Court Leaves Open Whether a Cooperative Society May Penalize Encroachment on Common Areas

The Society challenged the Delhi Cooperative Tribunal’s order dismissing its appeal from an arbitral award that had set aside a notice imposing a daily penalty of ₹2,000 on the owner of Flat N-1 for placing flower pots and plants on a pathway.

The Society relied on a General Body Meeting resolution authorising penalties for encroachment on common areas.

The owner had died during the proceedings, the flat had been sold, and the penalty claimed had reached ₹17,80,000.

Whether the Society could impose a daily penalty for alleged occupation of a common pathway under its General Body Meeting resolution.

Whether the Delhi High Court should interfere under Article 226 with the Tribunal’s order setting aside the penalty.

The petition was brought under Article 226 of the Constitution, which empowers the High Court to exercise writ jurisdiction.

The dispute had been referred to arbitration under Sections 70 and 71 of the Delhi Co-operative Societies Act, 2003.

The Court observed that Society members should observe the Society’s discipline, while the Society and its Managing Committee should act for the members’ benefit rather than adopt adversarial positions.

The Court cited no precedent and expressly left open the legal question whether the Society could impose the penalty.

The Court noted the lengthy proceedings, the owner’s death, the transfer of Flat N-1, the family’s circumstances, and the substantial amount claimed as penalty.

In those circumstances, it considered that the claimed amount did not warrant payment in full and made a fact-specific order requiring payment of ₹50,000, without deciding the underlying legality of the Society’s penalty.

The parties were also directed to appear before the Delhi High Court Mediation Centre to attempt resolution of the dispute concerning Flat S-5, with the mediation report to be placed before the court hearing the related contempt case; the RCS was directed to assist.