Allowed

The Silverton Coop House Building Soc. Ltd, Chd v. Chd Administration and Ors.

Punjab & Haryana HC11 Jan 2012CWP/7523/2011

Case brief

AI extract

What is this about?

The court quashed executive instructions by the Joint Registrar that disqualified non-homeowners from contesting elections in Non-Allottee Cooperative Societies, ruling that rules cannot be supplemented by executive orders to create statutory disqualifications.

What did the court decide?

The impugned memo dated 15.09.2010 (P-2) and the consequent appellate order (P-3) stand quashed.

The Silverton Coop House Building… — Pension and Retirement Benefits | Punjab & Haryana HC (2012)

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CWP No.7523 of 2011

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

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CWP No.7523 of 2011 Date of Decision: 11.01.2012

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The Silverton Cooperative House Building (2^nd ) Society Ltd., Chandigarh

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..... Petitioner

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Versus

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Chandigarh Administration and others

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..... Respondents

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CORAM:- HON'BLE MR. JUSTICE RAJIV NARAIN RAINA

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Present: Mr. Gobinder Singh Sandhu, Advocate, for the petitioner.

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Mr. Kamal K. Sharma, Advocate, for the respondents.

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To be referred to the Reporters or not?

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Whether the judgment should be reported in the Digest?

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RAJIV NARAIN RAINA, J.

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The controversy involved in this writ petition centres around the validity of the executive instructions contained in Memo dated 19.9.2010 (P-2) issued by the Joint Registrar, Cooperative Societies, Union Territory, Chandigarh exercising the powers of the Registrar Cooperative Societies, UT, Chandigarh. The memorandum directs all Presidents and Secretaries of Cooperative House Building Societies registered in the Union Territory, Chandigarh to add a clause in the nomination paper for election to the Managing Committees of Non Allottee Cooperative House Building Societies that only such candidates would be permitted to contest elections

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as who do not own any house/flat/dwelling unit in his/her name or in the name of his/her/their spouse/dependent in the Tricities of Panchkula/Mohali and Chandigarh and who have not sold their interest in such dwelling units. These executive instructions (Annexure P-2) are said to be bad by the learned counsel for the petitioner inasmuch as it introduces a disqualification for candidates proposing to contest elections not envisioned by Rule 25 of the Punjab Cooperative Societies Rules, 1963 applicable to the UT, Chandigarh framed under the Punjab Cooperative Societies Act, 1961 as applicable to UT, Chandigarh. Rule 25 is an exhaustive list of disqualifications for membership of Managing Committees and deserves to be read in extenso to understand the matter as one proceeds further:-

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"25. Disqualification for membership of committee - No person shall be eligible for election as a member of the committee if-

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(a) he is in default of any Co-operative Society in respect of any sum due from him to the Society or owes to any cooperative Society an amount exceeding his maximum credit limit;

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(b) he has, directly or indirectly, any interest in any contract to which the Co-operative Society is a party except in transactions made with the Co-operative Society as a member in accordance with the objects of the Society as stated in the bye-laws;

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(c) he has at any time during a period of one year prior to the date of scrutiny of nomination papers, engaged in any private business, trade or profession of any description which is carried on by the society;

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(d) he has committed any offence involving dishonesty or moral turpitude during a period of five years prior to the date of scrutiny of nomination papers;

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(e) he is subject to any of the restrictions contained in rule 29;

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(f) he has, during a period of 12 months preceding the date of filing of nomination papers, remained inactive as member or has been carrying on, through agencies other than the Co-operative Society of which he is a member, the same business as is being carried on, by the Cooperative Society;

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(g) he is a member of an elected committee any Cooperative Society which has ceased to function or which has not fulfilled its objects as stated in its bye-laws and has been included in the list of D class societies maintained by the Registrar or is a membre of an elected committee of a Co-operative Society which is under winding up process;

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(gg) he has ceased to be a member of an elected committee of any Co-operative Society within a period of one year preceding the date of inclusion of such Co-operative Society in the list of D class Societies maintained by the Registrar or the operation of order of winding up to such Society under section 57 of the Act.

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(h) he incurs any other disqualification laid down in the bye-laws of the society."

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A plain reading of Rule 25 would leave no manner of doubt that it does not admit as a disqualification what the executive instructions (P-2) declare. Rule 25-H expands the list of disqualifications to such other disqualifications as are laid down in the bye-laws of the society.

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Mr. Gobinder Singh Sandhu, Learned counsel has produced before me the bye-laws of the petitioner-society and would refer to Bye-law 31 which also does not give any authority to the RCS, UT to add on a disqualification for membership of the Managing Committee as has been

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done in the impugned executive instructions (P-2). Bye-Law 31 reads as

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under:-

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"31. No person shall be eligible for election as a

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member of the Managing Committee of the Society if he:(a) is below 21 years of age ; or (b) is a paid employee of the Society or the financing Bank or

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(c) is convicted of any offence involving dishonesty or moral turpitude and a period of 5 years has not elapsed since his conviction or

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(d) has applied for insolvency or is declared insolvent : or

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(e) is of unsound mind ; (f) is in default in the payment of the sum due to this or any other Co-operative Society for a period exceeding three months from the date on which the payment fell due ; or

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(g) holds any office of profit under the Society or recovered any honorarium ; or

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(h) is interested directly in any contract with the Society in any sale or purchase made by the Society privately or in auction."

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The further legal framework necessary for appreciating the

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controversy in issue deserves to be referred to. It is not disputed that elections of the Managing Committee of the society are conducted as per 1963 Rules and bye-laws of the society. Section 26(1) of the Act lays down that members of the Committee of the Cooperative Society shall be elected in the manner prescribed and no person shall be so elected unless he is a shareholder of the society. Rule 23 of the 1963 Rules lays down that the members of the Committee of a Cooperative Society shall be elected in

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accordance with the Rules given in Appendix-C. This takes us to Appendix-'C'; Rule (3) (1) which lays down that the Manager shall draw up a detailed programme of election in accordance with the instructions issued by the Registrar, from time to time. Still further, bye-law 32 of the petitioner-society is relevant and is reproduced below to appreciate the drift of the submissions made before this court:-

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"Bye Law 32 – The committee shall be elected in the manner laid down in the Act, the Rules and the instructions issued by the Registrar in this regard from time to time. The Committee shall hold office for 1 year. An interim vacancy caused by the resignation or otherwise shall be filled by re-election for the unexpired period of the term of the Committee."

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On notice having been issued, the respondents put in appearance. A written statement has been filed by the Joint Registrar, Cooperative Societies, UT, Chandigarh on behalf of respondent Nos.1 to 3. A preliminary objection has been taken that a revision under Section 69 of the Act is available to the petitioner and, therefore, the writ petition is not maintainable in the presence of an alternative remedy. The next substantive submission of the State is contained in Para 3 which would be apposite to reproduce:-

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"3. That directive dated 15.09.2010 has been issued by the Joint Registrar, Cooperative Societies, U.T. Chandigarh in the interest of the members of the societies and for the successful conduct of the business of the societies. A member who owns a house or flat or dwelling unit or plot in Chandigarh or Panchkula or Mohali, is not interested in construction of a dwelling unit/flat and his participation in the election is neither in the interest of the society nor its members nor in carrying out successful business of the society so this directive has been issued to

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encourage the active participation of those members in the managing committee of the society who are interested in constructing a dwelling unit/flat. Thus no legal right of the petitioner society has been violated in any manner. Moreover, there is no violation of any statutory or legal right of the petitioner society. Therefore, the present writ petition is liable to be dismissed on this short ground alone."

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The petitioner has filed a replication contending the a revision is maintainable only in disputes which are subject matter of Arbitration under Section 55 of the Act and not against other orders and particularly the directive in question which has been passed unauthorizedly by the Joint Registrar. For this, reliance has been placed on the decision of the Supreme Court in Shahbad Coop. Sugar Mills Ltd. Versus Spl. Secretary to Government of Haryana Corpn. and others' reported as (2006) 12 SCC 404 .

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At this stage, it may not be out of place to notice a few facts relating to the history of the petitioner-society. The petitioner-society was registered in 1983 under the Act as applicable to UT, Chandigarh. Cooperative Societies are controlled and regulated by their Managing Committees elected from time to time in accordance with Act, Rules and Bye-Laws. The Union Territory, Chandigarh framed a scheme called “The

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Chandigarh Allotment of Land to the Cooperative Societies Scheme,

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1991" notified on 28.05.1991. The petitioner was allotted land under the scheme. There is no dispute that the scheme was repealed on 20.01.1997. In 2003, the RCS, UT, Chandigarh bifurcated under Section 13 & 14 of the Act existing Cooperative House Building Society into two societies, i.e., societies consisting of allottee members and the societies consisting of non-

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allottee members and there were separately ordered to be registered. The Bye-Laws however remained the same for both type of cooperative societies. In this manner, the petitioner was also bifurcated into two parts and was categorized as non-allottee society. It was so registered. The power and authority conferred upon the Registrar for issuing directives for the successful conduct of the business of the society are contained in Rule 45 of the Rules. Rule 45 reads as follows:-

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"45. Directives by Registrar for the successful conduct of the busines:- The Registrar may, from time to time, issue such directions as he considers necessary for the successful conduct of the business of a co-operative society or class of co-operative societies."

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According to Mr. Sandhu, learned counsel for the petitioner society, the Registrar has the jurisdiction to issue directives for the successful conduct of the business of the cooperative societies. The matter of elections or conditions of elections including qualifications or disqualifications are not encompessed within the expression “successful conduct of the business”. Therefore, the Joint Registrar exercising powers of the Registrar had no business or authority to issue a directive not known to law adding a disqualification unknown to Rule 25. The Punjab Cooperative Societies Act, 1961 replaced the older Punjab Cooperative Societies Act, 1954. Under the 1954 Act, Rule 43 was the predecessor of Rule 45 of the present rules. Both provisions are in pari materia. This Court in Fateh Singh and others Versus L.C. Vashishta, Registrar, Cooperative Societies, Punjab and others reported in Punjab Law Reporter Vol. LVIII1956 Page 581 while dealing with Rule 43 of the old Rules, dealt with an

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order of suspension of elected members of the society issued by the Registrar Cooperative Societies and the question arose whether he had jurisdiction under Rule 43 to pass such an order. This Court dealt with the provisions of Rules 41 to 57 and held as follows:-

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"A reading of all the rules under the heading "Working of Societies" shows that the matters dealt with in rules 41 to 57 are matters dealing with the day to day working of societies. The Registrar of Co-operative Societies has to exercise a general supervision over the transactions into which the society enters, so that no loss is caused to the society and the society does not enter into any undesirable or uneconomical transaction. The question of how the funds of the society may be invested and whether these funds may be used for purchasing lands or buildings and how the reserve fund is to be disposed of are matters dealt with under this heading. I am quite clear in my mind that the appointment of a director, his suspension or removal is not a matter which comes within the purview of rules 41 to 57. These matters are specifically dealt with in other rules namely rules 19 to 40 under the heading "Management of Society" and that being so, the Registrar was not competent to pass an order whereby the election was rendered ineffective. Rule 43 must be interpreted according to the principle of ejusdem generis. There is no other rule under the heading "Working of Societies" which has any remote bearing to the appointment, dismissal or suspension of Directors, whereas these matters are clearly dealt with in other rules to which I have already drawn attention.

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It is very difficult for me to say what was the reason for suspending the petitioners. It may well be that the Registrar was anxious to enquire into the complaints made by the defeated candidates or it may be that this decision was actuated by political motives. It is sufficient for me to say that the Registrar had no power to pass such an order under rule 43 and he acted

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completely without jurisdiction. That being so, this petition must be allowed and I quash the order of the Registrar dated the 27^th of July 1956."

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I pointedly asked Mr. Kamal K.Sharma, Learned counsel for the respondent UT, Administration to trace the source of power under which the executive instructions (P-2) have been issued and relate it to a provision under the Act, Rules or the Bye-Laws to sustain the instructions. He has not been able to show any other provision except to rely on Rule 45 supra. Learned counsel has placed reliance on a decision of this Court in the case

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Lashkar Singh v. The State Punjab and others, 1985 RRR 481 which dealt with Rule 45. This judgment is clearly distinguishable on facts. The issue before the Court arose in the context of a vacancy of the post of Chief Executive Officer of the society. The CEO is expected to perform vital functions of the society day in and day out. The absence of such a functionary could terribly effect the conduct of business of such a society. Therefore, this Court held that the Registrar could issue directions to the Bank to appoint a CEO if for some reason the Government failed to appoint the CEO within reasonable time of the occurrence of the vacancy. The Court further found that if the Registrar could give such a direction, then he could also suggest an official to the bank to be appointed as such. I am afraid this judgment does not help the learned counsel for the respondents.

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Mr. Sandhu, learned counsel for the petitioner has also relied on a Division Bench decision of this Court in Balwinder Singh & Ors. v. Financial Commissioner., Cooperation & Ors., reported in 2006(2) PLJ 183 to demonstrate that unwarranted directions of the Registrar not authorized by law and Guideline No.24 issued by the RCS in that matter

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providing for attestation of resolution/nomination paper of member society by Inspector Cooperative Societies and counter signature by Assistant Registrar on the basis of which the nomination papers/resolutions could be rejected on account of want of attestation in terms of such guidelines were declared totally illegal in denying the right of member societies to participate in elections. Though this judgment does not involve Rule 45 but it does help the learned counsel for the petitioner to contend that unwarranted intrusions by the RCS beyond his authority or jurisdiction are legally unsustainable. It would amount to usurping jurisdiction when none exists or vests in the authority.

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There is yet another argument of Mr. Sandhu which deserves to be noticed. He submits that under the Haryana Cooperative Societies Act, 1984 the Form of nomination papers is statutory. They form part of the Act and, therefore, there can be no departure from them. The position in Punjab is entirely different as the Punjab Cooperative Societies Act and, therefore, the Punjab Cooperative Societies Act as applicable to Chandigarh, no nomination papers have been prescribed which remain a matter of long practice since the Act came into operation. Therefore, the nomination paper (Annexure P-4) has no legal sanctity. The declaration No.2 contained in the foot of the nomination paper which reads “That I am not a member of any other similar kind of society” can be read only for the purposes of allotment. It is also no ones case that the petitioners are existing members of a "similar kind of society'. This argument is noticed as learned counsel for the respondents has relied on this condition to urge that the petitionerSociety imposed this condition on itself. Mr. Sandhu submits that there is

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nothing in condition no.2 that saves the executive instructions/directive issued by the RCS being beyond jurisdiction and contrary to statutory law. These instructions cannot be treated as filling in gaps in the legislation since it creates a disqualification itself for the first time.

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Mr. Sharma has relied upon the notification dated 28.05.1991 which is the allotment scheme and especially 1^st proviso to Rule 6. Rule 6 deals with eligibility of a society for allotment. The 1^st proviso reads as follows:-

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"Provided that no society shall be eligible for allotment of a site under this scheme if any of its members, their spouses or dependent children already owns either on free-hold, lease-hold or hire purchase basis, a dwelling unit or a residential house/site/flat at Chandigarh, Manimajra, Panchkula and S.A.S. Nagar (Mohali)."

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On the strength of this proviso, learned counsel for the UT, Administration contends that the impugned directive could have been issued, as the policy behind it is reasonable inasmuch as it could directly encourage active participation of those members in the Managing Committee of the society who are interested in constructing dwelling units/flats. The policy may be well intentioned but as T.S.Eliot put it "most of the evil in this world is done by people with good intentions". This in short sums up the case . The philosophy behind the directive may be good but its effect is evil as we use that word when we speak of "evil civil consequences'. The fear that the Society may be highjacked by non stakeholders may be real or well founded but the way to achieve that end would be in the domain of the legislature by bringing suitable amendment to Rule 25 to include this directive as a disqualification for elections in a non

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allottee cooperative society. Every executive action must have legislative sanction. I am unable to agree that the executive instructions/guidelines/directive as contained in Annexure P-2 can be sustained under Rule 45 or under Bye-Law 32. A cursory look at Bye-law 32 reveals that it deals only with elections in the manner laid down in the Act, Rules and the instructions issued by the Registrar. They do not authorize the Registrar to create a disqualification for the first time. It is well settled that executive instructions cannot supplant the rules. They can only supplement them. I cannot view the impugned directive as one which fills in a gap in the legislation permissible under Articles 162 and 166 of the Constitution of India. The impugned directive contained in the memo dated 15.09.2010 (P-2) appears to be perverse and without jurisdiction. The object of the directive may appear to be laudable but it has no apparent legal sanction to back it today and cannot be sustained.

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I have given serious thought to the arguments advanced before me for and against the directive but have not felt persuaded by the submissions of the Learned counsel for the Chandigarh Administration to put judicial approval on the impugned directive and, therefore, I am inclined to allow this petition and quash the impugned directive dated 15.09.2010 (P-2). Consequently, the order passed by the Secretary Cooperation, Union Territory, Chandigarh (Annexure P-3) on the petitioners' appeal against the Memo dated 15.09.2010 holding that the appeal is not maintainable under Section 58 of the Act and yet proceeding uncalled for to decide the case on merits and upholding the impugned directive stands cremated.

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For the foregoing reasons, the petition is allowed and the

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impugned memo (P-2) and the consequential appellate order (P-3) stand quashed but with no order as to costs.

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(RAJIV NARAIN RAINA) JUDGE

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11.01.2012 manju

The Silverton Coop House Building Soc. Ltd, Chd v. Chd Administration and Ors.

Case brief

What is this about?

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The Silverton Coop House Building Soc. Ltd, Chd v. Chd Administration and Ors.

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