2007 Supreme(Kar) 266

2008 (2) KLO 1771
IN THE HIGH COURT OF KARNATAKA
N. Kumar, J.
RFA No. 809 of 1997
Binny Mill Labour Welfare House Building Co-operative Society Limited - Appellant
Vs.
D. R. Mruthyunjaya Aradhya - Respondents
Decided on 13-4-2007

Headnote:SPECIFIC RELIEF ACT, 1963 - Section 31 : [N.Kumar,J] Cancellation of a sale deed -Unilateral cancellation of a sale deed by Vendor - Held, If after execution and registration of the sale deed, the owner wants to get back the property, it has to be done by cancelling the sale deed on any of the grounds which are available to him under the provisions of the Indian Contract Act. Unilaterally he cannot execute what is styled as a deed of cancellation, because on the date of execution and registration of the deed of cancellation, the said, person has no right or interest in that property. Further, In the case of a sale deed executed and registered the owner completely loses his right over the property and the purchaser becomes the absolute owner. It cannot be nullified by executing a deed of cancellation because by execution and registration of a sale deed, the properties are being vested in the purchaser and the title cannot be divested by mere execution of a deed of cancellation. Therefore, even by consent or agreement between the purchaser and the vendor, the said sale deed cannot be annulled. If the purchaser wants to give back the property, it has to be by another deed of conveyance. If the deed is vitiated by fraud or other grounds mentioned in the Contract Act, there is no possibility of parties agreeing by mutual consent to cancel the deed. It is only the court which can cancel the deed duly executed, under the circumstances mentioned in Section 31 and other provision of the Specific Relief Act, 1963. Therefore, the power to cancel a deed vests with a Court and it cannot be exercised by the vendor of a property.

       TRANSFER OF PROPERTY ACT, 1882 - Section 2(d): [N. Kumar,J] Effect of registration and non-registration of an instrument - Held, A combined reading of Sections 47, 48 and 49 of the Registration Act makes it clear that an instrument which purports to transfer title to the property requires to be registered, the title does not pass until registration has been effected. The registration by itself does not create a new title. It only affirms a title that has been created by the deed. The title is complete and the effect of registration is to make it unquestionable and absolute. Section 47 of the Act makes it clear that a registered document shall operate from the time from which it would have commenced to operate if no registration thereof had been required or made and not from the time of its registration. However, Section 47 of the Registration Act makes it clear that, though a document is registered on a particular date, the effective date would be the date on which the said document was executed and not from the date of registration. If the document is not registered but is compulsorily registerable, though the document is duly executed, it has no legal effect and it does not affect the immovable property comprised in the said document in view of Section 49 of the Act. The registration of such a duly executed document comes into operation, the moment it is duly registered, not from the date of registration but from the date of execution of the said document.

       INDIAN CONTRACT ACT, 1872 - Sections 2(h), 2(i), 2(g) & 2(j): [N.Kumar,J] Valid, Voidable Contracts - Enforceability - Legal effect of transactions - Held, A valid agreement is one, which is enforceable by law as a contract by the parties to the agreement. A void agreement is one, which does not exist in the eye of law, and therefore fails to receive any legal recognition or sanction. In legal parlance it is a nullity or non-est. It is not a contract at all. It would be automatically null and void without more ado. Its existence or continuation has no value, as one cannot continue a nullity. Further, If a statute specifically provides that a contract contrary to the provisions of the statute would be void, it is no contract in the eye of law, it is void ab initio, and the said agreement is unenforceable in law. In between these two extreme positions, lies the voidable agreement . In law it exists and also recognised. It is a contract. It can also be enforced. But because of some defect in its origin, at the option of the party to the agreement, it is liable to be cancelled or set aside. In other words, avoidable agreement is one which is void or valid at the election of one of the parties. However, it is valid, till it is declared void by a competent court of law, in a manner known to law. Therefore, it is not a nullity or non est. It is valid and good unless avoided. It requires to be set aside.

       INDIAN REGISTRATION ACT, 1908 - Sections 47, 48 & 49: [N.Kumar,J] Effect of registration and non-registration of an instrument - Held, A combined reading of Sections 47, 48 and 49 makes it clear that an instrument which purports to transfer title to the property requires to be registered, the title does not pass until registration has been effected. The registration by itself does not create a new title. It only affirms a title that has been created by the deed. The title is complete and the effect of registration is to make it unquestionable and absolute. Section 47 of the Act makes it clear that a registered document shall operate from the time from which it would have commenced to operate if no registration thereof had been required or made and not from the time of its registration. However, Section 47 of the Registration Act makes it clear that, though a document is registered on a particular date, the effective date would be the date on which the said document was executed and not from the date of registration. If the document is not registered but is compulsorily registerable, though the document is duly executed, it has no legal effect and it does not affect the immovable property comprised in the said document in view of Section 49 of the Act. The registration of such a duly executed document comes into operation, the moment it is duly registered, not from the date of registration but from the date of execution of the said document.

       KARNATAKA CO-OPERATIVE SOCIETIES ACT, 1959 - Byelaw of the society: [N. Kumar,J] Held, Bye-law cannot be equated to law, rules or regulations. The said bye-laws only governs 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 fact 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. Further, The sale deed executed by the society represented by the President, Secretary and the Treasurer in favour of a non-member is valid and binding on the society and it is not void. Therefore, it can not be said that the sale deed executed is contrary to bye-law and the same is void.

       KARNATAKA CO-OPERATIVE SOCIETIES ACT, 1959 - Bye-laws of the Society: [N. Kumar, J] Binny Mills Employees Co-operative Society - Management vest with the Board of Directors - Powers of the Board of Directors, as per the Rules and Bye-laws of the Society - Sale of site by the society in favour of non-members -Special general body meeting -Prior approval by passing resolution - Validity of the sale transaction - Held, The sale was for a valid consideration. There is no prohibition in the bye-laws to sell the sites in favour of non-members. Therefore, the sale deed executed by the society in favour of the non-members cannot be said to be void. The said agreement is not forbidden by law or is of such a nature that it would defeat the provisions of any law or it is immoral or opposed to public policy. Therefore, the said agreement is lawful and not void. It is a valid contract, which is enforceable.