Bombay High Court rules co-operative court can hear challenges to redevelopment resolutions when the dispute concerns meeting legality, not redevelopment merits

Everard Co-operative Housing Society Ltd., a registered housing society under the Maharashtra Co-operative Societies Act, 1960 (“MCS Act”), was involved in disputes concerning redevelopment of its property.

In Dispute No. CC/III/449 of 2024, certain members challenged an agenda notice dated 22 August 2022 and Resolution No. 3 passed at the Special General Body Meeting (“SGBM”) dated 28 August 2022, alleging lack of authority to convene the meeting, procedural violations, and illegality of the resolution concerning redevelopment.

In Dispute No. CC/III/92 of 2024, members challenged resolutions dated 27 and 28 January 2024 and an agenda notice dated 19 February 2024.

The Co-operative Court granted interim protection on 10 April 2024 restraining implementation of the impugned resolutions and further redevelopment-related steps.

The Co-operative Court subsequently returned both disputes under Order VII Rule 10 of the Code of Civil Procedure, 1908, holding that the disputes essentially concerned redevelopment, which did not touch the business of the society and therefore fell outside its jurisdiction.

The Maharashtra State Co-operative Appellate Court reversed those orders and restored the disputes to the Co-operative Court, holding that they primarily concerned the conduct of general meetings and management of the society.

The society, its office bearers and certain members challenged the appellate orders under Article 227 of the Constitution.

Whether disputes challenging the legality of notices, meetings and resolutions of a co-operative housing society, although connected with redevelopment, fall within the jurisdiction of the Co-operative Court under Section 91 of the MCS Act

Whether the fact that the impugned resolutions related to redevelopment automatically excluded the jurisdiction of the Co-operative Court on the ground that redevelopment did not touch upon the business of the society

Whether the Co-operative Court was justified in returning the disputes for presentation before the Civil Court under Order VII Rule 10 of the CPC

Section 91(1) of the MCS Act confers jurisdiction on the Co-operative Court over disputes touching the constitution, management or business of a society when they arise between parties belonging to the enumerated statutory classes; both the subject matter and the identity of the parties must satisfy the provision.

Section 91(3) operates as a bar where the dispute falls within the statutory jurisdiction of the Co-operative Court.

The Supreme Court’s decision in Margret Almeida v. Bombay Catholic Co-operative Housing Society Ltd., (2012) 5 SCC 642, requires both the nature of the dispute and the parties to fall within Section 91; however, challenges concerning a development agreement and related resolutions may need to be adjudicated together by the Civil Court where separate proceedings would produce conflicting or ineffective relief.

The decisions in Mohinder Kaur Kochar v. Mayfair Housing Pvt. Ltd., Maya Developers v. Rajkumar L. Nagda, and Parimal H. Solanki in the matter of Bhoumik Co-operative Housing Society Ltd. recognise that redevelopment ordinarily does not constitute the society’s business, subject to the statutory framework introduced by Section 154B-1(17), which includes demolition, reconstruction and construction of additional premises within the definition of a housing society; existing bye-laws continue under Section 154B-31 until amended.

The Bank of India Staff Panchsheel Co-operative Housing Society Ltd. v. Jitendra Kumar Jani holds that whether redevelopment forms part of a society’s objects may be a mixed question of law and fact unsuitable for threshold rejection under Order VII Rule 11.

Baliram Totaram Misal v. Saujanya Co-operative Housing Society Ltd. emphasises that where a development agreement is also challenged, a composite proceeding before the Civil Court may be necessary to avoid inconsistent outcomes.

The High Court held that the parties were unquestionably within the enumerated classes under Section 91.

It then examined the substance of the disputes rather than merely the fact that the impugned resolutions concerned redevelopment.

The principal challenges concerned the authority to convene the meetings, compliance with the MCS Act, Rules and bye-laws, breach of the Divisional Joint Registrar’s interim order, and the validity of resolutions passed at allegedly unlawful meetings.

These were disputes concerning the management and conduct of the society, rather than direct challenges to the merits of redevelopment, a development agreement, or completed third-party rights.

The Court rejected both extremes: redevelopment could not automatically oust Co-operative Court jurisdiction, but members could not use technical challenges to meeting procedure to circumvent the Civil Court where redevelopment had substantially progressed and contractual or third-party rights required determination.

In the present case, no developer had been appointed and no development agreement had been executed; moreover, the Co-operative Court’s interim order had restrained implementation of the resolutions and further redevelopment steps.

Consequently, there was no immediate risk of the disputes becoming infructuous or of conflicting adjudications between the Civil Court and the Co-operative Court.

The Appellate Court had therefore correctly restored the disputes to the Co-operative Court.

It held that the disputes primarily challenged the legality of the society’s meetings, notices and resolutions and therefore fell within the jurisdiction of the Co-operative Court under Section 91 of the MCS Act, notwithstanding their connection with redevelopment.

The Co-operative Appellate Court was justified in setting aside the orders returning the disputes to the Civil Court.

All four writ petitions were dismissed, the Rule was discharged, and no order as to costs was made.

The petitioners were left at liberty to pursue remedies in accordance with law concerning the Co-operative Court’s interim order dated 10 April 2024.