[Cites 4, Cited by 0]
Bombay High Court
Sudhakar Trimbak Wagh vs Jai Himgiri Co Op Hsg. Soc Ltd. And Ors on 12 March, 2026
Author: Amit Borkar
Bench: Amit Borkar
2026:BHC-AS:12070
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Sayali
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 12072 OF 2023
Digitally
Sudhakar Trimbak Wagh,
signed by
SAYALI Age 72 years, Occ.: Retired,
SAYALI DEEPAK
DEEPAK UPASANI Asha Pura Dham, Asha Pura CHS Ltd. Plot No.
UPASANI Date:
2026.03.12
11:57:12
+0530
3, Sector 16, Sanpada, Navi Mumbai 400 705. ... Petitioner
V/s.
1. Jai Himgiri Co-operative Housing
Society Ltd., having its registered office
at Type III-A, 27/314, R.C.F. Colony,
Chembur, Mumbai 400074.
1(a) Jayshree Sudhakar Wagh,
Age : 69 years, Occ.: Household
1(b) Pranavkumar Sudhakar Wagh,
Age 37 years, Occ. Occupation
both 1(a)& 1(b) resident of Address :
A 101, Ashapura CHS Ltd. Plot No.3,
Off Palm Beach Road, Near Moran
Residency, Sector 16, Sanpada, Navi
Mumbai, Thane, Maharashtra 400 705
2. Mr. Narendra Bhiwaji Ugalmugle,
since deceased, Through L/Rs.
2(a) Mandakini Narendra Ugalmugle,
Age 78 (approx.) Adult, Occ.: House
Keeping.
2(b) Ajay Narendra Ugalmugle,
Age 57 Adult, Occ.: Service, 2A & 2B
residing at Flat No. A-12, Jai Himgiri
Co-operative Housing Society Ltd.
Plot No. 1 & 2, Survey No. 14, C.T.S.
No. 470 , Swastik Park, Near Eastern
1
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Express High Way, Chembur, Mumbai -
400074.
3. Mohansing Amarsingh Raghuwashi,
Age 74 years, Occ.: Retired, residing at
Flat No. B-5 Jai Himgiri Co-operative
Housing Ltd., Plot No. 1 & 2, Survey No.
14, C.T.S> No. 470, Swastik Park,
Chembur, Mumbai - 400 074.
4. Vijay Parsuram Jadhav,
Age : 74 years, Occ.: Retired, residing at
A/10, Jai Himgiri Co-operative Housing
Society Ltd. Plot No. 1 & 2, Survey No.
14, C.T.S. No. 470, Swastik Park, near
Eastern Express High way, Chembur,
Mumbai - 400074.
5.. Kashinath Bhikaji Kadam,
since deceased through L/Rs.
5(a) Smita Kashinath Kadam,
Age 75 years, Occ.: Retired,
(widow of proposed applicant 5) ... Respondents
WITH
WRIT PETITION NO. 15729 OF 2022
1. Jai Himgiri Co-operative Housing
Society Ltd., having its registered office
at Type III-A, 27/314, R.C.F. Colony,
Chembur, Mumbai 400074.
2. Mandakini Narendra Ugalmugle,
Age : Adult, R/o A/12, Jai Himgiri Co-
operative Housing Society Ltd. Survey
No. 14, C.T.S. No. 470 , Swastik Park, ,
Chembur, Mumbai - 400074.
3. Ajay Narendra Ugalmugle,
Age : Adult, R/o A-12, Jai Himgiri Co-
operative Housing Society Ltd.
2
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Survey No. 14, C.T.S. No. 470 , Swastik
Park, Chembur, Mumbai - 400074.
4. Mohansing Amarsingh Raghuwashi,
Age : Adult, R/o. Type III-A, 13/51,
R.C.F. Colony, Chembur, Mumbai 400
074.
4. Vijay Parsuram Jadhav,
Age : 74 years, Occ.: Retired, residing at
A/10, Jai Himgiri Co-operative Housing
Society Ltd., 1st Floor, Plot No. 1 & 2,
Survey No. 14, C.T.S. No. 470,
Chembur, Mumbai - 400074. ... Petitioners
V/s.
1. Sudhakar Trimbak Wagh,
Age : Adult, Asha Pura CHS Ltd. Plot
No. 3, Sector 16, Sanpada, Navi
Mumbai 400 705.
1(a) Jayshree Sudhakar Wagh,
Age : 69 years, Occ.: Household
1(b) Pranavkumar Sudhakar Wagh,
Age 37 years, Occ. Service
both 1(a) & 1(b) resident of Address :
A 101, Ashapura CHS Ltd. Plot No.3,
Off Palm Beach Road, Near Moran
Residency, Sector 16, Sanpada, Navi
Mumbai, Thane, Maharashtra 400 705
2. Madhura Parmnand Sawant,
Age : Adult, R/a 904, Girnar CHS Ltd.
Ram Tekdi, Shivadi, Mumbai 400015.
3. Smita Kashinath Kadam,
Age : 75 years,
4. Abhiraj Kashinath Kadam,
Occ. Service,
5. Yogiraj Kashinath Kadam,
Nos. 2 to 4, R/o. A/8, Jai Himgiri Co-
3
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operative Housing Ltd. Ground Floor,
Plot Nos. 1 & 2, Survey No. 14., CTS
No. 470, Chembur, Mumbai 400 074.
6. Vijay Atmaram Sawant,
Age : Adult,
R/o. : B/03, Jai Himgiri Co-operative
Housing Society Ltd., 1st floor, Plot Nos.
1 & 2, Survey No. 14, CTS Nos. 470,
Chembur, Mumbai 400 074.
Mr. Nitesh v. Bhutekar with Mr. Prathamesh Mandlik
and Ms. Sejal Singh, for Petitioner in WP 12072/2023
and Respondent in WP- 15729/2022.
Mr. Kishor Tembe, for Petitioenr in WP/15729/2022
and Respondent no. 1 in WP/12072/2023.
CORAM : AMIT BORKAR, J.
RESERVED ON : MARCH 5, 2026
PRONOUNCED ON : MARCH 12, 2026
JUDGMENT:
1. The present writ petition challenges the order dated 21
January 2022 passed in Appeal No. 28 of 2018 by the learned
Maharashtra State Co-operative Appellate Court, whereby the said
Appeal came to be dismissed. By the said Appeal, the Petitioner
had assailed the judgment and order dated 22 August 2017
delivered by the learned Co-operative Court, Mumbai in Dispute
No. CC/I/810/1989.
2. The material facts, as per petitioner in Writ petition No.
12072 of 2023, giving rise to the present petitions may briefly be
stated as follows.
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3. The Petitioner claims to be a founder member of Respondent
No. 1 Co-operative Housing Society. Respondent Nos. 2 to 6 are
stated to be members of the said Society. The Society was formed
with the object of providing residential accommodation to its
members, who were employees of Rashtriya Chemicals and
Fertilizers Limited, by procuring land from the Government for
construction of residential premises. In or about the year 1977, the
promoters of the proposed Society selected the Petitioner as the
Chief Promoter. It is the case of the Petitioner that he thereafter
approached and pursued various Government authorities with a
view to secure a suitable plot of land for construction of residential
buildings for the members of the Society. Pursuant thereto, a
parcel of land admeasuring 41,899.38 square metres, being Plot
Nos. 1 and 2 of Survey No. 14 of CTS No. 470 situated at
Chembur, Taluka Kurla, came to be allotted to the proposed
Society on rental basis. The allotment was subject to the condition
that the said land would be utilised for accommodating thirty
Government-approved members of the proposed Society, and that
the land would be made available at a concessional rate fixed at
fifty per cent of the prevailing market value as on 1 February 1976.
Certain other conditions were also imposed while granting the said
allotment. In the Government approved list of members issued
under Order No. LCS 2650/256/CR/105/64, the name of the
Petitioner appeared at Serial No. 1. The Petitioner states that he
paid an amount of Rs. 250/- towards share capital of the Society
and Rs. 1/- towards membership fee. According to the Petitioner,
Respondent No. 2 was thereafter offered the position of Chairman
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of the Society. It is alleged that Respondent No. 2 collected a sum
of Rs. 10,000/- from each member of the Society. However, an
official receipt was issued only for an amount of Rs. 1,000/-, while
the remaining amount of Rs. 9,000/- from each member was
allegedly collected towards uncertain or unspecified expenses and
retained by Respondent No. 2. The Petitioner asserts that he
repeatedly demanded that Respondent No. 2 furnish proper
accounts and explain the utilisation of the total amount of Rs.
2,70,000/- collected from the members. It is stated that
Respondent No. 2 gave an evasive explanation that a substantial
portion of the said amount had been utilised for influencing
authorities to secure sanction of the plot for the Society. The
insistence of the Petitioner for transparency and accountability
allegedly led to differences among the members of the Society.
While some members supported the demand raised by the
Petitioner, others sided with Respondent No. 2. It is alleged that
thereafter the group led by Respondent No. 2 assumed control of
the management of the Society and began to conduct its affairs in
a manner detrimental to the interests of the Petitioner. It is further
alleged that Respondent No. 2 and the members supporting him,
without the knowledge of the Petitioner and certain other
members, submitted the registration documents of the Society
before the competent authority. According to the Petitioner, two
persons namely Mr. Shinde and Mr. Ugalmugale were inducted as
members of the Society without obtaining the approval of the
Collector, which was required under the terms of allotment of the
land. It is stated that after registration of the Society, the
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resignation of Mr. Ugalmugale was subsequently obtained. The
Petitioner alleges that in the final list of members his name was
deliberately placed at Serial No. 28 with the intention of curtailing
and prejudicing his rights in the Society.
4. The Petitioner further asserts that he had complied with the
financial demands raised by the Society towards construction of
the building. According to him, he forwarded various amounts to
the Society through cheques sent by registered post from time to
time. The amounts allegedly tendered by the Petitioner include
sums of Rs. 12,000/-, Rs. 27,100/-, Rs. 7,500/-, Rs. 1,572.20 and
Rs. 7,000/-, apart from the earlier payment of share capital,
membership fee and miscellaneous expenses amounting to Rs.
3,751/-. The Petitioner contends that Respondent No. 2 disputed
his claim and refused to accept the registered letters containing the
said cheques. It is, however, not disputed that the Society accepted
the membership fee, share capital, miscellaneous expenses and the
amount of Rs. 12,000/-, while declining to accept the remaining
amounts tendered by the Petitioner. The Petitioner states that in or
about the year 1984 he noticed that the Managing Committee of
the Society was attempting to secure larger flats for themselves on
the ground that they had undertaken substantial efforts in
obtaining the land from the Government and in implementing the
housing project. The Petitioner claims that being a founder
member of the Society he was entitled to be allotted a larger flat
admeasuring approximately 730 square feet. The resolution dated
17 August 1984 passed by the Society, which according to the
Petitioner was passed with mala fide intent, was challenged by
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him. The Petitioner also carried the grievance before the Assistant
Registrar of Co-operative Societies.
5. By a letter dated 21 August 1986 the Society informed the
Petitioner that he could not be treated as an original member of
the Society. It was further stated that he could be considered for
membership only upon submitting a fresh application for
membership and upon payment of all alleged dues together with
interest. The Petitioner alleges that the management of the Society
continued to act with mala fide intention in order to defeat the
claims of certain members. According to him, the management
adopted various manipulative measures, including arbitrary
induction and removal of members. It is alleged that dummy
members were introduced in the membership list, the number of
approved members was reduced, and ultimately only twenty eight
flats were constructed so as to enable certain office bearers to
secure larger residential units for themselves. The Petitioner
alleges that larger flats were allotted to such members while the
remaining members were left with smaller flats without following
any fair or transparent procedure.
6. The Petitioner thereafter approached the Assistant Registrar
of Co-operative Societies raising the grievance regarding denial of
his membership. Upon hearing the parties, the Assistant Registrar
recorded findings to the effect that the Petitioner was the Chief
Promoter of the Society, that his name was included in the list of
Government approved members, that he had paid the membership
fee, and that his name had been approved by the Collector as a
member of the Society. The Assistant Registrar accordingly held
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that the Petitioner continued to be a member of the Society. It was
further observed that if the Society intended to remove the
Petitioner from membership, it was required to adopt the
procedure prescribed under the law for expulsion of a member,
which admittedly had not been followed. Consequently, the
Assistant Registrar set aside the resolution of the Managing
Committee dated 6 October 1984, the resolution of the General
Body Meeting dated 13 November 1986 and the resolution of the
Managing Committee dated 18 November 1986. The Society was
further directed to record the name of the Petitioner in the
membership register and to issue a share certificate in his favour.
The said order was challenged by the Society by filing Appeal No.
441 of 1990 before the Co-operative Appellate Court. By order
dated 16 March 1994 the said Appeal was dismissed and the order
of the Assistant Registrar was confirmed. Thus, the findings
recorded by the Assistant Registrar attained finality. According to
the Petitioner, he was entitled to receive possession of a residential
flat in the Society in or about the year 1988. However, no flat was
allotted to him. As a result, the Petitioner continued to reside in
the residential quarters allotted to him by his employer until his
retirement and consequently had to forego the benefit of FRV and
HRA during the period of his service. After retirement he was
compelled to reside in private accommodation on leave and licence
basis, for which he has been paying rent and licence fees, and he
asserts that such expenditure continues even at present.
7. In the aforesaid circumstances, the Petitioner instituted
Dispute No. CC/I/810/1989 before the Co-operative Court against
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the Society and its Managing Committee members seeking reliefs
including possession of a flat, allotment of a larger flat
admeasuring 730 square feet, injunction and compensation. Upon
service of the dispute, the Respondent Society and Respondent
Nos. 4 to 6 filed their written statements resisting the claim. The
Petitioner relies upon the pleadings in the dispute as well as the
written statements filed by the Respondents. On consideration of
the pleadings and the questions of fact and law arising therefrom,
the learned Co-operative Court framed issues for determination.
Upon appreciation of the rival submissions advanced on behalf of
the parties and upon examination of the evidence placed on
record, the learned Co-operative Court partly allowed the dispute
with costs. The Court declared that the Petitioner, being a member
of the Society, was entitled to allotment of Flat No. B-10 and
accordingly directed the Respondent Society to allot and hand over
possession of the said flat to the Petitioner. The resolution dated 13
November 1986 passed by the Society was also declared illegal
and was set aside. However, the claim of the Petitioner relating to
monetary loss, compensation, and damages came to be rejected.
8. Being dissatisfied with the judgment and order dated 22
August 2017 passed by the Co-operative Court, both the
Respondent Society and the Petitioner preferred separate Appeals
before the Maharashtra State Co-operative Appellate Court at
Mumbai. The Society filed Appeal No. 103 of 2017, whereas the
Petitioner filed Appeal No. 28 of 2018. The learned Appellate
Court, after hearing the parties and considering the written
submissions placed on record, delivered a common judgment in
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both the Appeals. By the said judgment, both Appeals were
dismissed and the judgment of the Co-operative Court was
affirmed without any interference.
9. Mr. Nitesh Bhutekar, learned Advocate appearing on behalf
of the Petitioner, submitted that in or about the year 1976 certain
employees of Rashtriya Chemicals and Fertilizers Limited initiated
a proposal for formation of a Co-operative Housing Society.
According to him, the Petitioner was selected as the Chief
Promoter of the proposed Society. It is submitted that in November
1979 an application was submitted before the Tahsildar seeking
allotment of land for the proposed housing project. Thereafter, by
an order dated 20 December 1982, the Government approved a list
of thirty members of the proposed Society, in which the name of
the Petitioner appeared at Serial No. 1. Learned Counsel further
submitted that on 27 January 1983 the plot of land allotted for the
Society was purchased from the Collector. In the year 1983 the
Housing Society came to be registered and the name of the
Petitioner was reflected in Form A relating to the registration of
the Society. It is submitted that on 22 December 1983 the
Petitioner paid the membership fee, share capital and the amount
towards cost of the land. During the period between 1983 and
1985 the Petitioner allegedly tendered several cheques towards
construction and development expenses of the Society, though
according to him certain cheques were returned or refused by the
Society. It is further submitted that on 6 October 1986 the
Managing Committee passed a resolution refusing to recognize the
Petitioner as a member of the Society, and thereafter on 13
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November 1986 the Special General Body passed a resolution
cancelling the membership of the Petitioner. Prior thereto, by a
letter dated 25 August 1986 the Society alleged that the Petitioner
had become a member by "inadvertence". It is submitted that on
20 August 1990 the learned Assistant Registrar passed an order
under Section 79(2) of the Maharashtra Co-operative Societies Act
setting aside the aforesaid resolutions. The said order was carried
in appeal before the Co-operative Appellate Court, which by its
order dated 16 March 1994 dismissed the appeal and confirmed
the order of the Assistant Registrar. Learned Counsel submitted
that thereafter by judgment dated 22 August 2017 the learned Co-
operative Court held that the Petitioner was a member of the
Society and directed allotment of Flat No. B-10 to him, which
according to the Petitioner is a smaller flat. In the year 2017 both
the Petitioner as well as the Respondent Society preferred their
respective appeals before the Maharashtra State Co-operative
Appellate Court at Mumbai. By a common judgment dated 21
January 2022 the Appellate Court dismissed both the appeals.
10. Learned Counsel submitted that the learned Co-operative
Court correctly recorded a finding that the Petitioner has been a
member of the Society since its inception. However, according to
him, the Court failed to grant complete relief to the Petitioner in
respect of certain aspects. These aspects relate to the allotment of
an appropriate flat of larger size, compensation for the financial
loss allegedly suffered by the Petitioner, and appropriate relief in
respect of what is alleged to be a discriminatory allotment process
adopted by the Society. It is therefore contended that the Petitioner
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seeks limited correction of the impugned judgments to the extent
that these aspects have not been properly addressed. Learned
Counsel further submitted that by order dated 12 August 1990
passed under Section 79(2) of the Maharashtra Co-operative
Societies Act, the Assistant Registrar declared the resolutions dated
6 October 1986, 13 November 1986 and 18 November 1986 to be
null and void and directed that the name of the Petitioner be
reinstated in the membership register and that a share certificate
be issued to him. The said order was confirmed in appeal on 16
March 1993. According to the Petitioner, the said order was not
thereafter challenged by the Society and therefore the issue
relating to the membership of the Petitioner has attained finality. It
is further submitted that the attempt made by the Society to
remove the Petitioner from membership was wholly illegal since
the procedure prescribed under Section 35 of the Act for expulsion
of a member was not followed. The said provision requires a
resolution supported by a three fourth majority, a specific agenda,
opportunity of hearing to the member concerned and approval of
the Registrar. Learned Counsel submitted that the Society has
attempted to justify its action by describing the Petitioner as a
"member by inadvertence", which expression has no basis in the
statute. According to him, the Petitioner was the Chief Promoter of
the Society, his name appeared at Serial No. 1 in the Government
approved list, he had paid share capital and land cost and his
name was included in the registration documents. It is therefore
submitted that the membership of the Petitioner could not have
been retrospectively nullified.
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11. Learned Counsel further submitted that the Petitioner had
from time to time made payments and tendered amounts towards
the dues payable to the Society. According to him, the Petitioner
paid Rs. 250 towards share capital, Rs. 1 towards membership fee,
Rs. 2,500 towards land cost and Rs. 1,000 towards miscellaneous
expenses, all of which were accepted by the Society, aggregating to
Rs. 3,751. It is further submitted that the Petitioner paid an
amount of Rs. 10,000 as initial payment to Respondent No. 2, Rs.
12,000 towards construction deposit, Rs. 1,572.20 towards
balance land cost and Rs. 924.80 towards an additional receipt
amount, which amounts were also accepted by the Society.
According to the Petitioner, he thereafter tendered an amount of
Rs. 27,100 towards the demand raised for construction cost, which
was refused by the Society. Subsequently he forwarded a cheque of
Rs. 7,000 by Registered Post Acknowledgment Due, which was also
refused. It is therefore submitted that the aggregate amount paid
and tendered by the Petitioner to the Society comes to Rs. 58,597
and that the total amount paid or tendered by the Petitioner works
out to Rs. 62,348. Learned Counsel submitted that the evidence of
the witnesses examined on behalf of the Respondents itself
establishes the existence of the cheques sent by the Petitioner.
According to him, the envelopes containing the cheques were
opened in open Court and certain cheques were returned on
technical objections. It is therefore contended that the allegation
that the Petitioner had failed to make payment is factually
incorrect. Learned Counsel further submitted that the material on
record discloses mala fide conduct and discrimination on the part
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of the Society against the Petitioner. It is alleged that new
members were inducted and existing members were removed
without following due process. According to the Petitioner,
substantial amounts of cash were collected without issuing receipts
and an amount of approximately Rs. 2.25 lakhs remained
unaccounted. Reference is made to the cross examination of the
witness Mrs. Shamshad Hawaldar, who stated that one Mr. Ugal
Mugle had been inducted as a member and subsequently
withdrew, and that she herself was not an employee of RCF. It is
therefore contended that the functioning of the Society was
irregular and arbitrary. Learned Counsel further submitted that the
Society has failed to explain how a Society originally consisting of
thirty approved members ultimately came to have only twenty
eight members without obtaining permission of the Collector.
According to him, the Petitioner was targeted because he
demanded accounts from the management and his seniority was
arbitrarily reduced from Serial No. 1 to Serial No. 28.
12. Learned Counsel further submitted that the allotment of flats
by the Society was illegal and arbitrary. According to him, larger
flats were allotted to members of the Managing Committee on the
ground that they had put in greater effort for obtaining the land
and developing the project. It is submitted that the Petitioner,
being the Chief Promoter and instrumental in procuring the land,
was equally entitled to such consideration. Learned Counsel
contended that no transparent criteria or draw of lots was adopted
while allotting the flats and that the principles of equality and
fairness were violated. It is submitted that when the Petitioner
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came to know that two types of flats were being constructed he
raised a demand for allotment of a larger flat. Initially the Society
contended that larger flats had been allotted to Managing
Committee members who had contributed to the formation of the
Society. Reference is made to the deposition of Mr. Dharmadhikari,
examined as OPW-1, who stated that larger flats were allotted to
Managing Committee members on the ground that they had paid a
higher price for an additional area of one hundred square feet. He
further deposed that the first twelve members in the registration
list were allotted A type flats and that members who had taken an
active part in the formation of the Society were given the
opportunity to select flats. The Society subsequently contended
that allotment of larger flats was made pursuant to a resolution of
the General Body dated 20 July 1987. Learned Counsel submitted
that the minutes of the said meeting show that in view of the
decision taken in the General Body Meeting dated 13 November
1986 preference was given to members of the Managing
Committee to select flats of their choice and that the remaining
flats were to be allotted by lottery. According to him, the resolution
dated 13 November 1986 had already predetermined which
members would receive larger flats and which would receive
smaller flats. It is therefore submitted that the resolution relied
upon by the Society is merely a formal exercise intended to justify
an earlier predetermined decision.
13. Learned Counsel further submitted that the documentary
evidence on record indicates that even at the stage when the
registration documents of the Society were submitted in the year
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1983 it had already been decided by Respondent No. 2 and other
office bearers that the building would consist of two types of flats.
According to him, this decision was taken without any resolution
of the Society and without consultation with the members. It is
submitted that there is no material to show that it was decided
that larger flats would be allotted to members occupying particular
positions in the list of members or to members of the Managing
Committee. It is also submitted that there is no evidence to
indicate that the members who received larger flats had
contributed greater effort or resources for the formation of the
Society. According to the Petitioner, there is also no material to
show that at the time of submitting the registration documents any
meeting was held to ascertain whether certain members were
willing to contribute additional amounts for obtaining larger flats.
Learned Counsel submitted that it therefore appears that the
decision regarding allotment of larger flats was arbitrarily taken at
the time of registration of the Society itself and that the Petitioner
was deliberately placed at Serial No. 28 in order to deprive him of
such benefit. According to him, the subsequent explanation offered
by the Respondents that larger flats were allotted to Managing
Committee members or to those who contributed greater effort is
not supported by the record. The minutes of the meeting dated 20
July 1987 merely indicate that the members of the Managing
Committee were given the first opportunity to select larger and
better located flats. Some of them selected corner flats. It is
therefore submitted that there was mismanagement in the
functioning of the Society, particularly in the matter of allotment of
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flats, and that the Petitioner's right to obtain a flat of larger area
was adversely affected by the mala fide conduct of the Managing
Committee. Learned Counsel further submitted that Issue No. 3A
framed by the learned Co-operative Court, relating to the
allegation that the opponents had illegally drawn lots for
allotment, required proper consideration. According to him, the
issue was not framed in the correct manner and the evidence was
not properly appreciated. It is therefore submitted that the
allotment process lacked transparency and violated the principles
of equality.
14. Learned Counsel further submitted that the Petitioner
suffered substantial financial loss due to the conduct of the Society.
According to him, the Respondents deliberately attempted to
deprive the Petitioner of the benefits of membership and prevented
him from obtaining possession of a flat in the year 1988. As a
consequence, the Petitioner continued to reside in the residential
quarters provided by his employer and was required to forgo house
rent allowance during that period. After his retirement he was
compelled to reside in private accommodation under leave and
licence arrangements. It is submitted that evidence in support of
such arrangements has been placed on record by the Petitioner.
Learned Counsel also contended that the Petitioner has suffered
considerable mental distress on account of the prolonged dispute.
Reference is made to the cross examination of the witness
Ugalmugale, who stated that one Mr. Lokhande was temporarily
occupying Flat No. B-10. Similar evidence is said to have been
given by the witness Dharmadhikari. It is therefore submitted that
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the Society must have derived financial benefit from such
occupation and that it cannot contend that it suffered any loss by
keeping the flat vacant. On this basis it is submitted that the
Petitioner is entitled to compensation for financial loss and mental
hardship. Learned Counsel contended that although the learned
Co-operative Court correctly decided the issue of membership, it
failed to examine the discriminatory allotment process, the alleged
mala fide conduct in the allotment of flats and the consequences
flowing from the wrongful denial of the Petitioner's rights. Learned
Counsel further submitted that Co-operative Societies are required
to function in accordance with statutory provisions and principles
of natural justice. According to him, the will of the majority cannot
override statutory safeguards available to members. Internal
resolutions of a Society cannot defeat orders passed by statutory
authorities and once rights of a member have crystallised they
cannot be diluted by subsequent actions of the Society. It is
therefore contended that the conduct of the Society amounts to
abuse of majority power resulting in suppression of a founder
member. According to the Petitioner, the material on record
demonstrates deliberate refusal to accept lawful payments and
discriminatory allotment of flats in favour of a select group of
members. Learned Counsel therefore prayed that appropriate
directions be issued to the Society to allot a suitable flat to the
Petitioner consistent with seniority and fairness, that the
discriminatory allotment process be declared invalid and that
compensation be awarded for the financial loss suffered by the
Petitioner. It is also prayed that the petition filed by the Society be
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dismissed with costs.
15. Per contra, Mr. Kishore Tembe, learned Counsel appearing on
behalf of the Respondent Society submitted that the Disputant had
instituted a dispute before the Co-operative Court seeking
allotment and possession of a larger flat, together with claims for
damages, compensation and reimbursement of alleged loss. The
learned Co-operative Court partly allowed the dispute. The Court
declared that the Disputant was entitled to allotment of a smaller
flat and directed the Society to allot and hand over possession of
Flat No. B-10 to him. The Court also directed that the Disputant
shall pay the cost or value of the said flat to the Society after
adjusting earlier payments together with incidental charges, if any,
at the prevailing rate of allotment paid by other members. The
resolution dated 13 November 1986 was declared illegal and set
aside. However, the claim relating to monetary loss, compensation
and damages was rejected. Being aggrieved by the said judgment,
the Disputant preferred an appeal seeking allotment of a larger flat
and challenging rejection of the monetary claim, while the Society
filed a separate appeal challenging the direction that the Disputant
should pay the cost of the flat at the prevailing rate applicable to
other members. By a common judgment the Appellate Court
dismissed both appeals and confirmed the judgment of the Co-
operative Court. The present cross petitions challenge the decisions
of both the Courts below. Learned Counsel for the Society
submitted that the Disputant himself produced the application in
Form A submitted for registration of the Society, which shows that
he was a prospective member in respect of a smaller flat. The said
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document specifies that the estimated cost of a smaller flat was Rs.
75,000 whereas the estimated cost of a larger flat was Rs. 97,500.
It is submitted that both the Courts below have, after recording
reasons, held that the Disputant was entitled only to a smaller flat.
According to the Society, the Disputant was never allotted a larger
flat and the Society always demanded contribution from him only
towards the cost of a smaller flat. It is submitted that the Disputant
made certain payments towards the cost of a smaller flat and that
the claim for allotment of a larger flat was raised belatedly on the
basis of alleged seniority. According to the Respondents, seniority
cannot be a criterion for entitlement to a larger flat. It is further
submitted that by a resolution of the General Body passed by an
overwhelming majority the members of the Managing Committee
were given the first choice in selection of flats. The said resolution
was never challenged by the Disputant. It is therefore submitted
that the allotment of larger flats to certain members of the
Managing Committee was lawful and that the concurrent findings
of the Courts below that the Disputant is entitled only to a smaller
flat do not call for interference.
16. Learned Counsel further submitted that the claim made by
the Disputant in respect of monetary loss, compensation and
damages was rejected by the Co-operative Court and the said
rejection was affirmed by the Appellate Court after appreciation of
evidence. According to him, the said findings are concurrent
findings of fact and no ground has been made out for interference
with the same. He further submitted that the Society has
challenged the direction issued by the Courts below directing the
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Disputant to pay the cost of the smaller flat at the prevailing rate
of allotment applicable to other members. Learned Counsel for the
Society submitted that the Disputant had persistently defaulted in
making payment towards the cost of land and construction of the
smaller flat despite repeated demands made by the Society.
Reference is made to the demand letters dated 15 April 1986 and 5
December 1986 issued by the Society. In the application in Form A
submitted for registration of the Society it was indicated that the
estimated cost of a smaller flat was Rs. 75,000 and that the
Disputant was a member in respect of such a flat. It is submitted
that in paragraph 2 of the affidavit of evidence filed by the
Secretary of the Society, Mr. S. B. Dharmadhikari, it was stated that
the actual cost of the flat was Rs. 1,10,000. It is further submitted
that this statement was not challenged in cross examination. In
paragraph 3 of the said affidavit the witness stated that the
Disputant had persistently defaulted in making payment towards
the cost of the flat. Learned Counsel submitted that in the
statement titled "Details of Amounts Paid" filed on behalf of the
Disputant the particulars in Part A are correct and that Item Nos. 2,
3 and 4 in Part B are also correct. However, the amount of Rs.
10,000 mentioned in Item No. 1 of Part B represented cash
contribution made by all members towards expenses incurred in
connection with allotment of land. It is further submitted that the
cheques referred to in Item Nos. 5 and 6 of Part B were never
received by the Society.
17. Learned Counsel therefore submitted that the Disputant had
in fact paid only an aggregate amount of Rs. 18,247 as against the
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total cost of Rs. 1,10,000. According to the Society, the Disputant
was thus a persistent defaulter in payment of his contribution. In
such circumstances it is submitted that both the Courts below
erred in directing the Disputant to pay the cost or value of the flat
at the prevailing rate of allotment paid by other members, thereby
equating him with members who had paid their contributions
regularly. It is submitted that no reasons were recorded by the Co-
operative Court for issuing such a direction. Learned Counsel
further submitted that the Society was an open plot type Society
where acquisition of land and construction of buildings depended
entirely upon contributions made by the members. It was therefore
essential that each member make timely payment of his share of
the cost. Any delay or default by a member would adversely affect
the progress of construction and increase the overall cost.
According to the Society, the Disputant was the only member who
persistently defaulted. It is therefore submitted that the Disputant
ought to have been directed to pay the current market value of the
flat or at least the market value prevailing at the time of allotment
of flats together with interest. In the alternative it is submitted that
he should have been directed to pay the cost of the flat as on the
date of allotment together with interest at the market rate for the
period of default. Learned Counsel therefore contended that the
direction equating the Disputant with other members and
permitting him to pay the same rate without any additional
amount or interest is unjust and contrary to the interests of the
Society. It is therefore submitted that the petition filed by the
Disputant deserves to be dismissed with costs and that the petition
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filed by the Society deserves to be allowed in terms of the reliefs
sought therein.
REASONS AND ANALYSIS:
18. I have carefully read the material placed before me. I have
noted the rival submissions and the evidence relied on by the
parties.
Membership of petitioner:
19. I first deal with the question of membership. The Petitioner
claims that he was one of the founder members and was also
appointed as the Chief Promoter when the housing scheme was
proposed. The material on record shows that the society was
formed mainly for the benefit of employees of Rashtriya Chemicals
and Fertilizers. The society concerned in the present case is the
Respondent No. 1 Society. The documents placed before the Court
show that in the year 1982 in membership list the name of the
Petitioner appears at Serial No. 1. This fact is important because it
shows that from the beginning the Petitioner was treated as part of
the proposed membership.
20. It further appears from the record that certain resolutions
were later passed by the society attempting to remove the
Petitioner from membership. Those actions were challenged before
the Assistant Registrar. The Assistant Registrar examined the
matter and set aside decision of removal. The order passed by the
Assistant Registrar was carried in appeal before the Maharashtra
State Co-operative Appellate Court, but the appeal was dismissed
and the order of the Assistant Registrar was confirmed. After this,
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when the dispute came before the Co-operative Court, Mumbai,
the Court again considered the material on record and held that
the Petitioner continued to be a member of the society. The Co-
operative Court therefore directed that Flat No. B-10 be allotted to
the Petitioner. The matter again reached the Appellate Court in the
form of appeals filed by both sides in the year 2017. However,
those appeals also came to be dismissed.
21. The sequence of these orders shows that Petitioner's name
was included in the list of members. He had also paid the share
capital and the membership fees required for becoming a member
of the society. More importantly, when the society attempted to
remove him, it did not follow the legal procedure required for
expulsion of a member under the Act. The Act requires a proper
resolution and compliance with the statutory procedure as per
Section 35 read with rule 28 and 29 of the Rules. In the present
case the society has not shown that procedure was followed.
Because of these reasons the Assistant Registrar set aside the
resolutions of the society. That decision was confirmed in appeal
and therefore it attained finality. Once such a statutory finding has
reached finality, the society cannot again attempt to question the
membership by using a different expression such as describing the
Petitioner as a "member by inadvertence".
22. When the entire material is considered together, it becomes
clear that the Petitioner's membership was valid from the
beginning and that it has already been confirmed by competent
authorities under the Co-operative Act. The findings recorded by
those authorities are supported by the documents and the evidence
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placed before the Court. For these reasons I find no difficulty in
accepting the submission of the Petitioner that he continues to be a
lawful member of the Respondent Society.
The payments and the allegation of default:
23. The next aspect which requires consideration relates to the
payments made by the Petitioner and the allegation raised by the
Respondent Society that the Petitioner had defaulted in making the
required contributions. This issue is important because the
Respondent Society has repeatedly taken the stand that the
Petitioner failed to pay his share of the cost of the project and
therefore he cannot claim any right in respect of allotment of the
flat.
24. In order to support his case, the Petitioner has produced
several documents before the Court. These documents include
copies of cheques issued by him as well as acknowledgements of
registered post through which the cheques were forwarded to the
Society. During the course of the proceedings certain envelopes
sent by registered post were also opened in Court, which showed
that the cheques were indeed sent by the Petitioner to the Society.
The evidence further shows that even the witnesses examined on
behalf of the Respondent Society admitted in their cross
examination that some of the cheques were returned by the
Society.
25. The Petitioner has given a detailed account of the payments
made by him. According to the documents placed on record, he
first paid an amount of Rs. 250 towards share capital and Rs. 1
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towards membership fee. He further paid Rs. 2,500 towards the
cost of the land and Rs. 1,000 towards miscellaneous expenses
connected with the formation and administration of the Society.
These four amounts together come to Rs. 3,751. These payments
were accepted by the Society and there is no serious dispute about
their receipt.
26. Apart from these initial payments, the Petitioner has also
shown that he made additional payments towards the
development of the project. He paid Rs. 10,000 as an initial
contribution to the person who at that time was collecting funds
for the Society. He further paid Rs. 12,000 towards construction
deposit. Thereafter he paid Rs. 1,572.20 towards the balance land
cost and Rs. 924.80 towards an additional amount required by the
Society. These four payments together come to Rs. 24,497. When
this figure is added to the earlier sum of Rs. 3,751, the amount
which stands accepted by the Society comes to Rs. 28,248.
27. The Petitioner has also placed on record material to show
that he tendered further amounts towards the Society. In particular
he issued cheques for Rs. 27,100 and Rs. 7,000. However, these
cheques were not accepted by the Society and were returned. If
the amounts which were accepted and the amounts which were
tendered are taken together, the total amount paid or tendered by
the Petitioner comes to Rs. 62,348.
28. The Respondent Society has attempted to explain the
situation by stating that the Petitioner was a persistent defaulter
and that he did not make the necessary payments in time. The
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defence taken by the Society rests mainly on two arguments. The
first argument is based on the application for registration of the
Society, commonly referred to as Form A. According to the Society,
this document shows that the Petitioner was shown as a member
in respect of a smaller flat and therefore he was expected to
contribute only towards the cost of that smaller flat. It is further
suggested that the Petitioner failed to make the full payment even
for that category of flat. It is true that Form A contains certain
details relating to the proposed structure of the building and the
estimated cost of different types of flats. It also indicates that
certain members were proposed for particular types of flats. This
document therefore does have some evidentiary value.
29. However, Form A by itself cannot be treated as conclusive of
all rights between the parties. The reason is that several
subsequent developments took place which clearly establish the
Petitioner's status as a member of the Society from the beginning.
The list of members includes the name of the Petitioner. The
registration documents of the Society also include his name.
Further, the Society accepted various payments made by him.
These circumstances show that the Petitioner was treated as a
member in the functioning of the Society. Therefore the contents of
Form A cannot be relied upon in isolation to deny the Petitioner's
rights which have already been recognised by statutory authorities.
30. The second argument of the Society is that some of the
cheques allegedly sent by the Petitioner were never received by it
and therefore the Society did not actually obtain the money. This
contention also requires careful examination. As noted earlier, the
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Petitioner has produced registered post acknowledgements and
envelopes which were opened before the Court. The existence of
the cheques was therefore demonstrated in the proceedings
themselves. Moreover, witnesses of the Respondent Society
admitted that certain cheques were returned on technical grounds.
When such evidence is available, the claim that the Society never
received the cheques cannot be accepted without further
explanation. What is more important is that the Society has not
given a satisfactory reason as to why the cheques sent by
registered post were refused or returned. If a member forwards
payment towards the dues of the Society, the normal expectation is
that the Society will accept the payment or at least communicate
the reason for not accepting it. In the present case the material on
record does not show any explanation from the Society for
refusing these payments. For these reasons, the defence of the
Society that the Petitioner was a persistent defaulter does not
appear to be correct.
On the issue of compensation:
31. I now turn to the question of compensation which has been
claimed by the Petitioner. The claim of the Petitioner is that
because he was wrongly denied the benefit of membership and
allotment of a flat, he suffered financial loss and also mental
hardship for many years. According to him, if the Society had
acted in a fair and lawful manner, he would have received
possession of a flat when the flats were allotted to other members
around the year 1988.
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32. The material placed before the Court shows that Flat No. B-
10, which was ultimately directed to be allotted to the Petitioner,
was not always lying vacant. Evidence given by the witnesses
indicates that the said flat was at certain times occupied by other
persons. This fact shows that the flat existed and was capable of
being used, but the Petitioner was not given possession of it when
the flats were allotted to the other members. At the same time,
there is nothing on record to show that the Society suffered any
loss by keeping the flat reserved or by allowing temporary
occupation of it. The Society has not produced any material to
show that it incurred financial damage because the Petitioner did
not take possession earlier. In fact, the evidence suggests that the
flat remained available for use and was even occupied by others
for some time.
33. If a person who does not receive the accommodation which
he expected from the Society has to make alternative
arrangements for residence. In the present case the Petitioner
continued to remain in the quarters of his employer and thereafter
had to obtain private accommodation after retirement. These
circumstances indicate that the denial of possession had real
consequences for him. Therefore, when the evidence is viewed as a
whole, the claim of the Petitioner for compensation deserves
serious consideration. In such a situation, the Petitioner has at
least established a prima facie entitlement to claim compensation
for the financial loss suffered by him and also for the practical
hardship caused by being kept out of possession of the flat for
many years. Therefore the issue of compensation must be
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considered while granting appropriate relief in the present matter.
34. The evidence also establishes that at the time when flats
were allotted, the estimated price of the smaller flat was Rs.
75,000, whereas the price of the larger flat was Rs. 97,000. The
difference between the two therefore comes to Rs. 22,000. In the
present facts, since allotment of a larger flat is no longer possible,
the ends of justice would be served by directing the Society to
compensate the Petitioner for this difference in value.
35. Accordingly, the Respondent Society shall pay to the
Petitioner compensation equivalent to the difference between the
price of the smaller flat and the larger flat, namely Rs. 22,000
(Rupees Twenty Two Thousand only). Considering the long delay
and deprivation suffered by the Petitioner, the said amount shall
carry interest at the rate of 7 % per annum from the year of
allotment of flats, namely 1988, until the date of actual payment.
36. Accordingly, the following directions are issued:
(i) Writ Petition No. 12072 of 2023, filed by the member,
is partly allowed.
(ii) Writ Petition No. 15729 of 2022, filed by the Society
challenging the judgment of the Courts below, stands
dismissed.
(iii) The Respondent Society shall pay to the Petitioner
compensation equivalent to the difference between the price
of the smaller flat and the larger flat, namely Rs. 22,000
(Rupees Twenty Two Thousand only). Considering the long
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delay and deprivation suffered by the Petitioner, the said
amount shall carry interest at the rate of 7% per annum from
the year of allotment of flats, namely 1988, until the date of
actual payment.
(iii) The aforesaid amount shall be calculated and paid by
the Respondent Society to the Petitioner within a period of
twelve weeks from the date of this judgment.
(iv) Rule is made partly absolute in the above terms. No
order as to costs.
37. Both writ petitions are disposed of in the above terms. There
shall be no order as to costs.
(AMIT BORKAR, J.)
