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TMI Blog2007 (4) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 11.3.1974 and the purchaser was put in possession on 15.10.1975 under a possession certi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssession 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. On the aforesaid pleadings, the Trial Court has framed the following issues: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 which, the plaintiff claims title is void and plaintiff has no right to the suit schedule site. The General body meeting authorised the new office bearers in the meeting held on 28.9.1980 to cancel the sale deeds executed in favour of non members. It is in pursuance of the said authoris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 Corporation and avoid payment of interest. It is because of the members' non-cooperation, the society is unable to pay the loan to the State Housing Corporation. Few others suggested that instead of charging interest from the members for delay in payment of the sital value, the society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnayappa 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, the society has executed the sale deeds to its members, the very same sites which were sold to such nominal members without taking steps to cancel the same. But, after execution of the sale deed, they have executed cancellation deed cancelling the earlier sale deeds and got the same r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject 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 which entirely fails to receive legal recognition or sanction, the declared will of the parties being wholly destitute of legal efficacy. A voidable agreement stands midway between these two cases. It is not a nullity, but its operation is conditional and not absolute. By reason of some defect in its origin it is liable to be destroyed or cancelled at the option of one of the parties to it. On the exercise of this power the agreement not only ceases to have any efficacy, but is deemed to have been void ab init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oid 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 it was laid down that where the whole proceeding is coram Non-judice which means void ah initio, the action will be without any regard to the precept or process. The court laid down at page 532 thus: When a Court has jurisdiction of the cause, and, proceeds in verso ordinal or erroneously, there the party who sues, or the officer or minister of the Court who executes the precept or process of the Court no action lies against them. But when the Court has no jurisdiction of the cause, there the whole proceeding is coram Non-judice, and actions will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 not a contract at all. It would be automatically null and void without more ado. Its existence or continuation has no value, as one cannot continue a nullity. If a statute specifically provides that a contract contrary to the provisions of the statute would be void, it is no contract in the eye of law, it is void ab initio, and the said agreement is unenforceable in law. In between these two extreme positions, lies the voidable agreement. In law it exists and also recognized. It is a contract. It can also be enforced. But because of some defect in its origin, at the option of the party to the agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The registration confers on it a legal personality and consequently any contract entered into by it would be legally enforceable unless it is vitiated by an illegality or is shown to be void for any other reason. In the entire Bye-laws of the society there is no express prohibition prohibiting the society from selling the sites belonging to the society in favour of non-members. Till today the said resolution of the society is not challenged or annulled by the society. In the special General Body Meeting held on 25.12.1973 the Secretary Rajagopal also participated and supported the proposal to sell t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 govern the internal management, business or administration of a society. They are of the nature of the Articles of Association of a company incorporated under the Companies Act. They may be binding between the persons affected by them, but they do not have the force of a statute. 37. In view of the aforesaid authoritative pronouncement of the Supreme Court the said bye-law cannot be equated to law, rules or regulations. The said bye-laws only govern the internal management, business or administration of a society. They are in the nature of Articles of Association of a Company incorporated under the Companies Act. It has no statutory force. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 law. The reason being on the date of the second sale deed, he is not the owner of the property. Therefore, the purchaser would not get title to the property as the vendor could convey only that title which he has in the property on the date of execution and registration of the sale deed. Similarly, if after execution and registration of the sale deed, the owner wants to get back the property, it has to be done by cancelling the sale deed on any of the grounds which are available to him under the provisions of the Indian Contract Act. Unilaterally he cannot execute what is styled as a deed of cancellation, because on the date of execution and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 cause of action for such an action is an apprehension, if such an instrument is left outstanding may cause serious injury to the person against whom the written instrument is void or voidable. Such a person has the discretion to approach a competent Civil Court for adjudging the said instrument to be delivered up and cancelled. Even though in law a void instrument is unenforceable, has no value in the eye of law, void ab initio, the very physical existence of such a document may cause a cloud on the title of the party or cause injury or one can play mischief. Therefore, the law provides for cancellation of such instruments which are also non est, but which are in existence as a fact physically to get over the effect of such ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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. 42. Thus, without registration there is no transfer of ownership of the property. Therefore, it is clear that the act of registration in the scheme of things is not a mere instance of the State collecting some registration fee and providing authenticity to a written instrument. It is by the act of registration, the title in the property passes to the transferor, from the date of execution of the deed of transfer. Once such sale takes place, transfer is complete, the vendor of the property ceases to be the owner of the property. Thereafter if he executes one more sale deed in respect of the same property or a cancellation deed in respect of the property already sold, in law it has no value, and it in no way affects the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 such amount to C. Janardhana Rao when his sale deed was cancelled. He was unable to answer whether the society after cancellation called upon the allottees to surrender the sale deeds and possession certificates. He was unable to give the boundaries of the suit property. He was also unable to say whether the society took back possession of the suit property from C. Janardhana Rao after cancelling his sale deed. 45. From this undisputed material on record it is clear that the sale deed executed in favour of C. Janardhana Rao by the society was unilaterally cancelled without notice to him, without due authority of law. On the date of cancellation the plaintiff was in possession of the suit schedule property. He was in lawful ..... X X X X Extracts X X X X X X X X Extracts X X X X
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