G. Parameshwara, S/o. Late Ganganna v. Vittalnagar House Building Co-operative Society Limited
2024-03-06
ANANT RAMANATH HEGDE
body2024
DigiLaw.ai
ORDER : 1. The writ petitioner is assailing the order dated 08.04.2013 passed by the Karnataka Appellate Tribunal in Appeal No.361/2010, setting aside an award passed under Section 70 of the Karnataka Co-operative Societies Act, 1959 (for brevity 'Act of 1959'). 2. In terms of the impugned order, the petition under Section 70 of the Act of 1959, to declare the petitioner as the absolute owner of a house site and to cancel the registered sale deed in favour of present respondent No. 6, is rejected. Hence, the present Writ Petition impugning the order of the Tribunal. 3. The petitioner and respondent No. 5 are the members of respondent No.1, Housing Co-operative Society. The petitioner claims that he was admitted to membership of respondent No.1-Society in the year 1983 and on 01.04.1991, lease cum sale deed was executed in his favour by respondent No.1 - Society in respect of site No.124, measuring 30 ft. x 40 ft in Sy.No.15 of Bikashipura Village, Uttarahalli Hobli, Bengaluru South Taluk. The petitioner also claims that he was put in possession of the said property on 04.09.1994. 4. Petitioner alleged that site No.217 was allotted to respondent No.5 on 19.06.2000 and the lease cum sale deed was executed in favour of respondent No.5 on the same day. It is further stated that on 30.07.2001, the lease cum sale deed dated 01.04.1991 executed in his favour in respect of site No.124 was cancelled without his notice and consent. Thereafter, on 13.08.2001, the rectification deed was executed in favour of respondent No.5 by substituting site No.124 (petitioner’s site) in place of site No.217 without notice to the petitioner. 5. The petitioner further alleged that on 13.04.2005, the Administrator was appointed to respondent No.1 - Society and on 08.03.2006, absolute sale deed was executed in favour of respondent No.5 in respect of site No.124. The sale deed was registered on 10.03.2006. On 10.03.2006, respondent No.5 sold the aforementioned site No.124 in favour of respondent No.6. 6. On 01.08.2008, the petitioner raised a dispute under Section 70 of the Act of 1959 before the Joint Registrar of Co-operative Society. In the said proceedings, the respondent No.1 - Society, its President, Secretary and respondent No.5 – the member/allottee, and respondent No.6 – person (non-member) in whose favour sale deed is executed by respondent No. 5 are made as parties. 7.
In the said proceedings, the respondent No.1 - Society, its President, Secretary and respondent No.5 – the member/allottee, and respondent No.6 – person (non-member) in whose favour sale deed is executed by respondent No. 5 are made as parties. 7. In addition to the prayer to declare the petitioner as the owner of the disputed site, the petitioner also sought a declaration that the rectification deed dated 13.08.2001 and the sale deed dated 08.03.2006 executed by respondents No.2 and 3 in favour of respondent No.5 are illegal and nullity in law. The petitioner also sought a declaration that the sale deed executed by respondent No.5 in favour of respondent No.6 (non-member) on 10.03.2006 as illegal and nullity in law. By way of an amendment, petitioner also prayed for cancellation of the registered cancellation deed executed on 30.07.2001. 8. The purchaser/non-member took a stand that Registrar acting under the Act of 1959 has no jurisdiction to entertain the petition under Section 70 of the Act of 1959. 9. The Joint Registrar held that he has the jurisdiction to decide the dispute and also concluded that the execution of the sale deed by the Society in favour of respondent No.5 is bad in law and also held that the purchaser/respondent No.6 does not acquire any title in property and consequently, held that the petitioner is the owner of site No.124. 10. The purchaser filed the appeal before the Karnataka Appellate Tribunal. Rest of the parties did not challenge the award. The Tribunal held that the Registrar under Section 70 of the Act of 1959 does not have the jurisdiction to decide on the validity of the registered sale deed between a member of the co-operative society and a non-member. However, the Tribunal opined that act of the Society unilaterally cancelling the lease cum sale deed in favour of the petitioner is illegal. 11. Appearing for the petitioner’s counsel, the learned Senior counsel Sri. Jayakumar S. Patil raised the following contentions:- (a) Section 70 of the Act of 1959 is wide enough to cover all the disputes between a member and a co-operative society in connection with the allotment of site by a Housing Co-operative Society and if such a dispute is raised, all questions including the validity of registered sale deed can be looked into by the Registrar under Section 70 of the Act of 1959.
(b) The expression "persons claiming through a member" appearing in Section 70(1)(b) of the Act of 1959 also includes all persons, who derived title over the property from a member and if Section 70 is read along with Section 117(3)(a) of the Act of 1959, the Registrar does get the jurisdiction to decide a dispute even against a non-member if such person has derived the right over the subject matter through a member of a co –operative Society. (c) Section 118 of the Act of 1959 excludes the jurisdiction of Civil Court in respect of the matters covered therein. If Section 118 of the Act of 1959 is read along with Sections 70 and 117 of the Act of 1959, the Registrar gets jurisdiction to entertain the dispute raised by a member(petitioner) for allotting the site to another member (5th respondent ) by ignoring his seniority, and subsequent transfer of the property by a member to a non-member 12. In support of his contention, the learned Senior counsel relied upon the following judgments:- (i) Suresh Shah vs. Hipad Technology India Private Limited [ (2021) 1 SCC 529 ]; (ii) Narasegowda vs. HMT Employees House Building Co-operative Society Ltd., [ILR 1992 KAR 3564]; (iii) Vidya Drolia and others vs. Durga Trading Corporation [ (2021) 2 SCC 1 ]; (iv) A. Ayyasamy vs. A. Paramasivam and Others [ (2016) 10 SCC 386 ]; (v) Olympus Superstructures Pvt. Ltd vs. Meena Vijay Khetan and others. [ AIR 1999 SC 2102 ] 13. The learned Senior counsel Sri. D.L.N. Rao, appearing for the contesting respondent would raise the following contentions:- (a) The relief sought by the petitioner before the Joint Registrar is beyond the scope of Section 70 of the Act of 1959. The relief sought by the petitioner can be granted only by a competent Civil Court. (b) Contesting respondent No.6 is not a “person who is claiming through a member” provided under Section 70(1)(b) of the Act of 1959. (c) The contesting respondent No.6 is claiming right on the basis of the sale deed, which is an independent right and not a derivative right as contemplated under Section 70(1)(b) of the Act of 1959. 14.
(b) Contesting respondent No.6 is not a “person who is claiming through a member” provided under Section 70(1)(b) of the Act of 1959. (c) The contesting respondent No.6 is claiming right on the basis of the sale deed, which is an independent right and not a derivative right as contemplated under Section 70(1)(b) of the Act of 1959. 14. In support of his contention, the learned senior counsel for the contesting respondent placed reliance on the following judgments:- (i) Vinayaka Griha Nirmana Sahakara Sangha Ltd. vs. Karnataka Appellate Tribunal [ILR 1995 KAR 518]; (ii) Smt. Siddamma vs. Bhavani Housing Co-operative Society Limited and others [ 2016 (2) KCCR 1655 ] (iii) Sri. K. Raju vs. Bangalore Development Authority [ILR 2011 KAR 120]; (iv) M/s. Panna Stones Pvt. Ltd. vs. Sri. Rajendrakumar Goyal and another [W.A.No.608/2009 c/w W.A.No.607/2009]. 15. This Court has considered the contentions raised at the bar. The question that needs to be answered is; Whether a person who is not a member of a Co-operative Society and purchases the property from a member of a co-operative society, can be termed as a “person claiming through a member” under Section 70(1)(b) of the Act of 1959 and amenable to jurisdiction of the Registrar under Section 70 of the Act of 1959? 16. Respondent No.6-non member, purchased the property from a member-respondent No.5. The petitioner is a member of the first respondent co-operative Society. Since respondent Society is a Housing Co-operative Society, allotment of sites to its members is the business of the said Society. The dispute relating to allotment of sites among the members of a Society is a dispute touching the business of the respondent society is governed by Section 70 of the Act of 1959. 17. In the above said background, the petitioner contends that the 6th respondent purchased the property, from 5th respondent is covered under the expression “person claiming through a member” under Section 70 (1) (b) of the Act of 1959, and the dispute touches the business of the Co-operative Society. 18. It is urged by Sri Jayakumar S. Patil, the learned senior counsel that the aforementioned judgment is no longer a good law in view of the law laid down by the Hon'ble Apex Court in Vidya Drolia, supra.
18. It is urged by Sri Jayakumar S. Patil, the learned senior counsel that the aforementioned judgment is no longer a good law in view of the law laid down by the Hon'ble Apex Court in Vidya Drolia, supra. Emphasis is laid on paragraphs No.70 and 79, of the said judgment, to urge that all disputes which can be tried by the Civil Courts, except those falling under the category of judgment in rem and those which are to be mandated to be decided under the provisions of a special Statute, can be adjudicated if they fall under the category of cases covered under Section 70 (1) of the Act of 1959. 19. It is also urged that Section 118 of the Act of 1959, specifically prohibits the jurisdiction of the Civil Court in respect of the matters covered under Section 70 of the Act of 1959. Reference is also made to Section 117 (3) (a) of the Act of 1959 to urge that a non member can be a party to dispute under Section 70 of the Act of 1959. 20. The judgment in Vidya Drolia, supra is rendered interpreting the provisions of the Arbitration and Conciliation Act, 1996 (‘Act of 1996’), where the parties by consent subject themselves to the jurisdiction of the Arbitrator. In the said case, the Apex Court has held that if the adjudication does not render a judgment in rem and adjudication by the Civil Court is not barred by the special enactment, then such disputes can be arbitrated. 21. Here the question is slightly different. The Act of 1959 itself provides special forum to decide certain disputes. In addition, the Act of 1959 ousts jurisdiction of the Civil Court in respect of such matters where adjudicatory forum is provided in the Act of 1959. Moreover, unlike the Act of 1996, the jurisdiction of the Registrar is not by consent. The jurisdiction of the Registrar is governed under the Act of 1959. Thus, jurisdiction of the Registrar under Section 70 of the Act of 1959 is to be decided with reference to Section 70 and other provisions of Act of 1959. 22. Section 70 of the Act of 1959 reads as under : "70. Disputes which may be referred to Registrar for decision.
Thus, jurisdiction of the Registrar under Section 70 of the Act of 1959 is to be decided with reference to Section 70 and other provisions of Act of 1959. 22. Section 70 of the Act of 1959 reads as under : "70. Disputes which may be referred to Registrar for decision. - (1) Notwithstanding anything contained in any law for the time being in force, if any dispute touching the constitution, management, or the business of a co-operative society arises.- (a) among members, past members and persons claiming through members, past members and deceased members, or (b) between a member, past member or person claiming through a member, past member or deceased member and the society, its [board] or any officer, agent or employee of the society, or (c) between the society or its [board] and any past [board], any officer, agent or employee, or any past officer, past agent or past employee or the nominee, heirs, or legal representatives of any deceased officer, deceased agent, or deceased employee of the society, or (d) between the society and any other co-operative society, [or a credit agency] such dispute shall be referred to the Registrar for decision and [no - Civil or Labour or Revenue Court or Industrial Tribunal] shall have jurisdiction to entertain any suit or other proceeding in respect of such dispute.
(2) For the purposes of sub-section (1), the following shall be deemed to be disputes touching the constitution, management or the business of a co-operative society, namely.- (a) a claim by the society for any debt or demand due to it from a member or the nominee, heirs or legal representatives of a deceased member, whether such debt or demand be admitted or not; (b) a claim by a surety against the principal debtor where the society has recovered from the surety any amount in respect of any debt or demand due to it from the principal debtor, as a result of the default of the principal debtor whether such debt or demand is admitted or not; [(c) any dispute arising in connection with the election of a President, Vice-President, or any office-bearer or Member of board of the Society;] [(d) any dispute between a co-operative society and its employees or past employees or heirs or legal representatives of a deceased employee, including a dispute regarding the terms of employment, working conditions and disciplinary action taken by a co-operative society [notwithstanding anything contrary contained in the Industrial Disputes Act, 1947 (Central Act 14 of 1947)]; (e) a claim by a co-operative society for any deficiency caused in the assets of the co-operative society by a member, past member, deceased member or deceased officer, past agent or deceased agent or by any servant, past servant or deceased servant or by its [board], past or present whether such loss be admitted or not.] (3) If any question arises whether a dispute referred to the Registrar under this section is a dispute touching the constitution, management or the business of a co-operative society, the decision thereon of the Registrar shall be final and shall not be called in question in any Court." 23. Section 70 (1) of the Act of 1959 is exhaustive on the following two matters, namely, (a) Subject matter of dispute (b) Parties to the dispute. 24. The subject matters which fall under the jurisdiction of the Registrar are the disputes touching the constitution, management, or business of a co-operative society and nothing beyond. Under Section 70 of the Act of 1959, the Registrar can exercise jurisdiction only if, the “subject matter of the dispute” is the one touching the constitution, management, or business of a co-operative society.
Under Section 70 of the Act of 1959, the Registrar can exercise jurisdiction only if, the “subject matter of the dispute” is the one touching the constitution, management, or business of a co-operative society. If the dispute does not come under any one of the three categories referred to above, Section 70 of the Act of 1959 has no application. The dispute need not touch all three subjects referred to above; suffice if it touches any one of three subjects referred to above. 25. Sub clauses (a) to (d) Section 70 (1) of the Act of 1959, exhaustively mention as to the persons who are subjected to the jurisdiction of the Registrar in a dispute under Section 70 of the Act of 1959. 26. Thus, to raise a dispute under Section 70 of the Act of 1959, twin tests must be fulfilled namely; (i) The dispute must be the one touching the constitution, management, or business of a co-operative society. (ii) The dispute must be between or among the persons named in sub clauses (a) to (d) of Section 70 (1) of the Act of 1959. If any of the above said two criteria is not met, then the Registrar under Section 70 of the Act of 1959 will not have the jurisdiction to try the dispute. 27. The co-ordinate Bench of this Court in Smt Siddamma's case supra has taken a view that the dispute relating to the transfer of immovable property or validity of registered sale deed is not contemplated under Section 70 of Act of 1959. The Court has also taken a view that the dispute under Section 70 of the Act of 1959 is only confined to the disputes named in Section 70(2) (a) to (e) of the Act of 1959, and once the sale deed is executed and registered, the purchaser becomes the absolute owner and neither the Authority under the Act of 1959 nor the Society will have the power to negate the registered deed, unless it is cancelled by the competent Civil Court. 28. However, another Co-ordinate Bench in The Executive Director, KPTC Employees Co-operative Society Ltd. vs. Joint Registrar of Co-operative Societies & Another (2013) 04 KAR CK 0127 has held that the disputes named in Section 70 (2) (a) to (e) are not exhaustive.
28. However, another Co-ordinate Bench in The Executive Director, KPTC Employees Co-operative Society Ltd. vs. Joint Registrar of Co-operative Societies & Another (2013) 04 KAR CK 0127 has held that the disputes named in Section 70 (2) (a) to (e) are not exhaustive. This Court is of the view that whether the disputes mentioned in Section 70 (2) (a) to (e) are exhaustive need to be gone into in this case, as the petitioner does not cross the hurdle in Section 70 (1) of the Act of 1959. 29. As already noticed, respondent No.5 - the member of respondent No. 1 society sold the property to respondent No. 6 - the non-member. This sale transaction between respondents No.5 and 6 cannot be termed as a transaction touching the business of a Co-operative Society as the society has no role to play in the said sale transaction. Though, the respondent society is a Housing Co-operative Society, and the sale transaction between respondent No.1 Co-operative Society and its member namely 5th respondent is the business of the respondent Society, the further sale by 5th respondent member to 6th respondent who is not a member of the Society, is not a business of the Society. 30. Learned Senior Counsel for the petitioner urged that the 6th respondent though not a member of the first respondent co-operative society, since he purchased the property from a member of 1st respondent society, he is covered under the expression “person claiming through a member”. 31. It is relevant to note that the expression “person claiming through a member, past member or deceased member” appearing in Section 70 (1) (b) of the Act of 1959, also signifies that first part of the expression extracted above, i.e., “person claiming through a member” is not the legal representative of a deceased member. This is apparent because of the use of the expression “deceased member”. It is also relevant to note that the legislature has not the expression “from a member” and used the expression “through a member” AND there is a subtle difference between the words “through” and “from”. Respondent No. 6 is a purchaser from respondent No.5 and not a purchaser through respondent No.5. The sale transaction between 5th and 6th respondent cannot be termed as termed as sale through 5th respondent. In fact it is a sale from 5th respondent.
Respondent No. 6 is a purchaser from respondent No.5 and not a purchaser through respondent No.5. The sale transaction between 5th and 6th respondent cannot be termed as termed as sale through 5th respondent. In fact it is a sale from 5th respondent. And there is no involvement of the first respondent co-operative society. Thus, 6th respondent - non-member who purchased the property from 5th respondent – member, without involvement of the society cannot be termed as “person claiming through a member”. As already noticed to attract Section 70 of the Act of 1959, twin tests referred to above must be satisfied. In the instant case, the sale transaction between 5th and 6th respondent is neither the one touching the constitution, management or business of the co-operative society nor coming under the expression “claiming through a member”. Here on both counts, section 70 of the Act of 1959 is not attracted. 32. Referring to Section 117 (3) (a) of the Act of 1959, and taking shelter under the expression ‘person claiming through a member’ appearing in Section 70 (1) (b), it is urged that the person who is not a member of a co-operative society can also be made a party to the proceeding under Section 70 of the Act of 1959 provided that such non-member is claiming through a member. This Court is unable to accept the contention. 33. At this juncture, it is necessary to refer to sub-section (3) (a) of Section 117 of the Act of 1959. Section 117. xxxxxx (3) (a) If the Registrar or any other person to whom a dispute is referred is satisfied that a person, whether he be a member of the Co-operative Society or not, has acquired any interest in the property of a person who is a party to a dispute, he may order that the person who has acquired the interest in the property may join as a party to the dispute; and any decision that may be passed on the reference by the Registrar or his nominee or any other person shall be binding on the party so joined, in the same manner as if he were an original party to the dispute. (emphasis supplied) 34.
(emphasis supplied) 34. Section 117(3)(a) of the Act of 1959 enables the Registrar to implead any person who has acquired an interest in the property of a person who is a party to a dispute, whether such person is a member or not. This provision has a limited application. The expression “has acquired any interest in the property of a person who is a party to a dispute” has to be understood as a person who has acquired the interest in the property during the pendency of the dispute, and not before the dispute. If not, sub-clauses (a) to (d) of Section 70(1) of the Act of 1959 become redundant. The logic behind incorporating Section 117 (3) (a) of the Act of 1959 is to ensure that the act of transfer of the property in dispute, to a non member ‘during the pendency of a dispute’ under Section 70 of the Act of 1959, does not take away the jurisdiction of the Registrar, if he is adjudicating a dispute which is otherwise to be tried under Section 70 of the Act of 1959. 35. This being the position, the Registrar acting under Section 70 of the Act of 1959 could not have entertained a dispute raised by the petitioner where one of the defendants in the proceeding is a non-member of respondent co-operative society who purchased the property from a member. Accordingly, the award passed by the 7th respondent – Joint Registrar is one without jurisdiction. 36. The Court has also perused the judgments in Suresh Shah, A. Ayyasamy and Olympus Superstructures Private Limited supra. Since, the jurisdiction of the Registrar under Section 70 of the Act of 1959 is not decided in the aforementioned judgments and as the expression "claiming through a member" is required to be interpreted having regard to the expression "constitution, management or business of a co-operative society" appearing in Section 70(1) of the Act of 1959, the ratio laid down in the aforementioned judgments are not applicable to the facts of the present case. 37. It is also relevant to note that the Tribunal has given a finding that the act of the respondent-Society cancelling the lease cum sale deed is illegal. At the same time, the Tribunal has held that the Registrar had no jurisdiction to decide the dispute.
37. It is also relevant to note that the Tribunal has given a finding that the act of the respondent-Society cancelling the lease cum sale deed is illegal. At the same time, the Tribunal has held that the Registrar had no jurisdiction to decide the dispute. This being the position, this Court is of the view that the Tribunal could not have partially upheld the finding of the Registrar who had no jurisdiction to entertain the dispute. Though, there is no challenge to the said finding by the respondent-purchaser, same is set-aside in exercise of jurisdiction under Article 226 of the Constitution of India as the Tribunal could not have upheld the finding of the Registrar on the legality of the act of respondent-Society in cancelling the lease cum sale deed in favour of the petitioner. However, it is made abundantly clear that this judgment should not be construed as a finding on the merits of the claim of either of the parties other than the issue relating to the jurisdiction. All questions other than the jurisdiction of the Civil Court, to try the suit is instituted by the petitioner are kept open. 38. Since the dispute raised by the petitioner was fought in a forum which had no jurisdiction, this Court is of the view that liberty should be reserved to the petitioner to raise a dispute in a competent Civil Court. Accordingly, liberty is reserved to the petitioner to institute a suit in a competent Civil Court. If such a dispute is raised, the time spent in prosecuting the petition under Section 70 of the Act of 1959 till this date is to be excluded in computing the limitation to file the suit. 39. If such a suit is filed, same shall be decided on merits, without being influenced by the order of dismissal of this writ petition. 40. It is also noticed from the order sheet that the contesting respondent No.6 has put up a construction in the disputed property by giving an undertaking that he shall not claim any equity in the event of the petitioner succeeding in the writ petition. 41.
40. It is also noticed from the order sheet that the contesting respondent No.6 has put up a construction in the disputed property by giving an undertaking that he shall not claim any equity in the event of the petitioner succeeding in the writ petition. 41. Since, the claim of the petitioner is not decided on merits and the writ petition is dismissed on the premise that the Registrar under Section 70 of the Act of 1959 had no jurisdiction to entertain the petition, the 6th respondent is also precluded from claiming any equity, on the premise that he has constructed a building in the disputed property during the pendency of the writ petition, in case the petitioner succeeds in the suit if filed by the petitioner. 42. Hence the following : ORDER (i) The Writ Petition is dismissed. (ii) Liberty is reserved to the petitioner to file a civil suit before the competent Civil Court. (iii) If such suit is filed, the time spent in prosecuting the petition before the 7th respondent – Joint Registrar till this date has to be excluded in computing the period of limitation to file the suit. (iv) If such suit is filed, same shall be decided on its merits without being influenced by the order of the dismissal of the writ petition. (v) In case, the petitioner succeeds in the suit, the 6th respondent shall not claim equity on the premise that he has constructed a building in the disputed property. (vi) In case the suit is filed, the Civil Court shall decide the validity of the deed cancelling the lease cum sale deed executed in favour of the petitioner without being influenced by any of the observations made in the award and the impugned order. (vi) Respondent No.6 is restrained from creating any third party charges/rights over the disputed property for three months from today or till filing of the suit, whichever is earlier.