CHS REGISTRATION NEED NOT WAIT FOR PROJECT COMPLETION: BOMBAY HIGH COURT

Developer Cannot Postpone Society Formation Due to Future Wings

I. Case Background

In a significant ruling strengthening the rights of flat purchasers, 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 real estate project is completed.

The Court set aside the orders passed by the Divisional Joint Registrar (DJR), Co-operative Societies, and the Minister for Co-operation, which had cancelled the registration of a society in Mulund West, Mumbai.

II. Facts of the Case

The dispute concerned the 360 Degree Business Park Premises Co-operative Society, formed for the Brite Building, a 10-storey commercial structure constructed in 2007 by Brite Tools Pvt Ltd.

Key Facts:

  • Full Occupancy Certificate (OC) issued in August 2013

  • 44 units sold by the developer

  • Building fully occupied and functional

  • No society formed by the developer despite completion

As a result, 31 flat purchasers approached the District Deputy Registrar (DDR), T-Ward, in November 2022 seeking registration of a co-operative housing society.

III. Grant of Registration by DDR

After examining the statutory requirements, the DDR granted registration to the society on 28 April 2023, as the minimum threshold of members under law was satisfied.

IV. Developer’s Objection and Cancellation by DJR

The developer challenged the registration, arguing that:

  • Two additional wings were proposed on the same plot

  • The project was not fully completed

  • Registration could only be initiated by the promoter as per agreements for sale

Accepting this contention, the DJR cancelled the society’s registration, stating that the construction of the remaining two wings was pending.

V. Rejection by the Co-operation Minister

The society appealed to the Minister for Co-operation, but the minister upheld the DJR’s decision, reiterating that:

  • The sanctioned layout plan envisaged three wings with common amenities

  • Registration should await completion of the entire project

This prompted the society to approach the Bombay High Court.

VI. Issues Before the High Court

The Court was called upon to decide:

  1. Whether registration of a CHS can be postponed until completion of all proposed wings

  2. Whether future or hypothetical units can be counted to deny the 51% membership threshold

  3. Whether promoters retain exclusive control over society formation

VII. Statutory Framework Involved

1. Section 10, Maharashtra Ownership Flats Act, 1963 (MOFA)

Mandates promoters to take steps to form a co-operative society as soon as a minimum number of purchasers take possession.

The obligation is statutory and mandatory.

2. Maharashtra Co-operative Societies Act, 1960

Governs the process of registration once eligibility conditions are fulfilled.

VIII. High Court’s Findings

A single-judge bench of Justice Amit Borkar quashed the orders of the DJR and the minister, holding that:

  • Completion of the entire project is not a prerequisite for CHS registration

  • Section 10 of MOFA does not permit postponement due to future construction

  • Promoters cannot override statutory obligations through contractual clauses

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

IX. Rejection of the 51% Membership Argument

The developer argued that if proposed future wings were included, the society did not meet the 51% membership requirement.

The Court rejected this argument, clarifying that:

  • The 51% threshold applies only to existing units

  • Units capable of occupation alone can be considered

  • Future or fictitious units cannot be counted

“Counting fictitious units or future purchasers defeats the statutory object.”

On the relevant date, 31 out of 44 purchasers had signed the application—satisfying the legal requirement.

X. Rejection of Layout-Based Objections

The Court also dismissed the reasoning that registration could be denied because:

  • The sanctioned layout plan showed three wings with common amenities

Justice Borkar held that such an interpretation would:

  • Allow developers to indefinitely delay society formation

  • Defeat the protective purpose of MOFA

“Such reasoning is incompatible with the statutory scheme.”

XI. Judicial Precedents Relied Upon (Principle-Based)

Though not expressly cited, the ruling aligns with settled jurisprudence that:

  • Promoters act as trustees for flat purchasers

  • Statutory duties under MOFA override private agreements

  • Society formation is a purchaser’s right, not a developer’s discretion

XII. Constitutional Dimension

The ruling reinforces Article 300A of the Constitution of India, which protects property rights, by ensuring:

  • Collective management rights of purchasers

  • Freedom from prolonged developer control

XIII. Conclusion

The Bombay High Court’s judgment sends a clear message:

Developers cannot use future plans to stall present rights.

Once a building is completed and occupied, society formation is not optional—it is mandatory.

This decision significantly strengthens purchaser autonomy and curtails prolonged promoter dominance over completed premises.

Location: Pune, Maharashtra, India

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