Osmangunj Extension Co-operative Society Limited vs Bhawarlal Bohra and Others

N.D. Patnaik, J.—This Second Appeal is filed by the plaintiff in O.S. No. 2962 of 1977 in the Court of the IV Assistant Judge, City Civil Court, Hyderabad. The plaintiff (appellant) is the Osmangunj Extension Co-operative Society limited, which was formed for the purpose of construction of Shops and Godowns for its members in order to extend the existing Osmangunj market complex. It is alleged that as per the scheme of the Society unless all the constructions are completed no permanent allotment of Shops and Godowns is to be made to any share-holder of the Society. However, since the constructions could not be completed as per the scheme, it was decided by the plaintiff-society to let some shops to its members temporarily on rental basis for the time being, pending re-allotment on final and permanent basis, after completion of the entire construction. On 30-7-1976 one Sri Hiralal Kapadia, who was originally one of the members of the Society was allotted two shops, bearing Nos. 7 and 8 (new Nos. 19 and 20) temporarily on lease basis for six months. He sub-let the shops to defendants 2 and 3. Later on on 30-7-1976 the said Hiralal Kapadia transferred his membership in the Society including temporary lease to the first defendant and he informed defendants 2 and 3 to pay the rents to the first defendant. A fresh lease between the plaintiff and the first defendant took place from 1-9-1976. The plaintiff issued a notice dated 23-12-1976 terminating the lease in favour of the first defendant and asking him to hand-over vacant possession of the two mulgies in order to enable the plaintiff-society to make a permanent allotment of shops constructed by it to different share-holders. The copies of the notice were also sent to the defendants 2 and 3, but the defendants failed to deliver the vacant possession of the shops. The plaintiff alleged that though Hiralal Kapadia, who was a member of the plaintiff - society was paying rent of Rs. 173/- per month which was reduced to Rs. 104/- per month, the prevailing market rate of rent per each shop is Rs. 600/- per shop. The plaintiff, therefore, filed a suit for eviction of the defendants and for mesne profits at Rs. 1200/- per month.

The first defendant filed written statement stating that though the plaintiff-society issued notice on 26-12-1976 directing him to vacate the premises he was helpless as defendants 2 and 3 were not inducted into the possession by him and as such he could not deliver possession of the said mulgies. Healleged that mesne profits claimed by the plaintiff at Rs. 1,200/- per month is excessive but the plaintiff can claim mesne profits only at the rate of Rs. 104/- per month from defendants 2 and 3 only and he has no objection for suit being decreed without any claim for mesne profits against him.

Defendants 2 and 3 filed two separate written statements but taking similar contentions and denying the plaint allegations that the allotment was made to Hiralal Kapadia purely on temporary basis and contending that the plaintiff has no right to ask for the mulgies as the same was allotted to Hiralal Kapadia and that they are the lessees of the said Hirala Kapadia. The third defendant has taken another contention that he purchased the mulgi in his occupation for Rs. 45,000/- in the name of his wife and that the Society received the sale consideration and since August, 1978 he was in possession of the mulgi on behalf of his wife. They further contended that the suit is not maintainable in the Civil Court and the notice is bad and that the plaint is not properly instituted.

The trial Court rejected the contention of the defendants and decreed the suit for eviction and possession with mesne profits at the rate of Rs. 225/- and Rs. 275/- per month for the two mulgies from 1-12-1977 till the date of delivery of possession. Defendants 2 and 3 filed an appeal A.S. No. 84 of 1981 aggrieved by the judgment of the lower Court granting to give eviction; whereas the plaintiff-society filed an appeal A.S. No. 94 of 1981 regarding quantum of mesne profits. Both the appeals were heard together by the Additional Chief Judge, City Civil Court, Hyderabad, and disposed of by a common judgment dated 8-7-1981 whereby the learned appellate Judge held that the notice is valid but upheld the contention of the defendants that the suit it is not maintainable and suit is not properly instituted and so allowed the appeal A.S. No. 84 of 1981 filed by the defendants 2 and 3 and consequently dismissed the appeal A.S. No. 94 of 1981 filed by the plaintiff-society.

The plaintiff-society preferred the Second Appeal against the judgment in A.S. No. 94 of 1981. Previously the Second Appeal was dismissed by this Court by judgment dated 22-1-1987. Against that the plaintiff-society filed Civil Appeal No. 1588 of 1991 in the Supreme Court. By order dated 3-4-1991 the Supreme Court has set aside the order of this Court in Second Appeal and restored the Second Appeal and directed this Court to proceed to dispose of the appeal on merits and observed that all contentions open in law to either of the parties may be urged at the hearing of the appeal. That is how the Second Appeal has come up for hearing now.

I will refer to the parties as they are arrayed in the suit in order to avoid confusion.

Though the suit was filed against three defendants, and the suit was decreed against all of them, defendant No. 1 did not prefer any appeal but the defendant Nos. 2 and 3 only preferred the appeal. The main contention of the learned counsel for the defendants 2 and 3 is that the suit is not maintainable in view of Section 61 of the A.P. Co-operative Societies Act. Section 61 (1) of the said Act reads:-

"Notwithstanding anything in any law for the time being in force, if any dispute touching the constitution, management or the business of a society, other than a dispute regarding disciplinary action taken by the society or its committee against a paid employee of the society arises-

(a) xxxx xxxxx xxxx (b) between a member, past member or person claiming through a member, past member or deceased member and the society, its committee or any officer, agent or employee of the society; or

(c) xxxx xxxx xxxx (d) xxx xxxx xxxxx such dispute shall be referred to the Registrar for decision."

"Explanation:- For the purposes of this sub-section, a dispute shall include-"Clause (iii) "a claim by a society against a member, past member or the nominee, heir or legal representative of a deceased member for the delivery of possession to the society of land or other immovable property resumed by it for breach of the conditions of assignment or allotment of such land or other immovable property."

Therefore, it is contended on behalf of defendants 2 and 3 that since defendant No. 1 is a member of the plaintiff-society and the dispute is regarding possession of the shops of the society allotted to him, the dispute shall be referred to the Registrar of Co-operative Societies and that the Civil Court has no jurisdiction. On the other hand, the contention of the plaintiff-appellant is that there is no dispute between the plaintiff-society and the first defendant who is a member of the Society since he had no objection to deliver possession of the shops, but the dispute is between the plaintiff-society and the defendants 2 and 3 who are not the members of the Society and, therefore, Section 61 of the said Act is not applicable. The plaintiff''s case is that it is a simple suit for possession of two shops which is in the unauthorised occupation of defendants 2 and 3 and, therefore, a civil suit is maintainable. Admittedly, defendants 2 and 3 are not the members of the plaintiff-society. The contention of the learned counsel for the defendants 2 and 3 is that since they are sub-lessees of the first defendant and are claiming through the first defendant, they come within the scope of explanation (iii), referred to above. As I stated above, explanation (iii) refers to a claim by the Society against a member, past member or the nominee, heir or legal representative of a society member for the delivery of possession of immovable property.

The learned counsel for the plaintiff-appellant has referred to a decision of the Supreme Court in Sabharwal Brothers and Another Vs. Smt. Guna Amrit Thandani of Bombay, . In that case the Supreme Court has pointed out:-

"Where the objects of a society were to carry on the trade of buying, selling, hiring and letting land in accordance with the co-operative principles, the letting by a member of such society of the flat purchased from the society could not be said "to touch the business of the society".

The learned counsel for the appellant has also referred to the decision of the Supreme Court in Mahabir Prasad Verma Vs. Dr. Surinder Kaur, . In that case the question that arose was whether the Registrar u/s 91 (1) of the Bombay Co-operative Societies Act or the authority under the Bombay Rents, Hotel and Lodging House Rates Control Act had jurisdiction. It was pointed out that if two Acts can be best harmonised by holding that in matters covered by the Rent Act its provisions of the Act, i.e. Maharashtra Co-operative Societies Act should apply. But where the parties admittedly do not stand in the jural relationship of landlord and tenant, the dispute would be governed by Section 91 (1) of the Co-operative Act. The decision in Sabharwal Brothers and Another Vs. Smt. Guna Amrit Thandani of Bombay, , referred to above, was distinguished on two grounds. First, there was an outright sale of the flat by the society and not that it had been let out 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 learned counsel for the defendants 2 and 3 has referred to a Full Bench decision of Madra High Court in M.S. Madhava Rao and Others Vs. D.V.K. Surya Rao, Member of the Pithapuram Co-operative Bank, Pithapuram and Others, , in which it was pointed out that the words "touching the business of a society" must be given their full import, bearing in mind the object of the legislation and that taking the dictionary meaning of the word ''touching'' it indicates that the dispute need not directly arise out of the business of the society, but that it is enough that it should have reference or relation to or concern the business of the society. The word ''touching'' was clearly not intended to restrict the meaning of the word business; it was designed to enlarge its scope. Similarly, the word ''business'' in Section 51 is not used in a narrow sense and it is no doubt true that some sections of the Act refer to the "affairs of the society", while others refer to the business of the society; but the words ''affair'' and ''business'' have been used as interchangeable terms in the Act and are not intended to denote different concepts; the business has to be that of the society i.e. the corporate activity of the society and what the permissible corporate activities of the society are, have to be gathered from the sections of the Act, the rules framed under the Act and the bye-laws made by the corporation which are intra vires the Act and for, the power of the corporation is derived from these three sources, and so long as its activity is within those powers, it cannot be questioned as being invalid.

He has also referred to the Full Bench decision of the Bombay High Court in Manohar Ramchandra Sarfare Vs. The Konkan Co-operative Housing Society Ltd. and Others, , in which it is held:-

"Dispute between a co-operative housing society and a member of such society, to whom a tenement has been allotted by the society in accordance with the rules, by-laws and regulations of the society, relating to the recovery or possession of such a tenement or the amount payable by the member for the occupation of such tenement, can be decided only by the Registrar or his nominee u/s 54 of the Bombay Co-operative Societies Act 1925. Only the Courts referred to in Section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, will have jurisdiction to decide a similar dispute between two members of the Society or between a member of the society and a nominal member of the society, if the relationship between them is that of landlord and tenant. In other cases, where such relationship does not exist, the dispute can be decided only by the Registrar or his nominee u/s 54 of the Bombay Co-operative Societies Act."

Admittedly the 1st defendant is a member of the plaintiff society. Hiralal Kapadia, who was a member of the society transferred his membership along with temporary lease of the two shops to the 1st defendant. Therefore, if the plaintiff wants to evict the 1st defendant from the shop, he has to approach the Registrar u/s 61 of the Co-operative Societies Act. Though the learned counsel for the appellant contends that this is not a dispute which falls within the expression on touching the business of the society, I am unable to accept his contention in so far as the 1st defendant is concerned. Explanation 3 to Section 61 covers a claim of the society against a member etc. for delivery of possession of the shop or the land or other Immovable property resumed by it for breach of the conditions of assignment of such land or other Immovable property. Since the plaintiff society had terminated the lease in favour of 1st defendant, it is a dispute falling within the scope of Section 61 read with explanation Clause (iii). The Full Bench of the Madras High Court in Madhavarao v. Surya Rao (3 supra), which I have referred to above has stated that the words ''touching the business of the society'' must be given their full import, bearing in mind the object of the legislation and that taking the dictionary meaning of the word ''touching'' it indicates that the dispute need not directly arise out of the business of the society, but that it is enough that it should have reference or relation to or concern the business of the society". Since the object of the plaintiff society is to construct shops for its members and some shops were constructed and the two shops in question were temporarily allotted to Hiralal Kapadia and later to the 1st defendant on lease basis pending final allotment, it does come within the scope of the business of the society. In the Supreme Court decision reported in O.N. Bhatnagar v. Rukibai Narsindas (2 supra) it is pointed out that there is out-right sale of the flat by the society and society having sold the flat the letting of the flat by the flat owner did not in any affect the business of the society. That decision is not helpful because in this case the society had only allotted the shops to the 1st defendant temporarily on lease basis but did not sell the shops in favour of 1st defendant.

But, in so far as defendants 2 and 3 are concerned they are not members of the society. They are inducted into possession of the shops as sub-tenants by Hiralal Kapadia and later on they have attorned in favour of 1st defendant and are paying rent to him. Though the learned counsel for defendants 2 and 3 argued that they are not claiming as lessees under 1st defendant, but as transferees of his interest, I am unable to accept his contention. They are in possession of the shops only as sub lessees of Hiralal Kapadia, a past member of the society. Therefore, they come within the scope of persons claiming through a member or a past member within the meaning of Section 61 (1) (b) of the Act.

Even if they are considered to be not coming within the expression ''persons claiming through member'' in Section 61 (b) of the Act, the plaintiff can not file a suit directly against them for eviction without impleading the 1st defendant because they are not the lessees of the plaintiff. The plaintiff can only seek for eviction of the 1st defendant and the sub-lessees, defendants 2 and 3. Since the 1st defendant is a member of the society and the dispute touches the business of the society, it has to be adjudicated by the Registrar as provided in Section 61 of the Co-operative Societies Act. Therefore, I am unable to accept the contention of the learned counsel for the appellant that since there is no dispute between the plaintiff and the 1st defendant regarding eviction and defendants 2 and 3 are not members of the society, the suit is maintainable as against them. I, therefore, hold that in view of Section 61(1) (b) the dispute has to be decided by the Registrar under the Cooperative Societies Act and that the Civil Court has no jurisdiction to entertain- the suit.

It is further contended by the learned counsel for the appellant that since the 1st defendant did not file the appeal against the decree passed by die trial Court for eviction, defendants 2 and 3, who are only claiming through the 1st defendant cannot file the appeal as they have no better right than the 1st defendant. He has relied upon Section 115 of the Transfer of Property Act, which reads as follows:-

"115. Effect of surrender and forfeiture on under-leases: The surrender, express or implied, of a lease of immobeable property does not prejudice an under-lease of the property or any part thereof previously granted by the lessee on terms and conditions substantially the same (except as regards the amount of rent_ as those of the original lease; but, unless the surrender is made for the purpose of obtaining a new lease, the rent payable by, and the contracts binding on, the under lessee shall be respectively payable to and enforceable by the lessor.

The forfeiture of such a lease annuls all such under-leases, except where such forfeiture has been procured by the lessor in fraud of the under-lessees, or relief against the forfeiture is granted u/s 114".

In The Corporation of Madras Vs. Mr. A.D. Charles, the present President and Member of the General Committee of the Madras Club, a Division Bench of the Madras High Court has held", Under the Madras Buildings (Lease and Rent Control) Act, a sub-tenant as such is not recognised and if a land-lord brings a suit in ejectment against his tenant from the land upon which a building is constructed by the tenant, a sub-tenant let into possession of the building cannot raise any question and submit that he has a status under the Act which should be safeguarded by its provisions. Whatever rights the subtenant may have against the tenant cannot affect the rights of the landlord. So far as the landlord is concerned, the sub-tenant does not exist at all and any proceedings by which the landlord has got a decree against the tenant would be binding on the sub-tenant". He has also referred to a Division Bench decision of the Madhya Bharat High Court in Shankarrao v. Kisanlal, AIR 1950 Madhya Bharat 19 in which it is held, "Where a decree for ejectment is passed against the lessee and his sub-lessee the latter being adversely affected by the decree has a right of appeal, but if the decree has become final as against the lessee by reason of its not being appealed against by the lessee, the sublessee who has derived his interest from the lessee would be bound by the decree on the principle of the second part of Section 115 T.P. Act and the appeal by the sublessee alone would be incompetent".

Section 96(1) of the C.P.C. says, "Save where otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie from every decree passed by any court exercising original jurisdiction to the Court authorised to hear appeals from the decisions of such Court "Order 41 Rule4 C.P.C. says that where there are more plaintiffs or more defendants man one in a suit, and the decree appealed from proceeds on any ground common to all the plaintiffs or to all the defendants, any one of the plaintiffs or of the defendants may appeal from the whole decree, and thereupon the appellate Court may reverse or vary the decree in favour of all the plaintiffs or defendants, as the case may be. Since defendants 2 and 3 are aggrieved by the decree they can file appeal. But, what the Division Bench of the Madhya Bharat High Court says is that though the sub-lessees have a right of appeal, if the decree has become final as against the lessee the sub-lessees would be bound by the said decree. With great respect to the learned judges who rendered the judgment, I am unable to accept that. When defendants 2 and 3, that is, the sub-lessees have got a right to file appeal, they can attack the decree passed against them on the grounds available under law. Therefore, I am unable to accept the contention of the learned counsel for the appellant that since the1st defendant has not filed the appeal and the decree has become final against him, defendants 2 and 3 cannot question the decree.

The last question to be considered is, whether the suit was properly instituted. The lower Appellate Court held that as the plaint is signed by one Devata Narayana, who is a member of the Managing Committee, but not by the Chairman of the plaintiff society, the plaint is not properly filed. The learned counsel for the appellant has referred to bye-law 29 of the plaintiff society which deals with the powers of the Managing Committee. Sub-clause (13) of Clause (sic. bye-law) 29 says that the Managing Committee shall have the power to institute, conduct, defend, compromise, refer to arbitration or withdraw legal proceedings, claims by or against the society etc. Therefore any of the members of the managing committee or the Secretary or any other person specificaly authorised in this behalf can file the suit. The contention of the respondents is that there is no resolution authorising Sri Devata Narayana to file the plaint on behalf of the society. The evidence discloses that at the relevant time the Registrar appointed persons in-charge to manage the affairs of the society and Sri Devata Narayana is one of the persons in-charge and so it is contended by the appellant that he is competent to sign the plaint. Apart from that the learned counsel for the appellant has pointed out that a co-operative society comes under "Corporation" as held by the Supreme Court in Daman Singh and Others Vs. State of Punjab and Others, and he referred to Order 29 Rule 1 C.P.C which provides that in a suit by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the secretary or by any director or other principal officer of the corporation who is able to depose to the facts of the case. Therefore, he contends that a member of the Managing Committee, like a Director of the Corporation can sign a plaint. He has contended that at best it is only an irregularity. He has referred to the decision of this Court in K. Peddamma v. D. Gurunadharao, 1973 (2) AWR 112 in which it is held that it is well-settled that any defect or irregularity in the presentation of the original plaint due to the failure or omission on the part of the plaintiffs to sign, can be cured by subsequently filing a plaint copy signed by all the plaintiffs as it is not a material defect or irregularity which would go to the root of the case. This was followed in another case reported in Mangatayaramma v. Indian Bank, 1984 (2) AWR 292. Therefore, on this point, I am unable to agree with the finding of the lower court that the suit is not properly instituted and so it is liable to be dismissed.

In view of my finding that the suit is not maintainable in the civil Court, second appeal fails and is dismissed. No costs.