Summary
The Supreme Court dismissed a suit for possession and reconveyance of agricultural land that the plaintiff had sold while it was charged in favour of a co-operative society, holding that although Section 48(e) of the Maharashtra Co-operative Societies Act, 1960 declares such alienations void, the provision protects the society alone and operates only at its instance, so the transaction is at best voidable and the defaulting member cannot invoke his own breach to undo his sale; the unregistered 'Ram Ram Patra' reconveyance document was also rejected.
Issues
- Whether a sale deed executed by a member of a co-operative society over land charged in its favour under a Section 48 declaration, without repaying the loan or obtaining release, is void ab initio under Section 48(e) of the Maharashtra Co-operative Societies Act, 1960, and at whose instance.
- Whether the society's subsequent release of the charge on 27.08.1973, after repayment, had any bearing on the sale deeds of 02.11.1971 and 15.07.1972.
- Whether the registered sale deed of 02.11.1971 was in substance a conditional sale or security for a loan, in view of the unregistered 'Ram Ram Patra' reconveyance document of the same date.
- Whether defendant no. 2 was a bona fide purchaser for value, and whether the plaintiff could obtain relief founded on his own breach of the statutory embargo.
Provisions considered
- Section 48(a), (c), (d) and (e), Maharashtra Co-operative Societies Act, 1960A member who borrows from a society declares a charge on his land; clause (d) bars alienation until the loan with interest is repaid in full and clause (e) makes contrary alienations void, while clauses (c) and (d) allow variation or part-release with the society's consent. The charge here predated the sale of 02.11.1971 and no repayment or release had occurred, so the sale appeared void at first glance; but the Court held that the provision exists to safeguard the lending society, that the right to have such an alienation nullified rests only with the society, and that until the society seeks nullification the transaction is at best voidable, clause (e) being read as directory. (¶¶ 19, 20, 21, 22, 24, 25)
- Section 47(2) and (3), Maharashtra Co-operative Societies Act, 1960Relied on by the appellants as creating an embargo on transfer without prior sanction of the society and rendering contrary transfers void; the Court's analysis proceeded on Section 48 and on the question of who may invoke the voidness. (¶¶ 9, 12)
- Article 136, Constitution of IndiaAppellants contended that concurrent findings do not bar interference where a finding is de hors the pleadings or misreads the record; the Court found no error in the concurrent decisions of the Single Judge and Division Bench. (¶¶ 14, 33)
Held
- Under Section 48 of the Act, a member who has declared a charge on his land in favour of a society has no capacity to alienate it until the loan and interest are repaid in full, though the society may release part of the property on part-payment on the member's application. (¶ 20)
- Section 48(e) renders void an alienation by a member-loanee as against the society; its primary purpose is to safeguard the society that advanced the loan, so the right to sue or to obtain a declaration that an alienation is void rests only with the society. The defaulting member cannot himself seek to have his own breach declared void without the society coming forward, since the law does not reward a person for his own wrong (Sindav Hari Ranchhod followed). (¶¶ 23, 24)
- Where the society never moved any forum to enforce its charge or objected to either sale deed, Section 48(e) must be read as directory to the extent that it can be acted upon only at the instance of the aggrieved society; absent such action the transaction is at best voidable and not void ab initio. (¶ 25)
- Section 48(c), though framed in terms of variation of the declaration, by necessary implication includes release of the charge once the society's dues are satisfied; the society having itself released the charge on 27.08.1973 after repayment, its interest had not suffered. (¶¶ 22, 26)
- The 'Ram Ram Patra' reconveyance document could not be acted upon, being neither stamped nor registered and written by a different scribe from the registered sale deed of the same date; the plaintiff's own recital in the registered sale deed that the land was free of encumbrances negated the plea of a conditional sale. A genuine reconveyance agreement would ordinarily carry a time-limit and some escalation of the sum to be repaid, both absent here, and the plaintiff never pleaded that he tendered Rs. 5,000 and was refused, so no cause of action for reconveyance was shown. (¶¶ 28, 29, 30)
- The plea that the land was undervalued at Rs. 5,000 against a worth of Rs. 25,000 carried little weight given that the purchaser was the plaintiff's nephew and son-in-law and no valuation evidence was produced; defendant no. 2 was a bona fide purchaser on 15.07.1972, having bought on the title apparent from the registered sale deed of 02.11.1971 with no reason to suspect an encumbrance. (¶¶ 27, 31)
- A court will not assist a person who seeks to have his own action nullified as void and simultaneously claims relief flowing from that wrong; the maxim that no one may take advantage of his own wrong applied and the Court would not perpetuate the illegality (Ram Pyare v. Ram Narain; Kusheshwar Prasad Singh relied on). (¶ 32)
Result
Appeal dismissed; the Single Judge's judgment setting aside the decree for possession and dismissing the suit, as affirmed by the Division Bench, upheld; no order as to costs; I.A. No. 42744/2020 closed; Registry to prepare the decree sheet.