IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 6226 of 1996 For Approval and Signature: Hon'ble MR.JUSTICE M.S.PARIKH ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements? 2. To be referred to the Reporter or not? 3. Whether Their Lordships wish to see the fair copy of the judgement? 4. Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? -------------------------------------------------------------- ZOROASTRAIN CO OPERATIVE HOUSING SOCIETY LTD Versus DISTRICT REGISTRAR CO OP. SOCIETIES (URBAN) -------------------------------------------------------------- Appearance: MR MIHIR H JOSHI for Petitioners MR AJ PATEL with MR RAVINDRA SHAH for Respondent No. 1 MR SHIRISH JOSHI for Respondent No. 3 SERVED BY DS for Respondent No. 4 -------------------------------------------------------------- CORAM : MR.JUSTICE M.S.PARIKH Date of decision: 16/01/97 JUDGEMENT 1. The petitioner no.1, a co-operative housing society registered under the Bombay Co-operative Societies Act, 1955, and petitioner no.2 a member and the President of the petitioner no. 1 society have invoked extra-ordinary jurisdiction of this Court under Article 226 as also under Article 227 of the Constitution of India seeking following reliefs :- "(A) .. be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction quashing the directions of the 1st respondent vide letters dated 2/5/1995 at Annexure-N hereto and 16/8/1995 at Annexure-O hereto, (B) .. be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate order or direction quashing and setting aside the orders dated 28/5/1996 of the learned Nominee at Annexure-K hereto and that of the Tribunal dated 8/8/1996 at Annexure-L hereto and be pleased to further restrain the respondents nos. 2 and 3 and/or their agents for putting up any construction on plot no. 7 of the petitioner-society without permission of the petitioner-society, (C) .. be pleased to issue a writ of prohibition or a writ in the nature of prohibition or any other appropriate writ, order or direction restraining the respondent no. 1 from proceeding further with the appeal filed by the 2nd respondent u/S. 24 of the Gujarat Co-operative Societies Act against rejection of transfer of membership vide application dated 18/6/1996, (D) .. be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other writ, order or direction declaring the transfer of plot no. 7 by respondent no. 2 to the respondent no.3 as contended by respondent no. 2 as being illegal, void, non-est and not binding on the petitioner-society." 2. Broad facts on which the petitioners have sought the indulgence of this Court may be stated from the synopsis of dates and events : The petitioner-society was registered under the Bombay Co-operative Societies Act with the object of constructing houses and it is the say of the petitioners that bye-laws were framed restricting membership to Parsis. It is the further say of the petitioners that the objects of the petitioner-society also included construction of houses meant for the purpose of residence. On or around 26/9/1985 the respondent no.2, a member of the petitioner no.1-society gave application to construct residential-cum-commercial building on plot no. 7 occupied by him as the member, after demolishing his existing residential building. On or around 4/8/1986 such permission came to be rejected by the society on the ground that the commercial use was prohibited under the bye-laws. It is the say of the petitioners that such a stand was accepted by the respondent no.2. On or around 10/3/1988 second application for development was made for construction of ground floor plus nine floors (56 blocks) by the respondent no. 2 for constructing residential accommodation. It is the case of the petitioners that on 17/5/1988 conditional permission for development was granted inter-alia saying that the flats would be allotted for residential accommodation of Parsis, that the respondent no. 2 would be continued to be member of the society in respect of plot no. 7 and that additional taxes, if any, would not be borne by the petitioner no. 1-society. 3. It is asserted by the petitioners that nothing was done by the respondent no. 2 pursuant to the aforesaid permission till may 1995 i.e. for a period of 7 years. However, apprehending transfer of plot no. 7 by the respondent no. 2 and construction of residential-cum-commercial complex, the petitioner no. 1 society filed a suit before the Board of Nominees bearing Lavad Case No. (Arbitration suit no.) 570 of 1995. The learned Board of Nominee granted order of status-quo in the said suit. He, however, after hearing the learned advocates for the parties to the suit vacated the status-quo by order dated 28/5/1996. The matter was carried before the Gujarat State Co-operative Tribunal at Ahmedabad in Revision Application No. 112/1996. In that Revision Application an application for stay bearing exh. 5 was moved by the petitioner no. 1 society and after hearing the said stay application learned Member of the Tribunal by his speaking order dated 8/8/1996 dismissed the stay application exh. 5 at that stage. As stated above the petitioners have challenged the aforesaid two orders, namely the order of the Board of Nominee and the order passed by the Tribunal, before this Court in this petition. 4. In the meantime on or around 2/5/1995 the Registrar issued direction to the petitioner no. 1 society to delete the condition of permission granted by the society restricting development of residential accommodation only for the Parsis. Reference has been made to page 89 in this connection. The second direction came to be issued by the Registrar on or around 16/8/1995 to delete the condition as aforesaid and to grant application for the transfer of the plot by the respondent no.2. It is the stand of the petitioners that at both the relevant points of time there was no application for transfer of membership pending before the society. However, on 18/6/1996 the respondents nos. 2 and 3 filed an application for transfer of membership in respect of plot no. 7 and since the proposed transfer was contrary to the bye-laws of the society and the provisions of the Gujarat Co-operative Societies Act, 1961 (Gujarat Act No. 10 of 1962) 'the Act for short', the petitioner no. 1- society rejected the application on 24/6/1996. The respondents nos. 2 and 3 filed appeal against the said rejection of transfer of membership, by the petitioner no. 1 - society, before the District Registrar (respondent no. 1 herein) u/S. 24 of the Act. The petitioner no. 1- society received summons in respect of the said appeal on or around 13/8/1996. Apprehending that the District Registrar being the appellate authority, whose one of the officers, namely Registrar, had earlier issued directions to the petitioner no. 1society to delete the condition of permission granted by the society restricting development of residential accommodation only for Parsis, the petitioners have challenged the pending proceedings u/S. 24 of the Act before the District Registrar as can be seen from the reliefs quoted hereinabove. 5. There being a caveat from the respondent no. 2, the respondent no. 2 was heard at the admission and following order was passed :- "Heard. Rule returnable on 3/9/1996. Learned counsel Mr. Patel waives service on behalf of respondent no.2. Issue notice to the remaining respondents. In the meanwhile the parties are directed to maintain status-quo as on today. D.S." After the matter was admitted as aforesaid the respondent no.2 filed affidavit in reply dated 27/8/1996 raising the questions with regard to maintainability of the petition on the ground that interim orders have been challenged in this petition and that pending proceedings have also been called in question. Challenge is also levelled on the ground of multifariousness and availability of alternative remedies. It is the say of the respondent no. 2 that he had filed written statement on 9/8/1995 in the Lavad Case filed by the petitioner no. 1 - society and he inter-alia contended that the property in question was transferred to a non-trading corporation, who was not impleaded as a party. It is asserted that the geographic position of the society is such that it would not be possible to contend that admission of non-Parsis as members would disturb or hamper the ethic atmosphere of the society. The society is divided into 4 different parts and each part constitutes an independent division having no connection with the other devision. There are various high-rise buildings around the petitioner-society. It is the stand of the respondent no.2 that the members of the petitioner-society have been carrying on and running various commercial activities in the society. The President of the society himself is running a motor garage where many oil tankers and heavy vehicles are parked. Other members are also carrying on commercial activities. The respondent no.2 got the plans approved from the Ahmedabad Municipal Corporation on or around 22/9/1996 and spent about Rs.8,19,587/- towards the conversion, licence fees, security deposits, parking deposit and other charges. The respondent no.3 filed affidavits dated 2/9/1996 and 7/11/1996 raising the same contentions as have been raised by the respondent no.2. The respondent no. 3 asserted that no writ could be issued to the respondent no. 3 as respondent no. 3 could not be covered under Article 12 of the Constitution of India. It is finally asserted by the respondent no. 3 that even the very existence of the disputed bye-law restricting transfer only in favour of Parsis is under dispute in the Lavad suit. The respondents have therefore sought dismissal of the writ petition. 6. I have heard the learned advocates appearing for the rival parties. The principal question stated to arise in this petition is whether the petitioner no.1society is within its rights in refusing permission for commercial development in a co-operative housing society and rejecting application for transfer of membership in favour of non-Parsis. The impugned orders and the proceedings which have been challenged in this petition basically rest upon a prima-facie conclusion on the question whether any such bye-law, if in existence, can be said to be legal and valid. 7. The bye-law alleged to be in existence is the bye-law no.7. It would read as under :- "7. All persons, who have signed the application for registration are original members. Other members shall be elected by the committee provided that all members shall belong to the parsi community." 8. Both the learned Nominee and the Member of the Tribunal have answered the question against the petitioner no.1- society holding that the aforesaid bye-law is unconstitutional and illegal in as much as it absolutely bars transfer of membership/transfer of members' right to immoveable property. The provisions of the Constitution of India and the provisions of the Act and the Rules made under the Act as well as the Transfer of Property Act came to be canvassed before the lower adjudicating authorities. It has been concluded that the property in housing society is heritable and transferable and bearing in mind the principle of open membership u/S. 24 of the Act read with rule 12(2) of the Rules, which has been held intra vires by a Division Bench of this Court in Jain Merchants Co-op. Housing Society Ltd. v/s. H.U.F. of Manubhai reported in 36(1) G.L.R. p. 19, there is no prima-facie case for restraining the transfer to a non-parsi. With regard to construction of flats it has been held on prima-facie consideration of the facts that the plans have been signed by the respondent no. 2 and none else and that bearing in mind the petitioner no,1 society's letter dated 17/5/1988 it would be lawful for the flats being constructed in the plot/property held by the respondent no.2. It has been held that since the plans have been approved by the local authority the construction according to plans cannot be restrained. The respondent no.3 being not a party to either of the proceedings before the learned Nominee or the learned Tribunal, no order could be passed in favour of or against the respondent no.3. However, at that interim stage the application exh. 5 for granting status-quo/stay was dismissed pending the revision application before the Tribunal. 9. It has been submitted on behalf of the petitioners that the impugned orders of the learned Nominee and the learned Tribunal are not legal and they deserve to be quashed for the following reasons :- (A) Any construction by the 3rd Respondent is illegal and the society is entitled to injunction - (i) Respondent No.3 is not entitled to become a member of the society as per its bye-laws and as contemplated under the Act vide Sections 22, 24 and Rule 11, 12 and 18 of the Rules and has not been accepted as member of the society and is therefore not entitled to put up any construction on the plot of respondent no.2. (ii) In any case construction of residential-cum-commercial complex is contrary to the bye-laws of the society and against the conditional grant of permission dated 17/5/88 and contrary to Art. 19(1)(c) of the Constitution. (iii) Such development would seriously jeopardise the fragile culture of the Parsi community which has a worshipping place adjacent thereto and community activities like Charitable blocks, etc. being carried on. (B) In any case respondent no. 2 cannot at all claim a right to transfer the membership to respondent no.3 or to construct residential cum commercial complex for the following reasons :- (i) The Bye-laws of the society prohibit such action and respondent no.2 is bound by the same. (ii) Respondent no.2 has accepted rejection of the first application for commercial development and in the second application has applied for permission for residential accommodation to be allotted to Parsis and accepted the condition placed by the society and is therefore, estopped and precluded from claiming otherwise. (iii)The society has resolved on 8/4/68 as well as on 26/1/94 to transfer membership only to Parsis and in fact in the last 70 years of its existence there has been not a single instance of transfer to Non-Parsis and the respondent no.2 is therefore bound by the same. (iv) The respondent no.2 cannot claim to transfer his membership as a matter of right since the right to property is subject to limitations by law and is not absolute and the provisions of the Act more particularly sections 22, 24, 30, 31 and Rules 5, 7, 11, 12, 18 and 19 indicate the truncated nature of the right which has to be exercised within the parameters. (C) The orders ignore principles of prima facie case, balance of convenience and prospect of undue and irreversible hardship if respondent no.2 and/or respondent no.3 are permitted to construct residential cum commercial complex and the injunction is not granted." 10. In reply the following provisions of the Act and the Rules have been read before this Court :- Section 2(2) of the Act defines "bye-laws" as having been registered under the Act and would include such bye-laws as having been amended from time to time. It has been submitted that bye-laws should be in conformity with the provisions of the Act and the Rules. It has also been submitted that the bye-laws are the species of a contract as among the members of the society and it has no statutory flavour. In fact this submission arises from the settled position of law with regard to nature of bye-laws. Reference in this connection may be made to a decision of the Apex Court in the case of Co-operative Central Bank Ltd and ors. v/s. Additional Industrial Tribunal, Andhra Pradesh, Hyderabad and ors. reported in AIR 1970 SC 245, which has been referred to by a learned Single Judge in B. Anjaneyulu v/s. V.G. Raghunathan reported in 1995 C.T.J. 201. Section 2(13) defines a "member" of a society. It would read as under :- "member" means a person joining in an application for the registrationof a co-operative society which is subsequently registered, or a person, duly admitted to membership of a society after registration, and includes a nominal, associate or sympathiser member. Section 22 elaborates the different types of members of a co-operative society. Reference has been made to sub-section (1) clause (b) of the said provision, according to which a firm, company or any other body corporate constituted under any law for the time being in force or a society registered under the Societies Registration Act, 1860 would be included. Even a group of individuals or a Hindu Undivided Family can be member of a society. Reference in this connection may be made to a division bench decision of this Court in Jain Merchants Co-op. Housing Society Ltd. (supra). Section 4 of the Act deals with the societies which might be registered under the Act. The provision reads as under :- "4. A society, which has as its object the promotion of the economic interests or general welfare of its members or of the public in accordance with co-operative principles, or a society established with the object of facilitating the operations of any such society, may be registered under this Act" Section 8 deals with application for registration of a society to be made before the concerned authority. Section 12 deals with classifications of the societies and the provision would read as under :- "12. The Registrar may classify all societies in such manner, and into such classes, as he thinks fit; and the classification of a society under any head of classification by the Registrar shall be final." It has been submitted that such classification, however, could never include a classification based on religion. What could be the nature of the classification has been stated by making a reference to section 74 C of the Act, which deals with election of members of the committees of certain classified societies, namely, district co-operative banks, primary land development banks, district co-operative sale and purchase organisation, Taluka sale and purchase co-operative organisation, co-operative sugar factories, co-operative spinning mills, district co-operative milk unions and taluka co-operative processing societies. Accordingly, the societies could be validly classified on the basis of the nature of business and/or the activity which one or the other society might undertake. Section 28 deals with voting powers of the members of a society and it is submitted that when a group of persons hold one membership of the society there can be one membership and one vote for such group. Reference has then been made to Sec. 24 of the Act and rule 5 and rule 12 of the Gujarat Co-operative Societies Rules, 1965. Rule 5 deals with bye-laws. Section 24 and Rule 12 would read as under :- "24. (1) No society shall, without sufficient cause, refuse admission to membership to any person duly qualified therefor under the provisions of this Act, the rules and bye-laws of such society. (2) Where the society does not communicate any decision to a person within a period of three months from the date of receipt by the society of his application for admission, such person shall be deemed to have become the member of such society on the expiry of the aforesaid period of three months. (3) Where a person is refused admission as a member of a society, the decision together with the reasons therefor shall be communicated in writing to such person by the society within three months from the date of receipt by the society of the application for admission made by such person. (4) Any society aggrieved by the admission of a member under sub-section (2) or any person aggrieved by the decision of the society refusing him its membership under sub-section (3) may appeal to the Registrar. (5) An appeal under sub-section (4) shall be made within a period of two months from the date of communication to him of the decision of the society, or, as the case may be, from the date of the expiry of the period of three months specified in sub-section (2). (6) The decision of the Registrar in appeal shall be final and shall not be called in question in any court." Rule 12 : "12. Open membership - (1) No Seva Sahakari Mandali or Consumers' Society or Co-operative Milk Producers' Society, shall without sufficient cause refuse admission to membership to any person duly qualified therefore under the provisions of the Act and the bye-laws. (2) No co-operative housing society shall without sufficient cause, refuse admission to its membership to any person, duly qualified therefore under the provisions of the Act and its bye-laws to whom an existing member of such society wants to sell or transfer his plot of land or house and no such society shall without sufficient cause, refuse to give permission to any existing member thereof to sell or transfer his plot of land or house to another person who is duly qualified as aforesaid to become its member. Explanation.- A Seva Sahakari Mandali includes a multipurpose society and a primary agricultural credit society." Reliance has been placed on sub-rule (2) of rule 12. It has been submitted from the reading of the aforesaid provisions that membership has to be open and cannot be restricted without sufficient cause and that such restriction on the ground of religion would obviously be contrary to the provisions contained in the aforesaid provisions of law. The decision in Jain Merchants Co-operative society (supra) has been canvassed both for the aforesaid proposition of law and for dealing with the decisions which have been relied upon on behalf of the petitioners. 11. The first decision which has been relied upon on behalf of the petitioners is contained in the case of Karvenagar S.G.R. Sanstha Maryadit v/s. State reported in AIR 1989 Bombay 392. The learned Tribunal has explained the decision in following manner :- 'In AIR 1989 Bombay 392, the amendment of bye-laws for allowing construction of multi-storeyed building was imposed by the Maharashtra Govt. Notification and it was not voluntary action on the part of the society by a resolution of the general body as in the present case. The facts of the present case in the light of the general body resolution mentioned above, the judgment of Maharashtra Tribunal reported in 1993 CTJ 359 also will not apply to the present case. On similar observations as mentioned above, the judgment of this Tribunal in Revision No. 76/96 also does not apply.' It has, however, been strenuously argued that Article 19(1)(c) and Article 29(1) of the Constitution of India would support the restriction of the kind in the bye-law in question. Article 19 (1) (c) would read as under :- '19. Protection of certain rights regarding freedom of speech, etc.- (1) All citizens shall have the right - xxx xxx xxx xxx (c) to form associations or unions.' Article 29(1) would read as under :- '29. Protection of interests of minorities.- (1) Any section of the citizens residing in the territory of India or any part thereof having a distinct language, script or culture of its own shall have the right to conserve the same.' For lending support to the aforesaid argument a reference has been made here also to the aforesaid decision of the Bombay High Court. Following observations have been read from para. 9 of the said decision :- '9. Even assuming that the State Government has power to give directions as contained in the notification, still the submission of Dr. Naik that the directions are violative of fundamental rights guaranteed under Art. 19(1)(c) of the Constitution and therefore void requires acceptance. Article 19(1)(c) confers right on all citizens to form association or union and the petitioner society is constituted in exercise of that right. It is absolutely true that the right to form association can be regulated by the provisions of the statute. The petitioner society is registered under the Act and the bye-laws of the society are also registered by the