K.S.W.H.Corporation vs Narayana Poduval on 17 February, 2010

[Cites 9, Cited by 0]

Kerala High Court

K.S.W.H.Corporation vs Narayana Poduval on 17 February, 2010

The Kerala State Warehousing Corporation, an instrumentality of the State and its Senior Assistant Manager at Payyannur, defendant Nos. 1 and 2 in the trial court are the appellants in this Second Appeal.

2. The following substantial questions of law are framed for a decision:

                 (i)    Whether transfer of property by

           office bearers of a          Co-operative     Society

violating Rule 54(2) of the Kerala Co-operative Societies Rules, 1969 (for short, "the Rules") is legally sustainable?



                 (ii)   Whether there is actual transfer of

           properties     belonging to the Society under

           Ext.A1 or whether there is only an admission

           of right of respective parties regarding their

           properties as per Ext.A1 which is not a

           registered document?

S.A. No.354 of 1994

                                    -: 2 :-




                     (iii) Whether    the terms of Ext.A1,

               compromise     is  enforceable   without   an

               executable decree?

Parties are referred to as plaintiffs and defendants as in the trial court.

3. Litigation started in the year 1965, with Sekhara Poduval, father of plaintiff No.1 and defendant Nos.6 to 10 and maternal grand father of plaintiff No.2 instituting O.S. No.319 of 1965 in the local Munsiff's court against the Payyannur Tiles and Bricks Workers Industrial Society (for short, "the Society") which is the predecessor-in-interest of appellant No.1/defendant No.1 seeking decree for prohibitory and mandatory injunction. That suit concerned three items of properties - 82 cents in R.S.No.103/3, 1.28 acres in R.S.No.103/4 and 10 cents in R.S. No.96/1. Mandatory injunction prayed for was that the Society may be directed to demolish structures put up by it in a portion of 82 cents in R.S. No.103/3. Learned counsel on both sides tell me that there was no dispute concerning the 1.28 acres in R.S. No.103/4 which admittedly belonged to the Society and the 10 cents in R.S. No.96/1 which admittedly belonged to Sekhara Poduval. Dispute concerned 82 S.A. No.354 of 1994 -: 3 :- cents in R.S. No.103/3. Sekhara Poduval claimed that the said property belonged to his father who obtained it from Sumithra Ammal on leasehold right. While so one Saimon is stated to have acquired right over the disputed property from Sumithra Ammal as per Ext.B1. Right of Saimon was sold in court auction and purchased by one Pakkar. He executed Ext.B2, assignment deed in favour of Thambayi Amma who as per Ext.B7 assigned the same to the Society. During the pendency of that suit Sekhara Poduval died and plaintiff No.1 and defendant Nos.6 to 10 were impleaded as additional plaintiffs. While that suit was pending there was a compromise between plaintiffs and the Society represented by its former and then Presidents. As per the terms of the compromise, of the 82 cents in R.S. No.103/3, 11 cents was given to the Society which recognised right of plaintiffs in O.S. No.319 of 1965 regarding the remaining 71 cents in R.S. No.103/3. That suit was disposed of in terms of that compromise. The Liquidator appointed for the Society executed Ext.B5, assignment deed in favour of appellant No.1/defendant No.1. While so apprehending trespass into the said 71 cents in R.S. No.103/3 plaintiffs filed the present suit for prohibitory injunction. They also filed an application for temporary S.A. No.354 of 1994 -: 4 :- injunction against defendant Nos.1 and 2 trespassing into the 71 cents and constructing buildings thereon. That application was opposed by defendant Nos.1 and 2 stating that construction of buildings have already started. Learned Munsiff dismissed the application which the appellate court confirmed in the Civil Miscellaneous Appeal. Matter was brought to this Court in C.R.P. No.1023 of 1989. This Court disposed of the CRP granting permission to the plaintiffs to amend the plaint incorporating a prayer for recovery of possession. Accordingly plaint was amended to incorporate a prayer for recovery of possession of 43 cents out of the said 71 cents where according to the plaintiffs, defendant Nos.1 and 2 trespassed and constructed buildings. The said 71 cents which plaintiffs claimed title and possession is described in the A schedule to the plaint while the 43 cents out of the said 71 cents allegedly trespassed upon by defendant Nos.1 and 2 is described in plaint B schedule. Now as it stands plaintiffs' prayer is for recovery of possession of plaint B schedule after demolition of the structures thereon and injunction in respect of the entire 71 cents. Defendant Nos.1 and 2 contended that they are not aware of the transactions prior to the Liquidator assigning the property in their favour as per S.A. No.354 of 1994 -: 5 :- Ext.B5 and that compromise if any in O.S. No.319 of 1965 is not valid or binding on them. Defendant Nos.1 and 2 do not admit title of Sekhara Poduval over the suit properties. According to defendant Nos.1 and 2, Sekhara Poduval had no possession as well. It is also their contention that 80 cents in R.S. No.103/3 and 2.30 acres in R.S. No.103/4 which were outstanding in the possession of Thambayi Amma on jenm right was acquired by Saimon as first above stated. They also stated the derivation of title leading to Ext.B5, assignment deed in their favour. Trial court found, so far as the compromise and decree in O.S. No.319 of 1965 is concerned (Ext.A1 is the certified copy of compromise and decree) that as it created title over the disputed item of property in favour of plaintiffs and defendant Nos.6 to 10, it required registration in view of Section 17 of the Registration Act and in the absence of such registration Ext.A1 cannot have any legal effect. It was also found that for entering into a compromise and effecting transfer of property belonging to the Society it required previous sanction of the general body of the Society and the Registrar of Co-operative Societies as provided in Section 54(2) of the Rules, compromise as per Ext.A1 is without obtaining such sanction and hence is invalid and not S.A. No.354 of 1994 -: 6 :- binding on the Society. Title of defendant No.1 over the disputed property as per Ext.B5 was upheld and the suit was dismissed. Plaintiffs took up the matter in appeal. Learned Sub Judge was of the view that in so far as Ext.A1 did not confer title on plaintiffs and defendant Nos.6 to 10 but only recognised their pre-existing title and since the compromise was in respect of subject matter of O.S. No.319 of 1965 registration was not required under Sec.17 of the Registration Act. It was also found that disposition effected by the President of the Society as per Ext.A1 if at all without prior sanction of the general body of the Society and Registrar is only voidable in nature which is not set aside in accordance with law and until set aside it is binding on the Society. It was held that defendant No.1 did not acquire title over the suit property. Title and interest of plaintiffs and defendant Nos.6 to 10 in the suit property was upheld. It was also found that possession of defendant No.1 of plaint B schedule did not in any way affect title of plaintiffs and defendant Nos.6 to 10 and accordingly recovery of possession of B schedule was granted. First appellate court however directed that decree in favour of plaintiffs will not in any way affect the right of defendant No.1 to move for acquisition of plaint B schedule where according to S.A. No.354 of 1994 -: 7 :- it structures have already been put up. Judgment and decree of first appellate court are challenged in the Second Appeal on the substantial questions of law framed and stated above. It is argued by learned counsel for defendant Nos.1 and 2 that findings entered by the first appellate court are erroneous. According to the learned counsel Ext.A1 is not binding either on the Society or its assignee, defendant No.1. Learned counsel would argue that going by the compromise entered as per Ext.A1 it conferred title on the plaintiffs and defendant Nos.6 to 10 which otherwise they did not have and hence registration under Sec.17 of the Registration Act was necessary for Ext.A1. In so far as it is not registered it cannot affect the right of the Society as per Sec.47 of the Registration Act. Learned counsel has taken me through Rule 54(2) of the Rules and contended that in the absence of previous sanction of the general body of the Society and the Registrar property of the Society could not have been disposed of and hence the transaction as per Ext.A1 is void. Learned counsel for plaintiffs would contend that in so far as Ext.A1 only recognised the pre-existing right of plaintiffs and defendant Nos.6 to 10, there was no transfer of title and possession as per Ext.A1 and in so far as compromise was in respect of subject S.A. No.354 of 1994 -: 8 :- matter of O.S. No.319 of 1965 registration of Ext.A1 was not required in view of Sec.17(2)(vi) of the Registration Act. Learned counsel has placed reliance on the decisions in Som Dev v. Rati Ram ([2006] 10 SCC 788) and K. Raghunandan v. Ali Hussain Sabir ([2008] 13 SCC 102) in support of her argument. It is argued by learned counsel that there is no contention for defendant Nos.1 and 2 that President of the Society was incompetent to enter into any disposition on behalf of the Society and hence Ext.A1, compromise cannot be challenged on the ground that President of the Society was incompetent to do so. It is also argued that even if previous sanction of the general body of the Society and the Registrar as stated in Rule 54(2) of the Rules was required that did not make the compromise as per Ext.A1 void. At the worst it could only be said that the compromise was voidable at the instane of the Society or persons claiming under it and so far as Ext.A1 is not set aside in the manner known to law within the period of limitation provided under Article 58 of the Indian Limitation Act (for short, "the Act") title acquired by the plaintiffs and defendant Nos.6 to 10 as per Ext.A1 has become indefeasible on the expiry of the period of limitation provided under Article 58 of S.A. No.354 of 1994 -: 9 :- that Act.

4. Crucial aspect which requires consideration is Ext.A1. That, as I stated (supra) is a compromise entered into between plaintiffs and defendants in O.S. No.319 of 1965. It is not disputed that defendant Nos.1 and 2 herein are claiming title in defendants in O.S. No.319 of 1965. I stated the circumstances under which O.S. No.319 of 1965 was filed by the predecessor-in-interest of the plaintiffs and defendant Nos.6 to 10. As per Ext.A1, dispute regarding 82 cents in R.S. No.103/3 was resolved. It is stated in paragraphs 1 and 2 of Ext.A1 that in order to put an end to the litigation between the parties the compromise is entered into. Title and possession of the plaintiffs and defendants Nos.6 to 10 over a portion of the property comprised in R.S. No.103/3 (according to plaintiffs, 71 cents out of total extent of 82 cents) was accepted and acknowledged by the defendants in that case who admitted in Ext.A1, compromise that in respect of the said portion (71 cents according to the plaintiffs) they have no title or possession. So far as (the remaining) portion of the property comprised in R.S. No.103/3 towards west of the above said property is concerned (which according to the plaintiffs is the 11 cents over which title of S.A. No.354 of 1994 -: 10 :- Society was accepted), it was agreed by both sides that the said portion on the western side belonged to the defendants in that suit. In paragraph 4 of Ext.A1 it is stated:

" 103/3

(In respect of the eastern portion of R.S. No.103/3 which has been decided as belonging to the plaintiffs, defendant Society has released its jenm right over the said portion) (emphasis supplied) Referring to this clause in Ext.A1 learned Munsiff observed that there is a release of right over the property comprised in R.S. No.103/3 in favour of the plaintiffs. That amounted to a disposition and hence registration of Ext.A1 was required. First appellate court found referring to paragraphs 1 to 3 of Ext.A1 that it is not a case where defendants in O.S. No.319 of 1965 conferred any title over the property comprised in R.S. No.103/3 in favour of the plaintiffs therein S.A. No.354 of 1994 -: 11 :- but it is a case where the pre-existing title and possession of plaintiffs over a portion of the property in R.S. No.103/3 towards the eastern side referred to in Ext.A1 was acknowledged by the defendants. I have gone through Ext.A1 and do not find any reason to disagree with the view expressed by the first appellate court. It is clear from paragraphs 1 to 3 of Ext.A1 that title and possession of plaintiffs in O.S. No.319 of 1965 over a portion of the property comprised in R.S. No.103/3 towards the eastern side was acknowledged and accepted by the defendants therein and the remaining portion in that re-survey number towards the western side was found to be in the possession of the defendants. Paragraph 4 of Ext.A1 does not give any contra indication. The statement in paragraph 4 about transfer of jenm right is of no consequence. Even as per paragraph 4 of Ext.A1 what is allegedly transferred by the Society is its jenm right. Though Pakkar, predecessor-in-interest of the Society is said to have purchased right of Saimon in court auction there is no evidence to show that Pakkar got delivery of the property through court. As I stated paragraph 4 of Ext.A1 only stated that Society is transferring its jenm right over the property in favour of the plaintiffs. Right of landlord (jenm right) vested with the S.A. No.354 of 1994 -: 12 :- Government on 1.1.1970 in view of the provisions of the Kerala Land Reforms Act. Exhibit A1 is dated 18.11.1971. Hence as on that day Society had no jenm right over the disputed property to be transferred to the plaintiffs in O.S. No.319 of 1965. Hence also contention that Society has transferred its right to the plaintiffs in O.S. No.319 of 1965 cannot be sustained. Advocate Commissioner appointed in the present case has as per Exts.C1 and C1(a) identified the disputed property in accordance with Ext.A1 as forming part of the property on the eastern portion of the property referred to in Ext.A1. In the circumstances I am inclined to agree with the view expressed by the first appellate court that it is not a case of conferring title on the plaintiffs and defendant Nos.6 to 10 in respect of plaint A and B schedules in the present suit. In any view for two reasons registration of Ext.A1 is not required. Firstly, compromise is in respect of the subject matter of O.S. No.319 of 1965 and secondly, it is not as if as per Ext.A1 title has been conferred on plaintiffs and defendant Nos.6 to 10 and as I stated, it only recognised their pre-exiting title and possession in which case Ext.A1 does not require registration as held in the decisions in Som Dev v. Rati Ram and K.Raghunandan v. Ali Hussian Sabir S.A. No.354 of 1994 -: 13 :- (supra).

5. Then the question is whether the compromise as per Ext.A1 is valid in terms of the requirements of Rule 54(2) of the Rules. No doubt that Rule says that any transfer of property of the Society can be made only with the previous sanction of the general body of the Society and the Registrar. There is no evidence that any such sanction was obtained by the Society (defendants in O.S. No.319 of 1965) before compromise as per Ext.A1 was entered into. But there is no case for defendant Nos.1 and 2 that the President of the Society who represented that Society in Ext.A1 was incompetent to do so or transfer the property on its behalf. To decide that, bye- law if any of the Society was required to be perused. Unfortunately that bye-law is not before court. Therefore there is nothing on record and as I stated there is also no plea that President of the Society was incompetent to enter into Ext.A1 compromise.

6. So far as the contention regarding lack of previous sanction of the general body of the Society and the Registrar is concerned, I must bear in mind that first appellate court has found that it is not a case of transfer of property of the Society in favour of plaintiffs and defendant Nos.6 to 10 and instead it is only the S.A. No.354 of 1994 -: 14 :- acceptance of their pre-existing title. Hence prima facie Rule 54(2) has no application. Even if it is otherwise taken as contended by learned counsel for defendant Nos.1 and 2, I am unable to subscribe to the view that failure to obtain sanction as referred to in Rule 54(2) would make Ext.A1 void and non-est. At the worst it could be said that absence of sanction referred to in Rule 54(2) made Ext.A1 voidable at the instance of the Society or its assignee. If so, Ext.A1 had to be set aside in the manner known to law and within the time prescribed under Article 58 of the Act. Assuming that defendant Nos.1 and 2 were not aware of Ext.A1 and the decree which followed it before institution of the present suit, defendant Nos.1 and 2 got information about that from the plaint filed in the year, 1988. Defendant No.1 filed written statement on 20.9.1989. Even if period of limitation is taken from that day time provided for setting aside Ext.A1 has expired by 19.9.1992. Hence even if it is assumed that title obtained by the plaintiffs and defendant Nos.6 to 10 as per Ext.A1 (if at all it is considered to be a disposition of the property belonging to the Society) was defeasible at the instance of the Society, its successors or assignees that defeasible right became indefeasible on the expiry of the period of limitation S.A. No.354 of 1994 -: 15 :- prescribed. Therefore it is idle for defendant Nos.1 and 2 to now contend that Ext.A1 is not valid. Exhibit A1 has to stand. It is seen from Ext.A1 that accepting the compromise O.S. No.319 of 1965 was dismissed. Compromise has been accepted and acted upon by the court and hence as held in Salkia Businessmen's Association v. Howrah Municipal Corporation (2001 [3] KLT 113 SC) its terms have to be given effect to.

7. It is argued by learned counsel for defendant Nos.1 and 2 that if at all decree of the first appellate court is confirmed right of defendant Nos.1 and 2/appellants to move for acquisition of disputed property may be protected. First appellate court has made it clear that the decree will not prevent defendant Nos.1 and 2 moving for acquisition of the disputed property. That observation will stand. Learned counsel has made a further request that in view of the decision this Court has taken, appellants may be granted six months' time to move for acquisition. I do not consider it fit in this proceeding to grant time to move for acquisition. But I make it clear that proceedings in execution of the decree shall be initiated or if it is already initiated, continued only after a period of six months from this day during which time it will be open to appellants/defendant S.A. No.354 of 1994 -: 16 :- Nos.1 and 2 to move for acquisition if they are entitled to that course. Learned counsel has also requested that appellants/defendant Nos.1 and 2 may be permitted to move against the Society for appropriate reliefs. That is not a right or remedy which this Court has to grant in this proceeding. If appellants have any such right to proceed against the Society it is open to them to do so if they are so advised and are otherwise entitled to such a course.

8. Substantial questions of law framed are answered accordingly.

Resultantly, subject to the observations made by the first appellate court as to right of appellant Nos.1 and 2 to move for acquisition of the disputed property Second Appeal is dismissed with no order as to costs.

Interlocutory Application No.1155 of 2009 shall stand dismissed.

THOMAS P.JOSEPH, JUDGE.

vsv S.A. No.354 of 1994 -: 17 :- THOMAS P.JOSEPH, J.

================== S.A. NO.354 OF 1994 ========================== J U D G M EN T 17TH FEBRUARY, 2010

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