CHS registration need not wait till completion of the project: HC

The case pertained to the 360 Degree Business Park Premises Co-operative Society, formed for the Brite Building in Mulund West, a 10-storey structure constructed in 2007. The building received a full occupancy certificate in August 2013, and 44 units were sold by the developer, Brite Tools Pvt Ltd

MUMBAI: In a significant ruling, the Bombay High Court has held that the registration of a co-operative housing society (CHS) for a completed wing cannot be deferred until the entire project is completed. The court set aside orders of the minister for co-operation and the divisional joint registrar (DJR), co-operative societies, who had cancelled the registration of a society in Mulund West.

Mumbai, India - September 03, 2021: Bombay High Court at Fort, in Mumbai, India, on Friday, September 03, 2021. (Photo by Anshuman Poyrekar/Hindustan Times) (Anshuman Poyrekar/HT PHOTO)

The case pertained to the 360 Degree Business Park Premises Co-operative Society, formed for the Brite Building in Mulund West, a 10-storey structure constructed in 2007. The building received a full occupancy certificate in August 2013, and 44 units were sold by the developer, Brite Tools Pvt Ltd.

The District Deputy Registrar (DDR) of T Ward had granted registration to 360 Degree Business Park Premises Cooperative Society, but it was cancelled by the DJR on the ground that the two more wings were yet to be constructed.

As no society had been formed despite completion and occupation of the building, 31 flat purchasers approached the district deputy registrar (DDR) of T-Ward in November 2022 seeking registration of a co-operative housing society, which was granted on April 28, 2023.

However, the developer challenged the order, contending that two additional wings were proposed on the same plot and that the society could not be registered until the entire project was completed. The developer also claimed that under the agreements for sale, it had exclusive authority to initiate the registration process.

Accepting the developer’s appeal, the DJR cancelled the society’s registration, stating that the construction of the remaining two wings was pending. The co-operation minister subsequently rejected the society’s plea, prompting it to approach the high court.

A single-judge bench of justice Amit Borkar quashed the orders of both the DJR and the minister, and restored the registration of the society. The court held that Section 10 of the Maharashtra Ownership Flats (MOFA) Act mandates promoters to form a co-operative society as soon as the minimum required number of purchasers have taken possession.

“The statute does not permit the promoter to postpone this obligation on the basis of future construction,” the court observed.

Justice Borkar also rejected the developer’s argument that the society failed to meet the 51% membership requirement if the proposed future buildings were considered. “The law does not support this assumption,” the court said, clarifying that the 51% requirement applies only to existing units that are occupied or capable of occupation. “Counting fictitious units or future purchasers defeats the statutory object,” the judgment noted.

The court recorded that on the relevant date, 31 of the 44 flat purchasers had signed the application, thereby satisfying the statutory threshold.

The high court further rejected the reasoning of the minister and the DJR that registration could not be permitted because the sanctioned layout plan envisaged three wings with common amenities. Such an interpretation, the court said, was contrary to the mandate of Section 10 of MOFA.

“If accepted, such reasoning would allow developers to indefinitely defer formation of societies by planning multi-phase constructions. That result is incompatible with the protective scheme of MOFA,” the court concluded.