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Procedure for Expulsion of a member and their Rights in a Co-operative Housing Society in West Bengal

Introduction:

There are different procedures to expel a member from the Co-operative Housing Society in West Bengal and the members also have some rights to defend themselves when they are expelled by the authority. There are few Rules and Provisions given below which provides for expulsion of a member and their rights under West Bengal Co-operative Societies Rules, 2011 and West Bengal Co-operative Societies Act, 2006.

Exercise of Rights of Membership and Liability of Members come under Rule 111 of the WBCS Rules, 2011 which states that:

“(1) Before a member may exercise rights of membership, he shall: –

(i) sign a declaration in such form, as may be required by the Board, undertaking that he shall be bound by the bye-laws of the society.

 (ii) Sign the register of members; and

(iii) make payment of share money wherever necessary; Provided that the requirement of the provisions of this clause shall be communicated to a member within fifteen days from the date of enrolment of such member.”

So, it is cleared that when a member enjoys rights of membership, he or she must exercise the above-specified points.

“(2) Liability of members – The members of a cooperative society shall, upon the dissolution of the cooperative society, be jointly and severally liable to contribute towards any deficiency in the assets of the cooperative society:-

(a) if the cooperative society is a society with unlimited liability, without limit; and

(b) if the cooperative society is a society with limited liability, subject to such limitation as may be provided in the by –laws.”

Members of the Co-operative Housing Society will be liable to the above-mentioned matters which are provided by the WBCS Rules, 2011.

WBCS Rules, 2011 contains Rule 112 which provides Appeal against the order of Expulsion or Suspension:

“Where the Board of a Co-operative Society expels or suspends a member, such decision shall be communicated to the member within fifteen days from the date of such decision.

“The member such expelled or suspended shall have a right of appeal to the immediate next general meeting and the decision of the general meeting on such appeal shall be final.”

“Provided that no such expulsion or suspension shall be made after publication of notice of the  general meeting.”  

It is concluded from rule 112 that when a member is expelled by the Co-operative Housing Society, it must be communicated to the member who has been expelled so that he gets an opportunity to defend himself in the next immediate meeting. Actually, it is the right of the member to appeal before the authority.

The rule that governs the service of notice by post can be found in Section 27 of the General Clauses Act, 1897. Section 27 reads:

“Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, where the expression “serve” or either of the expressions “give” or “send” or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre-paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.”

It is relevant to note that the Supreme Court, in D. Vinod Shivappa v. Nanda Belliappa, (2006) 6 SCC 456 ruled that where a notice has been properly addressed and sent by registered post and subsequently returned with an endorsement that the addressee was not available, it would be generally presumed (although not in all cases) that notice has been duly served but that it would be open for the addressee to rebut the presumption by adducing proof to that extent.

WBCS Rules, 2011 contains Rule 133 which provides Expulsion of Members from the Co-operative Housing Society. Rule 133 gives the procedures of the expulsion of members from the Co-operative Housing Society as follows:

“(1) Any member who continues to default in payment of his dues towards cost of land or house or apartment allotted to him by the society for more than six months without a break continues to default in payment of his maintenance charges for more than three months without break may be expelled from the society by the vote of two-thirds of the members of the board present and voting at a meeting after he has been given an opportunity of being heard and no resolution of the board shall be effective unless it is submitted to the Registrar for approval and approved by him: Provided that the order of expulsion shall take effect only from the date of communication of the decision of the board to the concerned members after the approval of the Registrar, as aforesaid, has been duly obtained: Provided further that the approval or disapproval of the Registrar shall be communicated to the society within a period of six weeks and in the absence of such communication the resolution of the board shall be effective.”

“Explanation – The power of approval conferred under this rule shall vest in the Registrar exclusively and shall not be capable of being delegated to any other officer.”

“(2) A member may be expelled in the same manner as laid down in Sub-rule (1) if, in the opinion of the board, he has done any act prejudicial to the interest of the society or has violated a lawful decision of the board despite a warning.”

“(3) The member so expelled shall have a right to appeal to the State Government for which purpose he shall submit a written representation to the State Government within a fortnight from the date of communication of the order of expulsion.”

From the above rules, it is clear that the Society can decide to expel a member, and although the approval or disapproval of the Registrar is required, but if after a period of 6 weeks, there is no communication from the Registrar, then the resolution of the board to expel a member will stand effective.

It is also important to note that the expelled member has the right to appeal to the State Government within 14 days from the date of expulsion.

West Bengal Co-operative Societies Act, 2006 contains Section 92 which explains the Rights of members of the society as follows:

“(1) Any allotment (including re-allotment) of a plot of land or a house or apartment in a building made by a co-operative housing society to its member in accordance with its by-laws shall entitle such member to hold such plot of land, house or apartment, as the case may be, with such title or interest as may be granted under the prescribed conditions, and, subject to the provisions of sub-section (1) of section 61 an instrument of transfer in accordance with the provisions of Transfer of Property Act, 1882 (4 of 1882) and the Registration Act, 1908 (16 of 1908), shall be the conclusive evidence of such title or interest in favour of such member.”

“(4) Every member of a Co-operative housing society shall be entitled to an undivided interest in the common areas and facilities pertaining to the plot of land or house or apartment allotted to him.”

“(5) Every member of a co-operative housing society in whose favour a plot of land or a house or an apartment in a building has been allotted shall have the right to use the common areas and facilities as aforesaid for the purpose for which they are intended without interfering with or encroaching upon the lawful rights of other members in whose favour similar allotment has been made.”

“(6) The work relating to the maintenance, repair and replacement of the common areas and facilities (including additions or improvements thereto) shall be carried out in accordance with the bye-laws of the Co-operative housing society and the building rules of the concerned municipality, notified area authority or competent authority, as the case may be, and the costs thereof shall be apportioned amongst the members of the Co-operative housing society in such mariner as may be prescribed.”

Sub-Section (1) of section 92 simlpy says that if the society provides plot of land or apartment or house to its member then he or she is entitled to hold such property as described and prescribed under the above mentioned Act. Sub-Section (2) of section 92 says that when the member makes all the payment for the property then only he or she is entitled to such property and interest. Sub-Section (3) of section 92 says that any plot or house or apartment should be heritable and immovable property which can be transferred. Any legal heir is also eligible for membership in the society. Sub-Section (4) of section 92 provides that each and every member of the society is entitled to an undivided interest in the common areas and facilities. Sub-Section (5) of section 92 says that every member of the society can use the common areas and facilities allotted to them and cannot use others facilities which are allotted to them. Sub-Section (6) of section 92 says that the maintenance, repair or any work of the society shall be carried out according to the by-laws of the society and the costs which arise for such work shall be paid by the members of society.

From the above Section 92 of the WBCS Act 2006, it is clear that a housing co-operative member within West Bengal has absolute title over the property. However, if a member is expelled, what are his rights towards the property?

Case Analysis:

In Delhi Epdp Co-operative Group… vs Registrar Co-operative Societies… on 29 May 2015, it was held that:

“Subject to the provision 86 of the Act a co-operative housing society, which has been allotted land, before expelling a member shall give final opportunity by publishing the notice in the leading Hindi and English newspaper in the National Capital Territory of Delhi informing the affected member to be present in person or through the authorized representative before the Registrar on the date fixed for the final hearing. The Registrar shall decide the expulsion case within the period of one hundred eighty days from the date of the receipt of the resolution for expulsion of a member from the cooperative housing society and shall convey his decision in writing to such member.If the resolution of the co-operative housing society for expulsion of a member is not approved by the Registrar within the said period of one hundred eighty days, the resolution for expulsion of the member shall be deemed to have been approved and the committee shall convey this decision of expelled member and the Registrar within a period of thirty days after the expiry of one hundred eighty days time limit through the registered Post. If the approval of the deemed expulsion is not conveyed to the members and the Registrar within the above period of thirty days, thereafter, the resolution of expulsion shall be null and void. Aggrieved member shall have the right to file an appeal to the Tribunal within sixty days from the date of order of the Registrar or intimation of deemed expulsion.”

From the above case it is concluded that Before expulsion of a member, he or she should be given an final opportunity and the member should be present before the registrar on the date fixed for final hearing. The registrar should decide the expulsion within 180 days and shall convey the final decision to the member and if he fails to do so then within next 30 days he should approve the expulsion and again if he fails then resolution of expulsion will be considered as null and void. However, the rules within West Bengal Cooperative Society Act (WBCS 2006) and Rules 2011 are different and the Society can approve the expulsion of a member simply by way of resolution if the Registrar fails to respond within a period of 6 weeks, and thereafter the expulsion order will stand confirmed.

In “S.K. Jalaluddin & Ors vs The State Of West Bengal & Ors on 17 January, 2018, Calcutta High Court (Appellete Side), held that:

 “All six petitioners are residents of Khowab Housing Co-operative Society Limited, a co-operative Society registered under the provisions of the West Bengal Co-operative Societies Act, 2006 (hereinafter referred to as ‘the Society’). On the date of filing of the writ petition, the Society had a total of 48 members. The petitioners allege that they were required to pay certain amounts of money for obtaining a flat of a specified area, which according to the petitioners, was contrary to the decision approved in the Special General Meeting held in June 2013. In the writ petition, the petitioners have questioned the basis of increase in the price for allotment of flats and were finally aggrieved by the decision of the Society to expel them after they failed to pay the enhanced amount of money.”

“In the context of the above findings and on a pure question of fact, we find the direction of the learned Single Judge upon the petitioners to pay the outstanding amount for the flats within a specific time frame to be reasonable and no interference is warranted. It may not be out of place to mention that at the time of reserving the matter for judgment, counsel for the appellants / writ petitioners submitted that his clients were ready to pay the balance amount. We find this submission to be inexplicable; if the petitioners were indeed ready to settle, then why keep the entire Society on hold since 2015 and thereby cause inconvenience to all the other stakeholders? Without speculating further as to the motive of the petitioners’ shifting stand, we proceed to hold that the appeal is completely without merit and is liable to be dismissed.”

“The respondent no. 4 / Society, however, is at liberty to furnish a statement of outstanding dues as on the date of the pronouncement of the judgment to the six writ petitioners within a fortnight from date. The six writ petitioners, upon receipt of such statement, may make payment of the balance amount – as reflected in such statement – to the respondent no. 4 / Society within a month thereafter. Upon such payment being made, the appellants / writ petitioners shall be restored to their position as existed before the decision of expulsion, i.e., before the communication dated 20th August, 2015. The appeal is dismissed with the above directions.”

From the above case it is concluded that there are six petitioners who belong to the Khowab Housing Co-operative Society Limited, and they filed a writ petition which states that the petitioners have to pay certain amount for allotment of the flat which is according to the petitioners was contrary to the decision approved by the society in a general meeting held in June 2013. They also questioned the society the basis of increase in the price of the flat which is also mentioned in the petition. They were aggrieved by the decision to expel them from the society. Finally, the judgement was that the petitioners should pay the amount to the society and get restored to their position as they were before the decision of expulsion.

In Ishwar Nagar Coop House Building … vs Parma Nand Sharma & Ors on 15 November, 2010, Supreme Court of India held that:

“This Appeal is directed against the judgment and order dated 28/03/2008 in W.P. No. 474/1982 of the High Court of Delhi.”

“The respondent-1, Dr. Parmanand Sharma was enrolled as a member of the appellant society vide membership No. 35 on 11th March 1961. In 1968, he purchased a property bearing No. A-19/A, Kailash Colony, New Delhi in the name of his Hindu Undivided Family consisting of respondent-1, his wife and two minor children in 1968. In this chain of events, the membership of the respondent-1 was terminated from the appellant society on the ground that the respondent-1 owned another property, i.e., 19/A, Kailash Colony, in Delhi.

“The action of the society expelling the respondent-1 was approved by the Registrar, Cooperative Societies on 17th May 1978. On 26th February 1980, an application was filed by respondent-1 under Section 60 of the Act for reference of dispute to arbitration. The reference was dismissed on 5th November, 1980. Being aggrieved, the respondent filed a writ petition before the High Court, wherein the High Court by the impugned judgment and order dated 28/03/2008 held that 19/A, Kailash Colony, Delhi was being used for running a nursing home, i.e., for a commercial purpose and therefore, that would not constitute a violation of Rule 25 of the Rules. By the said order, the HC set aside the expulsion orders.”

“The present appeal is directed against the impugned judgment and order of the High Court by way of Special Leave Petition on which we heard the counsel appearing for the parties at length. We have considered the facts and circumstances of the case, and analysed the arguments put forth by both parties to buttress their stand. For the reasons that we have considered herein and mentioned above, we find that the arguments raised by respondent-1 are without merit, and the appeal therefore, is to be allowed.”

It is concluded in this case that the membership of the respondent-I was terminated from society stating that the respondent has another property. And this action of expelling the member from the society was approved by the Registrar. Then the respondent approached for other judicial authorities for justice and the Supreme Court of India held that arguments raised by the respondent was without merit.

The Supreme Court in Myurdhwaj Coop. Group Housing Society Ltd. v. Presiding Officer, Delhi Coop. Tribunal (1998) 6 SCC 39, relying on similar provisions in the previous co-operative societies act and rules, observed:

“10. This Rule deals with the procedure for the expulsion of members. In case a society decides to expel its member who is persistently defaulting in making the payment of his dues, the procedure to be followed could only be what is provided under this Rule and no other. The principle referred earlier that if a thing is required to be done in a manner as provided under the law has to be done in that manner alone and no other manner will apply with equal force under Rule 36, when a society decides to expel its member. In case of expulsion, the procedure provided under it and the expulsion has to be only under the mode provided therein and no other which is mandatory in nature. But this is only after decision is made to expel its member. This Rule does not take away the discretion of the society to expel a member or not which is preceding the exercise of power under Rule 36. For this, there is nothing under this Rule which either circumscribes or webs this discretion. Since this Rule is for the expulsion of its members, it is stringent in its application. Even after giving opportunity and even after the general body passes such a resolution, it requires approval of the Registrar. Outside this, there is nothing which restricts a society to act freely and to lay down its own policies. It is always open to it to decide on a fact to expel him or not. Its discretion to act is curtailed only by a statutory provision or any order having force of law. A policy may depend on various factors, its planning, projects, undertakings including its financial capacity etc. One society may be in a sound position and the other in a limping position thus may give to its member larger or lesser benefits as the case may be. Thus it is always open to a society to lay down its own principle for making such allotments. So consideration of prompt payment in shaping its policy which helps it to complete its project to confer on its member its fruits at the earliest may be justified exercise of its discretion. To what extent a default is going to affect a society will depend on the facts and circumstances of each case which has to be left at the discretion of each society. It is not proper even for the courts to interfere with such a discretion, except when it is arbitrary, irrational, mala fide, against any statutory provisions or against orders having the force of law. This will not be possible if a strict principle of seniority is followed. However it is open for a society to give weightage to seniority depending on the facts of each case. Within permissible limits, it is always open to lay down a principle which is just, fair and proper. When a society could decide the manner of allotment by instalments or other modes, there is no inhibition to it to modify it in case conditions are not complied by its members. Thus it is not possible to uphold that the society has no option but to proceed under Rule 36 to expel its member. Hence once a society has a discretion, it cannot be said its power is restricted to allot only under the strict rule of seniority.”

This clearly gives absolute discretionary powers to the society to decide whether to expel a member and under what circumstances and for what reasons. Courts can only interfere with the decision of the society, if it is arbitrary, irrational, mala fide, against any statutory provisions or against orders having the force of law.

In Gordhanbhai N. Vaghela vs. Maruti Coop. Housing Society & Ors., 2003(1) GLR 117, it was heldthat:

“… in a Housing Co-operative Society, after a person becomes member, a plot or a flat or a tenement is being allotted to him in his capacity as a member and may be that as against the allotment the person concerned when admitted as a member would be required to make payment to the society. However, the allotment of the plot/flat/tenement to a member in a Housing Co- operative Society is a valuable right, and therefore, right to property, even transfer of property and some interest, is created in the property namely, the plot/flat/tenement as the case may be on account of such allotment in capacity as member of the society. It may be that technically the Society is the owner of the said portion which is allotted to the member, but it cannot be said that the person has no valuable interest in the property. When the membership right of a person is coupled with the interest over the property which is allotted to him, his expulsion as a member becomes more serious action. Not only that, it is also a known fact that a plot or flat or tenement, which is allotted by the Society to a member concerned is like a shelter of the family of the member concerned possibly after investment of life savings, and therefore, the power under Section 36 of the Act, which may be exercised against the member by the Society cannot be lightly considered as consequently it results into deprivation of the property allotted to such member.”

“… in a housing co-operative society, the principles of natural justice must be extended to a larger extent with its fullest scope, so that before a person is expelled as a member and the property which is under his possession is taken back by the society, he must be given full opportunity of putting forward his case to the General Body of the Society. In any case, the society who takes the decision must consider all the aspects which are put forward by the member, including the facts and circumstances of the personal convenience/inconvenience and also rather an important fact that a shelter is to be lost by the member concerned when he is expelled as a member of (he Society in a housing Co-operative Society by the housing Co- operative Society. It should also be considered as to whether any other lesser action of imposing penalty or of recovering special cost etc. are possible or not…”

In Mazda Rise Cooperative Housing … vs Deputy Secretary Appeal … on 26 November, 2018, C/SCA/7088/2015, the High Court of Gujarat noted that:

“Non assigning reasons per se would not vitiate an order of approval. But the order of approval must, at the same time, reflect that there was an application of mind by the Authority to the material available on record, namely, the resolution passed by the Society, the basis for passing such a resolution, and the explanation of the member concerned as to why such approval should not be granted. This is having regard to the distinction already noted hereinbefore between the validity of the resolution and effectiveness of the resolution.”

“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 underlying idea of Section 36 of the Act is to give precedence to the collective rights of the members of the society when pitted against the individual rights of a solitary member. Of course, the provision has provided adequate safeguards. The section stipulates passing of a resolution by the prescribed majority, and after hearing the member concerned.”

“When a member raises his objection qua a resolution passed by the requisite majority of the society the member must be in a position to show that the resolution is either malafide, or arbitrary or perverse in the fact situation of a case. Only then would the Registrar be empowered to undertake an exercise for the purposes of disapproving the resolution. There could be another situation where the registrar may intervene; in a case where there is violation of principles of natural justice. However, onus lies on the member concerned to establish such malafides, arbitrariness or perversity qua resolution. The reason is not far to seek.”

“The Cooperative 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 C/SCA/7088/2015 JUDGMENT 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 Cooperative movement. Such being the nature of the Cooperative movement, there is no place in any Cooperative Society for any member who is not honest and who, as the Allahabad High Court observed in regard to the applicant, is a `liar’, `trickster’ and inclined to give false evidence. It is clearly in the interest of the Society that such a member should be expelled therefrom. In our opinion, having regard to the observations of the Allahabad High Court in regard to the petitioner, the Registrar rightly acted under rule 18(2) in expelling him from the various Cooperative Societies of which he was a member. (see Kamta Prasad vs. Registrar, Cooperative Societies, AIR 1967 MP 211).”

Conclusion:

From the above discussion, it can be stated that expulsion of member should be resorted to by societies only under extreme situations. However, grounds for expulsion are not exhaustive in nature and there can be a wide range of situations for which a member may be expelled by the society. Further, societies are divided by groups and partisanship, often the ones in majority are forcing their rule and opinions upon others. Under such circumstances, the true nature of a cooperative society is questionable. Often, members are hassled by majority members and forced to concede. It is recommended that housing society members in West Bengal should take necessary action against the society if it tries to put pressure on the member by threatening to expel such member. Further, much reform is needed to safeguard all parties involved in housing cooperative society disputes.

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