THE HON'BLE SRI JUSTICE P.S.NARAYANA W.P.Nos.4361 and 23786 of 2009 9th December, 2009 Between :- M.Anjaiah .. Petitioners And BDL Employees Mutually Aided Coop.Housing Society Ltd. And others .. Respondents THE HON'BLE SRI JUSTICE P.S.NARAYANA W.P.Nos.4361 and 23786 of 2009 COMMON ORDER:- Heard Sri Roopender, the learned Counsel representing the writ petitioner in both these Writ Petitions and Sri Nageswar Sree, the learned Counsel representing contesting respondents. 2. These two Writ Petitions are filed questioning the orders made in I.A.No.762/2008 and I.A.No.763/2008 in O.P.No.97/2008 on the file of the Cooperative Tribunal, Medak District. Several facts had been narrated in detail in the respective affidavits filed in support of the writ petitions and equally elaborate counter affidavits had been filed denying several of the averments. Several of the material papers, the allotment letters, the possession letters and also the applications also had been placed before this Court. 3. Sri Roopender had taken this Court through the contents of the affidavits filed in support of the writ petitions and would point out that though a common order had been made, since orders had been made in two applications, two Writ Petitions had been filed. The learned Counsel also demonstrated how several of the respondents are ineligible and how they are entitled to for allotment letters. The learned Counsel also pointed out to the interim order made by this Court in W.P.No.4361/2009 and would maintain that despite the same, subsequent thereto, several allotments were made and these are only paper allotments and even as on this day, the construction alone is going on, and none had occupied any of these houses. The Counsel also would point out that when clearly these members are ineligible members, to make allotments in their favour itself being illegal, it would be just and proper, at least, to maintain status quo as on today i.e., to see that no further inductions are made, so that the allotments may be made to the eligible and proper persons and when such strong prima facie case had been made out, dismissal of such applications by the Cooperative Tribunal, Medak District (hereinafter referred to as ‘the Tribunal’ for the purpose of convenience) is not justified. 4. On the contrary, Sri Nageshwar Sree had pointed out to the respective stands taken by the parties before the Tribunal and the reasons recorded by the Tribunal and would maintain that in the light of the interim order made in W.P.No.4361/2009, no further orders need be passed and the Tribunal may be directed to dispose of the main O.P. itself at an early date. The learned Counsel also specifically pointed out that the very membership of the petitioner had been transferred and the petitioner has no locus standi at all, even otherwise, in the light of the stand taken in para 15 of the counter affidavit in particular, it may not be just and proper to pass any interim order at this stage and hence the Writ Petitions are to be dismissed. 5. In view of the commonality of the questions involved in both these Writ Petitions, since these Writ Petitions had been filed challenging the common order made in I.A.No.762/2008 and I.A.No.763/2008 in O.P.No.97/2008, these Writ Petitions are being disposed of by this common order. 6. The respective pleadings of the parties in both these Writ Petitions also are common. In W.P.M.P.No.5720/2009 in W.P.No.4361/2009 on 13-3-2009 this Court made the following order:- “Any further steps taken by the respondents shall be subject to the result of the Writ Petition.” 7. No doubt, elaborate submissions had been made in this regard that subsequent thereto several illegal allotments had been made and ineligible members had been inducted into certain houses. Whether all the allottees had occupied their respective houses or not, whether the construction of these houses already had been completed or not, these are the disputed questions of fact between the contesting parties. Be that as it may, suffice to refer to the respective stands taken by the parties in one of the Writ Petitions in view of the commonality referred to above. 8. In W.P.No.23786/2009 it is averred that the petitioner filed O.P. No. 97 of 2008 on the file of the District Co-op. Tribunal, Medak District U/S. 37(1) b APMACS Act, 1995 alleging that the 1st respondent society Managing Committee is indulged in illegal activities and acting as real estate brokers against the interest of society, violating the Bye laws as well as conditions and guidelines of 5th respondent, ignoring the due process of law and thereby the object of the society for which it is established is defeated. The 1st Respondent society gave membership to ineligible persons by taking illegal pecuniary gains for their personal benefits and selfish motives. Due to their illegal activities the petitioner and other genuine members/Employees of BDL, Bhanur who are eligible houseless poor and downtrodden were deprived of their legitimate right to have a own house. The acts of the Managing Committee of the 1st respondent society are illegal, arbitrary, malafide and against the aims and objects of enactment of APMACS Act. To protect the rights and interest of members of the 1st respondent society (earlier BDL, Employees Housing Society, Bhanur) the petitioner herein filed O.P. before theTribunal under section 37 of the APMACS Act. The prayer of the petitioner in O.P. No. 97 of 2008 Tribunal is as hereunder:- 1. To declare that the respondent No. 7 to 74 are ineligible members and consequently cancel the membership of respondent No. 7 to74 from the 1st respondent society and further cancel the allotment of plots if any made to them. 2. To declare the circulars dated 10.3.2003 and 24-5-2004 issued by the 1st respondent society as illegal, arbitrary and against the objectives of the society and consequently cancel the membership and the process of allotment of plots if any made under the above circulars. 3. Appoint an upright officer from the Co-operative Department under the supervision of the District Collector, Medak and direct him to take up the process of fresh eligible membership from the 934 members who paid Rs. 500/- for the membership and registration of 1st respondent society and consequently allot plots afresh among the eligible members as per the conditions of the APIIC and also allot one plot to petitioner by canceling the membership of respondent No. 72. 4. To remove the office bearers of the 1st respondent society who are responsible for such illegal activities. 9. Further it is also stated that the petitioner filed I.A. No. 762 of 2008 and I.A. No. 763 of 2008 seeking stay of the allotment of plots and stop the construction of houses to ineligible members by the 1st respondent society as per the list dated 13.2.2007 addressed by the 4th respondent to the 2nd respondent, illegal transferees and Members of BDBEMACHS Ltd., Kanchanbagh ( Madhava Reddy Society ) pending disposal of the O.P., and the Tribunal by its order dated 20.1.2009 dismissed the said I.As. holding that the petitioner is ceased to be a member of the society by virtue of transfer made by him and no prejudice is caused to his interests, rights and the petitioner is not entitled to agitate for other members and also against the irregularities committed by the 1st respondent society under Sec. 37 of APMACS Act. The O.P. No. 97/08 is pending for adjudication. Aggrieved by the same the petitioner preferred the present Writ Petition. 10. It is also stated that the Common Order of the Tribunal is contrary to law and weight of the evidence and the Tribunal failed to appreciate the evidence in proper sense, biased and the order of the Tribunal is vitiated. The Tribunal without any evidence stepping in to the shoe of the 1st respondent and the order of the Tribunal is nothing but encouraging the illegal acts of the 1st respondent society and the very purpose of constitution of Co-operative Tribunal is vitiated. The Tribunal without framing a point ‘whether the petitioner is a member of the 1st respondent society prima facie’ ? and without the admission of the petitioner, arbitrarily held that the petitioner transferred his membership in favaour of third parties. Aggrieved by the said order the petitioner in the interest of himself and other members of the society/employees preferred the present Writ Petition by way of Writ of Certiorari. 11. It is also averred that the BDL Bhanoor, Medal District Employees, in the year 2000 formed a Housing Society in the name and style of ‘BDL Employee’s Housing Society, Bhanur with an object of providing house sites to the industrial workers who are not holding any house or plots. The said society on 25-1-2000, issued a circular stating that “All of our Employees aware that BDL Housing society is to be registered with registrar of Societies, Sanga Reddy for the registration of Society caution deposit is to be made and all the interested Employees can enroll their names by paying membership fee to society promoters “ 12. The said circular was issued in the name of Chief Promoter S.Shankariah. The said society collected Rs. 500/- from 934 employees. The society issued receipts for Rs. 150/- out of which Rs. 100/- towards Membership Fee and Rs. 50/- towards Administrative charges and balance amount of Rs. 350/- was collected to meet the expenditure for procuring land and to run the affairs of the society. No receipt was given for collection of Rs. 350/- by the society. The Chief Promoter of BDL Employees Housing society made a representation dated 28.6.2000 to the Government requesting for independent house sites instead of Multistoried buildings and the same was rejected by the Govt. vide G.O.Ms. No. 528, dated 28.9.2000. After due persuasions by the management of BDL and BDL Housing Society, the Govt. of A.P. allotted 32 Acres of land through APIIC i.e. 5th respondent herein for independent house sites to its employees instead of Multistoried flats. The Govt. of A.P. vide G.O. Ms. No. 18, Industries and Commerce (Inf) Department, dated 4.2.2003, referring the letter of the Deputy General Manager, BDL dated 22.2.2002, allotted land to the BDL Employee’s Housing Society and the said G.O. laid a condition that maximum plot area shall be 200 Sq.yds. Basing on the said G.O., on 14.05.2003 the 5th respondent allotted Ac.31.605 to the BDL Housing Society in survey No. 267 P, 268 P, 269 P, 280 P and 285 P situated at BHEL, Ramchandrapuram, Medak District. The Managing Committee of BDL Employee’s Housing Society stated in circular dated 25.01.2000 as ‘the BDL Employee’s Housing Society is to be registered with the Registrar of Societies’ and basing on the same and also on the advise of the Govt. authorities to have a registered society, the BDL Employee’s Housing Society Managing Committee registered the 1st respondent society under APMACS Act in the name of Style of Bharat Dynamics Bhanur Employees Mutually Aided Cooperative Housing Society Ltd., (BDBEMACHS Ltd) and was registered vide Regd. No. AMD/MDK/DCO/2002/55, dated 8.4.2002 at Sanga Reddy, with the promoters of BDL Housing Society as Board of Directors of registered society and the earlier chief promoter S. Shankaraiah as Secretary. For the registration of the 1st respondent society, the management of the BDL Employee’s Housing Society has nominated the Chairman and Directors with almost several promoters of BDL Employee’s Housing Society as Board of Directors to the registered 1st respondent society and the earlier chief promoter S. Shankaraiah as Secretary and the said Secretary is still continuing to the 1st respondent society. 13. Further it is also stated that after registration of the 1st respondent society, no separate membership drive was conducted. The Board of Directors of 1st respondent society categorically stated that all the 934 members who paid Rs. 500/- shall be the members of the 1st respondent society. There are approximately 1200 employees working in the BDL, Bhanur Unit, out of them 934 employees enrolled in the BDL Employee’s Housing Society by paying Rs. 500/-. The 1st respondent society did not allow the other employees of the BDL, Bhanur who did not pay Rs. 500/- as members of the 1st respondent society. The BDBEMACHS ( The 1st respondent Society) on 27.9.2002 submitted list of 934 eligible members in the society to Senior Manager, APIIC and in turn the Executive Director APIIC, Gonela, I.A.S., by his letter dt. 28.9.02 addressed to the Principal Secretary, Industries and Commerce Department furnished list of 934 members of BDBEMACHS Ltd., and basing on the same, the Govt. of A.P., vide G.O.Ms. No. 18, and the Zonal Manager, APIIC, by his letter dt. 14.05.2003 addressed to M/s. BDL Housing Society, Bhanur and 1st respondent society allotted land to the extent of AC.31.605 with specific conditions of allotment to the members. The condition from clause ‘a’ to ‘i’ are relevant for adjudication of this petition. 14. Sec. 6 of APMACS Act, 1995 states that a Society to be a body corporate and it is having perpetual succession and common seal and under ‘sub clause (2)’ all transactions entered into in good faith prior to registration, in furtherance of the objectives of the co-operative society shall be deemed to be transactions of the cooperative society after its registration. 15. Therefore the 934 members of the BDL Employee’s Housing society prior to registration are deemed to be the members of the 1st respondent society subject to the eligibility criteria that they shall not have availed House Building subsidy, not the member of any other Housing society and not having own house. The 1st respondent society is moving around the said 934 employees of BDL, Bhanur only and they imposed self-prohibition not to approach other than 934 members of BDL Employee’s Housing Society. The 1st respondent society determined to do activities to the said 934 members only even otherwise eligible. An amount of Rs. 350/- was collected from each member of the BDL Employee’s Housing Society to meet the expenditure for procuring land and to run the affairs of the society and they successfully procured land from Government vide G.O. Ms. No. 18 and also in formation of 1st respondent society. The BDL Employee’s Housing Society is a bud and the bud is metamorphosed in to flower of BDBEMACHS Ltd (i.e. 1st respondent society) at the cost of Rs. 350/- of each member of BDL Employee’s Housing Society and the 1st respondent society members are enjoying the fragrant of flower. These 934 members each invested Rs. 350/- and their investment was utilized in the formation of 1st respondent society. 16. The conditions laid down by the 1st respondent society for allotment of plot are as hereunder:- a) The Individual should be an employee of BDL. b) Employee should not have availed HBA/interest subsidy from BDL company. c) Employee should not be a member belonging to any other housing society. d) Of both wife and husband are employed in BDL one of them only will be considered for membership provided either of them are not a member beneficiaryof any other similar society. 17. The 1st respondent society issued a circular dated 10.3.03 wherein it is categorically stated that ‘the total land of 32 Acres will accommodate 450 members only as per HUDA norms and each plot area admeasures 200 Sq.Yds. “ Keeping in view of the above we invite the Rs. 500/- paid employees who are interested to build the house on need based, may please pay Rs. 32,020/- only as deposit towards land cost and Development charges initially. Only such employees will be given priority based on ‘first come first serve’ principle and ceiled about 450 members adjusting within sanctioned 32 acres of land as per the HUDA norms. The rest of the employee’s amount i.e. Rs. 500 will be paid back shortly. . . . The last date of depositing said amount in bank will be 20- 3-2003”. 18. It is also stated that the 1st respondent society asked to pay Rs. 32020/- only as deposit towards land cost and development charges initially not towards the membership fee and admission fee. The 1st respondent society did not ask for new membership in their society at any point of time as already 934 members were enrolled in BDL Employee’s Housing Society and they are deemed to be the members of the registered 1st respondent society. And there was no necessity for the 1st respondent society to go for new membership enrollment. 19. It is further stated that in the said circular, the 1st respondent society stated that there is provision only for 450 house plots for members as per the HUDA norms, so they cannot accommodate plots to 934 deemed members, therefore the 1st respondent society declared to return rest of the employees’ amount. The 1st respondent society is taken the liability of the BDL Employee’s Housing Society because both are one and the same, otherwise the 1st respondent society did not come forward to return the Rs. 500/-. From this liability of return of Rs. 500/-, it is crystal clear that the amount of Rs. 500/- collected is invested for the formation of the 1st respondent society and procurement of land and the same money is used for running the affairs the 1st respondent society. In the said circular nothing is mentioned about membership Fee amount of Rs. 2000/- and Rs. 20 towards admission fee. Except society office bearers, the other members out of 934 have no knowledge with regard to the bye law of membership fee amount of Rs. 2020/- till 2007 and when some of the members, who paid Rs. 500/-, filed cases before the Tribunal and the society never called for any separate membership for the registered society under APMACS Act. 20. As per the By-laws of the 1st respondent society - Clause 3.1 says that “Any Employee of the Bharat Dynamics Limited, Bhanur may be admitted by the board as a full-fledged member of the society on payment of at least one share of Rs. 2000/- and Rs. 20/- as entrance fee”. Clause 3.3 says that “The applicants have to apply for membership in such form as required and specified by the Board and submit it to the Chair person/secretary who will in turn place it before the Board for approval. The decision of the Board on this matter is final subject to the provision of the Act. The applications shall be disposed within 90 days from the date of application and decision together with reasons shall be communicated to the applicants”. 21. Further it is stated that the 1st respondent society did not prepare any application form for membership and they did not take signature of any employee of BDL, Bhanur on it as there was no necessity for them, as already there are 934 members were enrolled in BDL Employee’s Housing Society in the year 2000 and the same members are being considered as the members of the 1st respondent society. To become a member of the 1st respondent society, the society has to collect at least one share of Rs. 2000/- and Rs. 20/- as entrance fee, subsequently only they are entitled to collect any amounts towards land cost, advance amount etc. But in the instant case the 1st respondent society first collected Rs. 32020/- in one pay- in-slip. As per Bye-laws of the 1st respondent society, every member has to pay initially Rs. 2020/- on pay-in-slip at Bank and the said pay- in-slip has to be enclosed along with the application form for membership and after accepting the membership only, the enrolled member has to pay other amounts such as land cost, advances etc., and the said procedure is not at all followed in the 1st respondent society. That is the reason, the ineligible members were recruited in the 1st respondent society. The 1st respondent society insisted that all the payments have to be made through pay-in-slip in Andhra Bank, Bhanur branch in SB A/c. No. 9048. The reason behind skipping of this procedure is that they do not require no more membership as already there are 934 members. 22. It is also stated that the 1st respondent society categorically stated that Rs.32020/- has to be paid in Andhra Bank, Bhanur Branch in SB A/c. No. 9048 from 10-3-2002 to 20-3-2003, but the 1st respondent society closed receiving amount within one and half day. Thereafter they refused to receive deposit amount stating that already 541 employees have deposited the said amount. The petitioner with the help of Secretary managed the bank officials and paid money and some other employees were curtailed the chance of payment of Rs.32020/- because huge rush at the Bank counter. After processing, on 22.3.2003, the 1st respondent society had displayed the list of 325 members as eligible and return back the amounts of 216 employees stating that they are ineligible as per the conditions laid in the circular. In view of the above, many members who paid Rs. 500/- in BDL Employee’s Housing Society were unable to pay money due to closing of receiving of money within 1 ½ day. 23. Further it is averred that the 1st respondent issued circular dated 22.3.2003 and categorically stated that “it is informed that after allotting members, leftover plots will be allotted afresh by intimating to the eligible members in future”. This statement clarifying that among eligible members in 934 members of the BDL Employee’s Housing Society being allotted plots, later if any plots remained un-allotted, such plots will be allotted afresh to the remaining 934 employees out of total strength of 1200 employees working in BDL, Bhanur. It is pertinent to mention that there are still 125 memberships/plots are vacant out of 450, to fill the same the 1st respondent society will make another attempt. The petitioner had an opportunity to pay Rs. 32020/- on 13.3.2003. In the above notice, the office bearers gave an undertaking that the existing members would be adjusted in the left over plots by initiating the allotment process afresh. In the guise of making such assurance, the members who paid Rs. 500/- kept quite otherwise would have agitated over the manner in which collection of Rs.32020/- was derailed abruptly within 1 ½ day .. 24. It is further stated that the principle that “first come first serve” basis was invented by the office bearers of the 1st respondent society to distribute the fruits of the society only to their select few. The entire mischief in the process to allot plots had been done by the office bearers taking advantage of this phrase. In fact, it had no nexus with the objects sought to be achieved by the society at all. The society could have worked out some other intelligible ratio for distribution of the house plots. The society having fixed the last date of depositing the said amount of Rs.32020/- in the bank as 20-3-2003, the society’s management had no authority to windup the collection of the same before 20-3-2003 even if the number of payments had increased from 450. By fixing the principle - first come first serve and winding up the collection of initial amount before 20-3-2003, the office bearers had played fraud upon the genuine members of the society. The principle of first come first serve does not apply to a co-operative society, the Model Byelaws says that any co-operative society initially have to complete the admission of membership before making any application to the Government for allotment of land and accordingly the 1st respondent society before registration in the year 2000 made membership drive of 945 members by collecting Rs.500/- under BDL Housing Society and for registration of 1st respondent society. The 1st respondent society having taken membership they have to allot house sites by draw of lottery as per the directions of the effective and proper functioning for the cooperative societies in the state of A.P. 25. Further it is stated that a report is prepared by the Secretary of the 1st respondent society with his own signature on 9.7.2003 and it is not circulated to any of the members and the same is kept with