# J.N. CHAUDHARY & ORS. ETC v. STATE OF HARYAl\JA & ORS

- **Citation:** [2014] 6 S.C.R. 589
- **Court:** Supreme Court of India
- **Decided:** 2014-04-24
- **Case number:** Civil Appeal Nos. 4854-4855 of 2014
- **Bench:** Gyan Sudha Misra, Pinaki Chandra Ghose
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/j-n-chaudhary-ors-etc-v-state-of-haryal-ja-ors-30077
- **Pages:** 48

## Headnote

Go-operative Society:
Auction sale of land conducted in pursuance to the
resolution passed by the General Body of the Co-operative
Society and by duly following the procedure - Sale based on
A
B
c
the price prevalent on the date of auction sale could not be
faulted on the ground of a/legations leveled on the basis of 0
assumption and speculation of 10 members of the Society
who had assailed the same by invoking writ jurisdiction -
Challenge made 11 years after the sale, during which the
appellant Society practically ceased to exist and all members .
except 10 out of 288 left - There was no illegality or infirmity
E
in the impugned judgments passed by the courts below
concurrently refusing to set aside the auction sale held 11
years ago at the instance of a Co-operative Society which was
practically rendered defunct and ceased to exist.
Auction sale of land conducted in pursuance to the
F
resolution P.assed by the General Body of the Co-operative
Society - Challenged by handful of members - Held: In
judging the functioning of a Co-operative Society or any other
statutory body where the democratic process of election is
adopted in pursuance to the Rule and a collective decision
G
is taken by majority of the members of the entire body
expressed in terms of a resolution passed by the General
Body, then the same should not be ignored and bye-passed
on _challenge by a handful of members on the allegation of
589
H
590
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A
ma/a fide unless the alleged malicious action is· writ large on
the alleged decision and is challenged by majority of the
members - If a decision is taken by majority of the members
of a Cooperative Society or any other body under a statute
in terms of the Rule, it cannot be over-ruled by minority on
B
the ground of ma/a fide or fraud -unless it has passed through
a strict proof of evidence - It is a well known dictum that ma/a
fide is always easy to allege but difficult to prove as the same
cannot be held as proved relying on assumption, speculation
and. suspicion.
c
Writ jurisdiction: Scope of - Writ petition by members of
Co-operative Society challenging auction sale 11 years later
- Held: Members of the Co-operative Society opted a wrong
forum by filing a writ petition in the High Court - They should
have approached the civil court of competent jurisdiction
D
where it would have had the opportunity to adduce evidence
and prove all the allegations of under valuation and the
alleged fraud challenging the auction sale - High Court under
its writ jurisdiction ought not to have entertained the factual
dispute which was of a civil nature but in the interest of justice
E
and fairness as also equity and good conscience, the High
Court entertained the dispute and to a great extent took care
to scrutinize all aspects of the matter and then reached to a
conclusion considering entire conspectus of the matter which
cannot be held to be arbitrary, illegal or unjust in any manner.
F
On 04.03.1994, a Cooperative Society was formed
wherein 288 persons became members upto 1995-96 and
contributed a sum of Rs. 7.50 crores towards the funds
of the society which were to be utilized for purchase of
G
th~ land. In 1~96, the society purchased 10 acres of land
with the funds contributed by the members for achieving
its objects. At the time of formation of the society, a
Managing Committee was constituted with one 'RPG' as
Secretary but the same was suspended on 23.10.1996 by
the then Asstt. Registrar, Cooperative Societies on the
H
J.N. CHAUDHARY & ORS. ETC. v. STATE OF
591
HARYANA & ORS.
allegation of financial irregularities and a Board of A
Administrator was appointed. However, the Deputy
Registrar reinstated the Managing Committee on
30.08.1999. Subsequently, on 28.05.2000, a General Body
Meeting of the Society took place in which fresh election
was held and a n.ew Managing Committee was
B
constituted wherein 'AKM' was elected as member of the
new Managing Committee and entrusted with the work
of

## Text

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[2014] 6 S.C.R. 589
J.N. CHAUDHARY & ORS. ETC.
V.
STATE OF HARYAl\JA & ORS.
(Civil Appeal Nos. 4854-55 of 201-4'"tftt.)
APRIL 24, 2014
[GYAN SUDHA MISRA AND
PINAKI CHANDRA GHOSE, JJ.]
Go-operative Society:
Auction sale of land conducted in pursuance to the
resolution passed by the General Body of the Co-operative
Society and by duly following the procedure - Sale based on
A
B
c
the price prevalent on the date of auction sale could not be
faulted on the ground of a/legations leveled on the basis of 0
assumption and speculation of 10 members of the Society
who had assailed the same by invoking writ jurisdiction -
Challenge made 11 years after the sale, during which the
appellant Society practically ceased to exist and all members .
except 10 out of 288 left - There was no illegality or infirmity
E
in the impugned judgments passed by the courts below
concurrently refusing to set aside the auction sale held 11
years ago at the instance of a Co-operative Society which was
practically rendered defunct and ceased to exist.
Auction sale of land conducted in pursuance to the
F
resolution P.assed by the General Body of the Co-operative
Society - Challenged by handful of members - Held: In
judging the functioning of a Co-operative Society or any other
statutory body where the democratic process of election is
adopted in pursuance to the Rule and a collective decision
G
is taken by majority of the members of the entire body
expressed in terms of a resolution passed by the General
Body, then the same should not be ignored and bye-passed
on _challenge by a handful of members on the allegation of
589
H
590
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A
ma/a fide unless the alleged malicious action is· writ large on
the alleged decision and is challenged by majority of the
members - If a decision is taken by majority of the members
of a Cooperative Society or any other body under a statute
in terms of the Rule, it cannot be over-ruled by minority on
B
the ground of ma/a fide or fraud -unless it has passed through
a strict proof of evidence - It is a well known dictum that ma/a
fide is always easy to allege but difficult to prove as the same
cannot be held as proved relying on assumption, speculation
and. suspicion.
c
Writ jurisdiction: Scope of - Writ petition by members of
Co-operative Society challenging auction sale 11 years later
- Held: Members of the Co-operative Society opted a wrong
forum by filing a writ petition in the High Court - They should
have approached the civil court of competent jurisdiction
D
where it would have had the opportunity to adduce evidence
and prove all the allegations of under valuation and the
alleged fraud challenging the auction sale - High Court under
its writ jurisdiction ought not to have entertained the factual
dispute which was of a civil nature but in the interest of justice
E
and fairness as also equity and good conscience, the High
Court entertained the dispute and to a great extent took care
to scrutinize all aspects of the matter and then reached to a
conclusion considering entire conspectus of the matter which
cannot be held to be arbitrary, illegal or unjust in any manner.
F
On 04.03.1994, a Cooperative Society was formed
wherein 288 persons became members upto 1995-96 and
contributed a sum of Rs. 7.50 crores towards the funds
of the society which were to be utilized for purchase of
G
th~ land. In 1~96, the society purchased 10 acres of land
with the funds contributed by the members for achieving
its objects. At the time of formation of the society, a
Managing Committee was constituted with one 'RPG' as
Secretary but the same was suspended on 23.10.1996 by
the then Asstt. Registrar, Cooperative Societies on the
H
J.N. CHAUDHARY & ORS. ETC. v. STATE OF
591
HARYANA & ORS.
allegation of financial irregularities and a Board of A
Administrator was appointed. However, the Deputy
Registrar reinstated the Managing Committee on
30.08.1999. Subsequently, on 28.05.2000, a General Body
Meeting of the Society took place in which fresh election
was held and a n.ew Managing Committee was
B
constituted wherein 'AKM' was elected as member of the
new Managing Committee and entrusted with the work
of Honorary Secretary of the Society in place of the
previous Secretary 'RPG'. The new Managing Committee
upon inspection of records found gross irregularities by c
the previous Managing Committee in the purchase of
land and utilization of members funds. An FIR was lodged
against previous Managing Committee. On 02.06.2002 to
discuss affairs of the society, a meeting was held and
members were apprised that large scales and glaring 0
misappropriation of funds took place between 1994 and
2000 and it was resolved that the only option left before
the Society was to sell the land at the best possible
market price so as to refund the contrfbutions made by
the members. For the purpose of ascertaining the correct
market rate of the land, 'AKM' himself wrote to the
E
Tehsildar who quoted the market rate to Rs. 40 lakhs per
acre. 'AKM' wrote a letter to the Registrar, Cooperative
Societies seeking permission to dispose of the land at the
earliest for Rs. 4.2 crores. However, the Registrar before
wttom a dispute was raised_regarding removal of the
F
office bearers of the Cooperative Society suspended the
new Managing Co.mmittee on account of gross
irregularities as a result of which a Board of
Administrators was appointed. Thereafter, on 14.01.2003,
the Registrar granted permission to the Board of G
Administrators to dispose of the society land and a sale
committee was formed for this purpose.
Meanwhile, 'AKM' and others filed a writ petition
challenging th~ order of suspension of the new Managing
H
592
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A Committee as well as the order granting permission to
sell the land. During pendency of the said writ petition,
Assistant Registrar on 05.09.2003 removed the new
Managing Committee on account of its failure to perform
its duties as per Rules and Bye-laws.
B
.
.
Pursuant to the orders of Registrar dated 14.01.2003
granting permission to dispose of the society land, a
public notice was duly published. On an application
se'ek~ng an order of injunction filed by the suspended
C Mana'Qing Committee, a stay of the sale of land was
granted and auction was po~tponed. Thereafter, stay was
vacated and fresh date of auction was fixed. The auction
was held and the land was sold to respondent no. 7 for
Rs. 4.94 crores against the estimated market rate of about
Rs. 4.20 crores. After the auction of the land in favour of
D respondent no. 7 was complete, the writ petition which
was filed chC1llenging the suspension of the members of
the Managing Committee wherein 'AKM' and 'AS' were
elected as Secretary and Treasurer was withdrawn and
an appeal was filed under Section 114 of the
E Cooperatives Act. The appeal was dismissed. The Single
Judge dismissed the writ petition. 'AKM' along with 37
members filed LPA. The Division Bench of the High Court
upheld the decision of the single judge. The instant
appeals were filed challenging the order of the High
F · Court by the society and 10 members of the society. AKM
withdrew from the .SLPs.
Dismissing the appeals, the Court
HELD: 1. It was under the secretaryship of 'AKM' that
G a General Body Meeting was convened and a resolution
was passed by the General Body to auction sale the land
recording specific reasons in the Minutes of the General
Body Meeting whereby the Honorary Secretary/'AKM'
brought out, the options to the notice of the General
: 1
Body. One of the options was to construct flats on the
J.N. CHAUDHARY & ORS. ETC. v. STATE OF
593
HARYANA & ORS.
land for which tender was floated and it was noted that
A
one out of the two parties who responded to the tenders
had shown interest. The second option was sale of the
land which were in possession of the society free from
litigation. It was in view of this decision that follow up
actions were taken by the Board of Administrators under s
the Sales Committee, inviting proposals for the sale of the
land as the Managing Committee under 'AKM' and
. Treasurer 'AS' was under suspension due to the alleged
illegalities and irregularities. The single judge as also the
Division Bench of the High Court took note of the fact c
that although 10.69 acres of land was claimed by the
society, 14.50 were in dispute/litigation. The clear land
without any dispute with the society was only around
1.69 acres. The records further indicated that 3.5 acres
of land was never purchased by the society as per the
0
then Secretary 'RPG'. The single judge also took note of
the fact that this was under litigation as it was purchased
by another society whose registration was in progress.
Thus, if 3.5 acres were to be deducted out of 4.5 acres,
only 1.1 acre was left to the society. The single Judge
further noted that the land in question had been surveyed
by the Government along with other vacant land with a
view to clear it and the acquisition process had been set
in motion. The land belonging to the society had been
encircled/ surrounded by another society. Therefore, the
future course of action left to the society was to dispose
of the land of the society. [Paras 25 and 26] [623-D-E; 624E; 625-D-H; 626-A]
E
F
2. ·The dispute regarding suspension of the
Managing Committee under 'AKM' Mahindra in view of the
G
alleged irregularities of the previous managing committee
started only on 13.12.2002 and all the disputes in regard
to removal and induction of the society under 'AKM'
admittedly took place between 13.12.2002 and 24.11.2003.
But the resolution was passed by the General Body in its
H
594
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A
Meeting for sale of the land on 2.6.2002 when the
Managing Committee constituted under 'AKM" was duly
in place and no member of the society had raised any
grievance agafnst the said decision that it was erroneous
or tainted in any manner and the society was duly
B
represented by the Secretary and all members of the
society. The case of the Managing Committee and its
members that the Assistant Registrar illegally suspended
the Managing Committee under 'AKM' based on the
alleged irregularities of the previous Managing
c Committee under 'RPG' first of all took place on
13.12.2002 from which it is clear that when the General
Body Meeting was conducted and resolution was
pa~sed on 2.6.2002, the Secretary of the Managing
Committee 'AKM' was duly and legal.ly in place as
Secretary and was removed by the Registrar of Society
D only at a later stage on 05.09.2003 after which the Board
of Administrators was appointed by the Registrar and a
Sales Committee was also set up under whose
supervision the auctionsale was decided to be held
under supervision of the Sales Committee. The proposed
E auction was also challenged, as an application for
injunction restraining the auction sale was filed before
the District Court where an order of injunction restraining
the auction sale was also granted by the District Court
but the said injunction was later vacated against which
F
no appeal was preferred by any member of the society.
It is no doubt true and it has been contended that as no
Managing Committee was in existence at that point of
time, no appeal could be preferred against the order
vacating the injunction. However, this contention is
G clearly without substance for if the members in their
individual capacity ~ould assail the auction sale by filing
a separate writ petition, it cannot be accepted that'they
were precluded in any manner from challenging the
auction sale in case they were aggrieved and the
H subsequent challenge after seven years in 2010 clearly
J.N. CHAUDHARY & ORS. ETC. v. STATE OF
595
HARYANA & ORS.
appears to be an after thought at the instance of a A
miniscule number of members who decided to assail the
auction sale clearly as a matter of gamble. [Para 27) [626·
C-H; 627-A-D)
3. The resolution by the General Body of the Society
to auction sale the land was taken way back on 2.6.2002
B
by the resolution passed in the General B9dy when there
was dispute existing regarding the functioning of the
Managing Committee and it is only after more than one
year that the Secretary 'AKM' was removed by the
Registrar, Co-oper~tive Societies and since he was C
removed, he challenged his removal as also the decision
of the General Body to auction sale the land which
resolution during his tenure as Secretary was passed. In
fact as long as he was the Secretary he had not merely
approved the decision of the. General Body to auction D
sale, but also the existing market price of the land. [Para
28) [627 -D-F)
4. The then Secretary 'AKM' although t,iad challenged
his removal as Secretary of the Society, he never thought
it appropriate to file any appeal against the order vacating
E
the order of injunction against auction sale which he
could have done as the ex-secretary if he was genuinely
concerned. The matter regarding the dispute challenging
the auction sale had been filed in a court of competent
jurisdiction where initially an order of injunction was also
F
passed but the same was finally vacated against which
no appeal was preferred either by any member of the
society or the Secretary. The order of injunction against
auction sale was finally vacated but no member was
conscious or vigilant to challenge the same. On the G
contrary, large number of members gradually withdrew
the amount and walked out of the society. It is clear that
for the first time in the year 2010 when a new managing
committee was elected on 13.9.2010 that a decision was
taken to challenge the auction sale by which time the
H
596
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A existence of the society withered away when the majority
of the members out of 288 left and only 38 members
remained clearly implying that for all practical purposes
the Society ceased to retain its legal entity as the land of
the society for which contribution had been made was by
B all the 288 members and not merely 38 members. Even
out of this 38 members, only 10 members preferred LPA
before the High Court although the General Body
resolution was passed by the majority and cannot be
allowed to be overruled by 10 members only. [Para 29)
C [628-A-F]
5. The circle rate of the land at the relevant time was
Rs.12 lacs per acre and the market rate was Rs.40 lacs
per acre and as per the auction held, the price fetched in
the auction ultimately worked out to Rs.46 lacs per acre.
D The appellants had not furnished any material before any
court as to what was the market price of the undeveloped
land in the year 2003 when the auction sale was held in
pursuance to the General Body Resolution of the Cooperative Society. In any case, this question at this stage
E · is not of much relevance when the High Court has
increased the price of the land at Rs.70 lakhs per acre and
members of the society have been held entitled to refund
of their contribution amount along with 6% interest in
view of which undervaluation of the cost of the land no
F longer subsisted. It has no where been urged that at the
relevant point of time in the year 2003 when the land was
auctioned/sold, its valuation was much more than Rs.70
lakhs per acre so as to treat it prejudicial and detrimental
to the interest of the members of the society who had
G contributed for purchase of the land. [Para 30] [628-H;
629-A-C]
6. If the members of the Society by virtue of a
General Body resolution had decided to auction sale the
land during the tenure of a duly elected Secretary of the
H Society 'AKM' and for more than one year no member of
J.N. CHAUDHARY & ORS. ETC. v. STATE OF
597
HARYANA & ORS.
the society had any reason to challenge the same after A
which the Board of Administrator was appointed and the
price of the land on the date of auction could not be more
than Rs.70 lakhs per acre, it would be unfair and unjust
to interfere with the auction sale after 11 years of its.
holding on the plea that the price fetched in the auction
B
suffered from undervaluation as the same cannot be
compared with the present day valuation which obviously
must have grown over the years as compared to the year
2003 when the auction sale was held. The Secretary
'AKM' as also Patwari had also given out in writing and c
is on record which indicated that the value of the land at
the relevant time which was not a developed land at the
relevant time when the land was put to auction sale was
not more than Rs. 40,000 per acre which cannot be
doubted in absence of any material to the contrary
specially when the circle rate of the land was Rs.12 lacs
D
per acre only and the land was auction sold at Rs.46 lacs
per acre approximately in the year 2003. In any case, the
price of the land was already increased to Rs.70 lakhs per
acre by the High Court and was ordered to be paid ·
alongwith 6% interest and thus the Society has not been · E
put to monetary loss on account of the sale conducted
in pursuance to the resolution of the General Body which
was passed during the tenure of a duly constituted
Managing Committee under 'AKM'. Further, only a handful
of members of the co-operative society who are now only
F
10 out of 288 have not withdrawn from the society by
withdrawing their amount. [Para 31) [629-D-H; 630-A-B]
7. From the background, facts and circumstance of
the matter, it is further clear that the members of the coG
operative society had clearly opted a wrong forum by
filing a writ petition in the High Court for if they expected
the court to appreciate evidence and record a finding on
the said disputes for setting aside the auction sale, they
should have approached the civil court of competent
H
598
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A jurisdiction where it would have had the opportunity to
adduce evidence and prove all the allegations of under
valuation and the alleged fraud challenging the auction
sale. In fact, the writ petition for assailing a factual dispute
ought not to have been entertained by the High Court
8
under its writ jurisdiction but in the interest of justice and
fairness as also equity and good conscience, the High
Court entertained a dispute which purely was of a civil
nature since all contentions which have been raised
would have required appreciation of evidence. Yet the
C High Court to a great extent has taken care to scrutinize
all aspects of the matter in regarq to the writ petition filed
by the co-operative society members who sought to
assail the auction sale clearly alleging disputed questions
of fact alleging fraud in conducting auction sale as also
0
valuation of the land in question which required adducing
of evidence and the same could not have been
entertained by the High Court under Articles 226 and 227
of the Constitution except to the extent of considering
whether the order passed by the Registrar, Co-operative
Societies rejecting the challenge of removal of the
E managing committee was sustainable or not. Yet the High
Court has entered into all aspects and has then reached
to a conclusion considering entire conspectus of the
matter which cannot be held to be arbitrary, illegal or
F
unjust in any manner. [Para 32) [631-F-H; 632-A-C]
8. There is yet another feature of the matter which
emerged from the fact that when the removal of 'AKM' as
a Secretary of the society was set aside, then all activities
including passing of the General Body resolution in the
G meeting that ·were conducted during his tenure as
Secretary of the Managing Committee cannot be held to
be illegal in any manner.Thus when the General Body
resolution was passed during the tenure of a validly
elected managing committee under Capt. 'AKM' as the
H Secretary and the resolution to auction sale the land was
J.N. CHAUDHARY & ORS. ETC. v. STATE OF
599
HARYANA & ORS.
passed during his secretaryship whereby the value of the
A
land was also assessed and approved by Capt. 'AKM'
himself and no allegation was levelled by any member
against 'AKM' as all allegations were confined to 'AS',
then the resolution of the General Body obviously could
not have been faulted with specially when no appeal
B
against the order of the Civil Court vacating the order of
injunction against the auction sale was filed by any
member of the society specially the appellants. The
appellant-society and a handful of members now
restricted to 10, have levelled allegations but mere c
allegation cannot be treated as a proof and if the
members were in a position to assail the same which
clearly would have required strict proof by way of
evidence, they ought to have gone in for a civil suit and
the writ jurisdiction was clearly not the appropriate 0
remedy to establish and prove questions of fact. Yet
when the single judge as also the Division Benett have
meticulously examined all aspect of the matter and the
same did not indicate any perversity in the conclusions
drawn, it would be unfair and unjust to interfere with the
E
same by indulging into a roving enquiry merely
accepting the contentions of some of the members of the
Society which are clearly based on speculation,
conjecture and apprehension. The Courts, therefore, in
a circumstance of this nature cannot be expected to
decide such an issue on suspicion hunch or even
intuition which clearly would be abstract in nature and
has no place in the eye of law even before a court of fact
and much less before a court under writ jurisdiction. [Para
33] [632-D-H; 633-A-D]
9. The cumulative effect of the entire analysis based
F
G
on th~ facts and circumstance in the light of the
reasonings assigned by the Single Bench of the High
Court as also the Division Bench, it would not be just and
proper to interfere with the judgments and orders passed
H
600
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A by the single Judge as also the Division Bench of the
High Court holding concurrently that the auction sale
which was in pursuan"ce to the resolution passed by the
General Body of the Co-operative Society based on the
price prevalent on the date of auction sale could be
B faulted on the ground of allegations leveled on the basis
of assumption and speculation of 10 members of the
society who had assailed the same by invoking writ
jurisdiction. [Para 34] [633-E-F]
'
10. In judging the functioning of a co-operative
C society or any other statutory body where the democratic
process of election is adopted in pursuance to the Rule
and a collective decision is taken by majority of the
memb~rs of the entire body expressed in terms of a
resolution passed by the General Body, then the plea that
D the same should be ignored and bye-passed even if the
same has been challenged by a handful of members on
speculative allegation and assumption contrary to the
reasons recorded in the Minutes Books on the plea of
mala fide, without any evidence, would be illegal and
E arbitrary to accept being contrary to the rule unless the
alleged malicious action is writ large on the alleged
decision and is challenged by majority of the members.
If a decision is taken by majority of the members of a
Cooperative Society or any other body under a statute
F in terms of the Rule, it cannot be over-ruled by minority
on the ground of mala fide or fraud unless it has passed
through a strict proof of evidence. It is a well known
dictum that mala fide is always easy to allege but difficult
to prove as the same cannot be held as proved relying
G on assumption, speculation and suspicion. [Para 35]
[633-G-H; 634-A-C]
11. In the instant matter existing 10 members of the
society have practically reduced the Co-operative
Society to a defunct society as all members except 10 out
H of 278 have finally withdrawn. Hence, the auction sale at
J.N. CHAUDHARY & ORS. ETC. v. STATE OF
601
HARYANA & ORS.
their instance, although the said auction sale had taken
place in view of the majority support of the General Body
resolution which was conducted under the supervision
of the Board of Administrators appointed by the
Registrar, Co-operative Society and the Sales Committee
is difficult to scrap it as illegal in spite of the
overwhelming material relied upon by the High Court
which has upheld the auction sale. Thus, in a matter
where the decision has been taken collectively by the
General Body reflected in the form of a resolution passed
A
B
by the General Body, it would be unjust and inappropriate
C
to nurture a lurking doubt and keep suspecting the
· decision by entertaining the version of a handful who
, might be disgruntled or might be genuine but would be
difficult to be gauged by any court so as to over-rule the
General Body resolution and accept the view of the
minority based on no evidence except assumption and
speculation. If the instant matter is viewed meticulously,
it is clearly obvious that the appellants have expected the
court of writ jurisdiction to enter into the correctness and
validity of the auction sale essentially by expecting the
Court to draw inference without evidence that the auction
sale was not bona fide as it did not fetch the desired
value of the land contrary to the materials available on
. recqrd. Plethora of circumstances have been related to
establish the same which clearly are in the realm of
conjecture and speculation, yet the Single Judge and the
Division Bench have both scrutinized and considered the
same and have recorded a finding against the appellants
which cannot be held to suffering from perversity being
contrary to the existing materials before the Court which
have been relied upon. Thus, the validity and correctness
of the General Body resolution in view of which the land
was put to auction sale cannot be allowed to be assailed
specially when the price/alleged under valuation of the
land in the auction sale no longer survives as the High
Court has allowed the value of the land to be increased
D
E
F
G
. -' . . .
602
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A by increasing it from Rs. 40 lakhs to Rs.70 lakhs per acre
which has been ordered to be paid along with 6 %
interest. The appellants have not furnished any material
as noted by the High Court that the cost of the land in
the year of the date of auction which is 2003 was more
· 8
than Rs.70 lakhs per acre so as to offer a cause to
interfere even if it were to be interfered in the interest of
equity, justice and fair pla}l.specLally wbefl the circle rate
of the land il'l the year 2003 when ·file auction was held
was Rs.12 lacs per acre onl11 Hence, the endeavour of
C the appellants that the auction sale should be set aside
and the land be revived to the society cannot be
. entertained in absence of proof of mala fide contrary to
ttie existing materials on record on the basis of
speculation, assumption and inference urged by the
0
appellants~ [Paras 36 and 37] (634-D-H; 635-A-G]
12. Assuming for a while although not conceding that
i the land were to be reverted to the co-operative society
· for any reason whatsoever at this stage after 11 years of
the sale during which the appellant Society has practically
E ceased to ~ist where all members except ten out of 288
are left, it is obvious that the land cannot be reverted to
the original members who have taken their refund. In that
event, the appellant-society through a handful of
members numbering ten is bound to indulge in trading
F of the land by inducting new members quoting new rates
at their instance clearly sacrificing the very spirit of a cooperative sodety as the land cannot be marketed even ·
by the defunct Co-operative Society at the old rate which
land had been purchased out of the contribution made
G by the erstwhile 288 members out of which only 10 are
now left into the fray who had nev~r even objected to the
General Body Resolution approving sale of the land nor
challenged the auction sale in the year 2003 when the
auction was held. There is no illegality or infirmity in the
H impugned. judgments and orders passed by the sir.igle
J.N. CHAUDHARY & ORS. ETC. v. STATE OF
603
HARYANA & ORS.
Bench as also the Division Bench concurrently refusing
A
to set aside the auction sale held 11 years ago in the year
2003 at the instance of a Co-operative Society which has
practically been rendered defunct and thus ceased to
exist apart from the other weighty reasons, [Paras 38 and
39] [635-G-H; 636-A-E]
B
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.
4854-4855 of 2014.
From the Judgment and Order dated 27.08.2010 of the.
High Court of Punjab & Haryana at Chandigarh in LP.A. Nos.
C
215 and 216 of 2007.
WITH
C.A. Nos. 4856-4857 of 2014
P. S.'Patwali, C. A. Sundaram, Narender Hpoda, AAG,
Ashok K. Mahajan, Rajan Mukherjee, Ashbk K. Mahajan
(Petitioner-In-Person), Jaladhar Das, Rashmi Virmani, Bina
Gupta, Mukta Dutta, Shreyansh Mardia, Rakhi Ray, Naresh
D
Bakshi, Dr. Monika Gusain for the Appearing Parties.
E
The Judgment of the Court was delivered by
GYAN SUDHA MISRA, J. 1. Delay in SLP (civil) 475859/2011 condoned.
2. Leave granted in both sets of special leave petitions.
3. These appeals by special leave have been preferred
against the judgment and order dated 27.08.2010 passed by
F
the High Court of Punjab and Haryana at Chandigarh in Letters
G
Patent Appeal Nos.215 and 216 of 2007 (O&M) whereby the
Division Bench of the High Court dismissed both the letters
patent appeals by a common judgment and order which is
under challenge herein.
4. The letters patent appeals which stood dismissed arose
H
604
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A out of two writ petitions filed in the High Court before the learned
Single Judge bearing writ petition Nos.6491/2005 and 7742/
2005 which were filed challenging the orders dated 13.12.2002,
05.09.2003 and 19.11.2004 in the High Court at Chandigarh
which were the Suspension Order, Removal Order of the
B erstwhile Committee and 9rder of the Dy. Registrar who
dismissed the appeal against removal. The facts stated therein
disclosed that on 04.03.1994, a co-operative society in the
name of Mount Everest Co-operative Group Housing Society
was formed and constituted under the Haryana Co-operative
C Societies Act, 1984 wherein 288 persons became members
of the Society upto 1995-96 and contributed a total sum of
approximately Rs.7.5 crores towards the funds of the Society
which were to be utilised for purchase of the land. In the year
1996, the Society purchased approximately 10 acres 4 kanals
14 marlas of land in Village Wazirabad as well as Hyderpur
D Vi ran with the funds contributed by the members of the Society
for achieving its objects. At the time of formation of the Society,
a Managing Committee had also been constituted with Mr. R.P.
Gupta as Secretary but the same was· suspended on
23.10.1996 by the then Assistant Registrar Co-operative
E Societies, Gurgaon on the allegations of financial irregularities
and a Board of Administrator was appointed. However, the
Deputy Registrar reinstated the Managing Committee of the
society on 30.08.1999. Subsequently, on 28.05.2000, a
General Body Meeting of the society took place in which fresh
F election was held and a new Managing Committee was
constituted wherein the petitioner No.1 Captain Shri A.K.
Mahindra (since resigned during pendency of this appeal) was
elected as Member of the new Managing Committee and later
on was entrusted with the work of Honorary Secretary of the
G Society in place of the previous Secretary Shri R.P. Gupta.
5. It is the case of the petitioner/members of the Society
that the new Managing Committee after taking charge and upon
inspection of the records of the Society found that the earlier
H Managing Committee had indulged in large scale malpractices
J.N. CHAUDHARY & ORS. ETC. v. STATE OF
605
HARYANA & ORS. [GYAN SUDHA MISRA, J.]
B
and in order to investigate the same, aR internal committee was
A
constituted to go into the land records, finances as well as other
aspects of the Society. This internal committee therefore
conducted an intensive enquiry and submitted report which
highlighted gross irregularities by the previous Managing
Committee in the purchase of land, utilisation of members fund,
expenditure on account of day to day expenses and expenses
incurred on land and site development etc. This audit was
conducted for the period 1993 to 2001 when the Managing
Committee of the society stood suspended and the Board of
Administrators was in-charge of the affairs of the· Society. c
Finally, when the audit report was submitted in March, 2002,
the Managing Committee which had been constituted on
28.05.2000 with A.K. Mahindra as Secretary decided to lodge
an F.l.R. against the members of the earlier. Managing
Committee when R.P. Gupta was the Secretary and the F.l.R.
D
finally was lodged with the Police Station DLF, Gurgaon after
which investigation was conducted and arrests were made.
After investigation, charge sheet was also submitted in the
criminal courts but as per the charge sheet, no allegation was
found against any members of tne then Managing Committee
E .
except Mr. R.P. Gupta who was a member and Honorary
Secretary of the Society from its inception until the new
Honorary Secretary Captain Mahindra who was petitioner No.1
and has since resigned, took over as Secretary of the Society
in 2000.
6. When the new Managing Committee took over and
Captain A.K. Mahindra functioned as Honorary Secretary from
28.05.2000 along with another office bearer Mr. Ashok Sharma
F
as Treasurer, special general body meeting of the society was
held on 02.06.2002 in which'the affairs and conditions of the
G
society were discussed. In the meeting, the members were
apprised that large scales and glaring misappropriation of funds
took place between 1994 and 2000 and it was resolved that
the only option left before the Society was to sell the land at
... ··-----
606
SUPREME COURT REPORTS
[2014] 6 S.C.R.
A
the best possible market price so as to refund the contributions
made by the members. The General Body of the Society
decided to sell off the land for several reasons recorded in the
minutes which are as follows:
(Reasons for General Body to decide for auction sale of
B
theland)
c .
D
E
F
G
H
"(i)
That 10.69 acres of land bearing KhasraNos.1692,
1997, 1696, 1677, 1678 and 1679 stood
registered and mutated in the name of the Society
which were in possession of the Society. It could
be further noted that out of this land, around9 acres
(3.5 acres in Khasra Nos.1977, 1678 and 1679 and
5.5 acres in Khasra Nos.1692, 1696 and 1697)
were under dispute/litigation in the District Court at
Gurgaon and the clear and undisputedland with the
society was around only 1.69 acres.
(ii)
The General Body further noted that another 4.5
acres of land marked in yellow colour bearing
Khasra Nos.1677,1678, 1679, 1695, 1694, 1696,
1698,21, 20 and 27 also were under dispute/
litigation. It further transpiredto the General Body of
., the Society thatthe land in Khasra Nos.1977, 1678,
·1579 measuring around 3.5 acres were
neverpurchased by the co-operative societiesand
there were no dispute/litigationgoing on with the
Society as this landwas never the land of the
Society. Thus, out of the total land measuring 4.5
acressaid to .be in dispute only around 1.1 acres
in different Khasra Numbers was in dispute in
regard to which cases weregoing on in the District
Courts, Gurgaon.However, the Society further noted
that 6 this land had been purchased byanother
Society namely Saraswati Kunjwhose registration
was in progress. The General Body of the Society
further_ noted that these facts were available on
J.N. CHAUDHARY & ORS. ETC. v. STATE OF
607
HARYANA & ORS. [GYAN SUDHA MISRA, J.)
record after checking/verifying various records with
A
the revenue department with the help of Patwari/
Tehsildar and the Advocate, all of whom met a
number of times. Consequently, the Society was
given to understand that only a few days earlier to
the General Body Meeting the land of the Society
B
had been surveyed by the Government alongwith
other vacant land with a viewto acquire it i.e. the
acquisition processhad been set in motion. It was
further noted by the General Body of the Society that
in view of purchase of vaca_pt land ,round c
Saraswati Kunj theSociety of the petitioners. had
practicallybeen surrounded/ encircled"
••
7. In view of the aforesaid considerations taken note of in
the General Body meeting of the Society held on 02.06.2002, . 0
it was decided by the General Body to dispose of the land of
the Society and the Honorary Secretary of the Society Captain
A.K. Mahin.dra and Ashok Sharma, Treasurer were authorized
to initiate proceedings for disposal of the land. In pursuance to
the general body resolutions, a letter dated 02.07.2002 was
sent to the Registrar, Co-operative Societies seeking
E
permission to sell the land. In the meanwhile and for the purpose
, of ascertaining the correct market rate of the land, Captain A.K.
Mahindra himself wrote a letter to the Tehsildar, Gurgaon
ascertaining the correct market rate of the land to be disposed
of. In response to the same, the Tehsildar, Gurgaon quoted the . F
market rate to Rs.40 lakhs per acre by way of Endorsement
dated 14.06.2002. The Honorary Secretary of the society/
Captain A.K. Mahindra then wrote a letter further on
02.07.2002 to the Registrar, Co-operative Societies, Haryana
seeking permission to dispose of the land at the earliest for
G
an amount of Rs.4.2 crores. The contents of the aforesaid letter
dated 02.07.2002 written by Captain A.K. Mahindra are as
follows:
H
608
SUPREME COURT REPORTS
(2014] 6 S.C.R.
A
"To
B
c
D
E
The Asstt. Registrar,
Cooperative Societies
Gurgaon, Haryana
Sub: Permission for disposal/sale of society land.
Sir,
With reference to the letter No.2298 dated
1.7.02 received
from
the
office of the
Dy.
Registrar,Gurgaon, we are enclosing the u/m documents :
(a)
Summary of the land as per registersand
jamabandi submitted is enclosed asdes.ired. As
per this summary the total land with the society is
84 kanals 4 marlas, and
(b)
Rate of land in the area where the society land is
situated is Rs.40 lakhs(Rs. Forty Lakhs) per acre
as obtainedfrom the concerned patwaris office. A
photo copy of this letter is enclosed. As per this the
total value of land is Rs.4.20 crores (Rs. Four
Crores Twentylakhs Only).
Kindy grant us the necessary permission to dispose off the
F
land at the earliest and oblige.
Thanking you,
Sd/-A.K. Mahindra,
Hony. Secretary, Mt. Everest Coop. Group
Housing Societies Ltd."
8. However, the Registrar, Co-operative Societies before
- a dispute had been raised regarding removal of the office
.~rs of the co-operative societies passed a suspension
o, ..'.t:Jr on 13.12.2002 under Section 34 (2) of the Haryana Co·
J.N. CHAUDHARY & ORS. ETC. v. STATE OF
609
HARYANA & ORS. [GYAN SUDHA MISRA, J.]
operative Societies Act, 1984, suspending the new Managing
A
Committee of the Society based on allegations of gross and
serious irregularities as a result of which a Board of
Administrators was appointed. Thereafter, on 14.01.2003, the
Registrar, Co-operative Societies granted permission to the
Board of Administrators to dispose of the society land and the
B
Deputy Registrar, Co-operative Societies, Gurgaon formed a
Sales Committee of 5 members for selling land of the Society.
While granting permission for sale, respondent No.2/The
Registrar, Co-operative Societies appointed the following Sales
Committee of 5 members comprising inter alia of the following
C
(i)
Dy. Registrar, Co-operative Societies, Gurgaon,
(ii)
Inspector, Co-operative Societies, Gurgaon,
(iii)
Sub-Inspector, Co-operative Societies, Gurgaon.
9. It appears that in the meanwhile CWP No.2025 of 2003
was filed by Captain A.K. Mahindra and others challenging the
order of suspension of the new Managing Committee as well
D
as the order granting permission to sell the land.