Mayurdhwaj Cghs Ltd vs Registrar Cooperative Societies ...
2009 Latest Caselaw 4801 Del

                THE HIGH COURT OF DELHI AT NEW DELHI

%                                          Judgment delivered on: 24.11.2009

+      WP (C) 6807/2008

MAYURDHWAJ CGHS LTD                                              ...    Petitioner

                                      - Versus -

REGISTRAR COOPERATIVE SOCIETIES & ORS ...                              Respondents

Advocates who appeared in this case:-

For the Petitioner          : Mr S.K. Kaushik
For the respondent No.1     : Mr Anil Sharma for Ms Sujata Kashyap
For the Respondent No.3     : Mr R.S. Tomar

CORAM:-
HON'BLE MR. JUSTICE BADAR DURREZ AHMED
HON'BLE MS. JUSTICE VEENA BIRBAL

1. Whether Reporters of local papers may be allowed to see the judgment ? Yes

2. To be referred to the Reporter or not ? Yes

3. Whether the judgment should be reported in Digest ? Yes

BADAR DURREZ AHMED, J (ORAL)

1. This writ petition has been filed by the Mayurdhwaj Co-operative

Group Housing Society Limited (hereinafter referred to as „the society‟),

being aggrieved by the order dated 19.02.2008 passed by the Delhi Co-

operative Tribunal in an appeal under Section 112 of the Delhi Co-operative

Societies Act, 2003 (hereinafter referred to as „the 2003 Act‟), which, in

turn, was directed against the order passed by the Registrar of Co-operative

Societies on 20.11.2006 under Sections 60 and 61 of the Delhi Co-operative

Societies Act, 1972 (hereinafter referred as „the 1972 Act‟). By virtue of the

order dated 20.11.2006 passed by the Registrar of Co-operative Societies, it

was held that the respondent No.3 (Satish Kumar Gupta) was not entitled to

be considered as a member through nomination made by Late Shri Ram Lal

Dhamija on the ground that the said respondent No.3 was neither a blood

relative of the said Late Shri Ram Lal Dhamija nor was there any proof of

inheritance provided by the said respondent No.3.

2. The Delhi Co-operative Tribunal set aside the order dated 20.11.2006

passed by the Registrar-Co-operative Societies and directed the petitioner

society as well as the Registrar of Co-operative Societies to accept the

respondent No.3 (Satish Kumar Gupta) as a member and to allot him a flat in

the society at the earliest after he completed the formalities, if any. The said

Tribunal found that there was no requirement of a nomination being made in

favour of a blood relative under the 1972 Act. The Tribunal also found that

the society had earlier already accepted the respondent No.3 as a member

and that it was only after a lapse of nine years that the society refused to

allot him a flat and, that too, only because the Registrar of Co-operative

Societies had not accepted him as a member.

3. We may also note that in the order dated 20.11.2006, the Registrar of

Co-operative Societies, while rejecting the respondent No.3‟s claim to

membership through nomination, also took the view that if the transfer of

membership in such circumstances was allowed to be made in favour of the

nominee without verifying the documents relating to proof of inheritance or

any other legal documents submitted by the nominee, then the sale of flats in

the co-operative group housing societies was likely to take place through this

"back door channel" without any payment of stamp duty on the transfer of

documents as everybody would be able to nominate the purchaser and the

nomination could also be changed by any member at any moment during his

life time. According to the Registrar of Co-operative Societies, this would

give rise to transfers of membership without payment of any stamp duty /

Government fees and which would be exploited by the builders / property

dealers in the co-operative group housing sector.

4. We may state straightaway that this is an absurd and illogical

conclusion arrived at by the Registrar of Co-operative Societies inasmuch as

the nomination only takes effect on the death of the person who nominates.

Furthermore, a person dies only once. Therefore, the apprehensions on the

part of the Registrar of Co-operative Societies are not only misplaced but are

also illogical. The Tribunal, examining this situation, has also rightly

disagreed with the said conclusion of the Registrar of Co-operative

Societies.

5. The facts of the case are that Late Shri Ram Lal Dhamija was a

member in the petitioner society and he had initially paid some money to the

society. At the time of enrolment itself, he had indicated the name of the

respondent No.3 (Satish Kumar Gupta) as his nominee. Late Shri Dhamija

passed away on 05.01.1989 and immediately thereafter, the respondent No.3

approached the petitioner society for transferring the membership in his

name on the basis of the said nomination. The request was accepted by the

society through its resolution dated 28.03.1989 and the society started

demanding money for the cost of construction from the respondent No.3. As

and when the demands were made, the respondent No.3 met the demands of

the society. It may be pointed out that the society had also forwarded the

name of the respondent No.3 to the Registrar of Co-operative Societies for

inclusion of his name in the draw of lots. Since the Registrar of Co-

operative Societies insisted on obtaining certain documents with regard to

proof of inheritance and blood relationship and the same were not

forthcoming, the Registrar of Co-operative Societies took the stand that the

transfer by way of nomination in favour of the respondent No.3, not being

amongst the first degree of blood relations, could not be made in favour of

the respondent No.3 and, therefore, the respondent No.3 could not be

considered as a member of the society. The Registrar of Co-operative

Societies was of the view that the flat could not be allotted to the respondent

No.3 in the said society. Consequently, the petitioner society informed the

respondent No.3 in the year 1999 that he could not be considered as a

member and that the Registrar of Co-operative Societies has excluded his

name from the list of members for the draw of lots.

6. Thereafter, the petitioner approached the Delhi High Court twice by

way of separate writ petitions, details of which need not be gone into at this

stage. It is sufficient to note that after the directions given by the High

Court, the Registrar of Co-operative Societies considered the matter and

passed the impugned order dated 20.11.2006 which was set aside in appeal

by the Delhi Co-operative Tribunal by virtue of the impugned order dated

19.02.2008.

7. The only issue that arises for consideration is whether the respondent

No.3 could be regarded as a member of the society for the purposes of

allotment of a flat on the nomination being made by Late Shri Ram Lal

Dhamija.

8. Section 26 of the 1972 Act dealt with transfer of interest on death of

members. The said provision would be applicable in so far as the present

case is concerned. Section 26 of the 1972 Act reads as under:-

"26. Transfer of interest on death of members.-(1) On the death of a member a co-operative society may transfer the share or interest of the deceased member to the person nominated in accordance with the rules made in this behalf , or, if there is no person so nominated, to such person as may appear to the committee to be the heir or legal representative of the deceased member, or pay to such nominee, heir or legal representative, as the case may be, a sum representing the value of such member‟s share or interest as ascertained in accordance with the rules or bye-laws :

Provided that.- In the case of a co-operative society with unlimited liability, such nominee, heir or legal representative, as the case may be, may require payment by the society of the value of the share or interest as ascertained in accordance with the rules or bye-laws.

In the case of a co-operative society with limited liability, the society shall transfer the share or interest of the deceased member to such nominee, heir or legal representative, as the case may be, being qualified in accordance with the rules and bye-laws for membership of the society, or on his application within one month of the death of the deceased member to any person specified in the application who is so qualified.

No such transfer or payment shall be made except with the consent of the nominee, heir or legal representative, as the case may be.

A co-operative society shall, subject to the provisions of Section 36 and unless within six months of the death of member prevented by an order of a competent court, pay to such

nominee, heir and legal representative, as the case may be, all other moneys due to the deceased member from the society.

All transfer and payments made by a co-operative society in accordance with the provisions of this section shall be valid and effectual against any demand made upon the society by any other person."

A reading of the aforesaid provision makes it clear that the co-operative

societies may transfer the share or interest of the deceased member to the

person nominated in accordance with the rules. It is only if there is no such

person nominated that the transfer of the share or interest would be to the

legal heirs or legal representatives of the deceased member. In the present

case, it is an admitted position that Late Shri Ram Lal Dhamija had

nominated the respondent No.3 (Satish Kumar Gupta) in the nomination

form itself. We also note that Late Shri Ram Lal Dhamija was unmarried

and he did not have any heir or legal representative. In any event, the

question of legal heirs or legal representatives would only arise if there was

no nomination made by the said Late Shri Ram Lal Dhamija. Since he had

made the nomination, the question does not arise. Rule 35 of the Delhi Co-

operative Societies Rules 1973, which are the applicable rules, provides for

nomination of persons. The said rule reads as under:-

"35. Nomination of Persons -

1. For the purpose of transfer of his share or interest under sub-section (1) of Section 26, a member of a co-operative society may, by a document signed by him or by making a statement in any book kept-for the purpose by the society, nominate any person or persons. Where the nomination is made by a document, such document shall be deposited with the society during the member's life time and where the nomination is made by a statement, such statement shall be signed by the member and attested by one witness.

2. The nomination made under sub-rule (1) may be revoked

or varied by any other nomination made in accordance with that sub-rule.

3. The record of nomination shall be kept by a co-operative society in such manner as may be laid down in the bye- laws.

4. When a member of a co-operative society nominates more than one person, he shall, as far as practicable, specify-the amount to be paid or transferred to each nominee in terms of whole share and the interest accrued in the Society.

5. The value of the share or interest transferred or paid to a nominee or nominees shall be determined on the basis of the sum actually paid by the member to acquire such share or interest unless the bye-laws provided for calculation on a different basis.

6. (i) Where a member of co-operative society has not made any nomination, the society shall, on the member's death, by a public notice exhibited at the office of the society invite claims or objections for the proposed transfer of the share or interest of the deceased with the time specified in the notice.

(ii) After taking into consideration the claim or objections received in reply to the notice or otherwise, and after making such inquiries as the committee considers proper in the circumstances prevailing, the committee shall decide as to the person who in its opinion is the heir or the legal representative of the deceased member and proceed to take action under Section 26, subject to any appeal which may be filed to the Registrar by any person claiming the share, or interest of deceased member within 30 days of the decision of the committee. The orders of the Registrar on such appeal shall be final and binding upon all concerned.

7. If the committee refuses to transfer the share or interest of the deceased member to his nominee or his successor-in- interest, or fails to take a decision on the application of such nominee of the successor-in-interest as the case may be, within 30 days of the date of such refusal or the date of such application, a nominee or any person claiming to be a successor-in-interest of the deceased member shall file an appeal to the Registrar, who after hearing the society and the applicant or any other person interested, shall pass such order as he may deem fit and on such condition as he may impose and order made by the Registrar shall be final and binding on all concerned."

9. It would be apparent from the above extract that under Rule 35(1), a

member can make a nomination in favour of "any person or persons". There

is no restriction on the nominee being a blood relative of the said member

making a nomination. Rule 35 (6) which requires the issuance of a public

notice and invitation of claims and objections in respect of the proposed

transfer of share or interest of the deceased would come into operation only

where a member of a co-operative society "has not made any nomination".

In this case, the nomination had admittedly been made in favour of the

respondent No.3. Therefore, Rule 35(6) would not come into play at all. A

conjoint reading of Section 26 of the 1972 Act and Rule 35 of the 1973

Rules makes it clear that there is no restriction on a member nominating

anybody as his nominee. In other words, a member could have nominated a

person who was not a blood relative.

10. The position under the 2003 Act is, however, somewhat different.

Section 28, like Section 26 of the 1972 Act, deals with transfer of the

interest on the death of a member. Section 28(1) of the 2003 Act stipulates

that on the death of a member, the co-operative society shall transfer the

share or interest of the deceased member to the person nominated in

accordance with the rules. Rule 91 of the Delhi Co-operative Societies

Rules, 2007 clearly stipulates that a member of a co-operative housing

society may nominate a person or persons within his / her blood relations to

whom, in the event of his death, his right and interest in the co-operative

housing society shall be transferred. It also stipulates that joint and more

than one nomination within the blood relations shall be permissible.

Therefore, the position under the 2003 Act read with the 2007 Rules is

somewhat different from the position which obtained under the 1972 Act

read with 1973 Rules. Under the 1972 Act and the 1973 Rules, there was no

embargo on a member making a nomination in favour of a person who may

not have been his or her blood relative. To this extent, the finding of the

Tribunal is correct and that of the Registrar of Co-operative Societies is

wrong.

11. In view of the foregoing, the writ petition is dismissed and the

impugned order dated 19.02.2008 passed by the Delhi Co-operative Tribunal

is upheld. The petitioner society and the Registrar of Co-operative Societies

are directed to accept the respondent No.3 as a member and to allot him a

flat in the society at the earliest after he completes the formalities and clears

all his dues, if any. The learned counsel for the respondent No.3 states that

all formalities and dues, if any, would be cleared within 15 days. The other

formalities be completed by the society and the Registrar of Co-operative

Societies within two months thereafter.

With these observations, the writ petition stands disposed of. The

parties are left to bear their own costs.

BADAR DURREZ AHMED, J

VEENA BIRBAL, J NOVEMBER 24, 2009 dutt