‘Astronomical’ and ‘arbitrary’: HC strikes down ₹15.45L penalty on housing society member for keeping bicycle on staircase

MUMBAI: The Bombay High Court has struck down a ₹15

MUMBAI: The Bombay High Court has struck down a ₹15.45 lakh penalty imposed by a Mumbai cooperative housing society on a member for keeping a bicycle in a staircase, a practice that the society claimed amounted to encroachment of common space and had continued for nearly 11 years.

Calling the demand “astronomical” and the penalty excessive and arbitrary, justice Sandeep Marne observed that it appeared “quite ludicrous” for the society to seek to recover ₹15.45 lakh over the parking of a bicycle in the staircase.

The dispute dates back to August 13, 2021, when Dhanlakshmi Co-operative Housing Society issued a notice to Yogini Bhupendra Parikh and Sejal Patel, occupiers of a flat in the building, asking them to show cause why a penalty should not be imposed for allegedly encroaching upon common spaces by keeping a bicycle in the staircase between the ground and first floors of Building No. 1.

The society subsequently went much further than asking the members to remove the bicycle. In the bill for October 2021, it levied a penalty of ₹6,89,220 for the alleged encroachment between April 2011 and March 2021. A demand notice followed a fortnight later, along with a reminder to the members.

In June 2024, an advocate’s notice was issued to Parikh and Patel, demanding an enhanced amount of ₹10,74,107 towards the penalty and interest payable as of May 2024. With the amount still unpaid, the society approached the deputy registrar, Cooperative Societies, G/North Ward, seeking recovery of the penalty.

On April 4, 2025, the deputy registrar allowed the society’s recovery application and issued a recovery certificate for ₹15.45 lakh.

The members challenged the certificate before the district deputy registrar. On April 8, 2026, the district deputy registrar struck down the recovery certificate, but remanded the matter to the deputy registrar for fresh adjudication.

That prompted Parikh and Patel to approach the high court, pointing out that the district deputy registrar had himself held that the housing society had not adopted the new model bye-laws and therefore had no authority to impose a penalty under Clause 169(a) of those bye-laws. Despite this finding, they argued, the matter had been remanded instead of the demand itself being brought to an end.

The society sought to defend its action by relying on Clause 50(a) of the old bye-laws, claiming that it empowered the society to levy a penalty for unauthorised encroachment.

Justice Marne, however, refused to accept the argument, noting that no such bye-law had been placed before the court. But even assuming, for the sake of argument, that the society had the power to impose a penalty, the judge said the manner in which it had exercised that power could not be sustained.

The society’s action in imposing an “excessive penalty of ₹15 odd lakh over the trifle issue of bicycle parking” was, the court held, arbitrary.

The court also took issue with the society’s decision to impose the penalty retrospectively. It noted that the society had not objected to the bicycle being kept on the staircase before August 2021. Having raised the issue only then, the society could not, the court said, retrospectively levy a penalty dating back to April 2011.

Any penalty, if at all justified, could at most have been imposed prospectively, the court observed. While striking down the recovery certificate, Justice Marne made it clear that the ruling should not be read as encouraging members of housing societies to encroach upon common spaces. At the same time, housing societies must act reasonably, the court said.

Managing committees, the judge observed, cannot assume the role of “super-regulatory authorities” over their fellow members and raise “absurd demands”.

The high court consequently struck down the recovery certificate and directed Dhanlakshmi Co-operative Housing Society to refund ₹3,86,433 paid by the petitioners during the proceedings. The refund has to be made within four weeks.