Balraj Singh Malik vs Govt. Of Nct Of Delhi & Anr
2014 Latest Caselaw 7039 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                   Date of decision: 22nd December, 2014.

+              W.P.(C) No.8302/2014 & CM No.19254/2014 (for stay)

       BALRAJ SINGH MALIK                                   ..... Petitioner
                    Through:           Mr. Sanjay Sharawat with Mr. Ratish
                                       Kumar, Advs.

                                Versus

    GOVT. OF NCT OF DELHI & ANR              ..... Respondents
                  Through: Ms. Sangeeta Sondhi, Adv. for R-1.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J.

1. This petition under Article 226 of the Constitution of India impugns

Rule 102(2) of the Delhi Co-operative Societies Rules, 2007 (Rules) framed

under the Delhi Co-operative Societies Act, 2003 (the Act) to the extent it

enables the General Body of the Co-operative Group Housing Society to fix

higher charges of essential services in respect of dwelling units which are on

rent and in possession of tenants, on the ground of being ultra vires Sections

76, 89 and 93 read with Section 137(2) and other provisions of the Act and

Article 14 of the Constitution of India. Axiomatically, the decision taken by

the respondent No.2 Crown Co-operative Group Housing Society Ltd.,

Dwarka, Phase-I, New Delhi in its Annual General Body Meeting held on

12th October, 2014 and as recorded in Minutes / Letter dated 26th October,

2014, to increase the maintenance charges for flats on rent from the existing

rate of Rs.2624/- per month by Rs.300/- per month from November, 2014

till March, 2015 and by Rs.500/- with effect from April, 2015, is also

impugned.

2. It is the case of the petitioner:

(i) that the respondent No.2 Society was allotted land at plot

No.18-B, Sector-7, Dwarka, Phase-I, New Delhi and has constructed

a multi-storeyed building having 70 flats thereon and which flats were

allotted to the members of the respondent No.2 Society;

(ii) that of the said 70 flats, 40-45 flats are presently occupied by

tenants;

(iii) that the petitioner is a tenant in Flat No.A-902 in the said Co-

operative Society;

(iv) that the respondent No.2 Society had initially fixed Rs.1800/-

as monthly maintenance charges to be paid with respect to each of the

flats;

(v) that the petitioner in accordance with the agreement with his

landlord, who is a member of the said Society and the allottee of the

said flat, besides paying the rent of the flat, is also liable to pay the

said maintenance charges directly to the Society;

(vi) that the Society in its Annual General Body Meeting held on

12th October, 2014 took various decisions and with respect to Agenda

Item No.5(e) took the decision as under:

"(e) Discussion of Increase in Maintenance Charges The Secretary informed the House that Society, on account of Maintenance Charges, collects from members Rs.1,26,000/- and expenses are approx. Rs.1,55,000/- due to running of Water Pump for 23 Hrs. daily. This inflates the common area consumption very high and also tariff rates have gone up.

To meet this expense, we have two options-

 Option 1 - Increase maintenance by Rs.500/- per member, but still there will be no margin for contingencies.

 Option 2 - No increase in maintenance but distribution of common area electricity bill amount equally amongst all 70 members, then we will have little margin for contingencies. Few members also suggested increasing the maintenance charges for members who have rented out their flats. Decision: - To meet the requirement the following decisions had been taken/approved by the House.

(i) With regards to Common area electricity amount, the same be distributed and recovered from all 70 Members with effect from Nov. 2014 and the same be

reflected in monthly bill. No payment will be made from Maintenance Charges towards electricity bill w.e.f. Nov. 2014.

(ii) Maintenance Charges for flats on rent be increased by Rs.300/- till Mar. 2015 with effect from Nov. 2014 and by Rs.500/- with effect from Apr. 2015."

(vii) that in accordance with the aforesaid decision, members of the

respondent No.2 Society who are self occupying their flats have to

pay monthly maintenance charges at Rs.2624/- but the members

whose flats are occupied by tenants are required to pay Rs.2924/- per

month with effect from November, 2014 and Rs.3124/- per month

with effect from April, 2015;

(viii) that the said differentia has no rational nexus with the objective;

(ix) that the respondent No.2 Society has so decided in accordance

with Rule 102 of the Rules (supra) and the relevant portion whereof is

as under:

"102. Maintenance of essential services in a cooperative housing society-

(1) The Committee shall be responsible for maintaining the following essential services in the housing complex on regular basis, namely:-

(a) Electricity supply;

(b) Water supply and sewerage;

(c) Garbage disposal;

(d) Running of lifts, borewell, Genset, Water Harvesting system and maintenance of green areas;

(e) Security services;

(f) Availability of plumber, electrician and Mali etc., for day to day services for all occupants;

(g) Availability of fire safety equipments/ systems in running condition;

(h) Round the clock hours emergency response and staffing; and

(i) Other services as may be specified by the General Body.

(2) The general body while framing regulations for maintenance of essential services including mandatory green area in the co-operative housing society shall have to take into account the common areas, common facilities and the services which are rendered to the members and the residents by the co-operative housing society. The regulations shall have to spell out the basis of fixing up of the charges for the maintenance of essential services specially in such complexes, where area of dwelling units and number of storey of flats differ in sizes. Further, where lifts are installed in building charges for its use and maintenance shall have to be paid by all members and residents in spite of the fact whether the particular member or resident is staying at any floor of the building. The general body may fix higher charges of essential services in respect of dwelling units which are on rent and in possession of tenants." (emphasis added).

3. The petition came up before us for admission on 28th November,

2014, when prima facie not finding any merit in the petition, we heard the

counsel for the petitioner at length and reserved judgment on admissibility

of the petition.

4. The counsel for the petitioner has contended:

(a) that the underlying legislative policy of the Act is mutual help,

equitable contribution by the members to the capital of the Society

and equal apportionment of the maintenance charges amongst the

members; there is thus no scope to discriminate amongst the

members;

(b) that there is no embargo on the members allowing their flats to

be occupied by relatives, licensees and tenants and merely because

some members, instead of occupying the flats themselves, have

allowed the same to be occupied by others, is no ground to burden

such members with higher rate of maintenance;

(c) that Sections 76, 89 and 93 of the Act expressly provide that

the costs / charges of maintenance shall be apportioned amongst the

members and that the cost or maintenance charge is a charge on the

flat and "the member is primarily responsible for its payment"; it does

not permit classification of members on the basis of nature of

occupancy of their flats;

(d) that Government, in exercise of the rule making power under

Section 137 of the Act, cannot legislate on the field covered by the

Act;

(e) that the monthly maintenance charges levied for use of

common areas / facilities in a group housing society are the charges

determined for use of such facilities and are leviable against each flat

/ dwelling units if all the units / flats in a Society are of the same size

then the charges must be levied uniformly;

(f) that if occupancy is the determinative criterion for fixing

monthly maintenance charges, then such charges cannot be legally

levied upon a member who keeps his flat unoccupied;

(g) that power under Rule 102 (supra) can be exercised by the

Society only by framing Regulations, as provided under Section 89 of

the Act and which has not been done by the respondent No.2 Society;

(h) that without extending any special privileges and facilities to

the flats in occupation of tenants, they cannot be charged differently,

as the maintenance charges are to be shared „equally‟ by all members;

(i) attention in this regard is also invited to Section 2(g) of the Act

defining Co-operative Principles as that specified in the Schedule to

the Act and to the Schedule to the Act laying down the co-operative

principles and particularly to Clause 3 thereof which provides that

members contribute „equitably‟ and control the capital of their co-

operative democratically; and,

(j) reliance is placed on Agricultural Market Committee Vs.

Shalimar Chemical Works Ltd. (1997) 5 SCC 516, Kunj Behari Lal

Butail Vs. State of H.P. (2000) 3 SCC 40, Amarendra Kumar

Mohapatra Vs. State of Orissa (2014) 4 SCC 583, Patna

Improvement Trust Vs. Smt. Lakshmi Devi (1962) 2 SCR 812, State

of Uttar Pradesh Vs. Singhara Singh (1963) 4 SCR 485 and

Ramchandra Keshav Adke Vs. Govind Joti Chavare (1975) 1 SCC

559.

5. We have considered the material placed before us and also weighed

the contentions raised.

6. First and foremost question which, in our view, arises and which was

during the hearing posed to the counsel for the petitioner also is, whether the

petitioner who is admittedly not a member of the respondent No.2 Society,

has any locus to challenge the decision of the General Body of the

respondent No.2 Society or the Rule aforesaid in accordance wherewith the

said decision was taken and which decision is alleged to discriminate a

member / flat of the said member of the said Co-operative Society from

another member / flat in the said Co-operative Society. To us, it appeared

that the locus for such a challenge would only be of the member of the Co-

operative Society and not of the petitioner who is but a tenant in a flat of

one of the members and otherwise has no say in the Co-operative Society.

The counsel for the petitioner of course contended that it is the petitioner

who is affected by the decision and would thus have a cause of action. We

are however unable to agree.

7. Yet another question which was posed by us during the hearing to the

counsel for the petitioner and which remained unreplied was, whether even

a member of a Co-operative Society could challenge a decision taken in the

General Body meeting of the Society and whether the Court could interfere

in the same. In our view, the principle of the Courts not interfering in the

internal affairs of Society or a Club, would be attracted.

8. The Act was enacted to facilitate the voluntary formation and

democratic functioning of co-operatives as people‟s institutions, based on

self help and mutual aid, to enable them to promote their economic and

social betterment and to provide for regulation, management, and functional

autonomy of such Societies and for matters connected therewith. We may

remind ourselves that our Constitution vide Article 19(1)(c) vests a right in

all citizens to form co-operative societies and vide Article 43-B, it is the

directive principle of the State policy to promote voluntary formation,

autonomous functioning, democratic control and professional management

of co-operative societies.

9. The co-operative movement, as far as the city of Delhi is concerned,

is not new. The Act of 2003 was preceded by the Act of 1972. However,

with the ever increasing population of the city and with the resultant

shortage of land for housing and the axiomatic increase in cost of such land

as well as the inflationary trend in the cost of construction, the co-operative

movement got a huge fillip in the housing sector and co-operative house

building societies became the focal point, even for re-enactment of the Co-

operative Societies Act. This fillip was aided by the Delhi Development

Authority (Disposal of Developed Nazul Land) Rules, 1981 framed under

the Delhi Development Act, 1957 which carved out a category of co-

operative house building societies for allotment of such land on pre-

determined rates.

10. We have been unable to find anything in the Act to sustain the

challenge to Rule 102(2) (supra) as being in conflict therewith. As far as

reliance on Co-operative Principle as defined in Section 2(g) and Schedule

to the Act is concerned, the same is of „equitable‟ as distinct from „equal‟

contribution. The word „equitable‟, as per the Black‟s Law Dictionary,

Eighth Edition, means just, consistent with principles of justice and right,

existing in equity. Since the maintenance charges are expenses incurred by

the Society in maintenance of common areas and for maintenance of

common services and are apportioned between the members, we also looked

up the definition of „equitable distribution‟. The same is defined as a „fair‟

but not necessarily „equal‟ allocation; the fairness is to be determined by

considering all the relevant factors. Similarly, „equity‟ is defined as

fairness, impartiality, even handed dealing.

11. We similarly find the word „equitable‟ only and not „equal‟, used in

Sections 76, 89 and 93 of the Act on which the petitioner relies. All the said

Sections are under Chapter IX of the Act titled "Special Provisions for Co-

operative Housing Societies". Section 76, in sub-sections (1) to (7) thereof

lays down the rights and privileges of members on allotment of plot or

dwelling unit in a co-operative housing society. We are unable to find

therein any requirement for equal distribution of maintenance charges.

Section 86, provides for expulsion of a member of a co-operative housing

society inter alia on the ground of persistent default in respect of the dues of

the Society. Similarly Section 87 provides that a person ceases to be a

member of the co-operative housing society inter alia on the ground, if such

member, after becoming a member of the housing society, acquires either in

his own name or in the name of his spouse or any of his dependent children,

a residential property exceeding 66.72 sq. meters in area either on lease-hold

basis or free-hold basis or on power of attorney or on agreement to sell

basis. Section 88 provides that the management of co-operative housing

society shall vest in its committee. Section 89, on which reliance is placed,

requires every co-operative housing society to frame Regulations from time

to time with the approval of the General Body for maintenance of essential

services in the housing society and containing details of services to be

provided and service charges to be recovered for such services from the

"members and residents of its housing complex". We may highlight that the

same uses two separate expressions i.e. „members‟ and „residents‟ and does

not contain any requirement for the charges to be recovered "equally".

Section 93 provides that the management of a co-operative housing society

shall be entrusted to the committee and while again providing that it shall be

the responsibility of the „member‟ or „occupant‟ to make payment of

maintenance charges to the committee, does not state that such payment

shall be on equal basis.

12. We may at this stage also deal with the contention of the counsel for

the petitioner, of Section 89 providing for the charges to be recovered to be

specified by the Society by framing Regulations and that the respondent

No.2 Society has not framed any such Regulations. The meeting of the

respondent No.2 Society in which the impugned decision was taken was

admittedly of the General Body. From the minutes of the said meeting, it is

evident that one of the agendas for the meeting was the increase in

maintenance charges. Neither do we find in the Act nor has the counsel for

the petitioner argued that there is any procedure prescribed for framing such

Regulations. We are unable to see, as to how the decision taken in the said

meeting does not qualify to be a Regulation of the Society.

13. As far as the argument, of the distinction aforesaid made between self

occupied flats and tenanted flats of the Society, in the matter of levy of

maintenance charges, being violative of Article 14 of the Constitution is

concerned, what needs to be seen is, whether the two are similarly placed, in

the same class. Evidently, the members of the Society who by contributing

to the cost of land and cost of construction of the Society are in occupation

of the flats so allotted to them, cannot be said to be in the same class or

similarly placed as a person who has not contributed to the cost of land and

cost of construction of the flats and who is in occupation of a flat of the co-

operative housing society as a tenant therein of a member of a co-operative

society. The two clearly belong to distinct classes.

14. The next question to be considered is, whether the said differentiation

has a reasonable nexus to the resolution / decision of the General Body of

the Society to collect maintenance charges from the tenants at a rate higher

than from the members of the Society in self occupation of their flats.

Though the argument of the counsel for the petitioner, of the two being

equally liable because they equally / similarly enjoy the benefits of the

common services and areas, is attractive but the test laid down in the Act is

of equity and not of equality. The decision of the General Body of the

respondent No.2 Society and which as aforesaid is permitted by the Rules,

cannot be said to be not equitable or discriminatory. As aforesaid, the

question of discrimination between two separate and distinct classes, does

not arise. As far as treatment of two members of the Society differently is

concerned, though does not arise in this case as the petition has not been

filed by any member of the Society but still, a member who has let out his

flat, cannot be said to be similarly placed as a member who is in occupation

of his flat. While a member in occupation of the flat is not earning anything

therefrom, a member who has let out the flat is earning therefrom and thus

getting a return on the capital investment made in the cost of land and cost

of construction of the flat. If the General Body of the Society is of the

opinion that the same is equitable, it is not for this Court to interfere. This

Court in Lok Sevak Cooperative House Building Society Ltd. Vs. S.P.

Goyal 70 (1997) DLT 152 was dealing with a challenge to the differential

price being demanded by the Society for allotment of land to the members.

It was the contention that equality is the hallmark of democracy within the

Society and every member of the Society is to be treated at par and the

Society cannot discriminate between one member and another and all have

to be treated equally. It was held that a person who was inducted as a

member of the Society in the year 1986 cannot be allotted at the same rate at

which a member inducted in the year 1970 was allotted and equating the

two at par would amount to treating unequals as equals which is not

warranted by any criteria.

15. As aforesaid, the principle of Courts not interfering in internal affairs

of Societies/Clubs applies. It has been held that Clubs / Societies / other

such associations should be allowed to decide on their own affairs and the

Court insofar as such decision is reached by following the prescribed Rules

and procedure, will not interfere therein. As far back as in Satyavart

Sidhantalankar Vs. Arya Samaj, Bombay AIR 1946 Bombay 516, it was

held that every member of a corporation or an incorporated company joins

the same on the basis that prima facie the majority of members are entitled

to exercise powers and control operations generally and the same would be

the position in the case of unincorporated associations of individuals

whether the same be registered under the Societies Registration Act or not.

The rule of majority was held to be the normal basis of these associations.

It was held that the members of such associations know fully well that the

affairs of these associations would be conducted normally by the vote of the

majority of members thereof and no member would be heard to contend to

the contrary. The Supreme Court in T.D. Daver Vs. Lodge Victoria AIR

1963 SC 1144 held that interference of the Courts in the case involving

expulsion of a member from the Club is extremely limited and the Court‟s

enquiry only is to find out whether the decision making is within the four

corners of the rules and the Courts cannot sit in appeal over the decisions of

the Society/Club. This view was followed by the High Court of Kerala in

K. Nanu Vs. C.H. Kunhikrishna Kurup MANU/KE/1146/2013 as well as

by this Court in All India Wokey's Hockey Federation Vs. Indian Olympic

Association 55 (1994) DLT 607 and Ashok Kumar Vs. SBI Officers

Association 201 (2013) DLT 433 (in FAO (OS) 252/2013 preferred

thereagainst and decided on 27.08.2013 this part was not interfered with).

In the context of the Supreme Court Bar Association also, in its dispute with

B.D. Kaushik reported in (2011) 13 SCC 774 it was held that the Courts

leave it open to the association and its members to frame a bye law, rule or

regulation which may provide for eligibility and / or qualification for the

membership and / or provide for limitations / restrictions on the exercise of

any right by and as a member of the said association. It was held to be a

settled legal proposition that once a person becomes a member of the

association, he / she loses his individuality qua the association and has no

individual rights except those given to him by the rules and regulations and /

or bye laws of the association.

16. We repeat that no member of the Society has any grievance with such

a decision. Rather, the members who have let out the flats joined / are

deemed to have joined in taking the said decision. It is for the tenants of the

said members to, if of the view that the rate at which they are paying the

rent and at which they are required to pay the maintenance charges is not

worth the facilities, amenities provided or the aggregate thereof is higher

than the market rate, to quit the same. However, once the tenant has come

into occupation of the property, he cannot be permitted to dictate qua the

affairs of the Society. In fact, we had during the hearing, asked the counsel

for the petitioner that if the petitioner is aggrieved from the said decision,

the remedy of the petitioner is to call upon his landlord who is a member of

the Society to exercise his powers as a member and have the said decision

reversed, if majority of the other members of the Society are willing for the

same. The Supreme Court recently in J.N. Chaudhary Vs. State of

Haryana (2014) 11 SCC 249 held that in judging the functioning of a

Cooperative Society where the democratic process of election is adopted in

pursuance to the Rule and a collective decision is taken by majority of the

members of the entire body expressed in terms of a resolution passed by the

General Body, then the same cannot be ignored and bypassed at the instance

of handful of members. It was held that if a decision is taken by majority in

terms of the Rule, it cannot be overruled by minority even on the ground of

mala fide or fraud unless established through strict proof of evidence. It

was reiterated that mala fide is always easy to allege but difficult to prove.

17. In fact, the Supreme Court in the B.D. Kaushik judgment (supra) also

held that no citizen has the fundamental right to become a member of a

Cooperative Society; his right is governed by the provisions of the statute;

so the right to become or to continue being a member of the Society is a

statutory right and his being a member of the society is subject to the Act,

Rules and Bye-laws applicable from time to time. It was thus held that no

individual member is entitled to assail the constitutionality of the Act, Rules

and the Bye-laws as he has his right under the said Act, Rules and Bye-laws

and is subject to its operation and "the stream cannot rise higher than the

source". The same principle was echoed earlier in State of U.P. Vs. C.O.D.

Chheoki Employees' Cooperative Society Ltd. (1997) 3 SCC 681 and in

Zoroastrian Co-operative Housing Society Ltd. Vs. District Registrar Co-

operative Societies (Urban) (2005) 5 SCC 632. Though vide 97th

Amendment to the Constitution with effect from 15 th February, 2012 the

right to form Co-operative Societies has been made a fundamental right but

the same in our view would not alter the said principle in as much as the

right to form a Co-operative Society is different from the right to become a

member of a Co-operative Society which continues to be governed by the

provisions of the Act, the Rules and the Bye-Laws. At least a Division

Bench of the Madras High Court in M. Arumugam Vs. State of Tamil

Nadu MANU/TN/0811/2013has taken the same view.

18. Notice may also be taken of the fact that even for the levy of property

tax self occupied and tenanted flats/premises are treated differently.

19. While on the subject we may also notice that the position which

emerges from a reading of the various provisions of the Act is that the co-

operative housing societies are intended to fulfil the need of the citizens for

houses for their own occupation. Plots/flats in co-operative housing

societies are not intended for trading or as a tool of investment for

appreciation. It is for this reason only that conditions have been placed on

acquisition and disposal thereof. A person can be a member of one society

only and cannot become a member and / or ceases to be a member, if the

conditions regarding not having any other property as aforementioned, are

not fulfilled / are breached (Ref. Section 22 of the Act and Rules 21, 23 of

the Rules).

20. Considering all the aforesaid factors, we are unable to hold that the

decision of the General Body of the respondent No.2 Society as permitted

by the rules to levy a higher rate of maintenance charges on tenants of flats

in Co-operative Society can be said to be inequitable.

21. As far as the judgments cited by the counsel for the petitioner are

concerned, we do not find the same to be having any application to the

matter / issue at hand.

22. Agricultural Market Committee and Kunj Behari Lal Butail (supra)

are on the proposition of essential legislative functions being non-delegable.

The argument that the impugned part of Rule 102(2) is an essential

legislative function and beyond the rule making power in Section 137(2)(zz)

i.e. of making rules providing the guidelines for maintenance of essential

services in a co-operative housing society. However the same ignores the

other clauses of Section 137 which permit rules to be made qua the

management of co-operative housing society (zy). Moreover, Section 88

under Chapter IX (supra) containing Special Provisions with respect to the

co-operative housing societies vests the management of every co-operative

society in its committee and Section 89 permits a co-operative society to

from time to time with approval of the General Body frame regulations for

maintenance. No limitation is placed on the power of the General Body in

this regard and which is also indicative of there being no limitation on the

right of co-operative society to levy higher maintenance charges on tenant

vis-a-vis members.

23. As far as the reliance on Amarendra Kumar Mohapatra (supra) is

concerned, attention was invited to para 53 thereof, laying down the

principles to be determined for judging equality. We have already

hereinabove held that tenants cannot be said to be equally placed as

members of a co-operative society in self occupation of their flats. The last

three judgments are on the proposition of exercise of power,

though prescribed to be exercised by making Regulations, without framing

Regulations. We have already dealt with the said aspect hereinabove.

The counsel, inspite of our prodding, could not state as to how the decision

taken in the General Body meeting would not amount to framing

Regulations.

24. We therefore do not find any merit in this petition, which is

dismissed.

No costs.

RAJIV SAHAI ENDLAW, J.

CHIEF JUSTICE DECEMBER 22, 2014 bs