Delhi High Court

Parwana Co-Oprative Group ... vs The Registrar Of Cooperative ... on 7 February, 2011

Author: Sanjay Kishan Kaul

*           IN THE HIGH COURT OF DELHI AT NEW DELHI


%                                             Date of decision: 07.02.2011


+                               WPC No.3866/1993


PARWANA CO-OPRATIVE GROUP
HOUSING SOCIETY LTD.                                            ...APPELLANT


                    Through:             Ms.Nandni Sahni, Advocate

                                         Versus


THE REGISTRAR OF COOPERATIVE
SOCIETIES & ORS.                                                ...RESPONDENTS

                    Through:            None for R-1 to R-3.

                                        Mr.Rakesh Munjal, Sr.Adv.
                                        with Mr.D.R.Bhatia and Ms.Shallu,
                                        Advocates for R-4 to R-6.

                                        Mr.Ramesh Chandra, Sr. Adv.
                                        with Ms.Geeta Mehrotra and
                                        Mr.Deepak Vashishta, Advocates for
                                        R-7 and R-8

                                        None for R-9.
CORAM:
HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
HON'BLE MR. JUSTICE RAJIV SHAKDHER

1.      Whether the Reporters of local papers
        may be allowed to see the judgment?                             No

2.      To be referred to Reporter or not?                              No

3.      Whether the judgment should be                                  No
        reported in the Digest?


SANJAY KISHAN KAUL, J. (ORAL)

1. The present dispute is an unfortunate one which is hanging

fire for 19 years on a limited scope i.e. whether the _____________________________________________________________________________________________

impugned orders passed by the Joint Registrar referring the

claims of R-4 to R-6 to arbitration can be sustained.

2. The factual matrix required for determining the controversy

is limited. One Mr.S.S.Harit was appointed as an

Administrator who had enrolled R-4 to R-6 and other

persons as members of the Society in the year 1988.

Subsequently, elections were held and the Society pleaded

a case that the enrolment of such persons was wrongful and

thus sought to terminate their membership and refund the

amount deposited as initial share money. It is an

undisputed fact that before such action, no show cause

notice was issued.

3. Learned counsel for the petitioner submits that this is so as,

there were certain other members whose dis-entitlement

was upheld right till the Supreme Court. On the other hand,

learned counsel for R-4 to R-6 submits that the other

persons enrolled as members on the same date filed their

arbitration claims, succeeded in the same and ultimately

were entitled to flats even on concession of the

petitioner/Society in Civil Writ Petition No.5027/2001

decided on 16.07.2002.

4. A perusal of the impugned order dated 19.02.1988 shows

that the Joint Registrar has rightly taken note of the fact

that the question involved was only of enrolment by the

Administrator and whether such enrolment was invalid. In

this behalf, the Society had relied upon an order passed by

_____________________________________________________________________________________________

the Registrar on 19.02.1988 where the Registrar had

advised that any enrolment of members, appointment of an

architect and contractors made during the tenure of the Ex-

Administrator Sh.S.S.Harit be considered invalid and illegal

and thus an "appropriate action" may be taken on the same.

5. The appropriate action, in our considered view, would have

required the petitioner/Society to proceed for cessation of

membership of such persons in accordance with law; an

action which the members could challenge if they so desired

by taking recourse to arbitration proceedings under Section

60 of the Delhi Cooperative Societies Act, 1972 („the said

Act‟ for short).

6. The impugned order dated 19.02.1988 also takes note of

the fact that the wording of Section 60 the said Act

encompasses resolution of such disputes by arbitration.

The Section 60 of the said Act reads as under:

"Section 60 - Disputes which may be referred to arbitration

(1) Notwithstanding anything contained in any law for the time being in force, if any dispute touching the constitution, management or the business of a co- operative society other than a dispute regarding disciplinary action taken by the society or its committee against a paid employee of the society arises--

(a) among members, past members and persons claiming through members, past members and deceased members, or

(b) between a member, past member or person claiming through a member, past member or deceased member and the society, its committee or any officer, agent _____________________________________________________________________________________________

or employee of the society or liquidator, past or present, or ......

......

(3) If any question arises whether a dispute referred to the Registrar under this section is or not a dispute touching the constitution, management or the business of a co-operative society, the decision thereon of the Registrar shall be final and shall not be called in question in any court."

7. Thus, in our opinion, the order of the Registrar dated

19.02.1988 could not have been so construed so as to dis-

entitle a party to take recourse to the statutory remedy of

arbitration available under the said Act.

8. We may note that in the present proceedings, learned

counsel for the petitioner seeks to draw strength from a

Circular issued by the Office of the Registrar dated

29.11.1995; being a directive issued under Rule 77 of the

Delhi Cooperative Societies Rules, 1973 („the said Rules‟ for

short). The Circular provides for non-applicability of the

provisions of Section 60 of the said Act in respect of the

aspects of membership like admission/rejection of

membership apart from other aspects.

9. Learned counsel for R-4 to R-6 points out that the said

Circular having been issued after the reference of disputes

to arbitration would have no applicability as it would, if

applied, tantamount to giving it retrospective effect.

10. Learned counsel further points out that the power

conferred on the Registrar under Rule 77 of the said Rules _____________________________________________________________________________________________

cannot encompass such directives in view of the wording of

Rule 77 of the said Rules. The said Rule reads as under:

"77. Directives by Registrar for the successful conduct of the Business

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

11. The aforesaid Rule was examined by the learned

Single Judge of this Court in R.P.Dube v. Lieutenant

Governor & Ors; ILR (1977) I Delhi 79 where it has been

observed in para 14 as under:

"14. On a reference to the scheme of the Act and the Rules and the provisions with regard to the settlement of disputes affecting the constitution, management and business of the society it appears obvious that the expressions "management" and "business" of the society are not inter-changeable and, consistently with the ordinary meanings of these expressions, the former connotes and encompasses within its scope the constituent bodies of the Society, the election to such bodies, meetings etc., the maintenance of books of accounts etc., while the latter connotes the actual business which the society carries on, whether of trade, commerce, industry, etc. It is also apparent that except in certain types of societies a certain amount of corporate democracy is ensured in the management of the societies. It is also apparent that, by and large, orders which the Registrar is empowered to make affecting the interest of the societies or the individual concerned are made appealable as well as subject to review and revision.

Special provision is made for reference of disputes touching the constitution, management or business of the society between the members and the decisions that may be arrived at on these references, _____________________________________________________________________________________________

as indeed the award that may be made, are enforceable as also subject to appeal, review and revision. Having regard to these provisions, it is difficult to accept the contention that when Rule 77 empowers the Registrar to issue directions for "successful conduct of the business of a cooperative society or class of cooperative societies", it empowers the Registrar to decide disputes between the members of the societies with regard to the management of the society, such as the validity of the elections to various offices, validity of meetings of various constituent bodies or empowers him to cancel meetings or to direct fresh meeting being held or to otherwise supersede the decisions of the various constituent bodies of the societies or its individual officers or to adjudicate on the validity of the proceedings of the meetings, decisions with regard to the status of members or to declare that certain members have become disqualified or have ceased to be the members of the society. In view of the specific provision made under Sections 60 and 61 with regard to the adjudication of these matters, any general power to issue directions would exclude from its ambit matters for which there is a specific provision. Even otherwise, the expression "the successful conduct of the business of a cooperative society or class of cooperative societies" in Rule 77 is not wide enough to include any directions with regard to the management of the society otherwise the expression "successful conduct of business" would be given a meaning which will be wholly unjustified on the language of the Rule. To hold to the contrary would amount to making the Registrar a repository of wide powers to entertain and decide all types of disputes with regard to the constitution, management and business of the Society and interfere in the management of the society without any such decision, orders or directions being made subject to any appeal, revision or review because the directions that may be made under Rule 77 are not made justiciable either by the Act or by the Rules. To concede such powers to _____________________________________________________________________________________________

the Registrar would amount to elevating him to the position of a despot with absolute and unregulated power to make drastic orders that may affect the vital interests of the societies and their members and would not be justified either with reference to the scheme of the Act or the language of the Rules. It must, therefore, be held that Rule 77 merely empower the Registrar to issue directions for the successful conduct of the business of the society and such directions would not include matters which fall within the provisions of Section 60 and 61 of the Act."

(emphasis supplied)

12. The aforesaid view has also been adopted by a

Division Bench of this Court in WP(C) No.1715/2001

Rajdhani Cooperative Group Housing Society Ltd. v. The

Presiding Officer, Delhi Cooperative Tribunal & Ors.; decided

on 04.08.2010. We are further informed that this directive

was withdrawn vide a Circular dated 29.11.1995.

13. We are thus unequivocally of the view that the

resolution of the dispute pertaining to the validity of the

enrolment of R-4 to R-6 as members can be determined

only under arbitration conducted in pursuance to Section 60

of the said Act, which is the direction passed as per the