Petitioner developer challenged the registration of a cooperative housing society formed by flat purchasers. High Court held that as registration had already become effective and authorities lacked material to object, the petition failed and interim orders were vacated.
Petition failed. Rule discharged. All interim orders vacated.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.6587 OF 2006
M/s.Kushal Constructions .. Petitioner
Versus
Gunvant Ramlal Shah & Ors. .. Respondents
Mr.G.S.Godbole for petitioner
Mr.Dhakephalkar, Senior Advocate with Mr.Harshad
Deshpande for respondent Nos. 1 and 2.
A.G.P. for State.
CORAM : S.C.DHARMADHIKARI, J.
Reserved: 15th June 2007.
Pronounced: 18th July 2007.
ORAL JUDGEMENT: -
. Rule. Respondent Nos. 1 and 2 are
contesting respondents and Mr.Deshpande waives
notice for them. Learned A.G.P. waives service
for respondent Nos. 3 to 5. By consent of
parties, Rule made returnable forthwith.
2. This petition under Articles 226 and 227
2
of the Constitution of India is directed against
an order passed by the Minister of State for
Cooperation, Marketing and Textile Department of
Government of Maharashtra dated 12th June 2006 in
Revision Application No.399 of 1999.
3. That Revision Application was directed
against an order passed by Joint Registrar of
Cooperative Societies (Appeals) Pune Division in
Appeal No.102 & 108 of 1999. The Joint
Registrar, C.S. Pune passed an order in the
appeals which in turn were directed against the
order passed by the Deputy Registrar, C.S.Pune
dated 22nd/30th July 1999.
4. Petitioner is partner of one M/s.Kushal
Construction, which is carrying on business as
Builder and Developer. It has its office at the
address mentioned in the cause title.
5. Petitioner was granted development rights
3
in respect of property bearing C.T.S.No.553 of
1989, Rasta Peth, Pune. It is owned by one
Lilawati R. Shah. Petitioner, pursuant to the
development rights, constructed multi-storyed
building on the said property, apartments/flats
in which in turn were sold to several persons.
The property in all admeasures 4914.07 sq.mtrs.
and is spread over the S.Nos.553, 558 and 589A.
Petitioner constructed 90 residential tenaments,
71 shops and stores. Thus in all 180 tenaments,
spread over Wings A to I, have been constructed
by the petitioner.
6. It is not in dispute that the petitioner
is a promoter within the meaning of the said
term, appearing in Maharashtra Ownership Flats
(Regulation of the Promotion of Construction,
Sale, Management and Transfer) Act, 1963 (for
short 1963 Act). Petitioner has taken a sum of
Rs.1460/- as advance per flat purchaser.
Petitioner pursuant to the development and
4
construction of the property placed various
purchasers in possession of the flats/tenaments
under Individual agreements with them.
7. It is the case of petitioner that
individual apartments were elaborately described
in the deed of declaration. The deed of
declaration was registered in the office of the
sub-Registrar, Haveli II, Pune at Sr.No.3147.
8. The argument, therefore, all through out
is that once the deed of declaration was executed
and registered under the provisions of The
Maharashtra Apartment Ownership Act, 1970 (for
short 1970 Act) then section 10 of the 1963 Act
would apply and it is impermissible to register a
Coop.Society of the purchasers/occupants of the
apartments in such a building.
9. Despite this legal position, on 24th
March 1999 an application was filed by the first
5
respondent for registration of second respondent
as a cooperative housing society. It appears
that upon this application, notice was issued to
the petitioner and the petitioner appeared and
opposed the application on the ground that a Deed
of registration being duly executed and
registered, now, it is not permissible to
register a coop.society.
10. The grievance is that by brushing aside
this grievance, the Dy.Registrar C.S.Pune passed
an order on 22nd July 1999 permitting first
respondent to file such an application and also
reserving a name for the second respondent
society. The Dy.Registrar permitted opening of
bank account. A copy of this order is annexed as
Annexure B to the petition.
11. Later on, the said Dy.Registrar passed an
order under section 9 of the C.S. Act 1960 and
registered the second respondent as coop.society.
6
12. Aggrieved by this order, the petitioner
preferred an appeal being appeal No.103 of 1999
before Divisional Jt.Registrar, C.S. Pune. The
First Appeal was filed challenging the order
dated 22nd July 1999 and further appeal bearing
No.108 of 1999 was filed challenging the
registration of the society and an order made in
that behalf on 30th July 1999.
13. The Divisional Jt.Registrar C.S.
initially passed an interim order on 11th August
1999. This interim order being in favour of
petitioner, it was assailed and challenged by
respondent Nos. 1 and 2 by filing a revision
application before Minister.
14. Grievance of the petitioner is that this
revision application was allowed by the
Secy.Department of Coop. & Texetiles without
hearing the petitioner. Therefore, W.P.5578 of
7
1999 was filed in this Court which was allowed by
this Court on 22nd October 1999 and after
restoring the interim order, this Court directed
the Appellate authority to dispose of the appeals
expeditiously.
15. The Appellate Authority after allowing
parties to file their replies and written
arguments, passed a common order in the aforesaid
appeals, on 22nd November 1999, a copy of which
is annexed to the petition as Annexure H.
16. The appellate authority dismissed the
above appeals.
17. Aggrieved by this rejection and
dismissal, the petitioner approached the State
Govt. by filing Revision Application No.399 of
1999 and the Revisional Authority initially
stayed the orders of the Appellate Authority.
8
18. In the meanwhile, the petitioner contends
that several persons/flat purchasers who had
jointed in the registration proposal of the
society, including the first respondent got their
Deeds of apartment executed from petitioner.
Based upon these deeds of apartments, these
occupants/flat purchasers transferred their
respective apartments by creating third party
rights. Thus, the initial fact situation
underwent a radical change. Be that as it may,
the petitioner as well as respondent Nos.. 1 and
2 before me pursued the revision application and
placed their written arguments setting out the
subsequent developments as well. Petitioner
contended that 141 flat purchasers have executed
deeds of apartments and, thus, majority of them
do not intend to be governed and managed so also
administered by a cooperative housing society.
They would prefer to have an Association of such
apartment owners to manage their affairs.
Written arguments of both sides were taken on
9
record and the Revision Application No.399 of
1999 was placed for hearing and final disposal
before the Minister. By the order under
challenge in this petition dated 12th June 2006,
the Revision Application is dismissed.
19. Aggrieved by the concurrent orders and
findings, petitioner developer is invoking the
writ jurisdiction of this Court under Article 226
and 227 of the Constitution of India.
20. Mr.Godbole learned Counsel for petitioner
submits that the Minister who decided the
Revision Application committed grave error in
dismissing the revision application. The
revision application ought to have been allowed
inasmuch as the Dy.Registrar as also the Jt.Regr.
were in patent error in concluding that a
coop.society can be registered. Mr.Godbole
submits that the authorities have completely
misread and misconstrued the provisions of the
10
Ownership Act and Coop.Societies Act
respectively. He submits that 1963 Act and The
Maharashtra Apartment Ownership Act, 1970 (for
short 1970 Act) make distinct provisions which
completely rule out registration of
coop.societies in the event requirements
stipulated thereunder being not satisfied and
fulfilled. In other words, once there is no
compliance with the relevant statutory
provisions, then, the application preferred by
the first respondent was not maintainable.
Mr.Godbole has emphasised this aspect and invited
my attention to provisions of Section 10 of the
1963 Act. He submits that the deed of
declaration is signed and executed and that fact
has not been disputed so also its registration.
21. Mr.Godbole also assails the findings
arrived by the Revisional Authority to the effect
that function/obligation of a Builder comes to an
end when he sells flats to the purchasers. He
11
has no right or locus standi thereafter. He
submits that this finding is ex facie erroneous
in law in as much as it is vitiated by non
application of mind. He submits that the Single
Judge’s judgement of this Court which has been
relied upon by the Revisional Authority is not
applicable to the facts of the present case and
in any event has been rendered in ignorance of
the statutory provisions, more particularly
section 10(2) of 1963 Act. He, therefore,
submits that the impugned order deserves to be
set aside and this is a fit case where this Court
should interfere in its writ jurisdiction.
22. On the other hand Mr.Dhakephalkar,
learned Senior Counsel appearing for the
contesting respondents submits that the
concurrent findings do not require any
interference and the petition deserves to be
dismissed. He submits that this Court has
already taken a view that Builders and Developers
12
have no locus in matters of administration and
management of the property by the flat
purchasers. He submits that this is in
consonance with the general principles inasmuch
as there is a concept of dual ownership. The
Developer of land and flat purchasers do not have
a direct contact with the owner of land who gives
authority to developer and builder for putting up
construction and sell the flats to third parties.
Such purchasers, thereafter, get a title to the
structure and it is the duty of the
developer/builder, who has taken development cum
sale rights, from the owner to transfer the land
beneath the structure by executing a
comprehensive deed in that behalf. This
obligation on the developer and builder can by no
stretch of imagination be construed as conferring
upon him a right to object to the manner in which
the property is to be managed and administered by
the respective flat/tenament purchasers.
Mr.Godbole’s argument is totally misconceived and
13
fallacious, according to Mr.Dhakephalkar. He
submits that even if all the statutory provisions
are noticed, the conclusion drawn by learned
Single Judge about the authority and locus of
builder/developer does not suffer from any error,
much less can be said to be per incuriam.
Therefore, the revisional authority was in no
error in upholding the orders before him.
23. Mr.Dhakephalkar states that even the
factual position is such that the petitioner -
developer did not fulfil his obligation and
duties in law. He admittedly has not executed
any deeds of apartment and got them registered.
Thus, when he was utterly neglecting his duties
and obligation in law, the flat purchasers had no
alternative but to organise themselves and apply
for registration of a society which was formed by
them. It is not the case of the
Developer/Builder that the statutory minimum
number for forming a coop.society is not
14
fulfilled. On the other hand, after the society
was registered and to be precise during the
pendency of the Revision Application that the
deeds of apartments were executed by the
Developer/Builder. This does not frustrate the
registration of the coop. housing society which
is much prior in point of time. There is no
material produced on record that the second
respondent society does not exist in law or that
the flat purchasers have given up their
rights/membership in the society as alleged. In
the absence of any factual material and merely on
the strength of the deeds of apartment, for the
first time, the builder/developer cannot raise a
contention that the registration of the society
is illegal. This is not a pure question of law
and the material for applicability of section
10(2) has to be produced before the authorities
in that behalf. Therefore, even on facts and
considering the conduct of the builder, this
Court should not exercise its extra ordinary,
15
equitable and discretionary jurisdiction in its
favour.
24. For the purpose of appreciating rival
contentions, reference would have been necessary
to be made to the 1963 Act initially. That is an
Act to regulate for a certain period in the State
of Maharashtra, promotion of construction and
sale and management and transfer of flats on
ownership basis. There is much substance in the
contention of Mr.Dhakephalkar that apart from
noticing acute shortage of flats in several areas
of State, there were complaints of large scale
abuse and mal practices relating to promotion of
the construction of, and the sale and management
and transfer of flats. It is, therefore, that
the Legislature stepped in and enacted the 1963
Act. The term "Promoter" as defined in section
3(c) therein means a person who constructs or
causes to be constructed block or building of
flats or apartments for the purpose of selling
16
some or all of them to other persons or to a
Company, Coop.Society or to a company or
Coop.Society or other Association of persons and
includes his assigns. It is pertinent to note
that where a person who builds and a person who
sells is different person, then, the Term would
include both. The definition of the term "Flat"
is to be found in section 2(a). The term
"Registrar" has been defined in section 2(d) to
mean the Registrar as defined in Maharashtra
C.S.Act. The expression "Apartment" and
"Apartment Owner" are defined to have the same
meaning as are assigned to them in the 1970 Act.
Section 3 enlists liabilities of Promoter whereas
section 4 sets out his obligations. His
obligations are that he has to execute a written
agreement for sale. He must enter into a written
agreement for sale with each of the persons who
are to take or have taken flats and register that
document in accordance with the Registration Act.
Section 4(1)(A) sets out contents of the
17
Agreement and the documents attached thereto.
Consequences of registration would then follow
and the further obligation of the promoter are to
be found in sections 5 and 6. Section 7
indicates clearly that after plans and
specifications are disclosed to the intending
purchasers of flat/s the promoter cannot make any
alterations or additions in the same without
their consent. Even defects which are noticed
within three years have to be rectified by the
promoter. Thus, the intent is clear inasmuch as
the promoter will have to perform all duties and
functions so as to ultimately convey the property
to the flat purchasers. He cannot continue to
retain control and enjoy any rights therein.
Even if, there are any rights accrued in his
favour, their exercise is sought to be regulated
and controlled by the Legislature. This aspect
becomes more clear after sections 8, 9 and 11 are
perused. Section 13 sets out the Offences by
Promoters.
18
25. It is in this backdrop that section 10
will have to be looked at. It reads thus:-
"10(1): As soon as a minimum number of
persons required to form a cooperative
society or a company have taken flats,
the promoter shall within the prescribed
period submit an application to the
Registrar for registration of the
organisation of persons who take the
flats as a cooperative society or as the
case may be, as a company; and the
promoter shall join, in respect of the
flats which have not been taken, in such
application for membership of a
cooperative society or as the case may
be, of a company. Nothing in this
section shall affect the right of the
promoter to dispose of the remaining
flats in accordance with the provisions
19
of this Act.
(2) If any property consisting of
building or buildings is constructed or
to be constructed and the promoter
submits such property to the provisions
of the Maharashtra Apartment Ownership
Act, 1970, by executing and registering a
Declaration as provided by that Act, then
the promoter shall inform the Registrar
as defined in the Maharashtra Cooperative
Societies Act, 1960, accordingly; and in
such cases, it shall not be lawful to
form any cooperative society or company."
26. A bare perusal of subsection (1) thereof
would indicate that since minimum number of
persons required to form a Coop.Society or a
company has taken flats, the promoter shall
within a prescribed period submit an application
to the Registrar for Registration of the
20
organisation of persons who take flats, as
Coop.Society or as the case may be as company.
The obligation does not end here. The promoter
shall join flats which are unsold or non listed
in an application for membership of a
coop.society or as the case may be of a company.
However, his right to dispose of the remaining
number of flats in accordance with the provisions
of the 1970 Act are left undisturbed and
uninterfered with.
27. Sub-section 2 is very clear inasmuch as,
if the property consisting of building or
buildings is constructed or to be constructed and
the promoter submits such property to the
provisions of the 1970 Act by executing and
registering a declaration as provided by that
act, then, the promoter shall inform the
Registrar as defined in the M.C.S. Act
accordingly and in such cases, it shall not be
lawful to form any cooperative society or
21
company.
28. Thus, firstly, there should be a property
consisting of building or buildings. Secondly,
it should either be constructed or to be
constructed. Thirdly, the promoter must submit
such property to the provisions of 1970 Act by
executing and registering declaration as provided
by that Act. Fourthly, the promoter shall inform
the Registrar of Coop.Societies about such
submission, execution and registration or
declaration. Fulfilment of all these ingredients
would make registration of a coop.society or
company unlawful.
29. In the present case, the material about
fulfilment of the ingredients of section 10(2) is
absolutely lacking. In fact, one is not sure as
to whether the declaration which was executed by
the owners of the land and the petitioner as
developer dated 23rd July 1997 and allegedly
22
registered was a fact which was duly intimated
and informed to the Registrar by the promoter.
30. Therefore, it is doubtful as to whether
sub-section 2 of section 10 would be attracted in
the facts of the present case.
31. The 1970 Act is an Act to provide for
ownership of an individual apartment in a
building and to make such apartment habitable and
transferable property. The term "apartment" is
defined in section 3(a). Section 2 of the 1970
Act makes it clear that the Act applies only to
property, the sole ownership or all the owners of
which submit the same to the provisions of the
1970 Act by duly executing and registering a
declaration as provided therein. Section 2 of
the 1970 Act reads thus:-
"(2) This Act applies only to
property, the sole owner or all of the
23
owners of which submit the same to the
provisions of this Act by duly executing
and registering a Declaration as
hereinafter provided".
32. Hence, whether the sole owner or the
owners in the present case have submitted the
subject property to the 1970 Act in accordance
with the Act. The term "property" has been
defined so also the term "declaration",
respectively in section 3(r) and (j) of the 1970
Act. Section 5 of the same reads thus:-
"5. "Ownership of Apartments" (1)
Each apartment owner shall be entitled to
the exclusive ownership and possession of
his apartment in accordance with the
declaration executed and registered as
required by section 2 of this Act.
(2) Each apartment owner shall
24
execute a Deed of Apartment in relation
to his apartment in the manner prescribed
for the purpose.
A bare perusal of section 5 would indicate that
the declaration contemplated by section 2 and the
one contemplated by section 5(2) are distinct.
The deed of apartment is a distinct deed than
that of declaration. Their contents are also
distinct as is evident from sections 11 and 12.
Section 13 of the 1970 Act reads thus:-
"13. Declarations, Deeds of Apartments
and copies of floor plans to be
registered:- (1) The Declaration
and all amendments thereto and the Deed
of Apartment in respect of each apartment
and the floor plans of the buildings
referred to in sub-section (2) shall all
be registered under the Registration Act,
1908.
25
(2) Simultaneously with the
registration of the Declaration there
shall be filed alongwith it a set of the
floor plans of the building showing the
layout, location, apartment numbers and
dimensions of the apartments stating the
name of the building or that it has no
name, and bearing the verified statement
of an architect certifying that it is an
accurate copy of portions of the plans of
the building as filed with and approved
by the local authority within whose
jurisdiction the building is located. If
such plans do not include a verified
statement by such architect that such
plans fully and accurately depict the
layout, location, apartment numbers and
dimensions of the apartments as built,
there shall be recorded prior to the
first conveyance of any apartment, an
26
amendment to the Declaration to which
shall be attached a verified statement of
an architect certifying that the plans
theretofore filed, or being filed
simultaneously with such amendment, fully
and accurately depict the layout,
location, apartment number and dimensions
of the aparetment as built.
(3) In all registration offices a
book called "Register of Declaration and
Deeds of Apartments under the Maharashtra
Apartment Ownership Act, 1970" and Index
relating thereto shall be kept. The book
and the Index shall be kept in such form
and shall contain such particulars as the
State Government may prescribe.
(4) It shall be the duty of every
Manager of Board of Managers to send to
the Sub-Registrar of the Sub-District in
27
which the property containing the
apartments situate, or if there is no
Sub-Registrar for the area, to the
Registrar of the District in which such
property is situate a certified copy of
the Declaration and Deed of Apartment
made in respect of every apartment
contained in the building forming part of
the property together with a memorandum
containing such particulars as the State
Government may prescribe.
(5) The Sub-Registrar, or as the case
may be, the Registrar shall register the
Declaration alongwith floor plans of the
building and the Deed of Apartment in the
Register of Declarations and Deeds of
Apartments under the Maharashtra
Apartment Ownership Act, 1970 and shall
also enter particulars in the Index kept
under sub-section (3). Any person
28
acquiring any apartment of any apartment
owner shall be deemed to have notice of
the Declaration and of the Deed of
Apartment as from the date of its
registration under this section.
(6) Except as provided in this
Section, the provisions of the
Registration Act 1908 shall mutatis
mutandis apply to the registration of
such Declarations and Deeds of Apartments
and the words and expressions used in
this Section but not defined in this Act,
shall have the meanings assigned to them
in the Registration Act, 1908."
33. It is in this backdrop, section 14 will
have to be seen and which reads thus:-
"14. Removal from provisions of Act:-
29
(1) All the apartment owners may
remove a property from the provisions of
this Act, by an Instrument to that effect
duly executed;
provided that, the holders of all charges and
other encumbrances affecting any of the
apartments consent thereto or agree, in either
case by instruments duly executed that their
charges or encumbrances be transferred to the
percentage of the undivided interest of the
apartment owner in the property as hereinafter
provided.
(2) Upon removal of the property from
the provisions of this Act, the property
shall be deemed to be owned in common by
the apartment owner. The undivided
interest in the property owned in common
which shall appertain to each apartment
30
owner shall be the percentage of
undivided interest previously owned by
such owner in the common areas and
facilities."
34. Hence, unless the material is produced to
show that requirements stipulated by section 13
are fulfilled, it cannot be said that the
property is submitted to the provisions of 1970
Act. Further, the submission of the property to
the 1970 Act itself is not enough for the purpose
of section 10 of 1963 Act, as observed above.
35. In the facts and circumstances of the
present case, nothing has been pointed out which
would demonstrate that the application of the
first respondent for registration of second
respondent society could not have been
entertained by the Dy.Registrar. There is
substance in the contention of Mr.Dhakephalkar
that in these facts and circumstances, the
31
petitioner - developer had no right to object to
the application being entertained and considered
by the Authorities exercising powers under the
Coop.Societies Act. It is in the peculiar facts
of this case, I find substance in the contention
of Mr.Dhakephalkar that the petitioner -
developer had no locus to object to the
registration of second respondent society which
had already been done as far back as on 30th July
1999. The interim orders do not have the effect
of wiping out such registration in the facts of
this case and once it had taken effect, the
second respondent could not be prevented from
managing and administering the affairs of the
cooperative housing society.
36. In the peculiar facts of this case, the
larger question posed for my consideration about
the locus of builder and developer in general and
the judgement of this Court requiring
re-consideration, need not be gone into and
32
decided. Similarly, the larger issues as to when
can a property be said to be subjected to 1970
Act and, therefore, incapable of being
administered by forming a coop.society or company
also need not be considered.
37. When there is substance in the contention
about lack of factual materials being placed
before the Authorities so as to object to the
registration and the registration having already
taken effect in the year 1999, this is not a fit
case for interference by this Court in its extra
ordinary, equitable and discretionary
jurisdiction under Articles 226 and 227 of
Constitution of India. There is much substance
in the observations of the Dy.Registrar that the
petitioner - builder has failed to comply with
the provisions of law. In this behalf, finding
of fact recorded at para 8 (pages 30 and 31) of
the order passed by the Dy.Registrar being not
perverse and consistent with the materials
33
placed, no relief can be granted to the
petitioner in this case.
38. In the result, petition fails. Rule is
discharged. All interim orders to stand vacated
forthwith.
(S.C.Dharmadhikari, J)
3 issues framed by the court
Whether the High Court could exercise its writ jurisdiction to set aside the registration of the cooperative housing society despite the pending revision application.
Whether the petitioner-builder had locus standi to object to the registration of the society given the lack of material establishing compliance with the Apartment Ownership Act.
Whether the interim orders subsequently confused the legal position once the society registration had already become effective.
4 provisions across 3 enactments
M/s. Kushal Constructions
Gunvant Ramlal Shah
S.C. Dharmadhikari
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court