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2018 Supreme(Bom) 267
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
A.A. SAYED, MANISH PITALE, JJ.
Sarita Nagari Phase – 2 Co-operative Housing Society Ltd. & Others – Petitioners
Versus
The State of Maharashtra, through The Minister for Co-operation & Others – Respondents
Writ Petition Nos. 798 of 2005 & 414 of 2005
Decided On : 01-03-2018
For the Petitioner:Uday Warunjikar i/b D.G. Rangras, Tejas D. Deshmukh, Advocates.
For the Respondent:K.R. Kulkarni, Girish S. Godbole, a/w Drupad Patil, Advocates.
Headnote:
Maharashtra Apartment Ownership Act, 1970 - Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 - Section 10(2) - Maharashtra Cooperative Societies Act, 1960 - Whether members (flat owners) of two Petitioners – Societies had a right to form Co-operative Housing Societies - Original authority Registrar of Cooperative Societies allowed applications of Petitioners and granted registration as Cooperative Societies notwithstanding the said declaration by the Developer and Owner of land. But, on an appeal filed by the Respondent – Developer appellate authority Divisional Jt - Registrar of Cooperative Societies Division reversed order of original authority and cancelled registration of Petitioner Societies holding that once a declaration was executed and registered under Section 10(2) of MOFA Act members (flat owners) of Petitioner Societies were prohibited by law from forming cooperative societies - Petitioners filed revision applications before Revision Authority Minister for Cooperation which were dismissed essentially on same reasoning as given by appellate authority - These orders are subject matter of challenge in two writ petitions before us – Held, Hon’ble Supreme Court in case of Gujarat Cooperative Milk Marketing Federation Ltd - SCC has noted that a Cooperative is an autonomous association of persons united voluntarily to meet their common economic social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise and that Cooperatives are based on values of self help self responsibility democracy equality equity and solidarity - Formation of Cooperative Society by flat purchasers is intended to ensure that they are able to take care of their own welfare and that they are not defendant on Respondent Developer - This cannot be permitted to be scuttled by hurriedly executed declaration by developer particularly when agreements entered into by developer with flat purchasers specifically provided for formation of Cooperative Society – order Accordingly
The legal dispute primarily concerns whether flat owners of two societies had the right to form cooperative housing societies under the relevant Maharashtra laws, or if their efforts were legally barred due to prior declarations executed by the landowner and developer under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act (MOFA Act) and the Maharashtra Apartment Ownership Act (Apartment Act).
Key points include: - The original authority had granted registration of the societies as cooperative entities, recognizing the flat purchasers’ intent to form such societies (!) (!) . - The appellate and revisional authorities reversed this decision, relying on the execution and registration of a declaration under Section 10(2) of MOFA, which prohibits the formation of cooperative societies once such a declaration has been executed and registered (!) (!) . - The courts examined whether the declaration executed by the developer and landowner complied with the provisions of the Apartment Act, which requires specific disclosures and formalities for such declarations (!) (!) . - It was held that the declaration was hurriedly executed and did not fully comply with the statutory requirements, especially regarding the disclosure of common areas and the terms of lease, thus invalidating its effect to prohibit the formation of cooperative societies (!) (!) . - The court emphasized that the flat purchasers had entered into agreements with the developer, which explicitly promised the formation of a cooperative society, and a large majority of flat owners were members of the societies for over 17 years (!) (!) . - The orders cancelling the societies' registration were found to be based on an incorrect application of the law, particularly by relying solely on the declaration under Section 10(2) of MOFA, without considering the substantive compliance issues and the rights of the flat owners under the relevant laws and constitutional provisions (!) (!) . - The court also noted that the recent constitutional amendments and legal principles favor the protection and encouragement of cooperative societies, especially when the majority of flat owners have chosen and established such societies (!) (!) . - Consequently, the court set aside the appellate and revisional orders, restored the registration of the societies, and declared that the earlier cancellation orders were unsustainable, affirming the legal right of the flat owners to form and operate cooperative housing societies (!) .
In summary, the legal reasoning underscores that a declaration executed without full compliance with the statutory requirements cannot be used to bar the formation of cooperative societies, especially when the flat owners have relied on agreements and representations that promised such formation. The protections under constitutional and cooperative laws favor the flat owners' right to self-organize into cooperative societies, overriding the earlier legal prohibitions based solely on the executed declaration.
Manish Pitale, J.
1. The question that arises for consideration in these two writ petitions is, as to whether members (flat owners) of the two Petitioners – Societies had a right to form Co-operative Housing Societies under the provisions of the Maharashtra Cooperative Societies Act, 1960 (hereinafter referred to as the “MCS Act”) or that formation of such societies stood prohibited by law when the Respondent – Developer, along with the owner of the land, executed and registered a declaration under Section 10(2) of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (hereinafter referred to as the “MOFA Act”) submitting the property to the provisions of the Maharashtra Apartment Ownership Act, 1970 (hereinafter referred to as the “Apartment Act”).
2. The original authority i.e. the Dy. Registrar of Cooperative Societies, Pune, allowed the applications of the Petitioners and granted registration as Cooperative Societies, notwithstanding the said declaration by the Developer and Owner of land. But, on an appeal filed by the Respondent – Developer, the appellate authority, Divisional Jt. Registrar of Cooperative Societies, Pune Division, reversed the order of the original authority and cancelled the registration of Petitioner Societies, holding that once a declaration was executed and registered under Section 10(2) of the MOFA Act, the members (flat owners) of the Petitioner Societies were prohibited by law from forming cooperative societies. The Petitioners filed revision applications before the Revisional Authority, Minister for Cooperation, which were dismissed, essentially on the same reasoning as given by the appellate authority. These orders are subject matter of challenge in the two writ petitions before us. The facts necessary for appreciating the controversy and the contentions of the parties are as follows.
3. The land in question in the present case is Final Plot No. 544 in village Parvati, Pune. This plot includes Survey Nos. 119/1 to 119/4 and in the present case, the piece of land with which we are concerned, is old Survey No. 119/1. The owner of the land submitted an application for exemption under Section 20 of the Urban Land (Ceiling and Regulation) Act, 1976, before the competent authority in respect of surplus land in the said plot. The owner proposed scheme of development on the said land that would be governed by the MOFA Act and MCS Act. On 23.10.1989, the competent authority passed an exemption order in favour of the owner of the said land, recording that the scheme would be governed by provisions of the MOFA Act and Government Resolution dated 22.8.1986.
4. On 8.3.1990, the land owner entered into an agreement with the Respondent Developer (Respondent No. 3 in Writ Petition No. 414 of 2005 and Respondent No. 4 in Writ Petition No. 798 of 2005). On 2.11.1996, the land owner executed an irrevocable power of attorney in favour of the Respondent Developer for construction and sale of flats on the said land. Clauses 13 and 21 of the said document refer to formation of Society under the MCS Act. Accordingly, the Respondent Developer constructed flats on the said land, which were purchased by members of the Petitioner Societies. Each purchaser entered into an agreement of sale with the Respondent Developer, wherein the land owner was a consenting party. The Respondent Developer handed over possession of flats to respective purchasers after obtaining occupancy certificate from the Municipal Corporation.
5. On 25.11.1999, some flat purchasers (members of Petitioner Society in Writ Petition No. 798 of 2005) held a meeting wherein it was resolved that the Respondent Developer be asked to form cooperative society of flat purchasers and necessary steps be taken within one month in that regard. In this meeting, representative of the Developer was also present, thereby showing that on this date itself, the Developer was made aware of the intention of
