IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 13 of 1998 For Approval and Signature: Hon'ble MR.JUSTICE H.L.GOKHALE ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgment ? 2. To be referred to the Reporter or not ? 3. Whether their Lordships wish to see the fair copy of judgment? 4. Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder? 5. Whether it is to be circulated to the Civil Judge? ========================================================= -------------------------------------------------------------- ANJALIBEN NIKHILCHANDRA MEHTA Versus PRABHAKAR BAPURAO FANSALKAR (Through his widow Neelaben) -------------------------------------------------------------- Appearance: MR NIRUPAM NANAVATY WITH M/S SINGHI & BUCH ASSO. for Petitioners MR RM CHRISTIE for Respondent No. 1 MR NILESH A PANDYA for Respondent No. 2 NOTICE SERVED BY DS for Respondent No. 3 -------------------------------------------------------------- CORAM : MR.JUSTICE H.L.GOKHALE Date of decision: 29/08/98 ORAL JUDGEMENT A cooperative housing society, now known as Prabhat Colony Cooperative Housing Society, situated at Vaghodia Road, Vadodara, was promoted by one Shri Jaywantrao Ramchandra Chauhan. One Shri Prabhakar Bapurao Fansalkar joined the said society by entering into an agreement on 25.8.1966 with the said society. The said society was represented in the agreement by its promoter Shri Chauhan. That agreement provided that as and when the housing colony is developed, this Shri Fansalkar will be put in possession of plot no.2 in a category that was described as "B" type. The construction of the housing complex was to be done by the society. The cost of the constructed plot was estimated at Rs.12,551 out of which 40% was to be paid at the time of signing of the agreement. That 40% amount was worked out at Rs.5,272 which was paid by Shri Fansalkar at the time of signing of the agreement. 2 It appears that subsequently there were controversies amongst the members of the society with respect to the escalation of the cost etc. The above referred Shri Fansalkar was removed from his membership for alleged breaches on his part by invoking section 36 of the Gujarat Cooperative Societies Act, 1961. That action of the society was disapproved by the District Registrar of the Cooperative Socieites on 1st January 1982. On 2nd February 1982 said Shri Fansalkar offered to pay the entire amount that was claimed by the society. That letter was addressed to the Registrar of the Cooperative Societies with a copy to the society. The society however declined to receive that amount by its letter dated 22.4.1982 and preferred an appeal. The appeal filed by the society against the decision of the District Registrar was dismissed on 2nd November 1983. In the meanwhile, said Shri Fansalkar came to know that the plot which was supposed to be allotted to him was sub-divided by the society into two parts and was allotted to one Shri Nikhilchandra Mehta and one Shri Dinkarrao Ahirrao. He therefore raised a dispute bearing Arbitration Case No.411 of 1984 in the court of Board of Nominees under the provisions of the above Act.Act. That dispute was filed on 28.3.1984. The society was joined as respondent no.1, the above referred Jaywantrao Chauhan was joined as respondent no.2, the person from whom the land of the society was purchased, namely, one Pratapbhai Solanki, was joined as respondent no.3, and Nikhilchandra Mehta and Dinkarrao Ahirrao were joined as respondents nos.4 and 5 respectively. The principal prayers in the said dispute when translated into English read as follows:- "(1) It may be declared that since the disputant is a lawful member of the respondent-society with respect to plot no.2 of B type, respondent-society is lawfully bound to hand over the same to the disputant and that the disputant has a prior and superior right to retain the said flat no.2 of B type. (2) The respondent-society be directed to hand over plot no.2 of B type to the disputant peacefully and in case the said plot no.2 of B type is in possession of respondents nos.4 and 5 or any other person illegally, then the said illegal occupation be removed and the disputant be handed over possession thereof either from the respondent no.1-society or from the person who is having the illegal possession thereof." 3 Subsequently, the pleadings were completed, evidence was led and the Board of Nominees decided the dispute in favour of the disputant and by his judgement and order dated 21.7.1994 the learned Nominee granted the declaration as sought for. He also directed the respondents nos.4 and 5 to hand over the peaceful possesion of the two sub-plots along with the construction thereof to the disputant. In Para 3 of his order, the learned Nominee also directed the disputant to pay an amount of Rs.12,551 on various counts (plus Rs.3,000/-) to the first respondent-society within a period of 30 days thereof. This was towards the amount claimed by the society as referred realier in paragraph No.2 above. It appears that the above referred Shri Mehta died on 14.12.1980 and hence when the dispute was raised initially itself he was joined as respondent no.4 through his widow Smt. Anjaliben. The above referred Shri Dinakarrao Ahirrao died during the pendency of the trial on 12.9.1989 and hence his wife Smt. Indiraben was brought on record during the trial. 4 Smt. Anjaliben Mehta and Smt. Indiraben carried the matter in appeal before the Cooperative Tribunal by filing Appeal No.245 of 1994. The Tribunal dismissed the appeal by its judgement and order dated 29.8.1997. Being aggrieved by both these judgements and orders, this Special Civil Application has been filed invoking Article 226 of the Constitution of India. It is material to note at this stage that above mentioned Shri Fansalkar also died on 16.12.1995 during the pendency of the appeal and hence his wife Smt. Neelaben was brought on record and therefore in this petition the title of the proceeding shows her as representing deceased Prabhakar Fansalkar. After this petition came up for admission this Court (M.S.Shah, J.) issued notice with ad interim relief as sought by the petitioners in terms of prayer clause 15(C) and 15(D). That interim relief stayed the operation of the two orders as well as the proceedings of the Execution Petition No.89 of 1997 which respondent no.1 herein had initiated in the meanwhile. A limited stay was granted to begin with which was continued from time to time. When the matter came up before me, it got adjourned on a couple of occasions. It was lastly heard on 14.8.1998. Shri N.D. Nanavati with Shri M.D. Buch have appeared for the petitioners. Shri Christie appeared for respondent no.1 and Shri Nilesh Pandya has appeared for respondent no.2. Respondent no.3 has been duly served. 5 After the matter was heard at length on 14.8.1998, it was requested by all the learned counsel that it may be treated as part-heard. The arguments were practically completed on that day and hence it was suggested by the learned counsel that it may be heard and disposed of finally at this stage itself. The request was made on this footing that whereas both the petitioners are widows staying in the concerned two tenaments with their families, respondent no.1 is also a widow and she is required to stay at some place other than the one which was allotted to her husband when he became the member of the respondent no.2-society. Hence, it was suggested by all the learned counsel that whatever be the appropriate order it may be passed finally at this stage itself. Subsequently, when the matter came up before me on 18.8.1998, it was suggested by Shri Nanavati, learned counsel appearing for the petitioners, that in case the Court is against the petitioners, possibility of awarding appropriate compensation instead of specific performance be examined. That suggestion was made without prejudice and hence to consider that suggestion it was thought fit that the valuation of the houses involved in this litigation be called for. That was because, as suggested by Shri Christie for respondent no.1, the valuation should be one factor to be considered in this behalf. Hence, by my order dated 18.8.1998 I directed both the parties to file an affidavit enclosing therewith a report of an architect or a government valuer stating therein as to what is the constructed area of the houses, what is the open space available and what, in his rough estimate, can be the value of the property. I have also directed respondents to state as to what is the present housing arrangement available to respondent no.1 and to her sons and as to what is the condition of those houses and on what terms the houses were purchased/occupied. When the matter reached thereafter on 27.8.1998, Shri Christie, learned counsel for respondent no.1, filed the valuation report of the concerned premises made by Shri Suresh Kothari, registered architect and valuer. He has also filed the affidavit of Smt. Neela Fansalkar. The affidavit or the report of the architect to be given by the petitioners was not ready. They sought time and tendered the same on the next day i.e. 28.8.1998 whereafter the arguments based thereon were completed and the matter is being disposed of today. 6 Shri Nanavati, learned counsel appearing for the petitioner, principally made two submissions. His first submission was that the kind of dispute that was raised by the first respondent was not one which could be said to be falling under section 96 of the Gujarat Cooperative Societies Act, 1961. For our purpose, it is the sub-clauses (a) and (b) of Section 96 (1) which are relevant. They read as follows:- "96. Disputes --(1) Notwithstanding anything contained in any other law for the time being in force, any dispute touching the constitution, management or business of a society shall be referred in the prescribed form either 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 Registrar, if the parties thereto are from amongst the following:- (a) a society, its committee, any past or present officer, any past or present agent, any past or present servant or nominee, heir or legal representative of any deceased officer, deceased agent or deceased servant of the society, or the Liquidator of the society. (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 society." If one looks to the plaint filed in the dispute, it would be seen that according to the disputant, respondents nos.3 and 4 thereof (petitioners herein) are trespassers. They are not members of the society. Besides, respondent no.3 to the dispute is the original land owner. Shri Nanavati submitted that a litigation against such persons could not be taken to the Nominee under the provisions of Section 96 because, they are neither members nor past members or persons claiming through a past member or a deceased member of a society or a society which is a member of the society. That is the requirement of Section 96(1)(b). He submitted that it could not be filed under section 96(1)(a) also. Hence, in the submission of Shri Nanavati, the entire proceeding was without any jurisdiction. The second submission of Shri Nanavati was that though the dispute was filed under the Cooperative Societies Act, it was essentially for enforcing the rights of the disputant arising out of the agreement entered with the society and therefore it was in the nature of specific performance of a contract. Apart from submitting that, such a prayer could not be made in a dispute under the Cooperative Societies Act, he alternatively submitted that this was not a case where specific performance was required and that worse comes to worse, compensation would be the appropriate relief. 7 With respect to the provisions contained under section 96 of the Cooperative Societies Act, Shri Nanavati drew my attention to two judgements of the Hon'ble Supreme Court, firstly to Deccan Merchan Cooperative Bank v. Dalichand reported in AIR 1969 SC 1230 and then to the judgement in the case of Gujarat State Cooperative Land Development Bank v. P.R. Mankad reported in AIR 1979 SC 1203. Based on these two judgements, Shri Nanavati submitted that one has to look to the dispute as drafted by the disputant. He submitted that according to the disputant, the petitioners were trespassers and the prayer made in the nature of specific relief was outside the powers of the Nominee. Shri Nanavati also relied upon a recent judgement of the Hon'ble Supreme Court in the case of Usha Ranjan Bhattacharya v. Abinash reported in 1998 (5) Supreme 321 in this behalf. 8 Shri Christie, learned counsel for respondent no.1, on the other hand, submitted that the present dispute was undoubtedly a dispute touching the management or the business of a co-operative society. He submitted that on the one hand the disputant was a member whereas as far as respondents no.s 4 and 5 are concerned, they could be joined as the respondents under the provisions of Section 99 (3)(a) of the Gujarat Cooperative Societies Act. Section 99(3)(a) reads as follows:- "99-(3)(a) If the Registrar or his nomee or board of nominees is satisfied that a person, whether he be a member of the 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 board of nominees shall be binding on the party so joined, in the same manner as if he were an original party to the dispute." Shri Christie submitted that the dispute had arisen in view of the society not acting on the agreement which gave certain rights to a member. The prayer was essentially against the society. In the meanwhile, if the property had changed hands and if some others had been inducted, the Registrar or his Nominee had every right to proceed against such person under section 99(3)(a) of the Act. Shri Christie submitted that in the present case instead of Registrar doing that, after a dispute is presented to him, the disputant himself had joined the concerned persons as respondents at the outset. According to Shri Christie the object of the provision was to bring such persons within the proceeding so that all parties concerned are before the authority concerned and the controversy is decided in all its aspects. Any other interpretation would make the provision ineffective. 9 In my view, the submission of Shri Christie is well taken and the dispute raised cannot be said to be outside the jurisdiction of the Nominee and the authorities sited by SHri Nanavati do not help him. In Deccan Merchants Bank's case, the bank wanted to execute the arbitration award against the tenants of certain property and they were sought to be evicted. The tenants contended that they were protected by the provisions of the Bombay Rent Act and the action to evict them could not be proceeded under the Maharashtra Cooperative Societies Act. It was in that context that the Hon'ble Supreme Court held that such a controversy could not be taken to the forum under the Cooperative Societies Act. The relevant provision of the Maharashtra Cooperative Societies Act, 1961 regarding disputes, namely, Section 91(1) is pari materia with the provisions of Section 96 of the Gujarat Cooperative Societies Act. In Gujarat State Cooperative Land Development Bank's case it was a dispute between the cooperative society and its employees for whom a separate forum is available in the Labour Court and it was in that context that the Hon'ble Supreme Court held that the controvery could not be taken to the forum under the Cooperative Socities Act. In the case of Usha Ranjan Bhattacharya the question was as to who was the lawful successor of the deceased member in a Coop. Housing Society and it was therefore that the Hon'ble Supreme Court held that the said controvery could not be taken to the Cooperative Tribunal under the West Bengal Cooperative Scieties Act, 1973. In the present case, it is a controvery raised by a member against the society seeking to enforce his rights arising under an agreement entered into with the society. Such a member cannot be told that because some others are inducted into that property, the forum under the cooperative law is not available to him. The dispute is essentially concerning the business and management of the affairs of the society and it is precisely to deal with such type of situations that a specific provision has been made under section 99(3)(a) of the Cooperative Societies Act. In view of the aforesaid discussion, in my view, no fault can be found with the authorities below entertaining the dispute before them. 10 The next submission of Shri Nanavati is that the petitioners were bona fide purchasers nad were ignorant of the prior contract between respondent no.1 and the society. He therefore submitted that the specific relief in the nature of specific performance of the contract was not warranted. He drew my attention to various provisions of Specific Relief Act, 1963, particularly, to Section 19(b) thereof. Alternatively, Shri Nanavati submitted that in any case, various facts of this controversy will have to be borne in mind and under section 20 of the Specific Relief Act, the Court will always have a discretion not to decree specific performance but to award compensation, if deemed fit. 11 The first submission of Shri Nanavati in this behalf was that the petitioners were not knowing that the particular plot had already been allotted to respondent no.1 earlier. The petitioners have become members of the society on 15.10.1979. In the meanwhile the entries in their favour had come to be made in the record of rights on 4.10.1978. As against that, Shri Christie, learned counsel for the respondent no.1, submitted that respondent no.1 had the membership certificate issued on 22.5.1967. Unless the membership of respondent no.1 was determined validly, the same could not be passed over to anybody else. The endorsement had to be made to that effect on that very share certificate and no new certificates could be issued in this fashion to some others. In any case, it has come on record through the statement of earlier referred Shri Chauhan made before the City Survey Officer, Vadodara, on 30.9.1978 that the construction had come up by that time to the lintel level. That can be seen from para 2 of that statement which is taken on record before the Nominee at exh.103 and which is referred in the discussion on point no.6. Shri Christie also relied upon a judgemnt of a single judge of this Court reported in 13 GLR page 773 in the case of JESINGJI KHODAJI V. RAMESHCHANDRA in this behalf. In para 20 of that judgement, the learned judge after considering a number of earlier judgements has observed as follows:- "The explanation (II) to Sec.3 of the Transfer of Property Act must be read with the first part of the definition as to when a person is said to have a notice of a fact. If the purchasers failed to make any inquiry or wilfully abstained from making such an inquiry, they are deemed to have a notice of the fact of the previous contract and they cannot escape their inability by a bare statement that they were bona fide purchasers for value without notice. Mere bare denial would not be enough because he would be imputed with a constructive notice if some body else other than the vendor was in possession and if he failed to make any inquiry with regard to the nature of his possession." Shri Christie therefore submitted that any intending purchaser had a duty cast on him to make necessary inquiries and if he failed to make one, he shall deemed to have a notice of the fact of the previous contract and that by making a bare statement one cannot escape from one's responsibility. It is therefore that the learned Nominee has held on issue No.8 that it cannot be said that respondent no.4 to the dispute was a bona fide purchaser of the property. In the discussion on issue no.1, the learned Nominee noted that respondent no.4 had not paid the necessary fee for membership. That apart, as stated above, the fact remains that whereas the society was formed way back in the year 1966 the petitioners herein were becoming members in the year 1979 and when the structure that had come up on the concerned plot upto lintel level was available for anybody to see, it was expected of them that they would make the necessary inquiries. There is no use in simply saying that in the city survey record their names came to be entered in October 1978 and at that time the name of respondent no.1 was not there in that record. At that time, Respondent no.1 herein was admittedly a persona non grata for the society and his name would not be there in the revenue record since the society would not do it. The petitioners were becoming members of the society 12 years after its formation and when anybody could see the construction that had come up to a particular level, it was expected of them to inquire as to in whose place they were coming as members. Section 19 of the Specific Relief Act provides that a specifi performance of a contract may be enforced against (a) either party thereto; (b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for a value who has paid his money in good faith and without notice of the original contract. In the instant case, any deligent entrant would have made necessary inquiries about any other contract with respect to membership or otherwise concerning these premises and hence, in my view, the observation made by the learned judge in 13 GLR 773 will apply in full force. 12 Shri Nanavati relied upon a judgement of the Hon'ble Supreme Court in the case of Smt. Annapoorani v. G Thangapalam reported in (1989) 3 SCC 287 to contend that specific performance can be granted only against the executants of the contract. When the judgement is seen, observations to such effect therein are made entirely in the facts of that case and Section 19(b) of the Specific Relief Act, 1963, was not under consideration in that case. The said section does permit specific performance of a contract against a person other than the party to the contract when that party is claiming under either of the parties by a title arising subsequently to the contract to be enforced. In the instant case, the petitioners are opposing the enforcement of the contract on the basis of their title which they claim from the society and, as stated above, it cannot be said that they have acted diligently in the matter and they are deemed to have a notice of the prior contract as held by the learned single judge in 13 GLR 773. Besides, Section 99(3)(a) of the Gujarat Cooperative Societies Act specifically permits an action against such third parties. Hence, in my view, the above submission of Shri Nanavati that the petitioners were bona fide purchasers in good faith and without notice of the original contract cannot be accepted. 13 The last submission of Shri Nanavati is that even so the circumstances of the present case have to be examined and at the highest compensation would be proper relief. Whereas, on the one hand, the disputant is trying to claim the possession of plot no.2 of B type in its entirety on the basis of