IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.14365 of 2002 THE DREAM CO-OPERATIVE HOUSE-CONSTRUCTION SOCIETY LTD. Ramnabagh, Bari Path, Naya Tola, Patna through its Secretary---------------------------------petitioner Versus 1.THE REGISTRAR,CO-OPERATIVE SOCIETIES, Bihar, Patna 2.The Additional Registrar, Co-operative Societies (Planning) Bihar, Patna 3.The Joint Registrar, Co-operative Societies (Hqtrs) Bihar, Patna 4(i)Naushaba Usmani wife of Late Z.A.Usmani (ii)Zeda Usmani daughter of Late Z.A.Usmani (iii)Rana Usmani daughter of Late Z.A.Usmani (iv)Asfar Usmani son of Late Z.A.Usmani (v)Ahmad Usmani son of Late Z.A.Usmani All are residents of B-5, Sapana Apartment, Naya Tola, P.S.Peer Bahore,Dist.Patna-----------respondents ----------- For the petitioner :Mr.Ajay Kumar Sinha, Advocate For respondent no.4:Mrs.Mahashweta Chatterjee,Advocate For the State :Mr.Ritesh Kumar,A.C. to AAG I. ---- 8. 31.3.2010 Heard learned counsel for the petitioner, learned counsel for the respondent No.4 and learned counsel for the State. The petitioner seeks quashing of the order dated 4.4.2002 passed by the Additional Registrar, Co-operative Societies in Appeal Case No. 396 of 1996 as also the order dated 30.10.1996 passed by the Joint Registrar, Co- operative Societies in Case No. 40 of 1994. By the impugned order dated 30.10.1996 the Joint Registrar had directed that since the original respondent No.4 had paid the huge amount of Rs.2.34 lacs with the petitioner Co-operative Society for the purchase of flat and the flat had been constructed from the said amount and if the 2 respondent No.4 deposits the escalation amount as per the resolution passed in the meeting of the Co-operative Society held on 14.9.1991 as also the balance instalments, the amount for providing firefighting devices and the amount for road and site development within two months then the Society should hand over the flat to him, but if the respondent does not deposit the amount in lump sum within two months then the Society would have the right to return the amount to the respondent with interest at the rate of 15% per annum. By the appellate order dated 10.5.2002 passed by the Additional Registrar, Co-operative Society the said order of the Joint Registrar has been upheld. The facts of this case in short are that the petitioner is a Co-operative House Construction Society registered under the Bihar Co-operative Societies Act, 1935. The Society undertook a project for constructing an apartment known as Sapna apartment with a large number of separate flats. The original respondent No.4 was admitted as an associate member of the Society on 6.7.1988 and he was allotted a flat No.F-1 at a price of Rs.2.40 lacs to be paid in eight equal instalments by 5.7.1990. The respondent No.4 was 3 required to pay Rs. 48000/- as a booking amount and Rs.925/- for purchase of shares, admission fee, etc. The petitioner society also arranged a loan of Rs. 1.10 lacs to respondent No.4 from the Bihar State Housing Co-operative Federation which was disbursed by 31.3.1990. The respondent No.4 did not pay either the booking amount or the other instalments within the time fixed as per the terms and conditions laid down which had been signed by him on 6.7.1988 at the time of booking the flat and becoming an associate member. Reminder was also issued to him in that regard. However, the respondent continued to make the payment on his own from time to time and by 16.7.1991 an amount of Rs.18,150/- alone remained payable as per the admitted accounts. Thereafter on 12.8.1991 a further amount of Rs. 12,150/- was paid. Thus only Rs.6000/- remained payable. It is the case of the petitioner that under condition No.9 if there was an increase in the price of the building materials beyond 5% of the price existing on 6.7.1988 then the escalation charges would be leveled upon the same which would be borne by the applicant. It is stated that due to unprecedented rise in the price of building materials the society was compelled to 4 enhance the price of the flats by 21% in terms of Clause 9 of the terms and conditions. In addition to the escalation charges the society also claimed contribution from the allottees for providing firefighting devices as per the Government guidelines and road and site developments with respect to which the managing committee took a decision on 7.7.1991 which was subsequently ratified by the general meeting of the society. By letter dated 16.7.1991 the respondent no.4 was informed about the same. The respondent, however, raised an issue that the letter had been issued by a person who was not a duly elected Secretary of the society and also raised other issues and sought clarification regarding the escalation of price and the other charges. While replying to the demands, by the letter dated 5.9.1991 to the Secretary of the petitioner society the respondent no.4 and three other members also submitted a copy of the same along with their complaint to the Registrar, Co- operative Societies. The Registrar, Co-operative Societies directed the District Co-operative Officer, Patna to make an enquiry and submit his report, who submitted enquiry report on 20.6.1992. In the said enquiry the District Co- 5 operative Officer, inter alia, held that the demand for escalation was justified and it is the responsibility of the applicants to make the payment to the society. Earlier on 26.8.1991 the petitioner society issued a final reminder to the respondent no.4 directing him to make the payments demanded by the letter dated 16.7.1991 within 15 days, on failure of which the society would be constrained to conclude that he is no longer interested in the allotment of flat and cancel his booking and allot the same to other members who are willing to take the same. After the report dated 20.6.1992 of the District Co-operative Officer a letter dated 16.7.1992 was issued by the petitioner society to the original respondent No.4 stating that since he had not cleared all the dues of the society as mentioned in the letter dated 16.7.1991 the society has decided to cancel his booking and allot the same to another member of the society who may be interested. Aggrieved by the said action by the petitioner society the respondent No. 4 filed a case being Misc. Case No.40 of 1994 before the Joint Registrar, Co-operative Societies, who after hearing the parties by the aforesaid order dated 6 30.10.1996 directed as has been stated above. Aggrieved by the said order the petitioner filed Misc.Appeal No. 368 of 1996 before the Additional Registrar, Co-operative Societies, who by his order dated 4.4.2002 has dismissed the appeal affirming the order of the Joint Registrar. Learned counsel for the petitioner submits that the original respondent No.4 had violated the terms and conditions laid down by Annexure- 1/A under which he was obliged to make payment of the instalments as per the Schedule annexed to the same and further he was also obliged to make payment of escalation charges and on failure to do so the petitioner was liable for cancellation of his allotment. In this regard, he refers to the various terms and conditions therein. It is urged by learned counsel that at all times the dues of the respondent No.4 exceeded an amount of Rs.14,000/- since all his instalments were paid after substantial delay, which is evident from the details of the accounts given in Annexure-2 and thus the society was justified in cancelling his booking. Learned counsel also submits that in terms of Clause-16 the time for payment of instalments was of the essence of the contract and there was clear provision for levying the 7 escalation charges which had to be borne by the applicant. Thus when demand for escalation charges of Rs.50,400/- was made which remained uppaid for a long period of time despite reminder given on 16.7.1991 and even after the final warning on 26.8.1991 the society was well within its rights to cancel the booking of the respondent No.4. In this regard learned counsel further submits that the levy of escalation charges was found justified by the District Co-operative Officer as also by the Joint Registrar and thus the petitioner society has not at all acted in an unfair manner in levying the same and respondent No.4 was obliged to make payment in terms of the agreement that he had entered into. Learned counsel further submits that the proceeding before the Joint Registrar itself was not maintainable in terms of Section 48 of the Co-operative Societies Act as only a dispute between a member and the society or its managing committee could be referred under Section 48 of the Act. It is contended that respondent No.4 was only an associate member who cannot be considered in the category of member. In this regard learned counsel refers to Section 2(f) which defines 8 „member‟ and Clause (fff) which defines „nominal or associate member‟. It is submitted that the definition of associate member has been introduced into the Act by the amending Act 39 of 1982, but no corresponding amendment has been made in Section 48 of the Act to include a dispute between an associate member and the society also within the purview of reference to be made to the Registrar. It is thus urged by learned counsel that the consideration and decision of the dispute by the Joint Registrar and the appeal by the Additional Registrar are both without jurisdiction, there being no provision for dispute being adjudicated under Section 48 of the Act between an associate member and the society by them. Learned counsel further submits that since there was a specific condition that time was of the essence of the contract, then if the same was not complied then the society definitely had a right to cancel the allotment in favour of the respondent No.4. In support of the same he relies upon a decision of a Division Bench of this Court in the case of Bibi Jaibunnisa vs. Jagdish Pandit and others : 1996(2) PLJR 732 in paragraphs 16, 18 and 19 of which, it has been held as follows: 9 “16. It is true that there was no issue framed by the trial court whether the time was of the essence of the contract, but in the written statement, the defendant specifically pleaded that after expiry of the stipulated period in the agreement for obtaining re-conveyance of the suit property from the defendant, the sale of the suit house in favour of defendant became absolute and that the plaintiff neither in the year 1972, nor at any time in January, 1973 approached the defendant, nor offered the balance of consideration money, nor requested the defendant to execute deed of conveyance, nor requested the defendant to execute deed of conveyance. The trial court following the decision in Hasam Nurani Malik (supra) held that since it was an agreement for re-conveyance of the suit property, so the time was of the essence of the contract and the plaintiff failed to act according to the terms of the contract and as such her right to re- purchase was lost and, therefore, she could not enforce the contract. 18. In Smt.Indira Kaur and ors. (supra), neither there was any pleading, nor any issue was framed as to whether time was of the essence of the contract, nor any evidence on the said point was adduced by the parties, whereas in the present case, the defendant pleaded and the parties led evidence on the said point, although no such issue was framed by the trial court and both the courts below concurrently recorded findings of fact that the plaintiff failed to perform her part of the contract within the stipulated period in the agreement. Further in the aforesaid case before the apex court, in the agreement for sale, there was no reference of any transaction of sale, though both the deeds were executed contemporaneously, whereas in the present case, in the agreement (Ext.1) it was specifically recited that on the same day (21.1.1969), the executant of the agreement, namely, Bimli Devi, had purchased the property in question by registered sale deed for Rs. 4000/- 10 (rupees four thousand). In the said case, the defendant had permitted the plaintiff to continue in possession of the property in question on payment of rent equivalent of about 13.5% interest on the consideration amount, whereas in the present case, although the plaintiff asked for relief of confirmation of possession, or in case, she was deemed to have been dispossessed, then in alternative for recovery of possession, but has failed to prove her possession over the suit house. In the circumstances, in my opinion, the aforesaid case is distinguishable in the facts and circumstances of the present case and the ratio of the said case is not applicable herein. 19. In view of the concurrent finding by the courts below that the plaintiff failed to tender/pay the balance amount of consideration money within the stipulated time, she was not entitled to get a decree for specific performance of contract for sale in question. This appeal stands concluded by the findings of fact.” It is also urged by learned counsel for the petitioner that on facts both the Joint Registrar and the Additional Registrar have held that the petitioner was justified in raising the demand and the respondent No.4 ought to have paid the same; once it was held that the payment was due then there was no occasion for the Joint Registrar to have set aside the order of cancellation by directing the society to receive the money if paid by the respondent within two months and hand over the flat to him or on non- payment of the balance amount to refund the money 11 with 15% interest. It is contended that the findings of fact having been found against the respondent No.4 the application should have simply been dismissed and no further orders should have been passed. It is submitted that under the terms and conditions it is the delay in payment of the instalments that would have attracted the interest of 18% per annum for the period of delay, but in case of default resulting in cancellation of possession only the full amount was to be refunded as per the condition No.6 without payment of any interest. Learned counsel for the respondent No.4, on the other hand, submits that the plea of lack of jurisdiction has no legs to stand upon. It is submitted that the respondent No.4 had been duly inducted as an associate member and allotted share of Rs.950/- and thus had become an associate member of the society. It is urged that so far as the rights with regard to the flats are concerned, there is no difference between an associate member and a member and the same terms and conditions applied to both and thus merely because as an associate member the respondent No.4 did not have a right to participate in the elections of the society that does not mean that 12 the dispute between the respondent No.4 and the society could not have been raised under Section 48 of the Act before the Joint Registrar. It is further submitted that the petitioner society has treated the respondent like any other member and had even assisted him in getting loan from the Bihar Housing Co-operative Federation whose loans are given only to the members of Co- operative Societies. It is thus urged by learned counsel for the respondent that in terms of Section 48(1)(e) and Section 48(1)(b) read with Explanation 1 the respondent No.4 is entitled to raise the dispute. Learned counsel points out that even a claim of a registered society for any debt or dues against a non-member has been treated by Explanation 1 as dispute touching business of the society which is capable of being referred to the Registrar and, accordingly, the Joint Registrar has rightly entertained the dispute and the Additional Registrar has rightly not accepted the objection raised by the petitioner in this regard. In support of the aforesaid stand learned counsel relies upon a decision of a Division Bench of this Court in the case of Sudarsan Singh and another vs. Ram Ekbal Singh and other: 1956 13 BLJR 627 in the relevant part of paragraph 11 of which, it has been held as follows: “11. Mr.Shambhu Nath‟s contention that “member” has been defined in section 2(f) of the Act as follows: “(f) „member‟ includes a person joining in the application for the registration of society and a person admitted to membership after registration in accordance with the rules and bye-laws of such society;” Relying on the above definition, he contends that as, admittedly, Ramjas Singh is not one of the persons who joined and signed the application for the registration of the Society nor, was he a person admitted to membership after registration in accordance with the rules and bye-laws of such society, Ramjas Singh was in the position of a non- member, and, as such, the Assistant Registrar had no jurisdiction to pass a decree against him also……… The above case, however, has no application to the present case, because it is clear from section 48(1)(e), and, Explanation (1) to sub-section (1) of section 48, of the Act, that even a non- member is now amenable, by virtue of the Bihar Co-operative Societies (Amendment) Act, 1948 (Bihar Act XVI of 1948), to the jurisdiction of the Registrar, Section 48(1)(e) of the Act provides for reference to the Registrar of any dispute touching the business of a registered Society between a “financing bank” authorized under the provisions of sub- section (1) of section 16 and a person who is not a member of a registered society. “Financing bank” has been defined in section 2(c) of the Act as meaning a “registered society” the main object of which is to make advances in cash or kind to other registered societies or to agriculturists who are not members of registered societies or to both such societies and agriculturists. Explanation (1) to sub-section (1) of section 48 of the Act also provides that a claim by a registered society for any 14 debt, or demand due to it from a member, non-member, post member or the nominee, heir or legal representative of a deceased member or non-member or from sureties of members, past members or deceased members, whether such sureties are members or non-members, shall be a dispute touching the business of the society within the meaning of this sub- section even in case such debt or demand is admitted and the only point at issue is the ability to pay or the manner of enforcement of payment. Explanation (2) to sub-section (1) of section 48 of the Act provides that the question whether a person is or was a member of a registered society or not shall be a dispute within the meaning of this sub-section. In view of the Explanations (1) and (2) to sub- section (1) of section 48 of the Act, it cannot now be said that the Registrar is not empowered to decide the question whether a person is or is not a member of a society. Even if the Registrar comes to the conclusion that a person is not a member of the Society, he, by virtue of Explanation (1) to sub-section (1) of section 48 of the Act, has got the power to decide about the ability to pay, or the manner of enforcement of payment, between the Society and such non-member. In the Orissa case, there was no such provision in the Act empowering the Registrar to entertain a dispute between a Society and a non-member. The decision of the Orissa High Court, therefore, can have no application to the present case, where there is a specific provision in the Act itself for reference of a dispute between a Society and a non-member. It may also be mentioned in this connection that section 57(1) of the Act provides that save in so far as expressly provided in this Act, no Civil or Revenue Court shall have any jurisdiction in respect of any dispute required by section 48 to be referred to the Registrar. The order of the Assistant Registrar and the Registrar under sub-section (9) of section 48 of the Act has been declared to be “final”, and, section 57(3) of the Act further provides that such an order, which has 15 been declared “final”, shall not be liable to be challenged, set aside, modified, revised, or declared void in any Court, upon merits or upon any ground whatsoever except want of jurisdiction. As no want of jurisdiction has been shown in the present case, the order of the Assistant Registrar and of the Registrar on appeal, which have been declared to be „final‟ under section 48(9) of the Act cannot be questioned at all. In my opinion, therefore, the Assistant Registrar, who acted under section 48(1), Explanation (1), of the Act, had the power to give his decision on the question of liability of Ramjas Singh, petitioner no.2, to pay the loan. The contention also is, therefore, rejected.” The further contention of learned counsel for the respondent is that the right to cancel the booking was only there if the dues were more than Rs.14,000/- at any time. According to learned counsel the said condition No.7 has to be read with condition No.8 which provides that delay in payment of instalments will attract 18% interest for the period of delay. It is submitted that although the respondent deposited the instalments with some delay, but that was not the case only with respect to respondent No.4 but also of a large number of members of the society and the society itself waived its right to charge interest or cancel the allotment for the said reason when it kept on accepting the payments made by the respondent No.4 from time to time 16 till 12.8.1991. Once the said right has been waived the same cannot be raised at any later stage. It is urged that by 12.8.1991 only an amount of Rs.6000/- remained due as per the original agreement and even for that a cheque dated 26.9.1991 was sent which was not accepted by the society and thus there was no default in terms of the original terms and conditions. The further submission of learned counsel is that there was no right to cancel the allotment for non-payment of the enhanced cost as Clause 9 of the terms and conditions did not lay down any such right except providing that the cost to the extent of change beyond 5% of the existing price of building material will be borne by the applicant. It is thus submitted that only the amount of Rs.6000/- remained to be paid on 12.8.1991 and the said amount also having been tendered thereafter on 26.9.1991 there was, in fact, no dues in terms of the original agreement and so far as the escalation price is concerned, the same was disputed by the respondent No.4 before the Registrar, Co-operative Societies who had accordingly ordered for enquiry by the District Co-operative Officer. Hence, according to learned counsel there was no default with 17 respect to the amount of Rs.50,400/- since the matter was pending enquiry by the District Co- operative Officer. Learned counsel submits that the petitioner society has acted in a most arbitrary and unreasonable manner by not issuing demand notice after the District Co-operative Officer had given his report on 20.6.1992 justifying the demand on account of escalation cost and by directly issuing letter of cancellation of allotment within 15 days from the date of report. It is urged that the same shows the malafide intent of the petitioner society to some how or other deprive the respondent No.4. Learned counsel justifies the orders passed by the Joint Registrar stating that there was a clear finding that the petitioner has also committed default in not adhering to the terms and conditions. Learned counsel also challenges the aforesaid terms and conditions as not a binding agreement as the same has not been signed by both the parties and the same was on a plain paper