Vardhman Co-Operative H/B ... vs Anil Kumar Jain And Anr
2012 Latest Caselaw 5822 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+                       Date of Decision: 27.09.2012

%      W.P.(C) 1359/2012

       VARDHMAN CO-OPERATIVE H/B SOCIETY LTD..... Petitioner
                     Through: Mr. Sudhir Nandrajog, Sr.Adv. with
                              Mr.Sumit Tomar and Mr.Dhiraj
                              Philip, Advocates.
              versus

       ANIL KUMAR JAIN AND ANR                ..... Respondents
                    Through: Mr.Rakesh Tiku, Sr.Adv. with
                             Mr. S.C. Gupta, Advocate for R-1.
                             Mr.Rajiv Nanda, Addl. Standing
                             Counsel for Govt. of NCT of Delhi
                             with Ms.Shawana Bari, Adv.for R-2.

       CORAM:
       HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
       HON'BLE MR. JUSTICE VIPIN SANGHI

SANJAY KISHAN KAUL, J. (Oral)

1. The petitioner-society filed the present writ petition under Article 226 of the Constitution of India seeking to assail the order of the Deputy Registrar (Arbitration) dated 20.12.2010 issued on 07.01.2011 as well as the order dated 11.01.2012 of the Delhi Cooperative Tribunal (DCT) dismissing the appeal of the petitioner-society. The effect of these orders is that an application filed by respondent no.1 under Section 70 of the Delhi Cooperative Societies Act, 2003 (hereinafter referred to as „the said Act‟) seeking reference of disputes to arbitration has been allowed. Normally, we would not have entertained the writ petition as the impugned order merely

refers the claim of respondent No. 1 to arbitration and it does not decide any rights of the parties on merit. However, it is pointed out by learned senior counsel for the petitioner that the Registrar, while deciding to refer the claims to arbitration, is obliged to decide the aspect of limitation and the said aspect has completely escaped consideration by the Deputy Registrar (Arbitration), and has been erroneously been decided by the DCT upon adoption of a wrong approach. It is argued that in the facts of this case, ex- facie the claim of respondent No. 1 was barred by limitation. It is in these circumstances that we have decided to examine the matter.

2. Respondent no.1 filed a claim petition under Section 70 of the said Act for reference of disputes to adjudication under Section 71 of the said Act alleging that he is the bona fide member of the petitioner-society holding a valid share certificate issued on 01.11.1990. Respondent no.1 claims to be living in the same locality where the plots of the society are located as his father was an independent member of the society with whom he was staying. Respondent no.1 claims that no plot was available for allotment by the society to its waitlisted members as the competent authority had failed to allot additional land. Respondent No. 1 was also a waitlisted member, as the society had 168 members to whom 168 plots were allotted and one plot was earmarked for establishment of a place of worship with the approval of the concerned authorities. It is in the year 2004 that respondent no.1 claims that he smelt some foul play and started communicating with the society, with the first communication emanating on 23.07.2004. Respondent no.1 further claims that as per his knowledge five plots were lying vacant and thus he continued his communications with the society, the last of which is dated 25.10.2007. Thereafter there is a hiatus period of about three years, before

a legal notice is issued on 28.05.2010, inter alia, calling for copies of relevant resolutions but to no avail as, according to the petitioner-society, respondent no.1 was not admitted as its member vide resolution passed in the General Body Meeting held on 07.06.1992. In this meeting the enrolment of fourteen members by the Managing Committee vide resolutions dated 03.09.1989 and 18.02.1990 was held to be invalid and disapproved. Respondent no.1 thus prayed that the dispute be referred to arbitration that he is the bona fide member of the society and that his name could not be struck off from the list of members. He also sought a declaration that no copies of the resolution dated 07.06.1992 had been conveyed to him.

3. The aforesaid application was contested by the petitioner-society. It was alleged that respondent no.1 was living in the house of his father in the colony, which he had since inherited on the demise of the father along with other legal heirs. Respondent no.1 is alleged to have remained silent for about fourteen years (between 1990 to 2004), whereafter he started the communications. Knowledge is imputed to respondent no.1 of all that has transpired and a specific plea was taken that the petition was barred by time as the period prescribed for limitation is six years.

4. We may note that the relevant provision dealing with settlement of disputes is contained in Chapter VIII and Section 70 provides for reference of disputes to arbitration. Sub-section (4) provides for the period of limitation which reads as under:

"SETTLEMENT OF DISPUTES

DISPUTES WHICH MAY BE REFERRED FOR ARBITRATION

70.....

... .... ... ... ...

(4) (a) Notwithstanding anything contained in the Limitation Act, 1963 (36 of 1963), but subject to the specific provisions made in this Act, the period of limitation in the case of a dispute referred to the Registrar under sub-section (1) shall -

i)... ... ... ...

ii) save as otherwise provided in sub-clause (iii), when the dispute relates to any act or omission on the part of any of the parties referred to in clause (b) or clause (c) of sub-section (1), be six years from the date on which the act or omission with reference to which the dispute arose or took place.

........................

(b) The period of limitation in the case of any other dispute except those mentioned in the foregoing clause which are required to be referred to the Registrar shall be regulated by the provisions of the Limitation Act, 1963 (36 of 1963), as if the dispute was a suit and the Registrar a civil court.

(c) Notwithstanding anything contained in clauses (a) and (b), the Registrar may admit a dispute after the expiry of the period of limitation, if the applicant satisfies the Registrar that he had sufficient cause for not referring the dispute within such period and the dispute so admitted shall be a dispute which shall not be barred on the ground that the period of limitation has expired." (emphasis supplied)

5. It is pointed out to us that under the Delhi Cooperative Societies Rules, 2007 (hereinafter referred to as „the said Rules‟) enacted under the

said Act, Chapter VIII deals with settlement of disputes. Rule 84 provides for procedure for making reference of disputes under Section 71 of the said Act. The relevant provision reads as under:

"84. Procedure for making reference of dispute under section 71 of the Act-

(1) In case of any dispute referred to in sub-section (1) of section 70, the party concerned, shall apply to Registrar in writing in Form-12 stating inter-alia (i) all the facts constituting the cause of action, (ii) names and addresses of the other parties, (iii)facts showing that the subject matter of dispute is not barred by limitation, and,

(iv)relief claimed in terms of money or otherwise. Each statement in the application shall have separate consecutive paragraphs serially numbered. At the end of the application there shall be made verification with the place and date of verification by the applicant party. ...............

(4) If the Registrar is satisfied that the application is maintainable under section 70 of the Act, the Registrar shall by an order, admit the application for decision of the dispute in accordance with the Act and these rules and record his findings on the following points within ninety days of the receipt of the application of referring the dispute, namely:-

(a) Whether there is a dispute;

(b) Whether the dispute comes with in the purview of sub-section (1) of section 70 of the Act;

(c) Whether the dispute is between parties mentioned in clauses (a) (b)(c) and (d) of sub-section (1) of section 70 of the Act;

(d) Whether the dispute is with in the period of

limitation as per subsection (4) of section 70 of the Act.

... ... ... ... ... ..." (emphasis supplied)

6. Thus, an applicant has to specifically allege that the dispute is not barred by limitation and the Registrar has to satisfy himself that the dispute sought to be referred is within the prescribed period of limitation as provided in sub-section (4) of Section 70 of the said Act. Insofar as the factual matrix is concerned, we may note that a meeting of the Managing Committee of the petitioner-society is stated to have been held on 18.02.1990 where certain actions taken up by the Registrar Cooperative Societies qua the society were discussed. The society recorded that these actions were illegal and arbitrary which had resulted in huge litigation expenses for the society and that further expenses would arise, and thus the society may enroll ten members with immediate effect whose names were specified therein. The name of respondent no.1 was at serial no.9. The applications for such membership are recorded to have been duly received by the society on an open invitation displayed on the notice board of the society‟s office and it was resolved that the members be requested to deposit Rs.10 as admission fee, Rs.100/- towards share money. They could also be called upon to pay upto Rs.15,000/- on account of land cost. A copy of the resolution was to be sent to the RCS 'seeking his approval to the action of the society'. Respondent no.1 alleges that in pursuance to this resolution a share certificate was issued to him on 01.11.1990. Pertinently, at the stage when the elections were to be held in 1991 to the Managing Committee, the list of these members enrolled was provided by the ex-President Sh.C.L.Jain

(the real uncle of respondent no.1). This list was objected to on the ground that it was a bogus list and it is at that stage that the factum of enrolment of the 14 members was found out. On objections being raised to the inclusion of these fourteen members in the list of members as voters, the election officer disallowed the claims of these fourteen persons including respondent no.1.

7. A Special General Body Meeting was held on 07.06.1992, the original minutes of which have been produced before us. This meeting has been attended by the father of respondent no.1. The list of members provided by the ex-President during the elections was taken up. It was recorded that as per the Managing Committee‟s meeting held on 03.09.1989 and 18.02.1990 their admission was subject to the approval of the Registrar in this regard, which had not been obtained. It was also recorded that during the proceedings before the election officer it had been revealed that the enrolment of members was not in furtherance of the objects of the society, as it was to raise funds for meeting litigation expenditure of the society against the RCS (this is qua the enrolment of ten members and respondent no.1 is one of them). As far as the remaining four members enrolled vide the resolution of the Managing Committee dated 03.09.1989 are concerned, their enrollments were also stated to be not in accordance with law or bye- laws of the society. The minutes further record that in Civil Writ Petition No.2791/1989, the stand of the ex-President Sh.C.L.Jain to defend the enrollment of these members had not been accepted by the High Court. The minutes record that in terms of a circular no.F 50 (1)/77-Cooperative Housing dated 15.07.1977 issued by the RCS, it had been specifically provided that enrolment of members cannot be made by the society if there

is no vacancy (in the present case there was no vacancy). Out of the land available, 169 plots had been carved out and 168 members were allotted one plot each while one was reserved for place of worship. The members expressed their anguish at the enrolment of kith and kin of the members of the ex-Managing Committee. We have already noted that Sh. C.L.Jain, the ex-President, was the brother of the father of respondent no.1, and the father of respondent no.1 had already an independent plot which has now been inherited by respondent no.1 along with other legal heirs. It is in the presence of the members, including the father of respondent no.1, that the resolution was passed that the name of fourteen members mentioned in the list be deleted immediately and the RCS be informed accordingly and the amount deposited, if any, by the fourteen persons be refunded back. However, in case of respondent no.1, no amount other than the share certificate amount of Rs.100 plus Rs.10 were deposited and even the sum of Rs.15,000/- had not been deposited, and thus the question of refund of this amount to respondent no.1 did not arise.

8. We may also add here that learned senior counsel for the petitioner- society has pointed out to us that at the stage of alleged enrolment, the earlier Act of 1972 was applicable and Delhi Cooperative Societies Rules, 1973 had been enacted thereunder where Chapter (III) dealt with the issue of membership of the society. Rule 24 provided for conditions to be complied with for admission to membership. The relevant provision reads as under:

"24. Conditions to be complied with for admission to membership:-

1. No person shall be admitted as member of a co-operative society unless-

(i) ... ... ... ... ... ... ... ... ...

(ii) his application is approved by the committee of the co- operative society in pursuance of the powers conferred on it in that behalf and subject to such resolution as the general body may in pursuance of the powers conferred on it in that behalf from time to time pass, and in the case of nominal, associate, or sympathiser member by an officer of the society authorised in that behalf by the committee. (Amended on 24.5.82).

(iii) ... ... ... ... ... ... ... ... ..." (emphasis supplied)

9. It has thus been pointed out that the resolution of a General Body approving the decision of the Managing Committee for such enrolment was mandatory which had never taken place but, on the contrary, the meeting held on 07.06.1992 had resolved that the membership enrolment should not take place. It is in the conspectus of the aforesaid facts that we have to examine the plea raised by learned senior counsel for the petitioner i.e. that the dispute was incapable of being referred to arbitration on account of the bar of limitation. Learned counsel fairly stated that, at this stage, the merits could not be examined as that would be an issue only arising if a reference to arbitration was made.

10. The submission of Mr. Tiku, Senior Advocate for respondent No. 1 is that the society never communicated its resolution dated 07.06.1992 to the said respondent, and there was no other way in which the said respondent could become aware of the same. He submits that the stand of the society, contained in their communication dated 16.06.2005 was that the society was not obliged to correspond with respondent No. 1 as he was a non-member.

He submits that the respondent No. 1 become aware of the General Body Resolution dated 07.06.1992 only through the society‟s letter dated 16.06.2005. Thus, the invocation of arbitration was within limitation.

11. The aforesaid facts certainly do show that since respondent no.1 claims to have received a share certificate dated 01.11.1990 in pursuance of the Managing Committee Resolution dated 18.02.1990, the knowledge of the said resolution of the Managing Committee has to be imputed to him. The said resolution itself provided that the same was subject to the approval of the RCS. No such approval of the RCS took place, but on the contrary, the resolution of the General Body dated 07.06.1992 did not approve such enrolment of members by the Managing Committee which was required as per Rule 24(2) of the 1973 Rules. It is, thus, not open to respondent no.1 to profess ignorance on the basis of ignorance of law or facts as set out hereinabove. The delay is inordinate in the present case as its 20 years from the date of issuance of the certificate, and 18 years from the resolution passed on 09.06.1992 of which respondent no.1 claims ignorance. The resolution for enrolment of the petitioner dated 18.02.1990 itself had resolved that the members may be also called upon to pay Rs.15,000/- each on account of land. In the case of respondent no.1 no such deposit was made. Thus, respondent no.1 was quite aware that the very terms of the resolution had not been implemented and yet chose to remain silent for twenty years. He cannot profess lack of knowledge on account of the fact that in the elections to be held for 1991 objections were raised to the right of respondent no.1 to vote and those objections were sustained, questioning the enrolment of respondent no.1. Not only that, respondent no.1 himself claims to be living in the same locality with his father. He further claims that he

was continuously monitoring the issue from time to time, as set out in the application under Section 70 of the said Act. His father participated in the General Body Meeting held on 07.06.1992. The petitioner remained completely silent on the issue of his alleged claim right till the first communication addressed by him on 23.07.2004. This is what has been set out in the application filed under Section 70 of the said Act filed by respondent No. 1 himself. The application is stated to have been filed on 25.06.2010 on the anvil of the expiry of the limitation with intermittent silence over long periods, alleging a cause of action from September, 2007.

12. In our view, what has completely been lost sight of is that merely by issuing the communication post expiry of limitation and eliciting a reply, the limitation cannot be revived. This view finds support from the observations of the Supreme Court in C.Jacob Vs. Director of Geology and Mining, (2008) 10 SCC 115. It is after fourteen years of the alleged share certificate having been issued (which was issued without following the due process as the General Body did not approve the membership nor was approval of RCS obtained) that the first communication has been issued. The arbitration application has been filed only in June, 2010, i.e., 18 years from the passing of the resolution by the General Body, while the prescribed period of limitation is six years. The period of six years has to be reckoned from the date on which act or omission with reference to which the dispute arose or took place. This expression cannot imply that for a period of more than six years from the date when the cause of action accrues there can be silence and then a communication sent to re-trigger the limitation. A perusal of the impugned order shows that the Deputy Registrar (Arbitration) exercising the powers of the RCS did not even examine this issue while the appellate

tribunal in a cursory manner dealt with this issue only relying on the communication of the Assistant Registrar dated 25.09.2009 forgetting the principle that subsequent communications and responses cannot trigger off limitation if that period has already elapsed. The Supreme Court in C.Jacob‟s case (supra) has commented on this modus of „representation‟. The relevant para nos. 8 to 11 are reproduced below.

"8. Let us take the hypothetical case of an employee who is terminated from service in 1980. He does not challenge the termination. But nearly two decades later, say in the year 2000, he decides to challenge the termination. He is aware that any such challenge would be rejected at the threshold on the ground of delay (if the application is made before tribunal) or on the ground of delay and laches (if a writ petition is filed before a High Court). Therefore, instead of challenging the termination, he gives a representation requesting that he may be taken back to service. Normally, there will be considerable delay in replying to such representations relating to old matters. Taking advantage of this position, the ex-employee files an application/writ petition before the tribuna1/High Court seeking a direction to the employer to consider and dispose of his representation. The tribunals/High Courts routinely allow or dispose of such applications/petitions (many a time even without notice to the other side), without examining the matter on merits, with a direction to consider and dispose of the representation.

9. The courts/tribunals proceed on the assumption, that every citizen deserves a reply to his representation. Secondly, they assume that a mere direction to consider and dispose of the representation does not involve any "decision" on rights and obligations of parties. Little do they realise the consequences of such a direction to "consider". If the representation is considered and accepted, the ex-employee gets a relief, which he would not have got

on account of the long delay, all by reason of the direction to "consider". If the representation is considered and rejected, the ex-employee files an application/writ petition, not with reference to the original cause of action of 1982, but by treating the rejection of the representation given in 2000, as the cause of action. A prayer is made for quashing the rejection of representation and for grant of the relief claimed in the representation. The tribunals/High Courts routinely entertain such applications/petitions ignoring the huge delay preceding the representation, and proceed to examine the claim on merits and grant relief. In this manner, the bar of limitation or the laches gets obliterated or ignored.

10. Every representation to the Government for relief, may not be replied on merits. Representations relating to matters which have become stale or barred by limitation, can be rejected on that ground alone, without examining the merits of the claim. In regard to representations unrelated to the Department, the reply may be only to inform that the matter did not concern the Department or to inform the appropriate Department. Representations with incomplete particulars may be replied by seeking relevant particulars. The replies to such representations, cannot furnish a fresh cause of action or revive a stale or dead claim.

11. When a direction is issued by a court/tribunal to consider or deal with the representation, usually the directee (person directed) examines the matter on merits, being under the impression that failure to do so may amount to disobedience. When an order is passed considering and rejecting the claim or representation, in compliance with direction of the court or tribunal, such an order does not revive the stale claim, nor amount to some kind of "acknowledgement of a jural relationship" to give rise to a fresh cause of action." (emphasis supplied)

13. Even though Section 70 of the said Act authorizes the Registrar to

admit a dispute after expiry of the period of limitation, the said power can be exercised upon satisfaction of existence of sufficient cause for not seeking reference of the dispute within limitation. In the present case, neither sufficient cause was shown to exist, nor found to exist. Our aforesaid discussion shows that the respondent No. 1 did not show any plausible cause, much less sufficient cause, to explain the inordinate delay on his part in seeking reference of the dispute to arbitration.

14. We are, thus, of the view that the claim of respondent no.1 is clearly barred by time and the question of reference of such a claim to arbitration did not arise in view of the provisions of the said Act read with the said Rules which require the RCS to have examined this issue of limitation before making a reference.

15. The writ petition is accordingly allowed and the impugned order of the Deputy Registrar (Arbitration) dated 20.12.2010 issued on 07.01.2011 as well as the order dated 11.01.2012 of the Delhi Cooperative Tribunal are set aside making the rule absolute.

16. The parties are left to bear their own costs.

SANJAY KISHAN KAUL, J

VIPIN SANGHI, J SEPTEMBER 27, 2012 dm