WP(C)No. 1064 of 2007 Page 1 of 28 * HIGH COURT OF DELHI % Date of decision: August 29, 2008 + WP(C)No. 1064/2007 Anjuman Cooperative Group Housing Society Ltd. (Regd.) ..Petitioner through Mr. Ravinder Sethi, Sr. Advocate with Mr.Sumit Bansal, Advocate Versus Registrar of Cooperative Societies & Ors. ..Respondent through Ms. Sujata Kashyap, Advocate for respondent No.1-RCS Mr. Rajiv Bansal, Advocate for respondent No.2-DDA Mr. Harish Gulati with Mr. Anidya Malhotra, Advocates for CBI Mr. R.K. Gupta with Mr.Vimal Wadhawan, Mr. M. Goel and Mr. V.K. Mehra, Advocates for Objectors Mr. V.K. Tandon with Mr. Prem Mishra for Objector Mr. S.M. Chopra, Amicus Curiae Coram : Hon'ble Mr.Justice Manmohan Sarin Hon'ble Mr.Justice Sudershan Kumar Misra (1) Whether reporters of local paper 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 Manmohan Sarin, J. 1. Petitioner Society through its Secretary Mr. V.Subramaniam, has filed the present writ petition seeking a direction to the Delhi Development Authority, respondent No.2 herein, to issue the WP(C)No. 1064 of 2007 Page 2 of 28 Completion Certificate and grant Provisional Occupancy Certificate to the Society. A writ of mandamus is also sought directing the respondent No.1 Registrar, Cooperative Societies and respondent No.2, DDA to hold a draw of lots for allotment of flats to the members of the petitioner Society. 1. Background facts: (i) It is averred in the petition that originally, employees of Bharat Electronics Limited, Ghaziabad, had founded the Society in the year 1983 with 90 members having a freeze strength of 120 members. The Society had on 14.8.1990, resolved that members should contribute towards future cost of land @ Rs.2,000/- per quarter from October, 1990. The amount of contribution was reduced to Rs.1,000/- per quarter. Finally, on 16.10.1991, it was capped at 5 instalments of Rs.1,000/- each, totaling to Rs.5,000/-. The Society resolved to expel 29 members for default in payment towards the future cost of land. These members, it is claimed, had failed to make the payment despite repeated notices. On 8.11.1992, their share money was forfeited. On 23.4.1993, a list of 111 members was forwarded to the Registrar‟s office in which 9 persons, whose membership had been withdrawn, were to be excluded. This list was not approved on 16.12.1993. On 25.9.1994, the Society decided to refund the deposit towards cost of land as DDA had increased the land prices and members were keen for allotment of land in trans Yamuna area, near to their place of work. It WP(C)No. 1064 of 2007 Page 3 of 28 is at this juncture that Mr. Ashok Goswami and Mr.S.P.Saxena, against whom the CBI after investigations, has registered cases, got involved in the affairs of the Society. (ii) On 5.4.1998, S.P. Saxena, Ashok Goswami and Pramod Kumar became President, Secretary and Treasurer of the Society and the registered office of the Society was shifted to C-34, Madhu Vihar, Delhi. On 23.3.1999, Ashok Goswami applied for allotment of land. S.P. Saxena wrote a letter informing that Registrar, Cooperative Societies had approved list of 120 members to DDA. On 12.11.1999, an offer of allotment of land was made to the Society and finally on 3.5.2000, 7,000 sq. mtrs. of land at Plot No.20, Sector12, Dwarka was allotted to the Society @ Rs.4,063/- per sq. mtr., which was reduced in a Lok Adalat to Rs.3,533/- per sq. mtr. on an application made by S.P. Saxena. The payment in respect of the land was made to the DDA and possession received by Society. It is claimed that the Society applied for the sanction of the lay out and building plans and after its sanction, construction was raised on the plots. (iii) It is averred that in August, 2005, the scam relating to allotment of land to cooperative societies surfaced. It was learnt that an FIR had been lodged and the CBI- respondent No.3 was investigating the numerous illegal acts, omissions and offences of the office bearers of the Societies as also the officers of the Registrar of WP(C)No. 1064 of 2007 Page 4 of 28 Cooperative Societies on the direction of the Court. The affairs of the Society were also being investigated. Accordingly, a meeting was called on 21.8.2005. An Ad hoc Managing Committee was elected. The Ad hoc Committee was asked to continue pursuant to an extraordinary general body meeting held on 22.10.2005. The Registrar of Cooperative Societies was asked to appoint a Returning Officer for holding of the elections of the Society. In another extraordinary general body meeting held on 6.11.2005, members were informed of the progress in relation to the construction and development work. The Society took several steps towards completion of construction by getting the sewerage scheme sanctioned on payment of Rs.11.28 lacs. Further deposit of Rs.14.82 lacs was made with the Delhi Jal Board in September, 2005 towards Infrastructure Funds. „No Objection‟ for the installation of lifts was also obtained. The Society accordingly notified respondent No.1 regarding completion of construction and also applied for issuance of Provisional Occupancy Certificate. (iv) The society on its own submitted the requisite documents to respondent No.1 for allotment and draw of lots. Public notice was also published in newspapers regarding the proposal for clearance of names of 120 members for allotment of flats and inviting objections. The publication was stated to have been in the “Statesman” on 19.12.2005 in English and in “Veer Arjun” on 16.12.2005 WP(C)No. 1064 of 2007 Page 5 of 28 in Hindi. Petitioners also claim that it was their understanding that their name had been removed from the list of 133 Societies against whom investigations were in progress. Petitioner Society is also stated to have deposited penalty to the extent of Rs.12,93,000/- (Rupees Twelve Lakh Ninety Three Thousand only) for grant of extension of time. In short, the petitioners claim to have complied with all the requirements for issuance of the Provisional Occupancy Certificate. It is claimed that although all formalities have been complied by the petitioner Society, the grant of the Provisional Occupancy Certificate as also the case for extension of time was being delayed. The Society had also applied to the BSES for construction of Electric Sub-Station. It is averred that in fact, there is no impediment as the petitioner Society has completed all the requirements and formalities required for grant of Provisional Occupancy Certificate. (v) Members of the Society claim to be belonging to lower and middle class strata of the society. It is averred that the individual members have raised loans from financial and other institutions and contributed about Rs.17,00,000/- each towards cost of the flats. Despite the flats being ready, the members are living in rented accommodation and are paying rent for the accommodation as well as instalments to the financial institutions for the loans taken. It is claimed that members of the Society are not party to any illegal WP(C)No. 1064 of 2007 Page 6 of 28 actions or fraud practised by the members of the erstwhile Managing Committee, who are sought to be prosecuted. 2. Cooperative Scam (i) The position of the petitioner Society vis-à-vis the Cooperative Societies‟ scam is best reflected in the counter affidavit filed by the Registrar of Cooperative Societies. The present Society was amongst one of the 101 Societies being investigated by the CBI under orders of the Court passed in WP(C)No.10066/2004 titled “Yogi Raj Krishna Cooperative Group Housing Society Ltd. Vs. DDA & Ors.” The affidavit highlights the attempts of the Land and Building Mafia to take over the societies. The modus operandi of the Land and Building Mafia to take over the cooperative societies and subvert the cooperative movement was sought to be achieved by purchasing defunct societies, obtaining resignations of members and enrolling new members of their choice by charging premium, after having obtained the benefit of allotment of land at concessional/subsidized rates by the DDA to the Society. It was averred that the group housing societies had been revived by promoters and builders having vested interest after forging the signatures of the original members and thereafter, submitting forged affidavits. Fake resignation letters of the original members had been submitted. Manipulation of record had taken place and there appeared to be a WP(C)No. 1064 of 2007 Page 7 of 28 strong nexus between the Builders‟ Lobby, officials of the Registrar, Cooperative Societies and DDA in the whole process of revival of the defunct societies. It was also averred that advantage was taken of the unamended Rule 24(2) of the Delhi Cooperative Societies Rules, which required notifying of the vacancies for membership in newspapers only where lay out and building plan had been approved and not in other cases. The affidavit also sets out the steps being taken by the Registrar, Cooperative Societies to ensure transparency in the process of enrolment of members. (ii) As regards the present Society, it was averred that the FIR had been registered and as per the FIR filed by CBI, one Mr.Uttam Kumar Sharma had contacted Mr. R.K. Bansal, the then Treasurer of the Society, proposing transfer of the control of the Society to others. Thereafter, Mr.Ashok Goswami was introduced to Mr. R.K. Bansal and Mr. Rakesh Kumar Sharma, the then Secretary. Mr.Ashok Goswami offered to pay a sum of Rs.5,100/- in lieu of each resignation letter arranged by the Managing Committee. Undated resignation letters were obtained from some members for which, they were paid Rs.5,100/-. The scrutiny of the records revealed that the resignation letters and receipt of refund of 29 expelled members, who were expelled in 1992, were available in the file even though the resignation letter was shown to have been submitted in the year 2000. WP(C)No. 1064 of 2007 Page 8 of 28 (iii) During the investigation, 10 out of the 29 members stated that they had never resigned from the Society and the resignation letters did not bear their signatures. The DDA in its affidavit has averred that Plot No.20 in Sector 12 was allotted in the year 2000. It averred that till the inquiry and investigation was completed, it was not possible to issue Completion Certificate and Provisional Occupancy Certificate. Further, that the draw of lots for allotment of flats can be done when approved list of members of the Society for allotment of flats is received from respondent No.1. 3. Proceedings and Investigation (i) During the proceedings of the writ petition, the Court was informed that the CBI has been carrying on investigations and was in the process of preparing final complaint and in some cases was awaiting sanction. The CBI filed its action plan as also status report with regard to the societies under investigation. Several documents had been sent to the Examiner of questioned documents and their reports were awaited. On 5.7.2007, the Bench had taken up the present case separately from the other societies, when the Court was informed that the construction was complete and the flats were suffering attrition due to disuse. CBI investigation had revealed that out of 120 original members, resignations had been furnished by nearly 91 members over a period of 10 WP(C)No. 1064 of 2007 Page 9 of 28 months. 29 members were expelled resulting in 125 new members being enrolled. It was claimed that the resignations of original members were not genuine and had been fraudulently obtained or were forged and dishonestly induced. (ii) Mr.Harish Gulati, counsel for CBI, informed that Charge Sheet had been filed against Mr. S.P. Saxena and Mr.Ashok Goswami, former office bearers of the Society. There was also the question of premium being paid by the newly enrolled members. Investigations had further revealed that M/s. N.G. Constructions had advanced a sum of Rs.25 lacs for payment of land cost to DDA in lieu of the understanding that the contract for construction would be awarded to them. (iii) Vide orders passed on 5.7.2007, it was directed that the exercise of ascertaining and verifying the original members and their current addresses should be undergone and they be given an opportunity of putting their case with regard to the resignation/expulsion and cessation of their membership. The modalities of reconciling the interests of members, who had been enrolled, were also to be considered. Further, directions were given vide our order of 11.7.2007 to the CBI to verify the factum of resignations. CBI was also directed to indicate whether the investigations had revealed any relationship, business or otherwise or close proximity of WP(C)No. 1064 of 2007 Page 10 of 28 the new members, who had been inducted, with any of the accused persons. (iv) The Court appointed Mr.S.M. Chopra, retired Additional Sessions Judge, to act as a Local Commissioner and Amicus Curiae with the task of considering the objections as may be received in respect of the resignations/expulsion of the original members. During the course of proceedings, the Local Commissioner and Amicus Curiae had filed the interim report as also the final report to which, we shall advert later on. (v) Pursuant to the directions given, public notices inviting objections against cessation of membership following the resignations/expulsion, were published in the newspaper. A copy of the notice inviting objections was also despatched by the Amicus Curiae directly to the original members, who had resigned or had been expelled. 4. Evaluation of Objections (i) The Local Commissioner and Amicus Curiae in his report, has noted the saga of resignations/inductions for various periods and the numberings being given. It is not feasible for us in these proceedings to deal with each of those resignations and re-inductions, which have finally culminated in the list of 120 members as forwarded by the Society in March, 2005. The Local Commissioner noted that the Registrar of Cooperative Societies proceeded on the basis of resignation letters and not WP(C)No. 1064 of 2007 Page 11 of 28 approved the resolution of the Society for expulsion of members due to non-observance of complete statutory formalities. The Local Commissioner, therefore, had rather than giving the evaluation in respect of the members, who had been expelled, recommended that their objections could be offloaded to the Registrar of Cooperative Societies and the contesting parties could be left to avail of their statutory remedies. We are, however, of the view, considering the construction, which is complete, and objections having been invited, that any case, which has complex facts and which requires further probe, can be decided on the lines of the decision taken on the basic issues raised in the objections and decided in the writ petition. (ii) We are first dealing with the issues emanating from the objections filed by members whose resignations are stated to have been forged or wrongfully obtained or those, who have challenged their expulsion as being contrary to the provisions of the Delhi Cooperative House Building Society and its Rules and thereafter, specifically with the case of 9 objectors. (iv) We may, at this stage, notice that 44 objections were received in response to the public notices issued inviting objections. In 30 out of these 44 cases, the factum of submission of resignation is admitted before CBI and otherwise. In 11 cases, the resignations are stated to be forged. Learned Amicus Curiae in his report dated WP(C)No. 1064 of 2007 Page 12 of 28 17.3.2008, submitted that out of 11 cases, 9 objectors namely, Chand Singh, R.D. Trivedi, Vijay Shankar, P.C. George, Sajan Prasad, Shashikant, C.V. Verghese, P.Shankar Nair and R.P. Saini, the resignation letters have been found to be forged by the General Examiner of Questioned Documents (GEQD). The opinion in respect of Jitendra Nath and Ms. Maninder Kaur was awaited. As regards the resignation of 30 objectors wherein the resignations are admitted. It is sought to be urged that the same have been accepted in contravention of the Rules, norms and directions laid down by the RCS in dealing with the objections. Ms. Shashi Verma would also fall in the category of these 30 persons whose resignations are sought to have been accepted contrary to the prescribed norms or Rules of the Delhi Cooperative Societies Rules. 4(A). Submissions of the Objectors: (i) It would be appropriate at this stage to take note of the written submissions filed by Shri R.K. Gupta and Mr.Vimal Wadhawan, Advocates, who represent most of the objectors and whose submissions have also been adopted by the other objectors. (a) The first submission of Mr.R.K. Gupta is that the office of the Registrar of Cooperative Societies has issued directives from time to time dealing with the cases of involvement and acceptance of resignations and the Rules relating to enrolment, WP(C)No. 1064 of 2007 Page 13 of 28 resignations, cessation of membership and expulsion have to be strictly adhered to and in the absence of strict compliance with the same, the acceptance of resignation, cessation of membership or expulsion would not be valid. Reference was invited to Rule 30 of the DCS Rules regarding filling up of vacancies required, advertisement in the newspapers in terms of Rule 30 and its consideration thereof by the Managing Committee under Sub-Rule (4). It is submitted that the petitioner Society has failed to place on record the resolution passed by the Managing Committee enrolling the new members or record of the meetings where the procedure as required under Rule 30 had been followed. (b) Similarly, the resignation under Rule 40 postulates that on a resignation of a member being accepted, there has to be a transfer of whole or of his share or interest in the Society to another member on his death, removal or expulsion. In the instant case, it is urged that petitioner Society had failed to prove on record that alleged resignation letters were tendered by some of the objectors were theirs and these have been placed before the Managing WP(C)No. 1064 of 2007 Page 14 of 28 Committee and so accepted. These could not, therefore, be treated as valid resignations. (ii) It is urged that objections cannot be decided against the objectors who, the Society is claiming, had resigned, since the controversies and disputed facts require evidence. Regarding expulsion, it was submitted that a member could be expelled either on account of persistent default in payment or such member having committed an act which is detrimental to the interest and proper working of the Society. Prior to expulsion, the requirement was service of a registered notice and provision of an opportunity to represent his case. Reliance was placed on the directives issued under Rule 77 of the Cooperative Society Rules 1973 as also on the judgment of the High Court of Delhi in “R.K. Aggarwal Vs. Registrar, Cooperative Societies, Delhi and Ors.” reported at 45 (1991) DLT 105 in support of the strict compliance with Rule 36 and in the absence of proof of registered notices having been sent, the action of expulsion would be non est. (iii) We have considered the reports and response as filed by the CBI as also of the Registrar of Cooperative Societies, the reports of the Amicus Curiae and the objections filed by the Objectors. The following position emerges: 30 objectors which appear at Sl. Nos. 3, 5, 6, 8, 11, 12, 13, 15, 16, 17, 18, 19, 21, 25, 27, 29, 30 to 39, 41, 42 and 44 in the affidavit by the Registrar, WP(C)No. 1064 of 2007 Page 15 of 28 Cooperative Societies are persons, who have confirmed their respective signatures on the resignation letters before the CBI. These objections are without merit and not sustainable. Eleven objectors have denied their signatures on the resignations which have been found to be forged by the GEQD. These are objectors at Sl. Nos. 2, 7, 9, 10, 14, 20, 22, 23, 24, 26 and 43. The objectors at Sl. No.40 did not cooperate or give information to the CBI as required. Hence, verification and input from CBI could not be received and objection remained unsubstantiated. The objector at Sl. No.4 has not yet been recognized as a member by RCS and his objection, therefore, is misplaced and does not deserve any consideration. Another objector referred to at Sl. No.1 expired in 1995 and it is his LR who is agitating the claim and is being separately considered. (iv) We are of the view that members of the Society, who had tendered their resignations in this case to the Society and received refund of membership fee and the amount paid by them, cannot be permitted belatedly after a gap of a number of years to wake up like „rip van winkle‟ and then seek to claim membership from which they had tendered resignation. This is especially so when it is obvious that the realization and urge to stake a claim for membership WP(C)No. 1064 of 2007 Page 16 of 28 and consequently a flat, has been ignited by the spiraling prices in the value of real estate. These objectors cannot be permitted to displace others who have been enrolled in their place especially when the latter have during this interregnum of a number of years, made payments towards the price of flat. (v) Learned Senior Counsel Mr.Sethi is right in his submission that the petitioner Society after allotment of the land got the building and other plans approved and with the contribution from the newly enrolled members, constructions have been raised and flats are now ready for occupation. The objectors, who had chosen to resign from the Society cannot now be permitted to take advantage of any non-compliance or non-observance of all the Rules concerning acceptance of resignation to urge that their resignations be now ignored and they continued to be members, entitled to allotment of flats for which they had not paid any consideration but are now willing to do so in view of the spiraling and manifold rise in the cost of the real estate. The objectors after resigning and having received their refund of membership fee and other dues, merrily stayed back, while the others toiled and made the payment for construction of the flats. The flats being ready for occupation, they cannot now be permitted to urge that their resignations were not valid and hence, they are members and they should be allotted flats. It is rightly WP(C)No. 1064 of 2007 Page 17 of 28 said that “Vigilantibus, et non dormientibus, jura subveniunt – The vigilant, and not the sleepy, are assisted by the laws. (vi) Similar will be the position of the members, who claimed that their resignations had not been furnished by them voluntarily and had been obtained under coercion. As regards members, who had been expelled, petitioner Society contends that they had, despite notices, failed to tender the amounts due. Various opportunities were given to them to make the payment of the costs of the land in instalments but they failed to do so and consequently, as a result of resolution passed in the meetings duly held, were expelled. It is also significant that none of these objectors after their expulsion when the flats were to be constructed and instalments were being paid by others enrolled in lieu of them, took any steps to assert their rights. Without even going into the question of their forged resignations and treating the same as non est, the situation would not change because of their persistent default in making payment of the amount demanded followed by expulsion and their failure to challenge or dispute the same. We may note here that none of the objectors had on their own, initiated any proceeding or action to assert their rights. It is only when after the public notice had been taken out and a communication had been sent by the Local Commissioner that the claim is sought to be asserted. WP(C)No. 1064 of 2007 Page 18 of 28 (vii) We have also perused the reports of the CBI to ascertain whether any of the members enrolled in lieu of the earlier ones were involved in the commission of any of the offences or were in peri delicto with the office bearers against whom the charge