Interpretation of Rule 59 - Disqualification for Membership of Committee based on interest in contracts with the cooperative society.

( 1 ) BOTH these petitions emanate from the order dated 5. 11. 2002 passed by the Financial Commissioner. Therefore, we deem it appropriate to dispose of both these writ petitions by this common order.

( 2 ) FOR illustration, we are recapitulating the facts of CW 7892/2002 alone. Respondent, Mohd. Omar s/o Sher Mohd. filed a petition under Section 31 (7) read with Section 80 of the Delhi Cooperative Societies Act, 1972 challenging the election of petitioner, M. F. H. Beg, to the post of Director in the Managing Committee of Jamia Cooperative Bank in the election held on 26. 5. 2002. The sole ground of challenge is that the petitioner, M. F. H. Beg, is not qualified to become a member of the Committee on the ground that his son, Mirza Zaffar Beg, is having a lease agreement with Jamia Cooperative Bank in respect of property No. 334-E, Batala House, Jamia Nagar, New Delhi. We deem it appropriate to reproduce Section 59. Section 59 reads as under:

( 3 ) RULE 59 Disqualification for Membership of Committee: no person shall be eligible for election as a member of the committee, if-

(A ). . . . (b) he has, directly or indirectly, any interest in any contract to which the cooperative society is a party except in transaction made with the cooperative society as a member in accordance with the objects of the society as stated in the bye-laws.

( 4 ) IT may be pertinent to mention that the facts mentioned in the petition are admitted. It has not been denied by the petitioner that his son is having lease agreement in question with Jamia Cooperative Bank and he himself is residing with his son.

( 5 ) LEARNED senior counsel appearing for the petitioner submitted that the petitioner has no interest in the said property of his son and when the lease agreement was executed he was not even the Director of the Bank.

( 6 ) RULE 61 of the Delhi Cooperative Societies Act reads as under: rule 61. Prohibition against being interested in contracts are :

4 Without prejudice to the provisions of the bye-laws, no officer of a cooperative society, shall have an interest directly or indirectly, otherwise than as such officer:- (a ). . . . . (b) in any property sold or purchased or leased by or to the society. 1 Learned senior counsel appearing for the petitioner submitted that combined reading of Rules 59 (b) and 61 clearly shows that direct or indirect interest in any any property sold or purchased etc. is not a disqualification for seeking election to the Committee. The prohibition applies to the officers after one has been elected/appointed to the office. 2 The Financial Commissioner in his order stated that Rules 59 and 61 are distinct. Rule 59 applies to persons seeking election as members of the Committee, whereas Rule 61 governs the conduct of the office holders of the society. The learned Financial Commissioner observed that in the instant case the issue is squarely covered by the provisions of Rule 59. He further mentioned in the order that it is established that the lease agreement between his son and the society was subsisting when he filed the nomination for election. He further stated that it cannot be said that he was not an interested party in the contract as both father and son are residing in the same premises, Therefore, his case is clearly hit by the said rule. He also did not find any merit in the contention that the petitioner s interest is purely sentimental and not pecuniary as his son is an independent income tax payer. He also observed that Rule 61 is applicable only to the officers of the cooperative society. The learned Financial Commissioner set aside the election of M. F. H. Beg as according to him he attracted disqualification under Rule 59 at the time of filing of the nomination. He also observed that Mohd. Omar s/o Sher Mohd. cannot be declared as elected automatically in place of M. F. H. Beg and he directed fresh elections to take place according to the Rules and the Bye-laws. We cannot find any infirmity in t