The Bengal Secretariat Cooperative Land Mortgage Bank and Housing Society Ltd. vs Sri Aloke Kumar & Anr.

Allowing the appeal, the Court

HELD: 1.1 The High Court is not correct in saying that the appellant Society could not have entered into an agreement with a third party developer as the Act or the Rules do not provide for the same. It is too much for the High Court to expect that all the members of the appellant Society should on their own contribute and undertake the development of the new administrative building. As regard the total cost of the project, it is informed that approximately the cost would be Rupees Twenty Crore. What is in the mind of the respondent No. 1 perhaps is that the members of the appellant Society should contribute this amount and undertake the construction rather than involving a developer and making the entire project a business venture. It is just next to impossible. [Para 46][1106-D-E]

1.2 In the background of the constitutional mandate, the question is not what the statute does say but what the statute must say. If the Act or the Rules or the bye-laws do not say what they should say in terms of the Constitution, it is the duty of the Court to read the constitutional spirit and concept into the Acts. “In so far as in its Act Parliament does not convey its intention clearly, expressly and completely, it is taken to require the enforcement agencies who are charged with the duty of applying legislation to spell out the detail of its legal meaning. This may be done either by finding and declaring implications in the words used by the legislator, or by regarding the breadth or other obscurity of the express language as conferring a delegated legislative power to elaborate its meaning in accordance with public policy (including legal policy) and the purpose of the legislation”. The conventional view is that the legislature alone makes the law. [Para 47 and 48][1106-F-G; 1107-A-B]

1.3 It is not in dispute that the General Body of the appellant Society, which is supreme, has taken up a conscious decision to redevelop the administrative building. The General Body of the appellant Society has also resolved to appoint the Hi-Rise as the developer. Those decisions having not been challenged at all, the respondent No. 1 being a member of the appellant Society is bound by the said decisions. The General Body of the appellant Society has approved the terms and conditions of the development agreement by overwhelming majority. Merely because the terms and conditions of the development agreement are not acceptable to the respondent No. 1, who could be said to be in minuscule minority cannot be the basis of not to abide by the decision of the overwhelming majority of the General Body of the appellant Society. The redevelopment of the property is necessitated in view of the fact that the building is in a dilapidated condition with passage of time. The redevelopment thus, would be a requirement and a necessity and cannot be termed as business. The appellant Society in such circumstances did not even require to carry out any amendment to the bye-laws or to include the “redevelopment of the buildings” as one of the objects of the Society before taking any decision to redevelop its property. [Para 52][1108-H; 1109A-D]

1.4 Once a person becomes a member of the Co-operative Society, he loses his individuality with the Society and he has no independent rights except those given to him by the statute and bye-laws. The member has to speak through the Society or rather the Society alone can act and speaks for him qua the rights and duties of the Society as a body. Suffice it to observe that so long as the Resolutions passed by the General Body of the appellant Society are in force and not overturned by a forum of competent jurisdiction, the said decisions would bind the respondent No. 1. He cannot be permitted to take a stand alone position but is bound by the majority decision of the General Body. Notably, the respondent No. 1 has not challenged the resolutions passed by the General Body of the appellant Society to redevelop the property and more so, to appoint the Hi-Rise as the Developer to give him all the redevelopment rights. [Para 53][1109-D-H]

1.5 It was submitted that the property is in a good condition and there is no need to redevelop the existing building. In the first place, the decision of the General Body of the Society to redevelop the subject property has not been challenged at all. Besides, no provision in the Co-operative Societies Act or the rules or any other legal provision has been brought to the notice which would curtail the right of the Society to redevelop the property when the General Body of the Society intends to do so. Essentially, that is the commercial wisdom of the General Body of the Society. It is not open to the Court to sit over the said wisdom of the General Body as an Appellate Authority. Merely because one single member in minority disapproves of the decision, that cannot be the basis to negate the decision of the General Body, unless it is shown that the decision was the product of fraud or misrepresentation or was opposed to some statutory prohibition. That is not the grievance made before this Court. In the instant case, the General Body took a conscious decision after due deliberations for many years to redevelop its property. Even with regard to the appointment of the “Hi-Rise” as the Developer, the record shows that it was decided by the General Body of the Society after examining the relative merits of the proposals received from the developers. [Para 54][1110-A-D]

1.6 The object of the provision has to be borne in mind. The entire legislative scheme goes to show that the Co-operative Society is to function democratically and the internal democracy of a society, including resolutions passed in accordance with the Act, the Rules, and the bye-laws have to be respected and implemented. The Co-operative Movement is both a theory of life and a system of business. It is a form of voluntary association where individuals unite for mutual aid in the production and distribution of wealth upon principles of equity, reason and common good. It stands for distributive justice and asserts the principle of equality and equity ensuring to all those engaged in the production of wealth a share proportionately commensurate with the degree of their contribution. It provides as a substitute for material assets, honesty and a sense of moral obligation and keeps in view the moral rather than the material sanction. The movement is thus a great Co-operative movement. [Para 55][1110-E-G]

1.7 The basic principles of co-operation are that the members join as human beings and not as capitalists. The Cooperative Society is a form of organization wherein persons associate together as human beings on the basis of equality for promotion of economic interest of its members. This movement is a method of doing the business or other activities with ethical base. “Each for all and all for each” is the motto of the co-operative movement. This movement not only develops latent business capacities of its members but produces leaders; encourages economic and social virtues, honesty and loyalty, becomes imperative, prospects of better life, obtainable by concerted effort is opened up; the individual realises that there is something more to be sought than mere material gains for himself. So, in fact, it being a business cum moral movement, and the success of the Co-operative Society depends upon the reality with which one of the members work for the achievement of its objects and purpose. The Committee on Co-operation in India emphasized the moral aspect of co-operation. [Para 56][1110-H; 1111-A-C]

1.8 The impugned judgment and order passed by the High Court is not sustainable in law and is set aside. At one point of time, there is an inclination to allow this appeal by imposing an exemplary costs on the respondent No.1 for unnecessarily dragging the appellant Society into a frivolous litigation & not allowing the appellant Society to go ahead with the project for the past almost two decades. However, this Court refrains from passing such order of costs in the hope that the respondent No.

1 realises that the development of the administrative building will be for the betterment of the society. No individual member is going to gain anything from the redevelopment. It is the society as an autonomous body which will gain something. [Para 57][1112C-E]

1.9 It would now be open to the appellant Society to proceed further with its project of redevelopment in accordance with the resolutions passed by the General Body from time to time. [Para 58][1112-F]

Vipulbhai M. Chaudhary v. Gujarat Cooperative Milk Marketing Federation Limited (2015) 8 SCC 1 : [2015]

(3) SCR 997; Daman Singh v. State of Punjab (1985) 2 SCC 670 : AIR 1985 SC 973 : [1985] (3) SCR 580; State of U.P v. Chheoki Employees Co-operative Society Ltd. (1997) 3 SCC 681 : AIR 1997 SC 1413:[1997] (1) SCR 380; Rattan Chand Hira Chand v. Askar Nawaz Jung (Dead) by Lrs. (1991) 3 SCC 67 : [1991] (1) SCR

327 – referred to.

Seaford Court Estates v. Asher (1949) 2 KB 481 : (1949)

2 All ER 155 (CA) – referred to.

Bennion on Statutory Interpretation by Francis Bennion, 6th Edn. 136 - referred to.