The main legal point established in the judgment is that a pre-emption clause in restrictive covenants does not amount to an absolute restraint on alienation and is valid under the Transfer of Property Act.

P.C. :

1. The Notice of Motion is taken out by the Plaintiffs, who are trustees of two public charitable trusts, for a temporary injunction to restrain Defendant No.1 society from transferring 60 flats referred to in the plaint without the consent of the Trust.

2. Plaintiff Nos.1 to 4 are trustees of Seth Behramji Ferdunji Kuka and Bai Ratanbai Behramji Kuka Charity Trust (“Kuka Trust”), whilst Plaintiff No.5 is the sole trustee of Bai Hirabai Manchersha Gilder Charity Trust (“Gilder Trust”). Trustees of Gilder Trust were owners of a plot of land admeasuring about 3430 sq. yards at Andheri in Mumbai, and by an agreement for sale dated 20 February 1989 agreed to sell to the trustees of Kuka Trust the said land for a price of Rs.2 lakh. The purchasers, in turn, agreed to construct a building/buildings in the land for low income group Parsis. There were restrictions as to the area and price of flats to be constructed in the building/s. The area of the flats was not to exceed 350 sq. ft and the price not to exceed the cost price. It was agreed that it would be an express term of the by-laws of the proposed society or regulations of the association of flat purchasers that each and every flat in the building/s shall be used and occupied by Parsi/s professing the Zoroastrian religion only. (The relevant clauses of the agreement in this behalf shall be quoted later.) By a change report accepted by the Charity commissioner of State of Maharashtra, the land was declared as the property of Kuka Trust. Kuka Trust constructed six buildings of ground plus flour floors comprising of a total of sixty flats. The construction was accomplished with the help of Navroji P. Godrej Trust. Kuka Trust allotted flats to lower income Parsis at a concessional price of Rs.1,50,000/- per flat. The Trust entered into standard printed allotment agreements with the allottees. These agreements expressly incorporated the restrictive covenants contained in the agreement for sale and referred to above. (The relevant clauses shall be referred to later.) The society of allottees of flats (Defendant No.1) was registered under the Maharashtra Co-operative Societies Act, 1960. It is the case of the Plaintiffs that the restrictive covenants of the allotment agreements were not incorporated by Defendant No.1 in its bye-laws, but these covenants were nonetheless binding on every member of Defendant No.1. There is as yet no conveyance of the land with buildings from the Kuka Trust to Defendant No.1. It is claimed that non-incorporation of appropriate clauses in relation with the restrictive covenants is the reason why the conveyance has still not been executed. It is the case of the Plaintiffs that in the meanwhile the allottees/Defendant No.1 have transferred some flats in the building in breach of the restrictive covenants. The Plaintiffs apprehend that further transfers may take place and have approached the court seeking a declaration concerning the restrictive covenants being an integral part of the bye-laws of Defendant No.1 or in the alternative an order directing the latter to incorporate these covenants into its bye-laws. The Plaintiffs also seek to prohibit transfers of flats in breach of such covenants and pray for appropriate reliefs in that behalf.

3. The main defences to the suit of Defendant Nos.1 to 5, 7 and 8, who are the contesting Defendants, as disclosed in their reply, are these. The Defendants submit that the suit, in so far as it seeks a declaration/order in respect of byelaws, is barred by limitation, since the bye-laws came to be framed in 1991. The Defendants submit that the suit is bad for non-joinder of necessary parties, namely, all the sixty members/flat owners of Defendant No.1 society. It is submitted that the suit is bad for want of the consent of the Charity Commissioner under Section 51 of the Bombay Public Trusts Act, 1950. It is claimed that the present suit is nothing but a counter-blast to the consumer complaint transfer/conv