Holding

A member who is not in default cannot be served the notice contemplated in clause (iii) and the Society cannot expel such a member; consequently the appellant is entitled to a plot and may file the required affidavit within one month.

Summary

The appellant, a member of the Friends Central Government Employees House Building Society Ltd., had fully paid for a plot and was not in arrears. Under a compromise order of the Delhi High Court, the Society was directed to send notices to members in arrears demanding affidavits and payment, failure of which would disqualify them from plot allotment. The Society served such a notice on the appellant, although he was not a defaulter, and upon his failure to file the affidavit within the stipulated time, expelled him and denied him the plot. The appellant challenged the expulsion before the Delhi High Court, which dismissed his petition. On appeal, the Supreme Court held that the notice was misconceived because the appellant was not in default, the Society had no jurisdiction to remove him, and he must be allotted a plot, with a one‑month period to file the required affidavit if not already done.

Issues considered

Whether a member who is not in arrears can be served a notice under clause (iii) of the compromise order requiring an affidavit and payment.
Whether the Society had jurisdiction to expel a non‑defaulter member for failure to file the affidavit.
Whether the High Court erred in dismissing the appellant’s petition without granting an opportunity to file the affidavit.
Whether the appellant is entitled to allotment of a plot despite not having filed the affidavit.

Legislation cited

Delhi Cooperative Societies Act, 1972

Subjects

Cooperative societiesmembership rightsdefaultnoticeplot allotmentDelhi Cooperative Societies Actaffidavitexpulsionhigh court orderspecial leave petition

Judgment

'r
R.S. HARDAS A
v.
FRIENDS CENTRAL GOVERNMENT EMPLOYEES HOUSE
BUILDING SOCIETY LTD. AND OTHERS

NOVEMBER 21, 1996
B
(M.M. PUNCHHI AND K:VENKATASWAMI, JJ.]

Delhi Cooperative Societies Act, 1972 :

House Building Society-High Court directed Society to send notices to
members who were in arrears with Society to file requisite affidavits and pay
c
balance of amount due from them for plots proposed to be allotted to
them-Since appellant did not file requisite affidavit he was removed from
Society's membership although he was not a defaulter-High Court in another
case took the view that where a member was not in default, notice sent to
him was misconceived and therefore he would be entitled to the plot and D
pennitted him to file affidavit within one month from date of its order-Held:
appellant being also not a defaulter Society ought not to have removed him
from its membership-On the date the High Court dismissed appellant's
application, allotments were not complete and there was no good ground to
deny appellant from producing affidavit--Hence, appellant must be allotted E
a plot and if required affidavit not yet filed by appellant, the same be filed
within one month.

The High Court directed the respondent-Society to send notices to
members who were in arrears with the Society asking them to file requisite
affidavits and pay the balance of the amount due from them for the plots F
proposed to be allotted to them. Pursuant to the order of the High Court,
the respondent- Society called upon the appellant-member to file the
requisite affidavit. As the appellant did not file the affidavit in time, he
was removed from the Society's membership and consequently be lost the
right of allotment of plot even though he had paid the entire cost of the
G
--· J'~ plot and was not in arrears of any kind on the date when the respondent·
Society issued notice calling upon the appellant to sign the affidavit. The
High Court dismissed the writ petition filed by the appellant challenging
his aforesaid removal from the Society's membership. Hence this appeal.

On behalf to the appellant it was contended that the High Court in H
47
48 SUPREME COURT REPORTS (1996] SUPP. 9 S.C.R.
'(

A another case took the view that where a member was not In default, notice
sent to him was misconceived and therefore, he would be entitled to a plot
and was permitted to tile an affidavit within one month from the date of Its
order; that on the date when the High Court dismissed the appellant's
petition allotments were not complete; and that slmll11r opportunity ought
to have been given to the appellant to do so and the failure by the High
B Court in not giving the opportunity to the appellant was not legally sus·
tainable.

Allowing the appeal, this Court

c SocietyHELD : 1. The appellant was also not a defaulter and, therefore, the
ought not to have sent a notice to him and on the appellant's failure
to tile the affidavit the Society ought not to have removed him from its
membership. On the date when the High Court dismissed the application
allotments were not complete and there was no good ground to deny the
appellant from producing an affidavit. [52·A·B]
D
2. In the circumstances, the denial of the relief to the appellant by
the High Court cannot be sustained and the appellant must be allotted a
plot and if the required affidavit has not already been filed by the appel·
!ant, the same will be filed within one month from the date of this order.
[52·C·D]
E
CIVIL APPELLATE JURISDICTION: Civil Appeal N0.1780 of
1989.

From the Judgment and Order dated 17.1.89 of the Delhi High Court
in C.M. No. 881 of 1983 in Writ Petition No. 661 of 1980.
F
R. Sunderavardhan and R.N. Keshwani for the Appellant.

A.K. G,;mguli and Ghan Shyam Vashit for the Respondents.
s -

Rajnit Kumar, Ramesh Singh and Ms. Bina Gupta for the Inter-
G venors.

The Judgment of the Court was delivered by
...
VENKATASWAMI, J. The office of the second respondent issued a
notice on 9.5.1980 to the first respondent Society (hereinafter referred to
H as "the Society") to show cause within 15 days from the date of receipt of
RS. HARD AS v. FRIENDSCEN1RALGOVT. EMPLOYEES HOUSBBlDG. SOCY.LID. [VENKATASWAMI., J.] 49

that notice as to why the Managing Committee (then in office) of the A
Society should not be removed and an administrator appointed in its place.
The said show cause notice signed by the Deputy Registrar (H) pointed
out several irngularities committed by the said Managing Committee.
Immediately the Society through its then President moved the Delhi High
Court by filing C.W. No. 661 of 1980 challenging the said. show cause B
notice., Ultimately that writ petition was disposed of on the basis of
settlement arrived at between the parties and the High Court passed an
order on 22.5.1981 based on a memo of compromise. The relevant clause
in the order is clause (iii) which reads as follows :

"That the society will send notice, by registered post acknow- C
ledgement due to all the persons who are in arrears with the society
in respect of an amount exceeding Rs. 500. By this notice, these
persons will pay the balance of the amount due from them as shown
in column 9 of the Annexure P/32 for the plots proposed to be
allotted to them, which amount includes interest at the rate of 15% D
per annum from 1st January 1979 upto 30th April, 1981 or an
earlier date till which they were in default. The requisite affidavits
and the crossed bank drafts in favour of the petitioner society for
the amounts demanded in the notices (as shown in column 9 of
the Annexure P/32) must reach the society within one month from
the date of despatch of the said notice. The failure to submit the E
requisite affidavits or to make payment within the time shall finally
disentitle the person in default from participating in the elections
as also, from getting the allotment of a plot. No. further relaxation,
whatsoever, shall be made and the present relaxation shall not be
treated as a precedent. p

It is the case of the Society that pursuant to the above extracted
clause in the compromise order, the appellant was called upon to file an
affidavit (the form of which was enclosed along with notice) within the time
prescribed therein. The said notice was served on the father of the appel- G
!ant as at the relevant time, the appellant was in the United States of
America. As the appellant did not file the affidavit in time, he was removed
,,,.. from the Society's membership and consequently he lost the right of
allotment of the plot even though admittedly he had paid the entire cost
of the plot and was not in arrears of any kind of the date when the first
respondent issued a notice calling upon the appellant to sign the affidavit. H
50 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A The affidavit required such member of the Society who was entitled to get
y'
allotment to state on oath that neither he nor his spouse owns any plot or
house in Delhi. It is to be noted at this stage that such a declaration was
already signed and filed by the appellant as required under Bye-law (ii)
and after getting such declaration he was admitted as a member of the
Society.
B
The appellant aggrieved by the action of the Society removing him
from its membership moved the Delhi High Court by filing C.M.P. No.
881/1983 in C.W. No. 661/80 in which the High Court earlier passed the
order on the basis of the compromise memo giving certain directions to
c the Society. According to the appellant, the said C.M.P. was to permit him
to file the affidavit even though he was not liable to file such an affidavit
in terms of clause (iii) of the High Court order. The High Court did not
agree with the contention of the appellant that he was not liable to file such
an affidavit and he having come to the Court after an inordinate and
unexplained delay, he was not entitled to the relief sought for. On that
D ground the High Court rejected the application. In these circumstances,
the present appeal by special leave has been filed by the appellant.

Mr. R. Sunderavardhan, learned Senior Counsel appearing for the
appellant took us through the show cause notice issued by the second
E respondent to the first respondent, the compromise order of the High
Court passed on 22.5.1981 and also two orders passed by the High Court
in similar circumstances dated 25.5.1984 in C.M. No. 164/82 and C. M. No.
363/82. It is the contention of Mr. R. Sunderavardhan that the action of
the first respondent Society expelling the appellant from its membership
F was totally without jurisdiction and contrary to the bye-laws of the Society
and also the provisions of the Delhi Co-operative Societies Act and Rules
framed thereunder.. It is his submission that the Delhi High Court itself has
construed clause (iii) of the compromise order in C.M. No. 164/82 in C.W.
No. 661/80 to mean that notices issued to persons who were not in arrears
must be treated as mis-conceived. That being the position as explained/in-
G terpreted by the High Court, the counsel argued that the stand taken by
the appellant that the Society ought not to have sent th~ notice when the
admitted position was that he was not in arrears was right. Even assuming .... .,
that the appellant should have filed an affidavit in the form prescribed by
the Society and to be subscribed on a stamp paper, the appellant should
H have been given time to file such affidavit. Instead the Society removed him
RS. HARDAS v. FRIENDS CENIRALWVf. EMPWYEE5 HOUSEBillG. SOCY. LTD. [VENKATASWAMt, J.] 51

the list. He also placed heavy reliance on the orders of the High Court A
passed in C.M. No. 164/82 and C.M. No. 363/82 and submitted similar
opportunity ought to have been given to the appellant by the High Court
and the failure to do so was not legally sustainable. He also invited our
attention to an order dated 1.3.1989 passed by this Court while granting
special leave petition in the presence of counsel for the Society directing
the Society to keep one plot ~acant which will be allotted after the decision B
of this appeal and permitted plots to be allotted to other eligible members
of the Society. According to the learned counsel one plot as per orders of
this Court must be available as on date and in the event of success of this
appeal, that plot must be allotted to the appellant.

Mr. A.K. Ganguli, learned Senior Counsel appearing for the Society
c
except submitting that the notice was served on the father of the appellant
and he having failed to file the affidavit within the prescribed time, cannot
now seek the relief of allotment of the plot, has no effective answer to the
argument that on the admitted position that the appellant was not in
arrears of any kind on the date when the notice was issued, the issuance D
of notice itself was not right. Mr. Ganguli further submitted that subject to
the result of this appeal, the plot reserved as per the orders of this <fourt
has been allotted to the person in the waiting list and in case, the app~llant
succeeds that plot will have to be allotted to the appellant.

We have gone through the relevant materials placed before us and E
after considering the rival arguments, we are of the view that the appellant
has made out a case.

As pointed out by the learned Senior Counsel for the appellant, the
High Court itself had occasion to decide an issue similar to the one under
consideration in C.M. Nos. 164/82 and 363/82. The High Court observed F
therein that 'we are satisfied that the applicant had paid a sum Rs. 15,508
before the date of that notice and this is now accepted by counsel for the
Society. It is also accepted by the Society that the amount to be paid for a
plot measuring was Rs. 15,500. It is, thus obvious that the applicant/appellant
was not in default and hence the notice sent to him was misconceived. The G
applicant/appellant is, therefore, entitled to a plot. (Emphasis supplied)

~· After observing as above, the High Court directed the Society to allot
a plot to the applicant/appellant in that case and permitted the ap-
plicant/appellant to file an affidavit within one month from the date of the
order. Similar order was also passed in C.M. No. 363/82. When the matter H
52 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A under appeal came up before the High Court a different view was taken
presumably overlooking the relevant fact that the appellant was also not a ;
defaulter and, therefore, the Society ought not to have sent a notice as
contemplated under clause (iii) of the compromise order. We are also told
and it is not disputed that on the date when the High Court dismissed the
application of the appellant allotments were not complete and there was
B no good ground to deny the appellant frod:t producing an affidavit in any
event in the form required by the Society.

a:he circumstances, we are of the view that the denial of the relief
-~to'the appellant by the High Court cannot be sustained and the appellant
C must be allotted a plot and if the required affidavit has not already been
filed by the appellant, the same will be filed within one month from the
date of this order.

In the result, the appeal is allowed and the order of the Hlgh Court
is set aside and the prayer of the appellant in C.M.P. No. 881/83 to the
D extent indicated above is allowed.

I.A. No. 1/89 is filed by the individual who was in the waiting list and
who has been allotted the plot kept under reserve subject to the result of
the appeal. As already stated, the allotment to the applicant in LA. No.
1/89 must be subject to the result of this appeal. As the appeal .is now
E allowed, the application for intervention is dismissed. This will not, how-
ever, prejudice his any other rights against the society.

V.S.S. Appeal allowed.