HC flags misuse of mixed-use buildings for dual societies, sends Panvel case back for scrutiny

The Bombay High Court ruled that mixed-use buildings can't form separate housing societies unless they function independently, impacting Maharashtra's structures.

MUMBAI: The Bombay High Court has held that a promoter cannot carve a mixed-use building into two separate housing societies for residential and commercial units unless the structure is genuinely capable of functioning as two independent entities. The ruling, delivered by justice Amit Borkar on Tuesday, is likely to impact several mixed-use buildings across Maharashtra in which shops and offices sit below residential floors.

HC flags misuse of mixed-use buildings for dual societies, sends Panvel case back for scrutiny

Justice Borkar noted that mixed-use construction is common in urban areas, but the mere presence of different types of units does not justify the formation of separate cooperative societies. “What matters is whether the two portions can function independently,” the court said, adding that the Cooperative Societies Act permits more than one society only if there is a “clear and genuine separation” within the building.

The court observed that the law does not allow a promoter to “artificially divide one integrated building into different societies.” The right to form a separate society, Justice Borkar observed, “is not based on what the promoter desires. It depends on whether the structure and functioning of the building makes it feasible and lawful.”

The ruling came in a petition by Sadguru Universal CHS, a residential society in New Panvel, challenging the registration of a second society for commercial unit owners within the same premises. The Divisional Joint Registrar of Cooperative Societies under CIDCO had, in December 2021, permitted the registration of ‘Sadguru Universal Premises Co-operative Housing Society’ for the commercial units. The state government later upheld this decision in June 2024.

Setting aside both orders, the court directed the Assistant Registrar, CIDCO, to conduct a fresh inquiry to determine whether the building meets the legal and structural criteria for two societies.

The residential society argued that the developer, Sadguru Infra Project (I), constructed a ground-plus-13 storey building with 88 residential flats and 24 commercial units on the ground floor, nine of which remain with the promoter. Although their own society was registered, members claimed they discovered only after their first AGM that the builder had already registered a separate commercial society operating from the same address.

They contended that the building lacks separate entry and exit points, firefighting systems, and electric infrastructure for commercial occupants. AC units and TV antennas of the commercial units occupy common spaces, they said, adding that the building has only one sanctioned plan.

The commercial unit society, however, argued that they do not rely on common amenities. They said forming a single society would unnecessarily burden them with maintenance costs. They also cited a 2004 government circular that allows the creation of two societies on the same plot, with an option to form an association later. But the court dismissed this claim, stating that the circular carries “no statutory force.”

Directing CIDCO to re-examine the matter, the High Court said, “The test is functional and factual. It depends on how the building is constructed, used, and maintained.”