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Judgment
Mukul Mudgal, J.—These group of writ petitions challenge the virus of Rule 24(2) of the Delhi Cooperative Societies Rules, 1973
(hereinafter referred to as DCS Rules) as amended on 6th August, 1997 and 1st April, 2005. The Rule as amended and standing at present reads
as follows:-
24(2). In case of vacancy in a housing society including group housing society where layout and building plans have been approved by the
competent authority, the same shall be filled by the committee by notifying it in leading daily newspaper of Delhi in Hindi and English. In case the
number of applications are more than the notified vacancies the membership shall be finalised through draw of lot in the presence of authorized
representative of the Registrar.
The above rule was further amended on 1st April, 2005, which reads as follows:-
24(2). In case of vacancy in a housing society including group housing society the same shall be filled by the committee by notifying it in leading
daily newspaper of Delhi in Hindi and English. In case the number of applications are more than the notified vacancies the membership shall be
finalized through draw of lot in the presence of authorized representative of the Registrar.
For the sake of convenience we have taken the WP(C) Nos. 1403-14/2006 titled Rajib Mukhopadhyaya and Ors. v. Registrar of Cooperative
Society and Ors. as the lead petition and the judgment on the validity of Rule 24(2) of the DCS Rules, shall govern all the connected writ petitions.
The main challenge to the constitutional validity of the above Rule 24(2) of the Act is based upon the judgment of the Division Bench of this
Court in Federation of Co-operative G/H Society and Others Vs. Union of India and Others, . The said judgment related to the constitutional
validity of Rule 41A of the DCS Rules, which is reproduced as follows:-
41-A. Notwithstanding anything contained in these rules or the bye-laws of the Cooperative Group Housing Societies, vacancy or vacancies
arising as a result of resignation, expulsion and cessation of membership in such societies shall, until the allotment of land is made to them by the
Delhi Development authority, not be filled up. Vacancy of vacancies arising after the allotment of land to such societies shall be filled up from
amongst the willing registrants for flats with the Delhi Development Authority under its self-financing schemes or from amongst the members of
other co-operative group housing societies, which are yet to be allotted land by the Delhi Development Authority or from amongst the members of
such societies, as have not reached the stage of construction of flats.
Dealing with the validity of the above Rule 41A, the Division Bench of this Court affirmed the view taken by the learned Single Judge in
Navjivan Cooperative House Building Society v. Delhi Cooperative Tribunal, Delhi 1988 CLJ 75, in the following terms:-
The first contention, in this behalf of counsel for the petitioners is that Rule 41A is ultra vires, unreasonable, arbitrary and is also contrary to the
basic principles of cooperation. As already noted Section 4 of the Delhi Cooperative Societies act, inter alias refers to the society being required to
promote interests of members according to ''Cooperative Principles'' in order to get itself registered. What are the Cooperative Principles have
been dealt with by a single Judge of this Court in the case of Navjeevan Cooperative House Building Society v. Delhi Cooperative Tribunal, Delhi
1988 CLJ 75. While referring to the book entitled ''Indian Cooperative Laws vis- a-vis Cooperative Principles'' written by Shri P.E. Weeraman it
was observed in the said case of Navjeevan Cooperative Society that there are six cooperative principles and they are all equally important and
they form a system and are inseparable. These six principles are as follows:-
(i) Voluntary and open membership;
(ii)Democratic control;
(iii)Limited interest on capital;
(iv)Equitable division of surplus;
(v)Co-operative Education;
(vi)Co-operation among cooperatives.
At page 82 of the judgment it was observed by the learned single Judge in Navjivan Cooperative Society''s case, while referring to the
principle of voluntary and open membership as follows:
The principle that the membership shall be voluntary in the Cooperative Society means that:
(i) a person who joins a cooperative society of his own free will, and
(ii) the society which admits a person into its membership should likewise do so voluntarily.
The principle of open membership is that:
(i) there shall be no artificial restriction on the admission of members;
(ii) there shall be no social, political, racial or religious discrimination against persons who wish to join, and
(iii) memberships shall be available to all persons who need and can make use of the society''s services and are willing to accept the responsibilities
of membership.
The principle of voluntary, open membership would naturally exclude the state from becoming a member of a Cooperative Society and would
exclude the state interference in the affairs of the society.
We are in full agreement with the aforesaid principles. Rule 41A, however, sets at the main principle of voluntary and open membership. The right
of a society to admit like minded persons as its members has ceased to exist. The non-ostensive clause of Rule 41A overrides the bye-laws. More
often than not the cooperative group housing society provide for type of persons who can be members of the society. For example there may be a
cooperative group housing society of members of the High Court Bar Association which may require, as a condition of eligibility, that only a person
who is a member of the High Court Bar Association would be eligible to join the cooperative society. The effect of Rule 41A, however, will be
that vacancies in the cooperative societies can even be filled from amongst those members of cooperative societies who may not be the members
of the High Court Bar Association. This is an example which will show that Rule 41A negates the very principle of voluntary and open membership
which is so essential to the spirit of cooperation among the members. It is always like minded persons who join together and form a cooperative
society. If members are thrust on the society then the spirit of cooperation and comradeship will come to an end.
We have, Therefore, no hesitation in coming to the conclusion that the said Rule 41A is contrary to the cooperative principles and, Therefore,
is in conflict with Section 4 of the Delhi Cooperative Societies Act.
It was submitted by the learned Counsel for the respondents that thus Rule was promulgated with a view to check the mal-practices of sale of
membership by the societies and to give preference to DDA registrants in the matter of allotment of flats through cooperative societies as these
registrants had been awaiting for a number of years but have not been able to secure flats from the DDA. Whatever may be the object of enacting
Rule 41A, it does appear to us that it is clearly opposed to the basic concept of cooperative movement. Cooperative societies must be free to
choose their members....
There is also considerable force in the contention of the learned Counsel for the petitioners that Rule 41A is also vocative of Article 19(1)(c) of
the Constitution, which gives citizens right to form associations. No doubt under Sub-article (4) of Article 19 reasonable restriction on this right
may be imposed but the question is whether this Rule 41A places a ''reasonable restriction'' Looking at the fact that even after limited relaxation of
Rule 41A, the cooperative societies have been unable to fill up the vacancies we have no doubt that the restriction which is placed by Rule 41A is
clearly unreasonable. To frame an unworkable rule cannot be regarded as a reasonable restriction as contemplated by Sub-article (4) of Article
the right to form associations being an important fundamental right any restriction which is placed there on will have to be closely examined.
When it was demonstrated before us that the entire activity of the cooperative societies to obtain land from DDA and construct flats will be
frustrated because of the societies being unable to fill up the vacancies in view of rule 41A it must follow that the said rule places an unreasonable
fetter on the formation and running of the society and is, Therefore bad in law.
In our opinion 41A as originally framed on 2nd November, 1990 and also as re-framed on 19th August, 1991 is ultra virus Section 4 and
20(1) of the Act as well as ultra virus the rule making power contained in Section 97 of the Act and the said rule is accordingly quashed. The result
of this would be that the vacancies occurring in the cooperative societies can be filled by the societies concerned without the impediment which has
been created by Rule 41A and in accordance with law.
Particular emphasis has been laid down on the following principle relating to voluntary nature of the membership of the cooperative society ''(ii)
the society which admits a person into its membership should likewise do so voluntarily.'' It was also held by the learned Single Judge and affirmed
by the Division Bench that the principle of voluntary and open membership would naturally exclude the state from becoming a member of a
Cooperative Society and would exclude the state interference in the affairs of the society. Mr. Rai states that the above judgment applies to the
issues arising in all these connected matters before us.
Mr. Nandrajog, appearing in the companion matters states that the issue involved in the present matters is also covered by the judgment of the
Hon''ble Supreme Court in Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, , and particular emphasis have been laid down on
the following observations in the said judgment in Smt. Damyanti''s case (supra):-
It was argued that the right guaranteed by Article 19(1)(c) is only to form an association and, consequently, any regulation of the affairs of the
Association, after it has been formed, will not amount to a breach of that right. It is true that it has been held by this Court that, after an Association
has been formed and the right under Article 19(1)(c) has been exercised by the members forming it, they have no right to claim that its activities
must also be permitted to be carried on in the manner they desire. Those cases are, however, inapplicable to the present case. The Act does not
merely regulate the administration of the affairs of the Society; what it does is to alter the composition of the Society itself as we have indicated
above. The result of this change in composition is that the members, who voluntarily formed the Association, are now compelled to act in that
Association with other members who have been imposed as members by the Act and in whose admission to membership they had no say. Such
alteration in the composition of the Association itself clearly interferes with the right to continue to function as members of the Association which
was voluntarily formed by the original founder. The right to form an association, in our opinion, necessarily implies that the persons forming the
Association have also the right to continue to be associated with only those whom they voluntarily admit in the Association. Any law, by which
members are introduced in the voluntary Association without any option being given to the members to keep them out; or any law which takes
away the membership of those who have voluntarily joined it, will be a law violating the right to form an association. If we were to accept the
submission that the right guaranteed by Article 19(1)(c) is confined to the initial stage of forming an Association and does not protect the right to
continue the Association with the membership either chose by the founds or regulated by rules made by the Association itself, the right would be
meaningless because, as soon as an Association is formed, a law may be passed interfering with its composition, so that the Association formed
may not be able to function at all. The right can be effective only if it is held to include within it the right to continue the Association with its
composition as voluntarily agreed upon by the persons forming the Association....
The Court in the above passage, thus, accepted the principle that the Government servants, who may have formed an Association, could not be
compelled to resign from it by imposition of a condition of recognition of this Association by the Government and that, if the Government servants
are required to cease to be members, that would be a violation of the right under Article 19(1)(c). The Court, of course, in that case, further
proceeded to examine whether such a restriction on the right could be justified under Article 19(4) or not. That case, thus, supports our view that
the right to form an Association includes the right to its continuance and any law altering the composition of the Association compulsory will be a
breach of the right to form the Association.
This Court had also proceeded on the same basis in the case of State of Madras v. V.G. Row. Though this aspect was not clearly brought out
in the judgment, the point, which came up for consideration, was decided on the basis that persons forming an Association had a right under Article
19(1)(c) to see that the composition of the Association continues as voluntarily agreed to by them. That decision was given in an appeal from a
judgment of the High Court of Madras reported in V.G. Row v. The State of Madras. In the High Court, this principle was clearly formulated by
Rajamanner, C.J., in the following words:
The word ''form'' Therefore, must refer not only to the initial commencement of the association, but also to the continuance of the association as
such.
The Act, insofar as it interferes with the composition of the Society in Constituting the Sammelan, Therefore, violates the right of the original
members of the Society to form an association guaranteed under Article 19(1)(c).
Article 19(4), on the face of it, cannot be called in aid to claim validity for the Act. Under Article 19(4), reasonable restrictions can be imposed
only in the interests of the sovereignty and integrity of India, or in the interest of public order or morality. It has not been contended on behalf of the
respondent nor could it be contended that this alteration of the constitution of the Society in the manner laid down by the Act was in the interests of
the sovereignty and integrity of India, or in the interests of public order or morality. Not being protected under article 19(4), it must be held that the
provision contained in the Act for reconstituting the Society into the Sammelan is void. Once that section is declared void, the whole Act becomes
ineffective inasmuch as the formation of the new Sammelan is the very basis for all the other provisions contained in the Act.
Mr. Nandrajog highlighted the fact that the above judgment and in particular the passages cited by him clearly show that the impugned amendment
which fetters the right of the Society is clearly in violation of the Constitutional guarantee provided under Article 19(1)(c) of the Constitution of
India. Article 19(1)(c) along with Article 19(4) which permits the regulation of the said right are reproduced as under:
Protection of certain rights regarding freedom of speech, etc.-- (1) All citizens shall have the right
(a)
(b)
(c) to form associations or unions;....
(4) Nothing in Sub-clause (c) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from
making any law imposing, in the interests of [the sovereignty and integrity of India or] public order or morality, reasonable restrictions on the
exercise of the right conferred by the said Sub-clause.
Mr. Nandrajog submits that the aforesaid judgment in Damyanti Naranga''s case (supra) was applied by the Hon''ble Supreme Court in Asom
Rastrabhasa Prachar Samiti and Another Vs. State of Assam and Others, . The relevant paragraph of the judgment reads as follows:
It is Therefore clear that so far as the present case is concerned it is only that the new members are introduced, not only that the complete
control is left to the Board to be nominated by the government, about the persons no norms have been laid down, the person so nominated could
be anyone and no control is kept to those who formed the Society, those who had a right to form an association will be kept away and the Society
shall be run by a group of persons nominated by the government in accordance with Section 3. It is Therefore clear that what was done in the
Sammelan Acts which were under examination in the Constitution Bench judgment referred to above, much more has been done in this case. In
this case virtually the right of association has been taken away and not only that it is a sort of deprivation for all times as it is not even provided that
this Board may be an interim Board and thereafter a proper board will be elected but here this Board will continue to control and manage the
affairs of the Society. In the Constitution of Bench case their Lordships considered the scope of Article 19(1)(c) in the context of what was
contemplated in that Act and observed: (SCC pp. 684-85, para 6)
The right to form an association, in our opinion, necessarily implies that the persons forming the Association have also the right to continue to be
associated with only those whom they voluntarily admit in the Association. Any law, by which members are introduced in the voluntary Association
without any option being given to the members to keep them out; or any law which takes away the membership of those who have voluntarily
joined it, will be a law violating the right to form an association. If we were to accept the submission that the right guaranteed by Article 19(1)(c) is
confined to the initial stage of forming an Association and does not protect the right to continue the Association with the membership either chose
by the founds or regulated by rules made by the Association itself, the right would be meaningless because, as soon as an Association is formed, a
law may be passed interfering with its composition, so that the Association formed may not be able to function at all. The right can be effective only
if it is held to include within it the right to continue the Association with its composition as voluntarily agreed upon by the persons forming the
Association.
It is, Therefore, contended that the impugned Rule 24(2) of the DCS Rules in so far as it fettered and interfered with the right guaranteed under
Article 19(1)(c) of the Constitution to form an association was ultra virus of the Constitution of India and was not saved by the provisions of
Article 19(4) of the Constitution. It is submitted that a society as a component of its right to form an association clearly had a right to admit to its
fold members of its choice and such a right could not be interfered with as sought to be done by impugned Rule 24(2) of the DCS Rules. In this
respect, the judgment of the Constitution Bench in Damyanti Naranga''s case had cited with approval the view of the Madras High Court in V.G.
Row Vs. The State of Madras, , where it was held as follows:-
The word ''form'' Therefore, must refer not only to the initial commencement of the association, but also to the continuance of the association as
such.
The learned Counsel for the respondent relied upon the judgment dated 7th September, 2006 of a Division Bench of this Court in Writ Petition
(Civil) No. 19967/2004 titled Nehru Coop. G/H Society Ltd. v. Govt. of NCT of Delhi and Anr., to contend that the said judgment clearly upheld
the constitutional validity of Rule 24(2) of the DCS Rules , which was held to be operative by the above judgment. The relevant portion of the said
judgment reads as follows:-
Having heard the counsel for the petitioner as also counsel for the respondent and the Registrar, Cooperative Societies, and upon going through
the records, we find that in CW 4130/1997, an order was passed on 30.9.1997, whereby notice in the writ petition was issued by this Court.
While doing so, an interim order was passed staying the operation of the Rule 24(2) of the Delhi Cooperative Societies Rules, 1973 as amended
by Notification dated 6th August, 1997. Similar interim orders staying the operation of the amended Rule 24(2) were also passed in CW
4143/1997 on 3.10.1997. The aforesaid interim order which was passed in CW 4130/1997 was also made absolute by a subsequent order
passed in the said writ petition on 20.8.1998. In CW 4143/97 it was ordered on 3.10.97 that the said writ petition had to be heard along with
CW 4130/97. CW 4143/1997 was listed on 8.1.2003 along with CW Nos. 4209/97, 3430/98, 5683/98 and 1651/97. It is, however, brought to
our notice that while the aforesaid writ petitions were listed for consideration on 8.1.2003, CW 4130/97 was not listed. The Division Bench of this
Court by order dated 8.1.2003 disposed of the aforesaid writ petitions which were listed before it on the said date.
A bare perusal of the aforesaid order dated 8.1.2003 passed by this Court would indicate that in the said writ petitions, notice was taken of the
provisions of Rule 34(A) and Rule 36(A), but no observation whatsoever was made with regard to Rule 24(2). It is, Therefore, clear and apparent
that when the writ petitions were disposed of, the challenge made to Rule 24(2) also stood disposed of without returning a ruling in favor of the
petitioner that the said provision was liable to be struck down. The court did not hold that Rule 24(2) of the Delhi Cooperative Societies Rules is in
any manner ultra virus to the Constitution of India. That being the decision, and the stay order having merged with the final order passed while
disposing of the writ petition, it is manifest that there was no stay operating in so far as the provisions of Rule 24(2) of the Delhi Cooperative
Societies Rules are concerned.
Immediately, after passing of the said order, so far as these writ petitions are concerned, the said Rule 24(2) otherwise became operative and
applicable with immediate force as in our considered opinion, a rule could be said to be invalid only when the same is declared to be invalid by an
appropriate court. No declaration was made at any point of time by any court that Rule 24(2) is ultra virus or void. Although, CW 4130/1997 was
pending in this Court, the interim order which was granted therein would be deemed to be operative only for the purpose of that case and not for
any other case. It may also be noted that the said case was also later on dismissed in default on 7.7.2005. While dismissing the said writ petition on
7.7.2005, it was observed that the connected matter had already been disposed of.
The learned Counsel for the respondent submitted as follows:
a) The notification dated 5th August 1997 was challenged in a writ petition being W.P (C) No. 4143 in the matter of Federation of Cooperative
Group Housing Societies Ltd. New Delhi v. Union of India and this Court by an order dated 12th December 1997 stayed the notification dated
5th august 1997.
b) While disposing of W. P (C) No. 4147/97 with W.P (C) No. 4209/97, 3430/98, 1651/97, this Court by its judgment dated 8th August 2003
had directed the Registrar Co-operatives to issue necessary clarification in respect of Rule 34-A and 36-A of the DCS Rules, 1973.
c) This Court by its order dated 7th September 2006in W.P (C) No. 19967/04 in the matter of M/S Nehru C.G.H.S v. GNCT of Delhi, that
while disposing of WP(C) Nos. 4143/97, 4209/97, 3430/98, 5683/98 and 1651/97 this Court did not hold that the Rule 24 (2) of the DCS Rules
are in any manner ultra virus to the Constitution of India and further held that the stay order while having merged with the final order when the writ
petition was disposed of, it is evident that there was no stay operating in so far as the provisions of Rule 24 (2) of the DCS Rules are concerned. It
was also held that if any person is inducted as a member of cooperative society by the Managing Committee of the society in violation of the
aforesaid rules, the said membership is to be held as void ab initio for non-compliance with the mandate of the provisions of the Rule 24 (2) of the
DCS Rules. A provision in the statute cannot be declared as void or invalid in general terms unless the same are declared void or invalid by the an
appropriate court. The aforesaid provisions were operative till 8th January 2003. This Court directed the CBI/ Crime Branch to investigate as to
why and how no action was taken with effect from 8th January 2003 to 1st July 2004 for giving effect to the Rule 24 (2) of the DCS Rules, 1973.
It was also held that the Registrar, cooperative societies, to enquire into and to ascertain how many societies and which societies inducted new
members into the society after 2003 without adhering to the provisions of Rule 24 (2) of the DCS Rules and also how many cooperative societies
were involved and what was nexus between the concerned authorities, cooperative societies and the inducted person without giving effect to the
provisions of the Rule 24 (2) of the DCS Rules.
(d) A Group Housing Co-operative Society is a statutory society and freedom and association in case of cooperative societies are controlled by
the Delhi Cooperative Societies Act, 2003. Further, since the the societies are receiving the state largesse (for example being allotted at a lower
rate) the nature of these associations is different from association of a general nature. Therefore, a regulation made to ensure the effective
administration of these societies is not to be tested on the touchstone of Article 19 of the Constitution of India. In Pradeep Kumar Bisvas v. Indian
Institute of Chemical Biology (2003) 5 SCC 111, the Hon''ble Supreme Court laid down the following position of law:
...that the Indian Statistical Institute, a registered society is an instrumentality of the Central Government and as such is an ''authority'' within the
meaning of Article 12 of the Constitution. The basis was that the composition of Respondent 1 is dominated by the representatives appointed by
the Central Government. The money required for running the Institute is provided entirely by the Central Government and even if any other moneys
are to be received by the Institute, it can be done only with the approval of the Central Government, and the accounts of the Institute have also to
be submitted to the Central Government for its scrutiny and satisfaction....
(e) The Membership of a cooperative society is not a fundamental right but merely a statutory right, Therefore, the provisions of Article 19(1)(c) of
the Constitution of India have no application in case of State of U.P. and another etc. Vs. C.O.D. Chheoki Employees'' Co-op. Society Ltd. and
others etc., , the following position of law was laid down by the Hon''ble Supreme Court:
...Though Article 19(1)(c) gives freedom to form association, it is controlled by the provisions of the Act. As held by this Court, once a society has
been registered under the Act, the management of the society through Section 29 and the Rules made there under, is regulated by duty elected
members. In the democratic set up, all eligible persons are entitled to contest the election, as held, according to the provisions of the Act and
Rules. In the absence of elected members belonging to the weaker sections and elected women members, their nomination by the Government is
the alternative dispensation envisaged as one of the policies of the Act. Therefore, the Court cannot interfere with the policy and declare it
unconstitutional violating Article 19(1)(c) of the Constitution.
(f) It is an admitted position of law that the by-laws of the society may provide for formation of an association confined to particular profession,
belief, trade, way of life etc. and such a by-law can be interfered with statutorily. In Zoroastrian Co-operative Housing Society Limited and
Another Vs. District Registrar Co-operative Societies (Urban) and Others, , the Hon''ble Supreme Court laid down the following position of law:
...the effect of the observations in Daman Singh''s case(supra), is only that cooperative societies, from their very inception are governed by the
statute, the Cooperative Societies Act, that they are created by statute, they are controlled by the statute and so, there can be no objection to
statutory interference with their composition or functioning and no merit in a challenge to statutory interference based on contravention of the
individual right of freedom of association. As we understand the statement of the law by this Court in Daman Singh''s case, it only means that the
action of the society in refusing membership to a person has to be tested in the anvil of the provisions of the Act, the Rules and its bye-laws.
(g) It has been submitted by the learned Counsel for the petitioner that any regulation/restriction on the right of the societies would infringe their
right under Article 19(1)(c) of the Constitution of India and hence would be ultra vires. This submission of the petitioner is based upon the position
of law laid down by the Hon''ble Supreme Court in Damayanti Narang''s case (supra). Damayanti Narang''s case is clearly distinguishable on the
ground that had question involved in the Damayanti Narang''s case (supra) was in respect of an association which had been under Societies
Registration Act, and not an association registered under any Cooperative Societies Act. This is also supported by the decision of the Hon''ble
Supreme Court in Daman Singh and Others Vs. State of Punjab and Others, , wherein the Hon''ble Supreme Court held as follows:
The answer to the principal question raised by Shri Ramamurthi appears to us to be so plain as to merit no further discussion. We must however
notice here Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, on which reliance was placed by the learned Counsel on the basis
that Articles 31-A(1)(c) did not afford any protection to Section 13(8), (9) etc. That case has no application whatever to the situation before us. It
was a case where an unregistered society was by statute converted into a registered society which bore no resemblance whatever to the original
society. New members could be admitted in large numbers so as to reduce the original members to an insignificant minority. The composition of
the society itself was transformed by the Act and the voluntary nature of the association of the members who formed the original society was totally
destroyed. The Act, was Therefore, struck down by the court as contravening the fundamental right guaranteed by Article 19(1)(f). In the case
before us we are concerned with cooperative societies which from the inception are governed by statute. They are created by the statute, they are
controlled by statute and so, there can be no objection to statutory interference with their composition on the ground of contravention of the right
of freedom of association.
(h) Rule 24 (2) of the DCS Rules does not in any manner restrict the class of persons who are to become members of the cooperative societies as
per its bye-laws. It merely regulates the process of filling up the vacancy in membership from amongst the members of the same class. Rule 24 (2)
of the DCS Rules is not a restrictive but a regulatory provision which does not in any manner override the provisions of the bye-laws of the society
nor does it amend them. It requires notice to the eligible persons and to those only who are eligible to become members of the society can apply
for becoming members. However, the fact that if a possession is vacant must be publicized and thereafter the vacancy is filled by draw of lots in a
transparent manner in the presence of the Registrar, Cooperative Societies. Thus, Rule 24 (2) of the DCS Rules cannot be read to mean that it is
an invitation to general public to become member of a cooperative society irrespective of any qualification provided in the bye-laws of the society.
It has to be interpreted in this manner that it provides for public notice to all eligible persons and provides the process for filling up the vacancy in a
transparent manner. Once the society is registered it is governed by its bye-laws and run by an elected Committee as per the statutory provisions
and bye-laws. Rule 24(2) of the DCS Rules does not restrict the choice of the class of persons from which the members of the cooperative
housing society are to be selected. Thus, it is not in conflict with the Federation''s case, wherein it was held by this Court that Rule 41A
incorporated in 1990 which overrode the Cooperative Societies Rules as well as bye-laws of any society and prohibited filling up of any vacancy
except from the residents of flats of the DDA under Self Financing Scheme (SFS) was vocative of the right of the cooperative societies to choose
their members.
(i) Rule 24(2) of the DCS Rules is in furtherance of the object of the Act which are inter alias to ensure ''democratic management, transparency,
accountability in the affairs of the cooperative society, etc. as the modus operandi followed by the builders/managing committee controlled by the
builders responsible for the cooperative scam was that the builder in connivance with the officers of the cooperative department and the DDA have
revived many defunct/non functional housing societies and their names have subsequently been recommended to the DDA by the office of the
Registrar, Cooperative Societies, for allotment of land. The Group Housing Societies have been revived by the promoter members/builders with a
huge vested interest after forging signatures of the original members on the affidavits and thereafter submitting the false affidavits. No builder who
has taken over any society can make huge profit unless he is allowed to enroll members at his discretion in gross violation of Rule 24(2) of the
DCS Rules as only when this happens, huge premium and profit can be earned by them. The builders may not have entered in the cooperative
housing sector if Rule 24 (2) of the DCS Rules would have been implemented in letter and spirit.
(j) It two interpretations of a provisions of law are possible, the one which will make the provisions intra virus and the other which will make the
provisions ultra vires, then the one which will make the provisions intra virus has to be preferred. This was also laid down by the Hon''ble Supreme
Court in St. Johns Teachers Training Institute Vs. Regional Director, National Council for Teacher Education and Another, , wherein it was held as
follows:
It is also well settled that in considering the virus of subordinate legislation one should start with the presumption that it is intra virus and if it is open
to two constructions, one of which would make it valid and other invalid, the courts must adopt that construction which makes it valid and the
legislation can also be read down to avoid its being declared ultra vires.'' Similarly, in Jagpal Singh and others Vs. The State of Punjab, , the
Hon''ble Supreme Court cited with approval Maxwell on the Interpretations of the Statutes (10th Edition at page 7) as under:
...if the choice is between two interpretations, the narrower of which would fail to achieve the manifest purpose of the legislation, we should avoid a
construction which would reduce the legislation to futility and should rather accept the bolder construction based on the view that Parliament would
legislate only for the purpose of brining about an effective result.
(k) A person who becomes member of the cooperative society is subjected to the operation of the Act, Rules and bye-laws applicable from time
to time. No member of the society has an independent right qua the society and is Therefore, not entitled to assail the constitutionality of the
provisions of the Act, Rules and bye-laws. This was also held in Daman Singh''s case (supra) wherein the Hon''ble Supreme Court held as follows:
...Once a person become a member of a cooperative society, he loses his individuality qua the society and he has no independent rights except
those given to him by the statute and the bye-laws. He must act and speak through the society or rather, the society alone can act and speak for
him qua rights or duties of the society as a body. So if the statute which authorises compulsory amalgamation of cooperative societies provides for
notice to the societies concerned, the requirement of natural justice is fully satisfied. The notice to the society will be deemed as notice to all its
members.'' The above principle was reiterated by the Hon''ble Supreme Court in Chheoki Employees Cooperative Society Ltd. and Ors. (supra)
in the following terms:
Thus, it is settled law that no citizen has a fundamental right under Article 19(1)(c) to become a member of a cooperative societies. His right is
governed by the provisions of the statute. So, the right to become or to continue being a member of the society is a statutory right. On fulfillment of
the qualifications prescribed to become a member and for being a member of the society and on admission, he becomes a member. His being a
member of the society is subject to the operation of the Act, rules and bye-laws applicable from time to time. A member of the society has no
independent right qua the society and it is the society that is entitled to represent as the corporate aggregate. No individual member is entitled to
assail the constitutionality of the provisions of the Act, rules and the bye-laws as he has his right under the Act, rules and the bye-laws and is
subject to its operation. The stream cannot rise higher than the source.
After considering the pleas of the parties and pursuing the judgments cited by them the following position emerges:-
(a) If only the position of law laid down by the Hon''ble Supreme Court in Smt. Damyanti Naranga''s (supra) held the field, there is no doubt
whatsoever that the provision of Rule 24 (2) of the DCS Rules was clearly invalid and liable to be struck down. However, Smt. Damyanti
Naranga''s case (supra) which was a judgment of a Constitution Bench of 5 Judges of the Hon''ble Supreme Court was later on explained in the
judgment of Daman Singh (supra) which was another judgment of the Constitution Bench of 5 Judges of the Hon''ble Supreme Court and wherein
it was clearly held that the cooperative societies which from their very inception which are governed by the statutes, and are the creation of the
statutes, are controlled by the statutes and consequently there cannot be any objection to the interference with their rights guaranteed by Article
19(1)(c) of the Constitution.
In light of the above categorical position of law laid down by the Hon''ble Supreme Court in Daman Singh''s case which was followed by the
Hon''ble Supreme Court in the case of Chheoki Employees Cooperative Society Ltd. (supra), it is evident that the position of law as laid down by
Daman Singh''s case has to be applied by this Court. It is settled law that if a later judgment of the Hon''ble Supreme Court has explained the
scope of an earlier judgment by referring to it, then the High Court is bound by the interpretation of the earlier judgment of the Supreme Court by
the later judgment. In light of this position of law the judgment of the Hon''ble Supreme Court in ASOM Rashtrabhasa Prachar Samiti''s case
(supra) while following the position of law laid down in the Damayanti Naranga''s case was not apprised of the position of law laid down by the
Constitutional Bench in Daman Singh''s case and since the judgment in ASOM Rashtrabhasa Prachar Samiti''s case (supra) is a judgment of 3
Hon''ble Judges, we are respectfully bound by the position of law laid down by the Constitution Bench of 5 Judges of the Hon''ble Supreme Court
in Daman Singh''s case. However, the learned Additional Solicitor General Mr. Amarendra Sharan has fairly conceded that Rule 24(2) of the DCS
Rules does not in any manner restrict the right of the society to restrict its membership to the class of persons who are to become members of the
Cooperative Societies as per its bye-laws. He submitted that the said Rule 24(2) of the DCS Rules merely regulates the process of filling up of the
vacancies arising in such societies. Thus, Rule 24(2) of the DCS Rules according to him, was not a restrictive but a regulatory provision. It does
not in any manner override the provisions of the bye laws of the society or amends them. We accept Shri Sharan''s plea that a notice has to be
given under Rule 24 (2) of the DCS Rules only to the eligible persons and only such persons who are eligible to be members according to the
existing regulations and bye laws of the Society can apply for its membership. The draw of lots is only required to be held when the slot(s) for
membership are available and such availability/vacancy is publicized by notifying it in the daily newspaper Hindi and English and thereafter the
vacancies are filled up by the draw of lots in a transparent manner in the presence of the Registrar of the Cooperative Societies. He, thus,
submitted that if there are two interpretations of the Statute possible and one interpretation renders the provision unconstitutional and the other
sustains its constitutionality, then the Court should prefer such an interpretation which makes the provisions constitutionally valid. For this purpose,
he has relied upon the judgments of the Hon''ble Supreme Court in St. John''s Teachers Training Institute (supra) and the judgment of Jagpal
Singh(supra) where the Hon''ble Supreme Court while adopting the same interpretation has relied upon Maxwell on ''Interpretation of Statutes''.
While accepting the plea of the respondents reliance can also be placed on the judgment of the Hon''ble Supreme Court in Sunil Batra Vs. Delhi
Administration and Others etc., in which it has been held that the Court can read down a statute to prevent it from being rendered unconstitutional.
The relevant paragraphs of the said judgment reads as follows:
Batra puts in issue the constitutionality of Section 30(2) of the Prisons Act, 1894 (the Act, for short) while Sobraj impugns the virus of Section
But, the Court does not ''rush in'' to demolish provisions where judicial endeavor, amelioratively interpretational, may achieve both
constitutionality and compassionate resurrection. This salutary strategy of sustaining the validity of the law and softening its application was, with
lovely dexterity, adopted by Sri Soli Sobrabjee appearing for the State. The semantic technique of updating the living sense of a dated legislation is,
in our view, perfectly legitimate, especially when, in a developing country like ours, the corpus Jurisdiction is, in some measure a Raj hand-over.
36-A Read Dickerson has suggested:
... the Courts are at least free from control by original legislatures. Curtis, for one, has contended that consistently with the ascertained meaning of
the statute, a court should be able to shake off the dust of the past and plant its feet firmly in the present.
...The Legislature which passed the statute has adjourned and its members gone home to their constituents or to a long rest from all law making.
So, why bother about what they intended or what they would have done? Better be prophetic than archaeological, better deal with the future than
with the past, better pay a decent respect for a future legislature than stand in awe of one that has folded up its papers and joined its friends at the
country club or in the cemetery....
...Let the Courts deliberate on what the present or a future legislature would do after it had read the court''s opinion, after the situation has been
explained, after the Court has exhibited the whole fabric of the law into which this particular bit of legislation had to be adjusted.
The jurisprudence of statutory construction, especially when a vigorous break with the past and smooth reconciliation with a radical
constitutional value-set are the object, uses the art of reading down and reading wide, as part of interpretational engineering. Judges are the
mediators between the societal tenses. This Court in R.L. Arora v. State of Uttar Pradesh and in a host of other cases, has lent precedential
support for this proposition where that process renders a statute constitutional. The learned Additional Solicitor General has urged upon us that the
Prisons Act (Sections 30 and 56) can be a vehicle of enlightened values if we pour into seemingly fossilized words a freshness of sense.
It is well settled that if certain provisions of law construed in one way will be consistent with the Constitution, and if another interpretation would
render them unconstitutional, the Court would lean in favor of the former construction.
Consequently, we uphold the constitutional validity of Rule 24(2) of the DCS Rules subject to the above interpretation of the law submitted by
the learned Additional Solicitor General, which we accept and declare. The bye laws of the Society shall be fully followed in entertaining the claims
of memberships set up by those applying through the medium of Rule 24 (2) of the DCS Rules. Thus, if the society has any existing requirements in
its bye laws about the characteristics required to be possessed by an intending member, only such persons possessing the requirements as
stipulated in the existing bye laws and regulations of the Society are entitled to apply pursuant to Rule 24(2) of the DCS Rules. We also make it
clear that if the Society has any existing members who have still not got the allotment of a plot/flat, such members, in accordance with the bye laws,
shall be first allotted the vacant plot/flat/premises before resort to Rule 24(2) of the DCS Rules. It is only when all such existing members awaiting
allotment have been allotted the premises/plot/flats, shall the operation of Rule 24 (2) of the DCS Rules come into being.
Consequently, while dispelling the challenge to the constitutional validity of Rule 24(2) of the DCS Rules, we nevertheless uphold the societies
right to restrict its membership in accordance with the bye-laws, regulations and the rules of the society prospective candidates and further make it
clear that any prospective entrant to a society, pursuant to the mandate of Rule 24 (2) of the DCS Rules shall only be eligible to be allotted a plot
after the requirements of the existing members are fulfilled.
The operation of Rule 24 (2) of the DCS Rules requiring a draw of lots in the presence of the Registrar of the Cooperative Societies shall only
apply to new prospective entrants who apply pursuant to the notification issued under Rule 24(2) of the DCS Rules. In order to further streamline
the process of allotment and to expedite such process of allotment of residential accommodation in the city which is already very scarce, we make
it clear that the Registrar, Cooperative Societies, if called upon by the Society in writing to conduct the draw of lots, shall do so not later than six
weeks from the date of the receipt of the written intimation from the Society.
With the above observations and directions, this writ petition which challenges the constitutionality of Rule 24(2) of the DCS Rules is dismissed
but subject to the interpretation of Rule 24(2) of the DCS Rules delineated in this judgment.