Case Note & Summary
The dispute arose from a writ petition filed under Articles 226 and 227 of the Constitution of India before the High Court of Judicature at Bombay, challenging the registration of a co-operative housing society under Section 10 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA Act) and the appellate order affirming it. The petitioners, Krupa Zubin and another, were purchasers of flats in a building called 'Meghdoot' situated at Sion-Trombay Road, Mumbai. The building was constructed by a developer, M/s. Creative Builders, pursuant to a development agreement dated 1st June 1982 with respondent No.3 company, which owned the property. Clause 37 of the sale agreements executed between the developer and flat purchasers required each purchaser to become a member of respondent No.3 company, a company already established and controlled by the developer. The petitioners purchased shares and flat rights on 29th December 2006 and claimed membership of respondent No.3 company. In 2018, respondent No.3 company was dissolved and deregistered, though the petitioners alleged it continued to function in practice. On 5th March 2024, certain flat purchasers filed an application under Section 10 of the MOFA Act before the District Deputy Registrar, Co-operative Societies, seeking registration of a co-operative housing society. By order dated 28th March 2024, the authority allowed the application and registered respondent No.4 society. The petitioners appealed to respondent No.1, the Divisional Joint Registrar, Co-operative Societies, who dismissed the appeal on 11th March 2025, relying on a certificate of deregistration of the company. The petitioners then approached the High Court, contending that Clause 37 was binding and compelled them to remain members of the company, that the company continued to function despite deregistration, and that the applicants suppressed the fact of the company's existence and deregistration, thereby vitiating the registration. The court analysed Section 4(1A)(v) of the MOFA Act, which requires the agreement for sale to specify 'the precise nature of the organisation to be constituted of persons who have taken or are to take the flats.' The court held that this provision contemplates a new and independent organisation comprising the flat purchasers themselves, not an existing promoter-controlled company. A clause compelling purchasers to join such a company was repugnant to the statutory mandate and could not override the legislative intent of conferring autonomous rights on flat purchasers. The court further held that once the company was dissolved and deregistered, the flat purchasers' statutory right to form a co-operative society revived. The numerical requirement of more than five purchasers in an eight-unit building was satisfied. The appellate authority was justified in considering the deregistration certificate as additional evidence because appellate proceedings are a continuation of original proceedings. The allegation of suppression of material fact was rejected because the company being legally non-existent and the clause being void, non-disclosure did not affect the merits. Accordingly, the court upheld the registration of the co-operative society and dismissed the writ petition, finding no error in the orders of the authorities.
Headnote
A) MOFA Act - Statutory Requirement of Agreement for Sale - Section 4(1A)(v) of Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 - The agreement for sale must specify 'the precise nature of the organisation to be constituted of persons who have taken or are to take the flats'; the expression 'to be constituted' denotes a prospective organisation formed by flat purchasers, not an existing promoter-controlled company. Held that a clause compelling purchasers to join an existing company is repugnant to the statutory mandate and void; it perpetuates promoter control and defeats the consumer protection objective of MOFA (Paras 9-11, 16). B) MOFA Act - Registration of Co-operative Housing Society - Section 10 of MOFA Act read with Section 154-B-2 of Maharashtra Co-operative Societies Act, 1960 - Once the developer-promoted company is dissolved and deregistered, the flat purchasers' statutory right to form a co-operative society revives; numerical requirement of more than five purchasers in an eight-unit building satisfied. Held that registration of the society was valid and no legal impediment remained (Paras 12-14, 17). C) Evidence / Appellate Procedure - Additional Evidence in Appeal - Appellate authority can consider certificate of deregistration as continuation of original proceedings; such evidence goes to the root of the matter. Held that the objection that the certificate was not produced before the Competent Authority does not hold merit (Paras 12-13). D) Administrative Law - Suppression of Material Facts - Non-disclosure of the company's existence and deregistration was not material because the company was legally non-existent and the clause was repugnant to Section 4(1A)(v); Held that the suppression did not vitiate the registration under Section 10 of MOFA Act (Paras 15-18). E) Constitutional Law - Writ Jurisdiction under Articles 226 and 227 of Constitution of India - Scope of judicial review over orders of statutory authorities under MOFA Act - No error found in concurrent orders registering the co-operative society and dismissing the appeal. Held that no interference was warranted and the writ petition was liable to be dismissed (Paras 1, 7, 13-18).
Issue of Consideration
Whether a clause in a sale agreement compelling flat purchasers to become members of an existing promoter-controlled company is valid under Section 4(1A)(v) of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963; whether registration of a co-operative housing society under Section 10 of the said Act is permissible after the company has been dissolved and deregistered; and whether non-disclosure of the company's existence and deregistration before the Competent Authority vitiates the registration.
Final Decision
The writ petition was dismissed. The court upheld the registration of respondent No.4 co-operative housing society and the appellate order dated 11 March 2025, holding that Clause 37 was repugnant to Section 4(1A)(v), the company's deregistration revived the purchasers' statutory right to form a society, the numerical requirement was met, no material suppression occurred, and the appellate authority properly considered additional evidence.
Law Points
- Agreement for sale under MOFA must specify organisation to be constituted by flat purchasers
- Clause compelling purchasers to join pre-existing promoter-controlled company is repugnant to Section 4(1A)(v)
- Flat purchasers have right to self-governance and independent control
- Deregistration of company revives statutory right to form cooperative society
- Numerical requirement under Section 10 and Section 154-B-2 satisfied by more than five purchasers
- Appellate authority can consider additional material
- Suppression of immaterial fact does not vitiate registration
- MOFA is consumer protection statute
