9911796707
TMI Blog2010 (2) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Society being the Chairman (Petitioner No.2) and the Secretary. The parties have entered into correspondence with the Society as well as certain other authorities concerned with the transfer of the shares and the premises. Khimji contributed his share to the Respondent. The Respondent has paid the amount to the Society. This payment was made as a contribution to the Repair Maintenance Fund of the Society. The Respondent was conferred membership of the Society and the share certificates duly transferred in her name was given to her. All this has transpired between April 1992 to July 1992 as shall be enumerated presently. 3. The Respondent challenged the receipt of the amount representing 3% of the consideration amount towards transfer fees as illegal demand for transfer fees having been paid under coercion in the guise and name of the building repair and maintenance fund for the first time by her Advocate's notice dated 11th August 1994. Under that notice she demanded repayment of the amount paid to the Society with interest at 21% p.a thereon along with other amounts upon certain bills for repairs raised upon the Society. That having not been repaid by the Society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered. 8. The transactions relating to shares and premises in a Co-operative Society are governed under the Maharashtra Co-operative Societies Act 1960 (the Act) and the model bye-laws issued thereunder. The model bye-laws would govern the affairs of the Society, unless the Society has framed its own bye-laws. The Society in this case has adopted the model bye-laws. Bye-law No.40 thereof relates to transfer of shares and interest in the capital and property of the Society. It lays down the rights and entitlements of the Society as well as the members seeking transfer of their shares and interest in the capital and property of the Society. One of the requirements under bye-law 40(d) (vii) is the payment of premium by the member of the Society to the Society at the rate fixed in the AGM not exceeding ₹ 25,000/-. Any additional amount by way of donation etc., may be taken only with the consent of the member. 9. Indeed demand of money to be paid as transfer fees to the Society of an amount representing 3% of the consideration under the transaction of the sale/purchase of the flat is illegal except if it is donated by the member voluntarily. 10. The Act under which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by law. It was a case of an agreement which was later discovered to be void. That agreement was void only because a person had no interest in the lands he sought to transfer, but mere expectancy. He had this expectancy because the lands belonged to another through whom he claimed, but that other's widow had the interest which her husband during his life time had, under Hindu Law and under the Oudh Estates Act (which was analogous to Section 3 of the Hindu Women's Right to Property Act which later came to be applied to the whole of India from 1937) and he was a collateral and succession to collaterals opened only after the widow's death. Under these circumstances the transfer/contract to sell the land by him was void. That was not the case of an agreement being void under Section 23 of the Contract Act being prohibited by any other law. 14. The case of Kuju Collieries Ltd. Vs. Jharkhand Mines Ltd. A.I.R. 1874 S.C. 1892 also relied upon by Mr. Andhyarijuna was a case of a mining lease in favour of the Plaintiff. The lease was contrary to the provisions of the Mines and Minerals (Regulation and Development) Act, 1948 and the Mineral Concession Rules, 1949 made thereunde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, that would not be a case of an agreement which is later discovered to be void - it was void ab initio. Therefore, Section 65 does not apply to such a case. 15. Mr. Sakhare strongly relies upon this enunciation of the law in this judgment for the recovery of the amount by the Respondent by restitution of the advantage thereunder as claimed by the Respondent in the dispute. It is this aspect which is most material. 16. Further Mr. Andhyarujina claimed refund/repayment from the Society, to whom money was paid by the Respondent by mistake, under Section 72 of the Indian Contract Act. Section 72 runs thus:- 72. Liability of person to whom money is paid, or thing delivered, by mistake or under coercion. - A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it. 17. As an illustration of such payment which was ordered to be returned, he cited the case of Sri Sri Shiba Prasad Singh Vs. Maharaja Srish Chandra Nandi A.I.R. (36) 1949 Privy Council 297 which is the case of Mining lease entered into by the parties under which the lease rent was specified. The parties expected the freight to come down after a new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us belief. A mistake of law is shown to be a mistake about the legal effect of a known fact or a situation - Also termed error in law; error of law. It is, therefore, some act done without knowledge of the Law. A mistake is explained in Advanced Law Lexicon by P. Ramanatha Aiyar Third Edition Volume 3 page 3037 is : An unconscious ignorance or forgetfulness of a fact, past or present, material to the contract, or a belief in the present existence of a thing material to the contract, which does not exist; some intentional act, omission, or error arising from ignorance, surprise, imposition, or misplaced confidence...... Mistake of law explained in Advanced Law Lexicon by P. Ramanatha Aiyar Third Edition Volume 3 page 3038 is: A mistake of law occures when a person having full knowledge of facts comes to a erroneous conclusion as to their legal effect. 20.None can mistake a Law which is known. Hence if the party knows that an act is prohibited by any law, he cannot be taken to have mistaken that there was no such law and committed his act. He does that act knowing it to be unlawful. He then violates Section 23 of the Contract Act. Hence under Section 72 if the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voided by the party paying under a contract which is voidable at her/his option. In the latter there is no question of coercion. The Respondent claims under both these aspects of Section 72 of the Contract Act. 23. It would, therefore, have to be seen : 1. Whether the Respondent knew at the time she made payment to the Society in July 1992 that the amount paid by her was for transfer of the shares and the premises of the Society from Khimji to her which was an illegal payment or whether she knew at that time that it was only the amount payable to the Society towards repair fund. AND 2. Whether the coercion as defined under Section 15 of the Contract act was practiced upon her to part with that amount. 24.Mr. Andhyarujina has sought to show from the agreement between the Respondent and Khimji and the correspondence that ensued thereafter between the Respondent and the Society, Khimji and the Society, as well as by the Respondent and Khimji with other legal authorities that the Respondent only learnt in August 1994 that the amount which the Respondent paid to the Society by way of transfer fee, but in the guise and name of the building repair fund under coercion of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presence of their respective Advocates and Solicitors. Khimji has acknowledged the receipt of the earnest amount of ₹ 15 lakhs. 32.The Respondent has shown the unregistered and inadequately stamped type-written copy of the agreement without the relevant stamp papers as well as the docket thereon. 33.This lis has arisen from the aforesaid clause 7(viii) under which the parties agreed to pay the transfer fee @ 3% of the consideration amount equally by them which payment was then illegal. 34.As agreed in Clause 4 of the agreement dated 30th March 1992 Khimji applied to the Society for obtaining its N.O.C for the sale and transfer of the shares and the premises to the Respondent by his letter dated 9 th April 1992. Similarly the Respondent made her application to the Society to be admitted as a member on 9th April 1992. They both enclosed a copy of the agreement dated 30th March 1992. They both mentioned about the permission required from the Income Tax Authority. Whereas Khimji agreed to pay the necessary transfer fee to the Society, the Respondent agreed and undertook to abide by the bye-laws of the Society. Consequently they applied for permission for the sale and tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er a receipt for ₹ 9.63 Lakhs. 38.The Society transferred the share certificates in the name of the Respondent on 22nd July 1992 and thus admitted the Respondent as member of the Society. The Society encashed the cheque on 22nd July 1992 and passed its receipt in favour of the Respondent for ₹ 9.63 lakhs on 27th July 1992 received towards building repair fund . 39.The entire transaction for the sale and transfer of the shares and the premises agreed to be purchased by the Respondent was thus effectuated. 40.It can be seen that the Respondent was herself aware of, or had obtained the requisite legal advise with regard to the compliance of various requirements of the Society as well as legal authorities upon purchase of the flats by her. She knew about the application to be made before the Income Tax Authority for obtaining its permission, she knew about the application to be made to the Society setting out the precise amount of ₹ 9.63 lakhs which ultimately came to be paid by her to the Society, she also knew about the requirement of completing and signing the transfer forms as well as the Deed of Transfer for transfer of shares and the premises in her na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rformance - she paid ₹ 9.63 lakhs under her letter dated 8th July 1992. The Society resolved to transfer the flats in her name consequent upon such illegal payment made knowing it to be illegal. The Society transferred the share certificate and issued the receipt camouflaged as contribution to the repair fund thereafter. 43.On 9th August 1992 the Society held its A.G.M in which it acknowledged the payment received from the Respondent being 3% of the sale value of the flats purchased by her. The Society resolved that 3% of the sale value must be asked from every new member admitted to the Society towards its repairs and maintenance fund. This resolution shows that such payment was until then not received by the Society or demanded from the new members. The Respondent contends that under an earlier resolution of 9th February 1986 the new members were required to pay the specified percentage of the sale amount to the Society. Even if that be so, it is an illegal payment demanded by the Society and an illegal payment made by the new members being contrary to bye-law No.40 cited above. 44.It so happened that the flats purchased by the Respondent had certain leakages requirin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al amount of transfer fee made under the transfer of the shares to her name, leaving no option but to make payment and consequently it was illegally extorted by the Society. 48.The reason for her changed stance is not far to see. The Respondent put up some unauthorised construction on the terraces of her flats. She enclosed them. She consumed additional F.S.I without the permission of the Society. The Society has written 3 letters to her on 4th May 1994, 7th June 1994 and 17th June 1994 which have remained unreplied and uncomplied. In these letters the Society set out the undertaking given by the Respondent at the time of the transfer of the flat and showed its breach by putting up additions and making alterations in her premises. The Society called upon her to remove the additions, demanded inspection of her premises and even sent the copy of the sanctioned plan demanded by her showing the open terraces. Since none of these was heeded, the Society resolved to file a dispute and obtain orders against the Respondent in their Managing Committee Meeting dated 11th June 1994. 49.Thereafter, for the first time, the Respondent alleged coercion in her Advocates notice dated 11th Aug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annexing all the required documents could not have been written under detention. It does not even show any prejudice caused to her; in fact it caused immediate transfer of the shares and premises to her and gave her the status of a member, which she would have otherwise to fight for. The requirements of coercion as defined in Section 15 of the Contract Act are far from being satisfied. 52.Not only the agreement itself and the correspondence that ensued thereupon but also the further otherwise unrelated and innocuous correspondence relating to the leakage in the Respondent's flat as also the Respondent's ultimate notice show that the Respondent paid transfer fee to the Society knowing it to be an illegal payment. 53.The payment made under the contract with the Society by the Respondent as agreed between the Respondent and the Society reflected in the aforesaid correspondence as well as between the Respondent and Khimji as reflected in the aforesaid agreement of sale shows that the contract was entered into and completed by performance though it was illegal at the relevant time. Such a contract is void from the very inception under Section 23 of the Indian Contract Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oercion alleged. The intrinsic oral as well as documentary evidence unmistakenly shows lack of that vitiating factor. The Respondent having sent the typewritten letter dated 8th July 1992 annexing as many as 7 documents shows that the latter was not prepared under detention. The circumstantial evidence points to the irresistible conclusion of lack of any coercion. In that case the valid donation given by the Respondent to the Society cannot be refunded or repaid to her. 55.Consequently it is seen that knowing this precise legal position the Respondent, Khimji as well as the Society contracted for ₹ 9.63 lakhs which was paid and received as and by way of transfer fee for transferring the shares and the premises purchased by the Respondent in the name of the gracious contribution made by the Respondent as directed by the Society. The illegal payment of transfer fee was made in the garb of the legal payment of contribution stated to be gracious contribution of the Respondent. Any which way one sees the transaction, it gives the Respondent no leevay for backtrackking, the tenacious and erudite exposition of the Law of Contracts made by Mr. Andhyarijuna notwithstanding. 56.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated to be that when facts have been fairly tried by two Courts and the same conclusion has been reached by both, it is not in the public interest that the facts should be again examined by the ultimate Court of appeal. Whatever may be the reason for the rule, the practice has become fairly crystallized and this Court ordinarily will not interfere with concurrent findings of fact except in exceptional cases, where the findings are such that it shocks the conscience of the Court or by disregard to the forms of legal process or some violation of some principles of natural justice or otherwise substantial and grave injustice has been done . It is not possible nor advisable to define those circumstances. It must necessarily be left to the discretion of this Court having regard to the facts of a particular case. (underlining supplied) 58.The facts shown in the evidence, which are not even contested, the construction and interpretation of the contract of the parties, followed by the correspondence that ensued, requires to be parsed within the ambit of the applicable law, hitherto not considered. 59.Consequently, the judgment of the Learned Co-operative Court as well as the Le ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
