JUDGMENT
Asok Kumar Ganguly, J.
1. In this appeal an order dated 16th November, 1990, which was passed dismissing a pro interesse suo application, has been challenged.
2. The material facts of the case are as under :
A suit being Suit No. 406 of 1997 was filed by the Canara Bank (hereinafter referred to as the said ‘Bank’) against one Anamika Industries and its partners namely (1) Shri Rajkamal Prabhas and (2) Shri Prem Sehgal inter alia, on the ground that the respondents were unable to pay the dues of the Bank. The appellants were not parties to the said suit.
3. In the said suit the bank filed an application for appointment of Receiver and injunction. On the said application, the learned Trial Court appointed Joint Receivers on 8.5. 1987 over the hypothecated stocks of the respondent No. 2 and an order of injunction was also passed restraining the respondents from dealing with and/or disposing of the hypothecated stocks.
4. The sale of hypothecated stock could fetch Rs. 75,000/- and the same was confirmed by the Hon’ble High Court by its order dated 13.2.1989 and by the said order, the learned Single Judge directed the sale proceeds to be given to the bank after deducting therefrom the remuneration of the Receiver. The bank’s dues were, however, to the extent of more than Rs. 14 lakhs.
5. Sometime in the month of July, 1990, the Bank apprehended that the respondents will sell the flats owned by them namely the flat No. 6 at Mandevilla Garden and flat No. 10A at Lord Sinha Road and moved another interlocutory application, inter alia, for appointment of Receiver to make inventory of those flats and also take possession of those flats and also for an appropriate order of injunction restraining the respondent Nos. 2 and 3 from dealing with or disposing of or encumbering those two flats and to furnish full security of Rs. 25,01,562.94 paise being the outstanding dues of the said bank and also with a prayer for necessary attachment of flats before judgment and various other prayers. On such application a Receiver was appointed on 6.8.1990 to make inventory of the said two flats and the Receiver was directed to take symbolic possession and an order of injunction was also passed restraining the respondents from dealing with or disposing of the flats. In the said application, a further order was made on 17.8.1990 directing the Receiver to take possession of the flat at Lord Sinhha Road by breaking open the lock of the said flat.
6. The case of the appellants is that they found a notice hung up on the outer door of the Lord Sinha Road flat and from the said notice, the appellants came to know that a Receiver has been appointed in terms of the order of the Court dated 6.8.1990 and the Receiver wanted to take possession of the said flat in terms of the Court’s order. Immediately thereafter on 20.8.1990, the appellants filed an application pro interesse suo for vacating the orders dated 6.8.1990 and 17.8.1990. On such application, the Hon’ble High Court 6.8.1990 and 17.8.1990. On such application, the Hon’ble High Court directed the Receiver to continue in possession of the Lord Sinha Road flat, but directed the Receiver not to interfere with occupancy of the said flat and an order of status quo was passed.
7. The said application, however, was dismissed by a reasoned order by the learned Single Judge, inter alia, on the ground that the deed of transfer by which the appellants are claiming ownership of the flats in question was not registered and the ownership of the Lord Sinha Road flat (hereinafter referred to as the said ‘flat’) was transferred to the appellants by Prem Sehgal, the respondent in the suit, without the consent of the Registrar of Co-operative Societies. The learned Judge also held that from the facts of the case it appeared that the transaction was pushed through in a ‘hot haste’ and with ‘ulterior motive’.
8. In assailing the said order dated 16.11.1990, the case sought to be made out by the learned Counsel for the appellants is that the said flat originally belonged to Prem Sehgal who was a member of Park Street Co-operative Housing Society Limited (hereinafter referred to as the said ‘society’) and held 10 shares numbering 23-32 of Rs. 100/- each in the said society. The appellants’ case is that on or about 20.1.1990, the said Prem Sehgal entered into an agreement with the appellants for transfer of the 10 shares and the flats together with all rights in respect thereof subject to the tenancy of one Rotam Commercial Limited which was in the occupation of the said flat. The further case of the appellants is that on 20.1.1990 Prem Sehgal wrote a letter to Rotam Commercial that rent in respect of the flat should be paid to the appellants and on the very date, Prem Sehgal wrote another letter to the Secretary of the said society that 10 shares in the said society should be transferred in the name of the appellant. The further case of the appellants is that Rotam Commercial Limited vacated the said flat and informed the appellants of the same by its letter dated 31.7.1990. The said Co-operative Society also by its letter dated 14.4.1990 transferred the share certificates in the name of the appellants. The said transfer took place pursuant to a resolution of the Board of Directors held in its meeting dated 18.3.1990. On the very same date, another letter was written by the said Co-operative Society to the Assistant Registrar of the Co-operative Society informing the said Assistant Registrar that the Board of Directors of the said Co-operative Society had agreed vide its resolution dated 18.3.1990 to transfer the said flat and the share certificate in connection therewith in the name of the appellants.
9. Pursuant thereto on 28.7.1990 a deed of transfer was executed by Prem Sehgal in favour of the appellants.
10. In view of the aforesaid facts it was argued by the learned Counsel for the appellants that before the second interim order was passed on 16.8.1990, the said flat was transferred by Prem Sehgal in favour of the appellants and the appellants obtained possession of the same and started residing there on and from 2.8.1990. It has been further stated that the appellants are bona fide purchasers of the said flat without any notice of the suit. As bona fide purchasers, the appellants have valid title and they are entitled to file pro interesse suo application to prove the same and that the said Prem Sehgal lost his right, title or interest over the property. Therefore, the said Bank cannot touch the said property for realization of its dues, nor can the said bank proceed on the basis that the said flat is an asset of Prem Sehgal.
11. The learned Counsel appearing for the bank, on the other hand, controverted the aforesaid state of facts and submitted that the entire transaction is a subterfuge and has been made to defeat the claim of the bank. The learned Counsel urged that the total consideration for transfer was Rs. 8,70,000/- and the floor area of the said flat at Lord Sinha Road, a very posh area in the city of Kolkata, was 2386 square feet. The learned Counsel further submitted that payment schedule which has been set out in the order under appeal shows that no payment was received before 3.2.1990. Even the cheques were handed over only on 29.1.1990. But the alleged agreement of transfer between Prem Sehgal and the appellants is dated 20.1.1990 and Clause 2 of the said agreement stated that the appellants have agreed to transfer the said shares and flat against payment of consolidated sum of Rs. 8,70,000/- and Clause 4 of the said agreement provides how Rs. 7,59,000/- out of the total consideration of Rs. 8,70,000/- is to be paid and Clause 6 of the said agreement shows how to pay the balance amount of Rs. 1,11,000/- and the deed of the agreement is to be executed. Clause 8 of the said agreement provides that upon completion of the transfer and payment of the entire amount as specified in Clause 2 by the transferee to the transferor, the transferor shall put the transferee in possession of the said flat.
12. The learned Counsel submitted that no cheque was made over prior to 29.1.1990 and no cheque was encashed prior to 3.2.1990. But the letter dated 20.1.1990 purported to have been written by Prem Sehgal to the tenant shows that Prem Sehgal has transferred his right, title and interest in respect of the said flat on 20.1.1990 itself. Admittedly no payment was made on that date by the transferee and no transfer had taken place. Therefore, the learned Counsel argued that the purported attornment of tenancy was contrary to Clause 8 of the agreement of transfer.
13. The learned Counsel submitted, and in my judgment, there is considerable force in the contention that the question of attornment of tenancy arises only after entire payment in terms of the agreement has been received and transfer is complete. It is an admitted position that no payment did take place on 20.1.1990 and, therefore, no transfer could also take place in terms of the agreement of transfer.
14. Apart from that, there is another letter written by Prem Sehgal to the Secretary of the said society on 20.1.1990 to the effect that he had transferred the said flat and all his right the same in favour of the appellants and the appellants had fully reimbursed and paid the entire consideration for the transfer of the said flats. But, no money admittedly was paid on 20.1.1990. Therefore, an incorrect representation was made by the transferor before the Secretary of the said society.
15. From the aforesaid facts, it appears that the observations of the learned Judge in the order under appeal that the transaction was pushed through in hot haste and with ulterior motive are substantially correct.
16. Apart from that, the learned Judge found that the registered deed of transfer was not there. In the application filed by the appellants before the learned Judge, reference has been made to the registered deed in paragraph 8 wherein it has been stated that the registered deed of transfer was executed by respondent No. 2 in favour of the appellants in respect of the said flat on 20.7.1990 and the xerox copy of the said deed was annexed. But, in paragraph 3(u) of the affidavit-in-opposition filed by the bank, it has been specifically stated that the original should be produced. But, it appears that the said averments in paragraph 3(u) has not been denied by the appellant in the reply. In the aforesaid state of pleadings, it is clear that the original deed was not produced before the learned Judge. This is also not disputed before us.
17. Before the Appeal Court, an application was made by the appellant, being GA No. 617 of 2002 for bringing the said deed on record. The learned Counsel for the appellant, however, submitted that in view of the order dated 4.3.2002 passed by the Appeal Court at an interlocutory stage liberty was granted to the appellants to file a supplementary paper book. And an order was passed in terms of prayer (b). According to the learned Counsel for the respondent the said prayer (b) enables the appellant to rely on the said registered deed of transfer dated 20th July, 1990:
“(b) Leave be given to your petitioner to file a supplementary paper book in the instant appeal being appeal No. 194 of 1994 (Rama Mimani and Anr. v. Canara Bank and Ors.) including therein a copy of the Registered Deed of Transfer dated 20th July, 1990 evidencing transfer of ownership of flat No. 10A at Ankur at premises No. 10 Lord Sinha Road, Calcutta-700 071 from the respondent No, 4 in favour of your petitioners;”
18. The learned Counsel for the bank has, however, submitted that the same is not an order in terms of Order 41 Rule 27 of the Civil Procedure Code and in the absence of an order under Order 41 Rule 27 of the CPC, this Court cannot look into the said registered deed,
19. This Court, without being unduly technical in the matter, is of the view that substantially the provisions of Order 41 Rule 27 of the CPC has been complied with and the Court may consider the said deed since the same has been filed before this Court on a supplementary paper book with the leave of the Court.
20. Even then, the transfer cannot be said to have been legally made as it has not been made in accordance with the relevant provisions of the West Bengal Co-operative Societies Rules, which are framed under the Act.
21. From the facts, which have been stated above, it is clear that the flat in question was one to which the provisions of the West Bengal Co-operative Societies Act and the West Bengal Co-operative Societies Rules are attracted. Under the provisions of Sub-section (9) of Section 85 of the West Bengal Cooperative Societies Act, 1983 (hereinafter referred to as the ‘said Act’), a member of the Co-operative Society in whose favour a plot or a land or a house or apartment in a building has been allotted may transfer such plot or house or apartment, as the case may be, with the written consent of the Co-operative Housing Society and under such terms and conditions and in such a manner as has been prescribed to any other person eligible to be member of the society under Sub-section (1) of Section 85.
22. The relevant provision of Sub-section (9) of Section 85 is as follows :
Section 85(9). A member of a Co-operative Housing Society in whose favour a plot or a land or a house or an apartment in a [……………………………….] building has been allotted may transfer such plot or house or apartment, as the case may be, with the written consent of the Co-operative Housing Society, under such terms and conditions and in such manner as may be prescribed, to any other person eligible to be a member of the Co-operative Housing Society under Sub-section (1). If the Co-operative Housing Society refuses to give its consent to such transfer, it shall record the reasons for such refusal in writing and communicate the same to the member within one month from the date of receipt of his application in this regard and the member shall have a right of appeal to the Registrar within such period as may be prescribed.
23. Along with Sub-section (9) of Section 85, Sub-section (1) of Section 87 is also relevant. Under Sub-section (1) of Section 87 of the said Act it has been provided that a member of the Co-operative Society in whose favour a plot of land or a house or an apartment in a building has been allotted is entitled to hold such property, such land, house or apartment, as the case may be, with such title and interest as may be granted under the prescribed conditions, and, subject to the provisions of Sub-section (2) of Section 60 an instrument of transfer under the Transfer of Property Act and Registration Act.
24. Therefore, under the said Act Prem Sehgal was the owner of the flat in question, since it was allotted in his favour by the Co-operative Society. But the question is whether the transfer of the said flat by Prem Sehgal to the appellant is in accordance with the said Act and the Rules.
25. Transfer requires compliance with the provisions of Sub-section (9) of Section 85. Under the said sub-section there are two conditions, which are to be complied with. The first is that such transfer can be made with the written consent of the Co-operative Housing Society and under such terms and conditions and in such manner as may be prescribed. Here the expression ‘prescribed’ means “prescribed by rules made under the said Act”. [See Section 2(32) of the said Act].
26. Under Section 147 of the said Act the State Government has rule making power for carrying out the purpose of the Act. In Sub-section (2) of Section 147 it is made clear that in particular and without prejudice to the generality of the power under Sub-section (1) of Section 147 such rules may provide for all or any of the matters which may be or are required to be prescribed or made by rules. Under Sub-section (4) of Section 147 it is made clear that all rules made under the Act shall be laid before the State legislature and shall be subject to such modification as the State legislature may make during the session in which they are laid or the session immediately following.
27. In the instant case the relevant Rule is 142 of West Bengal Co-operative Societies Rules ,1987 (hereinafter called the ‘Rules’). It has been provided under Rule 142(1) of the said Rules that in all cases of transfer and letting out of land, house or apartment, prior permission of the Registrar shall be obtained in addition to the written consent of the society. The provision of the Rule 142(1) is as follows :
Rule 142(1). In all cases of transfer and letting Out of land, house or apartment, prior permission of the Registrar shall be obtained in addition to written consent of the society :
Provided that in no case permission of the Registrar or the written consent of the society shall be withheld arbitrarily where the ground or grounds enumerated in Sub-rule (3) of this Rule have been satisfactorily made out and the conditions set forth in Rule 135(2)(a) have been fulfilled.
28. It is an admitted position that, in the instant case prior permission of the Registrar has not been obtained. In fact no attempt has been made to obtain such permission. Therefore, there is a clear infraction of the Rules. The conditions of Rule 142 are mandatory in nature and the proviso to Rule 142 also makes it further clear that prior permission is a mandatory requirement. That is why such prior permission shall not be withheld arbitrarily where the ground or grounds enumerated in Sub-rule (3) of Rule 142 have been satisfactorily made out and the conditions set forth in Rule 135(2)(a) have been fulfilled. The grounds on which such permission can be granted have been made clear in Sub-rule (3) of Rule 142.
29. Therefore, it is clear that once the grounds are fulfilled, Registrar cannot withhold the permission. But obtaining of such prior permission is a mandatory statutory requirement.
30. The learned Counsel for the appellant has relied on two judgments for the purpose of contending that the rule requiring the prior permission of the Registrar is contrary to the provisions of the Act. The first judgment on which reliance was placed was rendered in the case of Sant Sharan Lall and Anr. v. Parashuram Sahu and Ors., .
31. The question which fell for consideration in that case was whether a money lender registered under the Bihar Money Lenders Act, 1938 can sue his debtor for a loan in excess of the amount mentioned as the maximum amount upto which he could transact business under the registration certificate issued to him. The Bihar Money Lenders Act, 1938 was enacted to regulate money lending transactions. Under Section 7 of the said Act, a duty is cast upon a money lender to maintain an account and to give receipt. Section 19 provides for cancellation of registration certificate under certain circumstances. Section 27 empowers the State Government to make rules for prescribing the forms of registration certificates mentioned in Sub-section (4) of Section 5 and the particulars to be contained in the application made under Sub-section (1) of Section 5.
32. In exercise of that rule making power, Bihar Money Lenders Rules, 1938 were framed. Under Clause (c) of Rule 1 the maximum amount of loan has been defined to mean the highest total amount which may remain outstanding on any day during the period of the validity of the registration certificate.
33. Now the learned Judges found that the Act does not anywhere provide for fixing of the upper limit of the loans which may remain outstanding at any particular point of time. It was held that the rule making power of the Government also does not extend to the fixing of such a limit. The rule making power under Section 27 was pronounced to be a limited power and under the said power only the form of registration certificate and particulars to be contained in the application made for the purpose of registration are to be notified. Such power does not authorise the State to prescribe the limit upto which loans may remain outstanding (para 19),
34. The learned Judges categorically found that the rule making power under the Act is not expressed “in the usual form” viz. that the rule making power was not given to the State Government to make rules for carrying out the purposes of the Act. Therefore, the rule making power being a limited one, such power, it was held, does not empower the State Government to prescribe the limit upto which the loans can be advanced by money-lender or can remain outstanding. In views of these statutory provisions the learned Judges found that the rules which prescribe such limit are contrary to the Act.
35. But here the rule making power is not a limited power. This is clear from sections 147(1) and (2), as pointed out above. On the other hand, subsection (2) of Section 147 is specific that such rules may provide for all or any of the matters which are required to be prescribed or made by rules. So the ratio in Sant Saran Lall (supra) rendered in the context of totally different statutory provisions does not help the appellants.
Reliance has also been placed by the learned Counsel for the appellant on the decision of the Supreme Court in the case of Bihari Lall Butail and Ors. v. State of Himachal Pradesh and Ors., , in order to contend that where rules are in conflict with the provisions of Act, such rules are bad in law and compliance with the requirement of such rules is not called for.
36. The provisions of the Act and Rules considered in Butail are remotely different from the statutory provisions with which we are concerned here. First of all, in Butail, the validity of an amendment to the rule was challenged by filing a writ petition. In the instant case no challenge has been made to any rule. Apart from that the subject-matter of challenge in Butail was also totally different. In Butail the facts were that the Tea Estates were totally excluded from the purview of the Act vide Section 5(G) of the Act, but the impugned rule sought to put an embargo on transfer of a plot of land which is a servient tenement to tea plantation and which has been exempted from the operation of the Act under Section 5(G). Considering the embargo under the rule in the background of this statutory provision, the learned Judges held that since Tea Estates are excluded from the provisions of the Act by Section 5(G), a rule which is made in exercise of delegated authority under the Act cannot impose a restriction in respect of transfer of a plot of land which falls under the exempted category in the Act. The learned Judges held that what is permitted by the delegated legislation is to carry out ancilliary and subordinate legislative function for the purpose of filling up the details in the Act. On the strength of such delegated authority, provision in the rule cannot be made which nullifies the exemption given under the Act.
37. In the instant case the position is just the reverse. Here the property of a member of a Co-operative Society can be transferred subject to two conditions made specifically clear under Sub-section (9) of Section 85 viz. (a) written consent of the Co-operative Housing Society and (b) under such terms and conditions and in such manner as may be prescribed. Here, obviously ‘prescribed’ means prescribed under the rules vide Section 2(32) of the said Act.
38. Therefore, the Act provided that the terms and conditions of such transfer can be prescribed under the rules. And this has been done under Rule 142. Here the delegated legislation in the form of the rules has merely filled up the details. The Rule is also very specific by saying that the prior permission of the Registrar must be obtained in addition to the written consent of the society. The written consent of the society is a requirement under the Act alongwith compliance with such terms and conditions as can be prescribed under the rules. The terms and conditions which have been prescribed under the Rule is the prior permission of the Registrar and such prior permission shall be in addition to the written consent of the society. Therefore, in the instant case the rules are not in any way contrary to or inconsistent with any provision of the said Act.
39. On the other hand the rules fill up the details of the terms and conditions of transfer. The transfer in question being contrary to the statutory rules, which are virtually part of the Act, is void. On this ground alone the pro interesse suo application can be rejected. In fact, this ground weighed with the learned Judge and the learned Judge was right in rejecting the same application.
40. In view of this finding by the Court, Daniell’s Chancery Practice relied on by the learned Counsel for the appellant is of no assistance to the appellant. The following paragraph from Daniell’s Practice has been relied on :
“Sometimes, where a person claiming a legal right to property sequestered has made an application for an inquiry as to his interest, the Court, finding his right to be clear and undisputed, has at once made an order in his favour, without an inquiry (b). The Court has also ordered the possession of the property claimed to be delivered up to the claimant, upon his entering into good and sufficient security to restore it, in case the decision upon his claim should be against him (c). In such cases the Court exercises a discretion, and where the case is considered to admit of no doubt, the Court will determine it, without further inquiry; in other cases the Court will see what is necessary to be done, in order to try the question of right, and will then put it in the way of trial (d)”.
41. Here the learned Single Judge heard the counsel for the appellant and considered the pro intersse suo application filed by the appellant and exercised his Lordship’s discretion properly in the rejecting the application by a reasoned order based’on valid grounds.
42. All these facts taken together support the finding of the learned Judge of the First Court that an attempt was made to push through the transaction and these facts would suggest that the transaction was made with an ‘ulterior motive’.
43. For the reasons discussed above this Court dismisses the appeal with costs assessed at 1000 G.Ms.
44. The appeal is, therefore, dismissed with costs. Indira
Banerjee, J.
45. I agree.
Later:
46. Prayer for stay is considered and rejected.
47. Urgent Xerox certified copy of this judgment and order, if applied for, be given to the parties as expenditiously as possible
Ashok Kumar Ganguly and Indira Banerjee, JJ.