1999 Supreme(SC) 1492

1999(10) Supreme 145
SUPREME COURT OF INDIA
(From Karnataka High Court)
S.B. Majmudar and A.P. Misra, JJ.
Hyderabad Karnataka Education Society -Appellant
versus
Registrar of Societies & Ors. -Respondents
Civil Appeal Nos. 6983-6984 of 1999
(Arising out of SLP (Civil) Nos. 7305-06 of 1997)
Decided on 7-12-1999
Counsel for the Parties :
For the Appellants : S.B. Sanyal, Sr. Advocate, Naresh Kaushik, Subhash Chand Kingi, Mrs. Lalita Kaushik, Advocates.
For the Respondents : S.P. Shanker and Ms. Kiran Suri, Advocates.

Headnote:Karnataka Societies Registration Act, 1960-Section 2(b)-Rule 7A of Bylaws-Validity of Rule 7A-Rule 7A provides that an ordinary member should pay annual subscription by December every year and if not paid by March of succeeding year he would cease to be a member-Challenge to Rule contending automatic cessation of membership ultra vires Section 2(b) and Rule is arbitrary-Held : Rule 7A does not violate Section 2(b)-Rule 7A valid-Show cause notice not required to be given to an ordinary member-Show cause notice implicit in Rule 7A itself-Rule arbitrary to the extent it does not contain provision to hear grievance of a member who had paid subscription but due to mistake not given credit to and also in case of non-payment due to reason beyond a member s control-Such members could make application to society and prove that he is not hit by Rule 7A-Such application must be before end of year concerned-Rule 7A read down to the extent it was unreasonable as stated above.

       Held : In order to remain a member of a society, amongst others, the very first requirement of Section 2(b) is that he should have been admitted to the membership of the society in accordance with the rules and regulations and shall have paid his subscription. That obviously should also be as per the rules and regulations of the society. The impugned Rule 7(A) deals with the concept of "admission" of a person to the ordinary membership of the society and the mode and manner of payment of subscription by him for being treated as an ordinary member for the year in question. It lays down that an ordinary member who fails to pay his subscription by the end of March of any relevant year will not be treated to be a continued member for that year. Thus, three months period is available to the member to pay the paltry amount of Rs. 25/- by way of subscription to remain on the roll of members for that year. This provision in Rule 7(A), therefore, has a direct nexus with the provision of Section 2(b), which deals with admission of members to a society as per the rules and regulations and the requirement of payment of subscription thereunder. It is difficult to appreciate how Rule 7(A) laying down these conditions can be said to fall foul on the touchstone of first part of Section 2(b). Rule 7(A) squarely falls in line with first part of Section 2(b) which enjoins that a member shall be treated to be a member of the society for the year concerned if he is admitted to that membership in accordance with the rules and regulations and shall have paid the subscription as laid down therein. If he does not pay his subscription for the year in question within the time permitted by Rule 7(A), then necessarily he must be held not to be duly admitted to the membership of the society in accordance with the Rules for the year in question. Such a Rule cannot be said to be going contrary to the requirement of Section 2(b). On the contrary, it runs parallel to it. (Para 9)

       The High Court in the impugned judgment has also taken the view that Rule 7(A) cannot be sustained for the additional reason that it violates the proviso to Section 6(2) of the Act. It is difficult to appreciate this line of reasoning. All that the said proviso guarantees is that no Rule or bye-law of a society can deprive a member of his right to vote, but before the said proviso can be pressed in service, the concerned member who makes a grievance regarding his deprivation of right to vote as a member has to be found to have subsisted on the roll of the society as a member. If he had validly ceased to be a member of the society because of the operation of any Rule or bye-law then he cannot be said to have been deprived of the right to vote as he is no longer a member. All that the proviso guarantees is that if a person is validly registered as an existing member on the rolls of the society, then no Rule can deprive him of his right to vote. Consequently, on the touchstone of this proviso also the legal efficacy of a Rule treating a person not to be a member under given contingencies cannot be said to have got vitiated. (Para 12)

       It is difficult to appreciate how an opportunity and facility for paying a paltry amount of Rs. 25/- within first three months in a given year can be said to be harsh from any view point. It is true that on the expiry of three months without payment of Rs. 25/- as membership fee for that year by the beginning of April i.e. the fourth month of that year, he will automatically cease to be a member. No notice will be required to be served to him in this connection. It is obvious that every member knows the relevant bye-law and the Rules governing his membership. An ordinary member has been given three months time to pay up this small amount, still if he does not do so, he has to thank himself. Then by the fourth month he will cease to be treated as an ordinary member for that year. The society is not expected to give him further notice to show cause why he should not be treated to be an ordinary member for that year because he has not paid his subscription during the period of first three months and has not availed of that opportunity. Such a notice is implicit in the Rule itself which is well known to all members who are enrolled as such in previous years. It is the member s own inaction which makes him get out of ordinary membership for that year once the fourth month starts. Consequently, there would remain no occasion for any member of the society to complain about failure of natural justice in not being issued a notice to show cause why he should not be treated as a non-member from April of that year. He is not being removed as an ordinary member on account of any alleged misconduct for which a show cause notice may be required on the principles of natural justice. Therefore, one that score also the Rule cannot be treated to be harsh or arbitrary. (Paras 16 & 17)

       However, one aspect of the matter will have to be considered in greater detail so as to sustain this Rule on the touchstone of reasonableness. Take a case wherein an ordinary member on the roll of the society for the year 1999 may not be treated to have paid Rs. 25/- up to the end of March 2000, as Rs. 25/- might not have credited to his account in the society s books during the relevant months but he may have a good defence to show that he had already tendered the same amount, but due to some mistake of the receiving cashier or clerk of the society the amount may not have been credited in his account. Such a defence would naturally be required to be considered by the society before treating him to have automatically ceased to be an ordinary member for that year on the onset of the fourth month. Similarly, the defaulting member, apart from the defence of actual payment not being noted by the society in its books of account for any reason, may have a sufficient cause for not paying this amount within the prescribed period from January to end of March of that year. He may, for reasons beyond his control, might have been prevented from remitting the said amount due to his prolonged sickness or absence from the place of work for unavoidable reasons or for any other sufficient cause. If such a case is put forward for consideration of the society and if the authorities of the society agree with him and hold after hearing him that he had actually paid the amount within time but it was not noted in the society s books or in the alternative even if he had not paid the said amount within the time prescribed, he had a sufficient cause for non-payment due to unavoidable sickness or for other reasons beyond his control, then once such a case is made out by the defaulting member to the satisfaction of the society, it has to be held that such an ordinary member cannot be said to have failed to pay his subscription before the end of March. Therefore, he will not incur automatic cessation of his membership for that year. It has to be kept in view that Rule 7(A), when reasonably construed, must mean that it will apply if it is shown that an ordinary member, by his own volition, wilfully and consciously without any real impediment and not for reasons beyond his control, had not paid his subscription before the end of March of any given year, and consequently he would automatically cease to be a member for that year. In order to show that he is not hit by Rule 7(A), it will be open to the alleged defaulter ordinary member to point out to the society relevant grounds of defence and if he does so before the year in question runs out, and if his defence is accepted by the authorities concerned of the society then his membership would not be hit by the provisions of Rule 7(A). To that extent, while sustaining Rule 7(A), appropriate reading down of the said provision for saving it from the vice of unreasonableness and arbitrariness has to be resorted to. It must, therefore, be held that Rule 7(A) has to be read down as under to sustain its legality and validity. If an ordinary member is shown not to have paid up his annual subscription of Rs. 25/- for a given year by the end of March of that year and if he disputes the allegation of non-payment of subscription by applying to the society before the expiry of the year concerned or if he proves to the satisfaction of the society that there was any sufficient cause which prevented him from paying up Rs. 25/- by the end of March of that year, then he will not be deemed to have automatically ceased to be such an ordinary member for that year. However, for that purpose even without the society being required to issue any show cause notice, it will be for the member concerned to apply to the society by raising a dispute about automatic cessation of his ordinary membership by putting forward for consideration of the society his relevant defence against the alleged non-compliance of Rule 7(A) by the end of March and if an application raising such a dispute is filed and if any valid ground is made out by the member concerned and if the society accepts such application and the ground made therein, then for that year, Rule 7(A) will not be treated to have dismembered him from his ordinary membership. However, such an application has to be moved by him, latest before the end of the year concerned. (Paras 18 & 19)