Research › Browse › Judgment

Karnataka High Court · body

1989 DIGILAW 202 (KAR)

NAVAJEEVAN CO-OPERATIVE HOUSING SOCIETY v. GIRISH EDUCATION

1989-06-21

M.P.CHANDRAKANTARAJ

body1989
M. P. CHANDRAKANTHARAJ, J. ( 1 ) THIS is a petition under Articles 226 and 227 of the Constitution presented by the Navajeevan Co-operative Housing society, which has its registered Office at jaypnagar in Hubli-Dharwad Corporation limits. It has suffered an award passed under Section 70 of the Karnataka Co-operative societies Act, 1959 (hereinafter referred to as the Act) as at Annexure-E to the petition. The award is dated 24-10-1983. An appeal preferred against that award before the Karnataka Appellate tribunal, Bangalore (hereinafter referred to as the Tribunal) in Appeal No. 506/ 1983 was dismissed sustaining the award on 16th August, 1984. Therefore, the present writ petition with the prayer to quash the award ot the Arbitrator as at annexure-E as well as the judgment of the Tribunal as at Annexure-F inter alia on the ground : (1) That the Arbitrator as well as the Tribunal erred in coming to the conclusion that the Arbitrator had jurisdiction to try the dispute under Section 70 of the Act inasmuch as the first respondent was not a member of the petitioner co-operative Society and as such, could not raise a dispute ; (2) That the Arbitrator and the Tribunal have erred in treating the first respondent as a deemed member in view of the amendment effected to the Act subsequently ; (3) That the Tribunal and the Arbitrator have failed to notice in terms of section 16 of the Act if the membership was not approved and accepted in accordance with law, it should be deemed to have been rejected and even on that ground the first respondent could not be a member and as such not entitled to be given a site belonging to the petitioner-Co-operative Society ; and (4) If the petitioner was aggrieved by the deemed rejection of his application for membership, he should have filed an appeal under Section 105a of the Act and not having done it, he could not have raised a dispute. ( 2 ) THE facts leading to this writ petition may be stated in order to appreciate the contentions raised and these facts are not in dispute. ( 3 ) RESPONDENT No. 1-Education society, through its President, made on application to admit it as a member of the petitioner-Co-operative Society which was originally an agricultural Co-operative society but was later converted into a non-agricultural Co-operative Society. It paid a sum of Rs. ( 3 ) RESPONDENT No. 1-Education society, through its President, made on application to admit it as a member of the petitioner-Co-operative Society which was originally an agricultural Co-operative society but was later converted into a non-agricultural Co-operative Society. It paid a sum of Rs. 251/- towards admission fee and share-amount through cheque drawn on Vijaya Bank on 4-5-1970. The first respondent-Socibtyalleged before the arbitrator that a resolution was passed by the petitioner-Co-operative Society on 4-5-1970 to sell certain plot of land of about 21 guntas (little over half acre) at the rate of Rs. 1,000/- per gunta in accordance with the fixation of the price by a Sub-Committee of the petitioner Co-operative society. Therefore, the first respondent-Society paid the sale consideration in the sum of Rs. 29,651/- to the defendant-Society. Despite repeated requests, no action was taken by the petitioner-Co-operative society to convey the property to the First defendant-Society. But, however, on 22-9-1979, the petitioner co operative Society sent a letter stating that the first respondent-Society is not at all a member of the Co-operative society and therefore directed the first defendant-Society to take back its money. It was in that circumstance that the first defendant-Society raised a dispute in regard to its membership as well as its right to have the property conveyed in its favour having paid consideration towards purchase of the same from the petitioner co-operative Society. ( 4 ) BEFORE the Arbitrator Co-operative society took up two main contentions resisting the arbitration, it pointed out in its written statement filed that the first respondent-Society would not, in law, be deemed to be a member, as in 1970, a society registered under the Societies registration Act was not eligible to seek membership, and in any event notwithstanding the fact that admission fee and share amount was paid by the first respondent-Society, its application was not considered and approved by the Committee of Management. Therefore, in accordance with Section 16, after lapse of three months of application, the membership should be deemed to have been rejected and as such the first respondent-Society could not raise a dispute with the petitioner co-operative Society. Therefore, in accordance with Section 16, after lapse of three months of application, the membership should be deemed to have been rejected and as such the first respondent-Society could not raise a dispute with the petitioner co-operative Society. There were other pleadings in regard to certain questions of facts and the Arbitrator permitted the parties to lead evidence on such issues and on recording evidence, came to the conclusion that the first respondent-Society was entitled to have the land measuring 21 guntas conveyed to it having regard to the resolution passed by the General Body Meeting held on 19-7-1969 directing the sale of the land in question after obtaining the opinion of the expert committee which the general body named and after the expert committee had fixed the price for the land. It was there after that the first respondent-Society paid the consideration so fixed. In regard to the question of membership purporting to place reliance on the decision of this Court in the case of 5 C. Patil v Hiremath (1976 (2) Kar. Law Journal 62) he held that first respondent-Society should be deemed to be a member in view of Section 16-C (2) of the Act. Aggrieved by the same, an appeal in Appeal No. 506/83 filed was by the petitioner-Society before the tribunal at Bangalore. That appeal came to be disposed of from 16th August, 1984 affirming the order of the Arbitrator. Therefore, the present writ petition. ( 5 ) SUBSTANTIALLY the same contentions which were raised before the Arbitrator and the Tribunal have been raised in this Court also which I have set out earlier in the course of this order. ( 6 ) NOW, in the light of the above undisputed facts, the contentions advanced by Mr. B. V. Jigjinni, the learned Counsel for the petitioner-Society may be examined. In 1970 no provision whatsoever was made in Section 16 of the Act for a firm or a Society registered under the karnataka Societies Registration Act, 1960 to seek membership of a Co-operative society. The provisions subject to the conditions imposed was introduced in clause C2 of Section 16 of the Act by way of amendment in 1976. Therefore, when the application was made and the share amount and the fee were paid the first respondent was not entitled to make an application seeking membership. This is not disputed and cannot be disputed. The provisions subject to the conditions imposed was introduced in clause C2 of Section 16 of the Act by way of amendment in 1976. Therefore, when the application was made and the share amount and the fee were paid the first respondent was not entitled to make an application seeking membership. This is not disputed and cannot be disputed. The Tribunal has taken the view that in view of the amendment made subsequently, it may be deemed that the first respondent-Society, which undoubtedly was a registered society under the Societies registration Act of Karnataka, had become a member. In other words, it gave retrospective effect to an amendment which otherwise was and is prospective. Section 16 of the Act forbids or prohibits any person being admitted as a member of a Co-operative Society except those who are enumerated in clauses (a), (b), (c) and (d) of sub-sec. (1) of S. 16 of the Act. Therefore, the amendment introduced by act 71 of 1976 and brought into force on 3-11-1976 cannot be held to be retrospective in its operation. Nothing in the amendment Act is suggestive of it. Therefore, the Tribunal was not correct in coming to the conclusion that on account of the amendment, the application made in 1970 by the first respondent-Society should be operative with effect from the date of the commencement of the Act and therefore, must be deemed to have become a member of the petitioner-Co-operative society is clearly unsustainable conclusion in law. ( 7 ) IN this regard, it would be useful to take into account the argument advanced in support of the third contention that in terms of sub-Section (4) of Section 16 of the Act, the application made in 1970 by the petitioner whether permissible or not should be deemed to have been rejected as it was not accepted by the petilioner-Co-operative society, has some relevance. In fact, in the ordinary circumstance the contention should be upheld because the legal fiction created must be allowed by the Courts to be operative. But the question is, whether having regard to the conduct of the petitioner-Co-operative Society it would be permissible to allow the petitioner to raise that plea after a lapse of eleven years. In fact, in the ordinary circumstance the contention should be upheld because the legal fiction created must be allowed by the Courts to be operative. But the question is, whether having regard to the conduct of the petitioner-Co-operative Society it would be permissible to allow the petitioner to raise that plea after a lapse of eleven years. In the course of the oral evidence adduced on behalf of the petitioner-Co-operative society the witness spoke of a resolution of the General Body meeting agreeing to convey the property in question in favour of the petitioner-Society even before it made an application for membership. The same General Body of the Co-operative Society appointed a committee of three to obtain expert opinion to assess the value of the land to be fixed and accordingly that Committee met and made recommendations. It is thereafter that the application was made for membership in 1970. Fee for admission as well as the share amount was also received by the Co-operative Society. It did not end there. Apparently, the value fixed was communicated to the first respondent-Society. The first respondent-Society, by 1973 deposited the full value of the site as per the value fixed by the axpert Committee. Thereafterwards, there appears to have been some correspondence as evidenced by the latter of 1979, the communication on which the petitioner-Co-operative society strongly relied upon to deny the membership to the first respondent-Society. In other words, for over six years, the full value of the money was retained by the Society and what follows from that is, that it used that money for its activities. Having done that, it cannot now take a plea of legal technicality to escape from the obligation of a contract which had been concluded in terms of the resolution of the general body and the payment of the consideration fixed by the general Body in the manner stated. Therefore, if it was a question of a contract between two individuals competent to contract, having entered into a contract, that is, an agreement to sell, if the party who had paid the consideration had the right to have the property conveyed by specific performance, the question to ask is whether the party who has paid the price would or would not succeed in a suit for specific performance. On the admitted facts, this Court should not hesitate to come to the conclusion that such a suit would have succeeded had it been filed. ( 8 ) THE petitioner-Co-operative Society which had kept quiet all along till the middle of 1979 perhaps preventing the respondent-Society from either recovering the money with interest by way of damages or seeking specific performance of the contract which it had entered into with the petitioner-Co-operative Society by its dilatory tactics of keeping the matter pending without informing that the petitioner was not entitled to be sold the site as a member, the conduct is such, it will be hit by Section 115 of the Indian Evidence act, 1872. No doubt, the Evidence act does not apply to proceedings of an arbitrator. The principles underlying in section 115 of the Evidence Act are always enforced by this Court while exercising its special and extraordinary jurisdiction under Articles 226 and 227 of the Constitution. It would be useful to set out Section 115 of the Evidence Act, which is as follows :-"115. When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither her nor his representative shall be allowed, any suit or proceeding between himself and such person or his representative, to deny the truth of that thing. "the language employed would clearly go to show that if a suit had been filed by the first respondent-Society to enforce a contract by specific performance, the petitioner would have been precluded from taking the stand which it has taken before the Arbitrator and the Tribunal and has taken in this Court. ( 9 ) THE principle of promissory estoppel is such that the Courts in India exercising the special jurisdiction have time and again emphasised, that a party who seeks justice must in turn must do justice. A party who does not come to this Court with clean hands, will be denied the relief solely on the ground that in equity he is not entitled to the relief in exercise of its extraordinary jurisdiction. A party who does not come to this Court with clean hands, will be denied the relief solely on the ground that in equity he is not entitled to the relief in exercise of its extraordinary jurisdiction. ( 10 ) WE have seen that throughout from the time of the General Body Meeting till the dispute was raised in 1979 when the communication was sent that the first respondent-Society is not a member, it was led to believe that it was a member and that the Co-operative Society would perform its obligations in terms of the contract spelt out earlier. Therefore, the Society was put at a disadvantage by the promise held out and paid what is a large sum of money to the petitioner-Co-operative Society, thereby placing itself at a disadvantage and corresponding advantage has been gained by the petitioner-Co-operative Society. Therefore, this Court, notwithstanding the illegality or want of jurisdiction to raise a dispute in the ordinary course must, nevertheless, hold that the petitioner-Co-operative society was disentitled to take the stand of want of jurisdiction on account of its conduct which it raised for the first time in its written statement which had been styled as legal objections and is made one of the Annexures to the writ petition. ( 11 ) THE learned Counsel for the petitioner-Co-operative society endeavoured hard to escape from the above by stating that there was no demand by the Society to pay the admission fee and share amount nor the sate consideration but it has been mechanically accepted by the petitioner-Co-operative society because it was tendered by the first respondent Society. Apart from the hollowness of the submission the fact is that those who accepted the payment were authorised officers of the Co-operative Society and they were acting as agents of the Co-operative Society and they knew they were accepting. This Court must presume they were acting with the knowledge and the authority of the management of the Co-operative Society and as such it cannot now be said that it was accepted automatically or mechanically. In fact, there is clear evidence to the contrary because in the letter of 1979 the communication which denied the membership, it clearly states that the first respondent-Society must take back its money. In other words, all along the petitioner-Co-operative Society knew that money had been deposited and was lying with it. In fact, there is clear evidence to the contrary because in the letter of 1979 the communication which denied the membership, it clearly states that the first respondent-Society must take back its money. In other words, all along the petitioner-Co-operative Society knew that money had been deposited and was lying with it. Therefore, I must reject the learned Counsel's submission on this aspect of the case. ( 12 ) ANOTHER argument was addressed which is noticed with reference to contention No. 4 extracted above. That was if there was a deemed rejection an appeal should have been filed and that not having been done in terms of Section 105a of the Act, a dispute could not be raised. True, refusal of membership is not a subject matter of dispute under Section 70 of the Act. Therefore, it is amenable to correction only by the specified authority under Section 105a of the Act. But the question is, whether that contention may be permitted to be taken by the petitioner-Society which made believe that the Respondent-Society was a member and allowed it to pay the consideration which the Co-operative Society accepted as consideration for the sale of the site in question Having at every stage held out the acceptance of the membership application by its conduct and not producing any material which was in the possession of the Co-operative Society to demonstrate the application was rejected at any point of time nor that the application was considered for whatever purpose by the managing Committee of the Society, it cannot now plead that the petitioner should have pursued some other remedy without sufficient provocation. ( 13 ) I, therefore, see no compelling reason to rectify the error of jurisdiction or the error of law which undoubtedly there is, because of the conduct of the petitioner-Co-o perative Society. It has not come with clean hands to this Court. On the technical and legal infirmities pointed out this Court should not interfere. While it may be correcting an error of law apparent on the face of record, it will be doing grave injustice to the first respondent-Society which has waited from 1969 till now. It has waited for twenty years to get possession of the site which it agreed to purchase. Therefore, this being a discretionary jurisdiction, this Court declines to grant any relief to the petitioner. It has waited for twenty years to get possession of the site which it agreed to purchase. Therefore, this being a discretionary jurisdiction, this Court declines to grant any relief to the petitioner. ( 14 ) IT may be pointed out that relegating the parties to the civil suit would be rubbing sait into the raw wound. Such civil litigation may last another twenty years having regard to the period that a suit takes to find culmination normally in this Country. Therefore, that should be avoided. ( 15 ) THE petition is therefore dismissed. Petition dismissed. --- *** --- .