Smt. Kusum Lata Gupta And Ors. vs Registrar Cooperative Societies ...
2007 Latest Caselaw 184 Del

JUDGMENT

Mukundakam Sharma, C.J.

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1. These writ petitions are similar in nature and they involve identical questions of law and facts and, therefore, they are being disposed of by this common judgment and order.

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2. The principal issue which arises for consideration in these writ petitions is whether or not the respondent societies could charge any gate money / entry fee / development fund / transfer fee / common good fund from the bona fide purchasers, who had purchased the flats from the original members of the society. Almost all the respondent societies concerned have charged from the petitioners herein, who are purchasers of flats from the original members of the society, charges of the aforesaid nature of various amounts ranging up to about a lac of rupees, from each of the purchasers of the flats so as to make them members of the society.

3. The petitioners herein have purchased flats on execution of relevant documents / conveyance deeds from the original members of the respondent societies. Their contention is that they had purchased the aforesaid flats as bona fide purchasers on payment of consideration / amount and upon execution of relevant documents / conveyance deeds as required. Their further contention is that the vendors, namely, the original owners and allottees of the flats had transferred all their rights in the aforesaid flats to them by executing relevant documents / conveyance deeds and that the said petitioners have stepped into the shoes of the original members. It is stated that despite the aforesaid fact, a demand has been made on behalf of the various societies for payment of gate money / entry fee / development fund / transfer fee / common good fund from the said purchasers of the flats before letting them in. The aforesaid action on the part of the societies is challenged in these writ petitions on the ground that they are violative of the directives issued by the Registrar, Co-operative Societies on 14.12.1999 and 10.10.2001, apart from being otherwise illegal and without authority of law. The reliefs that are sought for by the petitioners are of quashing of the aforesaid demands made from the petitioners by the societies and for refund of the entire amount paid by them, amounting to one lac of rupees or more, each with interest accrued thereon. Various societies, who are also parties herein, have taken up a plea in all these writ petitions that the directives issued by the Registrar, Co-operative Societies on 14.12.1999 and 10.10.2001 are without jurisdiction as there is no power vested on the Registrar, Co-operative Societies to issue such directives under the provisions of Rule 77 of The Delhi Co-operative Societies Rules, 1973.

4. It was submitted on behalf of the societies, that the societies are not carrying out any business in construction and allotment of the flats and also in carrying out the maintenance of the said flats, particularly, when no profit making is involved in carrying out such activity. It is also the case of the societies that the General Body of the society is the supreme authority as envisaged under the provisions of the Act and, therefore, the Registrar has no power and authority to sit over or to scrutinise the demands made by the societies from its members, which is an internal matter of the societies and their members.

5. We have heard the learned Counsel appearing for the parties, who have taken us through the pleadings of the parties and also the relevant laws including the various decisions, which they have relied upon, during the course of their arguments.

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6. Having analysed and scrutinised all the facts and circumstances and the laws relied upon by the counsel appearing for the parties, we propose to dispose of all these writ petitions by giving our reasons.

7. In order to appreciate the contentions of the counsel for the parties, it would be appropriate to refer to and extract the relevant portions of the notifications dated 14.12.1999, 10.10.2001 and 9.10.2002.

Notification dated 14.12.1999 Therefore, I, R.K. Srivastava, Registrar Cooperative Societies make it clear that none of the provisions of Delhi Cooperative Societies Act, 1972 and Delhi Cooperative Societies Rules, 1973 empower for charging any amount on account of ?Entry Fee? in any form whatsoever and accordingly, I, in exercise of the powers conferred upon me under Rule 77 of Delhi Cooperative Societies Rules, 1973 do hereby direct all the Cooperative Group Housing / House Building Societies not to charge any 'Entry Fee' from the persons eligible for taking the possession of flat / plot in the respective Cooperative Society. Violation of this directive will be viewed seriously and the President/Secretary of the concerned society would be held responsible jointly and individually. Action will be taken against the society under the provisions of the Act and Rules for any such violation.

Notification dated 10.10.2001 Therefore, I, N. Diwakar, Registrar : Cooperative Societies in exercise of powers conferred upon me under Rule 77 of Delhi Coop. Societies Rule, 1973 do hereby direct all the management Committee of Cooperative Group Housing/House Building Societies not to take Entry Fee in the name of Development Fund, Transfer Fee, Common Good Fund or any other fee from the Power of Attorney holders. Violation of this directive will be viewed seriously and the Management Committee of the concerned society would be held responsible jointly and individually. Action will be taken against such society under the provisions of the Act and Rules for any violation of the directive.

Notification dated 9.10.2002 Therefore, I.N. Diwakar, Registrar, Cooperative Societies, Delhi in exercise of power conferred upon me under Rule 77 of Delhi Cooperative Societies Rules, 1973 do hereby direct all the Managing Committees of Cooperative Group Housing/House Building Societies not to charge Entry Fee in the name of Development Fund, Transfer Fee, Common Good Fund or any other name from the Power of Attorney holders/the persons eligible for taking possession of flats/plots in the respective Cooperative Societies. Violation of this directive would tantamount to the contempt of the orders of Hon'ble High Court and the Managing Committee of the society concerned would be held responsible jointly and individually for the non-compliance of the same.

8. A bare perusal of the aforesaid directives issued by the Registrar, Cooperative Societies would indicate that the said directives were issued by the Registrar, Cooperative Societies under the purported exercise of power vested Page 0581 on him under Rule 77 of the Delhi Cooperative Societies Rules, 1973. Exercise of the power of the aforesaid nature is also under challenge in these writ petitions. Rule 77 of the Delhi Cooperative Rules, 1973 provides as follows:

The Registrar may, from time to time, issue such directives as he considers necessary for the successful conduct of the business of a co-operative society or class of co-operative societies.

9. The aforesaid Rules have been framed under the rule making power provided under the Delhi Co-operative Societies Act, 1972. It is, however, relevant to mention that the aforesaid Delhi Co-operative Societies Act, 1972 has since been superseded by the enactment of "The Delhi Co-operative Societies Act, 2003".

Chapter IX of the said Delhi Co-operative Societies Act, 2003 lays down special provisions for co-operative housing societies. Section 91 provides for special provision for regularisation of occupancy right of persons who have acquired such a right through the instrument of power of attorney or agreement for sale.

It further lays down that any person who has acquired property on occupancy right in a co-operative housing society through the instrument of power of attorney or agreement for sale would have the opportunity to become member of the concerned co-operative housing society where the property exists, by getting the property converted from leasehold to freehold and on paying the transfer fee to the concerned co-operative housing society along with dues, including the dues of the apex or financial institution, if any. The amount which is liable to be paid, which is termed as transfer fee, would be ten thousand rupees or as may be revised by the Registrar from time to time. As it appears, the aforesaid amount of ten thousand rupees is levied and payable as transfer fee for becoming a member so as to enable such person to have access to the services provided by the Committee, namely, the use of community hall, swimming pool or any other common facilities available to the members or the use of common parking spaces provided by the co-operative housing society. The aforesaid facilities would become available to such a member or to such a person, who has acquired a right over the property through an instrument of power of attorney or agreement for sale, by becoming a member of the said society. The aforesaid provisions of the Act came in force w.e.f. 1st April, 2005 and, therefore, all matters and demands to be made as transfer fee for becoming a member would only be governed by the aforesaid provisions. However, the issues that arise for consideration in the present cases are matters where cause of action has arisen prior to 1.4.2005, but subsequent to 14.12.1999 when the Registrar, Co-operative Societies issued the aforesaid directive under the provisions of Rule 77 of the Delhi Co-operative Societies Rules, 1973. It is true that at that relevant time, provisions like Section 91 were not explicitly contained either in the Delhi Co-operative Societies Act, 1972 or in the Rules framed there under. In that view of the matter, it was submitted on behalf of the societies, who are represented before us, that there being no such provision either in the Act or in the Rules limiting and restricting the amount of entry fee to only ten thousand rupees, it was open for the societies to realise and charge an amount of more than Page 0582 ten thousand rupees and even to the extent of one lac rupees and/or any such amount fixed by the General Body of the society, which is the supreme body under the provisions of the Act. The Registrar, Co-operative Societies issued successive directions under Rule 77 of the Delhi Co-operative Societies Rules, 1973, which were considered by this Court in various earlier decisions of this Court.

10. In this connection, we may refer to the decision of the Division Bench in Devinder Gupta and Ors. v. Registrar of Cooperative Societies and Ors. (CW No. 5726/2000 decided on 4th September, 2002) reported as 99 (2002) DLT 741. In the aforesaid case, the Division Bench of this Court, upon reference to the aforesaid directives of the Registrar, Co-operative Societies, clearly mentioning that the society would not charge any entry fee from the person eligible for taking possession of the flat in the society, held that charging of any entry fee is illegal. We may also refer to the decision in Dr. Rakesh Kishore v. Registrar of Coop Societies and Ors. reported as 2003 IV AD Delhi 641. In the said decision, the Division Bench referred to earlier orders passed in various other cases, namely, order dated 9.8.2002 in CWP No. 524/1998, order dated 12.8.2002 in CWP No. 2110/2001 and order dated 4.9.2002 in CWP Nos. 5726/20000 and 5898/2000.

11. We have perused the aforesaid judgments delivered by other Division Benches of this Court. We may extract the operative portion of the judgment in Dr. Rakesh Kishore (supra), which reads as follows:

13. The directive of the Registrar of Cooperative Societies is clear and specific that the charging of entry fee in any form is illegal. It is also mentioned in the directive that the violation of this directive will be viewed seriously and the President / Secretary of the concerned society would be held responsible jointly and individually and the action will be taken against the society under the provisions of the Act and the Rules for any such violation. It is abundantly clear that the amount of Rs. 50,000/- was not paid voluntarily by the original allottee but was charged by respondent No. 3 from the petitioner in a clandestine manner. Respondent No. 3 has resorted to totally illegal practice by demanding entry fee from the petitioner and other similarly placed persons. Consequently respondent No. 3 is liable to refund the amount of the petitioner forthwith....

12. The aforesaid ratio laid down by the Division Bench of this Court was subsequently followed in the decisions of this Court in Devinder Gupta and another (supra) and also in Captain Kapil Raina v. Delhi Development Authority and Ors. reported as Incidentally, the Special Leave Petition filed as against the decision of Capt. Kapil Raina (supra) by the aggrieved society was also dismissed by the Supreme Court vide order dated 9.1.2003 passed in SLP(C) No. 24506/2002 entitled Navkunj Coop. Group Housing Society Ltd. v. Registrar of Coop. Societies and Ors. Imposition of entry fee, whether by giving it a nomenclature of gate money / entry fee / development fund / transfer fee / common good fund, was held to be illegal in all the aforesaid decisions as the same was levied and claimed in violation of the directives issued by the Registrar starting from 14.12.1999.

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13. The petitioners herein, who are purchasers of the flats from original members, submitted before us in one word that they are willing to make payment of Rs. 10,000/- as transfer fee or some other reasonable amount fixed by this Court so as to enable them to enjoy the common benefits like those mentioned in Section 91 of the Delhi Co-operative Societies Act, 2003.

14. Despite the aforesaid clear judgments of this Court, one of which was also taken to the Supreme Court wherein the Special Leave Petition was dismissed, counsel appearing for the societies submitted before us that the said decisions did not consider or did not deal with the issue and contention of lack of power and jurisdiction on the part of the Registrar, Co-operative Societies to issue a direction under Rule 77 of the Delhi Co-operative Societies Rules, 2003. It was submitted that the directives could be issued by the Registrar under the aforesaid provisions only for the purpose of successful conduct of the business of the co-operative societies. While levying or demanding the gate money / entry fee / development fund / transfer fee / common good fund, the society never entered into any business nor was the same demanded for conducting business of the societies and, therefore, the Registrar, Co-operative Societies could not have issued any such directives restraining the societies from levying such charges. However, before answering the aforesaid issue, which is raised, it would be appropriate to mention that legality and validity of the aforesaid circulars and the directives issued by the Registrar were never questioned by any of the societies represented before us at any forum and, therefore, the said directives are in operation and govern the issue.

15. The Registrar, Co-operative Societies is vested with the power and jurisdiction to oversee management of the society and if there be any case of mismanagement, the Registrar is empowered to take action against the defaulting society. The activity which is being carried out by the society is for the welfare of the members in the spirit of co-operative movement. There is no bar on transfer of the flat by the allottee of a flat to a third party and when such a sale takes place by way of execution of transfer deed or agreement for sale, the purchaser of the flat steps into the shoes of the original occupier as he comes into the occupation of the said flat by virtue of the aforesaid transfer. By virtue of the aforesaid transfer, he also becomes entitled to use and occupy the flat and for doing so, he is also entitled to user of the common facilities including those facilities which are mentioned in Section 91 of the Delhi Co- operative Societies Act, 2003. The society may ask for and demand payment of a reasonable amount from the said transferee of a flat for making available to him all those aforesaid facilities, but there could not be any justification for demanding an amount, which is not commensurate with the object sought to be achieved. If some development is to take place in the society, monetary contribution towards the same is required to be made by all the members of the society and not only by few members who have acquired the property subsequent to the original allottees.

16. We find no reasonable justification for demanding amount equivalent to about a lac of rupees for inducting a transferee as a member of the society. The business of the society is to construct flats and make allotment of the Page 0584 same to its members. One of the other businesses of the society is to provide for and maintain the common facilities available to all the members. In our considered opinion, the submission of the counsel appearing for the societies is counter productive, for, if maintenance of common utility services is not the business of the society, in that event they have no power and jurisdiction to charge even a penny from the transferee.

17. Be that as it may, we find no reason to take a different view than what was taken in the earlier decisions of this Court even after taking notice of the provisions of Rule 77 of the Delhi Co-operative Societies Rules, 1973. In our considered opinion, the submission of the counsel for the respondent societies that no directive could be issued by the Registrar of Co-operative Societies under Rule 77, is misconceived and unjustified. The respondent societies could not have demanded or levied a hefty amount of rupees one lac and above from those transferees. Accordingly, we direct that Rs. 10,000/- shall be paid by each of the transferees towards transfer fee as agreed to by all of them and the balance amount, if any, standing in the credit of the members of the society shall be appropriated towards any present or future dues payable to the society and the remaining amount, if any, shall be refunded by the concerned societies to the individual members within a period of two months from today failing which, interest @ 9% shall be payable on the said amount from the date of default.

18. In terms of the aforesaid order, these writ petitions stand disposed of.