The Bombay High Court recently dismissed a writ petition challenging the registration of a cooperative housing society in Vashi, Navi Mumbai. The case involved a complex interplay of agreements, allotments, and the interpretation of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Manager and Transfer) Act, 1963 (MOFA).

The petitioner, a company that had leased the land and entered into a development agreement with a builder (respondent No. 3), challenged the registration of the society (respondent No. 1) formed by flat purchasers. The petitioner argued that the society's registration was invalid due to insufficient representation of unit holders and irregularities in the membership composition. They contended that they, owning a substantial number of units, should be counted as multiple members, and that a large number of allottees should be recognized as members.

The court examined the intricate details of the development agreement, allotment letters, and the relevant provisions of MOFA. A key issue was the status of the petitioner as a "promoter" under MOFA, and the legal standing of the allottees who had received units from the petitioner.

The court clarified the definition of "promoter" under MOFA, stating that it includes anyone who "causes to be constructed" a building, regardless of direct involvement in construction. Therefore, the petitioner, having facilitated the construction through the development agreement, was deemed a promoter under MOFA.

The court then addressed the crucial issue of who qualifies as having "taken flats" under Section 10(1) of MOFA, which governs the formation of cooperative societies. It distinguished between mere licensees and those with a "jus ad rem" – a right to a thing – acquired through a legally enforceable agreement to sell. The court emphasized that registered agreements to sell, as per Section 4 of MOFA, confer this "jus ad rem," giving purchasers a legally protected interest in the property. Upon reviewing the allotment letters issued by the petitioner, the court found they did not grant a "jus ad rem" but only a license to occupy, as they lacked the characteristics of agreements to sell. Therefore, these allottees could not be counted as members for the purpose of society registration.

Regarding the petitioner's claim to be counted as multiple members, the court held that as a promoter under MOFA, the petitioner should be counted as a single member for the purpose of registration, regardless of the number of units they own. This interpretation aligns with MOFA's intent to ensure promoter participation in the society's initial stages.

The court concluded that the 59 unit holders with valid agreements to sell, along with the petitioner as a single member, fulfilled the minimum membership requirement for society registration under MOFA and the Maharashtra Cooperative Societies Act. It upheld the registration of the society, finding no legal infirmity in the impugned order. The court’s decision clarifies the criteria for membership in a cooperative society under MOFA and reinforces the distinction between licensees and those with a legally enforceable right to purchase a flat.

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