A) ABSTRACT / HEADNOTE

The Supreme Court in Machhindranath S/o Kundlik Tarade (Deceased) through LRs v. Ramchandra Gangadhar Dhamne & Ors. dealt with the complex question of alienation of charged agricultural land under Section 48 of the Maharashtra Co-operative Societies Act, 1960. The central issue concerned whether a sale of land executed by a loanee-member in contravention of statutory restrictions was void ab initio or merely voidable at the instance of the concerned co-operative society. The Court examined the 1971 and 1972 sale transactions executed during subsistence of a co-operative society charge, as well as the subsequent release of the charge in 1973. It clarified that alienation without repayment of society dues was impermissible, but the statutory voidness under Section 48(e) could be invoked only by the society, not by the defaulting member. The doctrine of ex injuria sua nemo habere debet was applied, preventing the plaintiff from benefiting from his own wrong. Importantly, the Court interpreted Section 48(e) as directory, thereby holding such alienations voidable at the instance of the society, and not void ab initio. The Court dismissed the appeal and upheld the High Court’s decision, thereby protecting the rights of a bona fide purchaser while balancing statutory safeguards.

Keywords: Maharashtra Co-operative Societies Act, Section 48(e); alienation of charged property; void vs voidable; cooperative loan charge; reconveyance deed; ex injuria sua nemo habere debet; bona fide purchaser.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute revolved around alienation of ancestral agricultural land burdened with a charge created in favour of a co-operative society under Section 48 of the Maharashtra Co-operative Societies Act, 1960. The original plaintiff, a society member, had borrowed from the Kendal Bk. Vividh Karyakari Seva Sahakari Sanstha Ltd., and created a charge by declaration in 1969. Despite the subsisting charge, he executed a registered sale deed in favour of his nephew/son-in-law in 1971, followed by a reconveyance deed, and thereafter defendant no.1 sold part of the land to a third party in 1972. The plaintiff sought possession and reconveyance, relying on the statutory embargo under Section 48(e).

The Trial Court held both sale deeds void, but subsequent appellate proceedings before the Bombay High Court (Aurangabad Bench) reversed that decision, holding that the later release of charge by the society in 1973 validated the sales. The matter reached the Supreme Court, where the core question was whether Section 48(e) renders such alienations void ab initio or only voidable at the instance of the society, and whether the plaintiff could rely on his own default to invalidate the transactions.

The background also presented competing equities: protection of co-operative societies against defaulting members, safeguarding bona fide purchasers, and preventing wrongdoers from benefitting from their own breach. The Court had to harmonize these considerations with principles of statutory interpretation, doctrines of equity, and precedents on void and voidable transactions, such as Sindav Hari Ranchhod v. Jadev Lalji Jaymal (1997) 7 SCC 95 and Dhurandhar Prasad Singh v. Jai Prakash University (2001) 6 SCC 534.

D) FACTS OF THE CASE

The plaintiff, Machhindranath, owned ancestral land admeasuring 15 acres and 17 gunthas in Ahmednagar, Maharashtra. He became a member of the Kendal Bk. Vividh Karyakari Seva Sahakari Sanstha Ltd. in 1956 and availed a loan, creating a charge on the land by declaration in 1969 under Section 48(a).

Facing financial distress, he borrowed ₹5,000 from his nephew/son-in-law (defendant no.1) and executed a registered sale deed on 2.11.1971 in his favour, along with an unregistered “Ram Ram Patra” reconveyance deed promising reconveyance upon repayment. Mutation entries were recorded in defendant no.1’s name.

On 15.07.1972, defendant no.1 sold 10 acres to defendant no.2 for ₹30,000 through a registered deed, leading to bifurcation of survey numbers. The plaintiff filed Special Civil Suit No.49 of 1973 seeking possession and reconveyance.

The Trial Court in 1980 declared the 1971 deed void under Section 48(e), holding that defendant no.2 was not a bona fide purchaser, and directed reconveyance. However, appellate proceedings altered this finding. The Single Judge of the High Court set aside possession and dismissed the suit. A Division Bench upheld that view.

The Society, through a resolution on 27.08.1973, released the charge after repayment of dues. Notably, the society itself never challenged the sale deeds. The plaintiff appealed to the Supreme Court, contending the sales were void ab initio under Sections 47(3) and 48(e), while respondents argued that voidness was only at the society’s instance and that the plaintiff could not claim benefit of his own default.

E) LEGAL ISSUES RAISED

i. Whether the sale deed dated 02.11.1971 executed by the plaintiff in favour of defendant no.1 was void ab initio under Section 48(e) of the Maharashtra Co-operative Societies Act, 1960?
ii. Whether the subsequent sale deed dated 15.07.1972 executed by defendant no.1 in favour of defendant no.2 was valid in law despite the subsisting charge?
iii. Whether the release of charge by the Society in 1973 had retrospective effect validating prior transactions?
iv. Whether the plaintiff could maintain a challenge to his own alienation, or whether only the co-operative society could invoke Section 48(e)?
v. Whether defendant no.2 was a bona fide purchaser without notice, entitled to protection?

F) PETITIONER / APPELLANT’S ARGUMENTS

The appellants contended that Sections 47(2), 47(3), and 48(d)-(e) barred alienation of charged land without prior permission or repayment, rendering the 1971 and 1972 deeds void. They argued that subsequent removal of charge in 1973 could not operate retrospectively. Relying on C.S. Venkatesh v. A.S.C. Murthy (2020) 3 SCC 280, it was submitted that the transaction of 02.11.1971 was a conditional sale in substance, supported by the reconveyance deed.

They asserted that the Trial Court correctly held the deeds void and rejected defendant no.2’s bona fide purchaser claim, a finding unchallenged in appeal. They argued that the High Court erred by treating post facto release as validating past transactions, contrary to the legislative intent of Section 48.

They invoked State of Rajasthan v. Shiv Dayal (2019) 8 SCC 637, emphasizing Supreme Court’s power to interfere with concurrent findings where based on misinterpretation. They urged restoration of Trial Court’s decree.

G) RESPONDENT’S ARGUMENTS

The respondents argued that the plaintiff, having knowingly executed the 1971 sale deed during subsistence of charge, could not plead illegality to invalidate his own act. They contended Section 48(e) was meant to protect the society, not to allow the loanee to take advantage of his breach. They stressed that the society never objected and instead released the charge in 1973, extinguishing its interest.

They argued that defendant no.2’s purchase in 1972 was bona fide, supported by registered documents and payment of consideration. They emphasized that adequacy of consideration was irrelevant absent evidence of market value.

They urged that concurrent findings of fact by the High Court did not warrant interference, and that equity barred the plaintiff from invoking his own wrong.

H) RELATED LEGAL PROVISIONS

i. Section 47(2) & 47(3), Maharashtra Co-operative Societies Act, 1960 – requiring society’s sanction for transfers, declaring contravening transfers void.
ii. Section 48(a)-(e), Maharashtra Co-operative Societies Act, 1960 – creation of charge on land, prohibition on alienation until repayment, and declaring contravening alienations void.
iii. Prevention of Fragmentation and Consolidation of Holdings Act, 1947 – regulating fragmentation of agricultural holdings.
iv. Doctrine of ex injuria sua nemo habere debet – no one can take advantage of his own wrong.
v. Distinction between void and voidable transactions under Indian and English jurisprudence.

I) JUDGEMENT

The Supreme Court held that alienation of charged property under Section 48 without repayment was impermissible. However, the statutory voidness under Section 48(e) was to safeguard the society, and only the society could seek nullification. Since the society itself had released the charge in 1973 without challenging the sales, the transactions were voidable, not void ab initio.

The Court emphasized that the plaintiff could not benefit from his own wrong by executing an alienation in breach of statutory provisions and then seeking to invalidate it for his benefit. Applying Sindav Hari Ranchhod v. Jadev Lalji Jaymal (1997) 7 SCC 95, it held that only the society had standing to challenge. It further invoked Dhurandhar Prasad Singh v. Jai Prakash University (2001) 6 SCC 534* to distinguish between void and voidable transactions.

The reconveyance deed was disregarded as unregistered, unstamped, and inequitable. The Court noted that defendant no.2 was a bona fide purchaser based on apparent title in defendant no.1. Ultimately, invoking the maxim ex injuria sua nemo habere debet, the Court dismissed the appeal.

a. RATIO DECIDENDI

The ratio lies in the interpretation of Section 48(e) of the Maharashtra Co-operative Societies Act, 1960. Alienation of charged property without repayment is prohibited, but such alienation is void only at the instance of the society concerned. Unless the society challenges it, the alienation is voidable, not void ab initio. A loanee cannot invoke statutory protection to invalidate his own breach.

The Court clarified that post facto release of charge does not retrospectively validate past alienations, but the absence of objection by the society, coupled with discharge of dues, removes grounds for invalidation. Hence, transactions stand valid inter se between private parties, unless society asserts its right.

b. OBITER DICTA

The Court observed that reconveyance deeds lacking registration, stamp duty, and time-bound repayment clauses cannot be given legal recognition. It noted that adequacy of consideration in intra-family transactions cannot be scrutinized absent cogent evidence.

The Court highlighted the importance of balancing statutory protection of societies with security of transactions for bona fide purchasers. It underscored that law should not perpetuate illegality by rewarding a party’s own wrongdoing.

c. GUIDELINES

1. Section 48(e) of the Maharashtra Co-operative Societies Act, 1960 is directory, and its voidness clause operates only at the instance of the society.

2. Alienations made in violation of charge are voidable, not void ab initio, unless society challenges them.

3. A defaulting member cannot invoke statutory protection to avoid his own alienation.

4. Reconveyance deeds must be duly registered, stamped, and contain definite terms to be enforceable.

5. Bona fide purchasers relying on apparent title deserve protection in absence of fraud or collusion.

6. Courts will not permit a party to benefit from its own wrong, applying the doctrine ex injuria sua nemo habere debet.

J) CONCLUSION & COMMENTS

The judgment reflects a nuanced interpretation of co-operative law, balancing statutory restrictions with equitable principles. By holding alienations voidable at the instance of the society, the Court prevented misuse of statutory protection by defaulting members. It reaffirmed that statutory safeguards exist to protect co-operatives, not to provide defaulters an escape route.

The Court also protected bona fide purchasers, ensuring certainty of land transactions. Its refusal to give effect to an unregistered reconveyance deed underscored the sanctity of formal legal requirements. Importantly, by applying ex injuria sua nemo habere debet, the Court preserved the integrity of legal process against opportunistic claims.

This decision strengthens cooperative credit structures by clarifying that societies alone can enforce Section 48, while also safeguarding third-party transactions from uncertainty. It harmonizes property law with equitable doctrines, setting a precedent for future disputes involving alienation of charged land.

K) REFERENCES

a. Important Cases Referred

i. C.S. Venkatesh v. A.S.C. Murthy, (2020) 3 SCC 280.
ii. State of Rajasthan v. Shiv Dayal, (2019) 8 SCC 637.
iii. Sindav Hari Ranchhod v. Jadev Lalji Jaymal, (1997) 7 SCC 95.
iv. Dhurandhar Prasad Singh v. Jai Prakash University, (2001) 6 SCC 534.
v. Ram Pyare v. Ram Narain, (1985) 2 SCC 162.
vi. Kusheshwar Prasad Singh v. State of Bihar, (2007) 11 SCC 447.

b. Important Statutes Referred

i. Maharashtra Co-operative Societies Act, 1960 – Sections 47, 48.
ii. Prevention of Fragmentation and Consolidation of Holdings Act, 1947.
iii. Indian Registration Act, 1908 (reconveyance deed requirements).
iv. General equitable doctrines – ex injuria sua nemo habere debet.