Modern Coop. G.H. Socy. Ltd. vs Registrar Coop. Socy.
2002 Latest Caselaw 1527 Del

JUDGMENT

J.D. Kapoor, J.

1. As many as 27 members including respondents herein were expelled by petitioner-Society by Resolution dated 27.4.1987 on account of persistent defaults against demands. The society thereafter sent a proposal for approval of their expulsion to the Registrar on 20.2.1988 and meanwhile enrolled new members whose approval was also sought. Registrar allegedly did not take any action for grant of refusal of approval to expulsion till 1995 i.e. for seven long years. It was on 2.2.1996 that he ut the Society on notice and on consideration of the matter rejected its proposal for expulsion of the members by order dated 4.6.1996. The Society filed Revision against this which was dismissed by Financial Commissioner on 30.7.1996.

2. Feeling dissatisfied the Society filed a petition CW 3325/1996 which was disposed of remanding the matter to the Registrar for fresh consideration. Pursuant thereto Registrar passed order dated 26.8.1997 and declined approval of expulsion of only 13 members who were proceeded ex parte by him and rejected the expulsion of the remaining 14. The society took revision against this which was dismissed on 3.11.1997. It has now filed this petition for quashment of orders passed by Registrar refusing to grant approval for expulsion of all the respondents and order dated 3.11.1997.

3. Society's case in short is that Registrar's order has become void on account of his failure to grant or refuse the approval within six months from the date of receipt of proposal in terms of Rule 36 rendering the Registrar functus officio and as a consequence the proposal of the Society is deemed to have been approved. Rule 36(3) provides as under:

"36. Procedure for expulsion of members.

(3) When a resolution passed in accordance with Sub-rule (1) or (2) is sent to the Registrar or otherwise brought to his notice, the Registrar may consider the resolution and after making such enquiry as to whether full and final opportunity has been given under Sub-rule (1) or (2) give his approval and communicate the same to the society and the member concerned within a period of 6 months. The resolution shall be effective from the date of approval.

As is apparent, the Registrar is required to communicate his approval or rejection of the recommendations of the Society within a period of six months.

4. It is also submitted by learned counsel for the petitioner-society that even out of 14 members whose expulsion was rejected 10 members had taken back their share money implying that they had waived their right for membership as contemplated under Section 22 of the Act. Section 22 reads thus:

"22. Member not to exercise rights rill due payment made:- No member of a co-operative society shall exercise the rights of a member unless he made such payment to the society in respect of membership or has acquired such interest in the society as may be specified in the bye-laws."

5. As regards the contention that the members who had taken back their share money had waived their rights for membership, there appears to be force in this as Section 22 contemplates that no member of a Co-operative society shall be entitled to exercise the rights of a member unless he has made payments in respect of membership or he has acquired any interest in the society under its bye-laws. There are certain compulsory deposits prescribed under the bye-laws of the society which entitle a member toe exercise the rights of a member. For instance such deposits are membership fees, subscriptions to the share capital and other compulsory deposits as prescribed therein. Any member who was a defaulter or has failed to pay arrears due and demanded by the society is debarred from exercising his rights as a member. The members who had taken back their share money and other compulsory deposits made by them had not only ceased to be the members of the Society but they had waived their rights of membership as contemplated under Section 2 of the Act. Even those members who had committed defaults which in the instant case were persistent and continuous defaults were also debarred to exercise the rights of a member unless they had acquired such interest in the society as may be specified in the bye-laws.

6. As against this, Mr. R.S. Tomar, learned counsel representing private-respondents relied upon a decision of this court dated 12.3.1997 given in CW 3325/1996, (The Modern Co-operative Group Housing Society Ltd. v. The Registrar, Co-operative Societies, Delhi and Anr.) to show that expulsion on the face of its was bad as Registrar found that the Society had mismanaged its affairs and delayed the construction of flats for as good as 10 years in which situation private respondents had no obligation to pay the Society dues as no demand was raised against them.

7. First and foremost question that calls for determination is whether the Registrar had become functus officio on his failure to communicate his grant or refusal of approval of the recommendation of the Society expelling the respondents within the prescribed period of six months. Concomitant with this is the question whether inaction of the Registrar within the statutory period of six months culminated in 'deemed approval' of the expulsion of the members.

8. The Division Bench of this Court had the occasion of dealing with almost akin proposition in B.B. Chibber v. Anand Lok Cooperative Group Housing Society Ltd. and Ors. and took the view that to read into the provisions of Rule 36(3), 'deemed approval' is not legally permissible as it may construe that Registrar had not approved the action which in essence he may disapprove. It was observed:-

"That the obvious intention of the Legislature was that once the period of three months stipulated period expires, the Registrar becomes functus officio and his power to accord approval or disapproval to the resolution passed by the Society for expulsion of a member under Sub-section 91 of Section 36 of the Act lapses. It shows urgency which the legislature put in such matters but in no way the inaction of the Registrar can render the provisions otiose as ineffective though the desirability of his taking the decision within stipulated period cannot be lost sight off. Such a rule is always directory in nature and cannot assume the status of a mandate."

9. In the instant case Rule 36 does not provide that if the Registrar fails to give his approval or rejection and communicate the same to the Society within the period of six months the recommendation of the Society shall be deemed to have been approved. Had there been any such legislative intention such a provision would have found place in the statute itself. But such a provision is non-existant in the Statute.

10. The object of providing a specific period within which the authority is required to take decision is to inject speed in decision making process and to eliminate the delay, deep seated civic apathy and keep the authorities on tenter-hooks for expediting the process and keep them awake before they go into soporific slumber.

11. There is no denying the fact that inordinate delay taken by the authority in site of prescription of a particular time within which it is expected to take the decision is undesirable but is not fatal in its effect. Nor does the delayed action render the authority functus officio. Any authority vested with the power to take decisive action within a stipulated period and from whose decision emanates the remedy for redressal of the grievance, the concerned authority cannot be divested of the official power to act or can such an authority be prevented from exercising that power. It is only after taking a decision under the statute that such an authority becomes functus officio unless and until it is vested with the power to review its decision. In other words, till the statutory authority fulfills its obligation of an office and ends or exhausts its exercise of power it cannot become functus officio unless law prescribes a dead line for this.

12. Thus by no stretch of imagination would the contention that the failure of the Registrar in not communicating the decision of either grant or refusal of the recommendation within the prescribed period of six months would render the Registrar as a functus officio or have the effect of deemed approval of the recommendations of the Society become acceptable.

13. However, in the instant case the delayed action of the Registrar is to be viewed in the perspective of its facts. According to respondent No. 1 Registrar after receiving the request, directed the Society to produce the relevant records for verification but it failed. The Society was given various opportunities. On 28.3.1998 Society produced certain records and it was found that there are certain defaulters whose names were not approved by the General Body and as such society was directed to give names of such members to which society did not give any response and therefore reminders were issued. In spite of producing the relevant records of the Society, the society sent only list of newly enrolled persons. Again on 1.11.88 society was ordered to produce relevant records for verification followed by reminder dated 26.1.88. The society did not allow the official of the Registrar to verify the records. Thereafter several opportunities were given to the Society which finally submitted the records on 19.9.1995.

14. Let us assume the delay was partly attributable to the Society. Even if the Society does not respond to the communication of the Registrar nor does it produce the required documents, Registrar is not prevented from taking the decision one way or the other within a prescribed period and if he fails to take such a decision within reasonable period beyond the prescribed period the inference of approval of the recommendation is likely to be drawn. In this case the Registrar has taken aslong as 8 years in conveying the rejection of the proposal of the society. This inordinate long delay can't assume as a reasonable period for which Society was expected to wait.

15. Thus inordinate delay of about 8 long years taken by the Registrar in communicating either grant or refusal of its approval is neither compoundable nor excusable even if part of the delay was attributable to the Society. No Society muchless the petitioner-Society which is a Housing Society could be allowed to remain in limbo for such along period due to indecision of the Registrar. It could be not only ruinous to the interests of the Society but also would put its members who had been regularly making the payment of the Installments from time to time at the receiving end and at the mercy of those who had persistently defaulted in making the payments.

16. In the given facts and circumstances one can easily invoke the doctrine of deemed or inferred approval of the proposal of the Society for failure of the Registrar to communicate his decision within a reasonable period which, in our view should be one year from the receipt of Society's proposal as prescribed period is of directory and not mandatory nature. We are holding so because defaulting members cannot be allowed to hold the Society and the non-defaulting members to ransom. Society has to survive and carry on which it can't do without the co-operation of each and every member which includes regular payments of Installments by them as this is the only source for raising funds to fulfill its objects.

17. Defaulting members cannot be allowed to enjoy the fruits and claim the allotment of those flats which have been constructed with the finance of the members enrolled in their slots. No society can be faulted or put in the dock for the delinquent act or remissness of the authority which in this case is the Registrar. It is the defaulting member who has to bear the brunt and not those who have been rule abiding and regular in making payments and who have accelerated the process of construction of flats which is the ultimate goal of a Housing Society. Any lenity or sympathy towards a defaulting member is misplaced.

18. Even on merits the order of the Registrar cannot stand. The expulsion of 14 members was rejected mainly on the ground that the affairs of the Society were mismanaged by Mr. C.D. Garg who was father of the Secretary of the Society Mr. Sanjay Garg and as a consequence there was no development in the Society though turnover of members was large and the new members were waiting for enrolment after recommendation of expulsion.

19. It appears that the Registrar digressed and diverted himself from the actual enquiry i.e. whether the expelled members had committed persistent defaults or not. He was required to see whether the expelled members were discriminated against with a view to induct new member. The observations of the Registrar are based on surmises and conjectures and not on the basis of the records produced by the Society nor on the aspect of alleged defaults committed by the members that entailed their expulsions. The Financial Commissioner also fell in error by upholding the same. It is surprising that the Registrar and the Financial Commissioner did not deal with the matter in a proper and desired perspective in spite of matter having been remanded by this Court to the Registrar for fresh consideration.

20. No wonder that the Society laboured under the belief that in the absence of communication by the Registrar for such a long time about their recommendation for expulsion of the members had effect of 'deemed approval' and therefore they inducted new members who were cleared after verification by the Registrar and so much so also recommended for allotment of flats to them and that it was with their money that the society was able to complete the construction.

21. All this seems to have been overlooked by the Registrar while rejecting the expulsion of the members that too after about 8 years. Merely because the Society did not co-operate with the Registrar does not mean that the Registrar was prevented from taking action in accordance with the provisions of law for non-cooperation and for non-furnishing of requisite details by the Society. The Registrar cannot abjure his obligation of granting or refusing the approval of the recommendation of the Society within the reasonable period if not within prescribed period of six months which is directory and not mandatory in nature.

22. Having examined the matter from all possible angles we feel persuaded to set aside the order of the Registrar as well as the impugned order. In the result the petitioner succeeds and expulsion of all the 27 members shall stand approved.