Holding

The plaintiffs failed to prove the applicability of Section 49(1)(e) and could not challenge the sale transactions; therefore, the High Court’s remand order was set aside and the trial court’s dismissal was confirmed for all defendants.

Summary

The plaintiffs, sons of a borrower, sued to declare the sale deeds executed by their father null and void, alleging that the transactions violated Section 49 of the Gujarat Co-operative Societies Act because the father had an outstanding loan to the Rampara Seva Sahakari Mandali. The trial court found no evidence of illegality or immorality and dismissed the suit, a decision upheld by the Gujarat High Court except for a remand order to reconsider the applicability of Section 49(1) to the sales in favour of the appellant and respondent No.16. On appeal, the Supreme Court examined whether the plaintiffs were legally entitled to raise a claim under Section 49 when the cooperative society was not a party and whether they had proved the existence of an outstanding charge at the time of sale. The Court held that the plaintiffs failed to establish the attraction of Section 49(1)(e) and could not effectively challenge the sale deeds. Consequently, the High Court’s remand order was deemed unwarranted, and the trial court’s dismissal was confirmed for all defendants. The appeal was allowed, and the suit was dismissed against the appellant and respondent No.16.

Issues considered

Whether the plaintiffs were legally entitled to invoke Section 49(1)(d)(e) of the Gujarat Co-operative Societies Act against the sale deeds when the cooperative society was not joined as a party.
Whether the plaintiffs proved that the cooperative society's loan to the father was outstanding at the time of the sale, thereby attracting Section 49(2).
Whether the High Court was justified in remanding the case for a fresh determination of the applicability of Section 49(1).
Whether the Supreme Court could set aside the remand order and confirm the trial court’s dismissal under Order 41 Rule 4 of the CPC and Article 142 of the Constitution.

Legislation cited

Code of Civil Procedures. Order 41 Rule 4
Constitution of Indias. Article 142
Gujarat Co-operative Societies Act, 1961s. 49(1)(d), s. 49(1)(e), s. 49(2)

Subjects

Co-operative societiesSection 49Sale deed validityProperty lawCivil appealRemand orderOrder 41 Rule 4Article 142

Judgment

SINDAV HARi RANCHHOD A
v.
.. JADEV LAI.JI JA YMAL & ORS .

JULY 23, 1997
B
(S.B. MAJMUDAR AND D.P. WADHWA, JJ.]

Gujarat : Co-operative Societies Act, 1961 :
,__,A

Sections 49(1)(d)(e) and 49(2)-Applicability of
c
Cooperative Society-Bo"ower member-Sale transactions by Appel-
/ant purchaser of land-Similar transaction entered by bo"ower member with
respondent No. 16-Validity of sale questioned by sons of bo"ower-members
(respondents)-Suit for declaration that sale deeds by their father were null
and void-Society not joined as a party-Society also not challenged the sale D
deeds-Suit dismissed by Trial Court-Plaintiffs' appeal before High
-I Court-High Court held that the findings reached by trial court on the
question of legality and validity of the sale transactions in the light of the
alleged illegality and immorality underlying these transactions remained well
sustained on record and called for no interference-1herefore, the suit against
the defendants-purchasers qua whose transactions Section 49 was not at- E
tracted was held to be rightly dismissed-However, so far as the sale deed
executed in favour of appellant and respondent no. 16 herein, were concerned,
_.., the High Court found that there was no clear evidence as to whether Section
49 can be attracted-Accordingly it remanded the suit for a fresh decision on
the limited question of applicability of Section 49( 1)-Challenge to remand F
before Supreme Court-Though no relief was claimed by the plaintiffs against
the society yet the grievance made by the plaintiffs in substance was of course
on behalf of the society-They also failed to lead evidence for showing how
Section 49(2) was attracted-Consequently they could not legitimately and
effectively challenge the sale transactions entered into by their father in favour
--j
--< of the alienees namely appellant and, respdt. 16 on the ground of violation G
~
of Section 49(1) of the Act-Therefore, there was no occasion for the High
Court for ordering any remand-The plaintiffs' suit against appellant is liable
to be dismissed-Case of appellant and respondent No. 16 based on same
. set of facts-Held therefore it was a fit case for the court to exercise power
under order 41 Rule 4 of C.P. C. read with Article 142 of the Constitution in H
41
42 SUPREME COURT REPORTS (1997] SUPP. 3 S.C.R.

A his favour-Suit against respondent No. 16 also stands dismissed-Order of
.remand passed by High Court set aside-Order of Trial Court dismissing the
suit confinned.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2848 of
1979
B
From the Judgment and Order dated 17.7.79 of the Gujarat High
Court in P.A. No. 14 of 1974

H.S. Parihar for the appellant.

C M.J.S. Rupal, U.A. Rana, Sudhanshu Tripathi and Ashok Tiwari for
the Respondents.

The following Order of the Court was delivered :

This appeal is moved by original defendant No. 15 in Special Civil
D Suit No. 20 of 1968 filed by the respondents-plaintiffs in the court of the
learned Civil Judge, Senior Division, Surendra Nagar, for a declaration that
the sale deeds executed by their father, defendant No. 1 were null and void
and are not binding on them as defendant No. 1, their father was addicted
to bad habits and the transactions entered into by him in favour of the
E purchasers concerned were tainted with illegality and immorality. Learned
trial Judge recorded evidence offered by the parties and came to the
conclusion that there was nothing illegal or immoral about the said
transactions and they were binding on the plaintiffs as their father out of
necessity had entered into those transaciions. So far as the present
p appellant, defendant No. 15 is concerned, he is said to have purchased twQ
pieces of agricultural lands being Survey Nos. 1292/2/3. This sale
transaction in his favour was of January 27, 1965. Similar sale transaction
was entered into by Defendant No. 1 relating to survey No. 803 on May 4,
1965 in favour of the respondent No. 16 herein. By amendment to the plaint
G the original plaintiffs introduced paragraph 15-A as under :

"15-A. Further it is submitted that whereas defendant No. 1
executed sale deeds in favou~ of the defendants at that time, there
was a liability of charge in favour of Rampara Seva Sahakari
Mandali and on the dates of the sale deeds defendant No. 1 had
H not repaid the loan taken by him so there was a prohibition under
S.H.RANCHHOD V. J.L.JAYMAL 43
law to sell the said lands or to transfer in any manner and so also A
the sale deeds in favour of defendants were null and void under
law and so the defendants have not acquired any right on the suit
lands by virtue of such sale deeds."

The ayerments in the said paragraph were contested by the present
· appellant and other contesting defendants contending as under : B
"3. Further it is to be submitted that whatever the debt of
Rampara Seva Sahakari Mandali were paid up and so there is no
·charge of Rampara Seva Sahakari Mandali remained.

4. We deny the contention of the plaintiff that there was a C
prohibition under law from selling or transferring in any other
manner, to the father of the plaintiff and so the sale deed executed
by him is void. And further we submit that only Rampara Seva
Sahakari Mandali and at the best J aymal Deva have right to raise
such disputes i.e. to cancel the said sale deeds. but the sons, D
daughters of the said Jaymal Deva i.e. to the plaintiffs have no
. .-; right to raise such disputes and so plaintiffs are not entitled to
raise such disputes.

5. Further when no amount is due to Rampara Seva Sahakari E
Mandali now no question remains regarding whether sale is void
or not."

- In the light of the aforesaid pleadings of the parties an issue was
struck by the trial court being Issue No. 6A which reads as under :

"Whether the Plaintiffs are legally entitled to take the conten-
F
tion averred in para 15A of the Plaint ? If yes, whether the Plaintiffs
prove the averments made in para 15A of the Plaint? If yes, what
is its effect ?"

After recording evidence on this issue learned trial Judge came to G
the conclusion that the plaintiffs were legally entitled to take up the
conte'ntion averred in paragraph 15A. However, on the second part of the
issue, it was held that the plaintiffs could not prove the averments made in
paragraph 15A of the plaint and consequently, the thii-d part regarding the
effect of the decision on the said issue of the suit was found to be not H
44 SUPREME COURT REPORTS (1997] SUPP. 3 S.C.R.

A surviving. In this connection, the learned Judge after noting Section 49(1)
(d) & (e) of the Gujarat Co-operative Societies Act, 1961, observed as
under:

"It is for the Cooperative institutions concerned to take up this
dispute, that even after the alienations were made, the evidence
B
on record does show that from the two alienees, the Defendant
No. 12 and the Defendant No. 15, the Rampara Cooperative
Society had accepted the payment of the part of the debt due to
it from the Defendant No. 1 and, therefore, the society has not
taken any exception to the alienation made by the Defendant No.
c 1, which it could have taken, under section 49 of the Gujarat
Cooperative Societies Act. It is just possible that the Rampara
Cooperative Society might have allowed the Defendant No. 1 to
make a variation in the declarations made by him prior to the
various alienations covered iri this suit and under the said cir-
D cumstances, it might have accepted the part payment of the debt
due from the defendant No. 1 to it, which was made by the
Defendants Nos. 12 and 15. There is no clear evidence on record
as regards the non-variation of this declaration made by the Defen-
dant No. 1 and the burden to prove the same is on the Plaintiffs
E who have alleged these documents to be void on this count and
hence under circumstances, it is not possible to decide whether
the Suit alienations are hit by the provisions contained in Section
49(1) (e) of the Gujarat Cooperative Societies Act, 1961."

F As a result of the findings reached by the learned Judge on all the
issues against the plaintiffs, the suit was dismissed. The plaintiffs carried
the matter in appeal before the High Court in First Appeal No. 14of1974.
A Division Bench of the High Court after hearing the parties came to the
conclusion that the findings reached by the trial court on the question of
legality and validity of the sale transactions in the light of the alleged
G illegality .and immorality underlying these transactions remained well sus-
tained on record and called for no interference. On these findings, the suit
of the plaintiffs against the defendants- purchasers qua whose transactions
Section 49 was not attracted was held to be rightly dismissed and the
plaintiffs' appeal qua them was dismissed. However, so far as the sale
H deeds exe~uted by the defendant No. 1 in favour of Defendant No. 15 and
S.H.RANCHHOD v. J.LJAYMAL 45

., Defendant No. 10, respondent No. 16 herein, were concerned, the High A
Court found that there was no dear evidence as to whether Section 49 can
... be attracted on the facts of the case as there was nothing to indicate how
the society referred to in Section 49(2) is said to have advanced loans to
defendant No. 1 in connection with which Section 49 could be attracted.
ln the light of the said conclusion to which the High Court reached it was B
thought fit by the High Court to remand the suit for a fresh decision on
the limited question of applicability of Section 49(1) of the Gujarat Co-
operative Societies Act, 1961 so far as the suit against the defendant Nos.
15 and 10 was concerned. It is this remand order dated July 17, 1979 whic~
has been brought in challenge by defendant No. 15 in this appeal. Now, it
must be appreciated that the grievance made by Defendant No. 15, the C
appellant herein is on similar lines as earlier contended before the High
· Court not only by him but also by Defendant No. 10 respondent No. 16
herein as the question involved is common to both of them.

Learned counsel for the appellant vehemently contended before us D
, in support of this appeal that despite the averments made by the plaintiffs
r
in paragraph 15-A of the plaint which were contested by the defendants,
no clear evidence was led by the plaintiffs in support of their plea about
the transactions being void under section 49(1)(e) of the Gujarat
Cooperative Societies Act and only vague allegations were made therein E
and there was no clear evidence to support the said plea for voiding the
sale transaction of the appellant. It was also contended that such a
contention could not have been gone into in the absence of the
Co-operative society concerned as under the Act the Co-operative society
itself as per the proviso to Section 49(1) could in a given case, vary or waive
the whole or any part of the obligation of the debtor who had agreed to
F
create a charge in favour of the Society. That the section was meant for
the benefit of the Society and not for any one else, such benefit could have
been waived by the society in a given case. In any case, in the absence of
the society concerned on the record of this proceeding it was not open to
the plaintiffs, a third party, to urge on behalf of the society by holding a G
brief for it and to call in question the sale transactions executed by their
father in favour of the appellant as early as in 1965 and pursuant to which
the defendant No. 15 had entered into possession as owner and has
· continued through thereafter as such. It was, therefore, submitted that the
order of remand passed by the High Court was clearly uncalled for on the H
46 SUPREME COURT REPORTS (1997] SUPP. 3 S.C.R.

A facts of the present case and consequently, the order of remand be set
aside and the suit of the plaintiffs should be dismissed also against the
remaining defendants. ...
Learned counsel for the respondents-plaintiffs on the other hand
B submitted that the plaintiffs had already raised such a contention in the
trial court by amending the plaint and the learned trial court itself had
found that the impugned transactions were of 1965 and the society's money
appeared to have been paid thereafter and thus on the date of the sale
transactions there was outstanding debt of the society and, therefore, the
said society could legitimately contend that the transaction was a void
c transaction and even though the society was not joined as a party in the
proceedings, the plaintiffs could not be estopped from raising this pure
question of law only on that ground and this plea was rightly directed to
be reexamined on remand as ordered by the High Court. It was further
contended that plaintiffs did not claim any relief against society and,
D therefore, there was no occasion for the plaintiffs to array the society as a
defendant.

In our view, this submission on behalf of the learned counsel for the
respondents cannot be sustained. It is true that no relief was claimed by
E the plaintiffs against the society but the grievance made by the plaintiffs in
substance was of course on behalf of the society and whether such society
was covered by Section 49 or not and whether' such society had waived its
statutory right or not in favour of the original defendant No. 1 were all
questions which could have been thrashed out only in presence of the
F society which conspicuously was not joined as at least a proper party. It is
also pertinent to note that the society has not challenged these sale deeds
executed by Defendant No. 1 at any time. The plaintiffs also failed to lead
evidence for showing how Section 49(2) got attracted on facts of the
present case, despite having full opportunity before trial Court to prove
their case on this issue. They could not be given a second innings just for
G asking as is done in the impugned order. Consequently the plaintiffs could
..;
not legitimately and effectively challenge the sale transactions entered into
by their father in favour of the alienees namely Defendant Nos. 15 and 10
on the ground of violation of Section 49(1) of the Act. In our view on the
facts of the present case, therefore, there was no occasion for the High
H Court for ordering any remand as on the main issue the plaintiffs had
S.H.RANCHHOD V. J.L.JAYMAL 47
· failed, hence the suit ought to have been dismissed against all the defen- A
dants instead of only against some of them as ruled by the High Court.
... Consequently, this appeal is required to be allowed and the plaintiffs' suit
against appellant-Defendant No. 15 also is liable to be dismissed as on
merits the plaintiffs had failed to effectively challenge the sale transactions
entered into by their father in favour of Defendant No. 15.
B
However, this leaves out one ancilliary question. The High Court by
the impugned judgment has also remanded the proceedings for considering
the legality of the sale transactions in favour of Respondent No. 16,
Defendant No. 10 on the very same ground of applicability of Section 49(2)
of the Gujarat Cooperative Societies Act in connection with the dues of C
the same society against Defendant No. 1. It is true that Respondent No.
16 has not filed any appeal before us. But our decision in favour of the
appellant will have a direct bearing on the question of remand of the suit
for considering the challenge of the plaintiffs against the transactions in
favour of the Defendant No. 10. Respondent No. 16 herein based on same D
set of facts. In fact, the case of the appellant and the respondent No. 16 is
identical and involves common defence to the plaintiffs' case on this issue.
When the appellant and the respondent No. 16 sail in the same boat and
have common defence against the plaintiffs' case it can very well be
visualised that the grievance of the appellant once upheld would enure for
the benefit of Respondent No. 16 who is identically situated. We may in E
this connection, profitably refer to Order 41 Rule 4 C.P.C. which provides
that where there are more plaintiffs or more defendants than one in a suit,
and the decree appealed from proceeds on any ground common to all the
plaintiffs or to all the defendants, any one of the plaintiffs or of the
defendants may appeal from the whole decree, and thereupon the appel- 'p
late court may reverse or vary the decree in favour of all the plaintiffs or
defendants, as the case may be. In our opinion, it is a fit case to exercise
our power under Order 41 Rule 4 C.P.C. read with Article 142 of the
Constitution in favour of Respondent No. 16 (Defendant No. 10) so that
inconsistent situations and possibility of incongruous orders may not arise.
In view of our finding that the plaintiffs' case based on Section 49 for
a. .
voiding the impugned sale transactions is not sustained on merits, and on
' that ground once we grant relief to the Defendant No. 16, no useful
purpose would be served by sustaining the remand order of the High Court
for deciding the very same question on same set of facts by the trial court
so far as the sale transaction of Defendant No. 10 Respondent No. 16 H
48 SUPREME COURT REPORTS [1997] SUPP. 3 S.C.R.

·A herein is concerned.
. Hence while allowing this appeal the suit of the plaintiffs will stand
dismissed not only against defendant No. 15 but also against defendant No.
10 and the net result would be that the order of remand passed by the High
Court will stand wholly set aside and the order of the trial court dismissing
B the suit will get confirmed. The appeal is allowed accordingly. There would
be no order as to costs.

T.N.A. Appeal allowed.