Registrar Circulars on Co-operative Society Membership Valid Under Maharashtra Co-operative Societies Act: Bombay High Court - 2025-03-06

Bombay High Court Upholds Registrar's Power to Set Higher Membership Threshold for Co-operative Housing Societies

Mumbai, Maharashtra – The Bombay High Court has ruled in a recent judgment that circulars issued by the Registrar of Co-operative Societies, prescribing a higher number of members than the statutory minimum for registering a co-operative society, are lawful and binding under the Maharashtra Co-operative Societies Act, 1960 (MCS Act). Justice Sandeep V. Marne presided over the case, Prakash Raghunath Saave v. The State of Maharashtra & Ors. , dismissing a writ petition challenging the de-registration of a housing society.

Case Background and Key Issues

The petitioner, Prakash Raghunath Saave, promoter of the deregistered Harmony Plaza Premises Co-operative Society, challenged orders that upheld the de-registration of the society. The de-registration was initiated by M/s. Jainam Builders, the developer (Respondent No. 4), on the grounds that the society's registration was improperly obtained as it did not meet the required minimum percentage of flat purchasers as per existing circulars.

The central legal questions before the court were:

1. Is it legal for the Registrar to mandate, via circular, a higher number of signatories for a co-operative society registration application than the ten persons stipulated in Section 6(1) of the MCS Act?
2. If affirmative, should the prescribed percentage be based on total sanctioned/completed flats or only on flats sold at the time of application?

Arguments Presented

Petitioner’s Arguments:

Represented by Mr. Sarthak S. Diwan, the petitioner argued that:

• Section 6 of the MCS Act only requires ten persons for society registration.
• Circulars prescribing a higher percentage (like 51% or 60%) are administrative overreach and cannot override the statute, citing Janabai Shripat Patil & Ors. V/s. The Hon’ble Minister for Co-operation and Ors. and Padmavati Construction Co. & Ors. V/s. State of Maharashtra and anr.
• Even if circulars apply, the percentage should be calculated on sold flats, not total sanctioned flats, referencing Mukesh Makandas Mehta Vs. The State of Maharashtra . In this case, all 83 shop purchasers had applied, representing 100% of sold units.

Respondent’s Arguments:

Mr. Rohan Savant, representing the developer, countered that:

• Section 6(1) of the MCS Act, as amended in 1986, explicitly empowers the Registrar to set a higher membership threshold.
• Circulars dated 29 November 2010 and 23 March 2016, setting 60% and 51% respectively, are valid exercises of this power, relying on Anil Jadwani and Ors. V/s. The State of Maharashtra and Ors.
• Judgments cited by the petitioner were either per incuriam or made stray observations without considering the amended Section 6(1).
• The circulars are statutory, and with 198 total units, 83 signatories were insufficient. Section 154B-2 of the MCS Act, though enacted later, reinforces the 51% requirement.

Court's Analysis and Rationale

Justice Marne meticulously analyzed Section 6(1) of the MCS Act, highlighting the 1986 amendment that granted the Registrar authority to determine a higher number of persons for society registration. The court distinguished the precedent cases cited by the petitioner:

• Padmavati Construction Co. (supra) & Janabai Shripat Patil (supra): The court found these judgments made passing observations about administrative circulars without fully considering the Registrar's powers under the amended Section 6(1). Justice Marne noted these were per incuriam to the extent they contradicted the statutory empowerment of the Registrar and did not consider the Division Bench ruling in Anil Jadwani .
• Anil Jadwani (supra): This Division Bench judgment was pivotal, recognizing the Registrar's jurisdiction to issue circulars prescribing higher membership requirements under Section 6(1).
• Mukesh Makandas Mehta (supra): The court clarified that this judgment was specific to the interpretation of Section 154B-2 (enacted post-registration in this case) and not directly applicable to circulars issued under Section 6(1).

The court emphasized that the Registrar's circulars were not mere administrative directives but were exercises of statutory power conferred by Section 6(1) of the MCS Act. Justice Marne underscored the purpose of the 1986 amendment:

> "Thus, under Section 6(1) of the MCS Act, the minimum number of persons required for formation and registration of a cooperative society (other than a federal society) is 10. However, sub-section (1) of Section 6 of MCS Act has been amended by Mah. Act 20 of 1986, under which the Registrar has been conferred with power to prescribe higher number of persons for formation and registration of the Society having regard to the objects and economical viability of the society and development of the cooperative movement for each class of societies. Thus upto 1986, any co-operative society could be registered with 10 members applying for such registration. However, after the amendment of 1986, it is lawful for the Registrar to prescribe higher number of persons required for the registration of the Society for different classes of societies."

Regarding the application of the 51% rule, the court clarified that it applies to the total number of flats constructed or completed as per the sanctioned plans, aligning with the circular's intent.

Final Verdict and Implications

Ultimately, the Bombay High Court dismissed the writ petition, upholding the de-registration of the Harmony Plaza Premises Co-operative Society. The court reasoned that with 174 sanctioned units, at least 89 flat purchasers (51%) were required for registration, whereas only 83 had applied.

The judgment reinforces the validity and enforceability of Registrar's circulars that set higher membership thresholds for co-operative housing societies. It clarifies that these circulars are rooted in statutory authority and are not mere administrative guidelines. The ruling underscores the importance of adhering to these prescribed percentages for valid co-operative society registration in Maharashtra. The court however allowed the unit purchasers to submit a fresh application for registration if they could meet the 51% requirement based on the total sanctioned units.

[ Sandeep V. Marne , J.] Bombay High Court Date of Judgment: March 4, 2025