Bangalore District Court
) The Karnataka State Judicial vs ) Sri.S.Suresh Kumar on 10 January, 2022
KABC010170762010
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 10th day of January 2022
PRESENT: Sri. Rama Naik, B.Com., LL.B.,
(Name of the Presiding Judge)
O.S.No.6129/2010
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.6129/2010
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.S.SURESH KUMAR
S/o.Sri.siddagangappa
Aged abut 59 years
R/o No.1199/6, 1st Main Road
M.C.Layout, Vijayanagar
Bengaluru -560 040.
[By Pleader Sri. MSH]
2) SRI.J.GURU
S/o.late Sri.Jayadevappa
Aged about 44 years
R/o No.7, Pai Layout, Benniganahalli
Old Madras Road
Bengaluru -560 016.
[By Pleader Sri.R.H]
Date of Institution of the suit : 28.08.2010
Nature of the Suit : Declaration & Injunction
Date of commencement of
recording of evidence : 21.06.2012
O.S.NO.6129/2010
3
Date on which the Judgment
was pronounced : 10.01.2022
Year/s Month/s Day/s
Total Duration : 11 04 12
(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 22.11.2005 registered in the name of Defendant No.2 as Document No.BNG(U)- YLNK/9779/2005-06/1-10 at the Office of the Senior Sub-Registrar at Yelahanka, Bangalore and O.S.NO.6129/2010 4 Rectification Deed dated 25.01.2006 bearing No.BNG(U)-YLNK/11230/2005-06/1-7 are null and void and same are not binding on the Society, and consequential relief of permanent injunction restraining Defendants 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.2118-C measuring East to West 59+55/2 O.S.NO.6129/2010 5 feet and North to South 40 feet is carved out in the said residential layout.
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. As per resolution passed by Society, only the President or his appointed nominee could execute sale deed and a paid Secretary was never authorized to execute or sign on behalf of Society.
6) It is stated that Defendant No.1 was employed as Manager/paid Secretary of Society during the period between 02.11.1985 and 09.03.2006. Taking undue advantage of his post, Defendant No.1 created certain documents in favour of Defendant No.2. Defendant No.2, though O.S.NO.6129/2010 6 is the member of the Society, could not be allotted with suit schedule property as the same was already allotted to a member of the Society pursuant to a resolution passed by the Executive Committee of the Society. Allotment made in favour of Defendant No.2 is not preceded by any resolution.
7) It is stated that Defendant No.1 fraudulently issued an Allotment letter without any authority by mis-utilizing the seal of the Society. Space meant for the signature of the President has been left blank. In the Allotment letter, it has been stated that site has been allotted as per resolution dated 03.01.2002. Even no meeting of the Executive Committee was convened on the said date.
8) It is stated that Defendant No.1 fraudulently executed Sale Deed dated 22.11.2005 in respect of suit schedule property in favour of Defendant No.2.
O.S.NO.6129/2010 7 Defendant No.1 was not authorized to execute and sign the Sale Deed in favour of Defendant No.2; same was executed without the approval of the Executive Committee; and therefore, there was no occasion for the Society to know about the Sale Deed.
9) It is stated that Rectification Deed dated 25.01.2006 executed by Defendant No.1 in favour of Defendant No.2 is without any authority.
10) It is stated that Defendant No.2 did not pay any consideration amount to Society in respect of the sale transaction and hence, the entire transaction of execution and registration of Sale Deed in respect of suit schedule property is vitiated by fraud. There are gross irregularities in execution and registration of Sale Deed.
O.S.NO.6129/2010 8
11) It is stated that possession of suit schedule property still remains with the possession of Plaintiff. Sale Deed is not acted upon. Sale Deed executed by Defendant No.1 in favour of Defendant No.2 is a collusive transaction and same is not preceded by any resolution passed by the Society and hence, Sale Deed executed in the name of Defendant No.2 by Defendant No.1 is non-est in the eye of law.
12) It is stated that in the month of January 2006 the fraudulent transaction which took place between Defendants, came to the knowledge of the present President of the Society, and therefore, a criminal complaint was filed against Defendant No.1 and he was suspended from the service.
13) It is stated that signatures on documents created by Defendant No.1 got compared with the admitted signatures of the then President through O.S.NO.6129/2010 9 handwriting expert, who opined that the signatures found on the documents created by Defendant No.1 were not belonged to the then President.
14) It is stated that a detailed inquiry was held by the Assistant Registrar of Co-Operative Society, who found that allotment of sites made by Defendant No.1 in favour of his son-in-law, Sri.K.M.Somesh and few other persons were by means of forging the signatures of the then President.
15) It is stated that a dispute was raised before the Joint Registrar of Co-Operative Society by the Society challenging the sale transactions made in favour of Sri.K.M.Somesh, Smt.S.Ammula and Defendant No.2 and same was dismissed for non- prosecution. Appeal preferred before the Karnataka Appellate Tribunal [KAT] against the order passed on the recalling application is pending.
O.S.NO.6129/2010 10
16) It is stated that as Defendant No.2 asserts that he is in possession of suit schedule property, as an abundant caution, Society seeks for delivery of possession.
17) It is stated that the fact of fraudulent transaction made by Defendant No.1 was confirmed by the report submitted by the Inquiry Officer on 15.10.2008 and actual fraud committed by Defendant No.1 came to the knowledge of Plaintiff only after submitting the report by the Inquiry Officer. Hence, pray for setting aside the Sale Deed by decreeing the suit.
18) Summonses issued to Defendants No.1 and 2 were duly served. Defendant No.2 marked appearance through his advocate and filed his written statement. Defendant No.1 marked his appearance through his advocate and did choose not to file written statement.
O.S.NO.6129/2010 11
19) Defendant No.2, in his written statement, states that he is the member of the Society and he was allotted site in the normal course of business of Society.
20) It is stated that Defendant No.1 representing the Society executed Sale Deed dated 22.11.2005 and same was duly registered. Consideration amount paid was acknowledged by Society.
21) It is stated that he was not a party before the Inquiry Officer and Sale Deed dated 22.11.2005 was not questioned before the Inquiry Officer.
22) It is stated that he is in possession of suit schedule property. Suit filed without seeking possession is liable to be dismissed.
23) It is stated that suit filed by the Society is barred by limitation.
O.S.NO.6129/2010 12
24) It is further stated that suit is not properly valued and proper court-fee is not paid by the Society.
25) It is also stated that there is no cause of action to file the present suit. Hence, prays for dismissal of the suit.
26) Issues and Additional issues that have been framed by this Court are as under :
1) Whether Plaintiff's Society proves that it is absolute owner in possession and enjoyment of suit schedule property ?
2) Whethe Plaintiff's society further proves that document purporting to be sale deed dated 22.11.2005 registered n 23.11.2005 in the name of 2nd Defendnat is null and void and not binding on Plaintiff's society ?
3) Whethr valuation of suit property is improper and court Fee paid is insufficient ?
4) Whether there is no cause of action for present suit ?
O.S.NO.6129/2010 13
5) Whether Plaintiff's society is entitled for relief of declaration as praye d?
6) Whether Plaintiff's society is entitled for relief of permanent injunction as prayed ?
7) What decree or order ?
Additional Issues framed on 26.04.2019
1) Whether the Plaintiffs are entitled to the relief of possession of the suit schedule property ?
2) Whether the relief claimed by the Plaintiffs is barred by limitation ?
27) Sri.K.A.Sudhakar, the Secretary of the Society has been examined as PW.1 and Exs.P.1 to P.18 and P.18(a) have been marked on behalf of Society.
Defendant No.2 has got examined as DW.1 and got marked Exs.D.1 to D.11 on his behalf.
28) Heard learned Counsel for the Society, as well as Defendant No.2. Perused the records.
O.S.NO.6129/2010 14
29) My findings on above Issues and Additional Issues are as under :
Issue No.1 : In Negative Issue No.2 : In Negative Issue No.3 : In Affirmative Issue No.4 : In Affirmative Issue No.5 : In Negative Issue No.6 : In Negative Additional Issue No.1 : In Negative Additional Issue No.2 : In Affirmative Issue No.7 : As per final order, for the following :
REASONS
30) Issues No.1, 2, 5 and 6 : These issues being interrelated are taken together for discussion.
Suit is being for declaration that Society is the absolute owner of suit schedule property and for direction to Defendant No.2 to handover the vacant possession of suit schedule property to O.S.NO.6129/2010 15 Society. Consequent reliefs are for declaration that the registered Sale Deed dated 22.11.2005 and registered Rectification Deed dated 25.01.2006 executed by Defendant No.1 in favour of Defendant No.2 is null and void and same is not binding on the Society, and for permanent injunction restraining Defendants from interfering with peaceful possession and enjoyment of suit schedule property by the Society.
31) Ex.P.1, certified copy of Sale Deed dated 22.11.2005, makes it clear that Sale Deed has been executed by Defendant No.1 representing the Society in favour of Defendant No.2 and same has been registered in the office of Senior Sub- Registrar, Yelahanka, Bangalore vide Document No.BNG(U)-YLNK/9779/2005-06.
32) Sale Deed is sought to be declared as null and void and same is not binding on the Society. In O.S.NO.6129/2010 16 fact, Society has executed the Sale Deed in favour of Defendant No.2. In the Sale Deed, Defendant No.1, who was the Secretary of the Society, has represented the Society. Thus, Society is a party to the Sale Deed.
33) 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."
34) It is, therefore, clear that Society ought to have sought for cancellation of the Sale Deed instead of seeking declaration that the Sale Deed be declared as null and void and same is not binding on the Society.
O.S.NO.6129/2010 17
35) It is to be noticed that Society seeks possession of suit schedule property from Defendant No.2 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.
36) 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 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 O.S.NO.6129/2010 18 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. ..."
37) 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 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 O.S.NO.6129/2010 19 to get rid of the sale deed and Powers of Attorney....."
38) Thus, it can be conveniently said that even though Society seeks declaration that Sale Deed executed in favour of Defendant No.2 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.
39) In the present suit, Plaintiff, Karnataka State Judicial Employees House Building Co-Operative Society Limited, is shown as party twice. Plaintiff No.1 is represented by its Secretary, and Plaintiff No.2 is represented by its President.
O.S.NO.6129/2010 20
40) 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 22.11.2005. 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.
41) Ex.P.13 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 has taken the decision to institute a suit against 16 persons, who are alleged to have not obtained the membership of the Society and not paid the site O.S.NO.6129/2010 21 value, and instructed the Secretary to take further action in that regard.
42) In fact, no resolution, which specifically authorizes either the Secretary or the President to institute the suit against Defendant No.2 and to prosecute the matter on behalf of the Society, has been produced by the Society.
43) Ex.P.14 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".
44) 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 that "he shall be the Chief Executive Officer of the Society".
O.S.NO.6129/2010 22
45) 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 representatives 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.13 makes it clear that such authorization is conspicuously absent therein. Be that as it may. Bye-laws authorizes the Secretary to represent the Society in all litigations relating to the 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 O.S.NO.6129/2010 23 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.
46) Society has challenged the Sale Deed dated 22.11.2005 executed by it in favour of Defendant No.2 on the following grounds :
(a) Defendant No.1 fraudulently issued allotment letter in favour of Defendant No.2 without any authority of Society by misusing the seal of Society;
(a) Space meant for the signature of the President has been left blank in allotment letter;
(c) In allotment letter, resolution dated 03.01.2002 is shown to have been passed;
O.S.NO.6129/2010 24
(d) In fact, no resolution has been passed and no site has been allotted to Defendant No.2;
(e) Defendant No.1 fraudulently issued Possession Certificate dated 13.01.2006;
(f) Defendant No.1 fraudulently executed Sale Deed dated 22.11.2005 and Rectification Deed dated 25.01.2006 in favour of Defendant No.2;
(g) Sale Deed and Rectification Deed were executed without the approval of the Executive Committee;
(e) No possession of suit schedule property is handed over to Defendant No.2;
(f) No consideration has been paid to Society by Defendant No.2 in respect of sale of suit schedule property;
(g) Criminal case has been registered against Defendant No.1 for the fraud and forgery committed by him;
O.S.NO.6129/2010 25
(h) Forensic report has been obtained which discloses that signatures of the then President has been forged by Defendant No.1 in creating documents;
(i) Inquiry Report submitted fastens liability on Defendant No.1 stating the allotments of sites made in favour of son- in-law of Defendant No.1 and two others were illegal; and
(j) Sale Deeds executed in favour of son- in-law of Defendant No.1, Smt.S.Ammulu and Defendant No.2 were challenged and same were dismissed for non-prosecution. Appeal preferred is pending before KAT.
47) For the above grounds, Society seeks setting aside the Sale Deed executed in favour of Defendant No.2.
48) At this juncture, it would be relevant to go through the oral evidence of PW.1.
49) PW.1, in his cross examination, has deposed that the present suit is tried in respect of Site O.S.NO.6129/2010 26 No.2118-C. Sale Deed was executed in the name of Defendant No.2 on 22.11.2005 in respect of the said site. Sale Deed was executed by Sri.Suresh Kumar, when he was working as Secretary in Society.
50) It is further deposed that Defendant No.2 is the associated member of Society. He was made as associated member on 15.07.2005. Now also, he continues as associated member. His membership number is 1180/SLF. SLF is Sale Ledger Folio. 1682 is SDL of Defendant No.1 and same is site deposit ledger number. SLF and SDF books are available in the Society. Amount paid by Defendant No.2 regarding membership fee and site deposit has been mentioned in SLF and SDF. To that regard, Receipt Number is 7218. Defendant No.2 paid a sum of Rs.4,21,120/- towards the value of the site and membership fees. Said amount was credited to the account of Society.
O.S.NO.6129/2010 27
51) It is also stated that the purpose of the Society is to provide sites to all its members. Except voting right, all rights and facilities would be available to associated members. There is resolution book in the Society. Meetings were regularly held. No resolution book of 2005 has been produced. As per Bye-laws No.52G, the Secretary has power to sign all relevant documents on behalf of Society. Every year, auditing would be conducted and same would be confirmed and accepted in the annual general body meeting. The amount paid by Defendant No.2 has been shown in the audit report of 2005-06. The audit report of 2005-06 has been accepted in the annual general body meeting. No objection was raised by the members of the Society regarding the execution of sale deed executed in favour of Defendant No.2 in the general body meeting held in 2005-06.
O.S.NO.6129/2010 28
52) Evidence of PW.1 falsifies the case put-forth by Society in plaint that Defendant No.1 has fraudulently executed Sale Deed and Rectification Deed and that no sale consideration has been paid by Defendant No.2. On the other hand, evidence of PW.1 makes it clear that Defendant No.1 was the Secretary of Society; he has validly executed Sale Deed; sale consideration amount paid by Defendant No.2 has been credited to the account of Society and same has been shown in 2005-06 audit report, which has been accepted in the annual general body meeting of Society; and no member of the Society has objected to the Sale Deed executed in favour of Defendant No.2.
53) Society contends that allotment letter and possession certificate have been fraudulently created by Defendant No.1. It is to be noticed that such documents are not produced before the Court and moreover, no such relief has been sought for O.S.NO.6129/2010 29 relating to said documents. Hence, in absence of such documents and in absence of prayer in respect of such documents, the question of considering the pleadings regarding such documents does not arise.
54) Society further contends that Sale Deed and Rectification Deed do not precede with any resolution. In order to substantiate the said contention, it is the bounden duty of Society to produce the resolution book of the year 2005, however, the same has been withheld by Society. PW.1 has been specifically suggested that there has been resolution for execution of sale deed in the name of Defendant No.2 and in order to conceal such resolution, no resolution book of the year 2005 has been produced. Be that as it may. PW.1 has specifically deposed that Bye-laws No.52(g) authorizes the Secretary to sign all the relevant documents on behalf of the Society.
O.S.NO.6129/2010 30
55) Bye-laws No.52(g) reads as under :
"52. Duties of the Secretary -
(g) To sign all the documents for and on behalf of the society."
56) Thus, even assuming that no resolution was passed to execute the Sale Deed in favour of Defendant No.2, under the Bye-laws, Secretary is empowered to sign all such documents on behalf Society. This has been reiterated by PW.1 in his evidence.
57) It is further contended that Defendant No.2 could not be allotted with suit schedule property as the same had already been allotted to another member of Society.
58) It is to be noticed that PW.1 has specifically deposed that Defendant No.2 is a member of the Society. His membership number is 1180/SLF. He has deposited the site amount and same has been entered as 1682/SDL in site deposit ledger and O.S.NO.6129/2010 31 same has been credited to the account of Society. It is further deposed that site deposit made by Defendant No.2 has come in the audit report of the year 2005-06 and same has been approved by the annual general body meeting and sale deed executed in favour of Defendant No.2 has not been objected by any members of Society in annual general body meeting.
59) Moreover, Ex.D.1 produced by Defendant No.2 makes it clear that Defendant No.2 paid a membership fee and site deposit amount to Society on 15.07.2005.
60) If the Sale Deed had been executed in favour of any third party by the Society in respect of suit schedule property, Society would have produced the alleged sale deed and the person in whose name the alleged sale deed has been executed, would have been made as party to present suit.
O.S.NO.6129/2010 32 However, Society has chosen not to produce the alleged sale deed allegedly executed in favour of another member of Society in respect of suit schedule property and to make him as party to suit. Except evasive pleading, nothing has been placed by Society to show that a sale deed has already been executed in favour of another member in respect of suit schedule property. On the contrary, evidence of PW.1 makes it clear that sale deed has been validly executed by Society after receiving sale consideration in favour of Defendant No.2 and same has been accepted in the annual general body meeting. Hence, this Court finds no substance in the contention of Society that sale deed has already been executed in favour of another member in respect of suit schedule property.
61) Society contends that a police complaint has been initiated against Defendant No.1 and same has been registered in FIR No.43/2006, which is O.S.NO.6129/2010 33 pending for trial in CC No.8971/2007 for committing fraud and forgery.
62) Society has produced certified copies of police complaint dated 09.03.2006 lodged by the then President, Sri.C.Shivalingaiah against Defendant No.1 and his son-in-law, Sri.K.M.Somesh; FIR No.43/2006 registered by Yelahanka P.S; Panchanama; Charge-sheet in CC No.8971/07 along with report of Forensic Science Laboratory; and order-sheet at Exs.P.4 to P.9.
63) From the above documents, it would be clear that for the alleged fraud and forgery allegedly committed by Defendant No.1, a complaint has been lodged by Society and same has been registered as Crime No.43/2006 and charge-sheet has been filed against Defendants and others. Merely because charge-sheet has been filed against Defendants including Defendant No.2 it cannot be O.S.NO.6129/2010 34 said that Defendant No.2 has committed fraud in obtaining Sale Deed unless fraud is actually proved.
64) Society's contention is that Defendant No.1, in collusion with Defendant No.2, fraudulently executed Sale Deed in favour of Defendant No.1. 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.
65) 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."
66) Section 17 of the Indian Contract Act, 1872 defines 'fraud'. It is extracted as under :
O.S.NO.6129/2010 35 "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:
(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."
67) Thus, false assertion, active concealment, promise without intention of performing it, any other deceptive act, or any act declared as fraudulent would constitute 'fraud'.
68) 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.
O.S.NO.6129/2010 36
69) Sale Deed at Ex.P.1 goes to show that it has been executed by the Society. In the Sale Deed, Defendant No.1, being the Secretary of the Society, represented the Society. He has not executed the Sale Deed in his personal or individual capacity.
70) It has been pleaded in the plaint that Defendant No.2 was the Secretary of the Society during the period between 01.11.1985 to 09.03.2006. Sale Deed at Ex.P.1 was executed in favour of Defendant No.2 on 22.11.2005. PW.1 has reiterated the same facts. He has unequivocally deposed that Sale Deed executed by Defendant No.1 representing the Society has been approved in the annual general body meeting. In that eventuality, whatever the acts that were done by Defendant No.1 on behalf of the Society are binding on the Society.
O.S.NO.6129/2010 37
71) In order to constitute fraud either Society or its agent shall have played fraud on Defendant No.2 or Defendant No.2 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 Secretary and the Society and to project the Secretary as independent of the Society by contending that Defendant No.2, in collusion with Defendant No.1, has obtained Sale Deed.
72) If it is hypothetically assumed that Defendant No.1 committed fraud on the Society, the commission of fraud cannot be attributable to Defendant No.2 unless the involvement of Defendant No.2 is established. In the present suit, there are no materials before the Court to say that Defendant No.2 committed fraud on the Society, no materials have been placed by the Society, except O.S.NO.6129/2010 38 Defendant No. 2 has been shown as one of the accused in charge-sheet filed by police.
73) Society's further contention is that Inquiry officer, in his report dated 15.10.2008, has come to a conclusion that transactions and illegal allotments of sites made by Defendant No.1 in favour of his son-in-law and few other persons were by means of forging the signatures of the President of the Society. Society has produced Inquiry Report dated 15.10.2008 at Ex.P.15.
74) Ex.P.15 goes to show that an inquiry was conducted so far as eight charges levelled against Defendant No.1. From the said charges, Charge No.4 is relating to execution of Sale Deeds in favour of the members of Society, namely Sri.J.Guru [Defendant No.2), Smt.M.Ammulu and non-member, Sri.K.M.Somesh.
O.S.NO.6129/2010 39
75) It is to be noticed that inquiry and report relating to Charge No.4 states that even though Executive Committee did not allot any sites to members, Sri.J.Guru [Defendant No.2], Smt.S.Ammulu and non-member Sri.K.M.Somesh, Defendant No.1 informed the Sub-Registrar to register sites in their names. In the report, it is nowhere mentioned that on what basis Inquiry Officer has come to such conclusion. Opinion expressed in Inquiry Report is contrary to the proved facts in this case. Opinion expressed in Inquiry Report without any basis and that too in the absence of Defendant No.1, cannot be considered as evidence to rely upon. In that view, there is no reason to rely upon the Inquiry Report which is submitted in respect of the alleged fraud committed by Defendant No.1.
76) It is to be noticed that Society challenged the Sale Deed executed in favour of Defendant No.2 O.S.NO.6129/2010 40 before the Assistant Registrar of Co-Operative Societies and same came to be dismissed for non- prosecution. Against the order of dismissal of Recalling Application, Society preferred appeal before KAT. Exs.P.10 to 12 have substantiated the said fact. Nothing can be inferred from the said documents that Defendant No.2 has played fraud upon the Society in getting Sale Deed from the Society. At the most, it can be said that sale deed executed in favour of Defendant No.2 has been challenged and same has been dismissed for non- prosecution and appeal preferred against the order of rejection of recalling of order has been pending before KAT.
77) 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.
O.S.NO.6129/2010
41
78) 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..."
79) 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".."
80) 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.6129/2010 42 and collusion, it is not possible to hold that plaint contains necessary averments as to fraud and collusion..."
81) 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".
82) 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 fraudulently executed O.S.NO.6129/2010 43 Sale Deed in favour of Defendant No.2, 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.2 in absence of proving the said fact.
83) In Union of India vs. M/s Chaturbhai M. Patel & Co., [(1976) 1 SCC 747], the Hon'ble Supreme Court was pleased to hold as under :
"7. ... It is well settled that fraud like any other charge of a criminal offence whether made in civil or criminal proceedings, must be established beyond reasonable doubt:
per Lord Atkin in A.L.N. Narayanan Chettiyar v. Official Assignee, High Court, Rangoon."
84) It is the contention of the Society that no resolution was passed by the Board of the Society authorizing Defendant No.1 to execute the Sale Deed in favour of Defendant No.2 and there exists gross irregularities in execution of the Sale Deed.
O.S.NO.6129/2010 44
85) 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.2 and other than Society, no one can say about the affairs of the Society.
86) 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.
87) Defendant No.1 has produced Receipt, certified copies of the Sale Deed and Rectification Deeds, encumbrance certificate, Canara Bank pass book, tax paid receipt, photo and CD at Exs.D.1 to D.10 in order to show that he is the absolute owner in possession of the suit schedule property under registered Sale Deed and that Sale Deed has been acted upon.
O.S.NO.6129/2010 45
88) Rule-52 of the Bye-laws at Ex.P.14 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.
(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.
O.S.NO.6129/2010 46 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. "
89) 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.
O.S.NO.6129/2010 47 (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.
(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. "
90) Society has not produced any such share register; nomination register; receipt book for the year 2005; 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.
O.S.NO.6129/2010 48 These documents are required to be maintained by the Secretary as contemplated in Bye-laws.
91) If Society produces such documents and if they disclose that Defendant No.2 had not paid the consideration amount and that no resolution was passed to execute the Sale Deed and that suit schedule property was already allotted to other member, then it would be relevant to say that Defendant No.2 has not paid the consideration amount and that Sale Deed has been executed by Defendant No.1 in favour of Defendant No.2 without there being passing of resolution and that suit schedule property has already been sold to another member.
92) Society could have produced share register, nomination register, receipt book for the year 2005, voucher, cash book, general ledger, site deposit ledger, register of allotment of sites, property O.S.NO.6129/2010 49 register, minutes of book of the General Body meetings, minutes of book of the Board of Directors meeting, and audit rectification register. When the Society challenges the Sale Deed executed in favour of Defendant No.2 by Defendant No.1 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 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 O.S.NO.6129/2010 50 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.1 in favour of Defendant No.2 and that no consideration was paid to the Society.
95) Sale Deed at Ex.P.1 [Ex.D.2] makes it clear that the Defendant No.2 acknowledged the possession of the suit schedule property. In pursuance of Sale Deed executed in his favour, khatha of suit schedule property has been entered in the name of Defendant No.2 and he has paid property tax to BBMP. Photo produced by Defendant No.2 features the house
96) Moreover, DW.1 has specifically deposed that he has constructed a shed/house in the year 2005- O.S.NO.6129/2010 51 06 and has been residing in the said house after the death of his mother.
97) More so, after institution of the suit, plaint prayer has been substantially amended by the Society to the effect that Defendant No.2 be directed to handover the vacant possession of suit schedule property to the Society.
98) 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.2 does not arise at all; accordingly, I answer the above Issues.
99) Issue No.4 and Additional Issue No.2:
Society's contention is that cause of action for the suit arose in the month of January 2006, when someone called upon Society and informed the O.S.NO.6129/2010 52 alleged acts of Defendant No.1, and in the month of August 2008 when the Inquiry Officer submitted report dated 15.10.2018 on coming to the conclusion that Defendant No.1 forged and created the documents in respect of suit schedule property.
100) 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.
101) Society seeks the declaration of the Sale Deed as null and void on the ground of fraud. Society has placed reliance on the judgment of the Hon'ble Supreme Court in the case of MD.Noorul Hoda vs. Bibi Raifunnisa and ORS., [SLP (Civil) 25847/1995 dated 01.12.1995], wherein the Hon'ble Supreme Court was pleased to hold that O.S.NO.6129/2010 53 "the starting point of limitation is the date of knowledge of the alleged fraud".
102) It is to be noticed that no such alleged fraud allegedly committed by Defendants has been proved by the Society in the instant suit. Moreover, Inquiry Report submitted as per Ex.P.15 does not say that sale deed relating to suit schedule property is created. 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.2] makes it abundantly clear that Society has registered the Sale Deed in favour of Defendant No.2 through its Secretary, Defendant No.1, and same has been got registered in the Office of Senior Sub-Registrar, Yelahanka, Bangalore.
104) Section 3 of the Transfer of Property Act, 1882 deals with the word "Notice". It states that "A O.S.NO.6129/2010 54 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.
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 O.S.NO.6129/2010 55 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 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 O.S.NO.6129/2010 56 to property. Notice to agent amounts to notice to principal.
111) In the present suit, Sale Deed was executed on 22.11.2006, which contains the recital that possession of suit schedule property was transferred to Defendant No.2. 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.1 being the Secretary of the Society shall be deemed to have been within the 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 O.S.NO.6129/2010 57 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 5 years, and possession has been sought in the year 2019 after a lapse of 14 years by amending the plaint. In that view, it can be fairly said that suit filed by the Society is barred by limitation; accordingly, I answer the above issues in the affirmative.
114) Issue No.3 : It is the contention of Defendant No.2 that suit is not properly valued and proper court-fee is not paid.
115) Society valued the suit for Rs.8,00,000/- as on the date of suit for the relief of declaration under O.S.NO.6129/2010 58 Section 24(b) read with Section 38 of the KCF & SV Act and paid court-fee of Rs.51,125/- as per Valuation Slip dated 27.08.2010. It is to be noticed that, in the year 2019, plaint prayer has been amended and possession has been sought for. Valuation Slip dated 04.04.2019 filed after amendment of the plaint prayer goes to show that no court-fee has been paid for alternative relief of declaration and possession as sought for by way of amendment in the year 2019. On the contrary, it has been mentioned that Rs.51,150/- has already been paid on 27.08.2010.
116) Section 24(a) of the KCF & SV Act, makes it clear that "where the prayer is for a declaration and for possession of the property to which the declaration relates, fee shall be computed on the market value of the property".
O.S.NO.6129/2010 59
117) Prayer for possession has been sought for in the year 2019, in that circumstance, Society ought to have paid the court-fee on the basis of the market value of the suit schedule property as on the date of amending the plaint. In that view, it can be fairly said that court-fee paid by the Society is insufficient, accordingly, I answer the above issue in the affirmative.
118) Additional Issue No.1 framed on 26.04.2019 : Society seeks alternative relief of possession if Defendant No.2 is found to have been in possession of suit schedule property. As observed above, Defendant No.2 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 a lapse of 5 years and possession has been claimed after lapse of 14 years as observed above and same has O.S.NO.6129/2010 60 been barred by limitation. In that view, Society does not deserve for the relief as prayed in the plaint, accordingly, I answer the above issue in the negative.
119) Issue No.7 : For the foregoing discussion and findings on Issues No.1 to 6 and additional Issues framed on 26.04.2019, I proceed to pass the following :
ORDER (1) Suit filed by Plaintiffs is hereby dismissed.
(2) It is hereby ordered that Plaintiffs are liable to pay deficit court-fee on the basis of market value of suit schedule property as provided in Section 24(a) of the KCF & SV Act, as on the date of amending the plaint prayer for alternative relief of declaration and possession. If Plaintiffs fail to pay the same, office is hereby directed to calculate the requisite court fee O.S.NO.6129/2010 61 and to intimate the concerned Tahsildar to recover the same from Plaintiffs, as if it were the land revenue and remit the same to the Court account.
(3) No order as to costs.
(4) 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 10th day of January 2022) (RAMA NAIK) VI Addl.City Civil & Sessions Judge Bengaluru City O.S.NO.6129/2010 62 ANNEXURE I. List of witnesses examined on behalf of :
(a) Plaintiffs' side :
P.W.1 - Sri.K.A.Sudhakar, dtd.21.06.2012
(b) Defendants side : NIL ] D.W.1 - Sri.J.Guru, dtd.28.02.2020 II. List of documents exhibited on behalf of :
(a) Plaintiff's side :
Ex.P.1 Copy of Sale deed dtd.22.11.2005
exuecuted in favour of Defendant No.2 Ex.P.2 Copy of Rectification Deed dtd.25.01.2006 Ex.P.3 Encumbrance Certificate for the period from 01.06.1984 to 31.03.2004 Ex.P.4 Certified copy of Complaint dtd.09.03.2006 Ex.P.5 Certified copy of FIR dtd.09.03.2006 Ex.P.6 Certified copy of mahazar Ex.P.7 Certified copy of Charge Sheet Ex.P.8 Certified copy of Certificate dtd.24.02.2007 issued by Forensic Science Lab Ex.P.9 Certified copy of Order Sheet in CC.No.8971/2007 Ex.P.10 Certified copy of Order dtd.10.07.2009 passed by Joint Director of Co-Operative Societies O.S.NO.6129/2010 63 Ex.P.11 Certified copy of Order Sheet in Appeal No.602/2009 (Co-operative) Ex.P.12 Certified copy of Memorandum of Appeal in No.602/2009 (Co-operative) Ex.P.13 Certified copy of resolution dtd.16.04.2010 Ex.P.14 Certified copy of Bye-laws of House Building Co-operative Soceities Ex.P.15 Certified copy of Inquiry Report dtd.15.10.2008 Ex.P.16 Certified copy of List of sites allotted to members issued by Secretary of Plaintiff No.1 Ex.P.17 Certified copy of Share register and dividend register Ex.P.18 'Samyuktha Karnataka' newspaper dd.20.03.2012 Ex.P.18(a) Relevant portion of publication regarding issued of Notice
(b) Defendants side :
Ex.D.1 Receipt dtd.15.07.2005
Ex.D.2 Certified copy of Sale Deed dtd.22.11.2005
Ex.D.3 Certified copy of Rectification Deed
dtd.25.01.2006
Ex.D.4 Certified copy of Rectification Deed
dtd.20.02.2006
Ex.D.5 Electricity Bill
Ex.D.6 Encumbrance Certificate for the period
from 01.04.2004 to 12.02.2018
Ex.D.7 Canara Bank Pass Book of Defendant-2
O.S.NO.6129/2010
64
Ex.D.8 Property Tax Receipt for the year 2020-21
Ex.D.9 Photo
Ex.D.10 CD
Ex.D.11 Certified under Section 65B of Indian Evidence Act.
VI Addl.City Civil & Sessions Judge Bengaluru City O.S.NO.6129/2010 65