07 May 2121

Directives under Section 79A of the Maharashtra Co-operative Societies Act, 1960 are not mandatory and its sufficient compliance is adequate - Bombay High Court

Case : Abhanga Samata Co-op. Housing Society Ltd. v. Parag and Ors. Appeal from Order (ST) No. 7776 of 2021 in Notice of Motion No. 1589 of 2020 with Interim Application (ST) No. 7780 of 2021

Court : Bombay High Court

Bench : Justice Sandeep K. Shinde

Decided on : 07 May 2121

Relevant Statues

Order 39 Rules 1 and 2, Section 104 read with Order 43(1) (2) of the Code of Civil Procedure, 1908

Section 79-A of the Maharashtra Co-operative Societies Act, 1960

Brief Facts & Procedure History

1. The relevant seminal facts are that the Appellant is a co-operative housing society formed and registered under the provisions of the Maharashtra Co-operative Societies Act, 1960 and is the owner of the land and the building which is the subject matter of this appeal, i.e., property bearing CTS No.33 of 2014 situated at Mumbai. Respondent No.1 i.e. Plaintiff is a member of the society since 2020. Respondent No.2 is a Developer/Builder who has been appointed as ‘Developer’ by the Appellant/Society for carrying out the development of its property.

2. Respondent No.1 filed the Short Cause Suit No.1240 of 2020 in the City Civil Court against the Society and the developer inter-alia, seeking a declaration that any arrangement made between the society and the developer for the purpose of developing the subject property is bad in law and is contrary to the provisions of the law on the ground that re-development process initiated, violates the guidelines issued by the State vide its directives under Section 79-A of the Maharashtra Co-operative Societies Act, 1960. As also on the ground that the process of selection of developer itself is vitiated by fraud. Thus, pleaded that the directives issued under the said Act were not followed in its letter and spirit.

3. Hence, at the instance of a solitary member of Abhang Samata Co-operative Housing Society Ltd., the learned trial Court vide order dated 19.3.2021 (Impugned Order), injuncted the Appellant/Society from proceeding with the process of re-development of its building and the Appellant-society seeks to challenge the impugned order under Section 104 read with Order 43(1) (2) of the Code of Civil Procedure, 1908.

The Issue(s) of the Case

Whether the Appellant/Society is entitled for setting aside the impugned order dated 19.3.2021 in Notice of Motion No.1589 of 2020 in Short Cause Suit No.1240 of 2020 passed by the learned Trial Court?

The Observations of the Court

The Honourable Bombay High Court observed the following:

1. Observed that Plaintiff did not challenge the primary decisions i.e. various resolutions passed by the General Body, but instead seeks to challenge the ‘arrangement’ arrived at between the Society and the Developer. Hence, the Court opined that this is a fundamental defect in a suit and was failed to be noted by the learned Trial Judge.

2. Took cognizance of the fact that the meeting dated 8.12.2019 was attended by 36 persons/members out of 51. Hence, the decision to re-develop the building was with the consent of the majority members of the society thereby expressing the transparency of material to its members in the process of re-development.

3. Opined that Plaintiff did not establish the factors to be satisfied for the grant of temporary injunction i.e. prima-facie case, the balance of convenience and irreparable loss, which were overlooked by the learned Trial Judge.

4. Witnessed that the learned Trial Court failed to notice that the alleged irregularities in the meeting dated 8.12.2019 cannot ipso-facto nullify the resolutions passed by the General body since 2015. Also, the irregularities noted by the learned trial Judge cannot displace the decisions taken by the majority members of the society.

5. Noted that the findings recorded by the learned Trial Court were contrary to the evidence on record and the said Court has also failed to appreciate the effect of the subsequent events, i.e., execution and registration of the development agreement and various permissions granted by the Planning Authority.

6. By referring to the cases of Harsha Co-operative Housing Society Ltd. v. Kishandas S. Rajpal and Ors., Writ Petition No.10285 of 2009; Maya Developers v. Neelam R. Thakkar, Notice of Motion (L) No.834 of 2015, the Court held that the General Body is supreme and the view of the majority will bind on the minority. It further held that the Directives under Section 79A of the Maharashtra Co-operative Societies Act, 1960 are not mandatory and its sufficient compliance is adequate.

7. Further opined that the Directives under Section 79A of the Maharashtra Co-operative Societies Act, 1960 does not bind on the third party and the decisions are taken in accordance with the principles of democracy cannot be interfered with or displaced, unless the same was sanctioned by fraud or misrepresentation.

The Decision held by the Court

The Honourable Bombay High Court allowed the Appeal and set aside the impugned order dated 19.3.2021 in Notice of Motion No.1589 of 2020 in Short Cause Suit No.1240 of 2020 passed by the learned Judge, City Civil Court, Bombay.

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