M/S.
Anita Enterprises & Anr Vs. Belfer Coop. Housing Society Ltd. & Ors
[2007] Insc 1142 (14
November 2007)
B.N.
Agrawal & P.P. Naolekar
CIVIL
APPEAL NOS. 2990-2991 OF 2005 WITH
CIVIL APPEAL NOS. 2992-2993 OF 2005 AND CIVIL APPEAL NOS. 2994-2995 OF 2005 B.N.
AGRAWAL, J.
1.
These appeals by special leave have been filed against separate orders rendered
by a Division Bench of the Bombay High Court in Letters Patent Appeals whereby
the same have been dismissed as not maintainable, thereby confirming the common
judgment rendered by a learned Single Judge of the High Court in three writ
petitions filed under Article 227 of the Constitution of India [hereinafter
referred to as `the Constitution'].
2. The
facts, in brief, are that the Belfer Cooperative Housing Society Limited, Bandra
[West], Mumbai, respondent No. 1 in Civil Appeal Nos. 2990-2991 of 2005,
[hereinafter referred to as `the Society'], which was a tenant co-partnership
housing society, held both lands and flats constructed thereon and Dr. Gopal Mahadeo
Dhadphale, respondent No. 2 in the said appeals [hereinafter referred to as
`the member'] was admitted as member of the Society in the year 1962 and flat
No. 4 on the ground floor was allotted to him. On 3.6.1982, the member inducted
M/s. Anita Enterprises, appellant No. 1 in the said appeals, in room No. 2 of
the said flat on a monthly rental of Rs. 1000/- and on 3.10.1983 the appellant
aforementioned was inducted in room No. 3 as well on a monthly rental of Rs.
750/-. The member thereafter inducted M/s. Anita Medical Systems Pvt. Ltd.,
appellant No. 2 in the said appeals, in room no. 1 of the flat in question on a
monthly rental of Rs. 1000/- which was subsequently enhanced to Rs. 1500/- per
month and both the appellants were put in possession of the aforesaid premises.
The appellants paid rent upto the month of December, 1986 and as the member
refused to accept the rental from January, 1987, the rental was sent to him by cheques
under registered post, but the same was not accepted.
3.
Thereupon, the appellants were asked to vacate the premises in question which
necessitated filing of two separate suits by them in the year 1987 before the
Small Causes Court for a declaration that they were tenants with regard to the
aforesaid premises of which they were in occupation and for perpetual
injunction restraining the member from interfering in any manner with their
possession over the premises in question in which suits only the member was
made party and not the Society. The member in the said suits contested the
claim of the appellants and both the suits filed by the appellants were
dismissed by the trial court upon a finding that the appellants were not
inducted as tenants in the suit premises. But on appeal being preferred to the
appellate bench of the Small Causes Court, the same were decreed and it was
held that the appellants were inducted as tenants in the premises in their
occupation.
4. In
the meantime, the Society raised a dispute in the year 1989 before the
Cooperative Court under Section 91 of the Maharashtra Cooperative Societies
Act, 1960 [hereinafter referred to as `the Societies Act'] praying therein that
the appellants be evicted from the premises in their occupation and the member
be directed to occupy the same as, according to the Society, the member had
parted with possession of the premises in question in favour of the appellants
which was not permissible in law. The said case was contested by the appellants
in which the member and the appellants entered appearance and all contested the
claim of the Society. The Cooperative Court by its award decided the dispute in favour of the Society, passed an
order of eviction against the appellants and directed the member to occupy the
premises.
The
said order was upheld in appeal.
5.
Thereafter, before the High Court three writ petitions were filed one by the
appellants against the aforesaid order passed by the appellate court upholding
order passed by the Cooperative Court and the other two writ petitions by the
member against the order passed by the appellate bench of the Small Causes
Court whereby aforesaid declaratory suits filed by the appellants were decreed.
A learned Single Judge of the High Court, by a common judgment, dismissed the
writ petition filed by the appellants whereby order passed by the Cooperative
Court against the member and the appellants, which was upheld in appeal, has
been confirmed and allowed the writ petitions filed by the member, set aside
judgment and order passed by the appellate bench of Small Causes Court and
restored that of the trial court whereby declaratory suits filed by the
appellants were dismissed. The said judgment has been upheld by Division Bench
of the High Court by dismissing the Letters Patent Appeals on the ground that
the same were not maintainable in view of the fact that the writ petitions were
filed under Article 227 of the Constitution. Hence these appeals by special
leave.
6.
Undisputed facts are stated hereinafter. The Society was a tenant
co-partnership housing Society, the land and the structures standing thereon,
which include the premises in question, were held by it, respondent no. 2 was
admitted as its member, allotted flat No. 4 and put in possession thereof. The
appellants are in occupation of the premises in question since the date of their
induction aforementioned and the member remained in possession of the premises
for a period of more than one year before induction of the appellants therein.
Induction of appellants as tenants by the member amounted to transfer of
interest by the member in the premises in question, which was property of the
Society, and the appellants were neither members of the Society nor can be said
to be persons whose application for membership had been accepted by the Society
or persons whose appeal under Section 23 of the Societies Act had been allowed
by the Registrar or persons who were deemed to be members under Section (1A) of
Section 23 of the Societies Act. The appellants were inducted without the
consent of either the Society or its Managing Committee and never admitted as
nominal members of the Society.
7. Shri
Shekhar Naphade, learned senior counsel appearing on behalf of the appellants
in support of the appeals, submitted that respondent no. 2 - in his capacity as
member of the tenant co- partnership housing society - has a possessory right
in the premises in question and the Society was only, by way of legal fiction,
owner of the said premises. It was further submitted that there was no
relationship of landlord and tenant between the Society and the member and
there was such a relationship between the member and the appellants, as such,
the appellants were entitled to claim protection under the Bombay Rents, Hotel
and Lodging House Rates Control Act, 1947 [hereinafter referred to as `the Rent
Act') and the proceeding under Section 91 of the Societies Act was not
maintainable in view of the bar incorporated under Section 28 of the Rent Act.
According to him, the Society was not justified in contending that there was
relationship of landlord and tenant between the Society and the member and
consequently the appellants cannot be said to be sub-tenants of the member as
creation of sub-tenancy was forbidden under Section 15 of the Rent Act unless
there was contract to the contrary, which was not so in the case on hand and,
consequently such a sub-tenant cannot be treated to be a tenant within the
meaning of Section 5(11) of the Rent Act. It was also submitted that the
tenancy right could be created by the member as the transfer by him of his
right in the premises was not forbidden in law, therefore, the Society was not
justified in contending that relationship of landlord and tenant was not duly
created inasmuch as even if there was restrictive right of transfer and not
absolute one if the tenancy was created in infraction of the same, the
transaction creating tenancy right in the appellants by the member cannot be
said to be void as such and if a party wanted to avoid the same, it was
required to move a competent civil court for a declaration that the same was
invalid in law as the said transaction can, at the highest, be said to be voidable
and the said question cannot be examined by a Cooperative Court purporting to
act under Section 91 of the Societies Act.
8. On
the other hand, Shri U.U. Lalit, learned senior counsel appearing on behalf of
the Society, submitted that the relationship between the Society and the
member, as would appear from the Bye-Laws of the Society as well as
Regulations, was that of landlord and tenant in respect of the premises held by
the Society and the member purported to create right of a sub-tenant in the
appellants which was, in the absence of any contract to the contrary, forbidden
by Section 15 of the Rent Act, as such the appellants having not acquired the
status of a tenant within the meaning of the Rent Act, cannot claim protection thereunder
from eviction. Alternatively, it was submitted that even if it was treated that
there existed no relationship of landlord and tenant between the Society and
the member and relationship of landlord and tenant was created between the
member and the appellants, the same was not valid in law as it was not duly
created in view of the fact that such a transaction being in violation of the
provisions of Section 29 of the Societies Act, was invalid as the transfer made
was, though entered into after completion of period of one year of occupation
of the member, to a non-member which was forbidden by law, as would appear from
the said provisions and the Bye-Laws of the Society and its legality or
otherwise could have been examined in a dispute raised under Section 91 of the
Societies Act.
It was
then submitted that asking the Society to first seek such a declaration from a
competent civil court and thereafter raise a dispute under Section 91 of the
Societies Act would frustrate the very object of the Societies Act. It was
further submitted that in any view of the matter, in the present case as the
appellants had already filed suits before the Small Causes Court for a
declaration that their status was that of tenants under the Rent Act, in which
it was open to the Society to raise the question that the relationship of
landlord and tenant was not duly created, meaning thereby not in accordance
with law but contrary to law and for granting relief to the appellants therein
the Court was called upon to go into this question and decide the same. Learned
counsel also submitted that as the relationship of landlord and tenant was not
duly created, the appellants could not claim protection of the Rent Act and the
petition under Section 91 of the Societies Act was maintainable as the dispute
raised was touching upon business of the Society.
9. In
view of the rival submissions, the following questions fall for our
consideration in these appeals:-
1.
Whether status of a member in a tenant co-partnership housing society is that
of a tenant or landlord within the meaning of the Rent Act and consequently
there was any relationship of landlord and tenant between the society and its
member?
2.
Whether purported status of the appellants, who were inducted by the member in
the premises in question was that of a tenant or sub-tenant within the meaning
of Section 5(11) of the Rent Act and if it is held to be a tenant whether the
relationship of landlord and tenant between them was duly created so as to
claim protection from eviction under the Rent Act?
3.
Whether the question regarding legality or otherwise of creation of tenancy
right between the appellants and the member of the Society could be adjudicated
by the Small Causes Court in suits filed by the appellants against member of
the Society for declaration that there was relationship of landlord and tenant
between them and the High Court was justified in restoring decree passed by the
trial court to the effect that there was no relationship of landlord and tenant
between the appellants and member of the Society?
4.
Whether the matter regarding legality or otherwise of creation of tenancy right
between the appellants and the member could be adjudicated by the Cooperative
Court in dispute raised under Section 91 of the Societies Act before the
Cooperative Court or the Society before raising any such dispute was required
to obtain a declaratory decree from competent civil court by filing a properly
constituted suit before it?
10. In
order to appreciate the points involved in these appeals, it would be useful to
refer to the relevant provisions of the Societies Act, Maharashtra Co-operative
Societies Rules, 1961 [hereinafter referred to as `the Rules'], Bye-Laws of the
Society which were registered with the Registrar, Cooperative Society, at the
time of grant of registration to it [hereinafter referred to as `the
Bye-Laws'], Regulations relating to tenancies to be granted by the Society to
members in respect of premises held by the Society contained in Form A which
are part of registered Bye-Laws of the Society [hereinafter referred to as `the
Regulations'] and the Rent Act which run thus:-
THE
SOCIETIES ACT:
"Section
2 - Definitions.- In this Act, unless the context otherwise requires,-- [(16)
"housing society "means a society, the object of which is to provide
its members with open plots for housing, dwelling houses or flats; or if open
plots, the dwelling houses or flats are already acquired, to provide its
members common amenities and services];
(19) (a.)
"member" means a person joining in an application for the
registration of a Cooperative society which is subsequently registered, or a
person duly admitted to membership of a society after registration, and
includes a nominal, associate or sympathizer member;
* * *
* * (c.) "nominal member" means a person admitted to membership as
such after registration in accordance with the by-laws;
* * *
* *"
"Section
23 - Open membership.-
(1) No
society shall, without sufficient cause, refuse admission to membership to any
person duly qualified therefor under the provisions of this Act and its
by-laws.
[(1A)
Where a society refuse to accept the application from an eligible person for
admission as a member, or the payment made by him in respect of membership,
such person may tender an application in such form as may be prescribed
together with payment in respect of membership, if any, to the Registrar, who
shall forward the application and the amount, if any so paid, to the society
concerned within thirty days from the date of receipt of such application and
the amount; and thereupon if the society fails to communicate any decision to
the applicant within sixty days from the date of receipt of such application
and the amount by the society, the applicant shall be deemed to have become a
member of such society.] [If any question arises whether a person has become a
deemed member or otherwise, the same shall be decided by the Registrar after
giving a reasonable opportunity of being heard to all the concerned parties.]
(2)
Any person aggrieved by the decision of a society, refusing him admission to
its membership, may appeal to the Registrar. [Every such appeal, as far as
possible, be disposed of by the Registrar within a period of three months from
the date of its receipt:
Provided
that, where such appeal is not so disposed of within the said period of three
months, the Registrar shall record the reasons for the delay.]
(3)
The decision of the Registrar in appeal, shall be final and the Registrar shall
communicate his decision to the parties within fifteen days from the date
thereof.
[( 4)
Without prejudice to the foregoing provisions of this section, in the case of
agro-processing societies or any other society for which a definite zone or an
area of operation is allotted by the State Government or the Registrar, it
shall be obligatory on the part of such society to admit, on an application
made to it, every eligible person from that zone or the area of operation, as
the case may be, as a member of such society, unless such person is already
registered as a member of any other such society, in the same zone or the area
of operation.]"
"Section
29 - Restrictions on transfer or charge of share or interest .-
(1)
Subject to the provisions of the last preceding section as to the maximum
holding of shares and to any rules made in this behalf, 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.
(2) A
member shall not transfer any share held by him or his interest in the capital
or property of any society, or any part thereof, unless
(a)he
has held such share or interest for not less than one year;
(b)the
transfer is made to a member of the society or to a person whose application
for membership has been accepted [by the society, or to a person whose appeal
under Section 23 of the Act has been allowed by the Registrar; or to a person
who is deemed to be a member under sub-section (1A) of-section 23.].
(3)
Notwithstanding anything contained in sub- sections (1) and (2), where a member
is allowed to resign, or is expelled, or ceases to be a member on account of
his being disqualified by this Act or by the rules made thereunder or by the
by-laws of the society, the society may acquire the share or interest of such
member in the share capital by paying for it at the value determined in the
manner prescribed provided that the total payment of share capital of a society
in any financial year for such purposes does not exceed ten per cent of the
paid-up share capital of the society on the last day of the financial year
immediately preceding.
Explanation
--.[I]--The right to forfeit the share or interest of any expelled member in
the share capital by virtue of any by-laws of the society, shall not be
affected by the aforesaid provision.
[Explanation
II,--In this section, the expression "financial year" means the year
ending on the [31st day, of March] or, in the case of any society or class of
societies the accounts of which are with the previous sanction of the Registrar
balanced on any other day, the year ending on such day.]
(4)
Where the State Government is a member of a society, the restrictions contained
in this section shall not apply to any transfer made by it of its share or
interest in the capital of the society; and that Government may,
notwithstanding anything in this Act, withdraw from the society its share
capital at any time, after giving to the society notice thereof of not less
than three months".
"Section
31 - Share or interest not liable to attachment.- The share or interest of a
member in the capital of a society, or in the loan-stock issued by a housing
society, or in the funds raised by a society from its members by way of savings
deposit, shall not be liable to attachment or sale under any decree or order of
a Court for or in respect of any debt or liability incurred by the member; and
accordingly, neither the Official Assignee under the presidency-towns
Insolvency Act, 1909, nor a Receiver under the Provincial Insolvency Act, 1920,
nor any such person or authority under any corresponding law for the time being
in force, shall be entitled to, or have any claim on, such share or
interest."
"Section
47 - Prior claim of society.-
(1) Notwithstanding
anything in any other law for the time being in force, but subject to any prior
claim of Government in respect of land revenue or any money recoverable as land
revenue and to the provisions of sections 60 and 61 of the Code of Civil
Procedure, 1908.
(a)
any debt or outstanding demand, owing to a society by any member or past member
or deceased member, shall be a first charge,--
(i)
upon the crops or other agricultural produce raised in whole or in part whether
with or without a loan taken from the society by such member or past member or
deceased member,--
(ii)
upon any cattle, fodder for cattle, agricultural or industrial implements or
machinery, or raw materials for manufacture, or workshop, godown or place of
business supplied, to or purchased by such member or past member or deceased
member, in whole or in part, from any loan whether in money or goods made to
him by the society, and
(iii) upon
any movable property which may have been hypothecated, pledged or otherwise
mortgaged by a member with the society, and remaining in his custody;
(b)
any outstanding demands or dues payable to a society by any member or past
member or deceased member, in respect of rent, shares, loans or purchase money
or any other rights or amounts payable to such society, shall be a first charge
upon his interest in the immovable property of the society, Explanation.--The
prior claim of Government in respect of dues other than land revenue, shall be
restricted for the purpose of sub-section (1) to the assets created by a member
out of the funds in respect of which the Government has a claim.
(2) No
property or interest in property, which is subject to a charge under the
foregoing sub-section, shall be transferred in any manner without the previous
permission of the society; and such transfer shall be subject to such
conditions, if any, as the society may impose.
(3)
Any transfer made in contravention of sub-section (2) shall be void.
(4)
Notwithstanding anything contained in sub- sections (2) and (3), a society, which
has as one of its objects the disposal of the produce of its members, may
provide in its by-laws, or may otherwise contract with its members,--
(a) that
every such member shall dispose of his produce through the society, and
(b) that
any member, who is found guilty of a breach of the by-laws or of any such
contract, shall reimburse the society for any loss, determined in such manner
as may be specified in the by-laws."
"Section
91 - Disputes .-
(1)
Notwithstanding [anything contained] in any other law for the time being in
force, any dispute touching the constitution, [elections of the committee or
its officers other than elections of committees of the specified societies
including its officer], 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 co-operative Court if both the parties thereto are one or other
of the following:--
(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
representative of any deceased officer, deceased agent or deceased servant of
the society, or the Liquidator of the society [or the official Assignee of a
de-registered society] .
(b) a
member, past member of a person claiming through a member, past member of a
deceased member of society, or a society which is a member of the society [or a
person who claims to be a member of the society;]
[(c) a
person other than a member of the society, with whom the society, has any
transactions in respect of which any restrictions or regulations have been
imposed, made or prescribed under sections 43, 44 or 45, and any person
claiming through such person;
(d) a
surety of a member, past member or deceased member, or surety of a person other
than a member with whom the society has any transactions in respect of which
restrictions have been prescribed under section 45, whether such surety or
person is or is not a member of the society;) (e) any other society, or the
Liquidator of such a society [or-de-registered society or the official Assignee
of such a de-registered society].
[Provided
that, an industrial dispute as defined in clause (k) of section 2 of the
Industrial Disputes Act, 1947 , or rejection of nomination paper at the
election to a committee of any society other than a notified society under
section 73 - 1 C or a society specified by or under section 73 -G, or refusal
of admission to membership by a society to any person qualified therefor [or
any proceeding for the recovery of the amount as arrear of land revenue on a
certificate granted by the Registrar under sub- section (1) or (2) of section
101 or sub -section (1) of section 137 or the recovery proceeding of the
Registrar or any officer subordinate to him or an officer of society notified
by the State Government, who is empowered by the Registrar under sub - section
(1) of section 156,] [or any orders, decisions, awards and actions of the
Registrar against which an appeal under section 152 or 152 A and revision under
section 154 of the Act have been provided] shall not be deemed to be a dispute
for the purposes of this section.] (3) Save as otherwise provided under
[sub-section (2) to section 93], no Court shall have 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 [or an official Assignee of a
de-registered society] and [the members (including past members, or nominees,
heirs or legal representative or deceased members)] of the same society shall
not be referred [to the co-operative Court] 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 for 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 any 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, 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 condition as the
assignment."
"93.
Transfer of disputes from one Co-operative Court to another and suspension of
proceedings in certain cases.- * * * * * (2) Notwithstanding anything contained
in this Act, the Co-operative Court, on an application made to it by any of the
parties to the dispute, may, if it thinks fit suspend any proceedings in
respect of any dispute, if the question at issue between a society and a
claimant or between different claimants, is one involving complicated questions
of law and fact, until the question has been tried by a regular suit instituted
by one of the parties or by the society. If any such suit is not instituted in
a Civil Court within two months from the date of
the order of the Co- operative Court, shall continue the proceedings and decide
the dispute]"
[Emphasis
Added] THE RULES "Rule 8 Matters in respect of which Registrar may direct
society to make by-laws or society may make by-laws.-
(1)
The Registrar may require a society to make bye- laws in respect of all or any
of the following matters, that is to say.- * * * * * (c) the object of the
society;
* * *
* * (f) the privileges, rights, duties and liabilities of members including
nominal, associate and sympathizer members;
* * *
* * (m) the procedure for expulsion of members;
(2) A
society may make by-laws for all or any of the following matters, that is to
say * * * * * (c) the conditions, if any, under which the transfer of share or
interest of a member may be permitted;"
"Rule
10 Classification and sub-classification of societies.-
(1)
After registration of a society, the Registrar shall classify the society into
one or other of the following classes and sub-classes of societies prescribed
below according to the principal object provided in its by-laws:
Class
1 Sub-Class 2 Examples of societies falling in the class or sub- class, as the
case may be 3 * * * * 5 Housin g Society
(a)Tenant
Ownership Housing Society Housing Societies where land is held either on lease-
hold or free-hold basis by Societies and houses are owned or are to be owned by
members.
(b)Tenant
Co- partnership Housing Society Housing Societies which hold both land and
buildings either on lese- hold or free-hold basis and allot them to their
members.
(c)
Other Housing Societies House Mortgage Societies and House Construction
Societies.
"Rule
28 Expulsion of members.- Any member who has been persistently defaulting
payment of his dues or has been failing to comply with the provisions of the
by-laws regarding sales of his produce through the society or other matters in
connection with his dealings with the society or who, in the opinion of the
committee, has brought disrepute to the society or has done other acts
detrimental to the interest or proper working of the society may, in accordance
with the provisions of sub-section (1) of Section 35, be expelled from the
society. Expulsion from membership may involve forfeiture of shares held by the
member."
[Emphasis
Added] THE BYE-LAWS "Bye-law. 2.- The objects of the Society shall be: -
(a) To purchase plot No. or to purchase building .. constructed on Plot No
(referred to in the application for registration), or any other plot or plots
with the prior approval of the general meeting and of the Registrar and to
construct tenements on such plot or plots for the use of members;
* * *
* * (f) To do all things necessary or expedient for the attainment of the objects
specified in these by-laws;"
"Bye-Law
7.- All persons permanently residing in Bombay City and Suburban area or who
intend to settle down in Bombay City and Suburban area permanently and who have
signed the application for registration are original members. Other members
shall be admitted by the Committee. Every person on applying for membership
shall deposit Re.1/- as entrance fee and the value of at least five shares for
which he shall receive a copy of the by- laws. Two adverse votes are sufficient
to exclude an applicant. In case where an application is refused, the deposit
shall ordinarily be returned.
Note:-
Resident is a person who resides in the house or tenement permanently and which
he does not leave for more than 4 months at a time."
"Bye-Law
12.- (1) A member shall be expelled from the Society by the vote of not less
than two-thirds of the members present and voting at a General Meeting of the
Society on a motion (which shall be final and conclusive) that in the opinion
of the Meeting such member has:
(a) been
a persistent defaulter ,
(b) willfully
deceived the Society by false statements,
(c)
been bankrupt or legally disabled,
(d) been
criminally convicted of an offence involving moral turpitude ,
(e) intentionally
done any act likely to injure the credit of the Society,
(f) gravely
misused the dwelling rented by him from the Society or habitually acted in it
in a disgraceful manner or in a manner which has caused serious offence to his neighbours
or
(g)
without the previous written permission of the Managing Committee has let or
sub-let or given on caretaker or leave licence basis or used for accommodating
paying guests or disposed off in any other manner any portion of the dwelling
accommodation/shops/godowns/garages.
(h) failed
to occupy his premises in the building of the society within a period not
exceeding six months from the date of the allotment of a flat."
"Bye-Law
64.- No member shall be tenant of the Society unless he subscribes to such
number of shares as the Managing Committee prescribes."
"Bye-Law
64(a).- A member to whom a tenement is allotted shall occupy it himself and
shall not assign, underlet, vacate or part with the possession of the tenement
or any part thereof without the previous consent in writing of the Managing
Committee. Such permission shall not be granted unless the member authorizes
the society to recover rent or compensation and taxes and other common charges
from the sub-lettee, licensee or caretaker. The society shall admit every such
sub-lettee, licensee, or caretaker as a nominal member of the Society".
[Emphasis
Added] THE REGULATIONS "Regulation 4.- No tenant shall assign underlet,
vacate or part with the possession of the tenement or any part thereof without
the previous consent in writing of the Society"
"Regulation
24.- The rent shall be calculated as follows and shall be paid on the first day
of each calendar month: -
(a) A
rent of 61/4 per cent per annum (which shall not be increased during the
tenancy) on the cost including the building, land, roads and other items, such
cost to be certified by the Committee whose decision shall be final and
conclusive and to be paid by 12 equal calendar monthly payments.
(b) A
further rent during the term of 25 years of . Per cent per annum (which shall
not be increased during the said term of 25 years except for a new tenant) on
the said cost such rent to be applied to the share account of the tenants and
to be paid by 12 equal calendar monthly payments and it is anticipated that
when all these payments are made the dividend on the shares will be equal to
the rent paid under clause 24(a) hereof.
(c) A
further rent equal to the proportion (applicable to the tenement) of the
expense incurred from time to time in insurance against fire, tempest or flood or
violence by an army or mob or other irresistible force and in the management of
the Society and the maintenance and repair of the Society's Estate such expense
and proportion thereof payable by the tenant to be determined by the
Certificate of the Committee whose decision shall be final and conclusive such
further rent to be paid on the 1st day of the calendar month next following the
date of the said certificate.
(d) A
further rent equal to the proportion applicable to the tenement of the sum or
sums from time to time paid by the Society in respect of assessment and rates
such proportion to be determined by the Certificate of the Committee whose
decision shall be final and conclusive such further rent to be paid on the 1st
day of the calendar month next following the date of the said certificate.
I
agree to take the tenement known assubject to the above regulations which I
agree to observe and perform and by which I agree to be bound"."
[Emphasis
Added]
THE
RENT ACT
"Section
5 Definitions.- In this Act unless there is anything repugnant to the subject
or context,- * * * * * (3) "landlord" means any person who is for the
time being, receiving, or entitled to receive, rent in respect of any premises
whether on his own account or on account, or on behalf, or for the benefit of
any other person or as a trustee, guardian, or receiver for any other person or
who would so receive the rent or be entitled to receive the rent if the
premises were let to a tenant; and includes any person not being a tenant who
from time to time derives title under a landlord; and further includes in
respect of his sub- tenant, a tenant who has sublet any premises; [and also
includes in respect of a licensee deemed to be a tenant by section 15A,
licensor who has given such license, [and in respect of the State Government,
or as the case may be, the Government allottee referred to in sub-clause (b) of
clause (1A), deemed to be a tenant by section 15B, the person who was entitled
to receive the rent if the premises were let to a tenant immediately before the
coming into force of the Bombay Rents, Hotel and Lodging House Rates Control,
Bombay Land Requisition and Bombay Government Premises (Eviction) (Amendment)
Act, 1996]]"
* * *
* * "(11).- "tenant" means any person by whom or on whose
account rent is payable for any premises and includes, -
(a)
such sub-tenants and other persons as have derived title under a tenant [before
the 1st day of February 1973;] [(aa) any person to whom interest in premises,
has been assigned or transferred as permitted or deemed to be permitted, under
section 15;]
(b)
any person remaining after the determination of the lease, in possession, with
or without the assent of the landlord, of the premises leased to such person or
his predecessor who has derived title [before the first day of February 1973;]
(bb) such licensees as share deemed to be tenants for the purposes of this Act
by section 15A] [(bba) the State Government, or as the case may be, the
"'Government allottee, referred to in sub-clause (b) of clause (1A),
deemed to be a tenant, for the purposes of this Act by section 15B;].
[[(c)
(i) in relation to any premises let for residence, when the tenant dies,
whether the death has occurred before or after the commencement of the Bombay
Rents, Hotel and Lodging House Rates Control (Amendment) Act, 1978, any member
of the tenant's family residing with the tenant at the time of his death or, in
the absence of such member, any heir of the deceased tenant, as may be decided
in default of agreement by the Court;
(ii)
in relation to any permission let for the purposes of education, business,
trade or storage, when the tenant dies, whether the death has occurred before
or after the commencement of the said Act, any member of the tenant's family
using the premises for the purposes of education of carrying on business, trade
or storage in the premises, with the tenant at the time of his death, or, in
the absence of such member, any heir of the deceased tenant, as may be decided
in default of agreement by the Court.
Explanation.-
The
provisions of this clause for transmission of tenancy, shall not be restricted
to the death of the original tenant, but shall apply, and shall be deemed
always to have applied, even on the death of any subsequent tenant, who becomes
tenant under these provisions on the death of the last preceding
tenant.".] "Section 15. [In absence of contract to the contrary,
tenant not to sub-let or transfer] [or to give on licence].- [(1)]
Notwithstanding anything contained in any law [but subject to any contract to
the contrary,] it shall not be lawful after the coming into operation of this
Act for any tenant to sub-let the whole or any part of the premises let to him
or to assign or transfer in any other manner his interest therein [and after the
date of commencement of the Bombay Rents, Hotel and Lodging House Rates Control
(Amendment) Act, 1973, for any tenant to give on licence the whole or part of
such premises]:
[Provided
that the [State] Government may by notification in the Official Gazette, permit
in any area the transfer of interest in premises held under such [leases or
class of leases [or the giving on licence any premises or class of premises]
and no such extent as may be specified in the notification.] [(2) The
prohibition against the sub-letting of the whole or any part of the premises
which have been let to any tenant, and against the assignment or transfer in
any other manner of the interest of the tenant therein, contained in
sub-section (1), shall, subject to the provisions of this sub-section be deemed
to have had no effect [before the 1st day of February, 1973], in any area in
which this Act was in operation before such commencement; and accordingly,
notwithstanding anything contained in any contract or in the judgment, decree or
order a Court, any such sub-lease, assignment or transfer of any such purported
sub-lease, assignment or transfer in favour of any person who has entered into
possession, despite the prohibition in sub- section (1) as purported
sub-lessee, assignee or transferee and has continued in a possession [on the
date aforesaid] shall be deemed to be valid and effectual for all purposes, and
any tenant who has sub-let any premises or part thereof, assigned or
transferred any interest therein, shall not be liable to eviction under clause
(e) of sub-section (1) of section 13.
The
provisions aforesaid of this sub-section shall not affect in any manner the
operation of sub-section (1) after the [date aforesaid]".
"Section
15A. Certain licensees in occupation on 1st February 1973 to become tenants.-
(1)Notwithstanding anything contained elsewhere in this Act or anything
contrary in any other law for the time being in force, or in any contract where
any person is on the 1st day of February 1973 in occupation of any premises, or
any part thereof which is not less than a room, as a licensee he shall on that
date be deemed to have become, for the purpose of this Act, the tenant of the
landlord, in respect of the premises or part thereof, in his occupation.
(2) The
provisions of sub-section (1) shall not affect in any manner the operation of
sub-section (1) of section 15 after the date aforesaid]".
"Section
28 - Jurisdiction of Courts.- [(1)] Notwithstanding anything contained in any
law and notwithstanding that by reason of the amount of the claim or for any
other reason, the suit or proceeding would not, but for this provision, be
within its jurisdiction.-
(a) in
Greater Bombay, the Court of Small Causes, Bombay [*] [(aa) in any area for which, a
Court of Small Causes is established under the Provincial Small Cause Courts
Act, 1887, such Court and]
(b),
elsewhere, the Court of the Civil Judge (Junior Division) having jurisdiction
in the area in which the premises are situate or, if there is no such Civil
Judge the Court of the Civil Judge (Senior Division) having ordinary
jurisdiction, shall have jurisdiction to entertain and try any suit or
proceeding between a landlord and a tenant relating to the recovery of rent or
possession of any premises to which any of the provisions of this Party apply
[or between a licensor and a licensee relating to the recovery of the licence
fee or charge] and to decide any application made under this Act and to deal
with any claim or question arising out of this Act or any of its provisions-and
subject to the provisions of sub-section (2)] no other court shall have
jurisdiction to entertain any such suit, proceeding, or application or to deal
with such claim or question.
[(2)
(a) Notwithstanding anything contained in clause (aa) of sub-section (1), the
District Court may at any stage withdraw any such suit, proceeding or
application pending in a Court of Small Causes established for any area under
the Provincial Small Causes Courts Act, 1887, and transfer the same for trial
or disposal to the Court of the Civil Judge (Senior Division) having ordinary
Jurisdiction in such area.]
(b)
Where any suit, proceeding or application has been withdrawn under clause (a),
the Court of the Civil Judge (Senior Division) which thereafter tries such
suit, proceedings or application, as the case may be, may either re-try it or
proceed from the stage at which it was withdrawn.
(c)
The Court of the Civil Judge trying any suit, proceeding or application
withdrawn under clause (a) from the Court of Small Causes, shall, for purposes
of such suit, proceeding or application, as the case may be, be deemed to be
the Court of Small Causes.] Explanation.- In this section
"proceeding" does not include an execution proceeding arising out of
a decree passed before the coming into operation of this Act."
[Emphasis
Added]
11. In
our country, for the first time, Co-operative Credit Societies Act, 1904 was
passed, to encourage thrift, self-help and co- operation among agriculturists,
artisans and persons of limited means, and for that purpose to provide for the
constitution and control of co-operative credit societies, which laid down the
foundation of co-operative law. Under that Act ten members could form a society
and the object of the society was to raise funds either from members or
outsiders and give loans to the needy members out of the funds so collected.
The principle of limited liability was also recognized and the concept of
profit motive was given a go-by. The tendency towards concentration of wealth
in a few hands was discouraged by providing that no member could hold shares
beyond a certain limit. The said Act was replaced by the Cooperative Societies
Act, 1912, which was repealed by the Bombay Cooperative Societies Act, 1925.
The aforementioned Act was repealed by the Maharashtra Cooperative Societies
Act, 1960 to consolidate and amend the law relating to cooperative societies in
the State of Maharashtra the objective of which was to provide for the orderly
development of the cooperative movement in the State in accordance with the
Directive Principles of State Policy enshrined in Part Four of the Constitution
of India.
12.
`Society' has been defined under Section 2(27) of the Societies Act to mean a
cooperative society registered or deemed to be registered under the Societies
Act. Under Section 2(5) `by-laws' means by-laws registered under the Societies
Act and for the time being in force and includes registered amendments of such
by- laws. Under Section 2(16) `housing society' has been defined to mean a
society, the object of which is to provide its members with open plots for
housing, dwelling houses or flats; or if open plots, the dwelling houses or
flats are already acquired, to provide its members common amenities and
services. Section 2(19) defines `member' to be a person joining in an
application for the registration of a cooperative society which is subsequently
registered, or a person duly admitted to membership of a society after
registration and includes an associate, nominal or sympathiser member. Under
Section 2(19)(c) `nominal member' is a person admitted to membership as such
after registration in accordance with by-laws. Section 2(21) defines the
expression `prescribed' to mean prescribed by rules. Under Section 2(24)
`Registrar' has been defined to mean a person appointed as Registrar of
Co-operative Societies under the Societies Act. 'Rules' under Section 2(26)
means rules made under the Societies Act.
13.
Section 4 of the Societies Act lays down that a Society which has as its
objects the promotion of economic interests or general welfare of its members
or of the public in accordance with cooperative principles or a society
established with the object of facilitating the operations of any such society,
may be registered under the Societies Act. Under Section 9, upon the
satisfaction of the Registrar, cooperative society and its bye-laws are
registered on an application made to that effect under Rule 8. Section 12 lays
down that the Registrar shall classify all societies into one or other of the
classes of societies defined in Section 2 and also into such sub-classes
thereof, as may be prescribed. Rule 10 prescribes such classification of the
societies and under Rule 10(1)(5) three types of housing societies have been
enumerated. First is under Rule 10(1)(5)(a) which is a 'tenant ownership
housing society' where land is held either on leasehold or freehold basis by
the society and houses are owned or are to be owned by members. The second type
of housing society under Rule 10(1)(5)(b) is 'tenant co-partnership housing
society' which holds both land and buildings either on leasehold or freehold
basis and allots them to its members. The third type under Rule 10(1)(5)(c) is
'other housing societies' which are called house mortgage and house
construction societies and the same do not come in any of the categories of
housing societies referred to above.
14.
Section 22 of the Societies Act enumerates the persons who are eligible to be
admitted as members of a society. Section 23 lays down that no society shall,
without sufficient cause, refuse admission to membership to any person duly
qualified therefor under the provisions of the Societies Act and its by-laws.
Section 24 lays down that even if any person does not fulfill the eligibility
requirement enumerated in Section 22 of the Societies Act, he can be admitted
by the Society as a nominal, associate or sympathizer member. According to
Section 25 a person shall cease to be a member of the society on his
resignation from the membership thereof being accepted or on the transfer of
the whole of his share or interest in the society to another member or on his
death or removal or expulsion from the society or where a firm, company, any
other corporate body, society or trust is its member, on its dissolution or
ceasing to exist. Under Section 35 a society is empowered by resolution passed
by a majority of not less than three-fourths of the members entitled to vote,
who are present at its general meeting held for the purpose, to expel a member
for acts which are detrimental to the interest or proper working of the
society. Under Rule 28 of the Rules any member who has been persistently
defaulting payment of dues or has failed to comply with the provisions of the
bye-laws regarding sales of his produce through the society or other matters
connected therewith in connection with his dealings with the society or who, in
the opinion of the committee, has brought disrepute to the society or has done
other acts detrimental to the interest or proper working of the society may, in
accordance with the provisions of sub- section (1) of Section 35, be expelled
from the society. Under bye- law 12 a member is required not to let or sub-let
or give on caretaker or leave licence basis or use for accommodating paying
guests or dispose of in any manner any portion of the tenement without the
previous written permission of the Managing Committee of the Society and
failure thereof tantamounts to violation of the bye-laws within the meaning of
Rule 28 and such a member would be liable to be expelled thereunder.
15.
Section 29(2) of the Societies Act provides that a member shall not transfer,
inter alia, any interest in the property of any society or any part thereof
unless two conditions are fulfilled, namely, the member has held such interest
for not less than one year and the transfer is made either to an existing
member of the society or to a person whose application for membership has been
accepted by the society or to a person whose appeal under Section 23 of the
Societies Act has been allowed by the Registrar or to a person who is deemed to
be a member under sub-section (1A) of Section 23 of the Societies Act.
16.
Under Rule 8(2) of the Rules, a society may make bye-laws prescribing thereunder,
inter alia, conditions, if any, under which the transfer of share held by a
member or interest of a member in the tenement allotted to him may be
permitted. Under bye-law 64(a) a member to whom a tenement is allotted shall be
entitled to occupy the same himself and is not permitted to assign, underlet, vacate
or part with the possession of the same or any part thereof without the
previous consent in writing of the Managing Committee of the Society, which
permission shall not be granted unless the member authorises the society to
recover rent or compensation and taxes and other common charges from the sub- lettee,
licensee or caretaker who must agree to become its nominal member. Regulation 4
of the Regulations, which every member at the time of his admission to the
membership of the Society is required to observe by giving an undertaking in
writing, provides that no tenant shall assign, underlet, vacate or part with
possession of the premises or any part thereof without the previous consent in
writing of the society.
17.
Bye-law 2(a) enumerates objects of the society one of which would be to
purchase plot and to make constructions thereon for use of its members. The
further objects of the society are to advance loans to its members, guarantee
loans to its members for acquiring building sites, constructing houses, to
receive or guarantee repayments in lump sum or in instalments and to do all
things necessary or expedient for the attainment of the objects specified in
the bye-laws, meaning thereby that every member to whom a plot or flat is
allotted for his self occupation and use shall not part with possession thereof
unless permitted by the society, which, at the time of grant of permission,
shall admit such persons in whose favour the member intends to part with
possession by admitting him as a nominal member. Bye-law 7 lays down that all
persons permanently residing in Bombay City and Suburban areas or those who
intend to settle down in Bombay City and Suburban areas shall be eligible to be admitted as
members by the Committee of the Society. Bye-law 64 requires that no member
shall be a tenant of the society in respect of the tenement unless he
subscribes to such number of shares as the Managing Committee prescribes, which
is five paid-up shares in the society as per regulation 1 of the Regulations
and upon subscribing to such shares under bye-law 64 such a member shall be
allotted a tenement for his self occupation who shall not part with possession
thereof in any manner without the previous consent in writing of the Managing
Committee and while granting such permission the person in whose favour the
member intends to part with possession shall be admitted as nominal member.
18.
Under regulation 2, the committee of the society is required to maintain a
register of applicants for the tenements and the tenements would be offered to
the members in the order in which they appear in the register and in the event
of two or more members having made application on the same day, the one to whom
the offer is to be made shall be determined by lot.
Regulation
3 permits the tenancy to continue as long as the tenant or his successor in all
respects observes and performs the obligations imposed upon him under the
Regulations as a tenant.
Regulation
4 forbids a tenant to part with the possession of the tenement without the
previous consent in writing of the society.
Regulation
24 enumerates the manner in which rent would be calculated. The cost of the
land, building, road and other items to be determined by the committee of the
society and 6-1/4% thereof shall be paid every year in 12 equal monthly instalments.
In addition to the aforesaid rent, the tenant is required to make certain other
payments by way of rent as required under sub- clauses (b) to (d) of regulation
24. In the present case, the member in whose favour tenement, i.e., the flat,
has been allotted had undertaken in writing that he agreed to take the tenement
subject to the Regulations and agreed to observe the same.
19.
Section 31 gives immunity to the share or interest of a member in the capital
of a society or in the loan stock issued by society or in the funds raised by a
society from its members by way of savings deposit, from attachment or sale
under any decree or order of a court for or in respect of any debt or liability
incurred by the member. According to the provisions of Section 36 of the
Societies Act, a society, upon its registration, shall be treated to be a body
corporate, as such a juristic person. Section 47(2) of the Societies Act lays
down that interest of a member in those properties of the society whereupon a
charge has been created under sub-section (1) of Section 47 shall not be
transferred in any manner without the previous permission of the society and
for according permission the society may impose such conditions as it may deem
fit and proper. According to Section 47(3) any transfer made in contravention
of sub-section (2) of Section 47 shall be void. Under Section 79AA Regulations
can be framed by the society for carrying on its trade or business on the
direction of the Registrar and the same are required to be approved by him.
20.
Section 91, which begins with a non-obstante clause, lays down that if there is
any dispute, inter alia, touching the business of a society, the same shall be
referred to Cooperative Court by, inter alia, any of the parties to the
dispute. Section 91(3) lays down that, except as provided under sub-section (2)
of Section 93 of the Societies Act, no court shall have jurisdiction to
entertain any suit or proceeding in respect of any dispute referred to in sub-section
(1) of Section 91 of the Societies Act. Section 93(2), which also begins with a
non-obstante clause, provides that the Cooperative Court may, on an application
made to it by any of the parties to dispute, if it thinks fit, suspend any
proceedings in respect of any dispute, if the question at issue between a
society and a claimant or between different claimants is one involving
complicated questions of law and fact, until the question has been tried by a
regular suit instituted by one of the parties or by the society, but if any
such suit is not instituted in a Civil Court within two months from the date of
the order passed by the Cooperative Court, the proceedings under Section 91(1)
shall continue and dispute raised by the parties shall be decided by the
Cooperative Court. Section 94 (1) lays down that the procedure for adjudication
of the aforesaid disputes raised by the parties shall, as far as possible, be
the same as provided in the case of Civil Court by the Code of Civil Procedure,
1908. Section 97 prescribes appeal before the Cooperative Appellate Court
against award of the Cooperative
Court adjudicating
the dispute raised under Section 91 of the Societies Act.
21.
According to Section 146(1)(a) if any member of a society makes any transfer of
any property or interest in property in contravention of sub-section (2) of
Section 47 or any persons knowingly acquires or abets in the acquisition of
such property, the same, inter alia, would be an offence under the Societies
Act, punishment for which has been provided under Section 147 of the Societies
Act. Section 165 empowers the State Government to make rules for, inter alia,
the conduct and regulation of business of society and carrying out the purposes
of the Societies Act.
22.
The Rent Act was enacted to amend and consolidate the law relating to the
control of rents and repair of certain premises, of rates of hotels and lodging
house and of evictions and also to control the charges for licence of premises
etc. Section 5(3) of the Rent Act defines a `landlord' to be a person who, for
the time being, is receiving or entitled to receive rent of any premises from a
tenant, which includes a licensee who is deemed to be a tenant within the
meaning of Section 15A of the Rent Act. Section 5(11) defines `tenant' to mean
a person by whom or on whose account rent is payable for any premises which,
inter alia, includes a licensee, who is a deemed tenant under Section 15A of
the Rent Act but shall not include such a sub-tenant to whom interest in the
premises has been purported to have been assigned or transferred in the absence
of any contract to the contrary as required under Section 15 of the Rent Act.
Section 13 of the Rent Act enumerates the grounds for eviction of a tenant
which includes bona fide need of the landlord. Section 15 of the Rent Act lays
down that in the absence of any contract to the contrary, it shall not be
lawful for any tenant to sublet the whole or any part of the premises in which
he was inducted as a tenant. Section 15A lays down that if any licensee who was
in occupation of the premises, in which he was inducted as a licensee, before
the 1st day of February, 1973 and the licence was subsisting on that date, he
shall be deemed to have become a tenant of the landlord in respect of the premises
on that date i.e., 1.2.1973 when Maharashtra Act 17 of 1973 came into force
whereby Section 15A was inserted in the Rent Act.
23.
Section 28, which starts with a non-obstante clause, lays down that suit or
proceeding between a landlord and a tenant relating to recovery of rent or
possession of any premises to which provisions of Rent Act apply shall be
entertained by a court enumerated thereunder and no other court shall have
jurisdiction to entertain any such suit, proceeding or application or to deal
with such claim or question.
24. We
now proceed to deal with the first question, i.e., whether, in the present
case, status of the member was that of a tenant or landlord within the meaning
of the Rent Act and consequently there was any relationship of landlord and
tenant between them? Under Rule 10(1)(5)(a) `tenant ownership housing society'
has been defined to mean housing society where land is held either on leasehold
or freehold basis by the societies and houses are owned by its members, whereas
under Rule (10(1)(5)(b) in case of 'tenant co-partnership housing society', the
society holds both land and buildings either on leasehold or freehold basis and
allots them to its members. In the case of tenant co-partnership housing
society, it is clear from the Rules that the ownership of the land and building
both remains with the society and member cannot be said to be co-owner, but in
the case of tenant ownership housing society, the ownership of the land remains
with the society, but ownership of the building/flat vests in the member. So
far as tenant within the meaning of Section 5(11) of the Rent Act is concerned,
he has a mere right to occupy. He is entitled to the protection of the Statute
so long as grounds for eviction are not made out and can be evicted only by
instituting a suit in a court enumerated under Section 28 of the Rent Act.
25.
The concept of tenant co-partnership housing society was considered by this
Court in the case of Sanwarmal Kejriwal vs. Vishwa Cooperative Housing Society
Ltd., (1990) 2 SCC 288, wherein it was noticed that the title to the property,
i.e., the land and building/flat both, vests in the society. It has been
further noted that cost of construction of the dwelling is met from deposits
and rent besides the share money. The rental is usually determined on long term
basis so calculated as to meet the cost of construction and upkeep of the
building and to guarantee perpetuity of occupation on repayment of the whole
value of the tenement or flat. At the end of the period the member is credited
with additional shares equal to the amount paid by him, the interest on these
shares generally matches the rental payable by him to the society. This Court
has concluded that on full payment, the member becomes entitled to occupy the
tenement or flat free of charge as the rental he has to pay to the society is
almost met from the interest received from shares held by him and,
consequently, a member has more than a mere right to occupy the same. In this
regard, we may usefully refer to paragraph 13 of the case of Sanwarmal [supra]
which reads thus:-
"13.
That takes us to the next question whether or not a member of a copartnership
type of a cooperative society has such interest in the premises allotted to him
as would entitle him to give the same on leave and licence basis to a non-
member. In a tenant copartnership type of society the members are shareholders;
but the title to the property vests in the society which in turn rents the
tenements or flats to its members. The cost of construction of dwellings is met
from deposits and loans besides the share money. The rental is usually
determined on long term basis so calculated as to meet the cost of construction
and upkeep of the building and to guarantee perpetuity of occupation on
repayment of the whole value of the tenement or flat. At the end of the period
the member is credited with additional shares equal to the amount paid by him;
the interest on these shares generally matches the rental payable by him to the
society. Thus on full payment the member becomes entitled to occupy the
tenement of flat free of charge as the rental he has to pay to the society is
almost met from the interest received from shares held by him. Thus a member
has more than a mere right to occupy the flat."
[Emphasis
Added]
26.
From a bare perusal of the aforesaid passage, it would be clear that after full
payment a member is entitled to continue to occupy the tenement free of charge
and neither he is liable to pay any rent to the society nor the society is
entitled to receive any rent from the member. According to the definition of
`landlord' under Section 5(3) of the Rent Act, landlord is a person who is for
the time being receiving or entitled to receive rent and under Section 5(11) a
tenant is liable to pay rent, but in view of the observations of this Court in Sanwarmal
(supra), neither the society is entitled to receive rent from the member nor
member is liable to pay any rent to the society after the entire value of the
land and cost of construction of the building together with interest on its
value has been paid.
27.
The matter may be examined from another angle. If it is held that the society
is a landlord and the member is a tenant within the meaning of the Rent Act, in
that event the society can evict the member by filing a suit for eviction if it
requires the premises for its bona fide need, but under the Societies Act, it
can evict the member only as a consequence of his expulsion from the membership
and neither under the Societies Act nor Rules framed thereunder nor Bye-Laws
nor Regulations there is any provision that a Society can evict a member in
case it has got bona fide need of the same. The said interpretation would be
contrary to the object of the Societies Act.
28. It
appears to us that the status of a member in a tenant co- partnership housing
society is very peculiar. The ownership of the land and building both vests in
the society and the member has, for all practical purposes, right of occupation
in perpetuity after the full value of the land and building and interest
accrued thereon have been paid by him. Although de jure he is not owner of the
flat allotted to him, but, in fact, he enjoys almost all the rights which an
owner enjoys, which includes right to transfer in case he fulfills the two pre-conditions,
namely, he occupies the property for a period of one year and the transfer is
made in favour of a person who is already a member or a person whose
application for membership has been accepted by the society or whose appeal
under Section 23 of the Societies Act has been allowed by the Registrar or to a
person who is deemed to be a member under sub- section (1A) of Section 23 of
the Societies Act. In case any of these two conditions is not fulfilled, a
member cannot be said to have any right of transfer. Thus, we reiterate the law
laid down by this Court in the case of Sanwarmal (Supra) that a member has more
than a mere right to occupy the flat, meaning thereby higher than tenant, which
is not so in the case of a tenant within the meaning of Section 5(11) of the
Rent Act. This being the position, we have no difficulty in coming to the
conclusion that the status of a member in the case of tenant co-partnership
housing society cannot be said to be that of a tenant within the meaning of
Section 5(11) of the Rent Act, as such there was no relationship of landlord
and tenant between the Society and the member.
29. We
now turn to the second question, i.e., as to whether the status of the
appellants was that of tenant or sub-tenant. In view of our answer to question
no. 1 that the status of the member was higher than a tenant and although de jure
he was not an owner but, for all practical purposes, he was exercising almost
all the rights of an owner, excepting absolute right of transfer, he not being
the tenant, there is no question of his creating sub-tenancy in favour of the
appellants. A member may not be an owner of the flat in the eye of law but he
may still be a landlord within the meaning of the Rent Act which does not
necessarily postulate a landlord to be an owner of the property, but if a
person is entitled to receive rent or receiving rent he may be treated to be a
landlord within the meaning of the Rent Act. The question arises as to whether
such a member could create a tenancy right under law, meaning thereby whether
the relationship of landlord and tenant between the member and the appellants
was duly created so as to claim protection from eviction under the Rent Act.
The factum of letting out by the member to the appellants is not in dispute.
Purported
creation of tenancy right in favour of the appellants was in infraction of the
provisions of Section 29(2) of the Societies Act whereunder there is a
legislative command to the member not to transfer his interest in the property
of the Society unless two conditions are fulfilled, firstly, the member has
held the interest for a period of not less than one year, meaning thereby that
he has remained in occupation of the flat, which was allotted to him by the
Society, for a period of one year and, secondly, transfer was made to a member
of the Society or to a person whose application for membership has been
accepted by the Society or to a person whose appeal under Section 23 of the
Societies Act has been allowed by the Registrar and his application for
membership has been accepted by him or to a person who is deemed to be a member
under sub-section (1A) of Section 23. In the present case, the first
pre-requisite is fulfilled, but so far as the second one is concerned, the
appellants who claim to be tenants were not existing members of the Society nor
they ever filed any application for membership of the Society, much less its
acceptance nor it has been claimed that they shall be deemed to have become
members of the Society under sub-section (1A) of Section 23 of the Societies
Act.
30.
Undisputedly, in the present case, there is infraction of the provisions of
Section 29(2) of the Societies Act. Now it has to be seen whether sub-section
(2) of Section 29 is mandatory or directory. From the scheme of the Societies
Act, the Rules, Bye- Laws and Regulations it would be clear that in a case of
tenant co- partnership society the ownership of the land and the building both
vest in the society and the premises is allotted to the member for his
occupation only and not for the purpose of occupation of anybody else. That is
the object of the Societies Act as would appear from bye-law 2, i.e., `for use
of the member', meaning thereby his own use. According to bye-law 64, the flat
is allotted to a member for occupying it himself. Regulation 4 is also in line
with bye-law 64 which says that no tenant shall part with possession of the
premises without the previous consent in writing of the society.
Under
bye-law 64(a) also a member is restrained from parting with possession of the
flat without permission of the society which shall be granted upon filing
application, by an intending transferee, for grant of membership by admitting
him as a nominal member.
Keeping
in mind the language of Section 29(2), which is in the nature of injunction
upon the right of a member to transfer unless the twin conditions are
fulfilled, and the purpose for which the house is allotted to a member, i.e.,
for his self occupation, it cannot be said in any manner that the said
provision is directory as giving such an interpretation would frustrate object
of the Societies Act whereunder a flat is allotted to a member for his self-
occupation as would appear from the Societies Act, Rules, Bye- Laws and
Regulations. As such, we have no option but to hold that the provisions of
Section 29(2) are mandatory.
31.
The question that arises now is that if there is any infraction of the said
provision, whether the same would invalidate the creation of relationship of
landlord and tenant between the member and the appellants. It has been
submitted on behalf of the appellants that the member had absolute right of
transfer, as such relationship of landlord and tenant was duly created. In
support of the submission, reliance was placed upon two decisions of this Court
in the cases of Ramesh Himmatlal Shah vs. Harsukh Jadhavji Joshi, (1975) 2 SCC
105 and Sanwarmal [supra]. In Ramesh [supra], the question in issue was as to
whether interest of a member in a flat allotted to him by co-partnership
housing society could be attached and sold in execution of a decree passed
against a member. This Court referred to the provisions of Sections 29(2), 31
and 47 of the Societies Act. The Court was considering matter in the light of
the provisions of Section 31 of the Societies Act which lays down that share or
interest of a member in the capital of a society or in the loan stock issued by
a society or in the funds raised by a society from its members shall not be
liable to attachment or sale under any decree or order of a court in respect of
any debt or liability incurred by a member. Under this provision, there was
immunity from attachment/sale in execution of a decree to certain types of
interests of a member of the society, but the interests of a member in the flat
was not enumerated thereunder, as such there was no provision exempting
interest of a member in the flat allotted to him from being attached and sold
in execution of a decree against a member. Therefore, there was no legal bar in
attachment and sale of interest of a member in the flat allotted to him by the
society. Before this Court the question was raised that the restriction under
Section 29(2) put on the right of a member to transfer should be equally
applied in the case of auction sale in execution of decree against a member.
Court observed that "the only restrictions under Section 29(2) are that
the member may not transfer his interest in the property prior to one year and
the transfer is made to an existing member of the Society or to a person whose
application for membership has been accepted by the Society". Though the
Court has considered the provisions of Section 47 which lay down that interest
of a member in such a property which was allotted to him and upon which there
is a charge, cannot be sold by a member without permission of the society and
if there is infraction thereof, such a transaction has been declared by Section
47(3) of the Societies Act to be void, obviously the restrictions under Section
29(2) providing thereunder restricted right of voluntary transfer cannot apply
to auction sale in execution of a decree against a member which is distress
sale as the same has not been specifically exempted under Section 31 of the
Societies Act. Of course, while dealing with the provisions of Section 29(2), the
Court was also having in mind that under Section 47(3) if the transfer is in
infraction of the provisions of Section 47(2) the same has been declared, to be
void, by the Statute itself whereas in a case of infraction of Section 29(2) of
the Societies Act, the Statute is silent. As a matter of fact, the question as
to what would be the effect of infraction of the provisions of Section 29(2)
was not subject matter of consideration before this Court in the case of Ramesh
(supra), as such the law laid down therein that there was no prohibition
against transfer of right to occupy a flat was in the light of the fact whether
interest of the member in the flat could be auctioned/sold in execution of a
decree passed against the member, meaning thereby distress sale.
In the
present case we are concerned with voluntary transfer which is in contra
distinction to distress sale, as such the said case is clearly distinguishable.
32.
Another decision upon which reliance was placed on behalf of the appellants is
the case of Sanwarmal [supra]. In that case, a petition was filed under Section
91 of the Societies Act for passing an order of eviction of a licensee who was
inducted as a licensee by a member of the Society, though contrary to the
provisions of Section 29(2) of the Societies Act, but he became deemed tenant
under Section 15A of the Rent Act on 1.2.1973, i.e., the date on which the
amending Act came into force, as the licensee was in occupation of the premises
and licence was subsisting on that date, as such this Court held that the
petition under Section 91 of the Societies Act was not maintainable as the
licensee acquired the status of tenant even though there was no privity of
contract between the parties, but as the status of tenant was acquired, by
legislative intervention, under Section 15A of the Rent Act, as such he was
entitled to claim protection under the said Act. Though in that case the
question whether right to occupy a flat in a case of tenant co-partnership
society is transferable or not was not in issue before the Court, but following
the judgment in the case of Ramesh [supra], this Court observed that the right
of a member in the flat is transferable. In our view, the aforesaid observation
in the case of Sanwarmal [supra) cannot be said to be ratio of the case but a
mere obiter, as such the same can be of no avail to the appellants.
33. It
has been submitted that in case transfer has been made by a member in
infraction of the provisions of Section 47(2) of the Societies Act, according
to the provisions of Section 47(3) the same shall be void, but there is no such
provision in case there is infraction of the provisions of Section 29(2) which,
we have already found, are mandatory. In case there is infraction of a
mandatory provision, in that event the transaction cannot be said to be void
but would obviously be voidable and once avoided, the relationship of landlord
and tenant, i.e., between the member and the appellants cannot be said to have
been duly created, meaning thereby in accordance with law. Thus, we have no
difficulty in holding that the relationship of landlord and tenant between the
appellants and the member was not duly created, as such the appellants would
not be entitled to claim protection under the Rent Act and the bar created
under Section 28 of the Rent Act would not operate.
34.
This takes us to the next question whether legality or otherwise of the
creation of relationship of landlord and tenant between the member and the
appellants could be adjudicated in the suits filed by the appellants before the
Court of Small Causes for declaration that they were tenants in the premises in
their respective occupation and there was relationship of landlord and tenant
between the member and the appellants. The said suits were dismissed by the trial
court after recording a finding that no relationship of landlord and tenant
existed between the member and the appellants, but on appeal being taken the
appellate bench of the Court of Small Causes decreed the suits holding that
relationship of landlord and tenant did exist between the member and the
appellants after reversing decree passed by trial court.
When
the matter was taken to the High Court in writ applications, the same have been
allowed, decrees passed by the appellate bench of the Small Causes Court set
aside and those of the trial court restored whereby it was held that there was
no relationship of landlord and tenant between the member and the appellants.
When
suits were filed before the Small Causes Court by the appellants for a declaration
that there was relationship of landlord and tenant between them and the member,
it was open to the defendants to take a defence that no such relationship was
created either in fact or in law as creation of such a right was barred under
Section 29(2) of the Societies Act. In the present case the factum of creation
of tenancy has not been disputed, but what has been disputed is its legality.
As the creation of tenancy was in infraction of mandatory provisions of Section
29(2), it was voidable and invalid in law although not void and the Small
Causes Court was not only competent to decide the same but obliged under law to
go into the same before granting or refusing relief to the plaintiff as the
same was a point in issue in those suits. This being the position, we are of
the view that the High Court was justified in setting aside the decrees passed
by the appellate bench of the Small Causes Court and restoring those of the
Small Causes Court whereby suits for declaration were dismissed after recording
a finding that there was no relationship of landlord and tenant between the
member and the appellants who were consequently not entitled to claim
protection under the Rent Act and no interference by this Court is called for.
35.
The last question that falls for decision is as to whether the Society was
required to first obtain adjudication from a competent civil court by filing a
properly constituted suit for a declaration that relationship of landlord and
tenant was not duly created and, therefore, the induction of a person by the
member as tenant was invalid, the same being in infraction of mandatory
provisions of Section 29(2) of the Societies Act before raising a dispute under
Section 91 of the Societies Act or the said question could be gone into in a
proceeding under Section 91 of the Societies Act before the Cooperative Court
where a dispute touching upon the business of the society can be raised by the
parties and in deciding the said dispute was it permissible for the Court to go
into the said question. It is true that ordinarily in case of a transaction
like the present one which is voidable and not void, if an aggrieved party
intends to avoid the same it is required to obtain a decree from a competent
civil court by filing a properly constituted suit. But in a case like the
present one, if a party is first asked to obtain a decree from a competent
civil court and only thereafter raise a dispute which is undisputedly touching
upon the business of the society under Section 91 of the Societies Act, the same
would frustrate the provisions of Section 91 and the intention of the
Legislature in incorporating a cheap and expeditious remedy by referring the
same to a court constituted under the Societies Act instead of throwing a party
to cumbersome procedure of moving a civil court.
36.
The dispute raised in the present case, undoubtedly, touches upon business of
the Society which is a condition precedent for the applicability of Section 91
of the Societies Act. The business of tenant co-partnership housing society is,
after purchasing plots and constructing houses/flats thereon, to allot the same
to its members for their self occupation and for a period of one year they can
not part with possession of the same in favour of anybody and on expiry of the
said period can transfer the same in favour of member of the society or to a
person whose application for membership has been accepted by the society or to
a person whose appeal under Section 23 of the Societies Act has been allowed by
the Registrar or to a person who is deemed to be a member under sub-Section
(1A) of Section 23 of the Societies Act. It is part of business of the Society
to see that the house/flat allotted to a member remains in his occupation or in
occupation of any other member and if any non-member intends a transfer in his favour,
like the present one, he is required to obtain previous consent in writing
either of the Society or its Managing Committee and in the event of consent
being accorded, the Society shall admit him as a nominal member in which
eventuality only the transfer can be made in his favour. In the present case,
under Section 91 of the Societies Act, the Society was well within its right to
get a dispute adjudicated as to whether the member had, by inducting the
tenants in the flat, who were non-members, made a transfer in contravention of
the provisions of Section 29(2) of the Societies Act.
Thus
the question regarding legality or otherwise of the creation of tenancy right
by the member in favour of the appellants, which amounts to transfer of
interest of a member in the property of the Society, can be decided by raising
a dispute before the Cooperative Court.
37. In
the present case, the only dispute raised before the Cooperative Court was as
to whether transfer made by a member in favour of a so-called transferee/tenant
thereby purporting to create a tenancy right in his favour was in infraction of
the mandatory provisions of Section 29(2) of the Societies Act, as such the
same was touching upon business of the Society. In case Cooperative Court decides such a dispute in favour of
the Society in that eventuality the so-called transferee/tenant would not be
entitled to claim any protection under the Rent Act, the bar provided under
Section 28 of the Rent Act would not operate and consequently the petition
under Section 91 of the Societies Act would be maintainable.
38.
Learned counsel appearing on behalf of the appellants submitted that even if
the tenancy is created in breach of law having statutory force, the same would
not be void. Reliance in this connection has been placed upon a decision of
this Court in the case of Nanakram vs. Kundalrai, (1986) 3 SCC 83, in which it
was held that tenancy created in breach of Rent Control Order, which was having
a statutory force, was not void. In that case under Clause 22 of the Central
Provinces and Berar Letting of houses and Rent Control Order, 1949 a landlord
was required to report the matter to the Deputy Commissioner, upon vacation of
the premises, who alone was empowered to permit induction of any tenant, but
instead of adopting the said procedure, landlord himself inducted tenant which
was challenged by filing a suit before civil court for a declaration that
creation of tenancy right was invalid. The trial court decreed the suit and the
said decree was confirmed in appeal by the High Court. When the matter was
brought to this Court, it was held that the transaction was not void and the
infraction alleged was not of mandatory provisions of law which would obviously
mean that the transaction was not even voidable, as such the suit was liable to
be dismissed. In our view, the case of Nanakram [supra] is quite
distinguishable and shall have no application to the present case as here there
was infraction of mandatory provisions of Section 29(2) of the Societies Act.
Thus we hold that the question regarding legality or otherwise of creation of
relationship of landlord and tenant between the member and the appellants could
have been gone into by the Cooperative Court under Section 91 of the Societies
Act as it touches upon business of the Society and the High Court has not
committed any error in not interfering with the order passed by appellate court
confirming that rendered by the Cooperative Court.
39.
For the foregoing reasons, we do not find any merit in these appeals which are
accordingly dismissed, but there shall be no order as to costs.
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