Hon'ble Mr. Justice Ajay Rastog
NONREPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(s) 1313 OF 2019
(Arising out of SLP(Civil) No(s). 8138 of 2013)
DELHI DAYALBAGH COOPERATIVE HOUSE
BUILDING SOCIETY LTD. …….Appellant(s)
VERSUS
REGISTRAR
COOPERATIVE SOCIETIES AND ORS. ……..Respondent(s)
WITH
CIVIL APPEAL NO(s) 1314 OF 2019
(Arising out of SLP(Civil) No(s). 9015 of 2010)
CIVIL APPEAL NO(s) 1315 OF 2019
(Arising out of SLP(Civil) No(s). 26905 of 2010)
J U D G M E N T
Rastogi, J.
Civil Appeals arising out of SLP(Civil) No(s). 8138 of 2013,
SLP(Civil) No(s). 9015 of 2010,
SLP(Civil) No(s). 26905 of 2010
1. Leave granted.
2. The above noted appeals are directed against the orders
separately passed by the High Court of Delhi in writ petitions
filed at the instance of the present appellant Society which came
1
to be dismissed upholding the order of the Cooperative Tribunal
setting aside the award passed by the Registrar Cooperative
Societies holding that the Arbitrator had no jurisdiction to
examine the validity and legality of the registered sale deed which
can be questioned only by availing a remedy in the Civil Court
holding jurisdiction. Orders were separately passed by the
Tribunal in the cases of the individual members in whose favour
sale deed was executed by the society, having been separately
decided by the High Court, which has been challenged in these
batch of appeals.
3. The facts that emerge from the multitude and collateral and
exhaustive pleadings in brief are that the appellant is a house
building Society originally registered with the Registrar,
Cooperative Societies, Delhi (“hereinafter being referred to as
“RCS”) under the provisions of the Bombay Cooperative Societies
Act, 1925. On enactment of the Delhi Cooperative Societies Act,
1972, the provisions of the Act, 1972 and the rules framed
thereunder came to govern the field. However, the Act of 1972
came to be repealed by the Delhi Cooperative Societies Act,
2003(hereinafter being referred to as the “Act 2003”) as amended
2
by the Delhi Cooperative Societies(Amendment Act), 2006 which
now governs the field along with Delhi Cooperative Societies
Rules, 2007 framed thereunder.
4. The Society framed its byelaws, namely, Delhi Dayalbagh
Cooperative House Building Society Ltd., Soami Nagar, New
Delhi, with the primary object to acquire the land either through
outright purchase or on lease for construction of houses for its
members, either on rent or on hire purchase system or by
outright sale with a stipulation that no member shall be
permitted to transfer, sell or mortgage his house to any person
other than the members of the society or the society itself as
referred to under byelaw 51 and after the object being achieved
for which the Society has been formed, the procedure may be
followed for its liquidation as referred to under byelaw 65. Para
5, 51 and 65 of byelaws which are relevant for the purpose are
reproduced as under:
”5. (i) Any person shall be eligible to be a
member of the society provided:
(a) he is a follower of Radha Soami
faith and a member of Radha Soami
Satsang affiliated to Radha Soami Sabha,
Dayalbagh, Agra;
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(b) He, at the time of enrolment as a
member, is domiciled in the Union
Territory of Delhi or has been resident in
the Union Territory of Delhi for two
years or more; provided that this
condition shall not apply to members of
All India Services and employees of the
Central Government and the Delhi
Administration.
(c) his written application for
membership has been approved by a
majority of the Managing Committee.
(d) his age is more than 18 years,
except in the case of minor heir of a
deceased member;
(e) he is not a member of any other
house building society;
(f) he or his wife (she or her husband
in case of a woman) or any of his/her
dependents does not own a dwelling house
or a plot for building a house in Delhi;
(g) directly or indirectly he does not
deal in purchase or sale of house or
land for construction of houses either
himself or through any of his
dependents.
(h) he has carried out the provisions of
byelaw.
(ii)Every person seeking membership of the society
shall sign a declaration to the effect that he or his
wife(she or her husband) or any of his/her dependents
does not own a dwelling house or plot in Delhi and that
he/she is not a member of any other cooperative
house building society.
(iii)Every member on admission shall pay Rs.10/ as
admission fee which shall not be refunded in any case.
(iv)When a person’s application has been accepted by
the Committee and he has paid his admission fee and
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first instalment of this shares, he shall be deemed to
have acquired all the rights and incurred all the
obligations and liabilities of a member of the society as
laid down in the Cooperative Societies Act, the Rules
made there under and these byelaws.
(v)Application for admission as member and for
allotment of shares shall be made to the Secretary in
the form, if any, prescribed by the society for the
purpose. Every such application shall be disposed off
by the Managing Committee who shall have power to
grant admission or to refuse it after recording reasons
for such refusal, provided, however, that any person
whose application has been refused by the Managing
Committee may prefer an appeal within 30 days to the
Assistant Registrar, Cooperative Societies(Housing).
The decision of the Assistant Registrar shall be final.
51. No member shall be permitted to transfer, sell or
mortgage his house to any person other than the members
of the society or the society itself.
65. The society shall be wound up and dissolved only
by order of the Registrar under Section 39, 40 or 42 of the
Cooperative Societies Act.
After all the liabilities including the paid up share capital
have been met, the surplus assets shall not be divided
among the members, but shall be devoted to any object of
public utility determined by the General Meeting of the
society within three months of the date of final liquidation,
and approved by the Registrar, or they may in consultation
with them either be assigned by the Registrar in whole or in
part to any or all of the following :
(a) an object of public utility of local interest ;
(b) a charitable purpose as defined in section (2)
of the Charitable Endowment Act ;
(c) or may be placed on deposit with The Delhi
State Cooperative Bank until such time as a new
society with similar conditions is registered when,
with the consent of the Registrar, such surplus may
be credited to the Reserve Fund of such new
society.”
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5. To fulfil the object with which the society was formed, it was
desirous of obtaining land for construction of dwelling units to be
made available for its members. However, it did not go into the
market to purchase land but approached the appropriate
Government for its assistance with an application invoking Part
VII of the Land Acquisition Act, 1894, to provide the land located
in various Khasras admeasuring 137 bighas & 11 biswas
situated at village Chirag Delhi for construction of dwelling
houses for its members.
6. Part VII of Land Acquisition Act, 1894 under the heading
“Acquisition of Land for Companies” begins with Section 38 and
runs upto Section 44 B. Section 38 was repealed by Section 68
of 1984 with effect from 24th September, 1984. The issue in the
present case is pertaining to year 1955 when the acquisition
proceedings were initiated. Section 38A was a part of the Statute
at the relevant point of time when the acquisition proceedings
were initiated by the appropriate Government in the year 1955.
7. Section 39 lays down that Sections 6 to 16 and Sections 18
to 37 (both inclusive) shall not be put in force in order to acquire
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land on behalf of the company without previous consent of the
Government unless the company(includes society) executes an
agreement. In terms of Section 40, a consent is to be obtained
after the appropriate Government record its satisfaction either on
the report of the Collector under Section 5A or by the inquiry
held as provided for the purpose of acquisition is to obtain land
for erection of dwelling houses for workmen employed by the
company or that such acquisition is needed for construction of
building or work for the Company and that work is likely to be
proved useful to the public.
8. The State Government thus proceeded under Part VII of the
Land Acquisition Act and after holding preliminary enquiry as
envisaged under Section 40 of the Land Acquisition Act, 1894
and after recording its satisfaction, executed an agreement laying
down the terms & conditions with the appellant Society under
Section 41 dated 12th April, 1955 which was published under
notification dated 13th May, 1955 in the Official Gazette in terms
of Section 42 of the Act, became the force of law and binding not
only upon the parties to the agreement but also on the public at
large. The terms & conditions indicated in the agreement dated
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13th May, 1955 published in the Gazette and relevant for the
present purpose are reproduced hereunder:
“1. That the Society shall pay to the State
Government or such person or persons as the State
Government may appoint in this behalf before
possession of the said land is given to the Society the
compensation, if any, as settled by the Collector or if
reference is made to the court by the final court or
appeal and all compensation inclusive of all payments
and allowances in respect thereof payable under the
said Act and all Courts costs and pleaders fees etc.
incurred by the State Government in defending the
reference, if any, made to the court as aforesaid and on
appeal or appeals filed in connection therewith and all
compensation, pleaders fee etc. payable or paid by the
State Government to the claimant in the said matters.
The State Government shall not be bound to give
possession of the land until all the said money have
been paid, and may withdraw from the acquisition, and
in case of withdrawal the Society shall be liable to
indemnify the State Government against all expenses
incurred and damage sustained as the result of
anything done by them in the matter of acquisition till
the date of withdrawal.
2. That upon such payment by the Society the Chief
Commissioner covenants to convey and grant to the
Society the said land described in the Schedule hereto,
to held the same to the said Society for every subject to
the conditions hereafter not forth, namely:
(a) That the Society shall within 15 years of
being put in possession of the said land
utilise this land for the purpose it is
acquired.
(b) That the Society its successors and
assignees shall use the said land for
aforesaid purposes and for no other
purposes, whatsoever.
(c) That if the Society fails to carry out any
of the terms of this agreement or if the said
land no longer required by the said Society
for the aforesaid purpose, then the Society
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shall forthwith relinquish and restore the
same in favour of the Chief Commissioner
and land shall be liable to be resumed and
taken by the State Government on payment
to the Society of the amount of award as
finally settled or the estimated market value
of the land at the time of resumption,
whichever, shall be less and if there are any
buildings on the land the Chief
Commissioner may at his option either
purchase the buildings on payment of their
estimated value at the time or direct the
Society to remove the buildings at its own
cost which such time as may be allowed by
the State Government.
(d) That should any dispute or difference
arise touching or concerning the subject
matter of this agreement or any covenant or
clause of thing contained therein, the same
shall be referred to the Sole Arbitration of any
person nominated by the Chief Commissioner
of Delhi or in case his designation is changed
or his office is abolished to the sole
arbitration of any person nominated by the
officer, who for the time being is entrusted,
whether or not in addition to other functions
with the functions of the Chief Commissioner
of Delhi by whatever designation such officer
may be called. It will be no objection to any
such appointment that the arbitrator so
appointed is a Government servant that he
had to deal with the matters to which this
indenture relate and in the course of his
duties as such Government servant he has
expressed views on all or any of the matters
in dispute or difference. The award of the
arbitrator so appointed shall be final and
binding on the parties.”
9. After acceptance of the terms & conditions of the agreement
being deduced in writing, duly published in the Official Gazette
under Section 42 of the Act, having the force of law, the State
9
Government proceeded to complete the acquisition proceedings
and published the award under Section 11 of the Act dated 26th
February 1957 and after taking possession free from
encumbrances under Section 16 of the Land Acquisition Act,
handed over possession to the society in terms of the agreement
dated 13th May, 1955 on 11th June, 1957 and 30th July, 1957
respectively. It may be relevant to note that any agreement or
Memorandum of Understanding, if any, executed while
possession of the subject land was handed over to the society,
has not been placed by the society on record and inference can
be drawn that while handing over possession, the State
Government intended to comply with the terms & conditions of
the agreement dated 13th May, 1955 to be adhered to in its true
spirit by the society and indisputedly breach, if any, of the
conditions of the agreement has not been brought to the notice of
the Court.
10. The appellant Society in fulfilment of its obligations and in
terms of the agreement dated 13th May, 1955 allotted plots to its
members within the stipulated period of 15 years by a separate
registered sale deed executed on certain terms and conditions.
10
Since the terms and conditions of allotment as recited in the sale
deed are common, we have noticed from the registered sale deed
dated 30th December 1968 in reference to plot no. B68 to its
member Mr. Manocha, on acceptance of full consideration for the
plot in question.
11. Coming to the facts of the Civil Appeal arising out of SLP(C )
No. 8138 of 2013, Mr. K.L. Manocha, as a lead case, who was a
member of the Society allotted a plot no. B68, Soami Nagar and
sale deed was executed in his favour on 30th December, 1968 in
the same terms. It reveals that Mr. Manocha, had initially
constructed a single storey house later intended to demolish and
construct a multi storey structure for his own needs and
requirements. The appellant came across with the advertisement
in the magazine titled “Real Property Times” in June, 2005 for
sale of a basement, four bedroom apartments on each of the
upper four floors of the building constructed on the plot in
question. This fact came to the notice of the society on 18th June,
2005. The society published a notice inviting the public in
general that the residential plots in Soami Nagar cannot be sold
to persons who are not the members and who are not eligible to
be members of the society and violation of the society byelaws
11
and the sale deed even if registered shall be at his own risk and
peril.
12. At this stage, a claim petition was filed at the instance of
society under Section 70 of the Act, 2003 seeking declaration of
the sale/transfer of the property in question by the allottee to a
nonmember without prior notice or permission, as illegal and
void being in violation of clauses 2 & 3 of the sale deed and
clause 51 of the byelaws and it was prayed that the same may
be cancelled and the property be referred back to the society.
13. The award was passed in favour of the appellant society and
against the respondent no. 2 dated 1st December 2006 holding
that sale/transfer was violative of clauses 2 & 3 of the sale deed
and byelaw 51 directing the impleaded respondent(member of
the society) to hand over the property within the stipulated time
to the appellant society. But no order was passed against the
transferees/purchasers including the respondents being nonmembers of the society. When the proceedings were initiated in
execution of the award and property was stated to be attached at
one stage on 28th November, 2007, the respondents who were
stated to be the parties and claiming to be the purchasers and
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occupants filed separate appeals against the award before the
Cooperative Tribunal. At the same time, the appellant society
also filed appeal assailing the award to the limited extent with
regard to deletion of names of the impleaded respondent nos. 3
and 4 with a prayer for reinstatement. The appeals filed by the
impleaded respondents and of the appellant society were heard
by the Tribunal and disposed of by a common judgment dated 6th
January, 2012. The appeal of the appellant society was allowed
but the award passed by the Arbitrator dated 1st December, 2006
was set aside which was the subject matter of challenge before
the Delhi High Court and after being affirmed on dismissal of the
writ petition preferred by the appellant society, the matter is
under challenge in the present batch of appeals.
14. Civil appeal arising out of SLP(Civil) No. 9015 of 2010 has
been filed against the order dated 28th October, 2009. Although
the question was the same with the additional factor raised that
in terms of condition nos. 2 & 3 of the sale deed, notice was
served on the society that was not responded failing which the
member proceeded to sell the subject plot but service of notice
was disputed by the appellant society and the Tribunal held that
13
the appeal of the society for cancellation of the legally executed
registered sale deed is not a subject matter which is covered
under the provisions of the Delhi Cooperative Societies Act and
rules framed thereunder and such registered instrument, if at all
one is aggrieved, could be challenged in a civil Court having
jurisdiction and in the writ petition preferred by the society, the
High Court while upholding the view of the Tribunal further
observed that in the absence of the purchaser being impleaded as
party to the proceedings, his rights indeed has been jeopardised
who indisputedly was a necessary party to the proceedings and
when the valid transaction is sought to be set aside by the
Arbitrator under its impugned award, the purchaser was to be
heard and was held against the appellant and on the twin ground
the writ petition came to be dismissed is the subject matter of
challenge.
15. In civil appeal arising out of SLP(C ) No. 26905 of 2010, the
order of the Tribunal which was on the same lines and placing
reliance on the earlier order of the High Court dated 28th October
2009, the Writ Petition(C ) no. 2136/2008 came to be dismissed
with additional fact taken into consideration that Section 91 of
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the Act, 2003 gives recognition to purchase through the
registered agreement to sell or power of Attorney or a sale deed
and on fulfilment of conditions, the applicant, if apply for
membership by paying transfer fee, share money and admission
fee etc. as per the provision of the byelaws, the society and the
committee has to grant membership to the applicant within 30
days of the submission of application and refusal by the
Committee may give rise to appeal by the applicant to the
Registrar of the Cooperative Societies.
16. Mr. Shekhar Naphade, learned senior counsel for the
appellant submits that it is not in dispute that the land was
acquired by the appropriate Government under Part VII of the
Land Acquisition Act and for the aforesaid purpose, the appellant
society and the Government entered into an agreement dated 13th
May, 1955 under Section 41 of the Land Acquisition Act which
came to be published in the official Gazette in compliance of
Section 42 of the Act and has a force of law and learned senior
counsel submits that in terms of the agreement, the Government
has to execute a deed of conveyance and grant the said land to
the society. Indisputedly, the Government has failed to execute
15
deed of conveyance or make the grant in favour of the society and
further to support its title, the society filed a Writ Petition No.
6406 of 2001 and order came to be passed on 7th January, 2004
directing the Government by Writ of Mandamus to execute the
deed of conveyance. Taking assistance thereof, learned senior
counsel submits that in the absence of any agreement/deed of
conveyance been executed by the Government, the appellant
society itself does not hold a freehold title and is not a owner of
the subject land in question and so long as the society is not the
owner of the subject land, it could not transfer ownership rights
to its members as the transferor cannot confer on the transferee
a better right than what he himself possess and the purported
sale deeds executed by the society in favour of its members even
though indicated in the recital of the sale deed as owner of the
subject plot but that may not transfer any ownership/freehold
title on its members.
17. According to the learned senior counsel, the title of the
parcel of land is still with the Government and the Government
has not executed any deed of conveyance so far despite order of
the Delhi High Court dated 7th January, 2004 and the agreement
16
dated 13th May, 1955 is nothing more than a promise to execute
a deed of conveyance and the agreement may have a binding
force in view of its publication in the Gazette under Section 42 of
the Land Acquisition Act but cannot be construed as extending
freehold title to the society.
18. Learned senior counsel further submits that Section 44 A of
the Land Acquisition Act clearly provides that no company (which
include society) for whom land is acquired under Part VII of the
Act is entitled to transfer the land or any part thereof by sale,
mortgage, gift or otherwise except with the previous sanction of
the Government. According to learned senior counsel, the sale
deeds executed after 1962, when Section 44 A came on the
statute book w.e.f. 12th September, 1962 does not indicate that
any previous sanction has been obtained from the Government
and mere permission to use does not create any right or interest
on the subject land in favour of the society. At least, in any case,
no ownership of freehold right is created so far and Section 54 of
the Transfer of Property Act, 1882 is merely a codification of the
principle of common law which may not be of any assistance to
the respondents as its defence.
17
19. Learned senior counsel appears to be very futuristic in his
approach when submits that even if the Government decides at
later stage to grant ownership to the society, such ownership
would always be subject to Section 44A of the Land Acquisition
Act and society cannot make any transfer in any form, without
previous consent of the Government and the very concept of
freehold means that the holder of the land has an absolute right
to transfer and/or create any rights in the land without being
required to take any permission or consent of any other authority
or person and in this context, the finding which has been
recorded converting freehold rights in favour of the members in
respect of the plots allotted to them is erroneous and contrary to
law which according to him is not sustainable.
20. According to learned senior counsel Mr. Shekhar Naphade,
the purported sale deed executed by the society in favour of its
members has no legal effect and even the terms on which the
members of the society are occupying their respective plots or
their houses confers no right in favour of the allottees. Thus, the
transfer made by individual members to third parties/non18
members without previous sanction of the Government are void
ab initio bad and such transfer without prior permission/consent
of the society even by registered sale deed apart from being in
violation of the provisions of the byelaws are also hit by Section
44A of the Land Acquisition Act and no legitimate right can be
conferred on the allottee or its transferee to whom rights have
been transferred on the subject plot in question and placed
reliance on the judgment of this Court reported in Zoroastrian
Cooperative Housing Society Ltd. and another Vs. District
Registrar, Cooperative Societies(Urban) and Others 2005(5)
SCC 632.
21. Per contra, Mr. Ranjit Kumar, learned senior counsel for the
respondents while supporting the judgment of the High Court
submitted that the question which has been raised by the
counsel for the appellant is beyond the pleadings and it was
never the case of the society either before the Arbitrator or the
Tribunal or the High Court or even in the pleadings in the civil
appeal that in the absence of any deed of conveyance being
executed in terms of clause 2 of the agreement dated 13th May,
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1955, the society does not hold freehold title/rights over the
subject land in question and what is being argued before this
Court is beyond the pleadings and has been raised for the first
time while making oral submissions and there is no factual
foundation on record in support of what is being prayed and
further submitted that the subject plots have been allotted to the
members of the society as its owner free from encumbrances
transferred by the Government, after being acquired at the behest
of the society under the provisions of the Land Acquisition Act.
22. Learned senior counsel for the respondents further submits
that after the agreement dated 12th April, 1955 been executed
under Section 41 of the Land Acquisition Act, 1894 and
published in the Gazette dated 13th May, 1955 become a force of
law by virtue of Section 42 of the Act and the agreement dated
13th May, 1955 recites certain terms & conditions and on its
satisfaction, the appropriate Government had proceeded to
complete the acquisition proceedings and handed over possession
of the subject land in question to the society free from
encumbrances on 11th June, 1957 & 30th July, 1957 and after
the possession was taken over by the society, the society
20
proceeded in making allotment to its members by a registered
sale deed conferring rights and title in favour of the allottee.
23. Learned senior counsel for the respondents submits that a
conjoint reading of clauses 2 & 3 of the sale deed (dated 30th
December, 1968 in the instant case), the society reserves its preemptive rights over the subject plot in question and if the society
fails to purchase within the stipulated period at the prevailing
market price, the member will be at liberty to dispose of in the
manner as he/she likes.
24. According to learned senior counsel, Section 91 of the Delhi
Cooperative Societies Act, 2003 envisage that any member of the
housing society who has sold his plot or flat on the registered
Power of Attorney or agreement for sale or by sale deed ceases to
be a member of the society and the transferee who has
purchased the subject property on the registered Power of
Attorney or agreement for sale or by sale deed on fulfilment of the
conditions as stipulated on depositing the transfer fee and share
money, if any, the Society and the Committee is under obligation
to grant membership to the applicant within 30 days from the
submission of application and in case of refusal, there is remedy
21
to the applicant to approach the Registrar of the Cooperative
Societies for redressal of his/her grievance.
25. Learned senior counsel submits that there is no refusal ever
made by the society to the transferees who had purchased the
subject plot in question contemplated under Section 91 of Act,
2003 failing which the transferees, in their own capacity, be
considered and deemed to be a member of the society in the
absence of any order being passed by the society to the contrary.
26. Learned senior counsel for the respondents further submits
that throughout even, from the correspondence evident from the
letter dated 27th July, 1985 from the Secretary of the Society to
Lt. Governor stated in para 2 that the “Delhi Administration
acquired approx. 30 acres of land allotted to the society on 25th
March, 1957 on freehold basis”. Later, in the letter dated 15th
March, 1989 addressed to the authority from the Secretary of the
Society, it was stated that “the status of the land is totally
freehold and allotment of plots to the society’s members was also
on the same basis.” That apart, the society, at one stage,
approached the District Judge in RCA 95/82 titled as Delhi
22
Dayalbagh Cooperative House Building Society Ltd. Vs. Arjun Das
and after the matter was being heard, the learned trial Judge also
recorded its finding that the subject land in dispute is being a
freehold and there is no legal bar to the same being sold and the
order passed by the learned trial Judge never came to be
challenged by the society and accepted the nature of the land of
which the possession was handed over by the appropriate
Government on completion of acquisition proceedings initiated at
the instance of the society vested free from encumbrances.
27. Learned senior counsel further submits that Section 70 of
the Act have a limited jurisdiction to examine the dispute
touching the constitution, management or the business of the
cooperative society to arbitration and the prayers made are in the
nature of declaration that the registered sale deed in favour of the
nonmembers be held to be null and void is indisputedly beyond
its scope and jurisdiction and has been rightly interfered by the
Tribunal and confirmed by the High Court on dismissal of the
writ petition preferred at the instance of the society and placed
reliance on the judgment of this Court in Usha Ranjan
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Bhattacharjee and Others Vs. Abinash Chandra Chakaborty
and Ors. reported in 1997(10) SCC 344.
28. Learned senior counsel submits that after the enactment of
the Delhi Cooperative Societies Act, 1972 or 2003, the byelaws
of the societies have to be in conformity with the provisions of the
Act. There is a restrictive clause if inconsistent with the
provisions of the Act, 2003 may not have any enforceability under
the law and further submits that the possession free from
encumbrances was handed over by the appropriate Government
to the society after passing of the award in June/July 1957 and
it may not be open for the appellant to take a summersault and
raise a question which was never agitated. In last 60 years,
much water has flown in the Ganges, conferring rights over the
subject property and at this belated stage when number of sale
deeds have been executed at various point of time by the society
with its members which has been further transferred to nonmembers by registered power of attorney or agreement to sell or
sale deed and their rights are protected under Section 91 of Act,
2003 and at such belated stage when there is no residential plot
available with the society at its disposal, question of deed of
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conveyance not executed may not arise for consideration and it
appears that this plea has been raised to nullify the winding up
proceedings which is adversely affecting the rights of the society.
29. We have heard learned senior counsel for the parties at
length and with their assistance perused the records.
30. Before adverting further, we will discuss some material facts
and the relevant provisions of the Delhi Cooperative Societies Act
and the byelaws of the society which may have a direct bearing
on the issue under consideration.
31. After the action been initiated by the society for providing
land in fulfilment of the public purpose in providing plots to its
members, the appropriate Government issued a notification
under Section 4 dated 19th March, 1955 and after holding a
preliminary inquiry, as contemplated under Chapter 40 of Part
VII of the Act, 1894, and on its satisfaction, the appropriate
Government executed an agreement dated 12th April, 1955 with
the society under Section 41 in fulfilment of the necessary
requirements, namely, payment to the Government of the cost of
25
acquisition, the transfer of land to the society on such payment
prescribing the terms on which the land shall be provided to the
society and where the acquisition is for the purpose of erecting
dwelling houses, all the provisions of Act connected therewith,
time and the manner in which the dwelling houses have to be
erected, on the terms & conditions came to be published in the
Gazette under Section 42 of the Act on 13th May, 1955 which
became the law and binding on the parties and the public at
large. The appropriate Government thereafter proceeded in
making declaration under Section 6 of the Act. Consequent
thereto, award came to be passed under Section 11 on 11th
February, 1957 and the appropriate Government took possession
of the subject land in question, free from all encumbrances,
under Section 16 of the Land Acquisition Act and it has come on
record that possession was transferred to the society for whom
the acquisition proceedings were initiated at its instance on 11th
June, 1957 and 30th July, 1957 respectively free from
encumbrances and, therefore, the title in transferring the land to
the society in terms of the agreement dated 13th May, 1955
created a statutory genesis. It is not the case of either party that
there was any breach or violation of the terms and conditions
26
which has been referred to under the agreement dated 13th May,
1955 either by the society or its members or the purchasers or
the successors in interest.
32. The emphasis of learned senior counsel for the appellant
that the title of the land in question never stood transferred to
the society in the absence of the deed of conveyance been
executed, is without substance for the reason that the title at the
first place in favour of the society was not created by any of the
modes ascribable to the Transfer of Property Act and once the
acquisition proceedings have been initiated by the Government,
on fulfilment of the conditions referred to under Section 41 of
Land Acquisition Act on being published in the Gazette dated 13th
May 1955 under Section 42 of the Act which became the law,
there appears no further statutory requirement to register any
deed of conveyance under the Transfer of Property Act. Besides
it, the consideration amount was paid by the society as
demanded by the competent authority and physical and actual
possession, free from encumbrances, was delivered to the
appellant society and the land stood conveyed and granted in
terms of clause 2 of the agreement. At the same time, no party in
27
the instant proceedings ever raised any objection/dispute on the
issue of physical possession of the land in question being
delivered to the appellant society and/or the same being passed
on to the person who have purchased plots/flats therein
subsequently. In the given facts and circumstances, it can
legitimately be observed that the marketable title in transferring
respective plots to its members has created a statutory genesis.
33. It is also not the case of the appellant society that at any
later stage, after the appropriate Government handed over
possession, free from encumbrances, of the subject land in
question to the society, it ever raised objection in reference to the
breach of the terms & conditions of the agreement dated 13th
May, 1955 to resume the subject land or for taking legal recourse
in reference to the title of the subject land in question. In the
given facts and circumstances, a legal presumption can be drawn
that after the peaceful possession free from encumbrances, was
handed over by the State Government to the society, all rights of
the said land stood vested with the society free from
encumbrances and transferred to its members on the terms as
indicated in the registered sale deed executed by the society.
28
34. The sale deed dated 30th December, 1968 was executed in
favour of one of the applicant Shri Manocha, member of the
society to whom plot no. B68 was allotted by registered sale deed
on certain terms & conditions on depositing the cost of the land,
the physical possession of the subject land/plot was passed on to
the member of the society. The extract clause of the sale deed
dated 30th December, 1968 which are standardised conditions in
all the sale deeds relevant for the purpose is reproduced as
under:
“This Sale Deed is made on this 30th day of
December 1968 by the Delhi Dayalbagh Cooperative
House Building Society Ltd. Delhi, in favour of
Shri/Smt. K.L. Manocha, son of Shri M.R. Manocha,
resident of Delhi, a member of the Society,
WHEREAS the Chief Commissioner, Delhi vide
notification No. F15 (147/34LSG dated 17.3.55 and
notification No. F15(147)/54LSG dated 13.6.56 and
Awards in pursuance thereof acquired land for the
colony of the Society now known as “SOAMI NAGAR
COLONY” and whereas the society is the owner of the
plot No. B68 measuring 488 Sq. yds. forming part of
the SOAMI NAGAR COLONY and whereas the member
Shri K.L. Manocha has paid to the Society all the dues
in respect of the share money, the cost of the land, and
development charges.
AND WHEREAS the said plot No. B68 situated in the
said colony of the Society has been hereunder sold to
Shri K.L. Manocha for a sum of Rs.1952/(Rupees One
Thousand Nine Hundred Fifty Two only) being the cost
of land, which amount has been paid by the member to
the society.
29
AND WHEREAS the purchaser member has agreed
that he/she shall pay to the vendor Society or to whom
it directs, the amount which may be found by the
Vendor Society to be due from him/her in future in
respect of the aforesaid plot and in case of failure to
pay such dues which shall always be deemed as a debt
due to the Vendor Society, which dues shall be first
charge on the said plot and the building constructed
thereon.
AND WHEREAS the member Shri K.L. Manocha has
agreed to always abide by the Rules and Byelaws of
the Society in force time to time.
AND WHEREAS the purchaser member agreed that
he/she shall construct a house on the said plot sold to
him/her within two years after the sale deed by the
vendor society is registered.
NOW THIS DEED OF SALE WITNESSETH AS UNDER:
1. That subject to conditions stated in this sale deed and
in consideration of Rs. 1952/ (Rupees One Thousand
Nine Hundred Fifty Two only) as the cost of the land
paid by the member to the said society, it hereby
transfers, and conveys to the member Shri K.L.
Manocha his/her heirs and assignees all rights in the
plot of land no. B68 as delineated on the plan
annexed to this Sale Deed, to hold the same to the
member on the plan annexed to this Sale Deed, to held
the same to the member for ever.
2. The purchaser member will continue to be the member
of the vendor society, if the purchasing member
proposes to sell or transfer his house or plot, he/she
undertakes to sell or transfer it to or through the
society. If the society does not purchase the house
within six months at the prevailing market price, the
member will be at liberty to dispose it off as he/she
likes.
3. The successor will have also to be a member of the
vendor Society. If he/she does not become a member
of the society, he/she shall sell the house of plot to or
through the Society at the prevailing market price, if
the Society does not purchase the house within six
months, the successor will be at liberty to own it as
any other member or dispose it off as he/she likes.
30
4. That the purchaser member agrees to construct and
build house on the plot in accordance with the rules
and byelaws of the Municipal Corporation and will not
do anything to violate the said rules and byelaws of
the Corporation or of the Government which may bring
about or shift any liability on his/her account to the
Society and if he/she does anything which on his/her
account the vendor society is made liable, he/she shall
compensate the vendor Society and if/she does not pay
the vendor Society the said dues, the Vendor Society
liability on him/her will/be the first charge on the plot
and/or the house constructed by him/her.
5. Expenses in connection with the registration and
stamp will be borne by the vendor/society.”
35. Prior to the enactment of the Act 2003, the Delhi
Cooperative Societies Act, 1972 was in force, but by passage of
time, it revealed that the Act of 1972 fails to fulfil the object and
rule of cooperative societies which had undergone a sea change.
In order to gear up the cooperative societies to meet the challenge
posed due to economic liberalisation and superfast growth in the
field of Information Technology and to protect the interests of the
members of the cooperative societies as financial stakes had
become high, the Government of the National Capital Territory of
Delhi earlier appointed a Committee in 1995 to prepare a new
cooperative law and after a detailed discussion, Committee
submitted a report on 31st August, 1998 which was further
31
reviewed by the Review Committee and after the report being
submitted, the Delhi Cooperative Societies Act, 2003 came into
force on its publication in the Gazette of 3rd March, 2004.
Certain amendments were made vide the Cooperative Societies
Amendment Act, 2004 and 2006 respectively and in exercise of
power under Section 137, the Delhi Cooperative Societies Rules,
2007 were framed to achieve the object of the provisions of the
Delhi Cooperative Societies Act, 2003.
36. Apart from the provisions in reference to the settlement of
disputes as referred to under Chapter VIII, a separate Chapter IX
was introduced incorporating the special provisions for
Cooperative Housing societies. The Chapter applies to all
cooperative housing societies including housing financial society.
Section 74(a) defines allottee a member of the cooperative society
to whom plot or land or site or flat could be allotted by the
cooperative society and the principal object of the cooperative
housing society is defined in Section 74(e) and (f) of Section 74
deals with dwelling unit which includes a house, flat or
apartment for the purpose of dwelling and subsection (k) defines
the occupancy rights of an allottee to possess and use the plot or
32
the land. The limitation of membership has been provided under
Section 75 and the rights and privileges of members on allotment
of plot or dwelling unit in a cooperative housing society has been
defined under Section 76. It further takes note of not only
allotment but has a provision for nomination and restriction on
transfer of share or interest of a member. Permission to transfer
the occupancy right is not to be ordinarily refused is explained
under Section 80 with a special provision providing for settlement
of disputes and Section 91 introduces a special provision for
regularisation of occupancy rights of persons who have acquired
rights through the instrument on registered Power of Attorney or
agreement for sale or registered sale deed to become a member of
the society on depositing the requisite transfer fee, admission fee,
etc. Section 74(e), (f), (k), Section 80 and Section 91 which are
relevant for the purpose are reproduced as under:
74(e) "co-operative housing society" means a cooperative society-
(i) registered or deemed to be registered as a cooperative housing society under this Act;
(ii) the principal object of which is to provide its
members open plots under plot housing, dwelling
units or flats (whether in a multi-storeyed building
or otherwise) in a complex under group housing
and in case where open plots or dwelling units or
flats are already acquired to provide its members
33
common amenities and services including
services relating to the arrangement of finances
for facilitating construction of dwelling units in
order to solve their needs of dwelling units through
mutual-aid in accordance with the co-operative
principles, and includes a house building, copartnership, co-ownership housing society, cooperative housing maintenance society,
multipurpose co-operative housing society and
any other co-operative society of like nature and
purpose;
(iii) "co-operative housing maintenance society"
means a co-operative society formed by the
owners of dwelling units in a building for the
purpose of maintenance of the building and
provisions of common amenities, services, etc;
(iv) "co-ownership co-operative housing society"
means a co-operative society known as "house
building" or plotted society in which the land is
held either on lease-hold or free-hold basis by the
co-operative society and the houses constructed
on it are owned or to be owned by its members;
(v) "co-partnership co-operative housing society"
known as group housing means a co-operative
society in which land and buildings are held by the
co-operative society on lease-hold or free hold
basis and members are allotted flats or such other
premises in such buildings with a right to occupy
the same in accordance with terms of lease,
Government's guidelines and the bye-laws of such
group housing;
(vi) "multi-purpose co-operative housing society"
means a society formed with the object of
undertaking multifarious activities for the economic
and social development of its members,
particularly of slum dwellers and economically
weaker sections of the people, in addition to
providing better housing accommodation and
better environment to improve their quality of life;
(f) "dwelling unit" includes a house, flat and apartment for
the purpose of dwelling;
34
(k)"occupancy right" means the right of an allottee to
possess and use the plot of land, site or dwelling unit or flat
allotted to him with power to give it on hire or on lease and
licence or to mortgage it or to donate or to gift or to transmit it
by will or by inheritance or to transfer it after paying the
transfer fee;
80.Permission for transfer of occupancy right not to be
ordinarily refused and provision for appeal-
(1) No co-operative housing society shall ordinarily refuse to
grant to its member permission for transfer of his occupancy
right in the property of the co-operative housing society
unless the transferee is otherwise not qualified to be a
member:
Provided that nothing contained in any agreement,
contract or the bye-laws regarding eligibility for
membership stipulated therein shall apply to a
nominee, heir or legal representative of the
deceased member for his admission to membership
of the co-operative housing society:
Provided further that aforesaid transfer in case of
lease hold land shall be governed by the provisions
of the perpetual lease of land.
(2) The decision of the co-operative housing society on an
application for permission to such transfer shall be
communicated to the applicant within thirty days from the
date of receipt of the application.
(3) Any person aggrieved by the decision of the cooperative housing society refusing permission for such
transfer may within thirty days from the date on which the
refusal of permission is communicated to him appeal to
the Registrar.
(4) The Registrar shall dispose of the appeal within a
period of one hundred and twenty five days whose
decision shall be final.
91.A member of a housing society who has sold his plot or
flat on the power of attorney or agreement for sale or by
sale deed, shall cease to be a member of that society from
the date of the sale of plot or flat:
Provided that the purchaser having registered
power of attorney or registered agreement for sale
or registered sale deed, as the case may be, in
35
respect of such plot or flat, may apply for
membership by paying transfer fee of five hundred
rupees and share money and admission fee as
per the provisions of the bye-laws of the society
and the committee shall grant membership to the
applicant within thirty days after the submission of
his application. In case of refusal by the
committee, the applicant may appeal to the
Registrar within thirty days and the decision of the
Registrar shall be final:
Provided further that no purchaser shall be entitled
for more than one membership in a housing
society.
37. It may be further noticed that Section 131, save the existing
cooperative societies, registered either under the Act of 1904 or
under the Act of 1912 or under the Bombay Cooperative Societies
Act 1925 which was in force in Delhi or the Delhi Cooperative
Societies Act, 1972, shall be deemed to be registered under the
corresponding provisions of this Act(Act of 2003) and rules
framed thereunder with the further legislative mandate that byelaws thereof shall, so far as the same are not inconsistent with
the express provisions of this Act, continue to be in force until
altered or rescinded. Section 140 overrides other law,
notwithstanding anything inconsistent with the provisions of this
Act. Section 141 being repeal and savings stipulates that the day
on which the Delhi Cooperative Societies Act, 2003 comes into
force, the Delhi Cooperative Societies Act, 1972 which was in
36
force in the National Capital Territory of Delhi shall stand
repealed preserving the actions under the Repeal Act.
38. The Scheme of Act 2003, on its very inception, was
introduced with the object to meet the challenge posed due to
economic liberalisation and superfast growth and to protect the
interests of the members of the societies as financial stakes had
become high which made the Government and the National
Capital Territory of Delhi conscious by replacing the Act to subserve the purpose in protecting the interest of the members and
of the society which have been created for the welfare of its
members. The principal object of the cooperative housing
societies as referred to under Section 74(e), shall not be
ordinarily refused for transfer of occupancy rights, as referred to
under Section 80 and Section 91 mandates that if a member of
the housing society has sold his plot or flat on the Power of
Attorney or agreement for sale or sale deed, shall cease to be a
member of the society from the date of the sale of the plot of land
and the purchaser will enter into his shoes having registered
power of Attorney or registered sale deed, as the case may be, in
respect of the plot or a flat on depositing the transfer fee, share
money and admission fee as per the provisions of the byelaws.
37
The society and the committee are under obligation to grant
membership to the applicant within a period of 30 days and if the
society have assigned reasons to refuse, the remedy lies with the
applicant to file appeal to the Registrar. What is borne out from
the scheme of Act, 2003 that the purchaser having registered
Power of Attorney or agreement for sale or sale deed on fulfilment
of certain basic requirements on deposit the member fee, transfer
fee, share money and admission fee, etc. as per the provisions of
the byelaws of the society is entitled ordinarily to become the
member of the society. Section 91 read with Section 131 of the
Act provides that any byelaws if inconsistent or any other
enactment which is not in conformity with the provisions of Act of
2003, is ultimately the substantive law that has to prevail upon.
Section 131 & 141 of the Act, 2003 are reproduced below:
131. Saving of existing cooperative societies (1)
Every existing cooperative society which had been
registered under the Cooperative Credit Societies Act,
1904 or under the Cooperative Societies Act, 1912, or
under the Bombay Cooperative Societies Act, 1925, as
was in force in Delhi, or the Delhi Cooperative
Societies Act, 1972 shall be deemed to be registered
under the corresponding provisions of this Act and
rules framed thereunder and byelaws thereof shall, so
far as the same are not inconsistent with the express
provisions of this Act, continue in force until altered or
rescinded.
(2) All appointments, rules and orders made,
notifications and notices issued and suits and other
38
proceedings instituted under the said Acts shall, so far
as they are consistent with the provisions of this Act,
be deemed to have been respectively made, issued and
instituted under this Act, save that an order made
cancelling registration of a cooperative society shall be
deemed, unless the cooperative society has already
been finally liquidated, as an order issued under
section 95 or section 96 or section 97 for its being
wound up.
141. Repeal and savings – On the day on which the
Delhi Cooperative Societies Act, 2003 comes into
force, the Delhi Cooperative Societies Act, 1972 (35 of
1972) in force in the National Capital Territory of Delhi
shall stand repealed:
Provided that the repeal shall not affect
(a) The previous operation of the Act so repealed
or anything duly done or suffered thereunder;
or
(b) Any right, privilege, obligation or liability
acquired, accrued or incurred under the Act
so repealed; or
(c) Any penalty, forfeiture or punishment
incurred in respect of any offence committed
against the Act so repealed; or
(d) Any investigation, legal proceedings or
remedy in respect of any such right, privilege,
obligation, liability, penalty, forfeiture or
punishment as aforesaid and any such
investigation, legal proceedings or remedy
may be instituted, continued or enforced and
any such penalty, forfeiture or punishment
may be imposed as if that Act had not been
repealed.”
39. For saving the existing cooperative societies registered either
under the Act of 1904, 1912 or under the Act of 1925 which was
in force in Delhi at one stage or the Act of 1972, such existing
cooperative societies were deemed to be registered under the
39
corresponding provisions of the Act 2003 and the rules framed
thereunder and its byelaws thereof, so far as the same are not
inconsistent with the express provisions of the Act, 2003,
continue to be in force until altered or rescinded. It goes without
saying that byelaws of the existing cooperative societies have to
be in conformity with the express provisions of the Act of 2003
and all previous actions stood saved by virtue of Section 141 of
the Act.
40. The contention of the learned senior counsel for the
appellant that the sale/transfer of the plot in question by the
member of the society being in violation of condition nos. 2 and 3
of the registered sale deed or clause 51 of the byelaws which put
restriction on the member to transfer or a sale or otherwise to a
nonmember of the society, without permission of the society in
our opinion, deserves to be negated for the reason that there is
no restriction/prohibition under the provisions of the Act, 2003
which has been discussed in detail earlier and to be noticed that
if the byelaws to the extent are inconsistent to the provisions of
Act 2003, it is the statute which will prevail and it is not the case
of the appellant that the transaction of sale/transfer of the plot in
40
question by the member of the society by registered sale deed or
registered instrument is in violation of the provisions of the
mandate of Act 2003 or rules 2007 framed thereafter.
41. To the contrary, it appears to be the duty of the Registrar
cooperative societies including the registered housing cooperative
society to scrutinise the byelaws of the society and to the extent
they are inconsistent with the provisions of Act 2003 or of Rule
2007 framed therein, to ask them to make appropriate
corrections and to amend it to make it in conformity with the Act,
2003. It is needless to say that it is the onerous duty of the
competent authority to ensure that it performs the statutory task
in this behalf but if the task has not been performed as yet, at
least no provision in the byelaws inconsistent with the
provisions of the Act, 2003 can have a force of law.
42. As regards clauses 2 & 3 of the original sale deed executed
between the member of the society at the time of initial allotment
is concerned, the society reserves its preemptive rights to have a
cooling period of six months before the member may have an
opportunity to transfer the subject plot in the manner he or she
likes at least there was no absolute bar or restrain under clause
41
2 or 3 of the original sale deed, of which reference has been
made, to transfer the land or is otherwise impermissible to a nonmember under any other laws. But it was possible with prior
notice to the society and the cooling period of six months which
may enable the society to purchase the plot on the market value
and if it is unable to purchase, the member reserves the right to
transfer or sell out the plot in a manner he or she likes reserving
the preemptive rights of the society. In the given circumstances,
transfer by a registered instrument cannot be held void unless it
is in contravention of any law, which is not the case of the
appellant society.
43. It reveals that what transpired before the Tribunal or the
High Court was whether the transfer of title by a registered
instrument as alleged was open for scrutiny within the scope of
Section 70 of Act, 2003. Although it was never the case of the
appellant society that alleged registered sale deed was void ab
initio, bad or obtained by fraud or malpractices and it was also
not the case of the appellant society that the member of the
society in transferring the rights over the property by a registered
42
sale deed, is in violation of any of the provisions of the Act of
2003, or the rules of 2007 framed thereunder.
44. It is gainful to add that the possession was handed over to
the society on fulfilment of the conditions of the agreement dated
13th May, 1955, published in the Gazette under Section 42 of the
Land Acquisition Act, and became the law as observed, that at
the time when the possession was handed over to the society by
the State Government, no further deed or MOU was executed
restricting the rights of the society for fulfilment of its obligation
of its plots to its members, that persuades to infer that the
possession was handed over to the society of the subject land in
question by the Government free from encumbrances with
unrestrictive rights to execute the sale deed/allot the plots to its
members obviously as per its byelaws keeping in view of the
mandate of the statutory provisions of the Act, 1973 or Act, 2003
which has later on taken over the field in protecting the interests
of the members of the cooperative societies including the
cooperative housing society as in the instant case.
45. It may be relevant to note that the subject land was
throughout exhibited by the society as freehold land having
ownership rights and allotments were made by the society to its
43
members by the registered sale deed at the time of allotment of
plots. It is to be noticed that a letter dated 27th July, 1985 was
written by the Secretary of the society to the Lt. Governor and it
was mentioned in paragraph 2 of the letter that “Delhi
Administration acquired 30 acres of land allotted to the society
on 25th March, 1957 on freehold basis.” Later, in the letter dated
15th March, 1989 issued to the Secretary of the Society it was
certified that the status of the land is totally freehold and
allotment of the plots to the society members was also on the
basis of it and the society at one stage approached to the civil
Court in RCA No. 95/82 titled Delhi Dayalbagh Cooperative
House Building Society Ltd. Vs. Arjun Das and it was observed by
the learned trial Judge that “the land in dispute is freehold one
and there is no legal bar to the same being sold.” In the given
facts and circumstances, if the allotment has been made by the
society as a freehold land to its members who have further
transferred/sold the subject land/plot by registered sale deed to
its successors/purchasers, their rights to become member of the
society are indeed saved under Section 91 of the Act, 2003 that
in no manner could be eluded by the byelaws and that apart if
anyone has any objection regarding the registered
44
instrument(sale deed) pursuant to which right has been created,
at least it is not open to examine its validity within the domain
and ambit of Section 70 of the cooperative societies Act and any
person, if felt aggrieved, the remedy lies only before the civil
Court having jurisdiction questioning the registered instrument
within the parameters available under the law.
46. The appellant society at one stage in their counter affidavit
has stated that the subject land is a grant under the Government
Grants Act. It was nowhere the case ever set up and it was
raised just to denude the rights of the parties which deserves
outright rejection for the additional reason that the subject land
was acquired by the Government under Part VII of the Land
Acquisition Act and transferred to the society free from
encumbrances, there is no applicability to the Government
Grants Act. The judgment on which reliance was placed by the
learned senior counsel for the appellant in Mohsin Ali and
Others Vs. State of Madhya Pradesh 1975(2) SCC 122 may not
be of any assistance.
45
47. As regards submission made in respect to Section 44A of
the Act is concerned, it may not have any application, since the
rights of the parties are governed after the land stood vested with
the society free from encumbrances and regulated under the
special enactment of the Act 2003 and Rules 2007 framed
thereunder.
48. In conclusion, we find no substance in either of the
submissions made by the appellant to interfere with the
judgment impugned before us. The appeals, being devoid of
merit, are accordingly dismissed.
49. In terms of the dismissal of the appeals, application(s) for
impleadment, does not survive and are accordingly disposed of.
50. Pending application(s), if any, shall also stand disposed of.
…………………………J.
(A.M. KHANWILKAR)
………………………….J.
(AJAY RASTOGI)
New Delhi
January 30, 2019
46
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