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CASE NO.:

Appeal (civil) 538 of 2004

PETITIONER:

The New Friends Co-operative House Building Society Ltd.

RESPONDENT:

Rajesh Chawla and Ors.

DATE OF JUDGMENT: 21/04/2004

BENCH:

DORAISWAMY RAJU & ARIJIT PASAYAT.

JUDGMENT:

J U D G M E N T

ARIJIT PASAYAT, J.

The appellant-society calls in question legality

of the judgment rendered by Division Bench of the Delhi

High Court whereby it was held that respondents 1 to 3

were not defaulters and, therefore, demands raised

against them for the period prior to 4th August, 1984

were unsustainable. Respondents nos. 1 to 3 were the

writ petitioners nos. 1 to 3 in the writ petition filed

by them before the High Court. There was further

direction given by the High Court that there may have

been many members to whom similar demands have been

sent. They were also entitled to refund of any payment

taken by the society from them.

Writ application was filed by the respondents with

prayer to quash the order dated 1.2.2003 issued by the

Election Officer of the appellant-society and for

setting aside the orders dated 23.1.2003 passed by him

and for a direction for carrying out fresh inquiry

regarding defaulters. They had filed nomination for the

post of President, Member and Vice-President of the

society for the election which was scheduled to be held

on 1.2.2003. A bare reading of the writ petition shows

that they were not satisfied with the list of

defaulters prepared. The writ petition was filed on

8.1.2003. An affidavit was filed by the Secretary of

the appellant-society indicating as to how the stand of

the writ petitioners about they being not defaulters

was not correct. It has been specifically pointed out

that in the petition before this Court that the books

of accounts and correspondences were produced on

9.7.2003. Matter was listed on 25.7.2003 but no hearing

took place on account of lawyers' strike at the Delhi

High Court. But the appellant's officers were present

in the Court with the books of accounts and the

records.

The High Court seems to have adjudicated as to

whether the writ petitioners were defaulters or not.

Reference was made to a letter dated 4.8.1984 wherein

it has been stated that no dues were outstanding

against Shri Rajesh and Shri Rajiv Chawla holders of

plot no. 230, Sector VIII. Whether there was any

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amount outstanding would not normally and could not

effectively and finally be adjudicated in a writ

petition and that too filed against a decision

incidentally rendered in the course of election

proceedings by the Election officer. Separate forums

are available in the statutory governing and

functioning of co-operative society whereunder only

such issues affecting substantial civil rights of

parties could be got adjudicated. The High Court seems

to have not considered all such relevant aspects and

seems to have proceeded superficially and summarily.

Prayer in the writ petition was to the following

effect:

"(i) Issue a writ in the nature of

Mandamus or any other like writ or order

or direction directing the second and

the third respondent to enquire into the

alleged List of Defaulters submitted to

them by the present Managing Committee

of the Society;

(ii) Issue a writ in the nature of

Mandamus or any other like writ or

direction or order directing the second

and the third respondent to prepare,

after holding the necessary enquiry, a

fresh and actual List of Defaulters of

the members of the Society;

(iii) Issue a writ of Certiorari or any

other like writ or direction or order

quashing the Notification dated

6.01.2002 proposing to hold elections of

the Managing Committee of the Society on

the 1.2.2003;

(iv) Issue a writ of prohibition or like

writ, order or direction, prohibiting

the respondent nos. 5 and 6 herein from

holding the election of the members of

the Society on 1.2.2003; and

(v) pass such other and further order as

this Hon'ble Court may deem fit and

proper in the facts and circumstances of

the case to do complete justice between

the parties."

The question whether a member was a defaulter had

to be adjudicated in appropriate proceedings and writ

application prima facie was not a proper course.

Assuming without accepting that the stand taken for the

alleged defaulters can be entertained and gone into in

the course of conduct of election, it could, if at all

be only for the limited purpose of election and the

right of the society or the member for having their

rights and liabilities finally and effectively get

adjudicated by arbitration proceedings statutorily

provided for under the statute in lieu of proceedings

before civil court, and the conclusions arrived at or

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recorded in the course of election proceedings shall be

only without prejudice to and ultimately subject to all

or any such proceedings and decisions by such statutory

forums. In any event without proper hearing and

consideration of relevant materials, High Court seems

to have arrived at abrupt conclusions. High Court's

order is consequently unsustainable for more than one

reason. To add further to the vulnerability of the High

Court's judgment is the direction given for refund and

in favour of those who have not approached the Court

also, as though it is deciding statutory Arbitration

proceedings, envisaged under the Co-operative Societies

Act concerned. It was no body's case that any other

person has been illegally asked to pay, or that any

such collection has been illegally made. Direction for

refund to other members is without application of mind

and totally uncalled for. The records and

correspondences were apparently called for. If the High

Court wanted to decide the matter it should have been

done after looking into them which has not been done.

Even such decision, as noticed above, should be made

subject to any adjudication in the Statutory

Arbitration proceedings and not to decide finally the

civil liabilities inter se of parties. Therefore, we

set aside the judgment of the High Court and remit the

matter back for fresh adjudication. We make it clear

that except quashing the directions given for refund to

other members and restraining the High Court from

giving any such directions, rest of the matter shall be

adjudicated on its own merit in accordance with law and

such exercise could only be for the limited purpose of

treating the person(s) concerned "defaulters or not"

for participating in the election process and not for

foreclosing the right of the society to recover any

amount as such, through the forums prescribed under the

concerned Co-operative Societies Act and in accordance

with law.

It appears that respondents 1 to 3 have filed

application before the Registrar of the Society on

27.8.2003 for referring the dispute to arbitration,

which alone is the proper procedure to get their civil

liability finally and effectively adjudicated. The

High Court shall consider the desirability of

adjudicating the issues raised in the writ petition in

view of the recourse taken by respondents 1 to 3 (writ

petitioners before the High Court) themselves before

the Competent Authorities, availing already of their

effective remedies. The appeal is accordingly disposed

of. There shall be no order as to costs.