Co-operative membership must be fairly considered; HUFs may qualify, and transfer rules were upheld as valid regulation.

A co-operative housing society does not have an absolute right to refuse membership, and consideration of membership must be fair; refusal on flimsy grounds remains challengeable. A Hindu undivided family was treated as eligible to become a member, as the statutory scheme and bye-laws did not prohibit such membership. Rule 12(2) of the Gujarat Co-operative Societies Rules, 1965 was upheld as a valid regulatory measure that did not destroy the freedom of association. The transfer and membership documents were found to have substantially complied with the applicable requirements, and the authorities' orders admitting the transferee and recognising the transfer were sustained.

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Issues: (i) Whether a co-operative housing society has an absolute and unfettered right to refuse membership; (ii) Whether a Hindu undivided family is eligible to become a member of the society; (iii) Whether Rule 12(2) of the Gujarat Co-operative Societies Rules, 1965 is ultra vires Article 19(1)(c) of the Constitution of India; (iv) Whether the transfer application and membership requirements were substantially complied with.

Issue (i): Whether a co-operative housing society has an absolute and unfettered right to refuse membership.

Analysis: The right to be considered for membership was recognised, and such consideration must be fair. Refusal of membership on flimsy or trivial grounds remained open to challenge before the competent authority or court. A society registered under the statutory scheme could not claim an absolute power to admit or refuse membership at pleasure.

Conclusion: The contention that the society had an absolute and unfettered right to refuse membership was rejected, against the petitioner.

Issue (ii): Whether a Hindu undivided family is eligible to become a member of the society.

Analysis: Section 22(1)(a) permitting an individual competent to contract was read with Section 28(2), which recognises joint holding of shares by more than one person. The concept of "individual" was treated as wide enough to include a group of persons forming a unit. On that construction, there was no prohibition in the Act or the bye-laws against a Hindu undivided family becoming a member.

Conclusion: A Hindu undivided family was held eligible to become a member, against the petitioner.

Issue (iii): Whether Rule 12(2) of the Gujarat Co-operative Societies Rules, 1965 is ultra vires Article 19(1)(c) of the Constitution of India.

Analysis: The rule was treated as regulatory of the composition of a co-operative society and as balancing the society's associational interest with the member's property-right in the plot. Since co-operative societies are statutory bodies whose composition can be regulated by law, the rule was not found to destroy the freedom of association. The rule was therefore distinguished from the provisions earlier struck down and was upheld as a valid regulatory measure.

Conclusion: Rule 12(2) was upheld as intra vires, against the petitioner.

Issue (iv): Whether the transfer application and membership requirements were substantially complied with.

Analysis: The documents placed on record showed that the necessary particulars for transfer and membership had been supplied. The court applied a substance-over-form approach and held that the bye-law requirements had been substantially complied with. The objection regarding 50% premium had also already been addressed in the impugned orders.

Conclusion: Substantial compliance was found, against the petitioner.

Final Conclusion: The statutory authorities' orders directing admission of the transferee as member and recognising the transfer were sustained, and the challenge to those orders failed.

Ratio Decidendi: In a statutory co-operative society, membership is subject to fair consideration and lawful regulation of the society's composition, and a Hindu undivided family may qualify as an "individual" where the statutory scheme and bye-laws do not prohibit it; a regulatory rule governing transfer and membership is valid if it does not impermissibly destroy the right to form associations.

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