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CASE NO.: Appeal (civil)  2990-2991 of 2005

PETITIONER: M/s. Anita Enterprises & Anr

RESPONDENT: Belfer Coop. Housing Society Ltd. & Ors

DATE OF JUDGMENT: 14/11/2007

BENCH: B.N. AGRAWAL & P.P. NAOLEKAR

JUDGMENT: J U D G M E N T

CIVIL APPEAL NOS. 2990-2991 OF 2005 WITH CIVIL APPEAL NOS. 2992-2993 OF 2005 AND CIVIL APPEAL NOS. 2994-2995 OF 2005

B.N. AGRAWAL, J.

1.      These appeals by special leave have been filed against  separate orders rendered by a Division Bench of the Bombay High  Court in Letters Patent Appeals whereby the same have been  dismissed as not maintainable, thereby confirming the common  judgment rendered by a learned Single Judge of the High Court in  three writ petitions filed under Article 227 of the Constitution of  India [hereinafter referred to as ‘the Constitution’].  2.      The facts, in brief, are that the Belfer Cooperative Housing  Society Limited, Bandra [West], Mumbai, respondent No. 1 in Civil  Appeal Nos. 2990-2991 of 2005,  [hereinafter referred to as ‘the  Society’], which was a tenant co-partnership housing society, held   both lands and flats constructed thereon and Dr. Gopal Mahadeo  Dhadphale, respondent No. 2 in the said appeals  [hereinafter  referred to as ‘the member’] was admitted  as member of the  Society in the year 1962 and flat No. 4 on the ground floor was  allotted to him.  On 3.6.1982, the member inducted M/s. Anita  Enterprises, appellant No. 1 in the said appeals, in room No. 2 of  the said flat on  a monthly rental of Rs. 1000/- and on 3.10.1983  the  appellant aforementioned  was inducted in room No. 3 as well  on a monthly rental of Rs. 750/-.  The member thereafter inducted  M/s. Anita Medical Systems  Pvt. Ltd., appellant No. 2 in the said  appeals, in room no. 1 of the flat in question on a monthly rental of  Rs. 1000/- which was subsequently enhanced to Rs. 1500/- per  month and both the appellants were put in possession of the  aforesaid premises. The appellants paid rent upto the month of  December, 1986 and as the member refused to accept the rental  from January, 1987, the rental was sent to him by cheques under  registered post, but the same was not accepted.  3.      Thereupon, the appellants were asked to vacate the premises  in question which necessitated filing of two separate suits by them  in the year 1987 before the Small Causes Court for a declaration  that they were tenants with regard to the aforesaid premises of  which they were in occupation and for perpetual injunction  restraining the member from interfering in any manner with their  possession over the premises in question in which suits only the  member was made party and not the Society.  The member in the

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said suits contested the claim of the appellants and both the suits  filed by the appellants were dismissed by the trial court upon a  finding that the appellants were not inducted as tenants in the suit  premises. But on appeal being preferred to the appellate bench of  the Small Causes Court, the same were decreed and it was held  that the appellants were inducted as tenants in the premises in  their occupation.    4.      In the meantime, the Society raised a dispute in the year  1989 before the Cooperative Court under Section 91 of the  Maharashtra Cooperative Societies Act, 1960 [hereinafter referred  to as ‘the Societies Act’] praying therein that the appellants be  evicted from the premises in their occupation and the member be  directed to occupy the same as, according to the Society, the  member had parted with possession of the premises in question  in  favour of the appellants which was not permissible in law.  The  said case was contested by the appellants in which the member  and the appellants entered appearance and all contested the claim  of the Society.    The Cooperative Court by its award decided the  dispute in favour of the Society, passed an order of eviction against  the appellants and directed the member to occupy the premises.   The said order was upheld in appeal.   5.      Thereafter, before the High Court three writ petitions were  filed \026 one by the appellants against the aforesaid order passed by  the appellate court upholding order passed by the Cooperative  Court and the other two writ petitions by the member against the  order passed by the appellate bench of the Small Causes Court  whereby aforesaid declaratory suits filed by the appellants were  decreed.  A learned Single Judge of the High Court, by a common  judgment, dismissed the writ petition filed by the appellants  whereby order passed by the Cooperative Court against the  member and the appellants, which was upheld in appeal, has been  confirmed and allowed the writ petitions filed by the member, set  aside judgment and order passed by the appellate bench of Small  Causes Court and restored that of the trial court whereby  declaratory suits filed by the appellants were dismissed. The said  judgment has been upheld by Division Bench of the High Court by  dismissing the Letters Patent Appeals on the ground that the same  were not maintainable in view of the fact that the writ petitions  were filed under Article 227 of the Constitution.   Hence these  appeals by special leave.  6.      Undisputed facts are stated hereinafter. The Society was a  tenant co-partnership housing Society, the land and the structures  standing thereon, which include the premises in question, were  held by it, respondent no. 2 was admitted as its member,  allotted  flat No. 4 and  put in possession thereof. The appellants are in  occupation of the premises in question since the date of their  induction aforementioned and the member remained in possession  of the premises for a period of more than one year before induction  of the appellants therein.  Induction of appellants as tenants by  the member amounted to  transfer of interest by the member in the  premises in question, which was property of the Society, and the  appellants were neither members of the Society nor can be said to  be persons whose application for membership had been accepted  by the Society or persons whose appeal under Section 23 of the  Societies Act had been allowed by the Registrar or persons who  were deemed to be members under Section (1A) of Section 23 of the  Societies Act.   The appellants were inducted without the consent  of either the Society or its Managing Committee and never  admitted as nominal members of the Society. 7.      Shri Shekhar Naphade, learned senior counsel appearing on  behalf of the appellants in support of the appeals, submitted that  respondent no. 2 - in his capacity as member of the tenant co- partnership housing society - has a possessory right in the  premises in question and the Society was only, by way of legal  fiction, owner of the said premises.  It was further submitted that

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there was no relationship of landlord and tenant between the  Society and the member and there was such a relationship  between the member and the appellants, as such, the appellants  were entitled to claim protection under the Bombay Rents, Hotel  and Lodging House Rates Control Act, 1947 [hereinafter referred to  as ‘the Rent Act’) and the proceeding under Section 91 of the  Societies Act was not maintainable in view of the bar incorporated  under Section 28 of the Rent Act.  According to him, the Society  was not justified in contending that there was relationship of  landlord and tenant between the Society and the member and  consequently the appellants cannot be said to be sub-tenants of  the member as creation of sub-tenancy was forbidden under  Section 15 of the Rent Act unless there was contract to the  contrary, which was not so in the case on hand and, consequently  such a sub-tenant cannot be treated to be a tenant within the  meaning of Section 5(11) of the Rent Act.   It was also submitted  that the tenancy right could be created by the member as the  transfer by him of his right in the premises was not forbidden in  law, therefore, the Society was not justified in contending that  relationship of landlord and tenant was not duly created inasmuch  as even if there was restrictive right of transfer and not absolute  one if the tenancy was created in infraction of the same, the  transaction creating tenancy right in the appellants by the member  cannot be said to be void as such and if a party wanted to avoid  the same, it was required to move a competent civil court for a  declaration that the same was invalid in law as the said  transaction can, at the highest, be said to be voidable and the said  question cannot be examined by a Cooperative Court purporting to  act under Section 91 of the Societies Act.     8.      On the other hand, Shri U.U. Lalit, learned senior counsel  appearing on behalf of the Society,  submitted that the relationship  between the Society and the member, as would appear from the  Bye-Laws of the Society as well as Regulations, was that of  landlord and tenant in respect of the premises held by the Society  and the member purported to create right of a sub-tenant in the  appellants which was, in the absence of any contract to the  contrary,  forbidden by Section 15 of the Rent Act, as such the  appellants having not acquired the status of a tenant within the  meaning of the Rent Act, cannot claim protection thereunder from  eviction. Alternatively, it was submitted that even if it was treated  that there existed no relationship of landlord and tenant between  the Society and the member and relationship of landlord and  tenant was created between the member and the appellants, the  same was not valid in law as it was not duly created in view of the  fact that such a transaction being in violation of the provisions of  Section 29 of the Societies Act, was invalid as the transfer  made   was, though entered into after completion of period of one year of  occupation of the member, to a non-member which was forbidden  by law, as would appear from the said provisions and the Bye-Laws  of the Society and its legality or otherwise could have been  examined in a dispute raised under Section 91 of the Societies Act.    It was then submitted that asking the Society to first seek such a  declaration from a competent civil court and thereafter raise a  dispute under Section 91 of the Societies Act would frustrate the  very object of the Societies Act.  It was further submitted that in  any view of the matter, in the present case as the appellants had  already filed suits before the Small Causes Court for a declaration  that their status was that of  tenants under the Rent Act,  in which  it was open to the Society to raise the question that  the  relationship of landlord and tenant was not duly created, meaning  thereby not in accordance with law but contrary to law and for  granting relief to the appellants  therein the Court was called upon  to go into this question and decide the same.   Learned counsel  also submitted that as the relationship of landlord and tenant was  not duly created, the appellants could not claim protection of the

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Rent Act and the petition under Section 91 of the Societies Act was  maintainable as the dispute raised was touching upon business of  the Society.      9.      In view of the rival submissions, the following questions fall  for our consideration in these appeals:- 1.      Whether status of a member in a tenant co-partnership  housing society is that of a tenant or landlord within the  meaning of the Rent Act and consequently there was  any relationship of landlord and tenant between the  society and its member?  2.      Whether purported status of the appellants, who were  inducted by the member in the premises in question was  that of a tenant or sub-tenant within the meaning of  Section 5(11) of the Rent Act and if it is held to be a  tenant whether the relationship of landlord and tenant  between them was duly created so as to claim protection  from eviction under the Rent Act?  3.      Whether the question regarding legality  or otherwise  of   creation of tenancy right between the appellants and the   member of the Society could be adjudicated by the Small  Causes Court in suits filed by the appellants against  member of the Society for declaration that there was  relationship of landlord and tenant between them and  the High Court was justified in restoring decree passed  by the trial court to the effect that there was no  relationship of landlord and tenant between the  appellants and member of the Society?  4.     Whether the matter regarding legality or otherwise of  creation of tenancy right between the appellants and the  member could be adjudicated by the Cooperative Court  in dispute raised under Section 91 of the Societies Act  before the Cooperative Court or the Society before  raising any such dispute was required to obtain a  declaratory decree from competent civil court by filing a  properly constituted suit before it?   10.     In order to appreciate the points involved in these appeals, it  would be useful to refer to the relevant provisions of the Societies  Act, Maharashtra Co-operative Societies Rules, 1961 [hereinafter  referred to as ‘the Rules’], Bye-Laws of the Society which were  registered with the Registrar, Cooperative Society, at the time of  grant of registration to it [hereinafter referred to as ‘the Bye-Laws’],  Regulations relating to tenancies to be granted by the Society to  members in respect of premises held by the Society contained in  Form A which are part of registered Bye-Laws of the Society  [hereinafter referred to as ‘the Regulations’] and  the Rent Act  which run thus:-

THE SOCIETIES ACT:

"Section 2 - Definitions.-  In this Act, unless the  context otherwise requires,--

[(16) "housing society "means a society, the object of  which is to provide its members with open plots for  housing, dwelling houses or flats; or if open plots,  the dwelling houses or flats are already acquired, to  provide its members common amenities and  services];

(19) (a.)    "member" means a person joining in an  application for the registration of a Cooperative  society which is subsequently registered, or a  person duly admitted to membership of a society

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after registration, and includes a nominal,  associate or sympathizer member;

 *             *               *               *                *

(c.)    "nominal member" means a person admitted to  membership as such after registration in  accordance with the by-laws;

 *             *               *               *                *"

"Section 23 - Open membership.- (1) No society  shall, without sufficient cause, refuse admission to  membership to any person duly qualified therefor  under the provisions of this Act and its by-laws.

[(1A) Where a society refuse to accept the  application from an eligible person for admission as  a member, or the payment made by him in respect of  membership, such person may tender an application  in such form as may be prescribed together with  payment in respect of membership, if any, to the  Registrar, who shall forward the application and the  amount, if any so paid, to the society concerned  within thirty days from the date of receipt of such  application and the amount; and thereupon if the  society fails to communicate any decision to the  applicant within sixty days from the date of receipt  of such application and the amount by the society,  the applicant shall be deemed to have become a  member of such society.] [If any question arises  whether a person has become a deemed member or  otherwise, the same shall be decided by the  Registrar after giving a reasonable opportunity of  being heard to all the concerned parties.]

(2) Any person aggrieved by the decision of a  society, refusing him admission to its membership,  may appeal to the Registrar. [Every such appeal, as  far as possible, be disposed of by the Registrar  within a period of three months from the date of its  receipt:

Provided that, where such appeal is not so disposed  of within the said period of three months, the  Registrar shall record the reasons for the delay.]

(3) The decision of the Registrar in appeal, shall be  final and the Registrar shall communicate his  decision to the parties within fifteen days from the  date thereof.

[( 4) Without prejudice to the foregoing provisions of  this section, in the case of agro-processing societies  or any other society for which a definite zone or an  area of operation is allotted by the State Government  or the Registrar, it shall be obligatory on the part of  such society to admit, on an application made to it,  every eligible person from that zone or the area of  operation, as the case may be, as a member of such  society, unless such person is already registered as  a member of any other such society, in the same  zone or the area of operation.]"

"Section 29 - Restrictions on transfer or charge

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of share or interest .- (1) Subject to the provisions  of the last preceding section as to the maximum  holding of shares and to any rules made in this  behalf, a transfer of, or charge on, the share or  interest of a member in the share capital of a society  shall be subject to such conditions as may be  prescribed.

(2) A member shall not transfer any share held by  him or his interest in the capital or property of any  society, or any part thereof, unless\027

(a)he has held such share or interest for not less  than one year;

(b)the transfer is made to a member of the society or  to a person whose application for membership has  been accepted [by the society, or to a person whose  appeal under Section 23 of the Act has been allowed  by the Registrar; or to a person who is deemed to be  a member under sub-section (1A) of-section 23.].

(3) Notwithstanding anything contained in sub- sections (1) and (2), where a member is allowed to  resign, or is expelled, or ceases to be a member on  account of his being disqualified by this Act or by  the rules made thereunder or by the by-laws of the  society, the society may acquire the share or interest  of such member in the share capital by paying for it  at the value determined in the manner prescribed  provided that the total payment of share capital of a  society in any financial year for such purposes does  not exceed ten per cent of the paid-up share capital  of the society on the last day of the financial year  immediately preceding.

Explanation --.[I]--The right to forfeit the share or  interest of any expelled member in the share capital  by virtue of any by-laws of the society, shall not be  affected by the aforesaid provision.

[Explanation II,--In this section, the expression  "financial year" means the year ending on the [31st  day, of March] or, in the case of any society or class  of societies the accounts of which are with the  previous sanction of the Registrar balanced on any  other day, the year ending on such day.]

(4) Where the State Government is a member of a  society, the restrictions contained in this section  shall not apply to any transfer made by it of its  share or interest in the capital of the society; and  that Government may, notwithstanding anything in  this Act, withdraw from the society its share capital  at any time, after giving to the society notice thereof  of not less than three months".

"Section 31 - Share or interest not liable to  attachment.- The share or interest of a member in  the capital of a society, or in the loan-stock issued  by a housing society, or in the funds raised by a  society from its members by way of savings deposit,  shall not be liable to attachment or sale under any  decree or order of a Court for or in respect of any  debt or liability incurred by the member; and

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accordingly, neither the Official Assignee under the  presidency-towns Insolvency Act, 1909, nor a  Receiver under the Provincial Insolvency Act, 1920,  nor any such person or authority under any  corresponding law for the time being in force, shall  be entitled to, or have any claim on, such share or  interest."

"Section 47 - Prior claim of society.- (1)  Notwithstanding anything in any other law for the  time being in force, but subject to any prior claim of  Government in respect of land revenue or any money  recoverable as land revenue and to the provisions of  sections 60 and 61 of the Code of Civil Procedure,  1908.

(a) any debt or outstanding demand, owing to a  society by any member or past member or deceased  member, shall be a first charge,--

(i) upon the crops or other agricultural produce  raised in whole or in part whether with or without a  loan taken from the society by such member or past  member or deceased member,--

(ii) upon any cattle, fodder for cattle, agricultural or  industrial implements or machinery, or raw  materials for manufacture, or workshop, godown or  place of business supplied, to or purchased by such  member or past member or deceased member, in  whole or in part, from any loan whether in money or  goods made to him by the society, and

(iii) upon any movable property which may have  been hypothecated, pledged or otherwise mortgaged  by a member with the society, and remaining in his  custody; (b) any outstanding demands or dues payable to a  society by any member or past member or deceased  member, in respect of rent, shares, loans or  purchase money or any other rights or amounts  payable to such society, shall be a first charge upon  his interest in the immovable property of the society,

Explanation.--The prior claim of Government in  respect of dues other than land revenue, shall be  restricted for the purpose of sub-section (1) to the  assets created by a member out of the funds in  respect of which the Government has a claim.

(2) No property or interest in property, which is  subject to a charge under the foregoing sub-section,  shall be transferred in any manner without the  previous permission of the society; and such transfer  shall be subject to such conditions, if any, as the  society may impose.

(3) Any transfer made in contravention of sub-section  (2) shall be void.

(4) Notwithstanding anything contained in sub- sections (2) and (3), a society, which has as one of  its objects the disposal of the produce of its  members, may provide in its by-laws, or may  otherwise contract with its members,--

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(a) that every such member shall dispose of his  produce through the society, and

(b) that any member, who is found guilty of a breach  of the by-laws or of any such contract, shall  reimburse the society for any loss, determined in  such manner as may be specified in the by-laws."

"Section 91 - Disputes .- (1) Notwithstanding  [anything contained] in any other law for the time  being in force, any dispute touching the constitution,  [elections of the committee or its officers other than  elections of committees of the specified societies  including its officer], conduct of general meetings,  management or business of a society shall be  referred by any of the parties to the dispute, or by a  federal society to which the society is affiliated or by  a creditor of the society, to the co-operative Court if  both the parties thereto are one or other of the  following:--

(a) a society, its committee, any past committee, any  past or present officer, any past or present agent,  any past or present servant or nominee, heir or legal  representative of any deceased officer, deceased  agent or deceased servant of the society, or the  Liquidator of the society [or the official Assignee of a  de-registered society] . (b) a member, past member of a person claiming  through a member, past member of a deceased  member of society, or a society which is a member of  the society [or a person who claims to be a member  of the society;]

[(c) a person other than a member of the society,  with whom the society, has any transactions in  respect of which any restrictions or regulations have  been imposed, made or prescribed under sections  43, 44 or 45, and any person claiming through such  person;

(d) a surety of a member, past member or deceased  member, or surety of a person other than a member  with whom the society has any transactions in  respect of which restrictions have been prescribed  under section 45, whether such surety or person is  or is not a member of the society;)

(e) any other society, or the Liquidator of such a  society [or-de-registered society or the official  Assignee of such a de-registered society].

[Provided that, an industrial dispute as defined in  clause (k) of section 2 of the Industrial Disputes Act,  1947 , or rejection of nomination paper at the  election to a committee of any society other than a  notified society under section 73 - 1 C or a society  specified by or under section 73 -G, or refusal of  admission to membership by a society to any person  qualified therefor [or any proceeding for the recovery  of the amount as arrear of land revenue on a  certificate granted by the Registrar under sub- section (1) or (2) of section 101 or sub -section (1) of

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section 137 or the recovery proceeding of the  Registrar or any officer subordinate to him or an  officer of society notified by the State Government,  who is empowered by the Registrar under sub - section (1) of section 156,] [or any orders, decisions,  awards and actions of the Registrar against which  an appeal under section 152 or 152 A and revision  under section 154 of the Act have been provided]  shall not be deemed to be a dispute for the purposes  of this section.]

( 3 ) Save as otherwise provided under [sub-section  (2) to section 93], no Court shall have jurisdiction to  entertain any suit or other proceedings in respect of  any dispute referred to in sub -section (1).

Explanation 1.--A dispute between the Liquidator of  a society [or an official Assignee of a de-registered  society] and [the members (including past members,  or nominees, heirs or legal representative or  deceased members)] of the same society shall not be  referred [to the co-operative Court] under the  provisions of sub-section ( 1).

Explanation 2.--For the purposes of this sub-section,  a dispute shall include\027

(i) a claim by or against a society for any debt or  demand due to it from a member or due from it to a  member, past member or the nominee, heir or legal  representative of a deceased member, or servant for  employee whether such a debt or demand be  admitted or not;

(ii) a claim by a surety for any sum or demand due  to him from the principal borrower in respect of a  loan by a society and recovered from the surety  owing to the default of the principal borrower,  whether such a sum or demand be admitted or not;

(iii) a claim by a society for any loss caused to it by  a member, past member or deceased member, by  any officer, past officer or deceased officer, by any  agent, past agent or deceased agent, or by any  servant, past servant, past servant or deceased  servant, or by its committee, past or present,  whether such loss be admitted or not;

(iv) a refusal or failure by a member, past member or  a nominee, heir or legal representative of a deceased  member, to deliver possession to a society of land or  any other asset resumed by it for breach of condition  as the assignment."

"93. Transfer of disputes from one Co-operative  Court to another and suspension of  proceedings in certain cases.-     *             *               *               *                *

(2) Notwithstanding anything contained in this Act,  the Co-operative Court, on an application made to it  by any of the parties to the dispute, may, if it thinks  fit suspend any proceedings in respect of any  dispute, if the question at issue between a society

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and a claimant or between different claimants, is  one involving complicated questions of law and fact,  until the question has been tried by a regular suit  instituted by one of the parties or by the society. If  any such suit is not instituted in a Civil Court within  two months from the date of the order of the Co- operative Court, shall continue the proceedings and  decide the dispute]"

[Emphasis Added]

THE RULES  

"Rule 8 \026 Matters in respect of which Registrar  may direct society to make by-laws or society  may make by-laws.-

(1) The Registrar may require a society to make bye- laws in respect of all or any of the following matters,  that is to say.-

  *            *               *               *                *

(c) the object of the society;

         *             *               *               *                *

(f) the privileges, rights, duties and liabilities of  members including nominal, associate and  sympathizer members;

 *             *               *               *                *

(m) the procedure for expulsion of members;   (2) A society may make by-laws for all or any of the  following matters, that is to say \026

 *             *               *               *                *

(c)  the conditions, if any, under which the transfer of  share or interest of a member may be permitted;"

"Rule 10 \026 Classification and sub-classification  of societies.- (1) After registration of a society, the  Registrar shall classify the society into one or other  of the following classes and sub-classes of societies  prescribed below according to the principal object  provided in its by-laws:

Class

1 Sub-Class

2 Examples of societies  falling in the class or sub- class, as the case may be 3 * *

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* * 5 Housin g  Society (a)Tenant  Ownership  Housing Society Housing Societies where  land is held either on lease- hold or free-hold basis by  Societies and houses are  owned or are to be owned  by members.

(b)Tenant Co- partnership  Housing Society Housing Societies which  hold both land and  buildings either on lese- hold or free-hold basis and  allot them to their  members.

(c) Other Housing  Societies House Mortgage Societies  and House Construction  Societies.

"Rule 28 \026 Expulsion of members.- Any member  who has been persistently defaulting payment of  his dues or has been failing to comply with the   provisions of the by-laws regarding sales of his  produce through the society or other matters in  connection with his dealings with the society or  who, in the opinion of the committee, has brought  disrepute to the society or has done other acts  detrimental to the interest or proper working of the  society may, in accordance with the provisions of  sub-section (1) of Section 35, be expelled from the  society.  Expulsion from membership may involve  forfeiture of shares held by the member."

[Emphasis Added]

THE BYE-LAWS

"Bye-law. 2.-   The objects of the Society shall be: -

(a)  To purchase plot No\005\005\005\005\005\005\005\005\005.   or to  purchase building \005\005\005\005\005\005\005.. constructed on  Plot No\005\005\005\005\005\005\005\005\005\005\005\005 (referred to in the  application for registration), or any other plot or plots  with the prior approval of the general meeting and of  the Registrar and to construct tenements on such  plot or plots for the use of members;

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 *             *               *               *                *   (f)  To do all things necessary or expedient for the  attainment of the objects specified in these by-laws;"

"Bye-Law 7.- All persons permanently residing in  Bombay City and Suburban area or who intend to  settle down in Bombay City and Suburban area  permanently and who have signed the application  for registration are original members.  Other  members shall be admitted by the Committee.  Every  person on applying for membership shall deposit  Re.1/- as entrance fee and the value of at least five  shares for which he shall receive a copy of the by- laws.  Two adverse votes are sufficient to exclude an  applicant.  In case where an application is refused,  the deposit shall ordinarily be returned.

Note:-  Resident is a person who resides in the  house or tenement permanently and which he does  not leave for more than 4 months at a time."  

"Bye-Law 12.-   (1) A member shall be expelled from  the Society by the vote of not less than two-thirds of  the members present and voting at a General  Meeting of the Society on a motion (which shall be  final and conclusive) that in the opinion of the  Meeting such member has:  

(a) been a persistent defaulter , (b) willfully deceived the Society by false statements,

(c) been bankrupt or legally disabled,

(d) been criminally convicted of an offence involving  moral turpitude , (e) intentionally done any act likely to injure the  credit of the Society,

(f) gravely misused the dwelling rented by him from  the Society or habitually acted in it in a disgraceful  manner or in a manner which has caused serious  offence to his neighbours  or

(g) without the previous written permission of the  Managing Committee has let or sub-let or given on  caretaker or leave licence basis or used for  accommodating paying guests or disposed off in any  other manner any portion of the dwelling  accommodation/shops/godowns/garages.

(h) failed to occupy his premises in the building of  the society within a period not exceeding six months  from the date of the allotment of a flat."

"Bye-Law 64.-   No member shall be tenant of the  Society unless he subscribes to such number of  shares as the Managing Committee prescribes."

"Bye-Law 64(a).-  A member to whom a tenement is  allotted shall occupy it himself and shall not assign,

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underlet, vacate or part with the possession of the  tenement or any part thereof without the previous  consent in writing of the Managing Committee. Such  permission shall not be granted unless the member  authorizes the society to recover rent or  compensation and taxes and other common charges  from the sub-lettee, licensee or caretaker. The  society shall admit every such sub-lettee, licensee,  or caretaker as a nominal member of the Society".

[Emphasis Added]

THE REGULATIONS

"Regulation 4.-         No tenant shall assign  underlet, vacate or part with the possession of the  tenement or any part thereof without the previous  consent in writing of the Society"

"Regulation 24.-        The rent shall be calculated as  follows and shall be paid on the first day of each  calendar month: -

(a)     A rent of 61/4 per cent per annum (which shall  not be increased during the tenancy) on the cost  including the building, land, roads and other items,  such cost to be certified by the Committee whose  decision shall be final and conclusive and to be paid  by 12 equal calendar monthly payments.

(b)     A further rent during the term of 25 years of  \005\005\005\005. Per cent per annum (which shall not be  increased during the said term of 25 years except for  a new tenant) on the said cost such rent to be  applied to the share account of the tenants and to be  paid by 12 equal calendar monthly payments and it  is anticipated that when all these payments are  made the dividend on the shares will be equal to the  rent paid under clause 24(a) hereof.

(c)     A further rent equal to the proportion  (applicable to the tenement) of the expense incurred  from time to time in insurance against fire, tempest  or flood or violence by an army or mob or other  irresistible force and in the management of the  Society and the maintenance and repair of the  Society’s Estate such expense and proportion thereof  payable by the tenant to be determined by the  Certificate of the Committee whose decision shall be  final and conclusive such further rent to be paid on  the 1st day of the calendar month next following the  date of the said certificate. (d)     A further rent equal to the proportion applicable  to the tenement of the sum or sums from time to time  paid by the Society in respect of assessment and  rates such proportion to be determined by the  Certificate of the Committee whose decision shall be  final and conclusive such further rent to be paid on  the 1st day of the calendar month next following the  date of the said certificate.

I agree to take the tenement known as\005\005subject to  the above regulations which I agree to observe and

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perform and by which I agree to be bound"."

[Emphasis Added]

THE RENT ACT

"Section 5 \026 Definitions.- In this Act unless there  is anything repugnant to the subject or context,-

*               *               *               *                *  

(3) "landlord" means any person who is for the time  being, receiving, or entitled to receive, rent in respect  of any premises whether on his own account or on  account, or on behalf, or for the benefit of any other  person or as a trustee, guardian, or receiver for any  other person or who would so receive the rent or be  entitled to receive the rent if the premises were let to  a tenant; and includes any person not being a  tenant who from time to time derives title under a  landlord; and further includes in respect of his sub- tenant, a tenant who has sublet any premises; [and  also includes in respect of a licensee deemed to be a  tenant by section 15A, licensor who has given such  license, [and in respect of the State Government, or  as the case may be, the Government allottee referred  to in sub-clause (b) of clause (1A), deemed to be a  tenant by section 15B, the person who was entitled  to receive the rent if the premises were let to a  tenant immediately before the coming into force of  the Bombay Rents, Hotel and Lodging House Rates  Control, Bombay Land Requisition and Bombay  Government Premises (Eviction) (Amendment) Act,  1996]]"

*               *               *               *                *

"(11).-  "tenant" means any person by whom or on  whose account rent is payable for any premises and  includes, -

(a) such sub-tenants and other persons as have  derived title under a tenant  [before the 1st day of  February 1973;]

[(aa) any person to whom interest in premises, has  been assigned or transferred as permitted or  deemed to be permitted, under section 15;]

(b) any person remaining after the determination of  the lease, in possession, with or without the assent  of the landlord, of the premises leased to such  person or his predecessor who has derived title   [before the first day of February 1973;]

(bb) such licensees as share deemed to be tenants  for the purposes of this Act by section 15A]

[(bba) the State Government, or as the case may be,  the "’Government allottee, referred to in sub-clause  (b) of clause (1A), deemed to be a tenant, for the  purposes of this Act by section 15B;].

[[(c) (i) in relation to any premises let for residence,

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when the tenant dies, whether the death has  occurred before or after the commencement of the  Bombay Rents, Hotel and Lodging House Rates  Control (Amendment) Act, 1978, any member of the  tenant’s family residing with the tenant at the time  of his death or, in the absence of such member, any  heir of the deceased tenant, as may be decided in  default of agreement by the Court;

(ii) in relation to any permission let for the purposes  of education, business, trade or storage, when the  tenant dies, whether the death has occurred before  or after the commencement of the said Act, any  member of the tenant’s family using the premises for  the purposes of education of carrying on business,  trade or storage in the premises, with the tenant at  the time of his death, or, in the absence of such  member, any heir of the deceased tenant, as may be  decided in default of agreement by the Court.

Explanation.- The provisions of this clause for  transmission of tenancy, shall not be restricted to  the death of the original tenant, but shall apply, and  shall be deemed always to have applied, even on  the death of any subsequent tenant, who becomes  tenant under these provisions on the death of the  last preceding tenant.".]

"Section 15. [In absence of contract to the  contrary, tenant not to sub-let or transfer] [or  to give on licence].-

[(1)] Notwithstanding anything contained in any law  [but subject to any contract to the contrary,] it shall  not be lawful after the coming into operation of this  Act for any tenant to sub-let the whole or any part of  the premises let to him or to assign or transfer in  any other manner his interest therein [and after the  date of commencement of the Bombay Rents, Hotel  and Lodging House Rates Control (Amendment) Act,  1973, for any tenant to give on licence the whole or  part of such premises]:

[Provided that the [State] Government may by  notification in the Official Gazette, permit in any  area the transfer of interest in premises held under  such [leases or class of leases [or the giving on  licence any premises or class of premises] and no  such extent as may be specified in the notification.]

[(2) The prohibition against the sub-letting of the  whole or any part of the premises which have been  let to any tenant, and against the assignment or  transfer in any other manner of the interest of the  tenant therein, contained in sub-section (1), shall,  subject to the provisions of this sub-section be  deemed to have had no effect [before the 1st day of  February, 1973], in any area in which this Act was  in operation before such commencement; and  accordingly, notwithstanding anything contained in  any contract or in the judgment, decree or order a  Court, any such sub-lease, assignment or transfer of  any such purported sub-lease, assignment or  transfer in favour of any person who has entered  into possession, despite the prohibition in sub-

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section (1) as purported sub-lessee, assignee or  transferee and has continued in a possession [on the  date aforesaid] shall be deemed to be valid and  effectual for all purposes, and any tenant who has  sub-let any premises or part thereof, assigned or  transferred any interest therein, shall not be liable to  eviction under clause (e) of sub-section (1) of section  13.

The provisions aforesaid of this sub-section shall not  affect in any manner the operation of sub-section (1)  after the [date aforesaid]".

"Section 15A. Certain licensees in occupation  on 1st February 1973 to become tenants.-

(1)Notwithstanding anything contained elsewhere in  this Act or anything contrary in any other law for the  time being in force, or in any contract where any  person is on the 1st day of February 1973 in  occupation of any premises, or any part thereof  which is not less than a room, as a licensee he shall  on that date be deemed to have become, for the  purpose of this Act, the tenant of the landlord, in  respect of the premises or part thereof, in his  occupation.

(2) The provisions of sub-section (1) shall not affect  in any manner the operation of sub-section (1) of  section 15 after the date aforesaid]".

"Section 28 - Jurisdiction of Courts.-    [(1)] Notwithstanding anything contained in any law  and notwithstanding that by reason of the amount  of the claim or for any other reason, the suit or  proceeding would not, but for this provision, be  within its jurisdiction.-

(a) in Greater Bombay, the Court of Small Causes,  Bombay [*]

[(aa) in any area for which, a Court of Small Causes  is established under the Provincial Small Cause  Courts Act, 1887, such Court and]

(b), elsewhere, the Court of the Civil Judge (Junior  Division) having jurisdiction in the area in which the  premises are situate or, if there is no such Civil  Judge the Court of the Civil Judge (Senior Division)  having ordinary jurisdiction,

shall have jurisdiction to entertain and try any suit  or proceeding between a landlord and a tenant  relating to the recovery of rent or possession of any  premises to which any of the provisions of this Party  apply [or between a licensor and a licensee relating  to the recovery of the licence fee or charge] and to  decide any application made under this Act and to  deal with any claim or question arising out of this  Act or any of its provisions-and subject to the  provisions of sub-section (2)] no other court shall  have jurisdiction to entertain any such suit,  proceeding, or application or to deal with such claim  or question.

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[(2) (a) Notwithstanding anything contained in  clause (aa) of sub-section (1), the District Court may  at any stage withdraw any such suit, proceeding or  application pending in a Court of Small Causes  established for any area under the Provincial Small  Causes Courts Act, 1887, and transfer the same for  trial or disposal to the Court of the Civil Judge  (Senior Division) having ordinary Jurisdiction in such  area.]

(b) Where any suit, proceeding or application has  been withdrawn under clause (a), the Court of the  Civil Judge (Senior Division) which thereafter tries  such suit, proceedings or application, as the case  may be, may either re-try it or proceed from the  stage at which it was withdrawn.

(c) The Court of the Civil Judge trying any suit,  proceeding or application withdrawn under clause  (a) from the Court of Small Causes, shall, for  purposes of such suit, proceeding or application, as  the case may be, be deemed to be the Court of Small  Causes.]

Explanation.- In this section "proceeding" does not  include an execution proceeding arising out of a  decree passed before the coming into operation of  this Act."

[Emphasis Added]

11.     In our country, for the first time, Co-operative Credit Societies  Act, 1904 was passed, to encourage thrift, self-help and co- operation among agriculturists, artisans and persons of limited  means, and for that purpose to provide for the constitution and  control of co-operative credit societies, which laid down the  foundation of co-operative law.   Under that Act ten members could  form a society and the object of the society was to raise funds  either from members or outsiders and give loans to the needy  members out of the funds so collected.  The principle of limited  liability was also recognized and the concept of profit motive was  given a go-by. The tendency towards concentration of wealth in a  few hands was discouraged by providing that no member could  hold shares beyond a certain limit. The said Act was replaced by  the Cooperative Societies Act, 1912, which was repealed by the  Bombay Cooperative Societies Act, 1925. The aforementioned Act  was repealed by the Maharashtra Cooperative Societies Act, 1960  to consolidate and amend the law relating to cooperative societies  in the State of Maharashtra the objective of which was to provide  for the orderly development of the cooperative movement in the  State in accordance with the Directive Principles of State Policy  enshrined in Part Four of the Constitution of India.   12.     ‘Society’ has been defined under Section 2(27) of the Societies  Act to mean a cooperative society registered or deemed to be  registered under the Societies Act.  Under Section 2(5) ‘by-laws’  means by-laws registered under the Societies Act and for the time  being in force and includes registered amendments of such by- laws.  Under Section 2(16) ‘housing society’ has been defined to  mean a society, the object of which is to provide its members with  open plots for housing, dwelling houses or flats; or if open plots,  the dwelling houses or flats are already acquired, to provide its  members common amenities and services.  Section 2(19) defines  ‘member’ to be a person joining in an application for the

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registration of a cooperative society which is subsequently  registered, or a person duly admitted to membership of a society  after registration and includes an associate, nominal or  sympathiser member. Under Section 2(19)(c) ‘nominal member’ is  a person admitted to membership as such after registration in  accordance with by-laws. Section 2(21) defines the expression  ‘prescribed’ to mean prescribed by rules. Under Section 2(24)  ‘Registrar’ has been defined to mean a person appointed as  Registrar of Co-operative Societies under the Societies Act. ’Rules’  under Section 2(26) means rules made under the Societies Act.  13.     Section 4 of the Societies Act lays down that a Society which  has as its objects the promotion of economic interests or general  welfare of its members or of the public in accordance with  cooperative principles or a society established with the object of  facilitating the operations of any such society, may be registered  under the Societies Act.  Under Section 9, upon the satisfaction of  the Registrar, cooperative society and its bye-laws are registered on  an application made to that effect under Rule 8.  Section 12 lays  down that the Registrar shall classify all societies into one or other  of the classes of societies defined in Section 2 and also into such  sub-classes thereof, as may be prescribed. Rule 10 prescribes such  classification of the societies and under Rule 10(1)(5) three types of  housing societies have been enumerated. First is under Rule  10(1)(5)(a) which is a ’tenant ownership housing society’ where  land is held either on leasehold or freehold basis by the society and  houses are owned or are to be owned by members. The second type  of housing society under Rule 10(1)(5)(b) is ’tenant co-partnership  housing society’ which holds both land and buildings either on  leasehold or freehold basis and allots them to its members. The  third type under Rule 10(1)(5)(c) is ’other housing societies’ which  are called house mortgage and house construction societies and  the same do not come in any of the categories of housing societies  referred to above. 14.     Section 22 of the Societies Act enumerates the persons who  are eligible to be admitted as members of a society.  Section 23  lays down that no society shall, without sufficient cause, refuse  admission to membership to any person duly qualified therefor  under the provisions of the Societies Act and its by-laws.  Section  24 lays down that even if any person does not fulfill the eligibility  requirement enumerated in Section 22 of the Societies Act, he can  be admitted by the Society as a nominal, associate or sympathizer  member.  According to Section 25 a person shall cease to be a  member of the society on his resignation from the membership  thereof being accepted or on the transfer of the whole of his share  or interest in the society to another member or on his death or  removal or expulsion from the society or where a firm, company,  any other corporate body, society or trust is its member, on its  dissolution or ceasing to exist.   Under Section 35 a society is  empowered by resolution passed by a majority of not less than  three-fourths of the members entitled to vote, who are present at  its general meeting held for the purpose, to expel a member for  acts which are detrimental to the interest or proper working of the  society. Under Rule 28 of the Rules any member who has been  persistently defaulting  payment of dues or has failed to comply  with the provisions of the bye-laws regarding sales of his produce  through the society or other matters connected therewith in  connection with his dealings with the society or who, in the  opinion of the committee,  has brought disrepute to the society or  has done other acts detrimental to the interest or proper working  of the society may, in accordance with the provisions of sub- section (1) of Section 35, be expelled from the society.    Under bye- law 12 a member is required not to let or sub-let or give on  caretaker or leave licence basis or use for accommodating paying  guests or dispose of in any manner any portion of the tenement  without the previous written permission of the Managing

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Committee of the Society and failure thereof tantamounts to  violation of the bye-laws within the meaning of Rule 28 and such a  member would be liable to be expelled thereunder.        15.     Section 29(2) of the Societies Act provides that a member  shall not transfer, inter alia, any interest in the property of any  society  or any part thereof unless two conditions are fulfilled,  namely,  the member has held such interest for not less than one  year and the transfer is made either to an existing member of the  society or to a person whose application for membership has been  accepted by the society or to a person whose appeal under Section  23 of the Societies Act has been allowed by the Registrar or to a  person who is deemed to be a member under sub-section (1A) of  Section 23 of the Societies Act.  16.     Under Rule 8(2) of the Rules, a society may make bye-laws  prescribing thereunder, inter alia, conditions, if any, under which  the transfer of share held by a member or interest of a member in  the tenement allotted to him may be permitted. Under bye-law  64(a) a member to whom a tenement is allotted shall be entitled to  occupy the same himself and is not permitted to assign, underlet,  vacate or part with the possession of the same or  any part thereof  without the previous consent in writing of the Managing  Committee of the Society, which permission shall not be granted  unless the member authorises the society to recover rent or  compensation and taxes and other common charges from the sub- lettee, licensee or caretaker who must agree to become its nominal  member. Regulation 4 of the Regulations, which every member at  the time of his admission to the membership of the Society is  required to observe by giving an undertaking in writing, provides  that no tenant shall assign, underlet, vacate or part with  possession of the premises or any part thereof without the previous  consent in writing of the society. 17.     Bye-law 2(a) enumerates objects of the society one of which  would be to purchase plot and to make constructions thereon for  use of its members.   The further objects of the society are to  advance loans to its members, guarantee loans to its members  for  acquiring building sites,  constructing houses, to receive or  guarantee repayments in lump sum or in instalments and to do all  things necessary or expedient for the attainment of the  objects  specified in the bye-laws, meaning thereby that every member to  whom a plot or flat is allotted for his self occupation and use shall  not  part with possession thereof unless permitted by the society,  which, at the time of grant of permission, shall admit such persons  in whose favour the member intends to part with possession by  admitting him as a nominal member.   Bye-law 7 lays down that all  persons permanently residing in Bombay City and Suburban areas  or those who intend to settle down in Bombay City and Suburban  areas shall be eligible to be admitted as members by the  Committee of the Society.   Bye-law 64 requires that no member  shall be a tenant of the society in respect of the tenement unless  he subscribes to such number of shares as the Managing  Committee prescribes, which is five  paid-up shares in the society  as per regulation 1 of the Regulations and upon subscribing to  such shares under bye-law 64 such a member shall be allotted a  tenement for his self occupation who shall not part with  possession thereof in any manner without the previous consent in  writing of the Managing Committee and while granting such  permission the person in whose favour the member intends to part  with possession shall be admitted as nominal member. 18.     Under regulation 2, the committee of the society is required to  maintain a register of applicants for the tenements and the  tenements would be offered to the members in the order in which  they appear in the register and in the event of two or more  members having made application on the same day, the one to  whom the offer is to be made shall be determined by lot.  Regulation 3 permits the tenancy to continue as long as the tenant

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or his successor in all respects observes and performs the  obligations imposed upon him under the Regulations as a tenant.    Regulation 4 forbids a tenant to part with the possession of the  tenement without the previous consent in writing of the society.     Regulation 24 enumerates the manner in which rent would be  calculated.  The cost of the land, building, road and other items to  be determined by the committee of the society and 6-1/4% thereof  shall be paid every year in 12 equal monthly instalments. In  addition to the aforesaid rent, the tenant is required to make  certain other payments by way of rent as required under sub- clauses (b) to (d) of regulation 24.  In the present case, the member  in whose favour tenement, i.e., the flat, has been allotted had  undertaken in writing that he agreed to take the tenement subject  to the Regulations and agreed to observe the same. 19.     Section 31 gives immunity to the share or interest of a  member in the capital of a society or in the loan stock issued by  society or in the funds raised by a society from its members by way  of savings deposit, from attachment or sale under any decree or  order of a court for or in respect of any debt or liability incurred by  the member. According to the provisions of Section 36 of the  Societies Act, a society, upon its registration, shall be treated to be  a body corporate, as such a juristic person. Section 47(2) of the  Societies Act lays down that interest of a member in those  properties of the society whereupon a charge has been created  under sub-section (1) of Section 47 shall not be transferred in any  manner without the previous permission of the society and for  according permission the society may impose such conditions as it  may deem fit and proper. According to Section 47(3) any transfer  made in contravention of sub-section (2) of Section 47 shall be  void. Under Section 79AA Regulations can be framed by the society  for carrying on its trade or business on the direction of the  Registrar and the same are required to be approved by him.  20.     Section 91, which begins with a non-obstante clause, lays  down that if there is any dispute, inter alia, touching the business  of a society, the same shall be referred  to Cooperative Court by,  inter alia, any of the parties to the dispute. Section 91(3) lays down  that, except as provided under sub-section (2) of Section 93 of the  Societies Act, no court shall have jurisdiction to entertain any suit  or proceeding in respect of any dispute referred to in sub-section  (1) of Section 91 of the Societies Act.   Section 93(2), which also  begins with a non-obstante clause, provides that the Cooperative  Court may, on an application made to it by any of the parties to  dispute, if it thinks fit, suspend any proceedings in respect of any  dispute, if the question at issue between a society and a claimant  or between different claimants is one involving complicated  questions of law and fact, until the question has been tried by a  regular suit instituted by one of the parties or by the society, but if  any such suit is not instituted in a Civil Court within two months  from the date of the order passed by the Cooperative Court, the  proceedings under Section 91(1) shall continue and dispute raised  by the parties shall be decided by the Cooperative Court.  Section  94 (1) lays down that the procedure for adjudication of the  aforesaid disputes raised by the parties shall, as far as possible, be  the same as provided in the case of Civil Court by the Code of Civil  Procedure, 1908.   Section 97 prescribes appeal before the  Cooperative Appellate Court against award of the Cooperative  Court adjudicating the dispute raised under Section 91 of the  Societies Act.   21.     According to Section 146(1)(a) if any member of a society  makes any transfer of any property or interest in property in  contravention of sub-section (2) of Section 47 or any persons  knowingly acquires or abets in the acquisition of such property,  the same, inter alia, would be an offence under the Societies Act,  punishment for which has been provided under Section 147 of the  Societies Act. Section 165 empowers the State Government to

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make rules for, inter alia, the conduct and regulation of business  of society and carrying out the purposes of the Societies Act.    22.     The Rent Act was enacted to amend and consolidate the law  relating to the control of rents and repair of certain premises, of  rates of hotels and lodging house and of evictions and also to  control the charges for licence of premises etc. Section 5(3) of the  Rent Act defines a ‘landlord’ to be a person who, for the time being,  is receiving or entitled to receive rent of any premises from a  tenant, which includes a licensee who is deemed to be a tenant  within the meaning of Section 15A of the Rent Act. Section 5(11)  defines ‘tenant’ to mean a person by whom or on whose account  rent is payable for any premises which, inter alia, includes a  licensee, who is a deemed tenant under Section 15A of the Rent  Act but shall not include such a sub-tenant to whom interest in  the premises has been purported to have been assigned or  transferred in the absence of any contract to the contrary as  required under Section 15 of the Rent Act.  Section 13 of the Rent  Act enumerates the grounds for eviction of a tenant which includes  bona fide need of the landlord.  Section 15 of the Rent Act lays  down that in the absence of any contract to the contrary, it shall  not be lawful for any tenant to sublet the whole or any part of the  premises in which he was inducted as a tenant.  Section 15A lays  down that if any licensee who was in occupation of the premises,  in which he was inducted as a licensee, before the 1st day of  February, 1973 and the licence was subsisting on that date, he  shall be deemed to have become a tenant of the landlord in respect  of the premises on that date i.e., 1.2.1973 when Maharashtra Act  17 of 1973 came into force whereby Section 15A was inserted in  the Rent Act. 23.     Section 28, which starts with a non-obstante clause, lays  down that suit or proceeding between a landlord and a tenant  relating to recovery of rent or possession of any premises to which  provisions of Rent Act apply shall be entertained by a court  enumerated thereunder and no other court shall have jurisdiction  to entertain any such suit, proceeding or application or to deal  with such claim or question. 24.     We now proceed to deal with the first question, i.e., whether,  in the present case,   status of the member was that of a tenant or  landlord within the meaning of the Rent Act and consequently  there was any relationship of landlord and tenant between them?  Under Rule 10(1)(5)(a) ‘tenant ownership housing society’ has been  defined to mean housing society where land is held either on  leasehold or freehold basis by the societies and houses are owned  by its members, whereas under Rule (10(1)(5)(b) in case of ’tenant  co-partnership housing society’, the society holds both land and  buildings either on leasehold or freehold basis and allots them to  its members. In the case of tenant co-partnership housing society,  it is clear from the Rules that the ownership of the land and  building both remains with the society and member cannot be said  to be co-owner, but in the case of tenant ownership housing  society, the ownership of the land remains with the society, but  ownership of the building/flat vests in the member. So far as  tenant within the meaning of Section 5(11) of the Rent Act is  concerned, he has a mere right to occupy.  He is entitled to the  protection of the Statute so long as grounds for eviction are not  made out and can be evicted only by instituting a suit in a court  enumerated under Section 28 of the Rent Act.   25.     The concept of tenant co-partnership housing society was  considered by this Court in the case of Sanwarmal Kejriwal vs.  Vishwa Cooperative Housing Society Ltd., (1990) 2 SCC 288,  wherein it was noticed that the title to  the property, i.e., the land  and building/flat both,  vests in the society. It has been further  noted that cost of construction of the dwelling is met from deposits  and rent besides the share money. The rental is usually  determined on long term basis so calculated as to meet the cost of

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construction and upkeep of the building and to guarantee  perpetuity of occupation on repayment of the whole value of the  tenement or flat.  At the end of the period the member is credited  with additional shares equal to the amount paid by him, the  interest on these shares generally matches the rental payable by  him to the society. This Court has concluded that on full payment,  the member becomes entitled to occupy the tenement or flat free of  charge as the rental he has to pay to the society is almost met from  the interest received from shares held by him and, consequently,  a  member has more than a mere right to occupy the same.  In this  regard, we may usefully refer to paragraph 13 of the case of  Sanwarmal [supra] which reads thus:-

"13. That takes us to the next question whether or  not a member of a copartnership type of a  cooperative society has such interest in the  premises allotted to him as would entitle him to  give the same on leave and licence basis to a non- member. In a tenant copartnership type of society  the members are shareholders; but the title to the  property vests in the society which in turn rents  the tenements or flats to its members. The cost of  construction of dwellings is met from deposits and  loans besides the share money. The rental is  usually determined on long term basis so  calculated as to meet the cost of construction and  upkeep of the building and to guarantee  perpetuity of occupation on repayment of the  whole value of the tenement or flat. At the end of  the period the member is credited with additional  shares equal to the amount paid by him; the  interest on these shares generally matches the  rental payable by him to the society. Thus on full  payment the member becomes entitled to occupy  the tenement of flat free of charge as the rental he  has to pay to the society is almost met from the  interest received from shares held by him. Thus a  member has more than a mere right to occupy the  flat."

[Emphasis Added]

26.     From a bare perusal of the aforesaid passage, it would be  clear that after full payment a member is entitled to continue to  occupy the tenement free of charge and neither he is liable to pay  any rent to the society nor the society is entitled to receive any rent  from the member. According to the definition of ‘landlord’ under  Section 5(3) of the Rent Act, landlord is a person who is for the  time being receiving or entitled to receive rent and under Section  5(11) a tenant is liable to pay rent, but in view of the observations  of this Court in Sanwarmal (supra), neither the society is entitled  to receive rent from the member nor member is liable to pay any  rent to the society after the entire value of the land and cost of  construction of the building together with interest on its value has  been paid.  27.     The matter may be examined from another angle.  If it is held  that the society is a landlord and the member is a tenant within  the meaning of the Rent Act, in that event the society can evict the  member by filing a suit for eviction if it requires the premises for  its bona fide need, but under the Societies Act, it can evict the  member only as a consequence of his expulsion from the  membership and neither under the Societies Act nor Rules framed  thereunder nor  Bye-Laws nor  Regulations there is any provision  that a Society can evict a member in case it has got bona fide need  of the same. The said interpretation would be contrary to the object

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of the Societies Act.   28.     It appears to us that the status of a member in a tenant co- partnership housing society is very peculiar.  The ownership of the  land and building both vests in the society and the member has,  for all practical purposes, right of occupation in perpetuity after  the full value of the land and building and interest accrued thereon  have been  paid by him. Although de jure he is not owner of the flat  allotted to him, but, in fact,  he enjoys almost all the rights which   an owner enjoys, which includes right to transfer in case he fulfills  the two pre-conditions, namely, he occupies the property for  a  period of one year and the transfer is made in favour of a person  who is already a member or a person whose application for  membership has been accepted by the society or whose appeal  under Section 23 of the Societies Act has been allowed by the  Registrar or to a person who is deemed to be a member under sub- section (1A) of Section 23 of the Societies Act.  In case any of these  two conditions is not fulfilled, a member cannot be said to have  any right of transfer.   Thus,  we reiterate the law laid down by this  Court in the case of Sanwarmal (Supra) that a member has more  than a mere right to occupy the flat, meaning thereby higher than  tenant, which is not so in the case of a tenant within the meaning  of Section 5(11) of the Rent Act.  This being the position, we have  no difficulty in coming to the conclusion that the status of a  member in the case of tenant co-partnership housing society  cannot be said to be that of a tenant within the meaning of Section  5(11) of the Rent Act, as such there was no relationship of landlord  and tenant between the Society and the member.   29.     We now turn to the second question, i.e., as to whether the  status of the appellants was that of tenant or sub-tenant. In view  of our answer to question no. 1 that the status of the member was  higher than a tenant and although de jure he was not an owner  but, for all practical purposes, he was exercising almost all the  rights of an owner, excepting absolute right of transfer, he not  being the tenant, there is no question of his creating sub-tenancy  in favour of the appellants.  A member may not be an owner of the  flat in the eye of law but he may still be a landlord within the  meaning of the Rent Act which does not necessarily postulate a  landlord to be an owner of the property, but if a person is entitled  to receive rent or receiving rent he may be treated to be a landlord  within the meaning of the Rent Act.  The question arises as to  whether such a member could create a tenancy right under law,  meaning thereby whether the relationship of landlord and tenant  between the member and the appellants was duly created so as to  claim protection from eviction under the Rent Act. The factum of  letting out by the member to the appellants is not in dispute.  Purported creation of  tenancy right in favour of the appellants was  in infraction of the provisions of Section 29(2) of the Societies Act  whereunder  there is a legislative command to the member not to  transfer his interest in the property of the Society unless two  conditions are fulfilled, firstly, the member has held the interest for  a period of not less than one year, meaning thereby that he has  remained in occupation of the flat, which was allotted to him by  the Society,  for a period of one year and, secondly, transfer was  made to a member of the Society or to a person whose application  for membership has been accepted by the Society or to a person  whose appeal under Section 23 of the Societies Act has been  allowed by the Registrar and his application for membership has  been accepted by him or to a person who is deemed to be a  member under sub-section (1A) of Section 23.  In the present case,  the first pre-requisite is fulfilled, but so far as the second one is  concerned, the appellants who claim to be tenants were not  existing members of the Society nor they ever filed any application  for membership of the Society, much less its acceptance nor it has  been claimed that they shall be deemed to have become members  of the Society under sub-section (1A) of Section 23 of the Societies

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Act.  30.     Undisputedly, in the present case, there is infraction of the  provisions of Section 29(2) of the Societies Act.  Now it has to be  seen whether sub-section (2) of Section 29 is mandatory or  directory.  From the scheme of the Societies Act, the Rules, Bye- Laws and Regulations it would be clear that in a case of tenant co- partnership society the ownership of the land and the building  both vest in the society and the premises is allotted to the member  for his occupation only and not for the purpose of occupation of  anybody else. That is the object of the Societies Act as would  appear from bye-law 2, i.e., ‘for use of the member’, meaning  thereby his own use. According to bye-law 64, the flat is allotted to  a member for occupying it himself. Regulation 4 is also in line with  bye-law 64 which says that no tenant shall part with possession of  the premises without the previous consent in writing of the society.  Under bye-law 64(a) also a member is restrained from parting with  possession of the flat without permission of the society which shall  be granted upon filing application, by an intending transferee, for  grant of membership by admitting him as a nominal member.  Keeping in mind the language of Section 29(2), which is in the  nature of injunction upon the right of a member to transfer unless  the twin conditions are fulfilled, and the purpose for which the  house is allotted to a member, i.e., for his self occupation, it  cannot be said in any manner that the said provision is directory  as giving such an interpretation would frustrate object of the  Societies Act whereunder a flat is allotted to a member for his self- occupation as would appear from the Societies Act, Rules, Bye- Laws and Regulations.  As such, we have no option but to hold  that the provisions of Section 29(2) are mandatory.   31.     The question that arises now is that if there is any infraction  of the said provision, whether the same would invalidate the  creation of relationship of landlord and tenant between the  member and the appellants. It has been submitted on behalf of the  appellants that the member had absolute right of transfer, as such  relationship of landlord and tenant was duly created. In support of  the submission, reliance was placed upon two decisions of this  Court in the cases of Ramesh Himmatlal Shah vs. Harsukh  Jadhavji Joshi, (1975) 2 SCC 105 and Sanwarmal [supra].  In  Ramesh [supra], the question in issue was as to whether interest  of a member in a flat allotted to him by co-partnership housing  society could be attached and sold in execution of a decree passed  against a member. This Court referred to the provisions of Sections  29(2), 31 and 47 of the Societies Act. The Court was considering  matter in the light of the provisions of Section 31 of the Societies  Act which lays down that share or interest of a member in the  capital of a society or in the loan stock issued by a society or in the  funds raised by a society from its members shall not be liable to  attachment or sale under any decree or order of a court in respect  of any debt or liability incurred by a member. Under this provision,  there was immunity from attachment/sale in execution of a decree  to certain types of interests of a member of the society, but the  interests of a member in the flat was not enumerated thereunder,  as such there was no provision exempting interest of a member in  the flat allotted to him from being attached and sold in execution of  a decree against a member.  Therefore, there was no legal bar in  attachment and sale of interest of a member in the flat allotted to  him by the society.  Before this Court the question was raised that  the restriction under Section 29(2) put on the right of a member to  transfer should be equally applied in the case of auction sale in  execution of decree against a member. Court observed that "the  only restrictions under Section 29(2) are that the member may not  transfer his interest in the property prior to one year and the  transfer is made to an existing member of the Society or to a  person whose application for membership has been accepted by  the Society". Though the Court has considered the provisions of

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Section 47 which lay down that interest of a member in such a  property which was allotted to him and upon which there is a  charge, cannot be sold by a member without permission of the  society and if there is infraction thereof, such a transaction has  been declared by Section 47(3) of the Societies Act to be void,   obviously the restrictions under Section 29(2) providing thereunder  restricted right of voluntary transfer cannot apply to  auction sale  in execution of a decree against a member which is distress sale as  the same has not been specifically exempted under Section 31 of  the Societies Act.  Of course, while dealing with the provisions of  Section 29(2), the Court was also having in mind that under  Section 47(3) if the transfer is in infraction of the provisions of  Section 47(2) the same has been declared, to be void, by the  Statute itself whereas in a case of infraction of Section 29(2) of the  Societies Act, the Statute is silent.  As a matter of fact, the  question as to what would be the effect of infraction of the  provisions of Section 29(2) was not subject matter of consideration  before this Court in the case of Ramesh (supra), as such the law  laid down therein that there was no prohibition against transfer of  right to occupy  a flat was in the light of the fact whether interest  of the member in the flat could be auctioned/sold in execution of a  decree passed against the member, meaning thereby distress sale.   In the present case we are concerned with voluntary transfer which  is in contra distinction to distress sale, as such the said case is  clearly distinguishable.   32.     Another decision upon which reliance was placed on behalf of  the appellants is the case of Sanwarmal [supra]. In that case, a  petition was filed under Section 91 of the Societies Act for passing  an order of eviction of a licensee who was inducted as a licensee by  a member of the Society, though contrary to the provisions of  Section 29(2) of the Societies Act,   but he became deemed tenant   under Section 15A of the Rent Act on 1.2.1973, i.e.,  the date on  which the amending Act came into force, as the licensee was in  occupation of the premises  and licence was subsisting on that  date, as such this Court held that the petition under Section 91 of  the Societies Act was not maintainable as the licensee acquired the  status of tenant even though there was no privity of contract  between the parties, but as the status of tenant was acquired, by  legislative intervention, under Section 15A of the Rent Act, as such  he was entitled to claim protection under the said Act.  Though in  that case the question whether right to occupy a flat in a case of  tenant co-partnership society is transferable or not was not in  issue before the Court, but following the judgment in the case of  Ramesh [supra], this Court observed that the right of a member in  the flat is transferable.  In our view, the aforesaid observation in  the case of Sanwarmal [supra) cannot be said to be ratio of the  case but a mere obiter, as such the same can be of no avail to the  appellants.   33.     It has been submitted that in case transfer has been made by  a member in infraction of the provisions of Section 47(2) of the  Societies Act, according to the provisions of Section 47(3) the same  shall be void, but there is no such provision in case there is  infraction of the provisions of Section 29(2) which, we have already  found, are mandatory.  In case there is infraction of a mandatory  provision, in that event the transaction cannot be said to be void  but would obviously be voidable and once avoided, the relationship  of landlord and tenant, i.e., between the member and the  appellants cannot be said to have been duly created, meaning  thereby in accordance with law.  Thus, we have no difficulty in  holding that the relationship of landlord and tenant between the  appellants and the member was not duly created, as such the  appellants would not be entitled to claim protection under the Rent  Act and the bar created under Section 28 of the Rent Act would not  operate.    34.     This takes us to the next question whether legality or

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otherwise of the creation of relationship of landlord and tenant  between the member and the appellants could be adjudicated in  the suits filed by the appellants before the Court of Small Causes  for declaration that they were tenants in the premises in their  respective occupation and there was relationship of landlord and  tenant between the member and the appellants. The said suits  were dismissed by the trial court after recording a finding that no  relationship of landlord and tenant existed between the member  and the appellants, but on appeal being taken the appellate bench  of the Court of Small Causes decreed the suits holding that  relationship of landlord and tenant did exist between the member  and the appellants after reversing decree passed by trial court.   When the matter was taken to the High Court in writ applications,  the same have been allowed, decrees passed by the appellate  bench of the Small Causes Court set aside and those of the trial  court restored whereby it was held that there was no relationship  of landlord and tenant between the member and the appellants.  When suits were filed before the Small Causes Court by the  appellants for a declaration that there was relationship of landlord  and tenant between them and the member, it was open to the  defendants to take a defence that no such relationship was created  either in fact or in law as creation of such a right was barred under  Section 29(2) of the Societies Act.  In the present case the factum  of creation of tenancy has not been disputed, but what has been  disputed is its legality.  As the creation of tenancy was in infraction  of mandatory provisions of Section 29(2), it was voidable and  invalid in law although not void and the Small Causes Court was  not only competent to decide the same but obliged under law to go  into the same before granting or refusing relief to the plaintiff as  the same was a point in issue in those suits.  This being the  position, we are of the view that the High Court was justified in  setting aside the decrees passed by the appellate bench of the  Small Causes Court and restoring those of the Small Causes Court  whereby suits for declaration were dismissed after recording a  finding that there was no relationship of landlord and tenant  between the member and the appellants who were consequently  not entitled to claim protection under the Rent Act and no  interference by this Court is called for.  35.     The last question that falls for decision is as to whether the  Society was required to first obtain adjudication from a competent  civil court by filing a properly constituted suit for a declaration that  relationship of landlord and tenant was not duly created and,  therefore, the induction of a person by the member as tenant was  invalid, the same being in infraction of mandatory provisions of  Section 29(2) of the Societies Act before raising a dispute under  Section 91 of the Societies Act or the said question could be gone  into in a proceeding under Section 91 of the Societies Act before  the Cooperative Court where a dispute touching upon the business  of the society can be raised by the parties and in deciding the said  dispute was it permissible for the Court to go into the said  question. It is true that ordinarily in case of a transaction like the  present one which is voidable and not void, if an aggrieved party  intends to avoid the same it is required to obtain a decree from a  competent civil court by filing a properly constituted suit. But in a  case like the present one, if a party is first asked to obtain a decree  from a competent civil court and only thereafter raise a dispute  which is undisputedly touching upon the business of the society  under Section 91 of the Societies Act, the same would frustrate the  provisions of Section 91 and the intention of the Legislature  in  incorporating a cheap and expeditious remedy by referring the  same to a court constituted under the Societies Act instead of  throwing a party to cumbersome procedure of moving a civil court.  36.     The dispute raised in the present case, undoubtedly, touches  upon business of the Society which is a condition precedent for the  applicability of Section 91 of the Societies Act. The business of

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tenant co-partnership housing society is, after purchasing plots  and constructing houses/flats thereon, to allot the same to its  members for their self occupation and for a period of one year they  can not part with possession of the same in favour of anybody and  on expiry of the said period can transfer the same in favour of   member of the society or to a person whose application for  membership has been accepted by the society or to a person whose  appeal under Section 23 of the Societies Act has been allowed by  the Registrar or to a person who is deemed to be a member under  sub-Section (1A) of Section 23 of the Societies Act. It is part of  business of the Society to see that the house/flat allotted to a  member remains in his occupation or in occupation of any other  member and if any non-member intends a transfer in his favour,  like the present one, he is required to obtain previous consent in  writing either of the Society or its Managing Committee and in the  event of consent being accorded, the Society shall admit him as a  nominal member in which eventuality only the transfer can be  made in his favour. In the present case, under Section 91 of the  Societies Act, the Society was well within its right to get a dispute  adjudicated as to whether the member had, by inducting the  tenants in the flat, who were non-members, made a transfer in  contravention of the provisions of Section 29(2) of the Societies Act.  Thus the question regarding legality or otherwise of the creation of  tenancy right by the member in favour of the appellants, which  amounts to transfer of interest of a member in the property of the  Society, can be decided by raising a dispute before the Cooperative  Court.  37.     In the present case, the only dispute raised before the  Cooperative Court was as to whether transfer made by a member  in favour of a so-called transferee/tenant thereby purporting to  create a tenancy right in his favour was in infraction of the  mandatory provisions of Section 29(2) of the Societies Act, as such  the same was touching upon business of the Society. In case  Cooperative Court decides such a dispute in favour of the Society  in that eventuality the so-called transferee/tenant would not be  entitled to claim any protection under the Rent Act, the bar  provided under Section 28 of the Rent Act would not operate and  consequently the petition under Section 91 of the Societies Act  would be maintainable.  38.     Learned counsel appearing on behalf of the appellants  submitted that even if the tenancy is created in breach of law  having statutory force, the same would not be void. Reliance in this  connection has been placed upon a decision of this Court in the  case of Nanakram vs. Kundalrai, (1986) 3 SCC 83, in which it was  held that tenancy created in breach of Rent Control Order, which  was having a statutory force, was not void. In that case under  Clause 22 of the Central Provinces and Berar Letting of houses and  Rent Control Order, 1949 a landlord was required to report the  matter to the Deputy Commissioner, upon vacation of the  premises, who alone was empowered to permit induction of any  tenant, but instead of adopting the said procedure, landlord  himself inducted tenant which was challenged by filing a suit  before civil court for a declaration that creation of tenancy right  was invalid. The trial court decreed the suit and the said decree  was confirmed in appeal by the High Court. When the matter was  brought to this Court, it was held that the transaction was not void  and the infraction alleged was not of mandatory provisions of law  which would obviously mean that the transaction was not even  voidable, as such the suit was liable to be dismissed. In our view,  the case of Nanakram [supra] is quite distinguishable and shall  have no application to the present case as here there was  infraction of mandatory provisions of Section 29(2) of the Societies  Act. Thus we hold that the question regarding legality or otherwise  of creation of relationship of landlord and tenant between the  member and the appellants could have been gone into by the

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Cooperative Court under Section 91 of the Societies Act as it  touches upon business of the Society and the High  Court  has  not  

committed any error in not interfering with the order passed by  appellate court confirming that rendered by the Cooperative Court.  39.     For the foregoing reasons, we do not find any merit in these  appeals which are accordingly dismissed, but there shall be no  order as to costs.