Co-operative Societies – Housing Society – Redevelopment: Minority members of co-operative society bound by the resolution passed by the majority: Co-operative Societies Act.

The respondent society entered into an agreement dated
7.5.2008 to demolish an existing old building and to develop the plot/ property
as agreed.

There is no dispute that the agreement provides a time bound
schedule: to complete the project within 18 months from the date of receipt of
the full commencement certificate from MCGM. It also provides that pending
construction, the developer has to provide alternate suitable residential
accommodation to the respective members. Out of the 12 members, 10 members have
already shifted to the premises provided by respondent society.

The appellants are the members who objected in the Special
General Body Meeting, dated 2.3.2009, by endorsing ‘not agreeable’. However, the
resolution was passed by a majority. This resolution remained unchallenged.

The dispute was pending before the Arbitrator as the society
was unable to handover the possession to the developer. As the relief claimed in
the petition could not be granted under Sec. 17 of the Act, the Society had
invoked Sec. 9 of the Arbitration Act in the given background. The Hon’ble High
Court allowed the petition of the respondent society by appointing a receiver.
Against the said order, the minority members had preferred the present appeal.

The Hon’ble Court held that the appellant minority members
were bound by the agreement between the developer and the society. The purpose
of the society which is governed and run in pursuance of the MCS Act is to have
cooperation from all its members to fulfil its aims and objectives as per the
bye-laws of the society. Therefore, merely because two members are objecting to
the said resolution, it in no way affects the special resolution passed by the
majority and the agreement entered into between the parties accordingly. The
parties are bound by the same. It was a well established position that once a
person becomes a member of the co-operative society, he loses his individuality
with the society and has no independent rights except those given to him by the
statute and the bye-laws. The member has to speak through the society or rather
the society alone can act and speaks for him qua the rights and duties of the
society as a body. So, as long as the resolutions passed by the general body of
the Respondent No. 2 Society were in force, and not overturned by a forum of
competent jurisdiction, the said decisions would bind the appellants.

Sec. 9 of the Act, as invoked in the present matter, was
basically against Respondent No. 1 Society, as in its reluctance, it was unable
to hand over the premises, and, therefore the necessary commencement certificate
could not be obtained to proceed and complete the construction within 18 months;
because the minority members were not cooperating. Any delay was not in the
interest of the parties as well all the society members. The society has no
objection if the relief as prayed was granted by way of appointing a receiver.
Thus

Sec. 9 was rightly invoked in aid of the main relief/claim
which was pending before the Arbitral Tribunal. The appellants were not parties
to the agreement in question. The society had entered into the said agreement,
where there was a clause of arbitration. At this stage, all the members are
bound by the same. The relief under Sec. 9 of the Act, therefore, was rightly
granted against the consenting society.

In the present case the majority decision/ resolution
followed by the agreement binds the society and its members under the law.
Hence, the receiver appointed to handover vacant possession to the developer for
demolition and redevelopment was upheld.