THE NEW FRIENDS CO-OPERATIVE HOUSE BUILDING SOCIETY LTD. versus RAJESH CHAWLA AND ORS.

Citation: [2004] SUPP. 1 S.C.R. 489 · Decided: 21-04-2004 · Supreme Court of India · Bench: DORAISWAMY RAJU · Disposal: Disposed off

Judgment (excerpt)

THE NEW FRIENDS CO-OPERATIVE HOUSE BUILDING SOCIETY 
A 
LTD. 
v. 
RAJESH CHAWLA AND ORS. 
APRIL 21, 2004 
B 
[DORAISWAMY RAJU AND ARIJIT PASA YAT, JJ.) 
Constitution of India, 1950: 
Article 226-Co-operative Society-Election-Rejection of nomination C 
papers on ground of being "defaulters"-High Court holding the demands 
raised as unsustainable-Further directing refund to other members also--
Held, order of High Court is unsustainable-Issue as to whether one is a 
member or not is to be adjudicated in appropriate proceedings and writ 
application prima facie was not a proper course-Even otherwise, it could D 
be only for limited purpose· of election, and rights and liabilities of parties 
would be subject to decision by statutory forum. 
Respondents No. 1 to 3 filed nomination papers for election to the post 
of President, Member and Vice President, respectively, of the appellant.;Society. 
Meanwhile, a defaulters' list was prepared and nomination papers of the E 
respondents were rejected. They filed a writ petition before the High Court 
praying, inter a/ia, for quashing the election notification and for direction to 
prepare fresh defaulters' list after holding a necessary inquiry. The High 
Court held that respondents 1 to 3 were not defaulters and demands raised 
against them were unsustainable. It further observed that there might have F 
been many members to whom similar demands were issued and they were also 
entitled to refund of the amount from the Society. Aggrieved, the Society filed 
the present appeal. 
Disposing of the appeal, the Court 
HELD: 1.1. The question whether a member was defau\ter had to be G 
adjudicated in appropriate proceedings and writ application prima facie was 
not a proper course. Further, direction for refund to other members, who have 
not even approached the Court, is without application of mind and totally 
unca\\ed for. High Court's order is consequently unsustainable. [492-B-EJ 
f 
489 
H 
490 
SUPREME COURT REPORTS [2004] SUPP. I S.C.R. 
A 
1.2. Assuming that the stand taken for the alleged defaulters can be 
entertained and gone into in the course of conduct of election, it could, if at 
all, be only for the limited purpose of election; and rights and liabilities of 
the parties would finally and effectively get adjudicated by arbitration 
proceedings provided for_under the statute in lieu of proceedings before civil 
B court; and the conclusions arrived at or recorded in the course of election 
proceedings shall be only without prejudice to and ultimately subject to all or 
any such proceedings and decisions by such statutory forums. In any event 
without proper hearing and consideration of relevant materials, High Court 
seems to have arrived at abrupt conclusions. (492-B-DI 
C 
2. The judgment of the High Court is set aside and the matter is remitted 
back to it for fresh adjudication. Respondents 1 to 3 have filed application 
before the Registrar of Cooperative Societies for referring the dispute to 
arbitration, which alone is the proper procedure to get their civil liability 
finally and effectively adjudicated. The High Court shall, in this view of the 
matter, consider the desirability of adjudicating the issues raised in the wrif 
D petition. [492-F-G; 493-A-B] 
E 
F 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 538 of2004. 
From the Judgment and Order dated 29.7.2003 of the Delhi High Court 
in C.W.P. No. 895 of2003. 
A.K. Thakur for K.K. Gupta for the Appellant. 
Siddhartha Dave for Ms.Vibha Datta Makhija for the Respondents. 
The Judgment of the Court was delivered by 
ARIJIT PASAYA T, J. The appella~t-society calls in question legality of 
the judgment rendered by Division Bench of the Delhi High Court whereby 
it was held that respondents 1 to 3 were not defaulters and, therefore, 
demands raised against them for the period prior to 4th August, 1984 were 
unsustainable. Respondents nos. 1 to 3 were the writ petitioners nos. 1 to 3 
G in the writ petition filed by them before the High Court. There was further 
direction given by the J:ligh Court that there may have been many members 
to whom similar demands have been sent. They were also entitled to refund 
of any payment taken by the society from them. 
Writ application was filed by the respondents with prayer to quash the 
H order dated 1.2.2003 issued by the Election Officer of the appellant-society 
; 
.. 
lHENEWFRIENDSCO-OP.HOUSEBUILD. SOCY,LTD.1·. RAJESHCHAWLA [PASAYAT,J.J 49} 
and for setting aside th

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