Delhi High Court
Kamal Vihar Coop. G.H. Socy. Ltd. vs Mohan Chand And Ors. on 4 September, 2002
Equivalent citations: 100(2002)DLT660
Author: J.D. Kapoor
Bench: J.D. Kapoor
JUDGMENT J.D. Kapoor, J.
1. Petitioner society recommended the expulsion of as many as 46 members on account of their having committed persistent defaults against demands. The recommendations for expulsion of 45 members were approved by the Registrar vide order dated 26.3.1998 whereas the recommendation in respect of R-1 Mohan Chand did not find favor with him on the ground that R-1 had approached the Society way back in 1992 to complete the formalities for getting him loan advanced from the financial institutions but neither did the Society assist him in getting the necessary papers completed nor did it show any inclination to help him out and as a consequence he was burdened with huge interest on the principal amount. Besides this, the Registrar also directed the Society to only collect the principal amount from R-1 after getting all the documents executed. As regards the interest the Registrar directed both the Society as well as R-1 to go for arbitration and settle the matter there. Feeling aggrieved the Society preferred the appeal but did not succeed.
2. On 21.5.1989 the Society took the decision for expelling R-1 and sent its recommendation to the Registrar for approval on 5.6.1989. When it did not receive any response for more than a year though Registrar ought to have granted or refused the approval of expulsion within period of six months, the Society sent reminder after reminder. It was only in November, 1997 i.e. after about 8 long years that the Registrar woke up from deep sleep and put up the Society as well as R-1 on notice which culminated in the order dated 26.3.1989 and the impugned order.
3. Rule 40 of the DCS Rules provides that a member once enrolled by a Cooperative Society cannot be denied his membership right except on resignation, transfer, death, removal or expulsion. Rule 36 contemplates expulsion if there has been persistent default in payment of dues or the payment of claims made by a housing Society for raising its funds to fulfill its objects. Relevant extracts are as under:-
Rule 400 Cessation of Membership Without prejudice to the provisions of Section 27, a person shall cease to be a member of a co-operative society on his resignation from the membership there of being accepted or on the transfer of the whole of his share or interest in the society to another member, or on his death, removal or expulsion of incurring any of the disqualifications specified in the Act and the rules.
Rule 36 Procedure for Expulsion of Members (1) Notwithstanding anything contained in the bye-laws, any members who has been persistently defaulting in payment of his dues or the payment of claims made by a housing society for raising funds to fulfill its objects, has been failing to comply with the provisions of the bye-laws regarding sales of his produce through the society, or other matter in connection with his dealings with the society or who, in the opinion of the committee, has brought dispute to the society or he has done other acts detrimental to the interest or proper working of the society, the society may be a resolution passed by a majority of not less than three fourths of the members entitled to vote who are present at a meeting of the committee held for the purpose, expel a member from the society:
Provided that prior to placing the matter before the meeting of the committee, the member concerned shall be served with three registered notices in this regard and in case of member of a housing society, also a public notice in leading newspaper regarding the proposed expulsion shall be given fifteen days prior to holding of the committee's meeting:
Provided further that no resolution shall be valid, unless, the member concerned has been given an opportunity of representing his casein the committee of the society.
2) Where any member of a co-operative society proposes to bring a resolution for expulsion of any other member, he shall given a written notice thereof to the President of the Society. On receipt of such notice or when the committee itself decides to bring in such resolution, the consideration of such resolution shall be included in the agenda for the next general meeting and a notice thereof shall be given to the member against whom such resolution is proposed to be brought, calling upon him to be present at the general meeting, to be held nor earlier than a period of one month from the date of such notice and to show cause against expulsion to the general body of members. After hearing the matter, if present, or after taking into consideration any written representation which he might have sent, the general body shall proceed to consider the resolution.
3. When a resolution passed in accordance with Sub-rule (1) or (2) is sent to the Registrar or otherwise brought to his notice, the Registrar may consider the resolution and after making such enquiry as to whether full and final opportunity has been given under Sub-rule (1) or (2) give his approval and communicate the same to the society and the member concerned within a period of 6 months. The resolution shall be effective from the date of approval.
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4. As is apparent from the aforesaid provisions there has to be persistent defaults in making the payment towards demands made by the society. The member concerned ha to be put on notice and served with 3 registered notices and also a public notice in a leading newspaper regarding the proposed expulsion before passing resolution of expulsion. Member concerned has to be given an opportunity of representing his case in the Committee of the Society.
5. Admittedly R-1 became member of the Society in 1984 by depositing a sum of Rs. 110/- as share money. It was in 1988 that he was asked to deposit 25% of the land cost but he did not pay the same. As per requirement of Rule 36 he was served with three registered notices and a public notice in a leading newspaper proposing expulsion.
6. However, when the society received the letter of allotment from the DDA calling upon the Society to deposit Rs. 500000/- as earnest money it sent letters to all the members including R-1 for depositing their respective share. In January 1991 the Society received a demand of Rs. 55 lacs. The members were again sent a request to pay their share. R-1 did not pay any heed and remained unmoved. Petitioner-society published advertisements in the newspapers inviting applications for membership in 1993. R-1 did not respond even at that stage and did not make the payment except the initial payment of rs. 110/-.
7. The case of R-1 was that since the land was allotted to the Society in October 1990 and the Society was required to make the payment up to 31st March, 1991, any demand made by the Society prior to this point of time was not towards the claim of the Society to fulfill its objects. R-1 though denied having received any notice sent by the Society, yet he alleged that even if it is assumed that he had received such notices but said notices of demand were not notices as required under the law. R-1 further took the stand that he had written to the Society to furnish him certain papers to enable him to secure the loan from his employer but for the reasons best known to the Society, it failed to cooperate with him.
8. The order of the Registrar shows that he has not noticed any breach of the requirements of Rule 36 including the non-service of the registered notices and the validity of the resolution passed by the General Body of the Society. What has impressed and persuaded him is the non-cooperation of the Society to furnish requisite documents to facilitate R-1 to arrange the loan. As regard the persistent defaults committed by R-1 there is no dispute. R-1 was served with the notices dated 1.4.1989, 16.5.1989 to deposit his share towards land money. It is interesting to note that the Registrar had granted the approval for expulsion of 45 members for the queer reason that the proposal of the Committee in this respect has been pending since long and the Society has enrolled members in their places and to grant approval will hamper enrolment of members for their no fault.
9. It is not understandable as to what made R-1 indifferent and dormant for 8 long year i.e. from 1989 to 1997 in either moving the Society for making arrangements for loan or making the payment on his own towards the demands that stood against him. When all other members who were similarly placed as R-1 were granted approval as to their expulsion the case R-1 was no better than theirs. Merely because R-1 had deposited a share money of Rs. 110/- did not mean that he had all the rights of a member. Had it been so the provisions of Rule 36 would be rendered redundant.
10. Once a person undertakes a membership of a Society there is no statutory obligation upon the Society to provide a loan facility. It is just gesture on the part of the Society to make such an arrangement in order to facilitate its smooth functioning. Even if it is assumed that the Society did not co-operate with R-1 in arranging loan for him, R-1 cannot take refuge under this non-cooperation for not making the payment as and when demands were raised. Rule 36 casts statutory obligation upon the member to make payments as and when demanded by the Society. To say that the Society was only authorised to make the demand after the allotment of the land may not be correct as the demand towards the earnest money was also a legal and statutory demand whereas the subsequent demands have to be after receipt of the letter from the DDA for deposit of the land money.
11. If the contention of the respondent is accepted then the Society would be left high and dry and run the risk of cancellation of the allotment of land. Sufficient funds are required to be in the coffer of the Society if possession of the land is to be taken by it within the prescribed time. This can be done only with the co-operation of the members through the payments to be made by them.
12. Object of Rule 36 is that the member should incur expulsion if he has persistently defaulted in making the payments towards demands made by the housing Society. Otherwise, it would not be able to raise funds in order to fulfill its objects. The first and foremost object of the Society at the initial stage is to procure the land. Therefore, the demand made by the Society in this case upon R-1 towards earnest money was a demand towards fulfillment of its object. So much so R-1 did not make any payment towards this demand. He also remained indifferent when demand towards cost of the land was raised. The move for his expulsion was, therefore, justified. He could not be allowed to eat the cake from both the ends nor does he deserve any indulgence. Neither the order of the Registrar nor that of the Tribunal can be upheld.
In the result, petition succeeds and expulsion of R-1 stands approved.