09 May 2025 Civil Writ Petition >> Civil & Consumer Law   |   Property Law >> Personal Law  

The Bombay High Court, in a recent judgment, has set aside an order by the Divisional Joint Registrar, Cooperative Societies, that deregistered the Neelkanth Heights Cooperative Housing Societies Association. The Court emphasized that statutory rights of flat purchasers to form cooperative societies and associations cannot be overridden by contractual clauses or the developer's objections.

Background of the Dispute:

The petitioners, several cooperative housing societies, formed the Neelkanth Heights Cooperative Housing Societies Association Limited on April 1, 2022, after the developer (respondent No. 3) failed to constitute an apex body despite substantial completion of the housing project. The project, "Neelkanth Heights," was developed in phases, with occupancy certificates issued between 2004-2005 and 2011, and individual societies registered in 2006 and 2011.

The association sought deemed conveyance of leasehold rights under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA), as the developer had not executed the conveyance deed. In response, the developer filed an application for deregistration of the association, alleging premature registration without consent and misrepresentation. The Divisional Joint Registrar (respondent No. 1) subsequently deregistered the association on February 28, 2025.

Key Arguments and Court's Analysis:

• Maintainability of Writ Petition: The High Court addressed the preliminary objection regarding the availability of an alternative statutory remedy. Citing Maharashtra Chess Association v. Union of India (2020) , the Court reaffirmed that writ jurisdiction under Article 226 is discretionary and not strictly barred by an alternative remedy, especially when issues of statutory rights, serious injustice, or bad faith are involved. The Court found it necessary to entertain the petition due to the "palpable injustice" and allegations of official record tampering.
• Deregistration under Section 21A of MCS Act: The Court clarified that Section 21A of the Maharashtra Cooperative Societies Act, 1960 (MCS Act), allows for deregistration primarily when registration is obtained by "misrepresentation" or "fraud," or when the society has outlived its purpose. It is a punitive measure and not a substitute for appellate or revisional powers. Fraud must involve deliberate deception, suppression of material facts, or presentation of forged documents, and must be proven with cogent evidence. The Court emphasized that for deregistration based on misrepresentation, it must be shown that "but for the deceit, the society would not have been registered at all".
• Developer's Consent and Contractual Clauses: The Court held that the formation of a cooperative housing association under Section 154B-8(1) of the MCS Act is a statutory right of societies within a layout to manage common facilities and does not require the developer's consent or permission. Contractual clauses in flat purchase agreements, such as those stipulating an umbrella society's formation only after the entire project's completion, cannot override statutory mandates designed to protect flat purchasers. The Court cited Lok Housing and Constructions Ltd. Vs Lok Everest Cooperative Housing Society Ltd. (2025) and Flagship Infrastructure Ltd. Vs The Competent Authority (2025), which held that any contractual clause postponing conveyance beyond the statutory period is void.
• Distinguishing Precedents: The Court distinguished Waghamay Mahila Machchimar Sahakari Sanstha Maryadit v. Commissioner of Fisheries (2020), which the developer relied upon. The Court applied the "inversion test" from State of Gujarat vs. Utility Users Welfare Association (2018) , concluding that the proposition in Waghamay Mahila regarding "incorrect information" was an obiter observation and not the ratio decidendi, as the deregistration in that case was based on proven fraud and fabrication of documents, unlike the present case where the sole ground was the alleged failure to furnish the Section 4 MOFA agreement. Similarly, Lodha Belmondo Housing Federation Ltd. v. State of Maharashtra & Ors. was distinguished as the societies in the present case had been functioning for over a decade.

Conclusion: 

The High Court found that the Registrar's order of deregistration was based on a "wrong understanding of the law" and a "fundamental error". There was no evidence of fraud or misrepresentation by the petitioners. The Court emphasized that laws like MOFA and MCS Act are meant to protect flat purchasers and ensure collective ownership, not to be misused by developers through "legal technicalities". Therefore, the impugned deregistration order was set aside.

  Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963