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Citation Codes
Equivalent Citations
citation codes
Case Number
Judges
  • B.C Gadgil
  • V.V Vaze, JJ.
Acts
  • section 164 of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred
  • section 164 of the Maharashtra Co-operative Societies Act, 1960.
  • section 164 of the Co-operative Societies Act
  • SECTION 14 LIMITATION ACT
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Judges
  • B.C Gadgil
  • V.V Vaze, JJ.
Acts
  • section 164 of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred
  • section 164 of the Maharashtra Co-operative Societies Act, 1960.
  • section 164 of the Co-operative Societies Act
  • SECTION 14 LIMITATION ACT
See more information ...
Smart Summary

Judgment Summary — Gadgil, J.

Factual and Procedural Background

The plaintiff (originally plaintiff in Suit No. 5692 of 1963, City Civil Court, Bombay) appealed the dismissal of his suit. The City Civil Court dismissed the suit on the ground that it was not maintainable because no written notice under section 164 of the Maharashtra Co-operative Societies Act, 1960 ("the Act") had been given to the Registrar.

Procedural history recorded in the opinion: the appeal was placed before a Single Judge (Shared Manohar, J.) on June 20, 1984 who referred the appeal to a Division Bench because of the important question of law regarding interpretation of section 164. The Division Bench thereafter heard the matter.

Relevant factual background from the pleading and agreement:

  • The defendant is a co-operative society registered under the Act which purchased property at 63 Bhulabhai Desai Road, Bombay, comprising two buildings: Shanti Vihar and Anand Vihar.
  • The plaintiff occupied part of Shanti Vihar. The society desired to demolish Shanti Vihar and erect a new building to allot flats to its members, which required vacant possession of the plaintiff's portion.
  • On May 16, 1963 the plaintiff and the society entered into an agreement: the plaintiff agreed to vacate his possession in return for the society giving him certain premises on the first and second floors (part was handed over immediately; balance was to be handed over later once the society obtained possession from others).
  • The plaintiff's grievance was that although the society acquired the necessary possession from others it failed to hand over the agreed premises to the plaintiff; the plaintiff sued for specific performance including a claim for possession.
  • The society resisted the suit on various grounds; as a preliminary point it contended the suit was not maintainable for want of the notice mandated by section 164 of the Act; the trial court accepted that contention and dismissed the suit.

Legal Issues Presented

  1. Whether the agreement and the plaintiff's claim arise "in respect of any act touching the business of the society" so as to attract the mandatory requirement of a two months' written notice to the Registrar under section 164 of the Maharashtra Co-operative Societies Act, 1960.
  2. Whether the defendant's contention about non-maintainability for lack of a section 164 notice was waived by failing to raise it earlier in interlocutory proceedings.

Arguments of the Parties

Appellant's (Plaintiff's) Arguments

  • The plaintiff contended that the agreement and the rights flowing from it do not "touch the business of the society" and therefore section 164 does not apply; if the act does not touch the business of the society, no two months' notice is necessary.
  • The plaintiff also argued that the defendant had waived the right to raise the section 164 objection by failing to take that point in earlier interlocutory (notice of motion) proceedings.
  • The plaintiff further expressed a concern that if required now to give fresh notice and file a new suit (the agreement dated May 16, 1963), limitation might bar a subsequent suit; the plaintiff relied on the Court to avoid an outcome leaving him unable to recover his rights.

Respondent's (Defendant Society's) Arguments

  • The society's primary contention was that the plaintiff's suit is "in respect of any act touching the business of the society" and therefore the mandatory two months' notice under section 164 was a condition precedent to institution of the suit; absence of such notice rendered the suit not maintainable.
  • In opposition to the interim proceedings, the society raised the plea of non-maintainability for want of the section 164 notice as part of their defence (as reflected in the written statement).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Deccan Merchants v. Dalichand, Vol. LXXII-1970 B.L.R. 418 (Supreme Court) Interpretation of the phrase "touching the business of the society" — the Court observed the word "touching" is wide and would include any matter which relates to or concerns the business of a society; the Court also noted that not every act the society does to carry out its objects is necessarily part of its business, and in that case (a banking society) recovery of possession of certain assets was held not to touch the society's business. The Division Bench reviewed that interpretation and contrasted the factual setting of Deccan Merchants (a banking society) with the present case (a society whose main object is real estate development). The Bench concluded that, given the defendant society's objects and the agreement's direct relation to demolition/reconstruction and allotment of flats to members, the present agreement did touch the society's business and therefore section 164 applied.

Court's Reasoning and Analysis

The court proceeded through the following analytical steps, relying on the facts, the society's bye-laws and the cited precedent:

  1. The court examined the society's bye-laws (Bye-law No. 2) which expressly set out the objects: to engage in the business of real estate for the benefit of members, including purchase and sale of land/buildings, constructing/reconstructing/demolishing buildings, letting, surrendering and accepting surrender, fixing and collecting rents, and related activities. The court treated these objects as indicative of the society's business activities.
  2. The court then considered the agreement dated May 16, 1963, which stated the society had purchased the property for demolition and reconstruction and had begun demolition work. The explicit purpose of the agreement was to secure vacant possession of a portion of Shanti Vihar (occupied by the plaintiff) so that demolition and reconstruction could proceed for the benefit of members.
  3. Applying the reasoning in Deccan Merchants (interpretation of "touching the business of the society"), the court distinguished Deccan Merchants on its facts (a banking society where recovery of possession of assets was found not to touch the business) and found the present case materially different because here the society's business is real estate development and the transaction directly facilitated demolition and reconstruction — activities at the core of the society's objects.
  4. Consequently, the court concluded that the agreement and the plaintiff's claim flow from an act that does touch the business of the society; therefore the statutory precondition in section 164 (a two months' notice delivered to or left at the Registrar's office, and a statement to that effect in the plaint) is mandatory and missing in the original suit.
  5. On the waiver point, the court analyzed practice on interlocutory proceedings and pleadings: pleas affecting maintainability of the suit are to be pleaded in the written statement. In this case the society specifically took the section 164 objection in its written statement. The court therefore rejected the submission that the society had waived the objection by not raising it during earlier notice of motion proceedings.
  6. Regarding the plaintiff's concern about limitation if required to file a fresh suit after giving notice, the court observed section 14 of the Limitation Act (which may exclude time spent in bona fide but incorrect or improper proceedings) could be relevant and that the trial court should consider the applicability of section 14 to any subsequent suit. The Division Bench did not decide the limitation issue, leaving it for the trial court to consider.
  7. In the exercise of its discretion to avoid immediate prejudice, the court ordered continuation of interim reliefs granted in the appeal up to July 31, 1985, to enable the plaintiff time to give notice under section 164 and institute fresh proceedings if he chose to do so.

Holding and Implications

Holding:

APPEAL DISMISSED. The Division Bench affirmed that the suit was not maintainable without a notice under section 164 of the Maharashtra Co-operative Societies Act, 1960.

Direct consequences and immediate implications for the parties:

  • The trial court's dismissal for lack of compliance with section 164 was upheld.
  • The interim reliefs that were granted in the appeal were ordered to continue in force only up to July 31, 1985.
  • Parties were directed to bear their own costs in both Courts.
  • The Division Bench left open for the trial court to consider whether section 14 of the Limitation Act applies to any subsequently instituted suit (i.e., whether time spent in the original proceedings, prosecuted bona fide, should be excluded for limitation purposes).

Broader implications: The opinion does not purport to lay down a novel legal principle beyond applying existing guidance (as in Deccan Merchants) to the facts. The immediate legal effect is that claims arising from acts that "touch the business of the society" (read in light of the society's objects) require compliance with section 164 before suit. The Division Bench did not articulate any broader rule beyond its application to these facts; the trial court was left to assess limitation questions if a fresh suit is filed.

Appeal dismissed.
Show full summary ...

    C.F Marconi v. Madhav Co-Operative Housing Society Ltd.

    Per Gadgil, J.:— Plaintiff in Suit No. 5692 of 1963 of the file of the City Civil Court, Bombay, has preferred this appeal against the dismissal of his suit on the ground that the suit against the defendant co-operative society is not maintainable in the absence of a notice under section 164 of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as ‘the Act’).

    2. This appeal was originally placed before the learned Single Judge Shared Manohar, J., for hearing on June 20, 1984 the learned Judge passed the following order:

    “In view of the important question of law relating to the interpretation of section 164 of the Co-operative Societies Act involved in this appeal the appeal is referred to a Division Bench. Liberty is given to the appellant to move the Division Bench for fixation of early date of hearing.”

    3. On the basts of this order the office has placed this matter before the Division Bench for hearing.

    4. In order to understand the controversy between the parties it will be necessary to refer to a few facts. The defendant is a Co-operative Society registered under the Act. It appears that the defendant purchased a plot of land bearing No. 63, Bhulabhai Desai Road, Bombay, together with two buildings standing thereon viz. Shanti Vihar and Anand Vihar. The plaintiff was in possession of a part of the building Shanti Vihar. The society wanted to demolish this Shanti Vihar building and to construct a new building for allotment of the flats therein to its members. This was not possible unless the society was able to get vacant possession of Shanti Vihar and more particularly the possession of that part which was in possession of the plaintiff. Therefore, on May 16, 1963 the plaintiff and the defendant entered into an agreement (which is on page 15 of the compilation). The agreement mentions that the society has purchased the property for the purpose of demolition and reconstruction of a building thereon and has been carrying on demolition work of the said property. It also states that the society approached the plaintiff for surrender of the property which was in possession of the plaintiff. The plaintiff agreed to do so on certain terms and hence the agreement was executed. It is not necessary to give the details of the agreement. Suffice it to say that the parties agreed that the plaintiff should vacate the premises in his possession i.e the Shanti Vihar building and in consideration thereof the defendant should give certain premises on the first and second floor to the plaintiff as a tenant. On the date of the agreement, a part of the premises so agreed to be given to the plaintiff was handed over to the plaintiff. However, the remaining part of the premises was agreed to be handed over to the plaintiff at a later stage after the society would get the possession of that part from someone else. The grievance of the plaintiff is that though the society acquired that possession, it did not hand over the possession to the plaintiff in terms of the agreement. The plaintiff, therefore, filed the suit under appeal for specific performance for claiming certain reliefs including possession of that part.

    5. This suit was resisted by the defendant on various grounds. One of the grounds is that the suit is not tenable in the absence of a notice under section 164 of the Act. This point was heard as a preliminary point. The learned Judge of the City Civil Court, Bombay, accepted this contention and the suit was dismissed.

    6. Section 164 of the Act reads as follows:

    “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 main contention of the defendant is that the suit claim is in respect of an act touching the business of the society and consequently the two months notice as contemplated by section 164 of the Act is imperative. Shri Dalvi, for the plaintiff-appellant, however, urged that the provisions of section 164 are not applicable inasmuch as the agreement in question and the rights flowing therefrom do not touch the business of the society. It is not in dispute that a claim which is in respect of any act not touching the business of the society would be tenable without a notice and hence the important question that arises for our decision is as to whether the agreement in question and the claim arising therefrom is in respect of an act touching the business of the society. This phraseology “touching the business of the society” has been considered and interpreted by the Supreme Court in the case of 1(Deccan Merchants v. Dalichand), reported in Vol. LXXII-1970 B.L.R 418. In that case the society was carrying on a business of banking. The society was owning certain property which was in possession of the respondent before the Supreme Court. The society claimed the possession of that property. The respondent did not accede to that claim. The society, therefore, moved the Registrar of the Co-operative Societies for taking an appropriate action under section 91 of the Act. The respondent filed a writ petition in the High Court contending that this claim of the society is not in respect of any act touching the business of the society and consequently the proceedings under section 91 of the Act are not maintainable. It is material to note that in section 91 a provision is made for determination of certain disputes by a Co-operative Court. One of the category of the disputes is the dispute touching the business of the society. The Supreme Court took into account the fact that the business of the society was that of banking and that in that background the claim to recover possession of certain assets of the society was held to be a claim not touching the business of the society. On page 424 of the report the Supreme Court has held as follows:

    “While we agree that the nature of business which a society does can be ascertained from the objects of the society, it is difficult to subscribe to the proposition that whatever the society does or is necessarily required to do for the purpose of carrying out its objects can be said to be part of its business. We, however, agree that the word “touching” is very wide and would include any matter which relates to or concerns the business of a society, but we are doubtful whether the word ‘affects’ should also be used in defining the scope of the word ‘touching’.”

    8. It was urged by Shri Dalvi that the agreement in question has no concern with the business of the society and that at any rate it cannot be said that the agreement is an act touching the business of the society. We have the advantage of going through the bye-laws of the defendant society. Bye-law. No. 2 read as follows:

    “The objects of the society shall be:

    a) to engage in the business of real estate observing principles of co-operation for the benefit of its members and in the particular purchase and sale of land and/or buildings and owning, buying, selling, hiring, letting, sub-letting, exchanging, mortgaging, accepting mortgage, renting, leasing, sub-leasing, surrendering, accepting surrender, accepting lease, tenancy or sub-tenancy and constructing, reconstructing, altering or demolishing buildings, through its own agency or through licensed contractors and purchasing, holding in stock or selling materials incidental to construction, repair, overhaul or maintenance of land and building; to fix and collect rents:

    b) ……………

    c) ……………

    d) ……………

    e) ……………

    f) …………..”

    9. It is thus clear that the main object of the society is to purchase and sell lands and also to buy and sell buildings and construct such buildings mainly for the benefits of its members. The agreement dated May, 16, 1963 has made it clear that the society has purchased the said premises for the purpose of demolition and reconstruction of a building thereon and that a part of the demolition work has already begun. In order to enable the society to complete the demolition work of Shanti Vihar with a view to reconstruct a new building it was necessary that the society should get possession of the part which was with the plaintiff. The very purpose of the agreement is to secure such possession in consideration of letting out certain other premises from the adjoining building viz. Anand Vihar.

    10. It was urged by Shri Dalvi that this agreement may indirectly be concerned with the business of the society and that in terms of the Supreme Court decision that agreement may affect the business of the society. He further contended that the rights or claims under the agreement do not touch the business of the society. We are not able to accept the submission that this agreement affects the business of the society. In fact the very business of the society is to purchase and sell the lands to construct buildings thereon and to allot flats to its members. In the background of this business of the society it would be idle to contend that the agreement which enables the society to get possession of a part of the land for reconstructing a new building thereon for the benefit of the members would not be a transaction touching the business of the society. Under these circumstances, in our opinion, the learned atrial Judge was right in holding that the suit claim arises from an act touching the business of the society.

    11. It was next urged by Shri Dalvi that the contention about the necessity of the notice under section 164 of the Act should be deemed to have been waived by the defendant and that it would not be open for the defendant to urge for it. The suit in question was filed on May 11, 1963. The plaintiff filed a notice of motion in that suit claiming certain temporary reliefs. That notice of motion was opposed by the society by raising a number of contentions. However, the plea of non-maintainability of the suit on account of the absence of the notice under section 164 of the Act has been taken. But such a plea was specifically taken when the defendant filed a written statement to the suit. The argument of Shri Dalvi is that an omission to take plea in the notice of motion proceedings should be held to be a conduct suggesting that the plaintiff gave up that plea. We are not able to accept this contention for a simple reason that pleas for the suit are to be raised in the written statement. In the present case the concerned plea about the necessity of the notice has been so taken. An omission to raise it in the interlocutory matter would be irrelevant.

    12. It was next urged by Shri Dalvi that the plaintiff will be in an embarrassing position if he is now asked to file a fresh suit after giving a notice under section 164 of the Act. We have already observed that the agreement in question is dated May 16, 1963. We are now in 1985. Shri Dalvi, therefore, urged that it may as well be possible that the defendant may raise a plea of bar of limitation if a fresh suit is filed. It is, however, material to note that section 14 of the Limitation Act has made a provision of exclusion of time spent in a proceeding filed bona fide. That provision is meant to cover cases where incorrect or improper proceedings are taken and they are prosecuted in good faith in a Court which, from any cause, in unable to entertain it. It will be for the trial Court to consider this aspect of the applicability of section 14 of the Limitation Act to the suit that plaintiff intends to file how. And in that background we do not think that the apprehension about the second suit being barred by time should be considered at this stage.

    13. It was lastly urged by Shri Dalvi that the interim relief that have been granted by the Appellate Court should be continued for some period so as to enable the plaintiff to file a fresh suit and seek such or similar reliefs. He also submitted that the plaintiff will have to give a two months notice and then to file a suit. We think that it will be in the interest of justice if the interim reliefs granted in this appeal are ordered to be continued up to July 31, 1985.

    14. The result, therefore, is that the appeal is dismissed on the ground that the suit is not maintainable without a notice under section 164 of the Maharashtra Co-operative Societies Act, 1960. However, it is made specifically clear that the interim reliefs granted in this appeal shall continue to be operative up to July 31, 1985. Parties to bear their own costs in both the Courts.

    Appeal dismissed.
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    Comments

    C.F Marconi v. Madhav Co-Operative Housing Society Ltd.
    (Mar 19, 1985)