2015 (2) TMI 334 - HC - FEMA

Recognition of Dual Ownership in Cooperative Housing Societies: Forfeiture of Properties under SEFEMA Act

SHWETA PARK CO-OPERATIVE HSG. SOCIETY LTD. & 2 Versus UNION OF INDIA & 2

The court recognized the concept of dual ownership in Cooperative Housing Societies, where members own the superstructure but not the land, which remains ... Proceedings for forfeiture of her property under SAFEMA - Removal of superstructure of property - Forfeiture of property - Ownership of property - Society opposed request of CGOVT for entering its property in its name that a member of the Society is only the owner of the superstructure, the ownership of the land always remains with the Society, and further that in view of Section 22 of the Gujarat Cooperative Society Act, the Central Government cannot be a member of the Cooperative Society - Held that:- Central Government obviously be interested in liquidating the property by selling the property and to recover the sale proceeds. On the other hand, the Society has in the said affidavit in-rejoinder as well as through the counsel before the Court made it clear that if any individual member applies for membership of the society, who is otherwise qualified under the byelaws and agrees to abide by the byelaws of the society, the society would have no objection, subject to clearance of legal dues of the Society, to make him a member of the society, and transferring the plot in his name. - It would be open for the respondents and particularly, Respondent No.1 to identify the intending purchaser of the plot in question by assuring highest possible price to the Central Government through such means as may be permissible. - The Society shall make such purchaser its member and transfer the plot in question in his or her name, of course subject to clearance of all the legal dues of the society and payment of such transfer charges as may be permissible under the law. - Petition disposed of. Issues:1. Ownership rights of a member in a Cooperative Housing Society.2. Forfeiture of property under the Smugglers and Foreign Exchange Manipulators Act.3. Dual ownership concept in Cooperative Housing Societies.4. Membership criteria in a Cooperative Society.5. Disposal of property following forfeiture.Ownership rights of a member in a Cooperative Housing Society:The petitioners, a Cooperative Housing Society and its Office Bearers, sought direction to remove a superstructure on a plot earmarked as plot No.3. The Society claimed that its members own only the superstructure, not the land, which remains the Society's property. The Society opposed the Central Government's request to be named as the owner due to the Gujarat Cooperative Society Act's provisions. The Court acknowledged the concept of dual ownership in such societies, where the member has rights and liabilities, but the land ownership remains with the Society. The Court noted that the forfeiture of a member's property would transfer all rights to the Central Government, but the member's rights not enjoyed would not transfer.Forfeiture of property under the Smugglers and Foreign Exchange Manipulators Act:The competent authority under the SAFEMA forfeited a plot initially allotted to a member, leading to a dispute with the Society. The Society contended that the Central Government could not be a member as per the Cooperative Society Act. The Court recognized the authority's power to forfeit properties and the implications on ownership rights within the Society.Dual ownership concept in Cooperative Housing Societies:The judgment emphasized the well-established concept of dual ownership in Cooperative Housing Societies. It clarified that while members own the superstructure, the land remains under the Society's ownership. The member's rights are subject to the Society's bylaws, and forfeiture transfers all rights to the Central Government.Membership criteria in a Cooperative Society:The Gujarat Cooperative Society Act outlines the categories of individuals eligible for membership, excluding the Central Government. The Court highlighted the importance of abiding by the bylaws and criteria for membership in Cooperative Societies, preventing the Central Government from becoming a member.Disposal of property following forfeiture:The Court directed the respondents, particularly the Central Government, to identify an intending purchaser for the forfeited plot. The Society agreed to transfer ownership to a qualified individual, subject to legal dues clearance and transfer charges. The judgment facilitated the sale and transfer of the property with specific directions for the involved parties, ensuring a lawful disposal process.