Safiya Malik

High Court of Judicature at Bombay has upheld the removal of members from the managing committee of a cooperative housing society due to the absence of approval from the Maharashtra Housing and Area Development Authority (MHADA). The case involved a dispute over society membership and the eligibility of committee members to oversee the affairs of a redeveloped residential building.

The dispute arose from the redevelopment of a residential building originally constructed on a plot allotted by MHADA. The land was initially leased to an individual in 1962 and later transferred to a registered cooperative housing society. The society subsequently entered into a development agreement with a private builder for the construction of a new multi-story building.

According to the petitioners, their membership was validly obtained through transfers from original members, and they had actively participated in the management of the society for several years. They argued that their membership had been formally recognized by the Deputy Registrar of Cooperative Societies in 2018 and that they were duly elected to the managing committee.

The respondents, including certain flat owners and other stakeholders, challenged the petitioners' eligibility, contending that they had not received MHADA’s requisite approval before their election. They asserted that under the Maharashtra Cooperative Societies Act, 1960 (MCS Act), only those individuals who owned or occupied flats in the society’s building with MHADA’s explicit sanction could be considered bona fide members. The respondents further claimed that the petitioners, despite their election to the managing committee, did not possess any ownership rights over any flats within the society and were effectively controlling the society’s affairs without legal standing.

The Deputy Registrar of Cooperative Societies, upon reviewing the matter, initiated proceedings under Section 78A of the MCS Act. This section empowers the Registrar to remove committee members if they are found to be acting against the interests of the society. Following a review of the society’s records and relevant approvals, the Deputy Registrar issued an order on January 13, 2023, removing the petitioners from the managing committee and barring them from contesting elections for another term.

The petitioners challenged this order before the Divisional Joint Registrar, arguing that their removal was unlawful as they had been serving in their positions for years without any prior objections to their membership. They contended that the Deputy Registrar had acted beyond his jurisdiction by questioning the validity of their membership instead of focusing solely on their actions as committee members. However, the Divisional Joint Registrar upheld the decision, stating that the absence of MHADA approval at the time of their election was a fundamental deficiency that invalidated their positions.

Subsequently, the petitioners approached the Hon’ble Minister for Cooperation, seeking a revision of the order. The Minister upheld the prior decisions, maintaining that the lack of MHADA approval disqualified the petitioners from serving on the managing committee. This led to the present writ petitions before the Bombay High Court.

The High Court examined the legal framework governing cooperative societies and their membership eligibility. The court considered Section 78A of the MCS Act, which provides for the removal of committee members who act against the interests of the society. The court stated that the Deputy Registrar, in his January 13, 2023 order, had based the removal on the lack of MHADA approval, which was a prerequisite for society membership under relevant laws and regulations.

The court examined the model bye-laws applicable to cooperative housing societies, which establish that membership eligibility is contingent upon MHADA’s formal approval. It noted that MHADA’s role is crucial in regulating housing societies built on government-allotted land. The court observed that the petitioners had not produced any documentary evidence to establish that they had obtained the necessary approval before or at the time of their election.

The court also examined the argument that the Deputy Registrar had improperly reviewed the validity of membership instead of focusing on the petitioners’ conduct as committee members. It referred to previous rulings, including Sharadchandra T. Rane and Others v. Suresh Khedkar and Others, to conclude that committee members must meet all statutory requirements for eligibility, including membership approval from the relevant authority.

The court further addressed concerns regarding conflicts of interest. It noted allegations that one of the petitioners, Parvath Shetty, had a significant financial stake in the redevelopment project while simultaneously serving on the managing committee. The court stated that cooperative housing societies are expected to function transparently and in the best interests of their members. Allowing individuals with potential conflicts of interest to manage society affairs without legal standing would undermine governance principles.

The court also considered whether the petitioners had been denied due process. The petitioners had claimed that they were not properly notified before their removal. However, the court found that the Deputy Registrar had issued notices, provided an opportunity for representation, and followed the necessary procedural requirements before issuing the removal order.

Additionally, the court referred to its previous rulings that held that mere entry in a society’s membership register does not confer automatic legitimacy if other statutory requirements are not met. It reiterated that housing societies exist to protect the rights of legitimate flat owners and allottees, and individuals who do not meet these criteria cannot exercise control over society affairs.

The High Court upheld the removal of the petitioners from the managing committee, affirming the decisions of the Deputy Registrar, Divisional Joint Registrar, and the Hon’ble Minister. The court observed that the lack of MHADA approval at the time of their election was a substantive defect that could not be overlooked.

The court further directed those fresh elections be conducted for the managing committee, ensuring that only members with MHADA approval could contest. It stated that the election process must comply with all legal requirements to avoid future disputes over membership eligibility.

Case Title: Parvath Shetty & Others v. State of Maharashtra & Others

Case Number: WP No. 5312 of 2024 & WP No. 5111 of 2024

Bench: Justice Sandeep V. Marne

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