R.S.A. No. 4849 of 2009 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH R.S.A. No. 4849 of 2009 (O&M) Date of decision : 22.7.2010 ... National Fertilizers Ltd. Employees Co-operative House Building Society Ltd., Yamuna Enclave, Panipat through its Secretary ................Appellant vs. Ram Mehar Singh Kundu and another .................Respondents Coram: Hon'ble Mr. Justice K.C. Puri Present: Sh. Ashwani Talwar, Advocate for the appellant ... K.C. Puri, J. This is an appeal directed by National Fertilizers Ltd. Employees Co-operative House Building Society Ltd., Yamuna Enclave, Panipat through its Secretary against the judgment dated 13.6.2009, passed by Smt. Sarita Gupta, Additional District Judge, Panipat, vide which the appeal preferred by the defendant-appellant against the judgment dated 10.8.2007 passed by Sh. Sanjay Sandhir, Additional Civil Judge (Senior Division), Panipat, was dismissed. The challenge of the plaintiff is in respect of notice dated 16.2.2004 issued by defendant No.2, whereby the plaintiff was called upon to pay an outstanding sum of Rs49,995/- on account of interest R.S.A. No. 4849 of 2009 -2- and installments. The case of the plaintiff is that he is a member of defendant No.1 House Building Society. Defendant No.1 – society purchased the land for carving out plots and allotting to its members. Scheme No.1 was floated by defendant No.1-Society and plaintiff deposited a sum of Rs.8,000/- with defendant No.1 for allotment of plot. The plots were allotted by defendant No.1 in violation of terms and conditions, rules and regulations of the Societies to the persons who were close to the President/Office bearers of the Society, though said persons were not entitled for any such allotment and at the same time money of the plaintiff was returned on flimsy grounds. Thereafter, defendant No.1 floated scheme No.2 in 1986 and plaintiff deposited a sum of Rs.28,000/- in January and May 1987 for allotment of plot. No intimation of any kind was given to the plaintiff, whereas allotment of plots was made to other persons. Defendant No.1-Society issued letter No. 308 dated 27.3.1999 to the plaintiff calling upon him to pay a sum of Rs.34,038/- i.e. Rs.12,500/- being overdue amount and Rs.21,538/- being interest thereupon. A sum of Rs.12,500/- was paid by the plaintiff vide cheque No. 788323 dated 12.4.1999 directly in the account of defendant No.1-Society. It has been alleged that interest of Rs.21,538/- is not payable by the plaintiff because defendant No.1-Society had been utilizing Rs.28,000/- of the plaintiff since 1987 and no intimation or notice was ever given to the plaintiff regarding payment of installment. Had defendant No.1 demanded second installment, plaintiff would have certainly deposited the same. Hence, defendant No.1-society have not right, title or authority to charge interest on the said amount. Even R.S.A. No. 4849 of 2009 -3- otherwise no plot has yet been allotted and no possession was given to the plaintiff. It was alleged that there was no provision for interest on amount of installment till the plot was allotted. Plaintiff also alleged that plots have been allotted by defendant No.1-Society to one Salu Jain, Jiwana Lata, Suresh Kumar and other persons who were given membership at Sr.No. 587 to 591 and said persons have deposited amount without any interest on installments, whereas plaintiff has deposited a sum of Rs.1,75,500/- till now but not allotment of plot was given to him. Defendant No.1 – Society approached defendant No.2 for recovery of arrears from plaintiff and defendants were bent upon to cancel allotment/membership of the plaintiff at the instance of defendant No.1-Society. Plaintiff has challenged the notice dated 16.2.2004 on the grounds that the same violates principles of natural justice and the same should be declared null and void. Hence the suit. On filing of suit, defendant No.1 appeared and filed written statement taking preliminary objections regarding maintainability of the suit. It was alleged that plaintiff was having no locus standi or cause of action to file the present suit. Defendants have acted in accordance with law and as per provisions of Haryana Co-operative Societies Act. Defendant No.1 applied to defendant No.2 for recovery of outstanding amount, upon which plaintiff was summoned by defendant No.2 and was given opportunity of hearing but no objection was raised by plaintiff before defendant No.2 and he filed the present suit. It was alleged that plaintiff became member of scheme No.1 of defendant No.1-Society in 1982 and deposited a sum R.S.A. No. 4849 of 2009 -4- of Rs.8,000/- but later on expressed his inability to pay further installments and applied for refund of amount. His amount was refunded. Thereafter plaintiff again requested for membership of scheme No.2, which was declined on 12.11.2001. The said fact was not disclosed by the plaintiff in the present suit. It was denied that plot have been allotted by defendant No.1 to close associates/office bearers of the society. It was admitted that scheme No.2 was started in the year 1986 and plaintiff deposited a sum of Rs.28,000/-. Subsequently, vide UPC notice dated 1.5.1989 a sum of Rs.12,500/- was demanded from plaintiff alongwith other members of the society and the last date for depositing the said amount was extended uptill 5.9.1989. Defaulters were asked to deposit the same alongwith 18% interest as per resolution, rules and regulations of defendant No.1- Society. The demanded payment was not paid by the plaintiff intentionally because land covered by scheme No.2 was acquired by State Government. Plaintiff was called upon to deposit a sum of Rs.34,038/- vide letter No. 308 dated 27.3.1999. It was admitted that sum of Rs.12,500/- was deposited vide cheque No.788323 dated 12.4.1999 but amount of Rs.22,944/- being balance outstanding amount was adjusted against interest. It was alleged that plaintiff was liable to pay interest on initial amount of installment of Rs.12,500 and outstanding amount of plaintiff as on 30.9.2003 was Rs.48,800/-. It was alleged that members having Sr.No.587 to 591 were allowed to make payments without interest by the general body. It was also alleged that development work at site of scheme No.2 was under progress and plots were to be allotted to all the members without any R.S.A. No. 4849 of 2009 -5- discrimination. Defendant No.2 also filed written statement taking preliminary objections regarding maintainability of the suit and alleged that defendant No.2 was acting as per law and any member who fails to make payment of installment was liable to pay interest. Replication was filed by the plaintiff alleging that defendants were violating the provisions of Haryana Co-operative Societies Act and sum of Rs.8,000/- was deposited by the plaintiff in scheme No.1 but instead of allotting a plot, the same was returned to him without any interest. From the pleadings of the parties, following issues were framed:- 1. Whether notice dated 16.2.2004 issued by defendant No.2 is illegal, null and void and not binding on the plaintiff, as alleged? OPP. 2. Whether defendants are liable to be restrained from canceling the allotment of plot measuring 250 sq. yards of the plaintiff? OPP. 3. Whether civil court has no jurisdiction to try the present suit? OPD 4. Whether plaintiff has concealed material facts from the court? OPD 5. Whether plaintiff has no locus standi ? OPD 6. Relief. The plaintiff examined himself as PW-1 and closed his evidence after tendering certain documents. Defendants examined R.S.A. No. 4849 of 2009 -6- DW-1 M.N. Bhutani, Secretary and closed their evidence after tendering certain documents. Learned trial Court after appraisal of the evidence, returned the finding on issues No.1 and 2 in favour of the plaintiff. Issues No. 3, 4 and 5 were decided against the defendants and suit of the plaintiff was decreed. Feeling dissatisfied with the above said judgment dated 10.8.2007 passed by Additional Civil Judge (Senior Division), Panipat, both the defendants preferred the Ist appeal. The said appeal was heard and dismissed by the Additional District Judge, Panipat, vide judgment dated 13.6.2009. Still feeling dissatisfied with the judgments dated 13.6.2009 and 10.8.2007, referred to above, the present regular second appeal has been filed by appellant-defendant No.1. Learned counsel for the appellant, in paragraph No. 13 of the grounds of appeal has mentioned that following questions of law have arisen in the present appeal:- 1. Whether the Civil Courts possess the jurisdiction to try and entertain the present suit? 2. Whether the appellant-Society is free to function as per its Memorandum of Association and Bye-laws and is not to be governed by the Rules of Haryana Urban Development Authority or other Public Sector Utilities? 3. Whether the appellant is free to regulate its own affairs and is entitled to charge interest as per its resolution from the defaulting members and further is free to take coercive R.S.A. No. 4849 of 2009 -7- action against the members in default? Learned counsel for the appellant has submitted that the dispute in the present case relates to the payment of interest of Rs.21,538/-. A notice was sent to the plaintiff through UPC. All the other members have paid the interest. The plaintiff is also liable to pay the interest. Both the Courts below have misread and misinterpreted the evidence on the file. The Civil Court has no jurisdiction to try and entertain the present suit. The appellant-Society is free to function as per Memorandum of Association and Bye-laws and is not to be governed by rules of Haryana Urban Development Authority or other Public Sector Utilities. The Society is free to regulate its affairs and is entitled to charge interest as per its resolution from the defaulting members and is also free to take coercive action against the members in default. I have considered the submissions made by counsel for the appellant. According to the counsel for the appellant, the dispute in the present appeal is in respect of payment of Rs.21,538/- as interest. Both the Courts below have given a concurrent finding that the demand of said interest is not in accordance with the Rules and Regulations of the Society. Both the Courts below have returned a finding that registered notice is required to be served for the recovery of the amount and only thereafter, interest can be claimed by the Society. Both the Courts below have also reached to the conclusion that UPC notice is not a legal notice and has not been served upon the plaintiff. So, that being a finding of fact, returned by both the Courts R.S.A. No. 4849 of 2009 -8- below cannot be interfered in the regular second appeal. So, far as the issue regarding jurisdiction of the Civil Court is concerned, both the Courts below have given a concurrent finding that the Civil Court has the jurisdiction on the facts of the present case. It is settled law that in case the Society oversteps its jurisdiction, in that case the Civil suit is not barred. No doubt, the appellant- Society is free to function as per its Memorandum of Association and Bye-laws, but the Society has not unlimited power to charge interest even against the Bye-laws of the Society. So, in view of discussion made above, all the substantial questions of law raised by the appellant, stand answered against the appellant. Consequently, the appeal is without any merit and the same stands dismissed. ( K.C. Puri ) 22.7.2010 Judge chugh