Ghalib Apartments Residents ... vs Registrar Coop. Societies & Ors.
2010 Latest Caselaw 3248 Del

 *          IN THE HIGH COURT OF DELHI AT NEW DELHI

 +                       W.P. (C) No. 1508/1995

                                                   Reserved on: 5th July, 2010
                                                 Pronounced on: 14th July, 2010


 GHALIB APARTMENTS RESIDENTS WELFARE ASSOCIATION
                                           ...... Petitioner

                                Through: Mr. Hamid S. Shaikh, Advocate.

                                VERSUS

 REGISTRAR COOP. SOCIETIES & ORS.

                                                                 ....Respondents

Through: Mr. Sanjeev Rajpal, Advocate for Respondent No.4 .

CORAM:

HON'BLE MR. JUSTICE SANJAY KISHAN KAUL HON'BLE MR. JUSTICE VALMIKI J.MEHTA

1. Whether the 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 the Digest? Yes

% JUDGMENT

VALMIKI J. MEHTA, J

1. The petitioner in the present petition under Article 226 of the Constitution

of India is a registered Residents Welfare Association consisting of members of

respondent No.4 society. The prayers in this writ petition are unusual and the

same are reproduced herein below:-

a) writ of certiorari or any other suitable, writ, order or direction in the like nature to call for the records of Arbitration case No. 295/H/91-92 from the office of respondent No.1 and quash the award dated 31.3.1993 as passed by respondent No.2;

b) appropriate writ, order or direction directing respondent No.3 to realise from respondent No.5 the sum of Rs.1,80,440/- together with interest at the rate of 18% per annum from the date the said sum was attached by respondent No.3 pursuant to the award dated 31.3.1993 passed by respondent No.2 and pay the said sum to respondent No.4;

c) writ of Certiorari or any other appropriate writ, order or direction in the like nature dismissing the claim filed by respondent No.5 under Section 60 of the Delhi Cooperative Societies Act, 1972 against the respondent No.4;

d) appropriate writ, order or direction directing respondent no.1 to dismiss the claim petitions filed under Section 60 of the Delhi Cooperative Societies Act, 1972 by respondents No.6 to 11."

2. In effect, the relief which is prayed for is that an Award which has been

obtained by respondent No.5, one of the members of the respondent No.4

society, against the said society, and of which the members of the petitioner are

also the members, be set aside. The reliefs are unusual because the Award has

become final as the society did not challenge the same.

3. This case is on the 'Regular Board' and no one appeared on behalf of

respondents except respondent No. 4 when the matter was called out. The

counsel for respondent No.4 society has supported the stand of the petitioner.

Reference to the respondents in the present judgment is as per the original

memo of parties. Respondents 6 and 10, who died during the pendency of this

petition, were deleted from the array of parties on 13.1.2010 and amended

memo of parties was directed to be filed.

4. We are persuaded to exercise our extra ordinary jurisdiction under Article

226 of the Constitution of India in the peculiar facts of the present case in spite

of the unusual reliefs prayed for. The factors which have caused us to exercise

our jurisdiction under Article 226 are that: the effect of the Award against the

respondent No.4 society is effectively an Award against the members of the

society and which members pursuant to the Award, would be forced to pay the

unjustified claim of the respondent No.5 under the Award and the effect of

which also is that other members of the society would pay to the respondent

No.5, the successful awardee under the Award, charges towards the cost of

completion of the flat of the respondent No.5. The situation is accentuated by

the fact that all other members, including the members of the petitioner

association also received the flats in the same incomplete condition as the

respondent No.5 and who was successful in getting the Award inter-alia towards

completion cost of an incomplete flat. An added fact is that the Award was

obtained when the society was not represented by a normal elected managing

committee who would have otherwise effectively contested the case by bringing

on record all the relevant facts, but, the case was conducted when the society

was in the hands of a string of administrators. Finally, we are persuaded to

exercise our jurisdiction under Article 226 because we in the peculiar facts of

the present case find that the Award obviously has been obtained by

misrepresentation amounting to fraud and the effect of which will be grave

prejudice to the remaining members of the respondent No.4 society.

5. The facts of the case which have been pleaded are that on account of

mismanagement of the affairs of the society by a set of office bearers there

resulted a state of affairs whereby there was siphoning off of funds from the

society and the construction of the flats got greatly delayed because the society

had taken possession of the land in the year 1978 and had commenced

construction of the flats in the year 1982 after obtaining sanction of the building

plans from the Delhi Development Authority, however, till the year 1988 only

the superstructure of the flats with plumbing and sanitary work to the extent of

laying of pipes alone was completed in the flats. Work of flooring, plastering of

walls, providing sanitary fittings, laying of electric pipes, providing of doors

and windows was yet to be done. There was a complete slump in the

construction work. In consultation with respondent No.1- the Registrar of

Cooperative Society and the Delhi Development Authority it was decided to

hold draw of lots of the flats as per the then existing condition. The draw of lots

was held on 16.7.1988 and which action was confirmed by the Delhi

Development Authority vide letter No. F.4(248)/77/GH/DDA/215 dated

6.7.1989. Respondent No.5 was allotted flat No. 218 which is in the

H.I.G.Category.

6. It is then stated that on 4.8.1991 a General Body meeting of the

respondent No.4 was held wherein amongst others, it was unanimously resolved

by the General Body that since due to lack of funds the society was unable to

complete the flats and members were not forthcoming in payment of dues,

possession of the flats be given to the members in the existing condition after

obtaining the dues from the members for the work done at site till that date.

The idea behind the said resolution was that since each flat needed internal work

only, the respective members could take possession of the incomplete flats,

complete the internal work and occupy the flats allotted to them. The

respondent No.5 who is in the H.I.G. category, took forcible possession of his

flat. Large number of other persons also took possession of their flats and till

the filing of the petition about 200 members had taken possession of the flats

allotted to them. It may be stated that each member took possession of

incomplete flat and after taking possession, out of his own funds, got completed

the same. The petitioner then has pleaded that in this manner all members have

been treated alike and each one has paid his proportionate demand and each one

has got a flat which was incomplete. Each member in the HIG category apart

from paying Rs.1,80,000/- towards cost of construction paid a further sum of

Rs.49,722/- towards share money, land cost, development charges,

electrification etc. Respondent No.5 has not paid the said amount and after

taking possession of the flat allotted to him. Respondent no. 5 like other

members completed the same. In the year 1991 respondent no.5 filed an

arbitration case under Section 60 of the Delhi Cooperative Societies Act, 1972

praying that he having spent a sum of Rs.66,000/- towards completion of the

flat, was entitled to a decree in the said amount with interest. It was further

pleaded by respondent no.5 that he be compensated for the financial loss of

interest on the sum of Rs.1,80,000/- paid by him to the society for the

construction of the flat since the date of allotment i.e., 6.7.1988 because the flat

allotted to him was uninhabitable. A further sum of Rs.130/- per sq. foot as

refund for 200 sq. feet area was claimed on the allegation that the flat allotted to

him was 1000 sq. ft. as against the promised area of 1200 sq. ft.

7. It is further pleaded in the petition by the petitioner that since the

Managing Committee of the respondent no.4 was not performing its duties and

there were acts of malfeasance and misfeasance in the conduct of the affairs of

the society vide order dated 9.4.1992 Sh. Raghuraman, the then Joint Registrar

(Group Housing) passed an order under Section 32 of the Delhi Cooperative

Societies Act, 1972 superseding the Managing Committee appointing Sh.

A.B.Shukla as Administrator of the society. Sh. A.B.Shukla took over as

Administrator of the Society in April, 1992. Sh. A.B.Shukla was succeeded in

October, 1993 by Sh. B.L.Anand as Administrator and when the petition was

filed, Sh. Naqvi was the Administrator of the society from September, 1994. At

the time respondent no.5 filed his claim under Section 60, the society was not

under the Administrator and the case was being contested. The petition under

Section 60 of the Act was admitted vide orders dated 13.2.1992 and was

referred to respondent No.2 being the Registrar's nominee as an Arbitrator to

arbitrate upon and adjudicate upon the claim.

8. It is further stated that during the pendency of the proceedings before

respondent No.2, the Administrator was appointed, and the Administrator did

not take any interest in the proceedings with the result that sometimes the

counsel appointed by the Administrator would appear before the Arbitrator and

on some dates would not appear. No documents were filed nor any evidence of

any worthwhile nature led by the Administrator. This resulted in the passing of

the award dated 31.3.1993 by respondent No.2 in favour of the respondent

No.5. The respondent No.2 held that since the flat which was given to the

respondent No.5 was incomplete he was entitled to a sum of Rs.80,000/- as the

amount spent by him towards the completion of the flat together with an interest

@ 18% per annum from 7.5.1990. It was further held that since the area of the

flat given to respondent No.5 was less by 146 sq. ft. he was entitled to be

reimbursed a sum of Rs.18,000/- as interest at the rate of 18%. Costs in the sum

of Rs.3,000/- was awarded to the respondent No.5.

9. The petitioner has averred further that the Administrator of respondent

No.4 took no steps to challenge the said award in appeal before the Tribunal

constituted under the Delhi Cooperative Societies Act with the result that the

said award became final. The Administrator kept the members of the society in

dark about these events. On 24.6.1994 respondent No.3 pursuant to execution

of the Award in favour of respondent No.5 issued a warrant of attachment under

the Punjab Revenue Act in the sum of Rs.1,80,440/- and after attaching the said

sum from the loan account of the society (in which amounts of the society in

which amounts were being credited by the members for repayment of the loan

to D.C.H.F.S) got remitted the said amount of Rs.1,80,440/- and which stood

paid to the respondent No.5. On 15.7.1994 Sh. B.L.Anand the Administrator of

the society wrote a letter to each member demanding from the members the sum

of Rs.650/- each for paying the decretal amount of Rs.1,80,440/- got decreed

against respondent No.4 by respondent No.5. No details of the case were

brought to the notice of the members. The members of the petitioner and in

particular the office bearers of the petitioner had been making visits to the office

of respondent No.1 to see that steps are taken to recover the amount illegally got

decreed by respondent No.5. As stated above, all members were allotted

incomplete flats and every member completed the flat at his own cost and

respondent No.5 stood on no separate category. True and correct facts were

neither pleaded nor brought to the knowledge of the Administrator resulting in

the passing of the impugned award and treating the impugned award in question

as a precedent, other members of the society had already started filing similar

objections under section 60 of the Delhi Cooperative Societies Act before

Respondent No.1. Six such petitions filed by respondents No.6 to 11. The

number of the petitions filed by respondents No.6 and 7 is said to be not known

as on the date of filing of the petition but the numbers allotted to the petitions

filed by respondents No.8 to 11 are numbered as 342 to 345/JRI/GH/94-95.

The said petitions are identical.

10. The petitioner has further stated in the petition that the Administrator of

the society who is a nominee of the Respondent No.1 by his inaction has

suffered a decree against the society which decree is totally illegal and contrary

to the record. Taking the award passed by respondent No.2 as a precedent

member after member is filing similar petitions and if the award dated

31.3.1993 is allowed to stand it would become a precedent for all members

resulting in a strange situation where every member would obtain a decree

against the society and to liquidate the claim each member would be called upon

to pay his proportionate share towards the decretal amount, every member

would obtain a decree for and against himself. This madness of litigation would

compel every member to go to the court and those who do not file a similar

petition would not get similar awards and would be prejudiced.

11. Since the respondents are not represented, except the society, the fate of

the Arbitration Petitions filed by these respondents is not known. It is submitted

that under the circumstances to resolve the impasse and to meet the ends of

justice, the only course open in law is to set aside and quash the impugned

award dated 31.3.1993 passed by respondent No.2 in favour of respondent No.5.

The petitioner has therefore approached this Court by way of the instant petition

under Article 226 of the Constitution of India. The petitioner has submitted that

it is evident from the impugned award that the persons in the management of the

affairs of the respondent No.4 did not lead any evidence. As is evident from the

narration herein-above, each member gat a semi finished flat. Had the said

evidence been led before respondent No.2 the impugned award would not have

been passed. Evidence led by respondent No.5 of a few other members was to

the effect that even said members had got unfinished flats. It is contended on

behalf of the petitioner that from the testimony of the said members who

appeared as witnesses of respondent No.5, the respondent No.2 ought to have

drawn the only logical conclusion, namely, that all flats were incomplete. It

would be further pertinent to note that it was not the case of respondent No.5

that he had paid the amounts as paid by other members and that whereas all the

other members had got an unfinished flat. Similarly, as regards the area of the

flat, each HIG category flat had same area.

12. As is apparent from the stand of the petitioner narrated above, the facts of

the case presents a peculiar problem. The factual position is that every member

got an incomplete flat out of necessity of the situation. In fact the DDA

allowed allotment of incomplete flats because there was a complete stalling of

the construction. Once all the flats are in a similar position, allowing one

member to seek amounts from the society for completion of his flat would mean

that other members of the society are forced to contribute to the cost of

completion of the flat of the respondent No.5, although, all other members have

also received flats which are similarly incomplete as the flat of the respondent

No.5. Taking a cue from the respondent No.5 other members have also initiated

arbitration proceedings. If therefore this award and the arbitration proceedings

of the other members, which are similar in nature to those initiated by the

respondent No.5, are allowed to stand, it would mean that the other members of

the society including those of the petitioner will be forced to contribute amount

towards completion of flats of other members. Let us take a hypothetical case

that since every member got an incomplete flat, therefore, every member files a

monetary claim against the society and for which awards are passed which are

similar to the awards as in favour of the respondent No.5. What will be the

effect? The effect will be that every member will be entitled to amount from the

society, but to what result? The result would be that the society will have to

seek contribution from all the members for the decrees/awards against the

society. This would indeed be a very chaotic situation and would serve no

purpose either in law or in facts or in equity.

13. We completely accept the stand as pleaded by the petitioner as narrated in

the petition and herein above. We have already stated above that the Award was

obtained by the respondent No.5 in his favour and against the society when the

society was not represented by a duly elected Managing Committee and which

committee would have vigorously contested the case and brought the aforesaid

facts and every flat being incomplete flat to the notice of the Arbitrator in the

arbitration proceedings. We feel that the award in favour of the respondent No.5

in fact amounts to abuse of the process of law and misrepresentation amounting

to fraud inasmuch as respondent No.5 is very much similarly placed as all other

members and he had no right to obtain an award seeking refund of amounts and

other monetary claims with respect to an incomplete flat. Fraud vitiates

everything. An award which is obtained by fraud is a nullity in the eyes of law.

This is the mandate of Section 44 of the Evidence Act. The principle of res-

judicata is not attracted in such a case. See Raju Ramsing Vasave Vs. Mahesh

Deorao Bhivapurkar & Ors. (2008) 9 SCC 54, North Eastern Railway

Administration, Gorakhpur Vs. Bhagwan Das (Dead) By LRS. (2008) 8 SCC

511, T.Vijendra Das & Anr. Vs. M. Subramanian & others (2007) 8 SCC 751

and a host of other cases.

14. We make it clear that it is only in the peculiar facts and circumstances of

the case therefore that we are granting the reliefs. We thus direct that the award

which is passed in favour of the respondent No.5 shall be treated as non-est for

all intents and purposes. The amounts which have been received by respondent

No.5 pursuant to the award from the society are directed to be refunded by the

respondent No.5 to the society. In case, the respondent No.5 makes refund of

the amount as received by him under the award within a period of one month

from receiving a copy of this judgment, then, no interest will be payable by the

respondent No.5 with respect to the amounts he has received pursuant to the

award in the year 1994. In case however respondent No.5 fails to make

payment of the amount within a period of one month, then, the respondent No.5

shall be liable to pay interest at the rate of 12% per annum simple after the

period of one month till actual payment to the respondent No.4 society.

15. We further direct that in case the proceedings which have been initiated

by the other members of the respondent No.4 society, such as the original

respondents No. 6 to 11, if they are based on the similar facts and are similarly

placed as the proceedings which were initiated by the respondent No.5 and

which culminated into an award, then, all these proceedings are quashed and it

is directed that the society shall not be bound to make any payment to any such

member who claims monetary amount on account of his receiving an

incomplete flat and his having to complete the finishing of the flat. These latter

directions are passed, inasmuch as every member has received similar

incomplete flats.

16. With the aforesaid observations, the writ petition is accordingly disposed

of leaving the parties to bear their own costs.

VALMIKI J. MEHTA, J.

JULY 14 , 2010                                    SANJAY KISHAN KAUL, J.
ib