Ashiana Housing and Finance (India) Ltd. Vs. State of Jharkhand and ors. - Court Judgment

S.J. Mukhopadhaya, J.

1. The only point for consideration in this case is whether the Registrar, Cooperative Society, Jharkhand has Jurisdiction to interfere with the rights and interests of petitioner or not.

2. The petitioner has challenged those parts or portions of the impugned orders, whereby its interests have been prejudicially or adversely affected or tend to affect.

3. The 5th Respondent. Ispat Nagri Cooperative Housing Society Ltd. Mango, Jamshedpur (Society for short) purchased about 16-17 acres of land at a hilly place in the outskirts of Jamshedpur. Initially, it had 20 members. Subsequently, 27 more members were inducted, totaling 47 members altogether.

4. According to the petitioner, all members were allotted plots of their choice i.e., site and area. There being no habitation within the vicinity of 3 K.M., lands being hilly and uneven, the 5th Respondent could not attract more members nor could generate funds to develop the lands. After several informal meetings between the members, the Managing Committee in its meeting held on 16th December, 1998 decided to sell part of the lands for development, there being provision to sell under bye-laws.

5. An agreement between the 5th respondent and the petitioner was executed on 26th October, 1999 to sell out 8.3 acres of land for consideration of Rs. 1,50,75,000. It followed by execution of five Registered Sale deeds on 28th December, 1999; 17th February, 2000; 1st March, 2000; 30th March, 2000; and 5th March, 2001. The ownership of the lands, in question, was transferred in favour of petition.

The execution of sale deeds was followed by mutations made in favour of petitioner on 12th June, 2000 and 1st April. 2001.

For construction of more than 200 flats, the petitioner get the building plan passed from the Notified Area Committee, Jamshedpur on 22nd May, 2000. According to the petitioner, it has completed 164 flats in the first phase and 40% of work of the second phase for completion of 56 flats have also been done.

6. One Shri Bijay Kumar, convener of Sahkarita Adhyan Mandal, Jamshedpur set in motion the process. He filed a complaint petition on 8th May, 2000 before the Registrar, Cooperative Societies, Bihar, Patna alleging, inter alia, that the 5th respondent had indulged in land scam with a view to make wrongful gain at the cost of its members. The Registrar, Cooperative Societies. Bihar treated it as an application under Section 48 of the Bihar Cooperative Societies Act, 1935 (the 'Act' now known as Jharkhand Cooperative Societies Act, 2002) and registered as Supersession Case No. 136 of 2000. After reorganization of the State, it was re-registered as Supersession Case No. 49 of 2000.

7. In the aforesaid case, the following orders were passed by the Registrar, Cooperative Societies, Bihar/Jharkhand, which are under consideration in this case :

(i) The order dated 13th May, 2000, whereby the Registrar, Cooperative Societies, Bihar, Patna while issued notice on the 5th respondent, restrained the petitioner from making use of the lands, in question, till the disposal of the Supersession Case, though the petitioner was not a party;

It followed by a consequential order dated 29th July, 2002, whereby the SDO, Dalbhum, Jamshedpur-cum-Special Officer of Cooperative Society while restrained the petitioner, ordered to remove the Transformer from the lands, in question, and asked show cause from the petitioner why it be not proceeded for criminal act;

(ii) The order dated 19th August, 2002 passed by the Registrar, Cooperative Societies.

By this order, the Registrar, Cooperative Societies held the transfer of land illegal, unauthorized, without jurisdiction and invalid. An order of distraint was passed on petitioner to satisfy the loss to the Society (5th respondent); and

(iii) The order dated 10th October. 2002 issued by the Registrar, Cooperative Societies, Jharkhand by which the earlier order dated 19th August, 2000 was practically affirmed. The Registrar held that the matter falls within the ambit of Section 48 of the act.

8. The relevant portions of the orders which affected the petitioner, directly or Indirectly, are quoted hereunder ;

Order dated 13th. May. 2000 :

In view of the facts stated above, intervention at this state bears necessary. Therefore, said letter dated 8.5.2000 Is treated as a petition filed under Section 48 of the Act. Issue notice to the Chairman and Secretary of the Society through the Asstt. Registrar C.S.. Jamshedpur. Private promoter is restrained from making use of the said land till this case is disposed of. Put of on 30.5.2000.

Order dated 19th August, 2002 :

'It is established that the sale of land to the society is illegal. The land transfer is unauthorized, without jurisdiction and the deal is invalid. There has been heavy loss of revenue to the society. Breachy contract, cheating, defalcation are also established. There has been gross and blatant violation of the bye-laws of the society. The managing committee and the company disobeyed the order of restrain. The maladministration and mismanagement of the society was with full knowledge and willfully by the Managing Committee.

I am satisfied that it Is a fit case for dissolving the managing committee. The managing committee is dissolved using the power of Section 41(1) of the Jharkhand Co-operative Society Act 1935 and SDO Jmashedpur is appointed administrator of the society under Section 41(3) of the Act.

The administrator shall submit proposal for surcharge for the loss incurred by the society and initiate other legal actions against the then chairman, secretary and the company. As a consequence the company is restrained from further use of land and construction. Order of distraint is also passed on the company to satisfy the loss to the society.'

Order dated 10th October, 2002 :

'The word business in Section 48 of the Act cannot have a narrow construction of the word business, since the full bench has given the word business a wide construction so as to include within it the affairs of the society. In full Bench decision of Punjab High Court in case Indo Swiss Time Ltd., Dundahera v. Umrao and Ors., reported in AIR 1981 Punj 213.

It is held that the illegal and unauthorized sale of the land of the society to AHFIL. heavy financial loss to society on account of sale of land to AHFIL at low price, violation of bye-laws and violation of the layout map for unauthorized sale, mismanagement and mal-administration are issues affecting and touching the business and affairs of the society and are in the ambit of Section 48 of the Act.

In view of all the facts established In the case the petition of AHFIL is rejected, with this order the case is disposed off.'

9. The orders aforesaid on their face stipulate that they have been passed in exercise of jurisdiction vested in the Registrar, Cooperative Societies under Section 48 of the act, reads as follows :

'48. Disputes.--(1) If any dispute touching the business of a registered society (other than a dispute regarding disciplinary action taken by the society or its Managing Committee against a paid servant of society) arises :--

(a) amongst members, past members, persons claiming through members, past members or deceased members, and sureties of members past members or deceased members, whether such sureties are members or non-members; or

(b) between a member, past member, persons claiming through a member, past member or deceased member, or sureties of members, past members or deceased member, whether such sureties are members, or non-members, and the society, its Managing Committee or any officer, agent or servant of the society, or

(c) between the society or its Managing Committee and any past or present officer, agent or servant of the society; or

(d) between the society and any other registered society; (or)

(e) between a financing bank authorized under the provisions of Sub-section (1) of Section 16 and a person who is not a member of a registered society;

Such dispute shall be referred to theRegistrar :

Provided that no claim against a past member or the estate of a deceased member shall be treated as a dispute if the liability of the past member or of the estate of the deceased member has been extinguished by virtue of Section 32 or Section 63.'

10. From a bare perusal of Section 48, it would be evident that the jurisdiction of the Registrar is limited and confined to Clauses (a) to (e) Sub-section (1) thereof.

11. Admittedly, no member of the Society (5th respondent) approached the Registrar for resolution of any dispute. It is also not in dispute that neither any dispute between the members amongst themselves or between the Society and member (s) was ever brought to the notice of the Registrar for resolution. The Registrar, therefore, as far as Section 48 of the Act is concerned, had no jurisdiction whatsoever to deal with respect to sell, in question, nor had jurisdiction to pass any order against the petitioner in that regard.

12. Similar was the view of Supreme Court in the case of D.M. Co-Operative Bank v. Dalichand, AIR 1969 SC 1320.

13. The order under Section 41 of the Act superseding the Managing Committee of the Society was challenged in a connected writ petition being WP (Civil) No. 5151 of 2002 along with other orders. Vide judgment passed on 28th January, 2003 in that case and upon taking note of Sub-section (6) of Section 41 of the Act, the said writ petition was disposed of by permitting the petitioner of the said case (Society 5th respondent herein) to file a statutory appeal. Since the legality, validity, and the correctness of the order superseding the Managing Committee and other orders passed against the Managing Committee would form the subject matter of adjudication by the appellate authority in terms of Sub-section (6) of Section 41, it would not be desirable for this Court to go into any question or examining any issue touching upon the legality, validity or correctness of the supersession order.

In the present writ petition, this Court is only concerned with the jurisdiction of the Registrar in passing an adverse order against the petitioner.

14. Section 41 of the Act empowers the Registrar to pass an order superseding the Managing Committee of a Cooperative Society and to appoint an Administrator to run its affairs. Section 48 empowers the Registrar and gives him jurisdiction to resolve the dispute, as would be referred to him in his capacity as an adjudicatory Tribunal, if covered by Clauses (a) to (e) of Sub-section (1) of Section 48 of the Act. None of these two provisions, therefore, empowers any jurisdiction upon the Registrar to pass any order with respect to third party, such as the petitioner.

The petitioner had merely purchased the property in question, from the Cooperative Society. Neither Section 41 nor Section 48 of the Act empowers the Registrar or confers any jurisdiction upon him to decide any question relating to the legality and validity of the sell in favour of petitioner. Further I found that no provision exists in the entire Act conferring such a power or jurisdiction upon the Registrar to decide any question relating to legality and validity of sell in favour of petitioner.

15. In this case, it is not desirable to determine the legality and validity of decision of Managing Committee taken on 16th December. 1998 to sell out the lands in favour of the petitioner. Such issue can be seen by a competent authority or a Civil Court of competent jurisdiction. Therefore, the Supreme Court's decision in Maharaja Chintamani Saran Nath Sahdeo v. State of Bihar and Ors., (1999) 8 SCC 16, as referred to by the learned Advocate General is not applicable in this case.

16. The issue whether the land, in question, as transferred in favour of petitioner was meant for park site or not, also cannot be determined in this case, as no approved map was produced before the Court to suggest that it was meant for Park. In any case, that would not render the transfer of land illegal or invalid, if otherwise valid, in the eye of law. The learned Advocate General, therefore, cannot take advantage of Supreme Court's decision in Bangalore Medical Trust v. B.S. Muddappa, AIR 1991 SC 1902.

17. For the reasons aforesaid, the orders dated 13th May, 2000; 19th August, 2002; and 10th October. 2002 passed by the Registrar, Cooperative Societies, so far as they relate to petitioner and the finding relating to transfer of land, being without jurisdiction, are set aside. The consequential orders, as issued by the Administrator of Cooperative Society, including the prohibitory orders against the petitioners are also declared illegal and are also set aside.

18. However, this order shall not be construed as any expression of opinion by this Court with respect to the legality or otherwise of the sale transaction/transfer of land between the petitioner and the 5th respondent. We are saying so because we have gone only into the limited question of jurisdiction. We did not go into any question touching upon the legality or otherwise of the sale, transaction or the transfer of land.

19. The writ petition is allowed. However, there shall be no order, as to costs.