Gujarat High Court
Yogashram Cooperative Housing Society ... vs Ashish Kiritkumar Purani on 4 August, 2023
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 17081 of 2021
With
R/SPECIAL CIVIL APPLICATION NO. 21824 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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YOGASHRAM COOPERATIVE HOUSING SOCIETY LTD. PART I
Versus
ASHISH KIRITKUMAR PURANI
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Appearance:
MR KAMAL TRIVEDI, SENIOR ADVOCATE WITH MR RAVINDRA
SHAH(1299) for the Petitioner(s) No. 1
MR MIHIR JOSHI WITH MR JAY KANSARA FOR M/S WADIAGHANDY AND
CO(5679) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 04/08/2023
CAV JUDGMENT
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1.Heard learned Senior Advocate Mr. Kamal Trivedi with learned advocate Mr. Ravindra Shah for the petitioner and learned Senior Advocate Mr. Mihir Joshi with learned advocate Mr. Jay Kansara for the respondents.
2.Special Civil Application No.17081/2021 is filed by the petitioner society with the following prayers:
"(A) to issue a writ of certiorari or any other appropriate writ, order or direction quashing and setting aside the impugned judgement dated 18.10.2021 passed by the Gujarat State Co-operative Tribunal at Annexure-AB (Pages 396-422) to the petition in so far as it permits the respondents to make construction of ground + seven floors on sub plot 32/A of the petitioner society and the impugned award and operative part of the judgement dated 30.08.2019 rendered by the board of nominees, Amdavad in Lavad Suit 217/2017 at Annexure-S (Pages 251 275/B) to the petition and allow the Lavad Suit 217/2017 in toto by granting all the reliefs prayed for by the petitioner society;
(B) pending hearing and final disposal of the petition, to Page 2 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined restrain the Respondents, their agents, assigns, servants, whosoever etc. from carrying on erection or execution of construction of whatsoever nature in Sub-Plot 32/A of the Petitioner Society;
(C) pending hearing and final disposal of the petition, to stay the further execution, implementation and operation of the impugned judgement dated 18.10.2021 passed by the Gujarat State Co-
operative Tribunal at Annexure-AB (Pages 396 422) to the petition and the impugned award and operative part of the judgement dated 30.08.2019 rendered by the board of nominees, Amdavad in Lavad suit 217/2017 at Annexure-S (Pages 251 -
275) to the petition;
(D) pending hearing and final disposal of the petition, to extend the stay order dated 18.102.2021 passed by the tribunal at Annexure- AB (Pages 396-422) to petition;"
3.Special Civil Application No.21824/2019 is filed with the following prayers:
"(A) to issue a writ of mandamus or in the nature of mandamus or any other appropriate writ, order or direction setting aside the impugned action of the Respondent Authorities in approving the plan submitted by the Respondents 3 to 5 and grant of commencement letter dated 13.04.2017 Page 3 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined to be ultra vires, illegal and without authority of law and direct the Respondents to cancel/ revoke / recall the said Plan and commencement letter at Annexure-A (Colly) to the petition;
(B) to issue a writ of mandamus or in the nature of mandamus or any other appropriate writ, order or direction prohibiting the Respondent Authorities in accepting or approving any plan of Flat-Type or non-residential construction or in the nature of having superstructure construction of more than Ground plus Two Floors from the Respondents 3 to 5 or from any other person and granting construction permission for any Sub-Plot situated within the Petitioner Society;
(C) to issue a writ of mandamus or in the nature of mandamus or any other appropriate writ, order or direction directing the Respondents Authorities, officers, assigns, servants, etc. to remove the construction of existing superstructure erected by the Respondents 3 to 5 on Sub-Plot 32/A in the Petitioner Society and to remove the Respondents 3 to 5 to from the premises of Sub-Plot 32/A in the Petitioner Society:
(D) pending hearing and final disposal of the petition, to restrain the Respondents 3 to 5, their agents, assigns, servants, etc. from carrying on erection or execution of construction of whatsoever nature in Sub-Plot 32/A of the Petitioner Society;Page 4 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023
NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined (E) pending hearing and final disposal of the petition, to direct the Respondents 1 and 2 to forthwith stop the Respondents 3 to 5, their agents, assigns, servants, etc. from carrying on erection or execution of construction of whatsoever nature in Sub-Plot 32/A of the Petitioner Society;"
4.Brief facts of the case are that petitioner-
Yogashram Cooperative Housing Society Ltd.
was registered on 11.01.1962 under the Bombay Cooperative Societies Act, 1925 with Registration no.Gh-165 of 1962.
4.1) The District Registrar, Cooperative Societies passed an order dated 20.04.1989 under the provisions of section 17 of the Gujarat Cooperative Societies Act, 1961 (For short, "the Act, 1961") effecting division of the petitioner society into two independent residential cooperative societies i.e. Part-I located at Shreyas Tekra and Part-II located Page 5 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined near Ayojan Nagar Society.
4.2) The petitioner society was registered as Tenant-Ownership Society with new Registration No.Gh-13753.
4.3) In Tenant-Ownership type of Society, land belongs to the Society whereas member can construct his superstructure thereon whereas in Tenant-Co-Partnership type of society, society owns the land as well as superstructure thereon wherein the member has mere occupancy right. According to the petitioner, the petitioner society is a tenement/bungalow type society and not a flat type society.
4.4) Along with registration, bye-laws of the petitioner society also came to be registered in usual prescribed format called 'Leaflet-U'. Respondent nos.1 and 2 are Page 6 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined original allottees of Plot No.32/A situated in the petitioner society as they have purchased the right of use of Plot No. 32/A with the permission of the society in the year 1966 and since then the respondents are in occupation of the said plot.
4.5) Respondent no.1 made an application dated 12.03.2016 to the petitioner society seeking the consent for carrying out construction on sub-plot No. 32/A of the petitioner society stating inter-alia to the effect that they want to construct on their sub-plot No. 32/A as per Rules/Norms of the Ahmedabad Municipal Corporation along with the copy of plan.
4.6) Ex-Secretary of the petitioner Society Shri Yogeshbhai Shah gave a consent letter dated 23.05.2016 to respondent no.1 by approving Building Plan presented to the Page 7 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined petitioner society for construction of ground plus seven floors on sub-plot no.32/A. It is the case of the petitioner society that such consent letter was given without knowledge and information of the members of the society and in absence of any authorisation and/or resolution of the petitioner society, such consent letter was signed by former Secretary of the petitioner society.
4.7) Thereafter, respondent no.1 with reference to sub-plot no. 32/A and one Shri Manishkumar P. Shah with reference to sub-
plot No.32/B, jointly applied to the Ahmedabad Municipal Corporation (for short "AMC") on 31.05.2016 for entire sub-plot No.32 seeking permission for construction of Residential Flat in prescribed Forms-2(A), 2(B) and 2(C).
4.8) Respondents also sought Page 8 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined classification of such construction in prescribed Form-6(A) of the application as belonging to Category-III which is meant for use of Dwelling-3 comprising of building type such as Apartment, Hostel, Dharamshala, Cottage Industry and Pre-school.
4.9) The AMC approved the Building Plan and granted Development Permission to the respondents on 13.04.2017. According to the petitioner society, the Building Plan as approved by the AMC clearly shows that each of the ground plus seven floors of the proposed flat type construction to be used for residential usage, has an independent unit consisting of a living room, a bed room, a kitchen, store and a wash and a toilet.
4.10) It is the case of the petitioner society that on coming to know about passing of the construction plan by the AMC, members Page 9 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined of the petitioner society addressed a letter dated 06.05.2017 to its office bearers raising serious objections against the proposed construction of building consisting of ground plus seven floors by the respondents on their sub-plot no.32/A by stating inter-alia that the petitioner society is a residential cooperative society and the proposed construction is against the bye-laws of the petitioner society and therefore, the respondents should be restrained from proceeding ahead with the construction.
4.11) The Managing Committee of the petitioner society in response to such objections convened the meeting on 08.05.2017 wherein after deliberation, resolution was passed resolving inter-alia that right from the inception of the petitioner society, members have constructed tenement type of Page 10 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined building and that there is no practice permitting any member to construct flat type or multi-storeyed building and that therefore, the signature on the plan or approval of the plan may be treated as cancelled.
4.12) It is the case of the petitioner society that in furtherance of the above, the petitioner society through its Ex-Secretary Shri Yogeshbhai Shah wrote a letter dated 14.05.2017 to the AMC taking objections in view of resolution dated 08.05.2017.
4.13) Thereafter, the General Body of the petitioner society in its Annual General Meeting held on 04.06.2017 after taking note of the objections raised by the respondents who also attended the said meeting, passed a resolution and inter-alia decided not to allow construction of flat type, high rise or Page 11 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined commercial building etc. and the respondents were directed to file revised building plan.
4.14) Thereafter, the petitioner society had raised objections before the AMC by writing letters dated 29.06.2017, 12.07.2017 and 08.08.2017.
4.15) The petitioner society thereafter filed Lavad Suit No. 217 of 2017 in the Court of Board of Nominees and obtained injunction against further construction. The respondents being aggrieved by such injunction preferred revision application before the Gujarat State Cooperative Tribunal (For short "the Tribunal") which was dismissed followed by Writ Petition before this Court against such order.
4.16) The Ex-Secretary Shri Yogeshbhai Shah filed his written statement on Page 12 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined 07.07.2017 on behalf of the petitioner society stating inter-alia that he was misled by the respondents to believe that their Building Plan was not for construction of a Flat/Commercial Building.
4.17) Writ Petition being Special Civil Application No.17685/2017 filed by the respondents against the order of the Tribunal was disposed of by the learned Single Judge of this Court vide order dated 13.10.2017 confirming the order of interim injunction granted by the Board of Nominees by remanding the matter to the Board of Nominees with the direction to consider the injunction application afresh.
4.18) Meanwhile, the AMC passed an order dated 06.11.2017 on the objection letter given by the petitioner society raising objections against the proposed construction Page 13 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined of flat type building undertaken by the respondents inter-alia observing that the Development Permission dated 13.04.2017 issued by the AMC will be subject to the final orders that may be passed by the Board of Nominees, Appellate Tribunal and this Court in the pending proceedings.
4.19) The petitioner society preferred an appeal being Letters Patent Appeal No. 1851 of 2017 against the order dated 13.10.2017 passed in Special Civil Application No.17685/2017 wherein by order dated 09.11.2017, Division Bench of this Court modified the order in view of undertaking of the respondents that construction to be raised on sub-plot No. 32/A by the respondents would be for residential use only and the same would not be transferred, gifted or given on rent to anybody and that no construction would be raised beyond ground Page 14 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined plus two floors till the finalisation of the same by the Court of Board of Nominees.
4.20) The respondents thereafter, carried out the construction of building of ground plus two floors on Plot No.32/A between 10.11.2017 and 29.08.2019.
4.21) The Board of Nominees passed the order dated 30.08.2019 and decreed the suit in favour of the petitioner society observing that if the respondents carry out the construction beyond two floors on their sub-
plot No.32/A, the same would not be given on rent or for commercial purpose on the ground that the petitioner society is a Tenant Ownership Society and that before counter signing the plan, neither the petitioner society in the meeting of General Body nor in the meeting of its Managing Committee passed a resolution authorising the signature on the Page 15 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined plan produced by the respondents which was the basis for approval of such plan and issuance of Development Permission by the AMC and therefore, such plan would not be binding upon the petitioner society as per its bye-
laws and the respondents have failed to establish that the proposed construction is for their own residential use.
4.22) The respondents after passing of the impugned judgment and order, carried out construction of two more floors till injunction was granted by this Court between 01.09.2019 and 16.12.2019.
4.23) In Special Civil Application No.22364/2019 preferred by the petitioner society challenging the aforesaid Judgment and Award of the Board of Nominees, this Court granted injunction in favour of the petitioner society as the Tribunal had become Page 16 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined defunct on account of non appointment of judicial members which continued to be in operation till the Tribunal decided the appeal of the petitioner society.
4.24) The petitioner society also preferred Special Civil Application No.21824/2019 challenging the action of the AMC granting the approval to the plan and issuance of Development Permission in favour of the respondents in which notice was issued by this Court.
4.25) Respondent nos. 1 and 2 preferred Appeal No. 73/2019 before the Appellate Tribunal wherein the petitioner society filed the Cross Objection.
4.26) Learned Single Judge of this Court by order dated 03.02.2021 in Special Civil Application No.22364/2019 observed that as Page 17 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined the Tribunal was validly constituted, Appeal No.73/2019 filed before it together with Cross Objection would be heard by the Tribunal within a period of two months from the date of receipt of order and interim relief granted by the Court was ordered to be vacated on condition of filing an undertaking by respondent nos.1 and 2 before the Tribunal that in the event they do not succeed in appeal, construction shall be demolished.
4.27) Being aggrieved, the petitioner Society preferred Letters Patent Appeal No. 204/2021 which was disposed of by the Division Bench vide order dated 23.07.2021 directing the Tribunal to decide Appeal No.73/2019 with Cross Objection filed by the petitioner society within a period of three months on merits with a further direction to the Tribunal to pass further appropriate Page 18 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined orders with regard to the interim relief and continued the interim relief granted on 10.02.2021 by the Division Bench till final disposal of the appeal.
4.28) The Tribunal by order dated 18.10.2021 disposed of the appeal and cross objection by holding that in absence of any decision taken by the AMC either to stop the disputed construction or to cancel the Development Permission upon the representation made by the petitioner society that it has withdrawn the consent in favour of the respondents, the respondents were permitted to construct ground plus seven floors as per the approved plan and Development Permission granted by the AMC for their own residential purpose only and the same or part thereof would not be given on lease or sub-let and would not be used for commercial purpose.Page 19 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023
NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined 4.29) Being aggrieved, the petitioner society has preferred Special Civil Application No.17081/2021. This Court by order dated 23.11.2021 after considering the submissions made by both the sides passed the following order:
"5. Having heard the learned Counsels for the parties, I am of the opinion that the matter requires consideration and it is required to be heard with Special Civil Application No. 21824 of 2019, which is pending for adjudication before this Court because the question that arises for the consideration of this Court is as to whether, the Petitioner-Society can restrict any member from putting-up the construction beyond a particular height when there is no bylaw which prescribes such prohibition or any rules or resolution passed by the Petitioner-Society to that effect when all the members of the Petitioner-Society are of the opinion that such a construct should not be put-up. Further, whether only one member of the Petitioner-Society can be permitted to make construction of such ground plus seven floors building or not.Page 20 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023
NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined 5.1 So far as the use of the building to be constructed is concerned, the Tribunal has taken care of the said aspect by restraining the Respondents from using the same for any other purpose without the permission of the Petitioner-Society, except, for residential purpose. It is also required to be considered as to whether, the Tribunal can pass such order or not.
5.2 So far as the grant of interim relief is concerned, the Tribunal has already extended the interim relief, which was in operation during the pendency of the Appeal till 22nd November, 2021 and therefore the same interim relief is required to be granted till the next date of hearing.
5.3 At this stage, learned Counsels for the parties submitted that they are ready and willing to proceed with the matter finally and therefore, instead of admitting this matter, the same is adjourned for hearing on 16th December, 2021.
5.4 In the meantime, the Registrar of Cooperative Societies Tribunal is directed to sent the entire R&P to this Court before the next date of hearing."
4.30) In view of the aforesaid order, the petition was taken up for hearing with the Page 21 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined consent of the learned advocates for both the sides.
5.Learned Senior Advocate Mr. Kamal Trivedi with learned advocate Mr.Ravindra Shah for the petitioner society submitted that there are more than 56 bungalows in the petitioner society and not a single bungalow is having more than ground plus two floors as the petitioner society is a bungalow/tenement type society and not a flat type society.
5.1) It was submitted that since inception, the petitioner society is a Tenant-Ownership type society wherein land belongs to the society and the members of the society can construct only superstructure thereon.
5.2) Learned Senior Advocate Mr. Trivedi referred to and relied upon the following Page 22 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined bye-laws of the petitioner society, English translation of which is as under:
"6. Any person:
(2) Who himself or any member of his joint family does not have any house or a land for house in their name in this city and who has made requisite declaration for the same (this bye-
law would not bar a person who has obtained permission as per the provisions of bye-laws 9 and 11).
(4) Who has provided requisite details in the declaration and who has a special need of a house. Only such person can become the member of this Society.
11. In special cases, after taking prior permission of the District Registrar, any person having in his own name or in the name of his joint family, a plot or a house in this city, can become a member of this Society."
5.3) Referring to above bye-laws, it was submitted that bye-laws which are in the nature of contract are to be interpreted purposively taking into account subsequent resolution of the Managing Committee and Page 23 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined General Body of the society. It was submitted that the resolution passed in General Body of the Society on 4.06.2017 shall prevail in view of sections 73 and 74 of the Act, 1961.
It was submitted that as per Section 73 of the Gujarat Co-operative Societies Act, 1961, the final authority of every cooperative society vests in the General Body of members in General Meeting and that therefore, resolution passed by the Governing Body, binds every member of the Society. Therefore in this case the Resolution dated 08.05.2017, could not have been brushed aside by the learned Tribunal only on the ground that the construction plans for multi-storied building of Respondent No.1 and 2, was counter-signed by the Secretary of the Petitioner Society and approved by the Ahmedabad Municipal Corporation.
5.4) Learned Senior Advocate Mr.Trivedi Page 24 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined also referred to Schedule-1 and Schedule-3 of the bye-laws wherein clause (1) of Schedule-1 provides that as per the present Rules, a member who has applied for constructing a house in the society should possess five fully paid up shares.
5.5) It was submitted that word used is "Ghar". Reliance was also placed on clause nos. 2(7), 2(11) and 2(17) of Schedule-3, English translation thereof is as under:
"2. For the purpose of implementing the aforesaid obligations during the above agreed lease period, the lessee himself and his assigns, covenant that:-
(7) without the written consent of the lessor, shall not alter himself or allow to be altered through others, the structure and the design of the existing house on the leased plot, and on obtaining the permission of the lessor, if any additional construction is proposed to be made, details of such additional construction shall be first presented to the lessor and any existing house or construction Page 25 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined shall not be demolished or new construction be raised without prior written order or permission of the lessor.
(11) shall not cause or to be caused on the leased plot and place thereon, any disadvantage, annoyance, harassment or inconvenience to the occupants of nearby houses, lessor and the neighbors.
(17) shall follow all existing rules, regulations and bye-laws framed by the lessor as binding and implement, whatever directions and guidelines, that may be issued by the Managing Committee."
5.6) Referring to the above clauses, learned Senior Advocate Mr. Trivedi demonstrated that the petitioner society is not a flat type society nor is a tenant co-
partnership type of society and for that purpose, reference was made to Schedule-1(A) of the bye-laws relating to tenant co-
partnership society to point out that the same would not be applicable to the Page 26 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined petitioner society wherein clause 25 thereof provides for Flat type societies, English translation of which is as under:
"25. Flat Type Societies-
(1) Flat type societies shall be called 'Tenant co-partnership Societies' and the ownership of the house shall be of the Society and not of the member."
5.7) Learned Senior Advocate Mr. Trivedi submitted that as per the bye-law no. 6(4) of the bye-laws, the respondents have given a declaration to the petitioner society declaring that they do not have any residence or land for constructing their residential house either under their own names or under the name of any person of their joint family and that no person of their family is a member of any other cooperative society. It was submitted that inspite of such a declaration being filed by the respondents, there was deliberate suppression of the fact Page 27 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined that the respondents were having residential house wherein they are presently residing which is clear from the cause title of the impugned order passed in Appeal No. 73/2019 before the Tribunal wherein it is stated that the respondents are residing at 11/12, Shyamal Row House, Part No.V, Satellite, Ahmedabad before purchasing Tenement No.32/A in the petitioner society in the month of April, 2005 wherein also the respondents have never come to reside. It was therefore, submitted that the respondents have purchased the Plot No.32/A only for commercial purpose by constructing flat type construction of ground plus seven floors.
5.8) It was further submitted that though the bye-laws of the cooperative society are not the legislative provisions but a contract between the members and the society where its provisions are to be interpreted purposively Page 28 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined as per the intention of the majority of its members.
5.9) It was submitted that though there may not be any express prohibition provided in bye-laws of the society as regards the height of building or as regards the construction of flats, such a prohibition is implied in view of the overall circumstances like (i) each of 57 members of the petitioner society has residential tenements/bungalows having ground plus one or two floor construction and no flats, (ii) there is no express reference to flat type construction in Schedule-1 and Schedule-3 to the Bye-laws, applicable to the petitioner society just like Schedule-1(A) to the said Bye-laws which is not applicable to the petitioner society,
(iii) Resolution dated 08.05.2017 of the Managing Committee of the petitioner society and (iv) Resolution dated 04.06.2017 of the Page 29 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined General Body of the petitioner society.
5.10) Learned Senior Advocate Mr. Trivedi submitted that the direction of the Tribunal for usage of Ground plus 7-storied construction with each floor having living room, bed room, Dining Place, Kitchen, wash and toilet, only for residential purpose and that too, for a family of only four persons, apart from being illegal, is likely to be misused by using the said construction for providing Paying Guest or Bed and Breakfast facility.
5.11) It was therefore, submitted that merely because Ex-Secretary of the society has put his signature in the consent letter as well as plan submitted by the respondents, the petitioner society is not bound by the same as the Secretary was not authorised and therefore, there is no question of invoking Page 30 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined the principle of promissory estoppel.
Reliance was placed on section 2(19) of the Act, 1961 read with Section 74(1) of the Act, 1961 to submit that Secretary is not the society and in absence of any resolution passed by the Managing Committee and/or General Body of the society, no consent of the society was given to the plan submitted by the respondents.
5.12) It was submitted that the petitioner society is consisting of like-minded persons who have to abide by the wish of the members of the society in view of the principles of cooperation in a cooperative housing society and therefore, resolution passed in General Body meeting is binding upon each of the members. It was therefore, submitted that the Tribunal has committed an error in permitting the respondents to raise construction upto ground plus seven floor with a rider to be Page 31 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined used for their own residential purpose only and is liable to be quashed and set aside.
5.13) In support of his submissions, learned Senior Advocate Mr. Trivedi referred to and relied upon the following decisions:
(I) Tenant Ownership Housing Society
i) Karvengar Sahakari Griha Rachana Sanstha Maryadit, Pune and another v. State of Maharashtra and others reported in AIR 1989 Bombay 392, wherein it is observed as under:
"8. Dr. Naik submits that the housing societies are formed by the members with a view to construct houses for their own enjoyment and the members joined such society with an assurance that the plots of lands would not be exploited for commercial purposes. The members also were assured as to who would be their neighbors in the housing society. The registration of a housing society as tenant-ownership housing society makes it clear that the society holds the Land and Page 32 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined houses are owned by the members. The registration and classification of housing society as tenant-ownership housing society make it clear that the houses which would be constructed by the members would be owned by them and the by-laws of the society provides that such houses would not be sold, let out or possession parted with without prior approval of the society. The entire concept of forming a housing co- operative society is to provide accommodation to the members and the society is not formed with an intention of enabling the members to exploit the Land by commercial methods and make profits. The petitioner society is registered tenant-ownership housing society and the plots are allotted to the members who joined the society with the clear provision that construction would be made by the members for their own use. The by- laws of the society clearly provide that the person would not be enrolled as a member unless the society is satisfied that such applicant has bona fide desire to construct a house for his own occupation. It is necessary to bear in mind that the member is allotted a plot for construction of house, but the right in the Land underneath continued with the society all along. The rights of member of the society are regulated by the by-laws and Full Bench decision of this court reported in 63 Bom LR 1001 : (AIR 1962 Bom 154) Page 33 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined (Dr. Manohar Ramchandra Sarfare v. Konkan Co-operative Housing Society Ltd.), lays down (at p.159 of AIR):
"The mutual rights and obligation of a co-operative housing society and its members are quite different from those of a landlord and a tenant. The relationship is of special type, which is governed by special laws made for this purpose viz, the co-operative Societies Act and the Rules, By-laws and regulations made thereunder. Even though therefore, a member to whom a tenement is given for occupation is described in the by-laws and the regulations as a tenant, he is not a tenant in the sense in which this term is used in the Transfer of property Act or in the Rent Act, nor is the Society his landlord."
Respondent 5 has joined the petitioner society and has accepted the by-laws framed by the society and registered by the Registrar. The by-laws make it crystal clear that the construction is to be raised by the allottee for his own use and the member is not permitted to part with possession or to sub-let the premises without the prior approval of the society. In spite of this clear cut agreement, respondent 5 is insisting that multi-storyed building can be raised on his plot and respondent No. 5 would dispose Page 34 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined of the flats on ownership basis. The occupiers of the flat then would form a co-operative society with the result that on the Land of housing society another society would construct building and let it out to the members. It is obvious that such action on the part of the members of the housing society would invite his expulsion from the society. Respondent 5 insisted upon constructing multi-storeyed building because of the flat issued by the State Government on Jan. 19, 1985. Direction of the government proceeds on the basis that the existing by- laws of the society do not permit construction of multi-storeyed building by a member. The submission on behalf of State Government that existing by-laws permit such construction is therefore required only to be stated to be rejected. Directive claims that it is necessary to grant such permission to over-come the shortage of accommodation in city like Pune and Bombay and therefore the Registrar should direct amendment of by-laws. It further directs that the occupiers of the flats in such multi-storeyed building should form a society and a representative of that society should be a member in the existing housing society. Dr. Naik submitted that the State Government has no power to issue such direction. In answer in the submission the Government Pleader relied upon S. 4 and 79 A of the Act. We are unable to accept the Page 35 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined claim of the State Government that S.4 or S. 79A confers such power on the State Government. The proviso to S. 4 prescribes that the Registrar shall not register the society if the registration is contrary to policy directives issued by the State government. Section 4 confers upon State Government the right to issue policy directive for the purpose of achieving the object set out in the preamble to the Act and the object obviously is orderly development of the co-operative movement. The directives are issued or the guidelines are given so as to ensure that only those societies whose object is to advance cause of the co-operative movement are registered. This power certainly cannot be used to destroy the co- operative movement. Section 79A also confers power to give direction for advancement of the co-operative movement and this power cannot be made use of for the purpose of destroying the co-operative movement or to benefit the builders or the developers. The bare perusal of s. 4 and S. 79A leaves no manner of doubt that the power is to be exercised for the purpose of securing proper implementation of co-operative movement. In the present case the directive is issued by the State Government on a spacious ground that there is dearth of accommodation in the cities like Pune and Bombay. Though there is undoubtedly dearth of accommodation that does not enable the State to compel the Page 36 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined housing society to Act contrary to by-laws or to foist new members who are not acceptable to the existing members of the society. The members have joined the society in accordance with the by-law and the members join a housing society by ascertaining what would be the environments in which they will reside. It is not permissible for the State Government to compel the society to amend its by-laws as to defeat the object of formation of the society. In the present case the society was constituted with the object of providing peaceful accommodation to the members. The compulsion of the State Government that members should be permitted irrespective of the desire of the majority, to erect high rising buildings would totally destroy the basic concept of formation of society. The answer to the dearth of accommodation is not to force the existing registered housing societies to amend by-laws and permit few members to commercially exploit the plots in violation of agreements under which they were secured. The directive is nothing but a charter to permit breach of such agreements and compulsion to amend by-laws in only with a view to validate such infraction. In our judgment neither S.4 nor S. 79 A of the Act confers any such power upon the State government. The notification issued by the State government therefore is without any authority or jurisdiction and is Page 37 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined therefore required to be struck down.
10. The next contention of Dr. Naik that the Registrar is exercising quasi-judicial powers while sanctioning the amendment of by-laws u/s. 13 or compelling a society to amend the by-laws under Section 14 of the Act is correct. The Registrar is required under the provisions of the Act to exercise powers and while exercising the powers the Registrar is performing quasi-judicial functions. The power exercised by the Registrar is appealable under Section 152 of the Act and further revisable by the State Government. It is now well settled that exercise of such powers are quasi-judicial and the Registrar in exercise thereof should not be guided by extraneous consideration or by the directions issued by higher authorities including the State Government. A reference can be usefully made to the decision of the Supreme Court reported in AIR 1984 SC 322 (Chandrika Jha v. State of Bihar). Dr. Naik submitted that the petitioner society is compelled to amend the by-laws by the letter issued by the Registrar and the Registrar has exercised his power merely because the Government has issued directions and not because the requirements of Section 14 are complied with. Section 14 provides that the registrar may call upon the society to make the amendment provided it appears to the Registrar Page 38 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined that an amendment of the by-law is necessary or desirable in the interest of such society. The crucial words are "necessary or desirable in the interest of such society". The registrar has to be satisfied that the amendment of the by-laws are necessary or desirable in the interest of the society to which order is directed. The registrar in the present case has not even examined whether the requirements of S. 14 are satisfied, but has directed the society to amend the by-laws merely because the Government so desires. It hardly requires to be stated that permission to an allottee of a flat in the housing society to erect multy-storeyed structure would not be in the interest of the housing society. The Housing society, like the petitioners society is formed with a view to provide for peaceful accommodation to the members and therefore the by-laws insists the allotee of a plot of Land can erect structure for his own occupation and not for letting out or for commercial exploitation of the Land . An amendment to the by-laws permitting such actions can by no stretch of imagination be in the interest of society. The members of the society contributes the amount for maintenance for common amenities and service and the liability to contribute is on the basis that plots of Land would be enjoyed by the members by constructions of houses for their own benefits. The Page 39 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined internal roads are constructed, the lights are provided, water supply is given and all other common amenities and services are provided by the society. The permission to a member to construct high rising building and letting out the flats on ownership basis would result in heavy pressure on the common amenities and services provided by the society and for which the members surely have not contemplated while joining the co-operative society. The permission to construct high rising building on a developed plot in housing society would certainly give huge benefit to a member but at the cost of other members and in clear violation of by-laws. The amendment is also not necessary as the members have joined the society voluntarily accepting the rules and by-laws and in case a member is not desirous of constructing house for his own use, then there is no compulsion to continue the membership. It is therefore obvious that the Registrar is forcing the petitioner's society to amend the by-laws when it is neither necessary nor desirable in the interest of the petitioners society.
It is also difficult to appreciate how a sub-society of the flat owners in the high rising buildings can be formed and registered and how the registrar will classify it. As mentioned herein above the housing societies are divided in the three Page 40 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined sub-classes and the proposed society of flat owners on a plot of land allotted to a member of a tenant- ownership housing society would not fall in any of the three categories of sub classes referred to under item 5 of R. 10 of the Rules. Indeed the society which the Government contemplates under notification would neither be a tenant ownership housing society nor a tenant co- partnership housing society nor other housing society and therefore it is difficult to appreciate how the registrar would register such societies and under which clause or circular. In our judgment the registrar has issued a flat compelling the petitioner's society to amend the by-laws without satisfying whether the necessary ingredients for exercise for powers under Section 14 of the Act are in existence. A reference in this connection to the decision of division bench Dt July 2nd, 1981 in writ petition. No. 3555 of 1980 and to which one of us (Pendse, J. ) is a party is appropriate. The division bench held that the powers under Section 14 of the Act can be used by the registrar only if it is established that the amendment of the by-laws is desirable and is in the interest of such society. The exercise of powers in the present case is clearly faulty, and the petitioners are entitled to the relief sought."
Page 41 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined (II) Binding nature of the bye-laws of the Cooperative Housing Society
i) Zoroastrian Cooperative Housing Society Ltd. and another v. District Registrar, Cooperative Societies (Urban) and others reported in (2005) 5 Supreme Court Cases 632, wherein it is observed as under:
"(22.) The validity of a bye-law, that too an approved bye-law, has to be tested in the light of the provisions of the Act and the rules governing co-operative societies. In so testing, the search should be to see whether, a particular bye-law violates the mandate of any of the provisions of the Act or runs counter to any of its provisions or to any of the rules. Sec. 24(1) of the Act only provides for open membership subject to a person, aspiring to be a member, possessing the qualification prescribed by the bye-laws. It is not an open membership dehors the qualification prescribed by the bye-laws When in Daman Singh this Court held that when a co-operative society is governed by the appropriate legislation it will be subject to the intervention made by the concerned legislation, it only meant that a legislative provision in the Act can be introduced for the Page 42 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined purpose of eliminating a qualification for membership based on sex, religion or a persuasion or mode of life. But so long as there is no legislative intervention of that nature, it is not open to the court to coin a theory that a particular bye-law is not desirable and would be opposed to public policy as indicated by the Constitution. The Constitution no doubt provides that in any State action there shall be no discrimination based either on religion or on sex. But Part III of the Constitution has not interfered with the right of a citizen to enter into a contract for his own benefit and at the same time incurring a certain liability arising out of the contract. As observed by the High Court of Bombay in Karvanagar Sahakari Griha Rachana Sanstha Maryadit and others V/s. State of Maharashtra [AIR 1989 Bombay 392] the members have joined the society in accordance with the bye-laws and the members join a housing society by ascertaining what would be the environment in which they will reside. It is not permissible for the State Government to compel the society to amend its bye-laws as it would defeat the object of formation of the society. In that case, the society was constituted with the object of providing peaceful accommodation to its members. Though there may be circumstances justifying the State taking steps to meet shortage of accommodation, it Page 43 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined was not open to the State Government to issue a direction to the Registrar of Co-operative Societies to : direct a co-operative society to make ' requisite amendments to their bye-laws and grant permission to its members to raise multistoried constructions. In appeal from that decision reported as State of Maharashtra and others V/s. Karvanagar Sahakari Griya Rachana Sanstha Maryadit and others [(2000) 9 SCC 295] this Court while dismissing the appeal stated that it was clear that though a power was conferred on the Registrar to direct amendment of the bye-laws of a society, yet the paramount consideration is the interest of the society. So also, the power of the State Government to issue directions in public interest, could not be exercised so as to be prejudicial to the interest of the society. In the view of this Court, what was in the interest of the society was primarily for the society alone to decide and it was not for an outside agency to say. Where, however, the government or the Registrar exercised statutory powers to issue directions to amend the bye-laws, such directions should satisfy the requirement of the interest of the society. This makes it clear that the interest of the society is paramount and that interest would prevail so long as there is nothing in the Act or the Rules prohibiting the promotion of such interest. Going by Chheoki Employees' Co-Page 44 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023
NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined operative Society Ltd.,'s case[(1997) 3 SCC 681], neither the member, respondent no. 2, nor the aspirant to membership, respondent no. 3 had the competence to challenge the validity of the bye- laws of the Society or to claim a right to membership in the Society."
ii) Dhaneshbhai Bhikhubhai Patel & Another v. Shantiniketan Cooperative Housing Society Ltd. & another reported in 2014(2) GLR 1638, wherein it is observed as under:
"7. Having heard learned advocates for the parties and having perused the record of the case, it prima facie appears that the object of respondent No.1 society is primarily to permit its members to have dwelling house. Each tenant- member is required to comply with the terms of the bye-laws for his/her tenement. Byelaw No.66 specifically provides that no dwelling offered on lease shall be taken by persons who are not members of the society unless no member is willing to take it. Bye-law provides for activities to be undertaken by the society for houses of its members. Bye-laws also provide for powers of the Managing Committee of the society. It thus prima facie appears that the members are allowed to hold tenement in the society for dwelling purpose.Page 45 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023
NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined
9. It is required to be noted that there is no specific provision in the bye-law for permitting any of the members of the society to put up commercial construction. Learned advocate Mr. Desai for the petitioners however submitted that since there is no prohibition in the bye-law against putting up the commercial construction, use of the plots of the society will be governed by the GDCR and the provisions of the Corporation Act as per which the commercial construction is permissible on the plot of the society. Such contention of learned advocate Mr. Desai cannot be accepted for the simple reason that what is required to be considered is the intent and purpose contained in the bye-laws. Prima facie, it appears from the bye-laws that respondent No.1 society was incorporated to provide houses to its members. Therefore, every member of the society is well aware that he or she holds tenement as a house or dwelling unit to reside therein. Therefore, absence of prohibition in the bye-laws against making of commercial construction on the plot of the society, could not be taken as a permission for raising commercial construction on the plots of the society which the society never provided for in the bye-laws.
11. In above view of the matter and in the context of the provisions of the Act, the Chairman had no authority to sign the plans for Page 46 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined commercial construction contrary to the bye-laws of the society, especially when there was no decision by the society in its meeting. If the signing of the plans by the Chairman is to be taken as permission for commercial construction, it would not only be contrary to the Act and the bye-law but would also amount to altering the bye-laws without the decision by the society in its meeting by two- third majority and without there being any approval by the Registrar under the provisions of Section 13 of the Co-operative Societies Act.
14. In the case of Sant Lal Gupta (supra), the Hon'ble Supreme Court has held and observed in para 28 as under:-
"28. The High court ought to have considered that it was a writ of certiorari and it was not dealing with an appeal. The writ of certiorari under Article 226 of the Constitution can be issued only when there is a failure of justice and it cannot be issued merely because it may be legally permissible to do so. There must be an error apparent on the face of record as the High Court acts merely in a supervisory capacity. An error apparent on the face of the record means an error which strikes one on mere looking and does not need long drawn out process of reasoning on points Page 47 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined where there may conceivably be two opinions. Such error should not require any extraneous matter to show its incorrectness. Such errors may include the giving of reasons that are bad in law or inconsistent, unintelligible or inadequate. It may also 16 include the application of a wrong legal test to the facts found, taking irrelevant considerations into account and failing to take relevant considerations into account, and wrongful admission or exclusion of evidence, as well as arriving at a conclusion without any supporting evidence. Such a writ can be issued when there is an error in jurisdiction or authority whose order is to be reviewed has acted without jurisdiction or in excess of its jurisdiction or has failed to act. While issuing the Writ of Certiorari, the order under challenge should not undergo scrutiny of an appellate court. It is obligatory on the part of the petitioner to show that a jurisdictional error has been committed by the Statutory Authorities. There must be the breach of principles of natural justice for resorting to such a course."
iii) State of Maharashtra and others v.
Page 48 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined Karvanagar Sahakari Griha Rachna Sanstha Mary Adit and others reported in (2000) 9 Supreme Court Cases 295, wherein it is observed as under:
"(6.) From the above discussion, it is clear that though the power is conferred on the Registrar to direct amendment of the bye-laws of the Societies, yet the paramount consideration is the interest of the Society. So also the power of the State Government to issue directions in public interest cannot be exercised so as to be prejudicial to the interest of the Society. In our view, what is in the interest of the society is primarily for the society alone to decide and it is not for an outside agency to say. Where, however, the Government or the Registrar exercises statutory power of issuing directions to amend the bye-laws, such directions should satisfy the requirement of the interest of the Society. In the instant case, having regard to the nature of the Society and its objectives, referred to above, and having also regard to the fact that the Society in the case of 5th respondent has turned down his request for the grant of permission by overwhelming majority, we are unable to say that the amendment directed by Government is in the interest of the Society. The High Court is, therefore, right in Page 49 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined quashing the impugned directions/circulars."
iv) Kumari Jethi T. Sipahimalani v. The Maharashtra State Cooperative Tribunal, Bombay reported in 1973 SCC OnLine Bom 786, wherein it is observed as under:
"27. It is difficult to follow the arguments of Mr. Dalvi. If his argument is that Sections 64 and 65 did not apply to the resolutions passed by the General Meeting, these sections could not prevent the General Meeting from passing the resolutions. As stated above Section 72 constitutes the General Meeting of the Society, the Supreme authority in the Society subject to the Act, Rules and Bye-laws. The General Body of the members in general meeting is the final authority in all matters, unless there is some limitation imposed on that power under the general law of the land or under some section of the Act or some provision in rules framed thereunder or under the bye- laws registered under the Act. If honorarium is not remuneration as contended by Mr. Dalvi Section 64 also will not apply. Mr. Dalvi was unable to point out any limitation on the powers of the general meeting in any provision of the Act or in any rules framed under the Act or under the Society's Bye-laws or Page 50 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined under any other law. What is not prohibited under the Act, the Rules and Bye-laws framed thereunder is permitted to the general meeting subject to the general laws of the land. It is free to do what it likes subject to the provisions of the Act, the Rules and the Bye-laws provided it does not infringe any general law for the time being in force.
29. It is true that Section 64 deals with remuneration and not with honorarium. Section 65(2) deals with payment of honorarium only out of net profits. None of these sections came in the way of the general meeting of the Society in passing the resolutions for payment of honorarium as part of the construction cost. It was for the majority of the members in the general meeting to decide how much was the value of the services of petitioner No. 6 and how and when it should be paid to him. Petitioner No. 6, who was Honorary General Secretary of the Society, is an advocate. He had sacrificed all his time and energy and dedicated his services to the Society for ten years. Members who enjoyed the benefit of these services could decide to reward him. We do not think that Section 64 was a stumbling block to the members of the Society who wanted to pass any resolution regarding honorarium to be paid in such a case as construction costs. Section 64 Page 51 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined applied to division of the profits of the Society to any member qua member. Section 65 deals with appropriation of profits. All that Section 65(2) lays down is that out of net profits honorarium also may be paid. Even Section 65(2) does not prevent the general body of the Housing Society to pay honorarium to petitioner No. 6 as part of the construction cost. Construction cost was to be paid by members. Society was not paying it to him as a matter of division of funds. We, therefore, do not find any legal restriction whatsoever on the power of the general body under Section 72 to pass a resolution to pay honorarium as part of the construction cost to a person like petitioner No. 6, for the services rendered by him to the Society."
(III) Authority of the Secretary
i) Vasantkumar Radhakisan Vora (Dead) By His Lrs v. Board of Trustees of the Port of Bombay and another reported in (1991) 1 Supreme Court Cases 761, wherein it is observed as under:
"1. The respondent is a statutory body corporate initially constituted under the Bombay Port Trust Act, 1879 (Bombay Act 6 of 1879), for Page 52 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined short State Act. Under Section 26 thereof, the Board have power to acquire and hold, moveable and immoveable property and also have power to lease, to sell or otherwise convey moveable and immoveable property which may have become vested in or acquired by them. The respondent has appointed A. J. Mescarnas, Assistant Estate Manager as their power Of attorney holder to lease out its properties from time to time or terminate the leases and to lay action for ejectment, etc. The respondent owns the building bearing Old R.R. No. 941 known as "Frere Land Estate" in which room No. 2 admeasuring 28.27 sq. meters was leased out to Vasantkumar Raidhakisan Vora, for short 'Vasantkumar'. The appellants are his legal representatives. He was served with a notice under Section 106 read with Section 111(h) of the Transfer of Property Act terminating the tenancy in terms of the covenants of lease and was asked to deliver possession of the demised property giving one month's time from 22.01.1975.
2. It was served on Vasantkumar on 28.01.1975. The notice of termination thereby became effective from 28.02.1975. In the meanwhile Major Port Trust Act, 1963 (Act No. 38 of 1963), for short the "Central Act", was made applicable to the Bombay Port Trust by operation of Section 1330(2A) with effect from 1.02.1975. After the expiry of one Page 53 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined month, ejectment application was filed under Section 41 of the Bombay Presidency Small Cause Courts Act (Act 15 of 1882) as amended under 1963 Maharashtra Amendment Act, against Vasantkumar and another for delivery of possession. After 1976 Amendment Act 19 of 1976 came into force suits were laid against three other tenants. It was pleaded by the respondent that it is a successor in interest of the Board under the State Act and were entitled to eject the tenants and to the possession of the demised portions. The plea of Vasantkumar in his written statement elaborated by the learned counsel, is that the suit is not maintainable. Since the State Act ceased to be operative with effect from 1.02.1975, the quit notice issued under Section 106 read with Section 111 (h) of Transfer of Property Act became ineffective and without determining the tenancy afresh, the suit was not validly laid. It was also pleaded that the respondent had promised that on deposit of certain amount which the tenant did, Vasantkumar would be given on lease of a portion in the reconstructed building. Thereby the respondent is estopped by promissory estoppel to have the tenant ejected. It may be mentioned at this juncture that one suit was dismissed on the ground that the tenancy was not duly determined as per law. Other suits were decreed. No appellate forum has been prescribed under Amendment Act of 1963 but a substantive suit on Page 54 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined original side provided was available. By Maharashtra Amendment Act 19 of 1976 to the principal such a right to appeal was incorporated. Vasantkumar filed writ petition in the High Court under Articles 226 and 227 and others filed regular appeals to a Bench of two Judges of the Small Cause Court and are stated to be pending.
3. In the writ petition the petitioner challenged the vires of 1963 Amendment Provisions and also 1976 Amendment Provisions to the Presidency Small Cause Courts Act. When it came up for hearing before Masodkar, J., he referred to a Division Bench. The Division Bench by its Judgement dated January 17/18, 1982 upheld the constitutional validity' of those sections and remitted to the learned single Judge to dispose of the writ petition on merits. The learned single Judge considered and negatived two points namely, validity of the notice terminating the tenancy, promissory estoppel and dismissed the writ petition. Vasantkumar had leave of this Court under Art. 136."
(IV) Power to sanction plans by AMC is subject to permission granted by the Society
i) New India Cooperative Housing Society Limited v. Municipal Corporation of Greater Page 55 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined Mumbai and another reported in (2008) 9 Supreme Court Cases 694, wherein it is observed as under:
"(22.) As regards the observation in paragraph 3 of the impugned judgment of the Division Bench dated 1.9.2006, we are of the opinion that the dispute between the appellant and respondent No. 2 which is going on before the co-operative authorities has nothing to do with the powers of the Bombay Municipal Corporation which is a statutory body. We are concerned in this case about how a statutory body, like the Bombay Municipal Corporation should exercise its power. This has nothing to do with the dispute between the two private parties viz., respondent No. 2 and the appellant. Hence, the observation in paragraph 3 was wholly irrelevant and misconceived."
ii) Sarjan Cooperative Housing Society Ltd.
v. Surat Municipal Corporation and others reported in 2012(1) GLR 267, wherein it is observed as under:
"7.02. That the petitioner-Society passed a resolution dtd.18/07/2003 granting approval to the sale in favour of respondent Nos.2 and 3 and enrolled them as members of the Page 56 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined Society on terms and conditions mentioned in the said Resolution dtd.18/07/2003. As per condition No.7, it was provided that if any construction or renovation work is to be carried out by the member, before raising such construction/renovation, such plan should be approved from the society and then only the construction can be raised. As per condition No.8, it was further provided that construction upto second floor i.e. ground+2 Floors and upto 35 feet from the road level, is permissible and portion beyond 35 feet should be kept open. On the aforesaid terms and conditions, the respondent Nos.2 and 3 were enrolled as members of the society, which the respondent Nos.2 and 3 agreed to abide by the same. It appears that respondent Nos.2 and 3 wanted to renovate and wanted to put up construction, they have requested the Society to approve the plan for construction, which came to be approved by the Society, subject to the rules and regulations of the Surat Municipal Corporation as well as rules and regulations of the society and the said plan was also countersigned by the Society. It appears that at the relevant time responde2022nt Nos.2 and 3 were also given rules and regulations for raising construction which prohibits putting up construction above 35 feet and under which only ground plus 2 floors are permissible. It appears that respondent Nos.2 and 3 started Page 57 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined putting up construction without getting the plans sanctioned by the Corporation and Raja Chithhi issued and it was found that respondent Nos.2 and 3 raised construction beyond the plans approved by the Society and, therefore, the petitioner-society approached the Corporation by submitting that instead of ground plus 2 Floors, respondent Nos.2 and 3 are constructing ground plus 3 floors and even area of margin was also not maintained. Again remainders were sent to respondent No.1 and ultimately on 14/02/2005, the Corporation replied that respondent Nos.2 and 3 have put up construction beyond the plans approved and, therefore, Notices were issued to them. It appears that even revised plans submitted by respondent Nos.2 and 3 were rejected by the Corporation, as per intimation dtd.14/02/2005. It appears that thereafter, various correspondence between the petitioner -society and Corporation to remove the illegal construction raised by respondent Nos.2 and 3 had taken place and ultimately on 20/06/2006 the Corporation has replied that stay against the construction has been granted by the Corporation. It appears that thereafter revised plans were submitted by respondent Nos.2 and 3 without prior approval of the society, which were objected by the petitioner- society by submitting that without approval and sanction of the petitioner-society, Page 58 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined the Corporation cannot sanction the said revised plan. It appears that despite the above, the Corporation was to sanction the revised plan submitted by respondent Nos.2 and 3. At that stage, the petitioner- society preferred Lavad Case No.755/2006 before the Learned Board of Nominees Court, Surat, wherein ex-parte ad-interim relief was granted in favour of the petitioner- society and the same came to be continued from time to time. It is the case on behalf of the petitioner-society that the Learned Board of Nominees Court, Surat was also incharge of as Board of Nominees of other districts also and therefore, for certain period of time learned Board of Nominees Court was not available and, therefore, stay granted earlier could not be extended. However, as soon as the petitioner-society came to know about the fact that the stay has not been extended, the petitioner submitted application for extension of stay granted earlier before Learned Board of Nominees Court, which was objected by respondent Nos.2 and 3 herein. However, on the next day, after hearing the parties, the Learned Board of Nominees Court, Surat passed order of status-quo to be maintained. However, it appears that during the period when the stay granted earlier was not extended, respondent Nos.2 and 3 started putting up the construction and despite the aforesaid suit was pending, respondent No.1- Page 59 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined Corporation received the money to process the revised plans in November, 2008 and sanctioned the plans submitted by respondent Nos.2 and 3 on 05/12/2008, without obtaining prior approval of the petitioner-society. As stated above, thereafter, vide order dtd.07/01/2009 passed below Exh.132, after hearing both the parties, the learned Board of Nominees, Surat had passed an order of status-quo to be maintained. Being aggrieved by and dissatisfied with the aforesaid action of the Surat Municipal Corporation to sanction the revised plan and to permit respondent Nos.2 and 3 to put up the construction of Ground plus 3 floors and that too beyond 35 feet, the petitioner- society has preferred the present petition under Article 226 of the Constitution of India.
7.03. As stated above, under the rules and regulations of the petitioner-society for raising the construction, which the respondent Nos.2 and 3 agreed to abide by at the time of enrolling them as members, the construction upto ground plus 2 floors and upto 35 feet only is permissible. Even as per the conditions imposed by the Society while passing resolution dated 18/07/2003 enrolling respondent Nos.2 and 3 as members of the society and approving the sale in favour of respondent Nos.2 and 3, as per condition No.7, before any construction and/or renovation, Page 60 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined member is required to get approval of the society and/or get the plan sanctioned by the society and respondent Nos.2 and 3 also agreed to abide by the same. Despite the above specific terms and conditions and aforesaid rules and regulations for raising construction in the Society, respondent Nos.2 and 3 submitted revised plan before respondent No.1-Corporation without prior sanction / approval of the petitioner-society and raised construction contrary to the rules and regulations of the society and terms and conditions of the resolution, by which, sale in favour of respondent Nos.2 and 3 was approved and terms and conditions of the resolution, by which, respondent Nos.2 and 3 were enrolled as members of the petitioner-society.
iii) Bengal Secretariat Cooperative Land Mortgage Bank Housing Society Ltd. v. Aoke Kumar and another reported in 2022 SCC OnLine 1404, wherein it is observed as under:
56. It is not in dispute that the General Body of the Appellant Society, which is supreme, has taken up a conscious decision to redevelop the administrative building. The General Body of the Appellant Society has also resolved to appoint the Hi-Rise as the developer. Those decisions having not been challenged Page 61 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined at all, the Respondent No. 1 being a member of the Appellant Society is bound by the said decisions. The General Body of the Appellant Society has approved the terms and conditions of the development agreement by overwhelming majority.
Merely because the terms and conditions of the development agreement are not acceptable to the Respondent No. 1, who could be said to be in minuscule minority cannot be the basis of not to abide by the decision of the overwhelming majority of the General Body of the Appellant Society. The redevelopment of the property is necessitated in view of the fact that the building is in a dilapidated condition with passage of time. The redevelopment thus, in our view, would be a requirement and a necessity and cannot be termed as business. The Appellant Society in such circumstances did not even require to carry out any amendment to the bye-laws or to include the "redevelopment of the buildings" as one of the objects of the Society before taking any decision to redevelop its property.
57. By now it is well established position that once a person becomes a member of the Co-operative Society, he loses his individuality with the Society and he has no independent rights except those given to him by the statute and bye- laws. The member has to speak through the Society or rather the Page 62 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined Society alone can act and speaks for him qua the rights and duties of the Society as a body (see : Daman Singh v. State of Punjab, reported in (1985) 2 SCC 670 : AIR 1985 SC 973). This view has been followed in the subsequent decision of this Court in the case of State of U.P v. Chheoki Employees Co-operative Society Ltd., reported in (1997) 3 SCC 681 : AIR 1997 SC 1413. In this decision, this Court further observed that the member of a Society has no independent right qua the Society and it is the Society that is entitled to represent as the corporate aggregate. This Court also observed that the stream cannot rise higher than the source. Suffice it to observe that so long as the Resolutions passed by the General Body of the Appellant Society are in force and not overturned by a forum of competent jurisdiction, the said decisions would bind the Respondent No. 1. He cannot be permitted to take a stand alone position but is bound by the majority decision of the General Body. Notably, the Respondent No. 1 has not challenged the Resolutions passed by the General Body of the Appellant Society to redevelop the property and more so, to appoint the Hi-Rise as the Developer to give him all the redevelopment rights.
58. It was also argued on behalf of the Respondent No. 1 that the property is in a good condition and there is no need to redevelop the existing building. In the first Page 63 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined place, as noted earlier, the decision of the General Body of the Society to redevelop the subject property has not been challenged at all. Besides, no provision in the Co-operative Societies Act or the rules or any other legal provision has been brought to our notice which would curtail the right of the Society to redevelop the property when the General Body of the Society intends to do so. Essentially, that is the commercial wisdom of the General Body of the Society. It is not open to the Court to sit over the said wisdom of the General Body as an Appellate Authority. Merely because one single member in minority disapproves of the decision, that cannot be the basis to negate the decision of the General Body, unless it is shown that the decision was the product of fraud or misrepresentation or was opposed to some statutory prohibition. That is not the grievance made before us. In the present case, the General Body took a conscious decision after due deliberations for many years to redevelop its property. Even with regard to the appointment of the "Hi-Rise" as the Developer, the record shows that it was decided by the General Body of the Society after examining the relative merits of the proposals received from the developers."
Page 64 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined (V) Declaratory/statute having retrospective effect
i) Union of India and another v. V.V.F. Limited and another reported in (2020) 20 Supreme Court Cases 57, wherein it is observed as under:
"23. In the case of State Bank of India v. V. Ramakrishnan (2018) 17 SCC 394, it is observed and held that the presumption against retrospective operation is not applicable to declaratory statutes. For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective.
23.1 In the case of State of Bihar v. Ramesh Prasad Verma (2017) 5 SCC 665, it is observed and held that any legislation or instrument having force of law, if clarificatory, declaratory or explanatory in nature and purport, will have retrospective operation especially in the absence of any indication to the contrary as to retrospectivity either in parent Act or Rules or notifications involved.
23.2 In the case of Union of India v. Martin Lottery Agencies Ltd.Page 65 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023
NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined (2009) 12 SCC 209, it is observed and held that whether a subordinate legislation or a parliamentary statute would be held to be clarificatory or declaratory would depend upon the nature thereof as also the object it seeks to achieve.
23.3 In the case of T.N. Electricity Board v. Status Spg. Mills Ltd. (2008) 7 SCC 353 it is observed and held that a clarificatory order can be given retrospective effect as it can throw light on substantive provision by principle of contemporanea expositio.
25. In view of the above and for the reasons stated above and once it is held that the subsequent notifications/industrial policies which were impugned before the respective High Courts are clarificatory in nature and are issued in public interest and in the interest of the Revenue and they seek to achieve the original object and purpose of giving incentive/exemption while inviting the persons to make investment on establishing the new undertakings and they do not take away any vested rights conferred under the earlier notifications/industrial policies and therefore cannot be said to be hit by the doctrine of promissory estoppel, the same is to be applied retrospectively and they cannot be said to be irrational and/or arbitrary."
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ii) Ghanshyam Mishra and Sons Private Limited Through the Authorised Signatory v.
Edelweiss Asset Reconstruction Company Limited through the Director and others reported in (2021) 9 Supreme Court Cases 657, wherein it is observed as under:
(85.) In Justice G.P. Singh treatise on "The principles of Statutory Interpretation", 14th Edition, Revised by Justice A.K. Patnaik, former Judge of this Court, it is observed thus:
"(i) Declaratory Statutes The presumption against retrospective operation is not applicable to declaratory statutes. As stated in CRAIES and approved by the Supreme Court:
"For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective. The usual reason for passing a declaratory Act is to set aside what Parliament deems to have been a judicial error, whether in the statement of the common law or in the interpretation of statutes. Usually, if not Page 67 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined invariably, such an Act contains a preamble, and also the word 'declared' as well as the word 'enacted'.
But the use of the words 'it is declared' is not conclusive that the Act is declaratory for these words may, at times, be used to introduce new rules of law and the Act in the latter case will only be amending the law and will not necessarily be retrospective. In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is 'to explain' an earlier Act, it would be without object unless construed retrospective. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended. The language 'shall be deemed always to have meant' or 'shall be deemed never to have included' is declaratory, and is in plain terms retrospective. In the absence of clear words indicating that the amending Act is declaratory, it would not be so construed when the pre-
amended provision was clear and unambiguous. An amending Act may Page 68 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined be purely clarificatory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect and, therefore, if the principal Act was existing law when the constitution came into force, the amending Act also will be part of the existing law.
The above statement of the law relating to the nature and effect of a declaratory statute has been quoted with approval by the Supreme Court from earlier editions of this book in a number of cases.
"In Mithilesh Kumari v. Prem Bihari Khare[(1989) 2 SCC 95], section 4 of the Benami Transactions (Prohibition) Act, 1988 was, it is submitted, wrongly held to be an Act declaratory in nature for it was not passed to clear any doubt existing as to the common law or the meaning or effect of any statute. The conclusion, however, that section 4 applied also to past benami transactions may be supportable on the language used in the section."
These observations and criticism of Mithilesh Kumari's case also received the approval in R. Rajgopal Reddy v. Padmini Page 69 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined Chandrasekharan [(1995) 2 SCC 630], where the Supreme Court after quoting them (from 5th Edition pp. 315, 316) said :
"No exception can be taken to the above observations".
A proviso added from 1.4.1988 to section 43 B inserted in the Income Tax Act, 1961 from 1.4.1984 came up for consideration in Allied Motors(P.) Ltd. v. Commissioner of Income-tax and it was given retrospective effect from the inception of the section on the reasoning that the proviso was added to remedy unintended consequences and supply an obvious omission so that the section may be given a reasonable interpretation and that in fact the amendment to insert the proviso would not serve its object unless it is construed as retrospective. In Commissioner of Income-Tax, Bombay v. Podar Cement Pvt. Ltd., [(1997) 5 SCC 482] the Supreme Court held that amendments introduced by the Finance Act, 1987 in so far they related to section 27(iii), (iiia) and (iiib) which redefined the expression 'owner of house property', in respect of which there was a sharp divergence of opinion amongst the High Courts, was Page 70 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined clarificatory and declaratory in nature and consequently retrospective. Similarly, in Brij Mohan Das Laxman Das v.
Commissioner of Income -
tax[(1997) 1 SCC 352].
Explanation 2 added to section 40 of the Income-tax Act, 1961 from 1.4.1985 on a question on which there was a divergence of opinion was held to be declaratory in nature and, therefore, retrospective. And in Zile Singh v. State of Haryana, [(2004) 8 SCC 1] substitution of the word 'upto' for the word 'after' in the proviso to section 13A (added in 1994) in Haryana Municipal Act, 1973 by the Haryana Municipal (Second Amendment) Act, 1994 was held to be correction of an obvious drafting error to bring about the text in conformity with the legislative intent and, therefore, retrospective. Even without the amendment of the proviso, the court in all probability would have read and interpreted the section as corrected by the amendment."
(93.) As discussed hereinabove, one of the principal objects of I&B Code is, providing for revival of the Corporate Debtor and to make it a going concern. I&B Code is a complete Code in itself. Upon admission of petition under Section 7, there are various important duties and Page 71 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined functions entrusted to RP and CoC. RP is required to issue a publication inviting claims from all the stakeholders. He is required to collate the said information and submit necessary details in the information memorandum. The resolution applicants submit their plans on the basis of the details provided in the information memorandum. The resolution plans undergo deep scrutiny by RP as well as CoC. In the negotiations that may be held between CoC and the resolution applicant, various modifications may be made so as to ensure, that while paying part of the dues of financial creditors as well as operational creditors and other stakeholders, the Corporate Debtor is revived and is made an ongoing concern. After CoC approves the plan, the Adjudicating Authority is required to arrive at a subjective satisfaction, that the plan conforms to the requirements as are provided in subsection (2) of Section 30 of the I&B Code. Only thereafter, the Adjudicating Authority can grant its approval to the plan. It is at this stage, that the plan becomes binding on Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution Plan. The legislative intent behind this Page 72 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined is, to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims. If that is permitted, the very calculations on the basis of which the resolution applicant submits its plans, would go haywire and the plan would be unworkable.
(94.) We have no hesitation to say, that the word "other stakeholders" would squarely cover the Central Government, any State Government or any local authorities. The legislature, noticing that on account of obvious omission, certain tax authorities were not abiding by the mandate of I&B Code and continuing with the proceedings, has brought out the 2019 amendment so as to cure the said mischief. We therefore hold, that the 2019 amendment is declaratory and clarificatory in nature and therefore retrospective in operation."
iii) Hero Motocorp Ltd. v. Union of India reported in 2022 SCC OnLine SC 1436, wherein it is observed as under:
"70. We are, therefore, of the considered view that even on the ground of change of policy, which is in public interest or in view of the change in the statutory regime Page 73 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined itself on account of the GST Act being introduced as in the instant case, it will not be correct to hold the Union bound by the representation made by it, i.e. by the said O.M. of 2003. Further, this would be contrary to the statutory provisions as enacted under Section 174(2)(c) of the CGST Act."
6.On the other hand, learned Senior Advocate Mr. Mihir Joshi with learned advocate Mr. Jay Kansara for the respondents submitted that the petitioner society has prayed for a writ of certiorari and therefore, the scope of this petition is in a narrow compass to scrutinise the impugned Judgment and Order passed by the Tribunal from the aspect of perversity only.
6.1) It was submitted that there is express consent given by the Secretary of the Society in May, 2016 and thereafter, the plans are sanctioned in the month of April, 2017 by the AMC and till that point of time Page 74 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined no action is taken by the petitioner society and after plans are sanctioned by the AMC as per the Building Regulations in accordance with law, the petitioner now cannot say that the consent stands withdrawn and therefore, the AMC has committed any error in sanctioning the plan.
6.2) It was further submitted that the action of passing resolution in the petitioner society prohibiting the construction of multi-storeyed building in society is prospective one and therefore, cannot be applied to the plan which is already sanctioned by the AMC pursuant to the consent given by the society. It was therefore, submitted that principle of estoppel would apply and society cannot now pray for cancelling the plans which are already passed by the AMC in accordance with law.
Page 75 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined 6.3) It was submitted that the respondents are put to restriction of not using its premises for any other use by the impugned Judgment and Order passed by the Tribunal and therefore, the respondents should be permitted to put up construction as per the sanctioned plan beyond four floors upto seven floors as such construction would be as per the restriction placed by the Tribunal which is accepted by the petitioner society as the same is not under challenge.
6.4) It was submitted that how the property is to be used by the member of the society cannot be restricted by the bye-laws or by the other members of the society, more particularly, when such restriction to make construction would be contrary to the bye-
laws as bye-laws does not provide for any restrictions for height or for the way in Page 76 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined which a member can make construction on the plot allotted by the society.
6.5) It was submitted that the reliance placed upon bye-law nos.6(2) and 6(4) cannot be said to be causing any restriction upon the right of the respondent to put up construction for their own residential purpose as per the sanctioned plan.
6.6) Learned Senior Advocate Mr. Joshi submitted that the Tribunal has also restrained the respondents from giving, letting or sub-letting the property or to use the same for commercial purpose without prior sanction from the petitioner society. It was therefore, submitted that the impugned Judgment and Order is within the scope of provisions of Act, 1961 as well as the bye-
laws of the society.
Page 77 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined 6.7) Learned Senior Advocate Mr. Joshi submitted that the cases cited on behalf of the petitioners are not applicable to the facts of the case inasmuch as it is not in dispute that as per the principles of cooperation, members of the cooperative society are required to act as per the wish of the majority of members, however, at the same time when there is no prescription with regard to height of the residential building to be constructed on the plot allotted to the members of the society nor there being any restriction in the bye-laws or provisions of the Act to restrain the use of the plot by the members of the cooperative housing society for residential purpose, then in such case, the subsequent resolutions passed by the members cannot be made applicable retrospectively.
6.8) It was therefore, submitted that Page 78 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined once the AMC has sanctioned the plan pursuant to the consent letter given by the society, the society thereafter cannot take a 'U' turn and contend that such consent is withdrawn so as to cancel the plans which are already sanctioned by the AMC for construction of the residential unit of the respondents.
6.9) It was submitted that it is for the respondents to make construction over the plot allotted by the cooperative society and the cooperative society cannot dictate as to in what manner such construction is required by the respondents. It was therefore, submitted that the contention raised on behalf of the petitioner society that each plot contains separate residential unit is of no consequence because it is for the respondents to make construction over the plot in question and in such circumstances, the petitioner societ2022y cannot raise any Page 79 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined objection with regard to the manner of construction which is in accordance with the rules and regulations of the AMC.
6.10) Learned Senior Advocate Mr. Joshi therefore, submitted that no interference is required to be made in the impugned Judgment and Order passed by the Tribunal whereby the order passed by the Board of Nominees is modified by permitting the respondents to make construction as per the sanctioned plan for ground plus seven floors for residential purpose of the respondents and further restraining the respondents from using such construction over Plot No.32A of the petitioner society for letting or sub-letting or for commercial purpose without prior sanction of the petitioner society as per the bye-laws and the resolutions of the petitioner society.
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7.Having heard the learned advocates for the respective parties, it appears that the Ex-
Secretary of the society by consent letter dated 23.05.2016, approved the plan for construction put up by the respondents before the petitioner society and relying upon such consent letter, the AMC has sanctioned the plans and issued the Development Permission in the month of April 2017. When the respondents started construction on Plot No.32/A as per the sanctioned plan by the AMC, some members of the petitioner society raised objection, pursuant to which resolution dated 08.05.2017 was passed by the Managing Committee to withdraw the consent which was granted by the Ex-Secretary of the petitioner society in May 2016. The petitioner society in the Annual General Meeting dated 04.06.2017 has also ratified such resolution passed by the Managing Committee and decided not to allow Page 81 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined construction of flat type high rise or commercial building without express permission of the society and the respondents were directed to file revised plan by the said resolution.
8.Thus, the question arises as to whether the consent given by the petitioner society was an authorised permission signed by the Secretary or not?
9.As held by the Supreme Court in case of Vasantkumar Radhakisan Vora (Dead) By His Lrs (supra), the Secretary was not authorised to sigh the consent letter. Such consent letter was issued without there being any resolution passed by the Managing Committee and/or General Body and therefore, such consent letter could not have been acted upon by AMC in absence of any resolution passed by the petitioner society. In Vasantkumar Radhakisan Page 82 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined Vora (Dead) By His Lrs (supra), it is held as under:
"1. The respondent is a statutory body corporate initially constituted under the Bombay Port Trust Act, 1879 (Bombay Act 6 of 1879), for short State Act. Under Section 26 thereof, the Board have power to acquire and hold, moveable and immoveable property and also have power to lease, to sell or otherwise convey moveable and immoveable property which may have become vested in or acquired by them. The respondent has appointed A. J. Mescarnas, Assistant Estate Manager as their power Of attorney holder to lease out its properties from time to time or terminate the leases and to lay action for ejectment, etc. The respondent owns the building bearing Old R.R. No. 941 known as "Frere Land Estate" in which room No. 2 admeasuring 28.27 sq. meters was leased out to Vasantkumar Raidhakisan Vora, for short 'Vasantkumar'. The appellants are his legal representatives. He was served with a notice under Section 106 read with Section 111(h) of the Transfer of Property Act terminating the tenancy in terms of the covenants of lease and was asked to deliver possession of the demised property giving one month's time from 22.01.1975.
2. It was served on Vasantkumar on 28.01.1975. The notice of Page 83 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined termination thereby became effective from 28.02.1975. In the meanwhile Major Port Trust Act, 1963 (Act No. 38 of 1963), for short the "Central Act", was made applicable to the Bombay Port Trust by operation of Section 1330(2A) with effect from 1.02.1975. After the expiry of one month, ejectment application was filed under Section 41 of the Bombay Presidency Small Cause Courts Act (Act 15 of 1882) as amended under 1963 Maharashtra Amendment Act, against Vasantkumar and another for delivery of possession. After 1976 Amendment Act 19 of 1976 came into force suits were laid against three other tenants. It was pleaded by the respondent that it is a successor in interest of the Board under the State Act and were entitled to eject the tenants and to the possession of the demised portions. The plea of Vasantkumar in his written statement elaborated by the learned counsel, is that the suit is not maintainable. Since the State Act ceased to be operative with effect from 1.02.1975, the quit notice issued under Section 106 read with Section 111 (h) of Transfer of Property Act became ineffective and without determining the tenancy afresh, the suit was not validly laid. It was also pleaded that the respondent had promised that on deposit of certain amount which the tenant did, Vasantkumar would be given on lease of a portion in the reconstructed building. Thereby the respondent is estopped by promissory Page 84 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined estoppel to have the tenant ejected. It may be mentioned at this juncture that one suit was dismissed on the ground that the tenancy was not duly determined as per law. Other suits were decreed. No appellate forum has been prescribed under Amendment Act of 1963 but a substantive suit on original side provided was available. By Maharashtra Amendment Act 19 of 1976 to the principal such a right to appeal was incorporated. Vasantkumar filed writ petition in the High Court under Articles 226 and 227 and others filed regular appeals to a Bench of two Judges of the Small Cause Court and are stated to be pending.
3. In the writ petition the petitioner challenged the vires of 1963 Amendment Provisions and also 1976 Amendment Provisions to the Presidency Small Cause Courts Act. When it came up for hearing before Masodkar, J., he referred to a Division Bench. The Division Bench by its Judgement dated January 17/18, 1982 upheld the constitutional validity' of those sections and remitted to the learned single Judge to dispose of the writ petition on merits. The learned single Judge considered and negatived two points namely, validity of the notice terminating the tenancy, promissory estoppel and dismissed the writ petition. Vasantkumar had leave of this Court under Art. 136."Page 85 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023
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10. The petitioner society is a cooperative housing society formed on the basis of principle of cooperation as held by the Supreme Court in case of Zoroastrian Cooperative Housing Society Ltd. and another (supra), wherein it is observed as under:
"(22.) The validity of a bye-law, that too an approved bye-law, has to be tested in the light of the provisions of the Act and the rules governing co-operative societies. In so testing, the search should be to see whether, a particular bye-law violates the mandate of any of the provisions of the Act or runs counter to any of its provisions or to any of the rules. Sec. 24(1) of the Act only provides for open membership subject to a person, aspiring to be a member, possessing the qualification prescribed by the bye-laws. It is not an open membership dehors the qualification prescribed by the bye-laws When in Daman Singh this Court held that when a co-operative society is governed by the appropriate legislation it will be subject to the intervention made by the concerned legislation, it only meant that a legislative provision in the Act can be introduced for the purpose of eliminating a qualification for membership based on sex, religion or a persuasion or Page 86 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined mode of life. But so long as there is no legislative intervention of that nature, it is not open to the court to coin a theory that a particular bye-law is not desirable and would be opposed to public policy as indicated by the Constitution. The Constitution no doubt provides that in any State action there shall be no discrimination based either on religion or on sex. But Part III of the Constitution has not interfered with the right of a citizen to enter into a contract for his own benefit and at the same time incurring a certain liability arising out of the contract. As observed by the High Court of Bombay in Karvanagar Sahakari Griha Rachana Sanstha Maryadit and others V/s. State of Maharashtra [AIR 1989 Bombay 392] the members have joined the society in accordance with the bye-laws and the members join a housing society by ascertaining what would be the environment in which they will reside. It is not permissible for the State Government to compel the society to amend its bye-laws as it would defeat the object of formation of the society. In that case, the society was constituted with the object of providing peaceful accommodation to its members. Though there may be circumstances justifying the State taking steps to meet shortage of accommodation, it was not open to the State Government to issue a direction to the Registrar of Co-operative Societies Page 87 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined to : direct a co-operative society to make ' requisite amendments to their bye-laws and grant permission to its members to raise multistoried constructions. In appeal from that decision reported as State of Maharashtra and others V/s. Karvanagar Sahakari Griya Rachana Sanstha Maryadit and others [(2000) 9 SCC 295] this Court while dismissing the appeal stated that it was clear that though a power was conferred on the Registrar to direct amendment of the bye-laws of a society, yet the paramount consideration is the interest of the society. So also, the power of the State Government to issue directions in public interest, could not be exercised so as to be prejudicial to the interest of the society. In the view of this Court, what was in the interest of the society was primarily for the society alone to decide and it was not for an outside agency to say. Where, however, the government or the Registrar exercised statutory powers to issue directions to amend the bye-laws, such directions should satisfy the requirement of the interest of the society. This makes it clear that the interest of the society is paramount and that interest would prevail so long as there is nothing in the Act or the Rules prohibiting the promotion of such interest. Going by Chheoki Employees' Co- operative Society Ltd.,'s case[(1997) 3 SCC 681], neither the member, respondent no. 2, nor the Page 88 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined aspirant to membership, respondent no. 3 had the competence to challenge the validity of the bye- laws of the Society or to claim a right to membership in the Society."
11. In view of above settled legal position, the wish of the members of the petitioner society who are staying in such housing society peacefully has to be honoured. At the same time, the respondents cannot be restrained from putting up the construction as per their own wish for residential purpose. Therefore, without entering into the question whether the plans of ground plus seven floor of flat type construction were prepared, the issue has to be seen in light of the fact that all other 57 members of the petitioner society are having having maximum ground plus two floors for residential purpose. Therefore, t2022he intention of the respondents who have never stayed in the petitioner society since 2005 onwards after Page 89 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined purchasing Plot No.32/A is clear that the respondents never wanted to stay in the petitioner society but wanted to use the plot other than the residential purpose.
12. The Apex Court has time and again held in the following decisions that provisions of bye-laws of the cooperative societies are required to be applied to each of the members:
i) Zoroastrian Cooperative Housing Society Ltd. and another (supra), wherein it is observed as under:
"(22.) The validity of a bye-law, that too an approved bye-law, has to be tested in the light of the provisions of the Act and the rules governing co-operative societies. In so testing, the search should be to see whether, a particular bye-law violates the mandate of any of the provisions of the Act or runs counter to any of its provisions or to any of the rules. Sec. 24(1) of the Act only provides for open membership subject to a person, aspiring to be a member, possessing the qualification prescribed by the Page 90 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined bye-laws. It is not an open membership dehors the qualification prescribed by the bye-laws When in Daman Singh this Court held that when a co-operative society is governed by the appropriate legislation it will be subject to the intervention made by the concerned legislation, it only meant that a legislative provision in the Act can be introduced for the purpose of eliminating a qualification for membership based on sex, religion or a persuasion or mode of life. But so long as there is no legislative intervention of that nature, it is not open to the court to coin a theory that a particular bye-law is not desirable and would be opposed to public policy as indicated by the Constitution. The Constitution no doubt provides that in any State action there shall be no discrimination based either on religion or on sex. But Part III of the Constitution has not interfered with the right of a citizen to enter into a contract for his own benefit and at the same time incurring a certain liability arising out of the contract. As observed by the High Court of Bombay in Karvanagar Sahakari Griha Rachana Sanstha Maryadit and others V/s. State of Maharashtra [AIR 1989 Bombay 392] the members have joined the society in accordance with the bye-laws and the members join a housing society by ascertaining what would be the environment in which they will Page 91 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined reside. It is not permissible for the State Government to compel the society to amend its bye-laws as it would defeat the object of formation of the society. In that case, the society was constituted with the object of providing peaceful accommodation to its members. Though there may be circumstances justifying the State taking steps to meet shortage of accommodation, it was not open to the State Government to issue a direction to the Registrar of Co-operative Societies to : direct a co-operative society to make ' requisite amendments to their bye-laws and grant permission to its members to raise multistoried constructions. In appeal from that decision reported as State of Maharashtra and others V/s. Karvanagar Sahakari Griya Rachana Sanstha Maryadit and others [(2000) 9 SCC 295] this Court while dismissing the appeal stated that it was clear that though a power was conferred on the Registrar to direct amendment of the bye-laws of a society, yet the paramount consideration is the interest of the society. So also, the power of the State Government to issue directions in public interest, could not be exercised so as to be prejudicial to the interest of the society. In the view of this Court, what was in the interest of the society was primarily for the society alone to decide and it was not for an outside agency to say. Where, however, the government or the Registrar Page 92 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined exercised statutory powers to issue directions to amend the bye-laws, such directions should satisfy the requirement of the interest of the society. This makes it clear that the interest of the society is paramount and that interest would prevail so long as there is nothing in the Act or the Rules prohibiting the promotion of such interest. Going by Chheoki Employees' Co- operative Society Ltd.,'s case[(1997) 3 SCC 681], neither the member, respondent no. 2, nor the aspirant to membership, respondent no. 3 had the competence to challenge the validity of the bye- laws of the Society or to claim a right to membership in the Society."
ii) Dhaneshbhai Bhikhubhai Patel & Another (supra), wherein it is observed as under:
"7. Having heard learned advocates for the parties and having perused the record of the case, it prima facie appears that the object of respondent No.1 society is primarily to permit its members to have dwelling house. Each tenant- member is required to comply with the terms of the bye-laws for his/her tenement. Byelaw No.66 specifically provides that no dwelling offered on lease shall be taken by persons who are not members of the society unless no member is willing to take Page 93 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined it. Bye-law provides for activities to be undertaken by the society for houses of its members. Bye-laws also provide for powers of the Managing Committee of the society. It thus prima facie appears that the members are allowed to hold tenement in the society for dwelling purpose.
9. It is required to be noted that there is no specific provision in the bye-law for permitting any of the members of the society to put up commercial construction. Learned advocate Mr. Desai for the petitioners however submitted that since there is no prohibition in the bye-law against putting up the commercial construction, use of the plots of the society will be governed by the GDCR and the provisions of the Corporation Act as per which the commercial construction is permissible on the plot of the society. Such contention of learned advocate Mr. Desai cannot be accepted for the simple reason that what is required to be considered is the intent and purpose contained in the bye-laws. Prima facie, it appears from the bye-laws that respondent No.1 society was incorporated to provide houses to its members. Therefore, every member of the society is well aware that he or she holds tenement as a house or dwelling unit to reside therein. Therefore, absence of prohibition in the bye-laws against making of commercial construction on the plot of the society, could not be taken Page 94 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined as a permission for raising commercial construction on the plots of the society which the society never provided for in the bye-laws.
11. In above view of the matter and in the context of the provisions of the Act, the Chairman had no authority to sign the plans for commercial construction contrary to the bye-laws of the society, especially when there was no decision by the society in its meeting. If the signing of the plans by the Chairman is to be taken as permission for commercial construction, it would not only be contrary to the Act and the bye-law but would also amount to altering the bye-laws without the decision by the society in its meeting by two- third majority and without there being any approval by the Registrar under the provisions of Section 13 of the Co-operative Societies Act.
14. In the case of Sant Lal Gupta (supra), the Hon'ble Supreme Court has held and observed in para 28 as under:-
"28. The High court ought to have considered that it was a writ of certiorari and it was not dealing with an appeal. The writ of certiorari under Article 226 of the Constitution can be issued only when there is a failure of justice and it cannot be issued merely because it may be legally permissible to do so.Page 95 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023
NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined There must be an error apparent on the face of record as the High Court acts merely in a supervisory capacity. An error apparent on the face of the record means an error which strikes one on mere looking and does not need long drawn out process of reasoning on points where there may conceivably be two opinions. Such error should not require any extraneous matter to show its incorrectness. Such errors may include the giving of reasons that are bad in law or inconsistent, unintelligible or inadequate. It may also 16 include the application of a wrong legal test to the facts found, taking irrelevant considerations into account and failing to take relevant considerations into account, and wrongful admission or exclusion of evidence, as well as arriving at a conclusion without any supporting evidence. Such a writ can be issued when there is an error in jurisdiction or authority whose order is to be reviewed has acted without jurisdiction or in excess of its jurisdiction or has failed to act. While issuing the Writ of Certiorari, the order under challenge should not undergo scrutiny of an appellate court. It is obligatory on the part of the petitioner to show that a jurisdictional error has been Page 96 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined committed by the Statutory Authorities. There must be the breach of principles of natural justice for resorting to such a course."
iii) Karvanagar Sahaka2022ri Griha Rachna Sanstha Mary Adit and others (supra), wherein it is observed as under:
"(6.) From the above discussion, it is clear that though the power is conferred on the Registrar to direct amendment of the bye-laws of the Societies, yet the paramount consideration is the interest of the Society. So also the power of the State Government to issue directions in public interest cannot be exercised so as to be prejudicial to the interest of the Society. In our view, what is in the interest of the society is primarily for the society alone to decide and it is not for an outside agency to say. Where, however, the Government or the Registrar exercises statutory power of issuing directions to amend the bye-laws, such directions should satisfy the requirement of the interest of the Society. In the instant case, having regard to the nature of the Society and its objectives, referred to above, and having also regard to the fact that the Society in the case of 5th respondent has turned down his request for the grant of permission Page 97 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined by overwhelming majority, we are unable to say that the amendment directed by Government is in the interest of the Society. The High Court is, therefore, right in quashing the impugned directions/circulars."
iv) Kumari Jethi T. Sipahimalani (supra), wherein it is observed as under:
"27. It is difficult to follow the arguments of Mr. Dalvi. If his argument is that Sections 64 and 65 did not apply to the resolutions passed by the General Meeting, these sections could not prevent the General Meeting from passing the resolutions. As stated above Section 72 constitutes the General Meeting of the Society, the Supreme authority in the Society subject to the Act, Rules and Bye-laws. The General Body of the members in general meeting is the final authority in all matters, unless there is some limitation imposed on that power under the general law of the land or under some section of the Act or some provision in rules framed thereunder or under the bye- laws registered under the Act. If honorarium is not remuneration as contended by Mr. Dalvi Section 64 also will not apply. Mr. Dalvi was unable to point out any limitation on the powers of the general meeting in any provision of the Act or in any rules framed under the Act or Page 98 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined under the Society's Bye-laws or under any other law. What is not prohibited under the Act, the Rules and Bye-laws framed thereunder is permitted to the general meeting subject to the general laws of the land. It is free to do what it likes subject to the provisions of the Act, the Rules and the Bye-laws provided it does not infringe any general law for the time being in force.
29. It is true that Section 64 deals with remuneration and not with honorarium. Section 65(2) deals with payment of honorarium only out of net profits. None of these sections came in the way of the general meeting of the Society in passing the resolutions for payment of honorarium as part of the construction cost. It was for the majority of the members in the general meeting to decide how much was the value of the services of petitioner No. 6 and how and when it should be paid to him. Petitioner No. 6, who was Honorary General Secretary of the Society, is an advocate. He had sacrificed all his time and energy and dedicated his services to the Society for ten years. Members who enjoyed the benefit of these services could decide to reward him. We do not think that Section 64 was a stumbling block to the members of the Society who wanted to pass any resolution regarding honorarium to be paid in such a case as Page 99 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined construction costs. Section 64 applied to division of the profits of the Society to any member qua member. Section 65 deals with appropriation of profits. All that Section 65(2) lays down is that out of net profits honorarium also may be paid. Even Section 65(2) does not prevent the general body of the Housing Society to pay honorarium to petitioner No. 6 as part of the construction cost. Construction cost was to be paid by members. Society was not paying it to him as a matter of division of funds. We, therefore, do not find any legal restriction whatsoever on the power of the general body under Section 72 to pass a resolution to pay honorarium as part of the construction cost to a person like petitioner No. 6, for the services rendered by him to the Society."
13. However, it is true that bye-laws do not provide for any height of the building to be constructed by the members of the petitioner society but reading bye-laws a a whole, the same are required to be interpreted and applied purposively. The petitioner society is for the purpose of providing plots to its members for residential units of tenement and Page 100 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined bungalow since 1962. The members of the petitioner society are staying in the society for more than five decades and as such, any use of the plot of the petitioner society other than for residential purpose by making construction like the plans which are sanctioned by the AMC in the facts of the present case of ground plus seven floors, would be contrary to the basic concept of cooperation between the members of the cooperative society. The petitioner society on coming to know about the plans which are sanctioned by the AMC has passed resolution in General Body so as to restrain the respondents from making construction of ground plus seven floors and such resolution would be applicable retrospectively as the same is in consonance with the bye-laws of the society which are referred to here-in-
above.
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14. In such circumstances, the very purpose of the existence of the petitioner society is for peaceful residence of its members and if the respondents can also reside in the petitioner society, in the construction to be made but not of ground plus seven floor which apparently would be contrary to the bye-laws of the petitioner society, more particularly, when the petitioner society is for the purpose of making the land available to its members for construction of residential houses, the basic concept of principle of cooperation can be achieved.
15. The Tribunal while permitting the respondents to make construction of ground plus seven floor has failed to consider the aspect of principle of cooperation which are required to be applied to the members of the petitioner society and merely because there was a consent given by the Secretary who has Page 102 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined later on withdrawn the same by filing an affidavit before the Board of Nominees to the effect that he was misled by the respondents while granting the consen2022t and therefore, such consent cannot be said to be consent given by the petitioner society. Therefore, in view of decisions in cases of New India Cooperative Housing Society Limited (supra), Sarjan Cooperative Housing Society Ltd.
(supra) and Bengal Secretariat Cooperative Land Mortgage Bank Housing Society Ltd.
(supra), the consent given by the petitioner society is liable to be null and void and as such, plan sanctioned by the AMC could not have been granted relying upon such consent of the petitioner society which was given without any authority by the Ex-Secretary of the society.
16. The Resolution dated 04.06.2017 passed in Annual General Meeting of the petitioner Page 103 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined society would therefore, be binding upon all the members and operation of such resolution would be retrospective as the same would be declaratory resolution of the wish of the members of the petitioner society to the effect that all the members would not raise the height of their building nor put their residential units for any other use than the residence of the members and as such, the respondents could not have been permitted by the Tribunal to put up construction of ground plus seven floors contrary to such resolution. The Apex Court in the following decisions while holding that declaratory statute have retrospective effect have observed as under:
i) Union of India and another v. V.V.F. Limited and another (supra), wherein it is observed as under:
"23. In the case of State Bank of Page 104 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined India v. V. Ramakrishnan (2018) 17 SCC 394, it is observed and held that the presumption against retrospective operation is not applicable to declaratory statutes. For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective.
23.1 In the case of State of Bihar v. Ramesh Prasad Verma (2017) 5 SCC 665, it is observed and held that any legislation or instrument having force of law, if clarificatory, declaratory or explanatory in nature and purport, will have retrospective operation especially in the absence of any indication to the contrary as to retrospectivity either in parent Act or Rules or notifications involved.
23.2 In the case of Union of India v. Martin Lottery Agencies Ltd. (2009) 12 SCC 209, it is observed and held that whether a subordinate legislation or a parliamentary statute would be held to be clarificatory or declaratory would depend upon the nature thereof as also the object it seeks to achieve.
23.3 In the case of T.N. Electricity Board v. Status Spg. Mills Ltd. (2008) 7 SCC 353 it is observed and held that a clarificatory order can be given retrospective effect as it can throw light on substantive Page 105 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined provision by principle of contemporanea expositio.
25. In view of the above and for the reasons stated above and once it is held that the subsequent notifications/industrial policies which were impugned before the respective High Courts are clarificatory in nature and are issued in public interest and in the interest of the Revenue and they seek to achieve the original object and purpose of giving incentive/exemption while inviting the persons to make investment on establishing the new undertakings and they do not take away any vested rights conferred under the earlier notifications/industrial policies and therefore cannot be said to be hit by the doctrine of promissory estoppel, the same is to be applied retrospectively and they cannot be said to be irrational and/or arbitrary."
ii) Ghanshyam Mishra and Sons Private Limited Through the Authorised Signatory (supra), wherein it is observed as under:
(85.) In Justice G.P. Singh treatise on "The principles of Statutory Interpretation", 14th Edition, Revised by Justice A.K. Patnaik, former Judge of this Court, it is observed thus:
"(i) Declaratory Statutes Page 106 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined The presumption against retrospective operation is not applicable to declaratory statutes. As stated in CRAIES and approved by the Supreme Court:
"For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective. The usual reason for passing a declaratory Act is to set aside what Parliament deems to have been a judicial error, whether in the statement of the common law or in the interpretation of statutes. Usually, if not invariably, such an Act contains a preamble, and also the word 'declared' as well as the word 'enacted'.
But the use of the words 'it is declared' is not conclusive that the Act is declaratory for these words may, at times, be used to introduce new rules of law and the Act in the latter case will only be amending the law and will not necessarily be retrospective. In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is 'to explain' an earlier Act, it Page 107 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined would be without object unless construed retrospective. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended. The language 'shall be deemed always to have meant' or 'shall be deemed never to have included' is declaratory, and is in plain terms retrospective. In the absence of clear words indicating that the amending Act is declaratory, it would not be so construed when the pre-
amended provision was clear and unambiguous. An amending Act may be purely clarificatory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect and, therefore, if the principal Act was existing law when the constitution came into force, the amending Act also will be part of the existing law.
The above statement of the law relating to the nature and effect of a declaratory statute has been quoted with approval by the Supreme Court from earlier editions of this book in a number of cases.
Page 108 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined "In Mithilesh Kumari v. Prem Bihari Khare[(1989) 2 SCC 95], section 4 of the Benami Transactions (Prohibition) Act, 1988 was, it is submitted, wrongly held to be an Act declaratory in nature for it was not passed to clear any doubt existing as to the common law or the meaning or effect of any statute. The conclusion, however, that section 4 applied also to past benami transactions may be supportable on the language used in the section."
These observations and criticism of Mithilesh Kumari's case also received the approval in R. Rajgopal Reddy v. Padmini Chandrasekharan [(1995) 2 SCC 630], where the Supreme Court after quoting them (from 5th Edition pp. 315, 316) said :
"No exception can be taken to the above observations".
A proviso added from 1.4.1988 to section 43 B inserted in the Income Tax Act, 1961 from 1.4.1984 came up for consideration in Allied Motors(P.) Ltd. v. Commissioner of Income-tax and it was given retrospective effect from the inception of the section on the reasoning that the proviso was Page 109 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined added to remedy unintended consequences and supply an obvious omission so that the section may be given a reasonable interpretation and that in fact the amendment to insert the proviso would not serve its object unless it is construed as retrospective. In Commissioner of Income-Tax, Bombay v. Podar Cement Pvt. Ltd., [(1997) 5 SCC 482] the Supreme Court held that amendments introduced by the Finance Act, 1987 in so far they related to section 27(iii), (iiia) and (iiib) which redefined the expression 'owner of house property', in respect of which there was a sharp divergence of opinion amongst the High Courts, was clarificatory and declaratory in nature and consequently retrospective. Similarly, in Brij Mohan Das Laxman Das v.
Commissioner of Income -
tax[(1997) 1 SCC 352].
Explanation 2 added to section 40 of the Income-tax Act, 1961 from 1.4.1985 on a question on which there was a divergence of opinion was held to be declaratory in nature and, therefore, retrospective. And in Zile Singh v. State of Haryana, [(2004) 8 SCC 1] substitution of the word 'upto' for the word 'after' in the proviso to section 13A (added in 1994) in Haryana Municipal Act, 1973 by Page 110 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined the Haryana Municipal (Second Amendment) Act, 1994 was held to be correction of an obvious drafting error to bring about the text in conformity with the legislative intent and, therefore, retrospective. Even without the amendment of the proviso, the court in all probability would have read and interpreted the section as corrected by the amendment."
(93.) As discussed hereinabove, one of the principal objects of I&B Code is, providing for revival of the Corporate Debtor and to make it a going concern. I&B Code is a complete Code in itself. Upon admission of petition under Section 7, there are various important duties and functions entrusted to RP and CoC. RP is required to issue a publication inviting claims from all the stakeholders. He is required to collate the said information and submit necessary details in the information memorandum. The resolution applicants submit their plans on the basis of the details provided in the information memorandum. The resolution plans undergo deep scrutiny by RP as well as CoC. In the negotiations that may be held between CoC and the resolution applicant, various modifications may be made so as to ensure, that while paying part of the dues of Page 111 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined financial creditors as well as operational creditors and other stakeholders, the Corporate Debtor is revived and is made an ongoing concern. After CoC approves the plan, the Adjudicating Authority is required to arrive at a subjective satisfaction, that the plan conforms to the requirements as are provided in subsection (2) of Section 30 of the I&B Code. Only thereafter, the Adjudicating Authority can grant its approval to the plan. It is at this stage, that the plan becomes binding on Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution Plan. The legislative intent behind this is, to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims. If that is permitted, the very calculations on the basis of which the resolution applicant submits its plans, would go haywire and the plan would be unworkable.
(94.) We have no hesitation to say, that the word "other stakeholders" would squarely cover the Central Government, any State Government or any local authorities. The legislature, noticing that on account of obvious omission, Page 112 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined certain tax authorities were not abiding by the mandate of I&B Code and continuing with the proceedings, has brought out the 2019 amendment so as to cure the said mischief. We therefore hold, that the 2019 amendment is declaratory and clarificatory in nature and therefore retrospective in operation."
iii) Hero Motocorp Ltd. (supra) wherein it is observed as under:
"70. We are, therefore, of the considered view that even on the ground of change of policy, which is in public interest or in view of the change in the statutory regime itself on account of the GST Act being introduced as in the instant case, it will not be correct to hold the Union bound by the representation made by it, i.e. by the said O.M. of 2003. Further, this would be contrary to the statutory provisions as enacted under Section 174(2)(c) of the CGST Act."
17. Therefore, the contentions raised on behalf of the respondents that no interference would be required while issuing Page 113 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined writ of certiorari would be without any basis inasmuch as when the Tribunal has committed an error in interpreting the very basic concept of cooperation applicable to the cooperative society for the purpose of allowing the respondents from making construction of ground plus seven floors, merely on technical ground of consent letter issued by the society admittedly without any authority cannot be said to be justified in the facts of the case.
18. In view of the foregoing reasons, the petitions succeed and are accordingly allowed. The impugned order passed by the Tribunal as well as order of sanctioning the plan and issuance of Development Permission are also quashed and set aside with a permission to the respondents to file fresh revised plan in accordance with bye-laws of the petitioner society as well as the Page 114 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023 NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined resolutions which are passed by the petitioner society from time to time till date after obtaining necessary consent from the petitioner society without demolishing the existing construction put up by the respondents which shall be subject to the plans which may be submitted and sanctioned by the AMC. The respondents are also restrained from putting up construction of ground plus seven floors and the construction put up by the respondents during the pendency of this petition shall be continued to remain in existence and the same can be used by the respondents for their residential purpose by filing revised plans before the AMC which shall be sanctioned by the AMC in accordance with resolution dated 4.06.2017 passed by the petitioner society as well as the bye-laws and prevalent development rules.
Page 115 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023NEUTRAL CITATION C/SCA/17081/2021 CAV JUDGMENT DATED: 04/08/2023 undefined
19. Petitions stand disposed of accordingly.
No order as to costs.
Record and Proceedings be sent back to the concerned Tribunal.
(BHARGAV D. KARIA, J) RAGHUNATH R NAIR Page 116 of 116 Downloaded on : Sun Sep 17 00:08:36 IST 2023