IN THE HIGH COURT OF DELHI AT NEW DELHI
W.P.(C) 1403-14/2006 and CM No. 12310/06
02.07.2007
Reserved on : 19th March 2007
Pronounced on: 2nd July, 2007
RAJIB MUKHOPADHYAYA and ORS. ..... Appellants
Through Mr. K. K. Rai and Mr. S. K. Pandey,
Advs.
versus
REGISTRAR COOPERATIVE SOCIETIES ..... Respondent
Through Mr. A Sharan, ASG with Ms. Sujata
Kashyap for R-1.
Mr. Shashank Singh for CBI.
AND
W.P.(C) NO. 17218/2006 and CMs NO. 14136/06 and 79/2007
SANDEEP KR. VERMA ..... Appellants
Through Mr. D.K. Rustagi with Mr. R.K.
Chaudhary.
versus
THE REGISTRAR COOPERATIVE SOCIETIES ..... Respondent
Through Mr. A Sharan, ASG with Ms. Sujata
Kashyap for R-1.
Mr. Sarvagya Sharma for respondent
no.2.
AND
W.P.(C) NO. 2267/2006 AND CM 1985/2006
SATINDER PAL SINGH and ORS. ..... Appellants
Through Ms. Suruchi Aggarwal, Adv.
versus
THE GOVT. OF NCT OF DELHI and ORS. ..... Respondents
Through Mr. A Sharan, ASG with Ms. Sujata
Kashyap for R-1.
AND
W.P.(C) NO. 15741/2006 and CM 12630/2006
RAHUL KATHURIA .....
Appellants
Through Mr. D.K. Rustagi with Mr. R.K.
Chaudhary.
versus
THE REGISTRAR COOPERATIVE SOCIETIES ..... Respondent
Through Mr. A Sharan, ASG with Ms. Sujata
Kashyap for R-1.
Mr. Sarvagya Sharma for respondent
no.2.
AND
W.P.(C) NO.4143/1997 and CMS 7495/05, 10811/05 and 3294/07
FED. OF COOP. G.H. SOCIETY and ANR. .....
Appellants
Through NEMO.
versus
UOI AND ORS. ..... Respondents
Through Ms. Manish Singh for Mr. Amit Bansal
for UOI.
Mr. A Sharan, ASG with Ms. Sujata
Kashyap for RCS.
Ms. Charul Sarin, for DDA.
AND
W.P.(C) NO. 4130/1997 and CMS 2354/07 and 3289/07
HIND. COOP. G.H. SOCIETY LTD. and ANR. ..... Appellants
Through Mr. Rakesh Munjal, Sr. Advocate with
Ms. Shazia Ambrin.
versus
LT. GOVERNOR, DELHI and ORS. ..... Respondents
Through Ms. Manisha Singh for Mr. Amit Bansal,
for UOI.
Mr. A Sharan, ASG with Ms. Sujata
Kashyap for RCS.
AND
W.P.(C) NO.4011/1998 and CM 8401/1998
LAKHPAT RAI JAIN ..... Appellants
Through NEMO.
versus
UOI and ORS. ..... Respondents
Through Mr. A Sharan, ASG with Ms. Sujata
Kashyap for RCS.
AND
W.P.(C) NO. 2417-18/2006 and CM NOS. 2151/06, 2152/06 and 11512/06
YADVENDER SINGH and ANR. ..... Appellants
Through Mr. Sudhir Nandrajog with Mr. Sanjay
Kumar Pathak, Ms. K. Kaomudi Kiran
and Mr. M.K. Rai.
versus
GOVT. OF NCT OF DELHI and ORS. ..... Respondents
Through Mr. Som Dutt Kaushik with Ms. Payal
for respondent no.1 to 3.
CORAM:
HON'BLE MR. JUSTICE MUKUL MUDGAL
HON'BLE MS. JUSTICE ARUNA SURESH
1. Whether the Reporters of local papers
may be allowed to see the judgment? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be
reported in the Digest? Yes
JUDGEMENT
02-07-2007
MUKUL MUDGAL,J.
1. These group of writ petitions challenge the vires of Rule 24(2)
of the Delhi Cooperative Societies Rules, 1973 (hereinafter referred to as DCS
Rules) as amended on 6th August, 1997 and 1st April, 2005 . The Rule as
amended and standing at present reads as follows:-
?24(2). In case of vacancy in a housing society including group housing
society where layout and building plans have been approved by the competent
authority, the same shall be filled by the committee by notifying it in leading
daily newspaper of Delhi in Hindi and English. In case the number of
applications are more than the notified vacancies the membership shall be
finalised through draw of lot in the presence of authorized representative of
the Registrar.?
The above rule was further amended on 1st April, 2005 , which
reads as follows:-
?24(2). In case of vacancy in a housing society including group housing society
the same shall be filled by the committee by notifying it in leading daily
newspaper of Delhi in Hindi and English. In case the number of applications
are more than the notified vacancies the membership shall be finalized through
draw of lot in the presence of authorized representative of the Registrar.?
2. For the sake of convenience we have taken the WP(C) No. 1403-
14/2006 titled Rajib Mukhopadhyaya and Ors. vs. Registrar of Cooperative Society
and Ors. as the lead petition and the judgment on the validity of Rule 24(2) of
the DCS Rules, shall govern all the connected writ petitions.
3. The main challenge to the constitutional validity of the above Rule
24(2) of the Act is based upon the judgment of the Division Bench of this Court
in Federation of Co-op. G/H Society and Ors. vs. Union of India and Ors.,
1993(26) DRJ (DB) P. 156. The said judgment related to the constitutional
validity of Rule 41A of the DCS Rules, which is reproduced as follows:-
?41-A. Notwithstanding anything contained in these rules or the bye-laws of the
Cooperative Group Housing Societies, vacancy or vacancies arising as a result of
resignation, expulsion and cessation of membership in such societies shall,
until the allotment of land is made to them by the Delhi Development authority,
not be filled up. Vacancy of vacancies arising after the allotment of land to
such societies shall be filled up from amongst the willing registrants for flats
with the Delhi Development Authority under its self-financing schemes or from
amongst the members of other co-operative group housing societies, which are yet
to be allotted land by the Delhi Development Authority or from amongst the
members of such societies, as have not reached the stage of construction of
flats.?
4. Dealing with the validity of the above Rule 41A, the Division
Bench of this Court affirmed the view taken by the learned Single Judge in
Navjivan Cooperative House Building Society v. Delhi Cooperative Tribunal,
Delhi, 1988 Cooperative Law Journal 75, in the following terms:-
?84. The first contention, in this behalf of counsel for the petitioners is
that Rule 41A is ultra vires, unreasonable, arbitrary and is also contrary to
the basic principles of cooperation. As already noted Section 4 of the Delhi
Cooperative Societies act, inter alia refers to the society being required to
promote interests of members according to ?Cooperative Principles? in order to
get itself registered. What are the Cooperative Principles have been dealt with
by a single Judge of this Court in the case of Navjeevan Cooperative House
Building Society v. Delhi Cooperative Tribunal, Delhi , 1988 Cooperative Law
Journal 75. While referring to the book entitled ?Indian Cooperative Laws vis-
a-vis Cooperative Principles? written by Shri P.E. Weeraman it was observed in
the said case of Navjeevan Cooperative Society that there are six cooperative
principles and they are all equally important and they form a system and are
inseparable. These six principles are as follows:-
?(i) Voluntary and open membership;
(ii)Democratic control;
(iii)Limited interest on capital;
(iv)Equitable division of surplus;
(v)Co-operative Education;
(vi)Co-operation among cooperatives.?
85. At page 82 of the judgment it was observed by the learned single
Judge in Navjivan Cooperative Society's case, while referring to the principle
of voluntary and open membership as follows:
?The principle that the membership shall be voluntary in the Cooperative Society
means that :
(i) a person who joins a cooperative society of his own free will, and
(ii) the society which admits a person into its membership should
likewise do so voluntarily.
The principle of open membership is that:
(i) there shall be no artificial restriction on the admission of
members;
(ii) there shall be no social, political, racial or religious
discrimination against persons who wish to join, and
(iii) memberships shall be available to all persons who need and can make
use of the society's services and are willing to accept the responsibilities of
membership.
The principle of voluntary, open membership would naturally exclude the
state from becoming a member of a Cooperative Society and would exclude the
state interference in the affairs of the society.?
We are in full agreement with the aforesaid principles. Rule 41A,
however, sets at the main principle of voluntary and open membership. The right
of a society to admit like minded persons as its members has ceased to exist.
The non-obstantive clause of Rule 41A overrides the bye-laws. More often than
not the cooperative group housing society provide for type of persons who can be
members of the society. For example there may be a cooperative group housing
society of members of the High Court Bar Association which may require, as a
condition of eligibility, that only a person who is a member of the High Court
Bar Association would be eligible to join the cooperative society. The effect
of Rule 41A, however, will be that vacancies in the cooperative societies can
even be filled from amongst those members of cooperative societies who may not
be the members of the High Court Bar Association. This is an example which will
show that Rule 41A negates the very principle of voluntary and open membership
which is so essential to the spirit of cooperation among the members. It is
always like minded persons who join together and form a cooperative society. If
members are thrust on the society then the spirit of cooperation and comradeship
will come to an end.
87. We have, therefore, no hesitation in coming to the conclusion that the
said Rule 41A is contrary to the cooperative principles and, therefore, is in
conflict with Section 4 of the Delhi Cooperative Societies Act.
88. It was submitted by the learned counsel for the respondents that thus
Rule was promulgated with a view to check the mal-practices of sale of
membership by the societies and to give preference to DDA registrants in the
matter of allotment of flats through cooperative societies as these registrants
had been awaiting for a number of years but have not been able to secure flats
from the DDA. Whatever may be the object of enacting Rule 41A, it does appear
to us that it is clearly opposed to the basic concept of cooperative movement.
Cooperative societies must be free to choose their members.
.................
92. There is also considerable force in the contention of the learned counsel
for the petitioners that Rule 41A is also violative of Article 19(1)(c) of the
Constitution, which gives citizens right to form associations. No doubt under
sub-article (4) of Article 19 reasonable restriction on this right may be
imposed but the question is whether this Rule 41A places a reasonable
restriction? Looking at the fact that even after limited relaxation of Rule 41A,
the cooperative societies have been unable to fill up the vacancies we have no
doubt that the restriction which is placed by Rule 41A is clearly unreasonable.
To frame an unworkable rule cannot be regarded as a reasonable restriction as
contemplated by sub-article (4) of Article 19. the right to form associations
being an important fundamental right any restriction which is placed there on
will have to be closely examined. When it was demonstrated before us that the
entire activity of the cooperative societies to obtain land from DDA and
construct flats will be frustrated because of the societies being unable to fill
up the vacancies in view of rule 41A it must follow that the said rule places an
unreasonable fetter on the formation and running of the society and is,
therefore bad in law.
93. In our opinion 41A as originally framed on 2nd November, 1990 and
also as re-framed on 19th August, 1991 is ultra vires Section 4 and 20(1) of the
Act as well as ultra vires the rule making power contained in Section 97 of the
Act and the said rule is accordingly quashed. The result of this would be that
the vacancies occurring in the cooperative societies can be filled by the
societies concerned without the impediment which has been created by Rule 41A
and in accordance with law.?
5. Particular emphasis has been laid down on the following
principle relating to voluntary nature of the membership of the cooperative
society ?(ii) the society which admits a person into its membership should
likewise do so voluntarily.? It was also held by the learned Single Judge and
affirmed by the Division Bench that the principle of voluntary and open
membership would naturally exclude the state from becoming a member of a
Cooperative Society and would exclude the state interference in the affairs of
the society. Mr. Rai states that the above judgment applies to the issues
arising in all these connected matters before us.
6. Mr. Nandrajog, appearing in the companion matters states that
the issue involved in the present matters is also covered by the judgment of the
Hon'ble Supreme Court in Smt. Damyanti Naranga vs. The Union of India and others
AND The Hindi Sahitya Sammellan and others vs. Shri Jagdish Swarup and others,
1971(1) SCC 678, and particular emphasis have been laid down on the following
observations in the said judgment in Smt. Damyanti's case (supra):-
?6. It was argued that the right guaranteed by Article 19(1)(c) is only to
form an association and, consequently, any regulation of the affairs of the
Association, after it has been formed, will not amount to a breach of that
right. It is true that it has been held by this Court that, after an
Association has been formed and the right under Article 19(1)(c) has been
exercised by the members forming it, they have no right to claim that its
activities must also be permitted to be carried on in the manner they desire.
Those cases are, however, inapplicable to the present case. The Act does not
merely regulate the administration of the affairs of the Society; what it does
is to alter the composition of the Society itself as we have indicated above.
The result of this change in composition is that the members, who voluntarily
formed the Association, are now compelled to act in that Association with other
members who have been imposed as members by the Act and in whose admission to
membership they had no say. Such alteration in the composition of the
Association itself clearly interferes with the right to continue to function as
members of the Association which was voluntarily formed by the original
founders. The right to form an association, in our opinion, necessarily implies
that the persons forming the Association have also the right to continue to be
associated with only those whom they voluntarily admit in the Association. Any
law, by which members are introduced in the voluntary Association without any
option being given to the members to keep them out; or any law which takes away
the membership of those who have voluntarily joined it, will be a law violating
the right to form an association. If we were to accept the submission that the
right guaranteed by Article 19(1) (c) is confined to the initial stage of
forming an Association and does not protect the right to continue the
Association with the membership either chose by the founds or regulated by rules
made by the Association itself, the right would be meaningless because, as soon
as an Association is formed, a law may be passed interfering with its
composition, so that the Association formed may not be able to function at all.
The right can be effective only if it is held to include within it the right to
continue the Association with its composition as voluntarily agreed upon by the
persons forming the Association........................
7. The Court in the above passage, thus, accepted the principle that the
Government servants, who may have formed an Association, could not be compelled
to resign from it by imposition of a condition of recognition of this
Association by the Government and that, if the Government servants are required
to cease to be members, that would be a violation of the right under Article
19(1)(c). The Court, of course, in that case, further proceeded to examine
whether such a restriction on the right could be justified under Article 19(4)
or not. That case, thus, supports our view that the right to form an
Association includes the right to its continuance and any law altering the
composition of the Association compulsory will be a breach of the right to form
the Association.
8. This Court had also proceeded on the same basis in the case of State
of Madras v. V.G. Row. Though this aspect was not clearly brought out in the
judgment, the point, which came up for consideration, was decided on the basis
that persons forming an Association had a right under Article 19(1)(c) to see
that the composition of the Association continues as voluntarily agreed to by
them. That decision was given in an appeal from a judgment of the High Court of
Madras reported in V.G. Row v. The State of Madras . In the High Court, this
principle was clearly formulated by Rajamanner, C.J., in the following words:
?The word 'form' therefore, must refer not only to the initial commencement of
the association, but also to the continuance of the association as such.?
9. The Act, insofar as it interferes with the composition of the Society in
constituting the Sammelan, therefore, violates the right of the original members
of the Society to form an association guaranteed under Article 19(1)(c).
10. Article 19(4), on the face of it, cannot be called in aid to claim
validity for the Act. Under Article 19(4), reasonable restrictions can be
imposed only in the interests of the sovereignty and integrity of India , or in
the interest of public order or morality. It has not been contended on behalf
of the respondent, nor could it be contended that this alteration of the
constitution of the Society in the manner laid down by the Act was in the
interests of the sovereignty and integrity of India , or in the interests of
public order or morality. Not being protected under article 19(4), it must be
held that the provision contained in the Act for reconstituting the Society into
the Sammelan is void. Once that section is declared void, the whole Act becomes
ineffective inasmuch as the formation of the new Sammelan is the very basis for
all the other provisions contained in the Act.?
(emphasis supplied)
Mr. Nandrajog highlighted the fact that the above judgment and in
particular the passages cited by him clearly show that the impugned amendment
which fetters the right of the Society is clearly in violation of the
Constitutional guarantee provided under Article 19(1)(c) of the Constitution of
India. Article 19(1)(c) along with Article 19(4) which permits the regulation
of the said right are reproduced as under:-
?19. Protection of certain rights regarding freedom of speech, etc.-- (1) All
citizens shall have the right
(a)
(b)
(c) to form associations or unions;
..............
(4) Nothing in sub-clause (c) of the said clause shall affect the
operation of any existing law in so far as it imposes, or prevent the State from
making any law imposing, in the interests of [the sovereignty and integrity of
India or] public order or morality, reasonable restrictions on the exercise of
the right conferred by the said sub-clause.?
Mr. Nandrajog submits that the aforesaid judgment in Damyanti
Naranga's case (supra) was applied by the Hon'ble Supreme Court in Asom
Rastrabhasa Prachar Samiti and another vs. State of Assam and others, (1989) 4
SCC 496. The relevant paragraph of the judgment reads as follows:
?22. It is therefore clear that so far as the present case is concerned it is
only that the new members are introduced, not only that the complete control is
left to the Board to be nominated by the government, about the persons no norms
have been laid down, the person so nominated could be anyone and no control is
kept to those who formed the Society, those who had a right to form an
association will be kept away and the Society shall be run by a group of persons
nominated by the government in accordance with Section 3. It is therefore clear
that what was done in the Sammelan Acts which were under examination in the
Constitution Bench judgment referred to above, much more has been done in this
case. In this case virtually the right of association has been taken away and
not only that it is a sort of deprivation for all times as it is not even
provided that this Board may be an interim Board and thereafter a proper board
will be elected but here this Board will continue to control and manage the
affairs of the Society. In the Constitution of Bench case their Lordships
considered the scope of Article 19(1)(c) in the context of what was contemplated
in that Act and observed: (SCC pp. 684-85, para 6)
?The right to form an association, in our opinion, necessarily implies that the
persons forming the Association have also the right to continue to be associated
with only those whom they voluntarily admit in the Association. Any law, by
which members are introduced in the voluntary Association without any option
being given to the members to keep them out; or any law which takes away the
membership of those who have voluntarily joined it, will be a law violating the
right to form an association. If we were to accept the submission that the
right guaranteed by Article 19(1) (c) is confined to the initial stage of
forming an Association and does not protect the right to continue the
Association with the membership either chose by the founds or regulated by rules
made by the Association itself, the right would be meaningless because, as soon
as an Association is formed, a law may be passed interfering with its
composition, so that the Association formed may not be able to function at all.
The right can be effective only if it is held to include within it the right to
continue the Association with its composition as voluntarily agreed upon by the
persons forming the Association.
7. It is, therefore, contended that the impugned Rule 24(2) of the
DCS Rules in so far as it fettered and interfered with the right guaranteed
under Article 19(1)(c) of the Constitution to form an association was ultra
vires of the Constitution of India and was not saved by the provisions of
Article 19(4) of the Constitution. It is submitted that a society as a
component of its right to form an association clearly had a right to admit to
its fold members of its choice and such a right could not be interfered with as
sought to be done by impugned Rule 24(2) of the DCS Rules. In this respect,
the judgment of the Constitution Bench in Damyanti Naranga's case had cited with
approval the view of the Madras High Court in V.G. Row v. The State of Madras,
AIR 1951 Mad 147 : 1951 1 MLJ 628, where it was held as follows:-
?The word 'form' therefore, must refer not only to the initial commencement of
the association, but also to the continuance of the association as such.?
8. The learned counsel for the respondent relied upon the judgment
dated 7th September, 2006 of a Division Bench of this Court in Writ Petition
(Civil) No. 19967/2004 titled Nehru Coop. G/H Society Ltd. vs. Govt. of NCT of
Delhi and Anr., to contend that the said judgment clearly upheld the
constitutional validity of Rule 24(2) of the DCS Rules , which was held to be
operative by the above judgment. The relevant portion of the said judgment
reads as follows:-
5. Having heard the counsel for the petitioner as also counsel for the
respondent and the Registrar, Cooperative Societies, and upon going through the
records, we find that in CW 4130/1997, an order was passed on 30.9.1997, whereby
notice in the writ petition was issued by this court. While doing so, an interim
order was passed staying the operation of the Rule 24(2) of the Delhi
Cooperative Societies Rules, 1973 as amended by Notification dated 6th August,
1997 . Similar interim orders staying the operation of the amended Rule 24(2)
were also passed in CW 4143/1997 on 3.10.1997. The aforesaid interim order which
was passed in CW 4130/1997 was also made absolute by a subsequent order passed
in the said writ petition on 20.8.1998. In CW 4143/97 it was ordered on 3.10.97
that the said writ petition had to be heard along with CW 4130/97. CW 4143/1997
was listed on 8.1.2003 along with CW Nos.4209/97, 3430/98, 5683/98 and 1651/97.
It is, however, brought to our notice that while the aforesaid writ petitions
were listed for consideration on 8.1.2003, CW 4130/97 was not listed. The
Division Bench of this Court by order dated 8.1.2003 disposed of the aforesaid
writ petitions which were listed before it on the said date.
6. A bare perusal of the aforesaid order dated 8.1.2003 passed by this court
would indicate that in the said writ petitions, notice was taken of the
provisions of Rule 34(A) and Rule 36(A), but no observation whatsoever was made
with regard to Rule 24(2). It is, therefore, clear and apparent that when the
writ petitions were disposed of, the challenge made to Rule 24(2) also stood
disposed of without returning a ruling in favour of the petitioner that the said
provision was liable to be struck down. The court did not hold that Rule 24(2)
of the Delhi Cooperative Societies Rules is in any manner ultra vires to the
Constitution of India . That being the decision, and the stay order having merged
with the final order passed while disposing of the writ petition, it is manifest
that there was no stay operating in so far as the provisions of Rule 24(2) of
the Delhi Cooperative Societies Rules are concerned.
7. Immediately, after passing of the said order, so far as these writ petitions
are concerned, the said Rule 24(2) otherwise became operative and applicable
with immediate force as in our considered opinion, a rule could be said to be
invalid only when the same is declared to be invalid by an appropriate court. No
declaration was made at any point of time by any court that Rule 24(2) is ultra
vires or void. Although, CW 4130/1997 was pending in this Court, the interim
order which was granted therein would be deemed to be operative only for the
purpose of that case and not for any other case. It may also be noted that the
said case was also later on dismissed in default on 7.7.2005. While dismissing
the said writ petition on 7.7.2005, it was observed that the connected matter
had already been disposed of.?
9. The learned counsel for the respondent submitted as follows:
a) The notification dated 5th August 1997 was challenged in a writ
petition being W.P (C ) No. 4143 in the matter of ?Federation of Cooperative
Group Housing Societies Ltd. New Delhi v. Union of India ? and this Court by an
order dated 12th December 1997 stayed the notification dated 5th august 1997.
b) While disposing of W. P (C) No. 4147/97 with W.P (C) No. 4209/97,
3430/98, 1651/97, this court by its judgment dated 8th August 2003 had directed
the Registrar Co-operatives to issue necessary clarification in respect of Rule
34-A and 36-A of the DCS Rules, 1973.
c) This Court by its order dated 7th September 2006in W.P (C) No.
19967/04 in the matter of M/S Nehru C.G.H.S v/s GNCT of Delhi., that while
disposing of WP(C) Nos.4143/97, 4209/97, 3430/98, 5683/98 and 1651/97 this Court
did not hold that the Rule 24 (2) of the DCS Rules are in any manner ultra vires
to the Constitution of India and further held that the stay order while having
merged with the final order when the writ petition was disposed of, it is
evident that there was no stay operating in so far as the provisions of Rule 24
(2) of the DCS Rules are concerned. It was also held that if any person is
inducted as a member of cooperative society by the Managing Committee of the
society in violation of the aforesaid rules, the said membership is to be held
as void ab initio for non-compliance with the mandate of the provisions of the
Rule 24 (2) of the DCS Rules. A provision in the statute cannot be declared as
void or invalid in general terms unless the same are declared void or invalid by
the an appropriate court. The aforesaid provisions were operative till 8th
January 2003. This Court directed the CBI/ Crime Branch to investigate as to
why and how no action was taken with effect from 8th January 2003 to 1st July
2004 for giving effect to the Rule 24 (2) of the DCS Rules, 1973. It was also
held that the Registrar, cooperative societies, to enquire into and to ascertain
how many societies and which societies inducted new members into the society
after 2003 without adhering to the provisions of Rule 24 (2) of the DCS Rules
and also how many cooperative societies were involved and what was nexus between
the concerned authorities, cooperative societies and the inducted person without
giving effect to the provisions of the Rule 24 (2) of the DCS Rules.
(d) A Group Housing Co-operative Society is a statutory society and
freedom and association in case of cooperative societies are controlled by the
Delhi Cooperative Societies Act, 2003. Further, since the the societies are
receiving the state largesse ( for example being allotted at a lower rate) the
nature of these associations is different from association of a general nature.
Therefore, a regulation made to ensure the effective administration of these
societies is not to be tested on the touchstone of Article 19 of the
Constitution of India . In Pradeep Kumar Bisvas v. Indian Institute of Chemical
Biology, (2003) 5 SCC 111, the Hon'ble Supreme Court laid down the following
position of law:
?....that the Indian Statistical Institute, a registered society is an
instrumentality of the Central Government and as such is an ?authority? within
the meaning of Article 12 of the Constitution. The basis was that the
composition of Respondent 1 is dominated by the representatives appointed by the
Central Government. The money required for running the Institute is provided
entirely by the Central Government and even if any other moneys are to be
received by the Institute, it can be done only with the approval of the Central
Government, and the accounts of the Institute have also to be submitted to the
Central Government for its scrutiny and satisfaction....?
(e) The Membership of a cooperative society is not a fundamental right but
merely a statutory right, therefore, the provisions of Article 19 (1) (c) of the
Constitution of India have no application in case of Group Housing Societies.
In State of U.P. v. COD, Chheoki Employees Cooperative Society Ltd. and ors.
1997 (3) SCC 681, the following position of law was laid down by the Hon'ble
Supreme Court:
?.....Though Article 19(1) (c) gives freedom to form association, it is
controlled by the provisions of the Act. As held by this court, once a society
has been registered under the Act, the management of the society through Section
29 and the Rules made thereunder, is regulated by duty elected members. In the
democratic set up, all eligible persons are entitled to contest the election, as
held, according to the provisions of the Act and Rules. In the absence of
elected members belonging to the weaker sections and elected women members,
their nomination by the Government is the alternative dispensation envisaged as
one of the policies of the Act. Therefore, the Court cannot interfere with the
policy and declare it unconstitutional violating Article 19(1) (c) of the
Constitution.?
(f) It is an admitted position of law that the by-laws of the society may
provide for formation of an association confined to particular profession,
belief, trade, way of life etc. and such a by-law can be interfered with
statutorily. In Zorastrian Co-operative Housing Society Ltd. and anr. v.
District Registrar Cooperative Societies, (2005) 5 SCC 632, the Hon'ble Supreme
Court laid down the following position of law:
?.....the effect of the observations in Daman Singh's case(supra), is only that
cooperative societies, from their very inception are governed by the statute,
the Cooperative Societies Act, that they are created by statute, they are
controlled by the statute and so, there can be no objection to statutory
interference with their composition or functioning and no merit in a challenge
to statutory interference based on contravention of the individual right of
freedom of association. As we understand the statement of the law by this Court
in Daman Singh's case, it only means that the action of the society in refusing
membership to a person has to be tested in the anvil of the provisions of the
Act, the Rules and its bye-laws.?
(g) It has been submitted by the learned counsel for the petitioner that
any regulation/restriction on the right of the societies would infringe their
right under Article 19(1) (c) of the Constitution of India and hence would be
ultra vires. This submission of the petitioner is based upon the position of
law laid down by the Hon'ble Supreme Court in Damayanti Narang's case (supra).
Damayanti Narang's case is clearly distinguishable on the ground that had
question involved in the Damayanti Narang's case (supra) was in respect of an
association which had been under Societies Registration Act, and not an
association registered under any Cooperative Societies Act. This is also
supported by the decision of the Hon'ble Supreme Court in Daman Singh's case
(1985) 2 SCC 670, wherein the Hon'ble Supreme Court held as follows:
?The answer to the principal question raised by Shri Ramamurthi appears to us to
be so plain as to merit no further discussion. We must however notice here
Damyanti Naranga v. Union of India (1971) 3 SCR 840: (1971) 1 SCC 678 on which
reliance was placed by the learned counsel on the basis that Articles 31-A(1)(c)
did not afford any protection to Section 13(8), (9) etc. That case has no
application whatever to the situation before us. It was a case where an
unregistered society was by statute converted into a registered society which
bore no resemblance whatever to the original society. New members could be
admitted in large numbers so as to reduce the original members to an
insignificant minority. The composition of the society itself was transformed
by the Act and the voluntary nature of the association of the members who formed
the original society was totally destroyed. The Act, was therefore, struck down
by the court as contravening the fundamental right guaranteed by Article
19(1)(f). In the case before us we are concerned with cooperative societies
which from the inception are governed by statute. They are created by the
statute, they are controlled by statute and so, there can be no objection to
statutory interference with their composition on the ground of contravention of
the right of freedom of association.?
(h) Rule 24 (2) of the DCS Rules does not in any manner restrict the class
of persons who are to become members of the cooperative societies as per its
bye-laws. It merely regulates the process of filling up the vacancy in
membership from amongst the members of the same class. Rule 24 (2) of the DCS
Rules is not a restrictive but a regulatory provision which does not in any
manner override the provisions of the bye-laws of the society nor does it amend
them. It requires notice to the eligible persons and to those only who are
eligible to become members of the society can apply for becoming members.
However, the fact that if a possession is vacant must be publicized and
thereafter the vacancy is filled by draw of lots in a transparent manner in the
presence of the Registrar, Cooperative Societies. Thus, Rule 24 (2) of the DCS
Rules cannot be read to mean that it is an invitation to general public to
become member of a cooperative society irrespective of any qualification
provided in the bye-laws of the society. It has to be interpreted in this manner
that it provides for public notice to all eligible persons and provides the
process for filling up the vacancy in a transparent manner. Once the society
is registered it is governed by its bye-laws and run by an elected Committee as
per the statutory provisions and bye-laws. Rule 24(2) of the DCS Rules does
not restrict the choice of the class of persons from which the members of the
cooperative housing society are to be selected. Thus, it is not in conflict
with the Federation's case, wherein it was held by this court that Rule 41A
incorporated in 1990 which overrode the Cooperative Societies Rules as well as
bye-laws of any society and prohibited filling up of any vacancy except from the
residents of flats of the DDA under Self Financing Scheme (SFS) was violative of
the right of the cooperative societies to choose their members.
(i) Rule 24(2) of the DCS Rules is in furtherance of the object of the Act
which are inter alia to ensure ?democratic management, transparency,
accountability in the affairs of the cooperative society, etc. as the modus
operandi followed by the builders/managing committee controlled by the builders
responsible for the cooperative scam was that the builder in connivance with the
officers of the cooperative department and the DDA have revived many defunct/non
functional housing societies and their names have subsequently been recommended
to the DDA by the office of the Registrar, Cooperative Societies, for allotment
of land. The Group Housing Societies have been revived by the promoter
members/builders with a huge vested interest after forging signatures of the
original members on the affidavits and thereafter submitting the false
affidavits. No builder who has taken over any society can make huge profit
unless he is allowed to enroll members at his discretion in gross violation of
Rule 24(2) of the DCS Rules as only when this happens, huge premium and profit
can be earned by them. The builders may not have entered in the cooperative
housing sector if Rule 24 (2) of the DCS Rules would have been implemented in
letter and spirit.
(j) It two interpretations of a provisions of law are possible, the one
which will make the provisions intra vires and the other which will make the
provisions ultra vires, then the one which will make the provisions intra vires
has to be preferred. This was also laid down by the Hon'ble Supreme Court in
St. John's Teachers Training Institute vs. Regional Director, National Council
for Teacher Education and another 2003(3) SCC 321, wherein it was held as
follows:
?It is also well settled that in considering the vires of subordinate
legislation one should start with the presumption that it is intra vires and if
it is open to two constructions, one of which would make it valid and other
invalid, the courts must adopt that construction which makes it valid and the
legislation can also be read down to avoid its being declared ultra vires.?
Similarly, in Jagpal Singh and Ors. vs. State of Punjab 1991 (suppl 1)
SCC 549, the Hon'ble Supreme Court cited with approval Maxwell on the
Interpretations of the Statutes (10th Edition at page 7) as under:
?.....if the choice is between two interpretations, the narrower of which
would fail to achieve the manifest purpose of the legislation, we should avoid a
construction which would reduce the legislation to futility and should rather
accept the bolder construction based on the view that Parliament would legislate
only for the purpose of brining about an effective result.?
(k) A person who becomes member of the cooperative society is subjected to
the operation of the Act, Rules and bye-laws applicable from time to time. No
member of the society has an independent right qua the society and is therefore,
not entitled to assail the constitutionality of the provisions of the Act, Rules
and bye-laws. This was also held in Daman Singh's case (supra) wherein the
Hon'ble Supreme Court held as follows:
?.....Once a person become a member of a cooperative society, he loses his
individuality qua the society and he has no independent rights except those
given to him by the statute and the bye-laws. He must act and speak through the
society or rather, the society alone can act and speak for him qua rights or
duties of the society as a body. So if the statute which authorises compulsory
amalgamation of cooperative societies provides for notice to the societies
concerned, the requirement of natural justice is fully satisfied. The notice to
the society will be deemed as notice to all its members.?
The above principle was reiterated by the Hon'ble Supreme Court in
Chheoki Employees Cooperative Society Ltd. and Ors. (supra) in the following
terms:
?Thus, it is settled law that no citizen has a fundamental right under Article
19(1) (c) to become a member of a cooperative societies. 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. On fulfillment of the
qualifications prescribed to become a member and for being a member of the
society and on admission, he becomes a member. His being a member of the
society is subject to the operation of the Act, rules and bye-laws applicable
from time to time. A member of the society has no independent right qua the
society and it is the society that is entitled to represent as the corporate
aggregate. No individual member is entitled to assail the constitutionality of
the provisions of the Act, rules and the bye-laws as he has his right under the
Act, rules and the bye-laws and is subject to its operation. The stream cannot
rise higher than the source.?
10. After considering the pleas of the parties and pursuing the judgments
cited by them the following position emerges:-
(a) If only the position of law laid down by the Hon'ble Supreme Court in Smt.
Damyanti Naranga's (supra) held the field, there is no doubt whatsoever that the
provision of Rule 24 (2) of the DCS Rules was clearly invalid and liable to be
struck down. However, Smt. Damyanti Naranga's case (supra) which was a judgment
of a Constitution Bench of 5 Judges of the Hon'ble Supreme Court was later on
explained in the judgment of Daman Singh (supra) which was another judgment of
the Constitution Bench of 5 Judges of the Hon'ble Supreme Court and wherein it
was clearly held that the cooperative societies which from their very inception
which are governed by the statutes, and are the creation of the statutes, are
controlled by the statutes and consequently there cannot be any objection to the
interference with their rights guaranteed by Article 19 (1) (c) of the
Constitution.
11. In light of the above categorical position of law laid down by the
Hon'ble Supreme Court in Daman Singh's case which was followed by the Hon'ble
Supreme Court in the case of Chheoki Employees Cooperative Society Ltd. (supra),
it is evident that the position of law as laid down by Daman Singh's case has to
be applied by this Court. It is settled law that if a later judgment of the
Hon'ble Supreme Court has explained the scope of an earlier judgment by
referring to it, then the High Court is bound by the interpretation of the
earlier judgment of the Supreme Court by the later judgment. In light of this
position of law the judgment of the Hon'ble Supreme Court in ASOM Rashtrabhasa
Prachar Samiti's case (supra) while following the position of law laid down in
the Damayanti Naranga's case was not apprised of the position of law laid down
by the Constitutional Bench in Daman Singh's case and since the judgment in ASOM
Rashtrabhasa Prachar Samiti's case (supra) is a judgment of 3 Hon'ble Judges, we
are respectfully bound by the position of law laid down by the Constitution
Bench of 5 Judges of the Hon'ble Supreme Court in Daman Singh's case. However,
the learned Additional Solicitor General Mr. Amarendra Sharan has fairly
conceded that Rule 24(2) of the DCS Rules does not in any manner restrict the
right of the society to restrict its membership to the class of persons who are
to become members of the Cooperative Societies as per its bye-laws. He
submitted that the said Rule 24(2) of the DCS Rules merely regulates the process
of filling up of the vacancies arising in such societies. Thus, Rule 24(2) of
the DCS Rules according to him, was not a restrictive but a regulatory
provision. It does not in any manner override the provisions of the bye laws of
the society or amends them. We accept Shri Sharan's plea that a notice has to
be given under Rule 24 (2) of the DCS Rules only to the eligible persons and
only such persons who are eligible to be members according to the existing
regulations and bye laws of the Society can apply for its membership. The draw
of lots is only required to be held when the slot(s) for membership are
available and such availability/vacancy is publicized by notifying it in the
daily newspaper Hindi and English and thereafter the vacancies are filled up by
the draw of lots in a transparent manner in the presence of the Registrar of the
Cooperative Societies. He, thus, submitted that if there are two
interpretations of the Statute possible and one interpretation renders the
provision unconstitutional and the other sustains its constitutionality, then
the Court should prefer such an interpretation which makes the provisions
constitutionally valid. For this purpose, he has relied upon the judgments of
the Hon'ble Supreme Court in St. John's Teachers Training Institute (supra)
and the judgment of Jagpal Singh(supra) where the Hon'ble Supreme Court while
adopting the same interpretation has relied upon Maxwell on 'Interpretation of
Statutes'. While accepting the plea of the respondents reliance can also be
placed on the judgment of the Hon'ble Supreme Court in Sunil Batra v. Delhi
Administration and Ors. ( 1978 ) 4 SCC 494 in which it has been held that the
Court can read down a statute to prevent it from being rendered
unconstitutional. The relevant paragraphs of the said judgment reads as follows:
?34. Batra puts in issue the constitutionality of Section 30(2) of the Prisons
Act, 1894 (the Act, for short) while Sobraj impugns the vires of Section 56.
But, the Court does not 'rush in' to demolish provisions where judicial
endeavour, amelioratively interpretational, may achieve both constitutionlity
and compassionate resurrection. This salutary strategy of sustaining the
validity of the law and softening its application was, with lovely dexterity,
adopted by Sri Soli Sobrabjee appearing for the State. The semantic technique of
updating the living sense of a dated legislation is, in our view, perfectly
legitimate, especially when, in a developing country like ours, the corpus juris
is, in some measure a Raj hand-over.
36-A Read Dickerson has suggested:
... the Courts are at least free from control by original legislatures. Curtis,
for one, has contended that consistently with the ascertained meaning of the
statute, a court should be able to shake off the dust of the past and plant its
feet firmly in the present.
...The Legislature which passed the statute has adjourned and its members gone
home to their constituents or to a long rest from all law making. So, why bother
about what they intended or what they would have done? Better be prophetic than
archaeological, better deal with the future than with the past, better pay a
decent respect for a future legislature than stand in awe of one that has folded
up its papers and joined its friends at the country club or in the cemetery....
...Let the Courts deliberate on what the present or a future legislature would
do after it had read the court's opinion, after the situation has been
explained, after the Court has exhibited the whole fabric of the law into which
this particular bit of legislation had to be adjusted.
39. The jurisprudence of statutory construction, especially when a vigorous
break with the past and smooth reconciliation with a radical constitutional
value-set are the object, uses the art of reading down and reading wide, as part
of interpretational engineering. Judges are the mediators between the societal
tenses. This Court in R.L. Arora v. State of Uttar Pradesh and in a host of
other cases, has lent precedential support for this proposition where that
process renders a statute constitutional. The learned Additional Solicitor
General has urged upon us that the Prisons Act (Sections 30 and 56) can be a
vehicle of enlightened values if we pour into seemingly fossilized words a
freshness of sense.
It is well settled that if certain provisions of law construed in one way will
be consistent with the Constitution, and if another interpretation would render
them unconstitutional, the Court would lean in favour of the former
construction.?
(emphasis supplied)
12. Consequently, we uphold the constitutional validity of Rule 24(2) of
the DCS Rules subject to the above interpretation of the law submitted by the
learned Additional Solicitor General, which we accept and declare. The bye
laws of the Society shall be fully followed in entertaining the claims of
memberships set up by those applying through the medium of Rule 24 (2) of the
DCS Rules. Thus, if the society has any existing requirements in its bye laws
about the characteristics required to be possessed by an intending member, only
such persons possessing the requirements as stipulated in the existing bye laws
and regulations of the Society are entitled to apply pursuant to Rule 24(2) of
the DCS Rules. We also make it clear that if the Society has any existing
members who have still not got the allotment of a plot/flat, such members, in
accordance with the bye laws, shall be first allotted the vacant
plot/flat/premises before resort to Rule 24(2) of the DCS Rules. It is only
when all such existing members awaiting allotment have been allotted the
premises/plot/flats, shall the operation of Rule 24 (2) of the DCS Rules come
into being.
13. Consequently, while dispelling the challenge to the constitutional
validity of Rule 24(2) of the DCS Rules, we nevertheless uphold the societies
right to restrict its membership in accordance with the bye-laws, regulations
and the rules of the society prospective candidates and further make it clear
that any prospective entrant to a society, pursuant to the mandate of Rule 24
(2) of the DCS Rules shall only be eligible to be allotted a plot after the
requirements of the existing members are fulfilled.
14. The operation of Rule 24 (2) of the DCS Rules requiring a draw of lots
in the presence of the Registrar of the Cooperative Societies shall only apply
to new prospective entrants who apply pursuant to the notification issued under
Rule 24(2) of the DCS Rules. In order to further streamline the process of
allotment and to expedite such process of allotment of residential accommodation
in the city which is already very scarce, we make it clear that the Registrar,
Cooperative Societies, if called upon by the Society in writing to conduct the
draw of lots, shall do so not later than six weeks from the date of the receipt
of the written intimation from the Society.
15. With the above observations and directions, this writ petition which
challenges the constitutionality of Rule 24(2) of the DCS Rules is dismissed but
subject to the interpretation of Rule 24(2) of the DCS Rules delineated in this
judgment.
MUKUL MUDGAL, J.
ARUNA SURESH, J.
July 02, 2007
sk