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i.R. Hingorani Vs. Pravinchandra Kantilal Shah - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtMumbai High Court
Decided On
Case NumberSpecial Civil Application Nos. 2048 of 1963, 1249 of 1964 and Misc. Application No. 312 of 1963
Judge
Reported in(1965)67BOMLR306; 1965MhLJ523
Appellanti.R. Hingorani
RespondentPravinchandra Kantilal Shah
Excerpt:
maharashtra co-operative societies rules, 1961. rule 75-bombay co-operative societies act (bom. viii of 1925), section 54-friendly societies act, 1896 (59 & 60 vict. c. 25), section 68-practice-dispute when referred to registrar under section 91-'claiming through a member', meaning of words--dispute relating to accommodation provided by society between member and person to whom member has given such accommodation-whether such dispute touching business of society-dispute between such parties relating to rent or compensation or for mesne profits and jurisdiction of registrar or nominee.;the correct practice when a dispute is referred to the registrar under section 91 of the maharashtra co-operative societies act, 1960, is for the registrar to issue notices to both the parties and give.....h.k. chainani, c.j.1. these three applications have been heard together, because they raise a common question in regard to the interpretation of section 91 of the maharashtra cooperative societies act (hereinafter referred to as the act). the facts in application no, 2048 of 1963 are as under. respondent no. 1 in this application is a member of shalimar co-operative housing society. as such member he is the holder of a flat on the fifth floor of shalimar building, which belongs to the society. on. april 24, 1959, there was a leave and license agreement between the petitioner and respondent no. 1, by which respondent no. 1 allowed the petitioner to occupy his flat on payment of monthly compensation of rs. 250 for a period of eleven months. respondent no. 1 subsequently revoked the leave.....
Judgment:

H.K. Chainani, C.J.

1. These three applications have been heard together, because they raise a common question in regard to the interpretation of Section 91 of the Maharashtra Cooperative Societies Act (hereinafter referred to as the Act). The facts in application No, 2048 of 1963 are as under. Respondent No. 1 in this application is a member of Shalimar Co-operative Housing Society. As such member he is the holder of a flat on the fifth floor of Shalimar building, which belongs to the society. On. April 24, 1959, there was a leave and license agreement between the petitioner and respondent No. 1, by which respondent No. 1 allowed the petitioner to occupy his flat on payment of monthly compensation of Rs. 250 for a period of eleven months. Respondent No. 1 subsequently revoked the leave granted to the petitioner to occupy the flat and on March 8, 1963, called upon the petitioner to hand over possession of the premises and also to pay arrears of compensation due from him. As the petitioner did not vacate the flat, respondent No. 1 made an application to the Registrar that the dispute should be decided under the provisions of the Act. In this application he asked for possession of the flat, Rs. 3,250 as arrears of compensation and also future compensation until possession had been delivered. The Assistant Registrar, after going through the application made by respondent No. 1, passed an order that a dispute within the meaning of Section 91(7) of the Act existed and, therefore, referred this dispute for decision to the nominee mentioned in his order. Notice was then issued to the petitioner. He appeared before the nominee and filed a written statement, in which he contended that the nominee had no jurisdiction to decide the dispute. It appears that the petitioner thereafter addressed a letter to the Assistant Registrar in the matter. On November 12, 1963, he was informed by the Assistant Registrar that the question whether the matter fell within the purview of Section 91 of the Act had been already considered before referring the same to the Registrar's nominee and that consequently the petitioner's application had been filed. Thereafter the petitioner filed the present special civil application in this Court, in which he has prayed that the order of reference made by the Assistant Registrar as well as the proceedings pending before the nominee should be quashed.

2. In the other application No, 1249 of 1964, respondent No. 3 is a member of the Nirmal Co-operative Housing Society, respondent No. 4. As a member of the Society respondent No. 4, he had been allotted a flat on the second floor of the society's building. On August 23, 1960, respondent No. 3 gave the fiat on leave and license basis to the petitioner. On the same day the petitioner addressed a letter to respondent No. 8, in which the terms of agreement are mentioned. In this letter he has stated that permission had been given to him to occupy the flat from August 23, 1960, on leave and license basis on payment of Rs. 125 per month for the use of the premises. On November 27, 1963, the Society respondent No. 4 gave a notice to respondent No. 3 calling upon respondent No. 3 to quit, vacate and deliver peaceful possession of the flat to the society, as he had not been residing in the flat allotted to him and had parted with its possession in contravention of by law 78. On February 3, 1964, respondent No. 3 gave a notice to the petitioner canceling and revoking the leave and license granted to him to occupy the flat and called upon him to quit, vacate and deliver peaceful possession of the flat to respondent No. 3. In July 1964, he made an application to the Registrar requesting that the dispute may be referred for decision under Sections 91 to 96 of the Act. he asked for an order directing the petitioner to quit, vacate and deliver vacant and peaceful possession of the flat. He also prayed for arrears of compensation as well as future compensation. On August 4, 1964, the Assistant Registrar passed an order stating that he was satisfied that a dispute within the meaning of Section 91 of the Act existed and referred the same for decision to his nominee respondent No. 2. Thereafter the petitioner approached this Court. In his application he has prayed that the order made by the Assistant Registrar respondent No. 1 referring the dispute for decision, to his nominee should be set aside.

3. The dispute in Misc. Application No. 312 of 1963 is about the ground floor of a building, which originally belonged to respondent No. 4. On June 29, 1961, respondent No. 4; executed an agreement, by which he leased the entire ground floor of his building to the petitioners for a monthly rent of Rs. 250. Clause 6 of this agreement mentions that the property had been mortgaged to the Decean Merchants Co-operative Bank, respondent No. 3. On October 26, 1961, in proceedings under Section 91 of the Act between respondents Nos. 3 and 4, the Registrar's nominee passed a consent award for Rs. 4 lakhs against respondent No. 4. As respondent No. 4 committed default in paying the amount under the award, on January 3, 1963, an order was made under Section 98 of the Act for the sale of the building. As there were no bidders, on May 13, 1963, the Collector issued a certificate of transfer under Section 100 of the Act in favour of the Bank, respondent No. 3. Under this certificate the right, title and interest of respondent No. 4 in the building was to vest in respondent No. 3. On June 5, 1963, respondent No. 3 gave a notice to the petitioners that their possession of the premises was unauthorised and illegal and the petitioners were called upon to quit, vacate and deliver vacant possession of the premises. On June 11, 1963, respondent No. 3 made an application to the Registrar for a reference under Section 93 of the Act. In para. 5 of the application it is stated that respondent No. 4 had deliberately with a view to frustrating a part of the claim of the Bank made an attempt to create tenancies in respect of the said premises or otherwise part with possession of the premises and that the petitioners and other opponents mentioned in the application had no right, title or interest in the premises. Respondent No. 3, therefore, prayed that the dispute should be decided by the Registrar or his nominee under Sections 91 to 96 to the Act and that the petitioners should be asked to quit, vacate and deliver the premises in their possession. A prayer for compensation was also made. On June 19, 1963, the Assistant Registrar passed an order stating that he was satisfied that a dispute within the meaning of Section 91 of the Act existed and referred it for decision to his nominee. The petitioners then filed a petition on the Original Side of this High Court, in which they have prayed that the order made by the Assistant Registrar referring the dispute for decision under the provisions of the Act should be quashed.

4. Section 91 of the Act is in the following terms:

91. (1) Notwithstanding anything contained in any other law for the time being in force, any dispute touching the constitution, elections of the office bearers, conduct of general 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 Registrar, if both the parties thereto are one or other' of the followings:-

(a) a society, its committee, any past committee, any past or- present officer, any past or present agent, any past or present servant or nominee, heir or legal represents live of any deceased officer, 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 a deceased member of a society, or 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 transactions under the provisions of Section 45, and any person claiming through such a person;

(d) a surety of a member, past member or a deceased member, or a person other than a member who has been granted a loan by the society under Section 45, whether such a surety is or is not a member of the society;

(e) any other society, or the Liquidator of such a society.

(2) When any question arises whether for the purposes of the foregoing Sub-section, a matter referred to for decision is a dispute or not, the question shall be considered by the Registrar, whose decision shall be final.

(3) Save as otherwise provided under Sub-section (3) of Section 93, no Court shall have any jurisdiction to entertain any suit or other proceedings in respect of any dispute referred to in Sub-section (1).

Explanation 1.-A dispute between the Liquidator of a society and the members of the same society shall not be referred to the Registrar under the provisions of Sub-section (1).

Explanation 2.-For the purposes of this sub-section, a dispute shall include-

(i) a claim by or against a society for any debt or demand due to it from a member or due from it to a member, past member or the nominee, heir or legal representative of a deceased member, or servant or employee whether such a debt or demand be admitted or not;

(ii) a claim by a surety for any sum or demand due to him from the principal borrower in respect of a loan by a society and recovered from the surety owing to the default of the principal borrower, whether such a sum or demand be admitted or not;

(iii) a claim by a society for an3' loss caused to it by a member, past member or deceased member, by any officer, past officer or deceased officer, by any agent, past agent or deceased agent, or by any servant, past servant or deceased servant, or by its committee, past or present, whether such loss be admitted or not;

(iv) a refusal or failure by a member, past member or a nominee, heir or legal representative of a deceased member, to deliver possession to a society of land or any other asset resumed by it for breach of conditions of the assignment.

Rule 75 of the rules made under the Act states that a reference of a dispute under Section 91 shall be made in writing to the Registrar in Form P. Sub-section (1) of Section 93 states that if the Registrar is satisfied that any matter referred to him or brought to his notice is a dispute within the meaning of Section 91, the Registrar shall subject to the rules decide the dispute himself or refer it for disposal to a nominee or Board of Nominees appointed by the Registrar. Section 96 states that when a dispute is referred to arbitration, the Registrar or his Nominee or Board of Nominees may, after giving a reasonable opportunity to the parties to the dispute to be heard, make an award on the dispute.

5. The first question, which has been raised in all the three applications, is that the Registrar or the Assistant Registrar was bound to hear the petitioners before making the orders referring the disputes to his Nominees. We have been told that the practice at present generally followed by the Registrar is that after an application for reference has been scrutinised in his office, he refers the matter to a nominee. If a contention is then raised before the nominee that he has no jurisdiction, because no dispute exists within the meaning of Section 91, the nominee refers back the matter to the Assistant Registrar, who then decides whether a dispute within the meaning of Section 91 exists. This practice has been generally found to be convenient. It also saves time because we were told that only in about 5 to 10 per cent, of cases the nominees' jurisdiction, to entertain and decide a reference is challenged. The practice is also supported by several decisions of the Maharashtra Co-operative Tribunal, to which our attention has been drawn. The question which we have to consider is whether this practice is in accordance with law, Sub-section (1) of Section 93 refers to the satisfaction of the Registrar, while Sub-section (2) of Section 91 gives finality to the decision of the Registrar. It has been urged that as Sub-section (2) of Section 91 refers to a decision by the Registrar and not to the satisfaction of the Registrar, what Sub-section' (1) of Section 93 contemplates 'is provisional satisfaction of the Registrar arrived at after perusal of the application for reference, made to him, but without hearing the parties. The difficulty in accepting this argument is that it is only after the Registrar is satisfied that a dispute within the meaning of Section 91 exists that the Registrar can proceed to decide the dispute himself or refer it for disposal to his Nominee. The jurisdiction of the Registrar or his Nominee to decide a dispute is, therefore, dependent on the Registrar being satisfied that such a dispute exists. The Registrar cannot, however, come to the conclusion that a dispute exists unless he first applies his mind to the matter. The words used in Sub-section (2) of Section 91 are: 'When any question arises' and not 'when any question is raised'. The quest ion whether a dispute exists will arise as soon as the Registrar applies his mind to the matter in order to satisfy himself about the existence of a dispute within the meaning of Section 91. His satisfaction on this point will, therefore, be equivalent to his decision within the meaning of Sub-section (2) of Section 91. If he decides that a dispute exists, then he will take further action under Sub-section (1) of Section 93 to decide the dispute himself or refer it for disposal to his Nominee. It has been conceded before us that the question about the existence of a dispute has to be decided by the Registrar judicially and that the proceeding before him is a quasi-judicial proceeding. This necessarily implies that the Registrar must hear the parties before he decides or satisfies himself about the existence of the dispute. The present practice, therefore, does not appear to us to be in accordance with law. The correct practice would be for the Registrar to issue notices to both the parties and give them an opportunity of being heard on the question whether a dispute exists. It is only after the Registrar has heard the parties or given them an opportunity of being heard that he can decide or satisfy himself whether a dispute within the meaning of Section 91 exists. It is his decision so arrived at which will be final under Sub-section (2) of Section 91 of the Act.

6. None of the petitioners was heard by the Assistant Registrar before the order of reference was made. We would, therefore, have remanded the matters to the Assistant Registrar for deciding the question about the existence of a dispute within the meaning of Section 91 after hearing the parties, but we have decided not to do so, since the questions raised are general questions, which arise in many cases and also because the parties desire that we should decide them, so that the position in law may be clarified.

7. Following the decisions of the Supreme Court in Ranzada Topamdm v. Gorakhram (1963) 66 Bom. L.R. 106. and Vasudev v. Board of Liquidators (1963) 66 Bom. L.R. 205. a Full Bench of this Court has held in Dattatraya Krishna v. Jairam Ganesh : AIR1965Bom177 , F.b. that in order to determine' which Court has jurisdiction to try a suit, the Court should read the plaint as a whole and ascertain the real nature of the suit and what in substance the plaintiff has asked for. The jurisdiction of the Court should, therefore, be determined at the time of the institution of the suit when the plaint was filed and the plea of the defendant would not determine or change the forum. The same principle must apply in a proceeding under the provisions of the Cooperative Societies Act and the question whether a dispute within the meaning of 91 exists so as to enable the Registrar or his Nominee to entertain a reference in respect of such dispute will have to be decided by reference to the averments made in the application for reference made under Rule 75.

8. Under Section 91 it is not every dispute in respect of which a reference can be made for its determination under the provisions of the Act. Two conditions must be satisfied before a reference can be entertained and these are :

(1) That the dispute must touch the constitution, elections of the office bearers, conduct of general meetings, management or business of a society; and

(2) that both the parties to the dispute must be one or other of the persons mentioned in Clauses (a) to (e) of Sub-section (1) of Section 91,

In the three cases before us, it has been contended on behalf of the respondents that the disputes touch the business of the societies concerned. The question as to what the words 'touching1 the business of a society' signify has been considered by a Full Bench of this Court in Farkhwndali v. Potdar : AIR1962Bom162 F.B. At pages 986-987 it was observed:.The nature of business, which a society does, is to be ascertained from the objects of the society. But whatever the society does or is necessarily required to do for the purpose of carrying out its objects can be said to be part of its business. The word 'touching' is also very wide and would include any matter which relates to, concerns or affects the business of the society.

The Full Bench has cited with approval the decision of. the Full Bench of the Madras High Court in Madhava Rao v. Surya Rao [1963] Mad. 1047. that the words 'touching the business of the society'' must be given their full import and that the dispute need not directly arise out of the business of the society, but it is enough if it has reference or relation to or concern with its business.

9. The petitioners in the first two applications are in occupation of flats, which belong to Co-operative Housing Societies, Clause (16) in Section 2 of the Act defines a housing society as meaning' a society, the object of which is providing its members with dwelling houses. It has been urged by Mr. Vaidya and Mr. Samant that the dispute in each of these two applications is essentially between a member of the society and the person to whom he had given his flat for occupation, that no relief has been claimed against the society, that the society is, therefore, not concerned with the dispute and that consequently the dispute cannot be said to touch the business of the society. There is not much force in these arguments. Regulation 4 in Form A in the Model By-laws is as under:

No tenant shall assign, underlet, vacate or part with the possession of a tenement or any part thereof without the previous consent in writing of the society.

The Regulations of both the societies, to which the buildings in question belong, contain a similar Regulation. Consequently the flats now in occupation of the petitioners could not have been given to them for occupation without the permission of the societies. The object of a co-operative housing society being to provide housing accommodation to its members, it is the business of the society to see that such accommodation is occupied by its. members or by persons approved by it and not by unauthorised persons. Every member is bound by the rules, by-laws and regulations of the society. In respect of the common amenities provided by the society he has to pay certain charges and expenses to the society. A housing society is, therefore, vitally concerned with the question as to who occupies the accommodation provided by it. A dispute in regard to the occupation of such accommodation is, therefore, a dispute connected with the business of such a society. In any case there can be no doubt that such a dispute will touch the business of the society.

10. Clause (iv) in Explanation 2 in Section 91 brings within the ambit of this section a dispute arising out of a refusal or failure by a member, past member or a. nominee, heir or legal representative of a deceased member, to deliver possession to a society of land resumed by it for breach of conditions of the assignment. This clause does not refer to a person claiming through a member. It has, therefore, been argued that a dispute, in which possession is claimed from a person claiming title through a member is outside Section 91. The clause provides for a case in which a society seeks possession from a member on account of breach of the conditions on which the land had been assigned to him. In such a case the award, if any, made against the member would be binding on every person claiming through such member. The society can also make such person a party to the application made by it against the member. This position had been made clear by the Supreme Court in Importers v. Phiroze (1952) 55 Bom. L.R. 271 where it has been observed :.under the ordinary law a decree for possession passed against a tenant in a suit for ejectment is binding on a person claiming title under or through that tenant and is executable against such person whether or not he was or was not a party to the suit. The non-joinder of such a person does not render the decree any the less binding on him. It is in this sense, therefore, that he is not a necessary party to an ejectment suit against the tenant. It is, however, recognised that such a person is, nevertheless), a proper party to the suit in order that the question whether the lease has been properly determined and the landlord plaintiff is entitled to recover possession of the premises may be decided in his presence so that he may have the opportunity to see that there is no collusion between the landlord and the tenant under or through whom he claims and to seek protection under the Act (Rent Act), if he is entitled to any. Such a person may be joined as a party to the suit from the beginning of the suit or at any later stage of the suit if the Court thinks fit to do so.

This may be the reason why a person claiming through a member is not mentioned in Clause (iv) of the Explanation. This omission would not, therefore, indicate that a dispute in regard to possession oft premises between a member and the person who has obtained the premises from the member is not a dispute within the meaning of Section 91 of' the Act.

11. It was contended that the claim for compensation made against each of the petitioners cannot be said to touch the business of the society of which the particular respondent is a member and that such a claim cannot, therefore, be entertained by the Registrar. A society is ordinarily not concerned with how much amount a member charges to or recovers from, the person to whom he has given his tenement for occupation. Even if he gives it free or remits the whole amount payable, it will not affect the society. Consequently, a dispute in regard to rent or compensation payable to a member will not ordinarily touch the business of the society. A claim for mesne profits is, however, consequential or incidental to a claim for possession. The Court which has jurisdiction to decide a suit for recovery of possession of property has also jurisdiction to award mesne profits until possession has been delivered. This has been so held by the Supreme Court in Importers v. Phiroze, in which at p. 277 it has been observed :.The appellant points out that on the face of the plaint the plaintiffs declined to recognise it as a lawful occupant as sub-tenant or otherwise and treated it as a mere trespasser having no lawful claim to the demised flat and, therefore,... the suit in so far as it claimed compensation from him cannot be said to be a suit for recovery of rent. The last part of the contention need not detain us long, for the suit was undoubtedly one for possession of the flat and the claim for compensation was only incidental and ancillary to the claim for possession. Jurisdiction to entertain a suit for possession will empower' the Court hot only to pass a decree for possession but also to give directions for payment of mesne profits until delivery of possession. Such direction for payment of mesne profits is usually an integral part of the decree for possession.

Consequently if the Registrar or his Nominee is competent to entertain the applications for possession made against the petitioners, he will also have jurisdiction to decide the claims for past as well as future mesne profits made against them until possession had been given.

12. In application No. 2048 of 1963 the society has not been made a party to the application for reference made to the Registrar. Mr. Vaidya has, therefore, argued that the dispute cannot be said to touch the business of the society. This argument is without any merit. The nature of the dispute will not change merely because the society has not been made a party to the proceeding. Section 91 itself contemplates that a dispute touching' the business of a society may arise between a member and a member or between a member and a person claiming through a member.

13. In the third application, Miscellaneous Application No. 312 of 1963, the property was transferred to the Bank in part satisfaction of the amount due to it under the award obtained by it against respondent No. 4. The property was, therefore, acquired by the Bank in the ordinary course of its business. Thereafter it was necessary for the Bank to do all things necessary to look after and manage the property. In the course of its management, it evidently considered it necessary or desirable to recover possession from the petitioners. Consequently the dispute in regard to possession of the premises occupied by the petitioners can also be said to touch the business of the Bank.

14. Mr. Nariman has referred to Dinkar 'Wasudco v. Registrar, Cooperative Societies (1945) 48 Bom. L.R. 104 in which it was held that the word 'dispute' in Section 54 of the Bombay Co-operative Societies Act, 1925, implies some kind of disagreement between the parties concerned, some reference to a legal claim or liability and that the word 'dispute' cannot be said to be the same thing as a cause of action or the mere incurring of a liability. Mr. Nariman has contended that the tenancy of the petitioners has not been determined by giving them a proper notice and that consequently the Bank has no legal claim to the possession of the premises. The question whether a person has made a legal claim is quite different from the question whether he will be able to establish or prove that claim. At the preliminary stage when the Registrar has to decide the question of jurisdiction, he has only to consider whether the claim as made in the application for reference is a legal claim. In the present case the Bank's claim for possession cannot be said to be not a legal claim. 'Whether the Bank will be able to prove this claim is a different matter.

15. The next question, which arises for consideration, is whether the petitioners can be said to belong to one or the other of the categories of persons specified in Clauses (a) to (e) of Sub-section (1) of Section 91. None of the petitioners is a member of the particular co-operative society. Every petitioner has acquired his rights from a member of the society. The only clause which would, therefore, be applicable to him is Clause (b), provided he can be said to be a person claiming through a member. There has been a great deal of argument before us as to what these words exactly signify. Mr. Nariman has contended that these words refer to a person who though not a member claims as a member, that is, membership rights, by virtue of some transaction or relationship with a member. Section 22 of the Act mentions the persons who may be admitted as members of a society. Under Clause (b) a firm, company or any other body corporate constituted under any law for the time being in force, or a society registered under the Societies Registration Act, can be a member of the society. Under Clause (f) a registered public trust can also be a member of the society. Section 29 states that a transfer of or charge on the share or interest of a member in the share capital of a society shall be subject to such conditions as may be prescribed. Sub-rule (1) of Rule 24 provides that no transfer of shares can be effective unless it is made as provided in this sub-rule. Sub-section (1) of Section 30 states that on the death of a member of a society, the society shall transfer the share or interest of the deceased member to a person or persons nominated in accordance with the rules, or, if no person has been so nominated, to such person as may appear to the committee to be the heir or legal representative of the deceased member. Sub-rule (1) of Rule 25 provides that for the purpose of transfer of his share or interest under Sub-section (1) of Section 30, a member of a society may, by a document signed by him or by making a statement in any book kept for the purpose by the society, nominate any person or persons. Sub-rule (2) of Rule 20 states that a society may admit minors and persons of unsound mind inheriting share or interest of deceased members as its members through their legal representatives or guardians respectively. These provisions deal with transfer of shares and acquisition of rights of membership by inheritance or otherwise. Mr. Nariman has urged that a person can be said to, claim through, a member only when he claims qua a member, that is, when he claims the rights of membership, under these and other similar provisions, on account of transfer of shares to him or as a partner of a firm of which he is a member or as the heir or legal representative of a member or other similar reason.

16. In Shyam Co-operative Society v. Ramibai : AIR1952Bom445 a charitable trust was a, member of the appellant co-operative society. The trust had advanced Rs. 4 lakhs to the society. Subsequently the trustees filed a suit to recover the amount. A. notice of motion was taken out by the appellant society to stay the suit on the ground that under Section 54 of the Bombay Co-operative Societies Act the dispute could only be adjudicated upon by arbitration as provided in that section. This notice of motion was dismissed and the order was confirmed in appeal. The relevant part of Section 54 was as follows:-

54, (1)(a) If any dispute touching the business of the society arises... between the society... and any... member... of the society it shall be referred to the Registrar for decision by himself or his nominee...

The dispute shall include claims by a society for debts or demands due to it from a member or a past member or the heirs or assets of a past member, whether such debts or demands be admitted or not.

It was held that under this section the dispute must be between the society and a member as a member, that it must relate to a transaction in which the member was interested as a member and that Section 54 would have no application in a case where a member had advanced a loan to a society, which he was under no obligation to advance. At p. 518 the learned Chief Justice observed:.Now, before a case can fall under Section 54, it is not sufficient that there should be a dispute touching the business of the society. What is further required is that the dispute must be between the society and its member, and proper emphasis has got to be laid upon the expression 'member' used in this section. The dispute must be between the society and the member as a member or qua a member. It must be a dispute in which the member must be interested as a member. It must relate to a transaction in which the member must be interested as a member.

Thereafter Section 54 was amended and the following words were inserted into the second paragraph in Clause (a) of Sub-section (1) before the words 'whether such debtor....'

as well as claims by a member or past member or the heirs of a past member for any debts or demands due to him from the society.

The section as amended came up for consideration in Malvan Co-op. Bank v. XamialaJcar. 8 It was held having regard probably to the words 'any debts or demands', that the section as amended applied to a dispute in regard to a loan advanced to a member otherwise than in his capacity as a member. At p. 631 the learned Chief Justice observed:.Therefore, the Legislature by enacting this second paragraph was extending the scope of a dispute, which had been defined in Section 54(1)....Therefore, for the purpose of this enlarged definition of a 'dispute', all that is necessary is that there should be a debt or demand due to a society by a member and a claim to be made by a society in respect of that debt or demand. It is unnecessary for the purpose of this enlarged definition that the debt must be due from a member in his capacity as a member or qua a member. It is sufficient if there is a debt or a demand due by the member howsoever the debt or demand might arise, provided the debt or demand is due to the society and a claim is made by the society in respect of that debt or demand.

Provisions similar to Section 54 of the Bombay Co-operative Societies Act, 1925, are contained in Section 68 of the Friendly Societies Act, 1896. Clause (a) in Sub-section (1) of this section is as under:

Every dispute between-(a) a member or person claiming through a member or under the rules of a registered society or branch, and the society or branch or an officer thereof... shall be decided in manner directed by the rules of the society or branch...

It has been hold that disputes to be decided under this section must have relation to the membership of the member, such as the repayment of money deposited by a member and that dispute between a society and a member not in his capacity as a member, for example, a claim by a society against one of its officers for misappropriation of funds or a dispute with a member as mortgagor or mortgagee, are not disputes within this clause, see para. 123 at page 65 in Halsbury's Laws of England, Vol. 18, Third edn.

17. Section 51 of the Madras Co-operative Societies Act, 1932, contains similar provisions about the settlement of disputes between a co-operative society and its members. In Krishna Ayyar v. Urban Bank Ltd., Calicut I.L.R (1933) Mad. 970 the Madras High Court has held that in order that a dispute can be dealt with by the Registrar under Section 51 of the Madras Co-operative Societies Act, it must be a dispute between the society and a member in his capacity as a member. In that case it was decided that a dispute between the appellant and the Co-operative Bank, of which the appellant was a member, arising out of the matters relating to the appellant's acts as the Bank's Vakil, was not a dispute to which the Act applied and that the Registrar had, therefore, no jurisdiction to deal with the matter. The same view has been taken in Narayana Ayyar v. Co-op. Urban Bank Ltd. A.I.R [1936] Mad. 81 and Yegetols Ltd. v. Wholesale Co-op. Stores, Chittoor : (1956)1MLJ36 . In the last case it was observed that for a claim to fall within Section 51 of the Act, it should be a claim by the society against a member as a member touching the business of the society and that a liability of a member to the society which is not incurred by the member as a member is outside the scope of Section 51.

18. In these cases, therefore, it has been held, that the domestic tribunal set up by the Act has jurisdiction to decide only those cases in which a claim is made by or against a member as a member. These decisions do not, however, support Mr. Nariman's contention that a person can be said to claim through a member only when he claims membership rights.

19. Mr. Nariman has laid stress on the fact that whereas in the case of a deceased member Clause (6) of Sub-section (1) of Section 91 refers to a person claiming through a deceased member, in Clauses (i) and (iv) of Explanation 2 the words used are: 'Nominee, heir or legal representative, of a deceased member.' Mr. Nariman has argued that the Legislature has thereby indicated in what sense the word 'member' has been used. We are not impressed by this argument. The only persons, from whom a society can recover a debt due to it from a, deceased member, are his nominee, and heir or legal representative. These are also the persons who can claim a debt dug to a deceased member from the society. Similarly, the persons against whom a society can proceed for obtaining possession of premises allotted to a deceased member are his nominee, or heir and legal representative. An award passed against such persons will also bind the person claiming through the deceased member. Consequently reference to nominee, heir or legal representative in these clauses in the Explanation does not support Mr. Nariman's argument that only a person claiming membership rights can be said to be a person claiming through a member.

20. In our opinion, there is nothing in the Act or in the rules to justify our giving such a narrow meaning to the expression 'claiming through a member' as has been suggested by Mr. Nariman.

21. Mr. Setalvad has, on the other hand, argued, and his arguments have been adopted by Mr. Naik, that the word 'member' in Section 91 should not be interpreted to mean a member acting in his capacity as a member, because otherwise an anomalous position might arise, viz., that while Section 91 will apply when a society has advanced a loan to a person other than a member by reason of Clause (c) in Sub-section (1) of Section 91. it will not apply when the loan is given to a member otherwise than in his capacity as n member. There would have been force in this argument but for the decision in Malvan Co-operative Bank v. Kamalahar. The first clause in Explanation 2 is substantially in the same terms as the second para, of Section 54 of the Bombay Co-operative Societies Act, 1925, as amended which was construed in Malvan Co-operative Bank v. Kamalahar. In view of this decision a dispute arising1 out of a loan advanced to a member by a society will also be a dispute within the meaning of, Section 91.

22. Section 91 is very much wider in terms than the corresponding Section 54 of the Act of 1925. Clauses (c) and (d) bring within the ambit of this section several persons other than members, who enter into transactions with a Co-operative society. Mr. Setalvad has contended that in view of the fact that the special provisions of the Act relating to settlement of disputes have been made applicable to a large number of persons, who have dealings with a co-operative society, the word 'member' should no longer be given a limited meaning. Mr, Nariman has, on the other hand, urged that as the Legislature has in Clauses (c) and (d) specified categories of non-members who are covered by Section 91, it cannot be said, that the Legislature intended to alter the previous position in regard to the meaning which has been given by judicial decisions to the word 'member'.

23. It seems to us that the words 'claiming through a member' must be given their ordinary meaning, that is, deriving title or rights through a member. At the same time weight must be attached to the word 'member' and having regard to the decision referred to above, the title or rights claimed must be those to which a member was entitled or which he could claim by virtue of his being a member. The words 'claiming through a member' therefore mean deriving such title or rights through a member as the member possessed or had acquired by reason of his being a member or in his capacity as a member.

24. In the first two applications, the petitioner have acquired their rights of occupation of the flats in their possession respectively from respondent No. 1 and respondent No. 3 in these applications. These respondents were allotted these flats by the housing societies, of which they were members. As members they were entitled to the allotment of these flats. Consequently, the petitioners in these applications are persons claiming through members within the meaning of Clause (b) in Sub-section (1) of Section 91. The dispute in each application also touches the business of the particular society. Consequently these disputes are disputes within the meaning of Section 91. The order passed in each case by the Assistant Registrar, Co-operative Societies, referring the dispute for decision to his Nominee, is therefore correct.

25. The rule issued in each application will, therefore, be discharged. No orders as to costs.

26. The position is different in Miscellaneous Application No. 312 of 1963. The building, a part of which is in occupation of the petitioners, belonged to respondent No. 4. It did not belong to, nor had it been acquired from the Co-operative Bank respondent -No. 3, of which respondent No. 4 was a member. The petitioners cannot, therefore, be said to be claiming through a member of the Bank as a member. Consequently Clause (b) will not apply and the disputes between them and the Bank cannot be the subject of a reference under Sub-section (1) of Section 91.

27. In this view, it is not necessary to consider the other points raised by Mr. Nariman that after the transfer of the property to the Bank under Section 100 of the Act, the petitioners became direct tenants of the Bank. We have also not heard Mr. Nariman on his other contention that Section 91 is not applicable, as the, petitioners are the tenants of the premises.

28. In this application we, therefore, set aside the order made by the Assistant Registrar referring the dispute between the petitioners and respondent No. 3 to his Nominee for decision. The petitioners should get their costs of this application from respondent No. 3.

29. We have been told that our interpretation of Sub-section (2) of Section 91 and Sub-section (1) of Section 93 may lead to considerable increase in the work in the office of the Registrar, with the result that proceedings may be considerably delayed. This is, however, a matter for Government to consider. If Government decides to amend the Act, Government may also consider whether the power to decide whether a dispute exists within the meaning1 of Section 01 should not be vested in the authority to whom the matter is referred for disposal. The words with whom the society has or had transactions under the provisions of Section 45' in Clause (c) Section 91(1) do not seem to be appropriate to bring out the intention of the Legislature. Section 45 provides

Save as provided in the Act, the transactions of a society with persons other than members, shall be subject to such restrictions, if any, as may be prescribed.

It is, therefore, not clear which persons are intended to be covered by the above words in Clause (c) in Sub-section (1) of Section 01 For instance, if no restrictions have been prescribed under Section 45 the question would arise whether all the persons with whom the society has transactions will be within the ambit of Clause (c). Clause (d) refers to a person other than member, who has been granted a loan by the society under Section 45. The section which provides for loans to persons other than members is Section 44. These questions may also be considered in case Government decides to amend the Act.


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