No Clause In Private Agreement Can Nullify Statutory Rights Under Maharashtra Cooperative Societies Act: High Court

The Bombay High Court stated that no clause in a private agreement can nullify a statutory right under Maharashtra Cooperative Societies Act, 1960 (MCS Act), nor can it be the sole foundation for an administrative action of such severity as deregistration.

In this case, the issue before the bench was whether an apex cooperative housing association validly registered under Section 154B of the MCS Act, consisting of duly registered societies of flat purchasers, can be deregistered on the objection of a developer who failed to fulfill his statutory duties under Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA).

“In a society governed by rule of law, the supremacy of statute over contract is non-negotiable. If cooperative societies, having fulfilled the statutory requirements, resolve to federate, the Registrar cannot act contrary to law merely because the promoter objects on the basis of a contract clause that itself runs counter to the statutory scheme,” stated the bench of Justice Amit Borkar.

The Respondent No.3 is a developer who undertook construction of a large housing project named Neelkanth Heights on a larger land parcel. The respondent No.3 (developer) failed to take steps to constitute an apex body or association of societies as envisaged under Section 154B of the MCS Act.

Thereafter, owing to the persistent failure of respondent No.3 to execute a conveyance deed in terms of the statutory mandate under Section 11 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (for short, “MOFA”), the petitioners convened a special general body meeting of the apex association.

The developer filed Application before Divisional Joint Registrar, Cooperative Societies (respondent No.1), praying for deregistration of the petitioners' apex association. It was contended that the association was prematurely registered without his consent, and that the layout is yet to be completed. It was alleged that the registration was procured by misrepresentation.

The Divisional Joint Registrar passed the impugned order deregistering the association in purported exercise of powers under Section 21A of the MCS Act.

According to the petitioners, the developer has no locus standi to seek deregistration of a duly registered society, as he is not an aggrieved party in the eye of law. Formation of a cooperative society by purchasers of flats is a statutory right flowing from Section 10 of the MCS Act and Section 10 of the MOFA. Such a right cannot be contractually diluted or curtailed by any private agreement with the promoter.

The bench observed that instead of helping the flat purchasers as per law, the developer has acted in a manner which is meant to defeat their legal rights. The duty to help the purchasers in forming a cooperative society is not optional, but compulsory, as per Section 10 of the MOFA Act and Rule 9 of the MOFA Rules. After societies are registered, they have a full and independent right under Section 154B-8 of the MCS Act to form an apex or federation society. This right does not depend on the permission or consent of the developer.

“Any clause in the agreement of sale between the flat purchaser and the developer which is inconsistent with the rights and obligations flowing under the MCS Act and MOFA is void to the extent of such inconsistency. Statutory mandates cannot be defeated by contract. While a developer may have commercial or logistical reasons for planning completion of a larger layout in phases, such planning cannot override the statutory rights of flat purchasers and the autonomy of registered cooperative societies to federate under the MCS Act,” opined the bench.

The bench opined that the drastic power under Section 21A was mis-invoked in the case. The material on record does not reveal any conduct by the petitioners amounting to fraud or misrepresentation in obtaining registration.

In view of the above, the bench allowed the petition and quashed the order passed by the Divisional Joint Registrar, Cooperative Societies (respondent No.1).

Case Title: Rameshwar Cooperative Housing Society Limited v. Divisional Joint Registrar, Cooperative Societies

Citation: 2025 LiveLaw (Bom) 183

Case Number: WRIT PETITION NO.4704 OF 2025

Counsel for Petitioners: Akshay Patil with Devika Madekar and Kalpesh U. Patil

Counsel for Respondent: Neha Bhide

Click Here To Read/Download Order