Delhi Dayalbagh Cooperative House Building Society Ltd. v. Registrar Cooperative Societies
Background
A Delhi housing cooperative society had been allotted land by the government in the 1950s and in turn allotted plots to its members by registered sale deeds, with society bye-laws restricting resale only to other members or the society itself. When some members sold their plots to outsiders (non-members) without the society's permission, the society sought to have those sales declared void through an arbitration proceeding before the Registrar of Cooperative Societies, but the Cooperative Tribunal and the Delhi High Court held that such a dispute over a registered sale deed's validity could only be decided by a civil court, not by the cooperative arbitration machinery.
Decision Breakdown
The Supreme Court held that the society's land had validly vested in it free of encumbrances once the government handed over possession under the 1955 land acquisition agreement, so the absence of a formal conveyance deed did not defeat the society's title or its members' ownership. It further held that under the Delhi Cooperative Societies Act, 2003, a purchaser from a member (even a non-member) is entitled to apply for membership and cannot simply be denied rights by the society's own bye-laws if those bye-laws conflict with the statute. Crucially, the Court agreed that questions about the validity of a registered sale deed go beyond the limited arbitration jurisdiction under Section 70 of the Act and must be tested in a civil court, so it dismissed the society's appeals.
Lesson Learnt
A cooperative society's internal bye-laws cannot override statutory provisions that protect a buyer's right to seek membership after purchasing a flat or plot, and disputes about the validity of a registered sale deed itself must go to a civil court, not a cooperative arbitrator.