& Co. & Ors Vs. Fairfield Cooperative Housing Society Ltd. & Ors
 INSC 286 (19
B.C. (J) Ray, B.C. (J) Sen, A.P. (J)
1989 AIR 81 1988 SCR Supl. (3) 84 1988 SCC (4) 408 JT 1988 (3) 780 1988 SCALE
INFO : R 1989 SC 86 (2,3) R 1989 SC 87 (2) D 1990 SC1563 (14)
Cooperative Societies Act, 1960-Section 91- Whether Dispute filed by Fairfield, Co-operative Housing Society
seeking possession flat from licencees fell within section 91--Whether section
91 is ultra vires of the Articles 14 and 19 of the Constitution.
No. 2, a member of the Fairfield Co-operative Housing Society, a Tenant
Co-partnership Housing Society-- respondent No. I--permitted appellant No. I to
possess and occupy as licencee the not allotted to the respondent No. 2 as a
member of the society, without the consent of the society and in breach of the
bye-laws and Regulations of the Society. The Society filed a dispute against
the respondent No. 2, joining appellants Nos. 1 and 2, the two occupants of the
flat as opposite parties, seeking possession of the flat from all the
opponents. The appellants Nos. 1 and 2 filed written statements contesting the
dispute, stating that they were in exclusive occupation of the flat as licencees.
Judge, Co-operative Court made an award in favour of the Society, holding that
the respondent No. 2 was a member of the disputant Society and the appellants
Nos. 1 & 2 were not the members but were claiming through respondent No. 2
and that the dispute, touching the business, management and constitution of the
society, fell within Sec-91 of the Maharashtra Co-operative Societies Act, and
that the respondent No. 2 committed breach of the Bye-laws. Rules and
Regulations of the Society.
appeal by the appellants Nos. 1 and 2 against the award, the Maharashtra State
Co-operative Appellate Court held that the claim for-possession was not
affected by the Bye-laws and the appellants were not entitled to the protection
of the Bombay Rent Act. The appellants filed a writ petition before the High
Court which dismissed the same.
the appeal. the Court,
The claim of the fappellants as deemed tenants on PG NO 84 PG NO 85 the basis
of an agreement of leave and licence was untenable. This agreement had been
executed by the licenser respondent No. 2 in favour of Appellant No. 1 for 11
not renewed. [88E. G-H] The appellants 1 & 2 were licensees and not
statutory tenants. They were outsiders permitted to possess the suit premises
as licencees of respondent No. 2 in contravention of the Rules, bye-laws and
regulations of the Society. The dispute falls squarely within the provision of
Section 91(1) of the Act and the Co-operative Court has exclusive jurisdiction to entertain and decide the
dispute and not the Court under the Bombay Rent Act. [89E-F] There was no
factual basis of the allegation of collusion between respondents Nos. 1 and 2
and no merit in the contention. The Society filed the dispute application both
against its member and the appellants who were the occupants of the flat to get
possession of the flat as the appellants were trespassers put in possession
without the consent of the Society and in breach of its bye-laws, rules and
Regulations. [92D-E] Section 91(b) is not ultra vires of Articles 14 and 19 of
the Constitution. [92F.] D.H. Maniar & Ors. v. Waman Laxman Kudav,  I
SCR 403; O.P. Bhatnagar v..Smt. Rukibai Narsindas & Ors.,3 SCR 681 at
696, referred to.
Merchants Co-operative Bank Ltd. v. M/s. Dalichand Jugraj Jain & Ors.,
 1 SCR 887; Sabharwal Brothers & Anr. v. Smt. Cuna Amrit Thandani of
Bombay,  1SCR 53 and I. R. Hingorani v. P.K. Shah & Ors., AIR 1972 SC
v. V.K. Kalghatgi & Ors., AIR 1970 Bombay 201 and Rasiklal Patel & Ors. v. Kailasgauri Ramanlal Mehta &
CIVIL APPELIATE JURISDTCTION: Civil Appeal No. 472 of 1985 From the Judgment
and Order dated 9.8.1983 of the Bombay High Court in Writ Petition No. 1907 of
S.K. Dholakia, Y.R. Naik, K. Rajendra Choudhary, K. Shivraj Choudhary, A.M. Khanwilkar
and A.S. Bhasme for the Appellants.
86 U.R. Lalit, Girish Chandra and M.N. Shroff for the Respondents.
Judgment of the Court was delivered by B.C. RAY, J. This Appeal by special
leave is directed against the judgment and order dated 9th August 1983 passed
in Writ Petition No. 1907 of 1983 by the High Court of Judicature at Bombay
dismissing the writ petition and confirming the judgments and orders by the Maharashtra
Co- operative Appellate Tribunal made in Appeal No. 280 of 1978 and by and
Co-operative Court, Greater Bombay allowing the application of respondent
Co-operative Society filed under Sec. 91(1) of Maharashtra Co-operative
Societies Act, 1960 directing eviction of the respondent No. 2 member of the
Society as well as the appellants nos. 1 and 2 who are trespassers from its
flat No. 7 in the building of the disputants 'Fairfield.'' Churchgate
Reclamation, Bombay 20.
facts giving rise to the present appeal are that the respondent "Fairfield
Co-operative Housing Society" which is a "Tenant Co-partnership
Housing Society'' under Registration No. B -1412 of 1955 owned the suit
respondent No. 2 Smt. Vishni J. Kalwani as a member of the Society was allotted
Flat No. 7 in the 1st Floor of the suit premises for residing therein with
members of her family. The respondent No. 2 permitted the appellant No. I M/s.
A.V.R. and Co. to possess and occupy the said flat as a licencee without the
consent of the Society and in breach of bye-laws and Regulation No. 4 of the
Society's Regulations contained in Farm No. A of the Society's bye- laws. It
has been alleged in the dispute application that the respondent No. 2 obtained
the flat as a member only for investment purposes and she was profiteering by
letting out the flat to other persons contrary to the Bye-laws and Regulations
of the Society. The Society after coming to know of this position served a
notice on March 10,
1973 on her asking her
to vacate the flat. In the said notice it was alleged that the respondent No 2
parted with the possession of the flat without the Society's consent and in
contravention of the Bye-laws and Regulations of the Society. The Society also
alleged that the occupants of the flat were a source of nuisance and annoyance
to other members of the society and further that she had been a persistent
defaulter in payment of Societies dues which by the date of notice had come to
Rs.10,004.38 Paisa. The notice sent to Respondent No. 2 was not replied to.
the Society sent another letter stating all these facts. The respondent No. 2
did not comply with the request.
Co-operative Society, respondent No. 1,filed a dispute against the respondent
No. 2 who is a member for possession PG NO 87 of the said flat given to her.
The Society also joined the appellant Nos. 1 and 2. the two occupants as
opposite parties and sought for possession from all the opponents.
Society prayed for an award against the respondent No. 1 Smt. Kalwani for a sum
of Rs. 10,004.38 with future interest thereon as mentioned in the dispute
respondent No. 2 Smt. Kalwani did not file any written statement and remained
absent. The appellant No. 1 M/s. A.V.R. & Co. who was opponent No. 2 in the
dispute application filed a written statement contending inter alia that the
dispute was barred by jurisdiction as the opponent No. 1 Smt. Kalwani was a
tenant of the Society, that the appellant No. 1 was in exclusive occupation of
the said flat as the licencee of the respondent No. 2 and now, their sister
concern M/s. J.R. Enterprises, the appellant No. 2, were in occupation of the
premises as licencees. It was due to this the Society subsequently impleaded
the appellant No. 2 as opponent No. 3 in the dispute application. It was
further contended that their occupation of the suit premises was under the
leave and licence agreement which continued even after 1st February. 1973 and
so the appellant No. 2 are protected under the Provisions of Bombay Rent Act as
amended. They denied that they were causing any nuisance or annoyance to other
members of the Society. They also denied knowledge about the respondent being a
defaulter in payment of Society's dues. They contended that the right, title and
interest of Smt. Kalwani were not determined and the Society could not ask for
the possession of the suit Premises. The appellant No. 2 also filed a written
statement adopting all the contentions raised by the appellant No. 1 in their
Judge, Co-operative Court after hearing the parties and considering the
evidences has made an award in favour of the Society holding inter alia that
the opponent No. 1 is a member of the disputant society, that the opponent nos.
2 and 3 are not their members but claiming through the opponent No. 1, that the
dispute touches the business, management an(l Constitution of the Society, thus
falling within Sec. 91 of the Maharashtra Co-operative Societies Act. It was
also held that the opponent No. 1 committed breach of Bye-laws, Rules and
Regulations of the Society by inducting opponent Nos. 2 and 3 in the suit
premises without the consent and permission of the society. The opponents Nos.
1 to 3 have been directed to hand over possession of suit premises to the
disputants. The opponent No. 1 was also directed to pay Rs. 10,004.38 p. to the
society with interest thereto @ 9% from the date of filing of the dispute.
88 Against this award the appellants nos. I and 2 filed an appeal being Appeal
No. 280 of 1978 before the Maharashtra State Co-operative Appellate Court. The
respondent No. 1 filed an appeal but she subsequently withdrew the same. The
appellate Court held that the claim for possession was not affected by the
Bye-laws and the appellants were not entitled to protection of Bombay Rent Act.
The order directing giving possession was upheld with the modification that
award in respect of possession shall become executable on the disputant Society
depositing in Court or paying to Smt. Kalwani the contribution paid by her in
respect of the flat in question.
appellants filed a Writ Petition under Articles 226 and 227 of the Constitution
of India before the High Court at Bombay. The Writ Petition No. 1907 of 1983 was dismissed. Hence this appeal by
firstly urged on behalf of the appellants that they have been inducted into
possession of the flat as licencee on the basis of an agreement of leave and licence
and the said agreement of licence is subsisting on 1.2.197-.
they have become deemed tenants under Sec. 15A read with Sec. 5(4A) of the
Bombay Rents Hotel and Lodging House Rates Control Act, as amended up-to-date.
The agreement of leave and licence was not filed either in the trial court or
in the appellate court. It was filed in the High Court It is a leave and licence
agreement executed on 1.9.1969 by the licencee or respondent No. 2 in favour of
M/s. A.V.R. & Company for a period of 11 months. This agreement of licence
was not renewed. Moreover the appellant No.2 M/s. J.R. Enterprises who is in
occupation of Suit Premises has not produced any agreement of Licence inducting
them as licencees. Sec. 15A of the said Act which was inserted by Maharashtra
Amendment Act No. 17 of 1973 enjoins that any person in occupation of and premises
or any part thereof which is not less than a room as a licence on the 1st day
of February, 1973 under a subsisting agreement of licence, shall on that date
be deemed to have become tenant of the landlord in respect of the premises in
his occupation. The only witness examined on behalf of the appellant stated
that he had no personal knowledge about the facts of the case.
proceedings have been taken in any Court to claim the status of a perfected
tenant nor any leave and licence agreement has been filed by the appellant No.
2. The claim of the appellants as deemed tenants is untenable It may be noted
that the appellants did not urge this point therefore the appellate Court. In
the case of D. H. Maniar & Ors. v Waman Laxman Kudav,  1 SCR 403 it has
been observed that:
89 In order to get the advantage of section 15A of the Bombay Rent Act, the
occupant must be in occupation of the premises as a licencee as defined in
section 5(4A) on the 1st of February 1973. If he be such a licencee, the non- obstante
clause of section 15A(1) gives him the status and protection of a tenant in
spite of there being anything to the contrary in any other law or in any
contract. But if he is not a licensee under a subsisting agreement on the 1st
of February 1973, then he does not get the advantage of the amended provision
of the Bombay Rent Act." It was next contended that the dispute cannot be
entertained by the Co-operative Court as the appellants are not claiming
through the respondent No. 2, who is a member of the Society but claiming as
protected licencees. The jurisdiction of Co-operative Court under section 91 of
Maharashtra Co-operative Societies Act, 1947 is barred and the Small Causes
Court under section 28 of the said Bombay Rent Act is competent to entertain
and decide the dispute of the disputants. We have already held above that the
appellants are licencees and not statutory tenants. Sec. 91 of the Maharashtra
Co-operative Societies Act, 1960 provides that notwithstanding anything
contained in any other law for the time being in force any dispute touching the
constitution, business of the Society shall be referred by any of the parties
to the dispute to a Co-operative Court if any of the parties thereto is a
member or a person claiming through a member. The respondent No. 2 is the
member of the Disputant Society. The appellants Nos. 1 and 2 are not members of
the Society but they as licencees are claiming through the respondent No. 2.
The dispute touches the business of the Society and it falls within the ambit
of Section 91 of Maharashtra Co-operative Societies Act. The appellant Nos. 1
and 2 are outsiders who have been permitted to possess the suit premises as licencees
of respondent No. 2 in contravention of the Rules, bye-laws and regulations of
the Society. The dispute falls squarely with in the provision of Section 91(1)
of the Act and the Co-operative Court has exclusive jurisdiction to entertain
and decide the dispute and not the Court under the Bombay Rent Act. Section 28
of the Bombay Rent Act also begins with a non-obstante clause and provides that
the small causes Court or the Court of Civil Judge (Junior Division) shall have
exclusive jurisdiction to entertain and try any suit or proceeding between a
landlord and a tenant relating to the recovery of rents or possession of any
premises to which the Act applies. The scope of the provisions of the two Acts
has been very succinctly stated by this Court in O.P. Bhatnagar v. Smt. Rukibai
Narsindas & Ors.,  3 SCR 681 at 696 PG NO 90 to which one of us (A.P.
Sen, J.) was a party as follows:
the present case, the society is a tenant of co- partnership type housing
society formed with the object of providing residential accommodation to its
co-partner tenant members. Now, the nature of business which a society carries
on has necessarily to be ascertained from the object for which the society is
constituted, and it logically follows that whatever the society does in the
normal course of its activities such as by initiating proceedings for removing
an act of trespass by a stranger, from a flat allotted to one of its members,
cannot but be part of its business. It is as much the concern of the society
formed with the object of providing residential accommodation to its members,
which normally is its business, to ensure that the flats are in occupation of
its members, in accordance with the bye-laws framed by it, rather than of a
person in an unauthorised occupation, as it is the concern of the member, who
lets it out to another under an agreement of leave and licence and wants to
secure possession of the premises for his own use after the termination of the licence.
It must, therefore, follow that a claim by the society together with such
member for ejectment of a person who was permitted to occupy having become a
nominal member thereof upon revocation of licence, is a dispute falling within
the purview of s. 91(1) of the Act." This Court further observed at p. 697
seems to us that the two Acts can be best harmonised by holding that in matters
covered by the Rent Act, its provisions, rather than the provisions of the Act,
should apply. But where the parties admittedly do not stand in the jural
relationship of landlord and tenant, as here, the dispute would be governed by
s. 91(1) of the Act. No doubt, the appellant acquired a right to occupy the
flat as a licensee, by virtue of his being a nominal member, but in the very
nature of things, his rights were inchoate. In view of these considerations, we
are of the opinion that the proceedings under s. 91(1) of the Act were not
barred by the provisions of S. 28 of the Rent Act." It has been pleaded in
the dispute application that the opponent No. 1 PG NO 91 (Respondent No. 2 in
this appeal) inducted opponent No. 2 in possession of the said Act in violation
of the Bye-laws, and Regulation No. 4 of the Society's Regulations contained in
form A of Society's Bye-laws. On this pleading the Co- operative Court has sole
jurisdiction to decide the dispute under sec. 91 of the said Act as the
appellants are claiming as licencees through the member of the Society, the
opponent No. 1 according to the provisions of Sub-section (b) of Section 91 of
the said Act.
Counsel for the appellants cited Deccan Merchants Cooperative Bank Ltd. v. M/s.
Dalichand Jugraj Jain and Ors., [ 19691 1 SCR 887 and Sabharwal Brothers and
another v. Smt. Guna Amrit Thandani of Bombay, [ 1973] 1 SCR 53 in support of
the contention that dispute in question does not come within the parameter of
sec. 91 of the said Act. Those cases have been elaborately dealt with in Bhatnagar's
case (supra) and it had been observed that the ratio of the decisions of these
two cases are not applicable as the facts of these cases are different from the
case in question. The same observation is applicable to the instant case. In
the Deccan Merchant Bank's case the suit house belonged to the owner who
mortgaged the same to the co-operative Bank on taking a loan. The tenants in
question were inducted in the ground floor of the said premises after the mortgage
by the owner. Subsequently the Bank acquired the house in execution of mortgage
decree and then filed a dispute before the Registrar u/section 91 of the Bombay
Co-operative Society's Act to evict the tenant and to take possession. It was
held that this dispute is not within Sec. 91 of the said Act as the house
originally belonged to owner and not to the Society Bank and the tenants were
inducted before Bank purchased the same. In Sabharwal Brother's case the
disputant was the owner of the flat on the second floor of Block No. 8 "Shyam
Niwas" and he let it out to the tenant.
purchaser of the flat who is a member of the Society filed a claim under Sec.
91 of the said Act to recover possession from the tenant. The Society sold the
flat to the disputant member and the disputant is not claiming the flat qua
member of the Society. The dispute is not within the ambit of Sec. 91 of the
facts of the case in 1. R. Hingorani v. P. K. Shah & Ors., AIR 1972 SC 2161
are different from the facts of this case and so the ratio of this decision is
not applicable to the instant case. The owner of a flat entered into a leave
and licence agreement with the licencee. Subsequently a Housing Society was
formed and the owner became its member.
i963, the tenant applied for fixing his monthly PG NO 92 'copmensation' (Rent)
and in that litlgation the owner moved the Registrar for referring the dispute
held, that when the owner entered into the agreement with the tenant, he was
not acting as a member of the Society but as the owner of the flat. Hence the
case did not fall within Section 91(1)(b) of Maharashtra Co- operative
urged that the dispute filed by Respondent No. 1 was a collusive dispute as
between respondents Nos. 1 and 2.
respondent Nos. 1 and 2 in collusion with each other wanted to evict the
appellants Nos. 1 and 2 from the suit premises. No issue was framed about
collusion in the Trial Court nor any evidence was led to sub stantiate this
allegation. The only witness examined on behalf of the appellants admitted that
he did not know anything about the facts of the case. No particulars of the
collusion have been pleaded in the written statement. Moreover this point was
not urged either before the trial court or before the appellate Court. The
Society filed the dispute application both against its member and the
appellants who are the occupants of the flat-in-question to get possession of
the flat as the appellants are trespassers being put in possession without
consent of the Society and in breach of its bye-laws, rules and Regulations.
The allegation of collusion has not been pleaded nor proved. There is no
factual] basis of this allegation. There is no merit in this contention.
91(b) of Maharashtra Co-operative Societies Act has been assailed as ultra vires
of Articles 14 and 19 of the Constitution. The dispute between a Co-operative
Society and a non-member claiming through a member of the Society as provided
in Section 91(b) of the Maharashtra Co-operative Societies Act will be decided
by the co-operative Court.
classification has got nexus to the object of the Act namely the Special
procedure is applicable only to those non members claiming through a member of
the Society as they form a different class. This classification has a
reasonable and rational nexus with the object sought to be achieved by the Act.
In C.P. Khanna v. V.K. Kalghatgi & Ors., AIR 1970 (Bombay) 201 it has been
held that section 91 is not ultra vires of Articles 14 and 19 of the
Constitution. Similar view was expressed by Gujarat High Court in Rasiklal
Patel & Ors, v. Kailasgauri Ramanlal Mehta & Ors.,  Vol. XII
G.L.R. 355 which held clause (b) of sec. 96 of the Gujarat Co-operative
Societies Act, 1961 which corresponds to Sec. 91(b) of the said Act as valid
though clauses (c)(d)(e) of the section 96 were held as ultra vires. We agree
with the views expressed in those judgments and hold that Section 9 PG NO 93
1(b) is not ultra vires of Articles 14 and 19 of the Constitution.
other points have been urged before us.
the reasons aforesaid we dismiss the appeal. There will be no order as to
costs. The decree will not be executed for a period of six months from the date
of this order subject to the appellant's filing an usual undertaking within a
period of two weeks from today to the effect that the appellant will not
transfer, assign or encumber the flat in question in any manner whatsoever and
on undertaking that he will hand over peaceful possession of the flat in
question to the respondent on or before the expiry of the aforesaid period and
he will go on paying the occupation charges equivalent to the amount he had
been paying for each month by the 7th of succeeding month. In default of
compliance of any of these terms, the decree shall become executable only on
the disputant Society paying to Smt. Vishin J. Kalwani the contribution paid by
her in respect of the flat in question.