Case: Shri Sant Eknath Sahakari Sakhar Karkhana Limited Vs. Aurangabad Paper Mills Limited and Others

1. The respondents filed a suit for specific performance of an agreement dated 25-7-1974 to sell the land in question. That suit was contested by the appellant mainly on five grounds, namely, (i) lack of power to enter to the agreement, (ii) the actual possession had not been given, (iii) the price was ridiculously low, (iv) the Director of sugar had refused permission; and (v) failure to serve statutory notice. The learned trial Judge upheld some of the contentions and dismissed the suit. Against the order of dismissal of the suit the original plaintiff preferred a first appeal which was allowed by the District Judge reversing the decree of the trial Court. A second appeal was carried to the High Court, but the same to be dismissed on 16-8-1991. A review application was filed but that too was rejected on 28-8-1992. Being aggrieved by the High Courts order dismissing the second appeal and later the review application the original defendants have filed the present two appeals, the first against the main judgment in second appeal and the second against the order in review application2. In the special leave petition preferred before this Court the judgment of the High Court is assailed on the following grounds, namely"(i) When the dispute between the parties have arisen under section 91 of the Maharashtra Cooperative Societies Act, 1960 which bars the civil suit in the court, whether the decree passed by the First Appellate Court and the High Court, in second appeal is null Appellate and void as without jurisdiction ?(ii) When Section 164 of the Maharashtra Cooperative Societies Act, 1960 requires mandatory notice to be served by the plaintiff before filing the civil suit, which admittedly was not given by Respondent 1 herein, whether the judgment and decree passed under the circumstances are null and void in law ?(iii) Whether the High Court was justified in given relief under Section 20 of the specific Relief Act for specific performance - of the contract, when there was no case made out for such specific performance in view of the fact - (i) the Chairman of the Society had no authority or the sanction as required under Section 72 of the Maharashtra Cooperative Societies Act, 1960 was not given by the general body to execute the agreement for sale;(ii) the consideration for such agreement to sell was too low and disproportionate to the price of the land which resulted in heavy loss to the society and thus the specific performance was unexecutable; and(iii) Under Rule 47 of the Maharashtra Cooperative Societies Rules, 1961 the Director of Sugar specifically refused permission to execute the sale deed, and, therefore, the civil court namely District Court in first appeal and the High Court in second appeal had no justification in law to grant decree for specific performance of the contract." 3. So far as the first and second grounds are concerned, learned counsel for the appellant very fairly does not press the same in view of this Courts decision in Marine Times Publications (P) Ltd. v. Shriram Transport and Finance Co. Ltd. What survives, therefore, is the third ground. So far as the third ground is concerned, it has three limbs. As to the second limb which relates to the question of the inadequacy of the sale price the learned counsel for the appellant fairly states that that being a question of fact it would not be possible for him to request this Court to reappreciate the evidence in that behalf. That leaves us with the other two aspects, namely, (i) Whether the Chairman was duly authorised to execute the document in question and (ii) whether under Rule 47 of the Maharashtra Cooperative Societies Rules, 1961 (hereinafter called the Rules) the prior permission of the Director of Sugar for the execution of the document was a sine qua non and in the absence of such a permission the transaction was void. On the first point, reference may be made to Section 72 of the Maharashtra Cooperative Societies Act, 1960 (hereinafter called the Act). That section provides that subject to the provisions in this Act and the Rules, the final authority of every society shall vest in the general body of members. This section does not specifically speak about the Chairmans power or the lack of it to enter into the agreement in question. However, the bye-laws of the society throw some light in this behalf. Bye-law 43 states that subject to the special responsibilities as provided in the bye-law, the Board of Directors shall be responsible for conducting the affairs of the society. It then proceeds to say that in particular, the Board of Directors shall be responsible for all decisions in respect of the matter enumerated therein, sale of assets being Item No. (xix). It would thus seem that under the bye-laws the Board of Directors could decide on sale of assets of the Cooperative Society. It appears that a meeting of the Board of Directors was held on 6-6-1974 at 2.00 p.m. Since only four Directors were present it was adjourned for want of quorum and was recalled in the evening at 6.00 p.m. At the said meeting, Resolution No. 5 was passed to the effect that the land in question may be sold to the respondents for Rs 10, 665. The Resolution then proceeds to add : "It is decided that the authority be given to Honble Chairman for executing all relevant papers regarding this." It will thus be seen that the Board of Directors decided to sell the land in question to the respondent-Company for Rs 10, 665 and authorised the Chairman to execute all relevant documents in that behalf. Pursuant to the said authority, the Chairman executed the agreement to sell on 25-7-1974. The receipt evidencing the delivery of possession of even date was also executed by the Chairman. It will thus be seen that the Chairman was duly authorised by the members to enter into the transaction in question. The contention that the Chairman was not duly authorised is, therefore, without merit and the same cannot be questioned on the language of Section 72 of the Act 4. Lastly, the question regarding the prior permission of the Director of Sugar has to be examined in the context of Rule 47 which is the foundation for the plea. Rule 47 reads as under "47. On the application of a member of any society or of his own motion, when it appears to the Registrar that it is necessary in the interest of the working of any particular society, to regulate or restrict transactions of such society with any non-member, the Registrar shall after giving an opportunity to the society of being heard, issue such directions as he may consider necessary regulating or restricting such transactions." * No such directions were issued by the Registrar of the Society prohibiting or restricting the execution of such transactions, namely, sale of society property, at least none has been pointed out to us. The rule by itself unless supported by such a restrictive direction of the Registrar does not prohibit or preclude the Board of Directors from entering into such transactions which are permitted by Bye-law 43 (xix) of the bye-laws framed under the relevant provisions of the Act and the Rules. We, therefore, do not see any substance in this contention also

Decision:
0[ds]3. So far as the first and second grounds are concerned, learned counsel for the appellant very fairly does not press the same in view of this Courts decision in Marine Times Publications (P) Ltd. v. Shriram Transport and Finance Co. Ltd. What survives, therefore, is the third ground. So far as the third ground is concerned, it has three limbs. As to the second limb which relates to the question of the inadequacy of the sale price the learned counsel for the appellant fairly states that that being a question of fact it would not be possible for him to request this Court to reappreciate the evidence in that behalf. Thatleaves us with the other two aspects, namely, (i) Whether the Chairman was duly authorised to execute the document in question and (ii) whether under Rule 47 of the Maharashtra Cooperative Societies Rules, 1961 (hereinafter called the Rules) the prior permission of the Director of Sugar for the execution of the document was a sine qua non and in the absence of such a permission the transaction was void.On the first point, reference may be made to Section 72 of the Maharashtra Cooperative Societies Act, 1960 (hereinafter called the Act). That section provides that subject to the provisions in this Act and the Rules, the final authority of every society shall vest in the general body of members. This section does not specifically speak about the Chairmans power or the lack of it to enter into the agreement in question. However, theof the society throw some light in this behalf.43 states that subject to the special responsibilities as provided in thethe Board of Directors shall be responsible for conducting the affairs of the society. It then proceeds to say that in particular, the Board of Directors shall be responsible for all decisions in respect of the matter enumerated therein, sale of assets being Item No. (xix). It would thus seem that under thethe Board of Directors could decide on sale of assets of the Cooperative Society. It appears that a meeting of the Board of Directors was held onat 2.00 p.m. Since only four Directors were present it was adjourned for want of quorum and was recalled in the evening at 6.00 p.m. At the said meeting, Resolution No. 5 was passed to the effect that the land in question may be sold to the respondents for Rs 10, 665. The Resolution then proceeds to add : "It is decided that the authority be given to Honble Chairman for executing all relevant papers regarding this." It will thus be seen that the Board of Directors decidedto sell the land inquestion to thefor Rs 10, 665 and authorised the Chairman to execute all relevant documents in that behalf. Pursuant to the said authority, the Chairman executed the agreement to sell onThe receipt evidencing the delivery of possession of even date was also executed by the Chairman. It will thus be seen that the Chairman was duly authorised by the members to enter into the transaction in question. The contention that the Chairman was not duly authorised is, therefore, without merit and the same cannot be questioned on the language of Section 72 of thesuch directions were issued by the Registrar of the Society prohibiting or restricting the execution of such transactions, namely, sale of society property, at least none has been pointed out to us. The rule by itself unless supported by such a restrictive direction of the Registrar does not prohibit or preclude the Board of Directors from entering into such transactions which are permitted by43 (xix) of theframed under the relevant provisions of the Act and the Rules. We, therefore, do not see any substance in this contention also