In a significant ruling, the Bombay High Court has upheld the validity of a circular issued in March 2016 by the Registrar of Cooperative Societies, which mandates that at least 51% of flat or shop buyers must jointly apply for the registration of a Cooperative Housing Society (CHS). This ruling reinforces the power of the registrar to establish criteria for society formation under the Maharashtra Co-operative Societies (MCS) Act and has major implications for developers, homebuyers, and cooperative housing societies.
Case Background: Dispute Over Society Registration
The case stemmed from a petition filed by Prakash Saave, the promoter of Harmony Plaza Premises Cooperative Society in Boisar. The divisional joint registrar of cooperative societies for the Konkan division had issued a deregistration order in November 2023 following a complaint by the developer, Jainam Builders. The developer claimed that only 47.7% of unit owners (83 out of 174 sanctioned tenements) had applied for society registration, falling short of the 51% requirement prescribed in the March 2016 circular.
Saave challenged this decision, arguing that under Section 6 of the MCS Act, only 10 members are required to form a cooperative society. He contended that the registrar had exceeded its authority by mandating a higher percentage of applicants through a government circular.
Court’s Ruling: Registrar’s Circular is Valid
Justice Sandeep Marne, presiding over the single-judge bench, ruled in favor of the registrar’s authority, affirming that the 51% rule is legally enforceable. Key points from the judgment include:
Registrar’s Power to Increase the Registration Threshold
- Section 6 of the MCS Act grants the registrar discretionary power to set a higher percentage for society registration.
- The registrar had previously issued two circulars:
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- November 29, 2010 – Mandating 60% of unit purchasers for society formation.
- March 23, 2016 – Reducing the requirement to 51%.
Judgment Confirms Circulars’ Legality
- The court held that both circulars are enforceable, and no cooperative society can be formed if the prescribed percentage is not met.
- The March 2016 circular specifies that 51% of all sanctioned tenements (constructed or under construction) must apply for society registration.
Deregistration of Harmony Plaza Society Was Lawful
- Since only 47.7% of unit purchasers had applied, the court found no illegality in the society’s deregistration.
- However, it noted that since all 174 sanctioned tenements have now been constructed, the society can reapply once 89 unit owners (51%) agree to register.
Implications of the Judgment
The Bombay HC’s ruling has significant implications for homebuyers, developers, and housing societies:
Buyers Must Ensure Sufficient Participation
- Prospective flat or shop owners must be aware that society registration requires a majority consensus.
Developers Can Challenge Society Formation
- Builders can dispute society registration if the required 51% ownership threshold is not met.
Existing Societies May Face Re-Registration Issues
- Societies that were previously registered with fewer than 51% applicants could face legal scrutiny.
Conclusion
The Bombay High Court has reinforced the legal validity of the 51% rule for housing society formation in Maharashtra. By upholding the March 2016 circular, the judgment clarifies that cooperative societies must secure majority participation before registration. This decision is expected to bring greater transparency and compliance in the formation of housing societies, ensuring that developers and homebuyers adhere to the cooperative housing laws.
