Ajit Hembram And Others vs Sergeant Of Co-Operative Housing ...
2021 Latest Caselaw 3764 Cal

AD. 5 July 14, 2021.

MNS.

C. O. No. 3940 of 2019 (Via video conference)

Ajit Hembram and others Vs.

Sergeant of Co-operative Housing Society Limited and others

Mr. Sabyasachi Chatterjee, Mr. Pintu Karar

... for the petitioners.

Mr. Krishnendu Banerjee, Mr. Biswajit Dutta

...for the opposite parties.

Affidavit-of-service filed in Court today be

taken on record.

Both sides are represented through

learned counsel.

Heard both sides.

The premise of the challenge is that the

appellate forum refused to exercise jurisdiction

vested in it by law in affirming the decision of the

Arbitrator under the West Bengal Co-operative

Societies Act, 2006, (in short 'the Act of 2006'),

whereby the dispute was decided in favour of the

opposite parties.

Learned counsel appearing for the

petitioners cites the judgment of M/s.

Hindusthan Infrastructure Construction

Corporation Limited & Anr. Vs. M/s. R. S.

Woods International & Ors. reported at 2018

SCC OnLine Del 12960, in support of the

proposition that a proceeding is maintainable by a

partnership firm, even if unregistered, under

certain circumstances.

Learned counsel also places reliance on

the judgment of Delhi Development Authority

Vs. Kochhar Construction Work and Another

reported at (1998) 8 SCC 559 and contends that

since the parties, being the partners, can institute

a suit in their individual capacities, although not in

the name of the partnership firm, there was no

bar, as contemplated under Section 69 of the

Partnership Act, 1932 (hereinafter referred to as

'the 1932 Act) applicable to the present case.

Learned counsel further submits that the

agreement specifically contained provisions as

regards clearance of payments by the opposite

parties upon the petitioners making the

constructions as contemplated in the agreement.

However, the opposite parties unilaterally

terminated the contract, without making any

payment for the work already done by the

petitioners.

Learned counsel appearing for the

opposite parties contends, at the inception, that

there is no urgency in the matter and the matter

can be taken up in physical mode. However, in

view of the specific prevalent rules of this Court

restricting the arguments to the virtual mode,

there is no substance in such argument,

particularly since counsel himself is appearing on

virtual mode.

Learned counsel next contends that

Section 69(2) of the 1932 Act is a specific bar to

maintainability of the suit. Since the appellate

Tribunal held correctly, it is argued, that the

proceeding had the trappings of a suit, the bar of

Section 69(2) of the 1932 Act is squarely

applicable.

That apart, it is contended by the opposite

parties that the petitioners never gave any

specific break-up or raised any bill on the GST

amount and made unilateral claims on their own

whims. As such, the opposite parties were

compelled to terminate the contract. Such power

of unilateral termination, under the grounds

specified in the agreement, was envisaged in the

agreement itself.

Upon considering the submissions of both

sides, it appears that the appellate forum

proceeded on several misconceptions of law.

First, it is well-settled that although no litigation is

maintainable at the instance of a partnership firm

in case the firm is unregistered, there is no bar in

the individual partners of the firm to institute a

legal action in their individual capacities.

It is seen from the building contract

annexed to the revisional application, which was

purportedly terminated by the opposite parties

unilaterally, the building contract was entered into

between the opposite party no. 1-society and the

builders, that is, Asit Hembram, Sankar Ganguly

and Uttam Mondal , by name, only qualified by

the rider that they were carrying on business

under the name and style of M/s. Ma Tara

Enterprise, a partnership firm. Even the

complaint was lodged not by the firm, but by the

petitioners in their individual capacities, the logic

behind which is also borne out by the description

of the contractual parties in the building contract-

in-question.

Hence, there is no question of applicability

of either sub-section (2) or sub-section (3) of

Section 69 of the 1932 Act in the present case.

The judgment of the Hon'ble Delhi High

Court, cited by the petitioners, is not applicable to

the facts of the present case, since the premise of

such order was that the suit was not based on

any contract between the parties, but under the

statutory right provided by Sections 30 and 37 of

the Negotiable Instruments Act, 1881.

In the present case, however, the entire

rights claimed by the petitioners arise out of a

contract and, thus, are contractual and not

statutory in nature.

Hence, the ratio of the Delhi High Court

judgment is not attracted at all to the present

case.

However, the appellate forum, while

dismissing the appeal, took into account Section

69 of the 1932 Act, as a bar to the dispute, on two

unlawful premises.

First, the bar is not categorically applicable

since the agreement was entered into and the

dispute initiated by the partners of the

unregistered firm in their individual capacities as

well, and not merely in the name of the

partnership firm.

Secondly, the finding of the appellate

forum as regards the dispute raised before a co-

operative Tribunal or an Arbitrator under the Act

of 2006 is a suit, is fallacious, since merely

having the trappings of a civil proceeding does

not confer the status of a decree on an award

passed by a Tribunal. Although the procedure

followed by the Arbitrator might be akin to that

followed by a civil court, the statutory necessity of

having the award enforced through a civil court,

'deeming' the same to be a civil court's decree,

itself bring out the clear distinction between such

an award and a regular decree passed by the civil

court. Unless such distinction was recognized by

the legislature, there would be no necessity of

approaching a civil court further by deeming the

award to be a civil court's decree.

In any event, since Section 69 of the 1932

Act bar is not attracted in the present case also

for other reasons, as discussed above, the

aforesaid question is rendered merely academic.

As regards the other questions involved in

the appeal, the building contract between the

parties is admitted by both sides. Although there

might have a provision in the contract for

unilateral termination by the opposite parties in

the event of certain incidents happening, mere

agreement cannot confer jurisdiction and/or

curtail jurisdiction of a statutory forum. The

parties cannot contract out of statutory

requirements by individual contracts. In view of

the Act of 2006, such statutory power cannot be

curtailed by individuals by their agreements. Any

agreement against the law is ex facie barred.

Moreover, in the present case, the

exercise of the power of unilateral termination

was sanctioned by the appellate Tribunal without

taking note of the specific provisions of Sections

202 and 204 of the Indian Contract Act, 1872. In

view of the petitioners having invested huge

amounts and resources for the construction, it

creates a vested right in favour of the petitioners,

which cannot be unilaterally taken away by the

opposite parties, despite whatever clauses are

there in the contract.

That apart, the curtailment of jurisdiction of

courts and/or tribunals or other forums by

agreement is not valid in the eye of law. As such,

there was no bar for the Arbitrator and/ or the co-

operative Tribunal to enter into the merits of the

disputes.

As regards the merits of the rival

contentions of the parties on the alleged liability

of the opposite parties to pay GST amounts and

non-production of sufficient documents by the

petitioners, since neither of the forums below

considered such questions on merits, this Court

ought not, under the limited scope of Article 227

of the Constitution of India, to usurp the

jurisdiction of the said forums by entering into a

factual adjudication beyond the scope of Article

227 of the Constitution, thereby depriving both

parties of a forum of challenge.

Hence, C. O. No. 3940 of 2019 is allowed,

thereby setting aside the impugned order dated

September 18, 2019 passed by the West Bengal

Co-operative Tribunal in Appeal No. 26 of 2019

and remanding the matter back to the Co-

operative Tribunal for re-adjudicating the matter

on merits, upon giving opportunities to both sides

to produce further materials and/or evidence, if

necessary, to substantiate their respective cases.

However, the Tribunal shall enter into the merits

of the dispute and decide the same, and not

preclude the parties from approaching it on the

technical grounds as advanced in the impugned

judgement.

There will be no order as to costs.

Urgent photostat certified copies of this

order, if applied for, be made available to the

parties upon compliance with the requisite

formalities.

(Sabyasachi Bhattacharyya, J.)