Summary
A West Bengal housing co-operative resolved to have its dilapidated, century-old administrative building redeveloped by a developer. One member obtained an arbitral award restraining demolition through the developer. A later resolution renewed the arrangement on revised terms with the Registrar's approval, and neither was challenged, but the member still sought to execute the award. The executing court and the Calcutta High Court allowed execution. The Supreme Court allowed the society's appeal. Under Section 28 of the West Bengal Co-operative Societies Act, 2006, the general body is the final authority, and a member speaks only through the society and is bound by its unchallenged decisions. Redeveloping an unsafe building is a necessity, not business, and courts will not second-guess the general body absent fraud or illegality.
Issues
- Whether a co-operative society may redevelop its dilapidated building through a third-party developer under resolutions of its general body, over the objection of a single member.
- Whether the executing court and the High Court rightly treated the earlier arbitral award as still executable despite later unchallenged general body resolutions and the Registrar's permission.
Provisions considered
- Section 28, West Bengal Co-operative Societies Act, 2006The final authority of a co-operative society vests in its general body, whose resolutions bind the members. (¶¶ 33, 52)
- Rule 21, West Bengal Co-operative Societies Rules, 2011Rules on annual general meetings apply mutatis mutandis to special general meetings. (¶¶ 25, 34)
Held
- The High Court erred in holding that a society cannot engage a third-party developer because the Act and Rules do not provide for it; expecting members themselves to fund and build a project of about Rs 20 crore is unrealistic. (¶¶ 32, 46)
- A member of a co-operative society loses individuality qua the society and has no independent rights beyond the statute and bye-laws; so long as general body resolutions stand, they bind the dissenting member. (¶¶ 52, 53)
- Redevelopment of a dilapidated building is a necessity, not business, and needed no amendment of objects; the general body's commercial wisdom will not be interfered with by courts unless tainted by fraud, misrepresentation or a statutory prohibition. (¶¶ 52, 54, 55)
- The decision in Vipulbhai M. Chaudhary was referred to only for the history and principles of the co-operative movement, its reliance on Part IXB having been rendered per incuriam for local co-operative societies. (¶¶ 45A, 45B, 45C)
Result
Appeal allowed; the High Court's order set aside and the society permitted to proceed with redevelopment under its general body resolutions, with priority to demolishing the dilapidated building; no costs.