Electrical Cable Development Association Vs. M/S Arun Commercial Premises
Cooperative Housing Society  INSC 282 (6 May 1998)
Anand, S. Rajednra Babu Rajendra Babu, J.
appeal is preferred by a Company incorporated under the Companies Act. The
claim of the appellant is that an association which was an unregistered body
known as "Indian Cables Maker's Association" was inducted in the year
1969 as a tenant in the premises Room No. 503, 5th floor, Arun Chambers, Tardeo,
Bombay by respondent No. 2 under an agreement termed as 'leave and licence'
dated 23rd September, 1969 at a rental of Rs. 1500/- p.m. out of which Rs.
1000/- was towards the premises and rent of Rs. 500/- p.m. was payable towards
furniture and fixtures; that the name of the appellant was changed from Indian
Cable Maker's Association into M/s Electrical Cable Development Association
also another un-registered body in the month of August 1972 and with the said
association also a similar leave and licence' agreement was executed by the
respondent No. 2 on a rental of Rs. 1750/- p.m. out of which rent of Rs.
1,000/- was towards the premises and Rs. 750/- towards fixtures and furniture;
that in the year 1976 the unregistered body decided to convert itself in to a
company in order to carry on its affairs more effectively and so registered as
such under the Companies Act, 1956; that respondent No.2 continued to receive
rents from appellant in respect of the said premises. The appellant had also
been using parking space in the building in question and had been making
regular payments to respondent No.1 Society; that the appellant filed a suit
for declaration in the year 1981 in the Court of Small Causes at Bombay that
they are tenants in respect of the suit premises; that the second respondent
filed as suit bearing No. 210/296 of 1981 seeking for eviction of the
appellant; that when those proceedings were pending, Respondent No. 2 egged
upon respondent No.1 to raise a dispute in terms of Section 91 of the Maharashtra
Co-operative Societies Act, 1960 (hereinafter referred to as "the
Act") for the purpose of evicting the appellant to enable respondent No.2
to get the said premises and use personally through an arbitrator; that the
Arbitrator made an award on 23.3.1990 directing eviction of the appellant and
that the second respondent be directed to use the suit premises personally;
that the appellant filed an appeal against the said award before the Maharashtra
State Co- operative Appellate Court which was further dismissed by on order
made on 8.1.1991; that a writ petition was thereafter preferred under Article
227 of the Constitution before the High Court of Bombay; that by an order made
on 2.4.1991 the High Court upheld the order made by the Maharashtra State
Co-operative Appellate Court and dismissed the writ petition however giving
time to the appellant to vacate the premises by about a month. Hence this
appeals by special leave.
20th August, 1991, this Court made an order calling for a report from appellate
court after giving an opportunity to the appellant to examine such of its
witnesses as are considered necessary to prove the receipts and the agreement
and allow the respondent also a similar opportunity of rebuttal by leading
evidence both oral and documentary. A report has been received by this Court
pursuant to the said order. The findings recorded by the appellate court and
against the appellant.
Rohtagi, learned Senior advocate for the appellant contended that (1) the
dispute between the appellant and the second respondent arising under the
Bombay Rent Act is pending consideration in a court of competent jurisdiction
and, therefore, the authorities exercising powers under Section 91 of the Maharashtra
State Co- operative Societies Act could not exercise their jurisdiction in the
matter; (2) that the finding recorded by the appellate court and affirmed by
the High Court that the appellant-Company is a distinct legal entity which came
into existence in 1976 and is in occupation of suit premises without any agreement
of leave or licence is incorrect inasmuch as the appellant company is only a
successor to the two un-registered bodies referred to earlier; and (3) that the
finding recorded by the appellate court pursuant to the directions issued by
this Court on 20th of August, 1991 are not correct.
91 of the Act provides for raising a dispute inter alia touching upon the
business of a cooperative society. when a question was raised as to where a
society builds houses of the members and such members let out the premises,
whether it would be within the scope of business of the society, this Court in
O.N. Bhatnagar vs. Ruki Bai (1982 (2) SCC 244), answered the same. It was held
that if the business of the Society is to construct or buy houses and let them
out to it s members, such letting out would form part of its business. A
society formed with the object of providing accommodation to its members which
is its normal business activity and has to ensure that the premises are in
occupation of its members in accordance with the bye- laws framed by it rather
than of a person in unauthorised occupation as it is the concern of the members
who let it out to another under an agree to leave an licence and wants to
secure possession of the premises for his own use after the termination of the licence.
Therefore, a claim by the Society together with such member for ejectment of a
person who was permitted to occupy, upon the revocation of a licence, is a
dispute falling within Section 91(1) of the Act. The same view has been
reiterated by this Court in Samwanwal kejrwal vs. Vishal Cooperative Housing
Society Ltd. and Others [(1990) 2 SCC 288]. Therefore, it would not be open to
the appellant now to contend that the proceedings before the authorities
functioning under Section 91 of the Act would be barred notwithstanding the
proceedings filed by respondent No. 2 before the small causes Court. As held by
this Court in the aforesaid decisions the proceedings under the Act could be
maintained and , therefore, we are of the view that the first contention raised
by Shri Rohtagi deserves to be rejected.
of material was placed before the authorities and we were also taken through
the same to show that there was in existence an unregistered body known as M/S
Electrical Cable Development Association and also M/S Indian Cable Maker's
Association, its predecessor. However, there is no material on the record to
show that the appellant is the successor to such association. We have also
carefully gone through the Memorandum of Association and the Articles of the
appellant-Company to find out whether in any form the unregistered body has
converted itself into a registered body as a Company. On the other hand, what
is stated in clause 3(a) in regard to membership is as follows:- "3 (a)
Every person who shall be a member of the unregistered association known as
"Electrical Cable Development Association" at the date of
registration of this Association shall be entitled as of right to be admitted
as a member of this Association on his submitting a formal application
addressed to the Secretary of the Association agreeing to be bound by the Rules
and Regulations and Bye-laws made under these presents. Such a fee but shall
have to pay deposit as per Rule 5, within the period as may be prescribed and
extended by the Executive Committee." All that is provided under the said
Article is that member of Electrical Cable Development Association as of right
be admitted as a member of the appellant Company subject to certain conditions.
It does not say that all those members in the unregistered association became
members of the association much less any resolution is produced before us of
the Electrical Cable Development Association to show that they are converting
themselves into an incorporated body. The members of the unregistered body are
all incorporated bodies having a high commercial standing in the corporate
sector, and therefore, cannot be expected to be so have or ignorant as not to
take such steps in the event it was the intention of such body to become an
incorporated body in the manner suggested by the appellant.
really such action had been taken, it would not have been difficult for the
appellant to produce such material.
the fact that the appellant is a distinct legal entity as found by the
authorities below and affirmed by the High Court, cannot be seriously disputed.
Since the appellant is a distinct legal entity other than the unregistered
bodies and there is no material to show that it is a successor thereto it is
not understandable a sot how it became a tenant in respect of the premises in
question, without an agent with the Society or respondent No. 2 who is a member
thereof. it baffles us and thus the view taken by the High Court appears to us
to be correct. Therefore, the second contention raised by the appellant either
has no merit and is rejected.
as the third contention urged on behalf of the appellant is concerned in the
view we have taken, we may at once state that it is not necessary to examine
the evidence adduced before the appellate court and the appreciation of the
same by it. Even without deciding the same if we assume the same for the
purpose of appreciation of the matter that the findings recorded by the
appellate court are not correct and deserve to be answered in favour of the
appellant, still the appellant has to fail in view of the finding we have
recorded on the second contention raised by the appellants.
we hold that the High Court was justified in not interfering with the order
made by the appellate court and the appeal deserves to be dismissed. The appeal
is dismissed accordingly. However considering the nature and circumstances of
the case, we make no order as to costs. In the circumstances of the case, we
make no order as to costs.
circumstances of the case, we grant time to the appellant to vacate the
premises till 31st of December, 1998 subject to the condition that it shall
voluntarily, without putting the respondents to the necessity of any execution
deliver vacant possession of the premises to respondent No.2 and shall furnish
the usual undertaking to that effect within four weeks from today.