Paragraph numbers below are the court’s original numbering, recovered from the source text.
13. Section 4, on which reliance is placed, with particular reference to its proviso, only speaks of denial of registration if, in the opinion of the Registrar, the Society to be formed was economicallf·unsound, or its registration may have an adverse effect upon any other Society, or it is G opposed to, or its working is likely to be in contravention of public policy. Prima facie, it may have to be said that public policy, in the context of .. .A;i. Section 4 of the Act, is the policy that is adopted by the concerned Act and the Rules framed thereunder. The concept of public policy in the context of the· Cooperative Societies Act has to be looked for under the four corners of H that Act and in the absence of any prohibition contained therein against the ZOROASTRIAN CO-OP. HOUSING SOCIE. LTD. 1·. DIST. REG. CO-OP. SOCIE. [BALASUBRAMANYAN,J] 615 forming of a society for persons of Parsi origin, it could not be held that the A confining of membership as was done by bye-law No_ 7, was opposed to public policy_ When a statute is enacted, creating entities introduced thereunder on fulfillment of the conditions laid down therein, the public policy in relation to that statute has to be searched for within the four comers of that statute and when so searched for, one does not find anything in the Act which B prevents the Society from refusing membership to a person who does not qualify in terms of bye-law No. 7 of the Society.
14. Reliance was placed on Rule 12 of the Gujarat Cooperative Societies Rules, 1965. Rule 12 deals with open membership and provides in Rule 12(2) as follows : "12. Open membership.- (I) …… c (2) No co-operative housing society shall without sufficient cause, refuse admission to its membership to any person, duly qualified therefor, under the provisions of the Act, and its bye-laws to whom an existing member of such society wants to sell or transfer his plot D of land or house and no such society shall without sufficient cause, refuse to give permission to any existing member thereof to sell or transfer his plot of land or house to another person who is duly qualified as aforesaid to become its member." Rule 12(2), as can be seen, provides only that, no person shall be E refused admission provided he is duly qualified under the Act and the bye- laws of the society to be a member or permission for transfer refused if the proposed transferee is qualified to be a member. Here again, the primacy given to the bye-laws of the society is in no manner sought to be whittled down by reference to any public policy going by the larger concept of that F tenn and outside the Act. The decisions of the Bombay High Court, the Gujarat High Court and the Madhya Pradesh High Court relied on by learned counsel proceeded on the basis that if any provision is made against the constitutional scheme of things like confining membership in a Society to a caste, religion 9r creed, the same would be opposed to public policy and G hence unenforceable. The question is whether such an approach is warranted when a statute enacted in that behalf outlines the contours of the policy sought to be enforced by the creation of bodies thereunder, being essentially associations which are voluntary in nature.
15. Membership in a co-operative society only brings about a contractual H A relationship among the members forming it subject of course to the Act and the Rules. One becomes a member in a co-operative society either at the time of its fonnation. or acquires membership in· it on possessing the requisite qualification under the bye-laws of the society and on being accepted as a member. It is not as if one.has a fundamental right to become a member of B a co-operative society. But certainly, if the application of one for membership, who is otherwise qualified to be a member under the Act, Rules and the bye- Iaws of the society, is rejected unreasonably or for frivolous reasons, the person may be entitled to enforce his claim to become a member in an appropriate forum or court of law. This is the effect of the decision in Jain Merchants Co-operative Housing Society v. HUF of Manubhai, (1995) I C Gujarat Law Reporter 19, relied on by the High Court. The said decision does not lay down a proposition, nor can it lay down a proposition, that even a person who does not qualify to be a member in terms of the bye-laws of a society can enforce a right to become a member of that society. It is one thing to say that it is not desirable to restrict membership in a society based solely on religion or sex but it is quite different thing to say that any such D voluntary approved bye-law containing such a restriction could be ignored or declared unconstitutional by an authority or a tribunal created under the Act itself. Normally, the bye-laws of ·a society do not have the status of a statute and as held by this Court in Co-operative Central Credit Bank Ltd v. Industrial Tribunal, Hyderabad, AIR (1970) SC 245 bye-laws are only the rules which E governs the internal management or administration of a society and they are of the nature of articles of association of a company incorporated under the Companies Act. They may be binding between the persons affected by them but they do not have the force of a statute.
16. The validity of a bye-law, that too an approved bye-law, has to be F tested in the light of the provisions of the Act and the rules governing co- operative societies. In so testing, the search should be to see whether a particular bye-law violates the mandate of any of the provisions of the Act or runs counter to any of its provisions or to any of the rules. Section 24( I) of the Act only provides for open membership subject to a person, aspiring G to be a member, possessing the qualification prescribed by the bye-laws. It is not an open membership dehors the qualification prescribed by the bye- laws. When in Daman Singh this Court held that when a co-operative society is governed by the appropriate legislation it will be subject to the intervention made by the concerned legislation, it only meant that a legislative provision in thP. Act can be introduced for the purpose of eliminating a qualification for H membership based on sex, religion or a persuasion or mode of life. But so ZOROASTRIAN CO.OP. HOUSING SOCIE. LTD. 1·. DIST. REG. CO-OP. SOCIE. [BALASUBRAMANY AN, J] 61 7 long as there is no legislative intervention of that nature, it is not open to the A court to coin a theory that a particular bye-law is not desirable and would be opposed to public policy as indicated by the Constitution. The Constitution no doubt provides that in any State action there shall be no discrimination based either on religion or on sex. But Part III of the Constitution has not interfered with the right of a citizen to enter into a contract for his own benefit and at the same time incurring a certain liability arising out of the B contract. As observed by the High Court of Bombay in Karvanagar Sahakari Griha Rachana Sanstha Maryadit and Ors. v. State, AIR (1989) Bombay 392 the members have joined the society in accordance with the bye-laws and the members join a housing society by ascertaining what would be the environment in which they will reside. It is not permissible for the State Government to C compel the society to amend its bye-laws as it would defeat the object of formation of the society. In that case, the society was constituted with the object of providing peaceful accommodation to its members. Though there may be circumstances justifying the State taking steps to meet shortage of accommodation, it was not open to the State Government to issue a direction to the Registrar of Co-operative Societies to direct a co-operative society to D make requisite amendments to their bye-laws and grant permission to its members to raise multistoried constructions. In appeal from that decision reported as State of Maharashtra and Ors. v. Karvanagar Sahakari Griya Rachana Sanstha Maryadit and Ors., [2000] 9 SCC 295 this Court while dismissing the appeal stated that it was clear that though a power was conferred E on the Registrar to direct amendment of the bye-laws of a society, yet the paramount consideration is the interest of the society. So also, the power of the State Government to issue directions in public interest, could not be exercised so as to be prejudicial to the interest of the society. In the view of this Court, what was in the interest of the society was primarily for the society alone to decide and it was not for an outside agency to say. Where, F however, the government or the Registrar exercised statutory powers to issue directions to amend the bye-laws, such directions should satisfy the requirement of the interest of the society. This makes it clear that the interest of the society is paramount and that interest would prevail so long as there is nothing in the Act or the Rules prohibiting the promotion of such interest. Going by G Chheoki Employees' Cooperative Society Ltd 's case, neither the member, respondent No. 2, nor the aspirant to membership, respondent No.3 had the competence to challenge the validity of the bye-laws of the Society or to claim a right to membership in the Society.
17. It appears to us that unless appropriate amendments are brought to H (2005] 3 S.C.R. A the various Cooperative Societies Acts incorporating a policy that no society shall be formed or if formed, membership in no society shall be confined to persons of a particular persuasion, religion, belief or region, it could not be said that a society would be disentitled to refuse membership to a person who is not duly qualified to be one in terms of its bye-laws. c
18. It can be seen from the bye-laws of the present Society that the Society, more or less, adopted the model bye-laws made applicable to the Bombay Presidency. The object of the Society as set out in bye-Jaw No. 2 reads : "2. The objects of the Society shall be to carry on the trade of building, and of buying, selling, hiring, letting and developing land in accordance with Co-operative principles and to establish and carry on social, re-creative and educational work in connection with its tenets and the Society was to have full power to do all things it deems necessary or expedient for the accomplishment of all objects specified in its bye-laws, including the power to purchase, hold, sell, exchange, mortgage, rent, lease, sub-lease, surrender, accept surrenders of and deal with lands of any tenure and to sell by installments and subject to any terms or conditions and to make and guarantee advances to Members for building or purchasing property and to erect, pull down, · repair, alter or otherwise deal with any building thereon." Under bye-law No. 7, it was provided that members shall be elected by the Committee provided that all members shall belong to the Parsi community and on the conditions referred to in bye-law No.7. Provision has been made providing for the contingency arising out of the death of a member. Under bye-law No. 21, it is provided that any share held by a member could be sold F in terms of the other relevant bye-laws only with previous sanction of the Committee. The Committee is given full discretion in granting or withholding such sanction. Of course, in terms of the Act and the Rules, the refusal may be appealable before the Authority under the Act and the Society may not be in a position to argue that its decision is final. But that does not mean that · the Authority under the Act is competent to ignore the bye-Jaw relating to G qualification to membership and direct the Society by exercising appellate or other power, to admit a person to membership who is not qualified to be a member, on the basis of its notion of public policy or fairness in dealing. These approved bye-laws, clearly, confer power on the Committee to reject the application for membership of a person who is not qualified in terms of H the bye-law concerned and this cannot be interfered with on the basis of …. ZOROASTRIAN CO-OP. HOUSING SOCIE. LTD. v. DIST. REG. CO-OP. SOCIE. [BALASUBRAMANYAN, J.] 619 anything contained in the Act or the Rules. We are, therefore, satisfied that A by introducing a theory of what the court considers to be public policy, a society registered under the Cooperative Societies Act, cannot be directed to admit a member who is not qualified to be a member in terms of its duly registered bye-laws.
19. It is true that it is very tempting to accept an argument that Articles B 14 and 15 read in the light of the preamble to the Constit … tion oflndia reflect the thinking of our Constit11tion makers and prevents any discrimination based on religion or origin in the matter of equal treatment or employment and to apply the same even in respect of a co-operative society. But, while being thus tempted, the Court must also consider what lies behind the formation of C co-operative societies and what their character is and how they are to be run as envisaged by the various Cooperative Societies Acts prevalent in the various States of this Country. Running through the Cooperative Societies Act, is the theory of area of operation. That means that membership could be denied to a citizen of this Country who is located outside the area of operation of a society. Does he not have a fundamental right to settle down in any part of D the country or carry on a trade or business in any part of the country? Does not that right carry with it, the right to apply for membership in any cooperative society irrespective of the fact that he is a person hailing from an area outside the area of operation of the society? In the name of enforcing public policy, can a Registrar permit such a member to be enrolled? Will it not then go E against the very concept of limiting the areas of operation of cooperative societies? It is, in this context that we are inclined to the view that public policy in terms of a particular entity must be as reflected by the statute that creates the entity or governs it and on the Rules for the creation of such an entity. Tested from that angle, so long as there is no amendment brought to the Cooperative Societies Acts in the various States, it would not be permissible F to direct the societies to go against their bye-laws restricting membership based on its own criteria.
20. What is relied on to invoke the plea that the restriction of membership is opposed to public policy is the proviso to Section 4 of the Act. We have already quoted Section 4. For convenience, we extract the proviso once again:- G "Provided that it shall not be registered if, in the opinion of the Registrar, it is economically unsound, or its registration may have an adverse effect upon any other society, or it is opposed to, or its working is likely to be in contravention of pubic policy." A What is the public policy contemplated by the proviso, when the formation and running of an association like a cooperative society is governed by a law enacted for that purpose, the Cooperative Societies Act, which recognizes the sanctity of the rights of the citizens coming together, to impose restrictions on their own rights by making appropriate provisions in the bye-laws of the society? Normally, that policy has to be searched for within the confines of B that statute. What one has to bear in mind is that the statute reflects the policy of the Legislature in respect of the subject matter dealt with thereunder. When the Gujarat Cooperative Societies Act, 1961 was enacted, it could not be taken that the Legislature was unaware of the fundamental rights of citizens enshrined in Articles 19( l )( d) and (g) of the Constitution of India. But the C Legislation, in aid of the cooperative movement and in the context of the rights available to citizens under Article 19( l )( c) of the Constitution of India, imposes only certain restrictions as reflected by the Act, the Rules and the Bye-laws of the particular society. The Acts specifically gave sanctity to the bye-laws of a Society duly approved by the authorities under the Act. The expression 'public policy' in the context of Section 4 of the Act can be D understood only as being opposed to the policy reflected by the Cooperative Societies Act. As indicated in Renusagar Power Co. Ltd. v. General Electric Co., [1994) Supp. l SCC 644, the public policy underlying a statute has to be considered in the context of the provisions of that statute. Therein, in the context of the Foreign Exchange Regulation Act, 1973, it was held that any E violation of the provisions of that Act enacted in national economic interest would be contrary to public policy and that would be the sense in which it should be understood when used in Section 7(l)(b)(ii) of that Act.
21. Under the Indian Contract Act, a person sui juris has the freedom to enter into a contract. The bye-laws of a cooperative society setting out the · F terms of membership to it, is a contract entered into by a person when he seeks to become a member of that society. Even the formation of the society is based on a contract. This freedom to contract availabie to a citizen cannot be curtailed or curbed relying on the fundamental rights enshrined in Part III of the Constitution of India against State action. A right to enforce a fundamental right against State action, cannot be extended to challenge a G right to enter into a contract giving up an absolute right in oneself in the interests of an association to be formed or in the interests of the members in general of that association. This is also in lieu of advantages derived by that pers~n by accepting a membership in the Society. The restriction imposed, is generally for retaining the identity of the society and to carry forward the H object for which the society was originally formed. It is, therefore, a fallacy ZOROASTRIAN CO-OP. HOUSING SOCIE. LTD.,,_ DIST. REG. CO-OP. SOCIE. [BALASUBRAMANYAN, J.] 621 to consider, in the context of cooperative societies, that the surrendering of A an absolute right by a citizen who becomes a member of that society, could be challenged by the said member by taking up the position that the restriction he had placed on himself by entering into the compact, is in violation of his fundamental right of freedom of movement, trade or right to settle in any part of the country. He exercises his right of association when he becomes a B member of a society by entering into a contract with others regulating his conduct vis-'-vis the society, the members constituting it, and submerging his rights in the common right to be enjoyed by all and he '5 really exercising his right of association guaranteed by Article 19( I)( c) ·of the Constitution of India in that process. His rights merge in the rights of the society and are controlled by the Act and the bye-Jaws of the society.
22. Entering into an association with others for forming a co-operative society and subscribing to its bye-laws are matters of contract voluntarily undertaken by a citizen. While considering an argument that a provision in c the bye-laws thus subscribed to by a member is opposed to public policy, the court cannot forget another important public policy as stated by Jessel, M.R. D in Printing and Numerical Registering Company v. Sampson, (1874-75) Vol. 19 L.R. Equity Cases 462 : "it must not be forgotten that you are not to extend arbitrarily those rules which say that a given contract is void as being against public policy, because if there is one thing which more than another public E policy requires, it is that men offull age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of justice. Therefore, you have this paramount public policy to consider – that you are not lightly to F interfere with this freedom of contract. Now, there is no doubt public policy may say that a contract to commit a crime, or a contract to give a reward to another to commit a crime, is necessarily void. The decisions have gone further, and contracts to commit an immoral offence, or to give money or reward to another to commit an immoral offence, or to induce another to do something aginst the general rules G of morality, though far more indefinite than the previous class, have always been held to be void. I should be sorry to extend the doctrine much further."
23. In the context of the freedom of contract available to a person and H [2005) 3 S.C.R. A in the context of the right to form an association guaranteed by Article 19(l)(c) of the Constitution oflndia, and the law governing such an association, courts have to be cautious in trying to ride the unruly horse of public policy in acceding to a challenge to a qualification for membership in the bye-laws, not taboo under the Act and the Rules themselves.
24. It also appears to us, that a person after becoming a member of a Cooperative Society cannot seek to get out of the obligation undertaken by him while becoming a member of such a Society by resort to the principle of public policy based on constitutional protections given to an individual as against State action. As noticed in Rodriguez v. Speyer Bros., (1919) AC 59 C and Fender v. Mildmay, (1938) AC l, the considerations of public policy are disabling and not enabling. Observed Lord Sumner in Rodriguez (Supra)" : "Considerations of public policy are applied to private contracts or dispositions in order to disab!e,.not to enable. I never heard of a legal disability. from whiclf a party or a transaction could be relieved because it would be good policy to do so." By invoking considerations of public policy, there appears to be no justification in relieving a member of a Cooperative Society of the obligations undertaken by him while joining it. The argument, therefore, that Respondent No. 2, herein, a member, should be relieved of the obligation undertaken by him E while joining the Society or becoming its member or while seeking pennission to put up a multi-storeyed construction, should be relieved of the restriction, he has agreed to, on the ground that the same might affect his fundamental rights guaranteed by Article 19( l )( d) or (g) of the Constitution of India or that it offends Article 300A of the Constitution.
25. Dealing with the validity of a restriction which prohibits assignments of contractual rights which have the effect of bringing the assignee into direct contractual relations with the other party to the contract, the House of Lords held in linden Gardens Trust ltd v. lenesta Sludge Disposal ltd and Ors., (1993] 3 A:ll ER 417, that the prohibition on the .assignment including that G of accrued rights of action was not void as being contrary to public policy; since, a party to a building contract could have a genuine commercial interest in seeking to ensure that he was. in contractual relations only with a person whom he had sele_cted as the other party to the contract and there was no public need for the law to support a market in choses in action. The principle in our view supports the position that a contractual restriction on whom to H admit as a member or with whom to associate, cannot be said to be opposed ZOROASTRIAN CO-OP. HOUSINGSOCIE. LTD. v. DIST. REG. CO-OP. SOC!E. [BALASUBRAMANYAN,J.] 623 to public policy.
26. It is true that in secular India it may be somewhat retrograde to ·conceive of co-operative societies confined to group of members or followers of a particular religion, a particular mode of life, a particular persuasion. But that is different from saying that you cannot have a co-operative society confined to persons of a particular persuasion, belief, trade, way of life or a B religion. A co-operative society is not a state unless the tests indicated in Ajay Hasia are satisfied. There is no case here that the appellant society satisfies the tests laid down by Ajay Hasia so as to be considered to be a state within the meaning of Article 12 of the Constitution. The fundamental rights in Part III of the Constitution are normally enforced against State action or C action by other authorities who may come within the purview of Article 12 of the Constitution_ It is not possible to argue that a person has a fundamental right to become a member of a voluntary association or of a co-operative society governed by its own bye-laws. So long as this position holds, we are of the view that it is not possible, especially for a Registrar who is an authority under The Co-operative societies Act, to direct a co-operative society to D admit as a member, a person who does not qualify to be a member as per the bye-laws registered under the Act. Nor can a Registrar direct in terms of Section 14 of the Act to amend the bye-laws since it could not be said that such an amendment, as directed in this case is necessary or desirable in the interests of the appellant society. What is relevant under Section 14 of the E Act is the interests of the society and the necessity in the context of that interest. It is not the interest of an individual member or an aspirant to a membership.
27. It is true that in the activities ofa society, as envisaged by the bye- taws, the society may acquire rights or incur obligations which may be p enforced. But the incurring of such an obligation or the acquiring of such a right, cannot stand in the way of the right to form an association guaranteed by Article 19(l)(c) of the Constitution available to the members of the society who formed themselves into the appellant Society. The position under The Bombay Co-operative Societies Act under which the Society was originally formed was also no different as can be seen from the relevant provisions of G the Act. It, therefore, appears to us to be not open to the Registrar or any other authority under The Co-operative Societies Act to direct the Society to go against its own bye-laws and to admit a person to membership as has been sought to be done in this case. (2005] 3 S.C.R.
28. 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 C 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 D 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 E 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 F policy when the Act itself does not warrant it or sanction it.·
29. 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 G 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 't' 'I." ZOROASTRIAN CO-OP HOUSING SOCIE. LTD."· DIST. REG. CO-OP. SOCIE. [BALASUBRAMANYAN. JJ 625 public ord~r. It cannot be said that a person bargaining for membership in a A Society or for coming together with those of his ilk to form a society with 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, B 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 C 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 D 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.
30. The above conclusion would lead us to the question whether there E 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 to their beliefs, either religious or otherwise. It is not contended that there is F 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 G 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 _I …. 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, A 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 B 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 C 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 D 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 E 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 F 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. 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 [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. 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 F 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 G 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 H or with the prior consent of the society to a person qualified to be a member r— –1 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 A 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 B 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 C 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 E 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 F 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 G in the above manner. The appellant will be entitled to its costs here and in the court below. N.J. Appeal allowed.