What was the dispute about?

Solitaire CJ Co-operative Housing Society Ltd. filed a dispute against Parwez Alam, who owns Shop No. 1 in the Cosmos Jewels complex in Thane. The society alleged that the shop owner had encroached upon common areas and carried out unauthorised construction without the necessary permissions.

According to the society, the alleged encroachment included an area intended for six visitor parking spaces, obstruction of an entrance to the commercial complex, construction of a separate staircase leading to a banquet hall on the first floor, and occupation of other common areas.

The society also alleged that the disputed work affected common facilities, including access areas, a ventilation duct and spaces used for parking and maintenance.

Alam denied encroaching upon common property. He maintained that the developer had allotted the adjoining area to him for business use and that his occupation of the space was lawful.

The dispute eventually raised an important question for property owners: can a member claim exclusive rights over an area adjoining a shop merely because the developer has issued a letter permitting its use?

March 2016: Shop owner relies on developer’s letter for additional space

Alam purchased Shop No. 1 from Cosmos Lifestyle under a registered agreement for sale dated March 23, 2016.

The agreement described the premises as comprising 234.29 square metres of carpet area on the ground floor and 160.90 square metres on the first, or mezzanine, floor.

However, the registered agreement did not mention the additional open space adjoining the shop.

To establish his claim over that area, Alam relied on a separate letter dated March 25, 2016, allegedly issued by the developer. The letter referred to approximately 1,406 square feet of adjoining space and stated that it had been allotted for business use.

The appellate court examined the documents and found that the letter was written on plain paper, was unregistered and had no stamp duty paid on it. It also found no material on record establishing that the disputed open space was saleable property over which the developer had the legal right to confer exclusive rights.

The court therefore held that, at the interim stage, the letter did not establish a legally enforceable interest in the adjoining open space.

For property buyers, this is a significant warning. A developer’s assurance or letter permitting the use of an area does not necessarily establish ownership or a legally enforceable right to occupy common property exclusively.

October 2020: Municipal correspondence over alleged construction

The society approached the Thane Municipal Corporation over the alleged unauthorised construction and encroachment.

The appellate court referred to correspondence, including a letter dated October 21, 2020, from the corporation’s Executive Engineer to its Assistant Commissioner. According to the judgment, the correspondence indicated that the shop owner had not obtained permission for construction on the open space adjoining Shop No. 1.

The society continued to pursue the issue through correspondence and the municipal authorities.

This aspect of the case highlights the importance of documentary evidence when a society suspects that a member has occupied common areas or undertaken construction without permission.

A managing committee should identify the disputed area, examine the sanctioned plans and relevant property documents, communicate its objections in writing and approach the competent municipal authority where required.

December 2021: Society passes resolution imposing five-times maintenance penalty

The society’s Annual General Body Meeting held on December 12, 2021, passed a resolution imposing a penalty equivalent to five times the monthly maintenance charges on members found to have encroached upon common areas.

The society relied on Bye-law 169(a), which states that common areas intended for use by members, including parking spaces, staircases, landings, lifts and corridors, cannot be occupied by an individual member for exclusive use. The provision also addresses unauthorised construction and structural changes.

The society subsequently issued Alam a supplementary bill dated April 22, 2022, raising penalty charges of Rs. 7,26,709 for the period from June 1, 2018, to June 30, 2022.

Alam challenged the penalty and the resolution, maintaining that he had not encroached upon common property and that the charges were unlawful.

The society, on the other hand, argued that its resolution was consistent with the bye-laws and that the disputed open space was not the shop owner’s private property.

The appellate court found that the resolution appeared, prima facie, to be consistent with Bye-law 169(a). This finding became a key reason for rejecting the request to continue the interim stay.

However, the court was not finally deciding the entire penalty claim. Its decision concerned whether the resolutions should remain suspended while the underlying dispute was pending.

July 2022: Shop owner seeks stay on society’s resolutions

Alam filed an interim-relief application, Exhibit 10, before the Co-operative Court, Thane, seeking a stay on the operation and implementation of the penalty resolution and the society’s general conduct rules.

His counterclaim also sought to challenge the resolutions and cancel the supplementary penalty bill. He raised other grievances concerning the treatment of commercial unit owners, water charges, maintenance, security and access to the complex.

The society opposed the application, arguing that the shop owner had no legally established right over the adjoining open space and that his claims did not justify suspending the society’s decisions.

The interim application therefore required the court to examine whether Alam had established a sufficient legal basis to restrain the society while the substantive dispute continued.

April 2024: Co-operative Court stays the penalty resolution

On April 3, 2024, the Co-operative Court, Thane, allowed Alam’s interim-relief application.

The order stayed the operation and implementation of the society’s December 12, 2021, resolution concerning the five-times maintenance penalty and the general conduct rules dated October 27, 2021, framed pursuant to an earlier resolution dated August 15, 2018.

The society challenged this decision before the Maharashtra State Co-operative Appellate Court in Appeal No. 16 of 2025.

The appeal focused on whether the lower court had correctly granted interim protection to the shop owner despite the documents and bye-laws relied upon by the society.

October 27, 2026: Appellate court rules in favour of society at interim stage

The Maharashtra State Co-operative Appellate Court examined the registered sale agreement, the developer’s letter, the society’s resolutions, Bye-law 169(a) and the correspondence concerning the alleged construction.

It concluded that the developer’s letter did not establish a legal right over the adjoining open space and that the penalty resolution appeared consistent with the society’s bye-laws.

The court also considered the three principal requirements for an interim injunction: a prima facie case, balance of convenience and the likelihood of irreparable loss if relief was refused.

It found that these requirements were not satisfied in Alam’s favour.

The court reasoned that the documents did not establish his claimed entitlement to the open space, that the society had been attempting to address the alleged encroachment and that the shop owner had not demonstrated irreparable loss warranting an injunction.

The court also found no sufficient reason to suspend the general conduct rules, noting that they had been in force well before the interim application was filed.

Accordingly, the appellate court allowed Appeal No. 16 of 2025, set aside the Co-operative Court’s April 3, 2024, order and rejected the interim-relief application. Both parties were directed to bear their own costs.

Can a housing society impose a penalty for encroachment?

The judgment supports a society’s position when it relies on a relevant bye-law and a resolution that appears consistent with that provision. In this case, the appellate court found that Bye-law 169(a) supported the society’s resolution concerning alleged encroachment of common areas.

However, the ruling should not be interpreted as giving every housing society unrestricted authority to impose any penalty it chooses.

The validity of a penalty depends on the applicable law, the society’s registered bye-laws, the authority and procedure under which the decision was made, and the facts of the particular case.

Members who dispute a penalty should obtain the relevant resolution, the applicable bye-law, the calculation of the charge and the supporting documents. They can then raise specific legal objections and seek appropriate remedies.

Likewise, a managing committee should not assume that passing a general body resolution automatically makes every charge legally recoverable.

What happens next?

The immediate consequence of the October 27, 2026, judgment is that the interim stay granted by the Co-operative Court no longer operates. The shop owner has lost the interim protection that had suspended the effect of the disputed resolutions.

However, the appellate court decided only the interim-relief application. It did not finally dispose of the underlying dispute or conclusively determine every issue raised in the counterclaim.

The substantive proceedings will still need to address the alleged encroachment, the legal status of the disputed open space, the validity of the resolutions and the penalty bill.

The judgment should therefore not be interpreted as a final direction to demolish the disputed construction or as a final decree confirming recovery of Rs. 7,26,709.

The parties may also pursue any further legal remedies available to them, subject to applicable law and procedural requirements.

Lessons for ordinary housing society members

1. Do not rely only on a builder’s promise

Before claiming rights over adjoining open space, parking, a terrace or a passage, buyers should check the registered agreement, sanctioned plans and other relevant property documents.

A letter permitting use of an area may not establish ownership or an exclusive legal right over it.

2. Common areas cannot automatically become private property

Parking spaces, passages, staircases, lift landings and other shared facilities must be used according to their designated purpose and applicable legal provisions.

A member should not enclose or convert common space into a private commercial area without establishing the necessary legal entitlement and obtaining the required permissions.

3. Challenge penalties with specific legal grounds

If a member believes that a society has imposed an unlawful penalty, the member should obtain the resolution, the relevant bye-law and the calculation of the amount.

Simply disagreeing with the committee or filing a legal challenge does not automatically suspend a resolution. Interim relief must be independently justified.

4. Keep property documents safe

Buyers should preserve registered agreements, approved plans, written permissions and other documents relating to their premises. Any additional space promised by a developer should be legally verified before the buyer relies on that promise.

Lessons for housing society managing committees

1. Establish the status of the disputed area

Before alleging encroachment, committees should examine the sanctioned plans, registered documents, conveyance records and relevant bye-laws to establish whether the disputed area is common property.

2. Follow the bye-laws and applicable law

The committee should verify its authority to impose a penalty, follow the applicable decision-making procedure and maintain a transparent calculation of the charges. A resolution should not be treated as an unrestricted power to impose arbitrary penalties.

3. Document every step

Complaints, inspection records, photographs, notices, replies, general body minutes and municipal correspondence can become important evidence if a dispute reaches court.

4. Apply rules fairly

Rules should be enforced consistently, without discrimination, and affected members should be given the opportunity to respond in accordance with applicable law and the society’s bye-laws.

5. Understand the limits of an interim order

Winning an interim application does not necessarily mean winning the entire dispute. Committees should continue to preserve evidence, comply with court orders and pursue the substantive proceedings until the outstanding issues are resolved.

The larger lesson

The dispute between Solitaire CJ Co-operative Housing Society Ltd. and Parwez Alam illustrates the difference between permission to use a space and a legally established right to occupy it exclusively.

For members, the lesson is to verify property documents and respect common areas. For managing committees, it is to rely on clear records, follow the registered bye-laws and use lawful procedures when addressing alleged encroachment.

The appellate court’s October 27, 2026, judgment removes the interim protection granted to the shop owner and strengthens the society’s position at this stage. The final outcome of the underlying encroachment dispute and penalty claim, however, remains to be determined.

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