ZOROASTRIAN CO-OPERATIVE HOUSING SOCIETY LTD. AND ANR. v. DISTRICT REGISTRAR CO-OPERATIVE SOCIETIES (URBAN) AND ORS.

28Copy pinpoint28. The argument that public policy is as reflected by the constitutional guarantees, which govern rights and obligations has to be approached with caution. It will be easy for State Legislatures to provide in their respective Co-operative Societies Acts that no society could be formed or registe.red under the Act as confined to a group, a sex, a religion or members of a B particular persuasion or way of life. But that is different from saying that in the name of open membership, subject to its bye-laws contemplated by the relevant provisions of the Act, a direction could be issued to ignore the bye- laws and to admit a person who is not qualified to become a member. Moreover, what is public policy in the context of a co-operative society got registered by certain persons coming together and laying down a qualification for membership in that society, is a question that has to be considered essentially in the context of the availability of such a right in India to form such associations and the absence of a prohibition in that behalf contained in the Co-operative Societies Act and the Rules. In fact, the Act and the Rules contemplate classification of a society and even there, no prohibition has been indicated in respect of the confining of the membership to a class of people. The decisions of the Bombay High Court relied on by counsel for the respondent, 'in our view, have proceeded on the basis of the concept of open membersliip without giving adequate importance to the provision in the very section that the open membership is subject to bye-laws of the society or the qualification prescribed for membership in the society. In that context, it is not possible to import one's inherent abhorrence to religious groups or other groups coming together to form, what learned counsel for the respondent called "ghettos". That is certainly an important aspect but that is an aspect that has to be tackled by the legislature and not by the authorities under the Act directing the co-operative society to go against its own bye-laws or by the courts upholding such orders of the authorities, based on presumed public policy when the Act itself does not warrant it or sanction it.·

29Copy pinpoint29. Section 23 of the Contract Act provides that where consideration and object are not lawful the contract would be void. But for Section 23 to ... apply it must be forbidden by law or it must of such a nature that it would defeat the provision of any law or it is fraudulent or it involves or implies injury to the person or property of another or the court regards it as immoral or opposed to public policy. If we proceed on the basic premise that public policy in relation to a co-operative society is to be looked for within the four comers of the Act, the very enactment under which the very society is formed, a bye-law that does not militate against any of the provisions of the Act H cannot be held to be opposed to public policy unless it is immoral or offends

- ~:~ ZOROASTRIAN CO-OP HOUSING SOCIE. LTD."· DIST. REG. CO-OP. SOCIE. [BALASUBRAMANYAN. JJ

public ord~r. It cannot be said that a person bargaining for membership in a Society or for coming together with those of his ilk to form a society with 625

A ~',~ ~'t' the objects as set out in the bye-laws subscribed to by him, can be considered to be doing anything immoral or against public order. An aspirant to membership in a co-operative society, is at arms length with the other members of the society with whom he enters into the compact or in which he joins, having expressed his willingness to subscribe to the aims and objects of that society. In the context of Section 23 of the Contract Act, something more than possible or plausible argument based on the cortstitutional scheme is necessary to nullify an agreement voluntarily entered into by a person. We have already quoted the relevant observations of Lord Sumner in Rodriguez v. Speyer Bros., (1919) AC 59. Here, respondent No. 2 became a member of the Society of his own volition acquiring the rights and incurring the obligations imposed by the approved bye-laws of the Society. It is not open to respondent No. 2 to approach the authorities for relieving him of his obligations attaching to the acquisition of membership in the Society. It is also not open to the authorities under the Act to relieve him of his obligations in the guise of entering a finding that discrimination on the basis of the religion or sex is taboo under the Constitution in the context of Part III .. thereof. As has been held by this Court, he is precluded from challenging the validity of the bye-laws relating to membership.

30Copy pinpoint30. The above conclusion would lead us to the question whether there is anything in The Gujarat Co-operative Societies Act and the Gujarat Co- operative Societies Rules restricting the rights of the citizens to form a voluntary association and get it registered under The Co-operative Societies Act confining its membership to a particular set of people recognized by their profes.sion, their sex, their work or the position they hold or with reference 'I."

to their beliefs, either religious or otherwise. It is not contended that there is any provision in the Gujarat Co-operative Societies Act prohibiting the registration of such a co-operative society. We have already referred to the history of the legislation and the concept of confinement of membership based on residence, belief or community. The concept of open membership, as envisaged by Section 24 of the Act is not absolute on the very wording of that Section. The availability of membership is subject to the qualification prescribed under the provisions of the Act, the Rules and the bye-laws of such society. In other words, if the relevant bye-law of a society places any restriction on a person getting admitted to a co-operative society, that bye- law would be operative against him and no person, or aspiring member, can be heard to say that he will not be bound by that law which prescribes a H

ZOROASTRIAN CO-OP. HOUSING SOCIE. LTD. 1• DIST. REG. CO-OP. SOCIE. [BALASUBRAMANYAN, J.] 627 that members of that community for whose benefit the society was formed, alone could aspire to be members of that society. There is nothing in the Bombay Act or the Gujarat Act which precludes the formation of such a society. In fact, the history of legislation referred to earlier, would indicate that such coming together of groups was recognized by the Acts enacted in that behalf concerning the co-operative movement. Even today, we have Women's co-operative societies, we have co-operative societies of handicapped persons, we have co-operative societies of labourers and agricultural workers. We have co-operative societies of religious groups who believe in vegetarianism and abhore non-vegetarian food. It will be impermissible, so long as the law stands as it is, to thrust upon the society of those believing in say, vegetarianism, persons who are regular consumers of non-vegetarian food. May be, in view of the developments that have taken place in our society and in the context of the constitutional scheme, it is time to legislate or bring about changes in Co-operative Societies Acts regarding the formation of societies based on such a thinking or concept. But that cannot make the formation of a society like the appellant Society or the qualification fixed for membership therein, opposed to public policy or enable the authorities under the Act to intervene and dictate to the society to change its fundamental .... character.

34. Another ground relied on by the Authorities under the Act and the High Court to direct the acceptance of respondent No.3 as a member in the Society is that the bye-law confining membership to a person belonging to the Parsi community and the insistence on respondent No.2 selling the building or the flats therein only to members of the Parsi community who akne are qualified to be members of the Society, would amount to an absolute restraint on alienation within the meaning of Section I 0 of Transfer of Property Act. Section 10 of the Transfer of Property Act cannot have any application to transfer of membership. Transfer of membership is regulated by the bye- laws. The bye-laws in that regard are not in challenge and cannot effectively be challenged in view of what we have held above. Section 30 of the Act itself places restriction in that regard. There is no plea of invalidity attached to that provision. Hence, the restriction in that regard cannot be invalidated or ignored by reference to Section I 0 of the Transfer of Property Act. G

\ 35. Section 10 of the Transfer of Property Act relieves a transferee of ·immoveable property from an absolute restraint placed on his right to deal ) with the property in his capacity as an owner thereof. As per Section 10, a condition restraining alienation would be void. The Section applies to a case H

628 SUPREME COURT REPORTS [2005) 3 S.C.R.

A where property is transferred subject to a condition or limitation absolutely restraining the transferee from parting with his interest in the property. For making such a condition invalid, the restraint must be an absolute·restraint. It must be a restraint imposed while the property is being transferred to the transferee. Here, respondent No. 2 became a member of the Society on the B death of his father. He subscribed to the bye-laws. He accepted Section 30 of the Act and the other restrictions placed on a member. Respondent No.2 was qualified to be a member in terms of the bye-laws. His father was also a member of the Society. The allotment of the property was made to appellant in his capacity as a member. There was really no transfer of property to respondent No. 2. He inherited it with the limitations thereon placed by C Section 31 of the Act and the bye-laws. His right to become a member depended on his possessing the qualification to become one as per the bye- laws of the Society. He possessed that qualification. The bye-laws provide that he should have the prior consent of the Society for transferring the property or his membership to a person qualified to be a member of the Society. These are restrictions in the interests of the Society and its members D and consistent with the object with which the Society was formed. He cannot question that restriction. It is also not possible to say that such a restriction amounts to an absolute restraint on alienation within the meaning of Section 10 of the Transfer of Property Act. --

E 36. The restriction, if any, is a self-imposed restriction. It is a restric~ion in a compact to which the father of respondent No. 2 was a party and to which respondent No. 2 voluntarily.became a party. It is difficult to postulate that such a qualified freedom to transfer a property accepted by a person voluntarily, would attract Section 10 of the Act. Moreover, it is not as if it is an absolute restraint on alienation. Respondent No. 2 has the right to transfer the property to a person who is qualified to be a member of the Society as per its bye-laws. At best, it is a partial restraint on alienation. Such -~ \ partial restraints are valid if imposed in a family settlement, partition or compromise of disputed claims. This is clear from the decision of the Privy Council in Mohammad Raza v. Mt. Abbas Bandi Bibi, ALR 59 I.A. 236 and also from the decision of the Supreme Court in Gummanna Shetty and Ors. v. Nagaveniamma, AIR (1967) SC 1595. So, when a person accepts membership in a cooperative society by submitting himself to its bye-laws and secures an allotment of a plot of land or a building in terms of the bye- laws and places on himself a qualified restriction in his right to transfer the • property by stipulating that the same would be transferred back to the society or with the prior consent of the society to a person qualified to be a member

r-- ZOROASTRIAN CO-OP. HOUSING SOCIE. LTD. v. DIST. REG. CO-OP. SOCIE. [BALASUBRAMANYAN, I.] 629

of the society, it cannot be held to be an absolute restraint on alienation offending Section l 0 of the Transfer of Property Act. He has placed that restriction on himself in the interests of the collective body, the society. He has voluntarily submerged his rights in that of the society.

37. The fact that the rights of a member or an allottee over a building or plot is attachable and saleable in enforcement of a decree or an obligation against him cannot make a provision like the one found in the bye-laws, an absolute restraint on alienation to attract Section 10 of the Transfer of Property Act. Of course, it is property in the hands of the member on the strength of the allotment. It may also be atta<:hable and saleable in spite of the volition of the allottee. But that does not enable the Court to hold that the condition that an allotment to the member is subject to his possessing the qualification to be a member of the cooperative society or that a voluntary transfer by him could be made only to the society itself 9r to another person qualified to be a member of the society and with the consent of the society could straight away be declared to be an absolute restraint on alienation and consequently an interference with his right to property protected by Article 300A of the D ·Constitution of India. We are, therefore, satisfied that the finding that the restriction placed on rights of a member of the Society to deal with the property allotted to him must be deemed to be invalid'\s an absolute restraint on alienation is erroneous. The said finding is reversed.

... 38. In view of what we have stated above, we allow this appeal, set aside the judgments of the High Court and the orders of the Authorities under the Act and uphold the right of the Society to insist that the property has to be dealt by respondent No.2 only in terms of the bye-laws of the Society and assigned ei~her wholly or in parts only to persons qualified to be members of the Society in terms of its bye-laws. The direction given by the authority to the appellant to admit respondent No.3 as a member is set aside. Respondent No.3 is restrained from entering the property or putting up any construction therein on the basis of any transfer by respondent No.2 in disregard of the bye-laws of the Society and without the prior consent of the Society.

39. The Writ Petition filed by the appellant in the High Court is allowed in the above manner. The appellant will be entitled to its costs here and in the court below.

N.J. Appeal allowed.