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S.B. Lall and anr. Vs. Registrar of Co-operative Societies, New Delhi and anr. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 1075 of 1976
Judge
Reported inAIR1977Delhi236; 13(1977)DLT232; ILR1977Delhi164
ActsDelhi Co-operative Societies Act, 1972 - Sections 97; Delhi Co-operative Societies Rules, 1973 - Rule 25
AppellantS.B. Lall and anr.
RespondentRegistrar of Co-operative Societies, New Delhi and anr.
Advocates: A.R. Lal and; V.P. Nanda, Advs
Excerpt:
delhi co-operative societies act (1972) - section 97--delhi co-operative societies rules (1973), rule 25--whether rule 25, being retrospective in operation, is valid.; that in view of section 97(2)(v) of the delhi co-operative societies act, the disability that can be prescribed by a rule framed under the section to the continued membership has to be a prospective disability. it cannot provide for a disability which did not exist previously but by virtue of the rule is deemed to exist retrospectively. the phraseology of clause (v) of sub-section (2) of section 97 of act 1972 has to be read as a condition to be complied with by the existing members after the rules come into force. power to legislate retrospectively has been held to exist in legislatures. if the legislature wants..........of india raises only one question, namely, whether rule 25 or any of its sub-rules of the delhi cooperative societies rules, 1973, is ultravires the rule making power postulated by section 97 of the delhi cooperative societies act, 1972. (2) the facts material for the purposes of this case arc as stated hereafter. (3) petitioner no. 1, s. b. lall, claims himself to be a member of petitioner no. 2, which is a housing society registered as a co-operative society under the relevant law. this society was incorporated in 1950 having been registered under the bombay co-operative societies act, 1925, as applicable to the union territory of delhi, on december 9, 1950. in the middle of 1951, the society acquired by purchase land in mohammadpur munirka, a revenue estate in the union.....
Judgment:

Prakash Narain, J.

(1) This petition under Article 226 of the Constitution of India raises only one question, namely, whether rule 25 or any of its sub-rules of the Delhi Cooperative Societies Rules, 1973, is ultravires the rule making power postulated by Section 97 of the Delhi Cooperative Societies Act, 1972.

(2) The facts material for the purposes of this case arc as stated hereafter.

(3) Petitioner No. 1, S. B. Lall, claims himself to be a member of petitioner No. 2, which is a housing society registered as a Co-operative Society under the relevant law. This Society was incorporated in 1950 having been registered under the Bombay Co-operative Societies Act, 1925, as applicable to the Union Territory of Delhi, on December 9, 1950. In the middle of 1951, the society acquired by purchase land in Mohammadpur Munirka, a revenue estate in the Union Territory of Delhi. A portion of the land acquired by petitioner No. 2 was notified turn acquisition under the Land Acquisition Act, 1894. The Notification under Section 4 of the said Act was issued in 1957. Petitioner No. 2 started litigation questioning the validity and tenability of the said acquisition. Inasmuch as this litigation was taking time to be concluded and so the development of the land and allocation of the plots were held up, the first petitioner, who was in urgent need to construct a dwelling house for himself on account of his impending retirement from service, acquired some land in Kailash Colony and built a house thereon in 1962. The civil suit filed by petitioner No. 2 was decided on March 31, 1965. The judgment and decree of the civil court struck down the acquisition of the land belonging to petitioner No. 2. An appeal was preferred to the District Judge, Delhi, against the judgment and decree of the trial court but the same was dismissed on November 19, 1968. On further appeal, the High Court upheld the trial court's judgment and decree by its judgment of July 21, 1972. On April 2, 1973, the Delhi Cooperative Societies Act, 35 of 1972, came into force. On the same date the Delhi Cooperative Societies Rules, 1973, were also promulgated and came into force. The effect of the coming into force of the said Rules is that petitioner No. 1 has ceased to be a member of petitioner No. 2 and thus would not be entitled to allotment of a plot of land in the housing colony developed by petitioner No. 2.

(4) It is a common ground that no disqualifications attached to the petitioner in either having the first petitioner as a member of the second petitioner or allotting land to Him under the Bombay Cooperative Societies Act and the Rules framed there under. thereforee, we are only concerned with the relevant provisions of Act No. 35 of 1972 and the Rules of 1973.

(5) Section 1 of Act No. 35 of 1972, states, inter alia, that it extends to the whole Union Territory of Delhi. Clause (p) to Section 2 of the said Act defines Rules to mean the Rules made under the Act. Section 92 of Act No. 35 of 1972 lays down that every society existing on the date of enforcement of the Act which has been registered under the Co-operative Credit Societies Act, 1904, or under the Co-operative Societies Act, 1912, or under the Bombay Co-operative Societies Act, 1925, as in force in the Union Territory of Delhi, shall be deemed to be registered under the corresponding provisions of this Act, and its bye- laws shall, so far as the same are not inconsistent with the express provisions of this Act, continue in force until altered or rescinded. thereforee, petitioner No. 2 became a society registered under Act No. 35 of 1972. Section 97 of the Act gives powers to the Lt. Governor, Delhi, to make Rules, inter alia, to provide, as mentioned in clause (v), 'the conditions to be complied with by persons applying for admission or admitted as members, for the election and admission of members, and for the payment to be made and the interest to be acquired before the exercise of the right of membership.'

(6) In exercise of the powers conferred by Section 97 of Act No. 35 of 1972, the Lt. Governor of Delhi framed the Delhi Cooperative Societies Rules, 1973. These also came into force, as noticed earlier, on April 2, 1973. Rule 25 of the said Rules reads as under :-

25.'Disqualifications for Membership

(1)No person shall be eligible for admission as a member of a co-operative society, if he- (a) has applied to be adjudicated an insolvent or is an undischarged insolvent; or (b) has been sentenced for any offence other than an offence of a political character or an offence not involving moral turpitude and dishonesty and a period of five years has not elapsed from the date of expiry of the sentence ; or (e) in the case of membership of a housing society : (i) he owns a residential house or a plot of land for the construction of a residential house in any of the approved or un-approved colonies or other localities in the Union Territory of Delhi, in his own name or in the name of his spouse or any of his dependent children, on lease hold or free-hold basis ; (ii) he deals in purchase or sale of immovable property either as principal or as agent in the Union Territory of Delhi ; or (iii) he or his spouse or any of his dependent children is a member of any other housing society except otherwise permitted by the Registrar.

(2)Notwithstanding anything contained in the rules or the bye- laws of the co-operative society, if a member becomes, or has already become subject to any disqualifications specified in sub-rule (1), he shall be deemed to have ceased to be a member from the date when the disqualifications were incurred.

(3)Amember who ceases to be a member of a co-operative society under sub-rule (2), shall not be entitled to exercise rights of memberships or incur liability as member with effect from the date referred to in sub-rule (2) but as from the date he becomes a creditor of the co-operative society in respect of the amount due to him on account of paid up share capital, deposit, cost of land deposited or any other amount paid by him to the co-operative society as its member. As from the date of his ceasing to be a member of the society under sub-rule (2), the amount standing to his credit shall be paid to him by the co-operative society forthwith and when the co-operative society is already under liquidation, the amount due to him will be credited as a debt due to a third party from the co-operative society.

(4)If any question as to whether a member has incurred any of the disqualifications referred to in sub-rule ( 1 ) arises, it shall be referred to the Registrar for decision. His decision shall be final and binding on all concerned. The power of the Registrar under this rule shall not be delegated to any other person appointed to assist the Registrar.'

(7) The present challenge is restricted to clauses (2) and (3) of Rule 25. It is submitted that these clauses of Rule 25 are ultravires Section 97 (v) of Act No. 35 of 1972, for two reasons, namely :

(A)the impugned clauses have retrospective effect and provide for the existing members to cease to be members which is not warranted by the legislative powers under Section 97(v) of the Act ; and

(B)clauses (2) and (3) have been framed in the exercise of legislative powers which could be exercised only by the legislature particularly, when Section 97(v) of the Act does not lay down any policy which circumscribes or places any limitations, on the ambit and scope of subordinate legislation.

That vis-a-vis the existing co-operative society and its members, clauses (2) and (3) of Rule 25 have retrospective effect is not in dispute. The question is whether it is beyond the scope of rule making power postulated by Section 97(v) of the said Act.

(8) The precise question which has been raised in the present case came up for consideration in Prof. Balraj Madhok and others v. Registrar of Co-operative Societies and others (1974) Ii Delhi 684, and it was held that legislative intention gleared from the rule making power was that in the Union Territory of Delhi a person already having a dwelling house should not have a second dwelling house by becoming a member of a housing society. The validity of the rule it is claimed, was upheld. The respondents relied on this decision to defeat the petition that has been preferred. Learned counsel for the petitioners, however, urged that the decision in the case of Prof. Balraj Madhok (supra) is distinguishable and submitted that the precise question raised by him was not before the bench. It will, thereforee, be proper to notice the facts and the ratio of the decision in some detail.

(9) The petitioners in that case became members of a housing society which was registered under the Bombay Co-operative Societies Act, 1925. The Co-operative Society adopted its bye-laws which were later replaced by the new bye-laws. The relevant bye-laws, in 1968 were:-

5(I)(E):-'Any person shall be eligible to be a member of the society provided........he or his wife (she or her husband in case of a woman) or any of his/her dependents does not own a dwelling house in Delhi.'

8(VII):-'A person ceases to be a member. . . . . .on undertaking the business of purchase and sale of houses or land turn construction of houses either directly or indirectly or on purchasing a house or a plot of land for construction of house either in his own name or in the name of any of his dependents through any other source and the member shall, within one month of his undertaking the said business of purchase of a house or a plot of land shall inform the society about this'.

(10) The petitioners complained that the Registrar and the Assistant Registrar, Co-operative Societies, Delhi Administration had on the strength of these bye-laws treated the petitioners as having ceased to be members of the housing soceity. The petitioners did not deny that they had a houses in Delhi but they contended that they were nevertheless entitled to become members of the society under the bye-laws of 1959 and that the bye-laws of 1968 had no retrospective application so as to deprive them of their membership. The main relief prayed for by the petitioners was for a declaration that they continued to be the members of the housing society and for the quashing of the action of the Registrar and Assistant Registrar of the Cooperative Societies, treating them as non-members. Though the writ petition was filed on August 2, 1973, the petitioners did not refer to the effect of the coming into force of the Delhi Cooperative Societies Act, 1972, and the Delhi Cooperative Societies Rules 1973. It was in this background that the matter was heard. Construing the term ''eligible to be a member' used in bye-law No. 5(i) of this housing society, it was observed that 'the verb 'be' has two meanings, namely, (a) to exist and (b) to become. The former refers to the existence of state of affairs in present while the latter refer to the coming into existence of a new state of affairs.' The effect of coming into existence of Act No. 35 of 1972 and the Rules of 1973 was dilated upon. It was held that the housing society must be deemed to be registered under Section 9 of Act No. 35 of 1972, and so its bye-laws could not be contrary to the provisions of the Act and the Rules made there under. In that context it was observed that if bye-law 5(i) was applicable only to the admission of new members then the said bye-law continued in force only up to April 2, 1973. Rule 25(1) was noticed and it was mentioned that it disqualifies a. person from becoming a member if he owns a residential house or plot of land in Delhi. This rule, it was held, was framed under Section 97 (2) (v) which expressly empowers the framing of a rule which would affect not only persons applying for admission but also persons who were admitted as members already. Observing that the same power to affect the membership of persons who have already become members by the making of rules was also given by Section 71(2)(d) of the Bombay Co-operative Societies Act, 1925, it was held that the legislative intention underlying the rule making sections of both these statutes, i.e. Act of 1925 and of 1972, was the same. Old Bye-law 5(i) (v) was held to have ceased its effect in 1972, as it was inconsistent with rule 25(2). It seems the Bench was more concerned with the bye-laws of the society than the validity of rule 25(2), and we are in agreement with the learned counsel for the petitioner that the Bench did not consider the question as to whether Rule 25(2) was ultravires. Section 97(2) (v) of Act No. 35 of 1972.

(11) Section 97(2) (v) of Act No. 35 of 1972 reads as under :---

97(2): In particular, and with prejudice to the generality of the foregoing power such rules may provide for all or any of the following matters namely :- (v) the conditions to be complied with by persons applying for admission or admitted as members, for the election and admission of members, and for the payment to be made and the interest to be acquired before the exercise of the right of membership.'

(12) Reading Section 97(2) (v) if one puts a comma after the word 'admission' one can say that a fourth category of persons is also created, namely, those who were already members on the day when the rules came into force. As it is, we do not find that there is any comma. So, the disability that can be prescribed by a rule framed under -the section to the continued membership has to be a prospective disability. It cannot provide for a disability which did not exist previously but by virtue of the rule is deemed to exist retrospectively. The phraseology of clause (v) of sub-section (2) of Section 97 of Act 1972 has to be read as a condition to be complied with by the existing members after the rules come into force. Power to legislate retrospectively has been held to exist in legislatures. If the legislature wants subordinate legislation to be made retrospectively, that power has to be specifically given. In our view, this power has not been given by clause (v) of subsection (2) of Section 97 of the said Act. thereforee, so far as clause (2) of Rule 25 has retrospective effect, it must be held to-be ultravires the rule making power postulated by Section 97 of Act No. 35 of 1972.

(13) The view that we have taken above makes it unnecessary for us to dilate on the other aspects urged by the learned counsel for the petitioners.

(14) We, thereforee, accept this petition and declare that clause (2) of rulle 25 of the Delhi Co-operative Societies Rules, 1973, and in consequence clause (3) of the said rule arc ultravires Section 97(2) (v) of Act No. 35. of 1972. Inasmuch as the said rule has been struck down by us, we issue a mandamus against the respondents restraining them from enforcing the rule that has been struck down by us.

(15) In the circumstances of the case, we leave the parties to bear their own costs.


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