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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

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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

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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.