Justice Firdosh P. Pooniwalla, in his judgment dated 25 March 2026 in Writ Petition No. 973 of 2023, quashed the orders of the Divisional Joint Registrar and restored the Assistant Registrar’s decision rejecting the buyers’ membership claims.

The Case

The petitioner societies — Dheeraj Dreams Building No.1, 3, 4A, and 4B CHS Ltd. — manage several wings of the residential complex. The Full Occupancy Certificate was issued by the Municipal Corporation of Greater Mumbai (MCGM) in 2009. Floor plans attached to all legitimate flat purchases clearly marked certain open spaces on the 8th and 15th floors as refuge areas — compulsory unconstructed safety zones required under building regulations for emergency evacuation during fire or other hazards.

Despite this, Housing Development and Infrastructure Ltd (HDIL), the developer, executed five registered Agreements for Sale on 30 April 2019 with two individuals, Hukamsingh B. Sewadsha and Chetansingh B. Sewadsha, describing these refuge areas as residential flats (including units like A-1506, D-1501, etc.).

By then, key legal milestones had already passed:

• The societies were registered in 2008-09 with no unsold flats remaining. HDIL did not join as a member, which it was legally required to do under Section 10 of the Maharashtra Ownership Flats Act (MOFA) if any flats were unsold.
• In 2017, the societies obtained a Certificate of Entitlement for Deemed Conveyance, which divested the developer of further rights to sell or deal with the property.

The two buyers approached the societies seeking membership based on these agreements. When refused, they moved the Assistant Registrar under Section 22(2) of the Maharashtra Co-operative Societies (MCS) Act. The Assistant Registrar rejected their application on 19 October 2020, observing that the developer had no right to sell non-existent flats.

The buyers then filed revision applications. The Divisional Joint Registrar reversed the order on 22 July 2022, directing the societies to admit them as members, and an execution order followed in October 2022.

Court’s Strong Observations

Justice Pooniwalla held that:

• The so-called “flats” were refuge areas, not constructed residential units. They were shown as open spaces in the original plans and continue to be assessed as refuge areas by municipal authorities (with no property tax levied on them as flats).
• HDIL had no authority to sell these spaces after the Deemed Conveyance entitlement certificate was issued.
• Forcing the societies to admit the buyers would violate Section 154B-5 of the MCS Act, which prohibits admitting more members than the actual number of flats available in the society.

The court distinguished this case from earlier precedents (such as the Videocon Appliances judgment), noting that the issue here was not merely “unauthorised construction” but the complete non-existence of any flat. A society cannot be compelled to breach a statutory provision.

The High Court quashed both the revision order of 22 July 2022 and the subsequent execution order. It restored the Assistant Registrar’s order of 19 October 2020, declaring that the societies were right in refusing membership.

Significance

This judgment reinforces that:

• Refuge areas, meant for life safety, cannot be converted or sold as private flats.
• Once the Deemed Conveyance process begins, a developer loses the right to create new sales in the project.
• Cooperative societies have strong legal grounds to resist attempts to inflate membership beyond the actual number of flats.

The refuge areas remain under the control and possession of the societies.

The buyers’ agreements for sale were not directly declared void in this writ petition (a separate civil suit for that purpose is reportedly pending), but the ruling makes it clear that such transactions carry no enforceable right to membership in the housing society.

This decision is likely to be welcomed by housing societies across Maharashtra facing similar attempts to sell common or prohibited spaces.

Also Read: HDIL Homebuyers Get No Relief From MahaRERA

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The case revolves around Mulund Sandhyaprakash Cooperative Housing Society Limited, a small 11-flat society in Mulund (West), Mumbai. The society’s building had become old, and in April 2017, the general body passed a resolution to redevelop it. After negotiations, M/s. Space Master Realtors (the developer) was selected. On July 2, 2021, the society signed a Redevelopment Agreement (DA) with the builder, promising bigger flats, transit rent, and other benefits in exchange for extra FSI rights.

The DA included an arbitration clause (Clause 38), meaning any disputes would go to a private arbitrator instead of regular courts. Nine members signed or consented, but one resident — Neeta Sawant, owner of Flat No. 10 — strongly opposed the project from the start. She filed complaints, refused to vacate, and deliberately never signed the DA.

The builder obtained Intimation of Disapproval (IOD) in November 2023 and asked members to vacate. Ten families complied, but Neeta Sawant refused. The builder then approached the Bombay High Court under Section 9 of the Arbitration Act and got an order in August 2024 directing her to vacate (with a Court Receiver appointed to take possession if she didn’t). Possession was handed over via the Court Receiver on November 15, 2024.

Only after losing her flat did Neeta Sawant sign a Permanent Alternate Accommodation Agreement (PAAA) on November 14, 2024 (registered later), agreeing to Flat No. 8001 in the new building named Chandan Heights, plus transit rent. This PAAA had its own limited arbitration clause, but only for disputes related to rent, flat size, etc. — not the main DA.

The builder later claimed massive losses (over ₹13.13 crore) due to the delay caused by her refusal to vacate earlier. On July 28, 2025, the builder sent a legal notice demanding payment and invoking the arbitration clause from the DA (which she never signed). When she refused, the builder filed an application under Section 11 of the Arbitration Act before Justice Sandeep V. Marne, asking the court to appoint an arbitrator against her.

After detailed arguments (including help from senior lawyers Mayur Khandeparkar for the builder and Karl Tamboly for the resident), the court delivered its judgment on March 6, 2026.

Justice Marne ruled:

• Arbitration requires explicit written consent from both sides.
• A dissenting member who refuses to sign the DA is not bound by its arbitration clause.
• Being a beneficiary of redevelopment (getting a new flat/rent) or signing PAAA later does not automatically make someone a party to the DA’s arbitration clause.
• The builder can sue for money in a normal civil court, but cannot force private arbitration against someone who never agreed to it.

The application was dismissed — a clear win for Neeta Sawant and, by extension, any flat owner who says “no” to redevelopment and refuses to sign the main agreement.

Legal experts say this judgment strengthens the position of dissenting members: builders can get interim relief (like possession orders) against them, but cannot shortcut disputes through private arbitration if the member never consented in writing to that mechanism.

For society members worried about being pressured by builders during redevelopment — this ruling sends a strong message: If you don’t sign the main deal, you keep your right to fight in open court.

Also Read: Can a Housing Society Claim Tax Deduction on Interest from Co-operative Banks?

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Justice Amit Borkar, in his detailed judgment pronounced on February 24, 2026, in Writ Petition No. 11328 of 2023, allowed the petition filed by Magnum Unit ‘A’ CHS Ltd. and Magnum Unit ‘B’ CHS Ltd. The petitioners, representing owners of row houses and bungalows developed in the 1980s, successfully challenged the January 9, 2023, order passed by the District Deputy Registrar, Cooperative Societies, Mumbai City (3), which had granted deemed conveyance of approximately 10,097.84 sq. mtrs. out of the total 13,569 sq. mtrs. plot to Magnum Tower CHS (Respondent No. 3).

Background of the Dispute

The land in question, Plot No. 357, Survey No. 41 (Part), C.T.S. No. 1/175 of Oshiwara Village, Taluka Andheri, Mumbai, was originally owned by Oshiwara Land Development Corporation Pvt. Ltd. Development rights were acquired by Lokhandwala Estate & Development Company Ltd. through agreements in the late 1970s and early 1980s.

The development occurred in phases:

• Magnum Unit A (approx. 3,545.95 sq. mtrs.) and Magnum Unit B (approx. 4,389.82 sq. mtrs.) were constructed first as row houses/bungalows with appurtenant exclusive garden areas. The petitioners claimed peaceful possession for over 35 years, predating the high-rise construction.
• The remaining Floor Space Index (FSI) was utilized to build Magnum Tower, a high-rise occupying approx. 4,345.29 sq. mtrs.

Old agreements, including a Tripartite Agreement (1979), Package Deal Agreement (1982), and Supplementary Agreement (1984), were cited by the petitioners as conferring exclusive garden and open space rights to row house owners. These rights were reiterated in later documents and MOFA agreements.

In 2014, Magnum Tower filed a civil suit claiming joint use of a strip of land but lost before the City Civil Court at Dindoshi.

Key Procedural History

• In 2016–2017, Magnum Tower applied for deemed conveyance of the entire plot (13,569 sq. mtrs.) under Section 11 of the Maharashtra Ownership Flats Act, 1963 (MOFA).
• The application was rejected on January 24, 2017, primarily because granting conveyance would prejudice the rights of other building owners (the petitioners) and included disputed common areas like recreation grounds and internal roads.
• In 2022, Magnum Tower filed a fresh application seeking conveyance of 10,097.84 sq. mtrs. (slightly reduced area).
• On January 9, 2023, the Deputy Registrar granted the conveyance, issuing a certificate under Section 11 of MOFA.

The petitioners challenged this in the High Court, arguing that the 2023 order effectively overruled the final 2017 decision without jurisdiction.

Court’s Reasoning and Key Holdings

Justice Borkar extensively discussed the applicability of res judicata to proceedings before quasi-judicial authorities like the Deputy Registrar under MOFA. Relying on Supreme Court precedents such as Sajjadanashin Sayed v. Musa Dadabhai Ummer (2000) and Faime Makers Private Ltd. v. District Deputy Registrar (2025), the court held:

• Once a quasi-judicial authority decides a matter on merits and the order attains finality (without appeal or liberty to reapply), it binds the parties.
• The 2017 rejection was on merits: the authority examined entitlement and found that conveyance of such a large area, including common facilities, would harm other societies’ rights.
• The 2023 claim was substantially the same — only a marginal numerical adjustment — arising from the same cause of action and transaction.
• Allowing re-agitation would undermine finality, lead to endless litigation, and permit parties to bypass higher remedies by filing modified applications.

The court distinguished collateral/incidental findings from those “directly and substantially in issue.” Entitlement to conveyance over the disputed land was central to both proceedings.

The judgment also noted procedural lapses in the 2023 order, including failure to appoint an independent architect for measurement disputes (as per 2018 Government Resolution) and improper inclusion of disputed garden areas and access roads, contrary to precedents like Mazda Construction Co. v. Sultanabad Darshan CHS (2012).

Operative Directions

The High Court:

• Allowed the writ petition.
• Quashed and set aside the January 9, 2023, order and consequential certificate.
• Granted liberty to Magnum Tower to pursue remedies before a competent civil court for substantive relief on title/rights.
• Directed any such civil suit to be decided expeditiously, preferably within one year.
• Stayed the operation of the judgment for eight weeks on Magnum Tower’s request.

No costs were imposed.

This ruling underscores the limited scope of MOFA Section 11 proceedings — meant for summary enforcement of statutory conveyance rights — and protects long-possessing flat/row house owners from unilateral claims that reopen settled disputes.

Also Read: The Rise of Lifestyle Clubhouses

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Justice Amit Borkar, in his order dated February 2, 2026, in Writ Petition No. 1293 of 2026 (Amanul Ekramul Ansari vs. State of Maharashtra & Ors.), upheld the Revisional Authority’s decision to set aside an earlier appellate order granting membership. The court held that a basement and parking space do not qualify as a “flat” under Section 154B(1)(13) of the MCS Act, and therefore cannot form the basis for membership in a cooperative housing society.

Background of the Case The petitioner, Amanul Ekramul Ansari, claimed ownership of a basement and parking area through a registered conveyance deed dated December 12, 2019. On August 17, 2020, he applied for membership in Respondent No. 4, a cooperative housing society. When the society failed to communicate a decision within the statutory period, he invoked the appellate remedy under Section 22(2) of the MCS Act on the same day.

The Appellate Authority, by order dated July 12, 2021, directed the society to grant membership based on the material placed before it. Aggrieved, the society filed Revision Application No. 575 of 2023 before the State Government (Revisional Authority), which allowed the revision and set aside the appellate order.

The Revisional Authority held that the purchased area — a basement and parking space — did not answer the description of a “flat” under Section 154B(1)(13) of the MCS Act, rendering the membership claim unsustainable.

Petitioner’s Arguments Represented by Advocate Anish Karande and team, the petitioner argued that the scope of inquiry under Section 22(2) is limited and does not permit adjudication on the validity of title or legality of a registered instrument. He further contended that the society’s silence triggered deemed membership, relying on an earlier Bombay High Court decision in Videocon Appliances Ltd. vs. Maker Chambers V Premises Coop. Socy. Ltd. (2005).

Court’s Reasoning Justice Borkar rejected these contentions, relying heavily on the recent Bombay High Court judgment in Uday Dalal & Ors. vs. Divisional Joint Registrar & Ors. (WP No. 15089 of 2025, decided December 5, 2025). Key observations include:

• Membership in a cooperative housing society (under Chapter XIII-B of the MCS Act) is conditioned upon ownership or lawful entitlement to a “flat” as defined in Section 154B(1)(13) — a self-contained unit corresponding to the sanctioned building plan.
• The statutory scheme distinguishes between mere possession and lawful entitlement referable to a recognised unit in the approved layout.
• Deemed membership (arising from the society’s failure to reject within time) operates only within statutory eligibility boundaries. It cannot enlarge membership rights beyond what the Act permits.
• The architect’s certificate annexed to the conveyance deed showed the basement and parking spaces were situated outside the Floor Space Index (FSI) utilised for construction. FSI reflects the permissible built-up area sanctioned by the planning authority.
• Units outside FSI are typically treated as common areas or appurtenant facilities (not independent flats). A conveyance deed, “however carefully drafted,” cannot override the sanctioned plan or convert a common area into a separate flat for membership purposes.

The court concluded that the Revisional Authority committed no jurisdictional error or perversity. Its finding was based on the statutory definition, sanctioned plan, and material on record. No grounds existed for interference under writ jurisdiction.

Outcome The writ petition was dismissed with no order as to costs. The ruling reaffirms that membership rights in Maharashtra cooperative housing societies are strictly linked to ownership of a sanctioned “flat” — not basements, parking spaces, or other common-area components.

This decision serves as a strong precedent for societies to reject membership claims based on non-qualifying units and warns buyers against relying solely on registered deeds for areas not recognised as independent flats in building plans.

Also Read: Open Parking Space Cannot be Sold and this is Final

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The judgment, delivered by Justice Sandeep V. Marne on January 5, 2026, in the case of Apsara Co-operative Housing Society Ltd. v. Vijay Shankar Singh (Writ Petition Nos. 3908 and 4146 of 2025), quashed claims filed by a former building manager seeking bonus, leave wages, and gratuity totaling over ₹8.5 lakhs.

Background and Sequence of Events

The dispute began in October 2022 when Apsara Co-operative Housing Society, a registered entity under the Maharashtra Co-operative Societies Act, 1960, terminated the services of its Building Manager, Vijay Shankar Singh, who had been appointed in August 2013 and was drawing a monthly salary of ₹90,000 at the time of termination. The society claimed it paid him ₹5 lakhs as a full and final settlement towards bonus dues.

Undeterred, Singh filed two separate applications in 2023:

• One under Section 33-C(2) of the Industrial Disputes Act, 1947 (ID Act), before the 10th Labour Court in Mumbai, claiming ₹3.87 lakhs towards unpaid bonus and leave wages for 2020-2023.
• Another under the Payment of Gratuity Act, 1972 (PG Act), seeking ₹4.67 lakhs in gratuity based on his nine years of service.

The society challenged the very maintainability of these proceedings, arguing that it was neither an “industry” under the ID Act nor an “establishment” under the Maharashtra Shops and Establishments Act, 2017, which triggers the applicability of the PG Act.

On January 17, 2024, both the Labour Court (also functioning as the Controlling Authority under the PG Act) rejected the society’s preliminary objections, allowing the claims to proceed. Aggrieved, the society approached the Bombay High Court through two writ petitions, which were heard together and finally decided on January 5, 2026.

Why a Housing Society is Not an ‘Industry’

Justice Marne’s detailed 28-page judgment extensively analysed the legal position, relying on Supreme Court and prior Bombay High Court precedents.

The court explained that under Section 2(j) of the ID Act, an “industry” requires systematic activity involving business, trade, or commerce. Cooperative societies engaged in trade (like cooperative banks or sugar factories) may qualify as industries, but housing societies do not.

Key reasons outlined:

• Housing societies are formed solely for the collective management and maintenance of residential buildings owned by flat purchasers. Their primary objective is to secure common ownership of land/building and provide personal services (cleanliness, security, lifts, etc.) to members for their own use.
• They do not carry on any systematic commercial or profit-oriented activity. Monthly contributions from members fund operations, and any surplus is not profit but excess over expenditure.
• Incidental income — such as from renting terrace space for telecom towers/antennas or operating a clubhouse — is merely to reduce members’ maintenance charges. It is an “adjunct” to the main non-commercial purpose, not a dominant trading activity.

The court heavily relied on the Supreme Court’s 2002 ruling in Management of Som Vihar Apartment Owners Housing Maintenance Society Ltd. v. Workmen, which held that societies rendering personal services only to members are not industries. It also cited Bombay High Court decisions like Dalamal House Commercial Complex CHS (2018, upheld by Supreme Court), Arihant Siddhi, and Shantivan-II, reinforcing that even telecom towers or clubhouses do not change this status.

Rejecting the ex-manager’s plea for evidence to prove commercial activity, the court said no amount of evidence could alter the settled legal position.

Not an ‘Establishment’ Under Gratuity Law

On the gratuity claim, the court held that the PG Act applies only to “establishments” under state shops and establishments laws, which require carrying on business, trade, or profession. Analogous to the “industry” reasoning, housing societies lack this commercial character and thus fall outside the PG Act’s ambit.

Outcome and Implications

The High Court set aside the lower authorities’ orders, dismissed both the ex-manager’s applications as non-maintainable, and imposed no costs considering the circumstances.

This ruling provides clarity and relief to cooperative housing societies, preventing them from being dragged into protracted labour disputes. Legal experts hail it as a “historic” affirmation of prior precedents, potentially impacting similar pending cases statewide.

Also Read: Bombay High Court Slams BMC for ‘Bureaucratic Lethargy’: Dismisses Appeal After 1,526-Day Delay in Property Tax Case

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The judgment in Writ Petition No. 8889 of 2024 was delivered by Justice Amit Borkar, dismissing a petition by the Bank of India Staff Panchsheel Co-operative Housing Society Ltd. that sought to stop a member’s challenge from proceeding in the Co-operative Court.

Background: What Was at Stake?

The petitioner society had sought dismissal of a dispute filed by its member, Jitendra Kumar Jani, before the Co-operative Court No.3, Mumbai. The society argued that the dispute involved issues of building redevelopment which, according to it, do not fall within the jurisdiction of the Co-operative Court.

In response, the member had filed a dispute — challenging the manner in which general body meetings were conducted and resolutions were passed relating to redevelopment. The society then applied under Order VII Rule 11 of the Civil Procedure Code (CPC) for the dispute to be summarily rejected at the outset.

Although the Co-operative Court initially dismissed the society’s application, the society appealed. The Appellate Co-operative Court upheld the member’s dispute. Aggrieved, the society approached the High Court.

Court’s Core Finding: Jurisdiction vs Maintainability

At the heart of the High Court’s decision was a fundamental legal principle:

Jurisdiction (power to hear a case) must be distinguished from maintainability (whether a particular dispute can proceed).

The court emphasized that:

• A Co-operative Court’s jurisdiction arises only from statute.
• Order VII Rule 11 CPC allows a complaint to be rejected at the threshold only if a statutory bar is plainly visible from the complaint itself.
• A dispute cannot be dismissed at the preliminary stage if its resolution depends on examining documents, bye-laws, evidence, or facts outside the pleadings.

Justice Borkar noted that the society’s argument required examining the society’s bye-laws and resolutions, which were not part of the dispute application. Since this analysis depends on evidence, it cannot be done at the threshold under Order VII Rule 11.

Chapter XIII-B and 2019 Amendment: No Automatic Bar to Dispute

The petitioner society relied on the 2019 amendment to the Maharashtra Cooperative Societies Act, which expanded the definition of a housing society to include demolition and reconstruction activities.

However, the High Court clarified:

• This definition is enabling, not mandatory.
• Section 154B(31) contains a saving clause confirming that existing bye-laws continue in force until expressly amended.
• Therefore, redevelopment does not automatically become part of every society’s “business” simply because of the amended statutory definition.

The court ruled that whether a society’s objects include redevelopment depends on examination of its actual bye-laws and resolutions, a task requiring trial and evidence.

General Body Resolutions Within Co-operative Court’s Domain

The society also contended that redevelopment decisions were beyond the Co-operative Court’s jurisdiction. The High Court disagreed, holding:

• A member can challenge conduct of general body meetings and resolutions under Section 91 of the Act.
• These disputes clearly fall within the statutory framework of the Co-operative Court.

The court further noted that decisions of lower courts had conflated jurisdiction with maintainability, which led to incorrect reasoning.

Order and What Happens Next

The High Court dismissed the society’s writ petition, meaning:

• The dispute will continue in the Co-operative Court.
• The member’s challenge will be heard on its merits, including scrutiny of bye-laws and resolutions.
• The society’s objections will be part of trial arguments, not grounds for premature dismissal.

Why This Ruling Matters

This judgment has significant implications for society members and redevelopment disputes:

• Societies cannot block member disputes merely on technical grounds.
• Jurisdictional arguments cannot be used to shut out cases without factual examination.
• Order VII Rule 11 CPC cannot be misused to avoid trial where evidence is required.
• Members have a robust avenue to challenge general body decisions, including redevelopment resolutions.

Legal experts say this decision reinforces the principle that procedural shortcuts cannot replace a full hearing on merits, especially in matters where bye-laws, resolutions, and factual contexts are central.

Also Read: MHADA issues Tender for Abhyudaya Nagar Redevelopment

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The ruling came in a dispute involving a posh South Mumbai cooperative housing society — Banganga Anurag Cooperative Housing Society Ltd., Walkeshwar, and an auction purchaser who sought membership without paying long-pending society dues.

The Society at the Centre of the Dispute

The case involved Banganga Anurag CHSL, a premium residential society located at Banganga Cross Lane, Walkeshwar, one of South Mumbai’s most upscale and tightly governed neighbourhoods.

Flat No. 602 in the building was originally owned by a member who had defaulted on a mortgage loan as well as on society payments. Following loan default, the flat was taken over by a cooperative bank and eventually sold through a bank-conducted auction under the SARFAESI framework.

What Triggered the Legal Battle

Sequence of Events

1. Loan Default & Bank Action
   The original flat owner defaulted on a mortgage loan. The bank took possession of the flat and later assigned the secured asset to an asset reconstruction company.
2. Auction Sale to New Buyer
   In February 2023, the flat was sold to a new purchaser through an e-auction, clearly stating that the sale was on an “as-is-where-is” and “subject to all encumbrances” basis.
3. Society Flags Outstanding Dues
   Even before the buyer applied for membership, the society informed him that substantial dues were pending, including:
   • Unpaid maintenance charges
   • Repair fund contributions
   • Conversion charges (for leasehold-to-freehold conversion)
   • Interest on long-standing arrears
4. Buyer Seeks Membership Without Paying Full Dues
   The buyer applied for membership but disputed liability, arguing that:
   • Dues belonged to the previous owner
   • The society should recover amounts from the former member
5. Society Refuses Membership
   Banganga Anurag CHSL refused membership within the statutory period, citing non-payment of dues, and furnished a detailed break-up of the amounts claimed.
6. Registrar Orders Membership
   The Deputy Registrar and Divisional Joint Registrar directed the society to admit the buyer, treating the dispute as a “genuine dispute over dues.”
7. Society Approaches High Court
   Challenging the orders, the society moved the Bombay High Court.

What the Bombay High Court Decided

Justice Amit Borkar set aside the Registrar’s orders and upheld the society’s refusal.

The Court ruled that:

• Section 154B-7 of the Maharashtra Cooperative Societies Act is mandatory
• No transfer or membership is valid unless society dues are cleared
• Bank or SARFAESI auction does not extinguish society dues
• Society dues attach to the flat, not merely to the previous owner

The Court also noted that the buyer had prior knowledge of the dues and that the auction sale certificate expressly stated that all liabilities were to be borne by the purchaser.

“As-Is-Where-Is” Means Taking on Liabilities Too

A key factor in the judgment was the auction condition.

The Court held that when a buyer purchases a flat on an “as-is-where-is” and “whatever-there-is” basis, he steps into the shoes of the previous owner — including inherited liabilities.

Society dues, the Court said, do not vanish merely because a bank has recovered its loan.

No Escape by Blaming the Previous Owner

Rejecting the buyer’s argument, the Court clarified:

• A housing society is not obligated to chase an ex-member who has lost the flat
• The society is entitled to protect its financial stability
• The auction purchaser may separately pursue recovery from the previous owner, but membership cannot be forced without payment

Why This Judgment Matters

This ruling has far-reaching consequences, especially in Mumbai where:

• Bank auctions are increasingly common
• Society arrears in older buildings can run into lakhs
• Buyers often assume auctions guarantee a “clean slate”

The judgment sends a clear warning: due diligence is non-negotiable.

Clear Takeaway for Homebuyers

Buying a flat in a bank auction does not mean buying it free of society dues. To become a member, you must clear the arrears — even if they belong to the previous owner.

Also Read: Wish To Buy A Bank Auction Property Read This First

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The judgment, delivered by Justice Amit Borkar, brings to an end a two-decade-long legal battle involving a Kandivali housing project and sends a strong message across Maharashtra’s real estate sector: certainty, transparency, and buyer consent are non-negotiable.

The Case at a Glance

The dispute arose from a residential project known as Dayal Smruti, located at Shantilal Modi Road, Kandivali (West), Mumbai.

• Developer: Rachana Developers
• Flat purchasers: Over 40 homebuyers
• Core dispute: Whether the project would be governed by a condominium under the Maharashtra Apartment Ownership Act (MAO Act) or a cooperative housing society under the Maharashtra Ownership Flats Act (MOFA) and Maharashtra Cooperative Societies Act.

While this question may appear technical, the outcome determines who controls the building, how common areas are owned, voting rights, management structure, and future redevelopment decisions.

What Triggered the Dispute

Between 2003 and 2004, Rachana Developers sold flats to multiple purchasers under agreements that contained a crucial clause.

The clause gave the builder “discretion” to later decide whether:

• a cooperative housing society would be formed, or
• the property would be submitted to a condominium by executing a declaration under the MAO Act.

In 2004–2005, the developer executed and registered a Declaration under the MAO Act, claiming that the project had become a condominium.

However, most flat purchasers disagreed.

Why Homebuyers Objected

The homebuyers raised serious objections:

• The declaration was not signed by all flat purchasers
• It was signed by only seven persons, six of whom were allegedly related to the promoter
• Purchasers had paid money for formation of a cooperative society
• They were never clearly told upfront that a condominium would be imposed

Despite this, in 2006, the buyers themselves applied to register a cooperative housing society.

The Deputy Registrar approved the society’s registration in 2007 — triggering a legal battle that would last nearly 20 years.

The Builder’s Legal Fight

Rachana Developers challenged the society’s registration, arguing:

• The condominium declaration was already registered
• Once a property is submitted to the MAO Act, a society cannot be formed
• The Registrar had no jurisdiction to register a cooperative society

The builder lost at:

1. Deputy Registrar
2. Divisional Joint Registrar
3. State Government (Revisional Authority)

Still, the developer persisted — finally approaching the Bombay High Court.

What the High Court Examined

The Court closely examined two key laws:

1. Maharashtra Ownership Flats Act (MOFA)

• A welfare legislation meant to protect homebuyers
• Requires the exact nature of the organisation (society, company, or condominium) to be disclosed at the agreement stage
• Does not allow uncertainty or future discretion

2. Maharashtra Apartment Ownership Act (MAO Act)

• Applies only if all owners submit the property
• Requires a collective, valid declaration
• Cannot be triggered by unilateral or selective consent

The Court’s Key Findings

The High Court made several crucial observations:

Builder Discretion Has Limits

Any agreement clause giving the builder open-ended discretion to decide later is illegal and contrary to MOFA.

No Unilateral Condominium

A condominium cannot be created unilaterally by the builder.
A declaration signed by a few purchasers — especially promoter-linked buyers — has no legal validity.

Registration Does Not Cure Illegality

Merely registering a declaration does not validate it if statutory requirements are violated.

Buyers’ Rights Come First

MOFA requires certainty at the time of agreement. Buyers must know what they are signing up for.

The Final Verdict

The Bombay High Court:

• Dismissed the builder’s writ petition
• Upheld the registration of the cooperative housing society
• Confirmed that authorities acted correctly and lawfully

In simple terms, the Court ruled:

A builder cannot use cleverly drafted clauses to override homebuyers’ statutory rights.

Why This Judgment Matters

This ruling has far-reaching implications:

• Strengthens homebuyers’ bargaining power
• Prevents forced condominiums
• Ensures transparency at the agreement stage
• Acts as a warning to developers using vague clauses
• Reinforces MOFA as a buyer-protection law

For thousands of homebuyers across Maharashtra, this judgment is a clear victory — affirming that their collective choice matters more than a builder’s convenience.

Conclusion: A Long Struggle, A Clear Win

What began as a technical dispute in a Kandivali housing project has now become a precedent-setting judgment.

After nearly two decades of litigation, homebuyers have emerged victorious — with the Bombay High Court firmly stating that housing laws exist to protect people, not promoters.

Also Read: Bombay HC: Maintenance Charges Must Match Your Flat Size

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Background of the 30-Year Dispute

The building originally belonged to Kamani Brothers Pvt Ltd, which went into liquidation in the 1990s. In 1995, six out of seven original tenants collectively paid ₹15 lakh to the Official Liquidator and an additional ₹61.36 lakh to clear other dues to acquire ownership and form the society. The seventh tenant, late Narendra R. Patel (father of respondents 6 & 7), refused to contribute his share of ₹5 lakh and allegedly informed the promoters in writing that he wished to remain a tenant only.

For nearly three decades, the society functioned with just six members. No elections were held; the same six members continued the managing committee through resolutions passed every few years. In February 2025, the Deputy Registrar appointed an Administrator (Authorized Officer) under Section 77A and directed elections, a decision upheld by both the Joint Registrar and the High Court.

In March 2025, the legal heirs of Narendra Patel (Shashin & Bhavini Patel) suddenly applied for membership, tendering ₹5 lakh (the 1995 amount). When the Administrator refused to decide the application, they approached the Registrar. On 23 April 2025, the Divisional Joint Registrar directly admitted them as joint members by invoking Section 23(2) of the Maharashtra Cooperative Societies Act, 1960 – an order the High Court has now set aside as illegal and without jurisdiction.

Key Findings & Directions of the High Court (19 Nov 2025)

1. Society alone has the primary and exclusive right to admit members. The Registrar cannot bypass the society and directly admit anyone, even under Section 23(2). The Court held: “Admission to membership is the prerogative of the society.”
2. The 23 April 2025 order of the Divisional Joint Registrar directly admitting the Patels is quashed along with all consequential actions (share certificates, record changes, etc.).
3. The earlier order of the Deputy Registrar (4 April 2025) is restored: The Administrator must convene a Special General Meeting within 4 weeks where only the existing six members can vote on the membership application of the Patels (or their buyer, Capital Mind Advisory Services Pvt Ltd).
4. Shashin Patel, Bhavini Patel and their transferee (Respondent No. 9) are not entitled to participate or vote in the SGM or any electoral process as members.
5. The society is free to:
   • Admit them on the old 1995 terms (₹5 lakh), or
   • Impose reasonable additional conditions/premium, or
   • Refuse membership altogether. Any refusal, if arbitrary or mala fide, can later be challenged before the Registrar.
6. The appointment of the Administrator and the direction to hold elections remain intact.

What Rights Do Cooperative Housing Societies Now Enjoy?

• Absolute first right to decide who becomes a member.
• Registrar’s power under Section 23(2) is only appellate and remedial – it cannot be used to force membership without the society first taking a decision.
• Long-delayed claims (here 30 years) do not create an automatic or vested right to membership on original terms.
• Existing members retain full voting control until new members are lawfully admitted.

The Court stayed its order for 4 weeks to enable an appeal, but continued the interim protection barring the Patels/their buyer from participating in society affairs.

Legal experts hail the judgment as a major victory for cooperative democracy and a clear message that Registrars cannot act as “super societies”.

Also Read: Bombay HC: Maintenance Charges Must Match Your Flat Size

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In a landmark order that could affect thousands of mixed-use housing projects across Maharashtra, the Bombay High Court has ruled that a developer cannot register two separate cooperative housing societies — one for commercial units and another for residential units — unless both are functionally and physically independent.

The Court has also struck down reliance on a 2004 Maharashtra government circular, holding that it has no statutory authority and cannot override the Maharashtra Cooperative Societies Act (MCS Act) or the Maharashtra Ownership Flats Act (MOFA).

Case Summary:

Case: Sadguru Universal CHS Ltd. vs. State of Maharashtra & Ors.
Court: Bombay High Court (Civil Appellate Jurisdiction)
Coram: Justice Amit Borkar
Date of Judgment: November 11, 2025
Filed by: Sadguru Universal CHS Ltd., New Panvel (West), Navi Mumbai
Respondents: State of Maharashtra, Registrar of Cooperative Societies, and Sadguru Infra Projects (the builder)

The Dispute:

A single building in New Panvel was constructed with 24 commercial units on the ground floor and 88 residential flats above.
The builder, Sadguru Infra Projects, registered two separate societies — one for commercial and another for residential owners.

The residential society (petitioner) objected, arguing:

• Only one building plan and one Occupancy Certificate were issued by CIDCO.
• Both residential and commercial owners use common passages, terraces, lifts, firefighting systems, and parking areas.
• Two societies would create conflict and violate MOFA, which mandates one collective society.

Key Findings by the High Court:

1⃣ Two Societies Not Allowed Without Real Separation

“The mere fact that some units are commercial and some are residential does not give the promoter a right to form two societies.”

• Separate societies are permissible only if there is clear physical and functional separation — e.g., separate entrances, lifts, utilities, firefighting systems, and maintenance mechanisms.

2⃣ Parameters for Allowing Two Societies

The Court listed mandatory parameters to assess independence:

• Structural Design & Layout
• Separate Entrances and Exits
• Independent Utilities (water, electricity, firefighting)
• Maintenance & Financial Responsibility

Additional parameters include:

• Parking and circulation
• Use pattern (timings and activity interference)
• Legal documents (OC, plan approval)
• Impact on members’ convenience and rights

3⃣ Govt Circular of 2004 Has No Legal Standing

The Court held that the Government Circular dated 30 July 2004, which allowed separate societies for wings or sections, has no statutory force.

“A circular issued by an administrative department does not become law only because it has been issued by a Government officer.”

It was not issued under the MCS Act and not authenticated under Article 166 of the Constitution, so it cannot override the law or curtail citizens’ rights.

4⃣ Matter Remanded for Fresh Inquiry

Both the Registrar and Revisional Authority failed to conduct any ground verification.
The Court set aside both orders and directed a fresh factual inquiry within four months to decide if two societies can truly function independently.

Impact on Developers and Societies:

• Builders can no longer arbitrarily split one building into separate societies to retain control or reduce obligations.
• Residential and commercial unit owners in mixed-use projects will now gain stronger rights under MOFA.
• The judgment redefines the scope of Section 154B-2(4) of the MCS Act — emphasizing functional, not formal, independence.

Expert Quote (Suggested Style):

“This judgment reinforces that MOFA’s purpose is to protect flat buyers — not builders’ convenience. If a structure functions as one building, the law expects one cooperative body,” said a Mumbai-based housing law expert.

Conclusion:

This ruling could reshape how housing societies are formed in Maharashtra — especially across CIDCO, MMRDA, and municipal layouts where commercial and residential units coexist.
It’s a strong message to developers and authorities: registration can’t be a paper exercise — it must reflect ground realities.

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