Raj Rani v Delhi Administration

371 A RAJ RANI & ORS. ETC. _v._ DELHI ADMINISTRATION & ORS. _December_ 10, 1976 [A. N. RAY, CJ., M. H. BEG AND JASWANT SINGH, JJ.] _Delhi Co-operative Societies_ _Act_ _1972-De/hi_ _Co-operative Societies Ru!es,_ 1973, _rr._ 24, 25, _30-Ru/es_ _about_ members/zip-Cooperativ~ _Society-App/1ca-_ _.tions-Payment_ _.of_ _share_ _money-Whether_ _mandatory or_ di~ectory----;Mala .fide _al/Dtment-Allotment with undue haste by passing persons m wanting_ _bst-_ _.Dedaration_ ru _default«s for non-payment_ _of tlues-Not_ _submitting affidavits._ On 6-7-1971 the Lt. Governor of Delhi passed an award directing the New Friends Co-operative House Building Society Limited to pay R~. 2~ lacs to the Delhi Administration. On 9-7-1971 the Lt. Governor by a notification removed the elected Managing Committee and appointed a nominated Managing Com-· mittee under rule 56 of the Delhi Cooperative Societies Rules, 1950 framed under the Bombay Cooperative Societies Act 1925 as applied to Delhi. Th~ term of the Managing Committee was for one year. On 23-10-1971 the nominated Managing Committee passed a resolution to make the ~ward of the ~t. Governor a rule of the court. In December, 1971, the nommated Managmg Committee passed a resolution for having direct sub-leases and in January 1972 called for more funds. In July, 1972, the Lt. Governor issued a second n@tification extending the term of the nominated Managing Committee by further two years. 287 members of the Society filed writ petition No. 340 of 1972, challenging the vires of rule 56 and challenging the action of the Lt. Governor in snperseding the elected Managing Committee and in extending the term of the nomi· nated Managing Committee by a further period of 2 years. On 30-4-1973, the nominated Managiing Committee issued a circular asking the members of the Society to pay certain amounts. On 6-7-1973, this Court restrained the Society and its Chairman from declaring any member a defaulter. On 13,8-1973, this -Court directed that all the interim orders passed in the writ petition should be confined to the 287 petitioners. On 16-8-1973, K. V. Johar filed a writ petition in a representative capacity under Order 1 rule 8 of the C.P .C. on behalf of all the members of the Society. On 17-8-1973, the nominated Managing Committee declared 321 members as defaulters. On 21-9-1973 this Court restrained ·the Society from taking any steps in pursuance of the said resolution. On an application made by respondent No. 6 the stay granted in K. V. Johar's petition was vacated. However, application for vacating the stay order in Raj Rani's petition wa~ not punucd. B # c D E F G H On 6-1-1974 the nominated Managing Committee declared 39 members as <lefaulters for non-payment of dues and 42 members as defaulters for not sub mitting the affidavits. On 25-1-1974 the nominated Managing Committee decided to enrol 60 new members. On 26-1-1974 a confidential letter was addressed by respondent No. 6 to the Lt. Governor seeking his approval to the enrolment of 60 new members. and allotment of plots to them. On the,same day the Lt. Governor gave his approval. Two C.M.~. were filed by the writ petiffo11ers challenging the de<:laration of the members as defaulters and enrolment of 60 new members. This Court on 29-3-1971 directed that all the papers including resolutions, original applications and original allotments should be produced in the Court. This Court also restrafoed the nominated Managing Committee by an injunction from taking any steps in any manner. On 4-4-1974, this Court passed direction in respect of some members who were declared defaulters and who had made part payments either within the time prescribed or even beyond the time prescribed. This Court also mentioned ~at the allotment of plots to 60 new members who were characterised as very important persons appeared .\ B ## c D E F G H 372 SUPREME COURT REPORTS [1977] 2 s.c.R. to have been made in undue haste and the persons on the waiting list were not considered and that no notice was given to persons inviting applications. Thia Court directed that the list of 60 new members had to await final adjudication and also directed that no further steps should be taken in the case of those 60 allottecs. The Court also directed that the cases of remaining 24 defaulters would be considered if it came to the conclusion that the allotment in favour of 60 new members could not be allowed to stand. Rule 24 of the Delhi Cooperative Societies Rules 1973, requires a persOR to apply for membership in writin.i; in the form prescribed by the Society. Hi& application is to be approved by the Managing Committee of the Society. He has to fulfil other conditions laid down in the Act, the Rules and the Bye-laws. Rule 25 provides that a person shall not be eligible for admission as a member if he owns a residential house or a plot of land for the construction of a residential house in Delhi. Rule 30 provides that on receipt of an application for membe~hip the Cooperative Society shall enter particulars of the application in the register of applications in the fonn mentioned therein. It also requir~ the Society to dispose of the applicat::>n received as early as possible and in no ca~ later than the expiration of a period of one month from the date of receipt of the application. Rule 30 further provides that the person whose membership has been approved by the Managing Committee of a Cooperative Society shall .deposit the membership fee and the amount of qualifying shares necessary to become a member within 14 days of the passing of the resolution of the Managing Committee approving the membership of the person concerned. Bye-law _5_ provides that every person seeking membership of the Society shall sign a declaration to the effect that he or his wife or any of his dependants does net own a dwelling house or a plot in Delhi. When the writ petitions came up for final hearing along with the C.M.Ps. on 2'-11-1'74 this Court appointed Shri Deb Brat Mukherjee as Chairman of the Society. The Chairman was 11Sked to scrutinise whether any person had been either illegally brought in 118 a member or illegally removed having regard to the rules, tho bye-laws and the regulations of the Society. The Chairman restored the membership of the alleged defaulters and published a tentative voters' list. The Chairman declared that out of the 60. new allottecs 21 did not have applications for membership and 38 were illegally admitted and could not be included in the voters' list. The chairman said that the allotment of plots in their favour could not be upheld. 11 persons out of the 60 new allottees filed two C.M.Ps. in August 1976 praying for an injunction restraining the chairman from holding elections. These applications were filed without serving any party to the proceedings contrary to the rules and practice of the court. On 23-9-1976, the Chairman submitted his report. Allowing the writ petitions, HELD :- 1. The date 0f the application, prescription of time for deposit of membership fee and the amount of qualifying shares, and the filing of the requisite declaration are formalities which cannot be disregarded. The Chair, man rightly came to the conclusion that the new allottees could not be treated as members. The mew allottees were taken in without considering the persons on the waiting list. It was incumbent on the Society to act in accordance with clause 7 of the Lt. GoYenior's award. The Managing Committee took 38 per sons as members unlawfully. The declaration of defaulters could not haTe been made except by the General Body with a special majority and with the approval of the Registrar. The nominated Managing Committee could not have functioned after 1st April 1973 in view of the provisions of s. 92 read with s. 32 of the Delhi Cooperative Societies Act 1972. In view of the award of the Lt. Governor dated 6-7-1971 the. Committee had nQ jurisdiction to declare any member a defaulter. The act of declaration of defaulters of 6-1-1974 cannot be dis-associated from the enrolment of new allottees on 25th and 26th January 197 4. The report of the chairman in restoring membership to the 108 alleged defaultors is just and correct. The circular dated 30-4-1973 issued by the nominated Managing Committee is not a notice within the meaniag of RAJ RANI _v._ DBLRI ADMINISTRATION _(Ray,_ C.J.) 373 tile **bye-la"'** of the Society **ud** the declaration of defaulters on the basis of the circular is illegal and contrary to the bye-laws of the Society. The circular was despatched after the time for payment mentioned therein was over. No opportunity was given to a member as required by the amended bye-laws to show cause why his right to a plot would not be forfeited. The order of this court dated 6-7-1973 continued to be in force **in** so far !Ill the petitioaers ill Raj Rani's petition are concerned. Therefore, the declaration of defaulters from amongst the petitioners in Raj Rani's petition was unjustified. The action of the nominated Managing Committee declaring defaulters was in bad faith becNJse they wanted to confer benefits on other persO'DS in the iUiae of declaca.· tion of defaulters. [381 A-B, D, E, H, 383A, D, F, 38'4B-E] The Chairman rightly came to the conclusion that out of the 42 declarations . of defaulters for not submirting affidavit 30 members had genuine erievances. [384-FJ **ne Ckairmu** rightly held that the. _**4**_ persoas whOie money **wii** lying with the Society 11hould be made members. The Chairman also rightly held that the _**4**_ persona whose lands had been acquired by the Society should bo accepted C aa membel'll. [385A-Bl Tho priority fixed by the Chairman about allotmont of plots is just. [385-C] [Tho Court with **a** view to ensuring that tho peraons mentioned in the Chairman'il report should get the reliefs mentioned in the report **lleld** that those persons should make fresh applications with affidavits lllroup the Chairman ·and the allotment of plo!B should. be made in accorduicc with the priority laid down by the Chairman.] D ORIGINAL JURISDICTION : Writ petition No. 340 of 1972. (Under article 32 of the Constitution of India). _P._ _H._ _Parekh_ and _Miss Manju Jetley,_ for the petitioners in W.P. 340/72 excepting petitioner No. _59_ and for petitioners in W.P. 1526/ E 73. Petitioner No. _59_ in W.P. No. 340/72 _in person._ _Yo"geshwar_ _Prasad, S._ _K._ _Bagga, Mrs._ _S._ _Bagga_ and _Miss Yesh_ Bag~a for the petitioner in W.P. No. 286/74. _Niren De, Attorney General_ in writ petition 340, _Sardar Bahadur_ _SB!wrya_ and _Vishnu Bahadur Saharya,_ for respondents Nos. l, 3, 4, _5_ and 15 in W.P. 340/72 and respondents in all the W.Ps. _K._ _J._ _John_ _for_ _M/s._ _**J.**_ _B. Dadachanji_ & _Co._ for R.R. 2, 6, 8. 10, and 12 in W. P. 340 & 1526 and R.R. 6, S, 9, 11 and 12 in W.P. 286/74. _S._ _K. Mehta,_ _K._ _R. Nagaraja_ and _P._ _N. Puri_ for R.R. 13-178 in W.P. 1526/73. The Judgment of the Court was delivered by F G RAY, C.J. This Court on 29 August, 1974 appointed Shri Debabrata Mookerjee Chairman to convene, fix the date and hold **H** the meeting of New Friends Cooperative House Building Society Ltd. referred to _as_ the Society in accordance with the provisions of the Delhi Co-operative Societies Act, 1972. This meeting **was** diroot 374 SUPREME COURT REPORTS [1977] 2 S.C.R. A ed to be held for the purpose of electing the members of the New Managing Committee The Chairman was directed to look into each and every disputed question of membership. The Chairman was further directed to decide whether the persons had been rightly or wrongly declared to be defaulters. The order further directed that if the Chairman came to the conclusion that the person had been wrongly declared to be a defaulter, the Chairman would include him .B or her in the list of members. The Chai!man was also asked to give effect to all orders of this Court already made in regard to persons who were declared defaulters and who according to orders of this Court on payment of moneys are not and cannot be treated defaulters. The Chairman was asked to go into cases where money had been sent and not accepted. If the Chairman came to the conclusion that money had been wrongly not accepted, the Chairman would decide the same in accordance with Rules and Bye-laws of the Society. There are further details in the order dated 29 August, 1974. D :F ,G H In the order dated 29 August, 1974 Brij Mohan Malhotra was :given liberty to adduce proof before the Chairman tl1at the money was tendered within time. If the Chairman came to the conclusion that it was tendered in time, he would decide in accordance with Rules and Bye-laws of the Society. The Chairman was entitled to scrutinise whether any person had been either illegally brought in as a member or illegally removed, having regard to the rules, bye-laws and regulations of the Society. Inder Bir Kaur alleged that she had been illegally removed from membership. The Chairman was directed to go into the question. The order was made in two writ petitions No. 340 of 1972 and 1526 of 1973 and in a number of miscellaneous applications. On 6 July, 1971 the Lt. Governor passed an award directing the Society to pay Rs. 22 lakhs to the Delhi Administration. On 9 July, 1971 the Lt. Governor by a notiftcation removed the elected Managing Committee and appointed a nominated Managing Committee under Rule 56 of the Rules made under the Bombay Cooperative Societies Act, 1925 hereinafter referred to as the Bombay Act which applied to Delhi. The term of the Managing Committee was for one year. On 23 October, 1971 the nominated Managing Committee passed a resolution to make the award rule of the Court. On 18 December, 1971 the nominated Managing Committee passed a resolution for having direct sub-leases. On 22 January, 1972 the nominated ·Managing Committee called for more funds. On 5 July, 1972 the Lt. Governor issued second notification extending the term of the nominated Managing Committee by two years. The Society was the subject matter of two writ petitions. 287 members of the Society filed writ petition No. 340 of 1972 here\inafter referred to Rai Rani's petition. The members challenged RAJ RANI _V._ DELHI ADMINISTRATION _(Ray,_ C.J.) 3 7 5 the vires of Rule 56 of the Society on the ground that the rule was A ultra vires section 71 of the Bombay Act and further that the rule was bad on account of excessive delegation. The petitioners contended that action under Rule 56 could not be taken without complying with the provisions of section 46A of the Bombay Act which was applicable to Delhi at the relevant time. The petitioners also challenged some notifications on the ground that the Lt. Governor having exercised his powers once could not extend the term. In B short, it was sald that the power of the Lt. Governor was exhausted. The other challenges were that the notifications were not speaking order and were made malafide. The broad challenge in the petition was against the extension of term of the Managing Committee. On 29 August, 1972 Rule Nisi was issued. On 30 April, 1973 the nominated Chairman of the Managing Committee issued a circular asking the members of the Society to pay certain amount. On 6 July, 1973 this Court restrained the ·Society and its Chairman from declaring any member a defaulter. On 13 August, 1973 this Court directed that all the interim orders passed in the writ petition should be confined to the petitioners in Raj Rani's petition. On 16 August, 1973 K. V. Johar filed a writ petition in a repre·sentative capacity under Order I Rule 8 of the Code of Civil Pro cedure. This is writ petition No. 1526 of 1973 hereinafter referred to as Johar's petition. On ·20 August, 1973 this Court issued Rule Nisi in J ohar's petition. On 17 August, 1973 the nominated Managing Committee declared 321 members as defaulters. This Court on 21 September. 1973 restrained the Society from taking any steps in pursuance of the resolution dated 17 August, 1973 against the petitioners and all other members of the Society. On 29 November, 1973 respondent No. 6 filed an application in Johar's petition for vacating the stay order granted on 21 September, 1973. An application for vacating the stay order granted on 6 July, 1973 in Raj Rani's petition was not pursued. This Court vacated the stay granted on 21 September, 1973 in Johar's petition and granted a fortnight's time to make the requisite payment. On 6 January, 1974 the nominated Managing Committee declared 39 me!7'.bers as defaulters for non-payment of dues, 42 members as defaulters for not submitting the affidavits. This was one of the controversies which formed the subject matter of the enquiry made by the Chairman. On 25 January, 1974 the nominated Managing Committee decided to enrol 60 new members. On 26 January, 1974 a conlidenti:il letter was addressed by respondent No. 6 to the Lt. Governor seeking his approval to the enrolment of 60 new members and allotment of plots to them. On the same day, the Lt. Governor addressed a: letter to respondent No. 6 giving his approval. The enrolment of S-1546SCI/76 # c D E F G H A B # c D E F G H 379 SUPREME COURT REPORTS [1977] 2 s.c.1.. new members on 25 January, 1974, the approval of the Lt. Governor on 26 January, 1974 and the allotment of plots to those 60 new members formed a big controversy which was also enquired into by the Chairman. Two Civil Miscellaneous Petitions No. 1683 and 1072 of 1974 challenging the declaration qf defaulters and the enrolment of new members were filed in this Court in February, 1974. C.M.P.No. 1683 of 1974 is in Raj Rani's petition and C.M.P.No. 1072 of 1974 is in Johar's petition. This Court on 29 March, 1974 directed that all the papers including resolutions, original applications, original allotments should be produced in this Court on 4 April, 197 4. This Court also restrained the Managing Committee by an injunction from taking any steps in any manner. On 4 April, 1974 this Court pMsed directions in respect of persons who had made part payments within the time prescribed or even beyond the time prescribed not to be treated as defaulters. This Court mentioned in its order that the allotment of plots to 60 new members who were characterised by the petitioners as very important persons appeared to have been made in undue haste and the persons in the waiting list were not considered and that no notice was given to persons inviting application5. This Court directed that the said list of 60 new members had to await final adjudioation by this Court. This Court also directed that in case of 60 allottees no further steps should be taken. This Court directed that the case of 24 defaulters would be considered if it came to the conclusion that the allotment in favour of 60 new members would be treated as defaulters. In the order dated 4 April, 1974 petitioners No. 60, 46, 216, 171 and 165 in Raj Rani's petition who paid in part after due date were not to be treated as defaulters and they were given four weeks' time to pay the balance. It was said that if they failed to pay the balance within the time granted they would be treated as defaulters. Petitioners No. 1, 118, 43 and 287 in Raj Rani's petition were stated to have paid in full but after the due date. They were not to be treatecli as defaulters. It was also said that if they had not paid the full amount, they were also given four weeks' time for paying the balance, if any. If they did not pay the balance within the time granted they would be treated as defaulters. In Johar's petition S. Diwan, Virendra Singh, Dalip Singh and Hari Singh were stated to have made payments in part beyond time. Iqbal Khanna and H. Bhatia were stated to have made payments in part within time. They were all given four weeks' time from the date of the order and in default of payment within the time they would be treated so defaulters. Ten other persons in Raj Rani's petition and 14 persons in Johar's petition were said not to have paid within time. A list of 31 persons was handed up to this Court by the petitioners. These 31 persons were alleged to have been admitted as members and to have been allotted plots. It was contended that this allotment is irregular. These allotments were made on 26 January, 1974 to which reference has already been made. It was RAJ RANI _V._ DELHI ADMINISTRATION _(Ray,_ C./.) 377 said that the list of 31 persons would· await final a~judication. .~en A defaulters in Raj Rani's petition and 14 defaulters I'll Joh_ar's pet.It.Ion aggregating 24 defaulters were to be considered at the time of final adjudication. It was said that if the allotment in respect of 31 per~ sons could not be allowed to stand then the cases of these 24 persons would be considered. In this back ground on 29 August, 1974 when the two 'Yrit pe~- B tions filed by Raj Rani and K. V. Johar came up for heanng this Court appointed Shri Deb(\brata Mookerjee as Chairman of the Society. It may be stated here that some time in 1975 some one started a suit against the Chairman to stop the enquiry by him. The matter was brought to the notice of this Court. Some malicious and ba~e- C less allegations were made against the Chairman. Under these circumstances this Court directed notice t~ the respondent who filed the suit to show cause why he should not be committed for contemp!: The Chairman was in the meantime asked to continue and he was directed to look into each and every matter as mentioned in the earlier orders. The Chairman between 17 March, 1975 and 5 August, 1975 restored the membership of the alleged defaulters. On 26 April, 1976 tentative voters' list was published. On 14 May, 1976 the Chairman informed the parties that election would be held on 29 August, 1976. On 12 July, 1976 the Chairman informed the parties that the election would be held on 29 August, 1976 at Mavalankar Hall. On 27 July, 1976 the Chairman declared that of the 60 new members who llad been described as very important persons 21 did not have applications for membership and 38 were not legally admitted members and could not be included· in the list. Too· Chairman said that the allotment of plots in their favour could not be upheld. On 28 July, 1976 the list of members was published. On 17 Angust, 1976 there was scrutiny of the ballot papers. D E F G On 24 August, 1976 11 persons out of the 60 persons who were enrolled members on 25 January, 1974 and allotted plots on 26. January, 1974 filed two Civil Miscellaneous praying for an order restraining the Chairman· from holding the election on 29 August, 1976 These applications were held without serving any party to the proceed. ings contrary to- the rules and practice of this Court. On 25 August, 1976 counsel for those petitioners mentioned the applications before the Court presided over by Khanna, J. asking that the applications filed might be heard. It was also mentio11ed without informing the . pa~ties. On 27 August, 1976 this Court further adjourned the oappli cations. On 29 August 1976 the meeting was held and voting took place at Mavalankar Hall. : . H On. 23 September, 1976 the Chairman submitted his report and g1ve copies to the parties. On 15 October, 1976 11 persons who A B # c 3.78 . SUPREME COURT REPORTS [1977] 2 S.C.R • , had made the two applications for restraining of holding of the election filed an application for adjournment of the case for two months. This Court cannot help observing two features. One is that an attempt was made some time in the year 1975 to restrain the Chairman from proceeding with the enquiry by filing a suit against him and making baseless allegation.s. It is only because thi~ Court took immediate notice of the matter that the frivolous suit which had been filed in abuse of process of cour~ was put an end to. The second is that on the eve of the election another attempt was made to restrain the Chairman from holding the election. These facts along with the attempt on the part of those 11 petitioners to keep the matter adjourned for two months indicate th~ persistent attitude on the part of some of those persons to mark time for some oblique purposes. In view af the importance of issues involved and the gravity of the situation where interest of ordinary citizens was sacrificed to meet the interest of persons of importance and influence that this Court took the aforesaid steps, in order to put an end to the litigation and the controversies. D It was to be kept in the forefront that the Society is not yet the lessee of the Government in respect of the land which is to be allotted to the members. In Volume II in Raj Rani's petition No. 340 of 1972 appears the printed memorandum agreement to be entered into between the Society and the President of India in. respect of land which will be allotted to the members of the Society, On 3 August, 1967 the Deputy Secretary, Delhi Administration wrote to the SecE retary of the Society, inter alia, as follows: "I am desired to make' it clear that the list Qf members submitted with your letter has been treated as final and no change i!l that list can be made without prior written permission of the Delhi Administration." F G The printed memorandum of agreement has three recitals. One of the raoitals is that whereas the Society has deposited with the Chief Commissioner the sum of Rs. 41, 62, 456.61 and has further agreed to deposit with the Chief Commissioner the additional sum or sums as hereinafter provided, being the amounts agreed to be paid by the Society to the President by way of premium for the grant to the Society of the lease hereinafter mentioned which amounts, pending the grant of the said lease, are to be a security to the President for due performance by the Society of the terms of the Agreement. It is agreed between the parties, inter alia, a~ follows: 1. The President hereby grants for a period of three years commencing from 13 February, 1973 a licence to the Society to enter upon the said land only for the purposes of making surveys and taking measurements and levels for preparing a lay-out plan. H VIII. Upon the completion of the development of the land in accordance with the provisions contained herein and to the satisfaction ol! the Chief Commissioner and issue by him of a certificate to that effect MJ RANI _V._ DELHI ADMINISTRATION _(Ray, C.J.)_ 3:79 and provided that the other conditions of the Agreement have been A , duly· ·observed, the President will, in -cionsideration · qf the expenses incurred by the Society on the development of the land and the payment of the premium and of the yearly rent as herein provided and of the covenants on the part of the Society to be contained in -the lease, grant to the Society and the Society .shall accept a . lease of such of the residential plots as may be determined by the Chief! Commissioner in: his abwlute discretion. B XV (a) . After the execution and registration ·of the lease, the Society' shall sub-lease, within such time and on such premium and yearly rent as may be fixed by the President, one residential plot to each of its members who or whose wife/husband or any:of his;hcr cependent relatives including unmarried children· does not own, in full or in part, on the free-hold or lease-hold basis,' any residential plot or house C in the urban areas of Delhi, New Delhi or Delhi ·Cantonment and who may be approved by the Chief Commissioner. Reference to the Agreement is necessary to show that the Society is not yet lessee of the Government in respecLof the land. This is a mere agreement for the grant to the Society · of the lease. The Government refused to grant lease. Thereafter the matter. was D referred to the arbitration of the Lt. Governor. The Lt. Governor made an award directing the Society to pay Rs. 22,45,742/- as the balance amount representing the cost of land. In 1972 a supplementary -agreement was made between the President of India and the Society. One of the recitals in that agreement mentions. that the Society has not completed the development of the: E land and the members of the Managing Committee resolved that the Lt. Governor of Delhi be requested to allow the members to pay their individual dues to the Administration to evacilte their sub-leases. This recital indicates that there was an attempt on the part of individual members to pay dues to the Society as well as to the Government. It can, therefore, be seen that membership of the Society and the allot~ ment of lands are different matters. F One of the main contentions before the Chairman was in regard to membership of 60 persons. These 60 persons .were admitted to membership on 25 January, 1974. The Lt. Governor approved of their membership on 26 January, 1974. The Chairman found that of these 60 persons 21 had at one time or another withdrawn their membership. 10 out of those 21 had. either never applied or never G paid the requisite membership fee. The result, according to thei Chairman, was that the cases of 39 persons were to be considered. The Chairman noticed that "many of these 60 person~. were highly placed Government officials and friends and relations of persons prominent in public life." Another: allegation was that many of them happened "to be close relations or friends arid members of the nomi-, nated Managing Committee." H At the meeting held on 27 July, 1976 the Chairman referred to Rules 24 and 30 of the 1973 Delhi Cooperative Societies Rules. These A B # c D E F G H 380 SUPREME COUR.T REPORTS [1977] 2 s.c.R.. rules were under the Delhi Ce>-operative Societies Rules 1972 which replaced the Bombay Act 1925 in rel'ation to the Union Territory. These rules relate to conditiORS to be complied with for admission to membership. Bye-law _5_ of the Society Bye-laws was also referred to by the Chairman. " · Broadly stated, Rule 24 requires a person, to apply in writing in the form laid down by the Society for membership. His application is to be approved by the. Committee of the Society. He has to fulfil other conditions laid down in the Act, the Rules and the Bye-laws. Rule 25 of the Delhi Ce>-operative Societies Rules, 1973 provides _inter_ _alia_ that no person shall be eligible for admission as member of a ce>-operative society, if in. the case of membership of a housing society ( 1) he owns a residential h01.1se or a plot of land for the construction of a residential house iri any of the approved or up-approved colonies or other localities ia the Union Territory of Delhi, 111 his own name or in the name of his spouse or any of his dependent children on lease hold or free hold basis; (2) he deals in purchase or sale of immovable property either as principal or as agent in the Union Territory of Delhi; or (3) he or his spouse or any of his dependent children is a member of any other housing society except otherwise permitted by the Registrar. Rule 25(2) provides that if a member becomes or has already become subject to any disqualifications specified in sub-rule ( 1), ho shall be deemed to have ceased to be a member from the date when tho disqualifications were incurred. Rule 30 deals with the disposal of application for admission of members. The rufo provides that on receipt of an application for membership, the ce>-operative society shall enter particulars of tho application in tho register of applications in the form mentioned therein. The ce>-operative society shall dispose of an application receivoo for admission as member as early as possibl6 and in no case later than the expiration of a period of one month from the date of receipt _of_ the> application by the Society. In case of refusal to admit, such socit'lty shall communicate its decision togethcr: with reasons thereof. The appeal to the Registrar lies against the order for refusal to admit a member. An important feature in rule 30 is the date of receipt of application for membership because the application is to be dealt with within one month. Rule 30( 4) provides that the person whose membership has been approved by the Managing Committee of a ce>-operative society shall deposit the membership fee, and the 'amount of the !qualifying shares nec~ary to become a member, within 14 days of the passing of the resolutiOn. of the Managing Committee approving the membership of the person concerned. Bye-law _5,_ _inter alia,_ provides that every person seeking membership of the Society shall sign a declaration to the effect that he 0r his wife (she or her husband) or any of his/her dependents does not own a dwelling house or plot in Delhi and that he/she is not a member of any other cooperative house building society. RAJ llANI _V,_ DELHI ADMINISTlUTION _(Ray, C.J.)_ 381 Judged by these rules and considering the rival contentions of the A partiOi the Chairman found that of the 39 cases there was only one car>0 of N. K. Mukherjee M. No. 1526 which fulfilled the requiremenbl of the rules and the bye-laws and the Chairman in his report declared him as having been validly accepted as member. Out of those 39 persons 20 applications did not bear any date. The date of an application, the prescription of time for deposit of the membership fee an_d the amount of qualifying share and the filing of the re- B ,quisite declaration are formalities which could 11.ot be disregarded. The Chairman rightly came to the conclusion that out of 39 persons ·except N. K. Mukherjee the other 38 were not legally admitted to -the membership and, therefore, they could not be treated as members. The Chairman in paragraphs 9 to 16 of the Report considered C the cases of several persons who had been declared defaulters. He rightly came to the conclusion that 108 persom; mentioned in Annexure 'C' should be restored to membership. The Chairman next considered whether there should be a waiting list. A list of 102 persons described as the waiting list was forwarded and endorsed by the officers of the Delhi Administration. D The Chairman came to the conclusion that of the 102 persons on the list, only a few prosecuted their claims before the Chairman and the rest appeared to him to be no more interested in the membership of the Society. In an annexure marked 'G' the Chairman rightly in· duded in the waiting list the names of such persons who could be -considered. The Chairman said that 38 persons whose membership was can ~lled by him at the meeting held on 27 July, 1976 could apply afresh so that their applications could be considered. The Chairman said that 24 persons made applications for membership. The Chairman rightly said that it would be fair to leave the consideration of the applications of these 24 persons to the new Managing Committee and that their names should be kept in a waiting list. The Chairman next found that the Society had received from 4 persons deposits towards the price of the land more than a decade ago but took no steps to return the moneys or to admit them to the benefit of membership. Again, there were 4 other persons wh08C land had been acquired by the Delhi Administration. There was an agreement which required the Society to offer membership to these persons upon their fulfilling the conditions of membership. The Chairman found that those 4 persons whose land had been acquired bad made applications. The Chairman rightly came to the conclusion that these 8 persons, namely 4 from whom moneys had been received and the other 4 whose land had been acquired should be accepted as members. Out of 38 persons whose membership was cancelled by the Chairman on 27 July 11 applied to this Court in C.M.P. No. 2065 of 1976 for an order that admission of 124 members mentioned ia E F G H A B # c D E F G H 382 SUPREME COURT REPORTS (1977] 2 S.C.R. Annexure 'C' to the petition is illegal and for further declaration of revocation of membership of 38 members as mentioned in Annexure'B' to the said petition. These petitioners also asked for an orderdirecting the Chairman not to proce~d with the meeting of the Society and the holding of elections on 29 August, 1976. These 11 persons also made applications C.M.Ps. No. 8485 and. 8486 for filing objections to the report of the Chairman. They wanted two months to file objections. It should be stated here that 11 applicants wanted to prevent the ~C?ld~g of the meeting and the election for the purpose of prolonging · litigation. This Court rightly did not prevent the holding of the ni~eting and the election. The report of the Chairman shows that the meeting as. well as the election was lawfully and validly held. These 11 persons were given full opportunity to make their submissions by way of objection to the report. Counsel appeared and made their submissions. These 11 persons submitted that no relief can be sought by the petitioners in the writ petitions against the Society and that Article 19 cannot now be invoked for the enforcement of rights. Their further submissions were these. On 6 January, 1974 39 persons were declared defaulters by the Managing Committee for non-compliance with the order of this Court passed on 11 December, 1973. 01;1e of those 39 defaulters made an application to this Court on 9 February, 1974 for condonation of delay and for restoration of his membership. The application was dismissed on 25 February, 1974. On 4 April,. 1974 this Court granted four weeks' time to 15 persons out of the 39 declared defaulters and therefore the default of 24 persons was. confirmed. The Chairman re-considered the cases of 24 defaulters including the one whose application was dismissed. These 11 persons submitted that their membership and allotment should have· been restored. The Chairman was also in error in considering the· cases of 8 persons because records were not available. It is significant that out of 1100 members and the several partiesc to the writ petitions none has taken objection to the report of the Chairman. The only persons who objected are out of the 24 persons· whose membership and allotment on 26 January, 1974 was cancelled. These 24 persons have however been put by the Chairman in a waiting list. The membership as well as the allotment of plots to these 38 persons is rightly rejected by the Chairman. The Chairman based his finding on facts of tabulated statements prepared in the presence of counsel and parties in open public hearings. No challenge can be· taken to the dates and facts. The Chairman rightly found that even if the date of the eligibility certificate is taken as the effective date· of application the position cannot be otherwise. The Chairman rightly found that the records do not indicate that the payment was: RAJ lilANI _V._ DELHI ADMINISTRATION _(Ray, C.J.)_ 383 made within 14 days of the date of resolution. The Chairman rightly A fol.ind that the requirement of payment is not proved and there ~as not been substantial compliance. The conclusion is correct and m• escapable that the enrolment of 38 persons was not only rushed but was done with unseemly haste. It also appears from the report of the Chairman that persons in the waiting list were not considered before these 3 8 persons were B enrolled as members. Reference may be made to clause (7) of the Award of the Lt. Governor which was made the rule of Court. The award is dated 6 July, 1971. Clause (7) made it encumbent on the Society to act in accordance with the aw~rd. Ther~ were some persons who were treated by the new Managmg Committee as defaulters and these 38 persons were taken by the new Managing Committee unlawfully as members. C The Chairman in Annexure 'C' restored 108 persons to membership. These 108 persons had been declared defaulters by the nomi- . nated Managing Committee. This Court by order dated 29 August, 1974 required the Chairman to look into each and every disputed question of membership and to decide as to whether a member has been rightly or wrongly declared a defaulter. D The nominated Managing Committee ori 6 January, 1974 declared a number of persons to. be defaulters. The declaration of defaul~ ters could not have been made except by the General Body with a special majority and with the approval of the Registrar. The nomi~ nated Managing Committee could not have functioned ·after 1 April, 1973 ig view of the provisions of section 92 read with section 32 .of the Delhi Co-operative Societies Act. 1972. In view of the award of the Lt. Governor dated 6 July, 1971 the Committee had thereafter no jurisdiction to declare any· member a defaulter. This Court by order dated 4 April, 1974 observed that the case of 24 defaulters would be considered if it transpired that the list of new allottees could not be allowed to stand. The· act· of declaration of defaulters on 6 January, 1974. cannot be dissociated from the enrolment of new allottees on 25 and 26 January, 1974. - The report of the Chairman in restoring 108 alleged defaulters to membership is just and correct. This Court by order dated 29 August, 1974 required the Chairman to look into each and every disputed question of membership and to decide whether a person has been rightly or wrongly declnred a defaulter. The order further stated that if the Chairman came to the conclusion. that the person has been declared to be a defau1ter the Chairman will include him or her in the list of ·members. The report of the Chairman is lucid and direct to the point. The report noticed that there was widespread discontent as to the way in which the affairs of the Society were ooriducted. The report said. "Allegations of favouritism, want of fairplay, mal-administration, deliberate suppression of the rights of members were freely made against the nominated Managing Committee in 1971 ". The Chairman noticed that there was "nothing to E F G A B # c D 1iJ G #### II SUPREME COUllT llEPOJlTS [1977) 2 S.C.ll. #### choose between the old elected Committee -· which was superse4ed and the nominated Managing Committee which cam~ to take its place". Letters were hardly replied to. Enquiries were rarely attempted to. Cheques were hardly ever cashed in time. Sudden declarations of default were made without following the prescrib!d procedure laid down in the Act and the Rules. The nominated Managing Committee issued a circular dated 30 April, 1973 demanding Rs. 6 per sq. yard and threatened the members that in case they did not pay the said amount they woulg be declared defaulters. This circular is not a notice within the meaning of the bye-laws of the Society and declaration of defaulters on the basis of the circular is illegal and contrary to bye-laws of the Society. Further the said circular was despatched after the time for payment mentioned therein was over. No opportunity was given to a member as required by the amended bye-laws to show oouse why his right to a plot would not be forefeited for non-payment of deposit. Figures of alleged dues were not mentiooed in the circular in most of the caiei. In view of the award of the Lt. Governor dated 6 July, 1971 the nominated Managing Committee could not declare any member to be a defaulter. Further the order of this Court dated 6 July, 1973 continued to be in force, in so far as the petitioners in Raj Rani's petition are concerned. The declaration of defaulters from amongst tht petitioners in Raj Rani's petition was unjustified. The action of the Managing Committee declaring defaulters was in bad faith because they wanted to confer benefits on other persons under the guise of declaration of defaulters. This Court in the order dated 4 Al'ril, 1974, observed that the cases of 24 defaulters would be considered if it transpired that the list of allottees on 26 January, 1974 could not be allowed to stand. The Chairman has rightly dealt with the cases of 24 defaulters in view of his right conclusion that the allotments on 26 January; 1974 were bad. The Chairman considered the cases of 42 persons who had 0eeu declared defaulters. The Chairman rightly came to the conclusion that 30 persons had genuine grievances and he accepted them is members on their submitting fresh affidavits with a view to putting an end to all controversies whether they filed affidavits of not. It was admitted before the Chairman that all these persons had field their affidavits originally while seeking membership. The question was whether they filed any fresh atlidavits as required by the subsequent direction of the Delhi Development Authority. Some of the members contended before the Chairman that they filed amended affidavits. Some members contended that in spite of their request to give the proforma of the amended affidavit the nominated Managing Committee did not give the proforma of the affidavit. Under these circumstances the Chairman rightly accepted the contentions of 30 out of the 42 persons. RAJ RANI _v._ DELHI ADMINISTRATION _(Ray,_ C.J.) 31S5 The Chairman rightly held that 4 persons whose money was lying **A** with the Society should be made members. The Chairman also right**ly** held that 4 persons whose lands had been acquired by the Society should be accepted as members. . The Chairman in paragraph 37 of the report has indicated that the new Managing Committee should fix priorities in the order mentioned in sub-paragraph (a) to (e). These in sub-paragraphs (a) to **B** (b) belong to classes of members in whose favour there was specific allotment as early as the year 1957. Due communication was made to them . about the specific allotment of plots. . They were persons who had paid more than Rs. 17,000. They were declared defaulters for non-payment of Rs. 3000 or less by the nominated . Managing Committee as late as the year 1974. The Chairman rightly put persom; in sub-paragraphs (a) and (b) in order of priority. **C** Persons in sub-paragraph (c) in paragraph 37 of the Chairman's report comprise those who were declared defaulters round about the year 1962-63. The amounts paid by persons in sub-paragraph (c) are less than the amounts paid by persons in sub-paragraphs (a) and (b ). There was no specific allotment of plots in favour of persons mentioned in sub-paragraph ( c). Persons in sub-paragraph ( c) **D** therefore cannot claim prio.r;ity over persons in sub-paragraphs (a) and (b). In sub-paragraph (c) only one person objected regarding priority. The other 47 persons accepted their plac~ in sub-paragraph ( c) . This also shows the justness of the report, Subject to the following directions, the report of Mr. D. Mookerjee dated 23 September, 1976 is accepted and confirmed. **E** 1. The Managing Committee of the New Friends Co-operative Society Ltd. (hereinafter called "the new Managing Committee") elected at the meeting held on 29 August, 1976 shall assume charge with effect from the date of this order. ' 2. The new Managing Committee shall send to all persons referred to in sub-paragraphs (a) to (e) of paragraph 37 of Mr. Mookerjee's report, through Mr. Mookerjee, a letter stating that membership fee and the amount of qualifying share necessary to become a member of the Society and also copies of this order as well as the appropriate forms of application for membership of the . Society and of the affidavits to be sent by the applicants to the new Managing Committee within one month from the date of tl'lis order. 3. Each person referred to in sub-paragraphs (a) to (e) of paragraph 37 shall, if he desires to have any plot allotted to him, apply for membership of the Society. All such applications for membership of the Society shall be sent to Mr. Mookerjee within 30 days ·from the date of receipt of the documents referred to in the next preceding paragraph hereof. If any application is not received by . Mr. Mookerjee within the said period, or if the affidavit referred to in the next preceding paragraph is not enclosed with the application, or if any application or affidavit be found by Mr. Mookerjee to be **F** G **H** A B # c D E F G H 386 SUPREME COURT REPORTS [1977] 2 s.c.R. not in complian~e with the form of the application and the affidavit sent to the applicant, Mr. Mookerjee shall reject such application .. . Such rejection by Mr. Mookerjee shall be finaJ. . 4. All applications for membership along with affidavits found. ~y Mr. Mookerjee to ~e in order, will be forwarded by Mr. Mookeriee . to t~e new Managmg Committee upon the expiry of. the said ### penod of 39 d.ays. Mr. Mookerjee will ID:ake a list of the persons whose . applications are so forwarded by him to tlle new Managing Committee. 5. The new Managing Committee shall convene a meeting of the Committee ~ithin 30 days from the receipt of the applications along with the affidavits sent by Mr. Mookerjee to the new Managing Committee as aforesaid and pass a resolution· accepting all such appliqmts for membership as members of the Society. 6. The new Managing Committee shall convey to Mr. Mookerjee its said resolution within 14 days . of the passing of such resolution and shall send to Mr. Mookerjee at least as many copies of the resolution as the number .of persons who are admitted as members of the Society by virtue of that resolution. Mr. Mookerjee will thereafter send a copy of the said resolution to each of the applicants who is admitted as a member of the Society by virtue of the said resolution. 7. On receipt of the said communication froni Mr. Mookerjee each person who has been admitted as member of the Society by· virtue of the said resolution shall, within 14 days from the receipt of the communication from Mr. Mookerjee, pay to Mr. Mookerjee by Bank Draft (drawn in favour of "New Friends Co-opertt'.ive House Building Society Ltd.") an amount including the membership fee and the amount of qualifying share necessary to become a member of the Society. Mr. Mookerjee will thereafter forward the Bank Drafts to the new Managing Committee. 8. Regarding the allotment of plots, the suggestions of. Mr. Mookerjee contained in sub-paragraphs (a) and (b) of paragraph ~ ### 37 of his report will be given effect to by the new Managing Com- 1 mittee, subject to the availability of plots and subject also to each person referred to in the sajd two sub-paragraphs and to whom any plot is allotted complying with the direction contained in the preceding paragraph 7 hereof and further subject to each su~h person paying his full share of the money payable to the Delhi Development Authority under the Supplementary Agreement entered into between the President of India and the Society on 1 February, 1972 by a Bank Draft drawn in favour of the Delhi Development Authority". 9. The allotment of plots among persons referred to in sub-paragraphs (a) and (b) of paragraph 37 of Mr. Mookerjee's report shall be . in the order of priority mentioned there and already ea~arked for them. If plots which are already earmarked for persons m subparagraphs (a) and (b) are not available then there will be. allotments to those persons by draw of lots first among those m sub RAJ RANI _v._ DELHI ADMINISTRATION _(Ray, C.J.)_ 38 7 paragraph ( c) and thereafter among those in sub-pargraph (b). **A** Mr. Mookerjee will prepare a list of persons to whom plots are so allotted and send copies of the list of the new Managing Committee and the Delhi Development Authority and inform the persons to whom such allotments are made. 10. Each person referred to in the said sub-paragraphs (a) and {b) of paragraph 3 7 and to whom any plot is allotted shall, within **B** 14 days from the receipt of the communication from Mr. Mookerjee as referred to in paragraph 6 hereof, enquire from the Delhi DeveloP ment Authority as to the sum payable by him to the Delhi Development Authority as aforesaid and upon receipt of the reply from the Delhi Development Authority pay the sum to the latter by a Bank Draft within 15 days from the date _of the receipt of the reply. In -default of such payment the allotment to him will stand cancelled. **C** In the event of any such cancellation allotment may be made to the next person if any, in this sub-paragraph. . 11. Thereafter, if any plot or plots remain to be allotted the .allotment or allotments shall strictly be in accordance with the order .of priority laid down in paragraph 37 of Mr. Mookerjee's report. Such allotments shall be made by Mr. Mookerjee by means of draw -of- lots first among the persons referred to in sub-paragraph ( c) there.after among those in sub-paragraph (d) and thereafter among those in sub-paragraph (e) of paragraph 37 of his report. Mr. Mookerjee will prepare a list of persons to whom the plots are so allotted and -send copies of the list to the new Managing Committee and the Delhi Development Authority and inform the persons to whom such allotments are made. Any person referred to in sub-paragraphs ( c), (d) and (e) of Mr. Mookerjee's report who is allotted any plot shall within 14 days from the receipt of the communication from Mr. Mookerjee to the effect that a particular plot has been allotted to him enquire from the Delhi Development Authority as to the sum payable by him to the Delhi Development Authority as aforesaid and upon receipt of the reply from the Delhi Development Authority pay the sum to the latter by a Bank Draft within 15 days from the date of the receipt of the reply. In default of such payment the allotment to him will stand cancelled. In the event of any such cancellation, allotment may be made to next person, if any, in that ~ub­ paragraph. **D** E **F** 12. Each allotment of plot, referred to in this order, shall be in **G** ·accordance with the application of each applicant for membership referred to in paragraph 3 hereof, that is to say, will not be entitled to any allotment of any land, the area whereof is different from the -area mentioned in his application form. 13. If any person referred to in any of the gub-paragraphs of paragraph 37 of Mr. Mookerjee's report has already paid any money **H** to the Society and proves such payment to Mr. Mookerjee, the money -so paid and proved shall be appropriated towards payment of the ·.amounts mentioned in paragraphs No. 7, 8 aJlld **11** hereof. A B # c D 388 SUPREME COURT REPORTS [1977) 2 S.C.ll. 14. Upon allotment of land to any person mentioned in this R~ port each allottee shall pay to the Society a sum of Rs. 1,000/- withia one month from the date of such allotment as and by way of costs relating to these proceedings. In default of payment of such sum, the allotment to such person shall stand cancelled. In the event of. any such default, the procedure laid down in paragraph 10 and 11 hereof shall be followed. To sum up. In the event of any 11uch default the allotment may be made to the next person, if any, in the sub-paragraph group of the defaulting persons and thereafter to the next sub-paragraph group of persons. No lease shall be granted to any allottee until and unless all directions contained in this erder are fully complied with by him. The Society shall pay to Mr. Mookerjee a further sum of Rs. 45,000/- as his remuneration for the work done by him so far. The Society shall also pay Mr. Mookerjee a further sum of Rs. 5,000/for the work to be done by him under this order and also such f11l'tber sum or sums as he may intimate to the ne_w Managing Committee as extra expenses, including remuneration for his staff, postage etc. for the work to be done under this order. Mr. Mookerj&e'a PersC>nal Assistant Mr. Jain will be paid Rs. 300/- per month. This order shall not apply to such members of the Society whe have already obtained leases from the President of India. This order will govern only the affairs of this Society ind will not be a precedent for the affairs of any other co-operative socrety. E Some persons have deposited monies with the Registrar of this Court. The Registrar may hand over the money to the S0ciety. Writ Petition No. 340 of 1972, 1526 of 1973 and 286 of 1974 and all proceedings in these writ petitions are disposed of accordingly. All parties will pay and bear their own costs. #### P.H.P. Petitions allowed. ~