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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Sonia Gokani, Nisha M. Thakore, JJ.
Bileshwar Corporation – Appellant
Versus
Shantinagar Shela Co Operative Housing Society Limited – Respondent
R/First Appeal No. 2320 of 2022 With Civil Application (For Stay) No. 1 of 2022
Decided On : 06-10-2022
The Court dismissed the appeal challenging the trial court's order rejecting the plaint under Order 7 Rule 11 of the Civil Procedure Code (CPC) for non-issuance of a statutory notice under Section 167 of the Gujarat Cooperative Societies Act, 1961. The Court held that the trial court erred in dismissing the suit without examining the facts of the case and determining whether the dispute touched the business of the society. The Court noted that the determination of whether a dispute touches the business of the society is a mixed question of law and fact and that the trial court should have ascertained the facts of the case before rejecting the plaint. The Court also held that the requirement of issuing a statutory notice under Section 167 is mandatory only if the suit is in respect of an act touching the business of the society and that the burden of proving that the dispute touches the business of the society lies on the defendant society.
Fact of the Case:
The appellant, a partnership firm, entered into an agreement to purchase land from the respondent, a cooperative housing society. The appellant paid a substantial portion of the purchase price, but the respondent failed to execute the sale deed. The appellant filed a suit for specific performance of the agreement and for a permanent injunction restraining the respondent from selling or transferring the land to any third party. The respondent filed an application under Order 7 Rule 11 of the CPC, seeking rejection of the plaint on the ground that the appellant had failed to issue a statutory notice under Section 167 of the Gujarat Cooperative Societies Act, 1961. The trial court allowed the application and dismissed the suit.
Finding of the Court:
The Court held that the trial court erred in dismissing the suit without examining the facts of the case and determining whether the dispute touched the business of the society. The Court noted that the determination of whether a dispute touches the business of the society is a mixed question of law and fact and that the trial court should have ascertained the facts of the case before rejecting the plaint. The Court also held that the requirement of issuing a statutory notice under Section 167 is mandatory only if the suit is in respect of an act touching the business of the society and that the burden of proving that the dispute touches the business of the society lies on the defendant society.
Issues: 1. Whether the trial court erred in dismissing the suit without examining the facts of the case and determining whether the dispute touched the business of the society? 2. Whether the requirement of issuing a statutory notice under Section 167 of the Gujarat Cooperative Societies Act, 1961 is mandatory in all cases?
Ratio Decidendi: 1. The determination of whether a dispute touches the business of a cooperative society is a mixed question of law and fact, and the trial court should have ascertained the facts of the case before rejecting the plaint under Order 7 Rule 11 of the CPC. 2. The requirement of issuing a statutory notice under Section 167 of the Gujarat Cooperative Societies Act, 1961 is mandatory only if the suit is in respect of an act touching the business of the society, and the burden of proving that the dispute touches the business of the society lies on the defendant society.
Final Decision: The Court allowed the appeal, set aside the order of the trial court, and remanded the case to the trial court for fresh consideration of the application under Order 7 Rule 11 of the CPC.
JUDGMENT :
Sonia Gokani, J.
1. This appeal is preferred by the original plaintiff under Section 96 of the Civil Procedure Code, 1908 whereby, the challenge is made to the judgment and decree dated 06.07.2022 passed by the Principal Senior Civil Judge, Sanand in Special Civil Suit No. 407/2017 in the following factual background.
Factual Matrix.
1.1. The respondent society has rights in the suit property being block/survey no. 211 to 216-220, 224-229, 231-234, 235/paiki in all admeasuring 2,20,189 sq. mts. (2,63,349 sq. yards) of Village Shela, Takula Sanand, Ahmedabad.
1.2. By way of an agreement to sale dated 22.12.2006, the respondent – original defendant agreed to sell the suit property to the plaintiff appellant for a sum of Rs. 15,80,08,800/-. As per the Clause 3 of the agreement, the society had agreed to sell the suit property in favour of the appellant on payment of 50% of the sale consideration. In compliance of the said terms, by 24.12.2007, the appellant paid Rs. 11,49,60,600/- which is roughly 75% of the sale consideration.
1.3. It is averred that the society was avoiding the execution of the sale deeds on one or the other pretext, hence, the Memorandum of Understanding (MOU) was executed between the parties, where also the respondent had admitted the execution of agreement to sale. The terms contained therein recognized the fact that the amount of Rs. 11.49 crores (rounded off) was already paid by the appellant. It was also agreed that the appellant would have 75% share in the suit property and one Mr. Ashish Patel, the Chairman of the society would have 25% of the share. The respondent had executed the sale deed in favour of the appellant for survey no. 227 and 228 on 14.09.2007. However, it was later on found that the respondent – society had not cleared the rights of certain persons in the said land which had led to the litigation and the sale transaction was subsequently reversed and the sale deeds were cancelled on 06.05.2011 without any consideration being paid to the appellant.
1.4. The Special Civil Suit No. 272 of 2013 had been preferred before the Senior Civil Judge, Ahmedabad Rural by the appellant plaintiff. It was renumbered as 407 of 2017 in the Court of Principal Senior Civil Judge, Sanand. This was for specific performance, declaration and permanent injunction. An application for injunction below Exh. 5 also was preferred for interim injunction during the pendency of the suit. The defendant appeared and filed the application below Exh. 15 under Order 7 Rule 11 for rejection of the plaint. The plaintiff appellant filed the reply to the same vide Exh.17. It is also his grievance that no written statement or documentary evidence in support of its case have been filed by the respondent and the respondent continuously remained absent in the suit proceedings.
1.5. In June, 2022, when the appellant came to know that the respondent – society had initiated the transactions to alienate the part of the suit property being Survey Nos. 229, 224, 219, 220, 226 etc. the appellant preferred an application below Exh. 51 praying to decide the interim injunction application for stay. The appellant also filed list of documents below Exh. 50 to include the sale deeds of the said parcels of lands. The complaint by the Directorate of Enforcement before the Special Court under the Prevention of Money Laundering Act, 2002 had been placed into service. It was recorded that though Rs. 11.49 crores was paid by the appellant, the Chairman of the Society Mr. Ashish Patel did not execute the sale deeds in favour of the appellant and laundered the money. The appellant produced the record of Special Civil Suit No. 51 of 2020 preferred by the present respondent society wherein execution of the agreement to sale and MOU although admitted, the respondents have sought cancellation on the ground that society is not able to fulfill the conditions of the agreement.
1.6. It is the say of the plaintiff that the original defendant chose not to remai
Point of law : If a suit is instituted before a Civil Court against a co-operative society touching the business of the Society, then notice under Section 167 of the Act is mandatory.
Jurisdiction of civil courts is barred in challenging cooperative society actions under the Maharashtra Co-operative Societies Act without prior notice as required by law.
A statutory notice under S.167 is not required if the dispute does not concern the co-operative society's business.
The main legal point established in the judgment is the application of statutory provisions related to deemed conveyance and mandatory notice requirements under the Maharashtra Ownership Flats Act, 1....
The judgment establishes the principle that while deciding an application under Order 7 Rule 11, the Court should only consider the averments in the plaint and the requirement of cause of action for ....
Section 9 of Code of Civil Procedure, Civil Court is vested jurisdiction to adjudicate all suits of civil nature. Exclusion of jurisdiction of Civil Court to adjudicate suit of civil nature is an exc....
Authority under Section 70 enables the Additional Registrar to cancel improper allotments and registered sale deeds within cooperative societies, reinforcing adherence to bylaws and judicial oversigh....
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