HYDERABAD KARNATAKA EDUCATION SOCIETY versus REGISTRAR OF SOCIETIES AND ORS.

Citation: [1999] SUPP. 5 S.C.R. 161 · Decided: 07-12-1999 · Supreme Court of India · Bench: S.B. MAJMUDAR · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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HYDERABAD KARNA T AKA EDUCATION SOCIETY 
v. 
REGISTRAR OF SOCIETIES AND ORS. 
DECEMBER 7, 1999 
[S.B. MAJMUDAR AND A.P. MISRA, JJ.] 
Karnataka Societies Registration Act, 1960-Section 2b,-Rule 7 
amended as 7 A-Provision for automatic cessation of ordinary membership 
A 
B 
on failure to pay yearly subscription within 3 months-Held, not violative C 
of the Act-Not harsh or arbitra~Further Held, Rule runs parallel to 
Section 2 (b) which provides for resignation of members. 
Section 6(2)-Rule 7 A-Held does not violate the provision of right of 
voting by valid members-Karnataka Societies Registration Act, 1960-Rule 
7 A erstwhile Rule 7-Framed under Karnataka Societies Registration Rules- D 
Providing for automatic cessation without notice to members on failure to 
· pay subscription provision read down-Defaulter can apply to society to 
show that he was prevented from doing so due to unavoidable reasons -An 
application in this regard, held, has to be moved within the end of the year 
concerned. 
E 
Respondents 2 to 10 who had ceased to be members of the appellant 
Society due to their default in payment of subscription within the prescribed 
time as laid down in Rule 7 A of the Rules framed unrler Karnataka Societies 
Registration Act, 1960 challenged before the High Court the validity of the 
Rule 7 A and erstwhile Rule 7 of the Act of 1960 wherein it was provided that 
a member automatically ceases to hold membership on his failure to pay F 
subscription for 3 consecutive months. A Single Judge of the High Court 
dismissed the Writ Petitions holding that Rule 7 A was not inconsistent with 
Section 2(b) of the Act which provided that a member on resignation would 
cease to be a member parallel to Section 2 (b) as the defaulter can be treated 
to have resigned from membership. 
G 
The appeal filed by the Respondents before the Division Bench was 
allowed. The Division Bench held that Rule 7 A and for that matter earlier 
Rule 7 were ultra vires Section 2 (b) of the Act of 1960 and even otherwise 
they were harsh and were liable to be struck down being arbitrary. The Division 
161 
H 
162 
SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R. 
A bench also issued consequential directions to the Registrar of Societies. 
In appeal to this Court the Appellant-Society contended that the Division 
Bench had patently erred in taking the view that the impugned Rule 7 A was 
ultra vires Section 2(b) of the Act, that on a conjoint reading of the Rule and 
other relevant provisions of the Act it could be held that Rule 7 A ran parallel 
B to Section 2 (b) and did not violate it, that a bye-law or a Rule is a contract 
between the parties and would remain binding on the parties, that there was 
no provision for issuing a notice to the member who was in default of payment 
of subscription for the year in question as the thrust of the bye-laws was very 
well known to all members and these bye-laws were binding on them, and if 
C they by their own volition failed to pay the subscription within the three months 
period allowed to them, they automatically ceased to be members, that such a 
provision in the bye-law cannot be said to be contrary to any express provisions 
of the Act, that there was no question of issuing a notice or hering the 
defaulter concerned as it is his inaction that brings out the consequential 
D 
adverse result on him or her, that the stand of the Respondents were clearly 
contrary to the Act and the Rules and there would survive no occasion for the 
Appellant to hear them on any supposed dispute regarding payment or non-
payment of relevant subscription, that there is no question of the Rule being 
harsh as it operates to the full knowledge of the member concerned and it is 
the in-action of the part of the member concerned which visits the automatic 
E consequence of non-membership to him or her and that if after the passage of 
number of years all arrears are allowed to be paid up at a time then it would 
be going contrary to Rule 7 A read with Section 2 (b) and would almost amount 
to granting retrospective ordinary memberships to the Respondents for years 
which have gone behind. 
F 
The Respondents contended that on a correct interpretation of Section 
2 (b) of the Act it has to be held that if an existing member defaults in paying 
up the subscription for the concerned years within the time prescribed by 
Rule 7 A, it cannot be said that automatically he will become a non-member, 
that all that is provided is

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