# MD. MOINUDDIN AND ORS v. THE COMMISSIONER FOR COOPERATION AND REGISTRAR OF COOPERATIVE SOCIETIES AND ORS

- **Citation:** [2014] 14 S.C.R. 235
- **Court:** Supreme Court of India
- **Decided:** 2014
- **Case number:** Civil Appeal No. 5448 of 2014
- **Bench:** Surinder Singh Nijjar, Fakkir Mohamed Ibrahim Kalifulla
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/md-moinuddin-and-ors-v-the-commissioner-for-cooperation-and-registrar-of-29734
- **Pages:** 30

## Headnote

Cooperative Societies - Group-housing co-operative
society -
Initially having 28 members, rising upto 75
members - Initially land purchased with the funds provided
A
B
c
by 11 founder members - Membership of 37 members
disputed - Claim of the 11 founder members for exclusive D
right in the land, as it was purchased with the funds provided
by them -
Held: Claim by individual members is not
acceptable - Once the land was purchased by the Society,
the property vests in the Society-- It is for the Society to deal
· with the land in accordance with the co-operative principles E ·
and the objects with which the society was formed- Direction
to General Body of the Society to consider allotment of plots
to members taking into consideration their seniority.
Allowing the appeals, the Court
HELD: 1. The admission of the 37 members can
F
no longer be in controversy as it was a concluded issue.
If at all the membership of the 37 persons were to be·
cancelled, the same could have been done by applying
any of the relevant provisions in the Bye-laws of the Cooperative Society. Out of 37 members, 10 have accepted G
their refund of share capital and as on datE!, only 27 out
of the 37 remain who have returned the cheques issued
by the society. In the absence of any such valid order of
approval by the Registrar relating to the expulsion of the
235
H
236
SUPREME COURT REPORTS
[2014) 14 S.C.R.
A newly added members, there is no question of the
remaining 27 members having ceased to be the
members of the society. [Paras 29, 30 and 31][253-B-H]
2. The members, who contributed their funds to the
society, have no exclusive right to claim any share in
B the property on the ground that they made the
investments for the purchase of the iand. Such a claim
would run counter to the cooperative principles, which
is the object of the society when it came to be formed.
Once the land was purchased by the society, the
C property vests in the society. Therefore, It is for the
society to consider how to deal with the said land in
accordance with the cooperative .Principles and the
objects with which the society was formed as mentioned
in the By-Laws. It is not for the individual members to
D claim in what manner the land should be dealt with for
the purpose of distribution amongst its members.
[Paras 35 and 36][257-D-H]
3. Therefore, neither th_e founder members nor.
E those who were subsequently inducted/admitted as·
members, can claim any preference or right of allotment
in any particular manner, other than the manner i.e. after
the layout is sanctioned, the General Body would
consider the allotments of plots in favour of th.e members
F of the society by taking into consideration their seniority
as per the Bye-Laws concerning allotment of plots.
[Paras 38 and 39][258-H; 29-A, C-D]

## Text

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[2014] 14 S.C.R. 235
MD. MOINUDDIN AND ORS.
v.
THE COMMISSIONER FOR COOPERATION AND
REGISTRAR OF COOPERATIVE SOCIETIES AND ORS.
(Civil Appeal No. 5448 of 2014)
MAYO?, 2014
[SURINDER SINGH NIJJAR AND
FAKKIR MOHAMED IBRAHIM KALIFULLA, JJ.]
Cooperative Societies - Group-housing co-operative
society -
Initially having 28 members, rising upto 75
members - Initially land purchased with the funds provided
A
B
c
by 11 founder members - Membership of 37 members
disputed - Claim of the 11 founder members for exclusive D
right in the land, as it was purchased with the funds provided
by them -
Held: Claim by individual members is not
acceptable - Once the land was purchased by the Society,
the property vests in the Society-- It is for the Society to deal
· with the land in accordance with the co-operative principles E ·
and the objects with which the society was formed- Direction
to General Body of the Society to consider allotment of plots
to members taking into consideration their seniority.
Allowing the appeals, the Court
HELD: 1. The admission of the 37 members can
F
no longer be in controversy as it was a concluded issue.
If at all the membership of the 37 persons were to be·
cancelled, the same could have been done by applying
any of the relevant provisions in the Bye-laws of the Cooperative Society. Out of 37 members, 10 have accepted G
their refund of share capital and as on datE!, only 27 out
of the 37 remain who have returned the cheques issued
by the society. In the absence of any such valid order of
approval by the Registrar relating to the expulsion of the
235
H
236
SUPREME COURT REPORTS
[2014) 14 S.C.R.
A newly added members, there is no question of the
remaining 27 members having ceased to be the
members of the society. [Paras 29, 30 and 31][253-B-H]
2. The members, who contributed their funds to the
society, have no exclusive right to claim any share in
B the property on the ground that they made the
investments for the purchase of the iand. Such a claim
would run counter to the cooperative principles, which
is the object of the society when it came to be formed.
Once the land was purchased by the society, the
C property vests in the society. Therefore, It is for the
society to consider how to deal with the said land in
accordance with the cooperative .Principles and the
objects with which the society was formed as mentioned
in the By-Laws. It is not for the individual members to
D claim in what manner the land should be dealt with for
the purpose of distribution amongst its members.
[Paras 35 and 36][257-D-H]
3. Therefore, neither th_e founder members nor.
E those who were subsequently inducted/admitted as·
members, can claim any preference or right of allotment
in any particular manner, other than the manner i.e. after
the layout is sanctioned, the General Body would
consider the allotments of plots in favour of th.e members
F of the society by taking into consideration their seniority
as per the Bye-Laws concerning allotment of plots.
[Paras 38 and 39][258-H; 29-A, C-D]
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
5448of2014.
G
From the Judgment and Order dated 15.09.2009 in Writ
H
Appeal No. 798 of 2007 of the High Court of Andhra Pradesh
at Hyderabad.
WITH
MD. MOINUDDIN v. COMMNR. FOR COOPERATION & REGISTRAR OF
237
COOPERATIVE SOCIETIES [FAKKIR MOHAMED IBRAHIM KALIFULLA, J.]
C.A. Nos. 5451, 5449, 5450 of 2014
A
Conmt. Pet. No. 251 of 2011 and Conmt. Pet. No. 302
cif2010.
Mr. AT. M. Rangaramanujam, R. Basant, Jaideep Gupta,
Sr.Adv., Ms. Neha Sharma, D. Verma, AV. Rangam, Buddy B
A. Ranganadhan, GV. Giridhar, D. Mahesh Babu, Ms. Suchitra
Hrangkhawl, Amjid Maqbool, Amit K. Nain, Aditya Jain,
Ramakrishna Rao, GauravAgrawal,Anup Kumar, Ms. Neha
Jaiswal, Devvrat, Ms. Kasturika Kaumudi, Mrs. K. Sharda Devi,
Anurag Pandey, Rameshwar Prasad Goyal, Venkita c
Subramoniam T.R., Rahal Bansal, Gagandeep Sharma, Nikhil
Jain, Advs.for the appearing parties.
K. Srinivasa Rao, Petitioner- in - Person.
The Judgment of the Court was delivered by
FAKKIR MOHAMED IBRAHIM KALIFULLA, J.
1. Delay condoned. Leave granted.
D
2. In all the above appeals and the connected contempt
petitions, the issue concerns with the members of a cooperative
E
society called 'The Valtas Employees Cooperative House
Building & Construction SoCiety Ltd. No.TAB 508'. It is a classic
case where the members of the above referred to society got
themselves entangled in a series of litigations and to add to
this, some orders were passed by the officials of the F
Department of Cooperative Society of Andhra Pradesh, which
has created pandemonium byvirtue of the divergent orders
passed at different points of time and, therefore, requires the
consideration of this Court to pass appropriate orders and
put an end to this complicated litigation once and for all. The G
entire dispute amongst the members of the society pertains
to a piece of land, which was purchased by the society in
pursuance of its object of getting some benefit for its members
for providing housing accommodation. Before delving deep
into the controversy, raised in this litigation, it is necessary to
H
238
SUPR~ME COURT REPORTS
[2014] 14 S.C.R.
A
set out the different Special Leave Petitions filed before us,
wherein orders have been challenged by different Appellants
which ultimately, as pointed out by us, pertains to the issue.
relating to the land purchased by the society for providing
housing accommodation.
B
3. Civil Appeal(@ SLP(C) No.4679 of 2010) has been
filed challenging the Division Bench order of the Andhra
Pradesh High Court dated 15.09.2009, passed in WritAppeal .
No.144 of 2007 by which the High Court dismissed the Writ
Appeal filed by the Appellant herein which is the very society,
C namely, the Valtas Employees Cooperative House Building
Society (hereinafter referred (ci..'the society'). Civil Appeal(@
SLP(C) No.3105 of2010) hasbeen filed by three individuals,
namely, Shri M. Balaji, Bilque:~~ Sultana and Kanda Sureka,
who were the Appellants in W~itAppeal No.809 of 2007 before
D the Division Bench of the Andhra Pradesh High Court and
whose writ appeal was also dismissed by the High Court in its
common judgment dated 15.09.2009, along with Writ Appeal
No.144of2007.
E
4. SLP (CC) No.10023 of 2011 has been preferred by
four individuals, namely, Nerella Venkateswarlu, S Jagadish,
PasupulaAnjaneyulu and Shanigarapu Ramesh seeking leave
of this Court to file an appeal,against the final judgment and
order dated 15.09.2009 in Writ Appeal No.144 of 2007, as
F well as Writ Appeal (MP) Na;2.325 of 2009 in the said writ
appeal. The Division Bench while dismissing the Writ Appeal
No.144 of 2007, by its common order, also dismissed the
(.
:
above Miscellaneous Petition No.2325 of 2009 by which the
Petitioners wanted to get themselves impleaded as parties in
G the Writ appeal.
H
5. Civil Appeal (@ SLP(C) No.692 of 2010) has been
filed by five persons, namely, Md. Moinuddin, A Narasimha,
Md. I. Shareef, Khalander Hussain and R. Shankar, seeking
to challenge the common judgment dated 15.09.2009 of the
MD. MOINUDDIN v. COMMNR. FOR COOPERATION & REGISTRAR OF
239
COOPERATIVE SOCIETIES [FAKKIR MOHAMED IBRAHIM KALIFULLA, J.]
Division Bench of High Court of Andhra Pradesh in Writ Appeal A
No.798 of 2007, along with WritAppealNos.144 of 2007 and
809 of 2007.
6. To narrate the facts in brief, the Valtas Employees
Cooperative House Building & Construction Society Ltd. was
registered on 29.10.1982 under the Andhra Pradesh
B
Cooperative Societies Act 7of1964. Its address was 4-161,
Madhavi Nagar, Firozguda, Hyderabad. Its operations were
confined to the municipal limits of Hyderabad. The object of
the society is to carry on activities for the benefits of its
members in the field of building including buying, selling, hiring,
C
letting and developing land in accordance with the cooperative
principles and also to give loans to its members for construction
of dwelling houses. Under Bye-Law No.4, the share capital of
the society was to be made up of 5000 shares of Rs.100 each.
Bye-Law No.5 prescribes the eligibility of a member. Bye-Law D
No.6 deals with the procedure as to how an eligible employee
ofVoltas can become a member of the society. Bye-Law No.8
with its sub-clauses (i) to (iv), prescribes the disqualification
for membership. Bye-Law No.12 prescribes the procedure for
withdrawal of the share capital. Bye-Law No.16 describes as
E
to how a member can be expelled from the society. Bye-Law
No.17 lists out the various sources by which the society can
ordinarily obtain funds. Bye-Law No.22 states the maximum
period up to which the Managing Committee can function and
the consequences of the proceedings becoming invalid on
F
account of any vacancy or vacancies in the Committee, which
remained unfilled. The powers of the Managing Committee
has been set out in Bye-Law No.28 and sub-clause (d) of ByeLaw No.28 empowers the Managing Committee to admit
members and allot shares. Bye-Law No.36 describes the
G
powers of the General Body and the manner in which the
General body is to be convened. Sub-clause (vi) empowers
the General Body to deal with the expulsion of a member. ByeLaw No.37(b) makes it clear that the General Body Meeting
should consist of all the members of the society.
H
240
SUPREME COURT REPORTS
[2014] 14 S.C.R.
A
7. Keeping the abovesaid prescriptions in the Bye-Laws,
when we proceed to analyze the various facts involved, we
find that the society in the first instance had a membership of
28 members at the time of formation of the society in the year
1982, which rose to 43 as on 30.06.1982 and gradually the
B membership went up to 75 as on 31.03.1997, when 37
members stated to have got admitted in the year 1996. In fact.
the whole controversy pertains to the admission of those 37
persons as members whose aspirations to get an allotment in
the land originally purchased with the funds provided by the 11
c founder members gave scope for this controversial and
complicated litigation amongst themselves. In the year 1982,
the society purchased a land measuring 1 acre 14 guntas in
Survey No.233 of Thokatta Village. The entire land cost was ·
paid by 11 of the founder members.
D
8. In one of the statements placed before this Court,
E
discloses that as on 30.06.1984, the advances collected from
the members towards the land cost were Rs.64,000/-.and that
the contributors were 33 in number, two of whom stated to have
got back the advance deposited by them with the society.
9. Be that as it may, the Deputy Registrar of Cooperative
Societies Housing in a letter dated 25.09.1996, addressed to
the President and Secretary of the Society, referred to a
representation received from Shri Srinivasa Rao and others.
F alleging that the Managing Committee in their Meeting refused
to enroll them as members of the society. This was referred to
the Cooperative Sub-Registrar by the office of the Deputy
Registrar. On receipt of the report of the Cooperative SubRegistrar, in the said communication dated 25.09.1996, the
G Deputy Registrar indicated to the society that the .request of
Shri Srinivasa Rao and others are genuine and that they are
eligible to become members of the society and, therefore, they
should be admitted as members. The admission of their
membership was also directed to be intimated to the office of
H the Deputy Registrar.
MD. MOINUDDIN v. COMMNR. FOR COOPERATION & REGISTRAR OF
241
COOPERATIVE SOCIETIES [FAKKIR MOHAMED IBRAHIM KALIFULLA, J.]
10. In the minutes of the Executive Committee Meeting, A
stated to have been held on 03.10.1996 at6 p.m., it was stated
that as per the agenda dated 18.09.1996, the matter of
admitting the 37 new applicants into the society was thoroughly
discussed and unanimously decided to admit them as
members. The said minutes, however, state that with the
B
cooperation of new entrants, a suitable piece of land can be
purchased for the interested new members and that the 37
members or any other member who wish to share a plot will
be accommodated in the land to be purchased as a second
venture of the society.
C
11. By a letter dated 04.10.1996 addressed to the Deputy
Registrar, Housing, the society confirmed the above resolution
passed admitting the 37 new applicants as members in the
Meeting held on 03.10.1996 .. Subsequently, the General Body
Meeting was stated to have been held on 04.04.1997 at 6 D
p.m. in the society's premises. The agenda was to ratify the
admission of the new members and also to explore the
possibilities for a new venture. The resolution relating to
ratification was passed and it was ratified. The other issues
were discussed in the General Body Meeting. It was E
deliberated that since the new members did not join at the
time when the land was purchased and for purchasing the said
land the contribution was made only by the 11 members who
continued to be members on the date of the General Body
Meeting, they alone will have the right to get allotment in the
F
said lands.
12. By proceedings dated 17.04.1997, a general
direction under Sec.lion 4(2) of the Andhra Pradesh
Cooperative Society Act, 1964 (hereinafter referred to 'the Act') G
was issued by the Registrar of Cooperative Societies, which
inter alia contained a direction that no society shall admit any
new members to be in waiting in service, except to the extent
of maximum of 1 oo/o of members provided with the plots at
any given time. It was further directed that no member of the .H
242
SUPREME COURT REPORTS
(2014] 14 S.C.R.
A society, who is not allotted a house or house site, shall be
eligible to vote in the ensuing elections unless he completes
one year as a member in the society. The electoral authorities
were directed to take into consideration the said aspect while
preparing the electoral roll of the members of the society. By
B virtue of Section 4(2) of the Act, all the cooperative societies
were directed to comply with the above directionscPursuanf
to the general direction issued on 17.04.1997, the Deputy
Registrar came forward with.a fresh communication to the
society dated 01.12.1998, stating that the instructions issued
C by its office in its letter dated 25.09.1996, stood withdrawn
with immediate effect. Closely followed by that, by a
communication dated 20.07.1999, the members who were
admitted in the Meeting held on 03.10.1996 were informed
that subsequent to their admission, a resolution was passed
D in the committee Meeting held on 16.07.1999 to expel all the
37 members. The membership fee of Rs.100 was also returned
in theform of a cheque. The said letter dated 20.07.1999 made
a reference to a Writ Petition, namely, W.P. No.3720of1999,
filed by Mr. K. Srinivasa Rao, challenging the Deputy
E
Registrar's direction dated 01.12.1998, which was stated to
have been dismissed by the learned Single Judge of the High
Courton 13.07.1999.
13. As against the order of the Single Judge dated
13.07.1999, in W.P. No.3720of1999, Sririivasa Rao preferred
F a Writ Appeal No.1056 of 1999. The Division Bench passed
G
H
the following order in the said Writ Appeal:
"In view of the peculiar facts and circumstances, the
observation of the learned single Judge that the petitioner
. has not been adversely affected by the withdrawal of the
instructions cannot be sustained as has been
demonstrated by the subsequent order passed by the
society, which has been placed on record in this appeal.
In our considered view and the observations made
above, the order dated 20.7.1999 passed during the
MD. MOINUDDIN v. COMMNR. FOR COOPERATION & REGISTRAR OF
243
COOPERATIVE SOCIETIES [FAKKIR MOHAMED IBRAHIM KALIFULLA, J.]
pendency of the appeal is liable to be set aside and it is
A
ac~ordingly set aside. In view of the fact that the
membership of the petitioner-appellant was cancelled
without taking a decision on merits, it is left open to the
society to decide with respect to the membership of the
petitioner- appellant on merits in accordance with law B
and without taking into consideration the instructions
issued by the Deputy Registrar or the Registrar of cooperative Societies and after hearing the appellant.
The writ appeal is disposed of accordingly. No costs."
25 other members who were identically placed like that
of Mr. Srinivasa Rao, filed Writ Petition No.18294 of 1999. A
Single Judge of the Andhra Pradesh High Court relying upon
c
the Division Bench order dated 02.08.1999 in Writ Appeal
No.1056 of 1999, set aside the proceedings of the Society D
dated 20.07 .1999 and directed them to follow the directions
of the Division Bench referred to above.
14. Thereafter, the society issued a show cause notice
dated 06.10.1999 to the 37 members, wherein after making
reference to the· order of the Division Bench in Writ Appeal
E
No.1056 of 1999 dated 02.08.1999 and the order dated
01.09.1999 in Writ Petition No.18294of1999, called upon
the members to show cause as to why they should not be
expelled in as much no land is available to admit any member
to the society. That apart, at the instance of one K. Sivarama
F
Raju and C. Viswam, a Writ Petition in W. P. No.11268 of 2000
was filed, who claimed to be the founder members. The said
writ petition was disposed of by a Single Judge oftheAndhra
Pradesh High Court by order. dated 18.11.2000, in which
reference was made to the order of the Division Bench in Writ G
Appeal No.1056 of 1999 and the connected Writ Petitions and
certain other Miscellaneous petitions filed in that writ petition ..
Ultimately, the learned Judge ·observed as under in the
penultimate paragraph of the judgment: .
H
244
SUPREME COURT REPORTS
[2014] 14 S.C.R.
A
"It is also urged by Sri Prasad, the learned counsel for
the applicant herein, that there are infirmities in the
electoral roll which requires that electoral rolls are
rectified. This argument is advanced on the premise that
the 37 new members ought not to have formed part of
B
the Electoral College. This contention is misconceived
and does not command consideration by this court. The
37 members, including the writ petitioners are as on date
valid members of the society not having been divested
of such membership by any formal proceedings issued
C
in due conformity with Jaw. Be that as it may alleged
deficiencies in the electoral roll are not a ground relevant
to interdict the democratic process of election to a
cooperative society. The contention is accordingly
rejected."
D
15. Yet another proceeding relating to the launching of
prosecution at the instance of the Registrar of Cooperative
Societies on the basis of the alleged misappropriation
of
societies funds was initiated and subsequently an order came
to be passed by the Government of Andhra Pradesh, Housing
E
Department dated 29.03.2004, in Memo No.2768/CH1/20039. By the said order, the Government while setting aside the
proceedings initiated by the Registrar of Cooperative Societies
also observed that the existing committee which came into
being with the support of the invalid votes of the 37 disputed
F members, who participated in the elections should be declared
as null and void and that the 37 disputed members should be
replaced to set right the affairs of the society.
16. The said part of the order dated 29.03.2004
declaring the membership of the 37 persons as invalid was
G challenged by the society by filing Writ Petition No. 7794 of 2004
before the High Court of Andhra Pradesh. By order dated
. 15.12.2006, the learned Single Judge while affirming the order
dated 29.03.2004, insofar as it set aside the proceedings of
the Registrar dated 15.01.2002 and 25.01.2002, however, held
H
MD. MOINUDDIN v. COMMNR. FOR COOPERATION & REGISTRAR OF
245
COOPERATIVE SOCIETl_ES [FAKKIR MOHAMED IBRAHIM KAUFULLA, J.]
that the findings arrived at by the State Government, insofar A
as it related to the election of the existing committee members
and allotments of plots to the 11 member have to be treated
as non est in law, since the First Respondent has gone into the
question which was not canvassed before it.
17. In pursuance of the order passed in Writ App~al 8
No.1056 of 1999 and Writ Petition No.18294 of 1999, the
Divisional Cooperative Officer, by his order dated 02.04.2004,
decided to authorize the Sub-Divisional Cooperative Officer,
Secunderabad Mand al, to convene the General Body Meeting
of the society to decide the issue of membership. The C
Divisional Cooperative Officer passed further order on
22.12.2004 and gave further directions authorizing the SubDivisional Cooperative Officer, Secunderabad Manda!, to
convene the General Body Meeting for deciding the
membership in pursuance of the orders of the High Court in
D
Writ Appeal No.1056 of 1999 dated 02.08.1999 and the order
of the Single Judge in Writ Petition No.18294 of 1999 dated
01,09.1999. Pursuant to the said direction, the date and time
for the General Body Meeting was fixed on 22.05.2005 at 11.30
a.m. Though, as scheduled, the members stated to have E
assembled on 22.05.2005, the Presiding Officer did not
commence the Meeting. Therefore, the Meeting, as directed
by the Sub-Divisional Cooperative Officer, did not take place.
Nevertheless, 15 of the members stated to have proceeded
with the Meeting and passed some resolution adverse to the
F
interest of the 37 members and forwarded the same to the
Officers of the Cooperative Society. But, by a communication
dated 04.06.2005, the Deputy Registrar of Cooperative
Society addressed the society and made it clear that the issue
of convening the General Body Meeting was re-examined by G
the Deputy Registrar and in the light of the order dated
08. 11.2000 in Writ Petition No.11268 of 2000 and the interim
order dated 26.04.2004 in Writ Petition No.7794 of 2004 it
was decided not to proceed with the proposed General Body
H
246
SUPREMECOURTREPvRTS
[2014] 14 S.C.R.
A
Meeting on 22.05.2005. The said communication also
revealed that the Sub-Divisional Cooperative Officer, who
convened the General Body Meeting, explained the said
position to the members on 22.05.2005, that there would be
no discussion on the agenda and the General Body Meeting
B would not take place. Ultimately, the so-called resolution
cl<Iimed to have been passed by 15 of the members was held
to be invalid.
18. There was also Writ Petition filed in W.P. No. 701 of
2003, wherein there was a challenge to an order oftheAndhra
C Pradesh Cooperative Tribunal in C. T.A. No.160 of 2000, by
which the Tribunal set aside an award A.R.C 3 of 1998 dated
10.03.2002, passed by the Joint Registrar. The said Writ
Petition came to be dismissed upholding the order of the
Tribunal. The sum and substance of the order of the Tribunal
D was that the so-called allotment of lands, to the promoting
members, anticipating the approval of the layout was not valid
and, therefore, the resolution passed by the Society allotting.
the plots to the founder members, subject to the approval of
the layout was held to be arbitrary and illegal. The Writ Petition
E preferred by the so-called founder members was dismissed
with an observation that the said order would not preclude the
General Body from considering the allotment of plots in favour
of the members of the society after the layout is sanctioned by
taking into consideration their seniority as per the Bye-Laws
F concerning allotment of plots.
19. Having noted the development after the emergence
of #le society and after its registration, as well as the issue
relating to the admission of the new members to the society
and the various orders passed by the officers of the department
G of the society, as well as the High Court, before examining the
correctness of the orders impugned in these appeals, it will
be necessary to note the provisions of the Bye-Laws to
ascertain as to the rights of the original members and the
members who claim to have been subsequently admitted into
H
MD. MOINUDDIN v. COMMNR. FOR COOPERATION & REGISTRAR OF'
24 7
COOPERATIVE SOCIETIES [FAKKIR MOHAMED IBRAHIM KALIFULLA, J.]
the society. There is no controversythat the object of the society A
is for the benefit of getting housing facility for its members in
accordance with the cooperative principles. The object has.·
been succinctly stated in Bye-Law No.2. As far as membership
is concern.ed, !he eligibility has been prescribed in Bye-Law
No.5, which reads as under:
B
"MEMBERSHIP ELIGIBILITY:
5. Any individual who has attained majority; and who is
competent to contract and of sound mind and who did
not have any house in city in his name or in the name of c
his wife or minor children and who is not a member ·in
any other house building society in the same area shall
be eligible for admission as member, minor may be
admitted as associate member through their legal
guardians, but they shall not be eligible to vote or have 0
any interest in profit."
20.A reading of Bye-Law No.5 disclose that in order to
be eligible to become a member, an individual should be a
major, he should be of sound mind, lie should not have any .
house in the city in his name or in the name of his wife or minor E
children and that he should not be a member of any other house
building society in the same area. If the above conditions are
satisfied, he would be eligible to become a member.
21. Though, the Bye-Laws do not specifically state that
such an individual should be an employee of the Valtas
F
Company, since the very society was formed by the employees
of Valtas and the name itself makes it clear that the society
was formed by the employees of the Valtas for providing
housing facility, it is imperative that the individual should be an
employee of Valtas. As per Bye-Law No.6 read along with ByeG
Law No.4, one who seeks to become a member should be a
shareholder and the cost of such share has been fixed at
Rs.100, made up of 5000 shares, which would form the capital
of the society. When an application for admission as a member
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A
for allotment of the share is made to the Secretary of the society
in the prescribed form, such an application should be disposed
of by the Managing Committee, who has been empowered to
grant admission and allot shares or refuse the sane. Jn the
event of refusing to allot a share, reasons will have to be
B adduced. Bye-Law No.6(b) also states that if no such decision
is communicated within the prescribed time, then within 50
days from the date of application for membership, the society
shall be deemed to have admitted such applicant as a member
on the date of expiration of 60 days from the date of application
c and the Secretary should give effect to such admission. Once
a ·person is admitted as a member of the society by virtue of
Bye-Law No. 7, he will be eligible for the services of the society.
22. After the membership of a person into the society is
confirmed, his exit from the society can be either by way of
D disqualification as provided under Bye-Law No.~, or by way
of withdrawal of share capital under Bye-Law No.12 or by way
of an expulsion under Bye-Law No.16. If the exit of a
membership is by way, of a disqualification, it should come
· under any one of the sub-clauses (i) to (iv) of Bye-Law No.8. If
E
it is by way of withdrawal of share capital, as provided under
Bye-Law No.12, then again the stipulation contained in the said
Bye-Law should be fulfilled. If a member is to be expelled,
specific procedure has been prescribed under Bye-Law
No.16( 1) and in the event of any resolution for expulsion having
F been passed as prescribed under Bye-Law No.16(1), such
expulsion should have the approval of the Registrar of
Cooperative Societies under Bye-Law No.16(2). Therefore,
an expulsion of a member cannot be cl<::iimed to be made by a
mere stand taken by the-society. There must be an order of
G approval of the Registrar of.Cooperative Society confirming
the expulsion resorted to as proscribed under Bye~Law
No.16(1) or otherwise, such an expulsion of membership
claimed by the society cannot be valid.
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MD. MOINUDDIN v. COMMNR. FOR COOPERATION & REGISTRAR OF
249
COOPERATIVE SOCIETIES (FAKKIR MOHAMED IBRAHIM KALIFULLA, J.]
23. One other provision in the Bye-Law to be noted is A
the term of the Managing Committee, which has been
prescribed under Bye-Law No.22. It states that such term shall
be for a period of 3 years and that any proceedings of the
Managing Committee should be invalidated on account of any
vacancy or vacancies of the Committee, which may remain
B
unfilled. Under the said Bye-Law, it is stipulated that all the
members of the committee would vacate their office on the
expiry of the term of the office of the committee. These are all
the salient features in the Bye-Laws. Apart from the above
specific provisions, under Bye-Law No.36, it is stated that the c
ultimate authority in all matters relating to the administration of
the society, shall vest in the General Body. Even an expulsion
of a member is one of the specific powers to be exercised
only by the General Body.
24. Keeping the abovesaid prescription in the Bye-Law,
D
when we examine the emergence of the society and the
subsequent events, it is not in dispute that at the time of
formation of the society, the founder members were 28 in
number in the year 1981. A list of members, as from the year
1981-82 onwards, disclose that as on 30.06.1982, the E
membership went up to 43, which remained constant, though
there was a slight increase in the membership up to 56
sometime in the year 1988.As on 31.03.1997, the total number
of members were 75. Be that as it may, when the society
purchased the land admeasuring 1 acre 14 guntas in Survey
F
No.233 of Thokatta Village in the year 1982, it is stated that
the cost of the land was incurred by 11 of the members of the
society, namely, M. Balakrishnan, K. Sivarama Raju, V.
Sivaramakrishna, P.S. Sastry, N. Suryaprakash Rao, K.
Bhaktavatsalam, T.S. Benerjee, T.N. Shankar, C. Viswam, U.
G
Talapathi and K.G.K. Murthy. It is also mentioned in one other
statement that the land cost was collected from the other
members in the year 1983-84, as per which statement the total
investment was in a sum of Rs.64,000/-.
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25. While the purchase of the land came to be made, as
above, by the society and the process of providing housing
facility was being examined and was pending till the year 1996,
the issue relating to the admission of 37 persons as members
of the society cropped up. Therefore, before arriving at any
B definite conclusion as to how the housing facility in respect of
the land already purchased, namely, 1 acre and 14 guntas in
Thokatta Village is to be dealt with, we will have to steer clear
of the membership of the society, in particular about the claim
of the 37 persons as having become members of the society,
. C who also claim their right to have a share in the land already
purchased by the society for distribution in the form of housing
accommodation.
26. Insofar as the said claim of the 37 members is
concerned, the first document is the letter dated 25 .09 .1996
D of the Deputy Registrar of Cooperative Society, addressed to
the society by which the society was requested to admit them
as members and intimate the same to the Deputy Registrar.
Pursuant to the said letter, the minutes of the Executive
Committee Meeting of the Society dated 03.10.1996, disclose
E that as per the agenda dated 18.09.1996, the matter relating
to admission of 37 applicants was thoroughly discussed and
unanimously decided to admit them as members. The minutes
of the said Meeting, however, stated that their claim for a share
in the land already purchased, cannot be considered as such
F
a claim would be considered 1n a different venture. Confirming
the admission of those 37 members, a comriiunication was
also sent to the Deputy Registrar by the society on 04.10.1996.
That apart, there was a General Body Meeting held on
04.04.1997, which discloses that the admission of the 37
G members to the society was also ratified by the General Body,
though their claim in respect to the land purchased in the
Thokatta Village was not acceded to in the General Body.
'
27. From the above proceedings, it must be stated that
the admission of the 37 members to the society was a
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MD. MOINUDDIN v. COMMNR. FOR COOPERATION & REGISTRAR OF
251
COOPERATIVE SOCIETIES [FAKKIR MOHAMED IBRAHIM KALIFULLA, J.]
concluded issue as on the date of the General Body, namely,
A
04.04.1997. However, the offices of the Cooperative
Department took a sudden u-turn in the year 1998, when the
Deputy Registrar issued a communication to the society on
01.12.1998, stating that the instructions issued by it in its letter
dated 25.09.1996 was to be treated as withdrawn based on
B
the proceedings of the Registrar of Cooperative Societies
dated 17. 04.1997. It will have to be stated that the said stand
of the Deputy Registrar Cooperative Societies is not
permissible in law and we do not find any support for such a
stand either based on any Statutory Provision or any other rule c
or regulation. That apart, when based on the said
communication dated 01.12.1998, the society wanted to
withdraw the membership of the 37 persons, the issue went
before the High Court by way of Writ Petition No.3720of1999,
which was rejected by the learned Singh Judge in Writ Appeal D
No.1056 of 1999, the proceedings of the society dated
20.07 .1999, withdrawing the membership, was set aside with
the observation that it is open to the society to decide one way
or the other with respect to the membership of one of the 37
members. The said conclusion was followed in respect of 25
E
other persons among the 37 memb.ers when their Writ Petition
in W.P. No.18294 of 1999 was decided by order dated
01. 09.1999, wherein the conclusion in Writ Appeal No.1056
of 1999 was followed.
28. Though, the society wanted to initiate proceedings
F
by issuing show cause notice on 06.10.1999, the fact remains
thatthe said show cause notice was not pursued. On the other
hand, in Writ Petition No.11268 of 2011 by order dated
18.11.2000, the High Court virtually declared that the 37
1
members, including the writ petitioners, had become valid
G
members as on the date of the order as society not having
divested of such membership in any formal proceedings in
due conformity with the law. It was stated in the said order that
any alleged deficiencies in the electoral roll cannot be a relevant
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(2014] 14 S.C.R.
A ground to interdict the democratic process of elections to a
cooperative society and the contention that the 37 new
members cannot form part of the Electoral College was
rejected. It must be pointed out that the said order of the
learned Single Judge dated 18, 11.2000 passed in W.P.
B No.11268 of 2011 was not varied at any point of time in any
subsequent proceedings, either in an appeal or by any other
valid order passed by the society. In fact, subsequently, while
dealing with an issue relating to the prosecution of the
members for alleged misappropriation when the State
c Government passed an order on 29.03.2004, it was
innocuously stated that the disputed membership of 37 persons
cannot be accepted, as their membership was not valid. The
said order was challenged in a separate writ petition in W.P.
No. 7794 of 2004 and the said part of the order was also set
D aside by the High Court in the order dated 15.12.2006. Here
again it must be stated that the said order in W.P. No.7794 of
2004 has become final and conclusive as the same was not
challenged in the manner known to law. The said writ petition
was filed by the society itself. The net result was that by virtue
E of the orders passed in W. P. No.11268 of 2000 dated
18.11.2000 and the order dated 15.12.2006 in W. P. No. 7794
of 2004, the validity of membership of these 37 persons was
beyond the pale of controversy.
29. One other factor which has also to be noted is that
F belatedly, an attempt was made by the department in a
proceeding dated 02.04.2004, to deal with the validity of
membership of these 37 person by directing one of its officers,
namely, the Sub-Divisional Cooperative Officer to call for a
General Body Meeting of the society and decide the issue
G relating to the membership. Pursuant to the said proceeding,
though a General Body Meeting was called for by the said
officer and a date was also fixed as 22.05.2005, the said
Meeting was not convened, since the proceedings of the
Deputy Registrar dated 04.06.2005 made it clear the that the
H Sub-Divisional Cooperative Officer who convened the General
MD. MOINUDDIN v. COMMNR. FOR COOPERATION & REGISTRAR OF
253
COOPERATIVE SOCIETIES [FAKKIR MOHAMED IBRAHIM KALIFULLA, J.]
Body Meeting, explained to the members on 22.05.2005 and A
made it clear that there would not be any discussion on the
agenda, namely, about the validity of the admission of the 37
members and that there was no General Body Meeting as
proposed to be convened. Therefore, as p9inted out by us
earlier, the admission of the 37 members based on the Meeting B
dated 03.10.1996, can no longer be in controversy as it was a
concluded issue.
30. Even while holding so, it must be noted that if at all
the membership of the 37 persons were to be cancelled, the
. same could have been done by applying any of the relevant C
provisions in the Bye-Law, namely, on the ground of eligibility
as provided under By-Law No.5 or by way of disqualification
as provided under Bye-Law No.8 or by withdrawal of share
capital as provided under Bye-Law No.12 or by way of an
expulsion as stipulated in Bye-Law No.16. As far as the
eligibility criteria is concerned, it was not pointed out before
us that any of the 37 m_embers lacked such eligibility as
stipulated in Bye-Law No.5. It was also not pointed out before
o·
us in the form of any acceptable material that any of the 37
members suffered disqualification as provided under Bye-Law E
No.8. As far as application of Bye-Law No.12 is concerned, it
must be stated that out of 37 members, 10 have accepted
their refund of share capital and as on date, only 27 out of the
37 remain, who returned the cheques issued by the society
during the year 1999, along with proceeding dated 20.07.1999.
F
31. When we come to the expulsion of membership, it is
. not the case of either the society or any of the rival claimants
that any such proceeding for such expulsion, as stipulated under
Bye-Law No.16, was carried out and that such proceeding was
also approved by the Registrar. In such circumstances, in the G
absence of any such valid order of approval by the Registrar
relating to the expulsion of the newly added members, there is
no question of the remaining 27 members having ceased to
be the members of the society.
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[2014] 14 S.C.R.
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32. Keeping the above factors in mind, relating to the 37
members, now 27, the only other question which remains to
be considered is as to the entitlement of the members of the
society for a housing accommodation in the land ad measuring
1acre14 guntas in Survey No. 233 ofThokatta Village. When
B we consider the said issue, the claim of the so- called 11
founder members is that the entire value of the land was borne
by them and, therefore, they are exclusively entitled to the
distribution of the land amongst themselves. Such a claim was
distinctly mentioned in the General Body Meeting of the society
c held on 04.04.1997. In fact, there was a serious deliberation
and discussion in the said Meeting relating to the said issue
and the minutes of the General Body Meeting states as under:
D
E
F
G
H
"It was explained that since new members did not join in
the venture, the then existing 11 members, who have
decided to continue in the venture, contributed all the
extra amounts to refund the amounts to the members,
who resigned from the land advance on their own accord.
Thus the following 11 (eleven)
· 1.
V. Sivarania Krishna
2.
M. Balakrishnan
3.
K. Sivarama Raju
4.
P.S. Sastry
5.
K. Bhaktavatsalam
6.
N. Suryaprakash Rao
7.
TN. Shankar
8.
TS. Banerjee
9.
C.