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The Salem Fiarlands Co-operative House Building Society Ltd. by Its Secretary Vs. R. Sugunaleelavathi Ammal and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtChennai High Court
Decided On
Reported in(1968)1MLJ300
AppellantThe Salem Fiarlands Co-operative House Building Society Ltd. by Its Secretary
RespondentR. Sugunaleelavathi Ammal and ors.
Cases ReferredKruse v. Johnson L.R.
Excerpt:
- .....neither applies for the loan nor commences construction of the house within six months from this date (date of registration of this amendment or date of allotment of the site whichever is later) it shall be competent to the board of directors to cancel the allotment and re-allot the plot to another member.the first respondent in this petition was admitted as a member of the petitioner-society on 29th march, 1959 and was allotted plot b-1 for the construction of a house eversince the allotment of the plot to the first respondent, there was continuous correspondence between the society and the allottee for nearly three vears it is unnecessary to state in detail the nature of the correspondence that passed between them; suffice it to say that the crux of the correspondence seems to lie.....
Judgment:
ORDER

T. Venakatadri, J.

1. The Salem Fairlands co-operative House Building Society Limited has by its Secretary, filed this writ petition to call for the records in C.M.A. No. (C.S.) 1 of 1963 on the file of the co-operative Tribunal, Salem (District Judge, Salem) and quash the order dated 20th November, 1964.

2. The Salem Fairlands co-operative House Building Societv Limited is a Society registered under Act VI of 1932. The object of the Society is to carry on for the benefit of its members the trade of building and of buying, selling, hiring, letting and developing land in accordance with co-operative principles and to give loans to members for construction of new dwelling houses. In respect of it, the Society has framed by--laws, and By-law 37(b), with which we are concerned in this petition, provides:

A member who has under by-law 37 (a) exercised the option of constructing the house himself or herself shall apply for a Government loan through the Societv within the period of six months from this date. (Date of registration of this amendment or date of allotment of site whichever is later). However if the member does not choose to apply for a Government loan, he or she shall commence the construction of the house according to the designs approved by the Board of Directors within six months from this date. If the member neither applies for the loan nor commences construction of the house within six months from this date (date of registration of this amendment or date of allotment of the site whichever is later) it shall be competent to the Board of Directors to cancel the allotment and re-allot the plot to another member.

The first respondent in this petition was admitted as a member of the petitioner-Society on 29th March, 1959 and was allotted plot B-1 for the construction of a house Eversince the allotment of the plot to the first respondent, there was continuous correspondence between the Society and the allottee for nearly three vears It is unnecessary to state in detail the nature of the correspondence that passed between them; suffice it to say that the crux of the correspondence seems to lie that while the Society was insisting upon the allottee constructing the building as expeditiously as possible, the first respondent has been evading, dodging and deliberately neglecting the construction of the house, as per bye-law relating to construction, on some pretext or other. When the Society started questioning the conduct of the first respondent in postponing construction of the house, she pretended to start construction by digging the ground and excavating some earth for the proposed foundation and also partly digging a well. After waiting for sufficient time, the Board of Directors of the Society got exasperated at the conduct of the first respondent They convened a meeting on 8th January, 1962, and resolved to issue notices to 18 defaulters including the first respondent herein to show cause why the a motment should not be cancelled for non-compliance m spite of repeated reminders This notice was served on the first respondent on 15th January, 1962. The first respondent replied on 26th January, 1962 to the Board s previous letter dated 25th December, 1961, but did not refer at all to the communication dated 8th January, ig62. Finally the Board of Directors of the Society met on 15th February 1962 and cancelled the allotment made to the first respondent and also resolved to re-allot the same. The plot in question was allotted thereafter to the second respondent on 19th July, 1962.

3. Thereupon, the first respondent filed an arbitration claim before the Deputy Registrar of co-operative Societies, Salem, under Section 51, of the Madras Cooperative Societies Act, 1932. He found that the first respondent vidated bye-law 37(b) of the Society, in the matter of the construction of the house, that the resolution of the Board of Directors was passed without any bias or ulterior motive and was therefore fully justified. In the end, he dismissed the claim of the first respondent. On appeal to the Co--operative Tribunal, Salem (District Judge, Salem), the learned Tribunal allowed the Appeal and set aside the order of the Deputy Registrar. The Tribunal has observed that if the bay-law is not specific, if the bay-law is wanting in some respects, ifthe bay-law does not specify the time within which the building should be completed, it is not for the Registrar or for the Court to interpret the bay-law in a way advantageous to the Societies or disadvantageous to the members. He held that the first respondent did not come within the mischief of bay-law 37(b) and that therefore the allotment in favour of the second respondent by the Society was incompetent. It is to quash this order of the Tribunal, the Society has filed this petition under Article 226 of the Constitution.

4. Dealing with bye-laws, Edward Beal in his book on Cardinal Rules of legal Interpretation (1908 Edition) says at pages 405-406:

By-law or bay-law is the Scandinavian byr (hamlet) a Jaw made by a hamlet or township for the regulation of its own affairs. In Scotland those laws are called laws of bur law or bur law, which are made by neighbours elected by common consent in. the birlaw Courts. Every by-law must be legi, fidei rationi consona. If it be lawful and reasonable, it will be good.... A by-law, not reasonable in any respect, will be Void.

Lord Russel of Killowen, C. J. in the classical case on the subject Kruse v. Johnson L.R. (1998) 2 Q.B.91 observed:

A by-law.... I take to be an ordinance affecting the public, or some portion of the public, imposed by some authority clothed with statutory powers ordering something to be done or not to be done, and accompanied by some sanction or penalty for its non-observance. It necessarily involved restriction of liberty of action by persons who come under its operation as to acts which but for the by-law, they would be free to do or not do as they pleased. Further, it involves this consequence--that, if validly made, it has the force of law within the sphere of its legitimate operation....

In De Morgan v. Metropolitan Board of Works L.R. (1880) 5 Q.B.D. 155 , Lush, J., said:

By-laws are a code of restrictions,

Commenting on this observation, it is stated in Craies on Statute Law at page 297 (foot-note) that such restrictions are restrictions on the liberty of residents in the locality to which they apply. These bye-laws are regulations made by public bodies, municipal corporations and registered societies. Only when the bye-laws of building societies are uncertain and unreasonable, they should be treated as ultra vires. A bay-law is liable to be declared void if it is not certain and positive in its terms, i.e., if it does not contain adequate information as to what it requires or forbids to be done, so that persons affected may be in no doubt as to what they are required to do or abstain from doing, and as to the penalty for non-compliance. Generally, Courts are averse to declaring bye-laws of this kind bad, on the ground of their being unreasonable. Lord Hobhouse said in Slattery v. Muylor L.R. (1883) 13 A.C. 446:

But in determining whether or no a bay-law is reasonable, it is material to consider the relation of its framers to the locality affected by it, and the authority by which it is sanctioned.

In this connection, it is also worthwhile to remember the passage of Lord Russel of Killowen in Kruse v. Johnson L.R. (1898) 2 Q.B. 91:.when the Court is called upon to consider the bye-laws of public representative bodies clothed with the ample authority which I have described, and exercising that authority accompanied by the checks and safeguards which have been mentioned, I think the consideration of such bye-laws-ought to be approached from a different standpoint. They ought to be supported if possible. They ought to be, as has been said, 'benevolently' interpreted, and credit ought to be given to those who have to administer them that they will be reasonably administered. This involves the introduction of no new cannon of construction. But, further, looking to the character of the body legislating under the delegated authority of parliament, to the subject-matter of such legislation, and to the nature and extent of the authority given to deal with matters which concern them, and in the manner which to them shall seem meet, I think Courts of justice ought to De slow to condemn as invalid any bye-law, so made under such conditions, on the ground of supposed unreasonableness.... But unreasonable in what sense? If, for instance, they were found to be partial and unequal in their operation as between different classes; if they were manifestly unjust; if they disclosed bad faith if they involved such oppressive or gratuitous interference with the rights of those subject to them as could find no justification in the minds of reasonable men, the Court night well say, parliament never intended to give authority to make such rules; they are unreasonable and ultra vires. But it is in this sense, and in this sense only, as I conceive, that the question of unreasonableness can properly be regarded. A bay-law is not unreasonable merely because particular Judges may think that it goes further than is; prudent or necessary or convenient, or because it is not accompanied by a qualification or an exception which some Judges may think ought to be there.

5. On a review of the case-law above mentioned, I am of opinion that a bay-law made by a Society ought to be benevolently interpreted, unless it is manifestly unjust or disclosed bad faith. The particular by-law has specifically stated that if the member does not commence construction of the house within six months from the date of allotment of the site, it shall be competent to the Board of D rectors to cancel the allotment and re--allot the plot to another member. It certainly means that the construction should be started within the time stipulated and completed within a reasonable time. Such a bay-law cannot be said to be not specific and wanting in some respects. In the instant case, the Directors have waited for more than 24 months thereby giving the first respondent ample time and opportunity to make the construction. But she deliberately postponed the construction of the building. In such circumstances, the Board of Directors have acted within their rights in canncelling the allotment made to her and re-allotting the plot to the second respondent herein.

6. For the foregoing reasons, the writ petition is allowed, the order of the Cooperative Tribunal set aside and that of the Deputy Registrar restored. There-will be no order as to costs.


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