In the case at hand, that there was a single transaction
whereunder the respondents-sellers had agreed to sell to the
appellant-society a parcel of land to the society, for use by the
society in terms of the objects for which it is established. It may, in
that sense, be a transaction that touches the business of the
appellant-society but it is common ground that the respondents
were not in the business of selling land as a commercial or business
activity for it is nobody’s case that the respondents were property
dealers or had a land bank and were, as a systematic activity,
selling land to make money. If the respondents were agriculturists
who had agreed to sell agricultural land to the appellant-company,
the transaction was, from their point of view, not a “business
transaction”. For ought we know that transaction may have been
prompted by family necessity, poverty or some such other
compulsion. Such a transaction without any business element in the
same could not constitute a “business transaction” leave alone
“business transactions” within the meaning of Section 64(1)(c).
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.5704 OF 2015
(Arising out of SLP (C) No.36497of 2012)
Bhanushali Housing Cooperative Society Ltd. …Appellant
Vs.
Mangilal & Ors. …Respondents
T.S. THAKUR, J.
Citation;AIR 2015 SC 3016
1. The short question that arises for consideration in this appeal,
by special leave, is whether a dispute arising out of a contract for
sale and purchase of immovable property owned by the
respondents was amenable to adjudication under Section 64 of the
M.P. Cooperative Societies Act, 1960. By his order dated 1st March,
2004, the Deputy Registrar, Co-operative Societies, Ujjain, before
whom the proceedings were initiated, answered that question in
the affirmative and decreed specific performance of the contract
entered into between the parties. A first appeal preferred by the
sellers (respondents-herein) before the Joint Registrar Ujjain failed
and was dismissed by his order dated 7th August, 2009. Aggrieved
by the said two orders, the respondents preferred a second appeal
before the M.P. State Co-operative Tribunal, Bhopal who allowed
the same and set aside the orders passed by the Deputy Registrar
and that passed by the Joint Registrar holding that the dispute
raised by the purchaser-society could not be made the subject
matter of proceeding under Section 64 of the M.P. Cooperative
Societies Act, 1960. The purchaser-society then filed writ petition
No.15195 of 2011 which was heard and dismissed by a Division
Bench of the High Court of Madhya Pradesh. The High Court
concurred with the view taken by the Tribunal that a dispute arising
out of a contract of sale and purchase of immovable property was
beyond the purview of Section 64 of the Act. The present appeal
calls in the question the correctness of the said judgments and
orders.
2. Section 64 of the M.P. Cooperative Societies Act, 1960, may,
at this stage, be extracted in extenso :
“64. Disputes: - (1) Notwithstanding anything contained in
any other law for the time being in force, [any dispute
touching the constitution, management or business, or the
liquidation of a society shall be referred to the Registrar] by
any of the parties to the dispute if the parties thereto are
among the following:-
(a) a society, its committee, any past
committee, any past or present officer, any past
or present agent, any past or present servant or
a nominee, heirs or legal representatives of any
deceased agent or deceased servant of the
society, or the liquidator of the society;
(b) a member, past member or a person
claiming through a member, past member or
deceased member of a society or of a society
which is a member of the society;
(c) a person other than a member of the society
who has been granted a loan by the society or
with whom the society has or had business
transactions and any person claiming through
such a person.
(d) a surety of a member, past member of
deceased member or a person other than a
member who has been granted a loan by the
society, whether such a surety is or is not a
member of the society.
(e) any other society or the liquidator of such a
society; and
(f) a creditor of a society.
(2) For the purpose of sub-section (1), a dispute shall
include –
(i) a claim by a society for any debt or demand
due to it from a member, past member or the
nominee, heir or legal representative of a
deceased member, whether such debt or
demand be admitted or not;
(ii) a claim by a surety against the principal
debtor where the society has recovered from the
surety any amount in respect of any debt or
demand due to it from the principal debtor as a
result of the default of the principal debtor,
whether such debt or demand be admitted or
not;
(iii) a claim by a society for any loss caused to it
by a member, past member or deceased
member, any officer, past officer or deceased
officer, any agent, past agent or deceased
agent, or any servant, past servant or deceased
servant or its committee, past or present,
whether such loss be admitted or not;
(iv) a question regarding rights, etc., including
tenancy rights between a housing society and its
tenants or members; and
(v) any dispute arising in connection with the
election of any officer of the society or of
composite society;
Provided that the Registrar shall not entertain
any dispute under this clause during the period
commencing from the announcement of the
election programmed till the declaration of the
results.
(3) If any question arising whether a dispute referred to the
Registrar is a dispute, the decision thereon of the Registrar
shall be final and shall not be called in question in any
court.”
3. A careful reading of the above would show that for a dispute
to be brought within the purview of Section 64 two essential
requirements must be satisfied viz. (i) that the dispute must “touch
the constitution, management or business of the society or must
relate to the liquidation of the co-operative society;” and (ii) that
the dispute must be between parties referred to in clauses ‘a to f’
of Section 64(1) (supra). It is only when the twin requirements
are in the facts and circumstances of a given case satisfied that a
dispute can be said to be amenable to adjudication under Section
64. Failure of any one of the two requirements would take the
dispute beyond the said provision.
4. In the case at hand the dispute raised by the appellant-society
before the Deputy Registrar related to the alleged refusal of the
respondent to complete the sale transaction in terms of the
agreement to sell executed between the respondents and/or their
predecessors-in-interest, on the one hand, and the
appellant-society on the other. The nature of the dispute,
therefore, did not obliviously touch the constitution and
management of the society nor did the dispute have anything to do
with the liquidation of the society. Whether or not the dispute
sought to be raised was a dispute “touching the business of the
society” is in that view one of the questions that needs to be
examined.
5. As regards the second requirement viz. that the dispute must
be between the persons referred in clauses ‘a’ to ‘f’ of Section 64 of
the Act, it is common ground that the respondents-sellers were not
members of the society nor do they fall under anyone of the
clauses ‘a’, ‘b’, ’d’ or ‘f’ enumerated under Section 64 (1). This
would mean that the respondents must answer the description of
persons mentioned in clause (c) to Section 64(1) of the Act. The
Tribunal as also the High Court have taken the view that the
respondents do not answer the description of parties falling under
Section 64 (1)(c). That is because the appellant-society had
neither granted any loan to the respondents or any one of them
nor did the respondents have any “business transactions” with
the society. The Tribunal and the High Court have interpreted the
words “business transactions” to mean a series of transactions in
connection with the business of the society. The expression did
not, according to them, postulate a single contract for sale or
purchase of the property between the society and a third party.
6. Two distinct questions that need to be answered by this Court,
therefore, are:
(i) whether the dispute in the case at hand touches the business
of the appellant-society? and
(ii) whether the dispute sought to be raised arising as it is out of
the execution of a contract for sale of property by the
respondent in favour of the appellant-society constitutes
“business transactions” within the meaning of
Section 64 (1)(c)?
Re: Question No.1:
7. The expression “business of the society” has not been defined
in the Act or elsewhere. The expression has fallen for interpretation
of the courts in the country with commendable frequency.
Pronouncements from different High Courts have even led to a
cleavage in judicial opinion as to the true meaning and scope of
that expression appearing as it was in Section 43(1) of the
co-operative Societies Act, 1912 and later in analogous provisions
made in different State enactments. One line of decision takes a
liberal view of the expression “business of the Society” while the
other prefers a narrower interpretation. Both these were noticed by
this Court in Deccan Merchants Co-operative Bank Ltd. vs.
M/s. Dalichand Jugraj Jain and Ors. (AIR 1969 SC 1320). An
elaborate discussion on the subject led this Court to declare that
the legislature had used the expression “business of the society” in
a narrower sense and approved the view taken by the High Courts
of Madras, Bombay and Kerala in preferences to that taken by the
High Courts of Madhya Pradesh and Nagpur. While saying so, this
Court enumerated five kinds of disputes mentioned in Section 91
(1) of the Maharashtra Co-operative Societies Act and observed:
“The question arises whether the dispute touching the
assets of a society would be a dispute touching the business
of a society. This would depend on the nature of the society
and the rules and bye-laws governing it. Ordinarily, if a
society owns buildings and lets out parts of buildings which
it does not require for its own purpose it cannot be said that
letting out of those parts is a part of the business of the
society. But it may be that it is the business of a society to
construct and buy houses and let them out to its members.
In that case letting out property may be part of its business.
In this case, the society is a co-operative bank and
ordinarily a co-operative bank cannot be said to be engaged
in business when it lets out properties owned by it.
Therefore, it seems to us that the present dispute between a
tenant and a member of the bank in a building, which has
subsequently been acquired by the bank cannot be said to
be a dispute touching the business of the bank, and the
appeal should fail on this short ground.
While we agree that the nature of business which a society
does can be ascertained from the objects of the society, it is
difficult to subscribe to the proposition that whatever the
society does or is necessarily required to do for the purpose
of carrying out its objects can be said to be part of its
business. We, however, agree that the word ‘touching’ is
very wide and would include any matter which relates to or
concerns the business of a society, but we are doubtful
whether the word ‘affects’ should also be used in defining
the scope of the word ‘touching’. ”
8. Dealing in particular with the question whether a dispute
touching the assets of the society would be a dispute touching the
business of the society, this Court observed:
“18 .xxxxx xxxxx xxxxx
…... Ordinarily, if a society owns buildings and lets out parts
of buildings which it does not require for its own purpose it
cannot be said that letting out of those parts is a part of the
business of the society. But it may be that it is the business
of a society to construct and buy houses and let them out to
its members. In that case letting out property may be part
of its business....”
9. The question was once again considered by this Court in O.N.
Bhatnagar vs. Smt. Rukibai Narsindas & Ors. (1982) 2 SCC
244 where this Court referred to the decision in Deccan
Merchant’s case (supra) and observed:
“Thus, the Court adopted the narrower meaning given to
the word “business” as expressed by the Madras, Bombay
and Kerala High Courts in preference to the wide meaning
given by the Madhya Pradesh and Nagpur High Courts.
According to the view taken in Deccan Merchants
Cooperative Bank case the word “business” in the context
means “any trading or commercial or other similar business
activity of the Society”. It was held that the word “business”
in Section 91(1) of the Act has been used in a narrower
sense and that it means the actual trading, commercial or
other similar business activity of the Society which the
Society is authorised to enter into under the Act and the
Rules and its bye-laws.”
10. On the facts of the case before it, this Court in Bhatnagar’s
case (supra) held that the act of initiating proceedings for
removing an act of trespass by a stranger from a flat allotted to
one of its members could not but be a part of its business. This
Court held that it was as much the concern of the society formed
with the object of providing residential accommodation to its
members, which was normally its business, as it was of the
members to ensure that the flats are in occupation of its members
in accordance with the bye laws framed by it, rather than the
occupation of a person who had no subsisting reason to be in such
occupation. The decision in Deccan Merchant’s case (supra) was
on facts held to be distinguishable and resort to proceedings under
Section 64 of the Act, held legally permissible. Page 11
11
11. Reference may also be made to the decision of this Court in
The Co-operative Central Bank Ltd. and Ors. vs. The
Additional Industrial Tribunal, Andhra Pradesh and Ors.
(1969) 2 SCC 43, wherein the question was whether the
expression business of the society appearing in Section 61 of the
Andhra Pradesh Co-operative Societies Act, 1964 covered a dispute
in respect of alteration of the conditions of service of an employee
of the society. The tribunal and the High Court had in that case
taken the view that such a dispute fell outside the purview of
Section 61 of the Act. Affirming that view this Court observed:
“In that case [Deccan Merchants case], this Court had to
interpret section 91 of the Maharashtra Co-operative
Societies Act, 1960. [Maharashtra Act 32 of 1961], the
dispute related to alteration of a number of conditions of
service of the workmen which relief could only be granted
by an Industrial Tribunal dealing with an industrial dispute.
xxx xxx xxx
….. Since the word “business” is equated with the actual
trading or commercial or other similar business activity of
the society, and since it has been held that it would be
difficult to subscribe to the proposition that whatever the
society does or is necessarily required to do for the purpose
of carrying out its objects, such as laying down the
conditions of service of its employees, can be said to be a
part of its business, it would appear that a dispute relating
to conditions of Service of the workmen employed by the
society cannot be held to be a dispute touching the business
of the society.”
(emphasis supplied)
12. In the case at hand the objects of the appellant-society as set
out in the Articles of Association are as under:
“Objective of this society would be to make arrangement for
the construction of building, to purchase, sale, take on rent
or rent out, prepare land for construction of building and to
make arrangement related to social, educational and
entertainment to its members and it would be complete
right to this society to carry out such work which will be
necessary and proper in its opinion. These rights shall mean
and include to purchase land, take land on lease, sale,
exchange, mortgage, let out on lease, sub-lease, to give
resignation, or to accept resignation and to do all other
relative work and to sell the building on instalment on
proper and necessary restrictions, to give loan or guarantee
of loan for facilitating construction of building, to make
repairing, and will include other rights to carry out work
related to it.”
13. Purchase of land for being used in the manner set out in the
objects extracted above is, therefore, one of the facets of the
business that the society undertakes. Such purchase is directly
linked to the object of developing the acquired land for allotment of
house sites to the members of the society. There is, therefore, a
clear and discernible nexus between acquisition/purchase of land
and the object of providing house sites to the members which
under the circumstances happens to be the main business of the
society. It is not a case where the facts giving rise to the dispute
are not relatable to the objects of the society or where the connect
between the facts constituting the dispute and the objects of the
society is remote or their interplay remarkably tenuous or
peripheral, as was the position in Co-operative Central Bank
Ltd.’s case (supra) involving alteration of the conditions of service
of the employees of the society. We have in that view no hesitation
in holding that the dispute arising out of the purchase of the land
owned by the respondents was, in the instant case, a dispute
touching the business of the appellant-society. Question No.1 is
answered accordingly.
Re: Question No.2:
14. The second essential requirement for a dispute to fall within
the purview of Section 64 is that the parties to the dispute must be
those enumerated in sub-clauses ‘a to f’ under Section 64 of the
Act. Clause (a) of Section 64(1) envisages disputes between a
society, its committee, any past committee, any past or present
officer, any past or present agent, any past or present servant or a
nominee, heirs or legal representatives of any deceased agent or
deceased servant of the society, or the liquidator of the society.
This clause has obviously no application to the facts of the present
case. That is true even about clause ‘b’ whereunder the dispute
between a member, past member or a person claiming through a
member, past member or deceased member of a society or of a
society which is a member of the society is brought within the
purview of Section 64. We shall presently deal with clause ‘c’ to
Section 64 (1) upon which counsel for the appellant-society placed
reliance but before we may do so we may deal with the application
of clauses (d), (e) and (f). Clause (d) of Section 64 (1) envisages
disputes involving a surety of a member, past member of the
society, member or a person other than a member who was
appointed by the society; whether or not such a society is a
member of the society. So also clauses (e) and (f) do not have any
application to the case at hand as the same deal with disputes
between any other society, the liquidator of such a society or
creditor of a society.
15. That leaves us with clause (c) of Section 64 (1), which
postulates disputes between non-members to whom loans are
granted by the society and the society or disputes between the
society or a non-member with whom the society has or had
“business transactions” or any person claiming under such a
society.
16. It was argued on behalf of the appellant-society that the
dispute between society, on the one hand, and the respondent, on
the other, arising out of the contract for sale and purchase of
immovable property fell under this clause inasmuch as the society
was a party to the dispute arising out of a transaction that
constitutes a business transaction between the society and the
respondent non-members. The fact that the dispute related to a
single transaction did not, according to the learned counsel for the
appellant, make any material difference having regard to the
provisions of Section 5 of the M.P. General Clauses Act, 1957. That
provision, it was argued, made it clear that words in singular shall
include the plural, and vice-a-versa. This implied that a single
business transaction could also bring the dispute arising out of any
such transaction within the purview of Section 64.
17. On behalf of the respondents, it was contended that Section
64(1)(c) had no application to the case at hand not only because a
single transaction did not constitute business but also because the
legislature had deliberately used the expression “business
transactions” to make it clear that it is only a series of transactions
that would bring the dispute arising out of such transactions within
the purview of Section 64. The scheme underlying Chapter VII of
the Act that provides for settlement of disputes clearly suggests
that it is only when there are multiple transactions which can be
described as “business transactions” that any dispute arising out of
such transactions would come within the purview of Section 64. In
the light of such legislative intent, the provisions of General
Clauses Act, could not be called in aid by the appellant-society.
18. What is the true scope and meaning of the expression
“business transactions” appearing in clause (c) of Section 64(1) of
the Act is what falls for our consideration. That expression has not
been defined in the Act or elsewhere. Advanced Law Lexicon
(3rd Edition, 2005) by P. Ramanatha Aiyar describes the
expression “Business transaction” as under:
“Business transaction is a generic expression used in the
sense that it is a transaction which a businessman, in a
commercial business, would enter into.”
19. The above meaning ascribed to the expression is fairly
accurate hence acceptable. All that may be added is that in order
that a transaction may be treated as “business transaction”, it must
be a transaction that answers the above description from the stand
point of both the parties to the transaction. It cannot be a business
transaction from the standpoint of one party to the transaction and
something else from the other. It must be business bilaterally. So
viewed a single transaction where an owner of immovable property
agrees to sell his land to a society may or may not constitute a
business transaction, depending upon whether the seller is in the
business of selling property for profit. If the seller is not in any such
business, the transaction from his stand point will not be a business
transaction no matter, from the point of view of the society the
transaction may be a business transaction because the society is in
the business of buying land and developing it for the benefit of its
members. A transaction of sale of property would in such a case fall
outside the expression “business transaction”. A somewhat similar
view was taken by this Court in Manipur Administration vs. M.
Nila Chandra Singh (AIR 1964 SC 1533). This Court was in that
case dealing with the provisions of Manipur Foodgrains Dealers
Licensing Orders 1958. The question was whether a single
transaction of sale, purchase or storage of food grains was enough
to make the person concerned a dealer and whether any such act
would constitute business. Repelling the contention that a single
transaction would also constitute “business”, this Court observed:
“In dealing with the question as to whether the respondent
is guilty under Section 7 of the Essential Commodities Act, it
is necessary to decide whether he can be said to be a dealer
within the meaning of clause 3 of the Order. A dealer has
been defined by clause 2(a) and that definition we have
already noticed. The said definition shows that before a
person can be said to be a dealer it must be shown that he
carries on business of purchase or sale or storage for sale of
any of the commodities specified in the Schedule, and that
the sale must be in quantity of 100 mds. or more at any one
time. It would be noticed that the requirement is not that
the person should merely sell, purchase or store the
foodgrains in question, but that he must be carrying on the
business of such purchase, sale, or storage; and the concept
of business in the context must necessarily postulate
continuity of transactions. It is not a single, casual or
solitary transaction of sale, purchase or storage that would
make a person a dealer. It is only where it is shown that
there is a sort of continuity of one or the other of the said
transactions that the requirements as to business postulated
by the definition would be satisfied. If this element of the
definition is ignored, it would be rendering the use of the
word “business” redundant and meaningless. It has been
fairly conceded before us by Mr. Khanna that the
requirement that the transaction must be of 100 mds. or
more at any one time governs all classes of dealings with
the commodities specified in the definition. Whether it is a
purchase or sale or storage at any one time it must be of
100 mds. or more. In other words, there is no dispute
before us that retail transactions of less than 100 mds. of
the prescribed commodities are outside the purview of the
definition of a dealer.”
20. Reference may also be made to the decision of this Court in
Barendra Prasad Ray and Ors. vs. Income Tax Officer ‘A’
Ward, Foreign Section and Ors. (1981) 2 SCC 693 where this
Court interpreted the word “business” and held that the same was
an expression of wide import and means an activity carried on
continuously and systematically by a person by the application of
his labour or skill with a view to earning profit. In B.R.
Enterprises etc. vs. State of U.P. and Ors. etc. (1999) 9 SCC
700 this Court held that business is a term wider than trade. It
includes almost anything which is an occupation as distinguished
from pleasure. The term must, however, be construed according to
its context. To the same effect are the decisions of this Court in
Mahesh Chandra vs. Regional Manager U.P. Financial
Corporation and Ors. (1993) 2 SCC 279, and S. Mohan Lal vs.
R. Kondiah (1979) 2 SCC 616.
21. Suffice it to say that while the expression “business” is of a
very wide import and means any activity that is continuous and
systematic, perceptions about what would constitute business may
vary from public to private sector or from industrial financing to
commercial banking sectors. What is certain is that any activity in
order to constitute business must be systematic and continuous. A
single transaction in the circumstances like the one in the case at
hand would not constitute business for both the parties to the
transaction. At any rate, the legislature having used the expression
“business transactions” has left no manner of doubt that it is not
just a solitary transaction between a society, on the one hand, and
a third party, on the other, which would bring any dispute arising
out of any such transaction within the purview of Section 64(1)(c).
The dispute must be between parties who have had a series of
transactions, each one constituting a business transaction in order
that the provisions of Section 64 are attracted and a dispute arising
out of any such transaction brought within its purview.
22. The argument that the plural used in the expression “business
transactions” must include the singular in view of the provisions of
Section 5(b) of the M.P. General Clauses Act has not impressed us.
We say so because Section 5 of the M.P. General Clauses Act, 1957
like Section 13 of the Central General Clauses Act postulates
singular to include the plural and vice-versa only if no different
intention appears from the context. That intention, in the case at
hand, appears to be evident not only from the scheme of the Act
but also from the context in which the expression “business
transactions” has been used. The purpose and the intent underlying
the provision appears to be to bring only such disputes under the
purview of Section 64 as are disputes arising out of what is
business for both the sides and comprise multiple transactions.
Decisions of this Court in Newspapers Ltd. vs. State Industrial
Tribunal, U.P. and Ors. (AIR 1957 SC 532) and M/s.
Dhandhania Kedia & Co. vs. The Commissioner of Income
Tax (AIR 1959 SC 219) have settled the legal position and
declared that the principle underlying Section 13 of the General
Clauses Act regarding singular including the plural and vice versa
does not have universal application and that the principle can apply
only when no contrary intention is deducible from the scheme or
the language used in the statute.
23. In the case at hand, that there was a single transaction
whereunder the respondents-sellers had agreed to sell to the
appellant-society a parcel of land to the society, for use by the
society in terms of the objects for which it is established. It may, in
that sense, be a transaction that touches the business of the
appellant-society but it is common ground that the respondents
were not in the business of selling land as a commercial or business
activity for it is nobody’s case that the respondents were property
dealers or had a land bank and were, as a systematic activity,
selling land to make money. If the respondents were agriculturists
who had agreed to sell agricultural land to the appellant-company,
the transaction was, from their point of view, not a “business
transaction”. For ought we know that transaction may have been
prompted by family necessity, poverty or some such other
compulsion. Such a transaction without any business element in the
same could not constitute a “business transaction” leave alone
“business transactions” within the meaning of Section 64(1)(c).
24. For the reasons stated above Question No.2 is to be answered
in the negative.
25. In the result this appeal fails and is hereby dismissed, but in
the circumstances leaving the parties to bear their own costs.
……………………………………….…..…J.
(T.S. THAKUR)
……………………………………….…..…J.
(R.K. AGRAWAL)
……………………………………….…..…J.
(R. BANUMATHI)
New Delhi;
July 24, 2015Page 24
Print Page
whereunder the respondents-sellers had agreed to sell to the
appellant-society a parcel of land to the society, for use by the
society in terms of the objects for which it is established. It may, in
that sense, be a transaction that touches the business of the
appellant-society but it is common ground that the respondents
were not in the business of selling land as a commercial or business
activity for it is nobody’s case that the respondents were property
dealers or had a land bank and were, as a systematic activity,
selling land to make money. If the respondents were agriculturists
who had agreed to sell agricultural land to the appellant-company,
the transaction was, from their point of view, not a “business
transaction”. For ought we know that transaction may have been
prompted by family necessity, poverty or some such other
compulsion. Such a transaction without any business element in the
same could not constitute a “business transaction” leave alone
“business transactions” within the meaning of Section 64(1)(c).
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.5704 OF 2015
(Arising out of SLP (C) No.36497of 2012)
Bhanushali Housing Cooperative Society Ltd. …Appellant
Vs.
Mangilal & Ors. …Respondents
T.S. THAKUR, J.
Citation;AIR 2015 SC 3016
1. The short question that arises for consideration in this appeal,
by special leave, is whether a dispute arising out of a contract for
sale and purchase of immovable property owned by the
respondents was amenable to adjudication under Section 64 of the
M.P. Cooperative Societies Act, 1960. By his order dated 1st March,
2004, the Deputy Registrar, Co-operative Societies, Ujjain, before
whom the proceedings were initiated, answered that question in
the affirmative and decreed specific performance of the contract
entered into between the parties. A first appeal preferred by the
sellers (respondents-herein) before the Joint Registrar Ujjain failed
and was dismissed by his order dated 7th August, 2009. Aggrieved
by the said two orders, the respondents preferred a second appeal
before the M.P. State Co-operative Tribunal, Bhopal who allowed
the same and set aside the orders passed by the Deputy Registrar
and that passed by the Joint Registrar holding that the dispute
raised by the purchaser-society could not be made the subject
matter of proceeding under Section 64 of the M.P. Cooperative
Societies Act, 1960. The purchaser-society then filed writ petition
No.15195 of 2011 which was heard and dismissed by a Division
Bench of the High Court of Madhya Pradesh. The High Court
concurred with the view taken by the Tribunal that a dispute arising
out of a contract of sale and purchase of immovable property was
beyond the purview of Section 64 of the Act. The present appeal
calls in the question the correctness of the said judgments and
orders.
2. Section 64 of the M.P. Cooperative Societies Act, 1960, may,
at this stage, be extracted in extenso :
“64. Disputes: - (1) Notwithstanding anything contained in
any other law for the time being in force, [any dispute
touching the constitution, management or business, or the
liquidation of a society shall be referred to the Registrar] by
any of the parties to the dispute if the parties thereto are
among the following:-
(a) a society, its committee, any past
committee, any past or present officer, any past
or present agent, any past or present servant or
a nominee, heirs or legal representatives of any
deceased agent or deceased servant of the
society, or the liquidator of the society;
(b) a member, past member or a person
claiming through a member, past member or
deceased member of a society or of a society
which is a member of the society;
(c) a person other than a member of the society
who has been granted a loan by the society or
with whom the society has or had business
transactions and any person claiming through
such a person.
(d) a surety of a member, past member of
deceased member or a person other than a
member who has been granted a loan by the
society, whether such a surety is or is not a
member of the society.
(e) any other society or the liquidator of such a
society; and
(f) a creditor of a society.
(2) For the purpose of sub-section (1), a dispute shall
include –
(i) a claim by a society for any debt or demand
due to it from a member, past member or the
nominee, heir or legal representative of a
deceased member, whether such debt or
demand be admitted or not;
(ii) a claim by a surety against the principal
debtor where the society has recovered from the
surety any amount in respect of any debt or
demand due to it from the principal debtor as a
result of the default of the principal debtor,
whether such debt or demand be admitted or
not;
(iii) a claim by a society for any loss caused to it
by a member, past member or deceased
member, any officer, past officer or deceased
officer, any agent, past agent or deceased
agent, or any servant, past servant or deceased
servant or its committee, past or present,
whether such loss be admitted or not;
(iv) a question regarding rights, etc., including
tenancy rights between a housing society and its
tenants or members; and
(v) any dispute arising in connection with the
election of any officer of the society or of
composite society;
Provided that the Registrar shall not entertain
any dispute under this clause during the period
commencing from the announcement of the
election programmed till the declaration of the
results.
(3) If any question arising whether a dispute referred to the
Registrar is a dispute, the decision thereon of the Registrar
shall be final and shall not be called in question in any
court.”
3. A careful reading of the above would show that for a dispute
to be brought within the purview of Section 64 two essential
requirements must be satisfied viz. (i) that the dispute must “touch
the constitution, management or business of the society or must
relate to the liquidation of the co-operative society;” and (ii) that
the dispute must be between parties referred to in clauses ‘a to f’
of Section 64(1) (supra). It is only when the twin requirements
are in the facts and circumstances of a given case satisfied that a
dispute can be said to be amenable to adjudication under Section
64. Failure of any one of the two requirements would take the
dispute beyond the said provision.
4. In the case at hand the dispute raised by the appellant-society
before the Deputy Registrar related to the alleged refusal of the
respondent to complete the sale transaction in terms of the
agreement to sell executed between the respondents and/or their
predecessors-in-interest, on the one hand, and the
appellant-society on the other. The nature of the dispute,
therefore, did not obliviously touch the constitution and
management of the society nor did the dispute have anything to do
with the liquidation of the society. Whether or not the dispute
sought to be raised was a dispute “touching the business of the
society” is in that view one of the questions that needs to be
examined.
5. As regards the second requirement viz. that the dispute must
be between the persons referred in clauses ‘a’ to ‘f’ of Section 64 of
the Act, it is common ground that the respondents-sellers were not
members of the society nor do they fall under anyone of the
clauses ‘a’, ‘b’, ’d’ or ‘f’ enumerated under Section 64 (1). This
would mean that the respondents must answer the description of
persons mentioned in clause (c) to Section 64(1) of the Act. The
Tribunal as also the High Court have taken the view that the
respondents do not answer the description of parties falling under
Section 64 (1)(c). That is because the appellant-society had
neither granted any loan to the respondents or any one of them
nor did the respondents have any “business transactions” with
the society. The Tribunal and the High Court have interpreted the
words “business transactions” to mean a series of transactions in
connection with the business of the society. The expression did
not, according to them, postulate a single contract for sale or
purchase of the property between the society and a third party.
6. Two distinct questions that need to be answered by this Court,
therefore, are:
(i) whether the dispute in the case at hand touches the business
of the appellant-society? and
(ii) whether the dispute sought to be raised arising as it is out of
the execution of a contract for sale of property by the
respondent in favour of the appellant-society constitutes
“business transactions” within the meaning of
Section 64 (1)(c)?
Re: Question No.1:
7. The expression “business of the society” has not been defined
in the Act or elsewhere. The expression has fallen for interpretation
of the courts in the country with commendable frequency.
Pronouncements from different High Courts have even led to a
cleavage in judicial opinion as to the true meaning and scope of
that expression appearing as it was in Section 43(1) of the
co-operative Societies Act, 1912 and later in analogous provisions
made in different State enactments. One line of decision takes a
liberal view of the expression “business of the Society” while the
other prefers a narrower interpretation. Both these were noticed by
this Court in Deccan Merchants Co-operative Bank Ltd. vs.
M/s. Dalichand Jugraj Jain and Ors. (AIR 1969 SC 1320). An
elaborate discussion on the subject led this Court to declare that
the legislature had used the expression “business of the society” in
a narrower sense and approved the view taken by the High Courts
of Madras, Bombay and Kerala in preferences to that taken by the
High Courts of Madhya Pradesh and Nagpur. While saying so, this
Court enumerated five kinds of disputes mentioned in Section 91
(1) of the Maharashtra Co-operative Societies Act and observed:
“The question arises whether the dispute touching the
assets of a society would be a dispute touching the business
of a society. This would depend on the nature of the society
and the rules and bye-laws governing it. Ordinarily, if a
society owns buildings and lets out parts of buildings which
it does not require for its own purpose it cannot be said that
letting out of those parts is a part of the business of the
society. But it may be that it is the business of a society to
construct and buy houses and let them out to its members.
In that case letting out property may be part of its business.
In this case, the society is a co-operative bank and
ordinarily a co-operative bank cannot be said to be engaged
in business when it lets out properties owned by it.
Therefore, it seems to us that the present dispute between a
tenant and a member of the bank in a building, which has
subsequently been acquired by the bank cannot be said to
be a dispute touching the business of the bank, and the
appeal should fail on this short ground.
While we agree that the nature of business which a society
does can be ascertained from the objects of the society, it is
difficult to subscribe to the proposition that whatever the
society does or is necessarily required to do for the purpose
of carrying out its objects can be said to be part of its
business. We, however, agree that the word ‘touching’ is
very wide and would include any matter which relates to or
concerns the business of a society, but we are doubtful
whether the word ‘affects’ should also be used in defining
the scope of the word ‘touching’. ”
8. Dealing in particular with the question whether a dispute
touching the assets of the society would be a dispute touching the
business of the society, this Court observed:
“18 .xxxxx xxxxx xxxxx
…... Ordinarily, if a society owns buildings and lets out parts
of buildings which it does not require for its own purpose it
cannot be said that letting out of those parts is a part of the
business of the society. But it may be that it is the business
of a society to construct and buy houses and let them out to
its members. In that case letting out property may be part
of its business....”
9. The question was once again considered by this Court in O.N.
Bhatnagar vs. Smt. Rukibai Narsindas & Ors. (1982) 2 SCC
244 where this Court referred to the decision in Deccan
Merchant’s case (supra) and observed:
“Thus, the Court adopted the narrower meaning given to
the word “business” as expressed by the Madras, Bombay
and Kerala High Courts in preference to the wide meaning
given by the Madhya Pradesh and Nagpur High Courts.
According to the view taken in Deccan Merchants
Cooperative Bank case the word “business” in the context
means “any trading or commercial or other similar business
activity of the Society”. It was held that the word “business”
in Section 91(1) of the Act has been used in a narrower
sense and that it means the actual trading, commercial or
other similar business activity of the Society which the
Society is authorised to enter into under the Act and the
Rules and its bye-laws.”
10. On the facts of the case before it, this Court in Bhatnagar’s
case (supra) held that the act of initiating proceedings for
removing an act of trespass by a stranger from a flat allotted to
one of its members could not but be a part of its business. This
Court held that it was as much the concern of the society formed
with the object of providing residential accommodation to its
members, which was normally its business, as it was of the
members to ensure that the flats are in occupation of its members
in accordance with the bye laws framed by it, rather than the
occupation of a person who had no subsisting reason to be in such
occupation. The decision in Deccan Merchant’s case (supra) was
on facts held to be distinguishable and resort to proceedings under
Section 64 of the Act, held legally permissible. Page 11
11
11. Reference may also be made to the decision of this Court in
The Co-operative Central Bank Ltd. and Ors. vs. The
Additional Industrial Tribunal, Andhra Pradesh and Ors.
(1969) 2 SCC 43, wherein the question was whether the
expression business of the society appearing in Section 61 of the
Andhra Pradesh Co-operative Societies Act, 1964 covered a dispute
in respect of alteration of the conditions of service of an employee
of the society. The tribunal and the High Court had in that case
taken the view that such a dispute fell outside the purview of
Section 61 of the Act. Affirming that view this Court observed:
“In that case [Deccan Merchants case], this Court had to
interpret section 91 of the Maharashtra Co-operative
Societies Act, 1960. [Maharashtra Act 32 of 1961], the
dispute related to alteration of a number of conditions of
service of the workmen which relief could only be granted
by an Industrial Tribunal dealing with an industrial dispute.
xxx xxx xxx
….. Since the word “business” is equated with the actual
trading or commercial or other similar business activity of
the society, and since it has been held that it would be
difficult to subscribe to the proposition that whatever the
society does or is necessarily required to do for the purpose
of carrying out its objects, such as laying down the
conditions of service of its employees, can be said to be a
part of its business, it would appear that a dispute relating
to conditions of Service of the workmen employed by the
society cannot be held to be a dispute touching the business
of the society.”
(emphasis supplied)
12. In the case at hand the objects of the appellant-society as set
out in the Articles of Association are as under:
“Objective of this society would be to make arrangement for
the construction of building, to purchase, sale, take on rent
or rent out, prepare land for construction of building and to
make arrangement related to social, educational and
entertainment to its members and it would be complete
right to this society to carry out such work which will be
necessary and proper in its opinion. These rights shall mean
and include to purchase land, take land on lease, sale,
exchange, mortgage, let out on lease, sub-lease, to give
resignation, or to accept resignation and to do all other
relative work and to sell the building on instalment on
proper and necessary restrictions, to give loan or guarantee
of loan for facilitating construction of building, to make
repairing, and will include other rights to carry out work
related to it.”
13. Purchase of land for being used in the manner set out in the
objects extracted above is, therefore, one of the facets of the
business that the society undertakes. Such purchase is directly
linked to the object of developing the acquired land for allotment of
house sites to the members of the society. There is, therefore, a
clear and discernible nexus between acquisition/purchase of land
and the object of providing house sites to the members which
under the circumstances happens to be the main business of the
society. It is not a case where the facts giving rise to the dispute
are not relatable to the objects of the society or where the connect
between the facts constituting the dispute and the objects of the
society is remote or their interplay remarkably tenuous or
peripheral, as was the position in Co-operative Central Bank
Ltd.’s case (supra) involving alteration of the conditions of service
of the employees of the society. We have in that view no hesitation
in holding that the dispute arising out of the purchase of the land
owned by the respondents was, in the instant case, a dispute
touching the business of the appellant-society. Question No.1 is
answered accordingly.
Re: Question No.2:
14. The second essential requirement for a dispute to fall within
the purview of Section 64 is that the parties to the dispute must be
those enumerated in sub-clauses ‘a to f’ under Section 64 of the
Act. Clause (a) of Section 64(1) envisages disputes between a
society, its committee, any past committee, any past or present
officer, any past or present agent, any past or present servant or a
nominee, heirs or legal representatives of any deceased agent or
deceased servant of the society, or the liquidator of the society.
This clause has obviously no application to the facts of the present
case. That is true even about clause ‘b’ whereunder the dispute
between a member, past member or a person claiming through a
member, past member or deceased member of a society or of a
society which is a member of the society is brought within the
purview of Section 64. We shall presently deal with clause ‘c’ to
Section 64 (1) upon which counsel for the appellant-society placed
reliance but before we may do so we may deal with the application
of clauses (d), (e) and (f). Clause (d) of Section 64 (1) envisages
disputes involving a surety of a member, past member of the
society, member or a person other than a member who was
appointed by the society; whether or not such a society is a
member of the society. So also clauses (e) and (f) do not have any
application to the case at hand as the same deal with disputes
between any other society, the liquidator of such a society or
creditor of a society.
15. That leaves us with clause (c) of Section 64 (1), which
postulates disputes between non-members to whom loans are
granted by the society and the society or disputes between the
society or a non-member with whom the society has or had
“business transactions” or any person claiming under such a
society.
16. It was argued on behalf of the appellant-society that the
dispute between society, on the one hand, and the respondent, on
the other, arising out of the contract for sale and purchase of
immovable property fell under this clause inasmuch as the society
was a party to the dispute arising out of a transaction that
constitutes a business transaction between the society and the
respondent non-members. The fact that the dispute related to a
single transaction did not, according to the learned counsel for the
appellant, make any material difference having regard to the
provisions of Section 5 of the M.P. General Clauses Act, 1957. That
provision, it was argued, made it clear that words in singular shall
include the plural, and vice-a-versa. This implied that a single
business transaction could also bring the dispute arising out of any
such transaction within the purview of Section 64.
17. On behalf of the respondents, it was contended that Section
64(1)(c) had no application to the case at hand not only because a
single transaction did not constitute business but also because the
legislature had deliberately used the expression “business
transactions” to make it clear that it is only a series of transactions
that would bring the dispute arising out of such transactions within
the purview of Section 64. The scheme underlying Chapter VII of
the Act that provides for settlement of disputes clearly suggests
that it is only when there are multiple transactions which can be
described as “business transactions” that any dispute arising out of
such transactions would come within the purview of Section 64. In
the light of such legislative intent, the provisions of General
Clauses Act, could not be called in aid by the appellant-society.
18. What is the true scope and meaning of the expression
“business transactions” appearing in clause (c) of Section 64(1) of
the Act is what falls for our consideration. That expression has not
been defined in the Act or elsewhere. Advanced Law Lexicon
(3rd Edition, 2005) by P. Ramanatha Aiyar describes the
expression “Business transaction” as under:
“Business transaction is a generic expression used in the
sense that it is a transaction which a businessman, in a
commercial business, would enter into.”
19. The above meaning ascribed to the expression is fairly
accurate hence acceptable. All that may be added is that in order
that a transaction may be treated as “business transaction”, it must
be a transaction that answers the above description from the stand
point of both the parties to the transaction. It cannot be a business
transaction from the standpoint of one party to the transaction and
something else from the other. It must be business bilaterally. So
viewed a single transaction where an owner of immovable property
agrees to sell his land to a society may or may not constitute a
business transaction, depending upon whether the seller is in the
business of selling property for profit. If the seller is not in any such
business, the transaction from his stand point will not be a business
transaction no matter, from the point of view of the society the
transaction may be a business transaction because the society is in
the business of buying land and developing it for the benefit of its
members. A transaction of sale of property would in such a case fall
outside the expression “business transaction”. A somewhat similar
view was taken by this Court in Manipur Administration vs. M.
Nila Chandra Singh (AIR 1964 SC 1533). This Court was in that
case dealing with the provisions of Manipur Foodgrains Dealers
Licensing Orders 1958. The question was whether a single
transaction of sale, purchase or storage of food grains was enough
to make the person concerned a dealer and whether any such act
would constitute business. Repelling the contention that a single
transaction would also constitute “business”, this Court observed:
“In dealing with the question as to whether the respondent
is guilty under Section 7 of the Essential Commodities Act, it
is necessary to decide whether he can be said to be a dealer
within the meaning of clause 3 of the Order. A dealer has
been defined by clause 2(a) and that definition we have
already noticed. The said definition shows that before a
person can be said to be a dealer it must be shown that he
carries on business of purchase or sale or storage for sale of
any of the commodities specified in the Schedule, and that
the sale must be in quantity of 100 mds. or more at any one
time. It would be noticed that the requirement is not that
the person should merely sell, purchase or store the
foodgrains in question, but that he must be carrying on the
business of such purchase, sale, or storage; and the concept
of business in the context must necessarily postulate
continuity of transactions. It is not a single, casual or
solitary transaction of sale, purchase or storage that would
make a person a dealer. It is only where it is shown that
there is a sort of continuity of one or the other of the said
transactions that the requirements as to business postulated
by the definition would be satisfied. If this element of the
definition is ignored, it would be rendering the use of the
word “business” redundant and meaningless. It has been
fairly conceded before us by Mr. Khanna that the
requirement that the transaction must be of 100 mds. or
more at any one time governs all classes of dealings with
the commodities specified in the definition. Whether it is a
purchase or sale or storage at any one time it must be of
100 mds. or more. In other words, there is no dispute
before us that retail transactions of less than 100 mds. of
the prescribed commodities are outside the purview of the
definition of a dealer.”
20. Reference may also be made to the decision of this Court in
Barendra Prasad Ray and Ors. vs. Income Tax Officer ‘A’
Ward, Foreign Section and Ors. (1981) 2 SCC 693 where this
Court interpreted the word “business” and held that the same was
an expression of wide import and means an activity carried on
continuously and systematically by a person by the application of
his labour or skill with a view to earning profit. In B.R.
Enterprises etc. vs. State of U.P. and Ors. etc. (1999) 9 SCC
700 this Court held that business is a term wider than trade. It
includes almost anything which is an occupation as distinguished
from pleasure. The term must, however, be construed according to
its context. To the same effect are the decisions of this Court in
Mahesh Chandra vs. Regional Manager U.P. Financial
Corporation and Ors. (1993) 2 SCC 279, and S. Mohan Lal vs.
R. Kondiah (1979) 2 SCC 616.
21. Suffice it to say that while the expression “business” is of a
very wide import and means any activity that is continuous and
systematic, perceptions about what would constitute business may
vary from public to private sector or from industrial financing to
commercial banking sectors. What is certain is that any activity in
order to constitute business must be systematic and continuous. A
single transaction in the circumstances like the one in the case at
hand would not constitute business for both the parties to the
transaction. At any rate, the legislature having used the expression
“business transactions” has left no manner of doubt that it is not
just a solitary transaction between a society, on the one hand, and
a third party, on the other, which would bring any dispute arising
out of any such transaction within the purview of Section 64(1)(c).
The dispute must be between parties who have had a series of
transactions, each one constituting a business transaction in order
that the provisions of Section 64 are attracted and a dispute arising
out of any such transaction brought within its purview.
22. The argument that the plural used in the expression “business
transactions” must include the singular in view of the provisions of
Section 5(b) of the M.P. General Clauses Act has not impressed us.
We say so because Section 5 of the M.P. General Clauses Act, 1957
like Section 13 of the Central General Clauses Act postulates
singular to include the plural and vice-versa only if no different
intention appears from the context. That intention, in the case at
hand, appears to be evident not only from the scheme of the Act
but also from the context in which the expression “business
transactions” has been used. The purpose and the intent underlying
the provision appears to be to bring only such disputes under the
purview of Section 64 as are disputes arising out of what is
business for both the sides and comprise multiple transactions.
Decisions of this Court in Newspapers Ltd. vs. State Industrial
Tribunal, U.P. and Ors. (AIR 1957 SC 532) and M/s.
Dhandhania Kedia & Co. vs. The Commissioner of Income
Tax (AIR 1959 SC 219) have settled the legal position and
declared that the principle underlying Section 13 of the General
Clauses Act regarding singular including the plural and vice versa
does not have universal application and that the principle can apply
only when no contrary intention is deducible from the scheme or
the language used in the statute.
23. In the case at hand, that there was a single transaction
whereunder the respondents-sellers had agreed to sell to the
appellant-society a parcel of land to the society, for use by the
society in terms of the objects for which it is established. It may, in
that sense, be a transaction that touches the business of the
appellant-society but it is common ground that the respondents
were not in the business of selling land as a commercial or business
activity for it is nobody’s case that the respondents were property
dealers or had a land bank and were, as a systematic activity,
selling land to make money. If the respondents were agriculturists
who had agreed to sell agricultural land to the appellant-company,
the transaction was, from their point of view, not a “business
transaction”. For ought we know that transaction may have been
prompted by family necessity, poverty or some such other
compulsion. Such a transaction without any business element in the
same could not constitute a “business transaction” leave alone
“business transactions” within the meaning of Section 64(1)(c).
24. For the reasons stated above Question No.2 is to be answered
in the negative.
25. In the result this appeal fails and is hereby dismissed, but in
the circumstances leaving the parties to bear their own costs.
……………………………………….…..…J.
(T.S. THAKUR)
……………………………………….…..…J.
(R.K. AGRAWAL)
……………………………………….…..…J.
(R. BANUMATHI)
New Delhi;
July 24, 2015Page 24
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