Full Judgment Text
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PETITIONER:
O. N. BHATNAGAR
Vs.
RESPONDENT:
SMT. RUKIBAI NARSINDAS & ORS.
DATE OF JUDGMENT21/04/1982
BENCH:
SEN, A.P. (J)
BENCH:
SEN, A.P. (J)
FAZALALI, SYED MURTAZA
VENKATARAMIAH, E.S. (J)
CITATION:
1982 AIR 1097 1982 SCR (3) 681
1982 SCC (2) 244 1982 SCALE (1)377
CITATOR INFO :
F 1989 SC 81 (7,8)
F 1989 SC 122 (6,7,9,14)
F 1989 SC 295 (4,13)
E&R 1990 SC1563 (15)
D 1991 SC 626 (12,13)
ACT:
Maharashtra Cooperative Societies Act, 1960 Section
91(1)-"Dispute touching the business of the Society"-Whether
a claim for ejectment by a Housing Cooperative Society of an
occupant of a flat who had been let into possession of the
premises under an agreement of leave and licence executed
between him and a member of the Society is a "dispute"
referable to section 91(1) of the Act read with byelaws 66 &
68(a).
Bombay Rents, Hotel and Lodging House Rates Control
Act, 1947 Sections 5(4A), 13, 15A and 28, Scope of-Whether
the "non-obstante" clause in Section 28 of the Rent Act has
an overriding effect over the non-obstante clause in Section
91(1) of Societies Act. Applicability of Section 15A of the
Rent Act Resjudicata -Section 11 of the Civil Procedure
Code.
HEADNOTE:
Shyam Cooperative Housing Society Limited is
constituted under the provisions of the Maharashtra
Cooperative Societies Act, 1960 as a tenant copartnership
type housing society. Respondent No. 1 Smt. Rukibai N.
Bhavnani who is a copartner tenant member of flat No. 52 in
building 5A in the housing colony known as "Shyam Niwas"
situate at Warden Road, Bombay, inducted the appellant in
the said flat under an Agreement of Leave and Licence dated
November 28, 1961 after the appellant was accepted by the
Society as a "nominal member". The agreement was renewed
from time to time and the period of the last agreement
expired on February 28, 1965. By her notice dated March 31,
1965, 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 therefore, respondent
No. 1 preferred the claim for possession before the
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cooperative court which by its judgment dated April 28, 1978
made an Award against the appellant for possession of the
flat in 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 1981. The Letters patent Appeal
preferred by the appellant was also rejected. Hence the
appeal by special leave.
Dismissing the appeal, the Court,
^
HELD : (1) The claim by the society together with such
member for ejectment of a person who was permitted to occupy
having become a nominal member
682
thereof, upon revocation of licence, is a "dispute" falling
within the purview of Sec. (1) of the Maharashtra
Cooperative Societies Act, 1960. [696 D-E]
Deccan Merchant’s Cooperative Bank Ltd. v. M/s.
Dalichand Jugraj Jain & Ors. [1969] 1 SCR 887,
distinguished.
2:1 The proceedings under section 91(1) of the
Maharashtra Cooperative Societies Act, 1960 were not barred
by the provisions of Section 28 of the Bombay Rents, Hotel
and Lodging House Rates Control Act, 1947. The two Acts can
be best harmonised by holding that in matters covered by the
Rent Act, its provisions, rather than the provisions of the
Act should apply. But, where the parties admittedly do not
stand in the jural relationship of landlord and tenant, as
here the dispute would be governed by Section 91(1) of the
Societies Act. The appellant by virtue of his being a
nominal member, acquired a right to occupy the flat as a
licensee, but his rights were inchoate. [697 B-D]
Sabharwal Brothers and Another v. Smt. Guna Amrit
Thandani of Bombay, [1973] 1 SCR 53 discussed and
distinguished.
2:2 The two enactments deal with two distinct and
separate fields and therefore the non-obstante clause in s.
91(1) of the Act and that in s. 28 of the Rent Act operate
in two different planes. The two legislations pertain to
different topics of legislation. It will be noticed that s.
28 of the Rent Act proceeds on the basis that exclusive
jurisdiction is conferred on certain courts to decide all
questions or claims under that Act as to parties between
whom there is or was a relationship of landlord and tenant.
It does not invest those courts with exclusive power to try
questions of title, such as between the rightful owner and a
trespasser or a licensee, for such questions do not arise
under the Act. The appellant having raised a plea in the
nature of demurrer, the question of jurisdiction had to be
determined with advertence to the allegations contained in
the statement of claim made by the respondent No. 1 under s.
91(1) of the Act and those allegations must be taken to be
true. The respondent No. 1 unequivocally asserts that the
parties stood in the relation of licensor and licensee and
that fact is clearly borne out by the terms of the agreement
of leave and licence as between the parties. The burden was
on the appellant to establish that he had the status of a
"tenant" within the meaning of s. 5(11) of the Rent Act, as
it then stood, and that burden he has failed to discharge.
If, therefore, plaintiff in the plaint does not admit a
relationship which would attract any of the provisions of
the Act on which the exclusive jurisdiction given in s. 28
depends, the defendant cannot by his plea force the
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plaintiff to go to a forum where on averments the claim does
not lie. [689 A-E]
3:1 Upon the terms of Sections 5(4A) and 15A of the
Rent Act, it is clear that the appellant is not entitled to
the protection of Section 15A. The sine qua non for the
applicability of s. 15A of the Rent Act is that a licensee
must be in occupation as on Feb. 1, ’73 under a subsisting
licence. It is not disputed that the appellant does not
answer that description since the agreement of leave and
licence in his favour admittedly stood terminated by the
notice of the respondent No. 1 dated March 31, 1965. That
being so, the appellant is nothing but a rank trespasser and
is not entitled to the protection of s. 15A of the Rent Act
and cannot therefore plead the bar of s. 28(1) thereof. [690
F-H]
683
3:2 As a result of the introduction of s. 15A and s.
5(4A) of the Rent Act by Maharashtra Act 17 of 1973, the
licensee of any premises or any part thereof in a building
vesting in or leased to a cooperating housing society
registered or deemed to be registered under the Act, who was
in occupation of such premises under a subsisting licence as
on Feb. 1, 1973, is by a legal fiction, deemed to be a
tenant and thus has the protection of the Rent Act. In such
a case, the dispute between a licensor and a licensee
relating to possession of the premises of a flat would
attract s. 28 read with ss. 15A and 5(4A) of the Rent Act
and fall outside the purview of the Registrar’s jurisdiction
to adjudicate upon such dispute under s. 91(1) of the
Societies Act. In the instant case the question does not
arise. [691 A-C]
3:3 A bare reading of the agreement of leave and
licence is clearly indicative of the fact that the appellant
was a licensee. Admittedly his occupation of the flat was
not as a tenant but as a licensee. The question whether or
not the appellant was a licensee of the flat or a tenant
thereof was directly and substantially in issue between the
parties in the suit. The finding that he was not a tenant,
but had only the status of a licensee operates as
resjudicata 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 and (iii) the licence of the appellant having
been terminated by respondent No. 1, by her notice dated
March 31, 1965, the appellant was not in occupation of the
flat on Feb. 1, 1973 under a subsisting licence and
therefore did not acquire the status of a tenant under
section 15A and is, not protected under section 13 of the
Rent Act. [691 E-H; 692 A]
4. The respondent No. 2-Society being a copartnership
type housing society, having let flat no. 52 to the
respondent no. 1 as a copartner tenant-member, was vitally
interested in ensuring that no stranger is in unauthorised
occupation of the flat after the expiry of the term of the
licence. It was therefore rightly transposed as a co-
disputant in the proceedings under section 91(1) of the
Societies Act, and could raise a dispute regarding the
unauthorised occupation of the premises by the appellant
after the revocation of the licence. [693 D-G]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1843 of
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1981.
Appeal by special leave from the judgment and order
dated the 21st April, 1981 of the Bombay High Court in
Appeal No. 168 of 1981.
H.H. Advani, P.R. Ramasesh and Manu Iyanger for the
Appellant.
S.N. Kackar, V.K. Panwani and Girish Chandra for the
Respondents.
The Judgment of the Court was delivered by
684
SEN, J. This appeal by special leave directed against
the judgment of the Bombay High Court dated April 21, 1981
raises a question of some importance. The question is
whether a claim for ejectment by a housing cooperative
society, of an occupant of a flat who had 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
sub-s. (1) of s. 91 of the Maharashtra Cooperative Societies
Act, 1960 (for short ‘the Act’).
The material facts giving rise to this appeal are as
follows. 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 member 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 accordingly 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
685
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
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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
Assistant 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 dispute 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 Registrar’s nominee for adjudication. The appellant
did not challenge the decision of the Assistant Registrar.
Before the Registrar’s 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 Registrar’s nominee returned the papers,
the Registrar assigned the case to a retired District Judge
as an Officer on Special Duty to adjudicate upon the dispute
under s. 91 of the Act, as by then the old system of such
adjudication by the Registrar’s 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
novo 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
686
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 "disputant" 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
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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 the 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
appellant’s 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 this
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, 1981 by a learned single Judge. The
appellant unsuccessfully
687
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 by 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 eviction
under s. 13 of the 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 Causes 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-society 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 transposition 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-society 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.
The statutory provisions bearing upon these questions
are set out below. The relevant provision of sub-s. (1) of
s. 91 of the Act, prior to its amendment, provides :
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"91(1)Notwithstanding anything contained in any
other law for the time being in force, any dispute
touching the......business of a society, shall be
referred by any of
688
the parties to the dispute....... to the Registrar if
both the parties thereto are one or other of the
following :
(a) a society...............
(b) a member, past member or a person claiming through
a member................"
Section 91(2) of the Act lays down that when any question
arises whether for the purpose of sub-s. (1) any matter
referred to for decision is a dispute or not, the question
shall be considered by the Registrar whose decision shall be
final. The Registrar is, therefore, required to decide as a
preliminary issue the question whether the dispute is of the
kind as between the parties in sub-s. (1). Unless he finds
that the dispute falls within s. 91(1) of the Act he will
have no jurisdiction to decide it. It also attaches finality
to the decision of the Registrar on the preliminary issue.
Section 91(3) states that save as otherwise provided under
s. 91 (3) of the Act, no civil court shall have jurisdiction
to entertain any suit or other proceeding in respect of any
dispute referred to in sub-s. (1).
Section 28(1), of the Rent Act insofar as material,
reads :
"28(1) Notwithstanding anything contained in any
law and notwithstanding that by reason of the amount of
the claim or for any other reason, the suit or
proceeding would not, but for this provision, be within
its jurisdiction
(a) in Greater Bombay, the Court of Small Causes
Bombay,
(aa) xx xx xx
(b) xx xx xx
shall have jurisdiction to entertain and try any suit
or proceeding between a landlord and a tenant relating
to the recovery of rent or possession of any premises
to which any of the provisions of this Part apply...and
to decide any application made under this Act and to
deal with any claim or question arising out of this Act
or any of its provisions and...no other court shall
have jurisdiction to entertain any such suit,
proceeding or application or to deal with such claim or
question."
689
The two enactments deal with two distinct and separate
fields and therefore the non-obstante clause in s. 91(1) of
the Act and that in s. 28 of the Rent Act operate on two
different planes. The two legislations pertain to different
topics of legislation. It will be noticed that s. 28 of the
Rent Act proceeds on the basis that exclusive jurisdiction
is conferred on certain courts to decide all questions or
claims under that Act as to parties between whom there is or
was a relationship of landlord and tenant. It does not
invest those courts with exclusive power to try questions of
title, such as between the rightful owner and a trespasser
or a licensee, for such questions do not arise under the
Act. The appellant having raised a plea in the nature of
demurrer, the question of jurisdiction had to be determined
with advertence to the allegations contained in the
statement of claim made by the respondent No. 1 under s.
91(1) of the Act and those allegations must be taken to be
true. The respondent No. 1 unequivocally asserts that the
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parties stood in the relation of licensor and licensee and
that fact is clearly borne out by the terms of the agreement
of leave and licence as between the parties. The burden was
on the appellant to establish that he had the status of a
"tenant" within the meaning of s. 5(11) of the Rent Act, as
it then stood, and that burden he has failed to discharge.
If, therefore, plaintiff in the plaint does not admit a
relationship which would attract any of the provisions of
the Act on which the exclusive jurisdiction given in s. 28
depends, the defendant cannot by his plea force the
plaintiff to go to a forum where on averments the claim does
not lie.
In our opinion, there is a felt need at the very outset
to displace the appellant’s 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 no protection. The Legislature therefore, stepped in
and by Maharashtra Act 17 of 1973 the following provisions
were inserted in the Rent Act. Sub-s. (1) of s. 15A of the
Rent Act, as introduced now, provides :
"15A(1) Notwithstanding anything contained
elsewhere in this Act or anything contrary in any other
law for the
690
time being in force, or in any contract, where any
person is on the 1st day of February 1973 in occupation
of any premises, or any part thereof which is not less
than a room, as a licensee he shall on that date be
deemed to have become, for the purposes of this Act,
the tenant of the landlord, in respect of the premises
or part thereof, in his occupation.
(2) XX XX XX XX XX"
The term "licensee" as defined in s. 5(4A), insofar as
material, reads :
"5. In this Act unless there is anything repugnant
to the subject or context-
(4A) "licensee", in respect of any premises or any
part thereof, means the person who is in occupation of
the premises or such part, as the case may be, under a
subsisting agreement for licence given for a licence
fee or charge; and includes any person in such
occupation of any premises or part thereof in a
building vesting in or leased to a co-operative housing
society registered or deemed to be registered under the
Maharashtra Cooperative Societies Act, 1960; but does
not include a paying guest, a member of a family
residing together, a person in the service or
employment of the licensor etc;.....and the expressions
"licence, "licensor" and "premises given on licence"
shall be construed accordingly."
It is clear upon the terms of these sections that the
appellant is not entitled to the protection of s. 15A of the
Rent Act. The Legislature in its wisdom has drawn a line at
February 1, 1973 and laid down the condition that a licensee
in occupation under a subsisting licence as on that date
shall be deemed to be a tenant. The sine qua non for the
applicability of s. 15A of the Rent Act is that a licensee
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must be in occupation as on February 1, 1973 under a
subsisting licence. It is not disputed that the appellant
does not answer that description since the agreement of
leave and licence in his favour admittedly stood terminated
by the notice of the respondent No. 1 dated March 31, 1965.
That being so, the appellant is nothing but a rank
trespasser and is not entitled to the protection of s. 15A
of the Rent Act and cannot therefore plead the bar of s.
28(1) thereof.
691
As a result of the introduction of s. 15A and s. 5(4A)
of the Rent Act by Maharashtra Act 17 of 1973, the licensee
of any premises or any part thereof in a building vesting in
or leased to a cooperative housing society registered or
deemed to be registered under the Act, who was in occupation
of such premises under a subsisting licence as on February
1, 1973, is by a legal fiction, deemed to be a tenant and
thus has the protection of the Rent Act. In such a case, the
dispute between a licensor and a licensee relating to
possession of the premises of a flat would attract s. 28
read with ss. 15A and 5(4A) of the Rent Act and fall outside
the purview of the Registrar’s jurisdiction to adjudicate
upon such dispute under s. 91(1) of the Act. Once this
aspect is kept in view, there need be no apprehension as
expressed by learned counsel for the appellant 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.
It would be convenient to deal with the first two
questions together. The submission that the appellant was
inducted as a tenant under the agreement of leave and
licence is wholly misconceived. The distinction between a
lease and a licence is well-known. A bare reading of the
agreement of leave and licence is clearly indicative of the
fact that the appellant was a licensee. Admittedly, his
occupation of the flat was not as a tenant but as a
licensee. That apart, 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
692
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 copartnership 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
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trade of buying, selling, hiring, letting and developing
land in accordance with cooperative principles. The
respondent No. 1 is a co-partner tenant member and holds
flat No. 52 in Form-A. The flat in question therefore
belongs to the society and she is a co-partner tenant member
thereof. Paragraph 5 of Form-A reads:
"5. No tenant shall assign, underlet, vacate or
part with the possession of the tenement or any part
thereof without the consent in writing of the society."
The two bye-laws relevant for our purposes are Bye-laws 66
and 68(a) which provide as follows:
"66. Whenever a member to whom a tenement, a shop
or a godown has been allotted by the Society does not
require the same for his own use temporarily or for a
specific period, he may offer the same to any person,
as a licensee for temporary occupation for a specified
period, provided that he shall-(a) sign and undertaking
as required by the Society; (b) get such temporary
occupant enrolled as a nominal member of the society;
(c) shall not permit such occupation before receiving
permission from the Society’s Committee to do so,
provided such permission shall not be considered,
unless the member has paid all his due to the Society
uptodate, and authorizes the Society to recover from
the nominal member, out of compensation or rent
receivable by him from the nominal member any amount
due from the member to the Society by way of taxes,
general charges or any other dues."
"68(a) No person shall be a sub-tenant or licensee
or lessee etc. of the Society or of a member, unless
the Committee first enrols him as Nominal Member of the
Society and he pays Rs. 500 as a security deposit to
the Society. For this purpose, he has to apply in a
form prescribed by
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the Society. The Security Deposit will bear no interest
and will be issued in the joint names of the Society or
the member (as the case may be) and the occupant and it
will be refunded on the occupant vacating the tenement
in question."
The respondent No. 1 could not have let the premises to
the appellant in view of para 5 of the Form-A. All that she
could do if she did not require the flat for her immediate
occupation was to permit the appellant or some one to occupy
the same under an agreement of leave and licence. But for
that purpose both the parties had to comply with the
requirements of Bye-laws 66 and 68(a). The respondent No. 1
and the appellant accordingly by their application dated
December 8, 1961 applied to the society for permission to
let the flat on leave and licence and for the issuance of
five ’B’ shares of Rs. 100 each in their joint names called
"occupancy shares". The respondent No. 2-society by its
resolution dated December 15, 1961 issued the shares applied
for in their joint names and also admitted the appellant as
a nominal member for the purpose of occupying the flat.
After the termination of the agreement of leave and licence,
the appellant had no right to remain in’ occupation of the
flat. The contention that the respondent No. 2-society
cannot raise a dispute regarding his unauthorized occupation
of the premises after the revocation of the licence is
devoid of substance. The respondent No. 2-society being a
co-partnership type housing society, having let flat No. 52
to the respondent No. 1 as a co-partner tenant member, was
vitally interested in ensuring that no stranger is in
unauthorized occupation of the flat after the expiry of the
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term of the licence as it would tend to cause annoyance and
inconvenience to the other co-partner tenant members of the
society.
There was a determined effort to question the legality
and propriety of the order passed by the Maharashtra State
Cooperative Tribunal allowing the application for
transposition made by respondent No. 2-society but we did
not permit the appellant to do so for obvious reasons. The
appellant had challenged the impugned order of the Tribunal
by a writ petition in the High Court and eventually failed.
The appellant not having questioned the judgment of the High
Court, the order of the Tribunal allowing transposition of
the respondent No. 2-society as a co-disputant has attained
a finality which cannot now be upset. The proceedings
initiated by
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the respondent No. 1 under s. 91(1) of the Act could not go
on after the High Court had taken the view in certain cases
that unless the cooperative housing society is a disputant,
the claim by a member thereof for possession of the premises
of a flat against a licensee would not be a dispute falling
within the ambit of s. 91(1) of the Act. That being so,
quite apart from technicalities, we are inclined to the view
that the High Court was fully justified in not interfering
with the impugned order of the Tribunal allowing
transposition. The Tribunal adopted a course which was both
eminent and just and was necessary for doing complete
justice between the parties. The appellant who is a rank
trespasser has no equity in his favour. The contention that
the respondent No. 2-society could not be transposed as a
co-disputant in the proceedings under s. 91(1) of the Act
must therefore fail.
The third question is the much vexed question on which
the decision of the appeal must turn. It is submitted that
the dispute between the licensor and the licensee was not
one falling within the purview of s. 91(1) of the Act. It is
said that a dispute between a flat-owner and the occupant as
regards tenancy cannot be taken cognizance of by the
Registrar under s. 91(1) of the Act, but the remedy of the
flat-owner lies by way of suit for ejectment under s. 28 of
the Rent Act. The submission is that the fact that such
letting was forbidden by a regulation of the society was
immaterial. In reply, it is urged that the dispute
undoubtedly is a dispute touching the business of the
society and therefore comes within the ambit of s. 91(1) of
the Act. It is further urged that the non-obstante clause in
s. 91(1) of the Act had an overriding effect over s. 28 of
the Rent Act, prior to the introduction of s. 15A and s.
5(4A) in that Act.
There has been a long debate as to the true meaning of
the words ’touching the business of the society’ occurring
in s. 43(1) of the Cooperative Societies Act, 1912 and there
was a divergence of opinion expressed by different High
Courts but it is not necessary to burden the judgment with
many citations.
In Deccan Merchants Cooperative Bank Ltd. v. M/s.
Dalichand Jugraj Jain & Ors.,(1) the Court had occasion to
construe the meaning of the expression ’touching the
business of a society’ occurring in s. 91(1) of the Act. It
was observed that the answer depends on the words used in
the Act and that the non-obstante
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clause clearly ousts the jurisdiction of civil courts if the
dispute falls squarely within the ambit of s. 91(1) of the
Act. The Court then went on to enumerate five kinds of
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disputes mentioned in s. 91(1): first, disputes touching the
constitution of a society; secondly, disputes touching
election of the office-bearers of a society; thirdly,
disputes touching the conduct of general meetings of a
society; fourthly, disputes touching the management of a
society and fifthly, disputes touching the business of a
society. In the context, it was said:
"It is clear that the word ’business’ in this
context does not mean affairs of a society because
election of office bearers, conduct of general meetings
and management of a society would be treated as affairs
of a society. In this sub-section the word ’business’
has been used in a narrower sense and it means the
actual trading or commercial or other similar business
activity of the society which the society is authorised
to enter into under the Act and the Rules and it bye-
laws."
In regard to the question whether a dispute touching the
assets of a society would be dispute touching the business
of the society, it was observed:
"Ordinarily, if a society owns buildings and lets
out parts of buildings which it does not require for
its own purpose it cannot be said that letting out of
those parts is a part of the business of the society.
But it may be that it is the business of a society to
construct and buy houses and let them out to its
members. In that case letting out property may be part
of its business."
Thus, the Court adopted the narrower meaning given to
the word ’business’ as expressed by the Madras, Bombay and
Kerala High Courts in preference to the wider meaning given
by the Madhya Pradesh and Nagpur High Courts. According to
the view taken in Deccan Merchant Cooperative Bank’s case,
supra, the word ’business’ in the context means "any trading
or commercial or other similar business activity of the
society". It was held that the word ’business’ in s. 91(1)
of the Act has been used in a narrower sense and that it
means the actual trading, commercial or other similar
business activity of the society which the society is
authorised to enter into under the Act and the rules and its
bye-laws.
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In the present case, the society is a tenant co-
partnership type housing society formed with the object of
providing residential accommodation to its co-partner tenant
members. Now, the nature of business which a society carries
on has necessarily to be ascertained from the object for
which the society is constituted, and it logically follows
that whatever the society does in the normal course of its
activities such as by initiating proceedings for removing an
act of trespass by a stranger, from a flat allotted to one
of its members, cannot but be part of its business. It is as
much the concern of the society formed with the object of
providing residential accommodation to its members, which
normally is its business, to ensure that the flats are in
occupation of its members, in accordance with the bye-laws
framed by it, rather than of a person in an unauthorised
occupation, as it is the concern of the member, who lets it
out to another under an agreement of leave and licence and
wants to secure possession of the premises for his own use
after the termination of the licence. It must, therefore,
follow that a claim by the society together with such member
for ejectment of a person who was permitted to occupy having
become a nominal member thereof, upon revocation of licence,
is a dispute falling within the purview of s. 91(1) of the
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Act. The decision in Deccan Merchants Cooperative Bank’s
case, supra, is clearly distinguishable on facts. There, the
Court was dealing with a society which was a cooperative
bank and ordinarily a cooperative bank cannot be said to be
engaged in business when it lets out property owned by it.
In that case, the dispute was not a dispute between a
society and a member or a person claiming through a member.
Further when the original owner executed the lease, he was
not acting as a member but as a mortgagor in possession and
therefore the cooperative bank’s claim for ejectment of the
lessee did not fall within s. 91(1) (b) of the Act.
It is true that the Court in Deccan Merchants
Cooperative Bank’s case, supra, dealt with the question
whether on the facts and circumstances of that case, the
Rent Act applied and accordingly the jurisdiction of the
Registrar under s. 91(1) of the Act was ousted and it was
only the Court of Small Causes which had jurisdiction to
evict the tenant. The Court referred to the twin social
objectives with which the two enactments were designed and
observed that while s. 91(1) of the Act was intended and
meant, in the main, to shorten litigation, lessen its costs
and to provide a summary procedure for the determination of
the disputes relating to the internal management of the
societies, the Rent Act was intended to achieve
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a different social objective i.e. to prevent the eviction of
tenants and enhancements of rent, and then went on to say
that it was necessary that a dispute between the landlord
and tenant should be dealt with by the Courts set up under
the Rent Act and in accordance with the special provisions
of that Act. It then dealt with the inter-relation between
the non-obstante clause in s. 91(1) of the Act and s. 28 of
the Rent Act and observed that this special objective under
the Act does not impinge on the objective underlying the
Rent Act. It seems to us that the two Acts can be best
harmonised by holding that in matters covered by the Rent
Act, its provisions, rather than the provisions of the Act,
should apply. But where the parties admittedly do not stand
in the jural relationship of landlord and tenant, as here,
the dispute would be governed by s. 91(1) of the Act. No
doubt, the appellant acquired a right to occupy the flat as
a licensee, by virtue of his being a nominal member, but in
the very nature of things, his rights were inchoate. In view
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
appellant’s counsel on the decision in Sabharwal Brothers &
Anr. v. Smt. Guna 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 member 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 required 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
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revision, the Bench of the Small Causes Court held that the
Registrar’s nominee did have jurisdiction and the High Court
upheld the order of the Bench. Allowing the appeal, this
Court observed:
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"With all respect to the High Court, it seems to
us that there was a fundamental error in the above
approach. No doubt it was the business of the society
to let out premises and a member had no unqualified
right to let out his flat or tenement to another by
virtue of the bye-laws and a breach of the bye-laws
could affect the defaulting member’s right to
membership. But we are not able to see how letting by a
member to another member would touch the business of
the society which included inter alia the trade of
buying, selling, hiring and letting land in accordance
with cooperative principles. The letting of flat by
respondent No. 1 was a transaction of the same nature
as the society itself was empowered to enter into but
and letting by itself did not concern the business of
the society in the matter of its letting out flats.
Nothing was brought to our notice to show that such a
letting would affect the business of the society once
it had sold the flat to the respondent No. 1. The
position might have been different if the latter had
himself been a tenant of the flat under the society.
"To touch" means "to come in contact with" and it does
not appear that there is a point of contact between a
letting by the respondent No. and the business of the
society when the society was not itself the landlord of
the flat."
It is we think, important to remember that this authority
decided only one point albeit a point of great importance
namely, that the society having sold the flat, like any
other vendor of immovable property, the letting out of the
flat by the flat-owner was no concern of the society. There
was nothing to show that such letting would affect the
business of the society once it has sold the flat. With
respect, we entirely agree with all that was said. But then
the Court went on to say:
"The position might have been different if the
latter had himself been a tenant of the flat under the
society."
It logically follows, as a necessary corollary, that if the
transaction between the society and the holder of the flat
were governed by Regulations in Form-A, as here, that is to
say, if the society had let out the flat to her, the
decision of the Court would have been otherwise.
The decision in Sabharwal Brothers’ case, supra, is
distinguishable for two reasons. First, there was an
outright sale of the flat by
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the society and not that it had been let out to her under
Regulations in Form-A; and secondly, the society having sold
the flat, the letting of the flat by the flat-owner did not
in any way affect the business of the society in the matter
of its letting out the flat. The observation made by this
Court that the fact that such letting was forbidden by a
regulation of the society was immaterial did not fall for
decision in that case and was a mere obiter.
In the result, the appeal must fail and is dismissed
with costs.
S.R. Appeal dismissed.
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