismissed.