Full Judgment Text
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PETITIONER:
MARINE TIMES PUBLICATIONS PVT. LTD.
Vs.
RESPONDENT:
SHIRIRAM TRANSPORT AND FINANCE CO. LTD. AND ANR.
DATE OF JUDGMENT26/10/1990
BENCH:
KANIA, M.H.
BENCH:
KANIA, M.H.
SAHAI, R.M. (J)
CITATION:
1991 AIR 626 1990 SCR Supl. (2) 466
1991 SCC (1) 469 JT 1990 (4) 332
1990 SCALE (2)854
ACT:
Maharashtra Cooperative Societies Act, 1960: Section
91 Cooperative Society--Agreement to sell office premises in
a building owned by the Society between a member and a
non-member--Agreement subject to approval of the Cooperative
Society--Refusal of permission by the Cooperative
Society--Reference of dispute by non-member to Cooperative
Court praying specific performance of agreement and a direc-
tion to the Society for approval of agreement--Claim of
nonmember whether a claim against the Society through a
member-Dispute "whether touching the business of
society"--Cooperative court whether has jurisdiction over
the dispute.
HEADNOTE:
The appellant company, a member of Cooperative Society,
respondent No. 2, was having its office premises in a build-
ing owned by respondent No. 2. It entered into an agreement
to sell the said premises to respondent No. 1, a non-member
subject to the approval of the Cooperative Society. The
Cooperative Society declined to grant permission for trans-
fer of the premises. Respondent No. 1 filed a dispute
against the appellant and respondent No. 2 Cooperative
Society in the Cooperative Court under section 91 of the
Maharashtra Cooperative Societies Act, 1960 praying for a
decree of specific performance of the contract and a direc-
tion to the Cooperative Society to approve the said agree-
ment.
The Cooperative Court dismissed the dispute for want of
jurisdiction. On appeal by respondent No. 1, the Maharashtra
Cooperative Appellate Court set aside the order of the
Cooperative Court. Against the order of the Cooperative
Appellate Court, the appellant filed a writ petition in the
High Court which was dismissed by holding that the dispute
was governed by Section 91 of the Act.
In the appeal to this Court against the Judgment of the
High Court, it was contended on behalf of the appellant that
the dispute between the parties was not governed by Section
91 since it was neither a dispute "touching the business of
the society" nor was it a dispute between a person claiming
through a member against the society.
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467
Allowing the appeal and setting aside the judgment of
the High Court, this Court,
HELD: 1. Before a dispute can be referred to a Coopera-
tive Court under the provision of section 91(1) of the said
Act it is not only essential that the dispute should be of a
kind described in sub-section (1) of section 91 but it is
also essential that the parties to the said dispute must
belong to any of the categories specified in clauses (a) to
(e) of subsection (1) of the said section. [473B]
2. In the instant case the main claim of Respondent No.
1 a nonmember, was for a decree for specific performance of
the agreement. The prayer for an order that respondent No.
2-Society should be directed to give their approval to the
said agreement was merely an ancillary prayer made with a
view to complete the relief of specific performance. The
main claim to have the agreement specifically performed
cannot be said to be a claim made by a person (non-member)
against the Society. The claim against the society cannot be
said to be made through a member, the appellant, because it
is only when a decree for performance of the said agreement
is passed against the appellant, that it could be contended
that the other relief namely, for an order directing re-
spondent No. 2 to approve the said agreement is claimed
against the society through a member. Consequently, the
dispute cannot be said to fall within the scope of section
91(1)(b) of the Act. Therefore, the High Court committed an
error in coming to the conclusion that both the parties to
the dispute belonged to the categories covered under section
91(1)(b) of the Act. [473E-H; 474A]
Deccan Merchants Cooperative Bank Ltd. v. M/s Dalichand
Jugraj Jain and Ors., [1969] 1 S.C.R. 887; M/s Leong and
Anr. v. Smt. Jinabhai G. Gulrajami and Ors., A.I.R. 1981
Bom. 244 and Sanwarmal Kejriwal v. Vishwa Cooperative Hous-
ing Society Ltd. and Ors., [1990] 2 SCC 288, distinguished.
O.N. Bhatnagar v. Smt. Rukibai Narsindas & Ors., [1982]
3 S.C.R. 681, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4979 of
1990.
From the Judgment and Order dated 25.8.1989 of the
Bombay High Court in W.P. No. 6058 of 1986.
468
V.M. Tarkunde, D.R. Poddar and V.B. Joshi for the Appellant.
K.P. Parasaran (N.P.), Rama Subramaniam, A.K. Ganguli,
R.P. Bhat, K. Swamy and A.S. Bhasme for the Respondents.
The Judgment of the Court was delivered by
KANIA, J. Leave granted. Counsel heard.
This is an appeal from the judgment of a learned Single
judge of the Bombay High Court dismissing Writ Petition No.
6058 of 1986 filed by the appellant on the Appellate Side of
that Court. The appellant and respondent No. 1 are companies
incorporated under the Indian Companies Act. ReSpOndent No.
2 is a Cooperative Society registered under the Maharashtra
Cooperative Societies Act, 1961 (hereinafter referred to as
"the said Act"). Appellant is a member of respondent No. 2-
Cooperative Society and has its office premises in the
building owned by respondent No. 2. Some time prior to
September 10, 1985 the appellant entered into an agreement
to sell the said office premises to respondent No. 1 subject
to the approval of respondent No. 2. The terms of the said
agreement were incorporated in a letter dated September 10,
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1985 addressed by the appellant to the Vice-Chairman and the
president of respondent No. 1: It was set out in the said
letter that the price for the said premises was to be calcu-
lated at the rate of Rs. 2,000 per square feet. The letter
further stated:
"We are agreeable to sell you the same subject to approval
of the Cooperative Society owning the building.
We shall provide you vacant possession and hand over the
same free of all incumbrances only after we are able to
obtain alternate accommodation for our company ..... ".
A sum of Rs. 50,000 was paid by a demand draft by re-
spondent No. 1 to the appellant under the said agreement. By
a letter dated November 15, 1985 the appellant sought the
approval of respondent No. 2 to the transfer of the said
office premises to respondent No. 1. By its letter dated
November 18, 1985 addressed to the appellant, respondent No.
2 stated that the appellant was requested to offer to trans-
fer of the said. premises to the existing members of the
society as a first preference as per the established prac-
tice of the society. It further stated that in case the
existing members of respondent No. 2 were not willing to buy
the said premises, the premises could be given for trans-
469
fer to an outside transferee. By its letter dated November
22, 1985, addressed to respondent No. 1 the appellant point-
ed out that respondent No. 2 had declined to grant permis-
sion for transfer unless the premises were first offered to
the existing members of the society by Way of a first pref-
erence. The said letter then stated that it was not possible
to continue negotiations any further. Along with the said
letter the demand draft of Rs.50,000 referred to above was
returned by the appellant. Without any further correspond-
ence respondent no. 1 filed a dispute in the Cooperative
Court No. 17 Bombay against the appellant and respondent No.
1 by statement of claim which can be conveniently referred
to as a plaint.
In the plaint respondent No. 1 inter alia stated that on
the promises and representations made by the appellant to
respondent No. 1 it had paid a sum of Rs.2,60,000 to one
I.M. Choksey representing himself as the Chairman of the
appellant and one S. Ramakrishnan, claiming to be the repre-
sentative of his wife who was a Director of the appellant.
Respondent No. 1 further claimed that it had paid a further
sum of Rs.40,000 in cash to the appellant without taking
a .receipt. Respondent No. 1 urged that but for the assur-
ance given by Choksey and Ramakrishnan acting on behalf of
the appellant and one Col. G.D. Hadep, acting on behalf of
respondent No. 2 that the appellant would be in a position
to transfer the said premises by the end of November 1985
and respondent No. 2 would not object to such transfer,
respondent No. 1 would not have paid such a huge amount to
the appellant. Respondent No. 1 further stated that the
appellant and respondent No. 2 had promised respondent No. 1
that they would complete the formalities of transfer of the
said premises within a few days and there would be no objec-
tion or obstruction whatever in the said transfer. Respond-
ent No. 1 went on to say that it was given to understand
that the appellant and respondent No. 2 were conspiring to
sell the said premises to a third party for a larger amount.
Respondent No. 1 was ready and willing to perform its part
of the contract and prayed for an order for specific per-
formance of the contract. The relevant portion of paragraph
10 of the plaint, which deals with jurisdiction, sets out
that respondent No. 2 is a cooperative society and is vital-
ly interested in the transfer and sale of the said premises
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and to ensure that the transfer is done under the provisions
of its bye-laws, the said Act and the rules. Respondent No.
2 had taken active part in the transaction entered into be-
tween respondent No. 1 and the appellant who _is a member of
respondent No. 2, and that respondent No. 1 was claiming his
rights through the appellant who was a member and hence, the
subject matter of the dispute fell within the ambit of
section
470
91 of the said Act. Respondent No. 1 prayed for a declara-
tion that the aforesaid dispute was a dispute falling under
section 91 of the said Act and prayed that the appellant and
respondent No. 2 should be directed to specifically perform
the agreement recorded in the letter of September 10, 1985
and transfer the said premises to respondent No. 1. The rest
of the prayers in the plaint are immaterial for our pur-
poses.
Pursuant to certain orders made by the Bombay High Court
the Cooperative Court framed an issue as to whether it had
jurisdiction to entertain the dispute. The Court recorded
evidence led by respondent No. 1 off this issue and dis-
missed the dispute for want of jurisdiction. This order was
set aside by the Maharashtra Cooperative Appellate Court,
Bombay, by its order dated September 9, 1986. The appellant
herein filed a writ petition in the High Court to challenge
the said order. The learned Single Judge who heard the said
writ petition dismissed the same and held that the case was
governed by the provisions of section 91 of the said Act.;
It is this decision which is sought to be challenged before
us by the appellant.
It is submitted by Mr. Tarkunde, learned counsel for the
appellant that the agreement to sell the said premises with
which we are concerned, was entered into between the appel-
lant, a member of respondent No. 2, a Cooperative Society
and respondent No. 1, a nonmember. The said agreement was
for transfer of premises belonging to the appellant to
respondent No. 1, a non-member, in a building owned by
respondent No. 2, a cooperative society. The claim in the
dispute was for obtaining the specific performance of the
said agreement and the prayer for directing respondent No. 2
to approve the said agreement was in the nature of an ancil-
lary prayer to complete the relief. The main relief was for
specific performance of the said agreement. It was submitted
by him that such a dispute cannot be said to be a dispute
"touching the management or business of a society" as con-
templated in sub-section (1) of section 91 of the said Act
nor can it be said that respondent No. 1, a non-member was
making a claim against respondent No. 2-society through a
member, namely, the appellant. The main relief sought was
for specific performance of an agreement by a member to sell
the premises in the society building to a non member and
such a claim can never be said to be made against the socie-
ty through a member.
In order to appreciate the submissions made, it is
desirable to set out the material portion of Section 91 of
the said Act which runs as follows:
471
"91(1) Notwithstanding anything contained in any other law
for the time being in force, any dispute touching the con-
struction, elections of the office beares. conduct of gener-
al meetings, management or business of a society shall be
referred by any of the parties to the dispute, or by a
federal society to which the society is affiliated or by a
creditor of the society to the Cooperative Court if both the
parties thereto are one or other of the following:
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(a) x x x x x x x
(b) a member, past member or a person claiming through a