Case: Bhanushali Hsg. Coop. Society Ltd Vs. Mangilal

1. The short question that arises for consideration in this appeal, by special leave, is whether a dispute arising out of a contract for sale and purchase of immovable property owned by the respondents was amenable to adjudication under Section 64 of the M.P. Cooperative Societies Act, 1960. By his order dated 1st March, 2004, the Deputy Registrar, Co-operative Societies, Ujjain, before whom the proceedings were initiated, answered that question in the affirmative and decreed specific performance of the contract entered into between the parties. A first appeal preferred by the sellers (respondents-herein) before the Joint Registrar Ujjain failed and was dismissed by his order dated 7th August, 2009. Aggrieved by the said two orders, the respondents preferred a second appeal before the M.P. State Co-operative Tribunal, Bhopal who allowed the same and set aside the orders passed by the Deputy Registrar and that passed by the Joint Registrar holding that the dispute raised by the purchaser-society could not be made the subject matter of proceeding under Section 64 of the M.P. Cooperative Societies Act, 1960. The purchaser-society then filed writ petition No.15195 of 2011 which was heard and dismissed by a Division Bench of the High Court of Madhya Pradesh. The High Court concurred with the view taken by the Tribunal that a dispute arising out of a contract of sale and purchase of immovable property was beyond the purview of Section 64 of the Act. The present appeal calls in the question the correctness of the said judgments and orders.2. Section 64 of the M.P. Cooperative Societies Act, 1960, may, at this stage, be extracted in extensoDisputes: - (1) Notwithstanding anything contained in any other law for the time being in force, [any dispute touching the constitution, management or business, or the liquidation of a society shall be referred to the Registrar] by any of the parties to the dispute if the parties thereto are among the following:-(a) a society, its committee, any past committee, any past or present officer, any past or present agent, any past or present servant or a nominee, heirs or legal representatives of any deceased agent or deceased servant of the society, or the liquidator of the society;(b) a member, past member or a person claiming through a member, past member or deceased member of a society or of a society which is a member of the society;(c) a person other than a member of the society who has been granted a loan by the society or with whom the society has or had business transactions and any person claiming through such a person.(d) a surety of a member, past member of deceased member or a person other than a member who has been granted a loan by the society, whether such a surety is or is not a member of the society.(e) any other society or the liquidator of such a society; and(f) a creditor of a society.(2) For the purpose of sub-section (1), a dispute shall include –(i) a claim by a society for any debt or demand due to it from a member, past member or the nominee, heir or legal representative of a deceased member, whether such debt or demand be admitted or not;(ii) a claim by a surety against the principal debtor where the society has recovered from the surety any amount in respect of any debt or demand due to it from the principal debtor as a result of the default of the principal debtor, whether such debt or demand be admitted or not;(iii) a claim by a society for any loss caused to it by a member, past member or deceased member, any officer, past officer or deceased officer, any agent, past agent or deceased agent, or any servant, past servant or deceased servant or its committee, past or present, whether such loss be admitted or not;(iv) a question regarding rights, etc., including tenancy rights between a housing society and its tenants or members; and(v) any dispute arising in connection with the election of any officer of the society or of composite society;Provided that the Registrar shall not entertain any dispute under this clause during the period commencing from the announcement of the election programmed till the declaration of the results.(3) If any question arising whether a dispute referred to the Registrar is a dispute, the decision thereon of the Registrar shall be final and shall not be called in question in any court.A careful reading of the above would show that for a dispute to be brought within the purview of Section 64 two essential requirements must be satisfied viz. (i) that the dispute mustthe constitution, management or business of the society or must relate to the liquidation of the co-operativeand (ii) that the dispute must be between parties referred to in clauses ‘a toof Section 64(1) (supra). It is only when the twin requirements are in the facts and circumstances of a given case satisfied that a dispute can be said to be amenable to adjudication under Section 64. Failure of any one of the two requirements would take the dispute beyond the said provision.4. In the case at hand the dispute raised by the appellant-society before the Deputy Registrar related to the alleged refusal of the respondent to complete the sale transaction in terms of the agreement to sell executed between the respondents and/or their predecessors-in-interest, on the one hand, and the appellant-society on the other. The nature of the dispute, therefore, did not obliviously touch the constitution and management of the society nor did the dispute have anything to do with the liquidation of the society. Whether or not the dispute sought to be raised was a disputethe business of theis in that view one of the questions that needs to be examined.5. As regards the second requirement viz. that the dispute must be between the persons referred in clausesof Section 64 of the Act, it is common ground that the respondents-sellers were not members of the society nor do they fall under anyone of the clausesenumerated under Section 64 (1). This would mean that the respondents must answer the description of persons mentioned in clause (c) to Section 64(1) of the Act. The Tribunal as also the High Court have taken the view that the respondents do not answer the description of parties falling under Section 64 (1)(c). That is because the appellant-society had neither granted any loan to the respondents or any one of them nor did the respondents have anyth the society. The Tribunal and the High Court have interpreted the wordsto mean a series of transactions in connection withthe business of thesociety. The expression did not, according to them, postulate a single contract for sale or purchase of the property between the society and a third

Court's reasoning:
In this case, the society is a co-operative bank and ordinarily a co-operative bank cannot be said to be engaged in business when it lets out properties owned by it. Therefore, it seems to us that the present dispute between a tenant and a member of the bank in a building, which has subsequently been acquired by the bank cannot be said to be a dispute touchingthe business of thebank, and the appeal should fail on this short ground.On the facts of the case before it, this Court incase (supra) held that the act of initiating proceedings for removing an act of trespass by a stranger from a flat allotted to one of its members could not but be a part of its business. This Court held that it was as much the concern of the society formed with the object of providing residential accommodation to its members, which was normally its business, as it was of the members to ensure that the flats are in occupation of its members in accordance with the bye laws framed by it, rather than the occupation of a person who had no subsisting reason to be in such occupation. The decision in Deccancase (supra) was on facts held to be distinguishable and resort to proceedings under Section 64 of the Act, held legally permissible.Purchase of land for being used in the manner set out in the objects extracted above is, therefore, one of the facets of the business that the society undertakes. Such purchase is directly linked to the object of developing the acquired land for allotment of house sites to the members of the society. There is, therefore, a clear and discernible nexus between acquisition/purchase of land and the object of providing house sites to the members which under the circumstances happens to be the main business of the society. It is not a case where the facts giving rise to the dispute are not relatable to the objects of the society or where the connect between the facts constituting the dispute and the objects of the society is remote or their interplay remarkably tenuous or peripheral, as was the position in Co-operative Central Bankcase (supra) involving alteration of the conditions of service of the employees of the society. We have in that view no hesitation in holding that the dispute arising out of the purchase of the land owned by the respondents was, in the instant case, a dispute touchingthe business of theappellant-society. Question No.1 is answered accordingly.In the case at hand, that there was a single transaction whereunder the respondents-sellers had agreed to sell to the appellant-society a parcel of land to the society, for use by the society in terms of the objects for which it is established. It may, in that sense, be a transaction that touchesthe business of theappellant-society but it is common ground that the respondents were not in the business of selling land as a commercial or business activity for it iscase that the respondents were property dealers or had a land bank and were, as a systematic activity, selling land to make money. If the respondents were agriculturists who had agreed to sell agricultural land to the appellant-company, the transaction was, from their point of view, not a. For ought we know that transaction may have been prompted by family necessity, poverty or some such other compulsion. Such a transaction without any business element in the same could not constitute ave alonein the meaning of Section