TaxTMI 
TaxTMI 
2007 (4) TMI 776
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....law with a request to dispose of the appeals as expeditiously as possible. It is thereafter, this appeal is heard along with other six connected appeals. Though the parties are different, the question of law involved in all these appeals are one and the same. For a proper appreciation of the legal issues all the advocates appearing in these appeals were heard and the legal issues have been answered. However, as the factual position differed from appeal to appeal, in the light of the finding recorded on legal issues, these appeals are decided by writing separate judgments relating to the facts of each appeal. For the sake of convenience, the parties are referred to as they are referred to in the suit. 3. The subject matter of the suit is a site bearing No. 79, 1st Phase of Kempapura Agrahara, Hosahalli extension, Bangalore-40, measuring East to West 30' and North to South 50' which is more fully described in the schedule and hereinafter referred to as the "schedule property". The case of the plaintiff is that the defendant is the owner of the schedule property. The defendant sold the schedule property to one Sri C. Janardhan Rao under a registered sale deed dated 11.3.197....
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....y has not sold the said site in favour of Sri C. Janardhan Rao and put him in possession of the same under a registered sale deed dated 11.7.1974. The sale deed stated to have been executed in favour of Sri C. Janardhan Rao is a void document. He cannot claim any legal right, or title over the same. He could not transfer title in favour of P. Noorulla Bhasha under the alleged sale deed dated 1.8.1974. Therefore, P. Noorulla Bhasha could not have sold the property in favour of the plaintiff under the registered sale deed dated 22.11.19 80. They denied the transfer of katha in favour of the plaintiff and contended that the document produced is a created document and it has no validity in the eye of law. Notice issued under Section 125 of the Karnataka Co-operative Societies Act to the Registrar of Societies is not in accordance with law. Therefore, they sought for dismissal of the plaintiff's suit. 5. The plaintiff filed a rejoinder reiterating the allegations made in the plaint and also contending that the suit is not barred by time and the market value of the property is correctly given and the market value of the property mentioned in the written statement is false. 6. O....
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.... by time, the suit is properly valued and the court fee paid is sufficient and thus, it decreed the suit of the plaintiff as prayed for. Aggrieved by the said Judgment and decree, the Society has preferred this appeal. 9. The Learned Counsel for tire appellant, assailing the Judgment and decree, contended that Sri C. Janardhana Rao was not an employee of the Binny Mills or a member of the defendant society. As per the bye laws, the society could not have sold the property in favour of anon member. Therefore, the said sale is void. He further contended as per Clause 36 of the bye laws, the President, Secretary, Treasurer and three directors of the Society are authorised to sell the sites of the society. 10. Admittedly, the three Directors of the Society have not joined in executing the sale deed in favour of Sri C. Janardhan Rao. The amendment to the bye-laws, sought to be brought about in 1973 by the Secretary Sri Annayyappa, was not approved by the Asst. Registrar of Co-operative Societies. Similarly, the permission sought by the Society for sale of site to non members was refused by the Asst. Registrar of Co-operative Societies and therefore the sale deed on the basis of wh....
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....18 of the Mysore Co-operative Societies Act, 1959. After the aforesaid resolution was passed by the Board of Directors, the Secretary wrote a letter to the Assistant Registrar of the Co-operative Societies on 10.12.1973, requesting permission to sell the surplus building sites owned by the society to outsiders. By a letter dated 13/14.12.1973 the Assistant Registrar declined to grant permission. 14. Thereafter, in the Special General Body meeting convened on 25.12.1973 R. Annayappa, the Secretary informed the members that the progress cannot be made in the layout work due to non-availability of funds. He therefore, requested the members to pay the balance amount due from them towards the value of the sites allotted to them. In this connection, he also informed the members that the State Housing Corporation has not only refused to give any more loan to the society but also is pressing the society to return Rs. 3,00,000/-, which it had lent to the society earlier. 15. In reply to the question of a member Sri. Rajagopal, the Secretary Sri Annayappa answered that if all the members pay the amounts due to the society, the society will be in a position to pay the loan to the Corpor....
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.....1980. On the day of this meeting, Annayappa was not the Secretary, but still he participated in the General Body Meeting. It was Rajagopal who was the Secretary on that day. The aforesaid letter dated 03.09.1980 was placed before the General Body. In fact, in the said meeting, Sri. Annayappa spoke in support of the amendment. However, the General Body opposed the said amendment and passed a resolution that persons who are not the employees of Binny Mills should not be admitted as members of the society. Further it resolved to cancel the membership of such persons who are not the employees of the Binny Mills. Further it was resolved that the allotment of sites to them without the approval of the Bye-law is not in accordance with law and the Secretary at that point of time had no right to sell the properties and therefore, even if such an allotment has been made, such nominal members do not acquire any title to the property. Therefore, President was authorised to initiate suitable proceedings against such illegal allottees and further he was authorised to take steps even against such allottees, who have put up constructions on such sites. It is in pursuance of the said resolutions, ....
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.... unless- it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful, is void. Sections 24 to 30 deals with void agreements. Certain types of contingent agreements are also declared to be void under the Act. 22. These statutory provisions have been the subject matter of interpretation by jurists as well as courts, and these concepts are now well crystallized. Salmond on Jurisprudence, 12th Edition: In respect of their legal efficacy agreements are of three kinds, being either valid, void, or voidable. A valid agreement is one which is fully operative in accordance with the intent of the parties. A void agreement is one ....
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....peal in the case of R. v. Paddington Valuation Officer and Anr. Ex parte Peachey Property Corporation, Ltd. (1965) 2 All ER 836, where the valuation list was challenged on the ground that the same was void altogether. On those facts, Lord Denning, M.R. laid down the law observing at page 841 thus: It is necessary to distinguish between two kinds of invalidity. The one kind is where the invalidity is so grave that the list is a nullity altogether. In which case there is no need for an order to quash it. It is automatically null and void without more ado. The other kind is when the invalidity does not make the list void altogether, hut only voidable. In that case it stands unless and until it is set aside. In the present case the valuation list is not, and never has been, a nullity. At most the first respondent-acting within his jurisdiction - exercised that jurisdiction erroneously. That makes the list voidable and not void. It remains good until it is set aside. 26. In the case of Inre Mec. (A. Minor), 1985) 1 AC 528, the House of lords followed the dictum of Lord Coke in the Marshalsea case quoting a passage rendered in (1613), 10 CO rep 68b at P.76a where....
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.... a nullity but for avoiding the same a declaration has to be made. Voidable act is that which is a good act unless avoided, e.g., if a suit is filed for a declaration that a document is fraudulent and/or forged and fabricated, it is voidable as apparent state of affairs is real state of affairs and a party who alleges otherwise is obliged to prove it. If it is proved that the document is forged and fabricated and a declaration to that effect is given a transaction becomes void from the very beginning. There may be a voidable transaction which is required to be set aside and the same is avoided from the day it is so set aside and not any day prior to it. In cases, where legal effect of a document cannot be taken away without setting aside the same, it cannot be treated to be void but would be obviously voidable. 29. Therefore, the law on the point could be summarised as under: A valid agreement is one, which is enforceable by law as a contract, by the parties to the agreement. A void agreement is one, which does not exist in the eye of law, and therefore fails to receive any legal recognition or sanction. In legal parlance it is a nullity or non-est. It is n....
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....property, enter into contracts, institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it was constituted. The management of the said society vests with the Board of Directors constituted in accordance with the Act, Rules and Bye-laws of the society. The Board of Directors exercise such powers, discharge such duties and perform such functions as are conferred upon it by the Act, Rules and the Bye-laws. The society has a President, Secretary, Treasurer who are elected in accordance with the provisions of the Act, Rules or Bye-laws. The Board of Directors of the society in the meeting held on 9.12.1973 authorised the President, the Secretary and the Treasurer to execute the sale deeds in favour of outsiders who may be admitted as nominal members in terms of Section 18 of the Mysore Cooperative Societies Act, 1959. 33. It is in pursuance of the said authorisation, the President, the Secretary and the Treasurer of the society have executed the sale deeds in favour of non-members. A registered society under the Co-operative Societies Registration Act is a Corporation or a quasi Corporation capable of entering into contracts. T....
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....under the aforesaid bye-law the sale deed on behalf of the society is to be executed by the President, the Secretary, and three other Directors. In the instant case it is executed only by the President. Secretary and Treasurer, who is one of the Director and two other Directors have not executed the said sale deed. The question is whether it renders the sale void. In this regard it is useful to refer to a judgment of the Supreme Court in the case of Co-Operative Central Bank Ltd. and Ors. v. Additional Industrial Tribunal, Andhra Pradesh, Hyderabad and Ors. (1969)IILLJ698SC wherein it has been held as under: The bye-laws of a co-operative society framed in pursuance of the provisions of the Act cannot be held to be law or to have the force of law. It has no doubt been held that, if a statute gives power to a Government or other authority to make rules, the rules so framed have the force of Statute and are to be deemed to be incorporated as a part of the statute. That principle, however, does not apply to bye-laws of the nature that a co-operative society is empowered by the Act to make. The bye-laws that are contemplated by the Act can be merely those which go....
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....ocuments. If the argument of the society is to be accepted, then the cancellation deed as well as sale deed in favour of a member also becomes void. The allegations made against the previous Secretary Sri Anniyappa is without any basis as is clear from the aforesaid three resolutions. Therefore, in the light of the aforesaid discussion, there is no merit in the said contention. The sale deed executed by the society represented by the President, Secretary and the Treasurer in favour of a non-member is valid and binding on the society and it is not void. Points No. 3 and 4 39. When the owner of a property sells/conveys the property to - the purchaser under a written document and get the same registered, the right and the title to the said property is transferred from the owner to the purchaser on registration of the said documents. After such registration the owner of the property ceases to have any interest and all his rights in the property gets extinguished. He would not have any right to meddle with the property thereafter. If such a person were to execute one more sale deed and get it registered in respect of the said property the said sale deed has no value in the eye of ....
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....other provisions of the Specific Relief Act, 1963. Therefore, the power to cancel a deed vests with a Court and it cannot be exercised by the vendor of a property. In this context it is necessary to see Section 31 of the Specific Relief Act, which reads as under: 31. When cancellation may be ordered.- (1) Any person against whom a written instrument is void or voidable, and who has reasonable apprehension that such instrument, if left outstanding may cause him serious injury, may sue to have it adjudged void or voidable; and the court may, in its discretion, so adjudge it and order it to be delivered up and cancelled. (2) If the instrument has been registered under the Indian Registration Act, 1908 (16 of 1908), the Court shall also send a copy of its decree to the officer in whose office the instrument has been so registered; and such officer shall note on the copy of the instrument contained in his books the fact of its cancellation. 40. A reading of the aforesaid provision makes it clear that both void and voidable instruments can be cancelled by the Court. The ca....
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....lear that a registered document shall operate from the time from which it would have commenced to operate if no registration thereof had been required or made and not from the time of its registration. The Section however does not say when a sale would be deemed to be complete. However, Section 47 of the Registration Act makes it clear that, though a document is registered on a particular date, the effective date would be the date on which the said document was executed and not from the date of registration. If the document is not registered but is compulsorily registerable, though the document is duly executed, it has no legal effect and it does not affect the immovable property comprised in the said document in view of Section 49 of the Act. The registration of such a duly executed document comes into operation, the moment it is duly registered, not from the date of registration but from the date of execution of the said document. Section 54 of the Transfer of Property Act, 1882, which deals with sales of immovable property mandates emphatically the transfer of tangible immovable property of the value of one hundred rupees and upwards, can be made only by a registered instrument.....
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....efendant-society was not empowered to execute the deed of cancellation of the sale deed executed by the defendant-society in favour of nominal members of the defendant-society. Defendant has not produced the extracts of the meeting held on 2.3.1980. The defendant-society has not issued notice to the previous owners of the suit property in question as per Ex. P2. 4. DW-1 has admitted that the sale deed Ex. P3 was executed by the President, Secretary and Treasurer of the defendant-society in favour of C. Janardhana Rao. Exs. P4 and P5 are the receipts which show payment of money by Sri C. Janardhana Rao to the defendant society. Ex. P14 is the possession certificate issued by the defendant-society to C. Janardhana Rao. He was giving evidence in his capacity as Vice President of the society. He has pleaded his ignorance about the resolution passed in the Board of Directors meeting on 9.12.1973 and what was decided in the special general body meeting held on 25.12.1973. He also admits that society did not give any notice to the nominal members before cancelling the allotment and sale of sites made in favour of those persons. The society has not refunded a sum of Rs. 4,175/- or any s....