S.M. Daud, J.@mdashThis appeal takes exception to the quashing by a single Judge of an award made by the Registrar''s Nominee upon a reference made to him u/s 91 of the Maharashtra Co-operative Societies Act, 1960, (MCS Act).
2. The question that arises for determination in this appeal requires enumeration of the background and it may be stated thus:- A builder took up for construction a building at 50, Altamount Road, Bombay-26 sometime in the year 1962. One of the flats therein was taken up by deceased Mahtani. After construction the building came to be known as Olympus Apartments. The owners of the flats comprising the building were to form a co-operative housing society and steps were taken to get the society registered. Prior thereto negotiations took place between Mahtani on the one hand and M/s. Asnew Drums Ltd. on the other hand. The concern wanted Mahtani''s flat for the use and occupation of its director Mr. Brahma Paul. The discussion culminated in an agreement described as being one of leave and licence on September 24, 1962. One of the clauses appearing therein and numbered as Clause 2(k) was worded thus: -
The use of the flat shall be subject to rules and regulations of the proposed Co-operative Housing Society or of the building regulations framed by the Builders, a copy of which is annexed herewith.
3. The licensees came into occupation of the flat and on December 27, 1962, the society was registered. After the expiry of 3 years period stipulated for under the leave and licence agreement, the licensees applied to the licensor seeking extension of time. The licensor in reply expressed his disinclination to accede to the request. This brought forth the retort from the licensees that they were in fact tenants entitled to the protection of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (Rent Act). Eventually on October 10, 1972, Mahtani gave a final notice calling upon the licensees to vacate within 7 days of the service of the communication. The notice not having been complied with, the Society, possibly at the instance of Mahtani, adopted a resolution to initiate proceedings to evict the licensees.
4. In keeping with the resolution mentioned in the preceding paragraph, a dispute was lodged and eventually referred to a Nominee of the Registrar. The contention raised by the disputants Mahtani and the society, was, that the licence in favour of the opponents stood terminated and that their continued occupation of the flat was wrong and illegal. The opponents questioned the jurisdiction of the Nominee, pleading that Section 91 of the MCS Act did not apply, inasmuchas they were tenants against whom proceedings could be initiated only in the Court specified u/s 28 of the Rent Act. The learned Nominee raised appropriate issues, recorded evidence of witnesses examined by the rivals and passed an award. That award went in favour of the disputants and the same was the subject of a challenge before the single Judge. That learned Judge held that the Nominee''s award was without jurisdiction as the dispute raised did not attract Section 91 of the MCS Act. The transaction between the parties had preceded the formation of the society and therefore it could not be said that the dispute related to "the business of the society". Sustaining this submission, the learned Judge upheld reliance placed upon the judgments of the Supreme Court in
5. In appeal, it is contended that the disputant society was a tenants-copartnership society, that it had a right and obligation to see that its members occupied the flats allotted to them and that strangers did not continue in occupation. The single Judge had over looked the incompatibility of the claim of tenancy by a stranger vis-a-vis the premises situated in property owned by a co-operative Housing Society. In support of this contention, reliance is placed on a number of decisions. Before dealing with these reported decisions, it will be necessary to repeat the vital facts: The leave and licence agreement whereunder the respondents before us came on the premises, preceded the formation of the Co-operative Housing Society. The contention that the formation of the society was in progress and that in any case the leave and licence agreement specifically made the occupation of the licensees subject to the rights of the Society, would not affect the rights and liabilities of the contracting parties. Taken to its logical conclusion, Clause 2(k) from the leave and licence agreement can be stretched no further than holding that the parties were trying to keep the agreement beyond the reach of the Rent Act. It is trite that contracting out of a statute is not permitted and that clauses in contracts enabling such exclusion, are void and not binding upon the affected parties. Incidentally, the clause upon which reliance is placed has to be so read as to impute to parties a desire to stay within the confines of the law. So construed, it will have to be read down as governing only the manner of the flat''s user and making the same subject to the mode of user to be prescribed by the society in the offing as also the regulations of the builder. Normally, a transaction which precedes another, prevails over the latter. To apply this principle to the facts of the present case, the leave and licence agreement being prior in point of time, would prevail over any such restrictions as were placed upon the owners of the flats and not affect the rights of the occupants, which rights had sprung up prior to the coming into existence of the society. The owner having created a leave and licence in favour of the licensees had parted with some rights normally vesting in an unencumbered titleholder. He could not therefore confer upon the society an unfettered right which did not vest in him after the coming into existence of the leave and licence agreement. The society could not get a right which did not vest in the owner, who along with others had joined hands to create this society. This principle was laid down by the Supreme Court in Hingorani''s case (supra). The factual position in that case was that the first respondent before their Lordships was the owner of a flat in dispute. He had entered into a leave and licence agreement with the appellant-occupant on April 24, 1959. The appellant occupied the flat in 1959 and in 1962 the building of which the flat was a part, came to be managed by a co-operative Society known as the New Shalimar Co-operative Housing Society Ltd. On January 26, 1962, the owner became a member of the said society. In March 1963 the appellant filed an application for fixation of standard rent u/s 11 of the Rent Act before the Small Causes Court at Bombay. Respondent No. 1 denied the existence of a relationship of landlord and tenant between him and the appellant and contended that the question raised in the lis pertained to "the business of the society". For that reason, the Small Causes Court had no jurisdiction and the matter had to go to the Registrar of Co-operative Societies u/s 91 of the MCS Act. Respondent No. 1 moved the Registrar u/s 91 and that Officer referred the dispute that had arisen to his Nominee. The said Nominee whose jurisdiction was questioned by the appellant overruled the objection as to jurisdiction. This was confirmed in appeal by the Assistant Registrar and in a writ petition by the High Court. The appellant after obtaining a certificate moved the Supreme Court. The Court found in appellant''s favour and paras 3 and 4 of the judgment contain the following relevant excerpts:
The agreement was entered into between appellant and respondent No. 1 earlier. Respondent No. 1 was not a member of the society at that time. In fact the society was not even in existence on that date. That being the case we have to consider whether the present dispute can be said to fall within the scope of Section 91 of the Act In Deccan Merchants Co-operative Bank Ltd...this Court came to the conclusion that it did not fall within the scope of that section. Therein this Court ruled that before a person can be said to claim through a member, the claim should arise through a transaction or dealing which the member entered into with the society as a member. This Court further laid down that when the original owner executed the lease he was not acting as a member but as a mortgagor in possession. Hence the case did not fall within Section 91(1)(b) of the MCS Act. The ratio of that case fully applies to the present case.
6. Mr. Advani contends that the timing of the transaction between the tenant-member and the person inducted into the premises, is not enough to exclude the jurisdiction of the Registrar''s Nominee. What turns the scales, is the nature of the society and its business. If the society is a tenants co-partnership society its members are no more than member-tenants. The premises vest in the society and that entity has an uncontrolled right to see that its premises are occupied only by member-tenants and not by strangers. Occupation of such a society''s premises by strangers, and, a licensee whose licence has been revoked is no better than a stranger, affects the business of the society and therefore it has a right to move the Registrar u/s 91 of the MCS Act. This, according to the learned Counsel was emphasised in Deccan Merchants Co-operative Bank case (supra). Great emphasis has been placed by Mr. Advani upon the following words appearing in that decision: -
The question arises whether the dispute touching the assets of a society would be a dispute touching the business of a society. This would depend on the nature of the society and the rules and bye-laws governing it. Ordinarily, if a society owns buildings and lets out parts of buildings which it does not require for its own purpose it cannot be said that letting out of those parts is a part of the business of the society. But it may be that it is the business of a society to construct and buy houses and let them out to its members. In that case letting out property may be part of its business. In, this case, the society is a co-operative bank and ordinarily a co-operative bank cannot be said to be engaged in business when it lets out properties owned by it. Therefore, it seems to us that the present dispute between a tenant and a member of the bank in a building which has subsequently been acquired by the Bank cannot be said to be a dispute touching the business of the Bank.
7. If the inference sought to be drawn from the above is, that the factor of timing of the transaction is totally irrelevant, the simple answer is that this would be a misreading of the decision. The above decision deals with one type of case where the jurisdiction of the Registrar''s Nominee is excluded. Another case of exclusion of such jurisdiction would be, where the transaction resulting in the relationship between the owner and licensee, came into existence prior to the formation of the co-operative society. This is because at that time, the owner is not occupying the status of a member of the society. There is a difference between an intending member or a member-designate on the one hand, and, a fullfledged member on the other hand. Under the MCS Act a society comes into existence as from the date of its registration and such registration does not relate back to the date on which registration was applied for, much less, contemplated by those who wanted to constitute the society. There is nothing in the Deccan Merchants Co-operative Bank decision (supra) to restrict its operation, only to such societies whose business it is not to construct and buy houses and let them out to its members. Mr. Advani sought to get over the effect of Hingorani''s decision by the following passage from
Immunity against eviction of any such licensee of the Member, available to any tenant u/s 12 of the Rent Act is simply incompatible with such a Housing Society Scheme in which flats are intended for the needy members themselves. Such immunity is destructive of the very basis of the scheme evolved to solve the housing problems of the needy members.
8. Now, this is not to be read as a charter for those who have money to spare and invest it in the acquisition of premises, then let out these premises and with a view to get out of the clutches of the Rent Act, form what is in reality a property owners'' association, to get the advantages of the MCS Act. All that passage bears out, is, that in case of a leave and licence agreement between a member and an occupant made by the former when he was a member (which predicated the then existence of a society) the transaction would be outside the purview of the Rent Act. The decision of the Full Bench in
This apart, according to the Supreme Court, even a dispute raised by the society for possession of its building, for its benefit, from the tenants inducted therein by its members before the society became its owner, does not "touch the business of the society" within its concept, u/s 91 of the Act.
9. Therefore, joining of the society along with Mahtani in the institution of the proceeding did not make any difference. The society could not rescue Mahtani from the quagmire into which he had landed himself by the agreement of leave and licence dated September 24, 1962, preceding its formation. That the society was then in the process of formation and that the licensees were aware of its being in contemplation, did not make any difference. The timing of the leave and licence agreement in the situation then prevailing, and, not that under contemplation, governs the legal position. Mahtani was not a member of a tenants co-partnership society when the agreement was entered into, and, the fact that the disputant society was going to be a tenants copartnership society, would not curtail the rights of the licensee. We should not be understood as saying that the licensee''s claim to being a tenant or entitled to the protection of the Rent Act, is upheld. The limited question before us was whether the Registrar''s Nominee had jurisdiction to entertain the dispute. Here, with respect, we agree with the learned single Judge. The result of the foregoing discussion is that the appeal fails and is dismissed with costs.
10. Various sums have been deposited by the respondents during the pendency of these proceedings. Appellants will be at liberty to withdraw the said sums. Their counsel makes it clear that his clients will accept future payments towards the occupation of the flat, albeit such acceptance will be without prejudice to their rights and contentions.
