Case Note & Summary
The case involves a dispute between a member (plaintiff) of a cooperative housing society and the society, along with a subsequent allottee (defendant). The plaintiff was a member of the Central Government Employees Co-operative Housing Society and was allotted Plot No.152. She paid the cost and a registered sale deed was executed in her favour on 20.07.1992. Possession was handed over. Subsequently, without any notice or reasons, the Special Officer of the society executed a deed of cancellation on 04.05.1993, cancelling the sale deed unilaterally. The plaintiff filed a suit for declaration that the cancellation deed was void and for permanent injunction. The trial court dismissed the suit, holding that the society had no title to the property at the time of sale and that the cancellation was valid. The first appellate court reversed the decision, decreeing the suit. The defendant appealed to the High Court. The High Court framed the substantial question of law: whether a registered sale deed can be unilaterally cancelled by the vendor without the consent of the vendee or an order of a competent court. The court answered in the negative, holding that such unilateral cancellation is void. The court relied on the principle that a registered document can only be cancelled by a court under Section 31 of the Specific Relief Act, 1963, or by mutual consent. The court also applied the doctrine of feeding the grant by estoppel under Section 43 of the Transfer of Property Act, 1882, to hold that even if the society had no title at the time of sale, the subsequent acquisition of title would benefit the plaintiff. The second appeal was dismissed, confirming the decree of the first appellate court.
Headnote
A) Cooperative Law - Cancellation of Sale Deed - Unilateral Cancellation Void - A registered sale deed executed by a cooperative society in favour of its member cannot be unilaterally cancelled by the society by executing a deed of cancellation without the consent of the member or an order of a competent court. The court held that such unilateral cancellation is void ab initio and does not affect the title of the member. (Paras 10-15) B) Transfer of Property Act, 1882 - Section 43 - Feeding the Grant by Estoppel - Where a person transfers property to which he has no title, but subsequently acquires title, the transferee gets the benefit of the after-acquired title. The court applied this principle to hold that even if the society had no title at the time of sale, the subsequent acquisition of title would enure to the benefit of the plaintiff. (Para 16) C) Specific Relief Act, 1963 - Section 31 - Cancellation of Instruments - The court noted that cancellation of a registered instrument can only be done by a court under Section 31 of the Specific Relief Act, 1963, and not by the vendor unilaterally. (Para 12)
Issue of Consideration
Whether a registered sale deed executed by a cooperative society in favour of a member can be unilaterally cancelled by the society by executing a deed of cancellation without the consent of the member or an order of a competent court.
Final Decision
The second appeal is dismissed. The judgment and decree of the first appellate court are confirmed. No costs. Consequently, CMP No.2341 of 2003 is closed.
Law Points
- Unilateral cancellation of a registered sale deed by a vendor without consent of the vendee or court order is void
- Cancellation of sale deed by cooperative society without notice or reasons is arbitrary
- Section 31 of Specific Relief Act
- 1963 provides for cancellation of instruments
- Section 39 of Transfer of Property Act
- 1882 not applicable
- Doctrine of feeding the grant by estoppel under Section 43 of Transfer of Property Act
- 1882
