Delhi High Court

Virender Kumar Yadav vs Delhi Co-Operative Society & Ors. on 3 March, 2010

Author: Vipin Sanghi

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                 Judgment reserved on: 03.02.2010
%                Judgment delivered on: 03.03.2010

+                           W.P.(C) No.7323/2008


       VIRENDER KUMAR YADAV                        .....Petitioner
                     Through:         Mr. S.P. Kalra, Sr. Adv. with
                                      Mr. S.K. Pruthi and Mr. Manoj
                                      Ahuja, Advocates

                       Versus


       DELHI CO-OPERATIVE SOCIETY & ORS.    ......Respondents
                      Through:  Ms. Parul Sharma for Mr. V.K.
                                Tandon for Respondent No.1
                                      Mr. R.K. Gupta for Respondent
                                      No.2
                                      Mr. Ankur Arora for Respondent
                                      No.3

CORAM:

HON'BLE MR. JUSTICE GITA MITTAL
HON'BLE MR. JUSTICE VIPIN SANGHI

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

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

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


                                JUDGMENT

VIPIN SANGHI, J.

1. The petitioner has assailed the common order dated 28th

July, 2008 passed by the Delhi Cooperative Tribunal in Appeal

No.178/2009-DCT and Appeal No.199/2005-DCT, preferred by the

petitioner and the respondent No.2 society.

2. The facts giving rise to the present petition are in a narrow

compass and to the extent necessary, are set out hereafter. The

New Subhash Cooperative Group Housing Society, respondent no. 2

herein is a cooperative group housing society registered under the

Delhi Cooperatives Societies Act, 1972. This society was allotted a

plot of land by the Delhi Development Authority bearing plot no. A-2

Paschim Vihar, New Delhi for the construction of 58 flats for

allotment to its 58 members.

3. Sh. Lal S. Vaswani, respondent no. 3 herein was enrolled as

an original member of the respondent no. 2 in the year 1971 and

was allotted a flat no. 57 in the allotments effected on 7th December,

1980 to the members. It appears that the respondent society

passed a resolution on 21.9.1997 to expel Shri Lal S. Vaswani from

the primary membership of the society on account of his alleged

default in making payment of dues. The case of expulsion of Shri

Vaswani was placed before the Registrar, Co-operative Societies in

accordance with Rule 36 of the Delhi Co-operative Societies Rules

1973. In those proceedings, Shri Vaswani relied upon the audit

report for the year 1994-95 of the accounts of the society. He also

stated that he made payment of Rs.66,000/- and a loan was also

advanced by DCHFC Limited to the society on his account. He

contended that he was not a defaulter. He also challenged the rate

of interest which had been charged by the society.

4. After hearing the society and Shri Vaswani, the Registrar

Co-operative Societies vide order dated 8/13.10.1998 held that the

society had not followed the procedure under Rule 36 scrupulously

and had merely completed the formalities to harass Shri Vaswani.

The conduct of the society in not producing, or giving the statement

of dues pending against Shri Vaswani was held as substantiating his

allegations of ulterior motive, mala fide and harassment made

against the society. Consequently the Registrar Co-operative

Societies dropped the proceedings for expulsion of Shri Lal. S.

Vaswani.

5. The respondent society preferred an appeal from the

Registrar's order before the Financial Commissioner, Delhi which

was registered as Case No.376/98-CA. The Financial Commissioner

also did not accept the plea of the respondent society and dismissed

the appeal. Consequently the expulsion proceedings undertaken by

the respondent society against respondent no.3, Shri Lal. S. Vaswani

stood dropped, as the orders passed in those proceedings attained

finality and were not challenged by the society any further.

6. It appears that despite the aforesaid orders, the disputes

between the respondent society and Shri Lal. S. Vaswani continued

to persist. According to Shri Vaswani, he sent communications to

the society enquiring about the genuine and verifiable dues of the

society to make payment of the same, but there was no response

from the society. At the behest of Shri Vaswani, the Registrar of Co-

operative Societies ordered an inspection under Section 54 of the

Delhi Co-operative Societies Act vide order dated 03.02.2004.

Respondent no.3, it appears, learnt from the inspection report

prepared on the orders of the Registrar Co-operative Societies that

flat no.57 which had been allotted to him, had been further allotted

to Shri Virender Kumar Yadav, the petitioner herein, even though no

allotment of the said flat had been made in his favour by the DDA.

7. At that stage, the respondent no.3 invoked Section 60 of

the Delhi Co-operative Societies Act, 1972 to seek reference to his

claims against the respondent society and the petitioner to

arbitration. He claimed possession of flat no.57 from the society and

Shri Virender Kumar Yadav, the petitioner herein. He further sought

a direction that the respondent society should provide the genuine,

bona fide and verifiable amount due and payable by him.

Respondent no.3 claimed that he had tendered various amounts to

the respondent society in the year 2004, but the same were

returned by the respondent society. He also claimed a sum of Rs.

6,000/- per month w.e.f. September 2001, till the date of handing

over of possession of the flat, as damages for delay in handing over

possession of flat no.57 to him.

8. The Registrar, Co-operative Societies vide order dated

18.2.2005 held that, in his opinion, a dispute existed regarding the

membership, management and business of the Co-operative society.

It was held that the prayer with regard to the claim of possession of

flat no.57 and for a direction to the respondent society to provide to

him the genuine, bona fide and verifiable amount due and payable

by him, is arbitrable.

9. The Registrar Co-operative Societies appointed Shri D.P.

Dwivedi as the Arbitrator. After hearing Shri Vaswani, the society

and Shri Virender Yadav - the petitioner herein, the Arbitrator passed

a detailed award dated 13th of September 2005 in favour of

respondent no.3, Shri Vaswani holding that the respondent society

had violated the orders of the Registrar Co-operative Societies dated

30.10.1998 (sic 13.10.1998) and the order of the Financial

Commissioner dated 07.01.1999 whereby the expulsion proceedings

against Shri Vaswani had been dropped. It was held that without

taking the issue of the expulsion of Shri Vaswani to its logical

conclusion, the respondent society had acted in violation of the Delhi

Co-operative Societies Act, the Rules and the directives issued

thereunder, as the society had proceeded to accept money from the

petitioner for handing over possession of flat no.57 to him. The

arbitrator held that the respondent society was under a duty to raise

a verifiable and genuine demand on Shri Vaswani and upon payment

of the same, to hand over possession of flat no.57 to him. The

respondent society was also held solely responsible for its conduct in

dealing with Shri Yadav, the petitioner herein. The society was

directed to make efforts to retrieve the account of Shri Vaswani as

had been done in the case of other defaulter members so that Shri

Vaswani could make payment of the amount due, along with interest

as applicable. He also held that Shri Virendra Kumar Yadav the

present petitioner was not entitled to allotment of a flat. The

allotment of flat made to the petitioner and his possession thereof

was held to be illegal and he was directed to hand over the same to

the respondent society. He also held the transaction between the

society and the petitioner herein to be illegal and void. The

Arbitrator also directed that the Registrar should take necessary

action against the Managing Committee of the respondent society

for violation of the provisions of the Act provided under the Chapter-

Offences and Penalties.

10. The petitioner-Shri Virender Kumar Yadav and the

respondent society preferred appeals bearing nos. 178/05-DCT and

199/2005 DCT respectively before the Delhi Co-operative Tribunal

against the aforesaid award of the learned Arbitrator. By its order

dated 28th July, 2008, the learned Delhi Co-operative Tribunal has

dismissed both the appeals and affirmed the arbitrator's award

dated 13.9.2005, after hearing the parties.

11. Shri S.P. Kalra, learned senior counsel for the petitioner

submits that respondent no.3 Shri Vaswani was a persistent

defaulter and he had not paid the amounts due from him from the

beginning. He submits that even after the passing of the order

dated 07.01.1999 by the Financial commissioner dropping the

expulsion proceedings, and despite repeated demands made by the

society, Shri Vaswani failed to make payment of the amounts due

from him.

12. The further submission is that in respect of the loan

disbursed to the respondent society by the Delhi Co-operative

Housing Financial Corporation Limited (DCHFC Ltd.), the said

corporation had initiated arbitration proceedings to recover an

amount of Rs.13,21,859/- as principal along with interest and costs.

The Arbitrator appointed by the Registrar Co-operative societies had

passed an award in favour of DCHFC Ltd and against the society on

28.01.2003 directing payment of Rs.13,84,383/-. He submits that

with a view to liquidate the liability of DCHFC Ltd., the general body

of members of the respondent society decided to enrol the petitioner

as a member of the society. The petitioner is stated to have paid a

sum of Rs.13,75,000/- towards cost of the flat as demanded by the

society. Mr. Kalra contends that in these circumstances there is no

equity in favour of respondent no.3 who has been a persistent

defaulter, and, at the same time, equity lies in favour of the

petitioner who is a bona fide purchaser of the said flat for valuable

consideration. The further submission is that the petitioner came to

the rescue of the society by providing the necessary funds to the

society to clear the dues of DCHFC Ltd. under the award. Shri Kalra

has also submitted that the Registrar, not having disapproved the

expulsion of respondent No.3 in terms of Rule 36 of the Delhi

Cooperative Societies Rules, 1973 within the statutory period of 6

months, the expulsion of respondent no.3 attained finality and by

passing the subsequent orders, the Registrar and the learned

Financial Commissioner, as aforesaid, could not have restored the

membership of respondent No.3.

13. In support of his submissions, Shri Kalra, learned senior

counsel appearing for the petitioner has also placed reliance upon

the following decisions:

(i) R.K. Aggarwal V. Registrar Coop. Societies, Delhi & Ors., 45(1991) DLT 105 (DB);

(ii) Anand Lok Co-op. Group Housing Society Ltd V. The Registrar Co-op Societies & Ors., 68 (1997) DLT 246;

(iii) Myurdhwaj Cooperative Group Housing Society Ltd V.

The Presiding Officer, Delhi Cooperative Tribunal and Others; 74(1998) DLT 316 (SC).

We shall deal with the said decisions a little later.

14. The petition has been contested by respondent no.3, Shri

Vaswani. We may note that respondent no.2 society has not

advanced any submission in opposition of the writ petition. On the

contrary, the respondent society has filed its reply dated 12.11.2009

wherein they have supported the stand of the petitioner.

15. The submission of Mr. Ankur Arora, learned counsel for

respondent no.3 is that the management of the respondent society

has always acted in a mala fide and motivated manner against

respondent no.3. He submits that upon the passing of the order

dated 07.01.1999 by the learned Financial Commissioner, the

expulsion proceedings against respondent no.3 attained finality and

his expulsion was a closed chapter. Without challenging the said

order any further and obtaining approval in respect of the earlier

expulsion proceedings or undertaking fresh expulsion proceedings

against respondent no3, the respondent society could not have de

facto treated the respondent no.3 as having been expelled.

Consequently, respondent no.2 could not have enrolled any other

person as a member of the society in place of respondent no.3 with

a view to allot to him the flat in question which already stood

allotted to respondent no.3. He further submits that the respondent

society failed to comply with the orders passed by the learned

Arbitrator and the learned Financial Commissioner and did not issue

a genuine verifiable demand with which respondent no.3 could have

complied. He submits that respondent no.3 has always been ready

and willing to make payment towards the outstanding cost of the flat

and has even tendered various amounts from time to time which the

management of the respondent society has refused to accept

arbitrarily and in a mala fide manner.

16. Respondent no.3 also submits that in order to pay the

outstanding liability of DCHFC Ltd., the respondent society could not

have misappropriated the flat of respondent no.3 by illegally

enrolling the petitioner as a member of the society. The liability

owed to DCHFC Ltd. was not only in respect of the petitioner or the

flat in question, but was also a liability of the respondent society and

extended to each of the 58 members. He submits that the

respondent no.3 has been made the sacrificial goat by the

respondent society to liquidate the entire liability of the society and

by placing the entire burden against the respondent no.3 alone. He

further submits that though the initial cost of the flat in question was

only about Rs.1.60 Lacs, the respondent society had acted

malafidely by raising exorbitant demands in excess of Rs.22 Lacs

and Rs.50 Lacs from respondent No.3.

17. It has come in the impugned award of the learned

Arbitrator dated 13.9.2005 that the respondent society had raised a

demand of Rs.22,48,279/- on 9.8.1998 against respondent no.3 and

thereafter, in purported compliance of the order dated 07.01.1999

passed by the learned Financial commissioner, had raised a fantastic

demand of Rs.50,37,199.76 vide their demand letter dated

10.11.1999. The learned Arbitrator has further recorded that vide

letters dated 17.06.1999, 22.06.1999, 20.09.1999 and 01.07.2004,

respondent no.3 had demanded from the society a proper statement

of accounts and the amounts due and payable by him but the

respondent-society did not come forward with the requisite

information.

18. The learned arbitrator held that the crux of the order of the

Financial Commissioner was not only to intimate to the respondent

No.3 the outstanding dues, but also to ensure that the same were

genuine and verifiable. He also explained the expression

"verifiable", in the context, to mean that the demand has been

raised after checking the records and after arriving at a satisfaction

that the same is as per the records. He held that the society had not

produced any document to show that after raising the demand on

respondent No.3, the society had offered its accounts and

calculations for verification of respondent No.3. The arbitrator also

held that the demand, prima facie, appeared to be unsustainable on

account of non application of mind as a demand of Rs.22,48,279/-

raised on 09.06.1998 could not have become Rs.50,37,199.76 on

10.11.1999. The arbitrator has concluded that the said conduct of

the society shows its malafide intent to circumvent the order of the

learned Financial Commissioner and, in process, to harass the

respondent No.3.

19. It is apparent that before the learned arbitrator the stand of

the respondent society was that an amount of Rs.22,78,158/- was

outstanding against the respondent No.3. However, the respondent

society did not produce any records to substantiate the said claim

and the arbitrator rejected the said quantification of the dues by the

respondent society in the absence of any genuine or verifiable

records. The learned arbitrator has also gone into the aspect of the

records of the society not being retrieved by the management from

the Malviya Nagar Police Station, where they have been lying, as

certain complaints had been made in the past. The learned

arbitrator held that the concerned Metropolitan Magistrate had

passed an order on 21.08.1991 directing the return of the records to

Sh. N.K. Arora, an office bearer of the respondent society. In spite of

that order, the respondent society had not collected the records. He

held that for this inaction of the respondent society, the petitioner

could not be made to suffer.

20. So far as the aspect of membership of the petitioner is

concerned, the learned arbitrator examined the records produced by

the society which showed that payments had been received from

him by the society on 12.03.2003 and 12.09.2003 i.e. even before

holding of the AGM on 14.09.2003, which purportedly approved the

enrolment of the petitioner as a member of the society. Pertinently

the resolution of the AGM, purportedly passed on 14.09.2003, was

not produced before the learned arbitrator.

21. The learned arbitrator also held that the respondent society

had not produced any document to establish the compliance of the

requirement of Rule 24 of the Delhi Cooperative Societies Rules,

1973 before enrolling the petitioner as a member. Under Rule 24 of

the aforesaid rules, it was imperative for the respondent society to

have advertised the vacancy, if any, in the newspapers to invite

applications from all eligible persons, and to hold a draw of lots

before enrolling a new member to fill up an existing vacancy. It has

been admitted by Shri Kalra, learned senior counsel appearing for

the petitioner, that the respondent society did not issue any

advertisement in compliance of Rule 24 and that the petitioner came

into the picture as he was acquainted with some of the office

bearers of the respondent society at the relevant time. The

arbitrator, consequently, concluded that the enrolment of the

petitioner as a member of the respondent society was in violation of

the Delhi Cooperative Societies Act, the Rules and the directives

issued by the Registrar of Cooperative Societies and that his

membership was void-ab-initio.

22. The award made by the learned arbitrator was upheld by

the learned Delhi Cooperative Tribunal in the appeals preferred by

the petitioner and the respondent society. The Tribunal has noted

all the relevant facts, as aforesaid, and has considered the

submissions made by the petitioner and the respondent society.

Before us, Shri Kalra has not even ventured to assail the order

passed by the learned Tribunal on any of the legal submissions

advanced before it, each of which has been turned down by the

Tribunal. We may note that the petitioner and the respondent

society had raised the issue of the arbitrator exceeding his

jurisdiction, and of the claim of respondent No.3 being barred by

limitation. The Tribunal has dealt with these issues in the following

manner:-

"So far as the issue of limitation is concerned, the Financial Commissioner had directed the society in 1999 to issue verifiable/genuine demand and Sh. Vaswani pursued the matter with the society but the society did not revise the demand. Instead of giving the correct figure of the demand the society enrolled Shri Yadav in 2003 and therefore the claim was filed by Sh. Vaswani in 2004. Since the Delhi Cooperative Societies Act provides for six years' limitation period for such claims and since the claim was filed within this period we hold that it was not time barred. Coming to other issues also the society appears to be on a weak wicket. It is not denied by the society that the Financial Commissioner had finally rejected the expulsion of Sh. Vaswani done

by the society and had directed the society to issue him verifiable/genuine demand. The society deliberately ignored this order and raised demand of Rs.22 lacs/50 lacs which obviously was unreasonable and highly exaggerated considering the fact that the cost of construction of the flat is only Rs.1.60 lacs. On the other hand, Sh. Vaswani's claim of his payment of Rs.60/80 thousands made by him to the society has not been contradicted by the society and no justification has been given for raising the exaggerated demands. Besides, it is also a fact that Sh. Vaswani was not expelled again after the Financial Commissioner's order of 1999 which was final as it was not further challenged. This means that he continues to be a member in the society and since only one flat was available it has to be held that this flat was indirectly reserved for him. The enrollment of Sh. Virender Yadav in the year 2003 was therefore wrong because no vacancy was existing in the society on the date of his enrolment. It is also argued based on the records that the society had already accepted money (Rs.13 lacs) from him even before the proposal for his enrollment was brought before the General Body meeting and this fact leads to a conclusion that there was some sort of collusion between the then Managing Committee and Sh. Yadav. It also needs to be noted that the enrollment of Sh. Yadav has not been approved by the Registrar Cooperative Societies or the Delhi Development Authority and therefore also the allotment of a flat to him is unauthorized. The excuse given by the society that the society was in urgent need of money can not be accepted because even if there are defaulters in the society the society is expected to deal with them in accordance with the law and to raise money by legal means by filing arbitration cases against the defaulters; and not by illegal means like selling of somebody's flat to a newcomer by enrolling him illegally. In this case, the society has ignored all the legal actions and formalities and has not only harassed Sh. Vaswani for obvious personal

reasons but has also deprived him of his flat by not complying with the Financial Commissioner's order. Sh. Virender Yadav's argument that no direct claim was raised against him can not be accepted because he is the allottee and the possessor of the flat which should have legally gone to Sh. Vaswani and he was made a party in the original claims u/s 60. The arbitrator has rightly held that the society has now to deal with him at their own level."

23. Having heard learned counsel, we find no merit in the

submissions of Shri Kalra that the petitioner, while making the

payment, acted bonafide and in the belief that the allotment of the

flat in question made to him was legal. The petitioner ought to have

been aware of the law that a cooperative group housing society

could have enrolled a new member only after complying with the

provisions of Rule 24(2) of the Delhi Cooperative Societies Rules,

1973, which states that the vacancy "shall be filled by the

Committee by notifying it in leading daily newspaper of Delhi in

Hindi and English. In case of number of applications are more than

the notified vacancies the membership shall be finalized through

draw of lot in the presence of authorized representative of the

Registrar". Admittedly, these steps were not taken by the

respondent society. The fact that he made part payment to the

respondent society even before the holding of the purported Annual

General Meeting, which is claimed to have approved his enrolment

as a member, clearly shows the nexus between the petitioner and

the office bearers in the management in the respondent society at

the relevant time. It is not explained, how the petitioner came to be

allotted/delivered the flat in question on payment of Rs.13.75 Lacs,

when the demand against respondent No.3 (who admittedly was a

member since 1971 and had made some payments) as on that date

was over Rs.50 Lacs. It is evident that the petitioner illegally and

irregularly came to occupy the flat in question with the connivance

and the blessings of the office bearers of the society by riding

roughshod over the rights of respondent No.3.

24. Moreover, there was no existing vacancy in the respondent

society against which any other person, including the petitioner,

could have been enrolled. Even if it were to be assumed for the

sake of arguments that the petitioner deserves sympathy, he cannot

displace respondent No.3, whose expulsion proceedings had been

dropped and in whose favour the Registrar and the learned Financial

Commissioner had ruled. The rights of respondent No.3 could not

have been defeated by the acts and omissions of the respondent

society in, firstly, not raising a genuine and verifiable demand and,

secondly, not accepting the payments tendered by respondent No.3.

The fact that the demands raised by the respondent society of

Rs.22,48,279/- as on 09.06.1998 and Rs.50,37,199.76 upon the

respondent were not genuine or verifiable is evident from the fact

that the respondent society proceeded to palm off the flat in

question for Rs.13,75,000/- to the petitioner.

25. Shri Kalra's submission that respondent No.3 stood expelled

on account of the deemed approval of his expulsion is also without

any merit. Firstly, the petitioner has no locus standi to raise this

issue as he was not even in the picture when those proceedings took

place. If the respondent society was so advised, it could have itself

raised the said issue. However, the respondent society has,

admittedly, not raised any such issue at any stage. The same does

not appear to have been raised either before the Registrar (who

granted a hearing to the respondent society and respondent No.3)

before passing of the order dated 13.10.1998, or in the appeal

preferred from the said order before the learned Financial

Commissioner. The memorandum of appeal and the order passed

by the learned Financial Commissioner, which have been perused by

us, bear out the aforesaid position.

26. Secondly, the submission of Shri Kalra is even otherwise not

supported by a plain reading of Rule 36 of the Delhi Cooperative

Societies Rules, 1973. Sub-rules (1) & (2) prescribe the procedure

by which the society may pass a resolution for the purpose of

expulsion of a defaulting member. For our purpose, sub-rule (3) of

Rule 36 is relevant and the same reads as follows:

"(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."

27. A perusal of the aforesaid sub-Rule shows that there is no

deeming provision, as contended by Shri Kalra, which would render

the resolution for expulsion passed by the society as having been

approved by the Registrar, on the expiry of a period of six months.

28. In support of his submission Shri Kalra has placed reliance on a

decision of a Single Judge of this Court in Anand Lok Co-op. Group

Housing Society Ltd. v. The Registrar Co-op Societies &

Others. In this case the learned Single Judge had held that the

order of the Registrar, disapproving the expulsion of the member,

having been passed beyond the period of 6 months from the date

when it was sent to him for his approval, was without jurisdiction as

the Registrar had become functus officio and that the resolution of

the society had become operative on its own strength on the expiry

of the period of 6 months.

29. While delivering the aforesaid judgment, the court relied upon

the decision of the Supreme Court in The Balasinor Nagrik

Cooperative Bank Ltd. v. Babubhai Shankar Lal Pandya &

Others, AIR 1987 SC 849. This decision of the Supreme Court

dealt with Section 36 of the Gujarat Cooperative Society Act, which

also provides for expulsion of a member of a cooperative society.

30. We may note that a learned Single Judge of this Court in the

decision of Mrs. Beena Singhal v. Presiding Officer Delhi Co-

operative Tribunal & Ors. 85 (2000) DLT 171 noted the

distinguishing features in Rule 36 of the Delhi Cooperative Societies

Rules and Section 36 of the Gujarat Cooperative Society Act.

Section 36 of the Gujarat Cooperative Society Act contains the

following material proviso:

"Provided further, that the approval or disapproval of the Registrar shall be communicated to the society within a period of three months from the date of such submission, and in the absence of such communication the resolution shall be effective."

The consequence of the approval or disapproval not being

granted by the Registrar within 6 months has not been specifically

provided in the Delhi Rules, in contradistinction with a provision

made in Section 36 of the Gujarat Cooperative Society Act for the

same.

31. We find that in a judgment of this court reported at 90

(2001) DLT 652 (DB), B.B. Chibber v. Anand Lok Co-op Group

Housing Society Ltd., the Division Bench has held that the time

limit of 6 months prescribed in Rule 36(3) is not mandatory, and on

the expiry of the period of 6 months from the date when the

resolution passed by the general body of the cooperative society is

sent to the Registrar for approval, he does not become functus

officio. The relevant extract from the decision in B.B. Chibber

(supra) reads as follows:

"5. A comparison of Rule 36 of the Rules and Section 36 of Gujrat cooperative Societies Act, 1961 (in short Gujrat Act) which was under consideration of the Apex Court, would go to show that there is no prescription in Rule 36 as to the consequences which flow in the event of non-communication by the Registrar either while approving or disapproving the resolution. In Section 36 of the Gujarat Act it was there. In fact the Apex Court has come to the conclusion regarding the officer becoming functus officio in view of the specific provision contained in the second proviso. This is clear from the following observations of the Apex Court:

".....After the society communicates a resolution for the expulsion of a member for acts detrimental to the working of the society passed in the manner required by Sub-section (1) of Section 36 to the Registrar for his approval under the first proviso, there is a duty cast on the Registrar to exercise his power of according approval or disapproval within a period of three months from the date of such submission, as provided by the second proviso. According to its plain terms the second proviso places a limitation on the powers of the Registrar. It appears to us 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 (1) of Section 36 of the Act lapses."

6. Learned counsel for the respondent Society submitted that inaction of the

Registrar in dealing with the matter within the stipulated period has serious consequences. A person who is found undesirable by the Society may merrily continue to act as a member because of supine indifference of the Registrar. This cannot be the legislative intent. According to him the Court must read into the provision about the deemed approval. We do not find force in the plea, though in a given case inaction on the part of the Registrar may lead to undesirable consequences. But to read into the provision deemed approval is legally not permissible. It can be very well argued that even after taking six months the Registrar does not give his approval, it may be construed that he has not approved the action and in a sense there is disapproval. We do not think it necessary to go into this hypothetical question.

7. ......................

8. ......................

9. In view of the contextually and conceptually difference in the language of the two provisions, i.e. Rule 36 of the Rules and Section 36 of the Gujrat Act in our view the learned Single Judge was not correct in holding that the Registrar had become functus officio after expiry of six months." (Emphasis Supplied)

32. It is evident that view taken by the Single Judge was

overruled and is not the correct view. We are dismayed, and record

our strong disapproval of the petitioner citing the aforesaid decision

in Anand Lok Cooperative Group Housing Society v. The

Registrar Co-op Group Housing Society, which has been

overruled by a Division Bench of this court in its judgment reported

as B.B. Chibber v. Anand Lok Cooperative Group Housing

Society Limited 90 (2001) DLT 652 (DB).

33. We may note that in the present times, with the advent of

computerized legal softwares it is not difficult for counsels to carry

out legal research, particularly to determine whether a particular

decision, relied upon, has been affirmed or reversed in appeal, or

otherwise, by the same Court or by the Supreme Court. It is evident

that the requisite research has not been done. While observing the

aforesaid, we are assuming that the failure to cite the aforesaid

decision of the Division Bench is a mere oversight, and is not a

deliberate omission.

34. From the order passed by the Registrar disapproving the

expulsion of respondent No.3, it is evident that he has held the

necessary inquiry under Rule 36 before arriving at his decision. In

Anand Lok Co-op. Group Housing Society Ltd. (supra) the

learned Single Judge had held that the only inquiry which is

envisaged under sub-rule (3) of Rule 36 be made by the Registrar,

while granting his approval, is whether full and final opportunity has

been given under sub-rule (1) or (2) to the member concerned or

not. Even on this aspect a Division Bench of this Court has taken a

contrary view. In Sh. P.K. Gupta vs. Gold Craft Group Housing

Society Ltd., 1996 11 AD (Delhi) 106, it has been held that while

dealing with a case falling under sub-rule (3) of Rule 36, the scope of

the inquiry before the Registrar is wide and he has to go deep into

the matter. He has the power to hold a full inquiry, examine the

resolution carefully, deliberate upon it and then form an opinion

whether to approve the same or not.

35. In our view, the period of six months prescribed in sub-rule (3)

of Rule 36 cannot be said to be mandatory and sacrosanct. It

merely provides for a guideline of the timeframe within which the

Registrar is expected to convey his decision on the aspect of

approval/disapproval of the expulsion of a defaulting member.

Pertinently, the said rules do not provide for a consequence which

would flow in case the said deadline of six months is breached.

Even when a provision of law is couched in a negative language

which generally implies mandatory character, the same does not

necessarily lead to the conclusion that it is to be interpreted as a

mandatory provision. We may note that the language of Rule 36(3)

is not couched in negative language. The court, when called upon to

interpret the nature of the provision, may, keeping in view the entire

context in which the provision came to be enacted, hold the same to

be directory though worded in the negative form (See (2005) 4

SCC 480, Kailash v. Nanhku,).

36. In the present context, the interpretation that the time limit of

6 months is mandatory can lead to unjust results. The power of

Registrar is to grant approval to the expulsion of the member.

Therefore, he may, in a given case even disapprove the same.

Merely because the Registrar chooses not to pass the order within

the period of 6 months, there is no reason why his inaction should be

understood as an approval when a given case deserves the

disapproval of the Registrar. The effect of the said time limit not

being complied with, certainly cannot go against the concerned

member and result in a deemed approval.

37. Reliance placed by Sh. Kalra on the Division Bench

judgment of this Court in 45 (1991) DLT 105 (DB) R.K. Aggarwal

v. Registrar Co-op Societies, Delhi & Others to submit that the

provision of Rule 36 is mandatory and not directory is of no avail in

the facts of this case. What has been held in the said decision is

that the society, while expelling a member, has to strictly comply

with and adhere to the procedure prescribed in Rule 36 before it

chooses to expel a member. The decision in 74 (1998) DLT 316,

Mayurdhwaj Cooperative Group Housing Society Ltd. v. The

Presiding Officer, Delhi Cooperative Tribunal & Others also

does not come to the aid of the petitioner. The Supreme Court also

took the view that the procedure for expulsion of members under

Rule 36 is a mandatory procedure and that even after the general

body of the cooperative society passes resolution for expulsion, it

requires approval of the Registrar. In these two decisions, the court

was however, not called upon to and did not go into the aspect as to

whether the period of 6 months available to the Registrar for the

purpose of granting approval for expulsion is mandatory or directory

and the consequence of the said period not being adhered to. We,

therefore, have no hesitation in rejecting the aforesaid submission

on behalf of the petitioner.

38. In the present case, the resolution of the society purporting

to expel respondent No.3 from the primary membership of the

respondent No.2 society was passed on 21.09.1997. From the order

passed by the Registrar, it appears that matter was listed by him for

hearing on various dates when the society and Sh. Vaswani were

represented through their respective counsel. It also appears that

on 17.03.1998, the Registrar directed the Secretary of the society to

calculate the amount with interest as per the directives of his office

and to furnish the same to respondent No.3 along with a copy to his

office. It also appears that the society failed to furnish the same till

the conclusion of the proceedings on 30.09.1998. After conclusion

of proceedings on 30.09.1998, the Registrar passed the order on

13.10.1998 disapproving the purported expulsion of respondent

No.3. It, therefore, appears that the delay, if any, in passing the

order dated 13.10.1998 was attributable to the respondent No.2

society and not to the Registrar or to respondent No.3. It is also

clear from the order that the Registrar had already taken up the

case for consideration well within the period of 6 months of the

passing of resolution by the respondent society on 21.09.1997 and

heard the parties on various dates whereafter he proceeded to pass

a direction to the respondent society on 17.03.1998, which remained

un-complied till the closing of the proceedings on 30.09.1998.

39. Lastly, learned senior counsel for the petitioner has sought

to throw doubts on the statement of facts recorded by the learned

Arbitrator in his award with regard to the raising of the demands of

Rs.22,48,279/- on 09.06.1998 and Rs.50,37,199.76 as on

10.11.1999. We do not see any substance in this submission. It is

noteworthy that the petitioner was not even in the picture when the

said demands were raised by the respondent society on respondent

No.3. The petitioner, in any event, was not privy to the said

demands.

40. Moreover, the aforesaid findings of fact were recorded by

the learned arbitrator in his award dated 13.09.2005 and have also

been relied upon by the Tribunal in the impugned order dated 28 th

July, 2008. In judicial review under Article 226 of the Constitution of

India, it is not for us to indulge into another fact finding inquiry when

the same has been duly conducted by the learned arbitrator and

also considered by the learned Delhi Cooperative Tribunal in

statutory appeals. The learned arbitrator has recorded in his award

as follows: -

"In addition, the demand raised by society, prima-facie, indicates that no application of mind has been there while raising the demand because the demand of Rs.22,48,279 on 9.6.1998 cannot become Rs.50,37,,199.76 on 10.11.1999. This shows the malafide intention of the society to circumvent the order of the Financial Commissioner and in the process, harass the claimant leading to deprive him from the membership of the society resulting in non- allotment of flat to the claimant. Thus, it is concluded that defendant society has failed miserably on this account and has violated the order of the RCS and Financial Commissioner."

It has been further recorded in the award:

"Defendant society has not furnished any detail on the above issue. It has claimed that Rs.22,78,158 was outstanding against the claimant, hence, flat could not be allotted to Shri Lal S. Vaswani."

41. Pertinently the petitioner has not placed before this Court

the memorandum of appeal preferred by him or by the respondent

society to challenge the award made by the learned arbitrator dated

13.09.2005, before the learned Delhi Cooperative Tribunal. It is not

the petitioner's case even in this petition that the above recording of

facts made by the learned arbitrator in his award about the demands

raised by the respondent society on Shri Vaswani was factually

incorrect. Even the respondent society has not disputed the

aforesaid facts.

42. From the order of the Registrar dated 13.10.1998 it is seen

that the society had raised a demand vide letter dated 08.08.1997

for Rs.17,27,321.20 on respondent No.3. In the appeal preferred

before the Financial Commissioner from the said order dated

13.10.1998, the respondent society did not even contend that it had

not raised a demand for Rs.17,27,321.20 on 08.08.1997 on

respondent No.3. This demand of Rs.17,27,321.20 corroborates the

finding that the said demand stood revised firstly to Rs.22,48,279/-

as on 09.06.1998 and to Rs.50,37,199.76 as on 10.11.1999 against

respondent No.3. Consequently, it is clear to us from the record that

no dispute can be raised by the petitioner in these proceedings with

regard to the factum of the raising of the aforesaid demands of