1 srp IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION CHAMBER SUMMONS NO.641 OF 2011 IN SUIT NO.1 OF 2010 AND NOTICE OF MOTION NO.148 OF 2010 IN SUIT NO.1 OF 2010 ALONG WITH SUIT NO.1 OF 2010 B.Y. Chavan & Anr. ....Plaintiffs V/s. Association of Tenants of the Bombay Catholic Housing Society and Ors. ....Defendants Mr.Iqbal Chagla, Senior Counsel with Mr.F.E. DeVitre, Senior Counsel, Mr.Jimmy Avasia, Mr.J.P. Sen and Mr.Mustafa Doctor i/b Dastur Dadhich & Kalambi for the Plaintiff in Suit No.1 of 2010 and in support of the Chamber Summons and in support of the Notice of Motion. Mr.Vijay Thorat, Senior Counsel with Mr.Chetan Kapadia, Mr.Ivor Peter D’Cruz, and Mr.A. Lokhandwala i/b Lokhandwala & Co. for Defendant Nos.1, 3, 5, 10, 11, 13-A, 13-B, 14, 15, 16-A, 16-B, 18, 19, 21, 22, 27, 28, 30 to 32, 36, 40, 46 to 48, 52, 53, 55, 58 to 60, 62 and 64 in Suit No.1 of 2010. 2 Mr.J.M. D’Silva for Defendant Nos.2, 20, 26, 41, 66 and 70 in Suit No.1 of 2010. Mr.E.P. Bharucha, Senior Counsel with Mr.Farhan Dubash i/b Hetal Patel for Defendant Nos.6, 34, 45, 56, 61, 68 and 69 in Suit No.1 of 2010. Mr.Dinyar Madon, Senior Counsel with Mr.Robin Jaisinghani and Mr.Aditya Thakkar i/b Khare Legal Chambers for Defendant Nos.7, 17, 25, 37 and 42 in Suit No.1 of 2010. Mr.S.R. Page for Defendant Nos.12 and 63 in Suit No.1 of 2010. Mr.Robin Jaisinghani i/b Mr.R.K. Bobde for Defendant Nos.53-A and 57 in Suit No.1 of 2010. Mr.S.U. Kamdar, Senior Counsel with Mr.Vineet Naik, Mr.C.D. Mehta, Mr.B.C. Mehta and Mr.Lalan Gupte i/b Dhruve Liladhar & Co. for Defendant No.71 in Suit No.1 of 2010. Mr.Rafiq Dada, Senior Counsel with Mr.Prasad Dhakephalkar, Dr.Birendra Saraf and Ms.Tanmayi Gadre i/b Kishore Thakordas for Defendant No.72 in Suit No.1 of 2010. Mr.Kumul Taly with Mr.Rakesh Misar i/b S. Mohamedbhai & Co. for Defendant No.74 in Suit No.1 of 2010 (for 100 allottees.) CORAM : S.J. VAZIFDAR, J. THURSDAY, 5 TH MAY, 2011. ORAL JUDGMENT. :- 1. The preliminary issues were raised on 15th April, 2011. I rejected the preliminary issues before proceeding to hear the parties 3 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 :- ISSUES I) Whether the suit is maintainable in the absence of a notice under section 164 of the Maharashtra Co- operative Societies Act, 1960 ? II). Whether this Court has no jurisdiction to entertain this suit in view of sections 91 and 163 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 4 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 5 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 C.P.C., the Apex Court in Dhian Singh Sobha Singh and another v. Union of India, reported in AIR 1958 SC 274 as well as the Full Bench of our High Court in Vasant Ambadas Pandit v. Bombay Municipal Corporation and others, reported in AIR 1981 Bombay 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.” 6 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 section 80 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 7 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 8 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. M/s.B. Jeejeebhoy Vakharia & 9 Associates and others (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 Cooperative Court if 10 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 society or 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 re- ferred 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 11 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. 12 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 13 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. 14 (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 15 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. 16 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 17 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 18 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 19 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. 20 (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 21 interests. The learned Judge, accordingly, dismissed the Writ Petition. (B) The society