Cosmopolitan III Co-operative Housing Society Ltd. Vs Hon’ble Minister (Bombay High Court)
Summary: The Bombay High Court dismissed the petition filed by Cosmopolitan III Co-operative Housing Society Ltd. challenging the appellate order that had set aside the Joint Registrar’s decision permitting bifurcation of Cosmopolitan II Co-operative Housing Society Ltd. under Section 18(1) of the Maharashtra Co-operative Societies Act, 1960 read with Rule 17 of the Maharashtra Co-operative Societies Rules, 1961. The original society comprised 156 members, including residents of the main building, 27 row-house owners and 20 shop owners. The row-house and shop owners sought separation and formation of Cosmopolitan III Co-operative Housing Society Ltd. The Joint Registrar allowed bifurcation on 26 June 2020, but the Minister for Co-operation and Marketing allowed the appeal against that decision on 4 February 2021. The High Court examined the statutory scheme of Section 18 and Rule 17 and held that an order of bifurcation must comprehensively address the constitution of the resulting societies, their property rights and interests, liabilities, duties and obligations, and incidental, consequential and supplemental arrangements necessary to make the division workable.
The Court held that the expression “interest of members”, “interest of the co-operative movement” and the requirement of securing proper management could not be construed narrowly. A holistic examination of the consequences of bifurcation was necessary, particularly where property rights and common amenities could remain inseparably intertwined. In the present case, the constructed-area proportion was approximately 74:26 and physical division of the plot in that proportion would result in some row houses and shops falling within the portion attributable to the existing society. CIDCO, the lessor and competent authority, had also stated that subdivision or bifurcation of a plot on which construction had already been completed and an occupancy certificate obtained was not permissible. The Joint Registrar’s order nevertheless left questions concerning subdivision of land and separation of common amenities to the two societies instead of resolving them through the bifurcation scheme. The High Court further found that the Joint Registrar had not recorded a reasoned finding demonstrating why bifurcation was necessary under Section 18(1).
