In a path-breaking judgment, the Bombay high court has held that even a single dissenting member of a cooperative housing society cannot be thrown out by a builder based on a mere development agreement with the society and a majority of the flat owners in it for redevelopment of the building.
Expressing serious concern at the “disturbing trend of developers approaching the court and seeking eviction and dispossession of non-cooperating members of housing societies’’, Justice S C Dharmadhikari held that any redevelopment activity “should not compromise the rights of members and must safeguard the existence of the society’’.
“It is the developer who comes to court on the basis of rights conferred in his favour by the society, including that of FSI/TDR. Thus, the society not only loses the existing structure completely but is divested of its right to the land itself. If all such arrangements are accepted at their face value, then the existence of the cooperative housing society itself is threatened,’’ the judge observed, adding that these were serious issues for the state to consider.
The judgment struck a blow for dissenting members and clearly indicated that a redevelopment agreement entered into by the housing society with a builder, despite having the consent of a majority of members, cannot bind the minority if the reconstruction is not in the interest of all members of the society.
By his judgment, a detailed copy of which was available on Wednesday, Justice Dharmadhikari last Saturday dismissed an interim application filed by a developer Acknur Constructions Pvt Limited filed against Fardoon Apartment Cooperative Housing Society at Khar. The developer, Deepak Rao, was seeking eviction of the owners of two shops and one residential flat in the building, as they were “stalling the redevelopment work agreed by the society last January in a general body meeting’’.
Of the 12 members in the 39-year-old four-storey building, Sweety and Rajendra Agarwal, owners of two ground-floor shops, and Prakash Shivlani and Rashmi Bidichandani, who claimed rights to one flat, opposed the redevelopment project on the grounds that it was not in their interest or that of the society.
The builder, through his lawyer Narendra Walawalkar, said the dissenting minority was bound by the majority resolution and the society’s decision, and claimed that the society had conferred rights to the land on him. The society, through its lawyer Vipin Kamdi, supported the builder’s stand and claimed that a “non co-operative’’ “malicious’’ minority had no rights in the property. But also contradicting itself, it repeatedly said that what it had with the builder was a mere development agreement.
Mukesh Vashi, lawyer for the Agarwals, argued that from the documents being relied on, it was clear that the members had not agreed to confer any rights over the property on the builder. Besides, only those with existing legal rights could seek to evict his client. In this case, he said, the builder had no such rights under the development agreement. In fact, he argued and the judge agreed, that the annual general body meeting held by the society was not in conformity with the by-laws and had been held with inadequate notice.
The judge said the builder had failed to make out a prima facie case that he could remove members or that the agreement was binding on everyone. He also held, significantly, that the developer has no “higher right than the society’’. “The developer has approached the court only on the basis of the agreement executed with the society and the majority of its members individually. If anyone, it is the society that will have to initiate appropriate action against those not cooperating in the redevelopment or failing to abide by its resolutions,’’ he said.
The HC also noted that the case highlighted “several aspects of the development which cannot be brushed aside’’. These included allegations made against the builder of favouring one member of the society at whose instance the agreement was signed—the member has been give 30% more carpet area and terrace space while the shops get less area.
The HC held that though the society denied discrimination, this and another “serious allegation of the society and the developer misleading the deputy registrar of the cooperative societies must also be probed into at length’’ “Unless a probe into all this was completed, the relief claimed by the developer could not be granted,’’ Justice Dharmadhikari said observing that there is also a “serious charge of an underhand dealing’’ on the amount of corpus fund agreed by the builder,but which is denied by the society.
In the end the HC also observed that though the state government had come out with guidelines on redevelopment of old buildings of cooperative housing societies, the directives were found wanting on many aspects such as TDR and rights attached to the land. “In this case, the developer has prima facie not followed these directives.’’ In the final analysis, the court said the “cooperative society movement is a socio-economic and moral movement. It is to fulfil the constitutional aim of distribution of wealth. It is not a profit-making activity not is it a tool for power politics. Its true role cannot be forgotten or else commerce will displace service.’’