CASE NO.: Appeal (civil) 538 of 2004 PETITIONER: The New Friends Co-operative House Building Society Ltd. RESPONDENT: Rajesh Chawla and Ors. DATE OF JUDGMENT: 21/04/2004 BENCH: DORAISWAMY RAJU & ARIJIT PASAYAT. JUDGMENT:
J U D G M E N T
ARIJIT PASAYAT, J.
The appellant-society calls in question legality
of the judgment rendered by Division Bench of the Delhi
High Court whereby it was held that respondents 1 to 3
were not defaulters and, therefore, demands raised
against them for the period prior to 4th August, 1984
were unsustainable. Respondents nos. 1 to 3 were the
writ petitioners nos. 1 to 3 in the writ petition filed
by them before the High Court. There was further
direction given by the High Court that there may have
been many members to whom similar demands have been
sent. They were also entitled to refund of any payment
taken by the society from them.
Writ application was filed by the respondents with
prayer to quash the order dated 1.2.2003 issued by the
Election Officer of the appellant-society and for
setting aside the orders dated 23.1.2003 passed by him
and for a direction for carrying out fresh inquiry
regarding defaulters. They had filed nomination for the
post of President, Member and Vice-President of the
society for the election which was scheduled to be held
on 1.2.2003. A bare reading of the writ petition shows
that they were not satisfied with the list of
defaulters prepared. The writ petition was filed on
8.1.2003. An affidavit was filed by the Secretary of
the appellant-society indicating as to how the stand of
the writ petitioners about they being not defaulters
was not correct. It has been specifically pointed out
that in the petition before this Court that the books
of accounts and correspondences were produced on
9.7.2003. Matter was listed on 25.7.2003 but no hearing
took place on account of lawyers’ strike at the Delhi
High Court. But the appellant’s officers were present
in the Court with the books of accounts and the
records.
The High Court seems to have adjudicated as to
whether the writ petitioners were defaulters or not.
Reference was made to a letter dated 4.8.1984 wherein
it has been stated that no dues were outstanding
against Shri Rajesh and Shri Rajiv Chawla holders of
plot no. 230, Sector VIII. Whether there was any
amount outstanding would not normally and could not
effectively and finally be adjudicated in a writ
petition and that too filed against a decision
incidentally rendered in the course of election
proceedings by the Election officer. Separate forums
are available in the statutory governing and
functioning of co-operative society whereunder only
such issues affecting substantial civil rights of
parties could be got adjudicated. The High Court seems
to have not considered all such relevant aspects and
seems to have proceeded superficially and summarily.
Prayer in the writ petition was to the following
effect:
“(i) Issue a writ in the nature of
Mandamus or any other like writ or order
or direction directing the second and
the third respondent to enquire into the
alleged List of Defaulters submitted to
them by the present Managing Committee
of the Society;
(ii) Issue a writ in the nature of
Mandamus or any other like writ or
direction or order directing the second
and the third respondent to prepare,
after holding the necessary enquiry, a
fresh and actual List of Defaulters of
the members of the Society;
(iii) Issue a writ of Certiorari or any
other like writ or direction or order
quashing the Notification dated
6.01.2002 proposing to hold elections of
the Managing Committee of the Society on
the 1.2.2003;
(iv) Issue a writ of prohibition or like
writ, order or direction, prohibiting
the respondent nos. 5 and 6 herein from
holding the election of the members of
the Society on 1.2.2003; and
(v) pass such other and further order as
this Hon’ble Court may deem fit and
proper in the facts and circumstances of
the case to do complete justice between
the parties.”
The question whether a member was a defaulter had
to be adjudicated in appropriate proceedings and writ
application prima facie was not a proper course.
Assuming without accepting that the stand taken for the
alleged defaulters can be entertained and gone into in
the course of conduct of election, it could, if at all
be only for the limited purpose of election and the
right of the society or the member for having their
rights and liabilities finally and effectively get
adjudicated by arbitration proceedings statutorily
provided for under the statute in lieu of proceedings
before civil court, and the conclusions arrived at or
recorded in the course of election proceedings shall be
only without prejudice to and ultimately subject to all
or any such proceedings and decisions by such statutory
forums. In any event without proper hearing and
consideration of relevant materials, High Court seems
to have arrived at abrupt conclusions. High Court’s
order is consequently unsustainable for more than one
reason. To add further to the vulnerability of the High
Court’s judgment is the direction given for refund and
in favour of those who have not approached the Court
also, as though it is deciding statutory Arbitration
proceedings, envisaged under the Co-operative Societies
Act concerned. It was no body’s case that any other
person has been illegally asked to pay, or that any
such collection has been illegally made. Direction for
refund to other members is without application of mind
and totally uncalled for. The records and
correspondences were apparently called for. If the High
Court wanted to decide the matter it should have been
done after looking into them which has not been done.
Even such decision, as noticed above, should be made
subject to any adjudication in the Statutory
Arbitration proceedings and not to decide finally the
civil liabilities inter se of parties. Therefore, we
set aside the judgment of the High Court and remit the
matter back for fresh adjudication. We make it clear
that except quashing the directions given for refund to
other members and restraining the High Court from
giving any such directions, rest of the matter shall be
adjudicated on its own merit in accordance with law and
such exercise could only be for the limited purpose of
treating the person(s) concerned “defaulters or not”
for participating in the election process and not for
foreclosing the right of the society to recover any
amount as such, through the forums prescribed under the
concerned Co-operative Societies Act and in accordance
with law.
It appears that respondents 1 to 3 have filed
application before the Registrar of the Society on
27.8.2003 for referring the dispute to arbitration,
which alone is the proper procedure to get their civil
liability finally and effectively adjudicated. The
High Court shall consider the desirability of
adjudicating the issues raised in the writ petition in
view of the recourse taken by respondents 1 to 3 (writ
petitioners before the High Court) themselves before
the Competent Authorities, availing already of their
effective remedies. The appeal is accordingly disposed
of. There shall be no order as to costs.