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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Sandeep V. Marne, J.
Meru Heights Co-operative Housing Society Limited and ors. - Petitioners
Versus
The State of Maharashtra and ors. – Respondents
Writ Petition No. 8283 of 2022
Decided On : 05-12-2023
MCS Act - De-registration of society - Section 21A - Summary of Acts and Sections: The court discussed the provisions of Section 21A of The Maharashtra Co-operative Societies Act, 1960 (‘MCS Act’) and Section 14 of the Maharashtra Apartment Ownership Act, 1970 ('Apartment Ownership Act'). The court highlighted the right of majority apartment owners to remove the property from the provisions of the Apartment Ownership Act and the obligations of the developer under Section 10 of The Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 ('MOFA'). The judgment also emphasized the drastic nature of the power of de-registration under Section 21A and the need for a gross case of misrepresentation to exercise such power.
Fact of the Case:
The Petitioner-Society challenged the de-registration order passed by the Divisional Joint Registrar and the Minister-Cooperation. The dispute arose when Respondent Nos.5 and 6 sought de-registration of the society under Section 21A of the MCS Act, alleging misrepresentation and suppression of facts by the promoters of the society.
Finding of the Court:
The court found that the de-registration of the society was unwarranted as there was no misrepresentation, suppression, or fraud committed by the promoters of the society. The court held that the building was lawfully removed from the provisions of the Apartment Ownership Act by majority apartment owners and that the orders of de-registration were indefensible.
Issues: The main issue was whether de-registration of the Petitioner-Society was warranted under Section 21A of the MCS Act. The court also considered the necessity of issuing notice to the developer before registering the society and the alleged misrepresentation and suppression of facts by the promoters.
Ratio Decidendi: The court held that the de-registration of the society was not justified as there was no misrepresentation or fraud committed by the promoters. The court emphasized the right of majority apartment owners to remove the property from the provisions of the Apartment Ownership Act and the obligations of the developer under Section 10 of MOFA. The court also highlighted the drastic nature of the power of de-registration under Section 21A and the need for a gross case of misrepresentation to exercise such power.
Final Decision: The court set aside the orders of de-registration and ruled in favor of the Petitioner-Society. The request for stay to the order was rejected.
Certainly. Based on the provided legal document, here are the key legal points:
The power of de-registration of a society under Section 21A of the MCS Act is a drastic measure that should only be exercised in cases involving a gross misrepresentation or fraud by the promoters or members of the society. Minor irregularities or discrepancies do not justify such an action (!) (!) .
The de-registration process requires the Registrar to record a clear satisfaction that the society was registered on misrepresentation, and such misrepresentation must be substantial enough to warrant the drastic step of de-registration (!) (!) .
The failure to issue notice to the developer or promoter before registration of the society does not, in itself, constitute misrepresentation or fraud, especially when the relevant provisions do not mandate such notice. The right of majority apartment owners to remove the property from the provisions of the Apartment Ownership Act is lawful and does not necessitate prior notice to the developer (!) (!) .
The amendments to the relevant statutes, particularly the provisions allowing majority of apartment owners to remove a property from the provisions of the Apartment Ownership Act, have created a lawful right for such removal, which can be exercised without the developer's prior hearing or notice (!) (!) .
The registration of a cooperative society after such removal is permissible, provided the process adheres to the statutory requirements and is not tainted by fraud or misrepresentation. Payment of stamp duty and the manner of resolution adoption are not, by themselves, indicative of fraud (!) (!) (!) (!) (!) .
The exercise of the right to remove the property from the provisions of the Apartment Ownership Act and to form a cooperative society is valid when done by majority resolution, especially after the property has been lawfully removed from the Act's scope. The existence of prior litigation or judgments does not bar subsequent lawful actions by the flat owners (!) (!) .
Minor discrepancies or procedural irregularities in the registration process, such as minor document deficiencies or the timing of stamp duty payment, do not amount to misrepresentation or fraud. The order of registration, especially when promptly issued, is not necessarily illegal or fraudulent (!) (!) (!) .
The order of de-registration, when based on a misinterpretation of the law or on minor irregularities, is liable to be set aside. The courts emphasize that de-registration should only occur in clear cases of misrepresentation or fraud, and not on technical or procedural grounds (!) (!) .
The right of flat owners to form or reform their society, especially after lawful removal from the provisions of the Apartment Ownership Act, is protected, and actions taken in exercise of this right are lawful unless proven to be fraudulent (!) (!) .
The process of passing resolutions, executing instruments, and registering societies, when done in accordance with the law and without evidence of fraud, is valid. The court found that the actions of the majority in adopting resolutions and registering the society were lawful and not fraudulent (!) (!) (!) .
In summary, the judgment underscores that the power of de-registration under Section 21A is extraordinary and should only be exercised in cases of gross misrepresentation or fraud. The rights of majority apartment owners to remove their property from certain statutory provisions are recognized and protected, and procedural irregularities or minor discrepancies do not automatically invalidate such actions or the subsequent registration of cooperative societies.
JUDGMENT :
1. Rule. Rule is made returnable forthwith. With the consent of the learned counsel for parties, Petition is taken up for hearing.
2. By this Petition, Petitioner–Society challenges Order dated 27/12/2021 passed by the Divisional Joint Registrar, de-registering the Society under the provisions of Section 21A of The Maharashtra Co-operative Societies Act, 1960 (‘MCS Act’) as well as the Order dated 21/06/2022 passed by the Minister–Cooperation rejecting Petitioner’s appeal.
3. Briefly stated, facts of the case are that Respondent Nos.5 and 6 are the developers/promoters in respect of the building named Meru Heights. Completion Certificate in respect of the building was issued by the Municipal Corporation on 08/11/2011. Respondent Nos.5 and 6 instituted agreements for sale of flats in the building with Petitioners who are flat purchasers. Respondent Nos.5 and 6 executed and registered a Deed of Declaration dated 30/11/2006 under the provisions of the Maharashtra Apartment Ownership Act, 1970 (‘Apartment Ownership Act’). A Supplementary Deed of Declaration was executed on 14/05/2009 thereby framing bye-laws for the Condominium. Some of the flat purchasers desired to form a cooperative society and were apparently aggrieved by subjecting the building to the provisions of Apartment Ownership Act. Nine flat purchasers accordingly instituted Suit No.2617/2010 before the City Civil Court. Seven out of the 9 Plaintiffs got themselves deleted from the Suit which was pursued only by 2 members Mr. Kaushal A. Thakkar and Mr. Bakul U. Shah. The City Civil Court dismissed the Suit by Judgment and Decree dated 16/03/2016 holding that the Plaintiffs therein were not entitled to form a society and that the Defendant’s act of submitting the suit property to the provisions of the Apartment Ownership Act was valid.
4. Consequent to the amendment of the provisions of Section 14 of the Apartment Ownership Act, the Petitioners were advised that they could adopt a resolution by majority for removal of the building from the provisions of Apartment Ownership Act. Accordingly, the members convened a meeting on 25/01/2021 and adopted a resolution both for removal of the property from operation of provisions of the Apartment Ownership Act as well as for formation and registration of a cooperative housing society. Accordingly, an Instrument to Remove the Property from the Provisions of the Apartment Ownership Act was executed and registered on 25/01/2021. The members filed an application before the Deputy Registrar for registration of the society on 28/01/2021 and Petitioner–society came to be registered under the provisions of Section 9(1) of the MCS Act vide Certificate dated 28/01/2021.
5. Aggrieved by registration of Petitioner–society, Respondent Nos. 5 and 6 filed an application seeking de-registration of the society under the provisions of Section 21A of the MCS Act before the Divisional Joint Registrar, Co-operative Societies, Mumbai. By order dated 27/12/2021, the Divisional Joint Registrar allowed the application filed by Respondent Nos.5 and 6 and directed de-registration of Petitioner– society by setting aside registration certificate dated 28/01/2021. Aggrieved by the decision of the Divisional Joint Registrar, Petitioner– society filed Revision Application before the Minister–Cooperation. By order dated 21/06/2022, the Minister–cooperation, has rejected the Revision filed by the Petitioner–society. Aggrieved by the orders dated 27/12/2021 passed by the Divisional Joint Registrar and 21/06/2022 of the Minister–Cooperation, Petitioner–society has filed the present Petition.
6. Mr. Anturkar, the learned Senior Advocate appearing for the Petitioner – society would submit that the application filed by Respondent Nos. 5 and 6 seeking de-registration did not come within the purview of Section 21A of the MCS Act. He would submit that there was no misrepresentation on the part of promoter members in seeking registration of the society and therefore
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The pendency of a title suit cannot impede the issuance of a deemed conveyance under Section 11 of MOFA or justify the deregistration of a cooperative society under Section 21A of the MCS Act.
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