IN THE HIGH COURT OF JUDICATURE OF ANDHRA PRADESH : HYDERABAD TUESDAY, THE TWENTY FIRST (21st) DAY OF JUNE, TWO THOUSAND AND ELEVEN Present: HON’BLE SRI JUSTICE G.V.SEETHAPATHY Civil Revision Petition No.2481 of 2010 Between: M/s Srila Builders Private Limited, Hyderabad … Petitioner And: Praful Malpani & another … Respondents HON’BLE SRI JUSTICE G.V.SEETHAPATHY Civil Revision Petition No.2481 of 2010 ORDER: This revision petition is directed against the order dated 03.05.2010 in IA No.2066 of 2009 in OS No.2130 of 2009 on the file of the III Junior Civil Judge, City Civil Court, Hyderabad, wherein the said application filed by the petitioner herein-2nd defendant seeking rejection of the plaint under Order VII Rule 11(a) and (d) CPC, was dismissed. 2. Heard the learned counsel for the revision petitioner-D.2 and the learned counsel for the first respondent-plaintiff. Perused the record. 3. The first respondent herein filed suit against the 2nd respondent-first defendant and the petitioner herein-2nd defendant for permanent injunction restraining the defendants from making any construction or raising any structures in the plaint schedule property, which is vacant site measuring 3215 sq. yards situated in Nampally Station road, Hyderabad. According to the plaintiff, he is a member of first defendant Cooperative Society, which owns several properties including the suit property and that the Chairman of the first defendant society in collusion with some of its Directors, with a view to enrich himself, entered into an agreement of sale cum General Power of Attorney (GPA) with the 2nd defendant for developing suit property in to a commercial complex. It is further alleged that some of the members of the first defendant society raised objections, but they went unheeded. It is further alleged that the Chairman of the first defendant society did not even inform to the general body about proposed construction of the complex. The plaintiff addressed a letter dated 24.05.2007 to the Chairman of the first defendant society as to why the 2nd defendant was preferred, but the first defendant did not give any reply. The plaintiff again addressed another letter dated 23.02.2009 to the President of the first defendant society asking for copy of the agreement entered into between the first defendant and 2nd defendant, for which also there was no response. According to the plaintiff, one M/s CSK Realtors have offered to pay non-refundable deposit of two crores, but the President of first defendant society has chosen the 2nd defendant, who offered to pay only fifty lakhs as advance, out of which, twenty five lakhs was refundable with interest and the remaining twenty five lakhs without interest. The plaintiff, therefore, alleges that the development agreement dated 12.06.2007 between the defendants 1 and 2 is collusive and fraudulent. The plaintiff therefore filed suit for permanent injunction restraining the defendants from making construction over the suit site. 4. The first defendant society filed written statement inter- alia contending that in general body meeting held on 26.09.2003 it was resolved to constitute a building construction committee to take up the pre-requisites for having commercial complex and on the advise of the said committee, quotations were called from the builders and a public notice inviting the quotations was also issued in the news papers on 29.05.2006 and the Board of Directors have decided to enter into development agreement cum general power of attorney with 2nd defendant, who was found to be having requisite qualification, knowledge, capacity and experience to build the complex and accordingly, the development agreement cum GPA was registered on 12.06.2007. The first defendant further pleaded that the proposed construction is for the benefit of the society and the plaintiff has no right to question the development agreement and the suit is filed with a mala fide intention to black- mail the society and make a wrongful gain from the 2nd defendant. The 2nd defendant also filed a separate written statement contending that the plaintiff has no personal interest in the subject matter and so he cannot maintain the suit in his individual capacity and the plaintiff has not issued any notice as required under section 115 of the Multi State Cooperative Societies Act 2002 (for short ‘the Act’) before filing the suit and so, the suit is not maintainable. The 2nd defendant further contended that the alleged grievance of the plaintiff falls within the ambit of Section 84 of the Act, which has to refer to the Arbitration under the provisions of the Act, but not by civil Court and hence, the Court lacks inherent jurisdiction to deal with the matter. It is further pleaded that the plaint does not disclose the cause of action and the plaint is liable to be rejected under Order VII Rule 11(a) and (d) of CPC. The 2nd defendant raised several other contentions also pertaining to the merits of the case. 5. Based on the above said pleadings, necessary issues were framed. When the matter was coming up for trial, the 2nd defendant filed IA No.2066 of 2009 under Order VII Rule 11(a) and (d) CPC seeking rejection of the plaint on the ground that the plaint does not disclose any cause of action and secondly, the suit is barred for want of statutory notice as required under section 115 of the Act and also in view of Section 84 of the Act, under which the matter is liable to be referred for arbitration. 6. The first respondent-plaintiff filed counter opposing the application and contending that the notice under section 115 of the Act is required only when the dispute touches the Constitution, management or business of the society, but not the dispute like the present one, that too when the relief is sought against the third party-2nd defendant. The plaintiff further contended that Section 84 of the Act is not applicable for the same reason as the dispute to the present suit is not touching the Constitution, management or business of the society and so, the question of making reference to the Arbitration does not arise. 7. By impugned order, the learned Junior Civil Judge dismissed the application, rejecting the grounds raised by the petitioner-2nd defendant for rejection of the plaint. It was further observed in the impugned order that previously, the petitioner filed IA No.1446 of 2009 and the same was dismissed and the present application was filed raising the self same objections. 8. It is not disputed that previously, the first defendant- society filed IA No.1446 of 2009 under Order VII Rule 11(d) CPC seeking rejection of the plaint on the ground that the Court has no jurisdiction to try the suit. The said application was dismissed on the ground that the dispute in the suit is not relating to touching the Constitution, management or business, but was only for injunction and therefore, the grounds raised in the petition are untenable. Aggrieved by the said order, the first defendant filed CRP No.3425 of 2010. This Court by order dated 13.08.2010 dismissed the said revision petition. Aggrieved by the same, the first defendant society filed SLP (Civil) No.33737 of 2010. The apex Court by order dated 03.01.2011 while dismissing SLP, observed that the same does not come in the way of question of bar under Section 84 of the Act being raised in the present CRP No.2481 of 2010 filed by the builder. 9. The petitioner-2nd defendant seeks rejection of the plaint on two grounds, namely, that the suit is not maintainable in the absence of statutory notice required to be issued under Section 115 of the Act, secondly, in view of Section 84 of the Act, which requires the dispute to be referred to Arbitration. 10. The application is filed under Order VII Rule 11 (a) and (d) CPC. The said provision enables the court to reject a plaint in case where it does not disclose a cause of action and where the suit appears from the statement in the plaint to be barred by any law. In the plaint, specific averments have been made as to how and when the cause of action for filing the suit has arisen. The suit is filed for injunction restraining the defendants from making construction over the suit site by virtue of development agreement dated 26.02.2007 entered in to between the defendants 1 and 2. The specific case of the plaintiff is that the said agreement is vitiated by fraud and is brought in to existence collusively by the President of the society and the 2nd defendant to make a wrongful gain and to cause a wrongful loss to the society and its members. The defendant in their written statement, while denying the allegations of fraud and collusion sought to justify the development agreement contending that it was in the best interest of the society and its members. The defendants also contended that the plaintiff, who is only one of the members of the society, has no right to question the development agreement, which was entered in to in pursuance of a resolution passed by the general body. The question as to whether or not the said development agreement is vitiated by any fraud and whether or not the plaintiff has any locus stand to question the said agreement and stall the proposed construction by 2nd defendant-builder in pursuance of the said agreement are matters to be decided on evidence that may be adduced during the course of trial. For the purpose of the present application, what is required to be seen is whether the plaint discloses a cause of action or not. 11. It is well settled principle of law that the question as to whether or not the cause of action alleged is true is not relevant for considering an application filed under Order VII Rule 11(a) and what is to be considered at the stage is only whether or not the plaint discloses a cause of action, as the plaintiff specifically questions the genuineness and validity of the development agreement and made allegations of fraud and collusion against defendants 1 and 2 vis-à-vis the said agreement, it must be held that the plaint in fact discloses a cause of action for filing the suit for permanent injunction. The question as to whether or not the said cause of action is true is a matter to be considered by the trial Court on evidence at the time of trial. Hence, rejection of plaint under Order VII Rule 11(a) CPC does not arise. 12. Section 115 of the Act, no doubt contains a bar stating that no suit shall be instituted against a Multi-State Cooperative Society or its officers in respect of any act touching constitution, management or business of the society only expiration of 90 days after notice. Admittedly, no such notice is issued by the plaintiff. The plaintiff and first defendant therefore contend that in the absence of such notice, the suit is liable for rejection under Order VII Rule 11(d) CPC. It is to be noted that under Section 115 of the Act, statutory notice is required to be given if the suit is filed pertaining to any act touching the constitution, management or business of the society. Admittedly, the dispute in the present suit does not relate to constitution or management of the society. 13. Learned counsel for the petitioner-2nd defendant would seek to contend that the dispute relates to business of the society and therefore, notice under section 115 of the Act is required. As rightly observed by the trial Court, first defendant society has not raised any such objection and it is only the petitioner-2nd defendant, who is a third party that seeks to raise the objection for maintainability of the suit, in the absence of notice under section 115 of the Act. Section 115 of the Act bars a suit against the society or any of its officers, but not against the third party, like the petitioner-2nd defendant, who is a builder and has nothing to do with the affairs of the society. Even against the society or any of its officers, the suit is barred under section 115 of the Act only if the dispute relates to constitution, management or business of the society. The construction of a building complex in pursuance of development agreement entered into by the society with a builder cannot be construed as an act forming part and parcel of the business of the society and any dispute raised over the said agreement or proposed construction pursuant to the said agreement cannot be considered to be a dispute, touching business of the society. 14. The bye-laws of the society, which enumerates aims and objects of the society, do not show that construction of a commercial complex over a site belonging to the society would fall within the ambit of the business of the society. The society is to encourage self help, thrift and cooperation among members by affording facilities to invest a part of their income profitably. The execution of development agreement cum GPA between the defendants 1 and 2 and the construction work taken up by the 2nd defendant in pursuance of the said agreement in one of the sites belonging to the society is certainly not an activity touching the constitution, management or business of the society and therefore, any dispute like the present one does not attract the bar contained under Section 115 of the Act for want of statutory notice. 15. For the same reason, the recourse to Section 84 of the Act, which contemplates reference of the dispute to the arbitration, is also not called for, as the dispute that can be referred to arbitration under section 84 of the Act shall have to be one touching the constitution, management or business of the society. Further, such a dispute must have arisen among the members, past members and persons claiming through members, past members and deceased members; and the members of the society or its officers and other categories mentioned in Section 84 of the Act. The petitioner-2nd defendant, who is a third party and a builder and who is admittedly not a member of the society does not fall within any of the categories mentioned in clause (a) to (d) of Section 1 of Section 84 of the Act. 16. Learned counsel for the petitioner-2nd defendant seeks to contend that by virtue of development agreement, the petitioner- 2nd defendant becomes an agent of the society and therefore, even a dispute between a member and the society or its agent is referable to arbitration under clause (b) of sub-section (1) of Section 84. The petitioner-2nd defendant never pleaded that he is an agent of first defendant society. The petitioner-2nd defendant is a third party-builder, who was entrusted with the work of construction of a complex over the suit site belonging to the society. The petitioner does not act as an agent of the society and on the other hand, he is a party to the contract between himself and first defendant society in connection with the development and construction of the complex over the suit site. The defendants 1 and 2 are therefore contracting parties at par with each other. There was never any agreement of agency between the defendants 1 and 2. That apart, the dispute in the present case not being one touching the constitution, management or business of the society, the question of referring the same to arbitration under Section 84 of the Act does not arise. The recourse to arbitration under section 84 and bar contained in Section 115 of the Act owing to issuance of statutory notice are not attracted to the facts of the present case. Having regard to the nature of the dispute raised in the suit, the suit for permanent injunction is certainly maintainable. The grounds for rejection of the plaint urged by the petitioner-2nd defendant do not simply exist. 17. The decision in ‘Premier Automobiles Limited vs Kamlakar Shantaram Wadke[1]’ relating to the jurisdiction of the Civil Court vis-à-vis industrial dispute, cited by the learned counsel for the petitioner-2nd defendant is not applicable to the facts of the present case. 18. Similarly the other decision in ‘Munshi Ram v. Municipal Committee[2]’relied upon by the learned counsel for the petitioner- 2nd defendant, wherein it was held that ‘where a revenue statute provides for a person aggrieved by an assessment there under, a particular remedy to be sought in a particular forum, in a particular way, it must be sought in that forum land in that manner and all other forums and modes of seeking it are excluded’, is also not attracted to the facts of the present case, though the principle laid down therein cannot be disputed. 19. In ‘Krishak Bharti Cooperative Ltd. V. IFFCO Tokio General Insurance Co. Ltd’[3], the Delhi High Court held that ‘on a careful consideration of various averments and allegations made in the plaint and having regard to the nature and extent of reliefs claimed in the suit, it would appear to the Court that in essence the plaintiff’s challenge is to those acts of IFFCO, which touches not only the business of a multi-State cooperative society but also touches its Constitution and management.’ It was therefore held ‘that the plaintiff was under a statutory obligation to serve a notice on the Central Register of the multi-State Cooperative Societies as envisaged by Section 115 of the Act before filing of the suit and since no such notice has been served, the suit was shit by the provisions of Order VII Rule 11 Clause (D) CPC as barred by law.’ 20. The above decision also is not applicable to the present case, where the dispute raised in the suit cannot be said to be one touching the constitution, management or business of the society and hence, the statutory notice under Section 115 of the Act is not required to be served and therefore, the question of suit being barred by law in terms of Order VII Rule 11(d) CPC does not arise. 21. In the circumstances, it is held that the impugned order dismissing the application filed by the petitioner-2nd defendant for rejection of the plaint does not call for any interference. 22. In the result, the civil revision petition is dismissed. __________________ G.V.SEETHAPATHY, J Date: 21.06.2011 bss [1] AIR 1975 SC 2238 [2] AIR 1975 SC 1250 [3] 125 (2005) Delhi Law Times 45