Independent property of a spouse or co-shares below 66.72 square metres do not disqualify cooperative membership.

The Petitioners, Panna Lal Kapoor and Pawan Kapoor, challenged orders passed by the Registrar of Cooperative Societies (RCS) in 2004 and the Financial Commissioner in 2011 and 2024, which ceased their memberships in the Arawali Cooperative Housing Society Ltd

The memberships were originally held by Kewal Kishan Kapoor and Manohar Lal Kapoor, who transferred them to the Petitioners in 2001

Following a complaint by Respondent No. 3, the RCS held that the original members were disqualified under Rule 25 of the Delhi Cooperative Societies Rules, 1973, because they and their wives were co-owners of another property in Shalimar Bagh, Delhi

The RCS and Financial Commissioner concluded that the wives' shares were funded by the husbands, thereby exceeding the permissible area limit of 66.72 sq. meters for exemption

The Petitioners had been in possession of the allotted flats for approximately 25 years

1. Whether the original members incurred disqualification under Rule 25(1)(c)(i) of the Delhi Cooperative Societies Rules, 1973, by virtue of owning a share in an ancestral/joint property

2. Whether the phrase "in the name of" in Rule 25 requires the property to be legally owned by the member, even if held benami in the name of a spouse

The Court applied Rule 25(1)(c)(i) of the Delhi Cooperative Societies Rules, 1973, which prohibits membership if a person or their spouse/dependent child owns a residential house in Delhi

It emphasized the Proviso to Rule 25, which exempts co-sharers of property if their individual share is less than 66.72 sq. meters

Furthermore, the Court relied on the interpretation of "in the name of" established in Alimuddin v. Registrar of Cooperative Societies and R.K. Aggarwal v. Registrar of Cooperative Societies, which mandates that for disqualification to apply, the ownership must effectively belong to the member, regardless of whose name appears on the title

The Court observed that the Shalimar Bagh property was purchased in 1985, and Wealth Tax returns clearly reflected that the wives of the original members owned one-fourth shares in their own right

It held that the Financial Commissioner’s conclusion—that the husbands funded the wives' shares—was speculative and unsupported by evidence, especially given the lapse of 20 years before the inquiry

Most significantly, the Court determined that the individual shares of Kewal Kapoor and Manohar Kapoor were each less than 66.72 sq. meters

Therefore, even if the property was considered, the Petitioners were protected by the Proviso to Rule 25

The Court followed the R.K. Aggarwal precedent, noting that the mere existence of property in a spouse’s name does not trigger disqualification unless it is proved that the member is the real owner

The Court held that the original members did not incur any disqualification and the current Petitioners' memberships were valid

The Society was directed to recommend the Petitioners' names to the Delhi Development Authority (DDA) for formal allotment of the flats, subject to the clearance of outstanding maintenance charges

The Petitioners were also permitted to apply for lease-hold to free-hold conversion