In a significant judgment for flat buyers and housing society members citywide, the Bombay High Court has clarified that full payment of consideration to a builder is not a pre-condition for acquiring membership in a cooperative housing society — particularly under redevelopment projects governed by the Maharashtra Ownership Flats Act (MOFA) and the Maharashtra Co-operative Societies Act.
The division bench of Justice Amit Borkar allowed a writ petition challenging the cancellation of a deemed membership conferred on a flat buyer in an SRA redevelopment project, and restored the buyer’s membership rights, underlining that possession and statutory rights under MOFA take precedence over payment disputes.
Background of the Dispute
The case, Writ Petition No. 13583 of 2025, involved a flat purchaser, Digant Parekh, who executed a registered Agreement for Sale dated 16 September 2013 with developers Akruti Kailash Construction and Wellgroomed Venture for a flat in Hubtown Viva, Jogeshwari (East). The agreement was registered in the prescribed Form No. 5 under MOFA, which provides enhanced protections to flat buyers.
Despite the existence of this agreement, and after the purchaser applied for membership in the cooperative housing society formed for the project, the society did not grant membership. The purchaser then sought deemed membership under Section 22(2) of the Maharashtra Co-operative Societies Act, and the Assistant Registrar granted it on 18 August 2022.
However, the developers challenged this decision before the Divisional Joint Registrar, who in an order dated 25 November 2024 set aside the deemed membership, primarily on the ground that a civil suit (Suit No. 2225 of 2016) filed by the developers to enforce the Agreement for Sale was still pending in the City Civil Court, and that payment was allegedly incomplete.
High Court Trial of Key Legal Issues
The petitioners approached the High Court under Article 226 of the Constitution, raising several critical issues:
- Whether a registered MOFA buyer has “taken” the flat for society membership purposes even if full payment remains due.
- Whether a pending civil suit on validity and enforcement of the agreement bars membership.
- Whether the appellate authority had jurisdiction to set aside the deemed membership order in light of a government notification reforming appellate powers.
Court’s Historic Ruling
After reviewing the law and statutory purpose of MOFA, the High Court made several important findings:
1. Validity and Effect of the MOFA Agreement
The court observed that a registered MOFA agreement in Form No. 5 confers a special legal position on a buyer. The statute treats a purchaser under such an agreement as someone who has “taken” the flat, since registration itself contains detailed mandatory disclosures about the project, title, possession, price, and responsibilities of the promoter.
Accordingly, the court found that such purchasers are entitled to exercise rights available to flat buyers — including society membership — even if some payment remains outstanding. This is because:
- MOFA protects purchasers from unfair practices of builders.
- A purchaser’s legal status does not depend on full payment alone.
- Any unpaid amount places the developer in the position of an “unpaid seller”, whose remedies are limited to recovery, not denial of membership.
“When a purchaser signs a registered agreement under Section 4 of MOFA, the law gives enforceable rights, including membership rights in the co-operative society,” the judgment stated.
2. Pending Civil Suit Does Not Bar Membership
The court rejected the argument that the mere pendency of a civil suit to enforce the agreement should prevent the conferral of membership. It held that a civil dispute on title or payment does not automatically block administrative steps such as granting membership, unless a civil court issues a specific injunction.
3. Jurisdictional Error
The court also found that a State Government Notification dated 8 October 2024 had transferred appellate powers for grievances related to SRA housing societies to a newly constituted authority. As such, the Divisional Joint Registrar who set aside the membership order in November 2024 did not have jurisdiction to do so.
Final Decision
The High Court allowed the writ petition, holding that:
- The revisional order dated 25 November 2024 cancelling membership was quashed.
- The original deemed membership order dated 18 August 2022 was restored.
- The civil suit filed by the developers will continue independently and will not affect the society membership of the buyer.
- An application for stay of the judgment was rejected.
Impact of the Judgment
This judgment sends a strong message to the real estate sector, especially in redevelopment contexts:
- Society membership cannot be withheld solely on the basis of unpaid dues claimed by builders.
- Flat buyers under valid MOFA agreements have enforceable statutory rights that extend to society membership.
- Developers cannot use payment disputes to delay or block flat purchasers’ participation in the governance and management of their societies.
Legal experts say this interpretation reinforces MOFA’s protective purpose and ensures that housing society membership rights are not made hostage to payment disputes.
Also Read: Tribunal Rules Housing Society Not a Promoter Under RERA
