Co-operative Societies Act - Auction for sale of land was conducted with the permission and by following due procedure - Handful persons who have not objected at the time of Board meetings ,and at the time of sale - can not challenge the same on surmises - A defunct society can not ask for revertion of duly sold property - High court orders are confirmed =
Thus in a matter where
the decision has been taken collectively by the General Body reflected
in the form of a resolution passed by the General Body, it would be
unjust and inappropriate to nurture a lurking doubt and keep suspecting
the decision by entertaining the version of a handful who might be
disgruntled or might be genuine but would be difficult to be gauged by
any court so as to over-rule the General Body resolution and accept
the view of the minority based on no evidence except assumption and
speculation.
If the instant matter is viewed meticulously, it is clearly
obvious that the appellants have expected the court of writ
jurisdiction to enter into the correctness and validity of the auction
sale essentially by expecting the Court to draw inference without
evidence that the auction sale was not bona fide as it did not fetch the
desired value of the land contrary to the materials available on record.
Plethora of circumstances have been related to establish the same which
clearly are in the realm of conjecture and speculation, yet the Single
Judge and the Division Bench have both scrutinized and considered the
same and have recorded a finding against the appellants which cannot be
held to suffering from perversity being contrary to the existing
materials before the Court which have been relied upon.
Thus, the
validity and correctness of the General Body resolution in view of which
the land was put to auction sale cannot be allowed to be assailed
specially when the price/alleged under valuation of the land in the auction
sale no longer survives as the High Court has allowed the value of the
land to be increased by increasing it from Rs. 40 lakhs to Rs.70 lakhs
per acre which has been ordered to be paid along with 6 % interest.
The
appellants have not furnished any material as noted by the High Court that
the cost of the land in the year of the date of auction which is 2003 was
more than Rs.70 lakhs per acre so as to offer a cause to interfere even
if it were to be interfered in the interest of equity, justice and fair
play specially when the circle rate of the land in the year 2003 when the
auction was held was Rs.12 lacs per acre only.
37. Hence, the endeavour of the appellants that the auction sale
should be set aside and the land be revived to the society cannot be
entertained in absence of proof of mala fide contrary to the existing
materials on record on the basis of speculation, assumption and inference
urged by the appellants.
38. Assuming for a while although not conceding that the land were
to be reverted to the co-operative society for any reason whatsoever at
this stage after 11 years of the sale during which the appellant Society
has practically ceased to exist where all members except ten out of 288 are
left, it is obvious that the land cannot be reverted to the original
members who have taken their refund.
In that event, the appellant –society
through a handful of members numbering ten is bound to indulge in trading
of the land by inducting new members quoting new rates at their instance
clearly sacrificing the very spirit of a co-operative society as the
land cannot be marketed even by the defunct Co-operative Society at the old
rate which land had been purchased out of the contribution made by the
erstwhile 288 members out of which only 10 are now left into the fray who
had never even objected to the General Body Resolution approving sale of
the land nor challenged the auction sale in the year 2003 when the auction
was held.
39. We, thus find no illegality or infirmity in the impugned
judgments and orders passed by the single Bench as also the Division Bench
concurrently refusing to set aside the auction sale held 11 years ago in
the year 2003 at the instance of a Co-operative Society which has
practically been rendered defunct and thus ceased to exist apart from the
other weighty reasons discussed hereinbefore. Consequently, both the
appeals are dismissed but in the circumstance without any order as to
costs.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 4854-4855 OF 2014
(Arising out of S.L.P. (C) NOs.1581-1582/2011
J.N. Chaudhary & Ors. Etc. ..Appellants
Versus
State of Haryana & Ors. ..Respondents
WITH
CIVIL APPEAL NOS. 4856-4857 OF 2014
(Arising out of S.L.P. (C) NOs. 4758-59/2011)
Mount Everest Co-operative House
Building Society Ltd. ..Appellant
Versus
State of Haryana & Ors. etc. etc. ..Respondents
J U D G M E N T
GYAN SUDHA MISRA, J.
1. Delay in SLP (civil) 4758-59/2011 condoned.
2. Leave granted in both sets of special leave petitions.
3. These appeals by special leave have been preferred against the
judgment and order dated 27.08.2010 passed by the High Court of Punjab and
Haryana at Chandigarh in Letters Patent Appeal Nos.215 and 216 of 2007
(O&M) whereby the Division Bench of the High Court dismissed both the
letters patent appeals by a common judgment and order which is under
challenge herein.
4. The letters patent appeals which stood dismissed arose out of
two writ petitions filed in the High Court before the learned Single Judge
bearing writ petition Nos.6491/2005 and 7742/2005 which were filed
challenging the orders dated 13.12.2002, 05.09.2003 and 19.11.2004 in the
High Court at Chandigarh which were the Suspension Order, Removal Order of
the erstwhile Committee and order of the Dy. Registrar who dismissed the
appeal against removal. The facts stated therein disclosed that on
04.03.1994, a co-operative society in the name of Mount Everest Co-
operative Group Housing Society was formed and constituted under the
Haryana Co-operative Societies Act, 1984 wherein 288 persons became members
of the Society upto 1995-96 and contributed a total sum of approximately
Rs.7.5 crores towards the funds of the Society which were to be
utilised for purchase of the land. In the year 1996, the
Society purchased approximately 10 acres 4 kanals 14 marlas of
land in Village Wazirabad as well as Hyderpur Viran with
the funds
contributed by the members of the Society for achieving its objects. At
the time of formation of the Society, a Managing Committee had also been
constituted with Mr. R.P. Gupta as Secretary but the same was suspended on
23.10.1996 by the then Assistant Registrar Co-operative Societies, Gurgaon
on the allegations of financial irregularities and a Board of Administrator
was appointed. However, the Deputy Registrar reinstated the Managing
Committee of the society on 30.08.1999. Subsequently, on 28.05.2000, a
General Body Meeting of the society took place in which fresh election was
held and a new Managing Committee was constituted wherein the petitioner
No.1 Captain Shri A.K. Mahindra (since resigned during pendency of this
appeal) was elected as Member of the new Managing Committee and later on
was entrusted with the work of Honorary Secretary of the Society in place
of the previous Secretary Shri R.P. Gupta.
5. It is the case of the petitioner/members of the Society that
the new Managing Committee after taking charge and upon inspection of the
records of the Society found that the earlier Managing Committee had
indulged in large scale malpractices and in order to investigate the same,
an internal committee was constituted to go into the land records, finances
as well as other aspects of the Society. This internal committee therefore
conducted an intensive enquiry and submitted report which highlighted gross
irregularities by the previous Managing Committee in the purchase of land,
utilisation of members fund, expenditure on account of day to day expenses
and expenses incurred on land and site development etc. This audit was
conducted for the period 1993 to 2001 when the Managing Committee of the
society stood suspended and the Board of Administrators was in-charge of
the affairs of the Society. Finally, when the audit report was submitted
in March, 2002, the Managing Committee which had been constituted on
28.05.2000 with A.K. Mahindra as Secretary decided to lodge an F.I.R.
against the members of the earlier Managing Committee when R.P. Gupta was
the Secretary and the F.I.R. finally was lodged with the Police Station
DLF, Gurgaon after which investigation was conducted and arrests were made.
After investigation, charge sheet was also submitted in the criminal
courts but as per the charge sheet, no allegation was found against any
members of the then Managing Committee except Mr. R.P. Gupta who was a
member and Honorary Secretary of the Society from its inception until the
new Honorary Secretary Captain Mahindra who was petitioner No.1 and has
since resigned, took over as Secretary of the Society in 2000.
6. When the new Managing Committee took over and Captain A.K.
Mahindra functioned as Honorary Secretary from 28.05.2000 along with
another office bearer Mr. Ashok Sharma as Treasurer, special general body
meeting of the society was held on 02.06.2002 in which the affairs and
conditions of the society were discussed. In the meeting, the members were
apprised that large scales and glaring misappropriation of funds took place
between 1994 and 2000 and it was resolved that the only option left before
the Society was to sell the land at the best possible market price so as to
refund the contributions made by the members. The General Body of the
Society decided to sell off the land for several reasons recorded in the
minutes which are as follows:
(Reasons for General Body to decide for auction sale of the land)
“i) That 10.69 acres of land bearing Khasra Nos.1692, 1997,
1696, 1677, 1678 and 1679 stood registered and mutated in the
name of the Society which were in possession of the Society.
It could be further noted that out of this land, around 9
acres (3.5 acres in Khasra Nos.1977, 1678 and 1679 and 5.5
acres in Khasra Nos.1692, 1696 and 1697) were under
dispute/litigation in the District Court at Gurgaon and the
clear and undisputed land with the society was around only
1.69 acres.
ii) The General Body further noted that another 4.5 acres of
land marked in yellow colour bearing Khasra Nos.1677, 1678,
1679, 1695, 1694, 1696, 1698, 21, 20 and 27 also were under
dispute/litigation. It further transpired to the General
Body of the Society that the land in Khasra Nos.1977, 1678,
1679 measuring around 3.5 acres were never purchased by the
co-operative societies and there were no dispute/litigation
going on with the Society as this land was never the land
of the Society. Thus, out of the total land measuring 4.5
acres said to be in dispute only around 1.1 acres in
different Khasra Numbers was in dispute in regard to which
cases were going on in the District Courts, Gurgaon.
However, the Society further noted that this land had been
purchased by another Society namely Saraswati Kunj whose
registration was in progress. The General Body of the
Society further noted that these facts were available on
record after checking/verifying various records with the
revenue department with the help of Patwari/Tehsildar and
the Advocate, all of whom met a number of times.
Consequently, the Society was given to understand that only
a few days earlier to the General Body Meeting the land of
the Society had been surveyed by the Government alongwith
other vacant land with a view to acquire it i.e. the
acquisition process had been set in motion. It was further
noted by the General Body of the Society that in view of
purchase of vacant land around Saraswati Kunj the Society
of the petitioners had practically been surrounded/
encircled”
7. In view of the aforesaid considerations taken note of in the
General Body meeting of the Society held on 02.06.2002, it was decided by
the General Body to dispose of the land of the Society and the Honorary
Secretary of the Society Captain A.K. Mahindra and Ashok Sharma, Treasurer
were authorized to initiate proceedings for disposal of the land. In
pursuance to the general body resolutions, a letter dated 02.07.2002 was
sent to the Registrar, Co-operative Societies seeking permission to sell
the land. In the meanwhile and for the purpose of ascertaining the correct
market rate of the land, Captain A.K. Mahindra himself wrote a letter to
the Tehsildar, Gurgaon ascertaining the correct market rate of the land to
be disposed of. In response to the same, the Tehsildar, Gurgaon quoted the
market rate to Rs.40 lakhs per acre by way of Endorsement dated 14.06.2002.
The Honorary Secretary of the society/Captain A.K. Mahindra then wrote a
letter further on 02.07.2002 to the Registrar, Co-operative Societies,
Haryana seeking permission to dispose of the land at the earliest for an
amount of Rs.4.2 crores. The contents of the aforesaid letter dated
02.07.2002 written by Captain A.K. Mahindra are as follows:
“To
The Asstt. Registrar,
Cooperative Societies
Gurgaon, Haryana
Sub: Permission for disposal/sale of society land.
Sir,
With reference to the letter No.2298 dated 1.7.02 received from
the office of the Dy. Registrar, Gurgaon, we are enclosing the u/m
documents :-
a) Summary of the land as per registers and jamabandi
submitted is enclosed as desired. As per this summary
the total land with the society is 84 kanals 4 marlas,
and
b) Rate of land in the area where the society land is
situated is Rs.40 lakhs (Rs. Forty Lakhs) per acre as
obtained from the concerned patwaris office. A photo
copy of this letter is enclosed. As per this the total
value of land is Rs.4.20 crores (Rs. Four Crores Twenty
Lakhs Only).
Kindy grant us the necessary permission to dispose off the
land at the earliest and oblige.
Thanking you,
Sd/- A.K. Mahindra,
Hony. Secretary, Mt. Everest Coop. Group
Housing Societies Ltd.”
8. However, the Registrar, Co-operative Societies before whom a
dispute had been raised regarding removal of the office bearers of the co-
operative societies passed a suspension order on 13.12.2002 under Section
34 (2) of the Haryana Co-operative Societies Act, 1984, suspending the new
Managing Committee of the Society based on allegations of gross and serious
irregularities as a result of which a Board of Administrators was
appointed. Thereafter, on 14.01.2003, the Registrar, Co-operative
Societies granted permission to the Board of Administrators to dispose of
the society land and the Deputy Registrar, Co-operative Societies, Gurgaon
formed a Sales Committee of 5 members for selling land of the Society.
While granting permission for sale, respondent No.2/The Registrar, Co-
operative Societies appointed the following Sales Committee of 5 members
comprising inter alia of the following :
i) Dy. Registrar, Co-operative Societies, Gurgaon,
(ii) Inspector, Co-operative Societies, Gurgaon,
(iii) Sub-Inspector, Co-operative Societies, Gurgaon.
9. It appears that in the meanwhile CWP No.2025 of 2003 was filed
by Captain A.K. Mahindra and others challenging the order of suspension of
the new Managing Committee as well as the order granting permission to sell
the land. During pendency of the said writ petition, Assistant Registrar,
Co-operative Societies, Gurgaon on 05.09.2003 removed the new Managing
Committee under Section 34 (1) of the Haryana State Co-operative Societies
Act, 1984 based on the ground that the aforesaid Managing Committee had
failed to perform its duties as provided under the Act, Rules and Bye-Laws.
Simultaneously and in pursuance to the orders of Registrar, Co-operative
Societies dated 14.01.2003 granting permission to dispose of the Societies
land, a public notice for auction of the land of the Society was published
on 07.08.2003 indicating that the auction would be held on 21.08.2003.
This notice was published in all the specified newspapers in regard to
which a decision was taken by the General Body itself that it would be
published in ‘The Tribune’ (English and Hindi), Amar Ujala (Hindi), Dainik
Bhaskar (Hindi) and Dainik Jagran (Hindi).
10. The aforesaid notice for auction of the Societies land prompted
the suspended Managing Committee to file an application in the Court of
Senior Sub-Judge on 18.08.2003 which was moved seeking an order of
injunction on the Society from holding the auction on 21.08.2003. The Sub-
Judge’s Court entertained the application and a stay of the sale of land
was passed by the Sub Judge. In view of the order of stay, an
advertisement was further published in the newspapers on 20.08.2003 for
postponement of the proposed auction but a further development took place
when the interim order of the Sub Judge granting stay of auction was
vacated as a result of which another advertisement was issued which was
published in ‘The Tribune’ on 07.08.2003 wherein a fresh date of auction
for sale of the land was given for 28.02.2003 at 10 a.m. at the Society
site.
11. In pursuance to the aforesaid fresh date of auction, the
auction was held on 24.11.2003 whereby the land belonging to the Society
was sold to respondent No.7 for a sum of Rs.4,94,04,125/- as against the
estimated market rate of about Rs.4.2 crores.
12. After the auction of the land belonging to the Society in
favour of respondent No.7 was complete, the writ petition No.20252 of 2003
which had been filed challenging the suspension of the members of the
Managing Committee wherein Captain A.K. Mahindra and Ashok Sharma had been
elected as Secretary and Treasurer was withdrawn by the
petitioners/Secretary and Treasurer therein with liberty to avail all
existing and alternative remedies available to them by filing an appeal
under Section 114 of the Co-operative Societies Act. The
petitioners/Captain A.K. Mahindra and Ashok Sharma availed of the remedy
under Section 114 by filing the appeal, which was dismissed by the Deputy
Registrar on 19.11.2004, which was challenged by filing a writ petition
No.6491 of 2005, but was dismissed by the learned single Judge inter alia
holding as follows:
i) The suspension order dated 13.12.2002 and removal order
dated 05.09.2003 of the erstwhile Committee whereby Captain
A.K. Mahindra and Ashok Sharma had been appointed Secretary
and Treasurer respectively had been held did not subsist
because new election of the Managing Committee was held on
05.12.2004 wherein the appellant No.1 Captain A.K. Mahindra
was once again inducted as a member who earlier was holding
the post of Honorary Secretary as a result of the election
held on 28.05.2000 and the writ petition challenging
removal of Captain A.K. Mahindra and Ashok Sharma who were
removed in whose place the Board of Administrators had been
appointed was dismissed as infructuous as in view of
induction of new Managing Committee, the orders of
suspension and removal of earlier Managing Committee
challenged by the writ petition did not survive as the
learned single Judge was pleased to hold that when the new
Managing Committee was elected, the dispute regarding
adjudication of suspension of the office bearer of the
earlier Managing Committee constituted as a result of the
election held in 2002 were no longer sustainable.
ii) The learned single Judge inter alia further held that the
petitioner A.K. Mahindra had no locus to challenge the
order of his removal passed by the Registrar, Co-operative
Societies appointing Board of Administrators in his place
or the decision of the General Body for sale of the land
belonging to the society did not survive as it was only
A.K. Mahindra the suspended member who had challenged the
sale and no other member had come up to challenge the
decision of the General Body to sell the land of the
Society.
iii) The learned single Judge had further held that in the
appeal before the Registrar against removal of the members
of the Managing Committee, there was no challenge to the
order of the Registrar giving permission to sell/auction
was made nor the auction purchaser was impleaded as a party
therein and hence, the appeal suffered from misjoinder of
the necessary party and non-appealing of impugned order,
debarred the suspended petitioners to challenge the same in
the writ petition.
(iv) The learned single Judge further took note of the fact
that the decision to sell the land was of the General Body
Society which was taken on 02.06.2002 and the said decision
cannot be said to have been taken by authority constituted
under the Co-operative Societies Act but was taken by the
members of the Society in a General Body Meeting which had
passed a resolution to dispose of the land at reasonable
price and authorised Ashok Kumar and A.K. Mahindra to act
in the matter and that A.K. Mahindra assessed the market
value of the land as Rs.40 lakhs per acre on the basis of
the information obtained from the concerned Patwari as
already referred to hereinbefore.
(v) The learned single Judge was further pleased to hold that
the auction sale was conducted after due permission granted
by the Registrar under the supervision of the Sales
Committee already referred to hereinbefore and after giving
advertisement in three popular newspapers of Hindi and
English before fixing the minimum rate of land at Rs.40
lakhs per acre which was the market rate at that time.
vi) The learned single Judge also took note of the fact that
the petitioner therein did not bring on record any document
to show that the rate of land was more than Rs.40 lakhs per
acre as the prevalent collector rate/circle rate of that
time was Rs.12 lakhs per acre of the area whereas the
Societies land in question was sold at Rs.46.25 lakhs per
acre i.e. more than the market rate fixed at Rs.40 lakhs
per acre. The learned single Judge recorded a categorical
finding that there was neither any fraud in conducting the
auction sale nor was the auction sale bad or illegal in any
manner. In so far as the allocation regarding non
publication of the auction notice in less expensive
newspaper is concerned, it was held that this decision was
also taken in the General Body Meeting of the Society
itself. However, the learned single Judge enhanced the
rate of land from Rs.46.25 lakhs to Rs.70 lakhs per acre
which amount had himself been offered by Captain A.K.
Mahindra who was the Honorary Secretary of the Society at
least on the date when the resolution by the General Body
was passed on 02.06.2002. The learned single Judge after
hearing the contesting plea of the respective parties
disposed of the writ petition taking into account the
interests of the members of the Society holding that the
amount of Rs.70 lakhs per acre was sufficient for eligible
members.
(vii) The learned single Judge further ordered that the
difference of the amount which had come about with the
increase in the cost of the land by increasing the rate
from Rs.46.25 lakhs per acre to Rs.70 lakhs per acre would
be paid by the respondent No.7/auction purchaser to the
Registrar, Co-operative Societies within 45 days from the
date of the order i.e. 24.08.2007 with interest at the rate
of 6% per annum on the amount awarded by him from the date
of auction till the payment was actually made.
(viii) It was further directed by the learned single Judge
that the amount so received from respondent No.7/the
auction purchaser would be disbursed forthwith amongst the
eligible members proportionately, except the tainted ones,
by the Registrar himself or by any other person authorised
by him in that regard and the share of the tainted persons
would be kept until the decision of the cases against them
were adjusted against the recovery, if any ordered against
them. It was also made clear by the learned single Judge
that the members who had already received their share
amount would only be entitled to the difference on account
of increase of price and the concession given by the High
Court in the judgment.
13. The erstwhile Secretary of the Co-operative Society Captain
A.K. Mahindra who had been suspended by the Registrar, Co-operative Society
along with 37 members (38 in all) filed letters patent appeal No.215 of
2007 before the Division Bench of the High Court wherein the auction sale
conducted by the Board of Administrators under the supervision of the Sales
Committee of 5 members which included Deputy Registrar, Co-operative
Societies, Gurgaon, Inspector, Co-operative Societies, Gurgaon, Sub-
Inspector, Co-operative Societies, Gurgaon filed letters patent appeal
before the Division Bench of the High Court wherein the auction sale
conducted by the co-operative societies in pursuance to the order of the
Registrar passed by the co-operative societies were challenged essentially
on the following grounds:
i) That the advertisement for auction of the land was not
published in newspapers which had a wide circulation in an
area. It was alleged that the said notice was deliberately
issued in a newspaper which had negligible circulation in
Delhi and Gurgaon, where most of the members of the Society
used to reside.
(ii) The land belonging to the Society was sold for a song to
the respondent No.7 though it could have fetched more sale
consideration in case the auction after giving due
advertisement, would have been conducted.
(iii) There was no necessity of selling the land.
14. The learned Judges of the Division Bench who heard the letters
patent appeals rejected all the contentions of the appellants and upheld
the order passed by the learned single Judge holding therein that the plea
regarding suppression of notice in a newspaper lacking wide circulation
could not be sustained as the first advertisement regarding auction notice
were published in three newspapers of wide circulation and when the first
auction notice was cancelled, the second notice was published announcing
the new date as the said order against the auction had been vacated and the
said notice was published in the daily newspaper ‘The Tribune’ which is
locally the most prominent newspaper in Punjab and Haryana. Hence, the
Division Bench was pleased to hold that the land being situated in Haryana,
the publishing of the later advertisement in ‘The Tribune’ cannot be held
to cause any prejudice to the prospective buyers as alleged by the
appellant.
15. The Division Bench was further pleased to hold that the plea
raised by the counsel for the appellant that there was no necessity of
selling the land belonging to the Society was also not worth accepting when
a conscious and considered decision was taken by the General Body vide its
resolution passed on 02.06.2002, whereby a decision was taken to sell the
land keeping in mind the plight of the members who were initially made to
understand that in case flats were constructed a flat would cost around
Rs.4 lakhs but would later stipulated that on completion of the flat, the
same would cost Rs.17.50 lakhs approximately, if construction commenced on
time and were to be completed within three years, whereas at the relevant
point of time, flats in other adjoining societies were readily available
for a lower cost at Rs.12 to 13 lakhs. The Division Bench therefore was
pleased to hold that the decision in the General Body Meeting was taken
after considering the pros and cons of the decision to auction sale the
land.
16. In so far as the plea of the appellant emphasising that the
land was sold at a much cheaper rate to the respondent No.7 and thus was
prejudicial to the interest of the members of the Society is concerned, it
recorded that the appellant Captain A.K. Mahindra who was representing all
the appellants in LPA No.215/2007 had himself written a letter on
02.07.2002 while seeking permission to sell the land to the Assistant
Registrar, Co-operative Societies stating that the rate of the land in the
area where the Society is situated is Rs.40 lakhs per acre, as obtained
from the concerned Patwari office. Captain A.K. Mahindra had himself
forwarded that letter alongwith a copy of the letter received from the
concerned Patwari. In that letter which has been quoted hereinbefore, he
had categorically stated that the total value of the land was based on the
above rate which amounted to Rs.4.20 crores for the entire land of the
Society. Even the minutes of the General Body Meeting recorded that the
members themselves had resolved that the land prices in the area at the
relevant time, that is in the year 2002 had gone down. In view of the rate
quoted by the appellant himself in the aforementioned letter and the
decision taken by the General Body in its Meeting to sell the land on the
ground that the land prices were going down, no plea could be raised at
that stage to say that the land was sold at a lower price. The Division
Bench further took note of the fact that in any case, the rate of land was
enhanced from Rs.40 lakhs to Rs.70 lakhs per acre by order of the single
Judge. Besides this, when the General Body of the Society had decided to
abort the venture of the flat building due to germane factors such as the
pending litigation, possibility of acquisition by the Government, irregular
shape of the land and the surrounding land having been purchased by another
society namely Saraswati Kunj and the falling rate of land prices, it was
in the members interest to recover the investments made by them in the
failed venture as quickly as possible. The appellant No.1/suspended
Honorary Secretary Captain A.K. Mahindra had made enquiries himself from
the Tehsildar about the prevalent market price and the Tehsildar had opined
that at the relevant time while the Collector rate was Rs.12 lakhs per
acre, the market rate was about Rs.40 lakhs per acre. In spite of this,
the learned single Judge was pleased to enhance the rate of the land by
awarding Rs.70 lakhs per acre of the land owned and possessed by the
Society. Hence, the Division Bench was pleased to hold that when the
appellant No.1 Captain A.K. Mahindra, the erstwhile/ suspended Honorary
Secretary had himself as an office bearer sought permission to sell the
land at Rs.40 lakhs per acre, he cannot be permitted to question the
inadequacy of Rs.70 lakhs per acre which was awarded by the learned single
Judge. Thus, the amount which was actually paid for the purchase of the
land on 24.11.2003 exceeded by about Rs.70 lakhs, which was previously
estimated to be Rs.40 lacs per acre as per the market rate i.e. Rs.4.2
crores vide letter dated 02.07.2002 which was written by the appellant
No.1/Captain A.K. Mahindra on behalf of Mount Everest Society to the
Registrar, Co-operative Society, Haryana. The learned Judges of the
Division Bench thus were pleased to uphold the judgment and order passed by
the single Judge relying upon the figure suggested by the appellant No.1
himself relating to the cost of land recorded hereinbefore. Consequently,
the Division Bench which examined in detail the price fetched for the
society land, found it to be reasonable particularly in the light of the
adverse factors noticed by the General Body Meeting which prompted the
General Body to pass a resolution to put the land to auction sale which
have been scrutinised meticulously and extensively by the single Bench of
the High Court as also the Division Bench recorded hereinbefore. In view
of the aforesaid findings recorded by the Division Bench, the letters
patent appeals were dismissed by the High Court and thus it was
concurrently held by the single Judge as well as the Division Bench also
that the auction sale could not be held to be illegal, arbitrary or
suffering from the vice of surreptitious auction sale which could persuade
the High Court to set it aside as the High Court examined in detail the
price fetched for the society land and found it to be reasonable
particularly in the light of the adverse factors noticed by the General
Body in the Meeting which prompted the General Body to pass a resolution to
put the land to auction sale.
17. Feeling aggrieved with the judgment and order passed by the
Division Bench dismissing the two Letters Patent Appeals, thus upholding
the judgment and order of the single Judge, two appeals by way of special
leave had been filed by the petitioners/appellants Mount Everest Co-
operative House Building Society Ltd. and by 10 members of the Co-
operative Society out of which the petitioner/appellant No.1 Capt. A.K.
Mahindra withdrew himself from the special leave petitions due to
which he now ceases to be an appellant in the appeal filed by the members.
18. Learned senior counsels Mr. P.S. Patwalia and Mr. C.A.
Sundaram representing the appellant - members of the Mount Everest Co-
operative Society and the Mount Everest Co-operative Society
respectively assailed the judgment and order of the Division Bench which
was pleased to uphold the judgment and order passed by the single Judge
and thus upheld the auction sale in favour of the auction purchaser
respondent No.7 inter - alia on the grounds which substantially are the
same which had been urged before the High Court and were rejected
concurrently by the single Judge as also the Division Bench. However,
since the counsel for the parties were heard at length assailing the
correctness of the judgment and order passed by the High Court, it would be
appropriate in the interest of justice and fairness to the cause to
recapitulate and deal with the same.
19. The principal ground of challenge to the auction sale thus are
essentially two-fold. In the first place, it was submitted that the
action of respondent No.3 in suspending the new managing committee of the
petitioner/appellant society under Section 34(2) of the Haryana Co-
operative Societies Act, 1984 was arbitrary and illegal where no
proceeding for removal of the managing committee was pending under
34(1) of the aforesaid Act and the same was done with an oblique motive to
put the land of the Society to auction sale. In this context, it was also
submitted that the action of the official respondents and that of the
sales committee appointed by the official respondents in conducting the
auction sale of the land of the society on 24.11.2003 was sham and a
fraud committed on the members of the society and the public at large.
It was therefore further submitted that the official respondents and the
members of the sales committee had colluded in selling the land of the
society at a throw away price in favour of respondent No.7 which according
to the appellants has been established by the records of the auction
conducted on 24.11.2003. Thus, in sum and substance, it was contended
that the auction conducted on 24.11.2003 was a pre-determined affair,
illegal and a sham auction sale.
20. Commenting on this part of the averment, it was submitted that
it is clear from all the pleadings before the High Court raised on behalf
of the Society that the Society was not duly represented for want of the
office-bearers of the Society and the entire process of auction was
collusive. According to the counsel, the General Body Meeting which was
called by the society and the resolution which was passed therein should
not have been given effect to. It was, therefore, urged that the Division
Bench of the High Court erred in dismissing the Letters Patent Appeals
filed by the respondents as the High Court failed to appreciate that the
action of the respondents from the time i.e. suspending the Managing
Committee was merely to grab the land of the petitioner/society.
21. Elaborating on this aspect, it was further submitted that on
13.12.2002 Assistant Registrar, Co-operative Society suspended the
Managing Committee when A.K. Mahindra was the Secretary on the basis of
alleged irregularities of the previous Managing Committee under Shri
Gupta and not on the ground of mal-functioning of the then existing
Managing Committee under Capt. A.K. Mahindra. The Committee was thereafter
illegally removed on 5.9.2003 without even fixing the date of hearing.
Giving the sequence of events, it was stated that in between 13.12.2002 and
5.12.2004, there was no committee or effective society to manage the
affairs of the co-operative society since they had been suspended or
removed. At this time, a Board of Administrators was in control with
Mr. Ashok Sharma as one of the key administrators who acted in collusion
with the auction-purchaser. It has further been submitted that during
the period of suspension/removal of the managing committee and appointment
of the Board of Administrators which period was in between 13.12.2002 to
24.11.2003, the property was sought to be brought to sale through a sham
auction in collusion with the auction-purchaser without any notice to the
members of the society. Factual details were further given out stating
that the last elected secretary of the managing committee with Capt. A.K.
Mahindra as Secretary and 120 others filed a writ petition on 18.12.2003
challenging the suspension of the managing committee and the sale to the
respondent No.7. The society itself could not file any case since the
committee had been removed and was under the control of the Board of
Administrators whose collusive action was being questioned. However,
this writ petition had been withdrawn to challenge the removal before the
Registrar but as the Registrar rejected the petition challenging the
removal, another petition was filed on 26.4.2005. In the meantime, a sham
election was conducted on 5.12.2004 whereby Mr. Ashok Sharma was elected
and this was immediately challenged on 6.12.2004. The election was set
aside and once again a Board of Administrators was appointed on
26.9.2007. Elections were thereafter again conducted on 13.9.2010 by the
Registrar and the present committee was elected on 13.9.2010. It has been
submitted that this was the true committee representing the members who
were absent and in between the period of 13.12.2002 and 13.9.2010, the
managing committee became non-existent which was under the control of
Mr. Ashok Sharma who became the Member of the Board of Administrators and
is alleged to have been controlling even the Board of Administrators.
On 19.11.2010, when the new Managing Committee took over, a resolution
was passed on 27.8.2010 after which Letters Patent Appeals were filed
before the Division Bench which were dismissed and the same are under
challenge in these appeals by way of special leave petitions.
22. On the basis of the aforesaid facts, it was contended that the
society and its members were not duly represented for want of the
members of the society and no General Body Meeting was called to discuss or
decide the nature of the pleadings to be filed or the stand to be taken
by the members. The members of the society were kept entirely in the dark
between the period 13.12.2002 and 13.9.2010 and immediately upon a
representative committee being elected, the society preferred the
Special Leave Petitions before this Court out of which the instant
appeals arise. It was further contended that the plea of the respondent
that the majority of the members have no grievance is completely wrong
inasmuch as only 120 members out of 288 members had taken away their
payment and a substantial number of those did it under protest. The
allegation, therefore, that the cause of action to pursue the matter do
not survive at the instance of a few members is fit to be rejected. It
had also been reiterated that the managing committee of the society was
deliberately suspended to grab its land.
23. The auction-purchaser/respondent No.7 contested the aforesaid
plea and first of all submitted that only 38 members before the single
Judge and 10 members in Letters Patent Appeal challenged the judgment and
order of the High Court passed by the Division Bench and has also given the
detailed sequence of events under which the managing committee of the co-
operative society was suspended and also the fact that the decision was
taken by the Board of Administrators and the General Body in a bona fide
manner with which the respondent No.7 had no concern. It was further
contended that the decision to sell the land was taken by the General Body
of the Society after the society decided to sell the land and recorded
specific reasons for this by holding a General Body Meeting on 2.6.2002.
At this point of time, Capt. A.K. Mahindra was the Secretary of the
Managing Committee who had challenged the suspension of the Managing
Committee and the sale before the Registrar, had himself taken active
part in the society’s decision to sell the land who has now discreetly
withdrawn himself from the present special leave petitions. The General
Body Meeting minutes had recorded the reasons for the General Body to
approve of the auction sale indicating that it was agreed that the
society could not develop the land due to financial constraints as the
land was agricultural land for which license had been denied, certain
areas were under disputes/litigation, the land was not located close to
the main road and was not contiguous had multiple share holders and
thus did not command such land rates as other properties in the area
and, therefore, a conscious well-deliberated decision was taken by the
General Body to sell the land as that was a viable and beneficial
alternative for the members to go into. However, the auction purchaser-
respondent No.7 was not in the picture at all when the decisions were taken
by the General Body way back in 2002.
24. Learned senior counsel for the appellants Mr. Patwalia however
countered this submission and assailed it by submitting that even if the
decision by the General Body was taken to dispose of the land by putting
it to auction sale, it was not that the auction could be held and the
land could be sold at a throw away price putting the society to a great
loss. It was, therefore, urged that the basic question would be whether
the auction was conducted fairly and correctly so as to get the maximum
price. According to the learned counsel a perusal of the auction notice
and auction records would disclose that it was not done so and the auction
sale is a complete sham as the price at which the land was sold, was
highly inadequate and much below the price which it ought to have
fetched.
25. On a scrutiny of the sequence of events and the plea of the
contesting parties on the pivotal point as to whether the decision
taken to auction sale the land was bona fide or malafide, tainted with
dishonest motive and whether the suspension of the Managing Committee
and appointing the Board of Administrators was correct or not, it can
clearly be noticed that when the managing committee under Mr. Gupta as
Secretary was suspended, a new managing committee after fresh election
took over, when on 5.8.2001 Capt. A.K. Mahindra became Secretary of the
Managing Committee. It was under his secretaryship that a General Body
Meeting was convened and a resolution was passed by the General Body to
auction sale the land recording specific reasons in the Minutes of the
General Body Meeting whereby the Honorary Secretary/Capt. A.K. Mahindra
brought out the options to the notice of the General Body. One of the
options was to construct flats on the land for which tender had been
floated and it was noted that out of the two parties who responded to the
tenders, one namely M/s Antriksh Engineers and Construction & Corporation
had shown interest. Their main terms were as follows:
(a) that they will invest all money required to obtain CLU,
development charges etc. i.e. they will invest right upto the stage
where construction can begin. This will entail an expenditure of Rs.8
crores approximately.
(b) that they will refund the deposit of a limited number of members
after CLU permission is received.
I that in lieu of the money invested they will be given 50% of FAR
and;
iv) construction rate would be Rs.850/- sq. feet which is
deductible.
It was given out for information of the members that the advantage
would be that the Society would be able to move forward in achieving
its aim and that limited number of members desirous of leaving Society
will get their money back. In so far as the disadvantages were
concerned, it was noted that it will take around 6 months to get CLU
permission by which time Section 4 notice under the Land Acquisition
Act may be issued for acquisition of the land which the society
possessed. It was given out that a minimum period of 3 years will
take before the construction was announced and before completion goes
smoothly. In case, the project was undertaken, 1600 sq. feet flat
would cost Rs.13.60 lakhs approximately, and assuming a member of the
Society had paid Rs.4 lakhs the flat to be constructed would cost him
Rs.17.50 lakhs. It was therefore deliberated that the flats at a
lower rate than Rs.17.50 lakhs were readily available in Gurgaon in
Jal Vayu Vihar and Rail Apartments at Rs.12 to 13 Lakhs.
The Society therefore gave the second option to the General Body and
the second option was sale of the land which were in possession of the
society free from litigation. The Society noted that the land prices
had gone down at the relevant time which was lower than the purchase
price in the last few years when the Society had purchased the land at
Rs.7.5 crores. Thus, it was noted down by the Society before the
General Body that if the land belonging to the Society were to sell
the land it will be unable to recover the full amount which the
society has earlier invested in purchasing the land. However, a
comparative assessment of the objectives were also taken note of by
the society which were as follows:
v) Will avert the danger of the land belonging to the society
being acquired.
vi) Will avert all the cost and uncertainties of the
litigations being faced by the Society.
vii) Members of the Society will get back around 70% of their
investments.
viii) Will pave the way to recover the balance amount of
investments by members.
Thus, on a comparative assessments of the land being retained by the
Society and in case it was disposed of, the General Body of the
Society resolved on 02.06.2002 after taking a conscious decision to
dispose of the land of the Society.”
26. It was in view of this decision that follow up actions were
taken by the Board of Administrators under the Sales Committee inviting
proposals for the sale of the land as the Managing Committee under Captain
Mahindra and Treasurer Ashok Sharma was under suspension due to the alleged
illegalities and irregularities. The learned single Judge as also the
Division Bench of the High Court has scrutinized and taken note of
the overwhelming circumstance which weighed with the High Court. It was
considered by the High Court which took note of the fact that although
10.69 acres of land was claimed by the society, 9 acres i.e. 3.5 acres in
Khasra Nos. 1977, 1678 and 1679 as also 5.5 acres in Khasra Nos. 1692, 1696
and 1697 were in dispute/litigation in the District Court, Gurgaon. The
clear land without any dispute with the society was only around 1.69
acres. The records further indicated that 3.5 acres of land bearing
Khasra Nos. 1977, 1678 and 1679 was never purchased by the society as per
the then Secretary Mr. R.P. Gupta. The learned single Judge has also taken
note of the fact that this was under litigation as it was purchased by
another society –Saraswati Kunj whose registration was in progress. Thus,
if 3.5 acres were to be deducted out of 4.5 acres, only 1.1 acre was
left to the society. The learned single Judge further noted that the
land in question had been surveyed by the Government along with other
vacant land with a view to clear it and the acquisition process had
been set in motion. The land belonging to the society had been encircled/
surrounded by another society namely Saraswati Kunj. Therefore, the
future course of action left to the society which has been recorded
hereinbefore in detail in view of the considerations made by the General
Body, was to dispose of the land of the society.
27. Insofar as the dispute regarding suspension of the Managing
Committee under Captain A.K. Mahindra in view of the alleged
irregularities of the previous managing committee is concerned, it had
started only on 13.12.2002 and all the disputes in regard to removal
and induction of the society under Capt. A.K. Mahindra admittedly took
place between 13.12.2002 and 24.11.2003. But it is an equally undisputed
factual position that the resolution was passed by the General Body in
its Meeting for sale of the land on 2.6.2002 when the managing committee
constituted on 5.8.2001 under Capt. A.K. Mahindra was duly in place and
no member of the society had raised any grievance against the said
decision that it was erroneous or tainted in any manner and the society
was duly represented by the Secretary and all members of the society.
The case of the managing committee and its members that the Assistant
Registrar illegally suspended the managing committee under Capt. A.K.
Mahindra based on the alleged irregularities of the previous managing
committee under Mr. Gupta, first of all took place on 13.12.2002 from
which it is clear that when the General Body Meeting was conducted and
resolution was passed on 2.6.2002, the Secretary of the Managing
Committee Capt. A.K. Mahindra was duly and legally in place as Secretary
and was removed by the Registrar of Society only at a later stage on
05.09.2003 after which the Board of Administrators was appointed by the
Registrar and a Sales Committee was also set up under whose supervision the
auction sale was decided to be held under supervision of the Sales
Committee. It may further be noted that the proposed auction was also
challenged as an application for injunction restraining the auction
sale was filed before the District Court where an order of injunction
restraining the auction sale was also granted by the District Court but
the said injunction was later vacated against which no appeal was preferred
by any member of the society. It is no doubt true and it has been
contended that as no Managing Committee was in existence at that point of
time, no appeal could be preferred against the order vacating the
injunction. However, this contention is clearly without substance for if
the members in their individual capacity could assail the auction sale by
filing a separate writ petition, it cannot be accepted that they were
precluded in any manner from challenging the auction sale in case they
were aggrieved and the subsequent challenge after seven years in 2010
clearly appears to be an after thought at the instance of a miniscule
number of members who decided to assail the auction sale clearly as a
matter of gamble -
28. As already noted, the resolution by the General Body of the
Society to auction sale the land was taken way back on 2.6.2002 vide the
resolution passed in the General Body when there was dispute existing
regarding the functioning of the Managing Committee and it is only after
more than one year that the Secretary – Mahindra was removed by the
Registrar, Co-operative Societies and since he was removed, he challenged
his removal as also the decision of the General Body to auction sale the
land which resolution during his tenure as Secretary was passed. In fact
as long as he was the Secretary he had not merely approved the decision
of the General Body to auction sale, but also the existing market price of
the land and only when he was removed from the post of Secretary, he
started questioning the auction sale held under the supervision of the
Board of Administrators as also the decision to auction sale of the land
conveniently ignoring that the same had been approved by the General Body
Resolution during his tenure as Secretary when there was no dispute
regarding the Society’s functioning.
29. It may further be noted that the then Secretary Capt.
Mahindra although had challenged his removal as Secretary of the
Society, he never thought it appropriate to file any appeal against the
order vacating the order of injunction against auction sale which he
could have done as the ex-secretary if he was genuinely concerned. The
matter regarding the dispute challenging the auction sale had been filed
in a court of competent jurisdiction where initially an order of
injunction was also passed but the same was finally vacated against which
no appeal was preferred either by any member of the society or the
Secretary. The order of injunction against auction sale was finally
vacated but no member was conscious or vigilant to challenge the same.
On the contrary, large number of members gradually withdrew the amount
and walked out of the society. It is clear that for the first time in the
year 2010 when a new managing committee was elected on 13.9.2010 that a
decision was taken to challenge the auction sale by which time the
existence of the society withered away when the majority of the members
out of 288 left and only 38 members remained clearly implying that for all
practical purposes the Society ceased to retain its legal entity as the
land of the society for which contribution had been made was by all the
288 members and not merely 38 members. Even out of this 38 members,
only 10 members preferred Letters Patent Appeal before the High Court
although the General Body resolution was passed by the majority and cannot
be allowed to be over ruled by 10 members only.
30. Much emphasis has been laid on the valuation of the land as
it has been alleged that the land was auctioned/sold at a much lower price
than was capable of fetching which remains unsubstantiated in absence of
any evidence in this regard as to what were the market price of the
undeveloped land in the surrounding areas. On the contrary, it could be
noted that the circle rate of the land at the relevant time was Rs.12 lacs
per acre and the market rate was Rs.40 lacs per acre and as per the auction
held, the price fetched in the auction ultimately worked out to Rs.46 lacs
per acre. The appellants had not furnished any material before any court
as to what was the market price of the undeveloped land in the year 2003
when the auction sale was held in pursuance to the General Body Resolution
of the Co-operative Society. In any case, this question at this stage is
not of much relevance when the High Court has increased the price of the
land at Rs.70 lakhs per acre and members of the society have been held
entitled to refund of their contribution amount along with 6 % interest in
view of which undervaluation of the cost of the land no longer subsists.
It has no where been urged that at the relevant point of time in the year
2003 when the land was auctioned/sold, its valuation was much more than
Rs.70 lakhs per acre so as to treat it prejudicial and detrimental to
the interest of the members of the society who had contributed for
purchase of the land.
31. Thus, if the members of the Society by virtue of a General
Body resolution had decided to auction sale the land during the tenure of
a duly elected Secretary of the Society A.K. Mahindra and for more than
one year no member of the society had any reason to challenge the same
after which the Board of Administrator was appointed and the price of the
land on the date of auction could not be more than Rs.70 lakhs per acre,
it would be unfair and unjust to interfere with the auction sale after 11
years of its holding on the plea that the price fetched in the auction
suffers from undervaluation as the same cannot be compared with the
present day valuation which obviously must have grown over the years as
compared to the year 2003 when the auction sale was held. In this context,
it may also be noted that the Secretary Capt. Mahindra as also Patwari
had also given out in writing and is on record which indicates that the
value of the land at the relevant time which was not a developed land at
the relevant time when the land was put to auction sale was not more than
Rs. 40,000 per acre which cannot be doubted in absence of any material
to the contrary specially when the circle rate of the land was Rs.12 lacs
per acre only and the land was auction sold at Rs.46 lacs per acre
approximately in the year 2003. In any case, the price of the land has
already been increased to Rs.70 lakhs per acre by the High Court and has
been ordered to be paid alongwith 6 % interest and thus the Society has not
been put to monetary loss on account of the sale conducted in pursuance to
the resolution of the General Body which was passed during the tenure of a
duly constituted Managing Committee under Captain Mahindra. It is further
clear that only a handful of members of the co-operative society who are
now only 10 out of 288 and have not withdrawn from the society by
withdrawing their amount, expects that all the following aspects and
circumstance of the case should be brushed aside which are as follows :
i) The fact that the General Body Meeting was held on
2.6.2002 on which date there was no dispute regarding the
functioning of the managing committee;
(ii) Resolution of the General Body Meeting was passed unanimously on
2.6.2002 approving the decision to auction sale the land when the Society
was functioning under a duly constituted Managing Committee and had not
been suspended. The suspension of the Secretary of the Society was much
later after more than a year in 2003 and during this period the resolution
of the General Body was never challenged by any member.
(iii ) The constitution of the Board of Administrators should be struck
down as invalid although the members of the Co-operative Society had never
challenged the constitution of the Board of Administrators;
iv) The Sales/Supervision Committee under whom the auction sale
was held should be treated as a defunct body;
v) The valuation of the land in the year 2003 which was Rs.12
lacs per acre as per circle rate and Rs.40 lacs market rate
should be disbelieved in spite of any evidence to the
contrary which in any case has been increased to almost
the double by the High Court and has awarded 6 % interest
also which clearly takes care of the price factor as the
price of the undeveloped land could not have been more than
Rs.70 lacs per acre at the relevant time in the year 2003
when the auction sale had been held;
vi) All activities in regard to the conduct of the auction
sale should be treated as bogus and sham although the
District Court had vacated the order of injunction
restraining the auction sale against which no appeal was
filed;
vii) Only 10 members out of 288 are now aggrieved which
renders the co-operative society into a non-existent co-
operative society as even the rest 28 members out of 38 who
had filed the writ petition in the High Court have
withdrawn from the litigation.
32. From the background, facts and circumstance of the matter, it
is further clear that the members of the co-operative society had clearly
opted a wrong forum by filing a writ petition in the High Court for if
they expected the court to appreciate evidence and record a finding on the
aforesaid disputes for setting aside the auction sale, it is obvious that
the petitioners should have approached the civil court of competent
jurisdiction where it would have had the opportunity to adduce evidence
and prove all the allegations of under valuation and the alleged fraud
challenging the auction sale. In fact, the writ petition for assailing a
factual dispute ought not to have been entertained by the High Court
under its writ jurisdiction but in the interest of justice and fairness as
also equity and good conscience, the High Court entertained a dispute
which purely was of a civil nature since all contentions which have been
raised would have required appreciation of evidence. Yet the High Court to
a great extent has taken care to scrutinize all aspects of the matter in
regard to the writ petition filed by the co-operative society members who
sought to assail the auction sale clearly alleging disputed questions of
fact alleging fraud in conducting auction sale as also valuation of the
land in question which required adducing of evidence and the same could
not have been entertained by the High Court under Articles 226 and 227
of the Constitution except to the extent of considering whether the
order passed by the Registrar, Co-operative Societies rejecting the
challenge of removal of the managing committee was sustainable or not.
Yet the High Court has entered into all aspects and has then reached to a
conclusion considering entire conspectus of the matter which in our view
cannot be held to be arbitrary, illegal or unjust in any manner.
33. There is yet another feature of the matter which emerges from
the fact that when the removal of Capt. A.K. Mahindra as a Secretary of
the society has been set aside, then all activities including passing of
the General Body resolution in the meeting that were conducted during his
tenure as Secretary of the Managing Committee cannot be held to be illegal
in any manner. Thus when the General Body resolution was passed during
the tenure of a validly elected managing committee under Capt. A.K.
Mahindra as the Secretary and the resolution to auction sale the land was
passed during his secretaryship whereby the value of the land was also
assessed and approved by Capt. A.K. Mahindra himself and no allegation was
levelled by any member against Capt. A.K. Mahindra as all allegations were
confined to Ashok Sharma, then the resolution of the General Body obviously
could not have been faulted with specially when no appeal against the
order of the Civil Court vacating the order of injunction against the
auction sale was filed by any member of the society specially the
appellants herein. The appellant-society and a handful of members now
restricted to 10, have levelled allegations but mere allegation cannot be
treated as a proof and if the members were in a position to assail the
same which clearly would have required strict proof by way of evidence,
they ought to have gone in for a civil suit and the writ jurisdiction was
clearly not the appropriate remedy to establish and prove questions of
fact. Yet when the single Judge as also the Division Bench have
meticulously examined all aspect of the matter discussed hereinbefore and
the same does not indicate any perversity in the conclusions drawn, it
would be unfair and unjust to interfere with the same by indulging into a
roving enquiry merely accepting the contentions of some of the members of
the Society which are clearly based on speculation, conjecture and
apprehension. The Courts therefore in a circumstance of this nature cannot
be expected to decide such an issue on suspicion hunch or even intuition
which clearly would be abstract in nature and has no place in the eye of
law even before a court of fact and much less before a court under writ
jurisdiction.
34. The cumulative effect of the entire analysis based on the facts
and circumstance in the light of the reasonings assigned by the Single
Bench of the High Court as also the Division Bench, it would not be just
and proper to interfere with the judgments and orders passed by the
single Judge as also the Division Bench of the High Court holding
concurrently that the auction sale which was in pursuance to the
resolution passed by the General Body of the Co-operative Society based
on the price prevalent on the date of auction sale could be faulted on the
ground of allegations leveled on the basis of assumption and
speculation of 10 members of the society who had assailed the same by
invoking writ jurisdiction.
35. At this juncture, it would be appropriate to observe that in
judging the functioning of a co-operative society or any other statutory
body where the democratic process of election is adopted in pursuance to
the Rule and a collective decision is taken by majority of the members
of the entire body expressed in terms of a resolution passed by the
General Body, then the plea that the same should be ignored and bye-passed
even if the same has been challenged by a handful of members on
speculative allegation and assumption contrary to the reasons recorded in
the Minutes Books on the plea of mala fide, without any evidence, would be
illegal and arbitrary to accept being contrary to the rule unless the
alleged malicious action is writ large on the alleged decision and is
challenged by majority of the members. If a decision is taken by
majority of the members of a Co-operative Society or any other body under a
statute in terms of the Rule, it cannot be over-ruled by minority on the
ground of mala fide or fraud unless it has passed through a strict proof
of evidence. It is a well known dictum that mala fide is always easy to
allege but difficult to prove as the same cannot be held as proved relying
on assumption, speculation and suspicion.
36. In the instant matter existing 10 members of the society have
practically reduced the Co-operative Society to a defunct society as all
members except 10 out of 278 have finally withdrawn. Hence, the auction
sale at their instance, although the said auction sale had taken place
in view of the majority support of the General Body resolution which was
conducted under the supervision of the Board of Administrators appointed by
the Registrar, Co-operative Society and the Sales Committee is difficult to
scrap it as illegal in spite of the overwhelming material relied upon by
the High Court which has upheld the auction sale. Thus in a matter where
the decision has been taken collectively by the General Body reflected
in the form of a resolution passed by the General Body, it would be
unjust and inappropriate to nurture a lurking doubt and keep suspecting
the decision by entertaining the version of a handful who might be
disgruntled or might be genuine but would be difficult to be gauged by
any court so as to over-rule the General Body resolution and accept
the view of the minority based on no evidence except assumption and
speculation. If the instant matter is viewed meticulously, it is clearly
obvious that the appellants have expected the court of writ
jurisdiction to enter into the correctness and validity of the auction
sale essentially by expecting the Court to draw inference without
evidence that the auction sale was not bona fide as it did not fetch the
desired value of the land contrary to the materials available on record.
Plethora of circumstances have been related to establish the same which
clearly are in the realm of conjecture and speculation, yet the Single
Judge and the Division Bench have both scrutinized and considered the
same and have recorded a finding against the appellants which cannot be
held to suffering from perversity being contrary to the existing
materials before the Court which have been relied upon. Thus, the
validity and correctness of the General Body resolution in view of which
the land was put to auction sale cannot be allowed to be assailed
specially when the price/alleged under valuation of the land in the auction
sale no longer survives as the High Court has allowed the value of the
land to be increased by increasing it from Rs. 40 lakhs to Rs.70 lakhs
per acre which has been ordered to be paid along with 6 % interest. The
appellants have not furnished any material as noted by the High Court that
the cost of the land in the year of the date of auction which is 2003 was
more than Rs.70 lakhs per acre so as to offer a cause to interfere even
if it were to be interfered in the interest of equity, justice and fair
play specially when the circle rate of the land in the year 2003 when the
auction was held was Rs.12 lacs per acre only.
37. Hence, the endeavour of the appellants that the auction sale
should be set aside and the land be revived to the society cannot be
entertained in absence of proof of mala fide contrary to the existing
materials on record on the basis of speculation, assumption and inference
urged by the appellants.
38. Assuming for a while although not conceding that the land were
to be reverted to the co-operative society for any reason whatsoever at
this stage after 11 years of the sale during which the appellant Society
has practically ceased to exist where all members except ten out of 288 are
left, it is obvious that the land cannot be reverted to the original
members who have taken their refund. In that event, the appellant –society
through a handful of members numbering ten is bound to indulge in trading
of the land by inducting new members quoting new rates at their instance
clearly sacrificing the very spirit of a co-operative society as the
land cannot be marketed even by the defunct Co-operative Society at the old
rate which land had been purchased out of the contribution made by the
erstwhile 288 members out of which only 10 are now left into the fray who
had never even objected to the General Body Resolution approving sale of
the land nor challenged the auction sale in the year 2003 when the auction
was held.
39. We, thus find no illegality or infirmity in the impugned
judgments and orders passed by the single Bench as also the Division Bench
concurrently refusing to set aside the auction sale held 11 years ago in
the year 2003 at the instance of a Co-operative Society which has
practically been rendered defunct and thus ceased to exist apart from the
other weighty reasons discussed hereinbefore. Consequently, both the
appeals are dismissed but in the circumstance without any order as to
costs.
………………………………….J.
(Gyan Sudha Misra)
………………………………….J.
(Pinaki Chandra Ghose)
New Delhi;
April 24, 2014
-----------------------
42
Thus in a matter where
the decision has been taken collectively by the General Body reflected
in the form of a resolution passed by the General Body, it would be
unjust and inappropriate to nurture a lurking doubt and keep suspecting
the decision by entertaining the version of a handful who might be
disgruntled or might be genuine but would be difficult to be gauged by
any court so as to over-rule the General Body resolution and accept
the view of the minority based on no evidence except assumption and
speculation.
If the instant matter is viewed meticulously, it is clearly
obvious that the appellants have expected the court of writ
jurisdiction to enter into the correctness and validity of the auction
sale essentially by expecting the Court to draw inference without
evidence that the auction sale was not bona fide as it did not fetch the
desired value of the land contrary to the materials available on record.
Plethora of circumstances have been related to establish the same which
clearly are in the realm of conjecture and speculation, yet the Single
Judge and the Division Bench have both scrutinized and considered the
same and have recorded a finding against the appellants which cannot be
held to suffering from perversity being contrary to the existing
materials before the Court which have been relied upon.
Thus, the
validity and correctness of the General Body resolution in view of which
the land was put to auction sale cannot be allowed to be assailed
specially when the price/alleged under valuation of the land in the auction
sale no longer survives as the High Court has allowed the value of the
land to be increased by increasing it from Rs. 40 lakhs to Rs.70 lakhs
per acre which has been ordered to be paid along with 6 % interest.
The
appellants have not furnished any material as noted by the High Court that
the cost of the land in the year of the date of auction which is 2003 was
more than Rs.70 lakhs per acre so as to offer a cause to interfere even
if it were to be interfered in the interest of equity, justice and fair
play specially when the circle rate of the land in the year 2003 when the
auction was held was Rs.12 lacs per acre only.
37. Hence, the endeavour of the appellants that the auction sale
should be set aside and the land be revived to the society cannot be
entertained in absence of proof of mala fide contrary to the existing
materials on record on the basis of speculation, assumption and inference
urged by the appellants.
38. Assuming for a while although not conceding that the land were
to be reverted to the co-operative society for any reason whatsoever at
this stage after 11 years of the sale during which the appellant Society
has practically ceased to exist where all members except ten out of 288 are
left, it is obvious that the land cannot be reverted to the original
members who have taken their refund.
In that event, the appellant –society
through a handful of members numbering ten is bound to indulge in trading
of the land by inducting new members quoting new rates at their instance
clearly sacrificing the very spirit of a co-operative society as the
land cannot be marketed even by the defunct Co-operative Society at the old
rate which land had been purchased out of the contribution made by the
erstwhile 288 members out of which only 10 are now left into the fray who
had never even objected to the General Body Resolution approving sale of
the land nor challenged the auction sale in the year 2003 when the auction
was held.
39. We, thus find no illegality or infirmity in the impugned
judgments and orders passed by the single Bench as also the Division Bench
concurrently refusing to set aside the auction sale held 11 years ago in
the year 2003 at the instance of a Co-operative Society which has
practically been rendered defunct and thus ceased to exist apart from the
other weighty reasons discussed hereinbefore. Consequently, both the
appeals are dismissed but in the circumstance without any order as to
costs.
2014 ( April.Part ) judis.nic.in/supremecourt/filename=41463
GYAN SUDHA MISRA, PINAKI CHANDRA GHOSEREPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 4854-4855 OF 2014
(Arising out of S.L.P. (C) NOs.1581-1582/2011
J.N. Chaudhary & Ors. Etc. ..Appellants
Versus
State of Haryana & Ors. ..Respondents
WITH
CIVIL APPEAL NOS. 4856-4857 OF 2014
(Arising out of S.L.P. (C) NOs. 4758-59/2011)
Mount Everest Co-operative House
Building Society Ltd. ..Appellant
Versus
State of Haryana & Ors. etc. etc. ..Respondents
J U D G M E N T
GYAN SUDHA MISRA, J.
1. Delay in SLP (civil) 4758-59/2011 condoned.
2. Leave granted in both sets of special leave petitions.
3. These appeals by special leave have been preferred against the
judgment and order dated 27.08.2010 passed by the High Court of Punjab and
Haryana at Chandigarh in Letters Patent Appeal Nos.215 and 216 of 2007
(O&M) whereby the Division Bench of the High Court dismissed both the
letters patent appeals by a common judgment and order which is under
challenge herein.
4. The letters patent appeals which stood dismissed arose out of
two writ petitions filed in the High Court before the learned Single Judge
bearing writ petition Nos.6491/2005 and 7742/2005 which were filed
challenging the orders dated 13.12.2002, 05.09.2003 and 19.11.2004 in the
High Court at Chandigarh which were the Suspension Order, Removal Order of
the erstwhile Committee and order of the Dy. Registrar who dismissed the
appeal against removal. The facts stated therein disclosed that on
04.03.1994, a co-operative society in the name of Mount Everest Co-
operative Group Housing Society was formed and constituted under the
Haryana Co-operative Societies Act, 1984 wherein 288 persons became members
of the Society upto 1995-96 and contributed a total sum of approximately
Rs.7.5 crores towards the funds of the Society which were to be
utilised for purchase of the land. In the year 1996, the
Society purchased approximately 10 acres 4 kanals 14 marlas of
land in Village Wazirabad as well as Hyderpur Viran with
the funds
contributed by the members of the Society for achieving its objects. At
the time of formation of the Society, a Managing Committee had also been
constituted with Mr. R.P. Gupta as Secretary but the same was suspended on
23.10.1996 by the then Assistant Registrar Co-operative Societies, Gurgaon
on the allegations of financial irregularities and a Board of Administrator
was appointed. However, the Deputy Registrar reinstated the Managing
Committee of the society on 30.08.1999. Subsequently, on 28.05.2000, a
General Body Meeting of the society took place in which fresh election was
held and a new Managing Committee was constituted wherein the petitioner
No.1 Captain Shri A.K. Mahindra (since resigned during pendency of this
appeal) was elected as Member of the new Managing Committee and later on
was entrusted with the work of Honorary Secretary of the Society in place
of the previous Secretary Shri R.P. Gupta.
5. It is the case of the petitioner/members of the Society that
the new Managing Committee after taking charge and upon inspection of the
records of the Society found that the earlier Managing Committee had
indulged in large scale malpractices and in order to investigate the same,
an internal committee was constituted to go into the land records, finances
as well as other aspects of the Society. This internal committee therefore
conducted an intensive enquiry and submitted report which highlighted gross
irregularities by the previous Managing Committee in the purchase of land,
utilisation of members fund, expenditure on account of day to day expenses
and expenses incurred on land and site development etc. This audit was
conducted for the period 1993 to 2001 when the Managing Committee of the
society stood suspended and the Board of Administrators was in-charge of
the affairs of the Society. Finally, when the audit report was submitted
in March, 2002, the Managing Committee which had been constituted on
28.05.2000 with A.K. Mahindra as Secretary decided to lodge an F.I.R.
against the members of the earlier Managing Committee when R.P. Gupta was
the Secretary and the F.I.R. finally was lodged with the Police Station
DLF, Gurgaon after which investigation was conducted and arrests were made.
After investigation, charge sheet was also submitted in the criminal
courts but as per the charge sheet, no allegation was found against any
members of the then Managing Committee except Mr. R.P. Gupta who was a
member and Honorary Secretary of the Society from its inception until the
new Honorary Secretary Captain Mahindra who was petitioner No.1 and has
since resigned, took over as Secretary of the Society in 2000.
6. When the new Managing Committee took over and Captain A.K.
Mahindra functioned as Honorary Secretary from 28.05.2000 along with
another office bearer Mr. Ashok Sharma as Treasurer, special general body
meeting of the society was held on 02.06.2002 in which the affairs and
conditions of the society were discussed. In the meeting, the members were
apprised that large scales and glaring misappropriation of funds took place
between 1994 and 2000 and it was resolved that the only option left before
the Society was to sell the land at the best possible market price so as to
refund the contributions made by the members. The General Body of the
Society decided to sell off the land for several reasons recorded in the
minutes which are as follows:
(Reasons for General Body to decide for auction sale of the land)
“i) That 10.69 acres of land bearing Khasra Nos.1692, 1997,
1696, 1677, 1678 and 1679 stood registered and mutated in the
name of the Society which were in possession of the Society.
It could be further noted that out of this land, around 9
acres (3.5 acres in Khasra Nos.1977, 1678 and 1679 and 5.5
acres in Khasra Nos.1692, 1696 and 1697) were under
dispute/litigation in the District Court at Gurgaon and the
clear and undisputed land with the society was around only
1.69 acres.
ii) The General Body further noted that another 4.5 acres of
land marked in yellow colour bearing Khasra Nos.1677, 1678,
1679, 1695, 1694, 1696, 1698, 21, 20 and 27 also were under
dispute/litigation. It further transpired to the General
Body of the Society that the land in Khasra Nos.1977, 1678,
1679 measuring around 3.5 acres were never purchased by the
co-operative societies and there were no dispute/litigation
going on with the Society as this land was never the land
of the Society. Thus, out of the total land measuring 4.5
acres said to be in dispute only around 1.1 acres in
different Khasra Numbers was in dispute in regard to which
cases were going on in the District Courts, Gurgaon.
However, the Society further noted that this land had been
purchased by another Society namely Saraswati Kunj whose
registration was in progress. The General Body of the
Society further noted that these facts were available on
record after checking/verifying various records with the
revenue department with the help of Patwari/Tehsildar and
the Advocate, all of whom met a number of times.
Consequently, the Society was given to understand that only
a few days earlier to the General Body Meeting the land of
the Society had been surveyed by the Government alongwith
other vacant land with a view to acquire it i.e. the
acquisition process had been set in motion. It was further
noted by the General Body of the Society that in view of
purchase of vacant land around Saraswati Kunj the Society
of the petitioners had practically been surrounded/
encircled”
7. In view of the aforesaid considerations taken note of in the
General Body meeting of the Society held on 02.06.2002, it was decided by
the General Body to dispose of the land of the Society and the Honorary
Secretary of the Society Captain A.K. Mahindra and Ashok Sharma, Treasurer
were authorized to initiate proceedings for disposal of the land. In
pursuance to the general body resolutions, a letter dated 02.07.2002 was
sent to the Registrar, Co-operative Societies seeking permission to sell
the land. In the meanwhile and for the purpose of ascertaining the correct
market rate of the land, Captain A.K. Mahindra himself wrote a letter to
the Tehsildar, Gurgaon ascertaining the correct market rate of the land to
be disposed of. In response to the same, the Tehsildar, Gurgaon quoted the
market rate to Rs.40 lakhs per acre by way of Endorsement dated 14.06.2002.
The Honorary Secretary of the society/Captain A.K. Mahindra then wrote a
letter further on 02.07.2002 to the Registrar, Co-operative Societies,
Haryana seeking permission to dispose of the land at the earliest for an
amount of Rs.4.2 crores. The contents of the aforesaid letter dated
02.07.2002 written by Captain A.K. Mahindra are as follows:
“To
The Asstt. Registrar,
Cooperative Societies
Gurgaon, Haryana
Sub: Permission for disposal/sale of society land.
Sir,
With reference to the letter No.2298 dated 1.7.02 received from
the office of the Dy. Registrar, Gurgaon, we are enclosing the u/m
documents :-
a) Summary of the land as per registers and jamabandi
submitted is enclosed as desired. As per this summary
the total land with the society is 84 kanals 4 marlas,
and
b) Rate of land in the area where the society land is
situated is Rs.40 lakhs (Rs. Forty Lakhs) per acre as
obtained from the concerned patwaris office. A photo
copy of this letter is enclosed. As per this the total
value of land is Rs.4.20 crores (Rs. Four Crores Twenty
Lakhs Only).
Kindy grant us the necessary permission to dispose off the
land at the earliest and oblige.
Thanking you,
Sd/- A.K. Mahindra,
Hony. Secretary, Mt. Everest Coop. Group
Housing Societies Ltd.”
8. However, the Registrar, Co-operative Societies before whom a
dispute had been raised regarding removal of the office bearers of the co-
operative societies passed a suspension order on 13.12.2002 under Section
34 (2) of the Haryana Co-operative Societies Act, 1984, suspending the new
Managing Committee of the Society based on allegations of gross and serious
irregularities as a result of which a Board of Administrators was
appointed. Thereafter, on 14.01.2003, the Registrar, Co-operative
Societies granted permission to the Board of Administrators to dispose of
the society land and the Deputy Registrar, Co-operative Societies, Gurgaon
formed a Sales Committee of 5 members for selling land of the Society.
While granting permission for sale, respondent No.2/The Registrar, Co-
operative Societies appointed the following Sales Committee of 5 members
comprising inter alia of the following :
i) Dy. Registrar, Co-operative Societies, Gurgaon,
(ii) Inspector, Co-operative Societies, Gurgaon,
(iii) Sub-Inspector, Co-operative Societies, Gurgaon.
9. It appears that in the meanwhile CWP No.2025 of 2003 was filed
by Captain A.K. Mahindra and others challenging the order of suspension of
the new Managing Committee as well as the order granting permission to sell
the land. During pendency of the said writ petition, Assistant Registrar,
Co-operative Societies, Gurgaon on 05.09.2003 removed the new Managing
Committee under Section 34 (1) of the Haryana State Co-operative Societies
Act, 1984 based on the ground that the aforesaid Managing Committee had
failed to perform its duties as provided under the Act, Rules and Bye-Laws.
Simultaneously and in pursuance to the orders of Registrar, Co-operative
Societies dated 14.01.2003 granting permission to dispose of the Societies
land, a public notice for auction of the land of the Society was published
on 07.08.2003 indicating that the auction would be held on 21.08.2003.
This notice was published in all the specified newspapers in regard to
which a decision was taken by the General Body itself that it would be
published in ‘The Tribune’ (English and Hindi), Amar Ujala (Hindi), Dainik
Bhaskar (Hindi) and Dainik Jagran (Hindi).
10. The aforesaid notice for auction of the Societies land prompted
the suspended Managing Committee to file an application in the Court of
Senior Sub-Judge on 18.08.2003 which was moved seeking an order of
injunction on the Society from holding the auction on 21.08.2003. The Sub-
Judge’s Court entertained the application and a stay of the sale of land
was passed by the Sub Judge. In view of the order of stay, an
advertisement was further published in the newspapers on 20.08.2003 for
postponement of the proposed auction but a further development took place
when the interim order of the Sub Judge granting stay of auction was
vacated as a result of which another advertisement was issued which was
published in ‘The Tribune’ on 07.08.2003 wherein a fresh date of auction
for sale of the land was given for 28.02.2003 at 10 a.m. at the Society
site.
11. In pursuance to the aforesaid fresh date of auction, the
auction was held on 24.11.2003 whereby the land belonging to the Society
was sold to respondent No.7 for a sum of Rs.4,94,04,125/- as against the
estimated market rate of about Rs.4.2 crores.
12. After the auction of the land belonging to the Society in
favour of respondent No.7 was complete, the writ petition No.20252 of 2003
which had been filed challenging the suspension of the members of the
Managing Committee wherein Captain A.K. Mahindra and Ashok Sharma had been
elected as Secretary and Treasurer was withdrawn by the
petitioners/Secretary and Treasurer therein with liberty to avail all
existing and alternative remedies available to them by filing an appeal
under Section 114 of the Co-operative Societies Act. The
petitioners/Captain A.K. Mahindra and Ashok Sharma availed of the remedy
under Section 114 by filing the appeal, which was dismissed by the Deputy
Registrar on 19.11.2004, which was challenged by filing a writ petition
No.6491 of 2005, but was dismissed by the learned single Judge inter alia
holding as follows:
i) The suspension order dated 13.12.2002 and removal order
dated 05.09.2003 of the erstwhile Committee whereby Captain
A.K. Mahindra and Ashok Sharma had been appointed Secretary
and Treasurer respectively had been held did not subsist
because new election of the Managing Committee was held on
05.12.2004 wherein the appellant No.1 Captain A.K. Mahindra
was once again inducted as a member who earlier was holding
the post of Honorary Secretary as a result of the election
held on 28.05.2000 and the writ petition challenging
removal of Captain A.K. Mahindra and Ashok Sharma who were
removed in whose place the Board of Administrators had been
appointed was dismissed as infructuous as in view of
induction of new Managing Committee, the orders of
suspension and removal of earlier Managing Committee
challenged by the writ petition did not survive as the
learned single Judge was pleased to hold that when the new
Managing Committee was elected, the dispute regarding
adjudication of suspension of the office bearer of the
earlier Managing Committee constituted as a result of the
election held in 2002 were no longer sustainable.
ii) The learned single Judge inter alia further held that the
petitioner A.K. Mahindra had no locus to challenge the
order of his removal passed by the Registrar, Co-operative
Societies appointing Board of Administrators in his place
or the decision of the General Body for sale of the land
belonging to the society did not survive as it was only
A.K. Mahindra the suspended member who had challenged the
sale and no other member had come up to challenge the
decision of the General Body to sell the land of the
Society.
iii) The learned single Judge had further held that in the
appeal before the Registrar against removal of the members
of the Managing Committee, there was no challenge to the
order of the Registrar giving permission to sell/auction
was made nor the auction purchaser was impleaded as a party
therein and hence, the appeal suffered from misjoinder of
the necessary party and non-appealing of impugned order,
debarred the suspended petitioners to challenge the same in
the writ petition.
(iv) The learned single Judge further took note of the fact
that the decision to sell the land was of the General Body
Society which was taken on 02.06.2002 and the said decision
cannot be said to have been taken by authority constituted
under the Co-operative Societies Act but was taken by the
members of the Society in a General Body Meeting which had
passed a resolution to dispose of the land at reasonable
price and authorised Ashok Kumar and A.K. Mahindra to act
in the matter and that A.K. Mahindra assessed the market
value of the land as Rs.40 lakhs per acre on the basis of
the information obtained from the concerned Patwari as
already referred to hereinbefore.
(v) The learned single Judge was further pleased to hold that
the auction sale was conducted after due permission granted
by the Registrar under the supervision of the Sales
Committee already referred to hereinbefore and after giving
advertisement in three popular newspapers of Hindi and
English before fixing the minimum rate of land at Rs.40
lakhs per acre which was the market rate at that time.
vi) The learned single Judge also took note of the fact that
the petitioner therein did not bring on record any document
to show that the rate of land was more than Rs.40 lakhs per
acre as the prevalent collector rate/circle rate of that
time was Rs.12 lakhs per acre of the area whereas the
Societies land in question was sold at Rs.46.25 lakhs per
acre i.e. more than the market rate fixed at Rs.40 lakhs
per acre. The learned single Judge recorded a categorical
finding that there was neither any fraud in conducting the
auction sale nor was the auction sale bad or illegal in any
manner. In so far as the allocation regarding non
publication of the auction notice in less expensive
newspaper is concerned, it was held that this decision was
also taken in the General Body Meeting of the Society
itself. However, the learned single Judge enhanced the
rate of land from Rs.46.25 lakhs to Rs.70 lakhs per acre
which amount had himself been offered by Captain A.K.
Mahindra who was the Honorary Secretary of the Society at
least on the date when the resolution by the General Body
was passed on 02.06.2002. The learned single Judge after
hearing the contesting plea of the respective parties
disposed of the writ petition taking into account the
interests of the members of the Society holding that the
amount of Rs.70 lakhs per acre was sufficient for eligible
members.
(vii) The learned single Judge further ordered that the
difference of the amount which had come about with the
increase in the cost of the land by increasing the rate
from Rs.46.25 lakhs per acre to Rs.70 lakhs per acre would
be paid by the respondent No.7/auction purchaser to the
Registrar, Co-operative Societies within 45 days from the
date of the order i.e. 24.08.2007 with interest at the rate
of 6% per annum on the amount awarded by him from the date
of auction till the payment was actually made.
(viii) It was further directed by the learned single Judge
that the amount so received from respondent No.7/the
auction purchaser would be disbursed forthwith amongst the
eligible members proportionately, except the tainted ones,
by the Registrar himself or by any other person authorised
by him in that regard and the share of the tainted persons
would be kept until the decision of the cases against them
were adjusted against the recovery, if any ordered against
them. It was also made clear by the learned single Judge
that the members who had already received their share
amount would only be entitled to the difference on account
of increase of price and the concession given by the High
Court in the judgment.
13. The erstwhile Secretary of the Co-operative Society Captain
A.K. Mahindra who had been suspended by the Registrar, Co-operative Society
along with 37 members (38 in all) filed letters patent appeal No.215 of
2007 before the Division Bench of the High Court wherein the auction sale
conducted by the Board of Administrators under the supervision of the Sales
Committee of 5 members which included Deputy Registrar, Co-operative
Societies, Gurgaon, Inspector, Co-operative Societies, Gurgaon, Sub-
Inspector, Co-operative Societies, Gurgaon filed letters patent appeal
before the Division Bench of the High Court wherein the auction sale
conducted by the co-operative societies in pursuance to the order of the
Registrar passed by the co-operative societies were challenged essentially
on the following grounds:
i) That the advertisement for auction of the land was not
published in newspapers which had a wide circulation in an
area. It was alleged that the said notice was deliberately
issued in a newspaper which had negligible circulation in
Delhi and Gurgaon, where most of the members of the Society
used to reside.
(ii) The land belonging to the Society was sold for a song to
the respondent No.7 though it could have fetched more sale
consideration in case the auction after giving due
advertisement, would have been conducted.
(iii) There was no necessity of selling the land.
14. The learned Judges of the Division Bench who heard the letters
patent appeals rejected all the contentions of the appellants and upheld
the order passed by the learned single Judge holding therein that the plea
regarding suppression of notice in a newspaper lacking wide circulation
could not be sustained as the first advertisement regarding auction notice
were published in three newspapers of wide circulation and when the first
auction notice was cancelled, the second notice was published announcing
the new date as the said order against the auction had been vacated and the
said notice was published in the daily newspaper ‘The Tribune’ which is
locally the most prominent newspaper in Punjab and Haryana. Hence, the
Division Bench was pleased to hold that the land being situated in Haryana,
the publishing of the later advertisement in ‘The Tribune’ cannot be held
to cause any prejudice to the prospective buyers as alleged by the
appellant.
15. The Division Bench was further pleased to hold that the plea
raised by the counsel for the appellant that there was no necessity of
selling the land belonging to the Society was also not worth accepting when
a conscious and considered decision was taken by the General Body vide its
resolution passed on 02.06.2002, whereby a decision was taken to sell the
land keeping in mind the plight of the members who were initially made to
understand that in case flats were constructed a flat would cost around
Rs.4 lakhs but would later stipulated that on completion of the flat, the
same would cost Rs.17.50 lakhs approximately, if construction commenced on
time and were to be completed within three years, whereas at the relevant
point of time, flats in other adjoining societies were readily available
for a lower cost at Rs.12 to 13 lakhs. The Division Bench therefore was
pleased to hold that the decision in the General Body Meeting was taken
after considering the pros and cons of the decision to auction sale the
land.
16. In so far as the plea of the appellant emphasising that the
land was sold at a much cheaper rate to the respondent No.7 and thus was
prejudicial to the interest of the members of the Society is concerned, it
recorded that the appellant Captain A.K. Mahindra who was representing all
the appellants in LPA No.215/2007 had himself written a letter on
02.07.2002 while seeking permission to sell the land to the Assistant
Registrar, Co-operative Societies stating that the rate of the land in the
area where the Society is situated is Rs.40 lakhs per acre, as obtained
from the concerned Patwari office. Captain A.K. Mahindra had himself
forwarded that letter alongwith a copy of the letter received from the
concerned Patwari. In that letter which has been quoted hereinbefore, he
had categorically stated that the total value of the land was based on the
above rate which amounted to Rs.4.20 crores for the entire land of the
Society. Even the minutes of the General Body Meeting recorded that the
members themselves had resolved that the land prices in the area at the
relevant time, that is in the year 2002 had gone down. In view of the rate
quoted by the appellant himself in the aforementioned letter and the
decision taken by the General Body in its Meeting to sell the land on the
ground that the land prices were going down, no plea could be raised at
that stage to say that the land was sold at a lower price. The Division
Bench further took note of the fact that in any case, the rate of land was
enhanced from Rs.40 lakhs to Rs.70 lakhs per acre by order of the single
Judge. Besides this, when the General Body of the Society had decided to
abort the venture of the flat building due to germane factors such as the
pending litigation, possibility of acquisition by the Government, irregular
shape of the land and the surrounding land having been purchased by another
society namely Saraswati Kunj and the falling rate of land prices, it was
in the members interest to recover the investments made by them in the
failed venture as quickly as possible. The appellant No.1/suspended
Honorary Secretary Captain A.K. Mahindra had made enquiries himself from
the Tehsildar about the prevalent market price and the Tehsildar had opined
that at the relevant time while the Collector rate was Rs.12 lakhs per
acre, the market rate was about Rs.40 lakhs per acre. In spite of this,
the learned single Judge was pleased to enhance the rate of the land by
awarding Rs.70 lakhs per acre of the land owned and possessed by the
Society. Hence, the Division Bench was pleased to hold that when the
appellant No.1 Captain A.K. Mahindra, the erstwhile/ suspended Honorary
Secretary had himself as an office bearer sought permission to sell the
land at Rs.40 lakhs per acre, he cannot be permitted to question the
inadequacy of Rs.70 lakhs per acre which was awarded by the learned single
Judge. Thus, the amount which was actually paid for the purchase of the
land on 24.11.2003 exceeded by about Rs.70 lakhs, which was previously
estimated to be Rs.40 lacs per acre as per the market rate i.e. Rs.4.2
crores vide letter dated 02.07.2002 which was written by the appellant
No.1/Captain A.K. Mahindra on behalf of Mount Everest Society to the
Registrar, Co-operative Society, Haryana. The learned Judges of the
Division Bench thus were pleased to uphold the judgment and order passed by
the single Judge relying upon the figure suggested by the appellant No.1
himself relating to the cost of land recorded hereinbefore. Consequently,
the Division Bench which examined in detail the price fetched for the
society land, found it to be reasonable particularly in the light of the
adverse factors noticed by the General Body Meeting which prompted the
General Body to pass a resolution to put the land to auction sale which
have been scrutinised meticulously and extensively by the single Bench of
the High Court as also the Division Bench recorded hereinbefore. In view
of the aforesaid findings recorded by the Division Bench, the letters
patent appeals were dismissed by the High Court and thus it was
concurrently held by the single Judge as well as the Division Bench also
that the auction sale could not be held to be illegal, arbitrary or
suffering from the vice of surreptitious auction sale which could persuade
the High Court to set it aside as the High Court examined in detail the
price fetched for the society land and found it to be reasonable
particularly in the light of the adverse factors noticed by the General
Body in the Meeting which prompted the General Body to pass a resolution to
put the land to auction sale.
17. Feeling aggrieved with the judgment and order passed by the
Division Bench dismissing the two Letters Patent Appeals, thus upholding
the judgment and order of the single Judge, two appeals by way of special
leave had been filed by the petitioners/appellants Mount Everest Co-
operative House Building Society Ltd. and by 10 members of the Co-
operative Society out of which the petitioner/appellant No.1 Capt. A.K.
Mahindra withdrew himself from the special leave petitions due to
which he now ceases to be an appellant in the appeal filed by the members.
18. Learned senior counsels Mr. P.S. Patwalia and Mr. C.A.
Sundaram representing the appellant - members of the Mount Everest Co-
operative Society and the Mount Everest Co-operative Society
respectively assailed the judgment and order of the Division Bench which
was pleased to uphold the judgment and order passed by the single Judge
and thus upheld the auction sale in favour of the auction purchaser
respondent No.7 inter - alia on the grounds which substantially are the
same which had been urged before the High Court and were rejected
concurrently by the single Judge as also the Division Bench. However,
since the counsel for the parties were heard at length assailing the
correctness of the judgment and order passed by the High Court, it would be
appropriate in the interest of justice and fairness to the cause to
recapitulate and deal with the same.
19. The principal ground of challenge to the auction sale thus are
essentially two-fold. In the first place, it was submitted that the
action of respondent No.3 in suspending the new managing committee of the
petitioner/appellant society under Section 34(2) of the Haryana Co-
operative Societies Act, 1984 was arbitrary and illegal where no
proceeding for removal of the managing committee was pending under
34(1) of the aforesaid Act and the same was done with an oblique motive to
put the land of the Society to auction sale. In this context, it was also
submitted that the action of the official respondents and that of the
sales committee appointed by the official respondents in conducting the
auction sale of the land of the society on 24.11.2003 was sham and a
fraud committed on the members of the society and the public at large.
It was therefore further submitted that the official respondents and the
members of the sales committee had colluded in selling the land of the
society at a throw away price in favour of respondent No.7 which according
to the appellants has been established by the records of the auction
conducted on 24.11.2003. Thus, in sum and substance, it was contended
that the auction conducted on 24.11.2003 was a pre-determined affair,
illegal and a sham auction sale.
20. Commenting on this part of the averment, it was submitted that
it is clear from all the pleadings before the High Court raised on behalf
of the Society that the Society was not duly represented for want of the
office-bearers of the Society and the entire process of auction was
collusive. According to the counsel, the General Body Meeting which was
called by the society and the resolution which was passed therein should
not have been given effect to. It was, therefore, urged that the Division
Bench of the High Court erred in dismissing the Letters Patent Appeals
filed by the respondents as the High Court failed to appreciate that the
action of the respondents from the time i.e. suspending the Managing
Committee was merely to grab the land of the petitioner/society.
21. Elaborating on this aspect, it was further submitted that on
13.12.2002 Assistant Registrar, Co-operative Society suspended the
Managing Committee when A.K. Mahindra was the Secretary on the basis of
alleged irregularities of the previous Managing Committee under Shri
Gupta and not on the ground of mal-functioning of the then existing
Managing Committee under Capt. A.K. Mahindra. The Committee was thereafter
illegally removed on 5.9.2003 without even fixing the date of hearing.
Giving the sequence of events, it was stated that in between 13.12.2002 and
5.12.2004, there was no committee or effective society to manage the
affairs of the co-operative society since they had been suspended or
removed. At this time, a Board of Administrators was in control with
Mr. Ashok Sharma as one of the key administrators who acted in collusion
with the auction-purchaser. It has further been submitted that during
the period of suspension/removal of the managing committee and appointment
of the Board of Administrators which period was in between 13.12.2002 to
24.11.2003, the property was sought to be brought to sale through a sham
auction in collusion with the auction-purchaser without any notice to the
members of the society. Factual details were further given out stating
that the last elected secretary of the managing committee with Capt. A.K.
Mahindra as Secretary and 120 others filed a writ petition on 18.12.2003
challenging the suspension of the managing committee and the sale to the
respondent No.7. The society itself could not file any case since the
committee had been removed and was under the control of the Board of
Administrators whose collusive action was being questioned. However,
this writ petition had been withdrawn to challenge the removal before the
Registrar but as the Registrar rejected the petition challenging the
removal, another petition was filed on 26.4.2005. In the meantime, a sham
election was conducted on 5.12.2004 whereby Mr. Ashok Sharma was elected
and this was immediately challenged on 6.12.2004. The election was set
aside and once again a Board of Administrators was appointed on
26.9.2007. Elections were thereafter again conducted on 13.9.2010 by the
Registrar and the present committee was elected on 13.9.2010. It has been
submitted that this was the true committee representing the members who
were absent and in between the period of 13.12.2002 and 13.9.2010, the
managing committee became non-existent which was under the control of
Mr. Ashok Sharma who became the Member of the Board of Administrators and
is alleged to have been controlling even the Board of Administrators.
On 19.11.2010, when the new Managing Committee took over, a resolution
was passed on 27.8.2010 after which Letters Patent Appeals were filed
before the Division Bench which were dismissed and the same are under
challenge in these appeals by way of special leave petitions.
22. On the basis of the aforesaid facts, it was contended that the
society and its members were not duly represented for want of the
members of the society and no General Body Meeting was called to discuss or
decide the nature of the pleadings to be filed or the stand to be taken
by the members. The members of the society were kept entirely in the dark
between the period 13.12.2002 and 13.9.2010 and immediately upon a
representative committee being elected, the society preferred the
Special Leave Petitions before this Court out of which the instant
appeals arise. It was further contended that the plea of the respondent
that the majority of the members have no grievance is completely wrong
inasmuch as only 120 members out of 288 members had taken away their
payment and a substantial number of those did it under protest. The
allegation, therefore, that the cause of action to pursue the matter do
not survive at the instance of a few members is fit to be rejected. It
had also been reiterated that the managing committee of the society was
deliberately suspended to grab its land.
23. The auction-purchaser/respondent No.7 contested the aforesaid
plea and first of all submitted that only 38 members before the single
Judge and 10 members in Letters Patent Appeal challenged the judgment and
order of the High Court passed by the Division Bench and has also given the
detailed sequence of events under which the managing committee of the co-
operative society was suspended and also the fact that the decision was
taken by the Board of Administrators and the General Body in a bona fide
manner with which the respondent No.7 had no concern. It was further
contended that the decision to sell the land was taken by the General Body
of the Society after the society decided to sell the land and recorded
specific reasons for this by holding a General Body Meeting on 2.6.2002.
At this point of time, Capt. A.K. Mahindra was the Secretary of the
Managing Committee who had challenged the suspension of the Managing
Committee and the sale before the Registrar, had himself taken active
part in the society’s decision to sell the land who has now discreetly
withdrawn himself from the present special leave petitions. The General
Body Meeting minutes had recorded the reasons for the General Body to
approve of the auction sale indicating that it was agreed that the
society could not develop the land due to financial constraints as the
land was agricultural land for which license had been denied, certain
areas were under disputes/litigation, the land was not located close to
the main road and was not contiguous had multiple share holders and
thus did not command such land rates as other properties in the area
and, therefore, a conscious well-deliberated decision was taken by the
General Body to sell the land as that was a viable and beneficial
alternative for the members to go into. However, the auction purchaser-
respondent No.7 was not in the picture at all when the decisions were taken
by the General Body way back in 2002.
24. Learned senior counsel for the appellants Mr. Patwalia however
countered this submission and assailed it by submitting that even if the
decision by the General Body was taken to dispose of the land by putting
it to auction sale, it was not that the auction could be held and the
land could be sold at a throw away price putting the society to a great
loss. It was, therefore, urged that the basic question would be whether
the auction was conducted fairly and correctly so as to get the maximum
price. According to the learned counsel a perusal of the auction notice
and auction records would disclose that it was not done so and the auction
sale is a complete sham as the price at which the land was sold, was
highly inadequate and much below the price which it ought to have
fetched.
25. On a scrutiny of the sequence of events and the plea of the
contesting parties on the pivotal point as to whether the decision
taken to auction sale the land was bona fide or malafide, tainted with
dishonest motive and whether the suspension of the Managing Committee
and appointing the Board of Administrators was correct or not, it can
clearly be noticed that when the managing committee under Mr. Gupta as
Secretary was suspended, a new managing committee after fresh election
took over, when on 5.8.2001 Capt. A.K. Mahindra became Secretary of the
Managing Committee. It was under his secretaryship that a General Body
Meeting was convened and a resolution was passed by the General Body to
auction sale the land recording specific reasons in the Minutes of the
General Body Meeting whereby the Honorary Secretary/Capt. A.K. Mahindra
brought out the options to the notice of the General Body. One of the
options was to construct flats on the land for which tender had been
floated and it was noted that out of the two parties who responded to the
tenders, one namely M/s Antriksh Engineers and Construction & Corporation
had shown interest. Their main terms were as follows:
(a) that they will invest all money required to obtain CLU,
development charges etc. i.e. they will invest right upto the stage
where construction can begin. This will entail an expenditure of Rs.8
crores approximately.
(b) that they will refund the deposit of a limited number of members
after CLU permission is received.
I that in lieu of the money invested they will be given 50% of FAR
and;
iv) construction rate would be Rs.850/- sq. feet which is
deductible.
It was given out for information of the members that the advantage
would be that the Society would be able to move forward in achieving
its aim and that limited number of members desirous of leaving Society
will get their money back. In so far as the disadvantages were
concerned, it was noted that it will take around 6 months to get CLU
permission by which time Section 4 notice under the Land Acquisition
Act may be issued for acquisition of the land which the society
possessed. It was given out that a minimum period of 3 years will
take before the construction was announced and before completion goes
smoothly. In case, the project was undertaken, 1600 sq. feet flat
would cost Rs.13.60 lakhs approximately, and assuming a member of the
Society had paid Rs.4 lakhs the flat to be constructed would cost him
Rs.17.50 lakhs. It was therefore deliberated that the flats at a
lower rate than Rs.17.50 lakhs were readily available in Gurgaon in
Jal Vayu Vihar and Rail Apartments at Rs.12 to 13 Lakhs.
The Society therefore gave the second option to the General Body and
the second option was sale of the land which were in possession of the
society free from litigation. The Society noted that the land prices
had gone down at the relevant time which was lower than the purchase
price in the last few years when the Society had purchased the land at
Rs.7.5 crores. Thus, it was noted down by the Society before the
General Body that if the land belonging to the Society were to sell
the land it will be unable to recover the full amount which the
society has earlier invested in purchasing the land. However, a
comparative assessment of the objectives were also taken note of by
the society which were as follows:
v) Will avert the danger of the land belonging to the society
being acquired.
vi) Will avert all the cost and uncertainties of the
litigations being faced by the Society.
vii) Members of the Society will get back around 70% of their
investments.
viii) Will pave the way to recover the balance amount of
investments by members.
Thus, on a comparative assessments of the land being retained by the
Society and in case it was disposed of, the General Body of the
Society resolved on 02.06.2002 after taking a conscious decision to
dispose of the land of the Society.”
26. It was in view of this decision that follow up actions were
taken by the Board of Administrators under the Sales Committee inviting
proposals for the sale of the land as the Managing Committee under Captain
Mahindra and Treasurer Ashok Sharma was under suspension due to the alleged
illegalities and irregularities. The learned single Judge as also the
Division Bench of the High Court has scrutinized and taken note of
the overwhelming circumstance which weighed with the High Court. It was
considered by the High Court which took note of the fact that although
10.69 acres of land was claimed by the society, 9 acres i.e. 3.5 acres in
Khasra Nos. 1977, 1678 and 1679 as also 5.5 acres in Khasra Nos. 1692, 1696
and 1697 were in dispute/litigation in the District Court, Gurgaon. The
clear land without any dispute with the society was only around 1.69
acres. The records further indicated that 3.5 acres of land bearing
Khasra Nos. 1977, 1678 and 1679 was never purchased by the society as per
the then Secretary Mr. R.P. Gupta. The learned single Judge has also taken
note of the fact that this was under litigation as it was purchased by
another society –Saraswati Kunj whose registration was in progress. Thus,
if 3.5 acres were to be deducted out of 4.5 acres, only 1.1 acre was
left to the society. The learned single Judge further noted that the
land in question had been surveyed by the Government along with other
vacant land with a view to clear it and the acquisition process had
been set in motion. The land belonging to the society had been encircled/
surrounded by another society namely Saraswati Kunj. Therefore, the
future course of action left to the society which has been recorded
hereinbefore in detail in view of the considerations made by the General
Body, was to dispose of the land of the society.
27. Insofar as the dispute regarding suspension of the Managing
Committee under Captain A.K. Mahindra in view of the alleged
irregularities of the previous managing committee is concerned, it had
started only on 13.12.2002 and all the disputes in regard to removal
and induction of the society under Capt. A.K. Mahindra admittedly took
place between 13.12.2002 and 24.11.2003. But it is an equally undisputed
factual position that the resolution was passed by the General Body in
its Meeting for sale of the land on 2.6.2002 when the managing committee
constituted on 5.8.2001 under Capt. A.K. Mahindra was duly in place and
no member of the society had raised any grievance against the said
decision that it was erroneous or tainted in any manner and the society
was duly represented by the Secretary and all members of the society.
The case of the managing committee and its members that the Assistant
Registrar illegally suspended the managing committee under Capt. A.K.
Mahindra based on the alleged irregularities of the previous managing
committee under Mr. Gupta, first of all took place on 13.12.2002 from
which it is clear that when the General Body Meeting was conducted and
resolution was passed on 2.6.2002, the Secretary of the Managing
Committee Capt. A.K. Mahindra was duly and legally in place as Secretary
and was removed by the Registrar of Society only at a later stage on
05.09.2003 after which the Board of Administrators was appointed by the
Registrar and a Sales Committee was also set up under whose supervision the
auction sale was decided to be held under supervision of the Sales
Committee. It may further be noted that the proposed auction was also
challenged as an application for injunction restraining the auction
sale was filed before the District Court where an order of injunction
restraining the auction sale was also granted by the District Court but
the said injunction was later vacated against which no appeal was preferred
by any member of the society. It is no doubt true and it has been
contended that as no Managing Committee was in existence at that point of
time, no appeal could be preferred against the order vacating the
injunction. However, this contention is clearly without substance for if
the members in their individual capacity could assail the auction sale by
filing a separate writ petition, it cannot be accepted that they were
precluded in any manner from challenging the auction sale in case they
were aggrieved and the subsequent challenge after seven years in 2010
clearly appears to be an after thought at the instance of a miniscule
number of members who decided to assail the auction sale clearly as a
matter of gamble -
28. As already noted, the resolution by the General Body of the
Society to auction sale the land was taken way back on 2.6.2002 vide the
resolution passed in the General Body when there was dispute existing
regarding the functioning of the Managing Committee and it is only after
more than one year that the Secretary – Mahindra was removed by the
Registrar, Co-operative Societies and since he was removed, he challenged
his removal as also the decision of the General Body to auction sale the
land which resolution during his tenure as Secretary was passed. In fact
as long as he was the Secretary he had not merely approved the decision
of the General Body to auction sale, but also the existing market price of
the land and only when he was removed from the post of Secretary, he
started questioning the auction sale held under the supervision of the
Board of Administrators as also the decision to auction sale of the land
conveniently ignoring that the same had been approved by the General Body
Resolution during his tenure as Secretary when there was no dispute
regarding the Society’s functioning.
29. It may further be noted that the then Secretary Capt.
Mahindra although had challenged his removal as Secretary of the
Society, he never thought it appropriate to file any appeal against the
order vacating the order of injunction against auction sale which he
could have done as the ex-secretary if he was genuinely concerned. The
matter regarding the dispute challenging the auction sale had been filed
in a court of competent jurisdiction where initially an order of
injunction was also passed but the same was finally vacated against which
no appeal was preferred either by any member of the society or the
Secretary. The order of injunction against auction sale was finally
vacated but no member was conscious or vigilant to challenge the same.
On the contrary, large number of members gradually withdrew the amount
and walked out of the society. It is clear that for the first time in the
year 2010 when a new managing committee was elected on 13.9.2010 that a
decision was taken to challenge the auction sale by which time the
existence of the society withered away when the majority of the members
out of 288 left and only 38 members remained clearly implying that for all
practical purposes the Society ceased to retain its legal entity as the
land of the society for which contribution had been made was by all the
288 members and not merely 38 members. Even out of this 38 members,
only 10 members preferred Letters Patent Appeal before the High Court
although the General Body resolution was passed by the majority and cannot
be allowed to be over ruled by 10 members only.
30. Much emphasis has been laid on the valuation of the land as
it has been alleged that the land was auctioned/sold at a much lower price
than was capable of fetching which remains unsubstantiated in absence of
any evidence in this regard as to what were the market price of the
undeveloped land in the surrounding areas. On the contrary, it could be
noted that the circle rate of the land at the relevant time was Rs.12 lacs
per acre and the market rate was Rs.40 lacs per acre and as per the auction
held, the price fetched in the auction ultimately worked out to Rs.46 lacs
per acre. The appellants had not furnished any material before any court
as to what was the market price of the undeveloped land in the year 2003
when the auction sale was held in pursuance to the General Body Resolution
of the Co-operative Society. In any case, this question at this stage is
not of much relevance when the High Court has increased the price of the
land at Rs.70 lakhs per acre and members of the society have been held
entitled to refund of their contribution amount along with 6 % interest in
view of which undervaluation of the cost of the land no longer subsists.
It has no where been urged that at the relevant point of time in the year
2003 when the land was auctioned/sold, its valuation was much more than
Rs.70 lakhs per acre so as to treat it prejudicial and detrimental to
the interest of the members of the society who had contributed for
purchase of the land.
31. Thus, if the members of the Society by virtue of a General
Body resolution had decided to auction sale the land during the tenure of
a duly elected Secretary of the Society A.K. Mahindra and for more than
one year no member of the society had any reason to challenge the same
after which the Board of Administrator was appointed and the price of the
land on the date of auction could not be more than Rs.70 lakhs per acre,
it would be unfair and unjust to interfere with the auction sale after 11
years of its holding on the plea that the price fetched in the auction
suffers from undervaluation as the same cannot be compared with the
present day valuation which obviously must have grown over the years as
compared to the year 2003 when the auction sale was held. In this context,
it may also be noted that the Secretary Capt. Mahindra as also Patwari
had also given out in writing and is on record which indicates that the
value of the land at the relevant time which was not a developed land at
the relevant time when the land was put to auction sale was not more than
Rs. 40,000 per acre which cannot be doubted in absence of any material
to the contrary specially when the circle rate of the land was Rs.12 lacs
per acre only and the land was auction sold at Rs.46 lacs per acre
approximately in the year 2003. In any case, the price of the land has
already been increased to Rs.70 lakhs per acre by the High Court and has
been ordered to be paid alongwith 6 % interest and thus the Society has not
been put to monetary loss on account of the sale conducted in pursuance to
the resolution of the General Body which was passed during the tenure of a
duly constituted Managing Committee under Captain Mahindra. It is further
clear that only a handful of members of the co-operative society who are
now only 10 out of 288 and have not withdrawn from the society by
withdrawing their amount, expects that all the following aspects and
circumstance of the case should be brushed aside which are as follows :
i) The fact that the General Body Meeting was held on
2.6.2002 on which date there was no dispute regarding the
functioning of the managing committee;
(ii) Resolution of the General Body Meeting was passed unanimously on
2.6.2002 approving the decision to auction sale the land when the Society
was functioning under a duly constituted Managing Committee and had not
been suspended. The suspension of the Secretary of the Society was much
later after more than a year in 2003 and during this period the resolution
of the General Body was never challenged by any member.
(iii ) The constitution of the Board of Administrators should be struck
down as invalid although the members of the Co-operative Society had never
challenged the constitution of the Board of Administrators;
iv) The Sales/Supervision Committee under whom the auction sale
was held should be treated as a defunct body;
v) The valuation of the land in the year 2003 which was Rs.12
lacs per acre as per circle rate and Rs.40 lacs market rate
should be disbelieved in spite of any evidence to the
contrary which in any case has been increased to almost
the double by the High Court and has awarded 6 % interest
also which clearly takes care of the price factor as the
price of the undeveloped land could not have been more than
Rs.70 lacs per acre at the relevant time in the year 2003
when the auction sale had been held;
vi) All activities in regard to the conduct of the auction
sale should be treated as bogus and sham although the
District Court had vacated the order of injunction
restraining the auction sale against which no appeal was
filed;
vii) Only 10 members out of 288 are now aggrieved which
renders the co-operative society into a non-existent co-
operative society as even the rest 28 members out of 38 who
had filed the writ petition in the High Court have
withdrawn from the litigation.
32. From the background, facts and circumstance of the matter, it
is further clear that the members of the co-operative society had clearly
opted a wrong forum by filing a writ petition in the High Court for if
they expected the court to appreciate evidence and record a finding on the
aforesaid disputes for setting aside the auction sale, it is obvious that
the petitioners should have approached the civil court of competent
jurisdiction where it would have had the opportunity to adduce evidence
and prove all the allegations of under valuation and the alleged fraud
challenging the auction sale. In fact, the writ petition for assailing a
factual dispute ought not to have been entertained by the High Court
under its writ jurisdiction but in the interest of justice and fairness as
also equity and good conscience, the High Court entertained a dispute
which purely was of a civil nature since all contentions which have been
raised would have required appreciation of evidence. Yet the High Court to
a great extent has taken care to scrutinize all aspects of the matter in
regard to the writ petition filed by the co-operative society members who
sought to assail the auction sale clearly alleging disputed questions of
fact alleging fraud in conducting auction sale as also valuation of the
land in question which required adducing of evidence and the same could
not have been entertained by the High Court under Articles 226 and 227
of the Constitution except to the extent of considering whether the
order passed by the Registrar, Co-operative Societies rejecting the
challenge of removal of the managing committee was sustainable or not.
Yet the High Court has entered into all aspects and has then reached to a
conclusion considering entire conspectus of the matter which in our view
cannot be held to be arbitrary, illegal or unjust in any manner.
33. There is yet another feature of the matter which emerges from
the fact that when the removal of Capt. A.K. Mahindra as a Secretary of
the society has been set aside, then all activities including passing of
the General Body resolution in the meeting that were conducted during his
tenure as Secretary of the Managing Committee cannot be held to be illegal
in any manner. Thus when the General Body resolution was passed during
the tenure of a validly elected managing committee under Capt. A.K.
Mahindra as the Secretary and the resolution to auction sale the land was
passed during his secretaryship whereby the value of the land was also
assessed and approved by Capt. A.K. Mahindra himself and no allegation was
levelled by any member against Capt. A.K. Mahindra as all allegations were
confined to Ashok Sharma, then the resolution of the General Body obviously
could not have been faulted with specially when no appeal against the
order of the Civil Court vacating the order of injunction against the
auction sale was filed by any member of the society specially the
appellants herein. The appellant-society and a handful of members now
restricted to 10, have levelled allegations but mere allegation cannot be
treated as a proof and if the members were in a position to assail the
same which clearly would have required strict proof by way of evidence,
they ought to have gone in for a civil suit and the writ jurisdiction was
clearly not the appropriate remedy to establish and prove questions of
fact. Yet when the single Judge as also the Division Bench have
meticulously examined all aspect of the matter discussed hereinbefore and
the same does not indicate any perversity in the conclusions drawn, it
would be unfair and unjust to interfere with the same by indulging into a
roving enquiry merely accepting the contentions of some of the members of
the Society which are clearly based on speculation, conjecture and
apprehension. The Courts therefore in a circumstance of this nature cannot
be expected to decide such an issue on suspicion hunch or even intuition
which clearly would be abstract in nature and has no place in the eye of
law even before a court of fact and much less before a court under writ
jurisdiction.
34. The cumulative effect of the entire analysis based on the facts
and circumstance in the light of the reasonings assigned by the Single
Bench of the High Court as also the Division Bench, it would not be just
and proper to interfere with the judgments and orders passed by the
single Judge as also the Division Bench of the High Court holding
concurrently that the auction sale which was in pursuance to the
resolution passed by the General Body of the Co-operative Society based
on the price prevalent on the date of auction sale could be faulted on the
ground of allegations leveled on the basis of assumption and
speculation of 10 members of the society who had assailed the same by
invoking writ jurisdiction.
35. At this juncture, it would be appropriate to observe that in
judging the functioning of a co-operative society or any other statutory
body where the democratic process of election is adopted in pursuance to
the Rule and a collective decision is taken by majority of the members
of the entire body expressed in terms of a resolution passed by the
General Body, then the plea that the same should be ignored and bye-passed
even if the same has been challenged by a handful of members on
speculative allegation and assumption contrary to the reasons recorded in
the Minutes Books on the plea of mala fide, without any evidence, would be
illegal and arbitrary to accept being contrary to the rule unless the
alleged malicious action is writ large on the alleged decision and is
challenged by majority of the members. If a decision is taken by
majority of the members of a Co-operative Society or any other body under a
statute in terms of the Rule, it cannot be over-ruled by minority on the
ground of mala fide or fraud unless it has passed through a strict proof
of evidence. It is a well known dictum that mala fide is always easy to
allege but difficult to prove as the same cannot be held as proved relying
on assumption, speculation and suspicion.
36. In the instant matter existing 10 members of the society have
practically reduced the Co-operative Society to a defunct society as all
members except 10 out of 278 have finally withdrawn. Hence, the auction
sale at their instance, although the said auction sale had taken place
in view of the majority support of the General Body resolution which was
conducted under the supervision of the Board of Administrators appointed by
the Registrar, Co-operative Society and the Sales Committee is difficult to
scrap it as illegal in spite of the overwhelming material relied upon by
the High Court which has upheld the auction sale. Thus in a matter where
the decision has been taken collectively by the General Body reflected
in the form of a resolution passed by the General Body, it would be
unjust and inappropriate to nurture a lurking doubt and keep suspecting
the decision by entertaining the version of a handful who might be
disgruntled or might be genuine but would be difficult to be gauged by
any court so as to over-rule the General Body resolution and accept
the view of the minority based on no evidence except assumption and
speculation. If the instant matter is viewed meticulously, it is clearly
obvious that the appellants have expected the court of writ
jurisdiction to enter into the correctness and validity of the auction
sale essentially by expecting the Court to draw inference without
evidence that the auction sale was not bona fide as it did not fetch the
desired value of the land contrary to the materials available on record.
Plethora of circumstances have been related to establish the same which
clearly are in the realm of conjecture and speculation, yet the Single
Judge and the Division Bench have both scrutinized and considered the
same and have recorded a finding against the appellants which cannot be
held to suffering from perversity being contrary to the existing
materials before the Court which have been relied upon. Thus, the
validity and correctness of the General Body resolution in view of which
the land was put to auction sale cannot be allowed to be assailed
specially when the price/alleged under valuation of the land in the auction
sale no longer survives as the High Court has allowed the value of the
land to be increased by increasing it from Rs. 40 lakhs to Rs.70 lakhs
per acre which has been ordered to be paid along with 6 % interest. The
appellants have not furnished any material as noted by the High Court that
the cost of the land in the year of the date of auction which is 2003 was
more than Rs.70 lakhs per acre so as to offer a cause to interfere even
if it were to be interfered in the interest of equity, justice and fair
play specially when the circle rate of the land in the year 2003 when the
auction was held was Rs.12 lacs per acre only.
37. Hence, the endeavour of the appellants that the auction sale
should be set aside and the land be revived to the society cannot be
entertained in absence of proof of mala fide contrary to the existing
materials on record on the basis of speculation, assumption and inference
urged by the appellants.
38. Assuming for a while although not conceding that the land were
to be reverted to the co-operative society for any reason whatsoever at
this stage after 11 years of the sale during which the appellant Society
has practically ceased to exist where all members except ten out of 288 are
left, it is obvious that the land cannot be reverted to the original
members who have taken their refund. In that event, the appellant –society
through a handful of members numbering ten is bound to indulge in trading
of the land by inducting new members quoting new rates at their instance
clearly sacrificing the very spirit of a co-operative society as the
land cannot be marketed even by the defunct Co-operative Society at the old
rate which land had been purchased out of the contribution made by the
erstwhile 288 members out of which only 10 are now left into the fray who
had never even objected to the General Body Resolution approving sale of
the land nor challenged the auction sale in the year 2003 when the auction
was held.
39. We, thus find no illegality or infirmity in the impugned
judgments and orders passed by the single Bench as also the Division Bench
concurrently refusing to set aside the auction sale held 11 years ago in
the year 2003 at the instance of a Co-operative Society which has
practically been rendered defunct and thus ceased to exist apart from the
other weighty reasons discussed hereinbefore. Consequently, both the
appeals are dismissed but in the circumstance without any order as to
costs.
………………………………….J.
(Gyan Sudha Misra)
………………………………….J.
(Pinaki Chandra Ghose)
New Delhi;
April 24, 2014
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