Mumbai, March 30: In a ruling that underscores the limits of a housing society’s obligation to admit new members, the Bombay High Court has held that membership can be denied where the very “flats” claimed by purchasers do not exist and are, in fact, designated refuge areas.
Case background and petitions
The high court passed the order while hearing petitions filed by multiple co-operative housing societies in Bhandup – Dheeraj Dreams Building No. 1, 3, 4A and 4B CHS Ltd – challenging orders of the Divisional Joint Registrar.
These orders had directed the societies to admit certain purchasers as members based on agreements for sale executed in 2019. The purchasers claimed to have bought five flats from the developer, Housing Development & Improvement India Ltd. However, the societies argued that the areas sold were actually refuge spaces, where no flats had been constructed.
Court findings on refuge areas
The court, after reviewing the records, including floor plans annexed to agreements of existing flats, found that the disputed areas were consistently shown as refuge areas. It also noted that municipal authorities had treated these spaces as refuge zones and had not levied property tax on them, indicating that no residential units existed at those locations.
“The flats claimed… are actually refuge areas and not flats,” Justice Firdosh Pooniwalla observed. The judge further clarified that “the refuge area cannot be considered as a flat or even a raw flat.”
Developer’s role and legal validity
The Court also noted that when the societies were formed, there were no unsold flats. This was evident from the fact that the developer had not taken membership in respect of any remaining units.
Further, after the grant of deemed conveyance in 2017, the developer had no authority to enter into fresh agreements for sale. Any such agreements executed thereafter were held to be illegal and not binding on the societies.
Legal provisions and membership limits
A key issue in the case was Section 154B-5 of the Maharashtra Co-operative Societies Act, which prohibits societies from admitting members beyond the number of flats available for allotment.
The Court held that since the flats in question did not exist, admitting the purchasers would lead to membership exceeding the permissible limit.
“If the societies granted membership… the same would be in direct violation of Section 154B-5,” the Court said, adding that it would be “loathe to put its imprimatur on an illegal act of this kind.”
Distinction from earlier rulings
The Court also distinguished earlier judgments which say that societies cannot refuse membership on the ground of illegal construction. It clarified that such principles would not apply in cases where the subject property itself does not exist.
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Final ruling
Accordingly, the High Court quashed the orders of the Registrar directing admission of the purchasers, set aside the related execution proceedings, and restored the earlier order rejecting their membership applications.
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