Bombay High Court Division Bench Reviews Interim Injunction Granted in Suit Challenging Redevelopment Resolution of Co-operative Housing Society. Appeals Raise Issues Regarding Membership Rights Under Section 35 of Maharashtra Co-operative Societies Act and Application of Maharashtra Ownership of Flats Act.

Interlocutory appeals against an interim injunction order passed in suits challenging a cooperative housing society's resolution and conveyance for redevelopment.

The appellants (developer and society) sought to vacate or modify the interim injunction granted by the trial judge on 5 May 2011, which restrained further steps pursuant to the resolution dated 6 December 2009 and conveyance dated 7 December 2009 and ordered status quo over the suit property.

The respondent plaintiffs (15 tenants) filed suits alleging that the society's redevelopment resolution and conveyance were invalid due to pending bifurcation issues, improper loss of membership rights, and lack of clarity on disbursement of developer's funds.

The trial judge (single judge) allowed the notice of motion and granted interim injunction on 5 May 2011 pending final disposal of the suits. Earlier, in 1972, this Court had held that the plaintiffs had no proprietary interest in the society's property. Bifurcation proceedings initiated under Section 18 of the Act were ultimately quashed by the Minister's order dated 31 May 2010 after the applicant association withdrew its application.

Whether the interim injunction was justified when the bifurcation proceedings had been quashed before the filing of the suits, thereby removing any impediment to redevelopment. Whether the requirement for tenant-members to give up membership of the existing society contravened Section 35 of the Maharashtra Co-operative Societies Act, 1961, or was a permissible consequence of redevelopment under the Maharashtra Ownership of Flats Act, 1963. Whether the redevelopment plan properly provided for the formation of a new co-operative society under MOFA and safeguarded the interests of existing tenants.

The learned single judge erred in holding that the redevelopment resolution could not be implemented while the bifurcation issue was pending, because the bifurcation proceedings had been finally quashed by the Minister's order dated 31 May 2010 after the applicant association withdrew its application. The clause requiring tenant-members to give up membership of the existing society did not amount to expulsion under Section 35 of the Maharashtra Co-operative Societies Act, 1961, but was a natural consequence of redevelopment where the allottees would become members of a new co-operative society to be formed by the developer under Section 10 of the Maharashtra Ownership of Flats Act, 1963. The redevelopment plan was beneficial to the tenants as they would receive newly constructed tenements and higher rights of ownership, and the tenants had no proprietary interest in the property, as already held by this Court in the 1972 proceedings.

The land in question admeasuring about 5 ½ acres in Santacruz, Mumbai belongs to Bombay Catholic Co-operative Housing Society ltd. The learned Single Judge held that the petitioners therein, who are present plaintiffs, have no proprietary interest in the land and tenements belong to the Society which is the absolute owner of the property. there is no question of the tenant-members losing their membership. Once 69 tenant-members as well as 131 allottees will be given tenements to be constructed under the development agreement, they will have to become members of the Co-operative Society to be formed by the developer under section 10 of the Maharashtra Ownership of Flats ... Act, 1963

The society's structures were built around 1930. In 1966, the society passed a resolution for demolition and reconstruction. In 1972, the plaintiffs' challenge to that resolution was dismissed by the High Court, holding they had no proprietary interest; the appeal was dismissed in July 1972. In 1979, an application for bifurcation under Section 18 of the Maharashtra Co-operative Societies Act was made; bifurcation was granted in 1983 but later set aside and remanded. Ultimately, on 31 May 2010, the Minister allowed a revision and quashed the bifurcation proceedings after the applicant association withdrew its application. Meanwhile, on 6 December 2009, the society passed the impugned resolution for redevelopment, followed by a conveyance deed on 7 December 2009. The plaintiffs filed suits and a writ petition challenging the resolution and conveyance. The single judge granted interim injunction on 5 May 2011, directing status quo pending disposal of the suits. The present appeals were filed by the developer and society against that injunction order. The division bench heard arguments on 9 August 2012, but the judgement excerpt ends without recording the final order.

• Maharashtra Co-operative Societies Act, 1961: Section 18, Section 35
• Maharashtra Ownership of Flats (Regulation of the Promotion, Construction, Sale, Management and Transfer) Act, 1963: Section 10, Rule 10 of the Rules thereunder