Purvanchal Co-operative Housing Society Limited v. Vas

Judgment

JUDGMENT : JUDGMENT : -------- -------- -------- . All these petitions are directed against the order dated 14th June, 1999 passed in RVA-2798/C.R. 19/15-C passed by the Secretary (Co-operation), Government of Maharashtra whereby the revision application filed by respondent No.4 was allowed and the order dated 24th February, 1998 passed by the Joint Registrar, Co-operative Societies, CIDCO, Navi Mumbai was set aside. Though the petitions are filed by different societies but the facts are similar and challenges are identical. Hence all these petitions

are being disposed of by this common order. For the sake of convenience the facts are taken from Writ Petition No.4084/1999. Factual Matrix : Factual Matrix : Factual Matrix : -------------- -------------- --------------

2. M/s.Om Shanti Construction Company, a partnership firm ("partnership firm" for short), engaged in the business of land development, developed - 3 - plot of land admeasuring 14,255 sq.mtrs. situated at Airoli, Navi Mumbai and 2,400 sq.mtrs. at C.B.D., Belapur leased out to it by the City Industrial and Development Corporation (CIDCO).

3. On the aforesaid plot of land, buildings were sought to be constructed having about 300 apartments. The respondent No.4- M/s.Arcade (I) Private Limited, having its place of business at Navi Mumbai, entered into an agreement with the partnership firm to purchase 28 constructed shops admeasuring total carpet area of about 13,520 sq.ft. The contract is dated 11th May, 1987, signed by Shri Pyarelal Prajapati on behalf of the partnership firm, which, ultimately, developed and transferred the property in favour of Shree Om Shanti Co-operative Society ("Society" for short). Thus, Shri Pyarelal acted on behalf of the partnership firm M/s.Om Shanti Construction Co. as well as the Society.

4. It appears that respondent No.4 paid Rs.35 lakh by cheque in addition to Rs.22.22 lakh in cash, which has been acknowledged by the partnership firm vide its letter dated 16th September, 1987. It further appears that neither the Society nor the partnership firm handed over the possession of the constructed shops to the said respondent No.4. - 4 - Consequently, respondent No.4 filed a suit being Civil Suit No.224/1992 in the Court of Civil Judge, Senior Division, Thane joining M/s.Om Construction Company, Shri Pyarelal Prajapati and CIDCO as party defendants. The said suit is still pending for adjudication and some interim orders passed therein are holding the field.

5. It appears that Shree Om Shanti Co-operative Housing Society, on 26th July, 1991, applied to the Deputy Registrar, Thane for bifurcation and division of the Society into 5 societies. The said application was rejected by an order dated 27th March, 1996 for non-compliance of provision of section 17 of the Maharashtra Co-operative Societies Act, 1960 ("MCS Act" for short).

6. Being aggrieved by the aforesaid order, the Society appears to have filed Writ Petition Nos.4993/1995 and 2318/1996 in this Court. The Writ Petition No.2318/1996 came to be dismissed in view of an alternate remedy provided under the MCS Act. The Society, thereafter, filed appeal before the Divisional Joint Registrar, Co-operative Societies which came to be rejected on 19th March, 1997.

7. Being aggrieved by the aforesaid order, the - 5 - Society filed revision before the State Government (Hon’ble Minister for Co-operation). By an order 6th August, 1997, the State Government was pleased to remand the matter to the Divisional Joint Registrar, CIDCO for decision on merits within a period of four months from the date of order following principles of natural justice.

8. It appears that the Society came with a fresh proposal for dividing itself into 7 societies with an area of 16,800 sq.mtrs. The Divisional Joint Registrar, CIDCO passed preliminary order dated 9th December, 1997 and allowed division of the Society into 7 societies.

9. Being aggrieved by the aforesaid order, respondent No.4 invoked appellate jurisdiction of the State Government on 16th January, 1998. Notices were issued to the parties. Respondent No.4 raised an objection to the bifurcation and division of the Society in response to the public notice issued as per the direction of the Divisional Joint Registrar. However, it appears that while the said appeal was pending before the State Government, the respondent No.2 by his order dated 9th December, 1997 allowed bifurcation and division of the Society into 7 societies. The respondent No.3 passed final order - 6 - dated 24th February, 1998 ordering grant of registration to the newly divided seven societies.

10. The respondent No.4 brought on record the division of the Society into 7 societies by moving an application for amendment so as to raise additional ground. It appears that the said amendment application was allowed behind the back of the Society. It further appears that the State Government by an order dated 26th March, 1999 stayed operation of the order dated 24th February, 1998. However, stay order turned out to be ineffective since it was passed subsequent to the operation of the subject order. The appeal/revision was placed for hearing on 20th June, 1998, 2nd November, 1998 and 12th January, 1999 before the Hon’ble Minister for Co-operation. However, matter could not be heard. It appears that the appeal/ revision was, ultimately, transferred for final hearing to the Secretary (Department of Co-operation), Maharashtra State, Mumbai, who was pleased to allow the said revision by the impugned order dated 14th June, 1999.

11. Being aggrieved by the aforesaid order dated 14th June, 1999 the principle Society as well as other - 7 - 7 societies have invoked writ jurisdiction of this Court by filing present petitions under Article 227 of the Constitution of India contending that by preliminary order dated 9th December, 1997 and final order dated 24th February, 1998 the principle Society has been bifurcated and divided into 7 societies and are functioning since 1997 with separate registration numbers and that they were not joined as party respondents to the appeal/ revision as such the impugned order is liable to be quashed and set aside being in breach of principles of natural justice as well as erroneous on merits.

12. The order of stay granted by the State Government dated 26th March, 1999 did not affect birth of 7 societies since the stay order was passed much after their birth as stated hereinabove. It did not affect the standing and operation of the newly born societies. All these societies are contending that right from 9th September, 1986 they have been operating as independant registered co-operative societies. They further submit that they were not made parties to the appeal/ revision. The petitioners have urged that they have been given separate registration numbers. Each petitioner is a separate legal entity after their registration on 24th February, 1998 as such, no adverse order could have - 8 - been passed against them without joining them as party respondents to the appeal/ revision application. That the order granting amendment to challenge the order dated 24th February, 1998 was passed behind their back. They were not heard. In these circumstances, the submission is made that the impugned order is clearly in breach of the principles of natural justice. The petitioners also tried to demonstrate that the action of bifurcation is in accordance with the provisions of the MCS Act, as such on merits the impugned order is erroneous.

13. The learned counsel appearing for the petitioners has also taken me through various provisions of the MCS Act to show compliance thereof contending that the Society’s bifurcation is legal and proper.

14. The learned counsel for the respondent No.4 tried to support the impugned order and tried to demonstrate non-compliance of the provisions of the MCS Act. Consideration : Consideration : Consideration : ------------- ------------- -------------

15. Having heard both parties, on admitted facts, - 9 - one has to reach to the conclusion that when the appeal/ revision was preferred by respondent No.4, the order dated 24th February, 1998 was the only order in the field by virtue of which these seven societies came into existence as a consequence of bifurcation of Shree Om Shanti Co-operative Housing Society Ltd. The newly constituted societies were not made party to the appeal/ revision though the respondent No.4 was well aware of their existence, registration and formation. They were not heard before passing the impugned order. In these circumstances, the impugned order is clearly in breach of the principles of natural justice on the facts not in dispute.

16. The order allowing amendment to the appeal/ revision memo to raise additional grounds of challenge was also passed behind the back of the petitioner- societies. It is, thus, clear that even the order of amendment was passed in breach of principles of natural justice.

17. The Apex Court in the case of Management of Management of Management of M.S.Nally Bharat Engineering Co. Ltd. v. State of M.S.Nally Bharat Engineering Co. Ltd. v. State of M.S.Nally Bharat Engineering Co. Ltd. v. State of Bihar, (1990) 2 SCC 48 has ruled that what it is most Bihar Bihar important in the modern administration is the observance of the fairness of procedure with the elimination of element of arbitrariness. The State - 10 - functionaries are expected to act fairly; and reasonably. The terms fairness of procedure, fair play in action, duty to act fairly are perhaps used as alternatives to natural justice without drawing any distinction. Fairness is also a principle to ensure that statutory authority arrives at a just decision either in promoting the interest or affecting the rights of persons. To use the time hallowed; phrase that justice should not only be done but be seen to be done is the essence of fairness equally applicable to administrative and quasi-judicial authorities. Fairness is, thus, a prime test for proper and good administration. No man or no mans right should be affected without an opportunity to ventilate his views. The impugned orders being clearly in breach of principles of natural justice cannot stand to the scrutiny of law. Thus, the impugned order as well as the order allowing amendment, without examining merits or demerits thereof, are liable to be quashed and set aside on the short ground being in breach of principles of natural justice.

18. In the result, impugned order is set aside. The appeal/ revision application is restored to the file of the State Government with direction to respondent No.4 to add all the petitioners as party respondents to the said appeal/revision application - 11 - within eight weeks from the date of this order.

19. The State Government is directed to rehear the appeal/ revision including application for amendment seeking to challenge to the order dated 24th February, 1998 and after hearing the parties, the State Government to dispose it of by a reasoned order within 4 months thereafter giving due importance to factual position that all the petitioner- societies have achieved standing of more than 10 years from the date of their registration.

20. In the result, all these petitions are allowed. Rule is made absolute in terms of this order with no order as to costs. (V.C.DAGA, J.) (V.C.DAGA, J.) (V.C.DAGA, J.)