2014 (8) TMI 1181 - HC - Indian Laws

Whether compliance of the provisions of Section 48 of the MCS Act, and Rule 48 (5) of MCS Rules, 1961 is mandatory for lending cooperative society before claiming protection/charge on immovable property of members? - HELD THAT - Unless and until there is compliance of these two provisions, namely Section 48 and Rule 48 (5), the people at large cannot be expected to know about the charge, if any, on immovable property. In other words, if a society wants to claim protection or benefit of Section 48 of the MCS Act, the same can be obtained only from the date the charge is actually recorded in the record of rights and not otherwise - the provisions of Section 48 and Rule 48 (5) are mandatory in nature for a Cooperative Society if a cooperative society wants to claim benefit /protection of the said provisions - answered in affirmative. Whether it was necessary/mandatory for the appellant/plaintiff to serve the notice u/s 164 of the MCS Act before filing RCS No. 87/2012? - HELD THAT - The act of the society in mortgaging the suit property which was already sold to the appellant who was not even a member of the society cannot fall in the definition of Sec. 164 of the Act. Therefore, the provisions of Section 164 will have no application in addition because the plaintiff wants to exercise his independent civil right - the notice u/s 164 for filing the suit was not at all necessary - answered in negative. Whether the appellant/ plaintiff having served the notice under section 164 of the Act were estopped in law in filing the suit before expiration of statutory period of two months contemplated by he said provision? - HELD THAT - When notice u/s 164 of the MCS Act was not at all necessary before filing the suit in a civil court as held by me above, even if the respondents/plaintiffs, in fact, had given such notice but did not wait for two months, there cannot be any estoppel against law when the legal position that no such notice is necessary for filing the suit as a prerequisite to maintain the suit. Whether or not the plaintiffs had issued notice u/s 164 or he did not wait for the period of two months, would hence make no difference at all - When the law does not require issuance of notice u/s 164 of the MCS Act at all, to file the suit before expiry of the period would be of no consequence - answered in negative. Whether for filing the suit u/s. 38 of the Specific Relief Act, prior notice u/s 164 of the MCS Act is mandatory? - HELD THAT - The suit had nothing to do with the any legal act touching the business of society as stated in Section 164 of the Act. On the contrary, it is well-settled legal position that suit under section 38 of the Specific Relief Act for perpetual injunction is clearly out of the purview of such type of provisions - the suit u/s 38 filed by the appellant/plaintiff in this case was not required to be preceded by notice u/s 164 of the Act. Application disposed off.

Summary

Issues Involved:
1. Compliance with Section 48 of the Maharashtra Cooperative Societies Act (MCS Act) and Rule 48(5) of MCS Rules, 1961.
2. Necessity of serving notice under Section 164 of the MCS Act before filing a suit.
3. Legal consequence of filing a suit before the expiration of the statutory notice period under Section 164 of the MCS Act.
4. Requirement of notice under Section 164 of the MCS Act for filing a suit under Section 38 of the Specific Relief Act.

Detailed Analysis:

Issue 1: Compliance with Section 48 of the MCS Act and Rule 48(5) of MCS Rules, 1961
The court examined whether it was mandatory for the lending cooperative society to comply with Section 48 of the MCS Act and Rule 48(5) of MCS Rules, 1961 before claiming a charge on the immovable property of its members. The facts established that the property in question was sold to the appellant on 19.04.2002, while the charge was recorded by the society on 25.11.2003. The court held that for the society to claim protection under Section 48, it must ensure that the charge is recorded in the revenue records. The court concluded that compliance with Section 48 and Rule 48(5) is mandatory for a cooperative society to claim the benefits of these provisions.

Issue 2: Necessity of Serving Notice Under Section 164 of the MCS Act Before Filing a Suit
The court addressed whether it was necessary for the appellant to serve notice under Section 164 of the MCS Act before filing the suit. It was determined that the appellant had no concern with the respondent society or the loan obtained by the vendor after the property was sold. The court concluded that the institution of the suit for perpetual injunction did not touch the business of the society as contemplated by Section 164. Therefore, serving notice under Section 164 was not necessary before filing the suit.

Issue 3: Legal Consequence of Filing a Suit Before the Expiration of the Statutory Notice Period Under Section 164 of the MCS Act
The court considered whether the appellant, having served notice under Section 164, was estopped from filing the suit before the expiration of the two-month statutory period. The court found that since notice under Section 164 was not required, the premature filing of the suit did not contravene the legal requirements. Thus, the appellant was not estopped from filing the suit before the expiration of the notice period.

Issue 4: Requirement of Notice Under Section 164 of the MCS Act for Filing a Suit Under Section 38 of the Specific Relief Act
The court examined whether filing a suit under Section 38 of the Specific Relief Act necessitated prior notice under Section 164 of the MCS Act. It was determined that the appellant's suit for perpetual injunction was independent of any act touching the business of the society. Therefore, the court held that prior notice under Section 164 was not required for filing the suit under Section 38 of the Specific Relief Act.

Conclusion:
The court concluded that the respondent society had unjustly harassed the appellant by not verifying the status of the property before accepting the mortgage. The court allowed the second appeal, set aside the lower courts' orders, and directed the trial court to decide the suit on merits within one year. Additionally, the court imposed exemplary costs of Rs. 10,000 on the respondent society for harassing the appellant.

Order:
1. Second Appeal No. 191/2014 is allowed.
2. The impugned order dated 23.08.2013 and the judgment and decree dated 27.03.2014 are set aside.
3. Application (Exh.15) in Regular Civil Suit No. 87/2012 filed by the respondent no.1 is rejected.
4. Respondent nos.1 and 2 shall pay costs of Rs. 10,000 to the appellant.
5. The trial court is directed to decide Regular Civil Suit No. 87/2012 on merits within one year.