ZOROASTRAIN CO OPERATIVE HOUSING SOCIETY LTD v. DISTRICT REGISTRAR CO OP. SOCIETIES (URBAN)

above the petitioners have challenged the aforesaid two orders, namely the order of the Board of Nominee and the order passed by the Tribunal, before this Court in this petition.

4.(cid:9)In the meantime on or around 2/5/1995 the Registrar issued direction to the petitioner no. 1 society to delete the condition of permission granted by the society restricting development of residential accommodation only for the Parsis. Reference has been made to page 89 in this connection. The second direction came to be issued by the Registrar on or around 16/8/1995 to delete the condition as aforesaid and to grant application for the transfer of the plot by the respondent no.2. It is the stand of the petitioners that at both the relevant points of time there was no application for transfer of membership pending before the society. However, on 18/6/1996 the respondents nos. 2 and 3 filed an application for transfer of membership in respect of plot no. 7 and since the proposed transfer was contrary to the bye-laws of the society and the provisions of the Gujarat Co-operative Societies Act, 1961 (Gujarat Act No. 10 of 1962) 'the Act for short', the petitioner no. 1- society rejected the application on 24/6/1996. The respondents nos. 2 and 3 filed appeal against the said rejection of transfer of membership, by the petitioner no. 1 - society, before the District Registrar (respondent no. 1 herein) u/S. 24 of the Act. The petitioner no. 1- society received summons in respect of the said appeal on or around 13/8/1996. Apprehending that the District Registrar being the appellate authority, whose one of the officers, namely Registrar, had earlier issued directions to the petitioner no. 1society to delete the condition of permission granted by the society restricting development of residential accommodation only for Parsis, the petitioners have challenged the pending proceedings u/S. 24 of the Act before the District Registrar as can be seen from the reliefs quoted hereinabove.

5.(cid:9)There being a caveat from the respondent no. 2, the respondent no. 2 was heard at the admission and following order was passed :- "Heard. Rule returnable on 3/9/1996. Learned counsel Mr. Patel waives service on behalf of respondent no.2. Issue notice to the remaining respondents. In the meanwhile the parties are directed to maintain status-quo as on today. D.S." After the matter was admitted as aforesaid the respondent no.2 filed affidavit in reply dated 27/8/1996 raising the questions with regard to maintainability of the petition on the ground that interim orders have been challenged in this petition and that pending proceedings have also been called in question. Challenge is also levelled on the ground of multifariousness and availability of alternative remedies. It is the say of the respondent no. 2 that he had filed written statement on 9/8/1995 in the Lavad Case filed by the petitioner no.

1 - society and he inter-alia contended that the property in question was transferred to a non-trading corporation, who was not impleaded as a party. It is asserted that the geographic position of the society is such that it would not be possible to contend that admission of non-Parsis as members would disturb or hamper the ethic atmosphere of the society. The society is divided into 4 different parts and each part constitutes an independent division having no connection with the other devision. There are various high-rise buildings around the petitioner-society. It is the stand of the respondent no.2 that the members of the petitioner-society have been carrying on and running various commercial activities in the society. The President of the society himself is running a motor garage where many oil tankers and heavy vehicles are parked. Other members are also carrying on commercial activities.

The respondent no.2 got the plans approved from the Ahmedabad Municipal Corporation on or around 22/9/1996 and spent about Rs.8,19,587/- towards the conversion, licence fees, security deposits, parking deposit and other charges. The respondent no.3 filed affidavits dated 2/9/1996 and 7/11/1996 raising the same contentions as have been raised by the respondent no.2. The respondent no. 3 asserted that no writ could be issued to the respondent no. 3 as respondent no. 3 could not be covered under Article 12 of the Constitution of India. It is finally asserted by the respondent no. 3 that even the very existence of the disputed bye-law restricting transfer only in favour of Parsis is under dispute in the Lavad suit. The respondents have therefore sought dismissal of the writ petition.

6.(cid:9)I have heard the learned advocates appearing for the rival parties. The principal question stated to arise in this petition is whether the petitioner no.1society is within its rights in refusing permission for commercial development in a co-operative housing society and rejecting application for transfer of membership in favour of non-Parsis. The impugned orders and the proceedings which have been challenged in this petition basically rest upon a prima-facie conclusion on the question whether any such bye-law, if in existence, can be said to be legal and valid.

7.(cid:9)The bye-law alleged to be in existence is the bye-law no.7. It would read as under :- "7. All persons, who have signed the application for registration are original members. Other members shall be elected by the committee provided that all members shall belong to the parsi community. "

8.(cid:9)Both the learned Nominee and the Member of the Tribunal have answered the question against the petitioner no.1- society holding that the aforesaid bye-law is unconstitutional and illegal in as much as it absolutely bars transfer of membership/transfer of members' right to immoveable property. The provisions of the Constitution of India and the provisions of the Act and the Rules made under the Act as well as the Transfer of Property Act came to be canvassed before the lower adjudicating authorities. It has been concluded that the property in housing society is heritable and transferable and bearing in mind the principle of open membership u/S. 24 of the Act read with rule 12(2) of the Rules, which has been held intra vires by a Division Bench of this Court in Jain Merchants Co-op. Housing Society Ltd. v/s. H.U.F. of Manubhai reported in 36(1) G.L.R. p. 19, there is no prima-facie case for restraining the transfer to a non-parsi. With regard to construction of flats it has been held on prima-facie consideration of the facts that the plans have been signed by the respondent no. 2 and none else and that bearing in mind the petitioner no,1 society's letter dated 17/5/1988 it would be lawful for the flats being constructed in the plot/property held by the respondent no.2. It has been held that since the plans have been approved by the local authority the construction according to plans cannot be restrained. The respondent no.3 being not a party to either of the proceedings before the learned Nominee or the learned Tribunal, no order could be passed in favour of or against the respondent no.3. However, at that interim stage the application exh. 5 for granting status-quo/stay was dismissed pending the revision application before the Tribunal.

9.(cid:9)It has been submitted on behalf of the petitioners that the impugned orders of the learned Nominee and the learned Tribunal are not legal and they deserve to be quashed for the following reasons :- (A) Any construction by the 3rd Respondent is illegal and the society is entitled to injunction - (i) Respondent No.3 is not entitled to become a member of the society as per its bye-laws and as contemplated under the Act vide Sections 22, 24 and Rule 11, 12 and 18 of the Rules and has not been accepted as member of the society and is therefore not entitled to put up any construction on the plot of respondent no.2. (ii) In any case construction of residential-cum-commercial complex is contrary to the bye-laws of the society and against the conditional grant of permission dated 17/5/88 and contrary to Art. 19(1)(c) of the Constitution. (iii) Such development would seriously jeopardise the fragile culture of the Parsi community which has a worshipping place adjacent thereto and community activities like Charitable blocks, etc. being carried on.

(B) In any case respondent no. 2 cannot at all claim a right to transfer the membership to respondent no.3 or to construct residential cum commercial complex for the following reasons :- (i) The Bye-laws of the society prohibit such action and respondent no.2 is bound by the same. (ii) Respondent no.2 has accepted rejection of the first application for commercial development and in the second application has applied for permission for residential accommodation to be allotted to Parsis and accepted the condition placed by the society and is therefore, estopped and precluded from claiming otherwise. (iii)The society has resolved on 8/4/68 as well as on 26/1/94 to transfer membership only to Parsis and in fact in the last 70 years of its existence there has been not a single instance of transfer to Non-Parsis and the respondent no.2 is therefore bound by the same. (iv) The respondent no.2 cannot claim to transfer his membership as a matter of right since the right to property is subject to limitations by law and is not absolute and the provisions of the Act more particularly sections 22, 24, 30, 31 and Rules 5, 7, 11, 12, 18 and 19 indicate the truncated nature of the right which has to be exercised within the parameters. (C) The orders ignore principles of prima facie case, balance of convenience and prospect of undue and irreversible hardship if respondent no.2 and/or respondent no.3 are permitted to construct residential cum commercial complex and the injunction is not granted. "

10.(cid:9)In reply the following provisions of the Act and the Rules have been read before this Court :- Section 2(2) of the Act defines "bye-laws" as having been registered under the Act and would include such bye-laws as having been amended from time to time. It has been submitted that bye-laws should be in conformity with the provisions of the Act and the Rules. It has also been submitted that the bye-laws are the species of a contract as among the members of the society and it has no statutory flavour. In fact this submission arises from the settled position of law with regard to nature of bye-laws. Reference in this connection may be made to a decision of the Apex Court in the case of Co-operative Central Bank Ltd and ors. v/s. Additional Industrial Tribunal, Andhra Pradesh, Hyderabad and ors. reported in AIR 1970 SC 245, which has been referred to by a learned Single Judge in B. Anjaneyulu v/s.

V.G. Raghunathan reported in 1995 C.T.J. 201. (cid:9)Section 2(13) defines a "member" of a society. It would read as under :- "member" means a person joining in an application for the registrationof a co-operative society which is subsequently registered, or a person, duly admitted to membership of a society after registration, and includes a nominal, associate or sympathiser member. (cid:9)Section 22 elaborates the different types of members of a co-operative society. Reference has been made to sub-section (1) clause (b) of the said provision, according to which a firm, company or any other body corporate constituted under any law for the time being in force or a society registered under the Societies Registration Act, 1860 would be included. Even a group of individuals or a Hindu Undivided Family can be member of a society. Reference in this connection may be made to a division bench decision of this Court in Jain Merchants Co-op.

Housing Society Ltd. (supra). (cid:9)Section 4 of the Act deals with the societies which might be registered under the Act. The provision reads as under :- "4. A society, which has as its object the promotion of the economic interests or general welfare of its members or of the public in accordance with co-operative principles, or a society established with the object of facilitating the operations of any such society, may be registered under this Act" (cid:9)Section 8 deals with application for registration of a society to be made before the concerned authority. Section 12 deals with classifications of the societies and the provision would read as under :- "12. The Registrar may classify all societies in such manner, and into such classes, as he thinks fit; and the classification of a society under any head of classification by the Registrar shall be final. " It has been submitted that such classification, however, could never include a classification based on religion.

What could be the nature of the classification has been stated by making a reference to section 74 C of the Act, which deals with election of members of the committees of certain classified societies, namely, district co-operative banks, primary land development banks, district co-operative sale and purchase organisation, Taluka sale and purchase co-operative organisation, co-operative sugar factories, co-operative spinning mills, district co-operative milk unions and taluka co-operative processing societies. Accordingly, the societies could be validly classified on the basis of the nature of business and/or the activity which one or the other society might undertake. (cid:9)Section 28 deals with voting powers of the members of a society and it is submitted that when a group of persons hold one membership of the society there can be one membership and one vote for such group. Reference has then been made to Sec.

24 of the Act and rule 5 and rule 12 of the Gujarat Co-operative Societies Rules, 1965. Rule 5 deals with bye-laws. Section 24 and Rule 12 would read as under :- "24. (1) No society shall, without sufficient cause, refuse admission to membership to any person duly qualified therefor under the provisions of this Act, the rules and bye-laws of such society. (2) Where the society does not communicate any decision to a person within a period of three months from the date of receipt by the society of his application for admission, such person shall be deemed to have become the member of such society on the expiry of the aforesaid period of three months. (3) Where a person is refused admission as a member of a society, the decision together with the reasons therefor shall be communicated in writing to such person by the society within three months from the date of receipt by the society of the application for admission made by such person.

(4) Any society aggrieved by the admission of a member under sub-section (2) or any person aggrieved by the decision of the society refusing him its membership under sub-section (3) may appeal to the Registrar. (5) An appeal under sub-section (4) shall be made within a period of two months from the date of communication to him of the decision of the society, or, as the case may be, from the date of the expiry of the period of three months specified in sub-section (2). (6) The decision of the Registrar in appeal shall be final and shall not be called in question in any court. " (cid:9)Rule 12 : "12. Open membership - (1) No Seva Sahakari Mandali or Consumers' Society or Co-operative Milk Producers' Society, shall without sufficient cause refuse admission to membership to any person duly qualified therefore under the provisions of the Act and the bye-laws. (2) No co-operative housing society shall without sufficient cause, refuse admission to its membership to any person, duly qualified therefore under the provisions of the Act and its bye-laws to whom an existing member of such society wants to sell or transfer his plot of land or house and no such society shall without sufficient cause, refuse to give permission to any existing member thereof to sell or transfer his plot of land or house to another person who is duly qualified as aforesaid to become its member.

Explanation.- A Seva Sahakari Mandali includes a multipurpose society and a primary agricultural credit society. " Reliance has been placed on sub-rule (2) of rule 12. It has been submitted from the reading of the aforesaid provisions that membership has to be open and cannot be restricted without sufficient cause and that such restriction on the ground of religion would obviously be contrary to the provisions contained in the aforesaid provisions of law. The decision in Jain Merchants Co-operative society (supra) has been canvassed both for the aforesaid proposition of law and for dealing with the decisions which have been relied upon on behalf of the petitioners.

11.(cid:9)The first decision which has been relied upon on behalf of the petitioners is contained in the case of Karvenagar S.G.R. Sanstha Maryadit v/s. State reported in AIR 1989 Bombay 392. The learned Tribunal has explained the decision in following manner :- 'In AIR 1989 Bombay 392, the amendment of bye-laws for allowing construction of multi-storeyed building was imposed by the Maharashtra Govt. Notification and it was not voluntary action on the part of the society by a resolution of the general body as in the present case. The facts of the present case in the light of the general body resolution mentioned above, the judgment of Maharashtra Tribunal reported in 1993 CTJ 359 also will not apply to the present case. On similar observations as mentioned above, the judgment of this Tribunal in Revision No. 76/96 also does not apply.' It has, however, been strenuously argued that Article 19(1)(c) and Article 29(1) of the Constitution of India would support the restriction of the kind in the bye-law in question.

Article 19 (1) (c) would read as under :- '19. Protection of certain rights regarding freedom of speech, etc.- (1) All citizens shall have the right - xxx xxx xxx xxx (c) to form associations or unions.' Article 29(1) would read as under :- '29. Protection of interests of minorities.- (1) Any section of the citizens residing in the territory of India or any part thereof having a distinct language, script or culture of its own shall have the right to conserve the same.' For lending support to the aforesaid argument a reference has been made here also to the aforesaid decision of the Bombay High Court. Following observations have been read from para. 9 of the said decision :- '9. Even assuming that the State Government has power to give directions as contained in the notification, still the submission of Dr. Naik that the directions are violative of fundamental rights guaranteed under Art. 19(1)(c) of the Constitution and therefore void requires acceptance.

Article 19(1)(c) confers right on all citizens to form association or union and the petitioner society is constituted in exercise of that right. It is absolutely true that the right to form association can be regulated by the provisions of the statute. The petitioner society is registered under the Act and the bye-laws of the society are also registered by the Registrar as the same are in accordance with the requirements of the Act and the Rules. By the impugned notification the Government provides that a member can raise high rising building on the allotted plot and the occupiers of such plot would form a society, which can be described loosely as a sub-society and the representative of such sub-society would be a member of the petitioner housing society. In other words, the Government is compelling the housing society to accept a sub-society on its land and then accept the sub-society as a member of the petitioner society.

Dr. Naik complains, and in our judgment with considerable merit that it is not permissible for the State Government to foist any member on the housing society because the right to become a member is to be determined by the managingcommittee in accordance with the by-laws and Government cannot direct that any person would automatically become a member and that too against the wishes of the members of existing society. The submission is correct. Right to form association conferred under Art. 19(1)(c) is not only limited to the initial formation of the association but also operates in respect of continuance of such association. The direction issued by the State Government infringes upon right of citizen to form and continue the association and to determine who shall be member of such association. The State Government is forcing a member on such association and such compulsion clearly amounts to infraction of the fundamental rights.

Reliance by Dr. Naik on the decision of the Supreme Court reported in AIR 1971 SC 966 (Smt. Damyanti Naranga v. Union of India) is very appropriate. The Supreme Court held : "The right to form an association, necessarily, implies that the persons forming the association have also the right to continue to be associated with only those whom they voluntarily admit in the association. Any law, by which members are introduced in the voluntary Association without any option being given to the members to keep them out, or any law which takes away the membership of those who have voluntarily joined it, will be a law violating the right to form an association. The Hindi Sahitya Sammelan Act does not merely regulate the administration of the affairs of the original society; what it does is to alter the composition of the society itself. The result of this change in composition is that the members, who voluntarily formed the Association, are now compelled to act in that Association with other members who have been imposed as members by the Act and in whose admission to membership they had no say.

Such alteration in the composition of the Association itself clearly interferes with the right to continue to function as members of the Association which was voluntarily formed by the original founders. The Act, therefore, violates the right of the original members of the society to form an association guaranteed under Art. 19(1)(c)." In out judgment even assuming that the Government has power to issue directive, the directive issued under the impugned notification is clearly violative of Art. 19(1)(c) of the Constitution.' (cid:9)It may be seen that reliance has been placed on a decision of the Hon'ble Supreme Court in the case of Smt. Damyanti Naranga v. Union of India, reported in AIR 1971 SC 966. Apart from the fact that the observations quoted from Smt. Damyanti Naranga's case (supra) for finding that Article 19(1)(c) of the Constitution would be violated, if any directive is issued by the Government snatching away the volition of the members to form and continue their associations, the very observations also indicate that the right to form an association is attached with the individuals who become members of the association.

Where such associations are created under and governed or controlled by statute, there can be no objection of statutory interference with their composition on the ground of contravention of individual right of freedom of association. See Daman Singh v. State of Punjab reported in AIR 1985 SC 973. The Bombay decision in Karvenagar S.G.R. Sanstha Maryadit (supra) came to be referred to and the decision in Smt. Damyanti's case (supra) came to be considered by a Division Bench of this Court in the case of Jain Merchant Housing Society Limited v. H.U.F. of Manubhai reported in 1995 (1) G.L.R. at page 19. This Court while considering the vires of rule 12(2) of the Rules quoted hereinabove, had an occasion to deal with the individual rights guaranteed under Article 19(1)(c) and Article 300A of the Constitution of India and in that context the aforesaid decisions were required to be considered. Following observations might usefully be reproduced from para.

12 of the citation :- "Mr. Joshi argued that Rule 12(2) of the Rules is not pari materia with the language of Sec. 22(2) and Sec. 24 of the Act and that the provisions of Rule 12(2) seek to balance the right guaranteed under Art. 19(1)(c) with that of the right under Art. 300A of the Constitution of India. According to Mr. Joshi provisions of Rule 12(2) are regulatory in nature over the competence of a Society. He has placed reliance on a decision of the Constitution Bench reported