# A ZOROASTRIAN CO-OPERATIVE HOUSING SOCIETY LTD. AND ANR v. DISTRICT REGISTRAR CO-OPERATIVE SOCIETIES (URBAN) AND ORS - **Citation:** [2005] 3 S.C.R. 592 - **Court:** Supreme Court of India - **Decided:** 2005-04-15 - **Case number:** Civil Appeal No. 1551 of2000 - **Bench:** B.N. Agra Wal, P.K. Balasubramany An - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/a-zoroastrian-co-operative-housing-society-ltd-and-anr-v-district-registrar-co-20596 - **Pages:** 38 ## Headnote Cooperative Societies : C Gujarat Cooperative Societies, 1961-Sections 4, 24 and 30--Gujarat Cooperative Societies Rules, 1965-Rule 12(2)-Constitution of India, 1950-- Articles 19(/)(c) and 300A-Transfer of Property Act, 1882-Section 10Cooperative Housing Society-Admission of Member-Transfer of Membership-Bye laws of Society confining membership to persons belonging D to Parsi community-Validity of-Held: Bye laws ;·estricting membership to Parsi community do not violate Act or Rules-Nothing precludes Society from restricting membership to particular religion, bf!/ief or tenet-Restriction being in interest of Society and consistent with its object, not opposed to public policy-Right to become member of Co-operative Society governed by its own bye laws is not a fundamental right-Further, when person becomes member E of Society, he enters into a contract submitting to its bye laws which cannot be curtailed relying on fundamental right-Bye laws are not absolute restraint on alienation to attract section l 0 of l 882 Act but only a partial restraint which is valid in law-Also does not violate Article 300A-Bye laws being valid, Society cannot be directed to amend bye-laws relating to qualification F for membership-Property is to be dealt by member and assigned only to persons qualified to be member of Society, in terms of its bye-laws. Several persons formed appellant-society for purpose of erecting housing 1"or residential use of its members. After coming into force of Gujarat Act, society was regulated by Gujarat Cooperative Societies Act, G 1961. Society acquired land and allotted plots of land to its members. Bye law 7 of the Housing Society confined its membership to those of Parsi community and as per bye law 21 members could sell their share with previous sanction of the Commiittee of society only to person belonging to Parsi Community. Father of respondent No. 2 purchased flat from a H 592 - ,- I , ..... --- ZOROASTRIAN CO-OP. HOUSING SOCIE. LTD." DIST. REG. CO-OP. SOCIE 593 member being qualified under the bye laws. Respondent No. 2 became A member of society on death of his father. On Respondent No. 2's application Society granted permission to demolish the bungalow and construct residential flats to be sold to Parsis. Thereafter, in terms of the order of Board of nominees respondent No. 2 sought permission to transfer his share to respondent No. 3-a builder Association, non-parsi. Society rejected the B permission. Tribunal held that the bye laws restricting membership to Parsi was a restriction on the right to property and right to alienate property and thus invalid in terms of Article 300-A of the Constitution. High Court dismissed both Writ Petition and Writ Appeal. Hence the present appeal Allowing the appeal, the Court HELD : 1. The right of the appellant society to insist that the property has to be dealt by respondent No. 2 only in terms of the bye-laws of the Society and assigned either wholly or in parts only to persons qualified to be members c of the Society in terms of its bye-laws is upheld. Respondent No. 3 is restrained from entering the property or putting up any construction therein on the basis D of any transfer by respondent No. 2 in disregard of the bye-laws of the Society ·and without the prior consent of the Society. (629-E-FJ 2.1. The action of the Society in refusing membership ~o a person has to be tested in the anvil of the provisions of the Act, the Rules and its byelaws. The Act, the Rules and the bye-laws are not to be given the go-by, merely E because the particular bye-law or action of the Society may not accord with the concept of fairness or propriety in terms of the rights available to an ordinary citizen. A legislative provision in the Act can be introduced for the purpose of eliminating a qualification for membership based on sex, religion or a persuasion or mode of life. But so long as there is no legislative F intervention of that nature, it is not open to the court to coin a theory ## Text _Characters 0–39,378 of 103,161. This is a partial read: ask again with offset=39378 for what follows._ A ZOROASTRIAN CO-OPERATIVE HOUSING SOCIETY LTD. AND ANR. B v. DISTRICT REGISTRAR CO-OPERATIVE SOCIETIES (URBAN) AND ORS. APRIL 15, 2005 [B.N. AGRA WAL AND P.K. BALASUBRAMANY AN, JJ.] Cooperative Societies : C Gujarat Cooperative Societies, 1961-Sections 4, 24 and 30--Gujarat Cooperative Societies Rules, 1965-Rule 12(2)-Constitution of India, 1950-- Articles 19(/)(c) and 300A-Transfer of Property Act, 1882-Section 10Cooperative Housing Society-Admission of Member-Transfer of Membership-Bye laws of Society confining membership to persons belonging D to Parsi community-Validity of-Held: Bye laws ;·estricting membership to Parsi community do not violate Act or Rules-Nothing precludes Society from restricting membership to particular religion, bf!/ief or tenet-Restriction being in interest of Society and consistent with its object, not opposed to public policy-Right to become member of Co-operative Society governed by its own bye laws is not a fundamental right-Further, when person becomes member E of Society, he enters into a contract submitting to its bye laws which cannot be curtailed relying on fundamental right-Bye laws are not absolute restraint on alienation to attract section l 0 of l 882 Act but only a partial restraint which is valid in law-Also does not violate Article 300A-Bye laws being valid, Society cannot be directed to amend bye-laws relating to qualification F for membership-Property is to be dealt by member and assigned only to persons qualified to be member of Society, in terms of its bye-laws. Several persons formed appellant-society for purpose of erecting housing 1"or residential use of its members. After coming into force of Gujarat Act, society was regulated by Gujarat Cooperative Societies Act, G 1961. Society acquired land and allotted plots of land to its members. Bye law 7 of the Housing Society confined its membership to those of Parsi community and as per bye law 21 members could sell their share with previous sanction of the Commiittee of society only to person belonging to Parsi Community. Father of respondent No. 2 purchased flat from a H 592 - ,- I , ..... --- ZOROASTRIAN CO-OP. HOUSING SOCIE. LTD." DIST. REG. CO-OP. SOCIE 593 member being qualified under the bye laws. Respondent No. 2 became A member of society on death of his father. On Respondent No. 2's application Society granted permission to demolish the bungalow and construct residential flats to be sold to Parsis. Thereafter, in terms of the order of Board of nominees respondent No. 2 sought permission to transfer his share to respondent No. 3-a builder Association, non-parsi. Society rejected the B permission. Tribunal held that the bye laws restricting membership to Parsi was a restriction on the right to property and right to alienate property and thus invalid in terms of Article 300-A of the Constitution. High Court dismissed both Writ Petition and Writ Appeal. Hence the present appeal Allowing the appeal, the Court HELD : 1. The right of the appellant society to insist that the property has to be dealt by respondent No. 2 only in terms of the bye-laws of the Society and assigned either wholly or in parts only to persons qualified to be members c of the Society in terms of its bye-laws is upheld. Respondent No. 3 is restrained from entering the property or putting up any construction therein on the basis D of any transfer by respondent No. 2 in disregard of the bye-laws of the Society ·and without the prior consent of the Society. (629-E-FJ 2.1. The action of the Society in refusing membership ~o a person has to be tested in the anvil of the provisions of the Act, the Rules and its byelaws. The Act, the Rules and the bye-laws are not to be given the go-by, merely E because the particular bye-law or action of the Society may not accord with the concept of fairness or propriety in terms of the rights available to an ordinary citizen. A legislative provision in the Act can be introduced for the purpose of eliminating a qualification for membership based on sex, religion or a persuasion or mode of life. But so long as there is no legislative F intervention of that nature, it is not open to the court to coin a theory that a particular bye-law is not consistent with the scheme or a provision of the Constitution in Part Ill or IV thereof, and be declare it to be opposed to public policy by the court. (613-F-G; 616-G-H; 617-A) Damyanti Naranga v. Union of India and Ors., AIR (1971) SC 966, G referred to. Daman Singh and Ors. v. State of Punjab and Ors., AIR (1985) SC 973, explained and relied on. 2.2. The validity of a bye-law, that too an approved bye-law, has to be H 594 SUPREME COURT REPORTS [2005] 3 S.C.R. A tested in the light of the provisions of the Act and the rules governing cooperative societies. In so testing, the search should be to see whether a particular bye-law violates the mandate of any of the provisions ()f the Act or runs counter to any of its provisions or to any of the rules. Normally, the bye-laws of a society do not have the status of a statute but may be binding between the persons affected by them .. They are only the rules which govern B the internal management or administration of a society and they are of the nature of articles of association of a company incorporated under the Companies Act. (616-F-G; E] Co-operative Central Credit Bank ltd v. Industrial Tribunal, Hyderabad, C AIR (1970) SC 245, relied on. 2.3. In the instant case, the bye-laws had already been approved on the basis that it is consistent with the Act and the Rules. Even then, it may be possible in a given case to point out that a particular bye-law was against the terms of the Act or the Rule. Therefore, one has to search for a provision in D the Act or the Rules which prevails over bye-law No. 7 of the Society, confining membership in it, to only a person who is a Parsi. Section 24(1) of the Act only provides for open membership subject to a person, aspiring to be a member, possessing the qualification ·prescribed under the provisions of the Act, the Rules and the bye-laws of such society. It is not an open membership dehors the qualification prescribed by the bye-laws of the Society. Nor is there E anything in the Act which precludes a society from prescribing a qualification for membership based on a belief, a persuasion or a religion for that matter. Section 30(2) of the Act even places restrictions on the right of a member to transfer his right. If the relevant bye-law of a society places any restriction on a person getting admitted to a co-operative society, that bye-law would be F operative against him and no person, or aspiring member, can be heard to say that he will not be bound by that law which prescribes a qualification for his membership. In fact, the individual right of the member, respondent No.2", has got submerged in the collective right of the Society. (613-H; 614-A-C) " r State of UP. and Anr. v. C.O.D. Chheoki Employees' Cooperative Society G ltd and Ors., [1997] 3 sec 681, relied on. ~ Jain Merchants Co-operative Housing Society v. HUF of Manubhai, (1995) __ 1 Gujarat Law Reporter 19, referred to. 2.4. It is not possible to import one's inherent abhorrence to religious H groups or other groups coming together to form, what respondent called --- - ZOROASTRIAN CO-OP HOUSING SOCIE. LTD. 1·. DIST. REG. CO-OP. SOCIE. 595 "ghettos". That is certainly an important aspect but that is an aspect that A has to be tackled by the legislature and not by the authorities under the Act directing the co-operative society to go against its own bye-laws or by the courts upholding such orders of the authorities, based on presumed public policy when the Act itself does not warrant it or sanction it 1624-E-F) 2.5. Jn the activities of a society, as envisaged by the bye-laws, the society B may acquire rights or incur obligations which may be enforced but the same cannot stand in the way of the right to form an association guaranteed by Article 19(1)(c) of the Constitution available to the members of the society who formed themselves into the appellant Society. The position under the Bombay Co-operative Societies Act was also no different. Therefore, it is not C open to the Registrar or any other authority under the Co-operative Societies Act to direct the Society to go against its own bye-laws and to admit a person to membership. 1623-F-Gl 2.6. The approved bye-laws confer power on the Committee to reject the application for membership of a person who is not qualified in terms of D the bye-law concerned and this cannot be interfered with on the basis of anything contained in the Act or the Rules. Therefore, by introducing a theory of what the court considers to be public policy, a society registered under the Cooperative Societies Act, cannot be directed to admit a member who is not qualified to be a member in terms of its duly registered bye-laws. Neither the member, respondent No. 2, nor the aspirant to membership, respondent No. 3 had the competence to challenge the validity of the bye-laws of the Society or to claim a right to membership in the Society. 1617-GJ State of Maharashtra and Ors. v. Karvanagar Sahakari Griya Rachana Sanstha Maryadit and Ors., 12000) 9 SCC 295 and State of U.P. and Anr. v. C.O.D. Chheoki Employees' Cooperative Society Ltd and Ors., (19971 3 SCC 681, relied on. E F 2.7. Unless appropriate amendments are brought to the various Cooperative Societies Acts incorporating a policy that no society shall be formed or if formed, membership in no society shall be confined to persons G of a particular persuasion, religion, belief or region, it could not be said that a society would be disentitled to refuse membership to a person who is not duly qualified to be one in terms of its bye-laws. [617-H; 618-AJ 3.1. The doctrine of public policy is governed by precedents, its principles have been crystallized under the different heads and though it was permissible H 596 SUPREME COURT REPORTS (2005] 3 S.C.R. A to expound and apply them to different situations it could be applied only to clear and undeniable cases of harm to the public. Although, theoretically it was permissible to evolve a new head of public policy in exceptional circumstances, such a course would be inadvisable in the interest of stability of society. (626-E-Fl B Gheru Lal Parakh v. Mahadeodas Ma;ya and Ors., [19591Suppl.2 SCR 406, relied on. 3.2. When a statute is enacted, creating entities introduced thereunder 9n fulfillment of the conditions laid down therein, the public policy in relation to that statute has to be searched for within the four corners of that statute. C The statute reflects the policy of the Legislature in respect of the subject matter dealt with thereunder. (615-A-B) 3.3. Appellant Society was formed with the object of providing housing to the members of the Parsi community. It is open to that community to try D to preserve its culture and way of life and in that process, to work for the advancement of members of that community by enabling them to acquire membership in a society and allotment oflands or buildings in one's capacity as a member of that society, to preserve .its object of advancement of the community. It is also open to the members of that community, who came together to form the co-operative society, to prescribe that members of that E community for whose benefit the society was formed, alone could aspire to be.members of that society. There is nothing,in the Bombay Act or the Gujarat Act which precludes the formation of such a society. [625-F; 627-A) 3.4. When the Gujarat Cooperative Societies Act, 1961 was enacted, it could not be taken that the Legislature was unaware of the fundamental rights F of citizens enshrined in Articles 19(l)(d) and (g) of the Constitution. But the Legislation, in aid of the cooperative movement and in the context of the rights available to citizens under Article 19(l)(c) of the Constitution, imposes only certain restrictions as reflecte~ by the Act, the Rules and the Bye-laws of the particular society. The Acts specifically gave sanctity to the bye-laws of a G Society duly approved by the authorities under the Act The expression 'public policy' in the context of Section 4 of the Act can be understood only as being opposed to the policy reflected by the Cooperative Societies Act Prima facie, public policy, in the context of Section 4 of the Act, is the policy that is adopted by the concerned. Act and the Rules framed thereunder. One does not find anything in the Act which prevents the Society from refusing membership to H a person who does not qualify in terms of bye-law No. 7 of the Society and in ·--== -- ZOROASTRIAN CO-OP. HOUSING SOCIE. LID. v. DIST. REG. CO-OP. SOC!E. 597 the absence of any prohibition contained therein against the forming of a A society for persons of Parsi origin, it could not be held that the confining of membership as was done by bye-law No. 7, was opposed to public policy. (620-E] Renusagar Power Co. Ltd v. General Electric Co., (1994) Supp. 1 SCC 644, relied on. 3.5. By Rule 12(2), of the Gujarat Cooperative Societies Rules, 1965 the primacy given to the bye-laws of the society is in no manner sought to be whittled down by reference to any public policy going by the larger concept of that term and outside the Act. (615-E-F] 3.6. It is true that in secular India it may be somewhat retrograde to conceive of co-operative societies confined to group of members or followers B c of a particular religion, a particular mode of life, a particular persuasion. But that is different from saying that you cannot have a co-operative society confined to persons of a particular persuasion, belief, trade, way of life or a religion. The fundamental rights in Part III of the Constitution are normally D enforced against State action or action by other authorities who may come within the purview of Article 12. A co-operative society is not a State within the meaning of Article 12 of the Constitution. [62l-A-B] Ajay Hasia v. Khalid Mujib Sehravardi, [1981) 1 SCC 722, relied on. 3. 7. It cannot be said that a person has a fundamental right to become a member of a voluntary association or of a co-operative society governed by its own bye-laws. So long as this position holds, it is not possible, especially for a Registrar who is an authority under The Co-operative Societies Act, to direct a co-operative society to admit as a member, a person who does not qualify to be a member as per the bye-laws registered under the Act. Nor E F can a Registrar direct in terms of Section 14 of the Act to amend the byelaws since it could not be said that such an amendment, as directed in this case is necessary or desirable in the interests of the appellant society. What is relevant under Section 14 of the Act is the interest of the society and the necessity in the context of that interest. It is not the interest of an individual G member or an aspirant to a membership. (623-C-Fl 3.8. With regard to the submission that Articles 14 and 15 prevent any d.iscrimination based·on religion or origin in the matter of equal treatment or employment and to apply the same even in respect of a co-operative society, the Court must also consider what lies behind the formation of co-operative H 598 SUPREME COURT REPORTS (2005] 3 S.C.R. A societies and what their character is and how they are to be run as envisaged by the various Cooperative Societies Acts prevalent in various States of this Country. Running through the Cooperative Societies Act, is the theory of area of operation which means that membership could be denied to a citizen of this Country who is located outside the area of operation of a society. B r6t9-B-DJ 3.9. High Court made a wrong approach to the question of whether a bye-law like bye-la~ No. 7 could be ignored by a member and whether the Authorities under the Act and the court could ignore the same on the basis that it is opposed to public policy being against the constitutional scheme of C equality or non-discrimination relating to employment, vocation etc. So long as the approved bye-law stands and the Act does not provide for invalidity of such a bye-law or for interdicting the formation of co-operative societies confined to persons of a particular vocation, a particular community, a particular persuasion or a particular sex, it could not be held that the formation of such a societ)r under the Act would be opposed to public policy D and consequently liable to be declared void or the society directed to amend its basic bye-law relating to qualification for membership. [626-A-CJ 4.1. Under the Contract Act, a person suijuris has the freedom to enter into a contract The bye-laws of a cooperative society setting out the terms of membership to it, is a contract entered into by a person when he seeks to E become a member of that society. Even the formation of the society is based on a contract. This freedom to contract available to a citizen cannot be curtailed or curbed relying on the fundamental rights enshrined in Part III of the Constitution against State action. A right to enforce a fundamental right against State action, cannot be extended to challenge a right to enter into a F contract giving up an absolute right in oneself in the interests of an association to be formed or in the interests of the members in general of that association. This is also in lieu of advantages derived by that person by accepting a membership in the Society. The restriction imposed, is generally for retaining the identity of the society and to carry forward the object for which the society was originally formed. The person exercises his right of association when he G becomes a member of a society by entering into a contract with others regulating his conduct vis-a-vis the society, the members constituting it, and submerging his rights in the common right to be enjoyed by all and he is really exercising his right of association guaranteed by Article 19(1)(c) of the Constitution in that process. His rights merge in the rights of the society and H are controlled by the Act and the bye-laws of the society. r620-F-H; 621-A-CJ .. ZOROASTRIAN CO-OP. HOUSING SOCIE. LTD. ''· DIST. REG. CO-OP. SOCIE. 5 99 4.2. Section 23 of the Contract Act provides that where consideration A and object are not lawful the contract would be void. But for Section 23 to apply it must be forbidden by law or it must be of such a nature that it would defeat the provision of any law or it is fraudulent or it involves or implies injury to the person or property of another or the court regards it as immoral or opposed to public policy. Something more than a possible or plausible B argument based on the constitutional scheme is necessary to nullify an agreement voluntarily entered into by a person. The basic premise is that public policy in relation to a co-operative society is to be looked for within the four corners of the Act, the very emrctment under which the very society is formed. A bye-law that does not militate against any of the provisions of the Act cannot be held to be opposed to public policy unless it is immoral or C offends public order. 1624-G-H; 625-A) 4.3. In the context of the freedom of contract available to a person and the right to form an ussociation. guaranteed by Article 19(1)(c) of the Constitution, and the law governing such an association, the Courts have to be cautious in trying to ride' the unruly horse of public policy in acceding to D a challenge to a qualification for membership in the bye-laws, not taboo under the Act and the Rules themselves. Respondent No. 2 became a member of the Society of his own volition acquiring the rights and incurring the obligations imposed by the approved bye-laws of the Society. By invoking considerations of public policy, there is no justification in relieving a member- E respondent No. 2 of a Cooperative Society of the obligations undertakrn by him while joining it on the ground that the same might affect his fundamental rights guaranteed by Article 19(l)(d) or (g) of the Constitution or that it offends Article 300A of the Constitution. [621-H; 622-A; 622-D-F) Printing and Numerical Registering Company v. Sampson, (1874-75) Vol.19 F LR Equity Cases 462; Rodriguez v. Speyer Bros., (1919) A.C. 59; Fender v. Mildmay, (1938) AC 1 and Linden Gardens Trust Ltd v. Lenesta Sludge Disposal ltd and Ors., [1993) 3 All ER 417, referred to. 5.1. Section 10 of the Transfer of Property Act relieves a tram;feree of immoveable property from an absolute restraint placed on his right to deal G with the property in his capacity as an owner thereof. As per section 10 a condition restraining alienation would be void. The Section applies to a case where property is transferred subject to a condition or limitation absolutely restraining the transferee from parting with his interest in the property. For making such a condition invalid, the restraint must be an absolute restraint [627-H) H 600 SUPREME COURT REPORTS [2005) 3 S.C.R. A It must be a restraint imposed while the property is being transferred to the transferee. When a person accepts membership in a cooperative society by submitting himself to its bye-laws and secures an allotment of a plot of land or a building in terms of the bye-laws and places on himself a qualified restriction in his right to transfer the property by stipulating that the same B would be transferred back to the society or with the prior consent of the society to a person qualified to be a member of the society, it cannot be held to be an absolute restraint on alienation offending Section 10. He has placed that restriction on himself in the interests of the collective body, the society. He has voluntarily submerged his rights in that of the society. Section 10 cannot have any application to transfer of membership which is regulated by the byeC laws. The bye-laws in that regard are· not in challenge and cannot effectively be challenged. (628-A; 628-G-H- 629-A] 5.2. The restriction, if any, is a self-imposed restriction to which the father of respondent No. 2 was a party and respondent No. 2 voluntarily became a party. It is difficult to postulate that such a qualified freedom to D transfer a property accepted by a person voluntarily, would attract Section 10 of the Act. Moreover, it is not as if it is an absolute restraint on alienation. Respondent No. 2 has the right to transfer the property to a person who is qualified to be a member of the Society as per its bye-laws. At best, it is a partial restraint on alienation. Such partial restraints are valid if imposed in E a family settlement, partition or compromise of disputed claims. (628-E-F] Mohammad Raza v. Mt. Abbas Bandi Bibi, 59 I.A. 236 and Gummanna Shetty and Ors. v. Nagaveniamma, AIR (1967) SC 1595, relied on. 5.3. It is property in the hands of the member on the strength of the F allotment. It may also be attachable and saleable in spite of the volition of the allottee. But it does not enable the Court to hold that the condition that allotment to the member is subject to his possessing the qualification to be a member of the cooperative society or that a voluntary transfer by him could be made only to the society itself or to another person qualified to be a member of the society and with the consent of the society could straightaway be G declared to be an absolute restraint on alienation and thus an interference with his right to property under Article 300A of the Constitution and as such is to be set aside. (629-C-D] CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1551 of2000. H From the Judgment and Order dated 23.7.99 of the Gujarat High Court - ZOROASTRIAN CO-OP. HOUSING SOCIE. LTD. v. DIST. REG. CO-OP. SOCIE. [BALASUBRAMANYAN, J] 60} in L.P.A. No. 129/97 in S.C.A. No. 6226 of 1996. Soli J. Sorabjee, Sanjeev Sen, Ms. Nandini Gore, Ms. Seema Sundd, Ms. Jasmine Damakewal, Ms_ Kanika Agnihotri and Ashim Sood for Mrs. Manik Karanjawala with him for the Appellants. A V.A. Bobde, A.P. Mayee, N.S. Tambwekar, Sanjeev K. Choudhary, B Vishwajit Singh, Arjun Bobde, Ms. Hemantika Wahi with him for the Respondensts. The Judgment of the Court was delivered by P.K. BALASUBRAMANY AN, J. 1. The Zoroastrian Co-operative C Housing Society is a society registered on 19.5.1925, under the Bombay Co- .operative Societies Act, 1925. The Society applied to the Government of Bombay for acquisition of certain lands in Ahmedabad District, then in the State of Bombay, under the Land Acquisition Act, 1894 for the purpose of erecting houses for residential use of its members and to further the aims and. D objects of the Society. On the Government of Bombay agreeing to the proposal, the Society entered into an agreement on l7.2J928 with the Government under Section 41 of the Land Acquisition Act. Certain lands were acquired. From the lands thus acquired at its cost and given to it, the Society allotted plots of land to the various members of the Society in furtherance of the objects of the Society. On the re-organization of States, the Society became E functional in the State of Gujarat and came within the purview of the Gujarat Co-operative Societies Act, 1961. Section 169 of that Act, repealed the Bombay Co-operative Societies Act, 1925 . and in sub-section (2) provided that all societies registered or deemed to be registered under the Bombay Act, the registration of which was in force immediately before the commencement of the Gujarat Act, were to be deemed to be registered under the Gujarat Act. F The Gujarat Act came into force on l.5.1962. Thus, the Society came to be regulated by the Gujarat Co-operative Societies Act, 1961 (hereinafter referred to ~s 'the Act'). 2. On the scheme of the Bombay Co-operative Societies Act (hereinafter G referred to as 'the Bombay Act'), the Society had applied for registration in terms of Section 9 of that Act. The application was accompanied by the proposed bye-laws of the Society. The Registrar of Co-operative Societies, on being satisfied that the Society had complied with the provisions of the Act and the Rules and that the proposed bye-laws were not contrary to the Act and the Rules, granted registration to the Society and its bye-laws and H 602 SUPREME COURT REPORTS [2005] 3 S.C.R. A issued a certificate of registration in terms of Section I I of that Act. As per the bye-laws, the objects of the Society were to carry on the trade of building, and of buying, selling, hiring, letting and developing land in accordance with Co-operative principles and to establish and carry on social, re-creative and educational work in connection with its tenets and the Society was to have full power to do all things it deemed necessary or expedient, for the B accomplishment of all objects specified in its bye-laws, including the power to purchase, hold, sell, exchange, mortgage, rent, lease, sub-lease, surrender, accept surrenders of and deal with lands of any tenure and to sell by installments and subject to any terms or conditions and to make and guarantee advances to members for building or purchasing property and to erect, pull C down, repair, alter or otherwise deal with any building thereon. All persons who had signed the application for registration, are original members by virtue of bye-law No. 7. The said bye-law further provided that other members shall be elected by the Committee of the Society, provided that all members shall belong to the Parsi Community subject to satisfying other conditions in that bye-law. Bye-law No. 21 provided for sale of a share held by a member D but with previous sanction of the Committee which had full discretion in granting or withholding such sanction. It was also provided that until the transfer of a share is registered, no right was acquired against the Society by the transferee, and no claim against the transferor by the Society was also to be affected. In short, the qualification for becoming a member in the Society E was that the person should be a Parsi and that the transfer of a share to him had to have the previous sanction of the Committee of the Society. 3. Some of the relevant provisions of the Bombay Act may now oe noticed. Under Section 3, the Registrar had the right to classify all societies under one or other of the heads referred to in that Section. Under Section 5 F of that Act, a society which had as its object, the promotioA of economic interests of its members in accordance with economic principles, may be registered under the Act with or without limited liability. Section 6 placed restrictions on the interests of the members of the society with limited liability. Section 6A enacted that no person shall be admitted as a member of a society unless he w~ a person competent to contract under Section 11 of the Indian G Contract Act. Section 7 stipulated the conditions for registration and provided that no society could be registered under the Act which did not consist of at least 10 persons who were qualified to be members of the society under Section 6A and where the object of the society was the creation of funds to · be lent to its members, unless all persons forming the society resided in the H same town or village or in the group of villages or they belonged to the same - .. ZOROASTRIAN CO-OP. HOUSING SOCIE. LTD. 1·. DIST. REG. CO-OP. SOCIE. [BALASUBRAMANYAN, J.] 60} tribe, class or occupation, unless the Registrar ordered otherwise and no A person could be admitted to membership of any such society after its registration unless the persons fulfilled the two requirements as mentioned above. If the Registrar was satisfied that a society has complied with the provisions of the Act and the Rules and that its proposed bye-laws are not contrary to the Act or to the Rules, under Section I 0 he was to register the B society and its bye-laws. According to the Society. it '.: