1. We have heard Shri Rohit Agrawal, Learned Counsel for the petitioner. Learned standing counsel appears for the State respondents. Shri Sharad Kumar Pandey appears for Shri Madan Lal Arora, respondent No. 5. The sales tax dues of the assessment year 2002-03 (State) vide assessment order dated March 18, 2006, are sought to be recovered from the petitioner, the Chairman of the society in the relevant period, registered under the Societies Registration Act as "Maa Vaishno Gramodyog Sansthan". Learned Counsel for the petitioner states that the petitioner had resigned in the year 2004, after which a new committee of management was elected. Shri Madan Lal Arora, respondent No. 5, was elected as the Manager of the society. He had stopped the business of the society and sold away its entire assets in 2006.
2. Shri Agarwal submits that earlier the recovery was withdrawn on the ground that the petitioner had resigned from the society in the year 2004. Subsequently Trade Tax Department in pursuance to the provisions of section 8(3) of the U. P. Trade Tax Act, 1948 has initiated recovery against the petitioner, as the Chairman of the society in the relevant assessment year, giving rise to this writ petition.
3. It is submitted that the petitioner had resigned on May 12, 2004, after which a new committee of management was elected and that the assets of the company alone were liable for payment of trade tax dues.
4. Any seven or more persons associated for any literary, scientific or charitable purpose, or for any such purpose as is described in section 20 of the Act may, by subscribing their names to a memorandum of association, and filing the same with the Registrar of Societies form themselves into a society under the Societies Registration Act, 1860. u/s 3(1) as amended in the State of U. P. a Registrar registers a society under the Act upon the memorandum and certified copy being filed along with particulars of the address of the society by the Secretary of the society on behalf of the persons subscribing to the memorandum. Before registering a society the Registrar has to satisfy himself that the memorandum of association is duly signed by seven persons and the rules and regulations of the society bear the signature of not less than three members of the governing body. A society registered under the Act enjoys the status of a legal entity, apart from the members constituting it. It can sue and be sued in its own name.
5. Section 5 of the Societies Registration Act, 1860 provides for vesting of the property of the society whether movable or immovable, belonging to such a society, if not vested in trustees, shall be deemed to be vested, for the time being, in the governing body of such society, and in all proceedings, civil and criminal, may be described as the property of the governing body of such society by their proper title. The members of the society or the members of the governing body do not have any proprietary or beneficial interest in the property the society holds. No interest in the property can be claimed by them in the event of dissolution. The Societies Registration Act, 1860 does not create in the members of the registered society any interest other than that of bare trustees. What all the members are entitled to is the right of management of the property of the society subject to certain conditions. The amended section 5A as it is applicable in the State of Uttar Pradesh, by U. P. Act 26 of 1979 provides that notwithstanding anything contained in any law, contract or other instrument to the contrary, it shall not be lawful for the governing body of a society registered under the Act or any of its members to transfer without the previous approval of the court, any immovable property belonging to such society and every transfer in contravention to sub-section (1) shall be void. A society under the Act may sue or be sued in the name of the President, Chairman, or Principal Secretary, or Trustees, as may be determined by the rules and regulations of the society and in default of such determination, in the name of such persons as shall be appointed by the governing body for the occasion. The articles of association may enact the mode in which such suit may be brought.
6. A society registered under the Act is an association of persons, though for certain purposes it is recognized as an entity. Where a petition is filed by a society, registered under the Act, claiming rights under article 19 of the Constitution, such a petition must be regarded as one made on behalf of the members of the society. A society registered under the Act is not a body corporate, quite distinct from its members, yet it has got a separate existence for many purposes. It has its own identity, personality or entity which for all purposes is not identical with that of the members constituting it. The legal title in the properties may vest in the trustee or Board of Governors yet the equitable title vests in the society.
7. Section 8 of the Act provides that if a judgment shall be recovered against the person or officer named on behalf of the society, such judgment shall not be put in force against the property, movable or immovable, or against the body of such person or officer, but against the property of the society.
8. We may observe that where the society has stopped doing business otherwise than by a resolution or adjustment of its affairs u/s 13, and all the properties of the society have been sold leaving nothing to be recovered, the members of the society for the liabilities which the society may have incurred are liable in accordance with the bye-laws of the society. In the present case the bye-laws of the society to which the members have subscribed and submitted to the conditions, clause 20 provides that in case of any debt all the members of the society will be equally responsible to it.
9. Shri Rohit Agrawal has relied upon a judgment of the Kerala High Court in
10. Both the cases cited by Shri Rohit Agrawal are not applicable to the present case as in the case decided by the Kerala High Court the income tax dues were sought to be recovered from the members of the society without proceedings against the property of the society, and in the case decided by the Allahabad High Court recovery was pursued against the co-operative society which provides for specific provision under sub-section (2) of section 95 of the Act to recover firstly from the property of the society, secondly in the case of a society the liability of the members of which is limited, from the members, past members or the estates of the deceased members, subject to the limit of their liability and thirdly in case of other societies, from the members, past members or the estate of deceased members.
11. In Naresh Chander Gupta v. District Magistrate [2003] 22 NTN 358, it was held that the recovery certificate for recovering trade tax dues from M/ s. Shiv Sewa Samiti, a society registered under the Societies Registration Act of which the petitioner Shri Naresh Chander Gupta was the Secretary, could be recovered from him as he was really managing the entire society and had control over its operations.
12. In the present case the dues of a society registered under the Societies Registration Act can be first recovered from the estate of the society and thereafter from the office bearers or members of the society as the case may be. From the averments made in the writ petition we find that the society has stopped doing business since the year 2006 and that all its properties have been sold. The trade tax dues relate to the assessment year 2003-04. when the petitioner was the President of the society and is still a member of the society can be recovered from him under the bye laws-20 from the petitioner. The writ petition is dismissed.
