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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 4854-4855 OF 2014 (Arising out of S.L.P. (C) NOs.1581-1582/2011

J.N. Chaudhary & Ors. Etc.                  ..Appellants

Versus

State of Haryana & Ors.      ..Respondents

WITH

CIVIL APPEAL NOS. 4856-4857 OF 2014 (Arising out of S.L.P. (C) NOs. 4758-59/2011)

Mount Everest Co-operative House Building Society Ltd. ..Appellant

Versus

State of Haryana & Ors.  etc. etc.            ..Respondents

J U D G M E N T

GYAN SUDHA MISRA, J.

1. Delay in SLP (civil) 4758-59/2011 condoned.

2. Leave  granted  in  both  sets  of  special  leave  

petitions.

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3. These  appeals  by  special  leave  have  been  

preferred  against  the  judgment  and  order  dated  

27.08.2010  passed  by  the  High  Court  of  Punjab  and  

Haryana at Chandigarh in Letters Patent Appeal Nos.215  

and 216 of 2007 (O&M) whereby the Division Bench of  

the High Court dismissed both the letters patent appeals  

by  a  common  judgment  and  order  which  is  under  

challenge herein.

4. The  letters  patent  appeals  which  stood  

dismissed arose out of two writ petitions filed in the High  

Court  before  the  learned  Single  Judge  bearing  writ  

petition Nos.6491/2005 and 7742/2005 which were filed  

challenging the orders dated 13.12.2002, 05.09.2003 and  

19.11.2004 in the High Court at Chandigarh which were  

the  Suspension  Order,  Removal  Order  of  the  erstwhile  

Committee and order of the Dy. Registrar who dismissed  

the  appeal  against  removal.   The  facts  stated  therein  

disclosed that  on 04.03.1994,  a  co-operative society in  

the name of Mount Everest Co-operative Group Housing  

Society  was  formed  and    constituted    under   the  

Haryana  Co-operative  Societies  Act,  1984  wherein  288  

persons became members of  the Society upto 1995-96  

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and  contributed  a  total  sum  of  approximately   Rs.7.5  

crores   towards   the  funds of the Society which were to  

be utilised for purchase of the land.        In   the  year  

1996,  the   Society    purchased  approximately 10 acres  

4 kanals 14   marlas   of   land   in     Village Wazirabad  

as   well   as   Hyderpur   Viran   with   the   funds  

contributed by the members of the Society for achieving  

its  objects.   At  the time of  formation of  the Society,  a  

Managing Committee had also been constituted with Mr.  

R.P. Gupta as Secretary but the same was suspended on  

23.10.1996 by the then Assistant Registrar Co-operative  

Societies,  Gurgaon  on  the  allegations  of  financial  

irregularities and a Board of Administrator was appointed.  

However, the Deputy Registrar reinstated the Managing  

Committee of the society on 30.08.1999.  Subsequently,  

on  28.05.2000,  a  General  Body  Meeting  of  the  society  

took place in which fresh election was held and a new  

Managing  Committee  was  constituted  wherein  the  

petitioner No.1 Captain Shri A.K. Mahindra (since resigned  

during pendency of this appeal) was elected as Member  

of  the  new  Managing  Committee  and  later  on  was  

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entrusted  with  the  work  of  Honorary  Secretary  of  the  

Society in place of the previous Secretary Shri R.P. Gupta.  

5. It is the case of the petitioner/members of the  

Society that  the new Managing Committee after  taking  

charge and upon inspection of the records of the Society  

found that the earlier Managing Committee had indulged  

in large scale malpractices and in order to investigate the  

same, an internal committee was constituted to go into  

the land records, finances as well as other aspects of the  

Society.  This internal committee therefore conducted an  

intensive enquiry and submitted report which highlighted  

gross irregularities by the previous Managing Committee  

in  the  purchase  of  land,  utilisation  of  members  fund,  

expenditure  on  account  of  day  to  day  expenses  and  

expenses  incurred  on  land  and  site  development  etc.  

This  audit  was conducted for  the period 1993 to  2001  

when  the  Managing  Committee  of  the  society  stood  

suspended and the Board of Administrators was in-charge  

of  the  affairs  of  the  Society.   Finally,  when  the  audit  

report  was  submitted  in  March,  2002,  the  Managing  

Committee  which  had  been  constituted  on  28.05.2000  

with A.K. Mahindra as Secretary decided to lodge an F.I.R.  

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against the members of the earlier Managing Committee  

when R.P. Gupta was the Secretary and the F.I.R. finally  

was  lodged  with  the  Police  Station  DLF,  Gurgaon after  

which  investigation  was  conducted  and  arrests  were  

made.   After  investigation,  charge  sheet  was  also  

submitted in  the criminal  courts but as per the charge  

sheet, no allegation was found against any members of  

the then Managing Committee except Mr. R.P. Gupta who  

was  a  member  and  Honorary  Secretary  of  the  Society  

from  its  inception  until  the  new  Honorary  Secretary  

Captain Mahindra who was petitioner No.1 and has since  

resigned, took over as Secretary of the Society in 2000.

6. When the new Managing Committee took over  

and  Captain  A.K.  Mahindra  functioned  as  Honorary  

Secretary  from  28.05.2000  along  with  another  office  

bearer  Mr.  Ashok Sharma as Treasurer,  special  general  

body meeting of the society was held on 02.06.2002 in  

which  the  affairs  and  conditions  of  the  society  were  

discussed.  In the meeting, the members were apprised  

that  large scales and glaring misappropriation of  funds  

took place between 1994 and 2000 and it was resolved  

that the only option left before the Society was to sell the  

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land at the best possible market price so as to refund the  

contributions made by the members.  The General Body  

of  the  Society  decided  to  sell  off  the  land  for  several  

reasons recorded in the minutes which are as follows:   

(Reasons for General Body to decide for auction sale of the  land)

“i) That  10.69  acres  of  land  bearing  Khasra  Nos.1692,  1997,  1696,  1677,  1678  and  1679 stood registered and mutated in the  name  of  the  Society  which  were  in  possession  of  the  Society.   It  could  be  further noted that out of this land, around  9  acres  (3.5  acres  in  Khasra  Nos.1977,  1678  and  1679  and  5.5  acres  in  Khasra  Nos.1692,  1696  and  1697)  were  under  dispute/litigation  in  the  District  Court  at  Gurgaon  and  the  clear  and  undisputed  land with the society was around only 1.69  acres.

ii) The  General  Body  further  noted  that  another  4.5  acres  of  land  marked  in  yellow colour bearing Khasra Nos.1677,  1678,  1679,  1695,  1694,  1696,  1698,  21,  20  and  27  also  were  under  dispute/litigation.   It  further  transpired  to the General Body of the Society that  the land in Khasra Nos.1977, 1678, 1679  measuring around 3.5 acres were never  purchased by the co-operative societies  and  there  were  no  dispute/litigation  going on with the Society as  this  land  was never the land of the Society.  Thus,  out of the total land measuring 4.5 acres  said  to  be  in  dispute  only  around  1.1  acres in different Khasra Numbers was  in dispute in regard to which cases were  going on in the District Courts, Gurgaon.  However, the Society further noted that  

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this  land  had  been  purchased  by  another Society namely Saraswati  Kunj  whose registration was in progress.  The  General  Body  of  the  Society  further  noted that these facts were available on  record  after  checking/verifying  various  records  with  the  revenue  department  with  the  help  of  Patwari/Tehsildar  and  the Advocate, all of whom met a number  of times.  Consequently, the Society was  given  to  understand  that  only  a  few  days  earlier  to  the  General  Body  Meeting  the  land  of  the  Society  had  been  surveyed  by  the  Government  alongwith other vacant land with a view  to acquire it i.e. the acquisition process  had been set in motion.  It was further  noted  by  the  General  Body  of  the  Society  that  in  view  of  purchase  of  vacant land around Saraswati  Kunj  the  Society of the petitioners had practically  been surrounded/ encircled”

7. In  view of  the  aforesaid  considerations  taken  

note of in the General Body meeting of the Society held  

on 02.06.2002,  it  was decided by the General  Body to  

dispose  of  the  land  of  the  Society  and  the  Honorary  

Secretary of the Society Captain A.K. Mahindra and Ashok  

Sharma,  Treasurer  were  authorized  to  initiate  

proceedings for disposal of the land.  In pursuance to the  

general body resolutions, a letter dated 02.07.2002 was  

sent  to  the  Registrar,  Co-operative  Societies  seeking  

permission to sell the land.  In the meanwhile and for the  

purpose of  ascertaining  the  correct  market  rate  of  the  

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land, Captain A.K. Mahindra himself wrote a letter to the  

Tehsildar, Gurgaon ascertaining the correct market rate  

of the land to be disposed of.  In response to the same,  

the Tehsildar, Gurgaon  quoted the market rate to Rs.40  

lakhs per acre by way of Endorsement dated 14.06.2002.  

The  Honorary  Secretary  of  the  society/Captain  A.K.  

Mahindra then wrote a letter further on 02.07.2002 to the  

Registrar,  Co-operative  Societies,  Haryana  seeking  

permission to dispose of the land at the earliest for an  

amount of Rs.4.2 crores.  The contents of the aforesaid  

letter dated 02.07.2002 written by Captain A.K. Mahindra  

are as follows:

“To The Asstt. Registrar, Cooperative Societies Gurgaon, Haryana

Sub: Permission for disposal/sale of society land.

Sir,

With  reference  to  the  letter  No.2298  dated  1.7.02  received  from  the  office  of  the  Dy.  Registrar,  Gurgaon, we are enclosing the u/m documents :-

(a) Summary of the land as per registers  and jamabandi submitted is enclosed as  desired.  As per this summary the total  

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land  with  the  society  is  84  kanals  4  marlas, and

(b) Rate  of  land in  the  area  where the  society  land is  situated  is  Rs.40 lakhs  (Rs. Forty Lakhs) per acre as obtained  from the concerned patwaris office.  A  photo copy of this letter is enclosed.  As  per  this  the  total  value  of  land  is  Rs.4.20 crores (Rs. Four Crores Twenty  Lakhs Only).

Kindy  grant  us  the  necessary  permission  to  dispose off the land at the earliest and oblige.

Thanking you,

Sd/- A.K. Mahindra, Hony. Secretary, Mt. Everest Coop. Group

Housing Societies Ltd.”

8. However, the Registrar, Co-operative Societies  

before  whom  a  dispute  had  been  raised  regarding  

removal of the office bearers of the co-operative societies  

passed a suspension order on 13.12.2002 under Section  

34 (2) of the Haryana Co-operative Societies Act, 1984,  

suspending the new Managing Committee of the Society  

based on allegations of gross and serious irregularities as  

a  result  of  which  a  Board  of  Administrators  was  

appointed.  Thereafter, on 14.01.2003, the Registrar, Co-

operative Societies  granted permission to  the Board of  

Administrators  to  dispose  of  the  society  land  and  the  

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Deputy Registrar, Co-operative Societies, Gurgaon formed  

a Sales Committee of 5 members for selling land of the  

Society.  While granting permission for sale, respondent  

No.2/The Registrar, Co-operative Societies appointed the  

following Sales Committee of 5 members comprising inter  

alia of the following :  

(i) Dy.  Registrar,  Co-operative  Societies, Gurgaon,

(ii) Inspector,  Co-operative  Societies,  Gurgaon,

(iii) Sub-Inspector,  Co-operative  Societies, Gurgaon.

9. It appears that in the meanwhile CWP No.2025  

of 2003 was filed by Captain A.K. Mahindra and others  

challenging the order of suspension of the new Managing  

Committee as well  as the order  granting permission to  

sell the land.  During pendency of the said writ petition,  

Assistant  Registrar,  Co-operative  Societies,  Gurgaon  on  

05.09.2003 removed the new Managing Committee under  

Section  34  (1)  of  the  Haryana  State  Co-operative  

Societies  Act,  1984  based  on  the  ground  that  the  

aforesaid Managing Committee had failed to perform its  

duties as provided under the Act,  Rules and Bye-Laws.  

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Simultaneously  and  in  pursuance  to  the  orders  of  

Registrar,  Co-operative  Societies  dated  14.01.2003  

granting permission to  dispose of  the Societies land,  a  

public notice for auction of the land of the Society was  

published  on  07.08.2003  indicating  that  the  auction  

would be held on 21.08.2003.  This notice was published  

in  all  the  specified  newspapers  in  regard  to  which  a  

decision  was  taken  by  the  General  Body  itself  that  it  

would be published in ‘The Tribune’ (English and Hindi),  

Amar  Ujala  (Hindi),  Dainik  Bhaskar  (Hindi)  and  Dainik  

Jagran (Hindi).

10. The aforesaid notice for auction of the Societies  

land  prompted  the  suspended  Managing  Committee  to  

file  an application in  the  Court  of  Senior  Sub-Judge on  

18.08.2003  which  was  moved  seeking  an  order  of  

injunction  on  the  Society  from  holding  the  auction  on  

21.08.2003.   The  Sub-Judge’s  Court  entertained  the  

application and a stay of the sale of land was passed by  

the  Sub  Judge.   In  view  of  the  order  of  stay,  an  

advertisement was further published in the newspapers  

on 20.08.2003 for postponement of the proposed auction  

but a further development took place when the interim  

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order  of  the  Sub  Judge  granting  stay  of  auction  was  

vacated as a result of which another advertisement was  

issued  which  was  published  in  ‘The  Tribune’  on  

07.08.2003 wherein a fresh date of auction for sale of the  

land was given for 28.02.2003 at 10 a.m. at the Society  

site.   

11. In  pursuance  to  the  aforesaid  fresh  date  of  

auction, the auction was held on 24.11.2003 whereby the  

land  belonging  to  the  Society  was  sold  to  respondent  

No.7  for  a  sum  of  Rs.4,94,04,125/-  as  against  the  

estimated market rate of about Rs.4.2 crores.

12. After the auction of the land belonging to the  

Society in favour of respondent No.7 was complete, the  

writ  petition  No.20252  of  2003  which  had  been  filed  

challenging  the  suspension  of  the  members  of  the  

Managing Committee wherein Captain A.K. Mahindra and  

Ashok  Sharma  had  been  elected  as  Secretary  and  

Treasurer was withdrawn by the petitioners/Secretary and  

Treasurer  therein  with  liberty  to  avail  all  existing  and  

alternative remedies available to them by filing an appeal  

under Section 114 of the Co-operative Societies Act.  The  

petitioners/Captain  A.K.  Mahindra  and  Ashok  Sharma  

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availed  of  the  remedy under  Section  114 by  filing  the  

appeal, which was dismissed by the Deputy Registrar on  

19.11.2004, which was challenged by filing a writ petition  

No.6491 of 2005, but was dismissed by the learned single  

Judge inter alia holding as follows:  

(i) The suspension order dated 13.12.2002  and removal order dated 05.09.2003 of  the  erstwhile  Committee  whereby  Captain  A.K.  Mahindra  and  Ashok  Sharma  had  been  appointed  Secretary  and  Treasurer  respectively  had  been  held  did  not  subsist  because  new  election  of  the  Managing  Committee  was  held  on  05.12.2004  wherein  the  appellant  No.1  Captain  A.K.  Mahindra  was once again inducted as a member  who  earlier  was  holding  the  post  of  Honorary  Secretary  as  a  result  of  the  election held on 28.05.2000 and the writ  petition challenging removal of Captain  A.K.  Mahindra  and  Ashok  Sharma  who  were removed in whose place the Board  of  Administrators  had  been  appointed  was dismissed as infructuous as in view  of  induction  of  new  Managing  Committee,  the  orders  of  suspension  and  removal  of  earlier  Managing  Committee  challenged  by  the  writ  petition did not  survive as the learned  single  Judge  was  pleased  to  hold  that  when the new Managing Committee was  elected,  the  dispute  regarding  adjudication of suspension of the office  bearer  of  the  earlier  Managing  Committee constituted as a result of the  election  held  in  2002  were  no  longer  sustainable.  

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(ii) The  learned  single  Judge  inter  alia  further  held  that  the  petitioner  A.K.  Mahindra had no locus to challenge the  order  of  his  removal  passed  by  the  Registrar,  Co-operative  Societies  appointing Board of Administrators in his  place  or  the  decision  of  the  General  Body for  sale of  the land belonging to  the society did not survive as it was only  A.K.  Mahindra  the  suspended  member  who  had  challenged  the  sale  and  no  other member had come up to challenge  the decision of the General Body to sell  the land of the Society.

(iii) The  learned  single  Judge  had  further  held  that  in  the  appeal  before  the  Registrar  against  removal  of  the  members  of  the  Managing  Committee,  there was no challenge to the order of  the  Registrar  giving  permission  to  sell/auction  was  made  nor  the  auction  purchaser  was  impleaded  as  a  party  therein and hence, the appeal suffered  from misjoinder of the necessary party  and  non-appealing  of  impugned  order,  debarred  the  suspended  petitioners  to  challenge the same in the writ petition.

(iv) The  learned  single  Judge  further  took  note of the fact that the decision to sell  the  land  was  of  the  General  Body  Society which was taken on 02.06.2002  and the said decision cannot be said to  have  been  taken  by  authority  constituted  under  the  Co-operative  Societies  Act  but  was  taken  by  the  members  of  the  Society  in  a  General  Body  Meeting  which  had  passed  a  resolution  to  dispose  of  the  land  at  reasonable price and authorised Ashok  Kumar and A.K. Mahindra to act in the  matter and that A.K. Mahindra assessed  the market  value of the land as Rs.40  

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lakhs  per  acre  on  the  basis  of  the  information  obtained  from  the  concerned Patwari as already referred to  hereinbefore.

(v) The  learned  single  Judge  was  further  pleased  to  hold  that  the  auction  sale  was  conducted  after  due  permission  granted  by  the  Registrar  under  the  supervision  of  the  Sales  Committee  already  referred  to  hereinbefore  and  after  giving  advertisement  in  three  popular newspapers of Hindi and English  before fixing the minimum rate of land  at Rs.40 lakhs per acre which was the  market rate at that time.   

(vi) The learned single Judge also took note  of the fact that the petitioner therein did  not  bring  on  record  any  document  to  show  that  the  rate  of  land  was  more  than  Rs.40  lakhs  per  acre  as  the  prevalent  collector  rate/circle  rate  of  that  time was  Rs.12 lakhs per  acre of  the area whereas the Societies land in  question was sold at Rs.46.25 lakhs per  acre i.e. more than the market rate fixed  at  Rs.40  lakhs  per  acre.   The  learned  single  Judge  recorded  a  categorical  finding that there was neither any fraud  in conducting the auction sale nor was  the  auction  sale  bad  or  illegal  in  any  manner.   In  so  far  as  the  allocation  regarding non publication of the auction  notice  in  less  expensive  newspaper  is  concerned, it was held that this decision  was  also  taken  in  the  General  Body  Meeting of the Society itself.  However,  the learned single Judge enhanced the  rate of land from Rs.46.25 lakhs to Rs.70  lakhs  per  acre  which  amount  had  himself  been  offered  by  Captain  A.K.  Mahindra  who  was  the  Honorary  Secretary of the Society at least on the  

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date when the resolution by the General  Body was passed on 02.06.2002.   The  learned  single  Judge  after  hearing  the  contesting plea of the respective parties  disposed of the writ petition taking into  account the interests of the members of  the Society holding that the amount of  Rs.70 lakhs per  acre was sufficient for  eligible members.   

(vii) The learned single Judge further ordered  that the difference of the amount which  had come about with the increase in the  cost of the land by increasing the rate  from Rs.46.25 lakhs  per  acre  to  Rs.70  lakhs  per  acre  would  be  paid  by  the  respondent  No.7/auction  purchaser  to  the  Registrar,  Co-operative  Societies  within  45  days  from  the  date  of  the  order i.e. 24.08.2007 with interest at the  rate of  6% per  annum on the  amount  awarded  by  him  from  the  date  of  auction  till  the  payment  was  actually  made.   

(viii) It  was  further  directed  by  the  learned  single  Judge  that  the  amount  so  received  from  respondent  No.7/the  auction  purchaser  would  be  disbursed  forthwith amongst the eligible members  proportionately,  except  the  tainted  ones, by the Registrar himself or by any  other person authorised by him in that  regard  and  the  share  of  the  tainted  persons would be kept until the decision  of the cases against them were adjusted  against  the  recovery,  if  any  ordered  against them.  It was also made clear by  the  learned  single  Judge  that  the  members  who  had  already  received  their  share  amount  would  only  be  entitled to the difference on account of  increase  of  price  and  the  concession  given by the High Court in the judgment.

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13. The  erstwhile  Secretary  of  the  Co-operative  

Society Captain A.K. Mahindra who had been suspended  

by  the  Registrar,  Co-operative  Society  along  with  37  

members (38 in all) filed letters patent appeal No.215 of  

2007 before the Division Bench of the High Court wherein  

the auction sale conducted by the Board of Administrators  

under  the  supervision  of  the  Sales  Committee  of  5  

members which included Deputy Registrar, Co-operative  

Societies,  Gurgaon,  Inspector,  Co-operative  Societies,  

Gurgaon, Sub-Inspector, Co-operative Societies, Gurgaon  

filed letters patent appeal  before the Division Bench of  

the High Court wherein the auction sale conducted by the  

co-operative societies in  pursuance to the order  of  the  

Registrar  passed  by  the  co-operative  societies  were  

challenged essentially on the following grounds:  

(i) That  the  advertisement  for  auction  of  the  land  was  not  published  in  newspapers  which  had  a  wide  circulation  in  an  area.   It  was  alleged  that  the  said  notice  was  deliberately  issued  in  a  newspaper  which  had  negligible  circulation  in  Delhi  and  Gurgaon, where most of the members of  the Society used to reside.  

(ii) The land belonging to the Society was  sold for a song to the respondent No.7  

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though it could have fetched more sale  consideration in  case the auction after  giving  due  advertisement,  would  have  been conducted.  

(iii) There  was  no  necessity  of  selling  the  land.

14. The learned Judges of the Division Bench who  

heard  the  letters  patent  appeals  rejected  all  the  

contentions  of  the  appellants  and  upheld  the  order  

passed by the learned single Judge holding therein that  

the plea regarding suppression of notice in a newspaper  

lacking wide circulation could not be sustained as the first  

advertisement regarding auction notice were published in  

three newspapers of wide circulation and when the first  

auction  notice  was  cancelled,  the  second  notice  was  

published  announcing  the  new  date  as  the  said  order  

against the auction had been vacated and the said notice  

was published in the daily newspaper ‘The Tribune’ which  

is  locally the most prominent newspaper in Punjab and  

Haryana.  Hence, the Division Bench was pleased to hold  

that the land being situated in Haryana, the publishing of  

the later advertisement in ‘The Tribune’ cannot be held to  

cause any prejudice to the prospective buyers as alleged  

by the appellant.

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15. The Division Bench was further pleased to hold  

that the plea raised by the counsel for the appellant that  

there was no necessity of selling the land belonging to  

the  Society  was  also  not  worth  accepting  when  a  

conscious  and  considered  decision  was  taken  by  the  

General Body vide its resolution passed on 02.06.2002,  

whereby a decision was taken to sell the land keeping in  

mind the plight of the members who were initially made  

to understand that in case flats were constructed a flat  

would cost around Rs.4 lakhs but would later stipulated  

that  on  completion  of  the  flat,  the  same  would  cost  

Rs.17.50 lakhs approximately, if construction commenced  

on time and were to be completed within  three years,  

whereas  at  the  relevant  point  of  time,  flats  in  other  

adjoining societies were readily available for a lower cost  

at Rs.12 to 13 lakhs.  The Division Bench therefore was  

pleased  to  hold  that  the  decision  in  the  General  Body  

Meeting was taken after considering the pros and cons of  

the decision to auction sale the land.

16. In  so  far  as  the  plea  of  the  appellant  

emphasising that the land was sold at a much cheaper  

rate to the respondent No.7 and thus was prejudicial to  

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the interest of the members of the Society is concerned,  

it recorded that the appellant Captain A.K. Mahindra who  

was representing all  the appellants in LPA No.215/2007  

had himself written a letter on 02.07.2002 while seeking  

permission to sell the land to the Assistant Registrar, Co-

operative Societies stating that the rate of the land in the  

area where the Society is situated is Rs.40 lakhs per acre,  

as obtained from the concerned Patwari office.  Captain  

A.K. Mahindra had himself forwarded that letter alongwith  

a copy of the letter received from the concerned Patwari.  

In that letter which has been quoted hereinbefore, he had  

categorically stated that the total value of the land was  

based  on  the  above  rate  which  amounted  to  Rs.4.20  

crores  for  the  entire  land  of  the  Society.   Even  the  

minutes of the General Body Meeting recorded that the  

members themselves had resolved that the land prices in  

the area at the relevant time, that is in the year 2002 had  

gone down.  In view of the rate quoted by the appellant  

himself  in  the  aforementioned  letter  and  the  decision  

taken by the General Body in its Meeting to sell the land  

on the ground that the land prices were going down, no  

plea could be raised at that stage to say that the land was  

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sold at a  lower price.   The Division Bench further  took  

note of the fact that in any case, the rate of land was  

enhanced from Rs.40 lakhs to  Rs.70 lakhs per  acre by  

order of the single Judge.  Besides this, when the General  

Body of the Society had decided to abort the venture of  

the  flat  building  due  to  germane  factors  such  as  the  

pending  litigation,  possibility  of  acquisition  by  the  

Government,  irregular  shape  of  the  land  and  the  

surrounding  land  having  been  purchased  by  another  

society namely Saraswati Kunj and the falling rate of land  

prices,  it  was  in  the  members  interest  to  recover  the  

investments  made  by  them  in  the  failed  venture  as  

quickly  as  possible.   The  appellant  No.1/suspended  

Honorary  Secretary  Captain  A.K.  Mahindra  had  made  

enquiries himself from the Tehsildar about the prevalent  

market  price and the  Tehsildar  had opined that  at  the  

relevant time while the Collector rate was Rs.12 lakhs per  

acre, the market rate was about Rs.40 lakhs per acre.  In  

spite  of  this,  the  learned  single  Judge  was  pleased  to  

enhance the rate of the land by awarding Rs.70 lakhs per  

acre of  the land owned and possessed by the Society.  

Hence, the Division Bench was pleased to hold that when  

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the appellant No.1 Captain A.K. Mahindra, the erstwhile/  

suspended Honorary Secretary had himself as an office  

bearer sought permission to sell the land at Rs.40 lakhs  

per  acre,  he  cannot  be  permitted  to  question  the  

inadequacy of Rs.70 lakhs per acre which was awarded by  

the  learned single  Judge.  Thus,  the  amount  which  was  

actually paid for the purchase of the land on 24.11.2003  

exceeded  by  about  Rs.70  lakhs,  which  was  previously  

estimated to be Rs.40 lacs per acre as per the market  

rate i.e. Rs.4.2 crores vide letter dated 02.07.2002 which  

was written by the appellant No.1/Captain A.K. Mahindra  

on behalf of Mount Everest Society to the Registrar, Co-

operative  Society,  Haryana.  The  learned  Judges  of  the  

Division Bench thus were pleased to uphold the judgment  

and order  passed by the single Judge relying upon the  

figure suggested by the appellant No.1 himself relating to  

the cost of land recorded hereinbefore.   Consequently,  

the  Division  Bench  which  examined  in  detail  the  price  

fetched for  the society  land,  found it  to  be reasonable  

particularly in the light of the adverse factors noticed by  

the General  Body Meeting which prompted the General  

Body to pass a resolution to put the land to auction sale  

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which have been scrutinised meticulously and extensively  

by the single Bench of the High Court as also the Division  

Bench recorded hereinbefore.   In  view of  the aforesaid  

findings  recorded  by  the  Division  Bench,  the  letters  

patent  appeals  were  dismissed  by  the  High  Court  and  

thus it was concurrently held by the single Judge as well  

as the Division Bench also that the auction sale could not  

be held to be illegal, arbitrary or suffering from the vice of  

surreptitious auction sale which could persuade the High  

Court to set it aside as the High Court examined in detail  

the price fetched for the society land and found it to be  

reasonable particularly in the light of the adverse factors  

noticed  by  the  General  Body  in  the  Meeting  which  

prompted the General Body to pass a resolution to put  

the land to auction sale.

17. Feeling aggrieved  with the judgment and order  

passed by the Division Bench dismissing the two Letters  

Patent Appeals, thus upholding  the judgment and order  

of the single Judge, two appeals by way of special leave  

had  been  filed  by  the  petitioners/appellants  Mount  

Everest Co-operative  House Building Society Ltd. and by  

10 members of the  Co-operative Society out of which the  

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petitioner/appellant No.1 Capt.  A.K. Mahindra  withdrew  

himself from the   special leave petitions   due to which  

he now ceases to be an appellant in the appeal filed by  

the members.     

18.  Learned senior counsels Mr. P.S. Patwalia and  

Mr.  C.A.  Sundaram   representing   the  appellant  -  

members of the Mount Everest Co-operative Society and  

the  Mount Everest    Co-operative Society respectively  

assailed the  judgment and order of the Division Bench  

which was pleased to uphold  the judgment  and order  

passed by the single Judge and thus  upheld the auction  

sale  in favour of the auction purchaser respondent No.7  

inter - alia   on the grounds which substantially  are the  

same which had been  urged before the High Court and  

were rejected concurrently  by the single Judge as also  

the Division Bench.  However, since  the counsel for the  

parties were heard at length assailing the correctness of  

the  judgment  and  order  passed  by  the  High  Court,  it  

would  be  appropriate  in  the  interest  of  justice  and  

fairness to the cause to recapitulate  and  deal with the  

same.   

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19.  The  principal  ground  of  challenge  to  the  

auction sale thus are essentially  two-fold.    In the first  

place,  it  was submitted that  the  action of   respondent  

No.3 in suspending  the new managing committee of the  

petitioner/appellant  society  under  Section  34(2)  of  the  

Haryana Co-operative  Societies Act, 1984 was arbitrary  

and  illegal  where  no  proceeding   for  removal  of  the  

managing committee  was pending  under  34(1) of the  

aforesaid  Act  and the  same was  done with  an  oblique  

motive to put the land of the Society to auction sale.  In  

this context, it was also submitted that the action of the  

official  respondents  and  that  of  the   sales  committee  

appointed by the official respondents  in conducting the  

auction sale of the land of the society  on  24.11.2003  

was sham and a fraud  committed on the members  of the  

society and the public at large.  It was therefore further  

submitted that the official respondents and the members  

of the sales committee had colluded in selling the land of  

the society at a throw away price in favour of  respondent  

No.7  which  according  to  the  appellants  has  been  

established  by the records  of the auction conducted  on  

24.11.2003.   Thus,  in  sum  and  substance,  it  was  

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contended that the auction conducted on 24.11.2003 was  

a pre-determined affair,  illegal and a sham auction sale.   

20. Commenting  on  this  part  of  the  averment,  it  

was  submitted  that  it  is  clear  from  all  the  pleadings  

before the High Court raised on behalf of the Society that  

the  Society  was  not  duly  represented  for  want  of  the  

office-bearers  of  the  Society  and  the  entire  process  of  

auction  was  collusive.   According  to  the  counsel,  the  

General  Body Meeting which was called by the society  

and the resolution which was passed therein should not  

have been given effect to.  It was, therefore, urged that  

the Division Bench of the High Court erred in dismissing  

the Letters Patent Appeals filed by the respondents as the  

High  Court  failed  to  appreciate  that  the  action  of  the  

respondents from the time i.e. suspending the Managing  

Committee  was  merely  to  grab  the  land  of  the  

petitioner/society.

21. Elaborating  on  this  aspect,  it  was  further  

submitted  that  on  13.12.2002  Assistant  Registrar,  Co-

operative  Society  suspended the  Managing Committee  

when A.K. Mahindra was the Secretary on the basis  of  

alleged  irregularities   of  the  previous   Managing  

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Committee  under Shri Gupta and not on the ground of  

mal-functioning   of  the  then   existing   Managing  

Committee under Capt.  A.K.  Mahindra.   The Committee  

was  thereafter  illegally  removed  on  5.9.2003   without  

even fixing the date of hearing.  Giving the sequence of  

events,  it  was  stated  that  in  between  13.12.2002  and  

5.12.2004, there was no committee or effective society  

to manage the affairs of  the  co-operative society since  

they had been suspended or removed.   At this time, a  

Board of Administrators was  in control  with  Mr. Ashok  

Sharma as one of the key administrators who acted in  

collusion with the  auction-purchaser.  It has further been  

submitted that during the period  of suspension/removal  

of  the  managing  committee  and  appointment  of  the  

Board  of  Administrators  which  period  was   in  between  

13.12.2002 to 24.11.2003, the property was sought to be  

brought to sale through a sham auction in collusion with  

the auction-purchaser without any notice to the members  

of  the society.    Factual  details  were further given out  

stating that the last elected secretary of the managing  

committee with Capt. A.K. Mahindra as Secretary and 120  

others filed a writ petition on 18.12.2003 challenging the  

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suspension of the managing committee and the sale to  

the respondent No.7.   The society  itself could not file  

any  case since   the  committee had been removed and  

was  under  the  control   of  the  Board  of  Administrators  

whose collusive action was being questioned.   However,  

this writ petition had been withdrawn  to challenge the  

removal before the Registrar but as the Registrar rejected  

the  petition  challenging   the  removal,  another  petition  

was  filed  on  26.4.2005.   In  the  meantime,   a  sham  

election was conducted on 5.12.2004 whereby Mr. Ashok  

Sharma  was  elected  and   this  was  immediately  

challenged  on 6.12.2004.   The election was set  aside  

and once again a Board of Administrators  was appointed  

on 26.9.2007.  Elections  were thereafter again conducted  

on  13.9.2010  by  the   Registrar  and  the  present  

committee  was  elected  on  13.9.2010.   It  has  been  

submitted that this was the true committee representing  

the  members   who  were  absent  and  in  between  the  

period  of  13.12.2002  and  13.9.2010,  the    managing  

committee became  non-existent  which was under the  

control of  Mr. Ashok Sharma who became the Member of  

the Board of Administrators  and is alleged to have been  

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controlling    even  the  Board  of  Administrators.    On  

19.11.2010,  when  the   new Managing  Committee  took  

over, a resolution  was passed on 27.8.2010 after which  

Letters Patent Appeals  were  filed  before the Division  

Bench which were dismissed  and the same are under  

challenge   in  these  appeals  by  way  of  special  leave  

petitions.   

22. On  the  basis  of  the  aforesaid   facts,  it  was  

contended that the  society  and its members were not  

duly represented for want of  the members of the society  

and no General  Body Meeting was called to  discuss or  

decide the nature  of the pleadings to be filed  or  the  

stand to be taken by the members.  The members of the  

society were kept entirely in the dark between the period  

13.12.2002  and  13.9.2010  and  immediately  upon  a  

representative  committee   being  elected,  the  society  

preferred  the Special Leave Petitions  before this Court  

out of which the instant appeals arise.   It  was further  

contended   that  the  plea   of  the  respondent  that  the  

majority of the members have no grievance  is completely  

wrong  inasmuch as  only 120 members  out of   288  

members  had  taken  away  their  payment   and  a  

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substantial number of  those did  it under protest.  The  

allegation, therefore,  that the  cause of action to pursue  

the  matter  do  not  survive  at  the  instance  of  a   few  

members  is fit to be rejected.  It had also been reiterated  

that  the  managing   committee    of  the  society   was  

deliberately  suspended to grab its  land.  

23. The  auction-purchaser/respondent  No.7  

contested the aforesaid plea and first of all submitted that  

only  38  members   before  the  single  Judge  and  10  

members  in  Letters  Patent  Appeal   challenged  the  

judgment  and  order  of  the  High  Court  passed  by  the  

Division Bench and has also given the detailed sequence  

of events under which the managing committee of the co-

operative society  was suspended and also the fact that  

the  decision was taken by the Board of Administrators  

and the General Body in a bona fide    manner with which  

the  respondent  No.7  had  no  concern.   It  was  further  

contended that the decision to sell the land was taken by  

the General Body of the Society after the society  decided  

to sell the land and recorded specific reasons for this  by  

holding a General  Body Meeting  on 2.6.2002.   At  this  

point  of time, Capt. A.K. Mahindra was the Secretary of  

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the  Managing  Committee  who  had  challenged  the  

suspension of the Managing Committee  and  the  sale  

before the Registrar,  had himself  taken  active part  in  

the society’s  decision to  sell  the land   who has now  

discreetly  withdrawn   himself from the present special  

leave petitions.  The General  Body Meeting   minutes had  

recorded the reasons  for the General Body to approve of  

the auction sale   indicating that  it was agreed that  the  

society    could  not  develop  the  land  due  to  financial  

constraints  as the land was agricultural land for which  

license   had  been  denied,  certain  areas  were  under  

disputes/litigation, the land was not located  close to the  

main road  and was not contiguous  had multiple  share  

holders  and  thus  did not command  such land rates  as  

other properties  in the area and, therefore,  a conscious  

well-deliberated decision  was taken by the General Body  

to  sell  the  land  as  that  was  a  viable   and   beneficial  

alternative  for the members  to go into.  However, the  

auction purchaser-respondent No.7 was not in the picture  

at all when the decisions were taken by the General Body  

way back in 2002.  

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24. Learned senior  counsel  for  the appellants Mr.  

Patwalia however countered this submission and assailed  

it by submitting that  even if the decision by the General  

Body  was taken to dispose of the land  by putting it to  

auction  sale, it was not that the  auction could  be held  

and the land   could be sold at a throw away price putting  

the society to a great loss.  It was, therefore,  urged that  

the basic question would be  whether  the auction was  

conducted fairly and correctly so as to  get the maximum  

price.  According to the learned counsel a perusal of the  

auction notice  and auction records would disclose that it  

was not done so and the auction sale is a complete sham  

as  the   price  at  which  the  land  was  sold,  was  highly  

inadequate and  much  below the price which it ought to  

have fetched.  

25. On a scrutiny of the sequence of events and the  

plea of the contesting parties  on the pivotal  point    as to  

whether  the decision taken to auction sale the land  was  

bona fide  or malafide, tainted with  dishonest  motive  

and whether the suspension of the Managing Committee  

and appointing the  Board of Administrators was correct  

or  not,  it  can  clearly   be   noticed   that   when  the  

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managing committee  under Mr. Gupta as Secretary was  

suspended,  a  new   managing  committee  after  fresh  

election  took  over,   when  on   5.8.2001  Capt.  A.K.  

Mahindra   became   Secretary  of  the   Managing  

Committee.   It  was  under  his  secretaryship   that  a  

General Body Meeting was convened and a resolution was  

passed by the General Body to  auction sale  the land  

recording specific  reasons  in the Minutes of the General  

Body Meeting whereby the Honorary Secretary/Capt. A.K.  

Mahindra  brought out the options to the notice of the  

General Body.  One of the options was to construct flats  

on the land for which tender had been floated and it was  

noted that  out of the two parties who responded to the  

tenders,  one  namely  M/s  Antriksh  Engineers  and  

Construction  &  Corporation  had  shown  interest.   Their  

main terms were as follows:  

(a)  that  they  will  invest  all  money  required  to  obtain CLU, development charges etc. i.e. they will  invest right upto the stage where construction can  begin.   This  will  entail  an  expenditure  of  Rs.8  crores approximately.  

(b)  that they will refund the deposit of a limited  number  of  members  after  CLU  permission  is  received.   

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I  that in lieu of the money invested they will be  given 50% of FAR and;  

(iv) construction rate would be Rs.850/- sq.  feet which is deductible.   

It was given out for information of the members  that  the  advantage  would  be  that  the  Society  would be able to move forward in achieving its aim  and that limited number of members desirous of  leaving Society will get their money back.  In so far  as  the  disadvantages  were  concerned,  it  was  noted that it will take around 6 months to get CLU  permission by which time Section 4 notice under  the  Land  Acquisition  Act  may  be  issued  for  acquisition  of  the  land  which  the  society  possessed.   It  was  given  out  that  a  minimum  period of  3 years will take before the construction  was  announced  and  before  completion  goes  smoothly.   In  case,  the project  was undertaken,  1600  sq.  feet  flat  would  cost  Rs.13.60  lakhs  approximately,  and  assuming  a  member  of  the  Society  had  paid  Rs.4  lakhs  the  flat  to  be  constructed would cost him Rs.17.50 lakhs.  It was  therefore deliberated that the flats at a lower rate  than  Rs.17.50  lakhs  were  readily  available  in  Gurgaon in Jal Vayu Vihar and Rail Apartments at  Rs.12 to 13 Lakhs.

The Society therefore gave the second option to  the General Body and the second option was sale  of the land which were in possession of the society  free from litigation.   The Society  noted that  the  land prices had gone down at the relevant time  which was lower  than the purchase price in  the  last few years when the Society had purchased the  land at Rs.7.5 crores.  Thus, it was noted down by  the  Society  before  the  General  Body  that  if  the  land belonging to the Society were to sell the land  it will be unable to recover the full amount which  the society has earlier invested in purchasing the  land.  However, a comparative assessment of the  

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objectives were also taken note of by the society  which were as follows:

(v) Will  avert  the  danger  of  the  land  belonging to the society being acquired.

(vi) Will avert all the cost and uncertainties  of  the  litigations  being  faced  by  the  Society.

(vii) Members  of  the  Society  will  get  back  around 70% of their investments.

(viii) Will pave the way to recover the balance  amount of investments by members.

Thus, on a comparative assessments of the land  being retained by the Society and in case it was  disposed  of,  the  General  Body  of  the  Society  resolved on 02.06.2002 after  taking a conscious  decision to dispose of the land of the Society.”

26. It  was in  view of  this  decision that  follow up  

actions  were taken by  the Board of Administrators under  

the Sales Committee   inviting  proposals  for the sale of  

the  land  as  the  Managing  Committee  under  Captain  

Mahindra  and  Treasurer  Ashok  Sharma  was  under  

suspension  due  to  the  alleged  illegalities  and  

irregularities.   The  learned  single  Judge  as  also  the  

Division Bench  of  the High Court   has scrutinized  and  

taken  note  of   the overwhelming  circumstance  which  

weighed with the High Court.   It was considered by the  

High  Court   which  took  note  of  the  fact  that  although  

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10.69 acres of land was claimed by the society, 9 acres  

i.e. 3.5 acres in Khasra Nos. 1977, 1678 and 1679 as also  

5.5 acres in Khasra Nos. 1692, 1696 and 1697 were  in  

dispute/litigation in the District Court, Gurgaon.  The clear  

land  without  any   dispute  with  the  society   was  only  

around 1.69 acres.  The records further indicated that 3.5  

acres of land  bearing  Khasra Nos.  1977, 1678 and 1679  

was  never   purchased  by  the  society  as  per  the  then  

Secretary Mr. R.P. Gupta.  The learned single Judge has  

also taken note of the fact that this was under litigation  

as it was purchased by another society –Saraswati Kunj  

whose registration was in  progress.   Thus,  if  3.5  acres  

were  to be deducted   out of 4.5 acres, only 1.1 acre was  

left  to  the  society.   The  learned   single  Judge  further  

noted that the land in question  had been surveyed by  

the Government  along with other vacant land with a view  

to clear it   and the acquisition  process  had been set in  

motion.   The  land  belonging  to  the  society  had  been  

encircled/  surrounded   by  another  society   namely  

Saraswati Kunj.  Therefore, the  future  course of action  

left to the society  which has been recorded hereinbefore  

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in  detail  in  view  of  the  considerations  made  by  the  

General Body, was to dispose of the land of the society.  

27. Insofar  as the dispute regarding  suspension of  

the Managing Committee under Captain A.K. Mahindra in  

view   of  the  alleged  irregularities   of  the  previous  

managing committee  is concerned, it had   started only  

on   13.12.2002   and  all  the  disputes  in   regard   to  

removal  and induction of the society under Capt.  A.K.  

Mahindra admittedly took place between  13.12.2002 and  

24.11.2003.    But  it  is  an  equally  undisputed  factual  

position  that the resolution was passed by the General  

Body in  its  Meeting  for   sale of  the land on 2.6.2002  

when the managing committee constituted   on 5.8.2001  

under  Capt.  A.K.  Mahindra  was  duly  in  place  and  no  

member of the society had raised any grievance  against  

the said decision that it was  erroneous  or tainted in any  

manner  and the  society  was duly represented  by the  

Secretary and all members of  the society.   The case of  

the   managing  committee  and  its  members  that  the  

Assistant  Registrar  illegally  suspended  the  managing  

committee  under  Capt.  A.K.  Mahindra   based  on  the  

alleged  irregularities   of  the  previous   managing  

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committee  under   Mr.  Gupta,  first  of  all  took place on  

13.12.2002 from which  it is clear  that  when the General  

Body Meeting  was conducted and resolution was passed  

on  2.6.2002, the Secretary of the Managing  Committee  

Capt.  A.K. Mahindra  was duly and legally in  place as  

Secretary  and was removed by the Registrar  of  Society  

only at a later stage on 05.09.2003 after which  the Board  

of Administrators was appointed by the Registrar and a  

Sales  Committee  was  also  set  up  under  whose  

supervision  the  auction   sale  was  decided  to  be  held  

under supervision of the Sales Committee.  It may further  

be noted that the proposed auction  was also challenged  

as an application for  injunction restraining   the  auction  

sale  was filed  before the District  Court  where an order  

of  injunction  restraining  the  auction  sale  was  also  

granted by the District Court but the said injunction was  

later vacated against which no appeal was preferred by  

any member of the society.   It is no doubt true and  it  

has been contended that as no Managing Committee was  

in existence  at that point of time, no appeal could be  

preferred  against  the  order   vacating  the  injunction.  

However, this contention is clearly without substance for  

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if  the members in their  individual  capacity could assail  

the  auction  sale  by  filing   a  separate   writ  petition,  it  

cannot  be  accepted  that  they  were  precluded  in  any  

manner from challenging the auction sale  in case  they  

were  aggrieved   and  the  subsequent  challenge  after  

seven  years  in  2010  clearly  appears  to  be   an  after  

thought   at  the  instance  of  a  miniscule  number  of  

members  who decided to assail the auction sale clearly  

as a matter of gamble  -  

28. As already noted, the resolution by  the General  

Body of the Society to auction sale the land was taken  

way back on 2.6.2002 vide the resolution passed in  the  

General   Body when there was dispute existing regarding  

the functioning  of the Managing Committee and it is only  

after  more than one year  that the Secretary – Mahindra  

was  removed   by  the  Registrar,  Co-operative  Societies  

and since he was  removed, he challenged his removal as  

also the  decision of the General Body to auction sale  the  

land which resolution during his tenure as Secretary was  

passed.  In fact as long as he  was the Secretary  he had  

not merely  approved the decision of the General Body to  

auction sale,  but also the  existing market price of the  

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land  and only when he was removed from the post of  

Secretary,  he started questioning the auction sale held  

under the supervision of the Board of Administrators as  

also the decision to auction sale of the land conveniently  

ignoring  that  the  same  had  been  approved  by  the  

General Body Resolution during his tenure as Secretary  

when  there  was  no  dispute  regarding  the  Society’s  

functioning.   

29. It  may  further  be  noted   that   the  then  

Secretary Capt. Mahindra although had  challenged  his  

removal   as Secretary of the Society, he never thought  it  

appropriate  to  file any appeal against the order vacating  

the  order  of  injunction  against   auction  sale  which  he  

could have done as the ex-secretary if he was genuinely  

concerned.    The  matter  regarding  the  dispute  

challenging  the auction sale had been filed in a court of  

competent  jurisdiction   where  initially   an  order  of  

injunction was also  passed but  the  same   was finally  

vacated against which no appeal was preferred  either by  

any member of the society or the Secretary.  The order of  

injunction against auction sale was finally vacated but no  

member  was  conscious   or  vigilant  to  challenge   the  

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same.    On  the  contrary,  large  number  of   members  

gradually  withdrew the amount and walked out of the  

society.  It is clear that for the first time in the year 2010  

when  a  new  managing  committee  was  elected  on  

13.9.2010  that  a  decision  was  taken  to  challenge  the  

auction sale by which time  the existence of the society  

withered  away when the  majority of the members out of  

288 left and only 38 members remained clearly implying  

that  for  all  practical  purposes  the  Society  ceased   to  

retain its  legal entity as the land of the society for which  

contribution had been made was  by all the 288 members  

and not  merely  38 members.   Even  out  of   this    38  

members,  only  10  members  preferred  Letters  Patent  

Appeal before the High Court  although  the General Body  

resolution  was  passed  by  the  majority  and  cannot  be  

allowed to be over ruled by 10 members only.     

30. Much emphasis has been laid  on  the valuation  

of  the  land  as  it  has  been alleged that  the  land was  

auctioned/sold at a much lower price than  was capable of  

fetching  which  remains  unsubstantiated  in  absence  of  

any evidence in this regard as to what were the market  

price of the undeveloped land in the surrounding areas.  

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On the contrary, it could be noted that the circle rate of  

the land at the relevant time was Rs.12 lacs per acre and  

the market rate was Rs.40 lacs per acre and as per the  

auction held, the price fetched in the auction ultimately  

worked out to Rs.46 lacs per acre.  The appellants had  

not furnished any material before any court as to what  

was the market price of the undeveloped land in the year  

2003 when the auction sale was held in pursuance to the  

General Body Resolution of the Co-operative Society.  In  

any  case,  this  question  at  this  stage  is  not  of  much  

relevance when the High Court has increased the  price of  

the land at Rs.70 lakhs per acre  and members of the  

society  have  been  held  entitled  to  refund  of  their  

contribution amount along with 6 % interest in view of  

which undervaluation of the cost of the land no longer  

subsists.    It  has  no  where  been  urged  that  at   the  

relevant point of time in the year 2003 when the land was  

auctioned/sold, its valuation was much more than Rs.70  

lakhs   per  acre  so  as  to  treat  it  prejudicial   and  

detrimental   to  the  interest   of  the  members  of  the  

society who had contributed for purchase of the land.   

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31. Thus, if  the members  of the Society  by virtue  

of  a General Body  resolution had decided to auction sale  

the land  during the tenure of a duly elected  Secretary of  

the Society A.K. Mahindra and for more than  one year no  

member of the society  had  any reason to challenge  the  

same  after  which  the  Board  of  Administrator  was  

appointed  and  the  price  of  the  land   on  the  date  of  

auction could not be more than Rs.70 lakhs per acre, it  

would  be unfair and unjust to interfere with the auction  

sale after 11 years of its holding on the plea  that the  

price fetched in the auction suffers from  undervaluation  

as the same cannot be  compared with the present day  

valuation  which  obviously  must  have  grown   over  the  

years as compared to the year 2003 when the auction  

sale was held.  In this context, it may also be noted that  

the Secretary  Capt. Mahindra  as also Patwari had also  

given  out in writing  and is on record which indicates that  

the value of the land  at the relevant time which was not  

a developed land at the relevant time when the land was  

put to auction sale was not more than Rs. 40,000 per acre  

which  cannot be doubted in absence  of any material  to  

the contrary specially when the circle rate of the land was  

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Rs.12 lacs per acre only and the land was auction sold at  

Rs.46 lacs per acre approximately in the year 2003.  In  

any  case,  the  price  of  the  land  has  already  been  

increased to Rs.70 lakhs per acre by the High  Court and  

has been ordered to be paid alongwith 6 % interest and  

thus the Society has not been put to monetary loss on  

account  of  the  sale  conducted  in  pursuance  to  the  

resolution of the General Body which was passed during  

the  tenure  of  a  duly  constituted  Managing  Committee  

under Captain Mahindra.  It  is further clear that only a  

handful of members of the co-operative  society who are  

now only 10 out of 288 and have not withdrawn from the  

society by withdrawing  their amount, expects that all the  

following  aspects and circumstance  of the case should  

be brushed aside  which are as follows :

(i) The  fact  that  the  General  Body  Meeting  was held  on 2.6.2002 on which date there  was no dispute regarding  the functioning  of the managing committee;

(ii) Resolution of the  General Body Meeting was passed  unanimously  on  2.6.2002  approving  the  decision  to  auction sale the land when the Society was functioning  under a duly constituted Managing Committee and had  not been suspended.  The suspension of the Secretary of  the  Society  was  much later  after  more  than a  year  in  

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2003 and during this period the resolution of the General  Body was never challenged by any member.

(iii  )  The  constitution  of  the  Board  of  Administrators  should be  struck down as invalid  although the members  of  the  Co-operative  Society  had  never  challenged  the  constitution of the Board of Administrators;

(iv) The  Sales/Supervision  Committee  under  whom the auction sale was held should be  treated as a defunct body;

(v) The valuation of the land in the year 2003  which was Rs.12 lacs per acre as per circle  rate and Rs.40 lacs market rate should be  disbelieved in spite of any evidence to the  contrary  which  in  any  case  has  been  increased to  almost the double  by the  High Court and has awarded 6 % interest  also which clearly takes care of the price  factor  as  the  price  of  the  undeveloped  land could not have been more than Rs.70  lacs per acre at the relevant time in the  year 2003 when the auction sale had been  held;   

(vi) All activities  in regard to the conduct of  the  auction  sale  should  be   treated  as  bogus  and  sham  although  the  District  Court had vacated the order of injunction  restraining the auction sale against which  no appeal was filed;   

(vii) Only  10  members   out  of  288  are  now  aggrieved  which renders the co-operative  society  into  a  non-existent  co-operative  society as even the rest 28 members out  of 38 who had filed the writ petition in the  High  Court  have  withdrawn  from  the  litigation.    

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32. From the background, facts and circumstance  

of the matter, it is further clear  that the members of the  

co-operative society had clearly  opted  a wrong forum  

by  filing   a  writ  petition  in  the  High  Court  for  if  they  

expected the court to appreciate evidence and record a  

finding  on  the  aforesaid  disputes  for  setting  aside  the  

auction sale,  it  is  obvious  that  the petitioners  should  

have approached the civil court of competent jurisdiction  

where  it  would  have  had  the  opportunity  to  adduce  

evidence  and prove all the allegations of under valuation  

and the alleged fraud challenging the auction sale.   In  

fact,   the writ  petition for  assailing  a  factual   dispute  

ought not  to  have been entertained by the High Court  

under its writ jurisdiction but in the interest of justice and  

fairness as also equity and good conscience,   the High  

Court entertained  a dispute which purely was of a civil  

nature  since  all  contentions  which have been raised  

would have required appreciation of evidence.  Yet the  

High Court to a great extent has taken care to scrutinize  

all aspects of the matter in regard to the writ petition filed  

by  the  co-operative  society  members  who  sought   to  

assail   the  auction  sale   clearly  alleging  disputed  

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questions of fact alleging fraud in conducting auction sale  

as also valuation of the land in question which  required  

adducing  of evidence and the same could not have been  

entertained  by the High Court  under Articles 226 and  

227     of  the  Constitution   except   to  the  extent  of  

considering whether  the order passed by the Registrar,  

Co-operative   Societies   rejecting   the  challenge   of  

removal of the managing committee was sustainable or  

not.  Yet the High Court has entered into all aspects and  

has  then  reached  to  a  conclusion  considering  entire  

conspectus  of  the matter  which in  our  view cannot  be  

held to be arbitrary, illegal or unjust in any manner.   

33. There   is  yet  another   feature  of  the  matter  

which emerges from the fact that when the removal  of  

Capt. A.K. Mahindra  as a Secretary of the society  has  

been set aside, then all activities including passing of the  

General  Body  resolution  in  the  meeting  that  were  

conducted during his tenure as Secretary of the Managing  

Committee  cannot be held to be illegal in any manner.  

Thus  when   the  General  Body  resolution  was  passed  

during the  tenure  of  a  validly  elected  managing  

committee  under  Capt.  A.K.  Mahindra as  the  Secretary  

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and the resolution to auction sale the  land was passed  

during his  secretaryship whereby the value of  the land  

was also assessed  and approved by Capt. A.K. Mahindra  

himself  and no allegation was levelled by any member  

against  Capt.  A.K.  Mahindra  as  all  allegations  were  

confined  to  Ashok  Sharma,  then  the  resolution  of  the  

General Body obviously could not have been faulted with  

specially when no appeal  against  the order of the Civil  

Court vacating  the order of injunction against the auction  

sale was filed by any member of the society specially the  

appellants herein.  The appellant-society and  a handful of  

members now  restricted to 10,  have levelled allegations  

but mere allegation cannot be treated as a proof and if  

the   members  were  in  a   position  to  assail  the  same  

which clearly would have required strict  proof  by way of  

evidence, they ought to have gone in for a civil suit  and  

the  writ  jurisdiction  was  clearly  not  the  appropriate  

remedy  to  establish  and  prove  questions  of  fact.   Yet  

when the single Judge as also the Division Bench have  

meticulously examined all aspect of the matter discussed  

hereinbefore  and  the  same  does  not  indicate  any  

perversity  in  the  conclusions  drawn,  it  would  be unfair  

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and unjust to interfere with the same by indulging into a  

roving enquiry merely accepting the contentions of some  

of the members of the Society which are clearly based on  

speculation,  conjecture  and  apprehension.   The  Courts  

therefore  in  a  circumstance  of  this  nature  cannot  be  

expected to decide such an issue on suspicion hunch or  

even intuition which clearly would be abstract in nature  

and has no place in the eye of law even before a court of  

fact and much less before a court under writ jurisdiction.  

34. The  cumulative  effect  of  the  entire  analysis  

based on the facts and circumstance in the light of  the  

reasonings   assigned  by  the  Single  Bench  of  the  High  

Court as also the Division Bench, it would not be just and  

proper  to interfere  with the   judgments  and orders  

passed by the single Judge as also the Division Bench of  

the High Court  holding  concurrently that the auction sale  

which was in pursuance   to the  resolution passed by the  

General Body of  the Co-operative Society based on the  

price  prevalent  on  the  date  of  auction  sale  could  be  

faulted on the ground of allegations leveled on the basis  

of  assumption  and  speculation  of 10 members of the  

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society  who  had   assailed  the  same by  invoking   writ  

jurisdiction.   

35. At  this  juncture,  it  would  be  appropriate   to  

observe that in judging  the functioning  of a co-operative  

society  or any other statutory body where the democratic  

process  of election  is adopted in pursuance to the Rule  

and a  collective decision  is taken  by majority  of the  

members  of  the  entire   body  expressed in  terms  of  a  

resolution passed by the General Body, then the plea that  

the same should be ignored and bye-passed even if the  

same has been  challenged  by a  handful of  members on  

speculative  allegation  and  assumption  contrary  to  the  

reasons recorded in the  Minutes Books on the plea of  

mala  fide,  without  any  evidence,  would  be  illegal  and  

arbitrary to  accept being contrary to the rule unless the  

alleged  malicious  action  is   writ  large   on  the  alleged  

decision and is challenged  by majority of the members.  

If a decision is taken  by majority of the members of a Co-

operative Society or any other body under a statute in  

terms of the Rule, it cannot be over-ruled  by minority on  

the ground of  mala fide or fraud unless it  has passed  

through a  strict  proof  of  evidence.   It  is  a  well  known  

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dictum  that   mala  fide  is   always  easy  to  allege  but  

difficult to prove as the same  cannot be held as proved  

relying on assumption, speculation and suspicion.   

36. In  the instant  matter existing 10 members of  

the  society  have  practically  reduced  the  Co-operative  

Society to  a defunct  society as all members except 10  

out of 278 have finally withdrawn.  Hence,  the auction  

sale  at their  instance, although  the said auction sale  

had taken  place in view of the majority support of the  

General Body resolution which was conducted under the  

supervision of the Board of Administrators appointed by  

the  Registrar,  Co-operative  Society  and  the  Sales  

Committee is difficult to scrap it as illegal in spite of the  

overwhelming  material  relied  upon  by  the  High  Court  

which has upheld the auction sale.   Thus  in  a matter  

where the decision has been  taken collectively  by the  

General  Body  reflected   in  the form  of  a   resolution  

passed  by  the   General  Body,  it  would  be  unjust  and  

inappropriate   to  nurture  a  lurking  doubt  and  keep  

suspecting  the decision by entertaining   the version of a  

handful  who might be disgruntled  or might be  genuine  

but  would be difficult to be gauged  by any court  so as  

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to  over-rule  the  General Body resolution  and accept the  

view  of  the   minority  based  on  no  evidence  except  

assumption  and  speculation.   If  the   instant  matter  is  

viewed  meticulously,  it  is  clearly  obvious   that   the  

appellants have  expected the court of  writ jurisdiction to  

enter into  the correctness and validity of the auction sale  

essentially  by  expecting  the   Court  to  draw  inference  

without evidence  that the auction sale was not bona fide  

as  it  did  not   fetch   the   desired  value   of  the  land  

contrary to the materials available on record.  Plethora of  

circumstances have been related to establish  the  same  

which  clearly  are  in  the  realm  of  conjecture  and  

speculation, yet the Single Judge and the Division Bench  

have  both   scrutinized  and  considered   the  same and  

have  recorded  a  finding  against  the   appellants  which  

cannot  be  held   to  suffering  from   perversity  being  

contrary to the existing materials before the Court which  

have  been  relied  upon.   Thus,   the  validity  and  

correctness of the General Body  resolution in view  of  

which the land was put to auction sale cannot be  allowed  

to   be assailed specially when the price/alleged under  

valuation  of  the  land  in  the  auction  sale  no  longer  

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survives as the High  Court  has allowed  the value of the  

land  to be increased by increasing  it from Rs. 40 lakhs to  

Rs.70 lakhs per acre which  has been ordered to be paid  

along  with  6  %  interest.   The  appellants  have  not  

furnished  any material as noted by the High Court that  

the cost of the land in the year of the date of auction  

which is 2003 was more than Rs.70 lakhs per acre so as  

to   offer  a  cause  to  interfere   even  if  it  were   to  be  

interfered in the interest of equity, justice and fair play  

specially when the circle rate of the land in the year 2003  

when the auction was held was Rs.12 lacs per acre only.   

37. Hence, the endeavour of the appellants that the  

auction sale  should be set aside and the land be  revived  

to the society cannot be entertained in absence   of  proof  

of mala fide contrary to the existing materials on record  

on the basis  of  speculation,  assumption and inference  

urged by the appellants.      

38.       Assuming  for a while although not conceding  

that the land were to be reverted  to the  co-operative  

society  for any reason whatsoever at this stage after 11  

years of the sale during which the appellant Society has  

practically ceased to exist where all members except ten  

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out of 288 are left, it is obvious  that the land cannot be  

reverted to the original members who have taken their  

refund.  In that event, the appellant –society through a  

handful of members numbering ten is bound to indulge in  

trading of the land by inducting new members quoting  

new rates at their instance clearly sacrificing  the very  

spirit    of a co-operative society as the land cannot be  

marketed even by the defunct Co-operative Society at the  

old  rate  which  land  had  been  purchased  out  of  the  

contribution made by the erstwhile 288 members out of  

which only 10 are now left into the fray who had never  

even objected to the General Body Resolution approving  

sale of the land nor challenged the auction sale in the  

year 2003 when the auction was held.   

39. We,  thus  find  no  illegality  or  infirmity  in  the  

impugned  judgments  and  orders  passed  by  the  single  

Bench as also the Division Bench concurrently refusing to  

set aside the auction sale held 11 years ago in the year  

2003 at the instance of a Co-operative Society which has  

practically  been  rendered  defunct  and  thus  ceased  to  

exist  apart  from  the  other  weighty  reasons  discussed  

hereinbefore.   Consequently,  both  the  appeals  are  

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dismissed but in the circumstance without any order as to  

costs.

………………………………….J. (Gyan Sudha Misra)

………………………………….J. (Pinaki Chandra Ghose)

New Delhi; April 24, 2014    

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