Delhi Niwas Co-Operative Group ... vs Registrar, Co-Operative ...
1999 Latest Caselaw 404 Del

JUDGMENT

C.K. Mahajan, J.

1. Rule.

2. Heard.

3. The petition is directed against the order dated 7th December, 1998 passed by the Registrar disposing of the proceedings under Section 32 of the Delhi Co-operative Societies Act, initiated against the petitioner Society and order dated 12th February, 1999 passed by the Registrar, superseding the Managing Committee of the Society and appointing Shri Krishan Sethi, C.A. as the Administrator of the Society. The petitioner has prayed for quashing of the order dated 7th December, 1998 and 12th February, 1999 passed by the Registrar.

4. Petitioner No. 1 is a Co-operative Group Housing Society. It is not disputed that the Society is indebted to the Delhi Co-operative Housing Finance Corporation.

5. In 1994, the present Managing Committee was elected and took charge of the Society.

6. The respondent/Registrar of Societies issued a show cause notice to the petitioner Society on 23rd September, 1998 calling upon the Managing Committee of the Society to show cause as to why it should not be superseded. The following reasons were mentioned in the show cause notice :

(i) Whereas an order under Section 61(3) was passed by Mrs. Alka Diwan, Arbitrator vide Arbitration Case No. 23/JRI/GH/96-97/4413 dated 4.7.1997, that the Society shall initiate action under Rule 25 of the DCS Rules, 1973 against Shri P.C. Gautam, Secretary of the Society; and

(ii) Whereas a complaint has been received from Sh. Y.L. Sachdeva, member, that the Society is not implementing the order passed by Mrs. Alka Diwan passed on 1.7.1997 to initiate action against Sh. P.C. Gautam under Rule 25 of the DCS Rules, 1973; and

(iii) Whereas the Society was requested by this office vide letter dated 8.9.1998 to submit the action taken by the Society to cease the membership of Sh. P.C. Gautam, Secretary of the Society, as ordered by the Arbitrator under Section 61(3) on 1.7.1997, but the Society failed to respond to this letter;

(iv) Whereas the term of the Managing Committee of the Society expired on 23.11.1995 and requisition under Section 30(1) of the DCS Act, 1972 was issued on 8.7.1997 and Sh. Santu Ram, Head Clerk was appointed as Election Officer to conduct the election of the Managing Committee of the Society within 60 days.;

 (v)     Whereas Sh. Santu Ram, Election Officer has reported vide letter dated 11.9.1998 that inspite of several efforts, the Society failed to co-operate with the Election Officer;  
 

 (vi)    Whereas the Managing Committee of the Society has disobeyed the directions issued by this office and has defaulted in performance of its duties as per Act and Rules.   
 

7. The petitioner Society filed reply to the show cause notices and it was stated that the order dated 4th July, 1997 passed by Mrs. Alka Diwan was illegal and without jurisdiction. The Society could not be accused of not taking action against its members who were disqualified. The Society further contended that the directions issued by the Registrar have been vague arid there has been no default committed on its part in execution of it duties. Thereafter, the Registrar passed orders on 7th December, 1998, Annexure 'D' to the petition appointing Kartar Singh, Assistant Registrar to conduct the elections of the Managing Committee of the Society within 45 days of the issue of the order. The Managing Committee was directed to extend full co-operation to the members of the Society.

8. The Society was directed on 21st December, 1998 to furnish certain documents to the Election Officer. A representation was made on 28th December, 1998 to the Registrar, Co-operative Societies and a request was made for review of the orders appointing Sh. Kartar Singh and a prayer was made for changing the Election Officer, as according to the Society, the said Election Officer was biased and he tried to influence the proceedings under Section 59. The petitioner-Society in the meanwhile, sought extension of time for submitting the additional documents. The documents thereafter were submitted on 10th February, 1999 to the Registrar as well as the Election Officer. Thereafter, an order was passed by the Registrar on 12th February, 1999 superseding the Managing Committee.

9. It is contended by the learned Counsel for the petitioner that in terms of the provisions of Section 32 of the Act, the Managing Committee of any Co-operative Society making persistent default or is negligent in performing its duties under the Acts and the Rules or commit any act prejudice to the Society and its members, can be removed by the Registrar by an order in writing. It was further contended that in terms of Section 32(5) of the Act, before any action is taken in respect of a Co-operative Society, it is mandatory for the Registrar to consult with the financial institutions to which the Society was indebted. The petitioner contends that the Society was not negligent in any manner and nor was a persistent defaulter and the Managing Committee could not be removed by the Registrar on non-existent grounds. It was further submitted that the petitioner Society was not given any opportunity to raise its objections before passing the orders dated 12th February, 1999 nor did the respondent consult the financial institutions to which the Society was indebted in terms of Section 32(5) of the Act.

10. It is admitted by the Counsel for the respondents that the Society was indebted to the Delhi Co-operative Housing Finance Corporation.

11. The facts stated in the petition have not been controverted by the respondents.

12. By an order dated 17th March, 1999 as well as 28th April, 1999, the respondents were granted time to file the affidavit in opposition to the writ petition. A last opportunity was granted on 17th March, 1999 as well as on 20th April, 1999. On 28th April, 1999, another opportunity was granted to the respondents, subject to payment of Rs. 5,000/- as costs. Failure to file reply would entail forfeiture their right for filing the affidavit in respect to the writ petition and the contents of the petition shall be deemed to have been admitted.

13. During the course of the hearing, a statement was made by the Counsel for the respondent that they did not wish to file any reply.

14. In the circumstances, the facts stated in the writ petition stand admitted.

15. However, to cut the matter short, learned Counsel for the petitioner invited the attention of this Court to a decision of a Division Bench of this Court, , Capital Co-operative Industrial Society Ltd. v. Registrar, Cooperative Society, wherein it has been held that the consultation with the financial institutions is mandatory under Section 32(5) of Delhi Co-operative Societies Act. It is admitted by the respondents that there was no consultation with the financial institutions by the Registrar.

16. Following the aforesaid decision of the Division Bench, the writ petition has to be allowed. The petitioner must succeed in the given facts and circumstances of the case.

17. In so far as the prayer 'B' is concerned, the grievance no longer survives with the appointment of Mr. M. Mishra as the Election Officer.

18. Accordingly the order dated 12th February, 1999 is quashed and set aside.

19. The petitioner shall extend full co-operation to the Election Officer for holding the elections of the Society, as this was one of the grievance of the Registrar.

The writ petition is allowed.

No order as to costs.