1979 (9) TMI 203 - HC - Indian Laws

Transfer of shares and property in co-partnership societies clarified under Gujarat Co-op Act .

Mulshanker Kunverji Gor and Ors. Versus Juvansinhji Shivubha Jadeja

The court affirmed that in tenant co-partnership societies, transfers of shares and immovable property do not require a registered instrument under ... - Issues Involved:1. Validity of transfer of shares and super-structure in a co-operative housing society without a registered instrument.2. Applicability of Section 42 of the Gujarat Co-operative Societies Act, 1961, to the transfer of shares and immovable property.3. Distinction between tenant co-partnership society and tenant ownership society.4. Requirement of compulsory registration under Section 17 of the Registration Act, 1908.Issue-wise Detailed Analysis:1. Validity of Transfer of Shares and Super-structure Without a Registered Instrument:The primary issue was whether a registered document is necessary for transferring the super-structure standing on land allotted by a co-operative society to its members. The court examined the validity of the transfer of shares and the super-structure from Girish to the plaintiff without a registered instrument. It was established that Girish was the original allottee of the super-structure on Plot No. 8 from Santosh Co-operative Housing Society and had transferred his shares to the plaintiff with the society's approval. The court noted that the transaction was not effected by a registered instrument, thus not satisfying Section 17 of the Registration Act, 1908.2. Applicability of Section 42 of the Gujarat Co-operative Societies Act, 1961:Section 42 exempts from compulsory registration instruments relating to shares in a society, even if the society's assets include immovable property. The court highlighted that Section 42(a) carves out an exception to the rule enunciated in Section 17(1)(b) and (c) of the Registration Act, 1908. This exemption applies to shares in a co-operative society, extending the same exemption that Section 17(2)(ii) of the Registration Act provides to shares in a joint stock company.3. Distinction Between Tenant Co-partnership Society and Tenant Ownership Society:The court made a clear distinction between tenant co-partnership societies and tenant ownership societies. In a tenant co-partnership society, the land and buildings vest in the society, and members are allotted houses for occupation and enjoyment. The transfer of shares in such a society inherently includes the transfer of the member's interest in the immovable property. Conversely, in a tenant ownership society, the land belongs to the society, but the super-structure belongs to the member personally. Thus, the transfer of the super-structure in a tenant ownership society requires a registered instrument.4. Requirement of Compulsory Registration Under Section 17 of the Registration Act, 1908:The court examined the necessity of compulsory registration for the transfer of immovable property. Section 17(1)(b) and (c) of the Registration Act mandates registration for non-testamentary instruments transferring immovable property. However, Section 42(a) of the Gujarat Co-operative Societies Act, 1961, exempts such transfers within a co-operative society from this requirement. The court concluded that in a tenant co-partnership society, the transfer of shares, including the member's interest in the immovable property, does not require a registered instrument due to the exemption provided by Section 42(a).Conclusion:The court answered the referred question affirmatively for tenant co-partnership societies, where the land and super-structure belong to the society, and negatively for tenant ownership societies, where the super-structure belongs to the member personally. The matter was sent back to the single judge for final decision in light of this answer. The transfer from Girish to the plaintiff was deemed valid under the exemption provided by Section 42(a) of the Gujarat Co-operative Societies Act, 1961.