Bangalore District Court
) The Karnataka State Judicial vs ) Sri.H.S.Nagaraj on 2 November, 2021
KABC010148492010
Govt.of Karnataka TITLE SHEET FOR JUDGMENT IN SUITS
Form No.9(Civil)
Title Sheet for Judgment in
suits (R.P.91)
IN THE COURT OF THE VI ADDL. CITY CIVIL & SESSIONS JUDGE
AT BENGALURU CITY
(CCCH.11)
Dated this the 2nd day of November 2021
PRESENT: Sri. Rama Naik, B.Com., LL.B.,
(Name of the Presiding Judge)
O.S.NO.3889/2010
PLAINTIFFS 1) THE KARNATAKA STATE JUDICIAL
EMPLOYEES HOUSE BUILDING CO-
OPERATIVE SOCIETY LIMITED
No.7/2, 'Surya Chambers'
2nd Floor, 1st Main Road
Seshadripuram, Bengaluru -560 020.
Reptd.by its Secretary
2) THE PRESIDENT
THE KARNATAKA STATE JUDICIAL
EMPLOYEES HOUSE BUILDING CO-
OPERATIVE SOCIETY LIMITED
O.S.NO.3889/2010
2
No.7/2, 'Surya Chambers'
2nd Floor, 1st Main Road
Seshadripuram, Bengaluru -560 020
[By Pleader Smt.B.V.Vidyulatha]
/Vs/
DEFENDANTS 1) SRI.H.S.NAGARAJ
S/o.Sri.H.J.Subba rao
aged about 67 years
R/o No.272, 15th 'A' Cross
15th 'A' Main, K.H.B.Colony
Yelahanka New Town
Bengaluru -560 065.
[By Pleader Sri.Dr.Ravindra V. Reddy
2) SRI.C.SHIVALINGAIAH
S/o.Sri.Channe Gowda
Aged about 70 years
R/o No.421, 12th Cross
Sadashivanagar, Bengaluru
[Since deceased deleted vide
Order dtd.21.11.2015]
Date of Institution of the suit : 07.06.2010
Nature of the Suit : Declaration & Injunction
Date of commencement of
recording of evidence : 14.09.2012
Date on which the Judgment
was pronounced : 02.11.2021
O.S.NO.3889/2010
3
Year/s Month/s Day/s
Total Duration : 11 04 25
(RAMA NAIK)
VI ADDL.CITY CIVIL & SESSIONS JUDGE
BENGALURU CITY
JUDGMENT
Suit is filed by Plaintiffs [for brevity 'Society'] for declaring it as the absolute owner of suit schedule property and for handing over vacant possession of suit schedule property to it.
2) Further relief is for declaration that Sale Deed dated 03.03.2003 registered in the name of Defendant No.1 as Document No.BNG(U)- YLNK/12448/2002-03/1-20 at the Office of the Senior Sub-Registrar at Yelahanka, Bangalore, is null and void and same is not binding on the Society, O.S.NO.3889/2010 4 and consequential relief of permanent injunction restraining Defendants No.1 and 2 from interfering with its peaceful possession and enjoyment of suit schedule property.
3) Facts as stated in plaint are that Society is registered under the Karnataka Co-Operative Societies Act, 1959. Its incorporation is for the purpose of acquiring the land and for distributing the sites so formed by it to its members.
4) It is stated that Society formed a residential layout in the lands bearing various survey numbers of Allalasandra, Chikkabommasandra and Jakkur Plantation villages, Yelahanka Hobli, Bengaluru North Taluk and suit schedule property viz., Site bearing No.616, measuring East to West 50.6 + 49.6/2 feet and North to South 35.6 + 40.3/2 feet, is carved out in the said residential layout.
O.S.NO.3889/2010 5
5) It is stated that, as per the provisions of the Karnataka Co-Operative Societies Act, 1959 and Bye-laws of Society, sites carved out in the said residential layout can be allotted to its members only after collecting the costs incurred for the acquisition of the land.
6) It is stated that Defendant No.1 is not a member of the Society and he is not eligible for allotment of a site.
7) It is stated that Defendant No.1, having the knowledge that he is not eligible for allotment of site, in collusion with Defendant No.2, has got registered Sale Deed dated 03.03.2003 in respect of suit schedule property in his name. No right, title and interest passed on to Defendant No.1 over suit schedule property, and title of suit schedule property remains with Society.
O.S.NO.3889/2010 6
8) It is stated that entire transaction of execution and registration of Sale Deed dated 03.03.2003 in respect of suit schedule property is vitiated by fraud. There are gross irregularities in execution and registration of Sale Deed.
9) It is stated that the execution and registration of Sale Deed dated 03.03.2003 are not preceded by any resolution passed by the Society and hence, the Sale Deed executed in the name of Defendant No.1 by Defendant No.2 is non-est in the eye of law.
10) It is stated that as the possession of suit schedule property remains with the Society, Sale Deed dated 03.03.2003 was never acted upon and therefore, there was no occasion for the Society to get to know about the fraudulent transaction entered into between Defendant No.1 and Defendant No.2.
O.S.NO.3889/2010 7
11) It is stated that as Defendant No.2 was the President of the Society during 1999-2005, every care has been taken by Defendants to see that the said collusive transaction of execution of Sale Deed in respect of suit schedule property is not known to the Society.
12) It is stated that the present President of the Society took over the administration of the Society on 23.04.2008.
13) It is stated that in the context of few other fraudulent transactions in respect of certain other properties belonging to Society, an inquiry was ordered by the Assistant Registrar of Co-Operative Societies, Bangalore, and during the month of March 2009, when papers were being checked regarding the sites owned by Society, the fraudulent transaction which took place between O.S.NO.3889/2010 8 Defendants came to the knowledge of the present President of the Society.
14) It is further stated that Secretary of the Society issued legal notice dated 31.07.2009 to Defendant No.1, calling upon him to give explanation in getting Sale Deed in his favour and same was not claimed by Defendant No.1. If the Sale Deed executed in favour of Defendant No.1 is not interfered with, Society will be put to great hardship and injustice. Hence, pray for decree.
15) Defendants No.1 and 2 marked appearance through their respective counsel and filed their respective written statement.
16) Defendant No.1, in his written statement, states that he is the member of the Society and membership number was given by the Society as '586'.
O.S.NO.3889/2010 9
17) It is stated that after receiving entire sale consideration, Sale Deed dated 03.03.2003 has been executed and registered in his favour in respect of suit schedule property and he has been in peaceful possession and enjoyment of the suit schedule property since the date of execution of Sale Deed as absolute owner of the suit schedule property. Khatha of suit schedule property has been effected in his name. He has been paying property tax. Society is not in possession of the suit schedule property.
18) It is stated that suit filed by the Society is barred by limitation.
19) It is further stated that suit is not properly valued and proper court-fee is not paid by the Society after amending the plaint prayer.
20) It is also stated that suit filed by the Society without the resolution of the Board of Directors is O.S.NO.3889/2010 10 not maintainable. Hence, prays for dismissal of the suit.
21) Defendant No.2, in his written statement, states that the paid Secretary/Executive Secretary and other office bearers of the Society could process the application for allotment of site and receive the amount paid towards allotment of site. After scrutinizing the application and after receipt of the sale consideration, the Secretary prepared the Sale Deed for and on behalf of the Society and same was brought before him for his signature. Only after the completion of the formalities by the office of the Society, he would put his signature on the Sale Deed to be registered in favour of intending purchasers.
22) It is stated that he neither scrutinizes the application, nor processes the allotment, nor receives the sale consideration, and same is being O.S.NO.3889/2010 11 done by the Secretary as per the bye-laws of the Society.
23) It is stated that he has not executed the Sale Deed in favour of Defendant No.1 in his individual capacity or personal capacity. Sale Deed has been executed by the Society itself. He has represented the Society being the President of the Society.
24) It is stated that the Society, for the reasons best known to it, has filed the present suit falsely alleging that there was no occasion for the Society to get to know about the fraudulent transaction entered into between Defendants.
25) It is stated that Society has its auditor. Society transacts through Directors and other office bearers. He cannot take any independent decision. It is only the Society can take the decision.
O.S.NO.3889/2010 12
26) It is stated that Sale Deed has been executed and got registered by the Society in favour of Defendant No.1 and therefore, it cannot claim that it had no knowledge of the execution of the Sale Deed executed in favour of Defendant No.1 by the Society.
27) It is stated that Society used to get the accounts audited including the allotment of sites, execution of the Sale Deeds and receiving of the sale considerations every year, and therefore, Society cannot aver its ignorance of the Sale Deed executed in favour of Defendant No.1. Hence, prays for dismissal of the suit.
28) Issues and Additional issues that have been framed by this Court are as under :
1) Whether the Plaintiff proes that the first defendant is not a member of plaintiff's society and hence he is not eligible for allotment of site belongs to the plaintiff society as O.S.NO.3889/2010 13 per the bye-laws and as per the provisions of K.C.S Act 1959 ?
2) Whether the plaintiff further proves that the first defendant to knock of the valuable property of plaintiff society in collusion with the second defendant got the registered sale deed dated 03.03.2003 in respect of the plaint schedle property?
3) Whether the plaintiff further proves that right, title and possession of the plaint scheduled property still remains with the plaintiff society and sale deed datd 03-03-2003 was never acted upon?
4) Whether the plaintiff proves that plaintiff society is the absolute owner of the plaint schdule property?
5) Whether the plaintiff further proves that the sale deed dated 03-03-
2003 registered on 03-03-2003 in the name of the first defendant is null and void and not binding on the plaintiff?
6) Whether the plaintiff further proves that plaintiff is in lawful possession of the plaint schedule property as on the date of suit?
7) Whether the plaintiff further proves the alleged interference of the defendants as stated in the plaint?
8) Whether the second defendant proves that suit is bad for non joinder of necessary parties?
O.S.NO.3889/2010 14
9) Whether the second defendant further proved that suit is barred by limitation?
10) What decree or order?
Addl.Issue framed on 23.6.2014:
" Whether the plaintiff in alternative proves that plaintiff is entitled for the possession of the plaint schedule property from the defendants in case if the Court finds that the plaintiff is not in possession of the plaint schedule property as prayed for?"
29) Society has examined the Secretary of the Society as PW.1 and Exs.P.1 to P.6, P.6(a) have been marked in support of its case.
Defendant No.1 has got examined as DW.1 and got marked Exs.D.1 to D.23 on his behalf. Since Defendant No.2 has passed away during the trial, he has been deleted on 21.11.2015
30) Heard learned Counsel for the Society, as well as Defendant No.1. Perused the written O.S.NO.3889/2010 15 argument filed by the Society, as well as Defendant No.1, and the records.
31) My findings on above Issues and Additional Issue are as under :
Issue No.1 : In Negative;
Issue No.2 : In Negative;
Issue No.3 : In Negative;
Issue No.4 : In Negative;
Issue No.5 : In Negative;
Issue No.6 : In Negative;
Issue No.7 : In Negative;
Issue No.8 : Does not survive;
Issue No.9 : In Affirmative;
Additional Issue : In Negative; framed on 23.6.2014 Issue No.10 : As per final order, for the following :
REASONS
32) Issues No.1 to 7 : These issues being interrelated are taken together for discussion.
O.S.NO.3889/2010 16 Suit is being for declaration that Society is the absolute owner of suit schedule property and for direction to Defendant No.1 to handover the vacant possession of suit schedule property to Society. Consequent reliefs are for declaration that the registered Sale Deed dated 03.03.2003 executed by the Society in favour of Defendant No.1 is null and void and same is not binding on the Society, and for permanent injunction restraining Defendant No.1 from interfering with peaceful possession and enjoyment of suit schedule property by the Society.
33) Ex.P.2, certified copy of Sale Deed dated 03.03.2003, makes it clear that Sale Deed has been executed by Defendant No.2 representing the Society in favour of Defendant No.1 and same has been registered in the office of Senior Sub- Registrar, Yelahanka, Bangalore vide Document No.BNG(U)-YLNK/12448/2002-03/1-20.
O.S.NO.3889/2010 17
34) Sale Deed is sought to be declared as null and void and same is not binding on the Society. In fact, Society has executed the Sale Deed in favour of Defendant No.1. In the Sale Deed, Defendant No.2, who was the then President of the Society, has represented the Society. Thus, Society is a party to the Sale Deed.
35) Chapter-V of the Specific Relief Act, 1963 deals with 'cancellation of instruments'. Section 31 reads as under :
"31. When cancellation may be ordered - (1) Any person against whom a written instrument is void or voidable; and who has reasonable apprehension that such instrument, if left outstanding may cause him serious injury, may sue to have it adjudged void or voidable; and the court may, in its discretion, so adjudge it and order it to be delivered up and cancelled."
36) It is, therefore, clear that Society ought to have sought for cancellation of the Sale Deed instead of seeking declaration that the Sale Deed O.S.NO.3889/2010 18 be declared as null and void and same is not binding on the Society.
37) It is to be noticed that Society seeks possession of suit schedule property from Defendant No.1 by paying court-fee under Section 38 of the Karnataka Court-Fees and Suits Valuation Act, 1958 [KCF & SV Act]. Section 38 of KCF & SV Act deals with suits for cancellation of decrees or other document. In that view, it can be fairly said that Society seeks possession of suit schedule property after cancellation of the Sale Deed.
38) In Vikram Ravi Menezes vs. Victor Goveas, [WP No.38868/2013 (GM-CPC), dated 24-04-2015)], the Hon'ble High Court of Karnataka, in para-13, was pleased to hold thus :
"13. ... Any person against whom a written instrument is void/voidable and who has reasonable apprehension that such instrument, if left outstanding may cause him serious injury, may sue to have it adjudged void or voidable. Therefore, only a person who is a party to the O.S.NO.3889/2010 19 instrument is entitled to such relief. Any person against whom the instrument is void/voidable reasonably apprehends that such instrument if left outstanding, it may cause him serious injury, he may bring a suit to get the document annulled. That is precisely what is done by the plaintiff by filing the suit. A clever drafting would not enable the plaintiff to avoid payment of court fee. Instead of seeking possession after cancellation, the relief is sought by way of mandatory injunction directing the defendant to surrender the schedule property, failing which he would get it through process of court. In other words, after the sale deed is cancelled, the plaintiff wants delivery of possession. Therefore, he ought to have sought for cancellation of the sale deed under Section 31 of of the Specific Performance Act, valued the suit under Section 38 of the Karnataka Court Fee and Suit Valuation Act, and sought for consequential reliefs. ..."
39) In Guru Prasad and Others vs. S.A.Rudraradhya and Others, [WP
No.13120/2008 connected with WP Nos.13121 and 13123/2008 (GM-CPC)], the Hon'ble High Court of Karnataka, in para-7, was pleased to hold as under :
"7. ... However, the suits clearly indicate that the plaintiffs are seeking declaration that the sale deed executed by their alleged Powers of Attorney is not binding on them. The nomenclature or nature may be different. The effect of such declaration O.S.NO.3889/2010 20 amounts to cancellation of sale deed as against the plaintiffs are concerned. In my opinion, the relief sought for by the plaintiffs clearly falls under Section 38 of the Act, as the plaintiffs themselves want to get rid of the sale deed and Powers of Attorney....."
40) Thus, it can be conveniently said that even though Society seeks declaration that Sale Deed executed in favour of Defendant No.1 be declared as null and void and same is not binding on it, in fact, it seeks cancellation of the Sale Deed as envisaged in Section 31 of the Specific Relief Act, 1963 by paying court-fee under Section 38 of the KCF & SV Act, which deals with cancellation of decrees and other document. In that view, there is no impediment to entertain the suit filed by the Society.
41) In the present suit, there are two Plaintiffs. Both are the Karnataka State Judicial Employees House Building Co-Operative Society Ltd. Plaintiff O.S.NO.3889/2010 21 No.1 is represented by its Secretary, and Plaintiff No.2 is represented by its President.
42) Society's submission is that as an abundant caution President of the Society has been arrayed as Plaintiff No.2. It is further submitted that the President of the Society has got knowledge about the execution and registration of fraudulent, fabricated and collusive Sale Deed dated 03.03.2003. It is also submitted that the inclusion of the President of the Society as Plaintiff No.2 is in accordance with the powers vested in him by virtue of the provisions of the Karnataka Co-Operative Societies Act, 1959, and as per the Board's decision.
43) Ex.P.1 is extract of Resolution dated 16.04.2010 passed by the Executive Committee under the Chairmanship of the President of the Society. It goes to show that Executive Committee O.S.NO.3889/2010 22 has taken the decision to institute a suit against 16 persons and instructed the Secretary to take further action in that regard.
44) In fact, no resolution, which specifically authorizes either the Secretary or the President to institute the suit against Defendant No.1 and to prosecute the matter on behalf of the Society, has been produced by the Society.
45) Ex.P.4 is copy of bye-laws of the Society. Rule-49 of the bye-laws makes it clear that "the President of the Society shall preside over all the meetings of the committee and in his absence, the Vice-President may preside over the meeting".
46) Rule-51 makes it clear that "the Secretary shall be the paid servant of the society and he may be either full or part time official". His duties have been clearly mentioned in Rule-52, which states O.S.NO.3889/2010 23 that "he shall be the Chief Executive Officer of the Society". Be that as it may.
47) There has been a provision in bye-laws that Society to be represented by the Secretary in all litigations relating to the Society under Rule-52 of the Bye-laws. Apart from that, only Executive Committee may by resolution authorize its officials to institute the suit on its behalf and to prosecute the matter before the Court. At a time, two or more persons cannot be authorized as its representative to institute the suit on its behalf and prosecute the same before the Court. In the present case, neither the Secretary nor the President has been specifically authorized to institute the suit on behalf of Society and to prosecute the same. A plain reading of Ex.P.1 makes it clear that such authorization is conspicuously absent in Ex.P.1. Be that as it may. Bye-laws authorizes the Secretary to represent the Society in all litigations relating to the O.S.NO.3889/2010 24 Society. Moreover, there is no dispute about the post and designation held by the Secretary and the President, who represent the Society in the instant suit. Anyway, arraying both the Secretary and the President in the instant suit does not go to the root of the matter, at the most, it can be said that it may be an irregularity and same does not dis-entitle the Society to get the decision on the reliefs claimed in the suit.
48) Society has challenged the Sale Deed dated 03.03.2003 executed by it in favour of Defendant No.1 on the ground that Defendant No.1, in collusion with Defendant No.2, seems to have got registered Sale Deed dated 03.03.2003 in respect of suit schedule property. It is contended that no right, title and interest have been conveyed in favour of Defendant No.1 under the Sale Deed dated 03.03.2003.
O.S.NO.3889/2010 25
49) It is the contention of the Society that Defendant No.1 is not a member of the Society and that execution and registration of the Sale Deed dated 03.00.2003 are not preceded by any resolution passed by the Society.
50) On the contrary, Defendant No.1 contends that he is the member of the Society. His membership number is '586'. After payment of sale consideration, Sale Deed dated 03.03.2003 was executed in his favour by Defendant No.2 representing the Society. As per Sale Deed, khatha in respect of suit schedule property was entered in his name. Up to date tax was paid. As per Sale Deed, he is the absolute owner in possession of suit schedule property.
51) At this stage, it is relevant to state the contention taken by Defendant No.2 in his written statement. Defendant No.2 contends that it is the O.S.NO.3889/2010 26 Society which executed Sale Deed in favour of Defendant No.1. He was authorized to execute the Sale Deed in favour of Defendant No.1. He only represented the Society being the President of the Society. He never executed Sale Deed in his individual or personal capacity.
52) It is contended that, as per the bye-laws of the Society, the Secretary and other office bearers process the application for allotment and receive the amount paid towards allotment of site. After scrutinizing the application received for allotment of site and after receipt of the sale consideration paid to the Secretary, they prepare Sale Deed to be executed in favour of the allottee. Only after completion of formalities by the office, document would be brought before him for signature on the Sale Deed to be executed in favour of the intending purchaser.
O.S.NO.3889/2010 27
53) It is also contended that Society has its own auditor. All the proceedings of the Society are taken place through Directors and office bearers. He has done nothing except the decision of the Society. Merely because he signed the document on behalf of the Society, he cannot be held responsible.
54) In the backdrop of the contention taken in written statement of Defendant No.2, it is necessary to have regard to the bye-laws of the Society.
55) Rule-52 of the Bye-laws at Ex.P.4 deals with duties of the Secretary. It reads as under :
"52. DUTIES OF THE SECRETARY : -
He shall be the chief Executive Officer of the society and his duties shall be : To summon all the meetings of the General Body and the Board.
(b) To record proceedings of such meetings in the minutes book.
(c) To call for first meeting of the newly constituted committee.
O.S.NO.3889/2010 28
(e) To maintain account books, registers and other records, unless otherwise decided by the committee.
(f) To produce records of the society before different authorities concerned with the working of the Society.
(g) To sign all the documents for and on behalf of the Society.
(h) To receive the application for membership, for withdrawal of deposits, and shares etc., and place the same before the Board.
To place before the Board of directors all documents relating to the loan applications from members, all vouchers and receipts pertaining to the receipts and payments statements.
Subject to such rules as may be framed from time to time or any resolution in that behalf, the secretary is empowered to sign all papers to transact business on behalf of the society, to acquire, draw interest or endorse all Government and other remittances, debentures, or shares and to represent the society in all litigations relating to the society.
He shall be responsible for the safe custody of the registers and all other records of the society inclusive of cash, stock and other properties of the society. The overall responsibilities of all financial transactions lies on the secretary. "
O.S.NO.3889/2010 29
56) Chapter-VI of the Bye-laws deals with MISCELLANEOUS PROVISIONS. It reads as under :
"(1) Register of members. (2) Share Register (3) Nomination Register (4) Receipt book. (5) Voucher book. (6) Cash book .(7) General Ledger. (8) Site deposit ledger. (9) Register of allotment of sites. (10) Property Register. (11) Investment Register. (12) Loan Register. (13) Mortgage Register (14) Register of furniture, fixtures and other equipments. (15) Register of Library. (16) Minutes book of the General Body meeting. (17) Minutes book of the Board of directors meeting. (18) Audit rectification register.
DOCUMENTS : The society shall maintain the following documents. (1) Application for members. (2) Letter of resignation of members (3) Application for transfer of shares/interest on the capital. (4) correspondence with the Registering Authority.
(5) Conveyance of property. (6) Agreement and contract deeds. (7) Application for sites with all connected activities.
(8) Approved plans of layout. (9) Copy of the registered bye-law with uptodate amendments.
(10) certificate of Registration. (11) Memberwise loan application, sanction and documentations. (12) Periodical statements (13) Audit memos and audit reports (14) Notice and agenda of committee of management.
O.S.NO.3889/2010 30 (15) Notice and agenda of General Body meeting.
(16) Copies of the K.C.S. Act and K.C.S. Rules.
(17) File containing the
circulars/directions issued by
Registrar/Director of Audit or any other authority connected with the society. "
57) A plain reading of the above rules incorporated in the Bye-laws makes it clear that except presiding over the meetings of the committee, no work has been assigned to the President in the Bye-laws specifically. All that duties cast on the Secretary, who is the Chief Executive Officer of the Society under the Bye-laws.
58) Even though, Defendant No.2 passed away after filing of written statement and during the trial, the contention taken in his written statement that all the affairs of the Society are being done by Secretary is supported by the rules laid down in the Bye-laws of the Society.
O.S.NO.3889/2010 31
59) Society's contention is that Defendant No.1, in collusion with Defendant No.2, seems to have got registered Sale Deed dated 03.03.2003. Except this bare statement in plaint, no particulars as to alleged fraud have been exemplified by the Society as is mandated under Order VI Rule 4 of CPC.
60) Order VI Rule 4 of CPC deals with particulars to be given where necessary. It reads thus :
"4. Particulars to be given where necessary.- In all cases in which the party pleading relies on any misrepresentation, fraud, breach of trust, wilful default, or undue influence, and in all other cases in which particulars may be necessary beyond such as are exemplified in the forms aforesaid, particulars (with dates and items if necessary) shall be stated in the pleading."
61) Section 17 of the Indian Contract Act, 1872 defines 'fraud'. It is extracted as under :
"17. 'Fraud defined'.- 'Fraud means and includes any of the following acts committed by a party to a contract, or with his connivance , or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into contract:
O.S.NO.3889/2010 32 (1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent."
62) Thus, false assertion, active concealment, promise without intention of performing it, any other deceptive act, or any act declared as fraudulent would constitute 'fraud'.
63) Plaint does not give any particulars of alleged fraud and manner of committing the fraud as envisaged in Section 17 of the Indian Contract Act, 1872.
64) Sale Deed at Ex.P.2 goes to show that it has been executed by the Society. In the Sale Deed, Defendant No.2, being the President of the Society, O.S.NO.3889/2010 33 represented the Society. He has not executed the Sale Deed in his personal or individual capacity.
65) It has been pleaded in the plaint that Defendant No.2 was the President of the Society during the period 1999-2005. Sale Deed at Ex.P.2 was executed in favour of Defendant No.1 on 03.03.2003. Thus, it is clear that, at the time of execution of the Sale Deed in favour of Defendant No.1, Defendant No.2 was the President of the Society. In that eventuality, whatever the acts that were done by Defendant No.2 on behalf of the Society are binding on the Society.
66) In order to constitute fraud either Society or its agent shall have played fraud on Defendant No.1 or Defendant No.1 shall have played fraud on the Society as envisaged in Section 17 of the Indian Contract Act, 1872. In the present case, Society is trying to draw a line between President and the O.S.NO.3889/2010 34 Society and to project the President as independent of the Society by contending that Defendant No.1, in collusion with Defendant No.2, has obtained Sale Deed.
67) If it is hypothetically assumed that Defendant No.2 committed fraud on the Society, the commission of fraud cannot be attributable to Defendant No.1 unless the involvement of Defendant No.1 is established. In the present suit, there are no materials before the Court to say that Defendant No.1 played fraud upon the Society. Similarly, to say that Defendant No.2 committed fraud on the Society, no materials have been placed by the Society. On the contrary, there are no materials to say that action has been taken by the Society against the President and the Executive Committee for the alleged fraud allegedly committed by the President or the Executive Committee.
O.S.NO.3889/2010 35
68) Evidence of PW.1, the Secretary of the Society, does not disclose what type of fraud has been committed by Defendant No.1 in securing the Sale Deed from the Society.
69) PW.1 has specifically deposed that Defendant No.2 was the President of the Society during the year 2002-03. He has further deposed that Defendant No.2 executed Sale Deed in favour of Defendant No.1 when he was the President of the Society.
70) Thus, it would be clear that there are no material particulars in the pleadings regarding the alleged fraud and no oral evidence has been adduced stating the particulars and manner of committing the alleged fraud. On the contrary, it has been clear that no action was taken against Defendant No.2 for the alleged fraud alleged to have been committed by him.
O.S.NO.3889/2010
36
71) In Patel Tippeswamy vs. Smt.
Gangamma and Others, [2002(3) Kar.L.J.
512B], the Hon'ble High Court of Karnataka was pleased to hold that ".... A party pleading fraud and misrepresentation in respect of a transaction must give material particulars of allegations, and in absence of such particulars, his plea is to be rejected..."
72) In Ranganayakamma and Another vs K.S.Prakash (deceased) by L.Rs and Others, 2006(3) Kar.L.J. 177A (DB)], the Hon'ble High Court of Karnataka was pleased to hold that "... General allegation without particulars are not sufficient".."
73) In Mariyappa K.S. vs. Siddalinga Shetty, 1989(1) Kar.L.J. 150 (DB)], the Hon'ble High Court of Karnataka was pleased to hold that ".. Absence of material particulars regarding fraud O.S.NO.3889/2010 37 and collusion, it is not possible to hold that plaint contains necessary averments as to fraud and collusion..."
74) Society has placed reliance on the judgment of the Hon'ble Supreme Court in the case of S.P.Chengalvaraya Naidu (Dead) vs. Jagannath (Dead) by L.Rs., [AIR 1994 SC 853], wherein the Hon'ble Supreme Court was pleased to hold that "judgment or decree obtained by playing fraud on the court is a nullity".
75) It is true that 'fraud' vitiates all solemn transactions. However, before holding that fraud is committed, the same shall be proved by giving material particulars and by placing cogent evidence. In absence of proving the alleged fact of fraud, it cannot be said that fraud is committed. Averment in plaint that Defendant No.1, in collusion with Defendant No.2, has obtained the Sale Deed in O.S.NO.3889/2010 38 his favour is a mere assertion, on the basis of which, no inference can be drawn that fraud has been committed in obtaining the Sale Deed by Defendant No.1 in absence of proving the said fact.
76) It is the contention of the Society that Defendant No.1 is not the member of the Society and he is not eligible for allotment of the site.
77) Defendant No.1 has specifically contended in his written statement that his membership number as given by the Society is '586'.
78) Society contends that membership number '586' does not belong to Defendant No.2 and therefore, entire transaction of execution and registration of Sale Deed dated 03.03.2003 is vitiated by fraud.
O.S.NO.3889/2010 39
79) Sale Deed at Ex.P.2 [Ex.D.1] executed in favour of Defendant No.1 by the Society recites that Defendant No.1 is the member of the Society and his membership is '586'.
80) Society has produced the Membership Register at Ex.P.6 and Membership Register Extract relating to membership number 586/SL at Ex.P.6(a). Ex.P.6(a) clearly shows that the name of the member has been left blank in the said membership number.
81) PW.1 has been cross examined regarding the said aspect of the matter by Defendant No.1. He has deposed that it is not true to suggest that the Society has given membership number '586' to Defendant No.1. He has deposed that said membership number has not been given to any one. He has further deposed that membership number '587' onwards have been given to some O.S.NO.3889/2010 40 other persons. He has also deposed that there are no rules in the Society to give the next number by leaving blank of earlier number.
82) Ex.P.6 makes it clear that previous membership number of 586 was given to some other person, and membership number 587 onwards have been given to various persons. In fact, as deposed by PW.1, there is no provision in the bye-laws to leave the previous membership number blank and to give the next membership number. No explanation has been forthcoming in the plaint as well as in the evidence of PW.1 to the effect that why such membership number is left blank. Be that as it may. Sale Deed at Ex.P.1 makes it clear that Defendant No.1 is a member of the Society and his membership number is '586'. That being the case, there is no substance in the contention of the Society that Defendant No.1 is not the member of the Society.
O.S.NO.3889/2010 41
83) It is the further contention of the Society that no resolution was passed by the Board of the Society authorizing Defendant No.2 to execute the Sale Deed in favour of Defendant No.1 and that no sale consideration was paid by Defendant No.1.
84) It is important to note that it is the Society and Society only can say that whether resolution was actually passed or not in execution of the Sale Deed in favour of Defendant No.1 and other than Society, no one can say about the affairs of the Society.
85) Bye-laws requires that all the books and documents shall be maintained by the Secretary, who is the Chief Executive Officer of the Society as provided in Bye-laws.
86) Defendant No.1 has produced the Sale Deed, encumbrance certificate, M.A.R. No.19, khatha O.S.NO.3889/2010 42 extract, khatha certificate, and tax paid receipts at Exs.D.1 to D.23 in order to show that he is the absolute owner in possession of the suit schedule property under registered Sale Deed dated 03.03.2003 and that Sale Deed has been acted upon.
87) Sale Deed at Ex.P.1 specifically recites that "vendee being one such member applicant, has been allotted a Site No.616, in 30 x 50 feet, dimension at the above layout for consideration amount of Rs.38,848/- and the vendee has paid the said amount from time to time which vendor Society hereby acknowledge subject to the condition that the additional charges towards establishment of amenities and other funds created....."
88) Society has not produced share register; nomination register; receipt book; voucher; cash O.S.NO.3889/2010 43 book; general ledger; site deposit ledger; register of allotment of sites; property register; minutes of book of the General Body meetings; minutes of book of the Board of Directors meeting; and audit rectification register. These documents are required to be maintained by the Secretary as contemplated in Bye-laws.
89) Had the Society produced such documents and had they disclosed that Defendant No.1 is not the member of the Society and that he had not paid the consideration amount and that no resolution was passed to execute the Sale Deed, then it would be relevant to say that Defendant No.1 is not the member of the Society and that he has not paid the consideration amount and that Sale Deed has been executed by Defendant No.2 in favour of Defendant No.1 without there being passing of resolution.
O.S.NO.3889/2010 44
90) Society could have produced share register, nomination register, receipt book, voucher, cash book, general ledger, site deposit ledger, register of allotment of sites, property register, minutes of book of the General Body meetings, minutes of book of the Board of Directors meeting, and audit rectification register, and on production of the said documents, if they disclose that no such membership number as mentioned in Ex.P.1 [Ex.D.1] was given to Defendant No.1, then it could be said that membership number '586/SL' does not belong to Defendant No.1.
91) It is to be noticed that Society has filed Memo along with list of names and addresses of the allottees before the Hon'ble High Court of Karnataka in WP No.40994/2004 as per the report of its Board of Directors dated 17.06.2006 [said document has been marked as Ex.D.1 in O.S.No.3880/2010 filed by the Society]. In the list of O.S.NO.3889/2010 45 allottees, at Sl.No.371 Defendant No.1 has been shown as allottee of Site No.616, which is the suit schedule property.
92) That being the case, no occasion has arisen to say that Defendant No.1 is not the member of the Society and that no consideration was paid to the Society and that the Sale Deed was executed by Defendant No.2 without there being any resolution. When the Society challenges the Sale Deed executed in favour of Defendant No.1 by Defendant No.2 on the ground of fraud, it is its bounden duty to produce all such documents. On the contrary, all such documents have been withheld by the Society.
93) Section 114(f) and (g) of the Indian Evidence Act, 1872 specifically state that the Court may presume that the common course of business has been followed in particular cases and that evidence which could be and is not produced would, if O.S.NO.3889/2010 46 produced, be unfavourable to the person who withholds it.
94) In absence of production of such documents, presumption would naturally arise that common course of business has been followed in the case of Defendant No.1 and in that view, it can be fairly said that if said documents were produced by the Society, the same would be unfavourable to the Society. In that view, there is no reason to accept the Society's contention that no resolution was passed by the Society for execution of the Sale Deed by Defendant No.2 in favour of Defendant No.1 and that no consideration was paid to the Society.
95) It is to be noticed that Bye-law No.53 makes it clear that the Society shall allot sites/flats/houses only to members who are eligible as per bye-law No.10. Bye-law No.10 deals with rights of members.
O.S.NO.3889/2010 47 It states that the member does not already own a site or plot or house. A plain reading of Bye-laws, it would make it clear that there is no specific bar in the Bye-laws to allot the sites to non-members. Be that as it may.
96) In Binny Mill Labour Welfare House vs. D.R.Mruthyunjaya Aradhya, [ILR 2008 Kar 2245], the Hon'ble High Court of Karnataka was pleased to hold thus :
"36. .... In this regard it is useful to refer to a judgment of the Supreme court in the case of Co-Operative Central Bank Ltd. And Ors. V. Additional Industrial Tribunal, Andhra Pradesh, Hyderabad and Ors. Wherein it has been held as under :
The bye-laws of a co-operative society framed in pursuance of the provisions of the Act cannot be held to be law or to have the force of law. It has no doubt been held that, if a statute gives power to a Government or other authority to make rules, the rules so framed have the force of Statute and are to be deemed to be incorporated as a part of the statute. That principle, however, does not apply to bye- law of the nature that a co-operative society is empowered by the Act to make. The bye-laws that are contemplated by the Act can be merely those which govern the internal management, business or administration of a society. They are of O.S.NO.3889/2010 48 the nature of the Articles of Association of a company incorporated under the Companies Act. They may be binding between the persons affected by them, but they do not have the force of a statute.
37. In view of the aforesaid authoritative pronouncement of the Supreme court the said bye-law cannot be equated to law, rules or regulations. The said bye-laws only govern the internal management, business or administration of a society.
They are in the nature of Articles of Association of a Company incorporated under the Companies Act. It has no statutory force. Any act of the society contrary to the said bye-law ipso facto do not render the said act void and without authority. When the society enters into a contract with third parties or outsiders those outsiders are in no way bound by the said bye-law. The society is a body corporate by name having a perpetual succession and a common seal and when a contract is entered into by the office bearers of the society i.e., the President, the Secretary and the Treasurer on behalf of the society with the third parties, it is binding on the society even though it is contrary to the bye-law....."
97) Sale Deed recites that vendee acknowledges the possession of the suit schedule property. In pursuance of Sale Deed executed in favour of Defendant No.1, khatha of suit schedule property has been entered in the name of Defendant No.1 and Defendant No.1 paid tax to BBMP.
O.S.NO.3889/2010 49
98) After institution of the suit, plaint prayer has been substantially amended by the Society to the effect that Defendant No.1 be directed to handover the vacant possession of suit schedule property to the Society.
99) Having considered above aspects of the matter, it can be fairly said that Society is not in lawful possession and enjoyment of the suit schedule property as on the date of the suit. Hence, question of interference by Defendant No.1 does not arise at all; accordingly, I answer the above Issues.
100) Issue No.9 : Society's contention is that cause of action for the suit arose during March 2009, when the present President of the Society got the knowledge about the execution and registration of the fraudulent, fabricated and collusive Sale Deed registered in the name of Defendant No.1.
O.S.NO.3889/2010 50
101) Article 59 of the Limitation Act, 1963 states as follows :
Description of suit Period of Time from which period limitation begins to run
59. To cancel or set Three Years When the facts entitling aside an instrument or the Plaintiff to have the decree or for the instrument or decree rescission of a contract cancelled or set aside or the contract rescinded first become known to him.
102) Society seeks the declaration of the Sale Deed as null and void on the ground of fraud. It is to be noticed that no such alleged fraud allegedly committed by Defendants has been proved by the Society in the instant suit. Hence, fact of alleged fraud as contended by the Society cannot be availed of by the Society as knowledge of execution of Sale Deed.
103) Sale Deed at Ex.P.1 [Ex.D.1] makes it abundantly clear that Society has registered the Sale Deed in favour of Defendant No.1 through its O.S.NO.3889/2010 51 President, Defendant No.2 and same has been got registered in the Office of Senior Sub-Registrar, Yelahanka, Bangalore vide Document No.BNG(U)- YLNK/12448/2002-03/1-20.
104) Section 3 of the Transfer of Property Act, 1882 deals with the word "Notice". It states that "A person is said to have notice" of a fact when he actually knows that fact, or when, but for wilful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it."
105) Explanation-I says that where any transaction relating to immovable property is required by law to be and has been effected by a registered instrument, any person acquiring such property shall be deemed to have notice of such instrument as from the date of registration.
O.S.NO.3889/2010 52
106) Explanation-II says that any person acquiring any immovable property shall be deemed to have notice of the title of any person who is for the time being in its actual possession.
107) Explanation-III says that a person shall be deemed to have notice of any fact if his agent acquires notice thereof while acting on his behalf in the course of business to which that fact is material.
108) Proviso to Explanation III says that if the agent fraudulently conceals the fact, the principal shall not be charged with notice thereof as against any person who was a party to or otherwise cognizant of the fraud.
109) Section 229 of the Indian Contract Act, 1872 provides that "any notice given to or information obtained by the agent, provided it be given or obtained in the course of the business transacted O.S.NO.3889/2010 53 by him for the principal, has the same legal consequence as if it had been given to or obtained by the principal".
110) Thus, it would be clear that registration of a document is notice of all the facts stated in that document. Actual possession of the immovable property operates as constructive notice of the title to property. Notice to agent amounts to notice to principal.
111) In the present suit, Sale Deed was executed on 03.03.2003, which contains the recital that possession of suit schedule property was transferred to Defendant No.1. Society's only plea is that Sale Deed has been obtained by fraud. It has failed to prove the alleged plea of fraud. In that circumstance, execution and registration of Sale Deed by Defendant No.2 being the President of the Society shall be deemed to have been within the O.S.NO.3889/2010 54 knowledge of the Society as on the date of execution and registration of the Sale Deed.
112) In Lachhman Dass vs. Jagat Ram, [(2007) 2 SCR 980], the Hon'ble Supreme Court was pleased to hold that "the execution of a registered deed of sale is also to be treated as a notice in terms of Section 3 of the Transfer of Property Act, 1882."
113) Thus, Society, being party to the Sale Deed, cannot say that it is ignorant about the Sale Deed. In that view, it ought to have filed the suit within three years from the date of execution of the Sale Deed. However, same has been filed after lapse of 7 years, and possession has been sought after lapse of 11 years by amending the plaint.
114) Society's contention is that the present president came to the knowledge of the Sale Deed O.S.NO.3889/2010 55 during the March 2009. Said contention has been falsified by list of allottees produced before the Hon'ble High Court of Karnataka in WP No.40994/2004. It makes it clear that as per the report of the Board of Directors of the Society dated 17.01.2006, Society filed list of the names of the allottees before the Hon'ble High Court of Karnataka. Said list includes the name of Defendant No.1 also. In that view, there is no substance in the contention of the Society that it came to know about the Sale Deed in March 2009.
115) Assuming that Society did not notice the execution of Sale Deed on 03.03.2003, if the report dated 17.01.2006 of the Board of Directors of the Society is considered as date of knowledge, suit ought to have been filed on or before 17.01.2009. However, the same has been filed on 07.06.2010 for declaring it as absolute owner of suit schedule property, and possession has been sought for in the O.S.NO.3889/2010 56 year 2014. In that count also, suit filed by the Society is barred by limitation; accordingly, I answer the above issue in the affirmative.
116) Issue No.8 : Since during the trial of the suit, Defendant No.2 has passed away, the question of considering the said issue does not arise at all.
117) Additional Issue framed on 23.06.2014 :
Society seeks alternative relief of possession if Defendant No.1 is found to have been in possession of suit schedule property. As observed above, Defendant No.1 has been in lawful possession of suit schedule property on the basis of the Sale Deed validly executed by the Society. Society has failed to prove that Sale Deed is vitiated by fraud.
Moreover, suit has been filed after lapse of 7 years and possession has been claimed after lapse of 11 years as observed above and same has been barred by limitation. In that view, Society does not deserve O.S.NO.3889/2010 57 for the relief as prayed in the plaint, accordingly, I answer the above issues in the negative.
118) Issue No.10 : For the foregoing discussion and findings on Issues No.1 to 9 and additional Issue framed on 23.06.2014, I proceed to pass the following :
ORDER (1) Suit filed by Plaintiffs is hereby dismissed.
(2) No order as to costs.
(3) Draw Decree accordingly.
(Dictated to the Judgment Writer directly on computer, typed matter corrected and then pronounced by me in open court, on this the 2nd day of November 2021) (RAMA NAIK) VI Addl.City Civil & Sessions Judge Bengaluru City O.S.NO.3889/2010 58 ANNEXURE I. List of witnesses examined on behalf of :
(a) Plaintiff's side :
P.W.1 - Sri.K.A.Sudhakar, dtd.13.11.2019
(b) Defendants side :
D.W.1 - Sri.H.S.Nagaraj, dtd. 08.02.2021 II. List of documents exhibited on behalf of :
(a) Plaintiff's side :
Ex.P.1 Resolution dtd.16.04.2010 Ex.P.2 Certified copy of Sale Deed dtd.03.03.2003 Ex.P.3 Office copy of notice dtd.31.07.2009 Ex.P.4 Copy of Bye-law Ex.P.5 Returned RPAD Cover Ex.P.6 Membership register extract at Sl.No.586/SL Ex.P.6(a) Photocopy of Ex.P.6
(b) Defendants side :
Ex.D.1 Certified copy of Sale Deed dtd.03.03.2003 Ex.D.2 Encumbrance Certificate for the period from 01.04.2004 to 28.10.2017 Ex.D.3 Encumbrance Certificate for the period from 01.04.2015 to 17.02.2021 Ex.D.4 House Tax Assessment for the year 2003- 2004 (M.A.R.No.19 (Rule 57) O.S.NO.3889/2010 59 Ex.D.5 House Tax Assessment for the year 2015- 2016 Ex.D.6 Khatha Certificate dtd.24.07.2015 issued by BBMP Ex.P.7 Tax paid Receipts - 17 Nos. To Ex.D.23 VI Addl.City Civil & Sessions Judge Bengaluru City