Civil Writ Petition Nos.7492 & 7526 of 2009 1 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH 1. Civil Writ Petition No.7492 of 2009 Ram Mehar son of Late Sh.Basau Ram ...Petitioner versus The Hisar National Cooperative House Building Society Limited, Hisar and others ...Respondents 2. Civil Writ Petition No.7526 of 2009 Ajmer Singh son of Chhailu Ram ...Petitioner versus The Hisar National Cooperative House Building Society Limited, Hisar and others ...Respondents Date of decision : 28.02.2011 CORAM: HON'BLE MR. JUSTICE MEHINDER SINGH SULLAR Present: Mr.Anil Ghangas, Advocate for the petitioners. Mr.S.S.Dalal, Advocate for respondent Nos.1 & 3. Mr.Pardeep Solath, Advocate for respondent No.2. Mr.Narender Singh, Deputy Advocate General, Haryana for respondent Nos.4 to 6. M ehinder S ingh S ullar , J. (Oral) As identical questions of law and facts are involved, therefore, I propose to decide the indicated writ petitions, vide this common order to avoid the repetition. However, the factual matrix, which needs a necessary mention for the limited purpose of deciding the sole controversy, involved in these writ petitions, has been extracted from (1) CWP No.7492 of 2009 titled as “Ram Mehar vs. The Hisar National Cooperative House Building Society Limited, Hisar and Civil Writ Petition Nos.7492 & 7526 of 2009 2 others” in this context. 2. The conspectus of the facts, culminating in the commencement, relevant for disposal of the instant writ petitions and emanating from the record, is that late Basau Ram, father of petitioner Ram Mehar, was the member of the Cooperative House Building Society, governed by the provisions of The Haryana Cooperative Societies Act, 1984 (hereinafter to be referred as “the Act”). The Haryana State Cooperative House Federation Limited (for brevity “HOUSEFED”) (respondent No.2) borrowed the loan from Life Insurance Company (for short “LIC”) for further advancement to the members of the Primary Cooperative House Building Society to enable them to construct their dwelling units. Consequently, father of petitioner Ram Mehar had taken the loan of ` 49,000/- by pledging the original documents of the plot with the society. The loan was insured by the scheme of LIC and a premium of ` 686/- was deducted from the loan amount of the petitioner. 3. The petitioner claimed that although after the death of his father on 10.6.1988, the insured loan stood waived and there was no need to pay the instalments, but on 13.11.2001, respondent No.3 Ex-President of The Hisar National Cooperative House Building Society Limited (for brevity “respondent- Society”) issued notice to the petitioner to repay the balance loan amounting to ` 2,95,281/- alongwith penal interest. Thereafter, the petitioner deposited the indicated amount of loan alongwith penal interest, vide various cheques and requested the society to return the pledged documents of the house, but the same were not returned by respondent No.3. 4. The case set up by the petitioner, in brief in so far as relevant, was that on 29.1.2003, the HOUSEFED introduced a scheme of one time settlement (for short “OTS scheme”) (Annexure P2) and waived off the penal interest to benefit the loanee member and recovery of amount. After the introduction of the OTS scheme, the petitioner approached and asked respondent No.3 to apply for the Civil Writ Petition Nos.7492 & 7526 of 2009 3 benefit of OTS scheme for waiving off the penal interest. Respondent No.3 replied that the respondent-Society has already taken the appropriate step to benefit its members and assured the adjustment of the amount of penal interest on the basis of scheme and resolution (Annexure P3) was passed in this respect. 5. Sequelly, the petitioner has pleaded in para 6 of the writ petition as under:- “That when the petitioner did not get any positive response from the respondent No.3 for refund of amount as well as original papers, he enquired from the respondent No.2 regarding refund of excess amount. From the account statement, the petitioner found that the respondent No.3 has deposited the amount of the petitioner in February 2003, after delay of 2-4 months of payment of amount, as mentioned above, and the petitioner has suffered a further loss of about Rs.30000/-. The respondent no.3 has not deposited the whole amount as received from the petitioner but only deposited the principal amount + interest thereupon + interest w.e.f. 31.10.2002 till payment + LIC premium + 1% incentive of the society which comes to Rs.151000/-. The remaining amount of Rs.144281/- had been embezzled by the respondent no.3 in connivance with office bearers of respondent no.1 society. Despite repeated requests, the respondent no.3 refused to admit the claim of the petitioner on his own amount and the petitioner filed the arbitration case before the respondent no.4 along with criminal complaints. In the written statement filed by respondent no.2, it was admitted by the respondent no.2 that the case of the petitioner was settled under the OTS and the petitioner was entitled for the benefit of the same. In the written statement, the respondent no.1 and 3 have taken the stand that the petitioner does not fall under the OTS as the petitioner had already deposited the loan amount. In the written statement filed by the Development Officer, admitted the claim of the petitioner that the account of the father of the petitioner was settled under the OTS Scheme. A true copy whereof is attached herewith as Annexure P-4”. 6. The claim/dispute raised by the petitioner under sections 102 and 103 of the Act was negatived by the Assistant Registrar, Cooperative Societies (respondent No.4), by virtue of impugned award dated 24.3.2005 (Annexure P5). 7. Aggrieved by the impugned award (Annexure P5), the appeal filed by the petitioner was dismissed as well, by the Deputy Registrar (respondent No.5), by means of impugned order dated 5.9.2005 (Annexure P6) and the revision petition filed by him was also dismissed by the Special Secretary to Government Haryana, Cooperation Department (respondent No.6), by way of impugned order dated 26.5.2008 (Annexure P7). Civil Writ Petition Nos.7492 & 7526 of 2009 4 8. The petitioner still did not feel satisfied and preferred the instant writ petition, challenging the impugned orders (Annexures P5 to P7), invoking the provisions of Articles 226 and 227 of the Constitution of India. 9. Levelling a variety of allegations and narrating the sequence of events, in all, according to the petitioner that the persons/members, who were defaulter for more than two instalments on 31.10.2002, were eligible to get benefit of amount of waiver of penal interest as per OTS scheme (Annexue P2), which was formulated for the benefit of the members of the Society. The respondent- Society was stated to have deposited the loan amount of the petitioner minus penal interest and mis-appropriated this amount of penal interest. The petitioner claimed that although he is entitled to the benefit of waiver of amount of penal interest, but the respondent-Society has illegally retained it, without any legal basis. On the basis of aforesaid allegations, the petitioner sought the quashment of the impugned orders (Annexures P5 to P7) in the manner indicated hereinabove. 10. The respondents contested the claim of the petitioner. Respondent Nos.1 and 3 filed their joint written statement, while respondent No.2 filed its separate written statement and respondent No.3 also filed his additional affidavit, inter-alia, pleading therein that the amount of loan paid by the petitioner is accounted for in the cash book of the Society. The sole purpose of the OTS scheme was to help the societies and to reduce the imbalance position and to create surplus funds for the HOUSEFED. In all, according to the contesting respondents that the respondent-Society was entitled to the benefit of amount of waiver of penal interest and the petitioner was not entitled to claim this benefit as per OTS scheme. It will not be out of place to mention here that the contesting respondents have stoutly denied all other allegations contained in the writ petition and prayed for its dismissal. 11. At the very outset, it may be added here that petitioner Ajmer Singh in CWP No.7526 of 2009 has challenged the impugned orders on the same very Civil Writ Petition Nos.7492 & 7526 of 2009 5 grounds as in the instant writ petition and the respondents have raised the similar pleas to object his claim in their respective written statements. 12. Having heard the learned counsel for the parties, having gone through the record with their valuable help and after considering the entire matter deeply, to my mind, the instant writ petitions deserve to be partly accepted. 13. As is evident from the record that the petitioner claimed that he has already deposited the amount of loan alongwith penal interest, but the respondent- Society did not return/refund their amount of penal interest waived, in pursuance of the OTS scheme (Annexure P2) of respondent No.2. On the contrary, according to the respondent-Society, the benefit of the OTS scheme is not available to the petitioner and only the Society is entitled to reap its fruits. Thus, it would be seen that the facts of the present case are neither intricate nor much disputed. The controversy boils down to a narrow compass. 14. Above being the position on record, now the short and significant question, though important, that arises for determination in these cases is, as to whether the petitioner-loanee is entitled to the benefit granted by the scheme or the respondent-Society is entitled for it ? 15. What is not disputed here is that the HOUSEFED framed OTS scheme (Annexure P2) solely with the purpose to give relief to the loanee members of the society, in which, it was mentioned that the scheme will benefit 13517 members of 379 Primary Cooperative House Building Societies, who have taken the loan from the HOUSEFED. As per eligibility clause, a member should be a defaulter for more than two instalments as on 1.10.2002 and such members of Cooperative House Building Societies, Cooperative Group House Societies and Economically Weaker Section Societies are eligible. The words 'Overdues' 'Penal interest', 'Overdue interest', 'Overdue principal' and 'Balance Principal' have been defined in it. 16. Similarly, the OTS scheme postulates that the amount of overdue and Civil Writ Petition Nos.7492 & 7526 of 2009 6 principal recoverable from members at society level will be calculated as on 31.10.2002 and if a member repays an amount equal to overdue interest and overdue principal as on 31.10.2002 alongwith interest till date of payment, then penal interest will be waived off. Clause 5 of this scheme further posits that the society will be given 1% incentive on the amount of overdue interest received from member. 17. Meaning thereby, a complete procedure and eligibility of waiving off penal interest has been provided in the OTS scheme (Annexure P2) for giving benefit to 13517 members of 379 Primary Cooperative House Building Societies and only 1% incentive on the amount of overdue interest was to be paid to the concerned society. It is not a matter of dispute that father of the petitioner has taken loan of ` 49,000/-. In the wake of demand notice, the petitioner has already paid the loan amounting to ` 2,95,281/-, including the penal interest, but the Society has deposited the amount with the HOUSEFED minus penal interest and kept the remaining amount of ` 1,44,281/- in lieu of waiver of penal interest. 18. In this view of the matter, inter-alia following questions had arisen for determination before the authorities under the Act:- i) Whether the OTS scheme (Annexure P2) was framed for the benefit of the members of the House Building Cooperative Societies or not? ii) Whether the petitioner is entitled to and was eligible to derive the benefit of waiver of penal interest in pursuance of OTS scheme? iii)Whether the petitioner is entitled to the refund of the amount waived off in lieu of penal interest? iv)Whether the respondent-Society was entitled to any amount in excess of 1% incentive on the amount of overdue interest as per clause 5 of OTS scheme? 19. The petitioner has raised all these vital and important points before the arbitrator as well as appellate and revisional authorities, but the same were ignored by them with impunity. The authorities have negatived the claim of the petitioner without adhering to the essential ingredients of the scheme and illegally Civil Writ Petition Nos.7492 & 7526 of 2009 7 dismissed his claim, vide impugned orders. The authorities under the Act have thus ignored this vital aspect of the matter and passed the impugned orders in an illegal manner. 20. Therefore, the arguments of learned counsel for petitioner that the impugned orders are cryptic, non-speaking, non-reasoned and are the result of non- application of mind, have considerable force. On the contrary, the contentions of learned counsel for the respondents “stricto sensu” deserve to be and are hereby repelled under the present set of circumstances. 21. As the appellate as well as revisional authorities also did not consider the indicated vital aspects, therefore, they have also repeated the same very error in the impugned orders. Hence the impugned orders cannot possibly be sustained. It is now well settled proposition of law that such statutory authorities under the Act ought to have discussed the essential ingredients of entitlement and eligibility of the petitioner to the benefits of the OTS scheme (Annexure P2) and were legally required to record valid reasons to negative the claim of the petitioners in this respect. Every action of such authorities must be informed by reasons. The order must be fair, clear, reasonable and in the interest of fair play. Every order must be confined and structured by rational and relevant material on record because the valuable rights of the parties are involved. 22. An identical question arose before the Hon'ble Apex Court in case Chairman, Disciplinary Authority, Rani Lakshmi Bai Kshetriya Gramin Bank v. Jagdish Sharan Varshney and others (2009) 4 Supreme Court Cases 240. It was held (para 8) as under : - “The purpose of disclosure of reasons, as held by a Constitution Bench of this Court in S.N.Mukherjee v. Union of India, is that people must have confidence in the judicial or quasi-judicial authorities. Unless reasons are disclosed, how can a person know whether the authority has applied its mind or not? Also, giving of reasons minimises the chances of arbitrariness. Hence, it is an essential requirement of the rule of law that some reasons, at least in brief, must be disclosed in a judicial or quasi-judicial order, even if it is an order of affirmation.” 23. Meaning thereby, the impugned orders (Annexures P5 to P7) are Civil Writ Petition Nos.7492 & 7526 of 2009 8 non-speaking and non-reasoned orders. Thus, the same cannot legally be maintained, in the obtaining circumstances of the case. To me, interest of justice would be sub-served if the matter is remanded back to the arbitrator (respondent No.4) in this relevant connection. 24. In the light of aforesaid reasons and without commenting further anything on merits, lest it may prejudice the case of either side, during the course of subsequent hearing of the matter, the instant writ petitions are accepted. Consequently, the impugned orders (Annexures P5 to P7) are hereby set aside. The matter is remitted back to the arbitrator/AR/respondent No.4 to decide it afresh, in view of the aforesaid observations and in accordance with law and not otherwise. 25. The parties, through their counsel, are directed to appear before the AR (respondent No.4) on 30.3.2011 for further proceedings. 26. Needless to mention here that nothing observed, here-in-above, would reflect, in any manner, on merits of the case, as the same has been so recorded for a limited purpose of deciding the present petition. (Mehinder Singh Sullar) 28.2.2011 Judge AS Whether to be referred to reporter? Yes/No