Bhoumik Co-operative Housing Society Limited & Anr. v. Vina A. Sisawala & Ors.

(ii) the dispute must be between the persons contemplated in Section

91 of the MCS Act is applied, the dispute between the Society and the Developer or Developer and members of a Society concerning redevelopment is covered by the MCS Act.

13. Mr. Naphade has thereafter, referred to Section 154B-31(1) of the MCS Act which provides that rules, orders, Bye- Laws, circulars or instruments “having the force of law” shall unless repealed, modified or amended continue to apply to the societies. Further, he has referred to Section 154B-31(2) of the MCS Act which provides that every proceeding by or against a Society and pending before any the Court or Tribunal or Authority on the commencement of the amended Act shall continue as if the provisions of the amended Act are not applicable. He has submitted that Section 154B- 31(1) of the MCS Act which provides that the Bye-Laws prior to 2019 Amendment would continue to apply has to be harmoniously read with the amended definition of “Housing Society” in Section 154B-1 (17) of the MCS Act which provides that a Housing Society means a Society amongst other things whose objection is to carry out demolition of the existing building and reconstruct the same by using the potential of the land. In view of the definition of Housing Society having undergone a change, the Bye-Laws of a Society cannot be inconsistent with the MCS Act in light of Section 9 thereof. He has placed reliance on the judgment of the Supreme Court in Veena Kumari Tandon Vs. Neelam Bhalla[5] wherein it has been held that the Bye-Laws of a Society necessarily has to conform to the provisions of the Act and cannot be contrary to the Act. Although, the Supreme Court in the decision found the object of the Bye-Laws was laudable yet, since the Bye-Laws were contrary to the principal enactment it was held that the principal enactment would prevail over the Bye-

14. Mr. Naphade has further submitted that the present Suit filed by the Society and the Developer on 26th August 2019, which is after the 2019 Amendment came into force on 9th March 2019, Section 154B-31(2) will be inapplicable.

15. Accordingly, it has been submitted that a conjoint reading of Sections 154B-1(17) and 91(1) of the MCS Act, the Suit filed by the Society and the developer is covered by Section 91(1) of the MCS Act. Consequently, this Court will not have jurisdiction to entertain and try the Suit, as the jurisdiction of the Civil Court is barred in light of Section 91(3) of the MCS Act.

16. Mr. Pai, learned Senior Counsel appearing for the Defendant Nos. 2, 3, 7 to 11, 14 and 15 has supported the submissions made by Mr. Naphade and made additional submissions.

17. Mr. Pai has submitted that this Court being the Civil Court has no jurisdiction to try and entertain the present Suit, in view of the 2019 Amendment introduced into the MCS Act read with the MCS Rules. The Suit is therefore, barred under Section 163 of the MCS Act. He has submitted that it is not disputed for this purpose the Plaint along with documents produced along with the Plaint will have to be appreciated as they stand. He has referred to the order of the Supreme Court dated 12th February 2021 passed in SLP No. (C) 13869 of 2020, which had required the present Suit to be heard along with the Bombay City Civil Court (BCCC) Suit 175 of 2016.

18. The Supreme Court had allowed the BCCC Suit to be transferred to this Court to be heard together with the above Suit by directing that “the applications filed by the respective parties will be taken up and considered in accordance with law…”. This would include the jurisdictional issue which has been raised by the present Interim Application.

19. Mr. Pai has submitted that the jurisdictional question of law raised by the Defendants in the said Application is an issue which requires to be decided in the larger public interest pursuant to the 2019 Amendment of the MCS Act read with the MCS Rules. He has submitted that several Suits/Arbitration Petitions have been filed in this Court and Disputes in Co-operative Courts in relation to disputes between Co-operative Society, Developers and Members etc. and which matters covered larger interest pertaining to Co-operative Housing Societies as well as redevelopment projects. He has relied upon the Government Resolution of 2009 which was introduced in view of the various grievances and number of regulations and restrictions pertaining to the redevelopment projects, which was prescribed and provided under detailed directions by which the Housing Societies were bound in the process of such redevelopments of its property. The Government Resolution made several provisions including a provision that the Development Agreement should contain a clause that the disputes will be referred under Section 91 of MCS Act to the Co-operative Court.

20. Mr. Pai has referred to Mohinder Kaur Kochar (supra), wherein this Court had laid down the ratio in paragraph 20 thereof that the initial development of co-operative Housing Society of constructing the building may be the business of the Society and the subsequent redevelopment is not. Pursuant thereof the disputes arising out of redevelopment were required to be filed in Civil Court and those pending in Co-operative Court, were returned to the Civil Courts of competent jurisdiction. He has referred to one such instance of such dispute being order in Dispute No. CC/I/29 of 2012 which is tendered to the Court. The jurisdiction in matters relating to redevelopment of the societies was exercised by this Court in its Ordinary Original Civil Jurisdiction and also by the City Civil Court.

21. Mr. Pai has referred to the model Bye-Laws of 2014 for housing societies which was introduced by the Maharashtra Government in view of the 97th Amendment to the Constitution in which the Object Clause 5 (f) read with Chapter XX dealt with issues relating to redevelopment of the Society. Upon reading the aforesaid provisions, the intention of the legislature appears to bring redevelopment within the framework of business of the Society or touching the business of the Society.

22. Mr. Pai has then dealt with Maya Developers (supra). He has submitted that the facts in that case were entirety different. He has submitted that the regulations and restrictions imposed under the directions issued under Section 79A vide Government Resolution in respect of redevelopment projects undertaken by Housing Societies are saved under Section 45 and are to be dealt with under Rule 47 in the facts and circumstances of the present case. He has submitted that Maya Developers (supra) was prior to the Amending Act of 2019 and not a precedent in the present matter. Rule 47 of the MCS Rules was also not dealt with by this Court in Maya Developers (supra).

23. Mr. Pai has thereafter, referred to the decision of Supreme Court in Margret Almeida (supra) and has submitted that the scope of Section 45 has been appropriately dealt with in that decision which contemplates that it refers to general directions in respect of restrictions and regulations imposable and imposed under the relevant provisions of the MCS Act. He has submitted that in the present case, the Registrar at the request of the Plaintiff Society has exercised his jurisdiction under Rule 47 while dealing with the Disputes between the Plaintiffs and the Defendants in respect of the regulations and restrictions imposed by the Government Resolution relating to the redevelopment project in question. He has submitted that Section 45 is descriptive nature, and in view of the fact that it is specifically provides “save as provided under this Act” which necessarily include the regulations issued under Section 79A of the MCS Act.

24. Mr. Pai has also referred to the objects and Reasons of 2019 Amendment, which contemplates “settlement of disputes” for housing societies which includes prescribing a forum for settlement of disputes. He has referred to the definition of the “housing societies” which has also been referred to in the arguments of Mr. Naphade and has submitted that in view of the change of law by the 2019 Amendment, the earlier judicial pronouncements which took a view that although the initial development is the business of the Society, the subsequent development is not has been legislatively overruled.

25. Mr. Pai has also joined in the submissions with Mr. Naphade that there is a twin test of jurisdiction under Section 91 of the MCS Act after the 2019 Amendment. The first test being Section 91(1) of the MCS Act and the second test is for the parties to fall under Section 91(1)(a) to 91(1)(e) and in the present case 91(1)(a) and 91(1)(c) of the MCS Act. Section 91(1)(a) of the MCS Act contemplates Developer as an Agent of the Society. He has submitted that the Plaintiff No. 2-Developer being an Agent of the Society, falls within Section 91(1)(a) of the MCS Act. He has thereafter, placed reliance on the provisions of the Contract Act, 1872 in Chapter X which deals with “Agency” which is relevant for the purpose of Section 91(1)(a). The word “Agent” used in Section 91(1)(a) is referable to any sort of Agency which may be with or without consideration and ranging from a simple Agency to any complicated relationship, so long as it is “to represent in dealings with the third persons”. This is provided under Section 182 of the Contract Act. Agency may be for a consideration or without any consideration as provided under Section 185 of the Contract Act. The Agent’s authority may be express or implied as provided under Sections 186 and 187 of the Contract Act. He has submitted that the Agent’s authority, in the present case is “to do all lawful acts, deeds, matters and things pertaining to redevelopment” of the property of the Society. In that context, he has relied upon Clause 9 of the Development Agreement read with Section 188 of the Contract Act. Further, Agency of the Developer is terminable and in that context, he has referred to Clause 31 of the Development Agreement and Section 201 of the Contract Act. He has also submitted that the Agent can have interest in the property which is the subject matter of the Agency and in that context, he has relied upon Clause X of the Development Agreement read with Clauses 9 and 24 of the Development Agreement and the relevant Section 202 of the Contract Act. He has submitted that extent of delegation to the Agency does not making any difference so long as to the title of the Society is not parted with.

26. Mr. Pai has submitted that in the present case, particularly, considering Clause 29 read with other clauses of the Development Agreement, the new building after completion of the project will be handed over to the Society. The new flat purchasers from the “Free Sale Areas” are required to be the Members of the Society. The arrangement and agreement only extends to the existing potential of the land of the Society, whether by way of F.S.I., T.D.R. or otherwise. Any additional areas being available by way of F.S.I., T.D.R. or otherwise in future is the property of the Society. The Developer is entitled to act on behalf of the Society with a third party by virtue of the Power of Attorney executed by the Society in favour of the Developer. The wholesome reading of the Agreement read with Chapter X of the Contract Act clearly indicates that in no uncertain terms that the Developer is the Agent of the Society within the meaning of the Section 91(1)(a) of the MCS Act.

27. Mr. Pai has submitted that the payment of stamp duty under Maharashtra Stamp Act is not a criteria in any manner to treat the redevelopment agreement as a conveyance.

28. Mr. Pai has made submissions on Section 91(1)(c) of the MCS Act. Mr. Pai has submitted that by order dated 1st December 2014 passed by the Registrar, the Plaintiff Society was directed to abide by and follow the regulations and restrictions contained in the Government Resolution, 2009. The NOC dated 23rd December 2014 issued by the Deputy Registrar in the present case provides restriction and regulation on the transaction by directing compliance of Clauses 11 and 13 of the Government Resolution dated 3rd January, 2009. Thus, the documents clearly indicate that in the present case the Registrar had exercised the power under Rule 47 of the MCS Rules insofar as the restrictions and regulations contemplated by the Government Resolution in respect of the Disputes between the Plaintiffs and the Defendants. Thus, parties are clearly covered under Section 91(1)(c) of the MCS Act.

29. Mr. Pai has joined in the submissions with Mr. Naphade that Bye-Laws after the Amending Act are required to be consistent with the Amending Act and if the existing Bye Law is inconsistent with the amended MCS Act (2019 Amendment), the same cannot prevail for any purpose against the legislative intent as set out in the amended definition of the “Housing Society”. He has submitted that the amended Section 154B-31(2) is to be read in harmony with Section 9 of the MCS Act, which provides that the Bye- Laws cannot be inconsistent to the MCS Act or to the MCS Rules and only then it will be accepted for registration.

30. Mr. Pai has made submissions with regard to the Supreme Court order dated 12th February 2021. He has submitted that Defendant Nos. 1 to 3 had moved the Application under Section 24 of the CPC before this Court that both the Suits to be heard together. This is in view of the Defendants having filed the Suit NO. 175 of 2016 challenging the Development Agreement and the Power of Attorney in Bombay City Civil Court and the Plaintiffs filed the present Suit for specific performance of the Development Agreement in this Court. In view of this Court, not allowing the Application under Section 24 of the CPC for both the Suits to be heard together, the Supreme Court was moved by way of SLP. The Plaintiff, in view of the Caveat having been filed, was served a copy of the SLP. The SLP was filed by the Defendant Nos. 1 to 3 and the other Defendants were not served with the SLP. The other Defendants never participated in the said SLP, though that they were joined as formally non contesting parties being the Defendants in the present Suit. The order dated 12th February 2021 was passed at the admission stage and notice was not issued to the other Defendants. He has submitted that in the said order, both the Suits were directed to be heard together. The Supreme Court had clarified that the Application filed by the respective parties will be taken up and considered in accordance with law. The parties were thus not precluded from raising any question of law. In the present Suit, Interim Application has accordingly raised the question of law of bar of jurisdiction of this Court.

31. Mr. Pai has submitted that the Application of Defendant No. 5 is required to be allowed and the Plaint is required to be returned to the Plaintiffs to be presented before the competent Co-operative Court.

32. Mr. Dinyar Madon, learned Senior Counsel appearing for the Plaintiffs has submitted as also had been submitted on behalf of the Defendants that for the dispute to be amenable to the jurisdiction of the Co-operative Court, two factors have to be satisfied viz.

(i) the dispute should be of a kind described in subsection (1) of Section 91 of the MCS Act and (ii) the parties to the said dispute must belong to any of the categories specified in clause (a) to (e) of sub-Section (1) of the Section 91 of the MCS Act. This has also been held by the Supreme Court in Marine Times Publications Private Limited Vs. Shriram Transport and Finance. In the present case, neither these two requirements have been fulfilled.

33. Mr. Madon has submitted that the Defendants’ contention that in view of Amending Act of 2019, this Court no longer has jurisdiction to entertain and try the Suit is misplaced and upon a misreading of the Amending Act of 2019.

34. Mr. Madon has thereafter, referred to the definition of "Housing Society". He has submitted that the definition of "Housing Society" under Section 354B-(1) of the MCS Act is merely an enabling provision and does not make redevelopment an object or business of the Society unless the Co-operative Society actually amends its Bye-Laws to include redevelopment as one of its objects. If there was any doubt in the matter, the new Section 154B- 31(l) of the MCS Act makes it abundantly clear that the old Bye-Laws will continue to apply to the Society until such time, as it has been expressly modified or amended. 1st Plaintiff Society was registered prior to the Amending Act of 2019. The Bye-Laws of the Society do not have redevelopment as an object. It is nobody's case that subsequent to the Amending Act of 2019, Plaintiff No. 1 Society has amended its Bye-Laws to include redevelopment as one of its objects. Since redevelopment is not one of the objects of the Society, it cannot be said to be the business of the Society. He has submitted that the Amending Act of 2019, does not alter the legal position as laid down in a catena of judgments.

35. Mr. Madon has submitted that the expression "Builder promoter" in the Amending Act of 2019, though introduced by Section 154B-1(5), has not been included in Section 91(1) of the MCS Act. Thus, the legislature, despite introducing the definition of "Builder promoter" by the 2019 Amendment has specifically chosen not to amend Section 91 of the MCS Act to include disputes with a "Builder promoter". Accordingly, it is abundantly clear that the legislature did not want disputes with a Builder promoter to be resolved by the Co-operative Court.

36. Mr. Madon has submitted that the contention on behalf of the Defendants that the statement of objects and reasons for the Amending Act supports their contentions that the disputes, such as the present dispute is to be tried by the Co-operative Court is a incorrect reading of the objects and reasons of the Amending Act 2019 which clearly show that it was not made to include disputes regarding redevelopment to be tried by the Co-operative Court.

37. Mr. Madon has submitted that there is nothing in the Amending Act 2019 which bars jurisdiction of this Court to entertain and try the Suit. Mr. Madon has submitted that an attempt had been made on behalf of the Defendants to show that a Developer was a person who falls within Section 91(1)(c) of the MCS Act, by relying upon Sections 91(1) (c), 45 and 79A and the Government Resolution dated 3 January 2009. He has submitted that it is an admitted position that the Amending Act of 2019 does not in any manner amend Section 91, Section 45 or Section 79A of the MCS Act. The very same argument raised on behalf of the Defendants was advanced in the matter of Maya Developers (supra) and has been specifically rejected by this Court. This Court has specifically held that Section 79A and regulations/restrictions made thereunder are not those restrictions or regulations which are contemplated by Section 45. A perusal of Rule 47 makes it clear that the restrictions required by Section 45 are particular restrictions in respect of a specific Society and not general restrictions in respect of all societies and that such restrictions have to be passed after hearing the Society concerned.

38. Mr. Madon has submitted that the contention on behalf of the Defendants that the Developer is an Agent of the Society and covered by Section 91 of the MCS Act is misplaced. Agency is a question of fact and is necessarily to be pleaded and proved. He has relied upon the decision of the Supreme Court in Nusli Neville Wadia Vs. Ivory Properties[7], wherein it has been held that the evidence cannot be led while determining a preliminary issue. Mr. Madon has submitted that the contention on behalf of the Defendants that the Plaintiff No. 2 is the Agent of Plaintiff No. 1 was never pleaded and was argued for the first time across the bar 7 (2020) 6 SCC 557 para 56 without any pleadings to support the same. He has submitted in any view of the matter, the Development Agreement does not establish that Plaintiff No. 2 is the Agent of Plaintiff No. 1. The Development Agreement shows that it is a "contract for Sale and Transfer of rights and interest in immovable property" for which specific performance can be granted by the Court. He has relied upon the decision of the Supreme Court in Sushil Kumar Agarwal Vs. Meenakshi Sadhu and Ors.[8] in that context.

39. Mr. Madon has submitted that from the Development Agreement, it is clear that it is a contract to sell and transfer immovable property for consideration since the Development Agreement envisages that the Developer will have a share and interest in the land and building to be constructed by them at their cost and also entitled to sell free sale flats therein on ownership basis in their own name at such consideration as they may deem fit and on a principal to principal basis with the new flat buyers. The Developers are not accountable to the Society in any manner for the proceeds of the free sale flats nor is the Society liable in any manner to the new flat purchasers for any defects and deficiencies or 8 (2019) 2 SCC 241 paragraph 17 otherwise. The Development Agreement of this nature given for consideration and with right to sell is not and cannot be an Agency Agreement. The Development Agreement is on a principle to principle basis. He has relied upon the recital X and Clauses 1 to 7, 10, 12, 13, 15 to 25, 28, 33, 34 and 35 of the Development Agreement in this context.

40. Mr. Madon has submitted that the contention on behalf of the Defendants that Clause 9 required a Power of Attorney to be executed in favour of Plaintiff No. 2 by Plaintiff No.1 by which the Plaintiff No. 2 became the Agent of Plaintiff No. 1 is an argument in desperation. Clause 9 of the Development Agreement has to be read in consonance with Clause 23 thereof, which cast obligations upon Plaintiff No.1. It is only as an aid to fulfill the Society's obligations under the Development Agreement that the Power of Attorney is granted and the Power of Attorney cannot be read as a standalone document or an Agency agreement.

41. Mr. Madon has thereafter, referred to the Supreme Court order dated 12th February 2021 by which the Suit filed by the Defendants in the City Civil Court has been transferred to this Court and to be heard along with the present Suit, as the subject matter and arguments in both the Suits are same. An objection to the jurisdiction of this Court to entertain the present Suit was not taken by the Defendants before the High Court or Supreme Court and therefore, the Defendants have submitted themselves to the jurisdiction of this Court. Mr. Madon has submitted that even after the Amending Act of 2019, the Co-operative Court is consistently and uniformly returning the disputes filed before it concerning redevelopment by Co-operative Societies, stating that there has been no jurisdiction under Section 91 of the Act in respect of redevelopment matters. One such order made by the Co-operative Court is in the year 2021 namely, order dated 10th February 2022 in Dispute No. 207 of 2021 and another order is dated 24th November 2021 in Dispute No. CC/III/196/2021. These are two among several.

42. Mr. Madon has submitted that it is well settled that an objection to jurisdiction must be taken at the earliest. The present Application has been taken out after 3 years and 5 month of the Amending Act of 2019 and that too, with ulterior motives.

43. Mr. Madon has submitted that the decision relied upon by Mr. Naphade for the Defendant No. 5, namely, Veena Kumari Tandon (supra) has no application to the present case. In view of the fact that the MCS Act has not been amended to include redevelopment, as the business of the Society. Hence, the present Bye-Laws of the Plaintiff Society are not in derogation of the MCS Act. Section 154-B(31)(1) gives an option to the Society to retain its existing Bye-Laws without amending the Bye-Laws.

44. Mr. Madon has submitted that the model Bye-Laws of 2014 have been relied upon during the arguments on behalf of the Defendants and in particular Chapter XX therein titled “Regarding redevelopment of buildings the Co-operative Housing Society” in support of the contention that redevelopment of the property of the Society fell within the definition of "business of the Society" under Section 91(1) of the Act. Mr. Madon has submitted that in fact the Bye-Laws clearly sets out that the competent authority to decide the disputes pertaining to "Non-compliance of the terms and conditions of the Agreement, by and between the Builder/Developers (specific performance)" is the Civil Court and not the Co-operative Court.

45. Mr. Madon has submitted on the model Bye-Laws of 2014 for housing societies were introduced by the Maharashtra Government in view of the 97th Amendment to the Constitution in which the Object Clause 5(f) read with Chapter XX dealt with issues relating to redevelopment of the Society. There has thereafter been a striking down of the 97th Amendment to the Constitution by the decision of the Supreme Court in Union of India Vs. Rajendra N. Shah & Anr.9. Thus, it is not open now to place a reliance on these Bye-Laws.

46. Mr. Pai in counter submission submits that the partial striking down of the 97th Amendment, does not affect the efficacy of the model Bye-Laws.

47. Mr. Madon in the context of the arguments on behalf of the Defendants on Agency has relied upon the decision of the Supreme Court in Mani Nariman Daruwala Vs. Phiroz N. Bhatena10 and Mansukhlal Dhanraj Jain Vs. Eknath Vithal Ogale11 in support of his submission that jurisdiction is to be decided on the basis of the averments contained in the Plaint. The arguments of Mr.

Pai on Agency is without necessary pleadings and in any event, is a pure question of fact which cannot be decided without necessary pleadings and evidence being led.

48. Mr. Madon has submitted that the contention on behalf of the Defendants that Maya Developers (supra) is prior to the Amending Act of 2019 and accordingly, in view of the new law, has become per incuriam is entirely a misplaced argument and not a proper appreciation of the said decision. Maya Developers (supra) has clearly dealt with the applicability of Section 45, Section 79A and Section 91, which are unamended provisions and its decision is clearly in line with the decision of the Supreme Court in Margret Almeida (supra). Mr. Madon has submitted that the decision of the Supreme Court in Margret Almeida (supra) had considered the scope and purpose of persons enumerated in Section 91(1)(c) read with Section 45 and held that the persons enumerated in the Section 91(1)(c) are referring to persons other than members of the Society, who have deposited money with the Society or who have either lent or borrowed the money from the Society. Mr. Madon has submitted that the reliance placed by Mr. Pai on Rule 47 of the MCS Rules is wholly fallacious. The Rules are subsidiary legislation or delegated legislation. If there is a conflict between a statue and subordinate legislation, the statute will prevail. Rules 47 does not in any manner replace or override the specific provisions of the Section 45.

49. Mr. Madon has then submitted that a very patient hearing of the Interim Application has been given by this Court to the Applicant/original Defendant No. 5. It is in the interest of justice that Notice of Motion No. 2179 of 2019 filed by the Plaintiffs for Receiver and mandatory orders be immediately taken up for hearing, otherwise grave prejudice will be caused to the Plaintiff. The Defendants would have then succeeded in their malafide intent of delaying the redevelopment process. He has submitted that several steps have been taken by the Plaintiffs towards redevelopment. The IOD has already lapsed twice and had to be renewed on the non vacating of the Defendants. The Plaintiffs have already incurred a cost of over Rs. 10 Crores in the project.

50. Having considered the rival submissions, it is necessary to note that the Amending Act of 2019 had by Section 154B-1(17) brought an addition to the prior definition of “Housing Society” by including in the pre-amended definition, the following words:- “to demolish existing buildings and reconstruct or to construct additional tenements or premises by using potential of the land”.

51. There is also inclusion of a definition of "Builder promoter" in Section 154B-1(5) of the Amending Act of 2019. Further, Section 154B-31 of the Amending Act 2019 is required to be taken note of which reads as follows:- “Section 154B-31. Saving as to existing rules, orders, bylaws, etc. (1) The rules, orders, by-laws, circulars or instruments having the force of law and existing on the date of commencement of the Maharashtra Co-operative Societies (Amendment) Act, 2019, which are applicable to the societies governed by this Chapter on the date of such commencement, shall, until expressly repealed, modified or amended, continue to apply to the said societies.”

52. It is relevant to note that inspite of these changes in the aforementioned definitions brought about by the Amending Act of 2019, there were no corresponding change in Section 91 of the MCS Act.

53. Prior to the Amending Act of 2019, it was laid down in a catena of judgments of this Court including Vardhaman Developer Ltd. (supra), Mohinder Kochar (supra) and Maya Developers (supra), that the redevelopment of a Society does not constitute business of the Society within the meaning of Section 91 of the MCS Act.

54. The Amending Act of 2019 only brought above a change in the definition of “Housing Society” which now included redevelopment as one of the objects of the Society. However, Section 154B-31 clearly provided that inter alias, the Bye-Laws applicable to the Housing Society existing on the date of the Amending Act, to continue to be applicable, until expressly repealed, modified or amended. It is an admitted position that the Bye-Laws of the Plaintiff No. 1 Society have not been expressly repealed, modified or amended subsequent to the Amending Act of 2019 and would thus continue to apply to the Plaintiff No. 1 Society. This saving of existing Bye-Laws has been expressly brought in the Amending Act of 2019. The existing Bye-Laws of the Plaintiff No. 1 Society does not have “redevelopment” as one of the objects of the Society. Thus, I do not find merit in the contention on behalf of the Defendants that subsequent to the commencement of the Amending Act of 2019, the Bye-Laws are required to be read as if it includes redevelopment as one of the objects of the Plaintiff No. 1-Society. If this contention on behalf of the Defendants is upheld, the said saving provision in the Amending Act of 2019 would be rendered nugatory. In view of the said saving provision, the Bye-Laws of the Society would necessarily have to be amended to bring it in line with the definition of “Housing Society” under Section 154B-1(17).

55. Further, in Section 91(1) of the MCS Act, the opening words in the Section read as under:- “Section 91(1) Notwithstanding [anything contained] in any other law for the time being in force, any dispute touching the constitution, [elections of the committee or its officers conduct of general meetings, management or business of a Society shall be referred by any of the parties to the dispute, or by a federal Society to which the Society is affiliated or by a creditor of the Society, [to the cooperative Court] if both the parties thereto are one or other of the following ----- (a) to (e) ……….”

56. Thus, the dispute relating to the “business of the Society” which is to be referred by any of the parties to the dispute to the Co-operative Court necessarily would require redevelopment to be the “business of the Society”. This would have to be seen from the Bye-Laws of the Society as to whether redevelopment has been included in the Bye-Laws. The submission of Mr. Madon that the definition of “Housing Society” is an enabling provision and does not make redevelopment an object or business of the Society unless the Society actually amends its Bye-Laws to include redevelopment as one of its objects, is required to be accepted. In the present case, it is an admitted position that the Bye-Laws of the Society do not have redevelopment as an object. This can also be seen from the existing Bye-Laws of the Society tendered by Mr. Madon pursuant to the advocates for the Defendants calling upon the Plaintiffs to produce the Bye-Laws. It is no-one’s case that subsequent to Amending Act of 2019, the Plaintiff No. 1-Society has amended its Bye-Laws for inclusion of redevelopment as one of its object.

57. Thus, in my view, since redevelopment is not one of the objects of the Plaintiff No. 1-Society, as per the Bye-Laws of the Plaintiff No. 1-Society, it cannot be said to be the business of the Society.

58. Further, I find much merit in the submission of Mr. Madon that the Amending Act of 2019 does not alter the legal position as laid down in a catena of judgments referred to above, which lay down that redevelopment cannot be considered to be business of the Society. This is upon a reading of Section 91 of the MCS Act, wherein “business of the Society” has been mentioned. Thus, absent amendment to the Bye-Laws of the Society, redevelopment cannot be read into the business of Society in Section 91 of the MCS Act. Further, mere inclusion of definition of “Builder promoter” cannot imply that the Builder promoter is one of the persons contemplated in Section 91 of the MCS Act. This considering that Section 91 has remained unamended. Thereby not including Builder promoter thereunder.

59. I further do not find any merit in the contention on behalf of the Defendants that Section 91(1)(c) which provided for a person other than a member having transaction with the Society in respect of which any restrictions or regulations have been imposed under Sections 43, 44 and 45 of the MCS Act and any person claiming through such transaction takes into account the regulations made under Section 79A of the MCS Act.

60. In fact, in Maya Developers (supra) this Court had specifically negated that submission. For that purpose, it would be necessary to reproduce paragraph 21 to 24 of Maya Developers (supra), which is as under:- “21. Put in this fashion, the argument is not without its attractions. However -- and I am sure that Mr. Pai will agree with me on this -- attractions, generally speaking, can also be deceptive and dangerous. It seems to me that this case holds precisely such hazards. The edifice of Mr. Pai's argument has several constituent elements; each must be carefully parsed. The first and foremost, and possibly the most deceptively perilous, is this: that, as a result of this stringing together of Section 79A, Section 45 and Section 91, the restrictions in the last of these, Section 91, are entirely abandoned. Section 91(1)(c) directly references non-members and Sections 43, 44 and 45. It does not reference Section 79A at all. A non-member governed or affected by any directive under Section 79A is not included in Section 91(1) (c). The purpose and ambit of Section 79A and Section 45 are entirely distinct. They operate in different fields. Section 79A is a broad-based State power to be used in the public interest. The wording of that Section is an important clue as to its purpose and ambit. Any direction under that Section -- and the direction may or may not be a 'restriction' -- is for the avowed purposes (1) of securing proper implementation of co-operative production and other development programmes approved or undertaken by Government; or (2) of securing the proper management of the business of the Society generally; or (3) for preventing the affairs of the Society being conducted in a manner detrimental to the interests of the members, or of the depositors or the creditors thereof. This is generally worded, and the 2009 Directive, as we shall see, falls squarely within the third of these. Important is the difference in wording between the second and third of these parts: the second part speaks of the 'business of the Society generally'; the third does not. Therefore, if the 2009 Directive under Section 79A is held to fall within the third part, meant to prevent the affairs of the Society being conducted in a manner detrimental to its members' interests, then no question arises of dragging Section 91 into it.

22. Moreover, Section 45 restrictions are specific to individual transactions, or types of transactions. An example of one such restriction may, for instance, be that any contract by the Society if approved or signed by the managing committee must receive general body approval or ratification within a specified period; or, perhaps, that a certain type of transaction needs to be approved by something more than a simple majority. This is very different from a directive under Section 79A, one that is primarily driven by a public interest or for any of the three purposes I have outlined earlier.

23. I believe Mr. Kapadia is correct in saying that the restriction in Section 45 must be specifically under that Section. What Mr. Pai attempts is to drag a directive issued under Section 79A into Section 45 by some process of a deeming fiction. This, Mr. Kapadia submits, and I think correctly, is impermissible. Had the Government wanted to impose the 2009 Directive as a transactional 'restriction' under Section 45, nothing prevented it from doing so. It chose not to. It chose the Section 79A route. It is not open to a Court, he says, again correctly, to reverse course or change tack and to do that which the State Government expressly did not.

24. Section 45 fell for interpretation before a Division Bench of this Court in Dharamchand Premchand v Kopargaon Taluka Kapus Ginning & Pressing Society Ltd., Kopargaon. There, too, there arose a question of Section 45 read with Section 91. The Court held that the word 'prescribed' in Section 45 must be read with its definition in Section 2(21) as 'prescribed by the Rules'. This therefore requires the State Government to issue Rules; a very different thing from issuing a directive under Section 79A. The Court accepted the last of three interpretations of Section 45, and held that the Section only references those transactions in respect of which restrictions are placed under Section

45. Where there are no such restrictions, Section 91(1)(c) will not apply. The Court also considered a situation where there are no such restrictions; it held that not all transactions with non-members were intended to be brought within the sweep of Section 91(1)(c). Thus, if there are no restrictions under Section 45, that section does not operate and then neither does Section 91(1)(c). In the case before the Division Bench, there were in fact no restrictions, and the dispute with a non-member was held not to be covered by Section 91(1)(c). This decision is on all fours with the present case; and it is, in any case, binding on me unless Mr. Pai can show that it has been over-ruled or is no longer good law.”

61. I am not impressed with the arguments on behalf of the Defendants that Maya Developers (supra) being prior to the Amending Act of 2019, is no longer good law, as it is considering the provisions which have undergone a change in law. In my view, as Section 91 of the MCS Act has not undergone any change, Maya Developers (supra) is very much still applicable, particularly, in view of the directive under Section 79A continuing to be excluded from Section 91(1)(c) of the MCS Act. The purpose and ambit of Section 79A and Section 45 as held in Maya Developers (supra) are entirely distinct. They operate in different fields. Section 79A is a broad-based State power to be used in the public interest. One cannot read Section 79A into Section 45 as has been sought to be contended on behalf of the Defendants.

62. Further, in the present case, there are no specific restrictions and/or regulations under Section 45 of the MCS Act. The order dated 1st December 2014 passed by the Registrar only directs the Plaintiff Society to abide by and follow the regulations and restrictions contained in the Government Resolution, 2009 issued under Section 79A of the MCS Act. Further, the NOC dated 23rd December 2014 issued by the Deputy Registrar in the present case directs compliance of Clauses 11 and 13 of the Government Resolution dated 3rd January, 2009 issued under Section 79A of the MCS Act. Thus, the provision of Section 91(1)(c) is not applicable in the present case as there are no specific restrictions and regulations under Section 45 of the MCS Act. Reference is made to the decision of the Division Bench of this Court in Dharamchand Premchand Vs. Kopargaon Taluka Kapus Ginning & Pressing Society Ltd., Kopargaon & Anr.12. There arose a question of Section 45 read with Section 91 and the Court held that the word 'prescribed' in Section 45 must be read with its definition in Section 2(21) as 'prescribed by the Rules'. This therefore requires the State Government to issue Rules; a very different thing from issuing a directive under Section 79A. Where there are no restrictions under Section 45, Section 91(1)(c) cannot apply.

63. This Court in Maya Developers (supra) has considered the decision of the Supreme Court in Margret Almeida (supra). In Margret Almeida (supra) the Supreme Court has referred to the Sections 43, 44 and 45 and in that context held that where Section 91(1)(c) speaks of persons other than the members of the 12 (1965) SCC OnLine Bom 97 Society, it is actually referring to persons other than the members of the Society, who have deposited money with the Society or who have either lent or borrowed the money from the Society in accordance with the provisions of Sections 43 and 44 and subject to such restrictions and limitations as if any prescribed with reference to such lending or borrowing from to the Society. Thus, the persons other than the members of the Society has been narrowly defined and in my view, will not include the Plaintiff No. 2-Developer, apart from the fact that there are no specific restrictions and regulations as envisaged under Section 45 of MCS Act for making Section 91(1)(c) applicable.

64. Insofar as the arguments canvassed before this Court on the issue as to whether the Plaintiff No. 2-Developer is an Agent of the Plaintiff No. 1-Society, this issue is purely a question of fact which was required to be pleaded and absent such pleadings, it cannot be taken up for deciding the preliminary issues as to whether jurisdiction of this Court is barred. It has been held by the Supreme Court in Nusli Neville Wadia (supra) that evidence cannot be led while determining a preliminary issue. Thus, it is not necessary to consider the various clauses of the Development Agreement in order to determine whether the Plaintiff No. 2 is an Agent of Plaintiff NO. 1-Society. In any event, having held that under Section 91(1) of the MCS Act, the business of Plaintiff No. 1-Society does not include redevelopment, as the Bye-Laws of the Plaintiff No. 1-Society have not been amended to so include redevelopment, the aspect of Agency does not arise.

65. In any event, by the order of the Supreme Court dated 12th February 2021, the Suit filed by the Defendants in the City Civil Court has been transferred to this Court and is directed to be heard along with this Suit, in view of the subject matter in both the Suits being the same.

66. In view of the above findings, the relief sought for in the Interim Application is not granted.

67. Interim Application (L) No. 25993 of 2022 is accordingly, disposed of. [R.I. CHAGLA J.]