M/S Madhuban Hotels Pvt Ltd vs National Housing Co-Operative ...
2022 Latest Caselaw 12301 Kant

                           1


 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

     DATED THIS THE 11TH DAY OF OCTOBER, 2022

                        BEFORE

       THE HON'BLE MR.JUSTICE V. SRISHANANDA

         REGULAR FIRST APPEAL No.1044/2006

BETWEEN:

M/S. MADHUBAN HOTELS PVT. LTD.,
PRIVATE LIMITED COMPANY
INCORPORATED UNDER THE
INDIAN COMPANIES ACT
HAVING ITS REGISTERED OFFICE
AT NO.45
RAMRAJ MANSION,
100 FT. ROAD
VYSYA BANK COLONY
B.T.M. II STAGE
BANGALORE -76
REPRESENTED BY ITS
MANAGING DIRECTOR
K.S.S. RAJAN                           ... APPELLANT

(BY SRI D.R. RAVISHANKAR, SENIOR COUNSEL
A/W SRI GOUTHAM S. BHARDWAJ, ADVOCATE)

AND:

1.     NATIONAL HOUSING CO-OPERATIVE
       SOCIETY LTD.,
       THYAGARAJA ROAD
       MYSORE
       REPRESENTED BY ITS SECRETARY

2.     MUDA (MYSORE URBAN
       DEVELOPMENT AUTHORITY)
       J.L.B. ROAD,
       MYSORE
                                2


     REPRESENTED BY ITS
     COMMISSIONER.                       ... RESPONDENTS

(BY SRI G. BALAKRISHNA SHASTRY, ADVOCATE FOR R1;
    SRI RITHISH D. NAIK, ADVOCATE FOR
    SRI H.C. SHIVARAMU, ADVOCATE FOR R2)

     THIS R.F.A. IS FILED UNDER ORDER 41 RULE 1 R/W
SECTION 96 OF CPC, AGAINST THE JUDGMENT AND DECREE
DATED 30.1.2006 PASSED IN O.S. NO.120/95 ON THE FILE OF
THE II ADDL. CIVIL JUDGE (SR. DN.) AND CJM, MYSORE,
DISMISSING THE SUIT FOR PERMANENT INJUNCTION.

    THIS R.F.A. COMING ON FOR HEARING THIS DAY, THE
COURT, DELIVERED THE FOLLOWING:

                         JUDGMENT

Heard Sri. D.R.Ravishankar, learned Senior counsel for

appellant and Sri. G. Balakrishna Shastry, learned counsel

for respondent No.1 and Sri. Rithish D. Naik, learned

counsel for respondent No.2.

The parties are referred to as plaintiff and defendant

as per their original ranking before the Trial Court.

2. The present appeal is filed by the unsuccessful

plaintiff challenging the validity of the judgment passed in

O.S.No.120/1995 dated 30.01.2006. Shorn of unnecessary

facts, unnecessary details and the facts in brief necessary

for the disposal of the present appeal are as under

Plaintiff has filed a suit for declaration and permanent

injunction with the following prayers:

"a) to declare that the plaintiff is the absolute owner of the scheduled property.

b) for permanent injunction against defendant, restraining defendant, its agents, or servants from interfering with the peaceful possession and enjoyment of the suit scheduled property in any manner by granting permanent injunction.

c) for mandatory injunction directing the 2nd defendant not to accord the sanction for the scheduled property to the 1st defendant in forming the layout.

d) for costs and grant such other relief as the Hon'ble court deem fit to grant in the circumstances of the case in the interest of justice."

3. Plaintiff based his claim on the sale deeds said to

have been executed by the General Power of Attorney

holder of defendant No.1 - Society which were exhibited

and marked as Exs. P7 and P20. Few of the beneficiaries

under the sale deeds are the partnership firm which were

ultimately merged into plaintiff - Company, thereby plaintiff

became the owner in possession of the suit property. The

material on record also indicate that defendant No.1 -

Society authorised one Sri. K.S.N.Murthy to form a layout in

the agricultural land possessed by the 1st defendant -

Society and an agreement came to be entered into in this

regard coupled with general power of attorney, whereby

Sri. K.S.N.Murthy was given the full power to develop the

land and also to sell the sites to the intended purchasers.

There were series of disputes between Sri. K.S.N.Murthy

and the Society and ultimately a notice came to be issued

against the plaintiff on 20.07.1994 stating that the sale

deeds executed by Sri. K.S.N.Murthy in favour of plaintiff is

invalid. Having left with no alternative, plaintiff approached

the jurisdictional Civil Court in Mysore on 21.04.1995. After

the suit came to be filed, defendant No.1 got the

cancellation deed registered with the jurisdictional Sub-

registrar on 25.04.1995 and resisted the suit stating that

Sri. K.S.N.Murthy, the alleged General power of attorney

holder of the 1st defendant - Society had no authority to sell

the suit land in favour of the plaintiff and other beneficiaries

which ultimately merged into plaintiff - Company.

4. The trial Court raised the following issues in view

of the rival contentions of the parties.

"1. Does plaintiff prove that it acquired the suit property from the first defendant under the registered sale deeds, in the names of its share holders?

2. Does the suit property come within the Urban Agglomeration and under the control of the MUDA as pleaded in para.6 of the written statement?

3. Is the village panchayat of Hinkal competent to approve and sanction licence to the plaintiff to construct hotel in the suit property?

4. Does the plaintiff prove that the plaint schedule sites were validly transferred to Madhuban Hotels in the year 1982 by registered sale deeds?

5. Does the plaintiff prove that it was put in possession of suit property pursuant to said sales?

6. Does the plaintiff prove that the plaint schedule sites were in its lawful possession on the date of suit?

7. Is the alleged interference true?

8. Do the sale deeds relied upon by the plaintiff convey title in favour of the plaintiff?

9. Is the suit properly valued and the court fee paid sufficient?

10. To what relief is the plaintiff entitled?

Addl. Issue. No. 1: Whether the cancellation of sale deed by the defendants is valid in law and binds the plaintiff?

5. In order to prove the issues framed in the suit,

on behalf of plaintiff, Sri. K.S.S.Rajan, has been examined

as P.W.1 who is the Managing Director of the plaintiff -

Company. Plaintiff also relied on 44 documents which were

exhibited and marked as Exs.P1 to Ex.P44 comprising of

Certificate of Incorporation, Memorandum of Association,

Letter dated 11.10.1982, Corrigendum, License dated

1.9.81, Certificate dated 8.9.81, registered sale deed

dtd:13.8.81, Certified Copy of sale deeds, Resolution

copies, Demand register extracts, Kandayam receipts,

Account extracts/balance sheet, Office copy of lawyer

notice, Office copy of notice to Registrar of Co-operative

Society, Reply from Registrar of Co-operative Society's

office, COP, Paper Publication.

6. In order to disprove the case of the plaintiff, one

Sri. Shivashankaran is examined on behalf of defendant

No.1 - Society as D.W.1 and Sri. G.B.Shetty is examined as

D.W.2. Defendants in all relied on 53 documents which were

exhibited and marked as Exs.D1 to Ex.D53 comprising of

Proceeding, Cancellation of sale deeds, plaint copy, written

statement, copy of order in O.S.40/95, Letter from

Managing Director of KUWS&D Board, Bangalore, Letter

from MUDA, payment receipts, Receipts, Letter from MUDA,

Letter in respect of electrification, Letter from KEB, Receipt,

Sketch, Bye law of national Housing Co-operative Society

Limited, Proceedings, Renewal of agreement, order copy in

O.S.248/95, order copy in O.S.263/95, Application, Demand

Register Extract, Samachar Patrike 'Star of Mysore' News

paper, Cancellation of sale deeds.

7. After conclusion of the trial, trial Court heard the

parties in detail and on cumulative appreciation of the

materials placed on record dismissed the suit of the

plaintiff. Being aggrieved by the same, plaintiff has

preferred the present appeal on the following grounds.

"1. The Judgment passed by the Learned Civil Judge is not proper and illegal which is liable to be set-aside by this Hon'ble Court.

2. Even though there is cogent evidence regarding the existence of the plaintiff company and the plaintiff has taken permission for construction of the building the court came to

the conclusion that the company was not in existence at the time of filing of the suit.

3. The plaintiff has produced ample evidence to show that it had taken licence for construction of hotel building by Hinkal Gram Panchayath the court held the documents does not prove that the licence is for the suit schedule property only.

4. When the dispute is pending before the civil suit the question of constructing the hotel building does not arise, and the court held that on the disputed property hotel building is not constructed and the licence i.e., ex.. P.5 is not renewed from time to time which is not proper.

5. The Trial Court erred in coming to the conclusion that the sites are allotted to fictitious persons and family members of the plaintiff and the plaintiff failed to prove the existence of alleged sites referred in Ex.P 7 to P 20 in the year 1983 and the payment of sale consideration to the defendant society.

6. The Trial Court has committed a mistake in giving a finding that the plaintiff is not in

possession and enjoyment of the suit schedule property.

7. The Trial Court erred in giving a finding that Sy.No.52 of Hebbal village is coming under the Urban Agglomeration and under the Control of MUDA. Therefore, the licnece issued by Hinkal Grama Panchayath or the Hebbal Grama panchayath in favour of plaintiff co., have no value in the eye of law when the MUDA was not in existence at the time of obtaining licence by the plaintiff for construction of the building. In the year 1981, the suit schedule property were situated within the jurisdiction of Hinkal Grama panchayath and the licence issued by the panchayath is valid.

8. The Trial Court without appreciating the evidence of P.W.1 and the documents produced by him gave much importance to the case of the defendant and pleased to dismiss the suit of the appellant which is illegal and liable to be set aside."

8. Reiterating the grounds urged in the appeal, Sri.

D.R.Ravishankar, learned Senior counsel appearing for the

appellant - plaintiff contended that the trial Court

misdirected itself in recording a finding that plaintiff -

Company is not at all a registered company and therefore,

the suit is to be dismissed. The trial Court also recorded a

finding that the sale deeds on which the plaintiff is placing

reliance and claiming title are invalid and therefore,

dismissed the suit of the plaintiff, which is per se incorrect.

In order to substantiate the grounds urged in appeal

memorandum, Sri. D.R.Ravishankar, learned Senior counsel

for the appellant placed reliance on the application filed

under Order XLI Rule 27(aa) CPC which was ordered to be

considered along with the main appeal and brought to the

notice of the Court that defendant No.1 - Society ran into

loss and there were dues payable to the shareholders and

the bank and Sri. K.S.N.Murthy was also entitled to a sum

of Rs.1,08,077/- by virtue of the award passed by the

Jurisdictional Co-operative Societies, Mysore, and the action

initiated against Sri. K.S.N.Murthy for misappropriation of

funds of the Society came to be dismissed and later on the

action that was contemplated against Sri. K.S.N.Murthy

under Section 69 of the Karnataka Co-operative Societies

Act was also quashed by this Court in W.P.No.1423/1988 by

order dated 20.02.1997 and therefore, the Society left with

no alternative entered into an agreement with

Sri. K.S.N.Murthy to develop the lands of the Society and to

sell the same to the individual site owners and in this

regard, the Society also executed a General Power of

Attorney authorising him to sell the individual sites formed

in the said land belonging to the Society and to pay share

holders and bank dues and as such, there was full authority

and competence for Sri. K.S.N.Murthy to sell individual sites

in favour of the plaintiff and its subsidiary partnership firms

vide Exs.P.7 to P.20 and therefore, he needs to place these

additional evidence on record which will have a bearing in

resolving the real dispute between the parties and the same

could not have been placed by the plaintiff - appellant

before the trial Court as there was no proper issue framed

in this regard and parties did not join the said issue in the

trial Court and thus, sought for allowing the application.

Consequently also sought for allowing the appeal and remit

the matter for fresh consideration to the trial Court in

accordance with law.

9. Per contra, Sri. G. Balakrishna Shastry, learned

counsel appearing for the 1st respondent - Society denied

the contentions urged on behalf of the appellant. He pointed

out that Sri. K.S.N.Murthy was the Secretary of the 1st

defendant - Society earlier and his wife was the President of

the Society and there was total misappropriation of funds

made by them insofar as the funds of the Society is

concerned and therefore, Sri. K.S.N.Murthy was removed

from secretaryship and later on he has sold the individual

sites to himself in the name of Plaintiff - Company and its

subsidiaries wherein Sri.K.S.N. Murthy himself had the

personal interest and therefore, it is a sale made by Sri.

K.S.N. Murthy to himself in reality and therefore, the

Society got it cancelled by executing cancellation deed

before the Jurisdictional Sub-Registrar on 25.04.1995 which

is perfectly valid and the same has been rightly appreciated

by the learned trial Judge in dismissing the suit of the

plaintiff and thus, sought for dismissal of the appeal. He

also pointed out that a second chance cannot be provided

for the appellant to prove his case in the guise of allowing

the application filed under Order XLI Rule 27(aa) CPC and

sought for dismissal of the said application. He also pointed

out that contents in the affidavit filed in support of the

application are not sufficient for allowing the appellant to

rely on additional documents and sought for dismissal of the

application.

10. Sri. G. Balakrishna Shastry, learned counsel also

submitted that he is not sure whether defendant No.1 -

Society is still in existence as the correspondences made by

him to furnish necessary instructions to him to argue the

matter have come back with postal endorsements, "no such

society". However, as a dutiful officer of the Court, he has

addressed arguments only on the basis of records.

11. Learned counsel for the 2nd respondent - MUDA

Sri. Ritish D. Naik, supported the arguments put forth on

behalf of respondent No.1 and sought for dismissal of the

appeal.

12. In view of the rival contentions, the points that

would arise for consideration is:

a. Whether the material on record would be sufficient enough to dispose of the appeal on merits and if so, whether the application filed under Order XLI Rule 27 (aa) CPC needs to be dismissed?

b. What order?

13. I have heard the arguments of the parties in

detail and also perused the material facts cumulatively. It is

found from the records that there were disputes with regard

to the Society not only among the members of the society,

but also to its shareholders and also there were financial

dues to the financial institutions including Syndicate Bank.

The materials on record also reveal that the Society tried to

come out from the said financial crisis. The sale deeds that

are exhibited and marked as per Exs.P7 to Ex.P20 are

executed by Sri.K.S.N. Murthy in favour of plaintiff -

Company and its subsidiary partnership firms. The 1st

defendant - Society suffered a decree wherein the Society

was required to pay a sum of Rs.1,08,077/- to Sri.

K.S.N.Murthy. Further, judicial proceedings were also

initiated against Sri. K.S.N.Murthy by the Society in Misc.

No.7/1975-76 which was dismissed after contest by the

Assistant Registrar of Co-operative Societies, Mysore. The

appeal filed by the Society in Appeal No.390/1977 before

the Karnataka Appellate Tribunal challenging the order

passed by the Assistant Registrar of Co-operative Societies

was also dismissed on 31.08.1978 and thereafter, the

Society initiated action against Sri.K.S.N. Murthy under

Section 69 of the Karnataka Co-operative Societies Act. The

same was challenged before this Court in

W.P.No.1423/1988. The said writ petition was allowed and

action initiated against Sri.K.S.N. Murthy was quashed. As a

prudent defendant, 1st defendant before the trial Court

should have stated all these aspects of the matter in its

written statement. However, these aspects of the matter

has been suppressed by the 1st defendant in the written

statement. The issues raised in the suit referred to supra do

not make out a case as to whether the plaintiff was a

registered company or not. When there was no issue at all,

the trial Court recording a finding that plaintiff - Company is

not at all an incorporated company is uncalled for as the

parties did not join the issue. Even though there was no

issue, the trial Court went on to record a finding which could

be termed as legally untenable and also results in perverse

finding.

14. Order XIV Rule 5 no doubt could be pressed into

service in this appeal itself. However, having regard to the

fact that 1st defendant has not come out with necessary

details as to under what circumstances Sri. K.S.N.Murthy

became the authorised representative of the 1st defendant

society in developing the land and also authorising him to

sell the sites formed in the said layout, this Court is of the

considered opinion that the dismissal of the suit of the

plaintiff based on the materials on record has resulted in

injustice.

15. No doubt, the affidavit filed in support of the

application under Order XLI Rule 27(aa) CPC may not come

out with necessary details, having regard to the fact that

the documents now sought to be produced have all come

into existence much prior to the filing of the suit and the

defendant has suppressed said aspects of the matter before

the Court and the documents that is now sought to be

produced have got a bearing in deciding the suit, this Court

is of the considered opinion that the additional documents

are to be admitted in evidence in order to protect the

interest of justice. Further, as rightly contended by the

learned counsel for the appellant, if these documents are

admitted on record, the matter requires fresh consideration

by the trial Court. If the documents are to be considered

afresh by the trial Court by remitting the matter to the trial

Court, an opportunity needs to be provided for the

defendant to lead additional evidence. Therefore, keeping

the appeal pending before this Court and calling for finding

only on the additional evidence that is to be produced

before the Court would result in futile exercise and also the

parties would be deprived of proper appreciation of the case

based on the additional evidence. Therefore, this Court does

not want to proceed under Order XLI Rule 25 CPC and is of

the opinion that the matter requires fresh consideration in

accordance with law by remitting the matter to the trial

Court.

16. Accordingly, the point raised above needs to be

answered in affirmative and it is answered.

17. Hence, the following:

ORDER

a. Application filed under Order XLI Rule 27(aa) CPC is hereby allowed. Consequently, the appeal is allowed and the impugned judgment passed in O.S.No.120/1995 dated 30.01.2006 is set aside and the matter is remitted back to the trial court for fresh disposal in accordance with law.

b. It is made clear that mere allowing the application filed under Order XLI Rule 27(aa) CPC, it should not be construed that this Court has expressed opinion about the probative value of the additional

evidence that has been produced before this Court and the parties are at liberty to place their respective contentions on record in accordance with law.

c. Having regard to the age of the suit, suit needs to be expedited. Therefore, the plaintiff - appellant and 2nd respondent - MUDA shall appear before the trial Court positively on 27.10.2022 without further notice.

d. In view of the difficulties expressed by Sri. G. Balakrishna Shastry, learned counsel for 1st defendant, the trial Court shall issue Court notice to defendant No.1 - Society and also permit the plaintiff - appellant to effect personal service to defendant No.1 - Society. In any event, the service to defendant No.1 shall be completed in accordance with law within one month from 27.10.2022. Thereafter, the trial Court shall dispose of the suit on merits by affording suitable opportunities to the parties on or before 31.03.2023.

e. Office is directed to return trial court records with a copy of this order forthwith.

Sd/-

JUDGE VP