Bombay High Court Sets Aside Disqualification of Society Committee Members, Holds Redevelopment Guidelines Directory

Mumbai: The Bombay High Court, in a significant ruling, has quashed orders passed by the Deputy Registrar of Cooperative Societies that disqualified the managing committee members of a housing society for alleged non-compliance with redevelopment guidelines and subsequently appointed an Administrator. The court emphasized that government resolutions issued under Section 79A of the Maharashtra Cooperative Societies Act, 1960, pertaining to redevelopment, are directory and not mandatory, and that non-compliance with such guidelines does not automatically warrant disqualification under Section 79A(3) of the Act.

Justice Amit Borkar delivered the judgment in a writ petition filed by Harish Arora and others, who were members of the managing committee of Bandra Trishul Premises Cooperative Housing Society Limited. The petitioners challenged three orders: the disqualification order dated February 11, 2025, under Section 79A(3) for a period of six years; the consequential order dated February 20, 2025, appointing an Administrator under Section 77A; and an interim status quo order from the Divisional Joint Registrar in revision proceedings.

Case Background

The dispute arose from the redevelopment process initiated by the society. After a newly elected committee, including the petitioners, took charge in September 2024, they continued the redevelopment process, shortlisting developers through special general body meetings in October 2024. Complaints were subsequently filed with the Deputy Registrar, alleging irregularities in the process and violation of the Government Resolution dated July 4, 2019, issued under Section 79A(1) of the MCS Act, which provides guidelines for redevelopment.

Following an inquiry, the Deputy Registrar disqualified the petitioners, citing violations of these guidelines. This led to the appointment of an Administrator. The petitioners challenged these actions in the High Court, arguing procedural irregularities, violation of natural justice, and an incorrect interpretation of the law.

Arguments Presented

The petitioners contended that the disqualification order was passed without issuing notices or providing a hearing to all affected members, specifically petitioners 1 to 3. They also argued that the appointment of the Administrator under Section 77A was done without the mandatory publication of notice to the society members. Crucially, they submitted that the 2019 Government Resolution was merely directory, not mandatory, and its non-compliance could not lead to disqualification, citing previous Bombay High Court judgments in Maya Developers and Kamgar Swa Sadan CHSL . They highlighted the failure of the Deputy Registrar to follow these binding precedents and the statutory requirement of consulting the federal society before imposing disqualification under Section 79A(3).

Conversely, the respondents, including the Deputy Registrar and contesting society members, argued that the writ petition was not maintainable due to the availability of an alternative statutory remedy (revision under Section 154, which was already pending). They defended the Deputy Registrar's orders, stating they were justified due to procedural lapses and lack of transparency in the redevelopment process. They also contested the petitioners' claim that the Vilas Vishnu Jadhav judgment (which held the 2019 GR directory) was brought to the Deputy Registrar's notice.

High Court's Analysis and Findings

Justice Borkar first addressed the maintainability of the writ petition, acknowledging the general rule of exhausting alternative remedies but noting well-established exceptions, including violations of natural justice, orders passed without jurisdiction, or cases where binding precedents are ignored. The court found that the case fell under these exceptions, particularly the alleged breach of natural justice (lack of notice/hearing for some petitioners and for the S. 77A order) and the Deputy Registrar's failure to follow binding High Court judgments.

The court then critically examined Section 79A and the nature of the 2019 Government Resolution. Relying on its previous judgments in Maya Developers , Kamgar Swa Sadan CHSL , and Vilas Vishnu Jadhav , the court firmly reiterated that Government Resolutions issued under Section 79A(1), including the 2019 redevelopment guidelines, are directory in nature. The court emphasized that these guidelines are intended to ensure transparency and fairness but do not prescribe automatic penal consequences for non-compliance. Disqualification under Section 79A(3) requires a finding that a specific person responsible for complying with a direction failed without good reason, and the direction must be mandatory.

The court found that the Deputy Registrar had failed to follow binding precedents holding the 2019 GR directory, which amounted to "legal perversity". It held that non-compliance with directory provisions, even if proven, cannot be the sole basis for disqualification under Section 79A(3), especially when the decision was based on a General Body resolution.

Furthermore, the court found a clear violation of natural justice in the disqualification process, as petitioner Nos. 1 to 3 were not issued show-cause notices or given an opportunity to be heard. The court also held that the order appointing the Administrator under Section 77A was procedurally flawed as it was passed without the mandatory publication of notice to the society members, and no sufficient justification for dispensing with notice was provided.

The court also observed that the Deputy Registrar's actions, by first disqualifying the committee under Section 79A(3) and immediately appointing an Administrator under Section 77A, amounted to a "colourable exercise of power" aimed at achieving the supersession of an elected body without following the stricter procedures and safeguards mandated under Section 78 or 78A of the Act.

Conclusion and Directions

In conclusion, the High Court held that the impugned orders suffered from serious legal and procedural infirmities, including violation of binding precedents, breach of natural justice, and colourable exercise of power.

The court passed the following directions:

The impugned order dated February 11, 2025 (disqualification) and the order dated February 20, 2025 (Administrator appointment) are quashed and set aside.

The Principal Secretary (Co-operation), Government of Maharashtra, is directed to appoint a senior officer to conduct a comprehensive inquiry into the role and conduct of respondent No. 1 (Deputy Registrar) in the matter, considering his disregard for binding precedents and breach of natural justice.

The inquiry shall be completed within eight weeks, and a compliance report filed before the court.

The writ petition is to be placed for compliance and further directions on August 25, 2025.

The court rejected the Assistant Government Pleader's request to stay the operation of the judgment, emphasizing the reasons assigned for its decision. The ruling reinforces the importance of procedural fairness and adherence to judicial precedents by statutory authorities in matters affecting the democratic functioning of cooperative societies.