Case: O. N. Bhatnagar Vs. Smt. Rukibai Narsindas &amp; Ors

The respondent No. 2 herein, Shyam Cooperative Housing Society Limited is constituted under the provisions of the Maharashtra Cooperative Societies Act , 1960 as a tenant co-partnership type housing society to which Regulations in Form-A apply viz. Regulations relating to tenancies to be granted by the society to members in respect of houses held by the society. It owns and manages two housing colonies known as `Shyam Niwas and `Navik Niwas at Warden Road, Bombay. The society continues to be governed by Regulations in Form-A ever since they were adopted by it after approval by the Registrar of Cooperative Societies in 1950. It appears that in 1954 the Directors passed a resolution for the introduction of Regulations in Form-B but it was never implemented. The respondent No. 1 Rukibai N. Bhavnani is a co-partner tenant member of flat No. 52 in building No. 5-A in the housing colony known as `Shyam Niwas situate at Warden Road, Bombay. The respondent No. 1 inducted the appellant in flat No. 52 under an agreement of leave and licence dated November 28, 1961. The byelaws of the society provide that no m ember can part with his possession of the flat under an agreement of leave and licence to another except with the approval of the society and unless such licensee becomes a nominal member thereof. The respondent No. 1 and the appellant acco rdingly applied to the society on December 8, 1961 for accepting the appellant to be a nominal member. The respondent No. 2 society passed a resolution No. 90 on December 15, 1961 accepting the appellant as a nominal member. The leave and licence agreement executed by the respondent No. 1 was renewed from time to time and the last agreement was executed on January 10, 1965, the term of which was to expire on February 28, 1965. By her notice dated March 31, 1965 the respondent No. 1 called upon the appellant to vacate the premises as his occupation of the premises had become unlawful after termination of the licence. The appellant failed to comply with the demand and has remained in unauthorised occupation of the flat for all these years.After termination of the agreement, in May 1965, the respondent No. 1 Smt. Rukibai N. Bhavnani claiming to be a co-partner tenant member of the society and as such holder of flat No. 52, brought proceedings against the appellant before the District Deputy Registrar Cooperative Societies Bombay under s. 91(1) of the Act for his eviction and for recovery of arrears of compensation and mesne profits, impleading the society as Opponent No. 3. On receipt of the claim under s. 91(1) the Assistant Registrar, Cooperative Societies issued notice to the appellant for the purpose of satisfying himself that a dispute under that section existed. The appellant however did not appear before the A ssistant Registrar who was seized with the matter but instead filed an application before the Court of Small Causes, Bombay for fixing standard rent of the flat in dispute. These proceedings were stayed pending adjudication of the dispu te by the Assistant Registrar. The Assistant Registrar in the meanwhile proceeded with the inquiry and after holding that such a dispute exist he referred the case to the Registrars nominee for adjudication. The appellant did not challenge the decision of the Assistantthe Registrars nominee the appellant filed his written statement and thereafter evidence of the parties was recorded. It appears that when the proceedings before the nominee were about to end he returned the papers to the Registrar as he did not want to proceed further in the matter. When the Registrars nominee returned the papers, the Registrar assigned the case to a retired District Judge as an Officer on Special Duty to adjudicate upon th e dispute under s. 91 of the Act, as by then the old system of such adjudication by the Registrars nominees had been replaced by the appointment of Officers on Special Duty. Before the Officer on Special Duty the appellant made a demand for a de no vo trial which was granted. Again, the evidence of both the parties was recorded and the matter reached the stage of argument but in the meanwhile, in April, 1970, the appellant brought a suit in the Court of Small Causes, Bombay for a declaration that he was a tenant of respondent No. 3 in respect of the flat in dispute and obtained a temporary injunction restraining respondent No. 1 from proceeding with her case before the Officer on Special Duty. Thus, the proceedings before the Officer on Special Duty remained stayed till April, 1972, when the suit filed by the appellant in the Court of Small Causes, Bombay was dismissed both on merits as well as on the ground that it was barred by limitation.After the dismissal of the suit brought by the appellant, the proceedings before the Officer on Special Duty were revived in 1972. Meanwhile, the case had been assigned to another Officer on Special Duty, a retired Presidency Magistrate, for adjudication. Before him the appellant again demanded a de novo trial which was granted and therefore evidence had to be recorded afresh. During the stage of of evidence, respondent No. 2 applied for and obtained leave to be transposed as a "disputa nt" as the Bombay High Court took the view that unless the society was a disputant the Registrar would have no jurisdiction to proceed under s. 91(1) of the Act. The Officer on Special Duty by his order dated August 27, 1973 rejected the application for transposition made by respondent No. 2. Thereupon, respondent No. 2 preferred a revision before the Maharashtra Cooperative Societies Tribunal which by its order dated February 8, 1974 allowed its application for transposition as a co-disputant. The appellant tried to assail the order of the Tribunal by a writ petition but a Division Bench of the High Court by its judgment dated January 9, 1976 declined to interfere. By this time the system of Officers on Special Duty was again replaced, now by the setting up of Cooperative Courts. After the dismissal of the writ petition, the proceedings initiated by respondent No. 1 were assigned to a Judge of the Cooperative Court, Maharashtra. Before him t he original plaint was amended making necessary averments with respondent No. 2 as a co-disputant. Again the appellant asked for a de novo trial, but in view of the provisions of s. 91-A(4) his application was rejected Respondent No. 1 was however resummoned for further cross examination and thereafter the appellants evidence was recorded. In August, 1977 there was a change of the Judge of the Cooperative Court and the appellant repeated his prayer for a de novo trial but thi s application of his also rejected. The learned Judge of the Cooperative Court by his judgment dated April 18, 1978, made an award against the appellant for possession of the flat is dispute and for arrears of rent and mesne profits amounting to Rs. 30 , 000. Against the award the appellant filed an appeal before the Cooperative Appellate Court but it was dismissed in January, 1979. Thereafter the appellant filed a writ petition in the High Court in February, 1979 and it was dismissed in March, 1 981 by a learned single Judge. The appellant unsuccessfully preferred a Letters Patent Appeal which was dismissed by a Division Bench on April 21, 1981.There are three questions to be determined in the appeal. They are:(1) Whether having regard to the fact that the parties stood in the relationship of landlord and tenant in respect of flat No. 52, the remedy of the respondent No. 1 lay by way of a suit for eviction before the Court of Small Causes, Bombay and not b y a reference to the Registrar under s. 91(1) of the Act ? It is urged that the agreement of leave and licence was merely a colourable transaction for what in reality, was a lease and therefore the appellant was entitled to the protection from evic tion under s. 13 ofthe Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (for short `the Rent Act which is a special law dealing with the relationship of landlord and tenant and therefore the forum for trial is the Court of Small C auses which is a court of exclusive jurisdiction over such matters. It is said that the non-obstante clause in s. 28 of that Act has an overriding effect over the non- obstante clause in s. 91(1) of the Act.(2) Whether the respondent No. 2-s ociety had any locus standi to make an application for transposition, even assuming that the appellant was not a tenant but a licensee: It is urged that the appellant was entitled to question the legality and propriety of the order of tran sposition made in revision by the Maharashtra State Cooperative Tribunal permitting the society to be impleaded as a co-disputant so as to bring the dispute within the purview of s. 91(1) of the Act. It is said that the respondent No. 2-societ y without first terminating the nominal membership of the appellant could not make a claim for his eviction from the flat in question(3) Whether a claim for ejectment of an occupant of a flat by a housing cooperative society having been let into possession of the premises under an agreement of leave and licence executed between him and a member of the society, by virtue of his being a nominal member thereof, is a `dispute touching the business of the society within the meaning of s. 91( 1) of the Act ?We proceed to deal with these questions in turn.

Court's reasoning:
In our opinion, there is a felt need at the very outset to displace the appellants apprehensions that the effect of upholding the judgment of the High Court would be to throw all licensees of residential flats in multi-storeyed buildings belonging to cooperative housing societies without any protection. The apprehensions, if we may say so, appear to be wholly unfounded. The Legislature was fully aware of the acute paucity of housing accommodation in the metropolitan city of Greater Bombay and other urban areas in the State, and also the fact that lessors of ownership flats were adopting a device of inducting tenants under the garb of an agreement of leave and licence which left the licensee with noapart, the appellant brought a suit before the Court of Small Causes seeking a declaration that it was a tenant duly protected by the Rent Act and the agreement of leave and licence was only a colourable transaction. The suit was heard on merits and was dismissed by the Court of Small Causes in July 1972. Aggrieved by that decision, the appellant preferred an appeal before the Appellate Bench of the Small Causes Court but that appeal also was dismissed. The question whether or not the appellant was a licensee of the fiat or a tenant thereof was directly and substantially in issue between the parties in that suit. The finding that he was not a tenant but had only the status of a licensee operates as res judicata between the parties. The appellant having failed in his suit for declaration of his alleged status of a tenant brought in the Court of Small Causes cannot be permitted to reagitate the same question in these proceedings. Further, the licence of the appellant having been terminated by the respondent No. 1 by her notice dated March 31, 1965, the appellant was not in occupation of the flat on February 1, 1973 under a subsisting tenancy and did not acquire the status of a tenant under s. 15A and is therefore not protected under s. 13 of the Rent Act.As hereinbefore adumbrated, the respondent No. 2- society is governed by the Regulations in Form-A. It is registered as a copartner ship type housing society. The bye- laws of the society provide, inter-alia, by Bye-law 2 that one of the objects of the society would be to carry on the trade of buying, selling, hiring, letting and developing land in accordance with cooperativeview of these considerations, we are of the opinion that the proceedings under s. 91(1) of the Act were not barred by the provisions of s. 28 of the Rent Act.A great deal of reliance has been placed by the appellants counsel on the decision in Sabharwal Brothers &Anr. v. Smt. Gun a Amrit Thandani of Bombay.(1). The importance of that case lies in the fact that it relates to the respondent No. 2 society, and the disputant there was the owner of a flat on the second floor of Bloack No. 8 "Shyam Niwas". She was a membe r of the society and had acquired the flat in question, which was let out to the appellant Sabharwal Brothers under an agreement of leave and licence, which was renewed from time to time and when she asked the appellant to vacate as she requi red the flat for her personal occupation, they did not comply with the demand as a result of which the owner of the flat filed a statement of claim before the Registrar under s. 91(1) of the Act which required adjudication. There was a challenge to the jurisdiction of the nominee of the Registrar to whom it was referred, and ultimately he made an award that the appellant Sabharwal Brothers had occupied the flat on leave and licence basis and was therefore liable to be evicted. In revision, the Bench of the Small Causes Court held that the Registrars nominee did have jurisdiction and the High Court upheld the order of the Bench.