Refuge Area Cannot Be Treated As Flat For Grant Of Co-operative Society Membership: Bombay High Court
The High Court held that a refuge area cannot be treated as a flat or even a raw flat, and directing admission of members based on such premises would result in a violation of statutory limits under the Maharashtra Co-operative Societies Act, 1960.
The Bombay High Court has held that a refuge area cannot be equated with a flat for the grant of membership in a co-operative housing society, and that directing admission of members based on such premises would be contrary to Section 154B-5 of the Maharashtra Co-operative Societies Act, 1960, which restricts membership to the number of flats available for allotment.
The Court was hearing a writ petition under Article 226 challenging the order of the Divisional Joint Registrar directing the petitioner societies to admit certain purchasers as members on the basis of agreements for sale in respect of alleged flats.
A Single Judge Bench of Justice Firdosh P. Pooniwalla observed: “It is correct that it is not open for any Society to refuse membership on the ground that the constructions which have been carried out by the builder are illegal and the same is a matter to be determined by the Civil Court. The situation would be very much different in a case like the present one, where the flats simply do not exist, and what has been sold to Respondent Nos. 3 and 4 by Respondent No.7 is the refuge area”.
“As rightly submitted by the Petitioners, the refuge area cannot be considered as a flat or even a raw flat. In these circumstances, if the Petitioner Societies granted membership to Respondent Nos. 3 and 4, the same would be in direct violation of Section 154B-5 of the MCS Act”, the Bench added.
Advocate S. B. Shetty appeared for the appellants, while Manish Upadhye, AGP, represented the respondents.
Background
The petitioners are co-operative housing societies managing different wings of a residential complex. Respondent Nos. 3 and 4 claimed to have purchased five flats through registered agreements dated 30 April 2019, executed by the developer.
The petitioners contended that no such flats existed and that the areas in question were, in fact, refuge areas shown as open spaces in the sanctioned plans and floor layouts. It was further contended that the developer had no authority to execute such agreements, particularly after issuance of the deemed conveyance certificate, and that admitting such purchasers would violate Section 154B-5 of the Maharashtra Co-operative Societies Act, 1960.
The respondents, on the other hand, contended that the societies could not refuse membership on the ground that the construction was illegal or unauthorised, and that such issues fall within the domain of civil courts. Reliance was placed on the judgment in Videocon Appliances Ltd. v. Maker Chambers V Premises Co-operative Society Ltd. (2004), to contend that membership cannot be denied on such grounds.
Court’s Observation
The Court examined the factual position emerging from the record and noted that the floor plans annexed to agreements of other flats clearly showed the disputed areas as refuge areas and not constructed flats. It further noted that there were no constructed or even raw flats in existence at the locations claimed by the respondents. The Court observed: “the flats claimed by Respondent Nos. 3 and 4 are actually refuge areas and not flats.”
The Court also took note of the fact that at the time of formation of the societies, there were no unsold flats, as evidenced by the developer not joining as a member under Section 10 of the Maharashtra Ownership Flats Act, 1963. Further, the Court held: “the refuge area cannot be considered as a flat or even a raw flat.”
Interpreting Section 154B-5 of the Maharashtra Co-operative Societies Act, 1960, the Court emphasised that a housing society cannot admit members exceeding the number of flats available for allotment. It held that admitting the respondents as members would directly violate this statutory restriction.
“Section 154B-5 of the MCS Act provides that a housing society shall not admit to its membership persons exceeding the number of flats available for allotment in that Co-operative Housing Society. Since, as stated herein above, the flats sold by Respondent No.7 to Respondent Nos. 3 and 4 do not exist, if Respondent Nos. 3 and 4 are admitted as members of the Petitioner Societies, then that would be a direct violation of Section 154B-5 of the MCS Act as the members would exceed the number of flats available for allotment”, the Bench remarked.
Distinguishing the reliance placed on Videocon Appliances Ltd. (2004), the Court clarified that while societies cannot refuse membership on the ground of illegality of construction, that principle applies only where the premises exist and the dispute relates to the legality of construction. The Court held: “This Court would be loathe to put its imprimatur on an illegal act of this kind.”
The Court further held that the Divisional Joint Registrar had erred in directing admission of members based on non-existent flats and in relying upon the precedent in Videocon Appliances Ltd., which was inapplicable to the facts of the present case.
Conclusion
The High Court held that the petitioner societies were justified in refusing membership, as the purported flats did not exist and their admission would violate Section 154B-5 of the Maharashtra Co-operative Societies Act, 1960.
Accordingly, the Court quashed and set aside the order dated 22 July 2022 passed by the Divisional Joint Registrar and the consequential execution order dated 19 October 2022, and restored the earlier order rejecting the membership application.
Cause Title: Dheeraj Dreams Building No.1 CHS Ltd. & Ors. v. Divisional Joint Registrar, Co-operative Societies & Ors. (Neutral Citation: 2026:BHC-OS:7221)
Appearances
Petitioners: S. B. Shetty, Advocate with A. K. Menon
Respondents: Manish Upadhye, AGP, Senior Advocate Atul Damle; Chinmay Sharma, Vaishali Ugale, Advocates