Writ Petition No.1235 of 1992

25th February, 2005

Petitioner Counsel: K. V. DESHMUKH
Respondent Counsel: SANYAL

Cases Cited:
Rickmers Verwaltung, GMBH Vs. Indian Oil Corporation Ltd., (1999)1 SCC 1 [Para 6]
M/s. Hind Construction Contractors by its Sole Proprietor Bhikamchand Mulchand Jain (dead) through L.Rs. Vs. State of Maharashtra, AIR 1979 SC 720 [Para 7,9]
Smt. Chand Rani (dead) by L.Rs. Vs. Smt. Kamal Rani (dead) by L.Rs., AIR 1993 SC 1742 [Para 7,9]

JUDGMENT

JUDGMENT :- By the said petition under Article 226 of Constitution of India, the petitioner challenges the reversing judgment of Co-operative Appellate Court, Nagpur delivered on 31-12-1991, by which the said Court has allowed, the appeal preferred by present respondent No.2, challenging the judgment of Co-operative Court, Nagpur in Dispute No.56/1980. Said dispute under section 91 of Maharashtra Co-operative Societies Act was preferred by present petitioner assailing the cancellation of allotment of plot No.125-B in Dindayal Nagar in his favour and execution of sale deed in relation to that plot in favour of present respondent No.2 on 28-4-1980.

2. Petitioner states that he is Member of respondent No.1-Co-operative Housing Society since 1971 and he was allotted plot No.125-B in Dindayal Nagar, and from time to time he deposited amount of Rs.5,251.75 as consideration towards said plot. He further states that on 27-3-1980 the Society has demanded amount of Rs.1,500/- from him and accordingly he deposited amount of Rs.1,000/- on 15-4-1980 and amount of Rs.1,211/- on 5-5-1980. It is his case that amount of Rs.1,211/- was not accepted by the Secretary of the Society and, therefore, he deposited it directly in the account of respondent No.1-Society with Maharashtra State Co-operative Central Bank Ltd. He further states that in the meanwhile the Society executed sale deed of said plot No.125-B for consideration of Rs.6,189/-. It is his case that Society informed him of this sale deed for the first time on 22-9-1980 and thereafter he filed the dispute under section 91 of Maharashtra Co-operative Societies Act before the Co-operative Court at Nagpur. He prayed for declaration that plot No. 125-B has been allotted to him and for further declaration that its transfer in favour of respondent No.2 is illegal and void. He also prayed for possession of said plot.

3. Present respondent No.2, who was opponent No.2 before the Co-operative Court appeared in that Court and filed written statement opposing the claim. He contended that there was no Resolution of Society to allot this plot to the petitioner and, thereafter, stated that he himself has become member on 18-12-1972 and he paid amount of Rs.3,000/- to Society for allotment of plot. He further stated that, accordingly, plot No.125-B in Dindayal Nagar was allotted to him and on 21-4-1980 he received a letter from Secretary of Society that he should deposit amount of Rs.3,627/- and amount of interest at the rate of 12% per annum towards said plot. He states that accordingly on 28-4-1980 he deposited amount of Rs.3627/- with respondent No. 1-Society and then sale deed of plot No.125-B was executed in his favour. The respondent No.1-Society also filed its written statement and though it admitted some of the payments made by petitioner-disputant, it denied that amount of Rs.1,211/- has been paid by petitioner on 5-5-1980 to the Society. Society also denied that letter dated 27-3-1980 was a letter allotting plot No.125-B to the petitioner and contended that there was no Resolution allotting said plot to the petitioner. Thereafter it has disclosed that on 28-4-1980 it has sold said plot No.125-B to respondent No.2 for consideration of Rs.6,189/-. Society contended that as petitioner did not deposit amount of instalment as and when demanded by Society, he was not entitled to plot No.125-B. It is in this background, that the parties led evidence before the Co-operative Court and after appreciation of said evidence and after hearing the parties, Co-operative Court delivered the judgment on 11-3-1991. The Co-operative Court found that the said plot No.125-B was allotted to the petitioner and it was cancelled without giving any opportunity to him and in breach of principles of natural justice. In view of these findings it has allowed the dispute and has granted declaration and reliefs to the petitioner as prayed for. As it has found that respondent No.2 did not deposit the amount towards the plot in dispute, it directed respondent No.1-Society to allot any other plot if available with it to said respondent. Respondent No.2 challenged this award of Co-operative Court by filing appeal under section 97 of Co-operative Societies Act before the Maharashtra State Co-operative Appellate Court, Bombay, Bench at Nagpur in appeal No.46 of 1991.

4. The Co-operative Appellate Court has, after hearing parties, held that there was no formal allotment of plot No.125-B in favour of petitioner. Letter dated 27-2-1980 on which reliance was placed by petitioner was only an offer for allotment, and as such there was no question of cancellation of any plot allotted to the petitioner/appellant before it. It, therefore, allowed the appeal and set aside the judgment and award delivered by Co-operative Court.

5. I have heard Advocate K. V. Deshmukh for petitioner and Advocate Shri. Sanyal for respondent No.2. Nobody appears for respondent No.1 though served. Learned A.G.P. appears for respondent No.3 i.e. Co-operative Appellate Court.

6. Advocate Deshmukh for petitioner, after narrating the fact as mentioned above, states that before the Co-operative Court the receipts from which time to time he effected payment of instalment are all proved and there was no practice of passing any resolution of Managing Committee along with (sic - allotting) any plot to any particular member. He relies upon the letter dated 27-3-1980 to contend that said letter, in fact, is the proof of allotting the plot No.125-B, it shows that plot No.125-B was already allotted, to the petitioner. He relies upon the judgment of Hon'ble Apex Court reported at (1999)1 SCC Page 1, Rickmers Verwaltung, GMBH Vs. Indian Oil Corporation Ltd., to contend that intention of parties in such circumstances is to be construed, from the correspondence between them. He contends that the documents on record before the Co-operative Court proved that said plot No.125-B was allotted to the petitioner. He further states that provisions of sections 5 to 7 of the Indian Contract Act, 1972 also show that there was no notice of revocation to the petitioner if said letter dated 27-3-1989 is construed only to be an offer of the allotment. He points out how the proposals are required to be revoked or accepted and contends that even if it is presumed that it was only an offer of allotment, still there is no valid revocation thereof and hence he is entitled to claim plot No.125-B. Inviting the attention to byelaw No.53 of respondent No.1 - Society, he states that member has been given choice to select particular plot and as such when petitioner was allotted plot No.125-B, there was no question of allotting said plot to anybody else. He also relies upon provision of section 200 of Indian Contract Act to contend that the ratification of Secretary's act of execution of sale deed on 28-4-1980 in favour of respondent No.2 by General Body is not legal and is of no consequence.

7. As against this Advocate Sanyal appearing for respondent No.2 states that the very language of the letter dated 27-3-1980 reveals that there was only an offer of allotment. He further contends that said letter itself shows that time was essence of acceptance of such an offer and therefore 15 days time was given to petitioner to deposit the amount. Said period of 15 days expired on 11-4-1980. He contends that petitioner did not deposit entire amount with Society within that period and therefore, offer made was not accepted and as such the Society was free to allot said plot to anybody else and accordingly plot came to be allotted to respondent No.2. He relies upon the judgment of Hon'ble Apex Court at AIR 1979 SC 720, M/s. Hind Construction Contractors by its Sole Proprietor Bhikamchand Mulchand Jain (dead) through L.Rs. Vs. State of Maharashtra, (para No. 7) and AIR 1993 SC 1742, Smt. Chand Rani (dead) by L.Rs. Vs. Smt. Kamal Rani (dead) by L.Rs. (para Nos. 20 to 30) in support of his contention.

8. The basic dispute between the parties is, therefore, what is the effect of letter dated 27-3-1980, written by the Secretary of Society to the petitioner. Whether it is a letter of allotment or only an offer for allotment. Perusal of said letter demonstrates that the letter mentions that petitioner is a Member of Society and he has been given plot No.125-B at Dindayal Nagar. It further mentions that petitioner has deposited amount of Rs.2,935/- towards that plot with Society and as yet sale deed has not taken place. Letter, therefore, directs the petitioner to collect the forms under Urban Land Ceiling Act and get the same filled in through the office and thereafter to obtain a sale deed within period, of 15 days. It also mentions that if complete amount is not deposited, the deficit should be paid. The letter thereafter reads that the Society expected co-operation from the petitioner and he should immediately contact the office of the Society. After this typed material in Marathi, the petitioner has been asked to deposit amount of Rs.1,500/- immediately in the office of Society and to communicate his address. This sentence is in handwriting. Thus, this letter shows that before 27-3-1980 petitioner has paid amount of Rs.2,935/- towards plot No.125-B. It is, therefore, clear that plot No.125-B is not given or offered to the petitioner for the first time by this letter. In such circumstances, in view of the other terms of said letter, which are reproduced above, it is clear that petitioner was already allotted plot No.125-B and the letter was written to him only with a view to facilitate execution of sale deed of said plot in his favour. If this letter is to be viewed as an offer for allotment, language would have been entirely different. The petitioner has not been warned that if he defaults in payment within 15 days, allotment of plot No.125-B would be cancelled, or said plot would be allotted to other needy Member of the Society. Willingness of petitioner to accept plot No.125-B is also not called for. Bye-law No.53 on which reliance has been placed by the petitioner clearly shows that said bye-law permits members to choose their neighbours and if two or more persons desire to have a same plot, the Managing Committee has to hold draw of plots. Thus, if it was the offer only, petitioner would have been called upon to state whether he accepts plot No.125-B or not. It is thus clear that said letter dated 27-3-1980 is not an offer for allotment but it is a letter of allotment itself. The application of mind in this respect by the Co-operative Court, therefore, appears to be just and proper. The Co-operative Appellate Court has considered this aspect in paragraph No.6 of its judgment. The Co-operative Appellate Court says that composite reading of this letter (Exh.42) as a whole would show that it is in no way the allotment letter. The Co-operative Appellate Court further proceeds to observe that it can be construed at most an offer engrafting the condition of making particular payment by certain direction so as to make it a full-fledged allotment. On what basis this conclusions are drawn by Co-operative Appellate Court is not clear. The fact that plot was already allotted to petitioner and he made payment therefor earlier, as is apparent from said letter, are not even appreciated in this para of judgment by Co-operative Appellate Court. Thus I find that the Co-operative Appellate Court has erred in reversing the judgment of Co-operative Court in this respect.

9. Advocate Sanyal has contended that time was essence of contract and as the petitioner has not effected the payment within time, the Society was justified in effecting allotment to him. He has relied upon abovementioned two judgments for that purpose. Perusal of these judgments reveal that after consideration of facts, which the Hon'ble Apex Court has considered in those judgments, the Hon'ble Apex Court has arrived at a finding that the time was essence of contract. In AIR 1993 SC 1742 (supra), the terms and conditions of the contract which fell for consideration before the Hon'ble Court are reproduced, in paragraph Nos.25 and 26. The Hon'ble Apex Court has thereafter considered the language of the contract to arrive at a finding that time was essence of contract. Paragraph Nos.26 and 27 of said judgment are important and same read as under -

"26. Then comes the question as to the payment of Rs.98,000/-. The question is as to what is the meaning of the words "within a period of 10 days only?" Does it apply to the amount or the time limit of 10 days from 26th of August, 1971. The trial Court was of the view that the word "only" was meant to stress and qualify the amount of Rs.98,000/- and cannot be read to mean as if payment within 10 days was the essence of the contract. On this aspect, the appellate Court takes the contrary view and holds that the amount of Rs.98,000/- ought to have been paid on or before 6th of September, 1971. Failure to do so would constitute a breach committed by the defendant. We are of the considered view that the Division Bench is right in its conclusion. As rightly pointed out in the judgment under appeal, the word "only" has been used twice over.

(1) to qualify the amount of Rs.98,000/-, and

(2) to qualify the period, of 10 days.

27. Therefore, having qualified the amount there was no further need to qualify the same unless it be the intention of the parties to make time as the essence of the contract."

It is to be noted that the Hon'ble Apex Court in paragraph 28 has also stated that general proposition of law in such a situation is that time is not the essence of contract. Another judgment of Apex Court on which Advocate Sanyal has placed reliance at AIR 1979 SC 720 (supra). Reading of para No.7 of said judgment reveals that the Hon'ble Apex Court has held that basically it is the intention of parties which is to be gathered from the terms of the contract. It is to be noted that clause 2 of the condition of contract not only specifies time as essence of contract on part of contractor but even for completion of proportionate work specific period was mentioned and the consequences of default therein were also provided for. It is thus apparent that the contracts were of entirely in different nature. Here it is to be noticed that the petitioner is a Member of the respondent No.1-Co-operative Housing Society and, therefore, the situation cannot be viewed, as has been viewed by Hon'ble Apex Court i.e. from view point of relations between two independent persons, contracting with each other. The Petitioner became Member in 1971. He has effected payment from time to time and even after receipt of letter dated 27-3-1980, he has paid amount of Rs.1,000/- on 15-4-1980. This amount has been accepted by Society and thus payment beyond 15 days has been received from petitioner by the Society. Therefore, it cannot be said that period of 15 days mentioned in the communication dated 27-3-1980 was essence of said letter. It is to be noted the petitioner was called upon to pay Rs.1,500/- by letter dated 27-3-1980 and he deposited amount of Rs.1,000/- on 15-4-1980. Thus, going by letter, petitioner deposited only Rs.500/- short. However, later on i.e. on 5-5-1980 he has deposited amount of Rs.1,211/- directly in the account of the Society. All these aspects are not considered by the Co-operative Appellate Court at all.

10. Respondent No.2 though appears to have become Member after petitioner, was issued a letter in relation to plot No.125-B for the first time on 21-4-1980. The details of payment, if any, made by him from time to time are not on record. How he chose plot No.125-B or how he made the payment of consideration of Rs.6,189/- towards that plot is not apparent. In any case if the cancellation of allotment in favour of petitioner is quashed and set aside, respondent No.2 cannot claim plot No.125-B and sale deed executed in his favour is liable to be quashed and set aside. The learned Co-operative Appellate Court has not considered this aspect. It has reversed the finding of Co-operative Court on the ground that there was no allotment in favour of petitioner. Once said finding of Co-operative Appellate Court is quashed and set aside, the allotment in favour of petitioner revives and, therefore, sale deed executed in favour of respondent No.2 is liable to be quashed and set aside.

11. The Co-operative Court has also stated that plot No.125-B was allotted to the petitioner, and in view of payments made by him to the Co-operative Society, in case said allotment was to be cancelled, compliance of principles of natural justice is necessary. It is admitted position on record that there is no such compliance. The Co-operative Appellate Court has again not considered this issue at all. In view of its finding that there was no allotment in favour of petitioner, it has stated that there was no question of cancellation of such allotment and therefore indirectly it has also held that there was no requirements of complying principles of natural justice in the matter. For this reason also the judgment of Co-operative Appellate Court is liable to be quashed and set aside.

12. Advocate Deshmukh further points out the provisions of sections 5 and 7 of the Indian Contract Act. Under section 5 - A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer and acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards. Section 6 considers how revocation is to be made and it states that a proposal can be revoked by communication of notice of revocation by proposer to the other party. Thus, if in the facts of present case, the letter dated 27-3-1980 is held only offer of allotment or proposal of allotment and if it was to be revoked, the respondent No.2-Society ought to have communicated to the petitioner its decision to cancel allotment. There is no such communication on record. On the contrary, in view of payments accepted by Society from petitioner, the acceptance of offer by petitioner was complete as against Society and a concluded contract sprang to life. Thus, for this reason also the action of Society in withdrawing the allotment of plot No.125-B to the petitioner is liable to be quashed, and set aside. Under the circumstances, I find that the impugned judgment of Co-operative Appellate Court dated 31-12-1991 cannot be sustained. The same is, therefore, quashed and set aside. The judgment of Co-operative Court, Nagpur dated 11-3-1991 is hereby restored. The respondent No.1- Society shall handover possession of plot No.125-B to present petitioner within period of two months from the date of this order. It shall also execute sale deed of said plot in favour of petitioner within said period. Rule is made absolute in above terms. No order as to costs.

Petition allowed.