# THE BENGAL SECRETARIAT COOPERATIVE LAND MORTGAGE BANK AND HOUSING SOCIETY LTD v. SRI ALOKE KUMAR & ANR

- **Citation:** [2022] 13 S.C.R. 1084
- **Court:** Supreme Court of India
- **Decided:** 2022-10-13
- **Case number:** Civil Appeal No. 7261 of 2022
- **Bench:** Uday Umesh Lalit, S. Ravindra Bhat, J.B. Pardiwala
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-bengal-secretariat-cooperative-land-mortgage-bank-and-housing-society-ltd-v-35550
- **Pages:** 29

## Headnote

West Bengal Co-operative Societies Act, 1940: s. 95 - Dispute
pertaining to co operative societies - Appellant Society to carry
out the demolition/construction of the administrative building entered
into an agreement with the developer - Respondent No. 1, member
of the appellant Society filed a case u/s. 95(1) wherein the arbitrator
passed an award directed that the society to restrain itself from taking
any step towards demolishing the existing Administrative Building
with the developer and a special general meeting be called -
Appellant resolved in AGM to terminate the work orders issued in
favour of the developer and refund the security deposit - However,
the respondent No.1 filed another case on the ground that the former
Award had directed the Society to hold an Special General Meeting
and not an Annual General Meeting - Meanwhile the developer
also filed a matter seeking to injunct the appellant society from
giving effect to the Resolution wherein the parties were directed to
maintain status quo - In the light of the impasse, it was resolved in
the AGM that the Board of the Society to get the administrative
building developed through the developer on the revised terms and
conditions - Appellant society was accorded permission -
Respondent No. 1 then instituted the arbitration execution case in
respect of the award made in the 1st dispute case, which was allowed
- In revision, by the appellant society, the High Court upheld the
said order - Sustainability of - Held: Not sustainable - High Court
erred in holding the appellant Society could not have entered into
an agreement with a third party developer as the Act or the Rules
do not provide for the same - It is too much for the High Court to
expect that all the members of the appellant Society should on their
own contribute and undertake the development of the new
administrative building - Co-operative Society is to function
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democratically and the internal democracy of a society, including
resolutions passed in accordance with the Act, the Rules, and the
bye-laws have to be respected and implemented - General Body of
the Society resolved to appoint the developer, those decisions having
not been challenged at all, the respondent No. 1 being a member of
the appellant Society is bound by the said decisions - Merely because
one single member in minority disapproves of the decision, that
cannot be the basis to negate the decision of the General Body,
unless it is shown that the decision was the product of fraud or
misrepresentation - Redevelopment of the property was necessitated
in view of the dilapidated condition of the building - No provision
in the Co-operative Societies Act or the rules or any other legal
provision which would curtail the right of the Society to redevelop
the property when the General Body of the Society intends to do so
- It is not open to the Court to sit over the commercial wisdom of the
General Body as an Appellate Authority - Thus, the judgment and
order passed by the High Court is set aside.
Allowing the appeal, the Court
HELD: 1.1 The High Court is not correct in saying that
the appellant Society could not have entered into an agreement
with a third party developer as the Act or the Rules do not provide
for the same. It is too much for the High Court to expect that all
the members of the appellant Society should on their own
contribute and undertake the development of the new
administrative building. As regard the total cost of the project, it
is informed that approximately the cost would be Rupees Twenty
Crore. What is in the mind of the respondent No. 1 perhaps is
that the members of the appellant Society should contribute this
amount and undertake the construction rather than involving a
developer and making the entire project a business venture. It
is just next to impossible. [Para 46][1106-D-E]
1.2 In the background of the constitutional mandate, the
question is not what the statute does say but what the statute
must say.

## Text

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[2022] 13 S.C.R.
[2022] 13 S.C.R. 1084
1084
THE BENGAL SECRETARIAT COOPERATIVE LAND
MORTGAGE BANK AND HOUSING SOCIETY LTD.
v.
SRI ALOKE KUMAR & ANR.
(Civil Appeal No. 7261 of 2022)
OCTOBER 13, 2022
[UDAY UMESH LALIT, CJI, S. RAVINDRA BHAT AND
J.B. PARDIWALA, JJ.]
West Bengal Co-operative Societies Act, 1940: s. 95 - Dispute
pertaining to co operative societies - Appellant Society to carry
out the demolition/construction of the administrative building entered
into an agreement with the developer - Respondent No. 1, member
of the appellant Society filed a case u/s. 95(1) wherein the arbitrator
passed an award directed that the society to restrain itself from taking
any step towards demolishing the existing Administrative Building
with the developer and a special general meeting be called -
Appellant resolved in AGM to terminate the work orders issued in
favour of the developer and refund the security deposit - However,
the respondent No.1 filed another case on the ground that the former
Award had directed the Society to hold an Special General Meeting
and not an Annual General Meeting - Meanwhile the developer
also filed a matter seeking to injunct the appellant society from
giving effect to the Resolution wherein the parties were directed to
maintain status quo - In the light of the impasse, it was resolved in
the AGM that the Board of the Society to get the administrative
building developed through the developer on the revised terms and
conditions - Appellant society was accorded permission -
Respondent No. 1 then instituted the arbitration execution case in
respect of the award made in the 1st dispute case, which was allowed
- In revision, by the appellant society, the High Court upheld the
said order - Sustainability of - Held: Not sustainable - High Court
erred in holding the appellant Society could not have entered into
an agreement with a third party developer as the Act or the Rules
do not provide for the same - It is too much for the High Court to
expect that all the members of the appellant Society should on their
own contribute and undertake the development of the new
administrative building - Co-operative Society is to function
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democratically and the internal democracy of a society, including
resolutions passed in accordance with the Act, the Rules, and the
bye-laws have to be respected and implemented - General Body of
the Society resolved to appoint the developer, those decisions having
not been challenged at all, the respondent No. 1 being a member of
the appellant Society is bound by the said decisions - Merely because
one single member in minority disapproves of the decision, that
cannot be the basis to negate the decision of the General Body,
unless it is shown that the decision was the product of fraud or
misrepresentation - Redevelopment of the property was necessitated
in view of the dilapidated condition of the building - No provision
in the Co-operative Societies Act or the rules or any other legal
provision which would curtail the right of the Society to redevelop
the property when the General Body of the Society intends to do so
- It is not open to the Court to sit over the commercial wisdom of the
General Body as an Appellate Authority - Thus, the judgment and
order passed by the High Court is set aside.
Allowing the appeal, the Court
HELD: 1.1 The High Court is not correct in saying that
the appellant Society could not have entered into an agreement
with a third party developer as the Act or the Rules do not provide
for the same. It is too much for the High Court to expect that all
the members of the appellant Society should on their own
contribute and undertake the development of the new
administrative building. As regard the total cost of the project, it
is informed that approximately the cost would be Rupees Twenty
Crore. What is in the mind of the respondent No. 1 perhaps is
that the members of the appellant Society should contribute this
amount and undertake the construction rather than involving a
developer and making the entire project a business venture. It
is just next to impossible. [Para 46][1106-D-E]
1.2 In the background of the constitutional mandate, the
question is not what the statute does say but what the statute
must say. If the Act or the Rules or the bye-laws do not say what
they should say in terms of the Constitution, it is the duty of the
Court to read the constitutional spirit and concept into the Acts.
"In so far as in its Act Parliament does not convey its intention
THE BENGAL SECRETARIAT COOPERATIVE LAND MORTGAGE BANK
AND HOUSING SOC. LTD. v. SRI ALOKE KUMAR
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[2022] 13 S.C.R.
clearly, expressly and completely, it is taken to require the
enforcement agencies who are charged with the duty of applying
legislation to spell out the detail of its legal meaning. This may
be done either by finding and declaring implications in the words
used by the legislator, or by regarding the breadth or other
obscurity of the express language as conferring a delegated
legislative power to elaborate its meaning in accordance with
public policy (including legal policy) and the purpose of the
legislation". The conventional view is that the legislature alone
makes the law. [Para 47 and 48][1106-F-G; 1107-A-B]
1.3 It is not in dispute that the General Body of the appellant
Society, which is supreme, has taken up a conscious decision to
redevelop the administrative building. The General Body of the
appellant Society has also resolved to appoint the Hi-Rise as the
developer. Those decisions having not been challenged at all,
the respondent No. 1 being a member of the appellant Society is
bound by the said decisions. The General Body of the appellant
Society has approved the terms and conditions of the development
agreement by overwhelming majority. Merely because the terms
and conditions of the development agreement are not acceptable
to the respondent No. 1, who could be said to be in minuscule
minority cannot be the basis of not to abide by the decision of the
overwhelming majority of the General Body of the appellant
Society. The redevelopment of the property is necessitated in
view of the fact that the building is in a dilapidated condition with
passage of time. The redevelopment thus, would be a requirement
and a necessity and cannot be termed as business. The appellant
Society in such circumstances did not even require to carry out
any amendment to the bye-laws or to include the "redevelopment
of the buildings" as one of the objects of the Society before taking
any decision to redevelop its property. [Para 52][1108-H; 1109A-D]
1.4 Once a person becomes a member of the Co-operative
Society, he loses his individuality with the Society and he has no
independent rights except those given to him by the statute and
bye-laws. The member has to speak through the Society or rather
the Society alone can act and speaks for him qua the rights and
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duties of the Society as a body. Suffice it to observe that so long
as the Resolutions passed by the General Body of the appellant
Society are in force and not overturned by a forum of competent
jurisdiction, the said decisions would bind the respondent No. 1.
He cannot be permitted to take a stand alone position but is bound
by the majority decision of the General Body. Notably, the
respondent No. 1 has not challenged the resolutions passed by
the General Body of the appellant Society to redevelop the
property and more so, to appoint the Hi-Rise as the Developer
to give him all the redevelopment rights. [Para 53][1109-D-H]
1.5 It was submitted that the property is in a good condition
and there is no need to redevelop the existing building. In the
first place, the decision of the General Body of the Society to
redevelop the subject property has not been challenged at all.
Besides, no provision in the Co-operative Societies Act or the
rules or any other legal provision has been brought to the notice
which would curtail the right of the Society to redevelop the
property when the General Body of the Society intends to do so.
Essentially, that is the commercial wisdom of the General Body
of the Society. It is not open to the Court to sit over the said
wisdom of the General Body as an Appellate Authority. Merely
because one single member in minority disapproves of the
decision, that cannot be the basis to negate the decision of the
General Body, unless it is shown that the decision was the product
of fraud or misrepresentation or was opposed to some statutory
prohibition. That is not the grievance made before this Court. In
the instant case, the General Body took a conscious decision
after due deliberations for many years to redevelop its property.
Even with regard to the appointment of the "Hi-Rise" as the
Developer, the record shows that it was decided by the General
Body of the Society after examining the relative merits of the
proposals received from the developers. [Para 54][1110-A-D]
1.6 The object of the provision has to be borne in mind.
The entire legislative scheme goes to show that the Co-operative
Society is to function democratically and the internal democracy
of a society, including resolutions passed in accordance with the
THE BENGAL SECRETARIAT COOPERATIVE LAND MORTGAGE BANK
AND HOUSING SOC. LTD. v. SRI ALOKE KUMAR
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Act, the Rules, and the bye-laws have to be respected and
implemented. The Co-operative Movement is both a theory of
life and a system of business. It is a form of voluntary association
where individuals unite for mutual aid in the production and
distribution of wealth upon principles of equity, reason and
common good. It stands for distributive justice and asserts the
principle of equality and equity ensuring to all those engaged in
the production of wealth a share proportionately commensurate
with the degree of their contribution. It provides as a substitute
for material assets, honesty and a sense of moral obligation and
keeps in view the moral rather than the material sanction. The
movement is thus a great Co-operative movement. [Para
55][1110-E-G]
1.7 The basic principles of co-operation are that the
members join as human beings and not as capitalists. The Cooperative Society is a form of organization wherein persons
associate together as human beings on the basis of equality for
promotion of economic interest of its members. This movement
is a method of doing the business or other activities with ethical
base. "Each for all and all for each" is the motto of the co-operative
movement. This movement not only develops latent business
capacities of its members but produces leaders; encourages
economic and social virtues, honesty and loyalty, becomes
imperative, prospects of better life, obtainable by concerted effort
is opened up; the individual realises that there is something more
to be sought than mere material gains for himself. So, in fact, it
being a business cum moral movement, and the success of the
Co-operative Society depends upon the reality with which one of
the members work for the achievement of its objects and purpose.
The Committee on Co-operation in India emphasized the moral
aspect of co-operation. [Para 56][1110-H; 1111-A-C]
1.8 The impugned judgment and order passed by the High
Court is not sustainable in law and is set aside. At one point of
time, there is an inclination to allow this appeal by imposing an
exemplary costs on the respondent No.1 for unnecessarily
dragging the appellant Society into a frivolous litigation & not
allowing the appellant Society to go ahead with the project for
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the past almost two decades. However, this Court refrains from
passing such order of costs in the hope that the respondent No.
1 realises that the development of the administrative building
will be for the betterment of the society. No individual member is
going to gain anything from the redevelopment. It is the society
as an autonomous body which will gain something. [Para 57][1112C-E]
1.9 It would now be open to the appellant Society to proceed
further with its project of redevelopment in accordance with the
resolutions passed by the General Body from time to time. [Para
58][1112-F]
Vipulbhai M. Chaudhary v. Gujarat Cooperative Milk
Marketing Federation Limited (2015) 8 SCC 1 : [2015]
(3) SCR 997; Daman Singh v. State of Punjab (1985) 2
SCC 670 : AIR 1985 SC 973 : [1985] (3) SCR 580;
State of U.P v. Chheoki Employees Co-operative Society
Ltd. (1997) 3 SCC 681 : AIR 1997 SC 1413:[1997] (1)
SCR 380; Rattan Chand Hira Chand v. Askar Nawaz
Jung (Dead) by Lrs. (1991) 3 SCC 67 : [1991] (1) SCR
327 - referred to.
Seaford Court Estates v. Asher (1949) 2 KB 481 : (1949)
2 All ER 155 (CA) - referred to.
Bennion on Statutory Interpretation by Francis Bennion,
6th Edn. 136 - referred to.
Case Law Reference
[2015] (3) SCR 997
referred to
Para 36
[1985] (3) SCR 580
referred to
Para 45, 53
[1997] (1) SCR 380
referred to
Para 45, 53
[1991] (1) SCR 327
referred to
Para 51
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7261
of 2022.
From the Judgment and Order dated 08.08.2018 of the High Court
of Calcutta in C.O. No.2714 of 2014.
THE BENGAL SECRETARIAT COOPERATIVE LAND MORTGAGE BANK
AND HOUSING SOC. LTD. v. SRI ALOKE KUMAR
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Joydeep Mazumdar, Dhiman Kr. Sengupta, Vikas Kumar, Ms.
Shalini Kaul, Advs. for the Appellant.
Soumo Palit, Abhigya, Advs. for the Respondents.
The Judgment of the Court was delivered by
J. B. PARDIWALA, J.
1. Leave granted.
2. This appeal is at the instance of a Co-operative Society
registered under the West Bengal Co-operative Societies Act, 1940 (for
short, 'the Act 1940') and is directed against the judgment and order
passed by the High Court at Calcutta (Civil Revisional Jurisdiction,
Appellate Side) dated 08.08.2018 in the CO No. 2714 of 2014 by which
the High Court rejected the civil revision filed by the Appellant Society
herein thereby affirming the order passed by the Civil Judge (Senior
Division), 9th Court at Alipore, District South 24 Paraganas in the
Arbitration Execution Case No. 19 of 2009 dated 17.04.2014.
FACTUAL MATRIX
3. The Appellant Society was registered in the year 1945 under
the Act 1940 (now governed by the West Bengal Co-operative Societies
Act, 2006 as amended up to date, [for short, 'the Act 2006']). The
Appellant Society was formed for the purpose of providing housing to
the employees of the West Bengal Secretariat and others in accordance
with the bye-laws of the society. The registered office of the Appellant
Society at the time of registration was that of the Bengal Secretariat
being the Writers Buildings, Calcutta (P.O. Calcutta G.P.O., Thana-Hare
Street, Calcutta). At present, the registered office of the Appellant Society
is located at No. 1, Gariahat Road, Jodhpur Park, P.S. Lake, Koltaka700068.
4. The Appellant Society purchased a parcel land along with two
buildings erected on it on 18.07.1947 from the Official Trustee of Bengal,
the Executor of the property of Ketty Graham William admeasuring
approximately 80.90 acre. One of the buildings out of the two is used as
the administrative building of the Appellant Society and the other building
is used for the Girls School. The Appellant Society was registered with
multipurpose activities. The administrative building by now is almost 100
years old and is in a dilapidated condition. The certificate issued by the
Kolkata Municipal Corporation dated 15.07.2016 along with the
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photographs of the building would indicate that the same may collapse at
any time causing loss to life.
5. It appears from the materials on record that sometime in 1960,
the entire ground floor portion of the administrative building was let out
to the Indian Postal Department for running a post office namely the
Jodhpur Park Post Office with current PIN Code 700068. Since then,
the Post Office is functioning for the benefit of the members of the
Appellant Society as well as the locals at large. Having regard to the
fact that the administrative building is in a dilapidated condition and
requires urgent repairs and renovations, it was felt by the Appellant
Society sometime in the year 2001 that it would be more expedient to
demolish the old structure and construct a new building in its place which
would be safe for habitation and would allow for more efficient utilisation
of the available space/land area.
6. In such circumstances referred to above, the Appellant Society
invited tenders through an advertisement published in the local dailies
for the development of the administrative building through a joint venture
with the developer.
7. Pursuant to the tender process, the Hi-Rise Apartment Makers
Private Limited (for short, 'the Hi-Rise') was declared as the successful
bidder. The entire matter was placed before the General Body of the
Appellant Society at the Annual General Meeting which was held on
28.04.2002. The meeting was ultimately adjourned to 05.05.2002. At the
Annual General Meeting of the Appellant Society convened on
05.05.2002, it was resolved that the Appellant Society would accept the
earnest/security money from the Hi-Rise and enter into an agreement
accordingly with it for the purpose of demolition of old administrative
building and for construction of the new administrative building.
8. On 22.06.2002, the Appellant Society issued the work order
pursuant to the decision taken in the Annual General Meeting. In the
said work order, it was stated that the Appellant Society would enter into
an agreement with the Hi-Rise for the demolition of the old dilapidated
building and construction of a new administrative building. It was agreed
between the Appellant Society and the Hi-Rise that the new structure
would be partly residential and partly for commercial purpose.
9. It appears that the Respondent No. 1 herein namely Aloke
Kumar in his capacity as one of the members of the Appellant Society
THE BENGAL SECRETARIAT COOPERATIVE LAND MORTGAGE BANK
AND HOUSING SOC. LTD. v. SRI ALOKE KUMAR [J. B. PARDIWALA, J.]
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starting creating various hindrances in the way of the Appellant Society
and somehow or the other did not allow the Appellant Society to go
ahead with the project. It also appears from the materials on record that
the Board of the Appellant Society decided to remove the Respondent
No. 1 from the primary membership of the society on the ground of
having been found acting in a manner prejudicial to the interest of the
Appellant Society. Pursuant to the resolution passed by the Board dated
22.10.2002, the Appellant Society sought approval from the Registrar of
the Co-operative Societies to remove the Respondent No. 1 from the
primary membership of the society.
10. It appears that since the Registrar of the Co-operative Societies
did not object to the resolution terminating the membership of the
Respondent No. 1 herein within six weeks as per Rule 137(2) of the
West Bengal Co-operative Societies Rules, 1987 (for short, 'the Rules
1987'), the Board of the Appellant Society terminated the membership
of the Respondent No. 1 with effect from 04.12.2002. The Respondent
No. 1, being aggrieved with the action taken by the Board of the Appellant
Society, filed an appeal before the Registrar of the Co-operative Societies
under Rule 137(3) of the Rules 1987.
11. The materials on record further reveal that the decision of the
Board of the Appellant Society expelling the Respondent No. 1 from the
primary membership of the Appellant Society was later set aside.
12. On 14.01.2003 the Respondent No. 1 herein filed a dispute
case before the Registrar of the Co-operative Societies, West Bengal
against the Appellant Society, inter alia, praying for the following:
"a) declaring that all actions of the Board right from the
publication of the notice inviting bids, floating of bid
documents, the proceedings and resolution in the adjourned
Annual General Body of the aforesaid Society held on
5.5.2002 accepting the offer of M/s Hi-Rise Apartment Makers
Pvt. Ltd. and acceptance of Earnest Money and security
deposit of Rs. 10 lakh from them and thereafter, were illegal
and void."
13. The proceedings came to be registered as the Dispute Case
No. 47/RCS of 2002-03 filed under Section 95(1) of the West Bengal
Co-operative Societies Act, 1983 (for short, 'the Act 1983').
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14. The Arbitrator vide Award dated 21.12.2004 passed in the
Dispute Case No. 47/RCS of 2002-03, inter alia, directed as under:
"1) That the society shall restrain itself from taking any step
towards demolishing the existing constructions of the
Administrative Building of the society as part of a joint venture
with a private promoter/developer, M/s Hi Rise Apartment
Makers Pvt. Ltd.
2) That special general meeting be called with clear one
month's notice ensuring receipts by all the members- discussing
the issue in every detail with transparency at every stage being
observed to the full, and any resolution taken thereof in favour
of the ROC's proposal of this nature be sent to the Registrar
of Cooperative Societies, West Bengal for his approval has
required under Rule 149(11) of W.B.C.S. Rules, 1987."
15. The Appellant Society in due compliance with the Award dated
21.12.2004 resolved by way of resolution taken in the AGM dated
15.01.2006 to terminate the work orders dated 22.06.2002 issued in favour
of the Hi-Rise and refund the security deposit.
16. Not satisfied with the Resolution dated 21.12.2004 and the
consequent termination of the contractual obligations with the Hi-Rise,
the Respondent No.1 filed yet another Dispute Case being the DC No.
15 of 2006 challenging the said Resolution dated 15.01.2006, inter-alia,
on the ground that the Award dated 21.12.2004 had directed the Appellant
Society to hold an "Special General Meeting" and not an "Annual General
Meeting".
17. Being aggrieved, the Hi-Rise filed Dispute Case No. 11 of
2006 seeking to inter alia injunct the Appellant Society from giving effect
to the Resolution dated 15.01.2006. The said dispute came to be referred
to the Calcutta High Court vide the CO No. 2203 of 2006. Therein the
Calcutta High Court vide order dated 22.01.2007 remanded the matter
to the Arbitrator for fresh hearing while directing both the parties to
maintain status quo.
18. In the light of the impasse created due to the litigation initiated
by the Hi-Rise, it was, inter alia, resolved in the AGM held on 27.05.2007
that the Board of the Appellant Society be asked to resolve the dispute
with the Hi-Rise and further empowered it to get the administrative
THE BENGAL SECRETARIAT COOPERATIVE LAND MORTGAGE BANK
AND HOUSING SOC. LTD. v. SRI ALOKE KUMAR [J. B. PARDIWALA, J.]
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building developed through the Hi-Rise as BOT (Build Operate &
Transfer) partner based on the revised Terms and Conditions.
19. It is important to note that the Resolution dated 27.05.2007
passed at the Annual General Meeting of the Appellant Society has not
been challenged till date.
20. The Joint Registrar, Co-operative Societies (Housing) on
16.06.2011 accorded permission to the Appellant Society for the
construction of Office-cum-Administrative Building pursuant to the
Resolution passed in AGM on 27.05.2007.
21. On 30.10.2009, the Respondent No. 1 instituted the Arbitration
Execution Case No. 19 of 2009 before the Civil Judge, Alipore Court
seeking execution of the Award dated 21.12.2004 passed in the DC No.
47/RCS of 2002-03. On 17.04.2014, the Civil Judge inter alia declared
that the Execution Case was maintainable.
22. Being aggrieved, the Appellant Society preferred a Civil
Revision before the Calcutta High Court being the CO No. 2714 of 2014
wherein the impugned order came to be passed.
23. In view of the aforesaid, the Appellant Society is before this
Court.
SUBMISSIONS ON BEHALF OF THE APPELLANT
SOCIETY
24. Mr. Joydeep Mazumdar, the learned counsel appearing for
the Appellant Society vehemently submitted that the High Court
committed a serious error in passing the impugned order. The learned
counsel would submit that the final authority of a co-operative society
under the Act 2006 is its General Body of Members or its elected
representatives. In this regard, the learned counsel invited the attention
of this Court to Section 28 of the Act 2006. The learned counsel further
submitted that the High Court failed to appreciate one of the cardinal
principles of the "Co-operative Movement" that the co-operatives are
autonomous organisations and one single member of a co-operative
society should not be allowed to hold the entire society at ransom only
because of his own whims and caprice.
25. The learned counsel argued that the High Court failed to
appreciate that there is no material difference between an Annual General
Meeting and a Special General Meeting except for the nomenclature in
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all practical sense. In this regard, our attention was drawn to Rule 21 of
the West Bengal Co-operative Societies Rules, 2011 (for short, 'the Rules
2011').
26. The learned counsel would submit that the High Court failed
to appreciate that there is nothing in the Act and/or Rules which would
prevent a Society from taking a pragmatic and practical view of the
situation in approaching Developers who would act in the benefit of the
larger interest of the members of the Society. It was also argued that the
High Court fell into error in taking the view that the resolution dated
15.01.2006 was not transparent. It was also argued that the High Court
could not have taken a dismissive view of the order passed by the Joint
Registrar, Co-operative Societies (Housing) dated 16.06.2011 permitting
the Appellant Society to carry out the demolition/construction of the
administrative building pursuant to the resolution dated 27.05.2007. The
learned counsel pointed out something very important, that neither the
resolution dated 27.05.2007 nor the permission granted by the Joint
Registrar dated 16.06.2011 has been challenged by the Respondent No.
1 herein.
27. In the last, the learned counsel argued that the Respondent
No. 1 unilaterally has been stalling the efforts of the Appellant Society to
develop the administrative building for the last two decades contrary to
the spirit of the very "Co-operative Movement". According to the learned
counsel, the Respondent No.1 has been a true example of a "Dog in the
Manger".
28. In such circumstances referred to above, the learned counsel
appearing for the Appellant Society prayed earnestly that the impugned
judgment and order of the High Court may be set aside and the Appellant
Society may be permitted to go ahead with the development of the
administrative building in accordance with the plans & the rules and
regulations.
SUBMISSIONS ON BEHALF OF THE RESPONDENT
NO. 1
29. On the other hand, Mr. Soumo Palit, the learned counsel
appearing for the Respondent No. 1 vehemently opposed the present
appeal submitting that no error, not to speak of any error of law, could be
said to have been committed by the High Court in passing the impugned
order in exercise of its supervisory jurisdiction under Article 227 of the
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Constitution of India. In such circumstances referred to above, the learned
counsel appearing for the Respondent No. 1 prayed that there being no
merit in the present appeal, the same may be dismissed.
ANALYSIS
30. Having heard the learned counsel appearing for the parties
and having gone through the materials on record, the only question that
falls for our consideration is whether the High Court committed any
error in passing the impugned judgment and order?
31. Before adverting to the rival submissions canvassed on either
side, we must look into the line of reasoning adopted by the High Court
in its impugned order which is as under:
"25. It is seen that nowhere in the Act or the Ru1es, the
delegation of construction work to third party developers,
having commercial interest, is contemplated.
26. The entire spirit of the co-operative movement, being that
of participation of the members for their own good was missed
out in the commercial endeavour of the petitioners to earn
quick profits at the expense of the co-operative spirit.
27. The arguments of the petitioners, that the first component
of the arbitral award becomes academic upon fulfillment of
the second, is also not acceptable, since the first component
is a continuous restraint, independent of the second. The
petitioners have, in any event, flouted both the components
of the award by posing to cancel the previous agreement with
M/s Hi-Rise and renewing the same agreement in a superficially
changed format. The continuation of the earlier joint venture
has also been reflected from the project submitted by the
petitioners before the Registrar, Co-operative Societies,
purporting to seek approval.
28. The petitioners also rely on an annual report of an Annual
General Meeting held by the petitioner no. 1-Society on May
27, 2007, to impress upon this Court that the award was
complied with by the Society in spirit.
29. However, apart from the fact that the award contemplated
not an Annual General Meeting but a Special General Meeting,
the report itself belies the impression sought to be created by
the petitioners. It is reflected from the report that the Board of
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Directors, even in the teeth of the award, did not even consider
any other option than to renew the previous agreement with
M/s Hi-Rise itself, despite the specific restraint order
comprised in the first component of the arbitral award. The
project entered into, as reflected from the annual report itself,
contemplated only modification of terms of the previous joint
venture agreement, and blatantly exhibited the sole purpose
of such project to gain merely Rs. 20 million (by virtue of
enhancement of the market value of the project being fully
commercial). As such, although commerce ipso facto need not
be deprecated, the tenor of the arbitral award as well as the
spirit of the co-operative movement, as contemplated in the
West Bengal Co-operative Societies Act, 2006, was taken for
a ride by such acts of the petitioners. The resolution taken in
such Annual General Meeting was an iteration of the absence
of will on the part of the petitioners to comply with the award
and the deliberate attempt to carry on with old wine in a new
bottle, having the shape of a new-look agreement.
30. As such, it appears that although the impugned order was
a bit on the miserly side as far as reasons are concerned, the
conclusion arrived at in the said order, as to the execution
case being still maintainable in view of non-satisfaction of
the arbitral award, was valid.
31. As to the judgments cited by the opposite party on the
scope of interference under Article 227 of the Constitution of
India, this Court is of the opinion that the principles laid down
therein are well-settled. Since no patent jurisdictional error
is found in the impugned order, in any event, the said
judgments need not be gone into in detail."
32. Thus, from the aforesaid, it appears that what weighed with
the High Court is:
(1)
Neither the Act nor the Rules permits the society to ask a
third party to develop its building, more particularly when
the party has a commercial interest in the same, and
(2)
The members on their own should have undertaken the
commercial activity and that would have been in accordance
with the co-operative spirit.
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 On both the aforesaid counts, the High Court is not correct. We
shall assign reasons hereinafter as to why we are so saying.
33. We shall now look into few provisions of the Act and the
Rules. Section 28 of the Act 2006 reads thus:
"Section 28. Final authority of Co-operative society.-Subject
to the provisions of this Act, the final and ultimate authority
of a Co-operative society shall vest in the general body of its
members or its delegates or representatives elected under
Section 29 of this Act and assembled in a general meeting:
Provided that where the by-laws of a Co-operative society
so provide for representation of self-help group in any meeting
of the general body of the Co-operative society, such selfhelp group shall be represented through one of its members
elected in a meeting of the self-help group."
34. Rule 21 of the Rules 2011 read as under:-
"21. Special General Meeting.-
(1) The rules pertaining to Annual General Meeting shall
apply, mutatis mutandis to a Special General Meeting called
under Section 31.
(2) At a Special General Meeting, no business other than that
specified in the relevant notice shall be considered."
35. We shall now look into the relevant extract of the resolution
dated 15.01.2006 which reads as under:-
"But it resolved that the contract executed by and between
the Society and M/s Hi-Rise Apartment Markers Pvt. Ltd.,
including the work order issued by the Society are to be treated
as revoked and cancelled. The Board of Directors is directed
to refund the security deposit to the said company after
deducting necessary penalties and dues in terms of the said
contract.
The house further resolved that in supersession of all earlier
resolutions of the General Body as well as Board of Directors
in connection with the Administrative Building, the Board of
Directors is hereby authorized to take all further necessary
action such as erection of hoardings etc. for further
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development/ utilization of the said premises for the best
interest of the Society of its members, except letting out, long
term in nature under tenancy act."
SEVEN CARDINAL PRINCIPLES OF CO-OPERATIVE
36. In the case of Vipulbhai M. Chaudhary v. Gujarat
Cooperative Milk Marketing Federation Limited, (2015) 8 SCC 1,
this Court was called upon to answer the following question:
"Whether in the absence of a specific provision on removal
by no confidence in the Act, Rules or even Bye-laws of a
Cooperative Society, the Chairperson/ elected office-bearer
can be removed by a motion of no confidence, is the short but
complex question."
37. For the purpose of answering the aforesaid question, this Court
extensively traced the history of the Co-operative Movement in India.
The International Cooperative Alliance Statement on the Cooperative
Identity was adopted in Manchester, United Kingdom on 23.09.1995.
The 'Co-operative' is defined as:
"A cooperative is an autonomous association of persons
united voluntarily to meet their common economic, social, and
cultural needs and aspirations through a jointly-owned and
democratically-controlled enterprise."
38. The Statement further provides for the 'seven co-operative
principles' as guidelines by which the co-operatives put their values into
practice. Following are the principles:
"1st Principle:
Voluntary and Open Membership.- Cooperatives are
voluntary organizations, open to all persons able to use their
services and willing to accept the responsibilities of
membership, without gender, social, racial, political or
religious discrimination.
2nd Principle:
Democratic Member Control.-Cooperatives are
democratic organizations controlled by their members, who
actively participate in setting their policies and making
decisions. Men and women serving as elected representatives
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are accountable to the membership. In primary cooperatives
members have equal voting rights (one member, one vote) and
co-operatives at other levels are also organized in a democratic
manner.
3rd Principle:
Member Economic Participation.-Members contribute
equitably to, and democratically control, the capital of their
cooperative. At least part of that capital is usually the common
property of the cooperative. Members usually receive limited
compensation, if any, on capital subscribed as a condition of
membership. Members allocate surpluses for any or all of
the following purposes: developing their cooperative, possibly
by setting up reserves, part of which at least would be
indivisible; benefiting members in proportion to their
transactions with the cooperative; and supporting other
activities approved by the membership.
4th Principle:
Autonomy and Independence.-Cooperatives are
autonomous, self-help organizations controlled by their
members. If they enter to agreements with other organizations,
including governments, or raise capital from external sources,
they do so on terms that ensure democratic control by their
members and maintain their cooperative autonomy.
5th Principle:
Education, Training and Information.- Cooperatives
provide education and training for their members, elected
representatives, managers, and employees so they can
contribute effectively to the development of their cooperatives. They inform the general public - particularly
young people and opinion leaders - about the nature and
benefits of cooperation.
6th Principle:
Cooperation among Cooperatives.-Cooperatives serve
their members most effectively and strengthen the co- operative
movement by working together through local, national,
regional and international structures.
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7th Principle:
Concern for Community.- Cooperatives work for the
sustainable development of their communities through policies
approved by their members."
[Emphasis supplied]
39. The co-operative movement in India started at the beginning
of the 20th century. Though the movements were also based on some of
the values and principles stated above, it appears that the co-operatives
in India did not have effective autonomy, democratic functioning and
professional management. The National Policy on Co-operatives
announced by the Department of Agriculture and Co-operation, Ministry
of Agriculture, Government of India adopted in March, 2002, is wholly
based on the definition, values and principles stated above. The 97th
Amendment to the Constitution of India, in fact, gave a constitutional
frame to this policy.
40. Apart from providing for the right to form co-operative societies
to be a fundamental right under Article 19 of the Constitution of India
and insertion of Article 43B under the Directive Principles of State Policy
on promotion of co-operative societies, the amendment also introduced
a new Part IXB on Co-operative Societies. Reference to the Statement
of Objects and Reasons of the amendment would give a clear picture as
to the need to strengthen the democratic basis and provide for a
constitutional status to the co-operative societies. Thus, one has to see
the constitutional aspirations on the concept of co-operative societies
after the 97th Amendment in the Constitution of India which came into
effect on 12.01.2012:-
"STATEMENT OF OBJECTS AND REASONS
1. The co-operative sector, over the years, has made
significant contribution to various sectors of national economy
and has achieved voluminous growth. However, it has shown
weaknesses in safeguarding the interests of the members and
fulfilment of objects for which these institutions were
organised. There have been instances where elections have
been postponed indefinitely and nominated office bearers or
administrators remaining in- charge of these institutions for
a long time.