MP High Court Quashes Joint Registrar's Order Cancelling 18-Year-Old Land Sale Permission

Indore , MP: In a significant ruling, the High Court of Madhya Pradesh at Indore has set aside an order passed by the Joint Commissioner and Joint Registrar, Cooperative Societies, that cancelled a permission granted nearly two decades ago for a cooperative society to sell land.

Justice PranayVerma , presiding over Writ Petition No. 7617 of 2021, held that the Joint Registrar lacked the power of review under the M.P. Cooperative Societies Act, 1960, to suo motu cancel an order passed by a subordinate authority after a delay of 18 years, especially when the permission had already been acted upon and led to significant subsequent developments and legal proceedings.

The case involved M/S Shriram Builders (the petitioner), a real estate firm, which purchased disputed land in Indore from Nyay Vibhag Griha Nirman Sahkari Sanstha Maryadit (Respondent No. 6), a cooperative society, in 2003. The society had obtained permission from the Deputy Registrar, Cooperative Societies, on February 28, 2003, to sell the land. This permission was granted because the land, though intended for residential plots, was designated for commercial and Public-Semi Public (PSP) use in the Indore Master Plan, making residential development impossible for the society. The society aimed to sell the land to refund its members.

Following the purchase, Shriram Builders obtained mutation of the land, secured approval for development plans from the Town and Country Planning Department, and successfully litigated against attempts by the Indore Development Authority (IDA) to acquire the land in two separate schemes (Scheme No. 132 and 171). The firm also obtained orders for the removal of encroachments on the land. Crucially, after obtaining verification of the original 2003 permission from the Joint Registrar in February 2021, the petitioner was granted building permission by the Indore Municipal Corporation and commenced construction.

However, in March 2021, the Joint Registrar suo motu cancelled the 2003 permission based on a report alleging that the society had failed to comply with the conditions stipulated in the original permission, such as member refunds and following a transparent sale procedure. This cancellation order was challenged by Shriram Builders before the High Court.

The petitioner argued that the Joint Registrar had no jurisdiction to review or suo motu cancel the Deputy Registrar's order after such a long delay and after the permission had been fully acted upon through registered sale deeds. They contended that any non-compliance with conditions was the society's responsibility, not the purchaser's, and that the order violated principles of natural justice as they were not given a proper hearing by the authority passing the order. It was also submitted that the proceedings were initiated without jurisdiction at the behest of the Collector, who has no authority over cooperative society matters under the relevant Act.

The respondents and intervening parties supported the cancellation, primarily arguing that the original sale was void ab initio and that the society failed to follow due process and conditions, including fully refunding members. Some interveners raised title disputes, which the court noted were not relevant to the validity of the cancellation order itself, citing a direction from the Apex Court.

Justice Verma , relying on the principle established by the Apex Court in Mohinder Singh Gill and Another versus Chief Election Commissioner (1978), held that the validity of the impugned order must be judged solely on the reasons stated within it (non-compliance with conditions) and cannot be later supplemented by new reasons (like the original permission being illegal).

Examining the alleged non-compliance with the 2003 permission's conditions, the court found evidence suggesting substantial compliance by the society, particularly regarding the surrender of plots by members and refunding amounts. The court noted that the permission itself contemplated sale to the petitioner or a non-member, justifying the sale to Shriram Builders . It also found no material proving financial loss to the society or that the land was improperly valued, especially since the registered sale deeds and mutation were completed in 2003.

Crucially, the court emphasized that the permission was granted precisely because the land's master plan usage was non-residential, making the allegation of incorrect land use at the time of sale factually incorrect based on the permission's own premise.

The judgment highlighted that the permission dated 28.02.2003 had been fully acted upon and effectively exhausted. The petitioner had invested significant resources (Rs. 2.5+ Crore deposited for development) and time in litigating to protect and develop the land based on this permission. Revoking it after 18 years was deemed "wholly illegal, unjustifiable and inequitable."

The court further held that the Joint Registrar acted without jurisdiction. There is no provision in the M.P. Cooperative Societies Act, 1960, granting review power to the Registrar or any officer subordinate to review their own or a subordinate's order suo motu , particularly without an appeal or revision being filed. The power of review under the Act is conferred only upon the Cooperative Tribunal.

Finding the impugned order to be without jurisdiction and in gross violation of the principles of natural justice for failure to grant the petitioner an opportunity of hearing by the authority passing the order, the High Court quashed the order dated 22.03.2021 and all consequential actions taken against the petitioner. The writ petition was accordingly allowed.

This judgment underscores the importance of statutory authorities acting strictly within their conferred powers and highlights that long-standing permissions, once acted upon, cannot be arbitrarily cancelled after significant delay, particularly to the detriment of bona fide purchasers.