Times Publications Pvt. Ltd. Vs. Shiriram Transport and Finance Co. Ltd. & Anr
 INSC 328 (26
M.H. Kania, M.H. Sahai, R.M. (J)
1991 AIR 626 1990 SCR Supl. (2) 466 1991 SCC (1) 469 JT 1990 (4) 332 1990 SCALE
Cooperative Societies Act, 1960: Section 91 Cooperative Society--Agreement to
sell office premises in a building owned by the Society between a member and a
non-member--Agreement subject to approval of the Cooperative Society--Refusal
of permission by the Cooperative Society--Reference of dispute by non-member to
Cooperative Court praying specific performance of agreement and a direc- tion
to the Society for approval of agreement--Claim of nonmember whether a claim
against the Society through a member-Dispute "whether touching the
business of society"--Cooperative court whether has jurisdiction over the
appellant company, a member of Cooperative Society, respondent No. 2, was
having its office premises in a build- ing owned by respondent No. 2. It
entered into an agreement to sell the said premises to respondent No. 1, a
non-member subject to the approval of the Cooperative Society. The Cooperative
Society declined to grant permission for trans- fer of the premises. Respondent
No. 1 filed a dispute against the appellant and respondent No. 2 Cooperative
Society in the Cooperative
Court under section
91 of the Maharashtra Cooperative Societies Act, 1960 praying for a decree of
specific performance of the contract and a direc- tion to the Cooperative
Society to approve the said agree- ment.
The Cooperative Court dismissed the dispute for want of
jurisdiction. On appeal by respondent No. 1, the Maharashtra Cooperative
Appellate Court set aside the order of the Cooperative Court. Against the order of the Cooperative Appellate Court, the
appellant filed a writ petition in the High Court which was dismissed by
holding that the dispute was governed by Section 91 of the Act.
appeal to this Court against the Judgment of the High Court, it was contended
on behalf of the appellant that the dispute between the parties was not
governed by Section 91 since it was neither a dispute "touching the
business of the society" nor was it a dispute between a person claiming
through a member against the society.
Allowing the appeal and setting aside the judgment of the High Court, this
1. Before a dispute can be referred to a Coopera- tive Court under the
provision of section 91(1) of the said Act it is not only essential that the
dispute should be of a kind described in sub-section (1) of section 91 but it
is also essential that the parties to the said dispute must belong to any of
the categories specified in clauses (a) to (e) of subsection (1) of the said
section. [473B] 2. In the instant case the main claim of Respondent No. 1 a
nonmember, was for a decree for specific performance of the agreement. The
prayer for an order that respondent No. 2-Society should be directed to give
their approval to the said agreement was merely an ancillary prayer made with a
view to complete the relief of specific performance. The main claim to have the
agreement specifically performed cannot be said to be a claim made by a person
(non-member) against the Society. The claim against the society cannot be said
to be made through a member, the appellant, because it is only when a decree
for performance of the said agreement is passed against the appellant, that it
could be contended that the other relief namely, for an order directing re- spondent
No. 2 to approve the said agreement is claimed against the society through a
member. Consequently, the dispute cannot be said to fall within the scope of
section 91(1)(b) of the Act. Therefore, the High Court committed an error in
coming to the conclusion that both the parties to the dispute belonged to the
categories covered under section 91(1)(b) of the Act. [473E-H; 474A] Deccan
Merchants Cooperative Bank Ltd. v. M/s Dalichand Jugraj Jain and Ors.,  1
S.C.R. 887; M/s Leong and Anr. v. Smt. Jinabhai G. Gulrajami and Ors., A.I.R.
1981 Bom. 244 and Sanwarmal Kejriwal v. Vishwa Cooperative Hous- ing Society
Ltd. and Ors.,  2 SCC 288, distinguished.
v. Smt. Rukibai Narsindas & Ors.,  3 S.C.R. 681, referred to.
APPELLATE JURISDICTION: Civil Appeal No. 4979 of 1990.
the Judgment and Order dated 25.8.1989 of the Bombay High Court in W.P. No.
6058 of 1986.
V.M. Tarkunde, D.R. Poddar and V.B. Joshi for the Appellant.
(N.P.), Rama Subramaniam, A.K. Ganguli, R.P. Bhat, K. Swamy and A.S. Bhasme for
Judgment of the Court was delivered by KANIA, J. Leave granted. Counsel heard.
is an appeal from the judgment of a learned Single judge of the Bombay High
Court dismissing Writ Petition No.
of 1986 filed by the appellant on the Appellate Side of that Court. The
appellant and respondent No. 1 are companies incorporated under the Indian
Companies Act. ReSpOndent No.
2 is a
Cooperative Society registered under the Maharashtra Cooperative Societies Act,
1961 (hereinafter referred to as "the said Act"). Appellant is a
member of respondent No. 2- Cooperative Society and has its office premises in
the building owned by respondent No. 2. Some time prior to September 10, 1985 the appellant entered into an
agreement to sell the said office premises to respondent No. 1 subject to the
approval of respondent No. 2. The terms of the said agreement were incorporated
in a letter dated September
10, 1985 addressed by
the appellant to the Vice-Chairman and the president of respondent No. 1: It
was set out in the said letter that the price for the said premises was to be calcu-
lated at the rate of Rs. 2,000 per square feet. The letter further stated:
are agreeable to sell you the same subject to approval of the Cooperative
Society owning the building.
shall provide you vacant possession and hand over the same free of all incumbrances
only after we are able to obtain alternate accommodation for our company .....
of Rs. 50,000 was paid by a demand draft by re- spondent No. 1 to the appellant
under the said agreement. By a letter dated November 15, 1985 the appellant sought the approval
of respondent No. 2 to the transfer of the said office premises to respondent
No. 1. By its letter dated November 18, 1985
addressed to the appellant, respondent No. 2 stated that the appellant was
requested to offer to trans- fer of the said. premises to the existing members
of the society as a first preference as per the established prac- tice of the
society. It further stated that in case the existing members of respondent No.
2 were not willing to buy the said premises, the premises could be given for
trans- 469 fer to an outside transferee. By its letter dated November 22, 1985, addressed to respondent No. 1 the
appellant point- ed out that respondent No. 2 had declined to grant permis- sion for
transfer unless the premises were first offered to the existing members of the
society by Way of a first pref- erence. The said letter then stated that it was
not possible to continue negotiations any further. Along with the said letter
the demand draft of Rs.50,000 referred to above was returned by the appellant.
Without any further correspond- ence respondent no. 1 filed a dispute in the
Cooperative Court No. 17 Bombay against the appellant and respondent No. 1 by
statement of claim which can be conveniently referred to as a plaint.
plaint respondent No. 1 inter alia stated that on the promises and
representations made by the appellant to respondent No. 1 it had paid a sum of
Rs.2,60,000 to one I.M. Choksey representing himself as the Chairman of the
appellant and one S. Ramakrishnan, claiming to be the repre- sentative of his
wife who was a Director of the appellant.
No. 1 further claimed that it had paid a further sum of Rs.40,000 in cash to
the appellant without taking a .receipt. Respondent No. 1 urged that but for
the assur- ance given by Choksey and Ramakrishnan acting on behalf of the
appellant and one Col. G.D. Hadep, acting on behalf of respondent No. 2 that
the appellant would be in a position to transfer the said premises by the end
of November 1985 and respondent No. 2 would not object to such transfer,
respondent No. 1 would not have paid such a huge amount to the appellant.
Respondent No. 1 further stated that the appellant and respondent No. 2 had
promised respondent No. 1 that they would complete the formalities of transfer
of the said premises within a few days and there would be no objec- tion or
obstruction whatever in the said transfer. Respond- ent No. 1 went on to say
that it was given to understand that the appellant and respondent No. 2 were
conspiring to sell the said premises to a third party for a larger amount.
No. 1 was ready and willing to perform its part of the contract and prayed for
an order for specific per- formance of the contract. The relevant portion of
paragraph 10 of the plaint, which deals with jurisdiction, sets out that
respondent No. 2 is a cooperative society and is vital- ly interested in the
transfer and sale of the said premises and to ensure that the transfer is done
under the provisions of its bye-laws, the said Act and the rules. Respondent
No. 2 had taken active part in the transaction entered into be- tween respondent
No. 1 and the appellant who _is a member of respondent No. 2, and that
respondent No. 1 was claiming his rights through the appellant who was a member
and hence, the subject matter of the dispute fell within the ambit of section
470 91 of the said Act. Respondent No. 1 prayed for a declara- tion that the
aforesaid dispute was a dispute falling under section 91 of the said Act and
prayed that the appellant and respondent No. 2 should be directed to
specifically perform the agreement recorded in the letter of September 10, 1985 and transfer the said premises to
respondent No. 1. The rest of the prayers in the plaint are immaterial for our pur-
to certain orders made by the Bombay High Court the Cooperative Court framed an issue as to whether it
had jurisdiction to entertain the dispute. The Court recorded evidence led by
respondent No. 1 off this issue and dis- missed the dispute for want of
jurisdiction. This order was set aside by the Maharashtra Cooperative Appellate
Court, Bombay, by its order dated September 9, 1986. The appellant herein filed a writ
petition in the High Court to challenge the said order. The learned Single
Judge who heard the said writ petition dismissed the same and held that the
case was governed by the provisions of section 91 of the said Act.;
this decision which is sought to be challenged before us by the appellant.
submitted by Mr. Tarkunde, learned counsel for the appellant that the agreement
to sell the said premises with which we are concerned, was entered into between
the appel- lant, a member of respondent No. 2, a Cooperative Society and
respondent No. 1, a nonmember. The said agreement was for transfer of premises
belonging to the appellant to respondent No. 1, a non-member, in a building
owned by respondent No. 2, a cooperative society. The claim in the dispute was
for obtaining the specific performance of the said agreement and the prayer for
directing respondent No. 2 to approve the said agreement was in the nature of
an ancil- lary prayer to complete the relief. The main relief was for specific
performance of the said agreement. It was submitted by him that such a dispute
cannot be said to be a dispute "touching the management or business of a
society" as con- templated in sub-section (1) of section 91 of the said
Act nor can it be said that respondent No. 1, a non-member was making a claim
against respondent No. 2-society through a member, namely, the appellant. The
main relief sought was for specific performance of an agreement by a member to sell
the premises in the society building to a non member and such a claim can never
be said to be made against the socie- ty through a member.
order to appreciate the submissions made, it is desirable to set out the
material portion of Section 91 of the said Act which runs as follows:
"91(1) Notwithstanding anything contained in any other law for the time
being in force, any dispute touching the con- struction, elections of the
office beares. conduct of gener- al meetings, management or business of a
society shall be referred by any of the parties to the dispute, or by a federal
society to which the society is affiliated or by a creditor of the society to
the Cooperative Court if both the parties thereto are one
or other of the following: