Cooperative housing societies can expel a member for owning more than one property as acquiring concessional government land cannot be a ruse to accumulate wealth, the Supreme Court has ruled. “Experience has shown that voluntary organisations like cooperative societies are the best system which can suit the needs of poor and weaker sections,” a Bench of justices Mukundakam Sharma and A R Dave in their judgement.

The object of a cooperative society is not to earn profits but to enable the members to improve their economic conditions by helping them in their pursuits, the court said.

“Thus, the cooperative societies like the present one which seek to obtain the land at concessional rate from the government and to build houses must necessarily have a limitation in that only members who are in real need of houses should be permitted to become members and to take the benefit of land allotment,” Justice Sharma writing the judgement observed.

The apex court passed the judgement while upholding the membership termination of a doctor, Parmanand Sharma, by Ishwar Nagar Co-op Housing Building Society in south Delhi for being in possession of another housing property in violation of the society’s bye-laws.

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Sharma had purchased a property bearing No. A-19/A, Kailash Colony, New Delhi in his family’s name consisting of him, wife and two minor children in 1968. In the ground floor he was running a nursing home and on the other floors he was residing with his family.

His membership of the society was terminated in 1978 on the ground that Sharma owned another residential property, in the capital in violation of rule 25(1)(c)of Delhi Cooperative Societies Rules, 1973 which prohibited a member from owning any other property.

The Delhi High Court quashed the termination upon which the society moved the apex court.

Upholding the appeal, the apex court said, “In the garb of a cooperative society, a person cannot be permitted to avoid the stress of market prices and take a concessional advantage in obtaining a plot.

“Bye laws of the society regulate the management of the society and govern the relationship between society and members inter se. They are of the nature of Articles of Association of a company registered under the Companies Act.

If they are consistent with the Act and Rules, the members are bound by them,” the Bench said.

The apex court rejected the plea of the doctor that the Act cannot be applied retrospectively as at the time of purchasing the property he was governed by the Bombay Co-operative Societies Act, when there was no such prohibition. The Delhi Cooperative Societies rules, he pointed came subsequent to the purchase of his properties.

“Merely because a person who had become a member of the society at a point of time when the disqualification mentioned in Rule 25 was not in existence does not necessarily mean that the said rule is retrospective,” the Bench added.

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