Society’s procedural infractions under Rule 19(2) cannot invalidate membership of a bona fide allottee.

In response to a 2013 public notice for a membership vacancy in the Gulshan-E-Iqbal CGHS Ltd. ("the Society"), the Petitioner was allotted membership via a draw of lots and subsequently deposited Rs. 25,68,610/-

The Registrar of Cooperative Societies ("RCS") refused to approve the allotment, citing violations of Rule 19(2) of the Delhi Cooperative Society ("DCS") Rules, 2007, specifically the Society’s failure to intimate the RCS 15 days prior to the vacancy and the absence of an RCS official during the draw

The Petitioner succeeded in arbitration under Section 70 of the DCS Act, where the Sole Arbitrator held that the Society's procedural lapses should not penalize the Petitioner

This was upheld by the Delhi Cooperative Tribunal ("DCT") in 2018

However, the Rule 90 Committee, in a 2023 meeting, declared the enrollment "void ab-initio" due to the Rule 19(2) violations

The Petitioner challenged this decision via the present writ petition

1. Whether the Petitioner’s membership and allotment can be invalidated due to procedural irregularities committed by the Society’s management under Rule 19(2) of the DCS Rules

2. Whether the Rule 90 Committee was justified in declaring the allotment "void ab-initio" despite a subsisting Arbitral Award and Tribunal order in favor of the Petitioner

Rule 19(2) of the Delhi Cooperative Society Rules, 2007, which mandates that the RCS be intimated of vacancies within 15 days and requires the presence of an authorized representative of the RCS during the draw of lots

Rule 90 of the DCS Rules regarding the committee for regularization of memberships

The principle established in Sh. Rajeev Saxena & Ors. v. Registrar of Co-operative Societies & Ors., which permits the regularization of self-conducted draws of lots in cases where there is no evidence of fraud or competing claims from other members

The Court observed that the Petitioner was a bona fide applicant who had complied with all instructions, paid the full consideration, and had been waiting for allotment for over 13 years

It noted that the Society had indeed notified the RCS of the draw, but the RCS failed to depute an official; had the official been present, the dispute would likely not have arisen

The Court reasoned that procedural infractions under Rule 19(2) were administrative failures of the Society’s Managing Committee and should not result in "drastic consequences" or injustice to an individual member who had no role in management

Furthermore, since no other applicants or members objected to the allotment and the DCT had already directed regularization, the Rule 90 Committee’s decision was found to be overly technical and ignored the principles of natural justice and equity

The Court directed the Respondent Society to hand over possession of the vacant flat to the Petitioner within two weeks

The Petitioner was granted liberty to approach authorities for leasehold to freehold conversion, with the RCS directed to process such requests promptly

The Petitioner was held liable for maintenance dues and other charges only from the date of acquisition of possession