Co-operative Society- Right of Membership- Society has the right to refuse membership.

The Petitioner-Society is a Tenant Cooperative Society, as contemplated under Rule 10 of the Maharashtra Cooperative Societies Rules, 1961. The Respondent No. 5 applied for the transfer of shares and suit flat from the name of Respondent Nos. 3 and 4th members of the Petitioner Society on 24th January 2004. Respondent No. 3 was the Director of Respondent No. 5 and also the Secretary of Petitioner Society. The Society refused the said transfer for want of sufficient stamp and registration. The Society never accepted the payment on behalf of Respondent No. 5, and even through Respondent Nos. 3 and 4, and communicated their inability to transfer the suit flat. The Application filed by Respondent No. 5, was therefore rejected and the flat remained, so also the membership, in the name of Respondent Nos. 3 and 4. The Society returned the amount paid to it. Respondent Nos. 6 and 7, on 15th August 2008, filed an Application for transfer of the suit flat and shares from Respondent No. 5 to them. On 26th August 2008, the same was rejected as Respondent No. 5 was not the owner of the suit flat in the above background. Respondent Nos. 6 and 7, therefore, invoked section 23(1) of MCS Act, 1960 before the Deputy Registrar of Cooperative Societies on 13th April, 2009. The Registrar directed that they be admitted as members in respect of the suit shares and the suit flat. The Petitioner Society therefore, preferred a Revision Application and challenged the above order. Respondent No.1 the Divisional Joint Registrar by impugned order dated 15th December 2009, rejected the Revision Application, therefore, the Writ Petition was filed by the Society.

The Hon’ble Court observed that the MCS Act and Rules made there under makes provisions for members and membership and various classes of the same and the procedure to be followed for getting such membership. Mere filing of Application for getting membership is not sufficient. The Society is governed and run by the byelaws, which is basic requirement to consider to grant and/or refuse such membership. Normally, the Society, needs to grant membership if all other requisite elements and/or qualifications are satisfied. Even for rejection, the Society must give sufficient reason and/or must show the grounds for such refusal of admission. In the present case, for the above stated case, the Society refused to accept the membership Application.

The basic scheme and procedure so prescribed under the MCS Act referring to “Member”/”Membership”. Section 2(19)(a) provides the concept of “member”. The concept “deemed member” as provided in sections 22(2) and 23 is not defined. Section 22(2) deals with the members who became members and section 23 provides a procedure for open membership. For deciding the membership issue, the aspect of restriction on transfer or charge of share or interest, as contemplated u/s. 29 is also relevant, so also to maintain the register of members as contemplated u/s. 38 of the MCS Act. Rule 38 of the byelaws provides that the Society needs to follow the byelaws, which binds the Society, as well as, its members. Rule 19 deals with the conditions before admission for the membership. This also provides the detailed procedure to be followed by all the parties. Rule 24 deals with the procedure for transfer of shares, as no transfer of shares shall be effective unless the condition so provided under the Rules and the Act are fulfilled.

Thus for transfer of membership and/or shares, the concerned parties need to follow the various procedure and the supporting material and documents. The Society needs to apply its mind to the law, as well as, the related record before granting and/or refusing admission. The statutory Authorities are also under obligation to consider this, if the Society refused the membership and/or any challenge is made to grant such admission. These, are essential elements before considering the rival case, as well as, the contentions at every stage of admission of members and/or granting membership.

Merely because someone has claimed membership, a Society is not under obligation to grant the same. The lawful occupation, their rights, title and interest in the property, permissible transfer of shares and/or property and/or interest as per the byelaws and all related aspects, just cannot be overlooked by the concerned parties, including the Society, as well as, the Registrar/Authorities.

The Society having refused to grant admission with reasoned order, the interference by the Respondent Authority in the present facts and circumstances of the case and specifically by not giving the reasons in support of their reversal order as contemplated and by overlooking the provisions and procedures of the orders passed by the Authorities are unsustainable, therefore, required to be interfered with.

Thus, the Hon’ble Court held that the fact that Respondent Nos. 6 and 7 have purchased the property and are in occupation of the same since 2008; their entitlement based upon the said transaction and/or related agreements need to be reconsidered in accordance with law by the concerned Authorities afresh, by giving full opportunity to all the parties concerned. Further, the jurisdiction of Registrar u/s. 23, though nowhere contemplated to determine the validity and/or legality of the documents, which are executed in favour of the parties, but still the basic elements as contemplated under the scheme and the provisions as referred above, right from the byelaws of the Society, need to be looked into before granting and/ or refusing membership. The serious issue of validity and/ or legality of the documents may be the matter of trial and/ or inquiry before the appropriate forum, but that itself is not sufficient to deny the membership, if all requirements are prima facie satisfied.