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The Co- Operative Societies Act, 1912
Section 22(2) in The Co- Operative Societies Act, 1912
Section 23 in The Co- Operative Societies Act, 1912

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Bombay High Court
Shri Prakash M. Naik vs Smt. Hanifa Jetha Alias Mrs. ... on 16 December, 2009
Bench: Dr. D.Y. Chandrachud

1

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION (L) NO.2546 OF 2009

Shri Prakash M. Naik ..Petitioner Vs.

Smt. Hanifa Jetha alias Mrs. Hanifa A. Charania & Ors. ..Respondents Mr. A.S.Desai with Mr. Raja S. Ghadge for Petitioner Ms. Pritha Dave for Respondent No.1

Mr. G.W. Mathoos, AGP for Respondent Nos. 3 to 5

CORAM: DR. D.Y. CHANDRACHUD, J.

DATE: 16th December , 2009

ORAL JUDGMENT :

1. Rule.

2. With the Consent of the Counsel, the Petition is taken up for final hearing. Learned Counsel for the Respondents waives service.

3. Sometime in 1984, the Petitioner entered into an agreement for sale 2

with the First Respondent in respect of a residential flat (flat No.5). The Second Respondent is the Co-operative Housing Society where the flat is situated. Under the Agreement, the First Respondent agreed to purchase the flat at and for a consideration of Rupees Ninety Six Thousand. On 7th September 1984, the First Respondent filed an application seeking membership of the Co-operative society. Thereafter for a period of nearly 25 years no further steps were taken by the First Respondent to assert a right to the membership of the co- operative society. On 5th April 2009, the First Respondent filed an application before the Deputy Registrar of Co-operative Societies under section 22(2) of the Maharashtra Co-operative Societies Act, 1960, seeking to appeal against the inaction of the Co-operative Society . The prayer in the Appeal was for a declaration, that the First Respondent is a "deemed member" of the Co-operative Society. The Appeal was allowed by the Deputy Registrar by an order dated 4th May 2009. The Deputy Registrar held that the Co-operative Society having received a copy of the Application dated 5th September 1984, no steps have been taken for a period of three months and that consequently, the First Respondent must be deemed to have been admitted as a 3

member of the Co-operative Society. A direction was accordingly issued that the First Respondent must be treated as a member of the Co-operative Society with effect from 5th September 1984. The Petitioner carried the matter in Appeal. The Divisional Joint Registrar by his order dated 12th September 2009, confirmed the decision of the Deputy Registrar by holding that the First Respondent was eligible for deemed membership and that the Deputy Registrar had correctly come to that conclusion.

4. On behalf of the Petitioner, it has been submitted that the provision for deemed membership contained in Section 22(2) of the Maharashtra Co-operative Societies Act, 1960, came into force by Maharashtra Act 20 of 1986. Prior to the enforcement of Act 20 of 1986, the provision was to the effect that, if the society failed to communicate any decision to the Applicant within three months from the receipt of the Application, the Applicant shall be deemed to have been refused membership of the Co-operative Society. In the circumstances, it is urged that even on the assumption that the Co- operative Society had failed to take steps on the application dated 5th 4

September 1984, the statutory provision as it, then stood would lead to a deemed fiction of a denial of membership. The First Respondent would be entitled to challenge such a denial of membership in an Appeal under Section 23(2) of the Maharashtra Co-operative Societies Act, 1960. On the other hand, it was urged on behalf of the First Respondent that, the Petitioner had no locus to file the Petition having entered into an Agreement for sale with the First Respondent and in pursuance of which it was stated that the consideration has been paid to the Petitioner. Hence, it was submitted that it is the only Co- operative Society which could have been aggrieved by the decision of the Registrar, which was confirmed in Appeal by the Appellate Authority.

5. Section 22(2) of the Maharashtra Co-operative Societies Act , 1960, provides thus:

"22(2) Where a person is refused admission as a member of a society, the decisions (with the reasons therefor) shall be communicated to that person within fifteen days of the date of the decision, or within three months (from the date of receipt of the application for admission whichever is earlier. If the society does not communicate any decision to the applicant within three months from the date of receipt of such application the applicant shall be deemed to have been (admitted) as a member 5

of the society.) (If any question arises whether a person has become a deemed member or otherwise, the same shall be decided by the Registrar after giving a reasonable opportunity of being heard to all the concerned parties.)"

6. Under the provision, as it stands today, once a person is refused admission as a member of a society, the decision of the society has to be communicated within fifteen days of the date of the decision or, as the case may be, within three months of the receipt of the Application whichever is earlier. In the event, that the society does not communicate its decision within three months of the receipt of the Application, the Applicant shall be deemed to have been admitted as a member of the society. Both the authorities below proceeded on the basis that the provisions of Section 22(2) of the Maharashtra Co- operative Societies Act, 1960, as they now stand, would govern the proceedings. Both the Deputy Registrar and the Divisional Joint Registrar completely ignored the legal position which held the field at the material time prior to the amendment of Section 22(2) by Maharashtra Act 20 of 1986. The statutory provision was to the effect that if the society does not communicate its decision to the Applicant within three months from the date of receipt of the Application, the 6

Applicant would be deemed to have been refused admission as a member of the society. The words "refused admission" came to be substituted by the words " admitted" by Maharashtra Act 20 of 1986. The consequence of the amendment is that, whereas earlier, the silence of a Co-operative Society for a period of three years gave rise to a statutory fiction of a refusal of membership that has now been replaced after 1986 by a statutory implication of admission to membership. The application that was filed by the First Respondent was on 5th September 1984. Therefore, much prior to the enforcement of Maharashtra Act 20 of 1986, the statutory fiction came into effect under the provision which then held the field. The failure of the Co- operative Society to communicate a decision to the First Respondent within a period of three months, gave rise to a deemed fiction, which was that the membership stood refused. Hence, the remedy that was open to the First Respondent was to file an Appeal against the refusal of membership, under section 23(2) of the Maharashtra Co-operative Societies Act, 1960. The application that was filed by the First Respondent, after nearly 25 years proceeded on the basis that the First Respondent was entitled to the benefit of the deemed fiction under 7

section 22(2), as it now stands. That is what has been done by the authorities below. Both the authorities lost sight of the legal position as it existed at the material point of time when the First Respondent had applied for membership on 5th September 1984. There is no merit in the objection to the locus of the Petitioner. The substantive relief granted operates against the Petitioner.

7. Consequently, the orders passed by the Deputy Registrar and the Divisional Joint Registrar would have to be quashed and set aside. At the same time, the First Respondent who claims to have paid consideration to the Petitioner cannot be ousted of the remedy of challenging the deemed refusal of membership by filing an Appeal under section 23(2). In the event, that the First Respondent does so within a period of one month from today, the Appeal shall be heard and disposed of on merits without having regard to the bar of limitation. For the reasons aforesaid, the Petition is allowed. The impugned order passed by the Divisional Joint Registrar on 12th September 2009 is set aside. However, it would be open to the First Respondent to seek recourse to the remedies available in law for 8

seeking membership of the Co-operative Society .

8. Rule is made absolute in these terms. There shall be no order as to costs.

(Dr. D.Y.Chandrachud, J)