CHAMBER SUMMONS NO. 1359 OF 2000

7th February 2020

Petitioner Counsel: Mr. Madhav J. Jamdar Mr. Atul Damle Mr. Mohan P. Tekavade Pintu Chaurasia Mr. Mukesh Subramanian
Respondent Counsel: Mr. Mangal Bhandari Ms. Maya Sarkar Mandhukar Munim Mr. Satish J. Shah Mr. Sachin Satpute Satpute & Co. Mr. Chandrakant N. Chavan
Act Name: Indian Trusts Act, 1882 Land Acquisition Act, 1894 Income Tax Act, 1995 Maharashtra Co-operative Societies Act, 1960 Gujarat Co-operative Societies Act, 1961 Specifc Relief Act, 1963 Urban Land (Ceiling and Regulation) Act, 1976

Section :
Section 92 Indian Trusts Act, 1882 Section 94 Indian Trusts Act, 1882 Section 4 Land Acquisition Act, 1894 Section 6 Land Acquisition Act, 1894 Section 230A Income Tax Act, 1995 Section 36 Maharashtra Co-operative Societies Act, 1960 Section 37 Gujarat Co-operative Societies Act, 1961 Section 15 Specifc Relief Act, 1963 Section 15(h) Specifc Relief Act, 1963 Section 19 Specifc Relief Act, 1963 Section 19(e) Specifc Relief Act, 1963 Section 21 Urban Land (Ceiling and Regulation) Act, 1976

Cases Cited :
Para 7: Shri Rikhu Dev, Chela Bawa Harjug Dass Vs. Som Dass (deceased) Through his Chela Shiam Dass, (1976) 1 SCC 103
Paras 10, 20: Shri Ramji Mandir Narsinhji & ors. Vs. Narsinh Nagar Co-operative Housing Society Ltd Navsari & ors. AIR 1979 Gujarat 134
Paras 10, 21: Maneklal Mansukhbhai Co-operative Housing Society Ltd. Vs. Rajendra Kumar Maneklal Shah & anr., JT 2001 (10) SC 83
Para 25: Jai Narain Parasrampuria (dead) Vs. Pushpa Devi Saraf and others. (2006) 7 Supreme Court Cases 756
Para 25: Weavers Mills Ltd., Vs. Balkis Ammal & Ors. [AIR 1969 Mad. 462]
Para 25: Vali Pattabhirama Rao & Anr. Vs. Sri Ramanuja Ginning & Rice. Factory (P.) Ltd. & Ors. [AIR 1984 A.P. 176]

JUDGEMENT

1. This Chamber Summons is taken out by the applicants seeking their impleadment as the plaintiffs either by deleting extant plaintiffs or by adding the applicants as plaintiff nos.6 to 10.

2. As the dispute spans over a period of 40 years, it may be apposite to note the facts which led to the instant chamber summons, in a little detail.
(a) Plaintiff nos.1 to 5 claimed themselves to be promoters of the proposed Pateshwar Co-operative Housing Society. The plaintiffs claimed that the defendants agreed to sale the land bearing Survey no.42 (part) and CTS No.286 admeasuring 20,698.60 sq. mtrs. situated at village Hariali, Vikhroli, Mumbai (hereinafter referred to as ‘the suit property’), in favour of the plaintiffs by executing an Agreement for Sale dated 18th July, 1978. The suit property was proposed to be purchased by the plaintiffs for construction of houses for 108 members of the proposed Pateshwar Co-operative Housing Society, the name of which came to be changed from, “Gurunagar Co-operative Housing Society”.
(b) A notifcation under Section 4 and declaration under Section 6 of the Land Acquisition Act, to acquire the suit property were issued by the Government. Pursuant to the efforts made by the plaintiffs, the suit property came to be released from the acquisition in favour of the, “Gurunagar Co-operative Housing Society”. On or about 10th December, 1979, the plaintiffs prepared the indenture of sale and got it duly stamped. However, on or about 15th January, 1980, the defendants wrongfully terminated the said Agreement for Sale.
(c) A supplemental Agreement dated 17th December, 1982, came to be executed between the plaintiffs and the defendants. It was agreed that the plaintiffs would pay an additional consideration of Rs.2,25,000/- over and above the consideration paid under the Agreement dated 18th July, 1978. The defendants received the said additional consideration of Rs.2,25,000/- as well. The defendants, however, failed to forward the requisite certifcate under Section 230A of the Income Tax Act, 1995, as it stood then, in order to complete the conveyance. Instead, by a communication dated 27th May, 1983, the defendants wrongfully terminated the Agreements for Sale. Hence, the plaintiffs were constrained to institute the suit for declaration that the original Agreement for Sale dated 18th July, 1978, and the supplemental Agreement for Sale dated 17th December, 1982, are valid, subsisting and binding on the defendants and for the specifc performance of the contract for sale contained therein.
(d) The principal defence of the defendants, as set out in the written statement of defendant nos.2(a) to 2(d), 3 to 9, 11 and 12 dated 8th August, 2003, is of a valid termination of the Agreement for Sale dated 18th July, 1978, by the defendants on 15th January, 1980. Consequently, the defendants contended that the suit is barred by law of limitation.
(e) In the aforesaid backdrop, the applicants have taken out this Chamber Summons asserting, inter alia, that the plaintiffs have not been diligently prosecuting the suit and cause of the society, for which the suit property was agreed to be purchased. The suit was, thus, dismissed in default of appearance of the plaintiffs on 1st March, 2000.
(f) The members of the society in a Special General Body meeting held on 16th July, 2000, after noting the acts, of commission and omission of the plaintiffs, prejudicial to the interest of the society, passed a resolution to remove the plaintiffs from the position of the promoters of the society. Instead, by another resolution, the applicants came to be appointed as the promoters. Thereupon, the applicants ascertained the status of the suit. It was noticed that the plaintiffs had fled Notice of Motion No.1123 of 2000, for setting aside the dismissal order. However, as the plaintiffs have been removed from the position of the promoters of the society for the conduct, prejudicial to the interest of the society, the plaintiffs are not prosecuting the suit in a diligent manner. On the contrary, the applicants are vitally interested in prosecuting the suit for the beneft of all the members of the society. Thus, the applicants be either impleaded as the plaintiffs in the place of extant plaintiffs or, in the alternative, as co-plaintiffs alongwith the plaintiffs.

3. An affdavit-in-reply is fled by Mr. Prabhakar Sopan Tekwade, plaintiff no.5, in opposition to the applicants prayer of impleadment. It is averred that the instant suit has been instituted by the plaintiffs in their individual capacity. Since the agreement dated 18th July, 1978 and the supplemental agreement dated 17th December, 1982, were executed by the plaintiffs in their personal capacity, the status of the plaintiffs cannot be changed nor the plaintiffs can be substituted. In contrast, the applicants have no locus standi. Nor the applicants are either necessary or proper parties to the suit. The presence of the applicants is not necessary for a complete and effectual adjudication of the dispute. The plaintiffs alleged that the applicants are hand in glove with the defendants.

4. The claim of the applicants of being elected as the promoters of the society in the Special General Body Meeting dated 16th July, 2000 is also contested. The plaintiffs have also called in question the bona fde of applicant nos.1 and 2, who are alleged to be the partners of M/s. J. L. Developers, in whose favour the plaintiff nos.1, 3, 4 and 5 had executed the power of attorney in the year 1995. On account of the default, on the part of applicant nos.1 and 2, to develop the property the plaintiffs were constrained to revoke the power of attorney in the year 1996. Applicant no.5 is son of applicant no.1. It is asserted that looking to the age of applicant no.5 (23 years), he could not have been a member of the society when it was formed. Thus, the applicants have sought their impleadment with a design to advance their personal interest. Therefore, the application for impleadment be rejected.

5. In the backdrop of the aforesaid rival contentions, I have head Mr. Jamdar, the learned Counsel for the applicant, Mr. Damle, the learned Senior Counsel for plaintiff nos.4(c) and 5, Mr. Bhandari, the learned Counsel for defendant nos.2(b) to 2(d), 3 and 11, Mr. Shah, the learned Counsel for defendant nos.11(b) to 11(d) and Mr. Chavan, the learned Counsel for defendant nos.14 and 15.

6. Mr. Jamdar, the learned Counsel for the applicants submitted that the plaintiffs, who instituted the suit in the capacity of the promoters of the society, have disowned the society and are, in effect, setting a title in themselves, which is adverse to the interest of the society. This changed stance of the plaintiffs, according to Mr. Jamdar, is against the weight of the material on record. To draw home this point, the learned Counsel for the applicants invited the attention of the Court to the averments in the affdavit in reply, wherein the plaintiffs have averred that the agreements were executed in their individual capacity and they have instituted the suit in the personal capacity for specifc performance of the contract for sale. The learned Counsel further urged that this assertion of the plaintiffs is plainly inconsistent with the averments in the plaint and the agreements of which the specifc performance is sought. Laying emphasis on the cause-title and the opening sentence of the plaint, wherein the plaintiffs claim themselves to be the promoters of the society, coupled with the recitles in the agreement dated 18th July, 1978 and the supplemental agreement dated 17th December, 1982, wherein also the plaintiffs were described as the promoters of the society, it was submitted that the claim of the plaintiffs that they have executed the agreements in individual capacity runs counter to the pleadings and the agreements on which the suit is rested. Thus, the members of the society were constrained to remove the plaintiffs from their position as the promoters and instead appoint the applicants as promoters. Banking upon the copy of the resolution allegedly passed in the special general body meeting of the society dated 16th July, 2000, it was submitted that the impleadment of the applicants as the plaintiffs either by deleting the extant plaintiffs or, in the alternative, by adding them as co-plaintiffs is imperative for a complete and effectual adjudication of the dispute. Lest, the society and the members for whom the suit property was agreed to be purchased would suffer an irreparable loss as the plaintiffs have demonstrated that they are not earnestly pursuing interest of the society.

7. Mr. Jamdar further submitted that in view of the resolution dated 16th July, 2000, there can be said to be a devolution of the interest in the subject matter of the dispute upon the applicants and the consequent cessation of the interest of the plaintiffs in the same. In view of the devolution of the interest, the applicants are entitled to be impleaded as a party by invoking the provisions contained in Order XXII Rule 10 of the Code. In order to lend support to this submission, Mr. Jamdar placed a strong reliance on the judgment of the Supreme Court in the case of Shri Rikhu Dev, Chela Bawa Harjug Dass vs. Som Dass (deceased) Through his Chela Shiam Dass, (1976) 1 SCC 103. wherein the dispute was in respect of the succession to the offce of Mahant of a Dera. In the said case, after adverting to the provisions contained in Order XXII Rule 10 of the Code, the Supreme Court, inter alia, observed that when a suit is brought by or against a person in a representative capacity and there is a devolution of the interest of the representative, the rule that has to be applied is Order XXII, Rule 10 and not Rule 3 or 4, whether the devolution takes place as a consequence of death or for any other reason. Order XXII, Rule 10 is not confned to devolution of interest of a party by death, it also applies if the head of the mutt or manager of the temple resigns his offce or is removed from offce. In such a case, the successor to the head of the mutt or to the manager of the temple may be substituted as a party under this rule. The word ‘interest’ which is mentioned in this rule means interest in the property, i.e., the subject matter of the suit and the interest is the interest of the person who was the party to the suit.

8. In opposition to this, Mr. Damle, the learned Senior Counsel for plaintiff nos.4(c) and 5, stoutly submitted that the impleadment of the applicants as the plaintiffs to the suit would inevitably lead to the dismissal of the suit for there is no privity of contract between the defendants and the applicants. The moment, the plaintiffs, in whose favour the defendants had executed the agreements for sale, are deleted from the array of the plaintiffs, there is no person in whose favour the contract for sale is executed and who can seek enforcement of its performance. Questioning the bona fde of the applicants, Mr. Damle would urge that the applicants under the guise of prosecuting the interest of the society intend to advance the interest of the defendants.

9. Mr. Damle further submitted that, indisputably, the society has yet not been registered under provisions of the Maharashtra Co-operative Societies Act, 1960 and Rules thereunder, (‘the Act, 1960 and Rules 1961’). Mr. Damle submitted that in view of the provisions contained in Section 36 of the Act, 1960, only a registered society, can institute and defend the suit and other legal proceedings. An unregistered society, according to Mr. Damle, cannot maintain an action for specifc performance of the contract.

10. To bolster up this submission, Mr. Damle placed a strong reliance upon a Division Bench judgment of the Gujarat High Court in the case of Shri Ramji Mandir Narsinhji & ors. vs. Narsinh Nagar Co-operative Housing Society Ltd Navsari & ors. AIR 1979 Gujarat 134. and the judgment of the Supreme Court in the case of Maneklal Mansukhbhai Co-operative Housing Society Ltd. vs. Rajendra Kumar Maneklal Shah & anr., JT 2001 (10) SC 83. wherein the view of the Gujarat High Court in the Case of Ramji Mandir (supra) was affrmed.

11. To start with, the principles which govern the impleadment of a party to the suit. It is trite that the question of addition of parties under Order I Rule 10(2) is not one of the initial jurisdiction of the Court but of a judicial discretion which has to be exercised in view of the facts and circumstances of a particular case. Under the provisions of Order I Rule 10(2), the Court is empowered to direct that a person be added as party to the suit, if his presence in court is necessary in order to enable the court to adjudicate all the questions involved in the suit effectively and completely. The real test to determine whether a party is a necessary party to the suit is, whether in the absence of the person sought to be impleaded as a party to the suit, the controversy raised in the suit cannot be effectively and completely adjudicated. It is also well recognised that the expression “to settle all questions” employed in sub-rule (2) of Rule 10 of Order I receives a liberal and wide interpretation so as to facilitate the adjudication of all the questions pertaining to the subject matter of the suit. The jurisdictional condition is that the party sought to be impleaded must have a direct interest in the subject matter of litigation in contra-distinction to a commercial interest. Obviating multiplicity of proceedings is also one of the objects of the said provision.

12. The nature of the suit is also of critical signifcance. Indubitably, the suit is for specifc performance of the contract for sale of the property. The provisions contained in Sections 15 and 19 of the Specifc Relief Act, 1963, indicate the persons who may obtain the specifc performance and against whom the specifc performance may be enforced. Clause (h) of Section 15 and Clause (e) of Section 19, read as under:
“Section 15.: Who may obtain specifc performance – Except as otherwise provided by this Chapter, the specifc performance of a contract may be obtained by -
………..
(h) when the promoters of a company have, before its incorporation, entered into a contract for the purposes of the company, and such contract is warranted by the terms of the incorporation, the company:
Provided that the company has accepted the contract and has communicated such acceptance to the other party to the contract.”
Section 19.: Relief against parties and person claiming under them by subsequent title: – Except as otherwise provided by this Chapter, specifc performance of a contract may be enforced against –
……….
(e) when the promoters of a company have, before its incorporation, entered into a contract for the purpose of the company and such contract is warranted by the terms of the incorporation, the company:
Provided that the company has accepted the contract and communicated such acceptance to the other party to the contract.”

13. The aforesaid provisions, if read in conjunction, indicate that when the promoters of a company have entered into a contract before its incorporation, the contract may be enforced by the company or against the company after its incorporation, provided the company has accepted the contract and it is warranted by the terms of incorporation.

14. In the light of the above position reverting to the facts of the case, there is not much controversy over the fact that the Agreement dated 18th July, 1978 and the supplemental Agreement dated 17th December, 1982, were executed by the plaintiffs in the capacity of the promoters of the society. It is incontrovertible that in the plaint the plaintiffs have averred that they are instituting the suit in the capacity of the promoters of the society and the subject agreements were executed by the defendants in their favour as the promoters of the said society. In paragraph 1 of the plaint, it is averred that the society has 108 members. If the recitles in the agreement are read in juxtaposition with the averments in the plaint, an inference become inescapable that upto the date of the institution of the suit, at least, the stand of the plaintiffs was that the contract for sale was for the purpose of the society and they were pursuing the cause of the society in the capacity of the promoters.

15. There is another factor which bears upon the nature of the claim of the plaintiffs. It is averred in the plaint that the suit property was released from the acquisition proceedings. This assertion in the plaint fnds support in a letter dated 10th December, 1979, issued by the Deputy Secretary to the Government (Exhibit-C), to the effect that the Government has decided to release the suit property, which was notifed for acquisition for ex Maharashtra Housing Board under Section 4 of the Land Acquisition Act, 1894, vide notifcation dated 6th November, 1961 and declaration under Section 6 dated 3rd December, 1965, in favour of the Gurunagar Co-operative Housing Society (proposed). The Special Land Acquisition Offcer No.5 was directed to inform the chief promoter or any other authorised offce bearer of the society to furnish an undertaking that the society or any other party will not claim damages whatsoever on account of release of the land from acquisition. No objection was also conveyed thereunder to the Competent Authority for making a declaration under Section 21 of the Urban Land (Ceiling and Regulation) Act, 1976 that the suit property shall not be treated as the excess land.

16. The situation which thus obtains is that not only the agreements for sale were executed in the capacity of the promoters of the proposed society but subsequent to the execution of the agreement for sale dated 18th July, 1978, the Government took a decision to release the suit property from acquisition for the purpose of allotment to the society.

17. In the backdrop of the aforesaid fact - situation, the objection to the impleadment of the applicants on behalf of the plaintiffs premised an impermissibility of an unregistered society prosecuting a claim for enforcement of specifc performance of the contract, is required to be appreciated. Section 36 of the Act, 1960, on the strength of which the challenge was built on behalf of the plaintiffs, reads as under:
“36. Societies to be bodies corporate The registration of a society shall render it a body corporate by the name under which it is registered, with perpetual succession, and a common seal, and with power to acquire, hold and dispose of property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all such things as are necessary for the purpose for which it is constituted.”

18. The relevant part of Rule 4 of the Rules, 1961, which regulates the procedure for registration of a society, reads as under:
“4. Application for registration and registration fees
(1) Every application for registration of a society under Section 8 shall be made in Form ‘A’ in Marathi, Hindi or English, and shall, subject to the provisions of sub-section
(2) of Section 8 and sub-rules (2) and (3), be signed by the applicants and shall, in addition to four copies of the proposed bye-laws of the society, be accompanied by:
(a) a list of persons who have contributed to the share capital, together with the amount contributed by each of them, and the entrance fee paid by them;
(b) a certifcate from the Bank or Banks stating the credit balance therein in favour of the proposed society;
(c) a scheme showing the details explaining how the working of the society will be economically sound and, where the scheme envisages the holding of immovable property by the society, the description of such property proposed to be purchased, acquired or transferred to the society. ……...”

19. Section 36 of the Act in terms provides that only upon registration a society shall acquire a status of a body corporate, with perpetual succession and a common seal. The registration of society clothes it with the authority to acquire, hold and dispose of the property, to enter into contracts and also to institute and defend the suits and other legal proceedings. On a plane reading, the registration of the society seems to be peremptory for acting as a juristic entity; capable of entering into contracts, instituting the suits and also being sued.

20. At this juncture, a reference to the judgment of the Gujarat High Court in the case of Ramji Mandir (supra) would be apposite. In the said case, the society had instituted a suit for specifc performance of a contract for lease, executed in favour of its chief promoter, before registration of the society. The Division Bench of the Gujarat High Court, after adverting to the provisions contained in Section 37 of the Gujarat Co-operative Societies Act, 1961 and Rules 1965, thereunder, which are almost identical with the provisions of Section 36 and Rule 4, extracted above, held that a co-operative society becomes a legal person after it is registered and it is after its registration that it acquires the capacity to enter into contracts. It was further observed that the language of Section 37 of the Gujarat Act is clear enough to show that it is after registration of the society that it can enter into contracts. The language used in Rule 3 of the Gujarat Rules, 1965, cannot be interpreted so as to enlarge the scope of Section 37. Rule 3, does not expressly state that a proposed society can enter into a contract. No such indirect inference from that rule can be drawn for the purpose of enlarging the scope of the principle embodied in Section 37. Thus, the contract executed by the chief promoter was held to be a nullity and the suit bereft of a cause of action.

21. This decision was upheld by the Supreme Court in the case of Maneklal (supra). The Supreme Court affrmed the view of the Gujarat High Court that since the plaintiff society was not registered when the subject agreement was executed the suit fled by the plaintiff - society was not maintainable. The Supreme Court after referring to the provisions contained in Section 37 of the Gujarat Act, 1961, and Rule 3 of the Gujarat Rules, 1965 observed as under:
“4. The aforesaid provision shows that the Society becomes competent to acquire, hold and dispose of the property only when it is registered and not otherwise. We have noticed earlier that there was no assignment of the rights of Nanubhai Jogibhai Desai fowing from the agreement in favour of the Society. In absence of such assignment, the Society was not competent to fle a suit for specifc performance of agreement to sell under the Act.”

22. Mr. Damle, the learned Senior Counsel urged with a degree of vehemence that the aforesaid pronouncements are on all four with the facts of the instant case. Indubitably, the society was not registered, under the provisions of the Act, 1960, when the agreements were executed and even, as of today, there is no change in the status of the said society. Thus, the edifce of the submission of the applicants that the agreements were executed for and on behalf of the society gets dismantled. Mr. Jamdar made an endeavour to meet this challenge by canvassing a submission that the housing co-operative society cannot be registered until it owns the property. Therefore, the aforesaid pronouncements do not govern the facts of the instant case with equal force.

23. The question as to whether the suit instituted at the instance of the promoters of an unregistered society for specifc performance of a contract for sale can be legitimately determined at the conclusion of the trial or in the event the defendants mount such a challenge at a prior stage. It is interesting to note that the plaintiffs are banking upon the aforesaid pronouncements which, in a sense, impinge on the tenability of the suit, albeit for the purpose of opposing the impleadment of the applicants. At this stage, in the peculiar facts of the case, in my view, it is not warranted to delve into the aspect of the tenability of the suit, as framed, for the purpose of determination of this application.

24. The issue which troubles me is, can the plaintiffs, who have executed the agreements for sale in the capacity of the promoters of an unregistered society and instituted the suit, in that capacity, be permitted to claim the specifc performance of the contract in their individual capacity? The position of an unregistered society is, at worst, akin to an incorporated association. In view of the provisions contained in Section 15 of the Specifc Relief Act, adverted to above, a company subsequent to its incorporation is entitled to seek specifc performance of the contract executed by its promoters, before incorporation, upon fulfllment of certain conditions.

25. If the promoters, in a given case, assert that the property was acquired or agreed to be acquired in their individual capacity, would such claim be sustained? A proftable reference, in this context, can be made to a judgment of the Supreme Court in the case of Jai Narain Parasrampuria (dead) vs. Pushpa Devi Saraf and others. (2006) 7 Supreme Court Cases 756. In the said case, the promoters of the company, before its incorporation, endeavoured to assert their title to the property, which was purchased for the company. Repelling such claim, the Supreme Court dealt with the issue of acquisition of title to the property by an unincorporated corporation, under the heading ‘unincorporated corporation issue’. The following observations of the Court are instructive:
“21. Under the English Common Law, an unincorporated corporation could not have become an owner of the property. The law in India, however, is different.
24. In terms of Section 15(h) of the Specifc Relief Act, the promoters of a company before its incorporation could enter into a contract for the beneft of the company and such contract may be warranted by the terms of incorporation of the company. The said provision is subject to the proviso that the company should accept the said transaction. In the instant case, indisputably it was done. Section 19(e) of the Act provides for grant of a decree of specifc performance of a contract against a company when the promoters of a company before incorporation entered into a contract for the purpose of the company and such contract is warranted by the terms of incorporation. The said provision applies herein.
25. In Weavers Mills Ltd., vs. Balkis Ammal & Ors. [AIR 1969 Mad. 462] , the Madras High Court clearly held that Section 19(e) of the Specifc Relief Act carves out an exception from the common law of England, stating :
"While we accept the position that a promoter is neither an agent nor a trustee of the company under incorporation, we are inclined to think that in respect of transactions on behalf of it, he stands in a fduciary position. For the plaintiff-company Sections 92 and 94 of the Indian Trusts Act, 1882, were relied upon. It seems to us that neither of these sections is of assistance to it. These sections, as we think, contemplate transactions as between persons in existence. In any case, it seems to us that no trust as defned by Section 3 of the Act is brought about by the purchases made by the promoters. The legal position of a promoter in relation to his acts, particularly purchase of immovable properties on behalf of the company under incorporation, is a peculiar one not capable of being brought into any established or recognised norms of the law as to its character as an agent or a trustee. But, at the same time, it is impossible, to our minds, to deny that he does stand in a certain fduciary position in relation to the company under incorporation. When he does certain things for the beneft of it, as for instance, purchase of immoveable properties, he is not at liberty to deny that beneft to the company when incorporated. We are prepared to hold that in such a case the beneft of the purchase will pass on to the company when incorporated."
26. The said decision has been followed by a Division Bench of the Andhra Pradesh High Court in Vali Pattabhirama Rao & Anr. vs. Sri Ramanuja Ginning & Rice. Factory (P.) Ltd. & Ors. [AIR 1984 A.P. 176], wherein it was held :
"Thus, we hold that if the constitution of the partnership frm is changed into that of a company by registering it under Part 9 of present Act (Part 8 of previous Act), there shall be statutory vesting of title of all the property of the previous frm in the newly incorporated company without any need for a separate conveyance." (emphasis supplied)

26. In the light of the aforesaid exposition of the legal position, reverting to the facts of the case, the pivotal question which comes to the fore is, whether the plaintiffs are at liberty to deny the fact that the agreements were executed for the purpose of acquisition of the property for the society and, then, claim enforcement of the specifc performance of the contract in their individual capacity. As indicated above, there is overwhelming material on record that not only the agreements were executed in the capacity of the promoters of the society, but, even the Government released the suit property from acquisition for the purpose of its allotment to the society. To add to this, in the plaint, the plaintiffs have made a categorical assertion that the suit property was agreed to be purchased for the society of which there were 108 members. In my considered view, the plaintiffs cannot be permitted to disown the fduciary position in relation to the society and claim that the agreements were executed in their individual capacity and seek enforcement of the contract for their personal beneft.

27. The aforesaid bold stand of the plaintiffs provides a justifcation for impleadment of the persons, who claim to represent the interest of the society. Undoubtedly, at this juncture, the question as to whether the Special General Body Resolution of the society has any legal sanctity and provides the necessary authority to the applicants, cannot be enquired into. The impleadment of the persons who claim to represent the interest of the society would be necessary for the purpose of adjudication of the question as to who is entitled to the specifc performance of the contract in the event the Court decides to order its specifc performance. Would it be for the beneft of the members of the society or for the plaintiffs, in their personal capacity, which is now sought to be urged on behalf of the plaintiffs. For this purpose, the presence of the persons who represent the interest of the society is necessary for a complete and effectual adjudication of the dispute between the parties.

28. In the case at hand, there is material to indicate that the applicant nos.1 and 2 had claimed some interest in the suit property on the strength of the power of attorney, which was allegedly executed in their favour by the plaintiffs for the development of the suit property. It is the claim of the plaintiffs that the applicant nos.1 and 2 are the partners of M/s. J. L. Developers, and the said power of attorney came to be subsequently revoked. In the rejoinder, the applicants contend that the capacity of applicant nos.1 and 2, as the members of the society, is distinct from their capacity as the power of attorney holders of the plaintiffs. Applicant no.5 is alleged to be the son of applicant no.1 and his claim of membership is also under a cloud of doubt on account of his age i.e. 23 years on the date of fling of the Chamber Summons. It would thus be expedient to obviate the possible confict of duty and interest, while ensuring proper representation of society. Theoretically, any two members of the society can represent the interest of the society and all its members.

29. In the aforesaid view of the matter, I am impelled to hold that it would be in the ftness of things to implead applicant nos.3 and 4 only as the party defendants to the suit only for the purpose of espousing the cause of the society and seeking the enforcement of the specifc performance of the contract for the beneft of the members of the society. The Chamber Summons, thus, deserves to be partly allowed, to this extent.

30. Hence, the following order;
(i) The Chamber Summons stands partly allowed.
(ii) Applicant no.3 Mr. Vasant Maruti Pawar and applicant no.4 Dr. Ramesh Dhondulal Parekh be impleaded as party defendants to the suit.
(iii) The plaintiffs shall carry out the necessary amendment in the plaint within a period of three weeks and provide the amended copy of the plaint to the defendants including the newly impleaded defendants.
(iv) The newly added defendants (applicant nos.3 and 4) shall be at liberty to fle written statement seeking the enforcement of the contract contained in the agreement dated 18th July, 1978 and the supplemental agreement dated 17th December, 1982, for the beneft of the Pateshwar Co-operative Housing Society Ltd (proposed) and its members, within a period of one month of being served with the copy of the amended plaint.
(v) It is hereby made clear that the observations made hereinabove are for the purpose of determination of the question of the impleadment of the applicants as parties to the suit and may not be construed as an expression of opinion on merits of the rival claims in the suit. All questions are expressly kept open for consideration.
The Chamber Summons stands accordingly disposed of.