Mr. Devitre did not dispute the fact that the provisions of Section 164 of the said Act are mandatory. He however, submitted that a notice under Section 164 can be waived. He further submitted that the absence of a notice under Section 164 is a formal defect and can be cured by allowing an amendment of the plaint by dropping the society, which is only one of the parties and rejoining it with a notice served in the meantime. I find the submissions to be well founded, both on principal and precedent.
5. In Pimpri Refugee Industrial Co-operative Society v. Parmanand Bhimandas Talreja LJ SOFT 172 : 2007 (2) ALL MR 306 , a learned single Judge of this Court held in paragraph 6 as under:
6. It is not in dispute that the Petitioner never raised the issue regarding the absence of notice under Section 164, either in the written statement or even at the appellate stage. It cannot also be disputed that the requirement of notice under Section 164 can be waived and the waiver can be specific or implied. It is settled position in law that when a statute requires a notice should precede the filing of a suit, the compliance of such statutory provision is mandatory, but at the same time, the right thereof can be waived by the party for whose benefit the provision regarding pre-suit notice has been made, and further that the waiver can be expressly made as also impliedly. While dealing with the provision of law comprised under Section 30 of the Code of Civil Procedure, the Apex Court in Dhian Singh Sobha Singh and Anr. v. Union of India reported inMANU/SC/0010/1957 : AIR 1958 SC 274 as well as the Full Bench of our High Court in Vasant Ambadas Pandit v. Bombay Municipal Corporation and Ors. reported in MANU/MH/0348/1981 : AIR 1981 Bom 394 had held that the notice can be lawfully waived. Undoubtedly, the waiver has to be established by the Plaintiff. However, the same can be presumed when inspite of specific averment in the plaint regarding service of notice, the sufficiency of the notice is not challenged by the Defendant till the disposal of the appeal.
(emphasis supplied.)
What constitutes waiver must depend upon the facts of each case.
6. Section 164 of the said Act reads as under:
164. Notice necessary in suits:No suit shall be instituted against a society, or any of its officers, in respect of any act touching the business of the society, until the expiration of two months next after notice in writing has been delivered to the Registrar or left at his office, stating the cause of action, the name, description and place of residence of the Plaintiff and the relief which he claims, and the plaint shall contain a statement that such notice has been so delivered or left.
7. If the conduct of a party is such that the giving of a notice would render, the suit to be instituted against the society or any of its office bearers infructuous or would effectively or substantially prejudice the parties right to approach the Court for relief, interim or final, it must be deemed to have waived the requirement of a notice under Section 164. Provisions such as Section 164 of the Maharashtra Co-operative Societies Act, 1960 and Section80 of the Code of Civil Procedure are for the benefit of a party that may be affected by the litigation. As observed in paragraph 9 of the said judgment:
A statutory notice for filing of the suit is merely to put the Defendant on guard so that it can avoid the lis by complying with the demand of the Plaintiff based on the cause of action disclosed in the notice.
The notice, inter-alia, is to enable the society, upon being informed by the Registrar, to avoid litigation involving time and expense by settling a just claim. If therefore, such a party by its act deprives the Plaintiff of an opportunity of approaching the Court and seeking relief, final or even interlocutory, it is axiomatic that it does not wish to avail the benefit or opportunity provided by legislature to avoid the litigation by setting the matter or otherwise. On the question of waiver, it matters little whether the conduct prejudicially affects the right to obtain the final relief or even interim reliefs. The logical inference is that the party does not wish to settle the dispute and avoid litigation. It, thereby, waives its right to such a notice. The Plaintiff may yet give a notice and claim the benefit of exemption of the period of limitation. That however, would not lead to a conclusion that the Defendant cannot waive a notice.
8. A view to the contrary would render the provisions of Section 164 arbitrary, unfair and in fact irrational. It would enable the Defendant, by insisting upon of the empty formality of a notice, to defeat a just claim. The legislature could surely not have intended such a consequence.
Citation: 2011(5)ALLMR815, 2011(5)BomCR133, 2011(113)BOMLR1771, 2011(4)MhLj935
IN THE HIGH COURT OF BOMBAY
Decided On: 05.05.2011
Appellants: B.Y. Chavan and Anr.
Vs.
Respondent: Association of Tenants of the Bombay Catholic Housing Society and Ors.
Vs.
Respondent: Association of Tenants of the Bombay Catholic Housing Society and Ors.
Hon'ble Judges/Coram:
S.J. Vazifdar, J.
1. The preliminary issues were raised on 15th April, 2011. I rejected the preliminary issues before proceeding to hear the parties on the merits of the matter. I heard the parties on merits from 20th April, 2011. However, both the parties stated that they had no objection to my dealing with the preliminary objections and the Notice of Motion by a common order and judgment.
2. The following preliminary issues have been framed:
ISSUESI) Whether the suit is maintainable in the absence of a notice under Section 164 of the Maharashtra Co-operative Societies Act, 1960?
RE.: SECTION 164:
3. Defendant No. 71 is the Bombay Catholic Co-operative Housing Society Limited (hereafter referred to as "the society"). Defendant No. 2 to 70 are tenants, tenant-members and members of the society or occupants on the property of the society. Defendant No. 1 is an unregistered association of the tenant-members. Defendant No. 72 and 73 are M/s. Sumer Associates and Robin Home Developers Pvt. Ltd., who claim to have purchased a part of the property of the society in respect whereof the Plaintiffs claim to have a prior right.
4. Mr. DeVitre did not dispute the fact that the provisions of Section 164 of the said Act are mandatory. He however, submitted that a notice under Section 164 can be waived. He further submitted that the absence of a notice under Section 164 is a formal defect and can be cured by allowing an amendment of the plaint by dropping the society, which is only one of the parties and rejoining it with a notice served in the meantime. I find the submissions to be well founded, both on principal and precedent.
5. In Pimpri Refugee Industrial Co-operative Society v. Parmanand Bhimandas Talreja LJ SOFT 172 : 2007 (2) ALL MR 306 , a learned single Judge of this Court held in paragraph 6 as under:
6. It is not in dispute that the Petitioner never raised the issue regarding the absence of notice under Section 164, either in the written statement or even at the appellate stage. It cannot also be disputed that the requirement of notice under Section 164 can be waived and the waiver can be specific or implied. It is settled position in law that when a statute requires a notice should precede the filing of a suit, the compliance of such statutory provision is mandatory, but at the same time, the right thereof can be waived by the party for whose benefit the provision regarding pre-suit notice has been made, and further that the waiver can be expressly made as also impliedly. While dealing with the provision of law comprised under Section 30 of the Code of Civil Procedure, the Apex Court in Dhian Singh Sobha Singh and Anr. v. Union of India reported inMANU/SC/0010/1957 : AIR 1958 SC 274 as well as the Full Bench of our High Court in Vasant Ambadas Pandit v. Bombay Municipal Corporation and Ors. reported in MANU/MH/0348/1981 : AIR 1981 Bom 394 had held that the notice can be lawfully waived. Undoubtedly, the waiver has to be established by the Plaintiff. However, the same can be presumed when inspite of specific averment in the plaint regarding service of notice, the sufficiency of the notice is not challenged by the Defendant till the disposal of the appeal.
(emphasis supplied.)
What constitutes waiver must depend upon the facts of each case.
6. Section 164 of the said Act reads as under:
164. Notice necessary in suits:No suit shall be instituted against a society, or any of its officers, in respect of any act touching the business of the society, until the expiration of two months next after notice in writing has been delivered to the Registrar or left at his office, stating the cause of action, the name, description and place of residence of the Plaintiff and the relief which he claims, and the plaint shall contain a statement that such notice has been so delivered or left.
7. If the conduct of a party is such that the giving of a notice would render, the suit to be instituted against the society or any of its office bearers infructuous or would effectively or substantially prejudice the parties right to approach the Court for relief, interim or final, it must be deemed to have waived the requirement of a notice under Section 164. Provisions such as Section 164 of the Maharashtra Co-operative Societies Act, 1960 and Section80 of the Code of Civil Procedure are for the benefit of a party that may be affected by the litigation. As observed in paragraph 9 of the said judgment:
A statutory notice for filing of the suit is merely to put the Defendant on guard so that it can avoid the lis by complying with the demand of the Plaintiff based on the cause of action disclosed in the notice.
The notice, inter-alia, is to enable the society, upon being informed by the Registrar, to avoid litigation involving time and expense by settling a just claim. If therefore, such a party by its act deprives the Plaintiff of an opportunity of approaching the Court and seeking relief, final or even interlocutory, it is axiomatic that it does not wish to avail the benefit or opportunity provided by legislature to avoid the litigation by setting the matter or otherwise. On the question of waiver, it matters little whether the conduct prejudicially affects the right to obtain the final relief or even interim reliefs. The logical inference is that the party does not wish to settle the dispute and avoid litigation. It, thereby, waives its right to such a notice. The Plaintiff may yet give a notice and claim the benefit of exemption of the period of limitation. That however, would not lead to a conclusion that the Defendant cannot waive a notice.
8. A view to the contrary would render the provisions of Section 164 arbitrary, unfair and in fact irrational. It would enable the Defendant, by insisting upon of the empty formality of a notice, to defeat a just claim. The legislature could surely not have intended such a consequence.
9. In the present case, the resolution was passed by the society on 6th December, 2009. The conveyance was executed the very next day. The notice dated 26.11.2009 convening the meeting makes it clear that the society intended completing the entire process as expeditiously as possible in order to avoid it being challenged. Had the Plaintiff given a notice under Section 164 and waited for a period of two months, its suit could have been rendered infructuous. In any event, its ability to obtain effective relief would have been seriously prejudiced, had it waited for a period of two months prescribed in Section 164. The society and its contesting members had absolutely no intention of settling the matter. In fact they did not even consider a higher and better offer of the tenant members. The conclusion is inescapable that the society and its members had no intention of settling the disputes. They thereby waived the notice under Section 164. The Plaintiff was therefore justified in filing the suit on 22nd December, 2009 without issuing the notice under Section 164.
On this ground alone, the preliminary objection in this regard is rejected.
10. Further this defect can be cured by allowing the Plaintiff to amend the plaint by dropping the society and rejoining it with a notice served in the meantime. A Division Bench of this Court in an unreported judgment dated 26th April, 2009 in the case of Sahara India Commercial Corporation Limited v. B. Jeejeebhoy Vakharia and Associates and Ors. (Appeal No. 78 of 2009 in Chamber Summons No. 587 of 2007 in Suit No. 3376 of 2005) has approved this procedure.
In accordance with the procedure prescribed by the Division Bench, the Plaintiffs have filed Chamber Summons No. 641 of 2011 for this purpose viz. dropping the society Defendant No. 71 and rejoining it.
The Chamber Summons is therefore made absolute in terms of prayers (a) and (b). The amendments shall be carried out within four weeks from today.
11. The preliminary objection under Section 164 is, therefore, rejected.
12. This brings me to the objection under Section 91 of the MCS Act which reads as under:
91. (1) Notwithstanding anything contained in any other law for the time being in force, any dispute touching the construction, elections of the office bearers, conduct of general meetings, management or business of a society shall be referred by any of the parties to the dispute, or by a federal society to which the society is affiliated or by a creditor of the society to the Co-operative Court if both the parties thereto are one or other of the following:* * *(b) a member, past member or a person claiming through a member, past member or a deceased member of a society, or a society which is a member of the societyor a person who claims to be a member of the society.* * *(3) Save as otherwise provided under Sub-section (3) of Section 93, no court shall have jurisdiction to entertain any suit or other proceedings in respect of any dispute referred to in Sub-section (1).
13. Mr. Kamdar submitted that the suit is in respect of disputes which touch the conduct of the general meeting, management and the business of the society. He submitted that the reliefs sought in this suit are against the society based on an agreement entered into by Plaintiff No. 1 with some of the members of the society and that the Plaintiffs therefore claim through a member or members of the society. He submitted therefore, that both the ingredients of Section 91 are present in this case and that therefore, the suit is not maintainable in view of Sections 91 and 163 of the Act.
14. The Plaintiffs have sought a declaration that a resolution dated 6th December, 2009 passed by the society approving the sale of about six acres of its land in favour of Defendant No. 72 i.e. M/s. Sumer Associates and the conveyance dated 7th December, 2009 pursuant thereto are void and/or voidable against the Plaintiffs and Defendant Nos. 1 to 70, for a decree directing Defendant No. 72 to deliver up the conveyance for cancellation and for a perpetual injunction restraining Defendant Nos. 2 to 70 from entering into any agreement/arrangement of any nature whatsoever for the development of the property with any other person other than the Plaintiffs. I have by a separate order and judgment today in Writ Petition No. 1769 of 2010 and Notice of Motion No. 172 of 2010 in Suit No. 144 of 2010, set out the numerous facts in considerable detail. The above matters were heard along with the said Writ Petition and Notice of Motion, two other Writ Petitions and Notice of Motion No. 173 of 2010 in Suit No. 145 of 2010. I have disposed of all those matters by separate orders. I have however delivered this separate order in the above matters, as on merits they stand on a different footing.
15. For the purpose of the above proceedings, it is sufficient to notice only a few facts, which I will set out before dealing with this preliminary objection.
FACTS:
16. The society was incorporated and registered in the year 1917 under the provisions of the Central Co-operative Societies Act, 1912. The society, from time to time, purchased lands in Santacruz, Mumbai. The properties of the society comprised of three areas referred to as Willingdon West, Willingdon East and Willingdon South. The suit relates to Willingdon East which comprises of about five and half acres.
17. The society had about 762 members. The area comprised in Willingdon West and Willingdon South were sold to 60 shareholders on free-hold basis and 60 shareholders on a lease of 998 years. These members built their own houses or developed the land by constructing buildings thereon and formed their own co-operative societies. They, therefore, disposed of their interests in the property. It appears that they, however, continued to retain their shares in the society.
Twenty-five cottages were constructed in the Willingdon East area and were let out on monthly rental basis. There were 69 tenants of whom about 54 were also members of the society, who are referred to as the tenant - members. Out of the balance of about 585 shareholders, 300 (allottee-members) had deposited a sum of Rs. 15,000/- in anticipation of being allotted flats. 285 of these members had not deposited any amounts.
18. The society had invited applications from its allottee-members holding five shares for the allotment of flats in the buildings proposed to be constructed pursuant to the said scheme; submitted plans to the Bombay Municipal Corporation for construction; decided to allot the new flats to the successful members and called upon them to make advance payment of Rs. 15,000/- each. According to the society, about 191 members who are referred to as allottee members, made advance payment of Rs. 15,000/-, each.
19. (A) On 17th September, 1970, about 45 tenant-members filed an application under Section 18(1) of the Act for bifurcation or trifurcation of the society for the purpose of securing the proper management of the society.
Section 18(1) of the Act reads as under:
18. Power to direct amalgamation, division and reorganisation to public interest, etc.(1) Where the Registrar is satisfied that it is essential in the public interest or in the interest of the co-operative movement, or for the purpose of securing proper management of any society, that two or more societies should amalgamate or any society should be divided to form two or more societies or should be reorganised then notwithstanding anything contained in the last preceding section but subject to the provisions of this section, the Registrar may, after consulting such federal society as may be notified by the State Government by order notified in the Official Gazette, provide for the amalgamation, division or reorganisation of those societies into a single society, or into societies with such constitution, property rights, interests and authorities, and such liabilities, duties and obligations, as may be specified in the order.
(B). This application has been through three rounds of litigation. Each round took the parties through the three levels provided under the Act viz. the original proceeding before the Deputy Registrar, an appeal before the Divisional Joint Registrar and a Revision Application before the Minister for Co-operation.
(C). The case in the application is this. The society was not functioning in accordance with law and was being administered by a majority consisting of non-tenant members with no interest in the objectives of the society who were acting to the detriment of the interests of the tenant-members and the tenants. The non-tenant members who had purchased the plots on free-hold and lease-hold basis had parted with their rights in respect of the properties, but continued to be members of the society and to participate in the affairs thereof, despite their having no subsisting interest in the society. Such members, after having availed of all the benefits, were monopolizing the administration of the society. There were about 700 such members out of approximately 800 members. The funds of the society being squandered, there ought, therefore, to be a bifurcation of the society into three societies viz. a tenant-member society, a non-tenant member society having lease-hold land on which they had built their houses, and a non-resident shareholder society comprising of members who were not residing in the area, but were scattered all over Maharashtra and India and even abroad. There ought to be a separate society for members of free-hold properties who ought not to meddle with the property of the society in which they had no subsisting interest and could not ask for accommodation. It was stated that the Assistant Registrar, in a letter dated 8th April, 1960, had adversely commented on the working of the society and stressed on the undesirable effect of the preponderance of non-resident members.
THE FIRST ROUND:
20. (A)(i) Initially, the Federal society recommended that the application for bifurcation be allowed. Accordingly, a draft order for bifurcation of the society dated 6th September, 1979, was issued by the Deputy Registrar.
(ii) The society disapproved the bifurcation and took up the matter with the Federal Society.
(iii) The Federal Society re-examined the matter; opined that there was no case for bifurcation or division of the society and withdrew the recommendation for the bifurcation of the society. Consequently, the Deputy Registrar withdrew the draft bifurcation order and rejected the application for bifurcation.
(B) The Divisional Joint Registrar allowed the appeal filed by the tenant-members and remanded the matter to the Deputy Registrar to reconsider the application for bifurcation. The revisional authority set aside the order of the Divisional Joint Registrar and remanded the matter for passing a fresh order in appeal, after hearing both the parties. The Divisional Joint Registrar, thereupon heard the matter afresh and by an order dated 15th June, 1982, allowed the appeal and set aside the order dated passed by the District Deputy Registrar and directed the Assistant Registrar to proceed with the matter from the stage of the draft bifurcation order.
(C) The Respondent challenged the order dated 15th June, 1982, by filing a revision application. There was, however, no stay of the order dated 15th June, 1982. The counsel were unaware of the fate of this revision application. It probably became infructuous as on account of there being no stay of the order dated 15th June, 1982, the matter proceeded as stated hereunder.
THE SECOND ROUND:
21. As there was no stay of the order dated 15th June, 1982, the Assistant Registrar heard the matter afresh.
(A) By an order dated 22nd February, 1983, the Assistant Registrar directed a bifurcation of the society. The Assistant Registrar observed that a large number of shareholders who had joined the society were neither tenants nor lease-holders nor free-holders. They were a class of investor-type of members who had looked to the society as a source of investment and never identified themselves with the objectives of the society, thus creating a class of their own. They were in a menacingly large number - about 585 - enjoying equal voting rights and had lent their support to the 60 free-hold members and 60 lease-hold members while dealing with the tenant-members who were thereby in a microscopic minority of about 50. It was held that the interests of the minority had never been safeguarded and were always under fear of hostile treatment by a "steam-roller majority".The order, accordingly, provided for bifurcation of the society into two societies as per the details set out in Statement A annexed thereto. The society was to stand dissolved and its registration cancelled. The bifurcated societies viz. The Bombay Catholic Co-operative Housing Society Limited (lease-hold and free-hold land owners and others) and The Bombay Catholic (Tenants) Co-operative Housing Society Limited would consist of different shareholders and both the societies would be deemed to be registered under Section 9 of the Act. The area of operation of the tenant-society was of about 6 acres of land in what was known as Willingdon (East).(B) The society challenged the order of bifurcation dated 22nd February, 1983, by filing Writ Petition No. 708 of 1983. The said Writ Petition was disposed of by an order dated 4th October, 1988 in view of the alternate remedy available to the society by way of an appeal. Thereupon, the society filed an appeal against the order of bifurcation dated 22nd February, 1983. The appeal was dismissed by an order of the Divisional Joint Registrar dated 19th September, 1989.(C) I will pause here only to mention that an agreement dated 30th September, 1987, was entered into between Plaintiff No. 1 with the Tenants' Association for the development of the property. Plaintiff No. 1, in turn, has created certain rights in favour of Respondent No. 7 - M/s. Sagar Builders and Developers. The Plaintiffs have filed this suit to protect their alleged rights under these agreements. The Notice of Motion was heard alongwith Writ Petition Nos. 1769, 1801, 1824 and 704 (Lodging) of 2010 and Notice of Motion No. 172 and 173 of 2010 in Suit Nos. 144 of 2010 and 145 of 2010 filed by some of the tenant-members. I have disposed of these proceedings by separate orders passed today.(D) As the order of bifurcation was confirmed, the Assistant Registrar by a letter dated 18th January, 1990, cancelled the registration certificate of the society.(E) By an order dated 24th June, 1991, the Revision Application filed by the society was dismissed.(F) The society filed Writ Petition No. 2328 of 1991, challenging the order of bifurcation dated 22nd February, 1983, the orders dated 19th September, 1989, and 24th June, 1991, and the communication dated 18th January, 1990, cancelling the registration certificate of the society.(G) The Writ Petition was dismissed by an order and judgment dated 21st/22nd October, 1999.
22(A). The learned Judge also dealt with the order of bifurcation on merits and the aforesaid facts in detail. The learned Judge held that the Assistant Registrar had considered relevant material while ordering bifurcation of the society; that the order of bifurcation was not harsh or arbitrary or oppressive to the shareholders; that it was the tenant-members who had been oppressed and had suffered at the hands of the majority members who no longer had a sufficient or substantive interest in the objectives of the society; that the order of bifurcation did not confer any undue favours upon the tenant- members and a balance had been struck in respect of the rival interests. The learned Judge, accordingly, dismissed the Writ Petition.
(B) The society challenged the order and judgment dated 21st/22nd October, 1999, by filing Appeal No. 20 of 2000. By an order and judgment dated 4th August, 2007, the Division Bench allowed the appeal. The Division Bench upholding the only ground of challenge held that the opinion expressed by the Federation had not been considered by the Deputy Registrar while deciding to make the order of bifurcation and, therefore, violated a mandatory requirement of consultation with the Federal Society. The Division Bench set aside the orders dated 22nd February, 1983, the subsequent orders in appeal and in revision and the order of the learned single Judge confirming the same and remitted the matter back to the Deputy Registrar.
(C) The Special Leave Petition against the order and judgment of the Division Bench was dismissed by an order of the Supreme Court dated 17th September, 2007.
THE THIRD ROUND:
23. The third round commenced as ordered by the judgment of the Division Bench dated 4th August, 2007.
24(A). By an order dated 21st November, 2007, the Deputy Registrar allowed the application for bifurcation and directed the formation of a new society consisting only of tenants and the allottee-members of the said society. The property comprising Willingdon (East) was directed to be divested from the said society and vested in the new society.
(B) The society challenged the order dated 28th November, 2007, by filing an appeal before the Divisional Joint Registrar. By an order dated 27th December, 2007, the order of bifurcation was stayed. The tenant-members also filed an appeal against the order dated 28th November, 1997, but only insofar as it recognized the rights of the allottee-members in the bifurcated society.
(C) The above appeals were disposed of by an order dated 29th September, 2009, passed by the Divisional Joint Registrar by remanding them to the Deputy Registrar for a fresh consideration on the limited aspect of consultation with the Federal Society at the stage of the draft order.
(D) The Tenants' Association filed a Revision Application, challenging the above order dated 29th September, 2009. However, as there was no Minister for Co-operation to hear the revision, the tenant-members also filed Writ Petition No. 2258 of 2009 to challenge the said order dated 29th September, 2009.
The society did not challenge this order.
25. At this stage, another aspect of the matter commenced. The society purported to transfer the said land to Robin Home Developers Private Limited, or to its nominee M/s. Sumer Associates, Respondent No. 8. The society issued a notice dated 26th November, 2009, convening a special general body meeting on 6th December, 2009, inter-alia, to approve a proposed conveyance/sale of the said land to Robin Home Developers Private Limited or its nominee M/s. Sumer Associates on "as is where is" basis.
Despite objection from and a higher offer made by the Tenants' Association, a resolution was passed by a majority approving the sale and transfer of the said land to M/s. Sumer Associates on "as is where is" basis subject to the rights of 69 tenants and 161 allottees/members. On the very next day i.e. 7th December, 2009, the society executed a conveyance in favour of M/s. Sumer Associates in respect of the said land.
26. A special general body meeting of the Tenants' Association was held on 10th December, 2009. The minutes of the meeting record that the members of the association protested against the sale of the said land by the society to M/s. Sumer Associates.
27. The Plaintiffs, accordingly, filed the above suit on 26th December, 2009. I have answered the preliminary issues in the Plaintiffs' favour. I have, however, dismissed the Notice of Motion on the ground that the agreement dated 30th September, 1987, on the basis of which the Plaintiffs claim a right, is not enforceable in law. It is not necessary, therefore, to set out the details of the various proceedings that were filed by the parties before this Court and before the revisional authority and the orders passed therein. I have set out these facts in considerable detail in my judgment in Writ Petition No. 1769 of 2010. Some of the tenant-members apprehended that the others had switched sides and would withdraw the proceedings before the revisional authority. They, therefore, filed proceedings in this Court and before the revisional authority seeking to be heard and/or impleaded in the revision application. Some of the tenant-members filed the said Suit Nos. 144 of 145 of 2010 also challenging the resolution dated 6th December, 2009 and the conveyance dated 7th December, 2009. This Court had, inter-alia, directed the revisional authority to hear the tenant-members and the Plaintiffs herein before disposing of the revision application.
The revisional authority ultimately allowed the tenants' association/Defendant No. 1 to withdraw the revision application. However, having done so, the revisional authority also made certain observations and came to certain conclusions. The effect of the order was to quash the bifurcation proceedings. I have, in the judgment delivered today, inter-alia, in Writ Petition No. 1769 of 2010, set aside the order of the revisional authority dated 31st May, 2010, and directed the Deputy Registrar to hear the bifurcation proceedings afresh.
28. This brings me back to the preliminary objection under Section 91.
29. Mr. Dada, the learned Senior Counsel appearing on behalf of Defendant Nos. 72 M/s. Sumer Associates expressly stated that he does not support Mr. Kamdar as regards the preliminary objections under Section 91. Mr. Thorat, the learned senior Counsel appearing on behalf of some of the members of the society however, supported Mr. Kamdar as regards both the preliminary objections. Thus different stands have been taken by the contesting Defendants who otherwise supported each other on merits.
30. This preliminary objection must be answered in the negative. The agreement dated 30.8.1987 entered into between Plaintiff No. 1 and the unregistered tenants association does not fall within the ambit of Section 91. The agreement was not entered into by Plaintiff No. 1 with the tenants association or its members as the members of Defendant No. 71 - the society. The Plaintiffs' agreement dated 30th August, 1987 is dependent upon an order of bifurcation under Section 18(1). If the order of bifurcation as contemplated under the agreement is not in existence for any reason, the agreement even if otherwise valid and enforceable would cease to be effective. The agreement was not with the members of the tenants association as the members of the Defendant No. 71 society but with them/persons who may acquire an interest in the new society that may be formed in future in the event of an order of bifurcation as contemplated under the agreement, being made. Thus Defendant Nos. 2 to 70 did not enter into the agreement dated 30.8.1987 as the members of Defendant No. 71. They indeed could not have entered into such an agreement as the property did not belong to them but belonged to the society, which includes several other members as well. They entered into the agreement with Plaintiff No. 1 as the members of the new society/contemplated society to be formed contingent upon the order of bifurcation, if any.
31. Thus even if the suit pertains to the conduct of the meetings or the business of the society, the objection must be overruled.
32. The preliminary objection under Section 91 is liable to be rejected on another ground. As I noted earlier, the Plaintiffs have challenged the conveyance dated 7th December, 2009. It is true that the Plaintiffs have also challenged the resolution dated 6th December, 2009. The principal challenge however, to my mind is to the conveyance. Although the resolution if left outstanding, would not affect the rights of the Plaintiff totally and in any event substantially especially if it is not implemented the conveyance would. The conveyance, especially as it has been registered, if left outstanding would affect the rights of the Plaintiff, if any, totally and not merely substantially. Even if the Plaintiffs succeed in having the agreement upheld, it would be difficult if not impossible for them to enjoy the benefits thereof if the registered conveyance is left outstanding and not cancelled. The Plaintiffs for instance would be unable to develop the property for, in the public records, it is Defendant No. 72, M/s. Sumer Associates, who would continue to be shown as the owners thereof.
33. Thus the main relief is against M/s. Sumer Associates for cancellation of the conveyance executed in their favour. Section 91 does not apply to the suit in so far as this relief is concerned, as M/s. Sumer Associates is admittedly not a member. Even assuming that the relief claimed as regards the resolution would be covered by Section 91, it would not affect the maintainability of the suit, for it is only an incidental or ancillary relief, The reliance upon the judgment of the Supreme Court in Marine Times Publications (P) Ltd. v. Shriram Transport and Finance Co. Ltd. MANU/SC/0161/1991 : 1991 (1) SCC 469 is well founded. The Supreme Court held in paragraph 12 as under:
12. We find that the Appellant before us is a member of Respondent 2, a co-operative society. Respondent 1 is not a member. The main question before us is whether the claim of Respondent 1 in the dispute can be said to be one made against the cooperative society, being Respondent 2, through the Appellant, a member. On analysing the plaint it appears clear to us that the main claim of Respondent 1 is for a decree or order for specific performance of the agreement, whereby the Appellant agreed to sell the said premises to Respondent 1. The prayer for an order that Respondent 2 Society should be directed to give their approval to the said transaction was merely an ancillary prayer made with a view to complete the relief of specific performance. As far as the claim to have the agreement specifically performed is concerned, we fail to see how it can be said to be a claim made by a person (non-member) against the society. The claim of Respondent 1 against the society, as made in the plaint, cannot be said to be made through a member, the Appellant herein, because it is only when a decree for performance of the said agreement is passed against the Appellant, that it could be contended that the other relief, namely, for an order directing Respondent 2 to approve the said transaction is claimed against the society through a member. Moreover, as we have pointed out that relief is only in the nature of ancillary relief, subsidiary to the main relief of specific performance. In our opinion, the dispute set out in the plaint cannot be said to fall within the scope of Section 91(1)(b) of the said Act and, in view of this, the learned Judge of the High Court was, with respect, in error in coming to the conclusion that both the parties to the dispute belonged to the categories covered under Section 91(1)(b) of the said Act. In our opinion, it is not necessary for us to decide whether the dispute in question was one "touching the business of the society" because even if that were so, it could not be referred to the Cooperative Court in the view which we have taken as set out earlier.
34. In the circumstances, at the highest, only one of the two requirements of Section 91 applies to the present suit. The bar under Section 91 read with Section 163 therefore does not apply to the present suit.
35. In the circumstance, it is not necessary to consider the other submissions on behalf of the Plaintiffs including that the sale of the property is not part of the business of the society and that it is contrary to the provisions of bye-law 3 and/or Section 17 of the said Act. This question however is left open for the parties to contend on the merits of the case at the final hearing of the suit.
36. This brings me to the Notice of Motion. This is a purely speculative litigation. The Plaintiff's launching this litigation is as speculative as M/s. Sumer Associates entering into the transaction with the society, leading to the execution of the conveyance dated 7th December, 2009.
The document dated 30th June, 1987, is not a contract. It is not a concluded agreement. I refer to it as an agreement only for convenience. It is, at the highest, only an agreement to enter into an agreement. The very foundation even of such an agreement has ceased to exist. It has not even been entered into with the relevant parties. This is established by individual clauses therein and on a reading of the document as a whole.
37. That the agreement is unenforceable is clear on the first reading. Every subsequent reading reinforces the view.
38. The contesting Defendants submitted that the entire basis of the agreement was the said order of bifurcation dated 22nd February, 1983, passed by the Deputy Registrar; that the same has ceased to exist and that the agreement, therefore, is unenforceable. The submissions are well founded.
The submission that the entire basis of the agreement is the order of bifurcation dated 22nd February, 1983, is supported by a reading of the agreement as a whole and in particular, a conjoint reading of recital D read with Clauses 1, 2 and 4, which read as under:
D. The said order passed on or about 22 nd February 1983 by the Assistant Registrar, Co-operative Societies, H(West) Ward, Bombay is presently challenged in the High Court of Judicature, Bombay in the Writ Petition No. 708 of 1983 which Writ Petition is still pending hearing and final disposal.1. IN CONSIDERATION OF the valuable services rendered by the Developer to the Association of Tenants of the Bombay Catholic Co-operative Housing Society in the matter of division of the original Bombay Catholic Co-operative Housing Society into two Societies so as to safeguard and protect the interest of all members of the said Society having cottages/bungalows at Willingdon Colony, Santa Cruz, Bombay-54, the Association hereby irrevocably appoints the Developer to undertake the development of its property consisting of 26,000 sq. yards or thereabout and more particularly described in the Schedule hereunder written in accordance with the order of division of the Society as passed by the Assistant Registrar, Co-operative Societies, H(West), Ward, Bombay.2. The Developer is hereby authorized to carry on negotiations with any other reputed Builder with a view to undertake the huge development project of development of the entire piece and parcel of land of the Association by constructing buildings on the said property and allotting sufficient flats therein to the existing members and tenants comprising of an area equivalent to the present carpet area occupied by the existing members and tenants plus 20% of the said carpet area and by implementing the order passed by the Assistant Registrar Co-operative Societies H(West) Ward, Bombay of division of the Society under Section18 of the Maharashtra Co-operative Societies Act 1960. The Developer shall cause such reputed builders to execute an agreement with the Association confirming the terms and conditions on which the Developer has agreed with the Association to develop the said property and the same shall be with the consent of the Developer.4. The details of development project which shall provide adequate residential flats to the existing tenant-members of the Bombay Catholic Co-operative Housing Society consequent upon demolition of their cottages/bungalows at Willingdon colony, Santa Cruz, Bombay 54 and providing residential accommodation to the tenant share-holders and non tenant members in terms of the aforesaid scheme of division or bifurcation of the Society and to develop the balance land, which shall be owned by the new Society viz. the Bombay Catholic (Tenants) Co-operative Housing Society consequent upon division of the original Society as per the aforesaid order dated 22nd February 1983 shall be worked out by mutual consent of the parties to this Agreement.
The references in the operative clauses of the agreement to the order of the division of the society refers to the order dated 22nd February, 1983, passed by the Assistant Registrar and referred to in recital D. It must be noted that this agreement was entered into when the order of bifurcation was, though under challenge, in force.
40. Under Clause 1, Plaintiff No. 1 is appointed to undertake the development of the property "in accordance with the order of the division of the society as passed by the Assistant Registrar, Co-operative Societies H(West) Ward, Bombay." Clause 2 authorizes Plaintiff No. 1 to negotiate with other builders with a view to undertake the development "by implementing the order passed by the Assistant Registrar, Co-operative societies.... of division of the society under Section 18 of the MCS Act, 1960." Further, under Clause 2, Plaintiff No. 1 was to cause the builder to execute an agreement with the society confirming the terms and conditions on which Plaintiff No. 1 had agreed with the association to develop the property. As per Clause 1, the Plaintiff No. 1 had agreed to develop the property "in accordance with the order of division of the society as passed by the Assistant Registrar." Thus, the development by the builder appointed by Plaintiff No. 1 was also to be "in accordance with the order of the division of the society as passed by the Assistant Registrar."
Clause 4 also stipulates that the details of the development project to provide residential flats to the existing members "in terms of the aforesaid scheme of division or bifurcation of the society." The words aforesaid scheme of division or bifurcation' obviously relate to the order of the Assistant Registrar dated 22nd February, 1983, which is referred to in recital D.
41. Thus, the entire agreement was based solely upon and was subject to the order of bifurcation dated 22nd February, 1983. This is further established by Clause 3 which reads as under:
3. The Parties to this Agreement hereby declare that they are aware of the fact that the Development of the project shall always be subject to the final decision and the judgment in the aforesaid Writ Petition No. 708 of 1983.[emphasis supplied]
42. The next question is whether the order of bifurcation dated 22nd February, 1983, exists today or at the material time.
Writ Petition No. 708 of 1983 was disposed of by directing the Petitioners to avail the remedy of an appeal under the MCS Act which they did. That appeal, as noted earlier, was dismissed by the order dated 19th September, 1989; the revision filed against the order was dismissed by the order dated 24th June, 1991 and the Writ Petition No. 2328 of 1991 against the order of revision was dismissed by the said judgment dated 21st/22nd October, 1999.
However, ultimately, the Division Bench, by the order dated 4th August, 2007, allowed the appeal, set aside the aforesaid orders and remanded the matter to the Deputy Registrar. As a consequence thereof, the order of bifurcation dated 22nd February, 1983, ceased to exist. It is today not in existence. The basis, therefore, of the agreement does not exist as on date. The agreement, therefore, cannot possibly be performed.
43. Mr. DeVitre submitted that the agreement would apply to the fresh order of bifurcation, if any. He submitted that the agreement would apply even if the fresh order of bifurcation is different from the order dated 22nd February, 1983. This, he submitted, was despite the fact that the agreement does not state so.
44. The error in the submission is demonstrable. Take for instance a case where the fresh order of bifurcation is restricted to an area substantially less than the order of bifurcation dated 22nd February, 1983. Surely, Plaintiff No. 1 could not be expected to implement the agreement in that event. If the area of operation of the new society is less than the required area to accommodate all the members of the society as per Clauses 2 and 4, it would not even be possible for the Plaintiffs to implement the agreement.
45. Mr. DeVitre stated that the Plaintiffs are willing to take the risk and give an undertaking to that effect. What the Plaintiffs are now willing to do as another speculative venture cannot decide the nature, scope and enforceability of the agreement dated 30th June, 1987.
46. The fallacy in the submission is also established by the fact that Clause 2 refers to the builder identified by Plaintiff No. 1 requiring to undertake "the huge development project of development of the entire piece and parcel of land of the association." The reference to the "huge development project" is obviously keeping in mind and in relation to the bifurcation order dated 22nd February, 1983, and not to any order to be passed in future for a reduced area.
47. It is also clear that not all the essential terms and conditions have been agreed to and that several essential terms and conditions were yet to be discussed, leave alone finalized. It is of vital importance to note that the first part of Clause 4 stipulates that the project would provide adequate residential flats to the existing tenant- members. The second part of Clause 4 provides that the development of the balance land "shall be worked out by mutual consent of the parties to this agreement". This is one of the most crucial aspects of the agreement. It pertains to the consideration. Thus far, the agreement provides only for the provision of tenements by Plaintiff No. 1. There is no provision regarding the manner in which the entire property is to be dealt with. The consideration in favour of Plaintiff No. 1 was far from finalized in the agreement.
48. The contention that Plaintiff No. 1 was entitled to deal with the entire property unconditionally upon providing tenements to the existing tenant-members, non-tenant members etc. is unsustainable. The Plaintiffs cannot be permitted to hijack such a valuable property. The manner in which the balance land is to be utilized is of utmost importance with enormous financial implications. Assuming an FSI of 1 and assuming that each member is entitled to 600 sq. ft. plus twenty per cent thereof, about fifty per cent of the land, even as per the order of bifurcation dated 22nd February, 1983, would still be available. This works out to about 2.75 to 3 acres. There is no agreement in respect thereof. If the intention of the parties was as suggested by Mr. DeVitre, the agreement would, without a doubt, have provided for it. It is impossible to believe that a party such as Plaintiff No. 1 would not have insisted upon the same being recorded in the agreement. That it did not, totally destroys the case.
49. The Plaintiffs indeed are developers and builders and agreements entered into by them ought to be read in a commercial manner. I cannot, however, lose sight of the fact that the members of the society are not men of commerce. Even assuming that I ought to read the agreement in a commercial manner and give it commercial sense as suggested by Mr. DeVitre, it is impossible in the present case to hold that the Plaintiffs were entitled to the entire property upon providing tenements to those for whose benefit the order of bifurcation was made. All this, however, is assuming that the Plaintiffs are entitled to rely upon the order of bifurcation dated 22nd February, 1983, despite the same having been set aside and no longer being in existence.
50. Recitals F and G of the agreement read as under:
F) The Association with the concurrence of the majority of all its members, who are also the members of the Bombay Catholic Co-operative Housing Society and who are stationed at Willingdon Colony, Santa Cruz, Bombay-54 have desired to assign the development project of Willingdon Colony at Santa Cruz, Bombay-54 to the Developer herein on certain terms and conditions.G) The parties to this Agreement desire that a few of such terms and conditions be reduced to writing.[emphasis supplied]
51. The recitals indicate that the majority of the members of the tenants' association desired to assign the development project to the developer i.e. Plaintiff No. 1 "on certain terms and conditions" (Recital F) and that the parties desired that only "a few of such terms and conditions be reduced to writing" (Recital G). It is, therefore, clear on the Plaintiff's admission that the document does not contain all the terms and conditions. It contains only a few of them. There is no reason why they have not been mentioned. It is not the Plaintiff's case that there were no other terms and conditions. Implicit therefore, is the Plaintiff's admission that there were other terms and conditions. The plaint is absolutely silent as to the terms and conditions not incorporated in the document. This itself establishes that the document is incomplete. It also establishes that the parties had contemplated the execution of further documents and that the same was a term of the bargain and not a mere formality. The execution of a formal document is a mere formality and not a term of the bargain only when the agreement preceding it contains all the essential terms and conditions. In the present case, the agreement admittedly does not even contain all the terms and conditions which were allegedly agreed upon.
52. Recital F provides that only a majority of the members of the tenants' association had given their concurrence to the agreement. Clause 7 further provides as follows:
The Association shall obtain a letter of consent and confirmation from all its tenant-members regarding therein their consent to the contents of this Agreement and such letters will be in the possession of the Association as it is unregistered and will be produced as and when required.
53. The recitals indicate firstly that it is only a majority of the members of even the unregistered association of tenants who were parties to the agreement. The association is not an independent legal entity. It is a mere collection of persons. The contracting party, therefore, itself has no independent legal existence. Moreover, admittedly not all but only the majority of the members of the association had entered into the agreement. Even if the bifurcation is allowed, it will include persons, other than members of the tenants' association viz. the 161 allottee-members. Thus, the majority of those who would be entitled to the order of bifurcation, if any, are not even parties to the agreement. They cannot be bound by the agreement.
54. This belies Mr. De Vitre's contention that the society to be formed pursuant to the order of bifurcation, if any, would also be bound by the agreement. Parties who have not confirmed this agreement can never be bound even if it was a concluded agreement. It is not even possible to enforce Clause 7 effectively for even if the majority who are alleged to have consented to the agreement wish to do so, they cannot force the other members of the tenants' association or any other members, including the 161 allottee-members to agree to the same.
55. Faced with this, Mr. DeVitre submitted that under the bifurcation order dated 22nd February, 1983, the admission of the non-accommodated shareholders to membership of the newly created society is to be in a chronology order and shall be gradual as and when tenements get ready for occupation (paragraph 9 of the order).
This, he stated, was also recognized by the order and judgment dated 21st/22nd October, 1999. Thus, he submitted that immediately upon the society being formed, the tenant-members would be the only members and, therefore, the Plaintiffs could compel them to pass resolutions in accordance with their wishes in order to implement the agreement dated 30th June, 1987.
56. To accept this submission would amount to a Court assisting the Plaintiffs' strategy of deceit qua the persons that may be found to be entitled to the benefit of an order of bifurcation. It is not permissible for the Plaintiffs to rely upon the order of bifurcation dated 22nd February, 1983. Moreover, the requirements in the order of bifurcation does not necessarily imply that the initial members can do as they please. That would be contrary to and violative of the principles of co-operation. It would be contrary to the basis on which even the bifurcation order dated 22nd February, 1983, was passed. It would amount to a very small minority of eligible members of the new society defrauding the members for whose benefit the order of bifurcation is passed viz. 161 allottee-members and about 69 tenants which includes the tenant-members. Even though technically members are to be taken in gradually, it cannot possibly be suggested that merely about 45 members would be entitled to deal with the property of the newly formed society as they please. In the event of the bifurcation being ordered and less than 50 members deal with the property immediately upon the new society being registered contrary to the interests of the persons for whose benefit the bifurcation has been ordered, their conduct would be no better than what has been observed about the conduct of the majority of the members of the existing society.
57. Indeed, considering that such an argument has even been raised, in the event of the Deputy Registrar granting bifurcation he would do well to safeguard the rights of all such persons for whose benefit the order of bifurcation is made.
58. Clause 6 of the agreement dated 30th September, 1987, reads as under:
6. The Developer shall also not enter into any contract with any other reputed builder or with anybody in respect of the aforesaid property unless the written consent of the members of the committee of the Association is obtained by the Developer.
Plaintiff No. 1 entered into an agreement with Plaintiff No. 2 dated 20th July, 1992, without the written consent of the members of the committee. I do not think it is even necessary to refer to the agreement dated 20th July, 1992. The agreement is presumptuous to the extreme. The agreement proceeds on a basis that the members of the tenants' association and the various other members for whose benefit the bifurcation order was made, have nothing to do with the property, have no rights therein and are to be ignored. It is an agreement which, by no stretch of imagination, can affect the tenant-members, much less can it affect any other members who are not even referred to in the agreement dated 30th September, 1987.
59. In the circumstances, the question of enforcing the negative covenant in Clause 5 of the agreement cannot and does not arise. Clause 5 of the agreement reads as under:
5. The Association hereby declares and undertakes that it shall not enter into any contract and/or Agreement for the purpose of development of its property more particularly described in the Schedule hereunder written without the knowledge, consent and settlement of the claims of the Developer herein.
60. Considering the enormous uncertainties of this agreement, it is a fit case where specific performance ought not be granted even assuming that it is for some reason found to be a concluded contract.
61. The balance of convenience is clearly against the Plaintiffs. The agreement dated 30th September, 1987 is, in any event dependent at least on a order of bifurcation in future. It was admitted that if there is no order of bifurcation, the agreement would not survive. In the event of an order of bifurcation being passed, the balance of convenience requires that the members be permitted to develop the property in accordance with the order and in accordance with law so that they can reap the benefits of their rights. To grant an injunction would be to deprive them the right of obtaining tenements for themselves. They would suffer irreparable, harm and injury in the event of any order being passed in this suit.
62. After having heard all these matters for several days, it appears clear that the Plaintiffs have embarked on a speculative litigation and Defendant No. 20 has entered into a speculative transaction. As a result of the confusion caused by these two developers, the parties for whose benefit this land exists have suffered enormously for forty years. Any order in favour of either of these developers would prolong this misery, for all practical purposes, permanently.
63. The Notice of Motion is, therefore, dismissed.
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