TMI Blog1999 (12) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... reason for striking down the Rules, according to the High Court, was the fact that the Roles were harsh in their operation. In order to appreciate the grievance of the appellant-society regarding the impugned Rules, it is necessary to note a few relevant introductory facts. Background Facts : The appellant-society was earlier registered on 3.4.1958 under the provisions of the Hyderabad Societies Registration Act, 1958. At that time it was functioning in the territory of Ex-Nizam State at Gulbarga, After the said territory became part of the Karnataka State, the Act became operative and governed the functioning of the appellant-society. On 6th of June, 1961, the Hyderabad Societies Registration Act was repealed by the present Act of 1960 which came into force with effect from 6.6.1961. The appellant-society, therefore, became deemed to be registered under the present Act. Respondent Nos. 2 to 10 original writ petitioners in the two writ petitions before the High Court were admitted as ordinary members of the appellant-society during the period from 1975-1979. The appellant- society's contention was that they became defaulters in payment of annual subscription for the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed by the Division Bench, which took the view that Rule 7(A), and for that matter the earlier Rule 7, were ultra vires Section 2(b) of the Act and even otherwise they were harsh and were liable to be struck down being arbitrary. Certain consequential directions were issued by the Division Bench of the High Court in the impugned judgment to the Registrar of the Societies functioning under the Act It is obvious that these consequential directions would not survive if the main basis of the impugned judgment is found to be unsustainable. Rival Contentions : Learned senior counsel for the appellant, Shri Sanyal, submitted that the writ petitions against the appellant-society were not maintainable in law. However, he did not pursue this point further and attacked the impugned judgment on merits. He submitted 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. He submitted 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 to Section 2(b) and did not violate it. He also contended placing reliance on various judgments of this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended 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 on the part of the member concerned which visits the automatic consequence of non-membership to him or her. That for such a situation of member's own creation no harshness can be alleged so far as the operation of the Rule is concerned. He, therefore, submitted that these appeals deserved to be allowed. Sri Shankar, Learned counsel for the respondents-original writ petitioners, on the other hand, submitted 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 as section 2 (b) does not contemplate such a contingency. All that is provided therein is that he will not have a right to vote nor will he be counted as a member in proceedings under the Act especially Section 11 thereof. As the impugned Rule goes beyond he requirements of Section 2(b) and tries to laid down automatic cessation of membership on a ground not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 5 deals with the mode of Forming societies and lays down as under : 5. Mode of forming Societies;--Any seven or more persons, above the age of eighteen years associated for any purpose specified in Sec 3 may, by subscribing their names to a memorandum of association and otherwise complying with the requirement of this Act and the rules made thereunder, in respect of registration, form themselves into a Society under this Act. Section 6(1) deals with requirements with respect to Memorandum. .It reads as under : 6. Requirements with respect to memorandum.-(1) The Memorandum of Association of every Society shall state- (a) the name of the Society; (b) the object of the Society; (c) the names, addresses and occupations of the members of the governing body to whom, by the rules of the Society, the management of its affairs is entrusted; (d) the place at which the registered office of the Society is to be situated. Then follows Sub-section 2 of Section 6, which along with the proviso is relevant and, therefore, it is extracted as under : (2) There shall be registered with the memorandum of association, the rules and regulations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 18 Recovery of penalty accruing under bye-law. Whenever by any bye-law duly made in accordance With the rules and regulations of the Society, or, if the rules passed at a general meeting of the members of the Society, convened for the purpose by a majority of not less than three-fifths of the members present at such meeting, any pecuniary penalty is imposed for the breach of any rule or bye-law of the Society, such penalty, when accrued, may be recovered in any court having jurisdiction where the defendant shall reside, or the Society shall be situated, as the governing body thereof shall deem expedient. Section 19 deals with members liable to be sued as strangers and which provides a remedy to the society to recover the arrears of subscription of any member; who according to the rules of the society, falls to pay arrears of subscription. Section 21 deals with procedure for amalgamation of societies. It reads as under : 21. Procedure for amalgamation of Societies.-Whenever it shall appeal to the governing body of any Society registered under this Act, which has been established for any particular purpose or purposes, that it is advisable to amalgamate such Soci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Ordinary Member of the society, 7. (A) The Membership fee of an Ordinary Member is payable in advance annually in the month of December, An Ordinary member who fails to pay his subscription before the end of March of any year will automatically cease to be a member. 7(B) deals with admission of new members with which we are not concerned. The aforesaid Rules framed by the society clearly show that there are three types of members of the appellant-society. Their status will depend upon the amount of contribution which they pay, If a person pays ₹ 5,000 or more to the society in lumpsum, he will be a patron of the society who has not to contribute anything more to the society. If a person contributes ₹ 2,500 upto ₹ 4,999 he will become a life member of the society. He has also not to pay anything further to be continued on the roll of the society as a life member. The aforesaid two categories of members, having paid the respective amounts once and for all, will remain permanent members of the society subject to not incurring any disqualification laid down by the Rules. In the present proceedings, we are concerned with Respondent Nos. 2 to 10 who were on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubscription for the year in question, he would not be treated to be a member for that year. Thus in order to remain a member of a society, amongst others, the very first requirement of Section 2(b) is that he should have been admitted to the membership of the society in accordance with the rules and regulations and shall have paid his subscription. That obviously should also be as per the rules and regulations of the society. The impugned Rule 7(A) deals with the concept of admission of a person to the ordinary membership of the society and the mode and manner of payment of subscription by him for being treated as an ordinary member for the year in question. It lays down that an ordinary member who fails to pay his subscription by the end of march of any relevant year will not be treated to be a continued member for that year. Thus, three months period is available to the member to pay the paltry amount of ₹ 25 by way of subscription to remain on the roll of members for that year. This provision in Rule 7(A), therefore, has a direct nexus with the provision of Section 2(b), which deals with admission of members to a society as per the rules and regulations and the requireme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned during the year nor will he be counted as a member provided it is shown that his subscription at the relevant time in the year 2000 is in arrear for a period exceeding three months. Thus Section 2(b), by itself, lays down the nullifying consequences on the membership of an ordinary member if he remains in arrears of subscription for that year beyond March of that year. Rule 7(A) also lays down the same consequences. Therefore, it cannot be said that Rule 7(A) is violative of even last part of Section 2(b). On the country, it runs parallel to the same, to highlight this position another illustration may be taken. If Rule 7(A) had provided that an ordinary member who fails to pay subscription before the end of February of any year, will automatically cease to be a member, then it could be visualised that the Rule would make him non-member from March of that year being in arrears for a period exceeding two months in that year. Then it would have directly conflicted with the thrust of Section 2(0) which would not permit any-society to treat a person to be a non-member for a given year if he is in arrears of subscription for that year for a period not exceeding three months. But Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat he will lose will be a right to vote or act as a member only in the general meetings or special meetings contemplated by Section 11 and for all other purposes he would continue to be a member. Such a contention would squarely conflict with the statutory provision of Section 6(2) read with the very first part of definition section 2(b), as discussed earlier. For all these reasons, therefore, with respect, it is not possible to agree with the reasoning and conclusion of the Division Bench of the High Court that Rule 7(A) is violative of Section 2(b) of the Act. The High Court in the impugned judgment has also taken the view that Rule 7(A) cannot be sustained for the additional reason that it violates the proviso to Section 6(2) of the Act. It is difficult to appreciate this line of reasoning, All that the said proviso guarantees is that no Rule or bye- law of a society can deprive a member of his right to vote, but before the said proviso can be pressed in service, the concerned member who makes a grievance regarding his deprivation of right to vote as a member has to be found to have subsisted on the roll of the society as a member. If he had validly ceased to be a member of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of what we have seen earlier, once it is held that the impugned Rule 7(A) and its predecessor Rule 7, which is in pari materia, do not offend Section 2(b) in any manner, no further dilation on this aspect is required. Point No.1 is accordingly answered in negative in favour of the appellant-society and against the respondent-writ petitioners. Point No. 2 : That takes us to the consideration of me second ground on which the High Court has voided Rule 7(A). It is held that the Rule is very harsh in its operation and, therefore, it is arbitrary. now a mere look at the said Rule shows that whenever an ordinary member fails to pay a paltry amount of ₹ 25 per year as subscription for remaining as a member for that year by the end of March of that year despite having got a locus paenitentiae to pay up this paltry amount from the beginning of the year within three months, he will automatically cease to be a member for that year. It is difficult to appreciate how an opportunity and facility for paying a paltry amount of ₹ 25 within first three months in a given year can be said to be harsh from any view point It is true that on the expiry of three months without paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oll of the society for the year 1999 may not be treated to have paid ₹ 25 up to the end of March 2000, as Rs, 25 might not have credited to his account in the society's books during the relevant months but he may have a good defence to show that he had already tendered the same amount, but due to some mistake of the receiving cashier or clerk of the society the amount may not have been credited in his account. Such a defence would naturally be required to be considered by the society before treating him to have automatically ceased to be an ordinary member for that year on the onset of the fourth month. Similarly, the defaulting member, apart from the defence of actual payment not being noted by the society in its books of account for any reason, may have a sufficient cause for not paying this amount within the prescribed period from January to end of March of that year. He may, for reasons beyond his control, might have been prevented from remitting the said amount due to his prolonged sickness or absence from the place of work for unavoidable reasons or for any other sufficient cause. If such a case is put forward for consideration of the society and if the authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the organization. But this principle has been limited to situations where relevent facts are not disputed, and has been held not to be applicable where the facts are in dispute or the accused denies the charges, or where the penalty for an offence admitted by him is not automatic and fixed by the rules, since in the latter case the member has a right to present mitigating evidence and to state other facts which have a bearing on the punishment to be imposed- It must, therefore, be held that Rule 7(A) has to be read down as under to sustain its legality and validity. 1. If an ordinary member is shown not to have paid up his annual subscription of ₹ 25 for a given year by the end of March of that year and if he disputes the allegation of non-payment of subscription by applying to the society before the expiry of the year concerned or if he proves to the satisfaction of me society that there was any sufficient cause which prevented him from paying up Rs, 25 by the end of March of that year, then he will not be deemed to have automatically ceased to be such an ordinary member for that year. However, for that purpose even without the society being required to issue any sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 for being saved from the operation of Rule 7(A) for the years in question for the simple reason that it is an admitted position on record, as we have noted earlier, that the Respondents never came forward with a case that they had failed to pay the subscription of ₹ 25 per year by the end of March of that year by making out any sufficient cause for the delay and that too before the expiry of the year concerned. On the contrary, their case is that they were admittedly in arrears for a number of years. They had no case for consideration about having either paid up the amounts or having made out sufficient cause before the expiry of the year concerned as to why they could not do so in time. All that they wanted to submit was that they were at a time paying in lumpsum past arrears of subscription for a number of years. That obviously would not entitle them to get the benefit of even the read down Rule 7(A). They have obviously missed the bus. All that they can now submit is applications for fresh membership subject to following the procedure laid down by Rule 7(B) for admission as fresh and new members. Learned senior counsel for the appellant-society, Shri Sanyal, fairly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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