WP(C)6955/2007 Page 1 of 33 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C)6955/2007 & CM Nos. 13208/2007, 13714/2007 # NARENDER KUMAR JAIN …Petitioner through ! Mr. Jayant Bhushan, Sr. Adv. with Mr. Amit Gupta, Adv. -versus- $ GOVT. OF NCT OF DELHI …Respondent through ^ Mr. V.K. Tandon, Adv. for RCS Mr. R.N. Bhardwaj, Adv. for Respondent No.3 WITH W.P.(C)6956/2007 & CM Nos.13209/2007, 14385/2007 NARENDER KUMAR JAIN …Petitioner through Mr. Jayant Bhushan, Sr. Adv. with Mr. Amit Gupta, Adv. -versus- GOVT. OF NCT OF DELHI …Respondent through Mr.V.K. Tandon, Adv. for RCS Mr. R.N. Bhardwaj, Adv. for Respondent No.3 Mr. K.C. Mittal, Mr. Anil Kumar & Mr. Saurabh Sharma, Advs. for Respondent Nos.5 & 7 Date of Hearing : 18th September, 2008 % Date of Decision : 21st October, 2008 CORAM: * HON‟BLE MR. JUSTICE VIKRAMAJIT SEN HON‟BLE MR. JUSTICE S.L. BHAYANA 1. Whether reporters of local papers may be allowed to see the Judgment? Yes 2. To be referred to the Reporter or not? Yes 3. Whether the Judgment should be reported in the Digest? Yes WP(C)6955/2007 Page 2 of 33 VIKRAMAJIT SEN, J. J U D G M E N T 1. Learned counsel for the parties submit that the pleadings are complete and on their request we have heard Final Arguments. Therefore, we shall proceed to deliver the Judgment. 2. These Writ Petitions have been filed by nine persons, all of whom were declared elected to the Board of Directors of Respondent No.3, namely, Jain Cooperative Bank Ltd. („Bank‟ for short) in the Elections held in December, 2006. The Petitioners have assailed the Order dated 3.8.2007 passed by the Delhi Cooperative Tribunal („Tribunal‟ for short) which declared the elections to the Board of Directors of the Bank as void ab initio and set it aside. These Orders were passed in Appeal No.171/2006 filed by Respondents 4-6, and in Appeal No.158/N/2006 filed by Respondent No.7. On 21.9.2007 the Division Bench comprising Mukul Mudgal and Reva Khetrapal, JJ. in WP(C) No.6956/2007 had stayed the operation of the said Order dated 3.8.2007. Writ Petition No.6955/2007 assails the Order dated 28.8.2007 of the Registrar of Cooperative Societies appointing an Administrator for the Bank. The same Division Bench had stayed the operation of that Order on the same date, that is, 21.9.2007. WP(C)6955/2007 Page 3 of 33 3. Virtually at the end of the arguments an important question has cropped up which we propose to tackle at the very threshold. This conundrum is whether an appeal under Section 112 of the Delhi Cooperative Societies Act, 2003 („DCS‟ Act for short) is maintainable; or whether the aggrieved parties ought to have taken recourse to Section 70 of the DCS Act in terms of which ventilation of grievances has been provided for through the aegis of arbitration. 4. Section 112 is found in Chapter-XII which is a pandect comprising Sections 112-117 dealing with “Appeal, Revision and Review”. Section 112(1) enumerates the incidents against which an Appeal is maintainable. Sub-Section (d) speaks of “disputes relating to election under section 35”; sub-section (i) refers to “any decision made under section 70”. The enumeration covered by Section 112 (a) to (q) are 17 in number, all of which, excepting for sub-sections (d) & (i), refer to decisions/orders that may have been taken under the sundry sections of the statute. Section 70 falls in Chapter-VIII which is a fasciculus dealing with „Settlement of Disputes‟. Section 70(1) commences with a non obstante clause and covers any dispute touching the constitution, management or the business of a cooperative society. The generality of this Section is abundantly clear from the fact that the only exception thereto, catered for in the WP(C)6955/2007 Page 4 of 33 Section itself, pertains to disputes regarding disciplinary action taken by the cooperative society or its committee against its paid employee. The general application of this Section is not circumscribed by sub-clauses (a) to (d) and is, therefore, illustrative in character. Nevertheless, disputes relating to elections of the officers would be covered by sub-clause (b) which refers to disputes “between a member, past member or person claiming through a member, past member or deceased member and the cooperative society, its committee or any officer, agent or employee of the cooperative society or liquidator past or present; .....” Election disputes would also clearly fall in sub-clause (a) being controversies “among members”. Sub-section 4 (a) (iv) of Section 70 prescribes that “when the dispute is in respect of an election of an officer of a cooperative society be thirty days from the date of the declaration of the result of the election”. This is also indicative of the position that election disputes are governed by Section 70. 5. Section 35 of the DCS Act covers „election and nomination of members of committee‟ and lays down in its first sub-section that – “the superintendence, direction and control of the preparation of the electoral rolls for, and the conduct of elections of the members of the committee of a cooperative WP(C)6955/2007 Page 5 of 33 society shall be vested in the committee which shall appoint returning officer who shall not be a member or an employee of the society”. Sub-Section (3) mandates that elections must be held every three years. Sub-section(6) stipulates that – “no person shall be eligible to be elected as a member of the committee of a cooperative society unless he is a shareholder of the cooperative society”. Conspicuously, the Section itself requires that the shareholder seeking election shall not be a defaulter. 6. Section 25(d) prescribes that “if a member is in default of payment of the sum demanded by the cooperative society ... he shall have no voting right in the General Body Meeting of the Cooperative Society”. Explanation I thereto clarifies that the term „default‟ means any default in payment of loan instalment, land money, construction money and annual subscription payable as provided in the bye-laws of a cooperative society for which due notice for payment has been served on the member or an award has been passed for recovery of such sum. This Explanation, as will become manifest, has generated considerable debate before us. 7. Having given the controversy careful cogitation, our conclusion is that matters relating to the elections would stand covered by Section 70 of the DCS Act. Disputes of this category WP(C)6955/2007 Page 6 of 33 must, therefore, be decided through arbitration. On a perusal of the entire gamut of Section 35 disputes arising therefrom would relate to secret ballots, term of office of the elected members, holding or failure to hold elections, eligibility or disqualification for sending for elections and representation on behalf of the Government if it has subscribed to the share capital of cooperative society. This confusion could have been avoided if care had been taken in drafting of Sections 35 and 70. Since it has not been the case of the Petitioners before us at any stage that the Appeal decided by the Tribunal was not maintainable, we think it inexpedient to set aside the impugned Order on this technical ground. It is obvious that all the parties proceeded on the assumption that the Appeal before the Tribunal was maintainable. There can be no gainsaying that it is only in an exceptional case that evidence is recorded by the Appellate Forum. Disputes pertaining to elections invariably raise disputed questions of fact which cannot conveniently be decided in appellate proceedings. This is another reason which has persuaded us to hold that election disputes, under the DCS Act, must be decided through arbitration, as per Section 70 of the DCS Act and against the decision or Award published thereon, an appeal would lie under Section 112. We are fortified in this view by the decision in New Friends Cooperative House WP(C)6955/2007 Page 7 of 33 Building Society Ltd. –vs- Rajesh Chawla, (2004) 5 SCC 795 where it has been observed that “separate forums are available in the statutory governing and functioning of cooperative society.....Assuming without accepting that the stand taken for the alleged defaulters can be entertained and gone into in the course of conduct of election, it could, if at all, be only for the limited purpose of election and the right of the Society or the member for having their rights and liabilities finally and effectively get adjudicated by arbitration proceedings statutorily provided for under the statute in lieu of proceedings before the civil court, and the conclusions arrived at or recorded in the course of election proceedings shall be only without prejudice to and ultimately subject to all or any such proceedings and decisions by such statutory forums”. 8. This brings us to the debate, the fulcrum of which is the electoral rolls. The Tribunal has dwelt in detail on this contentious issue. Appeals were filed before the Tribunal by Respondent No.7, and jointly by Respondents 4-6. In the proceedings before us, although a Vakalatnama has been filed on behalf of S/Shri J.K. Jain and Sanjay Jain, Respondents 4-6 respectively, no representation or argument has been made on their behalf. Respondents 5-7 have been represented by Mr. K.C. Mittal, Mr. Anil Kumar and Mr. Saurabh Sharma, WP(C)6955/2007 Page 8 of 33 Advocates. Respondent No.4, who was the erstwhile Chairman of the Society, has obviously discontinued representation in these proceedings for tactical reasons. These reasons palpably are that the Petitioners, of whom Petitioner Nos.2, 5, 8 and 9 were members of the previous Board of Directors, have sought to fasten blame on the previous Management, which included Respondent No.4 as the Chairman, for failure to draw up a proper List of Members. Respondents 5-7, in their own turn, have vociferously attacked the previous Management for these very alleged transgressions and it would have been inconvenient and incongruent for them to do so if Respondent No.4, who had jointly filed the Appeal before the Tribunal with them, was present in these proceedings. In our opinion, neither side can derive any benefit from the actions or inactions of the previous Board of Directors. Malafides, therefore, weigh equally on both sides. Regardless of the fact that Petitioners 1, 3, 4, 6 and 7 were not part of the previous Management, they have now decided to align themselves with Petitioners 2,5,8 and 9. It is indeed ironical that vicissitudes of elections can so quickly transform inveterate bedfellows into strangers, if not virulent adversaries. 9. Mr. K.C. Mittal contends that the widespread errors in the electoral rolls and the fact that Defaulter Members were WP(C)6955/2007 Page 9 of 33 permitted by the Returning Officer to cast their votes vitiates the elections so substantially and completely that the Writ Court has no alternative but to countermand them. Mr. Bhushan, learned Senior Counsel for the Petitioners, however, submits that this was not the grievance of the contesting Respondent Nos.5-7 in the Appellate proceedings and could not have been legitimately agitated by Respondent No.4 since he was most intimately and influentially involved in the affairs of the Society at the relevant time. It is for this reason, according to him, that Respondent No.4 has chosen to absent himself from the present proceedings since otherwise he would be guilty of simultaneous approbation and reprobation. The decision in J.H. Patel –vs- Subhan Khan, (1996) 5 SCC 312 persuades us to ignore the complaint of Respondent No.4 before the Tribunal, pertaining to so-called Defaulters casting their vote, on the simple premise that he was instrumental more than any other person in this malady since he was at the helm of the management of the Society at the relevant time. 10. Two Constitution Benches have delivered Judgments within a month of each other on this interesting issue, namely, Jabar Singh –vs- Genda Lal, AIR 1964 SC 1200 and Ram Sewak Yadav –vs- Hussain Kamil Kidwai, AIR 1964 SC 1249. On a perusal of both the Judgments, it is evident that they are of the WP(C)6955/2007 Page 10 of 33 same opinion. For the purposes of the present Petition the gravamen of these decisions is that a petition for setting aside an election must contain an adequate narration of the material facts which the Petitioner relies on to make good his case. It is only when precise pleadings are present that the Tribunal, if prima facie satisfied that an inspection of the ballot papers is necessary, should proceed to do so. Flowing from the first proposition, it is palpable that an order of inspection of ballot papers should not be granted to support vague pleas made in the petition not supported by material facts; inspection should not be carried out where the petition is merely a fishing or roving inquiry. As a logical corollary, the onus is always on the petitioner to show that the result of the election has been materially affected as a result of improperly cast votes in favour of the returned candidate or incorrectly refused or illegally rejected votes with regard to any other candidate. Ram Sewak was followed in Sumitra Devi –vs- Shri Sheo Shanker Prasad Yadav, AIR 1973 SC 215. It was reiterated by the Three-Judge Bench that if the allegations in a petition are vague, and the evidence adduced by the petitioner is found unreliable, it would be inappropriate to inspect the ballot papers. Furthermore, this case lays down that a recount will not be granted as a matter of right. In Charan Dass –vs- Surinder Kumar, 1995 Supp (3) SCC WP(C)6955/2007 Page 11 of 33 318, also predicated on Ram Sewak, the Petitions were rejected on the ground that even after considering the entire material the allegations were very vague. In P.T. Rajan –vs- T.P.M. Sahir, AIR 2003 SC 460 a Three-Judge Bench observed that for obtaining the relief of declaring the election as void it was imperative “to show that amendment, addition, or deletion in electoral roll after 3:00 P.M. on 23.4.2001 had indeed materially affected the result of the election”. The second grievance that counting agents were kept away was also turned down. T.A. Ahammed Kabeer –vs- A.A. Azeez, AIR 2003 SC 2271 follows Ram Sewak. 11. In Santosh Yadav –vs- Narender Singh, (2002) 1 SCC 160 their Lordships have cautioned against jural interference in the result of an election unless it is pleaded and proved that the result was materially affected by the impropriety complained of. In Virender Nath Gautam –vs- Satpal Singh, AIR 2007 SC 581 their Lordships drew a distinction between material facts and particulars. The Petitioner had pleaded by reference to the electoral rolls firstly that persons who had already died had mysteriously cast votes and secondly that there were sixty instances of double votes. It was in these circumstances that the case was remitted back to the High Court for a fresh decision. Most significantly, so far as the case in hand is WP(C)6955/2007 Page 12 of 33 concerned, Respondent No.4 had not recorded any objection to the electoral rolls at any previous point in time. We have given careful consideration to the aspect of the proper time to voice objections to any aspect of the election process, and especially to the proper legal remedy in this regard. 12. This brings to the fore what appears to us to be the vexed question of the stage at which the electoral process commences and to the role of Courts in entertaining grievances pertaining to the elections. It is now firmly entrenched in our jurisprudence relating to elections to Parliament and/or to the Legislatures that it is wholly inappropriate and improper for any Court to interdict or impede the completion of the electoral process once it has commenced. The leading authority on this aspect of the law is N.P. Ponnuswami –vs- Returning Officer, Namakkal Constituency, AIR 1952 SC 64 : [1952] 1 SCR 218. The Constitution Bench had given full effect to Article 329 of the Constitution of India which proscribes interference at any intermediate stage of elections. This was even in the face of the following pithy passage from Sarvothama Rao –vs- Chairman Municipal Council, Saidapet, (1924) ILR 47 Mad. 585 AT 600, which also admirably articulates the reservations which we had entertained: WP(C)6955/2007 Page 13 of 33 I am quite clear that any post election remedy is wholly inadequate to afford the relief which the petitioner seeks, namely, that this election, now published be stayed, until it can be held with himself as a candidate. It is no consolation to tell him that he can stand for some other election. It is no remedy to tell him that he must let the election go on and then have it set aside by petition and have a fresh election ordered. The fresh election may be under altogether different conditions and may bring forward an array of fresh candidate. The petitioner can only have his proper relief if the proposed election without him is stayed until his rejected nomination is restored, and hence an injunction staying this election was absolutely necessary, unless the relief asked for was to be denied him altogether in limine. In most cases of this kind no doubt there will be difficulty for the aggrieved party to get in his suit in time before the threatened wrong is committed; but when he has succeeded in so doing, the Court cannot stultify itself by allowing the wrong which it is asked to prevent to be actually consummated while it is engaged in trying the suit. 13. Ponnuswami has been favourably received in several subsequent decisions of the Supreme Court of India, including Dr. Narayan Bhaskar Khare –vs- Election Commission of India, AIR 1957 SC 694, Mohinder Singh Gill –vs- Chief Election Commissioner, (1978) 1 SCC 405, The Election Commission of WP(C)6955/2007 Page 14 of 33 India –vs- Shivaji, AIR 1988 SC 61, Ram Phal Kundu –vs- Kamal Sharma, (2004) 2 SCC 759 and Manda Jaganath –vs- K.S. Rathnam, (2004) 7 SCC 492. We have harboured some doubts as to whether this exposition of the law would apply to elections of societies and bodies other than Parliament and Legislatures for two reasons – (a) because the constitutional provision, such as Article 329, do not apply, (b) because the remedy is not legally circumscribed by a statute such as the Representation of the People Act, 1951 and (c) because the electoral rolls are not finalised before the Notification or Declaration of the Elections. Our study, however, discloses that neither of these points is relevant. The conclusions found in Paragraph 25 of Ponnuswami indicates that their Lordships have not found any distinction between elections to Parliament and Legislatures and other elections, and because it is their opinion that if a statute provides that a remedy shall be before a special Tribunal by means of an election petition, legal recourse should be taken to that remedy alone. This is evident from the following passage:- 25 (2) In conformity with this principle, the scheme of the election law in this country as well as in England is that no significance should be attached to anything which does not affect the “election:” and if any irregularities are committed while it is in progress and WP(C)6955/2007 Page 15 of 33 they belong to the category or class which, under the law by which elections are governed, would have the affect of vitiating the “election” and enable the person affected to call it in question, they should be brought up before a special tribunal by means of an election petition and not be made the subject of a dispute before any court while the election is in progress. 14. The decision in Shri Sant Sadguru Janardan Swami (Moingiri Maharaj) Sahakari Dugdha Utpadak Sanstha –vs- State of Maharashtra, AIR 2001 SC 3982 was rendered in the context of the Maharashtra Cooperative Societies Act, 1960 and the several decisions pronounced on the subject by the Bombay High Court. The Apex Court had observed that the “preparation of the electoral rolls is an intermediate stage in the process of election of the Management Committee of a specified society and the election process having been set in motion, it is well- settled that the High Court would not stay the continuance of the election process even though there may be some alleged irregularity or breach of rules while preparing the electoral rolls”. These observations, however, stand subsequently clarified by their Lordships in Pundik –vs- State of Maharashtra, AIR 2005 SC 3746, the facts of which case were that the Managing Committee had decided to send the name of the Appellant instead of Respondent as the delegate to the election WP(C)6955/2007 Page 16 of 33 of the apex Society, strictly in conformity with the Rules and Regulations. The Collector, however, refused to recognise the change of the delegate. The High Court took the view that the preparation of the electoral rolls or voters‟ list, being an integral process of election, precluded the Court from interfering at that stage. After adverting to Sant Sadguru their Lordships in Pundik noted that “normally the High Court would not interfere in exercise of powers under Article 226 of the Constitution at the stage of preparation of list of voters but such action must be in accordance with law”. Sant Sadguru was distinguished and the decision of the High Court declining to exercise jurisdiction under Article 226 of the Constitution of India was set aside. So far as the election of cooperative societies in Delhi are concerned, Schedule-II of the repealed legislation as well as the extant statute and Rules, postulates the preparation of the electoral rolls or voters‟ list together with the defaulters‟ list are required to be forwarded to the Registrar, thirty days prior to the elections. This is obviously so ordained in order that remedial action that can be taken by any aggrieved party. This hiatus or interregnum is not a meaningless one. The position in Maharashtra and Delhi is different in essential respects. Since none of the learned counsel for the parties have argued that an infraction of Schedule-II has occurred in that the List(s) had not WP(C)6955/2007 Page 17 of 33 been forwarded to the Registrar within the stipulated period, we do not think it proper to apply these observations to the case in hand. 15. Manda Jagnath was also delivered by the Apex Court in the context of Article 329 of the Constitution of India and the Representation of the People Act, 1951 in a factual matrix where the Returning Officer had declined to permit the use of an election symbol to one of the candidates who had to stand as an independent and not as the official party candidate. Their Lordships opined that the Returning Officer had exercised the discretion vested in him in a proper and sound manner, and accordingly the High Court was not justified in interfering with his decision. The Court‟s analysis was that both Ponnuswami and Gill had not totally prohibited any intervention by the High Court under Article 226 of the Constitution. Their Lordships thereafter succinctly enunciated the law in these words:- 18. Of course, what is stated by this Court hereinabove is not exhaustive of a Returning Officer‟s possible erroneous actions which are amenable to correction in the writ jurisdiction of the courts. But the fact remains that such errors should have the effect of interfering in the free flow of the scheduled election or hinder the progress of the election which is the paramount consideration. If by an erroneous order conduct of the election is not hindered then the courts under Article WP(C)6955/2007 Page 18 of 33 226 of the Constitution should not interfere with the orders of the Returning Officers, remedy for which lies in an election petition only. What is significant is that if the Supreme Court proscribed all and every interference by the Writ Court in the election process a fortiori, where there is no statutory embargo prescribed against the conduct of elections jural interference as a consequence of an intercession by a candidate in any other election should not be rejected or repulsed by the Court especially where it appears