Bangalore District Court
) The Karnataka State Judicial vs ) Sri.Gangadhar R. Gurumath on 19 April, 2022
KABC010148452010
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 19th day of April 2022
PRESENT: Sri. Rama Naik, B.Com., LL.B.,
(Name of the Presiding Judge)
O.S.NO.3885/2010
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.3885/2010
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.GANGADHAR R. GURUMATH
S/o.Sri.G.M.Rudramuni
Aged about 51 years
R/o No.40, Vishwanath Rao Road
Madhava Nagar
Bengaluru -560 001.
[By Pleader Sri.MRC]
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
O.S.NO.3885/2010
3
Date on which the Judgment
was pronounced : 19.04.2022
Year/s Month/s Day/s
Total Duration : 11 10 12
(RAMA NAIK)
VI ADDL.CITY CIVIL & SESSIONS JUDGE
BENGALURU CITY
JUDGMENT
Suit is filed by Plaintiffs [for brevity 'Society'] to declare it as the absolute owner of suit schedule property and for direction to Defendant No.1 to hand over vacant possession of suit schedule property to it.
2) Further relief is to declare that the Sale Deed dated 26.09.2002 registered in the name of Defendant No.1 as Document No.BNG(U)- YLNK/1430/2002-03 at the Office of the Senior Sub-
O.S.NO.3885/2010 4 Registrar at Yelahanka, Bangalore on 26.03.2003 as null and void and is not binding on the Society, and consequential relief of permanent injunction restraining Defendants No.1 and 2 from interfering with peaceful possession and enjoyment of suit schedule property by it.
3) Facts, as stated in plaint, are that the Society is registered under the Karnataka Co-Operative Societies Act, 1959. Its incorporation is for the purpose of acquiring 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 land bearing various survey numbers of Allalasandra, Chikkabommasandra and Jakkur Plantation villages, Yelahanka Hobli, Bengaluru North Taluk. Suit schedule property viz., site bearing No.759/A measuring East to West 90 feet and North O.S.NO.3885/2010 5 to South 60 feet, is carved out in the residential layout formed by the Society.
5) It is stated that, as per the provisions of the Karnataka Co-Operative Societies Act, 1959 and Bye-laws of the 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. Defendant No.1, having knowledge that he is not eligible for allotment of site, in collusion with Defendant No.2, has got registered Sale Deed in respect of suit schedule property in his name. He derived no right, title or interest over suit schedule property and same remains with the Society. Entire transaction of O.S.NO.3885/2010 6 execution and registration of Sale Deed in respect of suit schedule property is vitiated by fraud.
7) It is stated that the execution and registration of Sale Deed 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.
8) It is stated that, as the possession of suit schedule property remains with the Society, Sale Deed 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.
9) It is stated that, as Defendant No.2 was the President of the Society during period between 1999 and 2005, every care has been taken by Defendants to see that the said collusive O.S.NO.3885/2010 7 transaction of execution of Sale Deed in respect of suit schedule property is not known to the Society.
10) It is stated that the present President of the Society took over the administration of the Society on 23.04.2008. In the context of few other fraudulent transactions in respect of certain other properties belonging to the Society, an inquiry was ordered by the Assistant Registrar of Co-Operative Societies, Bangalore. During the month of March 2009, when papers were being checked regarding the sites owned by the Society, the fraudulent transaction which took place between Defendants No.1 and 2 came to the knowledge of the present President of the Society.
11) It is further stated that the 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 name. If the O.S.NO.3885/2010 8 Sale Deed executed in favour of Defendant No.1 is not interfered with, the Society will be put to great hardship and injustice. Hence, pray for decree.
12) Defendants marked appearance through their respective counsel and filed their written statement.
13) Defendant No.1, in his written statement, states that suit is not maintainable since the Sale Deed is not sought to be cancelled within a period of limitation.
14) It is stated that suit is not maintainable under Section 70 of the Karnataka Co-Operative Societies Act, 1959 as the dispute raised by the Society is touching the business of the Society.
15) It is stated that, before execution of Sale Deed, the Society issued an Allotment Letter in O.S.NO.3885/2010 9 favour of Defendant No.1 and thereafter, Sale Deed was duly executed by the Society through its President after receiving entire sale consideration amount of Rs.1,60,000/-.
16) It is further stated that, in pursuance of the Sale Deed, Defendant No.1 is in possession of suit schedule property and Sale Deed has been acted upon.
17) It is also stated that suit filed, without paying proper court-fee, is liable to be dismissed. Hence, prays for dismissal of the suit.
18) 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 O.S.NO.3885/2010 10 of the sale consideration, the Secretary prepare the Sale Deed for and on behalf of the Society and same would be 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 the intending purchasers.
19) It is stated that he neither scrutinizes the application, nor processes the allotment, nor receives the sale consideration, and same is being done by the Secretary as per the bye-laws of the Society.
20) 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.
O.S.NO.3885/2010 11
21) 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.
22) It is stated that the 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.
23) 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.
24) It is stated that Society used to get the accounts audited including the allotment of sites, O.S.NO.3885/2010 12 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.
25) Issues and additional Issue that have been framed by this Court are as under :
1) Whether the Plaintiff proves that the 1st defendant is not a member of the plaintiff society and as such 1st defendant is not eligible for allotment of site belonging to plainitff society as stated in para 6 of the plaint?
2) Whether the plaintiff further proves that the 1st defendant in order to knock off valuable property belonging to the plaintiff society, in collusion with the 2nd defendant got registered a sale deed dated: 26.09.2002 in respect of the plaint schedule property as stated in para 6 of the plaint?
3) Whether the plaintiff further proves that right, title and possession of the suit schedule property still remains in the plainitff society and the alleged sale deed dated : 26.09.2002 is a O.S.NO.3885/2010 13 sham document and was never acted upon as stated in para 9 of the plaint?
4) Whether the plainitff further proves that plainitff society is a absolute owner in possession and enjoyment of the suit schedule property?
5) Whether the plainitff further proves that the registered sale deed dated : 26.9.2002 registered in the name of 1st defendant on 26.03.2003 is null and void and not binding on the plainitff?
6) Whether the plainitff further proves that the plainitff society is in lawful possession of the suit schedule property as on the date of suit?
7) Whether the plainitff proves alleged interference of the defendant?
8) Whether the 1st defendant proves that the suit is barred under Section 70 of the Karnataka Co-
9) Whether defendants 1 and 2
prove that the suit is barred by
limitation?
10) Whether the 2nd defendant
proves that the suit is bad for
non-joinder of necessary
parties?
O.S.NO.3885/2010
14
11) What decree or order?
Addl.Issue framed on 23.6.2014 Whether the Plaintiff in alternative proves that plainitff is entitled for the possession of the plaint schedule property from the defendants in case if th eCourt finds that the plainitff is not in possession of the plaint schedule property as prayed for?
26) Society has got examined its President and Secretary as PW.1 and PW.2 respectively and got marked Exs.P.1 to P.6 in support of its case.
Defendant No.1 has got examined as DW.1 and got marked Exs.D.1 to D.13 on his behalf.
27) Heard learned counsel for the Society as well as Defendant No.1. Perused the records.
28) My findings to above Issues are as under :
Point No.1 : In Negative Point No.2 : In Negative O.S.NO.3885/2010 15 Point No.3 : In Negative Point No.4 : In Negative Point No.5 : In Negative Point No.6 : In Negative Point No.7 : In Negative Point No.8 : In Negative Point No.9 : In Affirmative Point No.10 : Does not survive Additional Issue : In Negative Point No.11 : As per final order, for the following :
REASONS
29) Issues No.1 to 7 : These issues being interrelated are taken together for discussion.
Suit is being for declaring the Society as absolute owner of suit schedule property and for directing Defendants No.1 and 2 to handover the vacant possession of suit schedule property to the O.S.NO.3885/2010 16 Society. Consequent reliefs are for declaring the Sale Deed dated 26.09.2002 executed by the Society in favour of Defendant No.1 as null and void and not binding on the Society, and for permanent injunction restraining Defendants No.1 and 2 from interfering with peaceful possession and enjoyment of suit schedule property by the Society.
30) Ex.P.1, certified copy of Sale Deed dated 26.09.2002, the original of which has been marked as Ex.D.13, goes to show that Sale Deed was executed by Defendant No.2 representing the Society in favour of Defendant No.1 and same was registered in the office of Senior Sub-Registrar, Yelahanka, Bangalore vide Document No.BNG(U)- YLNK/1430/2002-03.
31) Sale Deed is sought to be declared as null and void and not binding on the Society. In fact, Society executed the Sale Deed in favour of O.S.NO.3885/2010 17 Defendant No.1. In the Sale Deed, Defendant No.2, who was the then President of the Society, represented the Society. Thus, Society is a party to the Sale Deed.
32) 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."
33) As envisaged in Section 31, 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 not binding on the Society.
O.S.NO.3885/2010 18
34) 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 observe 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 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 O.S.NO.3885/2010 19 Act, and sought for consequential reliefs. ..."
35) 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), 01.04.2010], the Hon'ble High Court of Karnataka, in para-7, was pleased to observe 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 to get rid of the sale deed and Powers of Attorney....."
36) It may 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 O.S.NO.3885/2010 20 Act, 1958 [KCF & SV Act]. In that view, it can be conveniently said that though Society seeks declaration that Sale Deed executed in favour of Defendant No.1 be declared as null and void and 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.
37) Society has challenged the Sale Deed 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 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 Sale Deed.
O.S.NO.3885/2010 21 37.1) 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 are not preceded by any resolution passed by the Society.
37.2) On the other hand, Defendant No.1 contends that he, being the member of the Society, was allotted with suit schedule property and was duly executed with registered Sale Deed in his favour by Defendant No.2 representing the Society. It is contended that, in pursuance of the Sale Deed, he is in possession of suit schedule property.
37.3) Defendant No.2, in the written statement, contends that it is the 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 O.S.NO.3885/2010 22 being the President of the Society. He never executed Sale Deed in his individual or personal capacity.
37.4) 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.
37.5) It is also contended that Society has its own auditor. All the proceedings of the Society are taken place through Directors and Office O.S.NO.3885/2010 23 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.
37.6) 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.
37.7) Rule-52 of the Bye-laws at Ex.P.3 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.3885/2010 24
(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.3885/2010 25 37.8) 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 O.S.NO.3885/2010 26 (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. "
37.9) A plain reading of the above rules incorporated in the Bye-laws makes it is clear that no work has been assigned to the President in the Bye-laws specifically. All that duties have been cast on the Secretary, who is the Chief Executive Officer of the Society under the Bye-laws.
37.10) Contention taken in written statement of Defendant No.2 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.
37.11) Society's contention is that Defendant No.1, in collusion with Defendant No.2 O.S.NO.3885/2010 27 seems to have got registered Sale Deed. 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.
37.12) 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."
37.13) 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:
(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
O.S.NO.3885/2010 28 (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." 37.14) Thus, false assertion, active concealment, promise without intention of performing it, any other deceptive act, or any act declared as fraudulent would constitute 'fraud'.
37.15) 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.
37.16) Sale Deed at Ex.P.1 goes to show that it has been executed by the Society. In the Sale Deed, Defendant No.2, being the President of the Society, represented the Society. He has not O.S.NO.3885/2010 29 executed the Sale Deed in his personal or individual capacity.
37.17) It has been pleaded in the plaint that Defendant No.2 was the President of the Society during the period between 1999 and 2005. Sale Deed at Ex.P.1 was executed in favour of Defendant No.1 on 26.09.2002. This makes it 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.
37.18) 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 O.S.NO.3885/2010 30 case, Society is trying to draw a line between President and the 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.
37.19) 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, PW.1 and PW.2 have specifically deposed that no criminal action has been taken by the Society against Defendants No.1 and 2 that Defendant No.2, in collusion with O.S.NO.3885/2010 31 Defendant No.1, executed Sale Deed fraudulently in favour of Defendant No.1.
37.20) Oral testimony of PW.1, the President of the Society, who is said to have personal knowledge of the affairs of the Society, does not disclose the fraud that has been allegedly committed by Defendant No.1 in securing the Sale Deed from the Society. On the contrary, the evidence of PW.1 makes it clear that, at the time of execution of the Sale Deed in favour of Defendant No.1, PW.1 was one of the Directors of the Society.
37.21) Thus, it is 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, evidence of PW.1 and PW.2 makes it clear that no action was taken against Defendant No.2 for the O.S.NO.3885/2010 32 alleged fraud alleged to have been committed by him.
37.22) 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.
37.23) 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.
37.24) In Mariyappa K.S. vs. Siddalinga Shetty, 1989(1) Kar.L.J. 150 (DB)], O.S.NO.3885/2010 33 the Hon'ble High Court of Karnataka was pleased to hold that absence of material particulars regarding fraud and collusion, it is not possible to hold that plaint contains necessary averments as to fraud and collusion.
37.25) 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.
37.26) 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.
O.S.NO.3885/2010 34 Assertion in plaint that Defendant No.1, in collusion with Defendant No.2, has obtained the Sale Deed in 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.
38) 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.
38.1) Defendant No.1 has specifically contended that he is the member of the Society and he was allotted with suit schedule property before being registered the same in his name.
38.2) Ex.P.5, extract of the membership register relating to membership number 532, goes to show that the name of the member has been left blank though the membership number has been O.S.NO.3885/2010 35 given. In plaint, it has been pleaded that membership number 532 does not belong to Defendant No.1.
38.3) It is to be noticed that it is nowhere stated that to whom the membership number 532 belongs to. Nor it is stated that no such membership number has been given to anyone. When membership number is not given to anyone, the question of mentioning the membership number in Ex.P.5 does not arise at all.
38.4) PW.2 has deposed that there is a mention in Ex.P.5 that membership number is 532. He has further deposed that there is a document in the Society to show that to whom the membership number 532 belongs to. He has also deposed that membership number is given after collecting membership fees.
O.S.NO.3885/2010 36 38.5) If membership number mentioned in Ex.P.5 belongs to some other member of the Society, the question would remain that what prevented the Society to mention the name of the said member in Ex.P.5. As deposed by PW.1, Society gives membership after collecting membership fees only. This makes it clear that Society collected membership fees, however, the name of the member has been left blank in Ex.P.5. Evidence has been given to the effect that there are documents to show that to whom the membership number 532 belongs to. However, no such document has been produced before the Court and the same has been withheld by the Society.
38.6) PW.1, on the contrary, has deposed that the membership number mentioned in Ex.P.5 may be the registration number of Sale Deed of Defendant No.1. This developed version of O.S.NO.3885/2010 37 PW.1 has also been falsified by the Sale Deed at Ex.P.1. Ex.P.1 explicitly makes it clear that the Sale Deed has been registered in the Office of the Senior Sub-Registrar, Yelahanka, Bangalore as Document No.1430/2002-03.
38.7) Defendant No.1 has tendered Annual General Body Meeting Notice along with audit report of the year 2004-05 in the evidence of PW.2 and same has been marked as Ex.D.2. Sl.No.14 of page-34 of Ex.D.2 has been marked as Ex.D.2(a) on behalf of Defendant No.1. It reads as under :
" 14) ನವವವಶನಗಳ ಹಹಚಕವ -
ಬಡಡವಣಣಯ ಪರಕಕಕಕತ ನಕಣಕಯಯತಣ ವವಧ ಅಳತಣಯ ಒಟಟಟ 2268 ನವಣವಶನಗಳರಟತತದಣ. ಎಯದಟ ಈ ಹಯದಣ ವರದ ಮಡಡದಣ. ಬಡಡವಣಣಯ ಕಣಲವವ ಜಮವನಟಗಳಗಣ ಸಯಭಯದಸದಯತಣ ನಡನಯಡಲಯದಲಲ ವಡನಜನಗಳದಟದ ನವಣವಶನ ನಮಡರಣ ಕಡಯರ ಪಪಣರಗಣಗಯಡರಟವ 2268 ನವಣವಶನಗಳಟ ಹಯಚಕಣಗಣ ಲಭನವರಟವವದಡಗ ಕಡಯರದರರಯವರಟ ತಳಸದಟದ , ದನಡಯಕಕ 04.01.1993 ರ ಆಡಳತ ಮಯಡಳ ಸಭಣಯಲಲ ಅಧನಕಕರಟ ಮತಟತ ಗಗರವ ಕಡಯರದರರಯವರಗಣ ಹಯಚಕಣ ಲಭನವರಟವ ನವಣವಶನಗಳನಟನ ಹಯಚಟವ ಅಧಕಡರ ನವಡದಯತಣ ಎಲಡಲ ನವಣವಶನಗಳನಟನ ಹಯಚಕಣ ಮಡಡರಟವವದಡಗ O.S.NO.3885/2010 38 ತಳದಟಬಯದರಟತತದಣ. ಸಯಘದಲಲ ನವರಹಸರಟವ ನವಣವಶನ ಹಯಚಕಣ ರಜಸಟರರ ನಟನ ಅಪಪಣರವಡಗ ಬರಣದಟಟರಟವ ಕಡರಣ ಸಡಲಡಖಣಖರಗಗ ಈ ಬಗಣಗ ನವಣವಶನಗಳ ಹಯಚಕಣ ಹಡಗಗ ನಣಗವಯದಣಯಡಗರಟವ ಬಗಣಗ ನಖರವಡಗ ಮಡಹತ ಲಭನವಲಲದ ಕಡರಣ ವಮರರಸಲಡಗರಟವವದಲಲ. ಕಡಯರದರರಯವರ ಹಣವಳಕಣಯಯತಣ ಸದರ ಬಡಡವಣಣಯಲಲ ನವಣವಶನ ಕಣಗವರ ನವಣವಶನ ಠಣವವಣಯ ಪಪಣರ ಮಬಲಗನಟನ ಪಡವತಸರಟವವರಗಣಲಡಲ ನವಣವಶನ ಹಯಚಕಣ ಮಡಡದಟದ , ಅವರಲಲ ಕಣಲವರಟ ನಣಗಯದಣ ಮಡಡಸಕಣಗಳಳಲಟ ಬಡಕ ಇದಣ ಎಯದಟ ವವರಣಣ ನವಡರಟತಡತರಣ.
ಅಯತಹವರಣಗಣ ನಗದತ ಕಡಲಮತಯಳಗಣ ನಣಗವಯದಡಯಸಕಣಗಳಳಲಟ ಸಗಚನಣ ನವಡ ಸಯಘದಲಲ ನವಣವಶನ ಹಯಚಕಣ ರಜಸಟರರ ಹಡಗಗ ನವಣವಶನ ನಣಗಯದಣ ರಜಸಟ ರನಟನ ಕಕಮಬದದವಡಗ ನಯಮಡನಟಸಡರ ಬರಣದಡಲಟ ಕಡಯರದರರಯವರಟ ಅಗತನ ಕಕಮ ಕಣಖಗಣಗಳಳಲಟ ಹಯದನ ಸಡಲಟಗಳಲಲ ತಳಸದದರಟ. ಈ ಬಗಣಗ ಯಡವವದಣವ ಕಕಮವಡದ ಕಡಯರದರರಯವರ ಕಕಮ ಆಕಣಕವಪಣಡಹಶವಡಗದಟದ ಕಗಡಲಣವ ಅಗತನ ರಜಸಟರರ ನಟನ ಕಕಮವಡಗ ಬರಣದಡತಕಕದಟದ.
ಸಮಡದಡನ ಕ - ಯಲಹಯಕ ನಡನಯಡಯಗ ಬಡಡವಣಣಗಣ
ಸಯಬಯಧಸದಯತಣ ಲಣಕಕಪರಶಣಗವಧನಡ ವರದಯಲಲ
ಸಗಚಸರಟವಯತಣ ಕಕಮವಡಲಡಗಟವವದಟ. "
38.8) Ex.D.2(a) makes it clear that the
Secretary of the Society has not properly written the necessary documents as per the rules and audit objection has been raised regarding the said aspect of the matter. Be that as it may.
O.S.NO.3885/2010 39 38.9) Allotment Letter at Ex.D.6; Sale Deed at Ex.P.1 [Ex.D.13]; Possession Certificate at Ex.D.4; and no Objection Certificate at Ex.D.7 make it abundantly clear that membership number 532 belongs to Defendant No.1. In all these documents, membership number of Defendant No.1 is shown as
532. Thus, it is crystal clear that Defendant No.1 is the member of the Society and his name has been intentionally left blank in Ex.P.5.
39) 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.
39.1) 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 O.S.NO.3885/2010 40 other than Society, no one can say about the affairs of the Society.
39.2 ) 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.
39.3) Sale Deed at Ex.P.1 [D.13 specifically recites that vendee being one such member applicant, has been allotted a Site No.759/A, in 60' x 90' feet, dimension at the above layout for consideration amount of Rs.1,60,000/- 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.
O.S.NO.3885/2010 41 39.4) Society has not produced register of members; 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. These documents are required to be maintained by the Secretary as contemplated in Bye-laws.
39.5) 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 O.S.NO.3885/2010 42 favour of Defendant No.1 without there being passing of resolution.
39.6) PW.2 has deposed that resolution passed in the year 2002-03 in respect of the sale transactions has not been produced before the Court. Had there been no such resolution in the year 2002-03 regarding the execution of Sale Deed in favour of Defendant No.1, as contended by the Society, certainly, the same would have been produced by the Society. However, the Society has withheld the same. Be that as it may, Ex.D.2(a) makes it abundantly clear that, in the Board Meeting of the Society held on 04.01.1993, the President and the Secretary of the Society were authorized to allot sites available for allotment. 39.7) 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 O.S.NO.3885/2010 43 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 allottees, at Sl.No.210, the name of Defendant No.1 has been shown as allottee of Site No.759/A, which is the suit schedule property.
39.8) That being the state of affairs, 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.
O.S.NO.3885/2010 44 39.9) 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.
39.10) 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.
O.S.NO.3885/2010 45
40) 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. It states that the member does not already own a site or plot or house. A plain reading of Bye-laws 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.
40.1) 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 O.S.NO.3885/2010 46 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 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....."
41) Sale Deed recites that vendee acknowledges the possession of the suit schedule property. In O.S.NO.3885/2010 47 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 the concerned authority.
42) 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.
43) Having considered the 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.
O.S.NO.3885/2010 48
44) Issue No.9 : Society's contention is that cause of action for the suit arose during the month of 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.
44.1) Article 59 of the Limitation Act, 1963 states as follows :
Description of suit Period of Time from which limitation period begins to run
59. To cancel or set Three Years When the facts aside an instrument entitling the Plaintiff to or decree or for the have the instrument or rescission of a decree cancelled or set contract aside or the contract rescinded first become known to him.
44.2) 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 O.S.NO.3885/2010 49 proved by the Society in the instant suit. Hence, fact of alleged fraud as contended by the Society cannot be availed of to the Society as knowledge of execution of Sale Deed.
44.3) Sale Deed at Ex.P.1 [Ex.D.13] makes it abundantly clear that Society has registered the Sale Deed in favour of Defendant No.1 through its 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/1430/2002-03.
44.4) Section 3 of the Transfer of Property Act, 1882 deals with the word "Notice". It states : "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."
O.S.NO.3885/2010 50 44.5) 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.
44.6) 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.
44.7) 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.
44.8) Proviso to Explanation III says that if the agent fraudulently conceals the fact, the O.S.NO.3885/2010 51 principal shall not be charged with notice thereof as against any person who was a party to or otherwise cognizant of the fraud.
44.9) 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.
44.10) 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.
44.11) In the present suit, Sale Deed was executed on 26.09.2002, which contains the recital O.S.NO.3885/2010 52 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 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 knowledge of the Society as on the date of execution and registration of the Sale Deed.
44.12) 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.
44.13) Thus, Society, being the party to the Sale Deed cannot say that it is ignorant about the Sale Deed. In that view, it ought to have filed O.S.NO.3885/2010 53 suit within three years from the date of execution of the Sale Deed. However, same has been filed after lapse of 8 years, and possession has been sought after lapse of 12 years by amending the plaint.
44.14) Society's contention is that the present President came to the knowledge of the Sale Deed during the month of 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 the month of March 2009.
O.S.NO.3885/2010 54 44.15) Assuming that Society did not notice the execution of Sale Deed on 26.09.2002, if the report dated 17.01.2006 passed by 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 in the year 2014. In that count also, suit filed by the Society is barred by limitation; accordingly, I answer the above issue in the affirmative.
45) Issue No.10 : During the trial of the suit, Defendant No.2 has passed away and therefore, the question of considering the said issue does not arise.
O.S.NO.3885/2010 55
46) Issue No.8 : Defendant No.1 contends that this Court has no jurisdiction as per Section 70 of the Karnataka Co-Operative Societies Act, 1959.
46.1) Section 70 of the Karnataka Co- Operative Societies Act, 1959 deals with disputes which may be referred to Registrar for decision. It states that if any dispute touching the constitution, management or the business of a co-operative society arises between a member and the society, such dispute shall be referred to the Registrar for decision.
46.2) In the instant case, the reliefs claimed by the Society are not relating to the dispute touching the constitution, management or the business of the Co-Operative Society. Relief is for declaring the Sale Deed as null and avoid and not binding on Plaintiff and for delivery of possession. Such declaratory relief can be granted O.S.NO.3885/2010 56 by the Civil Court only. In that view, there is no substance in the contention of Defendant No.1 that this Court has no jurisdiction to entertain the suit under Section 70 of the the Karnataka Co-Operative Societies Act, 1959, accordingly, I answer the above issue in the negative.
47) 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 8 years and possession has been claimed after lapse of 12 years as observed above and same has been barred by limitation. In that view, Society does O.S.NO.3885/2010 57 not deserve for the relief as prayed, accordingly, I answer the above issue in the negative.
48) Issue No.11 : For the foregoing discussion and findings to Issues No.1 to 10 and Additional Issue, 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 19th day of April 2022) (RAMA NAIK) VI Addl.City Civil & Sessions Judge Bengaluru City O.S.NO.3885/2010 58 ANNEXURE I. List of witnesses examined on behalf of :
(a) Plaintiffs side :
P.W.1 Sri.K.Sippegowda, dtd.14.09.2012 P.W.2 Sri.K.A.Sudhakar, dtd.0.11.2019
(b) Defendants side :
D.W.1 Sri.Gangadhar R. Gurumath, dtd.
24.09.2021 II. List of documents exhibited on behalf of :
(a) Plaintiffs side :
Ex.P.1 True copy of certified copy of Sale Deed dtd.26.09.2002 Ex.P.2 Resolution of the Society dtd.16.04.2010 Ex.P.3 Copy of Model Bye-laws of House Building Co-operative Soceities Ex.P.4 Notary attested copy of Certificate regarding amendment of bye-laws of the Society issued by Joint Registrar of Co-Operative Society dtd.20.09.2005 Ex.P.5 Membership & Share Register extract Ex.P.6 Office copy of notice dtd.31.07.2009 issued by Plaintiff Society to Defendant No.1.
O.S.NO.3885/2010 59
(b) Defendants side :
Ex.D.1 Audit Report of the Society for the year 2003-2004 and 2004-2005 Ex.D.2 Audit Report for the year 2004-2005 Ex.D.2(a) Relavant report Ex.D.3 Audit Report of the Society for the year 2003-2004 Ex.D.4 Possession Certificate dtd.17.10.2003 issued in the name of Defendant No.1 Ex.D.5 Encumbrance Certificate for 15 years for the period from 12.06.1989 to 31.03.2004 Ex.D.6 Site Allotment Letter dtd.24.08.2002 issued by Society to Defendant No.1 Ex.D.7 No Objection Certificate dtd.14.06.2004 issued by Society Ex.D.8 Challan for payment of tax for the year 2002-03 Ex.D.9 Tax paid receipt for the year 2003-04 Ex.D.10 Tax paid receipt for the year 2004-05 Ex.D.11 Acknowledgment dtd.25.01.2005 issued by Town Muncipality Ex.D.12 Bank Challan dtd.25.1.2005 for having paid Rs.15,000/-
Ex.D.13 Original Sale Deed dtd.26.09.2002 in favour of Defendant No.1 VI Addl.City Civil & Sessions Judge Bengaluru City