This Blog has originated in the backdrop of ensuing dispute between the Managing Committee of a Coop Hsg Society and one of my client and letter recorded by me to the said Managing Committee. It may be beneficial to read this Blog, so as to effectively deal with all the fanciful behaviour of Managing Committee of Coop Hsg Societies.
Date: …………..
To,
Shri ………….,
Hon. Secretary
…………. Apartment Co-operative
Housing Society Limited,
……………………………,
Mumbai – ……………...
Reference
Society letter dated ……………..
Subject
Transfer of Shares and interest of the deceased member ………………… , in the name of Mr…………., the legal heir of the said deceased Member of the Society.
Schedule of property
Share Certificate No…, distinctive Nos……….., …………. Apartment, A-Wing, Flat No……, ….. floor, …………. Road, ……………, Mumbai – ………….
Dear Sir,
I am writing to you under authority and instructions & information received from my client Mr………….., permanently residing at Apartment, Mumbai – , one of the nominee and the uncontested legal heir of the deceased Member…………… of the Society.
My client has placed on my hand, inter alia, the copy of legal opinion dated ……….., obtained by the Managing Committee from Learned Advocate / Solicitor ………. The said legal opinion was obtained by Managing Committee in consequent to Application dated ……….. submitted by my client being a legal heir, for the transfer of shares and interest of the deceased member in his name.
And so as to have very clear understanding of every issue involved in the case at hand, and so that the main points emphasized in this long letter is not lost sight of, I have penned an Index wherein each issue separated with appropriate heading. Every sentence is employed with great care and caution and the Managing Committee is therefore requested and strongly advised to read every part and every sentence of this long letter very carefully so as to have the correct picture of the whole case and thus can adopt the correct course of action.
INDEX
SR.NO. PARTICULARS
PAGE NO.
1 RELEVANT PROVISIONS OF LAW ENSHRINED UNDER MCS ACT 1960, MCS RULES 1961 AND THE BYE LAWS 3 TO 6
2 FACTS OF THE CASE 7 TO 8
3 INFIRMITIES IN THE LEGAL OPINION 9 TO 10
4 JUDGMENT ON SOCIETY ASKING FOR SUCCESSION CERTIFICATE / PROBATE / LETTERS OF ADMINISTRATION 11
5 ILLEGALITIES COMMITTED BY THE MANAGING COMMITTEE 12 TO 14
6 JUDGMENT ON “A SOCIETY CANNOT ARBITRARILY REFUSE TO MAKE PERSON A MEMBER
15
7 RECORDING OF REASONS / INTERPRETATION OF LAWS 16 TO 24
8 SUBMISSIONS 25 TO 26
9 JUDGMENTS ON COMPULSORY TRANSFER OF SHARES AND INTEREST OF THE DECEASED TO THE NOMINEE 27
10 LEGAL EXPECTATIONS FROM THE MANAGING COMMITTEE 28
11 CONSEQUENCES THAT MAY FOLLOW IF LEGAL EXPECTATIONS ARE NOT COMPLIED WITH 29
12 JUDGMENTS ON WHO TRY TO MISLEAD THE COURT AND WHO PROLONG THE LITIGATION 30 TO 32
13 JUDGMENTS ON IMPOSITION OF HEAVY COSTS ON LITIGANTS TAKING FALSE DEFENSES / PLEAS 33
14 MY CLIENT’S FINAL WORDS 34
15 ANNEXURE “A” TEXT OF MCS ACT, RULES AND BYE LAWS 35 TO 43
16 ANNEXURE “B” COPY OF JUDGMENT ON SUCCESSION CERTIFICATE
RELEVANT PROVISIONS OF LAW
AT THE OUTSET, my client says and submits that all the issues that arises in the present case are adequately, sufficiently and in very clear language answered in various provisions of Maharashtra Cooperative Societies (MCS) Act, 1960, the Rules and the Bye laws made under the said MCS Act, 1960. They are as follows:
• Section 22(1) read with Bye Laws 17 and 19 prescribe the qualifications needed and conditions to be complied with by a person who is desirous to be admitted as a Member of CHS;
• Section 30, Bye law No.35 enshrines the illuminating legislative command relating to transfer of shares and interest of the deceased member of the Society to the legal heir of the deceased.
• Section 22(2), 23(1), Bye law No.65 and Bye law No.139(8) prescribe the procedure to be adopted by the Managing committee in dealing and disposing the application submitted to it for transfer of shares and interest of the deceased member of the Society to the legal heir.
• Section 23(2) read with Rule 19A provides a redressal mechanism wherein any person who is aggrieved by the decision of a society, refusing him admission to its membership, may appeal to the Registrar.
• Section 25 enshrines the conditions under which a member ceases to be a member of the Society.
• Section 25-A casts a positive obligation and responsibility upon the Managing Committee of the Society to remove from the register of its members the name of a person who has ceased to be a member.
• Section 38 casts a positive obligation and responsibility upon the Managing Committee of the Society, inter alia, to keep and maintain a register of its members, incorporating therein particulars of the members.
• Section 73(1) states that the management of every Society is vested in the Managing Committee and the said section commands that the Managing Committee shall exercise the powers conferred upon them and the Managing Committee shall also perform such duties as is imposed upon them under the MCS Act, Rules and Bye Laws.
• Section 73 (1AB) further provides that the Members of the Managing Committee will be individually and collectively responsible for all the decision taken by the Managing Committee.
• Section 78(1) read with Rule 64 empowers the Registrar to remove any member of the Managing Committee or the entire Managing Committee, if in the opinion of the Registrar, the said Managing Committee or any of its Member, is negligent in the performance of the duties imposed on them by this Act or the rules or the bye-laws; or commits any act which is prejudicial to the interests of the society or its members etc.
• Section 79(2) empowers the Registrar to take action against the erring and defaulting Managing committee of the Society in cases where the Managing committee is not taking action in accordance with the mandate of MCS Act, Rules and the Bye laws of the Society.
• Section 79A(1) empowers the State Govt of Maharashtra to issue necessary directions to any Managing Committee of the Society, inter alia, to secure the proper management of the business of the society generally, or for preventing the affairs of the society being conducted in a manner detrimental to the interests of the members of the Society.
• Section 89(1)(a) empowers the Registrar to inspect the working of any society to ensure that the provisions of the Act, rules and bye-laws of the society are being properly followed by the society;
• Rule 32. Register of Members:- The register of members to be kept by every society under sub section (i) of Section 38 shall be in Form ‘I’.
• Rule 33. List of Members:- The list of members to be kept by every society under Section 39 shall be in Form ‘J’.
• Bye law No.34 provides the provisions with respect to transfer of shares and interest of the deceased member to the Nominee / Nominees of the deceased member.
• Bye law No.35 provides the provisions with respect to transfer of shares and interest of the deceased member to the legal heir of the deceased member.
• Bye law No.39(a) commands that the Committee shall strictly follow the procedure laid down under Bye law No.65 for disposal of Application received by it for transfer of shares and interest of members in the capital / property of the Society.
• Bye law No.39(b) further commands that the Managing Committee shall not refuse any application for admission to membership of transfer of shares and interest in the capital / property of the Society except on the ground of non compliance of the provisions of the Act, Rules and the Bye laws of the Society, or non compliance to any other law or order issued by the Govt of Maharashtra.
• Bye law No.39(c) further provides that if the Managing Committee fails to communicate its decision, on application for admission to membership of transfer of shares and interest in the capital / property of the Society, within 3 months of its receipt of said Application, the application shall be deemed to have been accepted and the transferee shall be deemed to have been admitted as a member of the Society as provided under section 22(2) of the Act.
• Bye law No.61 casts a positive obligation and responsibility upon the managing Committee to record the fact of cessation of membership of any member in the minutes of its meeting and also inform the same to the concerned member within 7 days of its said decision of cessation of membership.
• Bye law No.65 provides the procedure to be followed by the Managing committee / Society whenever they are in receipt of any Application, including Application for transfer of shares and interest of the deceased member to the Nominee / legal heir.
• Bye law No.113 provides that the Managing Committee shall exercise all powers, expressly conferred on it, and discharge all functions entrusted to it under the Bye law No.139.
• Bye law No.138: The Members of the Committee shall be jointly and severally liable for making good any loss which the Society may suffer on account of their negligence or omission to perform any of the duties and functions cast on them, under the Act, Rules, and the bye law of the Society.
• Bye law No.139: Power, duties and functions of the Committee: Subject to the Bye law No.113, the Committee shall exercise the powers and discharge the functions and duties as mentioned hereunder: 139(8) To consider and decide the applications for various purposes received by the Society.
• Bye law No.139 (37) To take the decision on the complaint application in the coming Committee meeting and inform the concerned member of its decision accordingly.
• Bye law No.141: Functions of the Secretary: The functions of the Secretary of the Society shall be those mentioned below: (8) To deal with the applications for various purposes received by the Society. (13) To record the minutes of all the meetings of the general body. (22) To discharge such other function under the Act, the Rules and the Bye laws of the Society and directions of the Committee, as are not expressly not mentioned hereinabove. (23) To place the complaint application with facts, before the Committee in the coming meeting.
• Bye law No 144 casts a positive obligation and responsibility upon the Secretary of the Society to maintain and keep up to date the account books, registers, and other records mentioned under Bye laws Nos 142 and 143. The records will include the Register of members and List of members.
My client says and submits that the Members of the Managing Committee, despite being well acquainted with all aforesaid provisions of MCS Act, the Rules and the Bye laws, are knowingly, deliberately and mischievously acting in manifest breach of Sections 22(2), 23(1), 30, 73(1); and Bye law Nos.35, 39(b) and 65(f), with the sole intention to harass my client.
My client is constrained to say that a simple and straight forward case, of transfer of shares and interest of deceased member of the Society, is deliberately made complex by the Managing Committee.
FACTS OF THE CASE
NOW MY CLIENTS, SO AS TO PUT THINGS IN PERSPECTIVE, PLACE ON RECORD THE MAIN FACTS OF THE CASE:
• On ………….. Smt ………………. was admitted as a Member of the Society and was the owner of flat No. ……….. in the building known as …………………………………………. Thereby holding 5 Shares distinctive Nos…………….
• On ………….. Shri ……………………., the Son of the aforesaid Member was admitted as a Associate Member of the Society.
• On ……………. Nomination was filed in favour of Shri …………
• On …………..: Smt executed a Will, wherein she has bequeathed all her title, Share and interest in respect of the said shares and said flat of the Society to her ………………..
• On …………., Smt. expired leaving behind her last Will dated …………
• On ……… the Associate Member Shri …………… informed to the Society about the death of Smt………………, the member of the Society.
• On…………. As per the advise and instructions of Managing committee of the Society, the legal heir of the deceased Member caused to issue a Public Notice in ………………. thereby invited objections to the proposed transfer of said Shares and said Flat in his name.
• It is stated that no objections has been received by the Society in pursuant to said Public Notice. It is a matter of record that no person has approached to the Society claiming himself / herself to be the legal heir of the deceased Member and claiming share in the estate of the deceased Member of the Society. It is further stated that no person has recorded any objection whatsoever to the proposed transfer of said Shares and said Flat to the legal heir of the deceased Member before the Society.
• On ………….., as per the advice and instructions of Managing Committee members, and in compliance to Maharashtra Cooperative Societies Act, Rules and Bye-laws, in particularly, Section 22(1), and Bye law No.65, the said legal heir submitted an Application alongwith requisite documents, to the Society, for the transfer of said Share and said Flat in his name.
• On ……………, the Society vide its letter, informed my client that the said Application was put before the Managing Committee in its meeting held on ………….. and it is stated that “after elaborate discussion”, the Managing Committee unanimously decided to seek a legal opinion in the matter and accordingly it was sent for a legal opinion to Mr. ……….., Advocate & Solicitor. The society has annexed the copy of the legal opinion obtained from the Learned Solicitor.
• The Society has in its aforesaid letter dated ………., inter alia, informed and instructed my client to comply with the requirements as stated in the legal opinion given by Learned Solicitor dated …….., and Society will then transfer the Shares of deceased Member in the name of the Applicant.
INFIRMITIES IN THE LEGAL OPINION
NOW CRAVE I LEAVE TO POINT OUT THE INFIRMITIES IN THE LEGAL OPINION GIVEN BY THE LEARNED SOLICITOR.
1. The Learned Solicitor, in the light of documents submitted to him, has posed a question to himself – Whether the Application submitted by the legal Heir of the deceased Member, is in compliance to Maharashtra Cooperative Societies Act, Rules and Bye-laws, so as to entitle him for the Transfer of said Share; and while answering the aforesaid question, the learned Solicitor was to advise and give opinion to the Society.
2. The learned Solicitor, inter alia, dealt with and perused all the documents submitted by the Heir of the deceased member and in his legal opinion the Learned Solicitor, inter alia, advised the Society to obtain Letters of Administration from the legal heir.
3. Further, from the perusal of the elaborate legal opinion forwarded by the Learned Solicitor, it is abundantly clear that (a) the Society has not received “any second claimant” in respect of the said Shares and said Flat; (b) the Society has not received any objection whatsoever from any other legal heir of the deceased Member with respect to the proposed transfer of said Shares and said Flat in the name of Shri ……………..
4. The Learned Solicitor has nowhere in his legal opinion pointed out any lacunae in the said application of the legal heir of the deceased member. The Learned Solicitor has nowhere in his legal opinion stated that the Application submitted by the legal heir is not in accordance with Maharashtra Co-operative Act, Rules and Bye-laws. The said legal opinion of the learned Solicitor does not in any word say that there was any infirmity of any nature whatsoever in the application submitted by the legal heir of the deceased member.
5. Thus, despite full knowledge of aforesaid background and that there is no second claimant, the learned Solicitor, without stating the basis for caution, and in manifest breach of Bye-law No.35 of the Society, advises the Society to obtain, inter alia, Letters of Administration from the legal heir of the deceased Member.
6. More strangely, the learned Solicitor is asking the Society to direct the Applicant to obtain fresh NOC from the legal heirs and also obtain Letters of Administration. My client says that if learned Solicitor is asking for fresh NOC from legal heirs then what is the point in seeking Letters of Administration; and if the learned Solicitor is asking for Letters of Administration (LoA), then what is the point in asking for NOC from legal heirs. The LoA duly covers the NOC part of legal heirs. The Managing Committee should seek explanation and justification from the Leaned Solicitor for this contradicting opinion and giving cautious advice to obtain Letters of Administration. The explanation and justification from Learned Solicitor is necessary because the Society itself is under legal obligation to adduce reasons in its decision for refusal to admission as a Member.
7. The learned Solicitor, so as to show of his wisdom, has unnecessarily travelled into the provinces of Indian Succession Act and the Bombay High Court Rules to which the case at hand has nothing to do with it.
May please refer JUDGMENT ON SOCIETY ASKING FOR SUCCESSION CERTIFICATE / PROBATE / LETTERS OF ADMINISTRATION.
My client invites the attention of the Managing Committee to a case wherein the Hon’ble The Maharashtra State Co-operative Appellate Court, Bombay, did justified the stand of Managing Committee / Society to seek Succession Certificate from the Applicant. In the said case of Sadashiv Vinayak Godbole versus The Panvel Co-op Hsg Society, 1985 C.T.J. 485, the Learned Bench of Shri M.H. Jadhav (President) and Shri S P Ghogre however justified the aforesaid stand of Managing Committee on the ground that the Society had received application from two persons for the transfer of share and interest of the deceased member. My client herewith annexes the copy of said judgment for the reference of the Managing Committee. (Para 7 of the judgment), Annexure B.
THE ILLEGALITIES COMMITTED BY THE MANAGING COMMITTEE WHILE PROCESSING MY CLIENT’S APPLICATION
1. At the outset my client is constrained to say that, either knowingly or unknowingly, the managing committee has misled my clients, for, in the light of the fact that there exists a valid nomination in the records of the Society, the Managing Committee should have advised my client to make Application as a nominee so that the Records of the Society can be maintained upto date, as required and mandated under MCS Act, Rules and Bye laws, more particularly Bye law No.144, Rule 32 and 33 read with Section 38 of the Act. Instead the Managing Committee ill advised my client to make Application being a legal heir.
2. My client further says and submits that the Managing Committee, in the light of express wordings of Bye law No.35, are fully conscious and aware that the Succession certificate / Probate / Letters of Administration is sought from an applicant legal heir only in cases where there are “claimants” other than the applicant, and when both claimants fails to reach any agreement as who will be the member; and there is existence of dispute between the legal heirs of the deceased, then only as a matter of abundant caution, the Managing Committee seeks Succession Certificate / Letters of Administration / Probate from the legal heir who is desirous of to be admitted as a Member of the Society. Yet, only to harass the applicant i.e. my client, the Managing Committee is seeking Letters of Administration from my clients, despite fully knowing that there are no claimants in his case and there is not an iota of dispute among the legal heirs of the deceased with respect to transfer of shares and interest of the deceased member in the name of my client. Moreover, my client has executed an Indemnity Bond in favour of Society to protect the interest of the Society.
3. My client submits that from the bare reading of Section 22(2), Section 23(1), Section 30, Bye law No.35, 39(b) and 65(f) will go on to show that the Managing Committee, in the guise and pretence of legal opinion, are knowingly, deliberately and blatantly acting in clear breach of aforesaid provisions MCS Act and Bye laws made under the MCS Act.
4. My client points out the gross procedural impropriety being committed by the Managing Committee in disposing of my client’s Application. My client invites the attention of the Managing Committee to Bye law No.39(b), and at the cost of repetition, reproduces the same.
Bye law No.39(b) commands that the Managing Committee shall not refuse any application for admission to membership of transfer of shares and interest in the capital / property of the Society except on the ground of non compliance of the provisions of the Act, Rules and the Bye laws of the Society, or non compliance to any other law or order issued by the Govt of Maharashtra.
My client says that the Managing Committee has by its letter dated 04-10-2011 refused my client’s Application. However, the Managing Committee in its said letter did not stated anything about “non compliance” by my client with respect to MCS Act, Rules and Bye laws and “non compliance” by my client with respect to the order or law made by the Govt of Maharashtra.
4. My client says that Bye Law No.65 lays down the procedure to be followed by Society whenever it is in receipt of an Application.
The said Bye law No.65(a)(ii) provides that an applications for transfer of shares and interest in the capital / property of the Society shall be addressed to the Secretary of the Society. Every application received by the Secretary shall be acknowledged by him;
Bye law 65(d) provides that the Committee or the general body as the case may be, shall consider all such applications at its meeting and take decisions thereon; The Society in its meeting held on ………….., took the decision to seek legal opinion with respect to my client’s Application.
Bye law 65(f) If the Committee or the general body, as the case may be, rejects any application, it shall record, in the minutes of its meeting, the reasons for rejection of the application;
HERE COMES THE ILLEGALITY OF MANAGING COMMITTEE:
5. My client says that, by merely applying common sense it can be said that every “decision” of the Managing committee presupposes a meeting of the Managing committee wherein the Managing Committee decides the fate of the Application submitted to it. The Learned Solicitor gave his legal opinion on or about …………. However, it is not known that in which Managing Committee meeting, the Society took the decision to adopt the said legal opinion and thereby rejecting my client’s Application. The Society letter dated ………… is completely silent with respect to the date on which the Managing Committee meeting was held wherein the decision was taken to adopt the said legal opinion and decision was taken to reject the Application and thereby directing the Applicant, i.e. my client to comply with the legal opinion given by the Learned Solicitor.
6. Therefore, on the face of the records, it can safely be inferred that the said legal opinion obtained from the learned Solicitor was not discussed in any of the Managing Committee meeting.
7. It is strange to see that the members of the Managing Committee have blindly adopted the said legal opinion without discussing the same in the Managing Committee meeting and disregarded its statutory obligation as mandated and manifested in Bye law No.39 and 65. Also, my client would be interested to know as which member of the Managing Committee took the decision to adopt the legal opinion and took decision to reject my client’s application.
8. My client therefore says that the Managing Committee’s decision to reject my client’s Application was not taken in any Managing Committee meeting. My client therefore says that the said letter dated ………… of the Society cannot be said to be a decision of the Managing Committee.
9. Therefore, my client says and submits that my client’s Application was not rejected in any of the Managing Committee meeting, as contemplated and mandated under the Bye law No.65(f).
10. My client further submits that despite the fact that the letter of the Society dated ……… was not a “decision” per se, yet assuming that it was a decision, than the Managing Committee manifestly did violence to section 22(2) and 23(1) of the Maharashtra Co-operative Societies Act, 1960. The said two sections unambiguously and in express terms provide that the Society SHALL record its reasons for its (refusal) decision. aforesaid sections, it can be inferred that whenever the Society intends to refuse admission to a person, its decision shall carry “Reasons therefor” and further that society shall not refuse admission to membership to any person duly qualified therefor under the provisions of this Act and its by-laws, “without sufficient cause”.
11. The recording of reasons by Society as contemplated under the Act entails that the Society has given due consideration to the Application submitted to it and that decisions of the Society on the Application have been reached according to law. The State legislature has specifically inserted words “Reasons therefor” and “without sufficient cause” so as to prevent the likelihood of arbitrary exercise of wide powers conferred upon the managing committee.
12. The reasons adduced must not only be intelligible but which will also deal with the substantial points which has been raised therein in the said application. A statement of reasons promote “thought” by the Society and compel it to cover the relevant points and eschew irrelevancies and assures careful & due consideration.
13. In order to satisfy the test of Section 22(2) and 23(1), every decision of Society must be informed by reasons and that an act uninformed by reasons is arbitrary, and arbitrariness is the very negation of the Rule of Law.
JUDGMENT ON “A SOCIETY CANNOT ARBITRARILY REFUSE TO MAKE PERSON A MEMBER”
My client invites the attention of Managing Committee to the remarkable observations made by Hon’ble Bombay High Court in the case of Gopal Vishnu Ghatnekar vs Madhukar Vishnu Ghatnekar on 24 June, 1981 Equivalent citations: AIR 1982 Bom 482, (1982) 84 BOMLR 41; Bench: Mody
Para 8. …….However, the right of a society to admit a person of its choice as a member cannot be exercised arbitrarily and so as to deprive a person of his right to the shares or property of a deceased member. The law does not give a right to the society to continue as member or to refuse membership to a person who is entitled to become a member. To put it differently, a society cannot arbitrarily refuse to make person a member.
New Sion Co-Operative Housing ... vs State Of Maharashtra And Ors. on 13 October, 2006; Equivalent citations: 2007 (4) Bom CR 421; Author: C D.Y.; Bench: C D.Y.
Para 5. Sub-section (1) of Section 23 of the Maharashtra Cooperative Societies' Act, I960, provides that no Society shall, without sufficient cause, refuse admission to membership to any person duly qualified therefor under the provisions of the Act and its bye-laws, observed thus, it was necessary for the authorities below to consider as to whether within the meaning of Sub-section (1) of section. 23, the Co-operative Society, had a sufficient cause for declining membership. This in the very nature of things ought to have been considered by the authority constituted to decide the issue under the Maharashtra Co-operative Societies' Act, 1960.
BEYOND CONTROVERSY IT CAN BE STATED THAT THE MANAGING COMMITTEE IS NOT AT LIBERTY TO IGNORE THE CATEGORICAL AND UNAMBIGUOUS MANDATE OF SECTION 22(2) AND SECTION 23(1) OF THE ACT; AND ALSO THE MANDATE OF BYE-LAW NO.35, 39(b)65(f).
MOREOVER, THE STATE LEGISLATURE HAS IN SECTION 73 IMPOSED A HEAVY AND POSITIVE DUTY UPON THE MANAGING COMMITTEE TO EXERCISE THEIR POWERS AND PERFORM THEIR DUTIES IMPOSED UPON THEM UNDER THE ACT, RULES AND BYE-LAWS.
RECORDING OF REASONS / INTERPRETATION OF LAWS
MY CLIENT SAYS AND SUBMITS THAT EVEN THE HIGHEST COURT OF THE COUNTRY, HIGH COURTS AND EVERY COURT OF THE COUNTRY, EVERY PUBLIC / ADMINISTRATIVE AUTHORITY ARE UNDER LEGAL OBLIGATION TO RECORD REASONS FOR THEIR DECISION. MY CLIENT OUTLINES HEREINAFTER MANY OF THE JUDGMENTS OF SC/HC EMPHASIZING THE NECESSITY OF REASONS IN THE DECISION MAKING PROCESS.
• The question as to whether an administrative authority should record reasons for its decisions has however come up for consideration before the Supreme Court in number of cases. Underlying the need the SC in Travancore Rayons Ltd Vs Union of India AIR 1971 SC 862 observed that the necessity to give sufficient reasons which disclose proper appreciation of the problem to be solved and the mental process by which the conclusion is reached where a non judicial authority exercises a judicial function is obvious. Here in this case the order of the Central Govt in rejecting a Revision u/s 36 of the Central Excises & Salt Act 1944 merely stated that the Govt having carefully considered the points made by the Applicant saw no reason to interfere with the order. The order of the Central Govt being laconic (brief) was held to be vitiated.
• The Supreme Court in Binapani Dei's case observed that if “there is power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such power. If the essentials of Justice be ignored and an order to the prejudice of a person is made, the order is a nullity. State of Orissa V Dr(miss) Binapani Dei AIR 1967 SC 1269;
• In Srilekha Vidyarthi versus State of UP reported in AIR 1991 SC 537, it was held by the Hon'ble SC that in order to satisfy the test of Article 14, every State action must be informed by reasons and it follows that an act uninformed by reasons, is arbitrary and arbitrariness is the very negation of the Rule of Law.
• Reasons must be recorded for exercising the powers even if the statute does not expressly enjoin upon the authority to do so. Consumer Action Group versus State of Tamilnadu, AIR 2000 SC 3060.
• In Schedule Caste and Weaker Sections Welfare Association (Regd) versus State of karnataka AIR 1991 SC 1117, it was observed by the SC that it is one of the fundamental rules of our constitutional set up that every citizen is protected against exercise of arbitrary authority by the State or its officers. An order becomes arbitrary when there is absence of adequate reasons for such decision.
• In M Krishna Swamy versus UOI (1992) 4 SCC 605 the SC held that non-recording of reasons by Statutory / public authority / functionary would render the decision arbitrary, unfair and unjust violating article 14 & 21 of the COI.
• A right to reason is an indispensable part of a sound system of judicial review. Anusayaben versus Jt CIT 256 ITR 685.
• Recording of reasons and disclosure thereof are not a mere idle formality.
Ajantha versus CBDT 102 ITR 281 (SC)
• The assessing, appellate, Revisional, and enforcement authorities must pass speaking orders giving the basis for their decision.
Gautam versus UOI ITR 530 (SC);
Ajantha versus CBDT 102 ITR 281 (SC);
Cf CIT versus Pillah 63 ITR 411, 415 (SC);
TRO versus gangadhar 234 (ITR) 188 (SC);
• The statutory authority must apply their mind to the case.
Bharat Nidhi versus UOI 92 ITR 1.
• Again, in the cases of Gautam versus reported in UOI ITR 530 (SC); Cf CIT versus Pillah reported in 63 ITR 411, 415 (SC); TRO versus gangadhar reported in 234 (ITR) 188 (SC), the Hon’ble Supreme Court said that the Assessing, Appellate, Revisional, and Enforcement authorities must pass speaking orders giving the basis for their decision. Without reasons, a party may speculate why the tribunal made an adverse decision and may have difficulty in deciding whether to appeal or otherwise challenge the decision. Similarly the Reviewing or Appellate Court may have difficulty in understanding rational for a decision without reasons. Absence of reasons may create disturbing impression of injustice.
• In the case of Rasiklal versus CWT reported in 121 ITR 219, it was held that the statutory authority must observe this rule (of giving reasons) in its proper spirit; mere pretence of compliance with it would not satisfy the requirement of law.
• The Hon’ble Supreme Court in the case reported in AIR 1979 SC 429, quoting Lords Halsbury – said, Discretion means when it is said that something is to be done within the discretion of the authorities, and that something is to be done according to the rules of reason and justice, and not according to private opinion, but according to law and not by humour.
• In an English case Associated Provincial Picture House Ltd Vs Wednesbury Corp, LORD GREENE, MR observed that it is an established law that a Person entrusted with a discretion must direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his considerations matters which are irrelevant to the matter that he has to consider. If he does not obey those rules, he may truly be said, and often is said, to be acting unreasonably.
• An American Supreme Court Justice B. CARDOZO in his book The Growth of the Law, opined – Complete freedom- unfettered and undirected- that never is. A thousand limitations- the product some of statute, some of precedent, some of vague tradition or of an immemorial technique- encompass and hedge us even when we think of ourselves as ranging freely and at large.
• Justice RAND in a Canadian case observed that in Public Regulations there is no such thing as absolute and untrammeled discretion, that is that action can be taken on any ground for any reason that can be suggested to the mind of the administrator.
• In the case of Ramdas Shriniwas Nayak V Union of Union reported in AIR 1995 BOM 235, the Hon’ble Bombay high Court, quoting the words of LORD CAIRNS, said, “Where a power is deposited with a Public officer for the purpose of being used for the benefit of persons who are specifically pointed out, and with regard to whom a definition is supplied of the condition upon which they are entitled, the power ought to be exercised, and the court will require it to be exercised.
• In the case of U.P. State Road Transport Corporation V Mohd Ismail reported in (1991) 3 SCC 239, the Hon’ble Supreme Court viewed that when statute confers discretion on a holder of public office that should be exercised reasonable and rationally.
• In the case of Ajantha versus CBDT reported in 102 ITR 281 (SC), the Hon’ble Supreme Court held that Recording of reasons and disclosure thereof are not a mere idle formality.
• In the case of The Siemens Engineering & Manufacturing Co. of India Ltd Vs The Union of India reported in AIR 1976 SC 1785, the Hon’ble Supreme Court held and said that due to proliferation of administrative law, administrative authorities are in some kind of cases replacing courts of law and that has made all the more necessary that such authorities should accord fair and proper hearing to the persons sought to be affected by their orders and give sufficiently clear and explicit reasons in support of the orders made by them.
• In the case of Maneka Gandhi Vs Union of India reported in AIR 1978 SC 597 at page 613, the Hon’ble Supreme Court held that the reasons if disclosed would be open to judicial scrutiny for ascertaining their nexus with the order, the refusal to disclose the reasons would equally be open to the scrutiny of the Court.
• In the case of Madhya Pradesh Industries Ltd Vs Union of India reported in AIR 1966 SC 671, the Hon’ble Supreme Court, Justice SUBBA RAO in a dissenting judgment once observed that if tribunals can make orders without giving reasons, the said powers in the hands of unscrupulous or dishonest officers may turn out to be a potent weapon for abuse of power. But if reasons for an order are given it will be an effective restraint on such abuse.
• In the case of Harinagar Sugar Mills Ltd Vs Shyam Sunder Jhunjhunwala reported in AIR 1961 SC 1669, the Hon’ble Supreme Court held that the quasi judicial authorities are enjoined with the duty and responsibility to see to it that in adjudicating upon proceedings which come up before them they pass properly reasoned orders so that those who are affected by such orders are assured that their case have received proper consideration at the hands of the said authorities and that such decisions have been reached according to law and have not been the result of caprice, whim or fancy and have been reached on ground of policy or expediency.
• In the case of Govt of India Vs Maxim A Lobo reported in (1991) 190 ITR 101, it was held that an order of Quasi Judicial nature without reasons is a wholly defective order in the eyes of law.
• In the case reported in AIR 1983 P & H 87., the Punjab High Court observed that abuse has an element of lack of bonafides so as to cause harm to one or undeservedly benefiting another.
• In the case of Balraj Taneja V Sunil Madan, it was observed that a Judgment/ Order must be a self contained document from which it should appear as to what were the facts of the case and what was the controversy which was tried to be settled by the Court. The process of reasoning by which Court came to a particular conclusion and decreed or dismissed the suit should clearly be reflected in the Judgment/Order.
• In the case of Maharashtra State Board of Secondary and Higher Education versus K S Gandhi reported in (1991) 2 SCC 716, it was held by Hon’ble Supreme Court that the reasons are harbinger between the mind of the maker of the order to the controversy in question and the decision or conclusion arrived at. Reasons exclude the chances to reach arbitrary, whimsical or capricious decision or conclusion. The reasons assure an in-built support to the conclusion/decision reached. When an order affect the right of a citizen or a person irrespective of fact whether it is quasi judicial or administrative order and unless the rule expressly or by necessary implication excludes recording of reasons, it is implicit that the principles of natural justice or fair play require recording of germane and precise relevant reasons as a part of fair procedure. Recording of reasons is also an assurance that the authority concerned has applied its mind to the facts on record. Reasons also aids the Appellate or Revisional Authority to see whether the maker of the order, Judgment, decree has justly meet out justice to the aggrieved person.
• In the case of Consumer Action Group versus State of Tamilnadu, reported in AIR 2000 SC 3060, the Hon’ble Supreme Court said that Reasons must be recorded for exercising the powers even if the statute does not expressly enjoins upon the authority to do so.
• There is some Australian authority to support the need to give reasons. In 1949, the High Court of Australia held that if a Minister was under a duty to act in a quasi judicial manner in revoking a license the minister would have to disclose to the licensee his reasons for wishing to do so. Election Importing Co. Pty Ltd versus Courtice (1949) 80 CLR 657
• English Judge LORD HUDSON in the landmark Padfield’s Case was of the view that although it is true that the Minister is not bound to give his reasons for refusing to exercise his discretion, yet when the circumstances indicates a genuine complaint for which the appropriate remedy is provided, the Minister would not escape from the possibility of control by Mandamus (a Writ) for adopting a negative attitude without explanation. Padfield Vs Minister of Agriculture, Fisheries and Food [1968] AC 997; [1968] 1 ALL ER 694.
• Reasons disclose how the mind is applied to the Application submitted for a decision and reveal a rational nexus between the Application considered and conclusions reached.
• Discretion in reality means a power given to a person with the authority to choose between two or more alternatives or possibilities each of which is lawful and permissible. The concept of discretion imports a duty to be fair, candid and unprejudiced; not arbitrary, capricious or biased; much less, warped by resentment or personal dislike.
• Recording of reasons will show application of mind and probably this recording of reasons is the only remaining visible safeguard against possible misuse of powers conferred upon those who manage the affairs of the Society.
IN THE LIGHT OF AFORESAID DISCUSSION ON REASONS AND STATUTORY PROVISIONS DISCUSSED HEREINBEFORE, IT IS BENEFICIAL TO THROW LIGHT AS HOW THE PROVISIONS OF LAW ARE INTERPRETED AND APPLIED.
The intention of the legislature is manifested in the language which the legislature has chosen to employ. If the words of a statute are clear or unambiguous, such words must be given their ordinary, natural and recognized meaning attributed to them unless they have acquired a technical or special legal meaning.
The meaning of the statute is to be gathered from the words used in the statute itself. If the intention of the legislature is clear, that intention constitutes the law. An statute is the authentic repository of the legislative will and the function of the court is to interpret it according to the intent of the legislature.
Each word, phrase or sentence in a Statute is to be considered in the light of the general purpose of the Act itself. The Legislature indicates its intention by the language it chooses to employ.
The factors which can be taken into consideration to ascertain the intention of the legislature are – the history of the Act, the reasons which led to the passing of the Act, the mischief which had to be cured and other provisions of the statute. In order to find out the legislative intent, we have to find out what was the mischief that the legislature wanted to remedy.
The Legislature is deemed not to waste its words or to say anything in vain. It should not be assumed that the Legislature used language without any purpose. It is a settled principle of construction that every word in a Statute is employed with some purpose in order to further the objectives laid down in the preamble of the Act itself. We must assume that the Legislature deliberately used that expression. The words in an Act of Parliament must be construed in such a manner as to give them a sensible meaning.
It is the duty of the Court to make such construction of a Statute which shall suppress the mischief and advance the remedy. The courts must in general must take it absolutely for granted that the Legislature has said what it meant and meant what it has said. It is a settled principle of construction that every word in a Statute is employed with some purpose in order to further the objectives laid down in the preamble of the Act itself.
I crave leave to cite here few judgments of Supreme Court which speaks about as how the provisions of a Statute are to be understood and dealt with.
• The dominant purpose in construing the statute is to ascertain the intention of the legislature. This intention, and, therefore, the meaning of the statute, is primarily to be sought in the words used in the statute itself., which must, if they are plain and unambiguous be applied as they stand, however strongly it may be suspected that the result does not represent the real intention of the legislature. In approaching the matter from this angle, it is a duty of the court to give fair and full effect to statute which is plain and unambiguous without regard to particular consequence in a special case. Harchand Singh versus Smt Shivarani, 1981 All WC 273 (SC) (per D A Desai J.).
• The Court endeavours to interpret the provision of a statute in a manner that will achieve the object of the provision, avoid mischief and advance the cause of justice, make the law workable, enforceable and best harmonize with and effectuate the object of the legislation.
• Each word, phrase, or sentence is to be considered in the light of the general purpose of the Act itself. That is the rule of purposive legislation. AIR 1953 SC 274.
• A provision has to be read and understood in the context of the entire scheme of the enactment. AIR 1995 SC 2329.
• Subha Rao, C.J. speaking for the Bench in Chandra Mohan v. State of UP, has pointed out that the fundamental rule of interpretation is that in construing the provisions of the Constitution or the Act of Parliament, the Court "will have to find out the express intention from the words of the Constitution or the Act, as the case may be.
• In the case of Nothman versus Barnet Council, [1978] 1 WLR 220, quoting Lord Denning, in all cases now in interpretation of statutes, we adopt such a construction as will “promote the general legislative purpose” underlying the provision. There is no reason why we should not follow it at once without waiting for a statute to tell us.
• The observation of Justice Das Gupta also deserves to be noted. The intention of the legislature has always to be gathered by words used by it, giving to the words- plain, normal, grammatical meaning.
• In the field of Interpretation of Statutes, the Court always presume that the legislature inserted part of it with a purpose and the legislative intention is that every part of the statute should have effect. [ Sankar Ram & Co. V Kasi Naikar, (2003) 11 SCC 699]
• Interpretation should make sense and not nonsense of the legislation, AIR 1954 Nag 43.
• Where the language of the section clearly expresses the intention of the Legislature, it must be given effect to. State versus Ramjivan Kaluram, AIR 1962 Bom 8, 12; State of Punjab versus Ajaib Singh, 1953 SCR 254, 264 (Das J.); Mysore State Electricity Board versus Bangalore Woolen etc mills Ltd AIR 1963 SC 1128.
• In the field of Interpretation of Statutes, the Court always presume that the legislature inserted part of it with a purpose and the legislative intention is that every part of the statute should have effect. [ Sankar Ram & Co. V Kasi Naikar, (2003) 11 SCC 699]
• Justice Gajendragadkar said in a case that the first and primary rule of interpretation is that the intention of the Legislature must be found in the words used in the Legislation itself. [ kanailal Sur V Paramnidhi Sadukan, AIR 1957 ]
• When a language is plain and unambiguous and admits of only one meaning no question of construction of a statute arises for the Act speak for itself. [St of UP V Vijay Anand Maharaj, AIR 1963] ; It is not open to first create an ambiguity and then look for some principles of Interpretations. [ Patangrao Kadam V Prithviraj S Deshmukh]
• When the words are capable of giving a plain meaning, it is said that the Courts should not busy themselves with supposed intention or with the policy underlying the Statute. [Pakala NArayaanaswamy V Emperor, AIR 1939 PC 47]; Justice Gajendragadkar in Gurmej Singh V Pratap Singh Kairon, AIR 1960.]
• When the Word SHALL is used in a statute the presumption is that its use is imperative and not merely directory, particularly when it is addressed to a court or to a public servant and when a right or benefit depends on its imperative use.[ CPC 1908- Order 14, Rule 2.]
SUBMISSIONS: IN THE LIGHT OF AFORESAID ALL DISCUSSIONS, MY CLIENT SUBMITS THAT –
1. The “decision” communicated by the Society vide its letter dated ……….. to my client Mr. ……… does not have the requisite elements of Section 22(2) and Section 23(1) and Bye law Nos.39(b) and is in manifest breach of Bye law No.65(f) and therefore said letter is not a “decision of the Society / Managing Committee” in the eyes of law.
2. And therefore, whereas the Society has failed to communicate its “decision” within three months, contemplated and mandated under Section 22(2) and Bye law no.39(c), to the applicant, i.e. to my client the applicant herein, my client is deemed to have been admitted as Member of the Society, as contemplated and directed under section 22(2) of the Act and Bye law no.39(c).
3. My client further submits that, my client is not only entitled to the transfer of shares and interest of the deceased member of the Society and be admitted as a member of the Society for being a legal heir of the deceased, but my client is also entitled to the transfer of shares and interest of the deceased member of the Society and be admitted as a member of the Society being also 1st Nominee of the said deceased member of the Society in the nomination so filed before the Society.
4. My client says that conjoint reading of Section 25, 25-A, 30, 38, Rule 32 and 33 and Bye law Nos. 61 and 144 obliges the Managing Committee of the Society that in the event of death of a member of the Society, the nominee/s of the deceased member immediately takes place in the list of Members, maintained by the Society in Form ‘J’.
5. Notwithstanding the “decision” of the Society, my client is within his right to make an application for to be admitted as a member of the Society being a lawful nominee of the deceased member and then in that situation by virtue of Section 30, Bye law No. 34 and all other enabling provisions of MCS Act, the Rules and the Bye laws and the Judicial pronouncements stated hereinafter, the Managing committee will have no option but to transfer the shares and interest of the deceased member in the capital / property of the Society to my client.
6. However, whereas my client so as to avoid unwarranted conflict with the Managing committee, in the exercise of his aforesaid right, is making Application as a Nominee, and, my client, submits his Application under Form ……… and all requisite documents, for transfer of shares and interest of the deceased member of the Society in my client’s name, being a lawful one of the nominee. The Original Share certificate and NOC of the legal heirs are already lying with the Society. The Society, in the backdrop of my client’s this Application, may withdraw previous application of my client dated ……………
JUDGMENTS ON COMPULSORY TRANSFER OF SHARES AND INTEREST OF THE DECEASED TO THE NOMINEE
Om Siddharaj Co-Operative ... vs The State Of Maharashtra & Others on 24 June, 1998 Equivalent citations: 1998 (4) Bom CR 506; Author:B Saraf; Bench: . B Saraf, A Sakhare
Para 4. On a plain reading of section 30, it is clear that on death of a member of the society, it is incumbent on the society to transfer the share or interest of the deceased member to" a person or persons nominated in accordance with the Rules". It is only in the event of there being no nomination of any person, the society can transfer the share or interest of the deceased member to "such person as may appear to the committee to be the heir or legal representative" of the deceased member. The language of the section is clear and unambiguous. If a person is nominated in accordance with the Rules, the society is obliged to transfer the "share and interest of the deceased member" to such nominee. It is no part of the business of the society in that case to find out the relation of the nominee with the deceased member or to ascertain and find out the heir or legal representatives of the deceased member.
Para 5. It was, therefore, incumbent upon the society, after the death of the member, to transfer his share and interest to the nominee and to deal with him for all purposes in place of the deceased member. We are in agreement with the conclusion of the teamed Single Judge in the above decision that once there is a valid nomination, the society is obliged to deal with the nominee.
Chitra Haldipur vs Shahid Bhagat Singh CHS Ltd. And ... on 7 October, 2006. Equivalent citations: 2007 (4) Bom CR 432; Bench: D.Y. Chandrachud.
There can be no dispute about the principle of law that on the death of the member of the society, the society is required to transfer the share or interest of the deceased member to the person who is nominated in accordance with the rules. If no person is nominated the Society has to transfer the share or interest to an heir or to the legal representative of the deceased member.
LEGAL EXPECTATIONS FROM THE MANAGING COMMITTEE: In the aforesaid background, I on behalf of my client, call upon the Managing Committee of the Society that –
1. The Managing Committee to transfer shares and interest of the deceased member in my client’s name for being a lawful nominee, by scrupulously following the due process of law stipulated under the MCs Act, Rules and the Bye laws.
CONSEQUENCES THAT MAY FOLLOW IF MANAGING COMMITTEE DOESN’T COMPLY TO LEGAL EXPECTATION STATED HEREINBEFORE:
1. My client under the empowering Section 79A of the MCS Act, will make a Complaint to the State Govt of Maharashtra, to exercise its such powers as specifically conferred upon it under the said Section;
2. My client under the empowering Section 78 of the MCS Act, will also make a Complaint to the Registrar / Dy Registrar, for the removal of Managing Committee, for being negligent in the performance of the duties imposed on it by this Act, the rules and the bye-laws; and committing acts which is prejudicial to the interests of its members, and are not discharging its functions properly and diligently, as mandated under Section 73 of the MCS Act.
3. My client will file a Writ Petition in the High Court if necessary, for appropriate relief.
4. Needless to say, my client, in addition to aforesaid steps, is at liberty to adopt all Civil and Criminal proceedings against the Managing Committee members as permissible under the laws of the land, entirely at the cost and consequences of Society and all such costs shall be ultimately recovered from every Managing Committee member.
JUDGMENTS ON WHO TRIES TO MISLEAD THE COURT AND WHO PROLONG THE LITIGATION
WHEREAS IT IS SEEN THAT ERRING PARTY TO THE LITIGATION TAKES FOR GRANTED THE MACHINERY AND THE AUTHORITY OF LAW AND ADOPT MANY DILATORY TACTICS TO PROLONG THE LITIGATION BY BLATANTLY MISREPRESENTING FACTS, MAKES INCONSISTENT STATEMENTS ETC. Nevertheless, my clients may inform you that there are ample provisions in Indian Penal Code 1860 to deal with whoever interferes in the administration of justice and provides for both imprisonment and fine for such interference. Sometime Courts invoke its Contempt jurisdiction to punish those who mislead the court by filing false affidavit. My clients will not hesitate to invoke applicable provisions of law if mischief with the administration of justice is undertaken.
PLEASE FIND BELOW SOME OF THE PROVISIONS DEALING WITH ADMINISTRATION OF COURT PROCEEDINGS.
Section 181 of Indian Penal Code declares that- when a person, who is under legal obligation, knowingly make any statement, on Oath, or by affirmation, before a Public Servant, statement which he knew that it is false or statement which he believes that it is not true, and when he is bound to state the truth, commits the offence under this section.
The punishment for this offence is imprisonment which may extend to three years, and will also be fined.
Section 191 of Indian Penal Code declares that when a person, who is under legal obligation, either on oath or under any provision of law, to state the truth, to declare upon any subject, knowingly makes false statement, the statement which he believes that it is false or he believes that it is not true, commits the offence under this section.
The punishment for this offence is imprisonment which may extend to Seven years, and will also be fined.
Case Laws: Offences relating to making false statement in the sworn Affidavits comes within the purview of this section.
Kori Gope versus Manmohan Das, AIR 1928 Pat 161 : 29 CrLJ 111 : 106 IC 703
Ranjit Singh versus State of PEPSU, AIR 1959 SC 843 : 1959 CrLJ 1124
Written statements and applications: A person filing a written statement is bound by law to state the truth and if he makes a statement which is false to his knowledge or belief, or which he believes not to be true, he is guilty of this offence. Mehrban Singh (1884) 6 All 626, Padam Singh, (1930) 52 All 856.
Section 196 of Indian Penal Code declares that when a person give or attempt to give any evidence as true or genuine evidence, knowing that the evidence he is giving is false or fabricated, to obstruct in the course of justice, commits the offence under this section.
The punishment for this offence is imprisonment which may extend to Seven years, and will also be fined.
Section 199 of Indian Penal Code declares that when a person voluntarily makes a declaration to a Court or to any public Servant, who are bound to take such declaration as evidence, and the person knowingly makes false statement in such declaration, the statement which he believed it to be false or he believed it to be not true. Also, the false statement so made must touch a point material to the object of such declaration, commits the offence under this section.
The punishment for this offence is imprisonment which may extend to Seven years, and will also be fined.
Case Laws: False Affidavit: M S Jaggi 1983 CrLJ 1527 (Ori)
Deputy GM Inter State Bus Terminal versus Smt Sudarshan Kumari, 1997 CrLJ 1931 (SC) : AIR 1997 SC 1902 : 1997 (3) SCC 496 : Gadhi versus Krishnaraja, 2000 CrLJ 1590 (Mad)
Baddu Khan versus Emperor, AIR 1928 All 182 : 29 CrLJ 336
Criminal Contempt of Courts: In the case of Dhananjay Sharma v State of Haryana & Ors., (1995) 3 SCC 757, the Supreme Court has held, inter alia, as- The filing of false affidavits in judicial proceedings in any court of law exposes the intention of the concerned party in perverting the course of justice. The due process of law cannot be permitted to be slighted nor the majesty of law be made a mockery by such acts or conduct on the part of the parties to the litigation or even while appearing as witnesses.
Filing of false affidavits or making false statement on oath in Courts aims at striking a blow at the Rule of Law and no court can ignore such conduct which has the tendency to shake public confidence in the judicial institutions because the very structure of an ordered life is put at stake." [See also, Rita Markandey v Surjit Singh Arora, (1996) 6 SCC 14]
In the case of Murray & Co. vs Ashok Kr. Newatia & Anr, AIR 2000 SC 833, 10. The right to inflict punishment for contempt of Court in terms of the Act of 1971 on to the Law Courts has been for the purposes of ensuring the rule of law and orderly administration of justice. This is a special Jurisdiction conferred on to the law courts to punish an offender for his contemptuous conduct or obstruction to majesty of law. Litigant public ought to be extremely careful and cautious in the matter of making statements before Courts of Law.
In the case of Afzal v. State of Haryana 1995 Supp (2) SCC 388 wherein this Court observed: It cannot be lightly brushed aside and the tendency to file false affidavits or fabricated documents or forgery of the document and placing them as part of the record of the Court are matters of grave and serious concern.
JUDGMENTS ON IMPOSITION OF HEAVY COSTS ON LITIGANTS TAKING FALSE DEFENSE / PLEAS
LITIGANT TAKING FALSE DEFENSE – DIRECTED TO PAY COST OF RS.50,000/ AS COST – (2004) 2 SCC 278
AWARD OF COSTS WHERE THE LITIGANT WAS UNNECESSARILY DRAGGED TO COURT – (2003) 7 SCC 270, 180
THE PRIMARY OBJECT OF LEVYING COST UNDER SECTION 35, 35A CPC IS TO RECOMPENSE A LITIGANT FOR THE EXPENSES INCURRED BY HIM IN LITIGATION TO VINDICATE OR DEFEND HIS RIGHTS – (2009) 2 SCC 656, 659.
LITIGANT TAKING FALSE PLEA – PUNITIVE COSTS – 2001 AIHC 3500, 3509 (BOM)
WHENEVER ANY PERSON WITH MALAFIDE INTENTION AND DILATORY TACTICS TRIED TO DELAY JUSTICE, THEN IN SUCH CIRCUMSTANCES, HEAVY COST COULD BE IMPOSED UPON THE SAME.
• NATWAR TEXTILES PROCESSORS PVT LTD VERSUS UOI AIR 1995 SC 2256;
• M/S SRF LTD V. M/S GARWARE PLASTICS & POLYESTERS LTD AIR 1995 SC 2228;
• SALEM ADVOCATE BAR ASSOCIATION V. STATE OF UOI AIR 2005 SC 3353.
COST AWARDED SHOULD NOT BE NOMINAL BUT SUFFICIENT TO MEET THE EXPENSES INCURRED BY THE SUCCESSFUL PARTY – 2004 AIHC 2693 (RAJ) (DB)
RS.5.00 LACS IMPOSED AS COSTS ON THE ERRING OFFICIALS OF THE DEVELOPMENT AUTHORITY FOR HARASSING THE PETITIONER – A 2005 DEL 150 (DB)
COSTS AWARDED THROUGHOUT FOR PROLONGING THE LITIGATION – ANGUISH EXPRESSED BY SC – (2004) 1 SCC 287; (2005) 5 SCC 375; (2005) 5 SCC 543; (2005) 5 SCC 527
PROLONGING LITIGATION – IMPOSITION OF HEAVY COSTS – (2005) 1 SCC 705
THE COURT MAY AWARD COSTS BY WAY OF COMPENSATION – A 2005 NOC 193 (KER) (DB)
NO LIMIT FIXED FOR IMPOSING EXAMPLARY COSTS – 2001 AIHC 3500, 3508 (BOM)
COSTS IMPOSED SHOULD BE ACTUALLY INCURRED BY THE SUCCESSFUL PARTY – (2005) 6 SCC 344, 369
MY CLIENT’S FINAL WORDS
1. My client requests the members of Managing Committee to shun the path of conflict and adopt the spirit of co-operation and do what is lawful, failing which the ………… Apartment Co-operative Housing Society Ltd will be thrown into unwarranted and unnecessary litigation.
2. The Managing committee members may be empowered to spend lacs of rupees on court litigations, but every penny spend by the Society on aforesaid unwarranted and unnecessary litigation will sought to be recovered personally from every Managing Committee Member, for the said litigation had ensued on account of negligence and omission to perform duties and functions cast upon the Managing committee members, under the Act, Rules, and the bye law of the Society; and despite being well aware that they are manifestly acting illegally, they are acting against the mandate of MCS Act, MCS Rules and the Bye laws of the Society, and yet they have deliberately thrown the Society into unwarranted and unnecessary litigation.
Thanking you in anticipation of your effective action in this regard.
Yours faithfully,
Sandeep Jalan
Advocate.
ANNEXURE A
MCS Act, 1960
Section 22(1) - Person who may become member: Subject to the provisions of section24, no person shall be admitted as a member of a society except the following, that is to say-- (a)an individual, who is competent to contract under the Indian Contract Act, 1872;
Section 22(2) Where a person is refused admission as a member of a society, the decision (with the reasons therefor) shall be communicated to that person within fifteen days of the date of the decision, or within three months 5 [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 been6 [admitted] as a member of the society.] 7 [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.]
Section 23 - Open membership
(1) No society shall, without sufficient cause, refuse admission to membership to any person duly qualified therefor under the provisions of this Act and its by-laws.
Section 23(2) Any person aggrieved by the decision of a society, refusing him admission to its membership, may appeal to the Registrar. 3[Every such appeal, as far, as possible, be disposed of by the Registrar within a period of three months from the date of its receipt:
Provided that, where such appeal is not so disposed of within the said period of three months, the Registrar shall record the reasons for the delay.]
(3) The decision of the Registrar in appeal shall be final and the Registrar shall communicate his decision to the parties within fifteen days from the date thereof.
Section 25: Cessation of Membership: A person shall cease to be a member of a society on his resignation from the membership thereof being accepted, or on the transfer of the whole of his share or interest in the society to another member, or on his death, or removal or expulsion1[from the society, or where a firm, company, any other corporate body, society or trust is a member, on its dissolution or ceasing to exist.]
Section 25A - Removal of names of members from membership register
The committee of a society shall remove from the register of its members the name of a person who has ceased to be a member or who stands disqualified by or under the provisions of this Act for being the member or continuing to be the member of a society:
Provided that, if the society does not comply with the requirement of this section, the
Registrar shall direct such society to remove the name of such person, and the society shall be bound to comply with such direction.
Section 30 - Transfer of interest on death of member:
(1) On the death of a member of a society, the society shall transfer of the deceased member to a person or persons nominated in or, if no person has been so nominated to such person as may be the heir or legal representative of the deceased member.
Section 38 - Register of members
(1) Every society shall keep a register of its members and enter therein the following particulars, that is to say,--
(a) the name, address and occupation of each member;
(b) in the case of a society having share capital, the share held by each member;
(c) the date on which each person was admitted a member;
(d) the date on which any person ceased to be a member; and
(e) such other particulars as may be prescribed:
Provided that, where a society has by or under this Act, permitted a member to transfer his share or interest on death to any person, the register shall also show against the member concerned the name of the person entitled to the share or interest of the member, and the date on which the nomination was recorded.
(2) The register shall be prima facie evidence of the date on which any person was admitted to membership, and of the date on which he ceased to be a member.
Section 73 - Committee, its powers and functions
1 [(1)] The management of every society shall vest in a committee, constituted in accordance with this Act, the rules and by-laws, which shall exercise such powers and perform such duties as may be conferred or imposed respectively by this Act, the rules and the by-laws.
[(1AB) The members of the committee shall be jointly and severally responsible for all the decisions taken by the committee during its term relating to the business of the society. The members of the committee shall be jointly and severally responsible for all the acts and omissions detrimental to the interest of the society. Every such member shall execute a bond to that effect within fifteen days of his assuming the office, in the form as specified by the State Government by general or special order. The member who fails to execute such bond within the specified period shall be demand to have vacated his office as a member of the committee]:
Section 78.1 [Power of removal of committee or member, thereof]
2 [(1) If, in the opinion of the Registrar, the committee of any society or any member of such committee makes default, or is negligent in the performance of the duties imposed on it or him by this Act or the rules or the bye-laws, or commits any act which is prejudicial to the interests of the society or its members, or willfully disobeys directions issued by the State Government, or by the Registrar for the purposes of securing proper implementation of co-operative policy and development programme approved or undertaken by the State Government or is otherwise not discharging its or his functions properly and diligently 3 [or where a situation has arisen in which the committee or any member of such committee refuses or has ceased to discharge its or his functions] and the business of the society has or is likely to come to a stand-still or where any member of such committee stands disqualified by or under this Act for being a member, the Registrar may, after giving the committee or the member, as the case may be, an opportunity of stating its or his objections, if any, within 15 days from the date of receipt of notice and after consultation with the federal society to which the society is affiliated, by order--
(a) (i) remove the committee, and
Section 79 - Registrar's power to enforce performance of obligations
(2) Where any society is required to take any action under this Act, the rules or the byelaws, or to comply with an order made under the foregoing sub-section, and such action is not taken--
(a) within the time provided in this Act, the rules or the bye laws, or the order as the case may be, or
(b) where no time is so provided, within such time, having regard to the nature and extent of the action to be taken, as the Registrar may specify by notice in writing. the Registrar may himself, or through a person authorized by him, take such action, at the expense of the society; and such expense shall be recoverable from the society as if it were an arrear of land revenue.
Section 79A - Government's power to give directions in the public interest, etc.
(1) 3 [If the State Government, on receipt of a report from the Registrar or otherwise, is satisfied] that in the public interest or for the purposes of securing proper implementation of co-operative production and other development programmes approved or undertaken by Government, or to secure the proper management of the business of the society generally, or for preventing the affairs of the society being conducted in a manner detrimental to the interests of the members or of the depositors or the creditors thereof, it is necessary to issue directions to any class of societies generally or to any society or societies in particular, 4 [the State Government may issue] directions to them from time to time, and all societies or the societies concerned, as the case may be, shall be bound to comply with such directions.
Section 89A - Power to inspect working of society
(1) It shall be competent for the Registrar to inspect or cause to be inspected the working of any society to ensure that--
(a) The provisions of the Act, rules and bye-laws of the society are being properly followed by the society;
MCS Rules, 1961
Rule 19A: Procedure for tendering application to the Registrar for membership under section 23(1 A):- (1) Where a society has refused to accept the application for membership from eligible person, such person shall tender an application to the Registrar in Form 4H-T together with requisite share money and entrance fee
(2) The Registrar, on receipt of such application, shall forward the same to the society concerned together with requisite share money and entrance fee within thirty days from the date of its receipt.
(3) The Society shall take the decision and communicate the same to the applicant within sixty days from the date of receipt of such application as provided in sub-rule (2) and if no decision is communicated to the applicant within the said period of sixty days, the applicant shall be deemed to have been admitted as a member of such society.
(4) In case the society refuses to admit the applicant as its member, it shall communicate the decision within the period of sixty days mentioned in sub-rule (3) with reasons therefor and refund the share money and entrance fee with such communication. If the society fails to refund the said amount, it shall be liable to pay interest at 15% per annum on the said amount from the date of such communication and the said amount if not paid, shall be recovered as an arrears of land revenue.]
Rule 32. Register of Members:- The register of members to be kept by every society under sub section (i) of Section 38 shall be in Form ‘I’.
Rule 33. List of Members:- The list of members to be kept by every society under Section 39 shall be in Form ‘J’
Rule 64. Procedure for appointment, suspension, and removal of members of the committee and other officers, etc:- (J) Notwithstanding anything contained in the by-laws of a society but subject to the provisions of Section 78, the Registrar may l[by an order stating the reasons therefor;]
(a) Remove the committee of a society and appoint a new committee in its place consisting of three or more members of the society to manage the affairs of the society; or
(b) Remove the committee and appoint one or more administrators, who need not be members of the society, to manage the affairs of the society; or
(c) Remove any member of the committee of a society and appoint in his place such other member as he may deem fit.
(2) Before making any order under sub-rule (I), the Registrar shall consult the federal society to which the society is affiliated and give an opportunity to the committee or the member concerned to show cause, within fifteen days from the date of issue of notice, why such an order shall not be made.
(3) The member appointed under clause (c) of sub-rule (J) shall hold office so long as the member in whose place he is appointed would have held office, if the vacancy had not occurred.
(4) Notwithstanding anything contained in the by-laws regarding holding any meeting of the society, the Registrar may, by special or general order specify the procedure for holding meetings of the Committee appointed by him under clause (a) of sub-rule (J).
(5) Immediately after the appointment of a new committee or an administrator or administrators under sub-rule (I), the committee in whose place such appointment is made and officers of the society shall give the new committee or the administrator or administrators, as the case may be, the of the property, documents and accounts of the society .
Bye Laws
Bye law No.17: Eligibility of individuals for membership of the Society – (a) No individual shall be admitted as a member of a Society except the following: (1) who is competent to contract under the Indian Contract Act, 1872;
Bye law No.19: Conditions for individuals desiring to be members of the Society – (A) An individual who is eligible to the member of the Society and who has applied to the membership of the Society in the prescribed form, may be admitted as member by the Committee on complying with the following conditions:-
(i) he has fully paid the value of at least five shares of the Society, alongwith his application for membership;
(ii) he has paid the entrance fee of Rs.100/- alongwith the application for membership;
(iii) he has given the application, as prescribed the particulars in regard to any house, plot or flat owned by him or any of the members of his family, anywhere in the area of operation of the Society;
(iv) he has given the undertaking in the prescribed form to the effect that he shall use the flat for the purpose for which it was purchased by him;
(v) he has furnished an undertaking in the prescribed form, if he has no independent source of income;
(vi) he has sent, alongwith the application for membership of the Society a certified copy of the agreement, duly stamped entered into by him with the promoter (Builder) or Transferor under Section 4 of the Ownership Flats Act;
(vii) he has furnished such other undertakings / declarations, in the prescribed forms as are required under any law for the time being in force and such other information as is required under the bye laws of the Society alongwith the application for membership.
Bye law No.34: Subject to the provisions of the Section 30 of MCS Act, 1960, Bye law No.17A, or 19, on the death of a member, the Society shall transfer the shares and interest of the deceased member in the capital / property of the Society to the nominee / nominees and in proportion with the shares and interest held by the deceased member, in case the property is purchased by member and associate member jointly.
In the event of death of a member, Nominee / Nominees shall submit the application for membership within six months from the death of a member.
If there are more than one nominee, on the death of a member, such Nominees shall make joint application to the Society and indicate the name of the Nominee who should be enrolled as a member. The other Nominees shall be enrolled as Joint / Associate members unless the nominees indicate otherwise.
The Nominees shall also file an indemnity Bond in the prescribed form indemnifying the Society against any claims made to the Shares and interest of the deceased member in the capital / property of the Society, by any of them, in case only one Nominee is indicated by the Nominees for membership of the Society.
Bye law No.35: Transfer of Shares and interest of the deceased member in the capital / property of the Society to the heir – Where a member of the Society dies without making a nomination, or no nominees comes forward for transfer, the Society shall invite within one month from the information of his death, claims or objections to the proposed transfer of shares and interest of the deceased member, in the capital / property of the Society, by a Public Notice, in the prescribed form, exhibited on the Notice Board of the Society. It shall also publish such Notice in at least two local newspapers, having wide circulation. The entire expenses of publication of the Notice shall be recoverable from the value of shares and interest of the deceased member in the capital / property of the Society. After taking into consideration the claims or objections received, in response to the said Notice, and after making such inquiries as the Committee considers proper in the circumstances prevailing, the Committee shall decide as to the person, who in its opinion is the heir or legal representative of the deceased member. Such a person will be eligible to be a member of the Society subject to the provisions of the Bye-laws Nos. 17(a) or 19, provided that he gives an Indemnity Bond alongwith his application for membership in the prescribed form, indemnifying the Society against any claims made to the shares and interest of the deceased member in the capital / property of the Society, at any time in future by any person.
If there are more claimants than one, they shall be asked to make the affidavit as to who should become a member of the Society and such person, named in the affidavit shall furnish the indemnity Bond as indicated above alongwith application for membership, referred to above. If however, the Committee is not able to decide as to the person who is the heir / legal representative of the deceased member or the claimant do not come to the agreement, as to who should become the member of the Society, the Committee shall call upon them to produce Succession certificate from the competent court. If however, there is no claimant, the shares and interest of the deceased member in the capital / property of the Society shall vest in the Society.
Bye law No.39:
(a) The procedure for disposal of Applications for transfer of shares and interest of members in the capital / property of the Society as laid down under the Bye law No.65 shall be followed by the Secretary and the committee of the Society.
(b) A meeting of the Committee or the General body, as the case may be, shall not refuse any application for admission to membership of transfer of shares and interest in the capital / property of the Society except on the ground of non – compliance of the provisions of the Act, Rules and the Bye laws of the Society, or any other law or order issued by the Govt in exercise of the statutory powers vested in it.
(c) If the decision of the Committee /General body meeting, as the case may be, on the Application for transfer of shares and interest in the capital / property of the Society is not communicated to the Applicant within 3 months of its receipt, the transfer application shall be deemed to have been accepted and the transferee shall be deemed to have been admitted as a member of the Society as provided under section 22(2) of the Act.
Bye law No.61: The Committee shall record the fact of cessation of member’s membership of the Society under the Bye law No.57 and of associate and nominal member’s membership respectively under the Bye laws Nos. 58, 59 and 60 in the minutes of its meeting and accordingly the Secretary of the Society shall inform the concerned member in writing within 7 days of the date of such decision of the committee.
Bye law No.65: Disposal of applications:
(a) All the applications for (i) admission to membership of the Society, including Associate and Nominal membership, (ii) approval to the transfer of shares and interest in the capital / property of the Society, (iii) permission for sub-letting or giving flats or parts thereof on leave and license or care taker basis, (iv) permission for additions and alterations in the flat, (v) allotment of parking space and stilts, (vi) permission for exchange of flats, (vii) permission for holding additional flats, (viii) permission for assigning, mortgaging or creating charge or interest in flats, (ix) permission for use of terrace, (x) for any other purpose provided under the bye law but not specifically mentioned above, shall be addressed to the Secretary of the Society. Every application received by the Secretary shall be acknowledged by him;
(b) on receipt of the applications, the Secretary of the Society shall scrutinize them and bring any shortcoming therein to the notice of the member concerned within 7 days of their receipt for compliance;
(c) The Secretary shall place all the applications, complete in all respects, or incomplete, before the meeting of the Committee or the general body, as the case may be, held next after receipt of the applications;
(d) The Committee or the general body as the case may be, shall consider all such applications at its meeting and take decisions thereon;
(e) The Committee shall ensure that all the applications received by the Secretary of the Society are disposed off within the maximum period of 3 months from the date of their receipt;
(f) If the Committee or the general body, as the case may be, rejects any application, it shall record, in the minutes of its meeting, the reasons for rejection of the application;
(g) The Secretary of the Society shall communicate the decision of the Committee or the general body as the case may be, to the applicant concerned, within 15 days of the decision of the Committee or the general body as the case may be. If the Society does not communicate the decision to the applicant within three months from the date of receipt of application for membership, including nominal or associate membership, the applicant shall deemed to have been admitted as a member as provided under section 22(2) of the Act.
Bye law No.113: Exercise of powers by the Committee: subject to the direction given or regulation made by a meeting of the general body of the Society, the Committee shall exercise all powers, expressly conferred on it, and discharge all functions entrusted to it under the Bye law No.139.
Bye law No.138: The Members of the Committee shall be jointly and severally liable for making good any loss which the Society may suffer on account of their negligence or omission to perform any of the duties and functions cast on them, under the Act, Rules, and the bye law of the Society.
Bye law No.139: Power, duties and functions of the Committee: Subject to the Bye law No.113, the Committee shall exercise the powers and discharge the functions and duties as mentioned hereunder: (8) To consider and decide the applications for various purposes received by the Society.
Bye law No.139(37) To take the decision on the complaint application in the coming Committee meeting and inform the concerned member of its decision accordingly.
Bye law No.141: Functions of the Secretary: The functions of the Secretary of the Society shall be those mentioned below: (8) To deal with the applications for various purposes received by the Society. (13) To record the minutes of all the meetings of the general body. (22) To discharge such other function under the Act, the Rules and the Bye laws of the Society and directions of the Committee, as are not expressly not mentioned hereinabove. (23) To place the complaint application with facts, before the Committee in the coming meeting.
Bye Law No.144: Unless otherwise decided by the Committee, it shall be the responsibility of the Secretary of the Society to maintain and keep up to date the account books, registers, and other records mentioned under Bye laws Nos 142 and 143.
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