Bombay High Court
Cosmopolitan Iii Co-Operative Housing ... vs Hon.Minister Co-Operation Marketing ... on 14 February, 2025
2025:BHC-AS:7337
WP-2183-2021 (final).doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 2183 OF 2021
Cosmopolitan III Co-operative Housing Society ]
Ltd. ]
A society registered under the Maharashtra Co- ]
operative Societies Act, 1960 having its address ]
at Punit Park, Plot No. 182/C, Sector 17, Nerul ]
(East), Navi Mumbai - 400 706. ] ...Petitioner.
Versus
1. Hon'ble Minister, Co-operation, Marketing, ]
Government of Maharashtra, ]
Having address at 3rd Floor, Mantralaya ]
Annexe, Madam Cama Road, Mumbai - ]
400032. ]
2. Cosmopolitan II Co-operative Housing ]
Society Ltd. ]
A society registered under the Maharashtra ]
Co-operative Societies Act, 1960 having its ]
address at Punit Park, Plot No. 182/C, Sector ]
17, Nerul (East), Navi Mumbai - 400 706. ]
3. The Joint Registrar, Co-operative Societies ]
(CIDCO) ]
Having address at City and Industrial ]
Development Corporation (Maharashtra) ]
Ltd., Raigad Bhavan, 3rd Floor, C.B.D. Belapur, ]
Navi Mumbai - 400 614. ]
4. B. D. Ahire, Administrator of Cosmopolitan ]
II Co-operative Housing Society Ltd. ]
A society registered under the Maharashtra ]
Co-operative Societies Act, 1960 having its ]
address at Punit Park, Plot No. 182/C, Sector ]
17, Nerul (East), Navi Mumbai - 400 706. ]
5. D. R. Patil, Authorized Officer of ]
Cosmopolitan III Co-operative Housing ]
Society Ltd. ]
A society registered under the Maharashtra ]
Co-operative Societies Act, 1960 having its ]
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address at Punit Park, Plot No.182/C, Sector ]
17, Nerul (East), Navi Mumbai - 400 706. ]
6. City and Industrial Development ]
Corporation (CIDCO) ]
having office at CIDCO Bhawan, CBD ]
Belapur, Navi Mumbai. ] ...Respondents.
------------
Mr. P. N. Patil i/b Mr. Laxman S. Deshmukh for the Petitioner.
Mr. B. B. Sharma (through VC) for Respondent No.6-CIDCO.
Mr. Shahaji Shinde, Addl. Govt. Pleader and Mr. S. L. Babar, AGP for Respondent-
State.
Mr. Rohan Cama, Mr. Akshay Deshmukh, Mr. Bhavesh Joshi, Ms. Mayureshwari
Korday i/b Mr. Akshay Deshmukh for Respondent No.2.
------------
Coram : Sharmila U. Deshmukh, J.
Reserved on : 17th December, 2024.
Pronounced on : 14th February, 2025.
Judgment :
1. Rule. With consent, Rule made returnable forthwith and taken
up for final hearing.
2. By this petition, exception is taken to order dated 4 th February,
2021 passed by the Hon'ble Minister for Co-operation and Marketing
setting aside the order dated 26 th June, 2020 passed by the Joint
Registrar, City and Industrial Development Corporation, Navi Mumbai
ordering the bifurcation of Respondent No.2-Society in exercise of
powers under Section 18(1) of the Maharashtra Co-operative Societies
Act, 1960 [for short, "MCS Act"] read with Rule 17 of the Maharashtra
Co-operative Societies Rules, 1961 [for short, "MCS Rules"].
3. The facts as discerned from the record is that the Respondent
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No. 2-Society is situated on plot of land admeasuring 7178.85 square
meters located at Nerul, Navi Mumbai. The layout comprises of a
building known as "Cosmopolitan II" comprising of 'A to D Wing', 27
Row houses and 20 shops. The constructed area of Cosmopolitan II is
5307.104 square meters, row houses is 1415.610 square meters and
shops is 449.652 square meters. The owners of the row houses and the
shops were initially members of Respondent No. 2-Society, which had
total of 156 members comprising of 109 residents of the building and
owners of 27 row houses and 20 shop owners.
4. These 27 row house owners and 20 shop owners moved an
Application on 2nd August, 2019, before the Joint Registrar seeking
bifurcation of Respondent No.2-Society seeking seperation of the row
houses and shops from the main building by forming Cosmopolitan-III
Co-operative Housing Society Limited. The bifurcation came to be
resisted by Respondent No.2-Society. Vide order dated 26 th June, 2020,
the Joint Registrar allowed the Application for bifurcation permitting
the owners of the row houses and shops to register a different
organization for its 47 members known as Cosmopolitan-III Co-
operative Housing Society Limited. Pursuant thereto, the Petitioner-
Society was issued 'Certificate of Registration'.
5. Against the order of bifurcation, Respondent No.2-Society filed
an appeal under Section 152 of the MCS Act before Respondent No.1
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which was allowed vide impugned order dated 4 th February, 2021
leading to the filing of the present petition.
6. Heard Mr. P. N. Patil for Petitioner, Mr. Rohan Cama for
Respondent No.2 and Mr. B. B. Sharma for Respondent No.6
respectively.
7. Mr. Patil, would submit that as per Section 18 of MCS Act, the
Registrar was required to be satisfied that it is in interest of members
that the Society be bifurcated for which consultation is required with
the Federal Society, which if not responded within 45 days, 'No
objection' is presumed. He submits that in the present case, the draft
scheme was prepared and forwarded to the federal Society and as
there was no opinion communicated, 'No objection' of federal society is
presumed. Pointing out to order of Joint Registrar, he submits that
Joint Registrar was satisfied that considering the disputes and the
groupism amongst the members and for appropriate administrative
control, action under Section 18(1) is warranted. He submits that the
Appellate Authority has taken a contrary view by considering factors
which are extraneous to an inquiry under Section 18 of MCS Act. He
submits that Appellate Authority has considered that there will be a
difficulty in sub-division of the plot and a dispute about the utilisation
of the Floor Space Index, which were not required to be considered. He
would further submit that provisions of Section 17 are distinct and
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separate from Section 18 of MCS Act and Appellate Authority has
upset the findings of Joint Registrar by considering non compliance of
Section 17 of MCS Act. He submits that Appellate Authority has erred
in holding that there is an encroachment by the row houses owners
which is irrelevant consideration. Drawing support from decision in the
case of The Ruby Emerald Diamond Park Co-operative Housing
Society v. Guru Dileep Mazgoankar1, he submits that in that case,
identical contention as regards the dispute on the aspect of F.S.I. was
raised and the Court held the said facts to be irrelevant for
consideration of bifurcation and that possibility of flat owners of the
majority flat owners having defining-say in decision-making process
cannot be lost sight of. He submits that the Special Leave Petition
against the said order came to be dismissed.
8. Per contra Mr. Cama, would submit that Respondent No.2-Society
has built-up area which amounts to 74% of the total built-up area
whereas the petitioner-society is having 26% of built-up area. He
tenders a sketch of layout to demonstrate the location of building, the
row houses and the shops. He submits that if the property is divided in
ratio of constructed area, i.e. 74:26, some of the row houses would fall
within 74% plot of Respondent No.2-Society and therefore, there is
actual impartibility aspect which was not considered. He would further
1 Writ Petition No. 828 of 2015 dtd.17th July, 2015.
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submit that the judgment in the case of The Ruby Emerald Diamond
Park Co-operative Housing Society (supra) in fact takes into
consideration the circumstances that three colonies therein were
situated on separate independent plots and had independent roads,
water pumping stations, electricity meters as also the planning was of
three different types which is not so in the present case. He submits
that the bifurcation order firstly does not record any finding that it is in
the interest of members that the Society should be bifurcated and
secondly, the directions place the responsibility of sub-division on
Respondent No.2-Society. He submits that the Application for
bifurcation demonstrates that the disputes are referable to Section 91
of MCS Act. He would further submit that Clause No. 46 of the Sale
Agreement provides that interest in the said building is impartible. He
submits that the property is leased by City and Industrial Development
Corporation, who has filed Affidavit-in-reply stating that
sub-division/bifurcation of the plot on which buildings have already
been constructed and occupancy certificate is obtained, is not allowed.
He submits that in view thereof, the property cannot be sub-divided
and would lead to further complications.
9. Drawing support from decision of Navjivan Commercial
Premises Co-operative Society v. Navjivan Co-operative Housing
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Society2 he would submit that the co-ordinate bench has held that the
bifurcation orders must first contain satisfaction of the Registrar and
that it is essential to settle the dispute on the questions with regard to
the common property and amenities including the dispute with regard
to the available FSI. He submits that the Joint Registrar did not take
into consideration all these aspects which has been rightly considered
by the Hon'ble Minister.
10. In rejoinder, Mr. Patil would submit that objection of absence of
consultation with federal society was not raised before the Hon'ble
Minister. He submits that the issue of F.S.I. is consequential act which is
not required to be taken into consideration at the time of adjudication
of Section 18 Application. He submits that as far as common amenities
are concerned, the order of Joint Registrar takes care of the same. He
submits that in Navjivan Commercial Premises Co-operative Society
(supra), the bifurcation order is under the pre-amended Act which was
in the context of public interest.
11. I have considered the submissions and perused the records.
12. There is no dispute about the layout comprising of building
consisting of four wings, the row houses and the shops as also about
the ratio of the constructed area in proportion of 74: 26. Bifurcation is
sought by members occupying 26% constructed area. For better
2 2024 SCC OnLine Bom 1615
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understanding of the actual position at site, Mr. Cama had submitted a
sketch of the layout, which was not disputed by Mr. Patil. The sketch
depicts that on the southern side of the building, some of the
rowhouses and shops are located. In event, the plot has to be physically
sub-divided in proportion to the constructed area, some of the row
houses and shops would fall within the 74% plot of the Respondent
No. 2-Society.
13. Coming to the statutory provisions, Section 18 of MCS Act
permits bifurcation of the Society if found essential in :
(a) public interest, or
(b) interest of members of such society, or
(c) interest of the co-operative movement, or
(d) for securing proper management of any society, and reads thus:
18. Power to direct amalgamation, division and
reorganisation in the public interest or in the interest of
members, etc.
(1) Where the Registrar is satisfied that it is essential in the
public interest or in the interest of members of such societies
or in the interest of the co-operative movement, or for the
purpose of securing the proper management of any society,
that two or more societies should amalgamate or any society
should be divided to form two or more societies or should be
reorganized then notwithstanding anything contained in the
last preceding section but subject to the provisions of this
section, the Registrar may, after consulting such federal
society as may be notified by the State Government by order
notified in the Official Gazette, provide for the amalgamation,
division or reorganization, of those societies into a single
society, or into societies with such constitution, property
rights, interests and authorities, and such liabilities, duties and
obligations, as may be specified in the order:
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Provided that, such notified federal society shall communicate
its opinion to the Registrar within a period of forty-five days
from the date of receipt of communication, failing which it
shall be presumed that such federal society has no objection to
the amalgamation, division or reorganisation and the Registrar
shall be at liberty to proceed further to take action accordingly.
(2) No order shall be made under this section, unless-
(a) a copy of the proposed order has been sent in draft to
the society or each of the societies concerned.
(b) the Registrar has considered and made such
modifications in the draft order as may seem to him desirable
in the light of any suggestions and objections which may be
received by him within such period (not being less than two
months from the date on which the copy of the order as
aforesaid was received by the society) as the Registrar may fix
in that behalf, either from the society or from any member or
class of members thereof, or from any creditor or class of
creditors.
(3) The order referred to in sub-section (1) may contain such
incidental, consequential and supplemental provisions as may,
in the opinion of the Registrar, be necessary to give effect to
the amalgamation, the division or reorganization.
(4) Every member or creditor of or other person inserted in
each of the societies to be amalgamated, divided or
reorganized who has objected to the scheme of
amalgamation, division or reorganization, within the period
specified, shall be entitled to receive, on the issue of the order
of amalgamation, division or reorganisation his share or
interest if he be a member and the amount in satisfaction of
his due if he be a creditor.
(5) On the issue of an order under sub-section (1), the
provisions in sub-sections (2), (3) and (4) of section 17 shall
apply to the societies so amalgamated, divided or reorganised
as if they were amalgamated, divided or reorganised under
that section, and to the society amalgamated, divided or
reorganised.
(6) Nothing contained, in this section shall apply for the
amalgamation of two or more co-operative banks or two or
more primary agricultural credit societies.
14. Rule 17 of the The Maharashtra Co-operative Societies Rules,
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1961 provides for the consultation by the Registrar with the Federal
Society on the draft scheme prepared and reads thus:
17. Direction by Registrar for amalgamation, division and
reorganisation of societies:-
(1) Before issuing any order under sub-section (1) of Section
18 providing for the amalgamation, division or reorganisation
of any society or societies, the Registrar shall prepare a draft
scheme in respect of such amalgamation, division or
reorganisation stating in particular the manner in which the
new committee or committees, of the society or societies
resulting from such amalgamation, conversion or
reorganisation shall be constituted and the by-laws which
such society or societies shall follow. The Registrar shall then
consult such federal society as may be notified by the State
Government in the Official Gazette, the notified Federal
Society shall offer its remarks within forty-five days from the
date of receipt of communication. If such Federal Society
does not offer remarks within forty-five days, or and after
considering the suggestions, if any, that will be made by such
federal society, shall send a copy of the draft of the order
proposed to be issued by him under sub-section (1) of Section
18, to the society or each of the societies concerned calling
upon it or them to invite objections or suggestions from any
member or class of members thereof or from any creditor or
class of creditors and to submit such objections and
suggestions together with its own or their own suggestions
and objections within a period of not less than two months
from the date on which the copy of the draft aforesaid was
received by it or them.
(2) The Registrar shall consider all such suggestions and
objections and make such modifications in the draft order as
may seem to him desirable in the light of those suggestions or
objections and then issue a final order under sub-section (1) of
Section 18.
(3) Any member or creditor of each of the societies to be
amalgamated, divided or reorganised, who has objected to the
scheme of amalgamation, division or reorganisation within the
period specified in sub-rule (1), may apply to the Registrar for
payment of his share or interest, if he be a member, and the
amount in satisfaction of his dues, if he be a creditor. Such
application shall be separate and distinct from the objection
or suggestion which he may have submitted to the society or
the Registrar under clause (b) of sub-section (2) of Section 18.
It shall be competent for the Registrar to nominate an officer
not below the rank of a Deputy Registrar to investigate such
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applications and to determine the payments required to be
made to the members or creditors, as the case may be.
(4) Subject to the provisions of the Act, the rules and the by-
laws, the Registrar may by order require the society concerned
to meet in full or satisfy otherwise all due claims of the
members and creditors and thereupon the society shall be
bound to meet in full or satisfy otherwise all due claims of the
members and creditors within such time as may be specified
by the Registrar in the order.
15. The statutory scheme of Section 18 read with Rule 17
necessitates the bifurcation order to be a comprehensive order
providing for constitution, property rights, interests and authorities,
liabilities, duties and obligations and to contain such incidental,
consequential and supplemental provisions as are necessary to give
effect to the division. Before ordering bifurcation, the Registrar is
required to consult the Federal Society on the draft scheme and after
considering its suggestions, if any, and where there are no remarks
offered within 45 days, the draft of the proposed order is to be sent to
the Society inviting suggestions and objections and thereafter the final
order is to be issued.
16. Considering the statutory provision, the use of the expression
"interest of members of such societies", or "in interest of the co-
operative movement" or "for the purpose of securing proper
management of the society" cannot be construed in a narrow sense of
personal interest of the members and has to be understood in the
context of the statutory scheme of Section 18. While adjudicating an
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application for bifurcation, there has to be holistic consideration of the
consequences ensuing from the bifurcation and whether the
bifurcation order is capable of providing a clear cut division of the
constitution of the societies, the property rights and interests,
separation of common amenities, etc. which are necessary for the
smooth functioning of the bifurcated societies. To achieve that end,
the property rights and interests and common amenities should not be
intertwined in such a manner so as to be inseparable. The intent
behind the preparation of the draft scheme in respect of the
bifurcation is to ensure that the scheme makes necessary arrangement
for separation of property rights and common amenities.
17. In the present case, although it is sought to be contended by Mr.
Cama that draft scheme as contemplated by Rule 17 was not sent to
federal society, the same is a question of fact and there is no material
produced on record to show that such objection was raised before any
authority and therefore, I am not inclined to consider the same.
18. Coming to the case set up by Petitioner, the Application under
Section 18 of MCS Act sought bifurcation on the ground that the
managing committee has misappropriated the society funds, there was
illegal calling and conduct of Annual General Meeting, contrary to the
statutory provisions. The request to hold election after end of tenure
was ignored and non-maintenance of their premises despite payment
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of maintenance. The allegations were denied by Respondent No. 2 and
it was pleaded that despite the share of Petitioner-Society being
26.01% of constructed area, an area of about 50% is occupied by them,
the bifurcation is not possible as the constructed built-up area of
Respondent No. 2 is 73.99%, whereas that of Petitioner is 26.01% and
that the drainage line is common and therefore, bifurcation is not
possible.
19. The order of the Joint Registrar holds that there is dispute
between the members and groupism and therefore, in interest of co-
operative movement and for securing proper management of the
Society, action under Section 18(1) is required. The order further
provides for separate constitution of two separate societies, the
arrangement as far as issuance of fresh share certificates of newly
constituted society. Most pertinent are the directions to approach the
Competent Authority for sub-division of the land and transfer of
conveyed land by Respondent No. 2 to the Petitioner in proportion to
the constructed area. The bifurcation order puts the responsibility
about the arrangement about separation of common amenities upon
two societies.
20. The difficulty with the bifurcation order is that firstly the
Competent Authority in this case is CIDCO, who had leased the
property to Respondent No. 2 and the resolution of CIDCO does not
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permit sub division/bifurcation of plots on which buildings have already
been constructed and occupancy certificate is obtained. The
bifurcation order does not take into consideration this eventuality of
refusal of permission by Competent Authority for sub-division of
property, in which case, the bifurcation order cannot be given effect.
That apart, the major issues required to be addressed by the
bifurcation order is the division of property rights, and common
amenities, which the bifurcation order fails to address and leaves the
contested issues wide open.
21. The bifurcation order also cannot be sustained as there is no
reasoned finding in the order as to why the bifurcation is necessary.
The Joint Registrar failed to notice that the mechanism provided under
the MCS Act were sufficient for resolving the disputes sought to be
put forth as ground for bifurcation as the allegations appear to be qua
the concerned Managing Committee members.
22. The allegation of misappropriation of Society funds, non-holding
of elections, irregular manner in passing of resolutions, maintenance,
etc. are all issues which are capable of being redressed by adopting the
necessary remedy under the provisions of MCS Act. The enquiry which
ought to have been conducted is whether the disputes have the effect
of disrupting the effective management of Society. In addition, it was
also necessary to consider whether the legislative intent of effective
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management can be achieved in the facts of present case where there
is practical impossibility of division of land in proportion to the built-up
area.
23. The Appellate Authority has rightly considered the probability of
sub-division creating difficulty in future. Although the Appellate
Authority observes that contention of Respondent No. 2 about
encroachment prima facie appears to have substance, the fact remains
that the observation of the Appellate Authority on issues outside its
jurisdiction would not have any binding effect. Further, though the
Appellate Authority has considered the provisions of Section 17(1) of
MCS Act, the same is irrelevant. What is of relevance is the finding of
the Appellate Authority that the bifurcation will result in dispute about
the utilisation of the F.S.I. and therefore, bifurcation is not in interest
of the Society.
24. Although it may not be possible to envisage every possible kind
of property dispute and make provision for the same in the bifurcation
order, in the present case, the objection raised by Respondent No.1
would clearly indicate the issue of actual impartibility of the property
considering the layout. Before this Court, the layout produced has not
been disputed and there is no answer by Mr. Patil to the issue of actual
division of the land in proportion to the constructed built-up area.
25. Mr. Cama has also raised an objection to the bifurcation on the
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ground of location of common amenities. From perusal of the record, it
is not discerned that the said issue was raised before the authorities.
However, it cannot be disputed that the amenities were shared in
common by the societies and making of alternate arrangements such
as drainage, water and electric supply have been left to the two
societies by the bifurcation order, which is unacceptable.
26. Sub-Section (1) read with Sub-Section (3) of Section 18 of MCS
Act makes it imperative for the bifurcation order to provide for the
constitution of the societies and property rights as well as necessary
directions on incident, consequential and supplemental requirements
if needed for bifurcation of the Society. In the facts of the present
case, there was a need to provide for the manner in which the division
of the land could take place considering ratio of the constructed built
up area. The bifurcation order, apart from the fact that it does not
indicate the Joint Registrar's satisfaction as envisaged under Section
18(1) of MCS Act, leaves open all contested issues regarding the actual
division of land.
27. In Navjivan Commercial Premises Co-operative Society vs
Navjivan Co-operative Housing Society (supra), the Co-ordinate bench
of this Court after analysing the provisions of Section 18 of the MCS
Act has upheld the observations in the impugned order therein that it
was necessary and essential to settle the dispute on the questions with
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regard to the common property and amenities including the dispute
with regard to division of available F.S.I. It was held that before passing
an order of bifurcation, it is necessary to adjudicate the necessary
arrangements with regard to division of assets and liabilities in the
scheme for division of the property approved by the Registrar. The
bifurcation order being passed as per unamended act is immaterial as
the Co-ordinate Bench has made observations in context of making
arrangements with regard to division of assets and liabilities.
28. In the present case, the Joint Registrar has rested its finding
only on the aspect of inter se dispute without supporting the said
conclusion by reasoned discussion. Further, the order of Joint Registrar
leaves the contested issue as regards the sub-division, common
amenities, etc. open, which is not the scheme of Section 18. An order
passed under Section 18 of the MCS Act should contain specific
arrangement as regards the constitution and the property rights and
interests as well as the liabilities, duties and obligations so as to
extinguish the probability of any further litigation in that respect. In
the present case, the mere fact about sub-division being a practical
impossibility militates against the order of bifurcation.
29. The Appellate Authority by taking into consideration the
impartibility aspect, which would have resulted in further dispute
between the parties has therefore, rightly set aside the bifurcation
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order.
30. The decision of The Ruby Emerald Diamond Park Co-operative
Housing Society vs Guru Dileep Mazgaonkar and Ors (supra) relied
upon by Mr. Patil is distinguishable on facts, as in that case, three
colonies were situated on three separate and independent plots, the
planning was of three different types, the colonies had independent
roads, water pumping station and electric meters. The distribution of
F.S.I. in the facts of that case were held not be germane for the
bifurcation order. However, in the instant case, the actual impartibility
of the land vitiates the bifurcation order.
31. In light of the above discussion, the order of the Appellate
Authority cannot be said to suffer from any infirmity so as to warrant
interference under Article 227 of the Constitution of India. Resultantly,
Petition fails and stands dismissed.
32. In view of dismissal of Writ Petition, nothing survives for
consideration in the pending Interim Applications and the same stand
disposed of.
[Sharmila U. Deshmukh, J.]
33. At this stage, request is made for extension of the ad-interim
relief, which is operating in favor of the Petitioner. The request is
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opposed by learned counsel for Respondent No. 2.
34. Interim relief is extended for a period of eight weeks from today.
[Sharmila U. Deshmukh, J.]
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