Page 1 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.

Page 2 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

2

Page 3 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

3

Page 4 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.

4

Page 5 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

5

Page 6 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

6

Page 7 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

7

Page 8 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

8

Page 9 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

9

Page 10 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.

10

Page 11 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

11

Page 12 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

12

Page 13 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.

13

Page 14 (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

14

Page 15 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

15

Page 16 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.

16

Page 17 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

17

Page 18 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.

18

Page 19 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

19

Page 20 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

20

Page 21 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

21

Page 22 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

22

Page 23 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

23

Page 24 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.

24

Page 25 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

25

Page 26 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

26

Page 27 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

27

Page 28 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

28

Page 29 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

29

Page 30 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

30

Page 31 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.

31

Page 32 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

32

Page 33 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.

33

Page 34 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

34

Page 35 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

35

Page 36 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

36

Page 37 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

37

Page 38 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

38

Page 39 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

39

Page 40 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

40

Page 41 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.

41

Page 42 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.

42

Page 43 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

43

Page 44 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

44

Page 45 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.

45

Page 46 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

46

Page 47 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

47

Page 48 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

48

Page 49 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

49

Page 50 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

50

Page 51 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

51

Page 52 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

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Page 53 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

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Page 54 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

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Page 55 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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