Suit No.311 of 2015

10th September, 2015.

Petitioner Counsel: Mr. YUSUF IQBAL YUSUF, a/w Mrs. A. MEHTA and Ms. PATHAN, instructed by M/s. YUSUFS
Respondent Counsel: Mr. VAISHNAWA, i/by M/s. N.N. VAISHNAWA & CO.

Cases Cited:
Deccan Merchants Co operative Bank Ltd. Vs. Dalichand Jugraj Jain and others, AIR 1969 SC 1320 [Para 4,7,8,9]
Wardhman Developers Ltd. Vs. Borla Co operative Housing Society Ltd. and others, 2014(7) ALL MR 487=Notice of Motion No.1081/2010 in Suit No.1442/2009 [Para 4]
Suprabhat Co operative Housing Society Ltd. and another Vs. Span Builders and another, 2002 (3) Mh.LJ. 837 [Para 4,8,9]
B.Y. Chavan and another Vs. Association of Tenants of the Bombay Catholic Housing Society and others, 2011(5) ALL MR 815=2011 Vol. 113 (3) Bom. L.R. 1771 [Para 9]
Dhian Singh Sobha Singh and another Vs. Union of India, AIR 1958 SC 274 [Para 9,11]
Chandu Lal Vadilal Vs. Government of Bombay, AIR 1943 Bom. 138 [Para 9]
Vasant Ambadas Pandit Vs. Bombay Municipal Corporation and Ors., AIR 1981 Bom. 394 [Para 11]
Pimpri Refugee Industrial Co operative Society Vs. Parmanand Bhimandas Talreja, 2007(2) ALL MR 306 [Para 11]

JUDGMENT

JUDGMENT :- The Defendant No.1 in his Affidavit in reply dated 28th December, 2014 to Notice of Motion (L) No. 2480 of 2014 submitted that in the absence of Notice under Section 164 of the Maharashtra Co-operative Societies Act, 1960 ('the Act'), the Suit filed by the Plaintiff is not maintainable, and a preliminary issue in that regard be framed under Section 9A of the Code of Civil Procedure, 1908 ('CPC'). In view thereof, this Court vide its Order dated 24th August, 2015, framed the following issue as a preliminary issue under Section 9-A of the CPC:

"Whether this Court has jurisdiction to entertain and try the Suit on the ground that the Plaintiff has not issued a notice to Defendant No. 2 (Society) under Section 164 of the Maharashtra Co-operative Societies Act, 1960?"

The Plaintiff as well as Defendant No. 1 agreed that they are not desirous of leading any evidence and that the Court may answer the issue after hearing the oral arguments advanced by the Advocates for the Parties.

2. Mr. Vaishnawa, the learned Advocate appearing for Defendant No.1, submitted that since the Plaintiff has joined Shikarpuri Co-operative Housing Society Ltd., as Party Defendant No.2 and has also sought certain reliefs against the Defendant No. 2 Society, the Plaintiff ought to have given notice under Section 164 of the Act. However, admittedly no notice is served by the Plaintiff as required under Section 164 of the Act, and therefore the Suit as filed is not maintainable.

3. In response, the Learned Advocate appearing for the Plaintiff has submitted that the Plaintiff has filed the present Suit against his brother the Defendant No. 1 who has fraudulently got their mother to execute a Gift Deed dated 30th December, 2011, in his favour in respect of Flat No. 25, 6th floor, Sindhu, 87 Marine Drive, Anuvrat Marg, 'G' Road, Mumbai-400 002 ('the suit flat'). The principal reliefs sought in the Suit is a declaration that the purported Gift Deed is illegal, invalid, void ab initio and of no legal force and effect, and a restraint order against Defendant No.1 be issued by this Court from dealing with the suit flat, creating any third party rights or in any manner attempting to enforce any rights under the purported Gift Deed dated 30th December, 2011. It is further submitted on behalf of the Plaintiff that since the Defendant No.1 on the strength of the purported Gift Deed applied to the Defendant No.2 Society to transfer the suit flat in his name, the Plaintiff lodged his protest before the Defendant No. 2 Society and requested the Society not to accede to the request of Defendant No.1. In fact, in response the Defendant No.2 Society itself wrote to the Plaintiff that they will withhold the transfer if the Plaintiff obtains an order from a Competent Court restraining the transfer of the suit flat. It is therefore submitted on behalf of the Plaintiff that the reliefs sought against the Defendant No. 2 not to transfer the suit flat in favour of Defendant No.1 and to disclose the sequence of events regarding the transfer of the suit flat are in the nature of consequential reliefs and not adversarial, and in fact as suggested by the Society itself. It is therefore submitted that by no stretch of imagination can it be contended that the above Suit is instituted against the Defendant No. 2 Society "in respect of any act touching the business of the Society".

4. The Plaintiff has relied on the decision of the Hon'ble Supreme Court in Deccan Merchants Co-operative Bank Ltd. vs. Dalichand Jugraj Jain and others AIR 1969 SC 1320 and the unreported decision of this Court in the case of Wardhman Developers Ltd. vs. Borla Co-operative Housing Society Ltd. and others In Notice of Motion No. 1081 of 2010 in Suit No. 1442 of 2009 : [2014(7) ALL MR 487]. In response, Mr. Vaishnawa has relied on the decision of a Learned Single Judge of this Court in the case of Suprabhat Co-operative Housing Society Ltd. and another vs. Span Builders and another 2002 (3) MhLJ 837.

5. I have considered the submissions advanced by the learned Advocates appearing for the Parties and the case law relied upon by them. Before adverting to the submissions of the Parties, it would be helpful to set out in brief the circumstances, according to the Plaintiff, in which the above Suit came to be filed and the reliefs sought therein.

5.1 The Plaintiff, K.T. Laungani and the Defendant No.1, D.T. Laungani are brothers. Defendant No. 2 is Shikarpuri Co-operative Housing Society Ltd., a Society registered under the Co-operative Societies Act, 1925. The Society is admittedly the owner of the property being a building consisting of residential flats known as "SINDHU", at 87 Marine Drive, Anuvrat Marg, 'G' Road, Mumbai-400 002.

5.2 The late father of the Plaintiff and Defendant No. 1 was admittedly the owner in respect of the suit flat in the Defendant No. 2 Society. The father of the Plaintiff and Defendant No. 1 passed away on 3rd February, 2006, leaving behind him his last Will and Testament dated 17th July, 1998, wherein he bequeathed his entire estate including the suit flat and the suit shares to the mother of the Plaintiff and Defendant No.1, Smt. Jamna Tarachand Laungani. According to the Plaintiff, their late father also executed a Codicil dated 28th July, 1998 to the said Will. In the said Codicil it was provided that in the event of the mother of the Plaintiff and Defendant No. 1 pre-deceasing their father, then in such event, save and except for a part of the estate which would go for charitable purposes as provided therein, the rest of the estate would be equally divided between the surviving children including the Plaintiff and Defendant No.1.

5.3 According to the Plaintiff, the property under the said Will and Testament dated 17th July, 1998 bequeathed by his late father was actually the family ancestral property and ought to have devolved as per the Hindu Law of Succession. However, since the mother of the Plaintiff was the sole beneficiary under the said Will and had no other source of income or other fixed assets, the Plaintiff and his other siblings unanimously decided not to challenge the said Will or to enforce their rights as they did not want to disturb their mother's health and also wanted to give her a sense of security in her final years. According to the Plaintiff, during the family discussions, the mother of the Plaintiff had promised and assured the Plaintiff that she would merely enjoy the estate which would devolve upon her from the father of the Plaintiff and Defendant No.1 and would not create any third party rights nor would she alienate the same during her life time. The mother of Plaintiff and Defendant No. 1 applied for probate of the Will of her deceased husband dated 17th July, 1998 and since there was no opposition, the probate was issued in favour of the mother of the Plaintiff and Defendant No. 1 on 16th December, 2011.

5.4 According to the Plaintiff, immediately after the grant of probate on 16th December, 2011, the Defendant No. 1 completely restricted the Plaintiff's access to his mother and prevented the Plaintiff from meeting his mother and even talking to her on the phone. However, in June, 2014, the Plaintiff was shocked to learn from a common family friend that the Defendant No. 1 had applied to the Defendant No. 2 Society for transfer of the suit flat and the suit shares from the name of his mother to his own individual name. The Plaintiff addressed a letter dated 24th June, 2014 to the Defendant No. 2 Society and called upon the Society not to transfer the suit flat and the suit shares in the name of Defendant No.1. The Society vide its letter dated 2nd July, 2014, replied to the Plaintiff stating that they had received an application dated 1st April, 2014 for transfer of the suit shares to Defendant No. 1 which was backed by a Gift Deed dated 30th December, 2011. The Defendant No. 2 also stated that they would withhold the said transfer if the Plaintiff obtained an order from a Competent Court restraining the transfer of the suit flat. The Plaintiff thereupon immediately contacted his sisters as well as Defendant No. 1 and sought an explanation from Defendant No.1. The Defendant No. 1 being caught off guard bought time by assuring the Plaintiff and the sisters that he would work out an amicable solution and would not transfer the suit flat and suit shares to his name. In the meantime the Plaintiff was able to obtain a copy of the purported Gift Deed dated 30th December, 2011 allegedly executed by his mother in favour of Defendant No. 1 within 14 days of the grant of probate.

5.5 Since no settlement was worked out, the Plaintiff filed the present Suit seeking the following reliefs:

"(a) This Hon'ble Court be pleased to declare that the Gift Deed dt. 30.12.2011 executed by Smt. Jamna Tarachand Laungani (mother of the Plaintiff) in favour of the Defendant No. 1 herein in respect of Flat No. 25, 6th floor, SINDHU , 87 Marine Drive, Anuvrat Marg, 'G' Road, Mumbai-400 002 along with 5 shares of face value of Rupees 50/- (Rupees Fifty Only) each, of the aggregate value of Rs. 250/- (Rupees Two Hundred and Fifty only) covered by share certificate No. 7 bearing distinctive Nos. 31 to 35 and also 60 (Sixty) shares of face value of Rs. 50/- (Rupees Fifty only) each of the aggregate value of Rs. 3,000/- (Rupees Three Thousand only) covered by Share Certificate No. 37 (both inclusive) bearing distinctive 501 to 560 issued by Defendant No. 2 is illegal, invalid, void ab initio and of no legal force and effect;

(b) This Hon'ble Court be pleased to restrain the Defendant No. 1 from dealing with the suit flat and the suit shares and/or creating third party rights in respect thereof or inducting anyone therein or any part thereof under any circumstances or in any manner attempting to enforce any rights under the said purported Gift Deed dt. 30.12.2011;

(c) this Hon'ble Court be pleased to restrain the Defendant No. 2 from transferring or recording the transfer or taking on record any application for transfer of the suit flat and the suit shares from the name of the Plaintiff's mother Smt. Jamna Tarachand Laungani to that of the Defendant No. 1 or anyone else at all.

(d) this Hon'ble Court be pleased to direct the Defendant No. 2 to disclose the entire sequence of events regarding the transfer o the suit flat and suit shares from the name of the Plaintiff's late father Shri Tarachand Mahadevmal Laungani to the name of the Plaintiff's mother and the date on which the Plaintiff's mother was recorded as the nominee member in the place and stead of the Plaintiff's late father and as well as the date on which the Plaintiff's mother was recorded as the beneficial owner in respect of the suit flat and suit shares pursuant to the grant of the Probate dt. 16.12.2011."

6. Section 164 of the Act is reproduced hereunder:

"164. Notice necessary in suits.- No suit shall be instituted against a Society, or any of its officers, in respect of any act touching the business of the society, until the expiration of two months next after notice in writing has been delivered to the Registrar or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims, and the plaint shall contain a statement that such notice has been so delivered or left."

7. The expression "touching the business of the society" which is found in Section 164 of the Act is also used in Section 91 of the Act. Section 91 of the Act provides that 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, conduct of general meetings, management or business of the society shall be referred by any of the parties to the dispute to a Co-operative Court, if both the parties thereto are one or other parties specified in clauses (a) to (e) of sub-section (1) of Section 91 of the Act. The Plaintiff has relied on the decision of the Hon'ble Supreme Court in the case of Deccan Merchants Co-op. Bank Ltd. (supra) wherein the Hon'ble Supreme Court held that in the context of Section 91 of the Act, the expression 'touching the business of the society' would not mean the affairs of the Society because election of office-bearers, conduct of general meetings and management of a society would be treated as affairs of a Society. The word "business" has been used in a narrower sense and it means the actual trading, commercial or other similar business activity of the society which the Society is authorised to enter into under the Act, the Rules and its bye-laws. The observations of the Hon'ble Supreme Court in paragraph 15 of the said Judgment are reproduced hereunder:

"15. The question arises whether the dispute touching the assets of a society would be a dispute touching the business of the society. This would depend on the nature of the society and the rules and bye-laws governing it. Ordinarily, if a society owns buildings and lets out parts of buildings which it does not require for its own purpose it cannot be said the letting out of those parts is a part of the business of the society. But it may be that it is the business of a society to construct and buy houses and let them out to its members. In that case letting out property may be part of its business. In this case, the society is a co-operative bank and ordinarily a co-operative bank cannot be said to be engaged in business when it lets out properties owned by it. Therefore, it seems to us that the present dispute between a tenant of a member of the bank in a building which has subsequently been acquired by the bank cannot be said to be a dispute touching the business of the Bank, and the appeal should fail on this short ground."

8. The Learned Advocate for the Defendant No. 1 has relied on the decision of the Learned Single Judge of this Court (Dr. D.Y. Chandrachud, J.) in the case of Suprabhat Co-op. Hsg.Soc. Ltd. (supra). In that case the Court was concerned with the construction to be placed upon the meaning of the expression 'touching the business of the society' in the context of Section 164 of the Act. The Learned Single Judge has in his judgment, after setting out the aforestated observations in Deccan Merchants (supra), in paragraph 9 of his Judgment observed as follows:

"9. The basic principle which has been formulated by the Supreme Court is that whether a particular dispute touches the business of the society would depend upon the nature of the society and the rules and bye-laws governing it. In the case before the Supreme Court, the Society was a Co-operative Bank. The Supreme Court held that ordinarily, a Co-operative Bank cannot be said to be engaged in a transaction which touches the business of the Society when it lets out properties owned by it. Therefore, a dispute between a tenant of a member of the Bank in a building which had subsequently been acquired by the Bank was held not to touch the business of the Bank. The Supreme Court in the observation which has been extracted above, however, also considers a case where it is the business of a Society to construct and buy houses and let them out to its members. The Supreme Court held that in such a case letting out of property is the business of the Society. The distinction between the two types of cases has to be borne in mind. The distinction is premised in the nature of the society as evidenced by its objects and bye laws."

The Learned Judge thereafter considered the facts of the case before him and after noting that the objects of the Society - Suprabhat Co-operative Housing Society Ltd., inter alia included buying or taking on lease the plot bearing No.C-39 of Sector 12, Khargar, admeasuring 7252 sq.mtrs. and constructing flats thereon, for allotment to the members of the Society for their authorised use, observed that the construction contract which was entered into with the Respondents was clearly in pursuance of the basic object of the applicants. Therefore having regard to the principle incorporated in Section 164 of the Act, the Learned Judge held that the suit which has been instituted by the Respondents is clearly one which touches the business of the society and the same was not maintainable since admittedly no notice under Section 164 of the Act was served.

9. The decision of the Hon'ble Supreme Court in Deccan Merchants (supra) as well as the decision of the Learned Single Judge in Suprabhat Co-op. Hsg. Soc. (supra) are cases where the principal/primary dispute is between the Plaintiff and the Defendant Society and the principal reliefs sought by the Plaintiff are against the Defendant Society. In the case of such principal/primary dispute against the Society, touching the business of the Society, notice under Section 164 of the Act is mandatory since it is settled law, and as also held by a Learned Single Judge of this Court (S.J. Vazifdar, J.) in B.Y. Chavan and another vs. Association of Tenants of the Bombay Catholic Housing Society and others 2011 Vol. 113 (3) Bom. L.R. 1771 : [2011(5) ALL MR 815], that the object of such a notice is inter alia to enable the Society, upon being informed by the Registrar, to avoid litigation which involves both time and expense, by settling a just claim. In the suit at hand, from the reliefs set out hereinabove, it is clear beyond any doubt that the principal/primary relief is claimed by the Plaintiff against his brother, Defendant No. 1, in respect of the Gift Deed purportedly executed by their mother in favour of Defendant No. 1, in respect of the suit flat in the Defendant No. 2 Society. It is only if the Plaintiff succeeds in getting the principal relief from this Court, the consequential relief sought against the Society to transfer the suit flat would be granted, and would come into effect. In fact, it is the Society which by its letter dated 2nd July, 2014 informed the Plaintiff to approach the Court and obtain necessary directions within a reasonable period of time, failing which the Society would be constrained to consider the application for transfer of the flat filed by Defendant No.1. Therefore, in my view, such a Suit cannot be termed as a suit touching the business of the Society and the question of giving notice under Section 164 of the Act to the Society pursuant to the object of the Act, does not arise. Again, as held by this Court in the case of B.Y. Chavan and another [2011(5) ALL MR 815] (supra), "A view to the contrary would render the provisions of Section 164 arbitrary, unfair and in fact irrational. It would enable the Defendant, by insisting upon the empty formality of a notice, to defeat a just claim. The legislature could surely not have intended such a consequence". In fact, whilst deciding a case with regard to issuing a notice under Section 80 of the CPC requiring 60 days notice in case of suits filed against the Government officials, the Hon'ble Supreme Court has in Dhian Singh Sobha Singh and another vs. Union of India AIR 1958 SC 274 confirmed the observations of "Beaumont C.J. in Chandu Lal Vadilal vs. Government of Bombay (AIR) 1943 Bom. 138 that "One must construe S. 80 with some regard to common sense and to the object with which it appears to have been passed".

10. What the provisions of Section 164 of the Act prohibit is a suit against the Society touching its business without service of a notice to the Registrar. We must, therefore, see the substance of the suit, namely, whether in substance it is a suit touching the business of the Society. In a suit, in substance concerning succession or transmission of interest in a flat held in a Co-operative Society between two rival claimants, the Society is really a mere formal party. Even the relief seeking a restraint on transfer against the Society is merely a relief effectively against the Defendant. Such relief does not in any way concern the business of the Society.

11. In any event, the Apex Court in Dhian Singh Sobha Singh and Anr. (supra) as well as the Full Bench of our High Court in Vasant Ambadas Pandit vs. Bombay Municipal Corporation and Ors. AIR 1981 Bom. 394, have in the context of statutory notice required to be served under Section 80 of the CPC and Section 527 of the Bombay Municipal Corporation Act (3 of 1888) held that giving such statutory notices is a condition precedent to the exercise of jurisdiction, but the same being a mere procedural requirement, does not go to the root of the jurisdiction in the true sense of the term and is therefore capable of being waived by the Defendants, and upon such waiver the Court gets jurisdiction to entertain and try the suit. In the case of Pimpri Refugee Industrial Co-operative Society vs. Parmanand Bhimandas Talreja [2007(2) ALL MR 306], a Learned Single Judge of this Court has dealt with the issue of absence of notice under Section 164 of the Act and in paragraph 6 of his Judgment held as under:

"It is not in dispute that the petitioner never raised the issue regarding the absence of notice under Section 164, either in the written statement or even at the appellate stage. It cannot also be disputed that the requirement of notice under Section 164 can be waived and the waiver can be specific or implied. It is settled position in law that when a statute requires a notice should precede the filing of a suit, the compliance of such statutory provision is mandatory, but at the same time, the right thereof can be waived by the party for whose benefit the provision regarding pre-suit notice has been made, and further that the waiver can be expressly made as also impliedly. While dealing with the provision of law comprised under Section 80 of the C.P.C., the Apex Court in Dhian Singh Sobha Singh and another vs. Union of India, reported in AIR 1958 SC 274 as well as the Full Bench of our High Court in Vasant Ambadas Pandit v. Bombay Municipal Corporation and others, reported in AIR 1981 Bombay 394 had held that the notice can be lawfully waived. Undoubtedly, the waiver has to be established by the plaintiff. However, the same can be presumed when inspite of specific averment in the plaint regarding service of notice, the sufficiency of the notice is not challenged by the defendant till the disposal of the appeal."

12. In the instant case, the Society despite service failed to appear and support the case of the Defendant No. 1, that the Suit filed by his brother, the Plaintiff abovenamed, be dismissed for want of notice under Section 164 of the Act. This Court directed the Secretary of the Defendant No. 2 Society to appear before the Court, which he did. On an enquiry made by the Court, the Secretary of the Society informed the Court that since the principal dispute in the above Suit is between two brothers viz. the Plaintiff and the Defendant No.1, and since only consequential reliefs are sought against the Society, the Society will in the above Suit submit to the orders of the Court. The Secretary of Defendant No. 2 Society however, requested the Court to grant him time to talk to the Committee Members of the Society and to file an affidavit setting out the decision of the Society qua the waiver of notice in the above Suit. The Secretary of the Society has thereafter filed an Affidavit dated 10th September, 2015 stating that he, as the Secretary of the Society, as well as the Society have decided to waive the notice under Section 164 of the Act.

13. I am therefore of the view that in the circumstances, as in the present Suit where the dispute has arisen between the Plaintiff and the Defendant No. 1 who are brothers, in respect of a flat in a Co-operative Housing Society, and the primary relief sought by the Plaintiff is against the Defendant No. 1 brother, which relief does not concern the Society, and the Society is joined as party Defendant only to obtain consequential directions arising out of the outcome in the Suit between the two brothers, such a suit cannot be treated as a suit instituted against the Society in respect of an act touching the business of the Society, and keeping in view the object of Section 164 of the Act, no notice would be required to be served to the Registrar/Society. Again, in a case where the Society itself has advised a party to obtain an order from the Court within a reasonable period of time, failing which the Society may be compelled to accede to the request of the applicant party, in my view, keeping in mind the object of Section 164 of the Act, no notice is required to be given to the Society under Section 164 of the Act, even if the steps which the Society may take in the matter may be in pursuance of its business, since the advice given by the Society to obtain appropriate orders from the Court would amount to implied waiver of the notice. In view thereof, in the present case it cannot be said that the present dispute in the Suit pertains to an act touching the business of the Society, and therefore the question of service of notice under Section 164 of the Act on the Defendant No. 2 Society does not arise. In any event, in view of the express waiver of such notice by the Defendant No. 2 Society, the Defendant No. 1 cannot be heard to say that the Court has no jurisdiction to entertain and try the Suit on the ground that the Plaintiff has not issued the notice to Defendant No. 2 Society under Section 164 of the Act. In view thereof, the preliminary issue is answered in the affirmative.

Ordered accordingly.