Co-op Societies can expel member for owning more than one property: SC

Cooperative housing societies can expel a member for owning more than one property as acquiring concessional government land cannot be a ruse to accumulate wealth, the Supreme Court has ruled.

Last Updated: Nov 17, 2010, 18:28 PM IST

New Delhi: Cooperative housing societies
can expel a member for owning more than one property as
acquiring concessional government land cannot be a ruse to
accumulate wealth, the Supreme Court has ruled.

"Experience has shown that voluntary organizations
like cooperative societies are the best system which can suit
the needs of poor and weaker sections," a Bench of justices
Mukundakam Sharma and AR Dave in their judgement.

The object of a cooperative society is not to earn
profits but to enable the members to improve their economic
conditions by helping them in their pursuits, the court said.

"Thus, the cooperative societies like the present one
which seek to obtain the land at concessional rate from the
government and to build houses must necessarily have a
limitation in that only members who are in real need of houses
should be permitted to become members and to take the benefit
of land allotment," Justice Sharma writing the judgement
observed.

The apex court passed the judgement while upholding
the membership termination of a doctor, Parmanand Sharma, by
Ishwar Nagar Co-op Housing Building Society in south Delhi for
being in possession of another housing property in violation
of the society`s bye-laws.

Sharma had purchased a property bearing No. A-19/A,
Kailash Colony, New Delhi in his family`s name consisting of
him, wife and two minor children in 1968. In the ground
floor he was running a nursing home and on the other floors he
was residing with his family.

His membership of the society was terminated in 1978
on the ground that Sharma owned another residential property,
in the capital in violation of Rule 25(1)(c)of Delhi
Cooperative Societies Rules, 1973 which prohibited a member
from owning any other property.

The Delhi High Court quashed the termination upon
which the society moved the apex court.

Upholding the appeal, the apex court said, "In the
garb of a cooperative society, a person cannot be permitted to
avoid the stress of market prices and take a concessional
advantage in obtaining a plot.

"Bye laws of the society regulate the management of
the society and govern the relationship between society and
members inter se. They are of the nature of Articles of
Association of a company registered under the Companies Act.
If they are consistent with the Act and Rules, the members are
bound by them," the Bench said.

The apex court rejected the plea of the doctor that
the Act cannot be applied retrospectively as at the time of
purchasing the property he was governed by the Bombay
Co-operative Societies Act, when there was no such
prohibition. The Delhi Cooperative Societies rules, he pointed
came subsequent to the purchase of his properties.

"Merely because a person who had become a member of
the society at a point of time when the disqualification
mentioned in Rule 25 was not in existence does not necessarily
mean that the said rule is retrospective," the Bench added.

PTI