Delhi HC Directs Registrar to Hear Bank-Auction Flat Buyers, Consider Sale Certificate After Society Cancels Membership Over Unregistered Papers

The Petitioners purchased Flat No. A-407 through a sale conducted by State Bank of Indore under the SARFAESI process, following default by the original member, and relied on the Bank’s Sale Certificate dated 12 March 2010.

The Society transferred membership to the Petitioners but cancelled it by notice dated 28 May 2024, stating that their purchase documents were not registered.

After their civil suit was disposed of for lack of jurisdiction, the Petitioners asked the Registrar of Cooperative Societies (RCS) to examine the cancellation under Section 86 of the Delhi Co-operative Societies Act, 2003; the RCS had not decided their representation dated 28 April 2025.

They petitioned for a direction requiring the RCS to decide the representation or, alternatively, for the cancellation notice to be quashed.

Section 86 of the Delhi Co-operative Societies Act, 2003, requires that a member facing expulsion be given an opportunity to be heard; the committee’s resolution must be referred to the Registrar, who must hear the concerned parties and decide whether to approve or reject the proposed expulsion.

Rule 99 of the Delhi Co-operative Societies Rules, 2007, requires the committee to deliberate on the proposal and serve at least three registered notices, each at least thirty days apart, setting out the grounds and supporting documents and allowing the member to respond in writing and in person.

In Delhi EPDP Coop. Group Housing Society Ltd. v. Registrar Coop. Societies, 2015 SCC OnLine Del 10050, the Court affirmed that membership is a valuable right and that the statutory expulsion procedure must be strictly followed.

The Court also noted that a Sale Certificate issued following a bank’s SARFAESI sale ought to be given credence like other registered sale documents.

The Society’s notice stated only that the Petitioners’ purchase documents were unregistered, but did not afford them the opportunity to defend themselves in writing or in person required by Rule 99.

Given the importance of membership and the mandatory procedural safeguards under Section 86 and Rule 99, the cancellation required examination by the RCS in accordance with law.

In doing so, the RCS was specifically directed to consider the Bank’s Sale Certificate; the Court did not itself determine the Petitioners’ ultimate entitlement to membership.

The Petition was disposed of, with all rights and remedies of the Petitioners left open.