PETITIONER:
RAJ RANI & ORS. ETC.
Vs.
RESPONDENT:
DELHI ADMINISTRATION & ORS.
DATE OF JUDGMENT10/12/1976
BENCH:
RAY, A.N. (CJ)
BEG, M. HAMEEDULLAH
SINGH, JASWANT
CITATION:
1977 AIR 1900 1977 SCR (2) 371
1977 SCC (2) 314
ACT
Delhi Co-operative Societies Act 1972--Delhi Co-opera-
tive Societies Rules, 1973, rr. 24, 25, 30--Rules about
membership--Cooperative Society--Applications--Payment of
share money--Whether mandatory or directory--Mala fide
allotment--Allotment with undue haste by passing persons in
wanting list-Declaration as defaulters for non-payment of
dues-Not submitting affidatvits.
HEADNOTE
On 6-7-1971 the Lt. Governor of Delhi passed an award
directing the New Friends Co-operative House Building Socie-
ty Limited to pay Rs.22 lacs to the Delhi Administration.
On 9-7-1971 the Lt. Governor by a notification removed the
elected Managing Committee and appointed a nominated Manag-
ing Commitee under rule 56 of the Delhi Cooperative Socie-
ties Rules, 1950 framed under the Bombay Cooperative Socie-
ties Act 1925 as applied to Delhi. The term of the Manag-
ing Committee was for one year. On 23-10-1971 the nominated
Managing Committee passed a resolution to make the award of
the Lt. Governor a rule of the court. In December, 1971,
the nominated Managing Committee passed a resolution for
having direct sub-leases and in January 1972 called for more
funds. In July, 1972, the Lt. Governor issued a second
notification extending the term of the nominated Managing
Committee by further two years.
287 members of the Society filed writ petition No. 340
of 1972, challenging the rites of rule 56 and challenging
the action of the Lt. Governor in superseding the elected
Managing Committee and in extending the term of the nominat-
ed Managing Committee by a further period of 2 years. On
30-4-1973, the nominated Managing Committee issued a circu-
lar asking the members of the Society to pay certain
amounts. On 6-7-1973, this Court restrained the Society and
its Chairman from declaring any member a defaulter. On
13-8-1973, this Court directed that all the interim orders
passed in the writ petition should be confined to the 287
petitioners. On 16-8-1973, K.V. Johar filed a writ petition
in a representative capacity under Order 1 rule 8 of the
C.P.C. on behalf of all the members of the Society. On
17-8-1973, the nominated Managing Committee declared 321
members as defaulters. On 21-9-1973 this Court restrained
the Society from taking any steps in pursuance of the said
resolution. On an application made by respondent No. 6 the
stay granted in K.V. Johar’s petition was vacated.
However, application for vacating the stay order in Raj
Rani’s petition was not pursued.
On 6-1-1974 the nominated Managing Committee declared 39
members as defaulters for non-payment of dues and 42 members
as defaulters for not submitting the affidavits. On 25-1-
1974 the nominated Managing Committee decided to enrol 60
new members. On 26-1-1974 a confidential letter was ad-
dressed by respondent No. 6 to the Lt. Governor seeking his
approval to the enrolment of 60 new members and allotment of
plots to them. On the same day the Lt. Governor gave his
approval. Two C.M. Ps. were filed by the writ petitioners
challenging the declaration of the members as defaulters and
enrolment of 60 new member‘. This Court on 29-3-1971 di-
rected that all the papers including resolutions, original
applications and original allotments should be produced in
the Court. This Court also restrained the nominated Manag-
ing Committee by an injunction from taking any steps in any
manner. On 4-4-1974. this Court passed direction in respect
of some members who were declared defaulters and who had
made part payments either within the time prescribed or even
beyond the time prescribed. This Court also mentioned that
the allotment of plota to 60 new metal:era who were cha-
racterised as very important persons appeared
372
to have been made in undue haste and the persons on the
waiting list were not considered and that no notice was
given to persons inviting applications. This Court directed
that the list of 60 new members had to await final adjudica-
tionand also directed that no further steps should be taken
in the case of those 60 allottees. The Court also directed
that the cases of remaining 24 defaulters would be consid-
ered if it came to the conclusion that the allotment in
favour of 60 new members could not be allowed to stand.
Rule 24 of the Delhi Cooperative Societies Rules 1973,
requires a person to apply for membership in writing in the
form prescribed by the Society.His application is to be ap-
proved by the Managing Committee of the Society. He has to
fulfil other conditions laid down in the Act, the Rules and
the Bye-laws. Rule 25 provides that a person shall not be
eligible for admission as a member if he owns a residential
house or a plot of land for the construction of a residen-
tial house in Delhi. Rule 30 provides that on receipt of an
application for membership the Cooperative Society shall
enter particulars of the application in the register of
applications in the form mentioned therein. It also re-
quires the Society to dispose of the application received as
early as possible and in no case later than the expiration
of a period of one month from the date of receipt of the
application. Rule 30 further provides that the person whose
membership has been approved by the Managing Committee of a
Cooperative Society shall deposit the membership fee and the
amount of qualifying shares necessary to become a member
within 14 days of the passing of the resolution of the
Managing Committee approving the membership of the person
concerned. Bye-law 5 provides that every person seeking
membership of the Society shall sign a declaration to the
effect that he or his wife or any of his dependants does not
own a dwelling house or a plot in Delhi.
When the writ petitions came up for final hearing along
with the C.M.Ps. on 29-8-1974 this Court appointed Shri Deb
Brat Mukherjee as Chairman of the Society. The Chairman was
asked to scrutinise whether any person had been either
illegally brought in as a member or illegally removed having
regard to the rules, the bye-laws and the regulations of the
Society.
The Chairman restored the membership of the alleged default-
ers and published a tentative voters’ list. The Chairman
declared that out of the 60 new allottees 21 did not have
applications for membership and 38 were illegally admitted
and could not be included in the voters’ list. The chairman
said that the allotment of plots in their favour could not
be upheld. 11 persons out of the 60 new allottees filed two
C.M.Ps. in August 1976 praying for an injunction restraining
the chairman from holding elections. These applications
were filed without serving any party to the proceedings
contrary to the rules and practice of the court. On 23-9-
1976, the Chairman submitted his report.
Allowing the writ petitions,
HELD: 1. The date of the application, prescription of time
for deposit of membership fee and the amount of qualifying
shares, and the filing of the requisite declaration are
formalities which cannot be disregarded. The Chairman
rightly came to the conclusion that the new allottees could
not be treated as members. The new allottees were taken in
without considering the persons on the waiting list. It was
incumbent on the Society to act in accordance with clause 7
of the Lt. Governor’s award. The Managing Committee took 38
persons as members unlawfully. The declaration of default-
ers could not have been made except by the General Body
with a special majority and with the approval of the Regis-
trar. The nominated Managing Committee could not have
functioned after 1st April 1973 in view of the provisions of
s. 92 read with s. 32 of the Delhi Cooperative Societies
Act 1972. In view of the award of the Lt. Governor dated
6-7-1971 the Committee had no jurisdiction to declare any
member a defaulter. The act of declaration of defaulters
of 6-1-1974 cannot be dis-associated from the enrolment of
new allottees on 25th and 26th January 1974. The report of
the chairman in restoring membership to the 108 alleged
defaulters is just and correct. The circular dated 30-4-
1973 issued by the nominated Managing Committee is not a
notice within the meaning of
373
the bye-laws of the Society and the declaration of default-
ers on the basis of the circular is illegal and contrary to
the bye-laws of the Society. The circular was despatched
after the time for payment mentioned therein was over. No
opportunity was given to a member as required by the amended
bye-laws to show cause why his right to a plot would not be
forfeited. The order of this court dated 6-7-1973 continued
to be in force in so far as the petitionrs in Raj Rani’s
petition are concerned. Therefore, the declaration of
defaulters from amongst the petitioners in Raj Rani’s peti-
tion was unjustified. The action of the nominated Managing
Committee declaring defaulters was in bad faith because
they wanted to confer benefits on other persons in the guise
of declaration of defaulters. [381 A-B, D, E, H, 383A, D,
F, 384B-E]
The Chairman rightly came to the conclusion that out of
the 42 declarations of defaulters for not submitting
affidavit 30 members had genuine grievances. [384-F]
The Chairman rightly held that the 4 persons whose money
was lying with the Society should be made members. The
Chairman also rightly held that the 4 persons whose lands
had been acquired by the Society should be accepted as
members [385A-B]
The priority fixed by the Chairmaan about allotment of plots
is just. [385-C]
[The Court with a view to ensuring that the persons
mentioned in the Chairman’s report should get the reliefs
mentioned in the report held that those persons should make
fresh applications with affidavits through the Chairman ’and
the allotment of plots should be made in accordance with the
priority laid down by the Chairman.]
JUDGMENT
ORIGINAL JURISDICTION: Writ petition No. 340 of 1972.
(Under article 32 of the Constitution of India).
P.H. Parekh and Miss Manju Jetlcy, for the petitioners
in W.P. 340/72 excepting petitioner No. 59 and for petition-
ers in W.P. 1526/ 73.
Petitioner No. 59 in W.P. No. 340/72 in person.
Yogeshwar Prasad, S.K. Bagga, Mrs. S. Bagga and Miss
Yesh Bagga for the petitioner in W.P. No. 286/74.
Niren De, Attorney General in writ petition 340, Sardar
Bahadur Saharya and Vishnu Bahadur Saharya, for respondents
Nos. 1, 3, 4, 5 and 15 in W.P. 340/72 and respondents in all
the W.Ps.
K.J. John for M/s. J. B. Dadachanji & Co. for R.R. 2, 6,
8, 10, and 12 in W.P. 340 & 1526 and R.R. 6, 8, 9, 11 and 12
in W,P. 286/74.
S.K. Mehta, K.R. Nagaraja and P.N. Puri for R.R. 13-178
in W.P. 1526/73.
The Judgment of the Court was delivered by
RAY, C.J. This Court on 29 August, 1974 appointed Shri
Debabrata Mookerjee Chairman to convene, fix the date
and hold the meeting of New Friends Cooperative House Build-
ing Society Ltd. referred to as the Society in accordance
with the provisions of the Delhi Co-operative Societies Act,
1972. This meeting was direct-
374
ed to be held for the purpose of electing the members of the
New Managing Committee The Chairman was directed to look
into each and every disputed question of membership. The
Chairman was further directed to decide whether the persons
had been rightly or wrongly declared to be defaulters. The
order further directed that if the Chairman came to the
conclusion that the person had been wrongly declared to be a
defaulter, the Chairman would include him or her in the list
of members. The Chairman was also asked to give effect to
all orders of this Court already made in regard to persons
who were declared defaulters and who according to orders of
this Court on payment of moneys are not and cannot be treat-
ed defaulters. The Chairman was asked to go into cases where
money had been sent and not accepted. If the Chairman came
to the conclusion that money had been wrongly not accepted,
the Chairman would decide the same in accordance with Rules
and Bye-laws of the Society. There are further details in
the order dated 29 August, 1974.
In the order dated 29 August, 1974 Brij Mohan Malhotra
was given liberty to adduce proof before the Chairman that
the money was tendered Within time. If the Chairman came to
the conclusion that it was tendered in time, he would decide
in accordance with Rules and Bye-laws of the Society.
The Chairman was entitled to scrutinise whether any
person had been either illegally brought in as a member or
illegally removed, having regard to the rules, bye-laws and
regulations of the Society. Inder Bir Kaur alleged that she
had been illegally removed from membership. The Chairman
was directed to go into the question.
The order was made in two writ petitions No. 340 of 1972
and 1526 of 1973 and in a number of miscellaneous applica-
tions.
On 6 July, 1971 the Lt. Governor passed an award direct-
ing the Society to pay Rs.22 lakhs to the Delhi Administra-
tion. On 9 July, 1971 the Lt Governor by a notification
removed the elected Managing Committee and appointed a
nominated’ Managing Committee under Rule 56 of the Rules
made under the Bombay Cooperative Societies Act, 1925 here-
inafter referred to as the Bombay Act which applied to
Delhi. The term of the Managing Committee was for one year.
On 23 October, 1971 the nominated Managing Committee
passed a resolution to make the award rule of the Court. On
18 December, 1971 the nominated Managing Committee passed a
resolution for having direct sub-leases. On 22 January,
1972 the nominated Managing Committee called for more
funds. On 5 July, 1972 the Lt. Governor issued second
notification extending the term of the nominated Managing
Committee by two years.
The Society was the subject matter of two writ peti-
tions. 287 members of the Society filed writ petition No.
340 of 1972 hereinafter referred to Raj Rani’s petition.
The members challenged
375
the vires of Rule 56 of the Society on the ground that the
rule.was ultra rites section 71 of the Bombay Act and fur-
ther that the rule was bad on account of excessive delega-
tion. The petitioners contended that action under Rule 56
could not. be taken without complying with the provisions of
section 46A of-the Bombay Act which was applicable to. Delhi
at the relevant time. The petitioners also challenged some
notifications on the ground that the Lt. Governor having
exercised his powers once could not extend the term, In
short, it was said that the power of the Lt. Governor was
exhausted. The other challenges were that the notifications
were not speaking order and were made malafide. The broad
challenge in the petition was against the extension of term
of the Managing Committee. On 29 August, 1972 Rule Nisi
was issued.
On 30 April, 1973 the nominated Chairman of the Managing
Committee issued a circular asking the members of the Socie-
ty to pay certain amount. On 6 July, 1973 this Court
restrained the Society and its Chairman from declaring any
member a defaulter. ’On 13 August, 1973 this Court directed
that all the interim orders passed in the writ petition
should be confined to the petitioners in Raj Rani’s peti-
tion.
On 16 August, 1973 K.V. Johar filed a writ petition in a
representative capacity under Order I Rule 8 of the Code of
Civil Procedure. This is writ petition-No. 1526 of 1973
hereinafter referred to as Johar’s petition. On 20 August,
1973 this Court issued Rule Nisi in Johar’s petition.
On 17 August, 1973 the nominated Managing Committee
declared 321 members as defaulters. This Court on 21 Sep-
tember, 1973 restrained the Society from taking any steps
in pursuance of the resolution dated 17 August, 1973
against the petitioners and all other members of the
Society.
On 29 November, 1973 respondent No. 6 filed an applica-
tion in Johar’s petition for vacating the stay order granted
on 21 September, 1973. An application for vacating the stay
order granted on 6 July, 1973 in Raj Rani’s petition was not
pursued. This Court vacated the stay granted on 21 Septem-
ber, 1973 in Johar’s petition and granted a fortnight’s time
to make the requisite payment.
On 6 January, 1974 the nominated Managing
Committee declared 39 members as defaulters for non-payment
of dues, 42 members as defaulters for not submitting
the affidavits. This was one of the controversies which
formed the subject mattter of the enquiry made by the
Chairman.
On 25 January, 1974 the nominated Managing Committee
decided to enrol 60 new members. On 26 January, 1974 a
confidential letter was addressed by respondent No. 6 to the
Lt. Governor seeking his approval to the enrolment of 60 new
members and allotment of plots to them. On the same day,
the Lt. Governor addressed a letter to respondent No. 6
giving his approval. The enrolment of
8--1546SCI/76
376
new members on 25 January, 1974, the approval of the Lt.
Governor on 26 January, 1974 and the allotment of plots to
those 60 new members formed a big controversy which was
also enquired into by the Chairman.
Two Civil Miscellaneous Petitions No. 1683 and 1072 of 1974
challenging the declaration of defaulters and the enrolment
of new members were filed in this Court in February, 1974.
C.M.P.No.1683 of 1974 is in Raj Rani’s petition and
C.M.P.No. 1072 of 1974 is in Johar’s petition. This Court
on 29 March, 1974 directed that all the papers including
resolutions, original applications, original allotments
should be produced in this Court on 4 April, 1974. This
Court also restrained the Managing Committee by an injunc-
tion from talking any steps in any manner. On 4 April, 197
4 this Court passed directions in respect of persons who had
made part payments within the time prescribed or even beyond
the time prescribed not to be treated as defaulters.
This Court mentioned in its order that the allotment of
plots to 60 new members who were characterised by the
petitioners as very important persons appeared to have been
made in undue haste and the persons in the Waiting list
were not considered and that no notice was given to persons
inviting application. This Court directed that the said list
of 60 new members had to await final adjudication by. this
Court. This Court also directed that in case of 60 allot-
tees no further steps should be taken. This Court directed
that the case of 24 defaulters would be considered if it
came to the conclusion that the allotment in favour of 60
new members would be treated as defaulters.
In the order dated 4 April, 1974 petitioners No.
60, 46, 216, 171 and 165 in Raj Rani’s petition who paid in
part after due date were not to be treated as defaulters and
they were given four weeks time to pay the balance. It was
said that if they failed to pay the balance within the time
granted they would be treated as defaulters. Petitioners
No. 1,118, 43 and 287 in Raj Rani’s petition were stated to
have paid in full but after the due date. They were not to
be treated as defaulters. It was also said that if they
had not paid the full amount, they were also given four
weeks time for paying the balance,if any. If they did not
pay the balance within the time granted they
would be treated as defaulters.
In Johar’s petition S. Diwan, Virendra Singh, Dalip
Singh and Hari Singh were stated to have made payments in
part beyond time.Iqbal Khanna and H. Bhatia were stated to
have made payments in part within time. They were all
given four weeks time from the date of the order and in
default of payment within the time they would be treated so
defaulters. Ten other persons in Raj Rani’s petition and
14 persons in Johar’s petition were said not to have paid
within time. A list of 31 sons was handed up to this
Court by the petitioners. These 31 persons were alleged
to have been admitted as members and to have been allotted
plots. It was contended that this allotment is irregular.
These allotments were made on 26 January, 1974 to which
reference has already been made. It was
377
said that the list of 31 persons would await final adjudica-
tion. Ten defaulters in Raj Rani’s petition and 14 de-
faulters in Johar’s petition aggregating 24 defaulters were
to be considered at the time of final adjudication. It was
said that if the allotment in respect of 31 per-, sons could
not be allowed to stand then the cases of these 24 persons
would be considered.
In this back ground on 29 August, 1974 when the two writ
petitions filed by Raj Rani and K.V. Johar came up for
heating this Court appointed Shri Debabrata Mookerjee as
Chairman of the Society.
It may be stated here that some time in 1975 some one
started a suit against the Chairman to stop the enquiry by
him. The matter was brought to the notice of this Court.
Some malicious and baseless allegations were made against
the Chairman. Under these circumstances this Court direct-
ed notice to the respondent who filed the suit to show cause
why he should not be committed for contempt. The Chairman
was in the meantime asked to continue and he was directed
to look into each and every matter as mentioned in the
earlier orders.
The Chairman between 17 March, 1975 and 5 August, 1975
restored the membership of the alleged defaulters. On 26
April, 1976 tentative voters list was published. On 14
May, 1976 the Chairman informed the parties that election
would be held on 29 August, 1976. On 12 July, 1976 the
Chairman informed the parties that the election would be
held on 29 August, 1976 at Mavalankar Hall. On 27 July,
1976 the Chairman declared that of the 60 new members who
had been described as very important persons 21 did not have
applications for membership and 38 were not legally admitted
members and could not be included in the list. The Chair-
man said that the allotment of plots in their favour could
not be upheld. On 28 July, 1976 the list of members was
published. On 17 August, 1976 there was scrutiny of the
ballot papers.
On 24 August, 1976 11 persons out of the 60 persons who
were enrolled members on 25 January, 1974 and allotted plots
on 26 January, 1974 filed two Civil Miscellaneous praying
for an order restraining the Chairman from holding the
election on 29 August, 1976 These applications were held
without serving any party to the proceedings contrary to the
rules and practice of this Court. On 25 August, 1976 coun-
sel for those petitioners mentioned the applications before
the Court presided over by Khanna, J. asking that the
applications filed might be heard. It was also mentioned
without informing the parties. On 27 August, 1976 this
Court further adjourned the applications.
On 29 August 1976 the meeting was held and voting took
place at Mavalankar Hall.
On 23 September, 1976 the Chairman submitted his report
and give copies to the parties. On 15 October, 1976 11
persons who
378
had made the two applications for restraining of holding of
the election filed an application for adjournment of the
case for two months.
This Court cannot help observing two features. One is
that an attempt was made some time in the year 1975 to
restrain the Chairman from proceeding with-the enquiry by
filing a suit against him and making baseless allegations.
It is only because this Court took immediate notice of the
matter that the frivolous suit which had been filed in abuse
of process of court was put an end to. The second is that
on the eve of the election another attempt was made to.
restrain the Chairman from holding the election. These
facts. along with the attempt on the part of those 11 peti-
tioners to keep the matter adjourned for two months indicate
the persistent attitude on the part of some of those persons
to mark time for some oblique purposes.
In view of the importance of issues involved and the
gravity of the situation where interest of ordinary citizens
was-sacrificed to meet the interest of persons of importance
and influence that this Court took the aforesaid steps, in
order to put an end to the litigation and the controversies,
It was to be kept in the forefront that the Society is
not yet the lessee of the Government in respect of the land
which is to be allotted to the members. In Volume II in
Raj Rani’s petition No. 340 of 1972 appears the printed
memorandum agreement to be entered into between the Society
and the President of India in respect of land which will be
allotted to the members of the Society, On 3 August, 1967
the Deputy Secretary, Delhi Administration wrote to the
Secretary of the Society, inter alia, as follows: "I am
desired to make it clear that the list of members submitted
with your letter’ has been treated as final and no change in
that list can be made without prior written permission of
the Delhi Administration."
The printed memorandum of agreement has three recitals.
One of the racitals is that whereas the Society has depos-
ited with the Chief Commissioner the sum of Rs.41, 62,
456.61 and has further agreed to deposit with the Chief
Commissioner the additional sum or sums as hereinafter
provided, being the amounts agreed to be paid by the Society
to the President by way of premium for the grant to the
Society of the lease hereinafter mentioned which amounts,
pending the grant of the said lease, are to be a security to
the President for due performance by the Society of the
terms of the Agreement. It is agreed between the parties,
inter alia, as follows:--
1. The President hereby grants f0r a period of three years
commencing from 13 February, 1973 a licence to the Society
to enter upon the said land only for the purposes of making
surveys and taking measurements and levels for preparing a
lay-out plan.
VIII. Upon the completion of the development of the land in
accordance with the provisions contained herein and to the
satisfaction of the Chief Commissioner and issue by him of a
certificate to that effect
379
and provided that the other conditions of the Agreement
have been duly observed, the President will, in-.considera-
tion of the expenses incurred by the Society on the develop-
ment of the land and the payment of the premium and of the
yearly rent as herein provided and of the covenants on the
part of the Society to be;contained in the lease, grant to
the Society and the Society ,shall accept a lease of
such of the residential plots as may be determined by the
Chief Commissioner in ,his absolute discretion.
XV(a). After the execution and registration of the lease,
the Society shall sub-lease, within such time and on such
premium and yearly rent as may be fixed by the President,
one residential plot to each of its members who or whose
wife/husband or any of his/her dependent relatives including
unmarried children does not own, in full or in part, on the
free-hold or lease-hold basis, ,any residential plot or
house in the urban areas of Delhi, New Delhi or Delhi Can-
tonment and who may be approved by the Chief Commissioner.
Reference to the Agreement is necessary to show that the
Society is not yet lessee of the Government in respect of
the land. This is a mere agreement for the grant to the
Society of the lease. The Government refused to grant
lease. Thereafter the matter was referred to the arbi-
tration of the Lt. Governor. The Lt. Governor made an
award directing the Society to pay Rs.22,45,742/- as the
balance amount representing the cost of land.
In 1972 a supplementary agreement was made between the
President of India and the Society. One of the recitals in
that agreement mentions that the Society has not completed
the development of the land and the members of the Managing
Committee resolved that the Lt. Governor of Delhi be re-
quested to allow the members to pay their individual dues to
the Administration to evacute their sub-teases. This
recital indicates that there was an attempt on the part of
individual members to pay dues to the Society as well as to
the Government. It can, therefore, be seen that membership
of the Society and the allotment of lands are different
matters.
One of the main contentions before the Chairman was in
regard to membership of 60 persons. These 60 persons were
admitted to membership on 25 January, 1974. The Lt,
Governor approved of their membership on 26 January, 1974.
The Chairman found that of these 60 persons 21 had at one
time or another withdrawn their membership. 10 out of
those 21 had either never applied or never paid the requi-
site membership fee. The result, according to the Chair-
man, was that the cases of 39 persons were to be consid-
ered. The Chairman noticed that "many of these 60 persons
were highly placed Government officials and friends and
relations of persons prominent in public life." Another
allegation was that many of them happened "to be close
relations or friends and members of the nominated Managing
Committee."
At the meeting held on 27 July, 1976 the Chairman re-
ferred to Rules 24 and 30 of the 1973 Delhi Cooperative
Societies Rules. These
380
rules were under the Delhi Co-operative Societies Rules 1972
which replaced the Bombay Act 1925 in relation to the Union
Territory. These rules relate to conditions to be complied
with for admission to membership. Bye-law 5 of the Society
Bye-laws was also referred to by the Chairman.
Broadly stated, Rule 24 requires a person to apply in
writing in the form laid down by the Society for membership.
His application is to be approved by the Committee of the
Society. He has to fulfil other conditions laid down in
the Act, the Rules and the Bye-laws.
Rule 25 of the Delhi Co-operative Societies Rules, 1973
provides toter alia that no person shall be eligible for
admission as member of a co-operative society, if in the
case of membership of a housing society (1 ) he owns a
residential house or a plot of land for the construction of
a residential house in any of the approved or up-approved
colonies or other localities in the Union Territory of
Delhi, in his own name or in the name of his spouse or any
of his dependent children on lease hold or free hold basis;
(2) he deals in purchase or sale of immovable property
either as principal or as agent in the Union Territory of
Delhi; or (3) he or his spouse or any of his dependent
children is a member of any other housing society except
otherwise permitted by the Registrar. Rule 25(2) provides
that if a member becomes or has already become subject to
any disqualifications specified in sub-rule (1), he shall be
deemed to have ceased to be a member from the date when the
disqualifications were incurred.
Rule 30 deals with the disposal of application for admission
of members. The rule provides that on receipt of an
application for membership, the co-operative society shall
enter particulars of the application in the register of
applications in the form mentioned therein. The co-opera-
tive society shall dispose of an application received for
admission as member as early as possible and in no case
later than the expiration of a period of one month from the
date of receipt of the application by the Society. In case
of refusal to admit, such society shall communicate its
decision together with reasons thereof. The appeal to the
Registrar lies against the order for refusal to admit a
member. An important feature in rule 30 is the date of
receipt of application for membership because the applica-
tion is to be dealt with within one month. Rule 30(4)
provides that the person whose membership has been approved
by the Managing Committee of a co-operative society shall
deposit the membership fee, and the amount of the -qualify-
ing shares necessary to become a member, within 14 days of
the passing of the resolution of the Managing Committee
approving the membership of the person concerned.
Bye-law 5, inter alia, provides that every person seek-
ing membership of the Society shah sign a declaration to the
effect that he or his wife (she or her husband) or any of
his/her dependents does not own a dwelling house or plot in
Delhi and that he/she is not a member of any other coopera-
tive house building society.
381
Judged by these rules and considering the rival conten-
tions of the parties the Chairman found that of the 39 cases
there was only one case of N.K. Mukherjee M. No. 1526 which
fulfilled the requirements of the rules and the bye-laws and
the Chairman in his report declared him as having been
validly accepted as member. Out of those 39 persons 20
applications did not bear any date. The date of an applica-
tion, the prescription of time for deposit of the membership
fee and the amount of qualifying share and the filing of the
requisite declaration arc formalities which could not be
disregarded. The Chairman rightly came to the conclusion
that out of 39 persons except N.K. Mukherjee the other 38
were not legally admitted to the membership and, therefore,
they could not be treated as members.
The Chairman in paragraphs 9 to 16 of the Report consid-
ered the cases of several persons who. had been declared
defaulters. He rightly came to the conclusion that 108
persons mentioned in Annexure ’C’ should be restored to
membership.
The Chairman next considered whether there should be a
waiting list. A list of 102 persons described as the wait-
ing list was forwarded and endorsed by the officers of the
Delhi Administration. The Chairman came to the conclusion
that of the 102 persons on the list, only a few prosecuted
their claims before the Chairman and the rest appeared to
him to be no more interested in the membership of the Socie-
ty. In an annexure marked ’G’ the Chairman rightly included
in the waiting list the names of such persons who could be
considered.
The Chairman said that 38 persons whose membership was
cancelled by him at the meeting held on 27 July, 1976 could
apply afresh so that their applications could be considered.
The Chairman said that 24 persons made applications for
membership. The Chairman rightly said that it would be fair
to leave the consideration of the applications of these 24
persons to the new Managing Committee and that their names
should be kept in a waiting list.
The Chairman next found that the Society had received
from 4 persons deposits towards the price of the land more
than a decade ago but took no steps to return the moneys or
to admit them to the benefit of membership. Again, there
were 4 other persons whose land had been acquired by the
Delhi Administration. There was an agreement which required
the Society to offer membership to these persons upon their
fulfilling the conditions of membership. The Chairman
found that those 4 persons whose land had been acquired had
made applications. The Chairman tightly came to the conclu-
sion that these 8 persons, namely 4 from whom moneys had
been received and the other 4 whose land had been acquired
should be accepted as members.
Out of 38 persons whose membership was cancelled by the
Chairman on 27 July 11 applied to this Court in C.M.P. No.
2065 of 1976 for an order that admission of 124 members
mentioned in
382
Annexure ’C’ to the petition is illegal and for further
declaration of revocation of membership of 38 members as
mentioned in Annexure ’B’ to the said petition. These
petitioners also asked for an order directing the Chairman
not to proceed with the meeting of the Society and the
holding of elections on 29 August, 1976.
These 11 persons also made applications C.M.Ps. No. 8485
and 8486 for filing objections to the report of the Chair-
man. They wanted two months to file objections.
It should be stated here that 11 applicants wanted to
prevent the holding of the meeting and the election for the
purpose of prolonging litigation.
This Court rightly did not prevent the holding of the
meeting and the election. The report of the Chairman shows
that the meeting as well as the election was lawfully and
validly held.
These 11 persons were given full opportunity to make
their submissions by way of objection to the report. Coun-
sel appeared and made their submissions.
These 11 persons submitted that no relief can be sought
by the petitioners in the writ petitions against the Society
and that Article 19 cannot now be invoked for the enforce-
ment of rights. Their further submissions were these. On 6
January, 1974 39 persons were declared defaulters by the
Managing Committee for non-compliance with the order of
this Court passed on 11 December, 1973. One of those 39
defaulters made an application to this Court on 9 February,
1974 for condonation of delay and for restoration of his
membership. The application was dismissed on 25 February,
1974. On 4 April, 1974 this Court granted four weeks time
to 15 persons out of the 39 declared defaulters and there-
fore the default of 24 persons was confirmed. The Chairman
re-considered the cases of 24 defaulters including the one
whose application was dismissed. These 11 persons submitted
that their membership and allotment should have been
restored. The Chairman was also in error in considering the
cases of 8 persons because records were not available.
It is significant that out of 1100 members and the
several parties to the writ petitions none has taken objec-
tion to the report of the Chairman. The only persons who
objected are out of the 24 persons those membership and
allotment on 26 January, 1974 was cancelled. These 24 per-
sons have however been put by the Chairman in a waiting
list.
The membership as well as the allotment of plots to
these 38 persons is rightly rejected by the Chairman. The
Chairman based his finding on facts of tabulated statements
prepared in the presence of counsel and parties in open
public hearings. No challenge can be taken to the dates and
facts. The Chairman rightly found that even if the date of
the eligibility certificate is taken as the effective date
of application the position cannot be otherwise. The
Chairman rightly found that the records do not indicate that
the payment was
383
made within 14 days of the date of resolution. The Chairman
rightly found that the requirement of payment is not proved
and there has not been substantial compliance. The conclu-
sion is correct and inescapable that the enrolment of 38
persons was not only rushed but was done with unseemly
haste.
It also appears from the report of the Chairman that
persons the waiting list were not considered before these
38 persons were enrolled as members. Reference may be made
to clause (7) of the Award of the Lt. Governor which was
made the rule of Court. The award is dated 6 July, 1971.
Clause (7) made it encumbent on the Society to act in ac-
cordance with the award. There were some persons who were
treated by the new Managing Committee as defaulters and
these 38 persons were taken by the new Managing Committee
unlawfully as members.
The Chairman in Annexure ’C’ restored 108 persons to
membership. These 108 persons had been declared defaulters
by the nominated Managing Committee. This Court by order
dated 29 August, 1974 required the Chairman to look into
each and every disputed question of membership and to
decide as to whether a member has been rightly or wrongly
declared a defaulter.
The nominated Managing Committee on 6 January, 1974
declared a number of persons to be defaulters. The declara-
tion of defaulters could not have been made except by the
General Body with a special majority and with the approval
of the Registrar. The nominated Managing Committee could
not have functioned after 1 April, 1973 in view of the
provisions of section 92 read with section 32 of the Delhi
Co-operative Societies Act, 1972. In view of the award of
the Lt. Governor dated 6 July, 1971 the Committee had there-
after no jurisdiction to declare any member a defaulter.
This Court by order dated 4 April, 1974 observed that the
case of 24 defaulters would be considered if it transpired
that the list of new allottees could not be allowed to
stand. The act of declaration of defaulters on 6 January,
1974 cannot be dissociated from the enrolment of new
allottees on 25 and 26 January, 1974.
The report of the Chairman in restoring 108 alleged
defaulters to membership is just and correct. This Court by
Order dated 29 August, 1974 required the Chairman to look
into each and every disputed question of membership and to
decide whether a person has been tightly or wrongly declared
a defaulter. The order further stated that if the Chairman
came to the conclusion that the person has been declared to
be a defaulter the Chairman will include him or her in the
list of members. The report of the Chairman is lucid and
direct to the point. The report noticed that there was
widespread discontent as to the way in which the affairs of
the Society were conducted. The report said "Allegations of
favouritism want of fairplay, mal-administration, deliberate
suppression of the rights of members were freely made
against the nominated Managing Committee in 1971". The
Chairman noticed that there was "nothing to
384
choose between the old elected Committee which was super-
seded and the nominated Managing Committee which came to
take its place". Letters were hardly replied-to. En-
quiries were rarely attempted to. Cheques were hardly ever
cashed in time. Sudden declarations of default were made
without following the prescribed procedure laid down in the
Act and the Rules.
The nominated Managing Committee issued a circular dated
30 April, 1973 demanding Rs.6 per sq. yard and threatened
the members that in case they did not pay the said amount
they would be declared defaulters. This circular is not a
notice within the meaning of the bye-laws of the Society and
declaration of defaulters on the basis of the circular is
illegal and contrary to bye-laws of the Society. Further the
said circular was despatched after the time for payment
mentioned therein was over. No opportunity was given tog
member as required by the mended bye-laws to show cause why
his right to a plot would not be forefeited for non-payment
of deposit. Figures of alleged dues were not mentioned in
the circular in most of the case.
In view of the award of the Lt. Governor dated 6 July,
1971 the nominated Managing Committee could not declare, any
member to be a defaulter. Further the order of this Court
dated 6 July, 1973 continued to be in force, in so far as
the petitioners in Raj Rani’s petition are concerned. The
declaration of defaulters from amongst the petitioners in
Raj Rani’s petition was unjustified. The action of the
Managing Committee declaring defaulters was in bad faith
because they wanted to confer benefits on other persons
under the guise of declaration of defaulters.
This Court in the order dated 4 April, 1974, observed
that the cases of 24 defaulters would be considered if it
transpired that the list of allottees on 26 January, 1974
could not be allowed to stand. The Chairman has rightly
dealt with the cases of 24 defaulters in view of his right
conclusion that the allotments on 26 January; 1974 were bad.
The Chairman considered the cases of 42 persons who had
been declared defaulters. The Chairman rightly came to the
conclusion that 30 persons had genuine grievances and he
accepted them as members on their submitting fresh affida-
vits with a view to putting an end to all controversies
whether they filed affidavits of not. R was admitted
before the Chairman that all these persons had field their
affidavits originally while seeking membership. The ques-
tion was whether they filed any fresh affidavits as required
by the subsequent direction of the Delhi Development Author-
ity. Some of the members contended before the Chairman that
they filed amended affidavits. Some members contended that
in spite of their request to give the proforma of the amend-
ed affidavit the nominated Managing Committee did not give
the proforma of the affidavit. Under these circumstances
the Chairman rightly accepted the contentions of 30 out of
the 42 persons.
385
The Chairman rightly held that 4 persons whose money was
lying with the Society should be made members. The Chairman
also rightly held that 4 persons whose lands had been ac-
quired by the Society should be accepted as members.
The Chairman in paragraph 37 of the report has indicated
that the new Managing Committee should fix priorities in the
order mentioned in sub-paragraph (a) to (e). These in sub-
paragraphs (a) to (b) belong to classes of members in whose
favour there was specific allotment as early as the year
1957. Due communication was made to them about the specific
allotment of plots. They were persons who had paid more
than Rs.17,000. They were declared defaulters for non-
payment of Rs.3000 or less by the nominated Managing Com-
mittee as late as the year 1974. The Chairman rightly put
persons in sub-paragraphs (a) and (b) in order of priority.
Persons in sub-paragraph (c) in paragraph 37 of the
Chairman’s report comprise those who were declared default-
ers round about the year 1962-63. The amounts paid by
persons in sub-paragraph (c) are less than the amounts paid
by persons in sub-paragraphs (a) and ’(b). There was no
specific allotment of plots in favour of persons mentioned
in sub-paragraph (c). Persons in sub-paragraph (c) there-
fore cannot claim priority over persons in sub-paragraphs
(a) and (b). In sub-paragraph (c) only one person objected
regarding priority. The other 47 persons accepted their
places in sub-paragraph (c). This also shows the justness of
the report,.
Subject to the following directions, the report of Mr.
D. Mookerjee dated 23 September, 1976 is accepted and con-
firmed.
1. The Managing Committee of the New Friends Co-opera-
tive Society Ltd. (hereinafter called "the new Managing
Committee") elected at the meeting held on 29 August, 1976
shall assume charge with effect from the date of this order.
2. The new Managing Committee shall send to all persons
referred to in sub-paragraphs (a) to (e)of paragraph 37
of Mr. Mookerjee’s report, through Mr. Mookerjee, a letter
stating that membership fee and the amount of qualifying
share necessary to become a member of the Society and also
copies of this order as well as the appropriate forms of
application for membership of the Society and of the affida-
vits to be sent by the applicants to the new Managing Com-
mittee within one month from the date of this order.
3. Each person referred to in sub-paragraphs (a) to (e)
of paragraph 37 shall, if he desires to have any plot allot-
ted to him, apply for membership of the Society. All such
applications for membership of the Society shall be sent to
Mr. Mookerjee within 30 days. from the date of receipt of
the documents referred to in the next preceding paragraph
hereof. If any application is not received by Mr. Mooker-
jee within the said period, or if the affidavit referred to
in the next preceding paragraph is not enclosed with the
application, or if any application or affidavit be found by
Mr. Mookerjee to be
386
not in compliance with the form of the application and the
affidavit sent to the applicant, Mr. Mookerjee shah reject
such application. Such rejection by Mr. Mookerjee shall be
final.
4. All applications for membership along with affida-
vits, found by Mr. Mookerjee to be in order, will be for-
warded by Mr. Mookerjee to the new Managing Committee upon
the expiry of the said period of 30 days. Mr. Mookerjee
will make a list of the persons whose applications are so
forwarded by him to the new Managing Committee.
5. The new Managing Committee shall convene a meeting of
the Committee within 30 days from the receipt of the appli-
cations along with the affidavits sent by Mr. Mookerjee to
the new Managing Committee as aforesaid and pass a resolu-
tion accepting all such applicants for membership as members
of the Society.
6. The new Managing Committee shall convey to Mr. Moo-
kerjee its said resolution within 14 days of the passing of
such resolution and shall send to Mr. Mookerjee at least as
many copies of the resolution as the number of persons who
are admitted as members of the Society by virtue of that
resolution. Mr. Mookerjee will thereafter send a copy of
the said resolution to each of the applicants Who is admit-
ted as a member of the Society by virtue of the said resolu-
tion.
7. On receipt of the said communication from. Mr.
Mookerjee each person who has been admitted as member of the
Society by virtue of the said resolution shall, within 14
days from the receipt of the communication from Mr. Mooker-
jee, pay to Mr. Mookerjee by Bank Draft (drawn in favour of
"New Friends Co-operative House Building Society Ltd.") an
amount including the membership fee and the amount of quali-
fying share necessary to become a member of the Society.
Mr. Mookerjee will thereafter forward the Bank Drafts to
the new Managing Committee.
8. Regarding the allotment of plots, the suggestions
of Mr. Mookerjee contained in sub-paragraphs (a) and (b) of
paragraph 37 of his report will be given effect to by the
new Managing Committee, subject to the availability of plots
and subject also to each person referred to in the said two
sub-paragraphs and to whom any plot is allotted complying
with the direction contained in the preceding paragraph 7
hereof and further subject to each such person paying his
full share of the money payable to the Delhi Development
Authority under the Supplementary Agreement entered into
between the President of India and the Society on 1 Febru-
ary, 1972 by a Bank Draft drawn in favour of the Delhi
Development Authority".
9. The allotment of plots among persons referred to in
sub-paragraphs (a)and (b) of paragraph 37 of Mr. Mookerjee’s
report shall be in the order of priority mentioned there
and already earmarked for them. If plots which are already
earmarked for persons in subparagraphs (a) and (b) are not
available then there will be allotments to those persons
by draw of lots first among those in sub-
387
paragraph (c): and thereafter among those in sub-pargraph
(b). Mr. Mookerjee will prepare a list of persons to whom
plots are so allotted and send copies of,the list of the
new. Managing Committee and,the Delhi Development Authority
and inform the persons to Whom, such allotments are made.
10. Each person referred to in the said. sub-paragraphs. (a)
and (b) of paragraph 37 and to whom any plot is allotted
shall, within (b) days from the receipt of the communication
from Mr. Mookerjee as referred to reparagraph 6 hereof,
enquire from the Delhi Development Authority as to the sum
payable by him to the Delhi Development Authority as afore-
said and upon receipt of the reply from the Delhi Develop-
ment Authority pay the sum to the latter by a Bank Draft
within 15 days from the date of the receipt of the reply.
In default of such payment the allotment to him will stand
cancelled. In the event of any such cancellation allotment
may be made to the next person if any, in this sub-para-
graph.
11. Thereafter, if any plot or plots remain to be
allotted the allotment or allotments shall strictly be in
accordance with the order of priority laid down in paragraph
37 of Mr. Mookerjee’s report. Such allotments shall be made
by Mr. Mookerjee by means of draw of lots first among the
persons referred to in sub-paragraph (c) thereafter among
those in sub-paragraph (d) and thereafter among those in
sub-paragraph (e) of paragraph 37 of his report. Mr. Moo-
kerjee will prepare a list of persons to whom the plots are
so allotted and send copies of the list to the new Managing
Committee and the Delhi Development Authority and inform the
persons to whom such allotments are made. Any person
referred to in sub-paragraphs (c), (d) and (e) of Mr. Moo-
kerjee’s report who is allotted any plot shall within 14
days from the receipt of the communication from Mr. Moo-
kerjee to the effect that a particular plot has been allot-
ted to him enquire from the Delhi Development Authority as
to the sum payable by him to the Delhi Development Authority
as aforesaid and upon receipt of the reply from the Delhi
Development Authority pay the sum to the latter by a Bank
Draft within 15 days from the date of the receipt of the
reply. In default of such payment the allotment to him will
stand cancelled. In the event of any such cancellation,
allotment may be made to next person, if any, in that
subparagraph.
12. Each allotment of plot, referred to in this order,
shall be in accordance with the application of each appli-
cant for membership referred to in paragraph 3 hereof, that
is to say, will not be entitled to any allotment of any
land, the area whereof is different from the area mentioned
in his application form.
13. If any person referred to in any of the sub-para-
graphs of paragraph 37 of Mr. Mookerjee’s report has al-
ready paid any money to the Society and proves such payment
to Mr. Mookerjee, the money so paid and proved shall be
appropriated towards payment of the amounts mentioned in
paragraphs No. 7, 8 mad 11 hereof.
388
14. Upon allotment of land to any person mentioned in
this Report each allottee shall pay to the Society a sum of
Rs.1,000/- within one month from the date of such allotment
as and by way of costs relating to these proceedings. In
default of payment of such sum, the allotment to such
person shall stand cancelled. In the event of any such
default, the procedure laid down in paragraph 10 and 11
hereof shall be followed. To sum up. In the event of any
lucia default the allotment may be made to the next person,
if any, in the sub-paragraph group of the defaulting persons
and thereafter to next sub-paragraph group of persons.
No lease shall be granted to any allottee until and
unless all directions contained in this order are fully
complied with by him.
The Society shall pay to Mr. Mookerjee a further sum
of Rs.45,000/- as his remuneration for the work done by him
so far. The Society shall also pay Mr. Mookerjee a further
stun of Rs.5,000/for the work to be done by him under this
order and also such further sum or sums as he may intimate
to the new Managing Committee as extra expenses, including
remuneration for his staff, postage etc. for the work to be
done under this order. Mr. Mookerjee’s Personal Assistant
Mr. Jain will be paid Rs.300/- per month.
This order shall not apply to such members of the Socie-
ty who have already obtained leases from the President of
India.
This order will govern only the affairs of this Society
and will not be a precedent for the affairs of any other
co-operative society.
Some persons have deposited monies with the Registrar of
this Court. The Registrar may hand over the money to the
Society.
Writ Petition No. 340 of 1972, 1526 of 1973 and 286 of
1974 and all proceedings in these writ petitions are dis-
posed of accordingly.
All parties will pay and bear their own costs.
P.H.P. Petitions
allowed.
389