On 13th October 2022, the Supreme Court in a division bench consisting of Chief Justice Uday Umesh Lalit, Justice S. Ravindra Bhat and Justice J.B. Pardiwala observed that merely because one single member in minority disapproves of the decision, that cannot be the basis to negate the decision of the General Body, unless it is shown that the decision was the product of fraud or misrepresentation or was opposed to some statutory prohibition (The Bengal Secretariat Cooperative Land Mortgage Bank and Housing Society Ltd. Vs. Sri Aloke Kumar & Anr.)
Facts of the Case:
The Appellant Society purchased a parcel land along with two buildings erected on it on 18.07.1947. One of the buildings out of the two is used as the administrative building of the Society and the other building is used for the Girls School. Having regard to the fact that the administrative building is in a dilapidated condition and requires urgent repairs and renovations, it was felt by the Society sometime in the year 2001 that it would be more expedient to demolish the old structure. So, the society invited tenders through an advertisement published in the local dailies for the development of the administrative building through a joint venture with the developer. Hi-Rise Apartment Makers Private Limited was declared as the successful bidder. Society entered enter into an agreement with the Hi-Rise for the demolition of the old dilapidated building and construction of a new administrative building. Aloke Kumar, member of the society was terminated on the ground of having been found acting in a manner prejudicial to the interest of the society. The respondent 1 filed a dispute case before the Registrar of the Co-operative Societies. Not satisfied with the Resolution and the consequent termination of the contractual obligations with the Hi-Rise, he filed another dispute case challenging the said resolution. The Joint Registrar, Co-operative Societies (Housing) on 16.06.2011 accorded permission to the Appellant Society for the construction of Office-cum-Administrative Building pursuant to the Resolution passed in AGM. Respondent 1 instituted the Arbitration Execution case before the Civil judge Alipore court seeking execution of the award which was declared maintainable. Aggrieved by the same, society filed a civil revision before the HC against which an appeal is filed by the appellant society.
Contentions of the Appellant:
The counsel for the Appellant submitted that “final authority of a co-operative society under the Act 2006 is its General Body of Members or its elected representatives. High Court failed to appreciate one of the cardinal principles of the “Co-operative Movement” that the co-operatives are autonomous organisations and one single member of a co-operative society should not be allowed to hold the entire society at ransom only because of his own whims and caprice.” Court’s attention was drawn to Rule 21 of the West Bengal Co-operative Societies Rules, 2011and Section 28 of the Act 2006. “High Court failed to appreciate that there is nothing in the Act and/or Rules which would prevent a Society from taking a pragmatic and practical view of the situation in approaching Developers who would act in the benefit of the larger interest of the members of the Society. Respondent No. 1 unilaterally has been stalling the efforts of the Appellant Society to develop the administrative building for the last two decades contrary to the spirit of the very “Co-operative Movement”. Moreover, neither the resolution dated 27.05.2007 nor the permission granted by the Joint Registrar dated 16.06.2011 has been challenged by the Respondent No. 1.”
Contentions of the Respondents:
The counsel for the respondents submitted that “no error, not to speak of any error of law, could be said to have been committed by the High Court in passing the impugned order in exercise of its supervisory jurisdiction under Article 227 of the Constitution of India. There being no merit in the present appeal, the same may be dismissed.”
Observations and Judgement of the Court:
The Hon’ble court observed that “According to the HC, Neither the Act nor the Rules permits the society to ask a third party to develop its building, more particularly when the party has a commercial interest in the same, and the members on their own should have undertaken the commercial activity and that would have been in accordance with the co-operative spirit. On both the counts HC is not correct.” The court referred to the seven co-operative principles and also referred to the case Vipulbhai M. Chaudhary v. Gujarat Cooperative Milk Marketing Federation Limited. “It is not in dispute that the General Body of the Appellant Society, which is supreme, has taken up a conscious decision to redevelop the administrative building. The General Body of the Appellant Society has also resolved to appoint the Hi-Rise as the developer. Those decisions having not been challenged at all, the Respondent No. 1 being a member of the Appellant Society is bound by the said decisions. The redevelopment of the property is necessitated in view of the fact that the building is in a dilapidated condition with passage of time. The redevelopment thus, in our view, would be a requirement and a necessity and cannot be termed as business. The Appellant Society in such circumstances did not even require to carry out any amendment to the bye-laws or to include the “redevelopment of the buildings” as one of the objects of the Society before taking any decision to redevelop its property. The General Body took a conscious decision after due deliberations for many years to redevelop its property. Even with regard to the appointment of the “Hi-Rise” as the Developer, the record shows that it was decided by the General Body of the Society after examining the relative merits of the proposals received from the developers.”
The appeal was allowed and the judgement and order passed by the High Court was set aside.
Case: The Bengal Secretariat Cooperative Land Mortgage Bank and Housing Society Ltd. Vs. Sri Aloke Kumar & Anr.
Citation: Civil Appeal No. __ Of 2022 (Arising Out Of S.L.P. (Civil) No. 506 Of 2020)
Bench: Chief Justice Uday Umesh Lalit, Justice S. Ravindra Bhat and Justice J.B. Pardiwala
Date: October 13, 2022
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