Can cooperative society refuse transfer of house on ground of religion?

[Anonymous]

Is it possible for a cooperative housing society to refuse sale / transfer of a flat / house by a member of the society to some one on grounds of religion, such as being a Muslim? Is it not a violation of the right to equality? Is it lawful? How such refusal permitted in a secular country like India?

[Dr. Ashok Dhamija]

It is a controversial topic and its answer would generally depend also upon the relevant law governing the concerned cooperative housing society as also the provisions in the bye-laws of the housing society concerned.

However, it is pertinent to point out that in the case of Zoroastrian Coop. Housing Society Ltd. v. District Registrar, Coop. Societies (Urban), (2005) 5 SCC 632 : AIR 2005 SC 2306, the Supreme Court has held that it was permissible to restrict the membership of the Zoroastrian Coop. Housing Society Ltd. only to those persons who are Parsis, i.e., belong to a particular religion / community only.

In the above case, the Bye-law 7 of the Bye-laws of the said housing society restricted membership of the hosing society only to members of Parsi community. The society had refused permission to the Respondent No. 2 to transfer his plot in the society to a person who was not a Parsi.

The Supreme Court repelled the argument that the right to equality was violated by denying membership of the society to a person who was not a Parsi. It was held as under:

“It is true that in secular India it may be somewhat retrograde to conceive of cooperative societies confined to a group of members or followers of a particular religion, a particular mode of life, a particular persuasion. But that is different from saying that you cannot have a cooperative society confined to persons of a particular persuasion, belief, trade, way of life or a religion. A cooperative society is not State unless the tests indicated in Ajay Hasia are satisfied. There is no case here that the appellant Society satisfies the tests laid down by Ajay Hasia so as to be considered to be State within the meaning of Article 12 of the Constitution. The fundamental rights in Part III of the Constitution are normally enforced against State action or action by other authorities who may come within the purview of Article 12 of the Constitution. It is not possible to argue that a person has a fundamental right to become a member of a voluntary association or of a cooperative society governed by its own bye-laws. So long as this position holds, we are of the view that it is not possible, especially for a Registrar who is an authority under the Cooperative Societies Act, to direct a cooperative society to admit as a member, a person who does not qualify to be a member as per the bye-laws registered under the Act. Nor can a Registrar direct in terms of Section 14 of the Act to amend the bye-laws since it could not be said that such an amendment, as directed in this case is necessary or desirable in the interests of the appellant Society. What is relevant under Section 14 of the Act is the interests of the society and the necessity in the context of that interest. It is not the interest of an individual member or an aspirant to a membership.”

The Supreme Court held that no citizen has a fundamental right under Article 19(1)(c) to become a member of a voluntary association or a cooperative society. His right is governed by the provisions of the statute. So, the right to become or to continue being a member of the society is a statutory right. On fulfilment of the qualifications prescribed by the statute, Rules and the approved bye-laws of the society concerned does a person become eligible for membership thereof. Hence, the action of the Society in refusing membership to a person has to be tested on the anvil of the provisions of the Act, the Rules and its bye-laws. The bye-laws of the appellant Society had already been approved on the basis that they were consistent with the Act and the Rules. Normally, the bye-laws of a cooperative society do not have the status of a statute and are only the rules which govern the internal management or administration of a society and they are of the nature of articles of association of a company incorporated under the Companies Act. They may be binding between the persons affected by them but they do not have the force of a statute. It may therefore be possible in a given case to point out that a particular bye-law even if approved, such as Bye-law 7 of the appellant Society, is against the terms of the Act or the Rules governing cooperative societies. In so testing, the search should be to see whether a particular bye-law violates the mandate of any of the provisions of the Act or runs counter to any of its provisions or to any of the Rules. There is nothing in the Gujarat Cooperative Societies Act and the Gujarat Cooperative Societies Rules restricting the rights of citizens to form a voluntary association and get it registered under the Cooperative Societies Act confining its membership to a particular set of people recognised by their profession, their sex, their work or the position they hold or with reference to their beliefs, either religious or otherwise. Hence it is not possible, especially for a Registrar who is an authority under the Cooperative Societies Act, to direct a cooperative society to admit as a member, a person who does not qualify to be a member as per the bye-laws registered under the Act.

In the end, the Supreme Court upheld “the right of the Society to insist that the property has to be dealt by Respondent 2 only in terms of the bye-laws of the Society and assigned either wholly or in parts only to persons qualified to be members of the Society in terms of its bye-laws”.

Thus, it should be possible for a housing society to have its bye-laws to refuse sale / transfer of a flat / house by a member of the society to some one on grounds of religion and insist that such flat or house may be sold only to a member of the community for whose benefit the society was formed. This is what has been held by the Supreme Court itself.

     

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Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.

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