Full order HONOURABLE MR.JUSTICE N.ANAND VENKATESH W.P(MD)No.12440 of 2020 and W.M.P.(MD).No.10651 of 2020 (Through Video Conferencing) R.V.Shanmuganandam .. Petitioner ——The discussion made herein above makes this Court come to an irresistible conclusion that the third respondent Society has been taken for a ride by its erstwhile office bearers who had conspired with the petitioner and one Thirisangu and the properties belonging to the third respondent Society has been conveyed at throw away prices. If cases of this nature are let off without taking stringent action, the Co-operative Movement in the State will suffer and it will ultimately end in closing down Societies which are already in the brink of precipice. This Court does not find any ground to interfere with the impugned proceedings of the third respondent dated 24.08.2020. 31. In the result, this writ petition is dismissed by imposing cost of Rs.10,00,000/-(Rupees Ten lakhs only) payable by the petitioner to the Chief Minister’s Relief Fund on or before 28.07.2021. Consequently, connected miscellaneous petition is closed. 32. There shall be a further direction to the third respondent Society to immediately take steps to set aside the compromise decree passed in O.S.No.645 of 2005 which is vitiated by fraud and which does not bind the third respondent Society. There shall also be a further direction to the investigation officer, who is investigating the FIR in Crime No.2 of 2020, to expedite the investigation and file a final report against all the accused persons within a period of three months from the date of receipt of a copy of this order. The respondents are also directed to take steps to get the pending writ petitions filed by the Secretary and other office bearers listed for hearing immediately. Subject to the final result in these writ petitions, effective and stringent action shall be taken against all those persons, who are behind this huge scam. The first respondent shall ensure that not an inch of property belonging to any Society in Tamil Nadu is permitted to be dealt with by the Society concerned without the concurrence of the first respondent and the Pricing Committee appointed by the Government. There shall also be a direction to the first respondent to conduct a thorough audit of the sale transactions entered into by all the Societies to find out if any other Society had indulged in a scam of this nature. 33. Post this case for reporting compliance regarding payment of cost on 29.07.2021.

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
RESERVED ON : 01.07.2021
PRONOUNCED ON : 07.07.2021
CORAM
THE HONOURABLE MR.JUSTICE N.ANAND VENKATESH
W.P(MD)No.12440 of 2020
and
W.M.P.(MD).No.10651 of 2020
(Through Video Conferencing)

R.V.Shanmuganandam .. Petitioner
Vs.
1.The Registrar,
Co-operative Societies,
II Floor, Tamil Nadu Co-operative Housing
Federation Building Complex,
No.48, Ritherton Road,
Veppery,
Chennai-600 007.

2.The Regional Deputy Registrar,
Co-operative Housing Societies
Samad School Road,
Kaja Nagar,
Tiruchirappalli-620020.

3.The Co-operative Sub Registrar/Administrator
The Tiruchirappalli Cooperative House
Construction Societies Ltd., 786′
Makkal Mandram,
Thillainagar,
Tiruchirappalli-620018. .. Respondents

Prayer: Writ Petition is filed under Article 226 of the Constitution of India, for issuance of a Writ of Certiorarified Mandamus, calling for records culminated in the impugned order dated 24.08.2020 on the file of the 3rd respondent and quash the same as illegal, void abinitio without jurisdiction ultra vires and direct the III respondent by way of Mandamus to execute registered sale deed in respect of the property compromised in No.6,8,9, New Block No.26, New Ward No.E(Y) in Anna Nagar approved lay out situated at Tenuur Village, Tiruchirappalli Taluk and District in respect of an extent of 6898 sq.ft., and an extent of 3,150 sq. respectively in favour of the petitioner as per the compromise decree dated 28.01.2010 in O.S.No.645/2005 on the file of the Principal District Munsif, Tiruchirappalli followed by the resolution dated 31.10.2015 in item No.3 passed by the III respondent.
For Petitioner : Mr.Shangar Murali
For Respondents : Mr.Veerakathiravan
Senior Standing Counsel
assisted by Mr.M.Lingadurai
Government Advocate

ORDER
The Tamil Nadu Co-operative Societies Act, 1983 (hereinafter called as Act) was enacted to provide for an orderly development of the co-operative movement in accordance with co-operative principles such as open membership, democratic management, limited interest on capital, distribution of surplus based on patronage, provision for co-operative education and co-operation among co-operatives for the promotion of thrift, self-help and mutual aid among persons with common socio-economic needs so as to bring about improvement in agriculture and industry, better methods of production, better business and better living.

2. The Hon’ble Supreme Court in the Judgment in Myurdhwaj Co-operative Group Housing Society vs. Presiding Officer Delhi Co-operative Tribunal, reported in AIR 1998 SC 2410 has succinctly captured the purpose of forming Co-operative Society by holding that the Co-operative society is formed, with a laudable objective to inculcate spirit to work in a group freely for rendering benefit to its members through the Co-operative contribution.

3. Considering the importance of encouraging the Co-operative Movement, the Legislature thought it fit to give Co-operative Societies a constitutional recognition and the Constitution (97th amendment) Act, 2011 was brought into force on 15.02.2012. Thereby Article 43-B was inserted in Part-IV and a new Part IX-B was inserted in the Constitution. Article 43-B of the Constitution envisages that the State shall endeavour and promote voluntary formation, autonomous functioning, democratic control and professional management of Co-operative Societies. After this amendment, the Tamil Nadu Government decided to amend the Act in consonance with the provisions of the Constitution and thereby necessary amendments were brought in to the existing Act through Act 4 of 2013.

4. On the one hand, the State and Central Governments are striving to improve the status of the Co-operative Movement, but unfortunately, there has been no growth and many Societies have become defunct and the manner in which the Co-operative Movement is functioning in the State militates against the very object of the Act. There are various causes attributed for this failure, namely, Government interference, mismanagement and manipulation, lack of awareness and functional weakness. The bane that afflicts the Co-operative Movement in this State is mainly attributable to misappropriation and manipulation of the funds of the Society by the office bearers and staff working in the Society. The poor, who are contributing their hard earned money to the Society are ultimately left in lurch and due to their poor bargaining capacity, many cases of misappropriation goes unquestioned and there are several criminal cases pending before Courts.

5. The present case required this prelude since this is one of those classical cases where the office bearers and third parties have entered into a conspiracy and immovable properties worth several crores of rupees have been conveyed at throw away prices, thereby the third respondent Society is said to have incurred a loss of more than Rs.6.20 crores. The manner in which the conspiracy has unfolded in the present case can be easily understood while narrating the facts of the case.

6. The petitioner has approached this Court challenging the proceedings of the third respondent Society dated 24.08.2020 and for a consequential direction to direct the third respondent Society to execute the sale deed in favour of the petitioner with respect to the subject property in line with the compromise decree passed by the learned Principal District Munsif, Trichirappalli in O.S.No.645 of 2005, dated 28.11.2010.

7. The case of the petitioner is that he entered into an agreement of sale with one Abdul Kadher and Kasim to purchase an extent of 18,000 sq.ft., in the subject property. It is stated that the third respondent Society filed a suit against them by including the petitioner also as the third defendant, seeking for the relief of permanent injunction in O.S.No.645 of 2005 on the file of the Principal District Munsif Court, Trichirappalli.

8.The further case of the petitioner is that the suit ended in a compromise and a decree was passed on 28.01.2010 in terms of the compromise. According to the petitioner, the third respondent Society, in terms of the compromise decree agreed to convey two items of property in favour of the petitioner. The first item of property measuring 7,800 sq.ft., which was agreed to be conveyed at the rate of Rs.802 per square feet. The second item of property measuring 9000 sq.ft., which was also agreed to be conveyed at the rate of Rs.802 per sq.ft.

9. It is further stated that the third respondent passed a resolution on 30.04.2015 to execute a sale deed in favour of the petitioner for 7800 sq.ft. Accordingly, a sale deed was executed in favour of the petitioner on 25.05.2015 for a total sale consideration of Rs.62,55,600/-(Rupees sixty two lakhs fifty five thousand and six hundred only).

10. It is further stated that the third respondent Society passed yet another resolution on 31.10.2015 to convey 10,048 sq.ft., to the petitioner.

11. The grievance of the petitioner is that this resolution was not acted upon and when the petitioner made a representation on 07.02.2020 to the third respondent calling upon the third respondent to execute the sale deed or in the alternate, to refund the sale consideration already paid with interest, the third respondent issued the impugned proceedings dated 24.08.2020 rejecting the claim made by the petitioner and directing the petitioner to get refund of the money he had already paid. Aggrieved by the same, the present writ petition has been filed before this Court.

12. Heard Mr.Shangar Murali, learned counsel appearing on behalf of the petitioner and Mr.Veerakathiravan, learned Senior Counsel appearing on behalf of the Government of Tamilnadu assisted by Mr.M.Lingadurai, learned Government Advocate.

13. The third respondent had filed a counter affidavit in this case. The relevant portions in the counter affidavit are extracted hereunder:
“4.(a) In order to safeguard the interest of the members of the Society and to put correct checks and balances with regard to purchase of land, Government order vide G.O.(D)No.224 Housing and Urban Development (HCS) Department dated 27.11.2009 was issued, Constituting a “Pricing Committee” for the purpose off fixing the upset price or minimum price for different category of plots in different lay outs of the co-operative Housing Society, in order to put correct check.
(b) The 1st respondent vide RC.1674/2008/C4 dated 21.12.2012 issued directions under Section 181 of the Tamilnadu Co-operative Societies Act, 1983 that any unsold Plots/sites available with all Co-operative Housing Societies under the control of the 1st respondent herein shall not be sold without prior permission from the 1st respondent and without fixation of upset price by the Pricing Committee appointed by the Government.
(c) The Tiruchirappalli Co-operative House Construction Society had instituted a Suit in O.S.No.645 of 2005 before the Principal District Munsif Judge of Tiruchirapalli praying for a permanent injunction restraining the defendants from in any manner interfering with the plaintiffs peaceful possession and enjoyment of the suit property in any manner whatsoever.
(d) During the pendency of the suit, without adhering to the Government order in G.O(D).No.224/Housing and Urban Development (HCS) Department dated 27.11.2009 a compromise petition dated 28.01.2010 was entered into by the Secretary, Tiruchirappalli Co-operative House Construction Society with the defendants.
(e) Recording the same, the Court of the Principal District Munsif Judge of Tiruchirapalli passed a compromise decree dated 28.01.2010.
(f) Subsequent to this, the Regional Deputy Registrar(Housing) vide order in Na.Ka.No.239/2011 dated 07.09.2011 communicated to the Writ Petitioner that the Compromise decree was in complete violation of the G.O.No.224 dated 27.11.2009, and as such the property cannot be said to him without the permission from the Government and after following the norms fixed by the Pricing Committee.
(g) The said proceedings was challenged by the petitioner herein in W.P.(MD).No.11573 of 2011 before this Hon’ble Court and the same was dismissed vide order dated 16.04.2015 as withdrawn.
(h) Proceedings under Section 81 of the Tamilnadu Co-operative Societies Act were initiated by the 2nd respondent herein vide proceedings made in Na.Ka.1277/2016 Na.Vee dated 27.01.2017, wherein the then Co-operative Sub-Registrar (Housing), Musiri was appointed as an enquiry officer, in view of the certain irregularities which took place from regarding allotment and registration of house plots and shop sites belonging to the society and those proceedings were challenged by the then Vide President Mr.M.Sait in W.P.(MD).No.8524 of 2017, wherein interim stay was ordered by this Hon’ble Court vide order dated 28.04.2017 passed in WMP(MD).No.6497 of 2017. The said writ petition is still pending.
i) In view of the illegal transfers of plots in collusion with the members and illegal activities pertaining to the erstwhile Secretary Mr.M.Karmegam causing wrongful loss to the society, disciplinary action was initiated by the 2nd respondent in Na.Ka.No.2/2016/Thu.Pa.(1) dated 27.06.2017 against the said Mr.M.Karmegam and the same was challenged by him by way of a writ petition in WP(MD).No.12771 of 2017 before this Hon’ble Court, wherein the respondents therein were directed to maintain status quo vide order dated 11.07.2017 passed in WMP.(MD).No.9874 of 2017. The said writ petition is pending.
(j)Subsequently the said Mr.M.Karmegam (on deputation) along with one V.Durairaj, a junior clerk (on deputation) were issued with independent orders vide Na.Ka.No.2/2016/Thu.Pa.(2) dated 13.07.2017 and Na.Ka.No.2/2016/Thu.Pa(1) dated 14.07.2017 respectively sending them to their parent unit in view of their continued illegal activities in collusion with the erstwhile board and the same were challenged by them in W.P.(MD).Nos.13215 and 13216 of 2017 respectively, wherein similar orders of status quo as on that day were passed by a common order dated 18.07.2017 by this Hon’ble Court. There was also a direction to post the said writ petition along with the connected writ petitions in W.P.(MD).Nos.8524 of 2017 and 12771 of 2017. The said writ petition is also pending.
(k) Blatant violation in terms of sale of public office sites and shop sites belonging to the society and causing loss of Rs.6,21,97,800/- to the society took place in the then existing board while the proceedings against the erstwhile board under Section 88(1) of the Act was pending and the order of interim stay passed in W.P.(MD).No.8524 of 2017 was also pending, resulting in issuance of a show cause notice vide ref.Na.Ka.5265/2017 Sa.Pa.2 dated 26.10.2017 by the 1st respondent herein regarding supersession of the board.
(l) The said proceedings were challenged by the said erstwhile board in W.P.(MD).No.21159 of 2017 wherein the proceedings were directed by this Hon’ble Court vide order dated 17.11.2017 passed in WMP(MD).No.17423 of 2017 to be kept in abeyance and further specifically directed that “No further execution of sale shall be executed in the meanwhile”.
(m) The said writ petition in WP(MD).No.21159 of 2017 was dismissed by this Hon’ble Court as withdrawn vide order dated 19.02.2020.
5.(ii) The averments in para 4 of the affidavit regarding the filing of suits and the compromise decree are matters of record and needs no comment. However, it is pertinent to state that the Compromise decree was entered into by the then Secretary of the Society in blatant violation of G.O.(D).No.224/Housing and Urban Development (HCS) Department dated 27.11.2009. As far as the averments regarding the registration of the sale deed in favour of the petitioner in respect of 7800 sq.ft comprised in T.S.No.39, Tennur Village, Tiruchirappalli Taluk and District is concerned, though there was a direction in the compromise decree against the petitioner to deposit the amount at the rate of Rs.802/- per sq.ft., the same was not deposited by him till 13.05.2015 and with the connivance and collusion of the erstwhile secretary and the erstwhile board in fraudulently resolving to direct the petitioner herein to withdraw the pending writ petition against the society and thereafter to execute sale deed at the rate of Rs.802/- per sq.ft in favour of the petitioner without obtaining the permission of the 1st respondent and accordingly the petitioner has got the execution of the sale deed on 25.5.2015 registered as Doc.No.3244/2015 on the file of SRO,Woriyur, Tiruchirappalli by making payment of the amount only on 14.5.2015 subsequent to his withdrawal of the writ petition in WP(MD).No.11573 of 2011 on 16.04.2015. While so, the existing guideline value of the said property measuring to 7800 sq.ft., was Rs.3,000/- per sq.ft., which would amount to Rs.2,34,00,000/-, not to speak of the market value. It is pertinent to point out that petitioner herein has sold the said property measuring 7800 sq.ft., to third parties vide sale deed dated 15.6.2015 registered as Document No.3728/2015 on the file of SRO, Woriyur, Tiruchirappalli, for many crores though the sum of Rs.2,34,00,000/- based on the then existing guideline value was show in the sale deed, within a period of 21 days from the date of his purchase. In respect of the above property allegedly measuring 9000 sq.ft., the proceedings of the 1st respondent in RC.No.9028/2008/E4 dated 21.11.2008 would not be applicable as at that point of time, the litigations which ended in compromise decree as claimed herein were pending in respect of the said property. Therefore, the allegation that the 1st respondent has accorded permission in favour of the 3rd respondent to sell the plots at the rate of Rs.755/- per sq.ft., is denied as incorrect.
(iv) As far as the allegations in para 7 of the affidavit that undue advantage of the sale by him to third parties was blamed by the society is concerned, the fact that he had colluded and conspired to make wrongful revenue loss to the society is evident from the urgent sale to third parties at huge market value and therefore the illegal profit making attitude of the petitioner is apparent. In respect of the allegations regarding the two sale deeds in favour of Mr.M.Thirisanghu, the same have been clandestinely done with an ill motive to make wrongful gain to themselves and the resultant wrongful loss to the society by the erstwhile Secretary Mr.M.Karmegam and the then President Mr.P.M.Kumar in connivance with the beneficiary. As against those illegal activities, disciplinary proceedings were initiated by the Society against them which were being challenged by them in various writ petitions as stated above. It is also pertinent to point out that vigilance and Anti-corruption wing, Trichy has also initiated proceedings in D.E.-92/2017-COop TRY against them and FIR has been registered and is pending investigation. Therefore, the petitioner cannot use those tainted sale deeds as precedents to his case.
(v) The averments in para 8 of the affidavit regarding the resolution dated 31.10.2015 in respect of the sale deeds to be executed in favour of the petitioner and the two other parteis as stated above were fraudulently made by the erstwhile board and therefore the petitioner cannot rely on the same. The payments made by the petitioner to the tune of Rs.80,58,496/- totally were only on 10.02.2016 and 12.02.2016, ie., six years after the compromise decree and the same are admitted. In fact the then existing guideline value for the alleged 9000 sq.ft., public office site was Rs.3500/- per sq.ft. The erstwhile president Mr.P.M.Kumar has issued an allotment letter dated 11.01.2018 without getting prior approval from the 1st respondent clearly explaining that the allottee has to adhere to the by-laws of the Co-operative Society rules and Co-operative Societies Act. It was clearly stated that the execution of sale deed in favour of the petitioner would be subject to the proposal submitted by the society to the 1st respondent and after getting his approval. Therefore, there is clearly a pre-condition to send the proposal to the 1st respondent and to get the necessary approval and only thereafter the sale deed could be executed. The highlight of the said allotment letter is mentioned in clause 6 that the amounts of Rs.80,58,496/- paid by the petitioner would be adjusted with the sale value to be fixed by the 1st respondent and the petitioner has by acknowledging the said letter has accepted all the terms and conditions mentioned therein. The petitioner has never challenged the said letter of allotment dated 11.01.2018 till date and therefore the said letter has attained finality. Having accepted the same without any demur, the petitioner therefore cannot have any manner of right to get the sale deed executed at Ra.802/- per sa.ft as per the compromise decree.”

14.This Court has carefully considered the submissions made on either side and the materials available on record.

15. This Court thought it appropriate to deliberate the facts of the present case in a tabulated form instead of narrative form since it will clearly convey the flow of events. Accordingly the dates and events are tabulated hereunder:
Sl.
No. Date Gist of the Facts
1. 13.06.1973 Subject property purchased by 3rd respondent Society.

2. 24.05.1975 Layout formed by 3rd respondent Society and got approval vide DTP No.79/73 dt. 24.05.1975.
3. 04.04.2005 The 3rd respondent Society filed a suit for Permanent Injunction against Abdul Khadhar, Kasim and petitioner in O.S.No.645/2005, before Principal District Munsif Court, Tiruchirappalli. The subject matter of the suit was an extent of 7800 sq.ft.

4. 2006 Abdul Khadhar and Kasim filed a declaration suit against 3rd respondent Society before Principal District Munsif Court, Tiruchirappalli.

5. 16.11.2009 Petitioner pays a sum of Rs.60 lakhs by way of six cheques during July and November 2009 respectively; and the Secretary of 3rd respondent Society issues a receipt.

6. 27.11.2009 G.O(D).No.224 was issued constituting a “Pricing Committee” for the purpose of fixing the upset price based on the market value of plot/site for commercial sites/public purpose sites. This Committee was constituted to ensure that Co-operative Societies don’t sell such plots below the price fixed by the Committee.
7. 28.01.2010 A Compromise Decree is passed in the suit filed by the 3rd respondent Society in O.S.No.645 of 2005. For proper appreciation, the entire decree is extracted hereunder:
1) that the 3rd defendant do pay a sum of Rs.802/- per sq.ft., to the plaintiff in respect of the extent of 7800 sq.ft., in T.S.No.39 in Tennur Village.

2) that the plaintiff is hereby directed to allot the same in the name of 3rd defendant as agreed by the other two defendants and subsequently the plaintiff shall execute a sale deed in favour of the 3rd defendant as per the permission given by the Registrar Housing, Chennai.

3) that the 1st defendant agrees that he has no right over the suit property in O.S.No.712/06 and agrees to withdraw the suit in O.S.No.712/06.
4) that the plaintiff is hereby agreed to allot the red marked portion in approved layout of Anna Nagar to the 3rd defendant in this suit as agreed upon by the other defendants measuring 9000 sq.ft., at the rate of Rs.802/- per sq.ft., subsequently to execute a sale deed in favour of the 3rd defendant in respect of the said extent after getting approval from the Registrar Housing, Chennai.

5) the layout attached with the petition shall be form part of the decree.

Terms of the Compromise
1) without prejudice to the contention of both parties in the suit all the defendants agree to pay a sum of Rs.802/- [Rupees Eight Hundred and Two] for sq.feet by the 3rd defendant to the plaintiff in respect of the extent of 7800 sq.ft., in T.S.No.39, in Tennur Village and the plaintiff agrees to allot the same in the name of the 3rd defendant as agreed by the other two defendants. Subsequently the plaintiff shall executive a sale deed in favour of the 3rd defendant as per the permission given by the Registrar Housing, Chennai.

2) That apart the 1st defendant agrees that he has no right over the suit property in O.S.No.712/06 filed by him and agrees to withdraw the said suit O.S.No.712/06 the plaintiff herein has agreed to allot the red marked portion in approved layout of Anna Nagar to the 3rd defendant in this suit as agreed upon by the other defendants measuring 9000 sq.ft., at the rate of Rs.802/- [Rupees Eight Hundred and Two only] per sq.ft., subsequently to execute a sale deed in favour of the 3rd defendant in respect of the said extent after getting approval from the Registrar Housing, Chennai. The layout forms part of the Decree.

3) In view of the compromise petition filed by the both parties a compromise decree may be passed accordingly after recording the same and thus render justice.
Particulars of costs
cost list not filed.

Description of Property
Tiruchirappalli Registration District, Taluk, Tennur Anna Nagar Colony, a plot bearing No.A-54 situate in Town Survey No.39, New ward E, Block No.27, New T.S.No.39, measuring an extent of 7,800 sq.feet admeasuring East West 120 feet and North South 130 by average feet within the following boundaries:

It is important to note that apart from the suit property another property of an extent of 9000 sq.ft., was added in the terms of compromise to be sold to the petitioner @ Rs.802/- per sq.ft. This is the property which is the subject property in this Writ Petition with an increased extent of 10,048 sq.ft.

8. 08.08.2011 Petitioner addresses a letter to the 1st respondent bringing to his attention the compromise decree and calling upon to execute sale deed for 7800 sq.ft., @ Rs.802/- and for 9000 sq.ft., @ Rs.802/- within 15 days from the date of receipt of notice.

9. 07.09.2011 The 2nd respondent addresses a letter to the petitioner stating that the compromise decree was in violation of G.O(D).No.224 dt.27.11.2009 and the compromise has been entered into without the permission of the 1st respondent or/and the government and therefore the property cannot be sold. It was also stated that the compromise decree is not binding on the 1st respondent. The petitioner was also informed that the cheques issued by him for Rs.60 lakhs was not encashed.

10. 2011 The proceedings of the 2nd respondent dt.07.09.2011 was challenged before this Court in W.P(MD).No.11573/2011.

11. 21.12.2012 The 1st respondent issued a Circular under Section 181 of Co-operative Societies Act, to the effect that any unsold plots/sites earmarked for residential/commercial/public purposes available with all Co-operative Housing Societies shall not be sold without prior permission of 1st respondent and price fixation committee appointed by the government.

12. 16.04.2015 W.P (MD).No.11573 of 2011 filed by the petitioner was dismissed as withdrawn and thereby the proceedings of the 2nd respondent dt.07.09.2011 refusing to register sale deed in favour of the petitioner became final.

13. 30.04.2015 The Secretary of the 3rd respondent Society initiates a resolution to the effect that a sale deed will be executed in favour of the petitioner for 7800 sq.ft., @ Rs.802/- per sq.ft.

14. 25.05.2015 The 3rd respondent Society executes a sale deed in favour of the petitioner in Doc.No.3244/2015 conveying 7800 sq.ft., for a total sale consideration of Rs.62,55,600/- [Rupees Sixty two lakhs fifty five thousand six hundred only].

15. 15.06.2015 Within a span of hardly 21 days, the petitioner sells this property in favour of one Dr.Kadhiravan and his wife in Doc.No.3728/2015 for a sale consideration of Rs.2,34,00,000/- [Rupees Two crores thirty four lakhs only]. This amount that is reflected in the sale deed is
merely the guideline value prevailing at that time [7800 sq.ft. X Rs.3000/- per sq.ft.]. Without any hesitation it can be taken that the market value must have been much more than the guideline value. Even going by the consideration mentioned in the sale deed, the petitioner earned a profit of Rs.1,71,44,400/- [Rupees One crore seventy one lakh forty four thousand and four hundred only] within 21 days.

16. 31.10.2015 The Secretary of the 3rd respondent Society once again initiates a resolution to sell 10,048 sq.ft., in favour of the petitioner @ Rs.802/- per sq.ft.
17. 10.02.2016
12.02.2016 Petitioner transfers through RTGS payment for a total sum of Rs.80,58,469/- [Rupees Eighty lakhs fifty eight thousand four hundred and sixty nine only] to the 3rd respondent Society pursuant to the above resolution.
18. 2016 Similar such sale was made by the 3rd respondent Society in favour of one Thirisangu for pittance through two sale deeds.
19. 2017 The above said Thirisangu sells the property within four months and earns profit of several crores of rupees. It is stated in the counter affidavit filed by the respondents that the 3rd respondent Society incurred a loss of Rs.6,21,97,800/- [Rupees Six crores twenty one lakh ninety seven thousand eight hundred only]. Enquiry was initiated under Section 81 of the Co-operative Societies Act and disciplinary proceedings have been initiated against the then Secretary. Writ Petitions have been filed and it is pending before this Court.
20. 07.02.2020 Representation made by the petitioner to the 3rd respondent calling upon to execute sale deed for 10,048 sq.ft., or in the alternative to refund Rs.80,58,469/- [Rupees Eighty lakhs fifty eight thousand four hundred and sixty nine only] with interest.

21. 24.08.2020 The 3rd respondent Society represented through the Administrator issued the impugned proceedings rejecting the claim made by the petitioner and called upon the petitioner to collect the amount transferred by him through RTGS.

22. 17.09.2020 The present Writ Petition filed.

16. It is clear from the above that the Secretary of the third respondent Society has virtually used the Civil proceedings as a ruse to enter into a private negotiation with the petitioner and alienate the properties belonging to the Society for pittance. There is a latin term Res ipsa loquitur which means “the thing speaks for itself”. The tabulor column supra by itself speaks/conveys how the Secretary of the Society and the petitioner had entered into a conspiracy and thereby the petitioner had earned a wrongful gain and the Society suffered a wrongful loss. In other words, a huge scam had taken place which requires immediate remedial measures.

17. The Society had merely filed a suit for bare injunction against Abdul Kadher, Kasim and the petitioner on the ground that they are interfering with the immovable property belonging to the Society. Admittedly, the petitioner did not enter into any transaction with the Society and his agreement of sale was only with the above said Abdul Kadher and Kasim. The terms of compromise clearly shows that these two persons have no right whatsoever over the property. It is also seen from the compromise decree that the subject matter of the suit were lands measuring an extent of 7,800 sq.ft.

18. The Government Order in G.O.(D).224 dated 27.11.2009 had come into force by then and thereby a price fixing Committee was constituted and the Co-operative Societies were informed that no properties belonging to the Society can be sold below the price fixed by the Committee. This Government Order had come into force even before the parties entered into a compromise and the compromise decree was passed.

19. The Secretary of the third respondent Society conveniently ignored this Government Order and unilaterally entered into a compromise and agreed to convey 7800 sq.ft., of lands at the rate of Rs.802 per sq.ft. It is even more intriguing that the petitioner proceeds to pay a sum of Rs.60,00,000/-(Rupees Sixty lakhs only) by way of six cheques and the Secretary of the third respondent Society also issues a receipt on 16.11.2009. It is only after issuing this receipt, the parties entered into a compromise. While entered into a compromise, the moral turpitude on the part of the Secretary of the Society and the petitioner becomes even more glaring since one more property measuring an extent of 9000 sq.ft., belonging to the Society was also included in the terms of compromise. It must be borne in mind that this property was not a subject matter of the suit and this property gets added while entering into a compromise. Even this extent of property is agreed to be sold by the Secretary of the third respondent Society at the rate of Rs.802/- per sq.ft.

20. In the first place, it is not known as to how the Secretary of the third respondent Society agreed to convey the property at the rate of Rs.802/-(Rupees Eight hundred and two only) per sq.ft., in the light of the Government Order which makes it very clear that the property belonging to the Society can be sold only at the rate fixed by the pricing Committee. The Secretary of the third respondent Society decided to disregard this Government Order and therefore, the decision taken by the Secretary will obviously not bind the Society.

21. The petitioner started taking steps to implement the compromise decree and he makes a representation to the first respondent in this regard on 08.08.2011. The second respondent issued a letter dated 07.09.2011 categorically informing the petitioner that the compromise was entered into without the permission of the first respondent and the Government and therefore it is not binding on the Society. The petitioner was also informed that the sale deeds will not be executed in his favour.

22. The petitioner thereafter chooses to challenge the letter of the second respondent dated 07.09.2011 before this Court in W.P.(MD).No.11573 of 2011. When this writ petition was pending, the first respondent also issued a circular under Section 181 of the Act to the effect that the properties belonging to the Co-operative Societies cannot be sold without the permission of the first respondent and the price fixing Committee appointed by the Government. This circular came into effect even during the pendency of the writ petition filed by the petitioner.

23. The events that takes place thereafter is even more shocking. The petitioner conveniently withdraws the writ petition and it was dismissed on 16.04.2015. The effect of dismissal of the writ petition would be that the decision taken by the second respondent through letter dated 07.09.2011 had become final. Therefore, the petitioner was not entitled to make any further claim for conveying the property belonging to the Society in his favour. Surprisingly the Secretary of the third respondent Society initiates a resolution on 30.04.2015 as if a sale deed will be executed in favour of the petitioner for 7800 sq.ft., at the rate of 802/-(Rupees Eight hundred and two only) per sq.ft. Within 25 days thereafter, the Secretary of the third respondent Society executes a sale deed in favour of the petitioner on 25.05.2015. As per the sale deed, the petitioner had paid a total sale consideration of Rs.62,55,600/-(Rupees sixty two lakhs fifty five thousand and six hundred only).

24. The petitioner thereafter, within a span of 21 days, sells the property in favour of one Dr.Kadhiravan and his wife on 15.06.2015 for a total sale consideration of Rs.2,34,00,000/- (Rupees Two crores thirty four lakhs only). This amount corresponds to the guideline value that was in force on the date of execution of the sale deed and obviously the market value was much more and it is not known how much money went into the hands of the petitioner apart from what was mentioned in the sale deed. Even if the amount mentioned in the sale deed is taken into consideration, the petitioner had earned a profit of Rs.1,71,44,400/-(Rupees One crore seventy one lakhs forty four thousand and four hundred only) within a period of 21 days. This clearly demonstrates that the property belonging to the Society was conveyed to the petitioner for pittance by misusing the compromise decree and there cannot be a better case to establish a criminal conspiracy between the petitioner and the Secretary of the third respondent Society.

25. The story does not end here and the conspiracy continues. The Secretary of the third respondent Society once again initiates a resolution on 31.10.2015 to sell 10,048 sq.ft., of lands to the petitioner at the rate of Rs.802/-(Rupees Eight hundred and two only) per sq.ft. Immediately the petitioner transferred an amount of Rs.80,58,469/- (Rupees Eighty Lakhs fifty eight thousand four hundred and sixty nine only) through RTGS to the third respondent Society during February, 2016. All these events were taking place parallely disregarding the Government Order and the circular issued by the first respondent.

26. It is also seen from records that the Secretary of the third respondent Society had not only entered into a conspiracy with the petitioner but also had entered into a similar conspiracy with one Thirisangu and executed sale deeds in his favour for pittance in the year 2016 and the said Thirisangu, within a very short time conveys those properties for a huge amount running into crores of rupees. This only demonstrates the fact that the office bearers of the third respondent Society had decided to knock of all the properties belonging to the Society by entering into private negotiations with third parties.

27. The negotiations with the petitioner are sought to be legitimized under the garb of a compromise decree. The terms of compromise are only an agreement between the parties and while passing the compromise decree, a Court only gives its seal of approval and it does not go into the merits of the case. Therefore, if such an agreement is vitiated by fraud, it will suffer the same consequences of a fraudulent decree. Fraud and justice can never dwell together. The Hon’ble Supreme Court has time and again held that fraud vitiates the solemn proceedings and such plea can be set up even in collateral proceedings immaterial of the lable of that proceeding.

28. The petitioner decided to take advantage of the resolution passed by the Secretary of the third respondent Society on 31.10.2015 and hence made a representation to the third respondent Society on 07.02.2020. In the meantime an enquiry was conducted into the fraudulent transactions and based on the report, action was initiated against the Secretary and others on the ground that the Society had suffered a loss of Rs.6,21,97,800/-(Rupees Six crores twenty one lakhs ninety seven thousand and eight hundred only). The third respondent Society came within the control of the Administrator appointed by the Government. The representation made by the petitioner came to be rejected by the third respondent through the impugned proceedings dated 24.08.2020. A careful reading of the impugned proceedings dated 24.08.2020 clearly shows as to how the Society has been cheated and the third respondent was perfectly justified in rejecting the claim made by the petitioner.

29. It is also brought to the notice of this Court that criminal proceedings have been initiated against the erstwhile Secretary of the third respondent Society and two others for offences under the Prevention of Corruption Act and Indian Penal Code and the same is pending investigation in Crime No.2 of 2020 before the Inspector of Police, Vigilance and Anti-Corruption, Trichirappalli.

30. The discussion made herein above makes this Court come to an irresistible conclusion that the third respondent Society has been taken for a ride by its erstwhile office bearers who had conspired with the petitioner and one Thirisangu and the properties belonging to the third respondent Society has been conveyed at throw away prices. If cases of this nature are let off without taking stringent action, the Co-operative Movement in the State will suffer and it will ultimately end in closing down Societies which are already in the brink of precipice. This Court does not find any ground to interfere with the impugned proceedings of the third respondent dated 24.08.2020.

31. In the result, this writ petition is dismissed by imposing cost of Rs.10,00,000/-(Rupees Ten lakhs only) payable by the petitioner to the Chief Minister’s Relief Fund on or before 28.07.2021. Consequently, connected miscellaneous petition is closed.

32. There shall be a further direction to the third respondent Society to immediately take steps to set aside the compromise decree passed in O.S.No.645 of 2005 which is vitiated by fraud and which does not bind the third respondent Society. There shall also be a further direction to the investigation officer, who is investigating the FIR in Crime No.2 of 2020, to expedite the investigation and file a final report against all the accused persons within a period of three months from the date of receipt of a copy of this order. The respondents are also directed to take steps to get the pending writ petitions filed by the Secretary and other office bearers listed for hearing immediately. Subject to the final result in these writ petitions, effective and stringent action shall be taken against all those persons, who are behind this huge scam. The first respondent shall ensure that not an inch of property belonging to any Society in Tamil Nadu is permitted to be dealt with by the Society concerned without the concurrence of the first respondent and the Pricing Committee appointed by the Government. There shall also be a direction to the first respondent to conduct a thorough audit of the sale transactions entered into by all the Societies to find out if any other Society had indulged in a scam of this nature.

33. Post this case for reporting compliance regarding payment of cost on 29.07.2021.
07.07.2021
Internet : Yes/No
Index : Yes/No

PJL

Note : In view of the present lock down owing to COVID-19 pandemic, a web copy of the order may be utilized for official purposes, but, ensuring that the copy of the order that is presented is the correct copy, shall be the responsibility of the advocate/litigant concerned.

To

1.The Registrar,
Co-operative Societies,
II Floor, Tamil Nadu Co-operative Housing
Federation Building Complex,
No.48, Ritherton Road,
Veppery,
Chennai-600 007.

2.The Regional Deputy Registrar,
Co-operative Housing Societies
Samad School Road,
Kaja Nagar,
Tiruchirappalli-620020.

3.The Co-operative Sub Registrar/Administrator
The Tiruchirappalli Cooperative House
Construction Societies Ltd., 786′
Makkal Mandram,
Thillainagar,
Tiruchirappalli-620018.

4.The Inspector of Police,
Vigilance and Anti-Corruption,
Trichirappalli.
N.ANAND VENKATESH, J.

PJL

PRE-DELIVERY
ORDER MADE IN
W.P(MD)No.12440 of 2020

07.07.2021