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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BHARGAV D. KARIA, J.
The Tolak Co-Operative Housing Society Ltd. – Appellant
Versus
The State Of Gujarat Served Thro' The Secretary & 12 Others – Respondents
R/Special Civil Application No. 13725 of 2006, 5129 of 2009, 15519 of 2005
Decided on : 21-10-2022
CO-OPERATIVE HOUSING SOCIETY - MEMBERSHIP - TRUST - BY-LAWS - TRANSFER OF SHARES - VALIDITY - INTERPRETATION OF BY-LAWS - PUBLIC TRUST - COMPETENCY TO CONTRACT - INDIAN CONTRACT ACT, 1882, SECTION 11 - GUJARAT CO-OPERATIVE SOCIETIES ACT, 1961, SECTIONS 2(13), 22(F), 24 - BY-LAWS 7, 14, 16, 17, 21.
Fact of the Case:
The dispute pertains to Plot No.17 of the Tolak Co-operative Housing Society Limited, which was purchased by Shree Samyak Gnan Shibir Public Charitable Trust for its activities. The Society rejected the Trust's application for membership, leading to litigation. The Trust filed an appeal before the Deputy Secretary (Appeals), who allowed the appeal and directed the Society to accept the Trust as a member. The Society challenged this order in the High Court.
Finding of the Court:
The High Court held that the Trust could not become a member of the Society on the basis of the agreement to sale and sale deed executed between the original owners and the Trust, as it violated the Society's by-laws. However, the Court noted that the original owners had filed affidavits consenting to the transfer of the plot to the Trust. Therefore, the Court permitted the Trust to submit a fresh application for consolidation of the plot and transfer of shares in the name of the Trust, subject to the Trust filing an undertaking that it would use the plot only for the purpose of residence for saints of the Jain community and library and study, without causing any disturbance to the members of the Society or nearby residents.
Issues: 1. Whether the Trust could become a member of the Society on the basis of the agreement to sale and sale deed executed between the original owners and the Trust, in violation of the Society's by-laws? 2. Whether the Trust could submit a fresh application for consolidation of the plot and transfer of shares in its name, subject to filing an undertaking to use the plot only for the purpose of residence for saints of the Jain community and library and study, without causing any disturbance to the members of the Society or nearby residents?
Ratio Decidendi: 1. The Court held that the Trust could not become a member of the Society on the basis of the agreement to sale and sale deed executed between the original owners and the Trust, as it violated the Society's by-laws. The by-laws provided that membership was open to individuals who were qualified in accordance with the rules and by-laws, and that the transfer of shares could only be made with the prior sanction of the Committee. The Trust was not a member of the Society at the time the agreement to sale was executed, and the Committee had not sanctioned the transfer of shares to the Trust. 2. The Court held that the Trust could submit a fresh application for consolidation of the plot and transfer of shares in its name, subject to filing an undertaking to use the plot only for the purpose of residence for saints of the Jain community and library and study, without causing any disturbance to the members of the Society or nearby residents. The Court noted that the original owners had filed affidavits consenting to the transfer of the plot to the Trust, and that the Trust had agreed to abide by the undertaking.
Final Decision: The Court allowed the Society's petition and quashed the order of the Deputy Secretary (Appeals) directing the Society to accept the Trust as a member. The Court also permitted the Trust to submit a fresh application for consolidation of the plot and transfer of shares in its name, subject to filing an undertaking to use the plot only for the purpose of residence for saints of the Jain community and library and study, without causing any disturbance to the members of the Society or nearby residents.
JUDGMENT :
Heard learned Senior Advocate Mr.Prakash Jani with learned advocate Mr.Pushpadatta Vyas for the petitioner-Society, learned advocate Mr.Baiju Joshi for respondent Nos.12 and 13-Babubhai Joshi and Smitaben Babubhai Joshi respectively and learned advocate Mr.Ankit Shah with learned advocate Mr.D.K.Puj for the respondent Trust.
1. Special Civil Application No.13725 of 2006 and Special Civil Application No.5129 of 2009 are filed by the Tolak Co-operative Housing Society Limited, whereas, Special Civil Application No.15519 of 2005 is filed by Shri Samyagnan Shibir Public Charitable Trust.
2. Dispute between the parties pertains to Plot No.17 of the Tolak Co-operative Housing Society Limited (for short ‘the Society’) which is alleged to have been purchased by Shree Samyak Gnan Shibir Public Charitable Trust (for short ‘the Trust’) for the purpose of its activities for the Library and Study of Jain religion.
3. The factual matrix giving rise to this litigation dates back to the year 1980.
3.1. The Society is a Co-operative Housing Society registered under the provisions of the Bombay Cooperative Societies Act, 1925, as applicable then in the bilingual State of Bombay in the year 1927.
3.2. The respondent No.12 namely Babubhai M. Joshi in Special Civil Application No.13725 of 2006 had inherited the Plot No.17 admeasuring 1084 Sq. Meters of the Society. Thereafter, on application given by the said Babubhai M. Joshi to the Society to bifurcate the Plot No.17 into two Sub- plot Nos.17A and 17B, the same was accepted by the Society and the name of the Babubhai Joshi was recorded as owner of Plot No.17A and name of his wife-Shrimati Smitaben Babubhai Joshi who is respondent No.13 in Special Civil Application No.13725 of 2006 was recorded as owner of Plot No.17B.
3.3. Babubhai M. Joshi and Smitaben Babubhai Joshi entered into an agreement to sale dated 09.03.1980 in respect of entire plot comprising of Plot Nos.17A and 17B together with its superstructure for Rs. 1,00,001/- in favour of one Kumarpal Amichand (Shah) Bagrecha-respondent No.5 in Special Civil Application No.13725 of 2006 who was one of the Trustees of the Trust-respondent No.4 in the said Special Civil Application. The possession of the said plot was handed over to the Trust on 09.03.1980.
3.4. Babubhai Joshi, Smitaben Joshi and Kumarpal Amichand submitted an application to the Society to become members. However, the Society rejected the application in the meeting held on 30th May, 1980.
3.5. Being aggrieved by the decision of the Society to reject the application to become member, a Lavad Suit No.176 of 1980 was filed before the Board of Nominees at Ahmedabad which was dismissed on 21.05.1987.
3.6. Thereafter, Civil Suit No.5076 of 1987 was filed before the City Civil Court, Ahmedabad by Babubhai Joshi and Smitaben Joshi against the respondent No.5 for cancellation of the agreement to sale dated 09.03.1980 between the parties. There was a compromise between the parties in the said Civil Suit in the year 1989 and as per the terms of the compromise, the sale deed dated 12.10.1990 was executed between the parties in favour of the Trust and its trustee Kumarpal Amichand Bagrechaby Babubhai Joshi and Smitaben Babubhai Joshi.
3.7. The Trust submitted an application on 27th February, 1989 before the Society through its Trustee-Navinchandra Gandhi with a request to enter the name of the Trust as a member of the Society stating the share certificates for Plot Nos.17A and 17B be transferred in name of the Trust. The Trust also signed a cheque of Rs.5,000/- towards transfer fees to the Society.
3.8. The Society in its meeting held on 12.03.1989 rejected the application of the Trust on the ground that the request of the Trust was made on the basis of the agreement dated 09.03.1980 and the Society had already in its meeting held on 30th May, 1980 rejected the said request and therefore, repeated requests made on the basis of the said agreement could not be accepted.
3.9. Feeling aggrieved a
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