Pramod Kumar Gupta & Ors. v. Registrar of Cooperative Societies & Ors.

Delhi High Court · 06 Oct 2016 · 2016:DHC:6943-DB

Sanjiv Khanna; Sunita Gupta

W.P.(C) 5271/2015

2016:DHC:6943-DB

property petition_allowed Significant

AI Summary

The Delhi High Court held that legal heirs are entitled to membership transfer in a cooperative society upon payment of legitimate dues with simple interest, rejecting exorbitant demands and directing possession of the flat after equitable settlement.

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W.P.(C) 5271-2015 HIGH COURT OF DELHI
W.P.(C) 5271/2015 & CMs 9544/2015, 32278/2015 &
24838/2016
Date of Decision: 06th October, 2016 PRAMOD KUMAR GUPTA & ORS. ..... Petitioners
Through: Mr.D.K.Rustagi and Mr.Manan Bansal, Advs.

VERSUS

REGISTRAR OF COOPRATIVE SOCIETIES & ORS. ..... Respondents
Through: Mr. Santosh Kumar Tripathi, ASc for GNCTD/Registrar, Cooperative Societies/R1.
Mr.R.K.Gupta, Adv. for R2.

CORAM:

HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MS. JUSTICE SUNITA GUPTA SANJIV KHANNA, J: (ORAL)

JUDGMENT

1. This case has a very long history of litigation. Late Mr. V.K. Gupta was enrolled as a member of the Mother Dairy Cooperative Group Housing Society Ltd. vide membership number 151. He had deposited Rs.9,46,530/- towards cost of land and construction of the flat being constructed by the Cooperative Society at Plot No.34, Sector – 10, Dwarka Phase – I, New Delhi. Mr V.K. Gupta expired on 2016:DHC:6943-DB 10.06.2000 leaving behind a widow and 6 other legal heirs. The children had executed relinquishment deeds in favour of their mother Lajjawati Gupta. Lajjawati thereafter applied for transfer / transmission of membership in her name vide her application dated 27.07.2000 alongwith the death certificate, indemnity bond and other documents. This was followed by her letter dated 19.09.2000. Lajjawati Gupta had agreed to pay legitimate dues of the society and to complete the formalities required.

2. The Cooperative Society by their letter dated 14.02.2001 raised a demand of Rs.9,62,501.45/- and, at the same time, averred that they had initiated expulsion proceedings against V.K. Gupta before the

3. As the Cooperative Society was not ready and willing to accept Lajjawati as a member, initiated proceedings under Rule 35(7) of the Delhi Cooperative Societies Rules, 1973. By the order dated 31.05.2002, the Registrar, Cooperative Societies held and directed that Lajjawati would apply to the Cooperative Society afresh and complete all required formalities as per law within one month. The Cooperative Society were directed to transfer V.K. Gupta's membership in Lajjawati's name after completing all the legal formalities within one month after receiving her application. The Cooperative Society was further directed to raise a demand, if any, towards the cost of construction of the flat and Lajjawati would clear all dues demanded by the Cooperative Society. The Registrar, Cooperative Societies dismissed the proposal of the Cooperative Society for expulsion of V.K. Gupta. The consequence thereof was that V.K. Gupta’s membership remained valid and intact.

4. In a nutshell, V.K. Gupta’s expulsion was rejected and this would mean that Lajjawati had stepped into his shoes, being his wife and legal representative. Pertinently, Lajjawati was the nominee of V.K. Gupta as per the records of the Cooperative Society.

5. Consequent to the order dated 31.05.2002, Lajjawati applied for transfer of membership in her name vide letter dated 14.06.2002. The Cooperative Society, by their letter dated 29.06.2002 raised a demand of Rs.6,55,641/-. In the meanwhile, the Cooperative Society filed a revision petition before the Financial Commissioner under Sections 80 and 81 Delhi Cooperative Societies Act, 1972 impugning the order dated 31.05.2002 passed by the Registrar, Cooperative Societies. During the pendency of the said revision petition, Lajjawati expired on 21.12.2004 and his legal heirs were brought on record. The revision petition remained pending for about 5 years and was disposed of vide order dated 06.02.2007. Paragraph 8 of the said order reads as under:

“8. The Lower Court record clearly shows that an inquiry was instituted under section 59(1) of the Act against Sh. V.K. Gupta, which was concluded with a finding of a liability of Rs.1.98 lacs being fixed on Sh. V.K. Gupta. The inquiry is dated 10th November, 1997. The petitioner society has not denied that respondent no.2 had applied for transfer of membership after the death of late Sh. V.K. Gupta, on grounds that she was valid nominee. It is the petitioner society’s case that respondent no.2 has to clear the liability of the original member because she

had stepped into the shoes of late Sh. V.K. Gupta, but the petitioner has simultaneously maintained that they would transfer the membership only after the outstanding amount is cleared. Section 59(2) of the Act provides that after an inquiry has been made under section 59 (1), the RCS is required to make an order which will indicate the amount to be paid alongwith interest, if any. Such an order under section 59(2) of the act is not on record, nor has any such order been relied upon by the petitioner. Hence, it is clear that there is no order passed under section 59(2) of the Act. I, therefore, conclude that no liability had been fixed on late Shri V.K. Gupta, during his lifetime under section 59(2) of the Act. It is also noteworthy that respondent no.2 had agreed to clear all outstanding dues against demand and this can do [sic.] be done only in the capacity as a member of the society I, therefore, agree that a non-member cannot be forced to pay any amount to the society, with which no relationship is yet established. The RCS has correctly observed in the impugned order that the society is required to transfer the membership of late Shri V.K. Gupta, in the name of respondent no.2 who is the nominee, after completing all legal formalities. In fact, the impugned order has given relief to the petitioner society also allowing it to raise legitimate demand and has directed respondent no. 2 to clear such dues. Under these circumstances, the petitioner has not been able to show me any reason for interference with the impugned order.”

6. The findings recorded in the aforesaid order were that Pramod Kumar, son of Lajjawati, had agreed to clear all outstanding dues. The dues were to be calculated by the Cooperative Society by treating Lajjawati (represented by Pramod Kumar) as a member of the society. The dues would not be raised against Lajjawati (represented by Pramod Kumar) by treating her as a non-member.

7. After the aforesaid order, Pramod Kumar applied for transfer of membership vide application dated 22.10.2008 and expressed his willingness and readiness to make payment of the entire amount. This was followed by the letter dated 23.04.2010 requesting compliance of the order dated 06.02.2007. Pramod Kumar subsequently had sent a legal notice dated 25.03.2011 to the Cooperative Society pressing his case for enrolment.

8. It is the case of the respondent Cooperative Society that they had replied to these letters written by Pramod Kumar. However, the purported responses, which are denied, have not been placed on record by the Cooperative Society.

9. Resultantly, Pramod Kumar was compelled to approach the exercise of powers conferred under Rule 35(7) of the Delhi Cooperative Societies Rules 1973 (corresponding to Rule 30(7) of the Delhi Cooperative Societies Rules, 2007) had directed as under: “(i) Shri Pramod Gupta, son of Late Shri V.K. Gupta & Late Smt. Lajjawati Gupta will complete all the required formalities (including Relinquishment Deed executed by the other legal heirs etc.) as per law within one month’s time; and

(ii) the Society will transfer the membership of his father, late Shri

V.K. Gupta, in his name after fulfilling all legal formalities within the next one month. The Society is further directed to raise demand, if any, pending towards the construction of flat and the applicant will clear such dues as demanded by the Society.”

10. Relinquishment deeds dated 07.06.2012 were executed by the other five legal heirs of Lajjawati in favour of Pramod Kumar, and these were submitted to the Cooperative Society on 13.06.2012. On 18.06.2012, the Cooperative Society issued a letter raising demand of Rs.75,86,837/- along with a chart giving the calculations. Pramod Kumar protested and complained vide letter dated 10.07.2012. His grievance was that the cost of the flat was Rs.12,47,278/- and late Mr. V.K. Gupta had already paid Rs.9,46,530/- (Rs. 8,83,780/- towards principal and Rs. 62,750/- as interest). Pramod Kumar was liable to pay the balance amount of Rs.3,68,598/- and was ready and willing to pay simple interest on this amount from February 1998 to 31st, January 2002 at the rate of 10% per annum. He had objected to compound interest being levied at the rate of 24% per annum up to 19.10.2007 and thereafter at the rate of 10% compounded annually. Pramod Kumar made payment of Rs.8,14,287.25 by cheque towards balance principal amount of Rs. 3,68,598/- and simple interest @ 10% per annum. He made a request that flat no.301 which had been kept vacant for allotment to the legal heirs of V.K. Gupta, may be allotted to him.

11. The cheque was returned by the Cooperative Society vide letter dated 23.07.2012.

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12. Aggrieved, Pramod Kumar approached the Registrar, Cooperative Societies by filing applications vide letters dated 9th May, 2013 and 16th January, 2014 protesting against the demand and rate of interest. Pramod Kumar reiterated that he was ready and willing to pay simple interest at the rate of 10%. In the letter dated 16.01.2014, Pramod Kumar had stated that he was ready and willing to pay Rs.11,16,391 as per calculations made. The Registrar, Cooperative Societies vide his order dated 27.05.2014 held that the controversy or the dispute was required to be decided as per Section 70 of the 2003 Act. The dispute relating to quantum of demand cannot be decided by him.

13. The Cooperative Society by their letter dated 20.07.2014 informed Pramod Kumar that they were refunding the amount paid by V.K. Gupta along with 7% interest per annum after deducting administrative charges. Pramod Kumar was required to collect the cheque of Rs.17,44,180/- from the Society’s office. Pramod Kumar protested vide letter/notice dated 25.08.2014, written by his counsel.

14. Pramod Kumar once again approached the Registrar, Cooperative Societies by way of a petition under Section 37 of the 2003 Act dated 22.10.2014, but no orders or directions were issued. In these circumstances, with the issue remaining unresolved, Pramod Kumar along with two brothers, namely, Pradeep Kumar Gupta and Sanjay Gupta have approached this Court in the present writ petition, which was filed on 16.05.2015.

15. It may be relevant to mention and refer to two orders passed by this Court as they partially resolve and decide the controversy. The order dated 01.09.2015 passed by the Division Bench of Gita Mittal and I.S. Mehta, JJ., reads as under:-

“1. Our attention is drawn by Mr.D.K.Rustagi, counsel for the petitioners to the demand raised by the respondent No.2-society as the amount payable by late Shri V.K.Gupta upto 31st July, 2002. We find that dues of Rs.6,55,641/- stand quantified therein. Shri V.K.Gupta unfortunately expired on the 10th June, 2000. Smt.Lajjawati, as his first nominee sought transfer of membership, who also expired on 20th December, 2004. The request of other legal heirs of late Shri V.K.Gupta and Smt.Lajjawati, i.e. petitioners herein is pending with the Society ever since. 2. The order dated 6th February, 2007 was passed by the Financial Commissioner in Case No.170/2002/CA filed by the respondent No.2-society directing that question of dues would arise only after legal heirs of deceased members had been substituted. Even this order has not persuaded the respondent No.2-society to consider the request of the petitioners. Our intervention has been compelled by this non-compliance. 3. Even today, we find that an unfortunate stand is being taken on behalf of the society before us. It is being contended that because of the dues against Shri V.K.Gupta, the petitioners must be diverted to the remedy of invoking arbitration under Section 70 of the Delhi Cooperative Societies Act. This is very unfortunate to say the least. Needless to state that Mr.Gupta, counsel for the society insists on filing counter affidavit even in these facts.

4. Let a short affidavit be filed by the society within three days from today. Rejoinder thereto, if any, be filed before the next date of hearing. However, we make it clear that in case we agree with the submissions of the petitioners, we shall be constrained to impose heavy costs on the respondent No.2-society.

5. We are informed by Mr.D.K.Rustagi, counsel for the petitioners that allotment of flats, other than single entry flats, stands allotted and the legal heirs of the petitioners have been wrongly deprived benefit of the flat as well.

6. In the meantime, the petitioners are permitted to deposit the sum of Rs.6,54,641/- with the respondent No.2-society before the next date of hearing without prejudice to their rights and contentions and the said amount shall be accepted by the society, being the payment which it had raised against the deceased Shri V.K.Gupta. 6. List on 9th September, 2015.”

16. The order dated 09.09.2015 again passed by the same bench reads:

“1. The counter affidavit filed on behalf of respondent No.1 would show that there is no real dispute between the parties and the respondent-society is only seeking completion of some documents from the petitioner so as to transfer the membership of the flat in question in the petitioner’s name. 2. The petitioner shall submit the completed documents with the respondent No.2-society within fifteen days with a copy of the same to Mr.R.K.Gupta, learned counsel for the respondent- society. The scrutiny shall be done by the respondent-society within one week. In case there are any objections or any further requirements by the society, the same shall be informed by Mr.R.K.Gupta, counsel for the society to Mr.D.K.Rustagi, counsel for the petitioner within one week of submission of the documents. The objections, if any, shall be cleared/removed within further period of one week. The petitioner shall pay interest @ 10% on the amount of Rs.6,55,641/- w.e.f. 1st August, 2002 till the date of payment to the society within six weeks from today. 3. It is submitted on behalf of the society that certain more dues towards maintenance of the flat and other statutory dues have

been paid by the society in respect of the flat in question. Let the details thereof be furnished to Mr.D.K.Rustagi, counsel for the petitioner within a period of four weeks from today. The admitted liability shall be cleared within one week of receipt of such details. Counsel for the parties may also sit together and sort out the pending disputes.

4. List on 23rd November, 2015.

5. A copy of this order be given dasti to counsel for the parties, as prayed.” The last sentence in paragraph 2 of the aforesaid order is relevant and important. It states that the petitioner i.e. Pramod Kumar will pay interest @ 10% on the amount of Rs.6,55,641/- w.e.f. 1st August, 2002 till the date of payment to the Society. This figure of Rs.6,55,641/- represents the principal amount or the balance price of the flat along with the interest which had accrued thereon till 31.07.2002. On this figure there was no lis or dispute between Pramod Kumar and the Cooperative Society. This order had further directed that Pramod Kumar would be liable to pay interest on Rs.6,55,641/with effect from 01.08.2002 at the rate of 10% till the date of payment to the Cooperative Society.

17. We have been informed that the petitioner had made payment of Rs.6,55,641/- on 6th September, 2015. Rs.8,74,200/- towards interest was paid on or about 23.11.2015.

18. Paragraph 3 of the order dated 09.09.2015 had directed the Cooperative Society to compute the dues towards maintenance of the flat and statutory dues that have been paid by the Cooperative Society in respect of the flat in question. The computation was to be furnished to the counsel for the petitioner within 4 weeks. It was directed that ‘admitted liability’ would be paid within one week of the receipt of demand. The counsel were directed to sort out the issues pending and disputed.

19. The Cooperative Society has filed computation claiming an amount of Rs.24,98,016/-. We have perused the computation and find that the calculations made and demanded by the Cooperative Society are exorbitant, wrong and unacceptable. In fact, the Cooperative Society seeks to rewrite the order dated 09.09.2015, quoted and reproduced above.

20. The construction charges due and payable including the interest as on 31.07.2002 had been calculated and computed at Rs.6,55,641/-. This amount of Rs. 6,55,641/- is final. Pramod Kumar has to pay interest at the rate of 10% per annum on Rs. 6,55,641/- with effect from 01.08.2002 till payment. The payment of Rs.6,55,641 was made on 06.09.2015. The calculation made by the Cooperative Society rightly takes the figure of Rs.6,55,641/- as the base for the year 2002 –

2003. However, the interest is computed on this figure at the rate of 10% compounded annually. This is impermissible and contrary to the order passed by the Division Bench of this Court on 09.09.2015. Once payment of Rs 6,55,641/- was made, the claim and demand towards cost of construction and interest up to 31.07.2002 was settled. Pramod Kumar has paid interest of Rs.8,74,200/- on Rs.6,55,641/- for the period between 01.08.2002 till 08.09.2015 vide demand draft NO. 04546 drawn on Dena Bank, Service Branch, New Delhi dated 10th November, 2015 in accordance with the order dated 09.09.2015. Interest has been computed at 10% per annum.

21. This leaves us with the controversy and question of the maintenance charges and other demands, which are as under: “Calculation of net amount payable after deducting maintenance an d other charges: S.No. Year Maintenance Charges Interest Amount Total

1. 2002-03 10800 1077 11677

2. 2001-02 10800 2157 12957

3. 2003-04 10800 1080 11880

4. 2004-05 10800 1077 11877

5. 2005-06 10800 1077 11877

6. 2006-07 10800 1077 11877

7. 2007-08 12000 1200 13200

8. 2008-09 15512 1547 17059

9. 2009-10 1926[2] 1921 21183

10. 2010-11 1926[2] 1921 21183

11. 2011-12 1926[2] 1926 21188

12. 2012-13 23262 2320 25582

13. 2013-14 33559 3347 36906

14. 2014-15 32146 3206 35352

15. 2015-16 32146 1605 33749 Total 271211 26536 297747 S.No. Particulars Charges Interest Amount Total

1. Vacant land charges 10000 1997 11997

2. Water charges 10667 1067 11734

3. Lift charges 60000 2499 62499

4. Legal Charges 229000 229000 Total 309667 5563 315230

22. The total principal amount claimed as maintenance charges is Rs.2,71,211/. The Cooperative Society also claimed vacant land charges of Rs.10,000/-; water charges of Rs.10667/-; lift charges of Rs.60000/- and legal charges of Rs.2,29,000/-.

23. As far as legal charges are concerned, Pradeep Kumar should not be burdened with the same. We have noted down the history of litigation in the present order. We leave the parties to bear their own costs.

24. Having noted the aforesaid facts, we will have to pass a just and equitable order balancing the case of Pramod Kumar on the one side and the Cooperative Society on the other side. The counsel for the Cooperative Society has submitted that one flat was kept vacant and the maintenance charges, water charges, vacant land charges and lift charges have been paid by other members of the Cooperative Society. Pramod Kumar, on the other hand, submits that he was deprived and denied possession of the flat and had to run from pillar to post. Since the flat was not in his possession, he is not required to pay maintenance charges, water charges, vacant land charges and lift charges. The lift charges are not payable because the petitioners have not used the lift.

25. During the course of hearing, learned counsel for the petitioners, on instructions, states that Pramod Kumar is ready and willing to pay Rs.[5] lacs to settle the matter and to bring this litigation to an end. Learned counsel appearing for the Cooperative Society has stated that he leaves it to the Court. The President of the Cooperative Society is present in person in the Court. The figure suggested by Pramod Kumar is just, fair and equitable. We accept the said suggestion.

26. Pramod Kumar, however, apprehends that the Cooperative Society will not hand over the possession of the flat even after payment of Rs. 5 lakhs is made. Learned counsel for the respondent Cooperative Society submits that papers have to be submitted and cleared by the Registrar, Cooperative Societies. Once the papers are cleared and approval is granted by the Registrar, Cooperative Societies, the possession of the flat will be handed over.

27. To resolve the controversy, it is directed that the petitioners would deposit the amount of Rs.[5] lacs in the name of the Registrar General of this Court and the same would be converted into an FDR for a period of 3 months, and renewed for similar periods. On intimation that the said deposit has been made, the Cooperative Society will, within 15 days, forward the papers and documents to the will examine the papers and in case there is any deficiency, ask the Cooperative Society and/or Pramod Kumar to appear and satisfy. The orders within 2 months from the date when the papers are submitted. In case there is any difficulty, the Registrar, Cooperative Societies may move an application in the High Court seeking extension of time.

28. On the approval being granted by the Registrar, Cooperative Societies possession of the flat would be given to Pramod Kumar. After possession of the flat has been handed over to Pramod Kumar, the Cooperative Society will move an application and the entire amount of Rs.[5] lacs along with interest accrued would be paid to the Cooperative Society.

29. The counsel for the Cooperative Society states that the demand draft of Rs.8,74,200/- dated 10.11.2015 towards interest has been misplaced by him. The counsel for the petitioners states that they will cooperate and ask the bank to issue a fresh / new draft. The Cooperative Society and the petitioners will furnish an indemnity bond as required by the bank for issuance of a fresh demand draft. We hope and trust that the petitioners, as well as the managing committee of the Cooperative Society, will cooperate.

30. The writ petition is disposed of in aforesaid terms.

31. Pending CMs are also disposed of.

SANJIV KHANNA, J SUNITA GUPTA, J OCTOBER 06, 2016

Pramod Kumar Gupta & Ors. v. Registrar of Cooperative Societies & Ors.

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