Membership cannot be compelled for non-existent flats in refuge areas, violating statutory limits on society membership.

The Petitioners are four Co-operative Housing Societies managing a residential complex in Mumbai

Respondent No. 7 (the Developer) executed registered Agreements for Sale in April 2019 for five units in favor of Respondent Nos. 3 and 4

The Petitioners refused to admit the purchasers as members, contending that the units were non-existent residential flats and were actually "refuge areas" in the possession of the Societies since 2009

Previously, in May 2017, a Certificate of Entitlement for Deemed Conveyance had been issued in favor of the Societies, which they argued divested the Developer of any further rights to sell units

Respondent Nos. 3 and 4 applied for membership under Section 22(2) of the Maharashtra Co-operative Societies (MCS) Act. The Assistant Registrar (Respondent No. 2) rejected their application in 2020, but the Divisional Joint Registrar (Respondent No. 1) reversed this decision in a Revision Application on July 22, 2022, directing the Societies to admit them

The Petitioners challenged this order and the subsequent execution order in the present Writ Petition

1. Whether the Divisional Joint Registrar was correct in directing the Societies to admit members based on agreements for units that comprised vacant refuge areas rather than constructed flats

2. Whether the admission of members for non-existent flats would violate the statutory limits on membership under Section 154B-5 of the MCS Act

Section 154B-5 of the MCS Act, 1960, which mandates that a housing society shall not admit members exceeding the number of flats or plots available for allotment

Section 10(1) of the Maharashtra Ownership Flats Act (MOFA), 1963, which requires a promoter to join the membership of a society for unsold flats at the time of incorporation

Principle from Videocon Appliances Ltd. v. Maker Chambers V Premises Co-operative Society Ltd., which stipulates that a society cannot refuse membership based on the legality of a construction (authorized vs. unauthorized), as such disputes are for Civil Courts to decide

The Court found that the floor plans and municipal tax assessments corroborated the Petitioners' claim that the spaces were refuge areas and not constructed flats

The Court observed that Respondent No. 7 did not join the Societies as a member for "unsold flats" during the 2008-09 incorporation, as required by Section 10 of MOFA, indicating no such flats existed at that time

The issuance of the Deemed Conveyance certificate in 2017 divested the Developer of rights to the property prior to the 2019 sale agreements

Distinguishing the Videocon precedent, the Court reasoned that while a society cannot adjudicate on whether a construction is authorized, it can refuse membership when the units physically do not exist as flats

The Court emphasized that since the refuge areas cannot be categorized as flats, granting membership would force the Societies into a direct violation of Section 154B-5 of the MCS Act by exceeding the number of available allotments

The Court dismissed the Registrar’s reliance on a private architect's certificate, noting it contradicted the official Occupancy Certificate and factual records

The Court restored the Assistant Registrar’s original order dated October 19, 2020, which had rejected the membership applications

The Court held that a housing society cannot be compelled to admit members for non-existent flats located in refuge areas, as such an act would violate the statutory membership limits prescribed under Section 154B-5 of the MCS Act