SCA/1616/1993 1/16 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 1616 of 1993 For Approval and Signature: HONOURABLE MR.JUSTICE JAYANT PATEL ========================================================= 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 the 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 ? ========================================================= VASUDHA WD/O VINAYAK GOKGHALE - Petitioner(s) Versus PRABHAT COLONY CO.OP.HOUSING SOCIETY LTD. & 1 - Respondent(s) ========================================================= Appearance : MR AY KOGJE for Petitioner(s) : 1, 1.2.1, 1.2.2, 1.2.3,1.2.4 NOTICE SERVED for Petitioner(s) : 1.2.1, 1.2.2, 1.2.3,1.2.4 RULE SERVED for Respondent(s) : 1, MR NV SOLANKI for Respondent(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE JAYANT PATEL Date : 19/06/2008 CAV ORAL JUDGMENT 1. The short facts of the case appears to be that SCA/1616/1993 2/16 JUDGMENT as per the petitioner, Vinayak Vishnu Gokhale (hereinafter referred to as 'the Original Petitioner') paid an amount of Rs.650/- on 5.3.1979 to the respondent No.1 Society for becoming the member. On 11.4.1979, the original petitioner further deposited an amount of Rs.9,600/- with the Society and ultimately a further amount was also paid and receipt was issued by the Society on 19.5.1979 for the amount of Rs.17,802/-, which included the earlier amount deposited. As per the petitioner, the share certificate was also issued, copy whereof is produced at Annexure D, by the society vide certificate No.94 for holding five shares by Jitendra Chunilal, which in turn were transferred in favour of the original petitioner on 10.7.1979. It is further case of the petitioner that on 21.4.1980 the respondent No.1 Society has also passed the Resolution for allotment of 'A' Type Block No.5 to the original petitioner. It is further case of the petitioner that the revenue entry was also mutated for such purpose and as the SCA/1616/1993 3/16 JUDGMENT petitioner was desirous to take loan, the certificate was also issued by the Society for holding of 'A' Type Block No.5 and the payment made for such purpose and clear marketability of the title of the Society vide Certificate dated 21.4.1980. It is also the case of the petitioner that another certificate came to be issued on 14.3.1980 by the Society to the effect that if the property is mortgaged by the original petitioner, without prior approval of Anyonya Sahakari Bank Limited, the same shall not be transferred to anyone else. It is also the case of the petitioner that the petitioner subsequently paid the additional amount to the society and the notice was also issued by the society to the petitioner, calling upon him to pay the remaining amount of Rs.9,964/- and, therefore, the petitioner contends that the petitioner was admitted as the member and the aforesaid block was allotted by the society to the petitioner. 2. It appears that as per respondent No.2, the President of the society allotted the very block SCA/1616/1993 4/16 JUDGMENT to respondent No.2 and it is the case of the respondent No.2 that based on the documents issued, including that of the share-certificate and the payment made in the year 1982, the respondent No.2 obtained a loan from the State Bank of India and at that stage, the respondent No.2 came to know that the President of the society had also issued similar share certificates, etc., to the petitioner and, therefore, respondent No.2 had filed Lavad Suit No.646 of 1983 before the Registrar's Board of Nominee for protecting the possession and prohibiting the interference in the further construction. In the said suit, the petitioner was not impleaded as the party. The pertinent aspect is that in the said suit, the society had filed the reply and it was stated that by way of a temporary measure, the papers were given, but the respondent No.2 herein had agreed that he would accept any block, which might be allotted by the society and the society had to allot block No.11/A and Block No.5/A, which was subject matter of the suit was allotted to the SCA/1616/1993 5/16 JUDGMENT original petitioner herein. The aforesaid pleadings of the society in the aforesaid suit support the case of the original petitioner. However, the fact remains that the original petitioner did not take any action during the period of 1983 onwards and only in the year 1985, the original petitioner preferred Lavad Suit No.1161 of 1985 before the Registrar's Board of Nominees for the relief, inter alia, of declaration that the property of Block No.5/A admeasuring 700 sq. ft. of the Society is belonging to the petitioner and the defendant be directed to entrust the vacant possession of the property. It appears that pending the aforesaid respondent No.2 has withdrawn Suit No.646 of 1983, which was for the injunction. It appears that the learned Nominee tried the suit and ultimately passed the judgement and the award dated 30.12.1991, whereby the suit was not accepted but it was directed that the defendant No.1 society shall refund the amount, which was deposited by the plaintiff and credited in the account of the society or in alternative, it was SCA/1616/1993 6/16 JUDGMENT also directed that if there is any vacant block in the society or if in future there is availability of the vacant block, the same be allotted to the plaintiff. 3. The petitioner carried the matter before the Gujarat Cooperative Tribunal in appeal and the Tribunal vide its decision dated 30th September, 1992 dismissed the appeal and it is under these circumstances, the petitioner has approached this Court by preferring the present petition. 4. Heard Mr.Kogje, learned Counsel appearing for the petitioner and Mr.Solanki, learned Counsel appearing for respondent No.2. Respondent No.1 society was served but has chosen not to appear. The learned Counsel appearing for the petitioner has made, the record and evidence of the suit proceedings, available to the Court during the course of the final hearing. 5. It does appear from the record produced on behalf of the petitioner that the payment was made by the original petitioner towards membership and towards construction in part and the share certificate also came to be SCA/1616/1993 7/16 JUDGMENT transferred in favour of the petitioner. It also appears that Block No.5 was initially allotted to the petitioner and the said fact is supported by the pleadings of the society made in the proceedings of Lavad Suit No.646 of 1983, copy whereof is produced at Ex. 17 in the suit proceedings. Therefore, the aforesaid documents go to show that the original petitioner was admitted as the member and was also initially allotted Block No.5. Therefore, the interest to that extent can be said to have been created of the petitioner in the aforesaid part of the property of the Society. 6. It deserves to be recorded that in a housing cooperative society, the ownership of the property of the society vests to the society and the allotment of the plot or block, as the case may be, is being made by the society. In the present case, as it appears, to be the scheme for not only the allotment of the plot, but also for making construction of a tenement and allotment of the tenement, after completing the construction by the society, the possession SCA/1616/1993 8/16 JUDGMENT after allotment was to be entrusted to the member, who has been allotted the block. The documents produced in the proceedings of the suit go to show that the original petitioner was admitted as a member and was allotted Block No.5/A, but it also appears that the actual possession of Block No.5/A was not handed over to the petitioner on account of either non- completion of the construction or non-payment of the remaining amount by the petitioner to the society. Therefore, the right, if any, of the petitioner could be said to have been created in the property of the society to that extent only. It also appears that in the year 1982 the respondent No.2 has also paid the amount towards membership and construction to respondent No.1 Society and the actual possession is entrusted by the society to respondent No.2. Not only that, but the respondent No.2 has obtained loan and at that time, as per respondent No.2, the title clearance certificate was also obtained. It also appears that the Society did complete construction as agreed and the respondent No.2 SCA/1616/1993 9/16 JUDGMENT had to complete the construction. As stated by the respondent No.2 in the affidavit-in- rejoinder, all construction after plinth level is made by him and it is further stated that the additional construction is also made by him by investing the total amount of approximately Rs.3,50,000/-. 7. It is not the case of the petitioner that the respondent No.2 had knowledge about the rights so created of the petitioner over Block No.5. On the contrary, as per the petitioner, since he was working outside Vadodara, when he inquired respondent No.2 was in possession and was making construction and at that stage, he informed respondent No.2 that the Block was already allotted to him and possibly that situation has given rise to the filing of the earlier suit in the year 1983 being Lavad Suit No.646 of 1983 preferred by respondent No.2. It is also an admitted position that the original petitioner did not take any civil action for prohibiting the construction or development by respondent No.2 and only in the year 1985 by the present SCA/1616/1993 10/16 JUDGMENT suit, prayed for declaration and the entrustment of the possession. 8. In normal circumstances, if a particular plot or a block is already allotted by the society to a particular person, right of such person to that extent in the property of the society may stand created, but it is not an interest created as if the transfer of the ownership to the fullest extent by the society to the concerned person or the member. In a given case, if the society on account of the default by the member has cancelled the allotment and has not handed over the possession of the block to such member, it may give cause to the aggrieved member to approach before appropriate forum for enforcement of such right, but thereby, it cannot be said that once the allotment is made but the same is actually not acted upon, the society will lose all interest over the property. Further, if the possession is already haded over after allotment of the same to the member concerned, it may stand on a different footing and the right of such member in such SCA/1616/1993 11/16 JUDGMENT property of the Society may stand crystallized to a greater extent, but the possession not handed over would not stand on the same footing. 9. Apart from the above, as per the petitioner as well as respondent No.2, the President of the Society has cheated both of them namely; the petitioner as well as respondent No.2. It was submitted by the learned Advocate for the petitioner as well as respondent No.2 that money is collected by the President of the society from the petitioner and also from respondent No.2 and such action on the part of the President of the Society has created the present situation, whereby the petitioner as well as respondent No.2, both, are made to suffer. 10.There is no reliable, cogent evidence on record to show that respondent No.2 became member and obtained possession of Block No.5/A with the conscious knowledge that the original petitioner was already allotted the same block. The documents produced on behalf of the respondent No.2, on the contrary, go to show that respondent No.2 acted in bonafide for becoming SCA/1616/1993 12/16 JUDGMENT the member of the society and also for getting the allotment of the block. As the society did not complete the construction, respondent No.2 had to make the construction at his cost. Therefore, it appears that the respondent No.2 can be said as having acted in bonafide for becoming member and for getting the allotment of Block No.5/A. The aforesaid is coupled with the circumstances that not only the construction is completed, which was agreed to be made by the Society, as on today, as per the respondent, he has incurred an expense of about Rs.3.50 lac for completing the construction and for making additional construction. 11.However, it appears that even if the respondent No.2 has acted in bonafide and has acquired the property of Block No.5/A from the Society, the rights so created of the original petitioner on account of the act and the agreement already undertaken by the society prior thereto, shall not stand vanished and it would be required for the society to compensate the loss, if any, caused on account of its action of allotment of SCA/1616/1993 13/16 JUDGMENT one block to two persons, more particularly when both such persons have acted in bonafide and the action of the society, may be by itself or through its President, has put both such persons to peril. 12.In view of the aforesaid circumstances, it appears that when respondent No.2 has acted in bonafide, the Court may not grant relief for treating the allotment made to respondent No.2 as cancelled and for entrustment of the property to the original petitioner. However, it would be required for the society to honour its liability towards the action done by it and also to compensate the petitioner by paying suitable interest upon the amount paid for becoming the member and towards construction to be made by the society over Block No.5/A. In the event, the Society has no property available like common plot or liquid fund in the Bank etc., since, as observed earlier, the rights to that extent over the property of the society are read as created in favour of the petitioner over Block No.5/A, it would be required for the SCA/1616/1993 14/16 JUDGMENT respondent No.2 to pay such amount to the petitioner and then to recover from the society as and when common property or the fund is available, as the case may be. Such a course appears to be in the interest of justice. 13.If the views taken by the learned Nominee as well as by the Tribunal are examined in light of the aforesaid observations, it does appear that the Nominee as well as the Tribunal have committed error in not considering the record and the material for creation of such rights of the petitioner over such property to that extent, nor have both the lower Authorities considered that even if respondent No.2 has acted in bonafide once the right is said to have been created to that extent in the property of the society, which is allotted to respondent No.2, in the event of failure on the part of the society to discharge its obligation, since respondent No.2 has acquired the property, such liability should reach to the subsequent allottee, who is respondent No.2 reserving liberty to him to recover from the property or SCA/1616/1993 15/16 JUDGMENT from the funds of the society in future. Therefore, it can be said that both the lower Authorities have committed error apparent on the face of record to that extent and hence, the judgements of both the lower authorities deserve to be modified to that extent. 14.In view of the aforesaid, the suit of the plaintiff is decreed only to the extent that the plaintiff shall be entitled to recover the amount of Rs.20,551/- with the interest at the rate of 8% per annum from 1982 till actual payment, from the common property and funds of respondent No.1 Society. It is further observed that in the event of non-availability of common property or funds of the Society, the plaintiff shall be entitled to recover the aforesaid amount from respondent No.2, who is allotted property of Block No.5/A of the Society. It is also observed that in the event respondent No.2 has paid such amount pursuant to the aforesaid decree on account of non-availability of the common property or funds of the society, to the petitioner, the respondent No.2 shall be at SCA/1616/1993 16/16 JUDGMENT liberty to recover the said amount from respondent No.2 society as and when common property or funds of the society are available. The other reliefs as prayed in the suit are not granted. 15.The petition is partly allowed to the aforesaid extent. Rule made absolute accordingly. Considering the facts and circumstances, there shall be no order as to costs. 19.6.2008 (Jayant Patel, J.) vinod