Delhi Union Chbs Ltd & Ors. vs Registrar Of Cooperative Societies & Ors.

$~37
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
Date of decision: 09 July, 2026
th
Uploaded on: 14 July, 2026
+ W.P.(C) 8999/2026
DELHI UNION CHBS LTD & ORS. .....Petitioners
Through: Mr. Sandeep Kumar, Adv.
versus
REGISTRAR OF COOPERATIVE SOCIETIES
& ORS. .....Respondents
Through: Mr. Shashi Pratap Singh, Adv. for R-1
(M. 9560536975)
Mr. Yashpal Chauhan, SQ for RCS.
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE VIKAS MAHAJAN
Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
CM APPL. 42143/2026 (exemption)
2. Allowed, subject to all just exceptions. Application is disposed of.
W.P.(C) 8999/2026 & CM APPL. 42142/2026 (for stay of order dated
03.07.2026)
3. The present petition has been filed by various members of the present
Managing Committee of the Delhi Union CHBS Ltd., Satsang Bhawan,
Kapileshwar Mandir, Kapil Vihar, Pitampura, Delhi-110034 (hereinafter,
‘Society’ ) under Article 226 of the Constitution of India, inter alia , assailing
the order dated 28th April 2026 (hereinafter, ‘impugned order’ ) passed by the
Registrar Cooperative Societies (hereinafter, ‘RCS).
4. The impugned order was challenged by the Petitioner before the ld.
Financial Commissioner in Case No. 63/2026, however, the same was
Signature Not Verified
Digitally Signed
By:DEEPAK SINGH
Signing Date:14.07.2026
15:50:08
W.P.(C) 8999/2026 Page 1 of 11

dismissed vide order dated 3rd July, 2026. This order dated 3rd July, 2026 is
also under challenge in the present petition.
th
5. At the outset, considering the order dated 11 May, 2026 passed by a
Co-ordinate Bench in W.P.(C) 6336/2026 titled ‘Delhi Union CHBS Ltd. &
Anr. v. Registrar Cooperative Societies & Ors.’ and the objection that today
an Administrator has been appointed for the Society, Petitioner No.1 is
deleted from the array of parties.
6. The brief background of the present case is that the RCS had issued a
rd
Show Cause Notice dated 23 August, 2024 in which various issues were
raised in respect of the functioning of the Society.
7. A reply was filed to the said Show Cause Notice. This Show Cause
th
Notice culminated into the impugned order dated 28 April, 2026. In the
impugned order, the RCS came to the conclusion that there were various
violations and non-compliances by the Managing Committee of the Society.
Hence, the Managing Committee was superseded and an Administrator i.e.,
Sh. Ajay Rathee was appointed under Section 37 of the Delhi Co-operative
Societies Act, 2003. The operative portion of the said order reads as under:
“It is also pertinent to note that although a Show Cause
Notice was issued to the erstwhile Managing
Committee, the name of the concerned member has still
not been restored in the records of the Society (as per
list of members of the society submitted by the petitioner
duly signed by the Assistant Registrar, Audit Branch,
RCS, copy received through RTI). This clearly
demonstrates that the present Managing Committee is
also continuing the violation of the order dated
21.02.2024 passed by the Registrar, Cooperative
Societies, as well as the directions dated 20.05.2025
issued by the Assistant Registrar.
Signature Not Verified
Digitally Signed
By:DEEPAK SINGH
Signing Date:14.07.2026
15:50:08
W.P.(C) 8999/2026 Page 2 of 11

Further, the Society has failed to comply with the
arbitral award whereby the demand raised against Sh.
Sushil Kumar Aggarwal was set aside. It is an admitted
position that no stay has been granted by the Hon'ble
Delhi Cooperative Tribunal. It is a settled proposition
of law that mere filing of an appeal does not operate as
a stay of the impugned order. Consequently, the Society
was under a legal obligation to implement the award,
including removal of the member from the defaulter list
and permitting his participation in the affairs of the
Society. The failure to do so reflects continued and
conscious non-compliance of lawful orders.
It has also been observed that the Society has been
charging interest at an exorbitant rate, reportedly as
high as 365% per annum on delayed payment of
maintenance charges, which is in clear violation of Rule
32 of the Delhi Cooperative Societies Rules, 2007.
Despite specific directions issued by the Assistant
Registrar vide letters dated 20.03.2023 and 22.12.2023,
the Society has failed to bring its practices in conformity
with the statutory provisions. The justification offered
by the Society on the basis of General Body resolutions
is unsustainable, as such resolutions cannot override
the Act and Rules, which have overriding statutory
force.
The Society has further contended that the election of a
new Managing Committee on 24.11.2024 renders the
present proceedings infructuous. This contention is
devoid of merit. Proceedings under Section 37 are
initiated against the Managing Committee as an
institution and not merely against individual office
bearers. A change in composition does not absolve the
Committee of its past acts of commission and omission,
particularly where continued violations and non-
compliance of lawful directions are evident.
Signature Not Verified
Digitally Signed
By:DEEPAK SINGH
Signing Date:14.07.2026
15:50:08
W.P.(C) 8999/2026 Page 3 of 11

Although the Society has preferred an appeal before the
Hon'ble Delhi Cooperative Tribunal, no interim relief
has been granted in its favour. Accordingly, the Society
remains legally bound to comply with the arbitral award
as well as the directions issued by the competent
authority, which it has failed to do.
Lastly, the subsequent withdrawal of the penalty clause
in the General Body Meeting dated 24.08.2025 does not
cure the earlier illegality or the continued non-
compliance. The violations had already occurred and
persisted for a considerable period despite repeated
directions from the competent authority.
From the foregoing, it is clearly established that the
Managing Committee has willfully acted in
contravention of the order dated 21.02.2024 passed
under Section 86 of the Delhi Cooperative Societies Act,
2003, and has failed to comply with binding directions
issued by the office of the Registrar, Cooperative
Societies. It has further not implemented the arbitral
award despite the absence of any stay by the competent
forum, in disregard of settled legal principles.
Additionally, the Managing Committee has violated
statutory provisions, particularly Rule 32 of the Delhi
Cooperative Societies Rules, 2007, and has continued
such violations despite repeated directions from the
competent authority.
The cumulative conduct of the Managing Committee
thus unequivocally demonstrates persistent default,
gross negligence in the discharge of its duties, and a
conscious disregard of statutory obligations, thereby
squarely attracting the provisions of Section 37 of the
Delhi Cooperative Societies Act, 2003.
Accordingly, I Krishna Kumar in exercise of the
powers conferred under Section 37 of the Delhi
Signature Not Verified
Digitally Signed
By:DEEPAK SINGH
Signing Date:14.07.2026
15:50:08
W.P.(C) 8999/2026 Page 4 of 11

Cooperative Societies Act, 2003, the Managing
Committee of Delhi Union Cooperative House
Building Society Ltd. is hereby superseded.
Further, an Administrator Sh. Ajay Rathee is hereby
appointed under Section 37 of the Act to manage the
affairs of the Society for such period as prescribed
under the Act and Rules, or till a newly elected
Managing Committee assumes charge, whichever is
earlier. The Administrator shall take over charge
forthwith, ensure smooth functioning of the Society,
safeguard records and assets, and Initiate steps for
conduct of elections in accordance with the provisions
of the Act, Rules, and Bye-laws.
The Managing Committee and all office bearers are
directed to hand over complete charge of records,
documents, accounts, assets, and all relevant materials
of the Society to the Administrator from the receipt of
this order.
This order is issued accordingly.”
8. The impugned order was challenged by way of a writ petition before a
Co-ordinate Bench of this Court being W.P.(C) 6336/2026 wherein vide order
th
dated 11 May, 2026, it was observed as under:
“8. Accordingly, the writ petition is disposed of in the
following terms:
(i) The learned FC is requested to take up the appeal,
annexed as Annexure B to this writ petition on 19 May
2026, or the stay application filed therewith, tentatively
at opening of the Court.
(ii) Till that date, the petitioners are protected from any
coercive action on the basis of the order dated 28 April
2026.”
9. Pursuant to the said above order, the ld. Financial Commissioner has
rd
now, vide order dated 3 July, 2026 upheld the order of the RCS. The position
Signature Not Verified
Digitally Signed
By:DEEPAK SINGH
Signing Date:14.07.2026
15:50:08
W.P.(C) 8999/2026 Page 5 of 11

as it stands today is that the Managing Committee of the Society which has a
term till November, 2027 stands superseded due to non-compliance of various
directions given by the RCS.
10. Mr. Sandeep Kumar, ld. Counsel for the Petitioners relies upon the
decision of the Supreme Court in State of M.P. and Ors. v. Sanjay Nagayach
and Ors. MANU/SC/0540/2013 and Vijay Mohan & Ors. v. Registrar of Co-
operative Societies & Ors., 2025:DHC:7123-DB to argue that usually the
elected Managing Committee ought not to be superseded and adequate
opportunity ought to be given to the Managing Committee to comply with any
directions which may be issued by the RCS.
11. Mr. Singh, ld. Counsel appearing for the RCS, on the other hand,
submits that in the same judgment of Sanjay Nagayach (Supra) the Supreme
Court has clarified that if the Managing Committee deliberately does not take
action in rectifying illegalities of the previous committees within a reasonable
time, the RCS is fully empowered to take action.
12. On behalf of the Respondent Nos. 2 and 3, who are some of the
complainants who had raised grievances, ld. Counsel submits that despite
repeated opportunities, the Managing Committee failed to take any corrective
measures.
13. The Court has heard the matter. In Sanjay Nagayach (Supra) , the
observations of the Supreme Court are as under:
“35. Further, we are inclined to give the following
general directions in view of the mushrooming of cases
in various courts challenging orders of supersession of
elected Committees:
(1) Supersession of an elected Managing
Committee/Board is an exception and be resorted to
Signature Not Verified
Digitally Signed
By:DEEPAK SINGH
Signing Date:14.07.2026
15:50:08
W.P.(C) 8999/2026 Page 6 of 11

only in exceptional circumstances and normally elected
body be allowed to complete the term for which it is
elected.
(2) Elected Committee in office be not penalised for the
shortcomings or illegalities committed by the previous
Committee, unless there is any deliberate inaction in
rectifying the illegalities committed by the previous
Committees.
(3) Elected Committee in office be given sufficient time,
say at least six months, to rectify the defects, if any,
pointed out in the audit report with regard to incidents
which originated when the previous committee was in
office.
(4) The Registrar/Joint Registrar are legally obliged to
comply with all the statutory formalities, including
consultation with the financing banks/controlling banks,
etc. Only after getting their view, an opinion be formed
as to whether an elected Committee be ousted or not.
(5) The Registrar/Joint Registrar should always bear in
mind the consequences of an order of supersession
which has the effect of not only ousting the Board out of
office, but also to disqualify them for standing for
election in the succeeding elections. The Registrar/Joint
Registrar therefore is duty-bound to exercise his powers
bona fide and not on the dictation or direction of those
who are in power.
(6) The Registrar/Joint Registrar shall not act under
political pressure or influence and, if they do, be
subjected to disciplinary proceedings and be also held
personally liable for the cost of the legal proceedings.
(7) Public money is not to be spent by the State
Government or the Registrar for unnecessary litigation
Signature Not Verified
Digitally Signed
By:DEEPAK SINGH
Signing Date:14.07.2026
15:50:08
W.P.(C) 8999/2026 Page 7 of 11

involving disputes between various factions in a
cooperative society. Taxpayers' money is not expected
to be spent for settling those disputes. If found
necessary, the same is to be spent from the funds
available with the Bank concerned.”
In terms of the above judgement usually the elected Managing Committee of
a Society ought not to be superseded. If there are any shortcomings of a
previous Managing Committee, the new Managing Committee cannot be
penalised, except if there is a deliberate inaction not to rectify the illegalities
of the earlier Committee. Further reasonable time ought to be given of at least
six months to rectify defects.
14. In The Managing Committee of Vallapuzha Service Co-op. Bank Ltd.
vs. The Joint Registrar Co-operative Societies, MANU/KE/0480/2009, the
High Court of Kerala has also held as under:
“27. For all the above reasons, I am satisfied that Ext
P5 and all proceedings pursuant thereto are
unsustainable. Accordingly, the same are quashed and
the writ petition is allowed. Before parting with the case,
I would like to comment on a very serious malady
plaguing the co-operative movement in the State. Over
politicization is the bane of the co-operative movement
in Kerala. Politics has permeated all aspects of the co-
operative sector so badly that the movement itself is
slowly dying in the State. Elections to cooperative
societies are also fought on political lines and political
parties resort to all sorts of legal and illegal methods to
win the majority in managing committees of co-
operative societies. Once in power, they admit members
owing allegiance to their political parties in order to
ensure a win for themselves in the next election. If they
do not win the majority, as soon as their party comes
into power in the State, they resort to every legal and
Signature Not Verified
Digitally Signed
By:DEEPAK SINGH
Signing Date:14.07.2026
15:50:08
W.P.(C) 8999/2026 Page 8 of 11

illegal means to dethrone the other side and wrest power
even physically. Every time the political climate in the
State changes, there is a spate of litigation against
proceedings under Section 32 of the Kerala Co-
operative Societies Act in respect of societies under the
control of the opposition parties. They make the officers
of me co-operative department who has control over the
co-operative societies as tools in the process of
overthrowing the other side from power. These officers
often do their bidding and pass orders as dictated by
their political bosses without any respect for natural
justice and fair play. Once the managing committees
having control thus having been unseated, they appoint
persons who do their bidding as administrators and
starts a process of wresting control through all sorts of
means without respect for democratic values. The
process is reversed when the political alliance
supporting the opposite side comes into power in the
State. In the process, the genuine co-operator is driven
out of the scene. Public money is squandered or
misappropriated with impunity. When the same is
detected, the Secretary is the one who is made a
scapegoat. Courts and other quasi-judicial institutions
are mere onlookers, since often evidences are
manufactured with the help of officers of the
department, who are only, too willing to toe the line for
their political masters. In the process, societies die a
slow death. Good money of the investors are no longer
safe in me co-operative Banks. Therefore, I am of
opinion that it is high time that co-operative societies
are made free from State control and made autonomous
bodies like local bodies. Otherwise, instances like the
present one would ultimately choke and kill the co-
operative movement in the State conclusively and
decisively With the solemn hope that wisdom would
dawn on the politicians at least now, to save the
movement in Kerala. I conclude.”
Signature Not Verified
Digitally Signed
By:DEEPAK SINGH
Signing Date:14.07.2026
15:50:08
W.P.(C) 8999/2026 Page 9 of 11

15. In the present case, the broad allegations against the Managing
Committee of the Society are:
(i) In respect of unreasonable amount of penalty
being imposed qua maintenance dues against
the members of the Society;
(ii) One of the members was expelled, and despite
directions, the membership was not reinstated;
and
th
(iii) The award dated 29 February, 2024 was not
implemented and penal interest was continued
to be levied by the Managing Committee.
16. The RCS is the supervisory authority over societies and the managing
committees do have an obligation to comply with the directions given by the
RCS from time to time.
17. Under Section 37 of the Delhi Co-operative Societies Act, 2003, the
RCS has the power to supersede the Managing Committee if there is
continuous default or negligence by the Managing Committee. The said
power having been exercised in this case was also upheld by the ld. Financial
Commissioner. In the opinion of this Court, the elected Managing Committee
of the Society ought to have complied with the requisitions of the RCS.
18. The Court having heard the Counsels for the parties today is of the
opinion that usually the elected Managing Committee ought not to have been
superseded. However, the judgment in Sanjay Nagayach (Supra) itself
provides exceptions and in the facts of this case, this Court is of the opinion
that the elected Managing Committee of the Society ought to agree to comply
with the directions of the RCS and also comply with the same within a
Signature Not Verified
Digitally Signed
By:DEEPAK SINGH
Signing Date:14.07.2026
15:50:08
W.P.(C) 8999/2026 Page 10 of 11

reasonable time.
19. Accordingly, let three members of the present elected Managing
th
Committee appear before the RCS on 16 July, 2026 at 03.00 PM, and the
RCS shall list out the compliances to be undertaken by the Managing
Committee. Reasonable time of 30 days shall be granted to the Managing
Committee to take the remedial action with cooperation of the Administrator,
who is presently been appointed by the RCS.
20. Upon the compliances being undertaken within one month thereafter,
the RCS after recording satisfaction shall pass appropriate orders for
restoration of the Managing Committee in accordance with law.
21. If the members of the Managing Committee in co-operation with the
Administrator fail to render the compliance, the impugned order shall stand.
22. The Administrator shall render full co-operation to the members of the
Managing Committee of the Society for compliance with the RCS.
23. The petition along with pending applications is disposed of in the above
terms.
PRATHIBA M. SINGH
JUDGE
VIKAS MAHAJAN
JUDGE
JULY 9, 2026
nsa/Ck
Signature Not Verified
Digitally Signed
By:DEEPAK SINGH
Signing Date:14.07.2026
15:50:08
W.P.(C) 8999/2026 Page 11 of 11