A cooperative society cannot deny membership to a SARFAESI auction purchaser over errors in the sale documents.

The Petitioners purchased Flat E-304, Ispat CGHS Ltd., Dwarka, at a Bank of Baroda auction under the SARFAESI Act for ₹1.91 crore.

The sale certificate and sale deed misstated the society’s name and described the flat as measuring 95.54 sq. m., although the dispute concerned an area of approximately 113 sq. m.

The Society did not transfer membership after the Petitioners applied and submitted the requested documents, except the original share certificate, which was unavailable; the RCS directed the Society to grant membership subject to completion of formalities, including an indemnity bond where the original certificate was unavailable.

The former owner, Lalit Kumar Jha, claimed rights in the additional area. His civil suit seeking relief concerning that portion was rejected under Order VII Rule 11(d) CPC as barred by law, with the District Court observing that the dispute fell within the SARFAESI framework.

Despite further RCS directions, including a direction to grant membership on submission of a fresh indemnity bond, the Society did not do so.

Whether the Society could withhold the Petitioners’ membership despite the RCS’s directions and the Petitioners’ purchase of the flat at a bank auction.

Whether the former owner’s claim to the disputed additional area justified withholding membership or requiring rectification of the sale deed.

Article 226 of the Constitution empowered the High Court to grant relief against the Society’s continued failure to implement the RCS’s membership directions.

Under Section 91 read with Rule 92(6) of the Delhi Co-operative Societies Act, 2003 and Rules, a transferee seeking membership must provide the prescribed documents; where the original share certificate is unavailable, the transferee may furnish an indemnity bond, and the Society is to transfer membership upon receipt of the required documents.

The Court also considered the RCS’s subsequent proceedings under Section 105 of the Act read with Rule 124, which directed membership subject to a fresh indemnity bond.

The District Court’s decision identified Section 17 of the SARFAESI Act as providing a remedy before the DRT for challenges to measures under that Act, and Section 34 as barring civil-court jurisdiction where the DRT is empowered to adjudicate; that decision, rather than a separate determination of those provisions by the High Court, formed part of the procedural context.

The Court held that the Petitioners could not be faulted for errors in the bank-prepared sale documents and that the flat’s identity was clear from the auction notice, leaving the area discrepancy as the only material dispute.

It treated the former owner’s claim to the additional area as lacking merit, noting the District Court’s rejection of his suit and concluding that, because the flat had been mortgaged, any increase in its area could not be retained by the former owner to defeat the auction purchaser’s claim.

The RCS had directed the Society to grant membership subject to an indemnity bond; the Society’s continued refusal to comply was therefore unjustified.

The Society was directed to issue a membership certificate within one week, forward it to the RCS for the record, and treat the membership as effective from 2 July 2025, the date of the RCS’s first order.

The Society was also directed to pay the Petitioners ₹25,000 in costs within two weeks.