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TMI Blog2019 (6) TMI 1725X X X X Extracts X X X X X X X X Extracts X X X X ..... ir cultivation directly or by agreement by auction as established in the internal statute of the society. It is submitted that the present lease granted in favour of the defendants was for development of the property and not for agricultural use and was opposed to the object of the plaintiff-society. 3. The defendants in their written statement have contested this claim of the plaintiff. The defendants do not admit that the bye-laws of the society did not permit the President of the society or any other person to create a lease. The defendants deny that the lease in question was either illegal or contrary to the object of the plaintiff-society. 4. In the impugned judgment the learned District Judge, whilst ruling on issue No. 1, which was the main and pivotal issue in the Special Civil Suit, held that on perusal of the Lease Deed, it was seen that there was no mention by the President of the plaintiff-society in the Lease Deed that he was authorised by any resolution of the administrative committee of the plaintiff to enter into the subject Lease Deed with the defendants. The learned Judge held that fixation of lease rent of ` 500/- per year for such a huge area of land given for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... President to execute the Lease Deed on behalf of the society. Learned Counsel submits that no particular provision has been pointed out by the defendants that the President could act on behalf of the society in a matter such as this. Learned Counsel submits that if it was the case of the defendants that the internal statute of the plaintiff-society did not contain any restriction for execution of a lease on behalf of the society by its President, it was for the defendants to seek production of that document at the trial. Learned Counsel submits that when a property is to be transferred, there must be a specific authority for such transfer. Learned Counsel also relies upon the objects of the society and submits that these objects militate against the defendants' case of a duly authorized Lease Deed in their favour. Learned Counsel lastly submits that the very fact that the Lease Deed of a period of 99 years, which can be termed as nothing but conveyance of title, was executed for a meagre consideration of ` 500/- per annum as lease rent, suggests the fraudulent nature of the transaction. 7. At the very root of the controversy in the present case are the matters of execution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not barred by the charter of the Company or its Articles of Association, and could be entered into on its behalf by the person executing it, he is entitled to presume that whatever formalities are required to be complied in connection therewith, have been duly complied with. A bona fide creditor, in the absence of any suspicious circumstances, is entitled to presume that such formalities such as passing of a resolution, etc., have been duly complied with. A transaction entered into by the borrowing company under such circumstances cannot be defeated merely on the ground that no resolution was in fact passed. The passing of such resolution is a mere matter of indoor or internal management of the company and its absence, under such circumstances, could not be used to defeat the just claim of a bona fide creditor; such creditor being an outsider or a third party and an innocent stranger is entitled to proceed on the assumption of its existence; he is not expected to know what happens within the doors that are closed to him. Where the act is not "ultra vires" the statute or the company, such creditor would be entitled to assume the apparent or ostensible authority of the agent to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onus was on the plaintiff in the present case. Under Section 106 of the Evidence Act, the burden of proving any fact which is especially within the knowledge of any person is upon that person. Its own internal statute was a matter which was clearly within the special knowledge of the plaintiff. If it was its case that having regard to this internal statute, the executant of the deed could be said to be lacking in authority to do so, it was indeed for it to prove such fact. The plaintiff, as we have noted above, has made no such attempt. The internal statute has, in fact, till date, not seen the light of the day. 13. The argument that the Lease Deed was executed for a meagre rent of ` 500/- per annum and was, therefore, clearly fraudulent, is neither here nor there. Though this was mentioned in the plaint, the plaintiff did not have any issue framed in this regard. Anyway, there is no evidence either to show that ` 500/- in this case would be an unacceptably meagre rent. Community properties held by Communidade's or societies of villagers are meant for the use of the villagers and not for making profits. It is not in dispute that the defendants are villagers of the same villag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court with nor what the defendant was called upon to show cause to. Naturally, therefore, that was not what the Court was called upon to rule on. But, Mr. Lotlikar would submit, there was a reference to the sub-lease in the plaint coupled with a prayer for recovery of possession of the leased property. That is stretching the things a bit too far. A stray reference in the plaint to sub-letting and a prayer for recovery cannot be treated in the manner we do by adding two and two to arrive at four. It is as plain as could be that prayer for possession is but a prayer consequential upon the declaration of nullity sought in the main prayer. It has effectively no connection with the plea of unlawful sub-letting. There is no plea of determination of lease by the plaintiff of as a result of such sub-letting and a plea for recovery of possession of the property based on such determination. There is, naturally, no evidence in support of any such plea at the trial. In the premises, this additional ground has no merit and does not require us to take a view different from what we have taken in case of First Appeal No. 6 of 2010. For the reasons discussed in the case of First Appeal No. 6/2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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