1 wp502-03 rpa IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURSIDICTION WRIT PETITION NO. 502 OF 2003 Anita Co-operative Housing Society Limited .. Petitioner V/s. Bhaskar Vinayak Desai .. Respondent ..... Mr. A. Dasgupta i/b M/s. Jhanglani Narula & Associates for the petitioner. Mr. N. Jayaraman for the respondent. ..... CORAM : A.S.OKA, J. DATE : AUGUST 23, 2011. ORAL JUDGMENT : Submissions of the learned counsel appearing for the parties were heard yesterday. This petition arises out of a dispute filed by the respondent under Section 91 of the Maharashtra Co- Operative Societies Act, 1960 (hereinafter referred to as the said Act, 1960). The respondent was a member of the petitioner Co- operative society which is a Tenant Co-partnership Housing Society. By virtue of his membership, the respondent was holding a flat along with a garage. The respondent was intending to sell the flat along with the garage to a limited company for the residential accommodation of its officers. It is alleged in the dispute filed by the respondent that in September 1994, the 2 wp502-03 memorandum of understanding was finalized. According to the respondent, he obtained approval of the appropriate authority under the Income Tax Act, 1961 and obtained clearance certificate from the Bank. In terms of the Bye-laws of the society, the respondent had made an application to the petitioner for grant of no objection certificate for transfer. The case made out in the dispute filed by the respondent is that the then treasurer of the petitioner society made an offer that the petitioner will be willing to transfer the shares provided the respondent agrees to pay 2.5 percent of the sale value of the flat to the petitioner. It is contended by the respondent that a legal opinion appears to have been obtained by the petitioner society. On 2nd March, 1995, the respondent was called to the office of the society and was informed by its manager Mr. Colabawalla that the no objection certificate would be granted subject to payment of a sum of Rs.3,87,500/-. The said Manager informed the respondent that he will have to also file an affidavit in terms of the specimen supplied to him. The respondent contended that the petitioner demanded a sum of Rs.4,12,500/- being 2.5 percent of the sale value of Rs.1,65,00,000/-. Out of the amount of Rs.4,12,500/-, a sum of Rs.25,000/- was to be paid as an official transfer fees prescribed by the Bye-laws and the balance amount of Rs.3,87,500/- paid by the respondent was to be treated as a 3 wp502-03 contribution to the repair fund of the petitioner Society. 2. The case of the respondent is that though he tried to convince the office bearers of the petitioner that their demand was not proper and illegal, the petitioner was not willing to accept any amount less than the demanded. He alleged that the respondent was afraid that if the amount demanded by the petition society was not paid, the deal may not go through. It is contended that he had to pay the said amount which is nothing but some sort of legal blackmail and after making payment, he obtained no objection certificate and the transaction was effected. It is contended in the dispute that the petitioner society can charge only such amount which is permissible under the Bye- laws. It is submitted that the demand made by the petitioner was completely illegal. It is submitted that even if it is assumed that the petitioner had adopted the model Bye-laws, the petitioner was entitled to claim a sum of Rs.25,000/- towards premium, a sum of Rs.50/- by way of transfer fees and a sum of Rs.10/- by way of entrance fees. It was contended that the respondent made an application before the Deputy Registrar of Co-operative Societies for refund of the amount. Though said application was decided in favour of the respondent, the petitioner preferred an Appeal before the Divisional Joint Registrar and the said Appeal was allowed in favour of the petitioner on the ground that the 4 wp502-03 Deputy Registrar had no jurisdiction. In the dispute, the respondent prayed for refund of amount of Rs.6,06,050/- with interest at the rate of 21% from 31st May, 1997 till the date on which the payment is made. The amount over and above Rs.4,12,500/- represents interest at the rate of Rs.21% per annum. 3. The petitioner filed written statement opposing the dispute. It was contended that it was the respondent who had agreed to pay contribution in the nature of donation being an amount of Rs.3,87,500/-, it was submitted that the respondent executed an affidavit on his free will in which he stated that the amount was being voluntarily paid towards the repairs fund out of his own free will. It was contended that the affidavit was submitted by the respondent prior to the actual payment mentioned therein. It was contended that from 30th January, 1973 to 31st October, 1974, the respondent was the Secretary of the managing committee and during his tenure as the Secretary, in case of all the transfers of membership, the members had given such voluntary contributions and it was the respondent who accepted the same. It was contended that even assuming that the demand was illegal, after having taken advantage of obtaining no objection for transfer by paying the said amount, now the respondent cannot make any grievance about the said amount. 5 wp502-03 The assertions made in paragraph Nos. 3 and 4 of the dispute were denied by the petitioner. It was contended that the voluntary contributions are made by the transferor members in the nature of donation realising the huge expenditure on repairs incurred by the petitioner society. It was contended that making the voluntary contributions by transferor member has always been a practice. 4. The parties adduced evidence. The learned Judge of the Co-operative Court by Judgment and Award allowed the dispute partly and directed the petitioner to pay a sum of Rs.24,999/- to the respondent with interest at the rate of 9 % per annum from 21st August, 1995 on Rs.24,999/- till the realization. The learned Judge of the Co-operative Court held that voluntary contribution in the sum of Rs.3,87,500/- was made by the respondent towards the repairs fund of the society. The learned Judge held that there is no evidence on record to show that the amount was paid under protest or without prejudice to the rights and contentions of the respondent. It was contended that since the amount was voluntarily paid, the respondent was not entitled to refund of the said amount. However, the Co-operative Court held that the demand of the amount of Rs.24,999/- which was paid on 21st August, 1995 was illegal and, therefore, the claim of the respondent was allowed to that extent. 6 wp502-03 5. An Appeal was preferred by the respondent for challenging the said Judgment and Award. The Appellate Court by its impugned Judgment and Award passed following operative part of order: “(a) Appeal is allowed. (b) Award passed by the Trial Court dated 29.11.2001 is hereby modified. The Society is directed to refund the amount of Rs.3,87,500/- and Rs.24,999/- to the Appellant along with interest at the rate of 12% per annum from the date of payment i.e. 6.3.1995 and 21.8.1995 respectively till realization.” 6. The learned counsel appearing for the petitioner has taken the Court through the impugned Judgment of the Co-operative Appellate Court as well as the documents on record. He pointed out that on his own showing, the payment made by the respondent was a voluntary payment. He pointed out the affidavit dated 2nd March, 1995 made by the respondent before the notary public in which he stated that he was voluntarily contributing a sum of Rs.3,85,500/- towards the repair funds. He invited the attention of the Court to the deposition of the respondent. He stated that deposition of the respondent itself shows that the affidavit was voluntarily executed by the respondent and in fact he admitted the contents of the affidavit. He admitted in the cross-examination that he had not written any letter to the petitioner society. He submitted that the fact that the 7 wp502-03 respondent himself was the Secretary of the petitioner Society for some time was admitted by the respondent. He submitted that the contents of the affidavit executed by the respondent show that he voluntarily made payment of Rs.3,75,5000/- in the year 1995 and, therefore, the respondent was estopped from making any grievance about the same by filing a dispute in the year 1997. He invited the attention of the Court to the findings of the Co- operative Appellate Court and submitted that effect of voluntary payment of the amount by the respondent has not been considered. He submitted that if any demand was illegally made, the respondent could have always filed the appropriate proceeding. He submitted that if any illegal demand of money for transfer of the flat was made, there were remedies available for the respondent under the provisions of the said Act. He relied upon a decision of the Apex Court in the case of Divisional Manager United India Insurance Co. Ltd. V/s. Samir Chandra Chaudhary [2005 (5) SCC 784]. He submitted that in view of the law laid down by the Apex Court, there was admission on the part of the respondent in the affidavit regarding the voluntary payment and the respondent had not explained the admission. He urged that interest granted by the Appellate Court is excessive. The learned counsel appearing for the respondent supported the impugned Judgment and order by relying upon the 8 wp502-03 Judgment and order of this Court in Writ Petition No. 4137 of 2002. The submission is that the Co-operative Appellate Court has considered all the aspects which have not been considered by the Co-operative Court. He submitted that even the rate of interest awarded was justified. He, therefore, submitted that no interference is called for. 7. I have perused the findings recorded by the Co-operative Appellate Court. The Appellate Court has recorded reasons in paragraph No.13 which read thus: 13. Besides the transfer charges of Rs.25,000/- the Society has also claimed and received a sum of Rs. 3,87,500/- from the Appellant. According to the Society, the Appellant paid this amount towards repair fund. The Appellant also annexed affidavit showing that he has voluntarily paid the amount towards repair fund. Copy of affidavit is on record. The copies of the payment receipts are also on record at Exhibits D3 and D4. Exhibit D4 is for transfer fee and Exhibit D3 is for Rs.3,87,500/- as voluntary contributions towards repair fund. According to Appellant an amount of Rs.3,87,500/- was illegally demanded. He paid the said amount, as he was afraid that the flat in question would not be transferred. In correspondence of the Society it has come out that it was practice of the Society to collect amount from Transferor towards repair fund. In para 8 of the Written Statement the Society has pleaded “it has always been the practice in the society that all the Transferor members voluntarily contribute in the nature of donation to wards the huge expenses incurred by the society that the Appellant was in arrears of repair funds and therefore he was asked to pay the amount. It is the case of the Society that it is practice of the Society to accept donation from the Transferor member. As there are no arrears towards repair fund from the Appellate who was the outgoing member, there should be no question of payment 9 wp502-03 towards repair fund and if after transfer any repairs are carried out it is the Transferee who has to pay the amount. Form the pleadings it appears that the Society has accepted donation from the Transferor member under the guise of repair fund. In fact there were no arrears towards the repair fund.” 8. It will be necessary to make a reference to the written statement of the petitioner and in particular paragraph No.8 thereof. The relevant portion of the paragraph No.8 reads thus: “8...... It is submitted that it has always been the practice in the Society that all the transferor members make the voluntary contribution in the nature of donation realising the huge expenditure incurred by the Society for repairs of their buildings and/or to repair the damage done by the outgoing members.” 9. It is also necessary to make a reference to the evidence of Mr. Sarosh Elavia, the secretary of the petitioner. In examination- in-chief he stated that the petitioner received transfer fee as voluntarily donation from respondent at the time of transfer of the disputed flat. What is stated by the said witness reads thus: “ The procedure in respect to transfer the dispute flat was followed in due course. The socy. received transfer fee at voluntary donation from the disputant at the time of transfer of disputed flat.” 10. In the cross-examination, the witness admitted that except transfer fee of Rs.25,000/- nothing else is required to be paid. In the further cross-examination, the affidavit of the respondent 10 wp502-03 was shown to the witness and the response of the witness was that the society takes such affidavit from every transferor for voluntary donation towards repairs fund of the society. 11. Thus, there is a clinching admission that the petitioner society received voluntary donation from the respondent at the time of transfer of the disputed flat. The witness admitted that except transfer fee of Rs.25,000/- nothing else was required to be paid at the time of transfer. Lastly, the witness admitted that in case of every transfer, such affidavits are taken from the transferors in the same format and language. Thus, while admitting that nothing more than a sum of Rs.25,000/- was payable by way of the transfer fee, the witness admitted that from every transferor of flats, such affidavits are taken for voluntary donation towards the repairs fund of the society. The perusal of the affidavit filed by the respondent shows that he has stated that :- “ THAT I do hereby voluntarily contribute a sum of Rs.3,87,500/- (Three lakhs eighty seven thousand five hundred only) towards the repairs Fund of Anita Co-operative Housing Society Limited. Further, the said payment is made by me of my own free will without any prejudice to the Society.” Perusal of the affidavit shows that a sum of Rs.3,87,500/- is not a donation but “voluntary contribution” towards the repairs fund. The payment amount of Rs.3,87,500/- which was received 11 wp502-03 as “voluntary contribution” from the respondent at the time of transfer of his flat has a direct nexus to the permission granted by the petitioner society for transfer of the said flat. In the affidavit, there is no reference to “donation”. The admission of the Secretary of the petitioner and the text of the affidavit shows that from every transferor member such affidavits and voluntary contributions are taken. If the contributions were genuine donations, there was no need to take such affidavits. Thus, before transfer of membership, the respondent was told to pay a sum of Rs.3,87,500/- over and above legal amount of Rs.25,000/- under the name of voluntary contribution towards the repairs fund. Suffice to say that though the amount of Rs.3,87,500/- was taken from the respondent ostentatiously towards the repairs fund, the amount was as a condition for permitting the transfer of flat. Though the amount of Rs.3,87,500/- was not payable by the respondent, it is obvious that the amount of Rs.3,87,500/- was paid by the respondent as demanded by the petitioner. The specific statement of the Secretary of the petitioner Society in evidence is that the Society received “transfer fee as voluntary donation from the respondent at the time of transfer of flat”. Thus, the finding recorded by the Co-operative Appellate Court regarding liability of the petitioner to refund an amount of Rs. 3,87,500/- cannot be faulted with. The said finding based on the 12 wp502-03 evidence on record. 12. The other issue is regarding grant of interest. Perusal of the dispute under Section 91 of the said Act filed by the respondent shows that there is no averment to the effect that prior to filing of the dispute, any legal notice was served demanding interest on the sum of Rs.3,87,500/-. In paragraph Nos.8 and 12 of the dispute, the respondent has claimed interest at the rate of 21 % per annum from the date on which the amount has been paid by the respondent to the petitioner till the date on which the amount is repaid. There is no prior notice issued claiming interest in terms of the Interest Act. The Co-operative Court can exercise power under Section 34 of the Code of Civil Procedure, 1908 as well under the Interest Act to grant interest. In the facts of the case, the interest could have been granted from the date of filing dispute in as much as prior to filing of the dispute, no notice was served by the respondent making a demand for interest from the date of payment of amount. There is no basis for granting interest at the rate of 21% per annum. Therefore, the interest could have been granted only from the date of filing of the dispute and that also at the rate of 6% per annum. To that extent, modification will have to be made to the impugned Judgment and Award of the Co-operative Appellate Court. 13 wp502-03 13. It must be noted here that on 15th January, 2002 the petitioner paid a sum of Rs.39,300/- to the respondent towards settlement of Award made by the Co- operative Court. 14. Hence, I pass the following order: :: O R D E R :: i. The impugned Judgment and Award dated 19th August, 2002 passed by the Co-operative Appellate Court is modified. The petitioner Society shall pay to the respondent a sum of Rs.3,87,500/- with interest thereon at the rate of 6% per annum from 9th June, 1997 (i.e. from the date of the filing of the dispute) till payment or realization. ii. Rule is partly made absolute with no order as to costs. iii. The learned counsel appearing for the petitioner prays for continuation of ad-interim relief. The said prayer is opposed by the learned counsel appearing for the respondent. The learned counsel appearing for the respondent prays for costs on the ground that he was repeatedly required to attend this Court. 14 wp502-03 iv. The petitioner cannot blamed for delay in disposal of this petition. On the contrary, this petition of the year 2003 has been given priority when writ petitions of the other category are pending from the year 1989 onwards. Therefore, the prayer for directing the petitioner to pay costs on account of delay is rejected. v. On the prayer made by the learned counsel appearing for the petitioner interim relief operating in the petition will continue to operate for a period of twelve weeks from today. (A.S.OKA, J.)