Court Continues To Be Flooded With Cases Where Minority Members Of Housing Societies Hinder Redevelopment Plans On 'Frivolous' Grounds: Bombay HC

The Bombay High Court expressed frustration at the conduct of non-consenting members of a Cooperative Housing Society who refused to vacate their flats despite the approval of a Development Agreement by majority of the Society's members.

Justice Arif S. Doctor observed that “The docket of this Court continues to be flooded with several such matters where minority members continue to attempt to stymie redevelopment on grounds which are ex facie frivolous, untenable and contrary to the well settled position in law”

The High Court was considering a Commercial Arbitration Petition filed by the petitioner, seeking relief against respondent nos. 2 to 11. The petitioner, a developer, was appointed by respondent no. 1, a cooperative housing society, for the redevelopment of a building in Andheri. A majority of members of the Society agreed to the Development Agreement.

However, respondent nos. 2 to 11 did not vacate and hand over possession of their flats despite the redevelopment agreement entered into between the petitioner and respondent no. 1.

The respondent no. 2 to 11 contended that the petitioner sought to act against his obligations under the Development Agreement by praying for exemption from the Permanent Alternate Accommodation Agreement (PAAA) with them. However, the High Court rejected the contention as the petitioner clarified that the prayer was made to prevent delays in obtaining the commencement certificate due to uncooperative members who refused to sign PAAA.

The respondents further contended that proceeding with the redevelopment would be in violation of the order passed by a City Civil Court, that had granted an injunction against respondent No. 1 and respondent No. 3 from creating any third-party rights in respect of Flat No. 08 in the B Wing. However, the Court rejected this contention and stated that the injunction did not restrain the redevelopment of said building, but only restrained creation of third-party rights in Flat No. 08 of the B Wing.

The High Court noted that the majority members of society/respondent no. 1 approved the resolution for redevelopment of the building, which was in a dilapidated condition. It further noted that there was no order of any court or authority that restrained the enforcement of the resolution passed by respondent no.1

It referred to the case of Girish Mulchand Mehta vs. Mahesh S. Mehta (AIR Online 2009 Bom 1), where a Division Bench of the Bombay High Court had observed that a resolution passed by the General Body of a Housing Society would be binding on its members and that minority members who were against the redevelopment could not take a stand-alone position. It was stated that the proprietary rights of minority members were subordinate to the authority of the Society and that since they were members of the Society, they were bound by the decision of the General Body of the Society.

The Court noted that the failure of respondent nos. 2 to 11 to vacate their flats despite the Development Agreement poses risks to the redevelopment plan. It remarked, “Such conduct of nonconsenting minority members has its own deleterious consequences as it not only prejudices the entire body of members of a society who seek to benefit from the redevelopment but infact also puts to risk the entire redevelopment.”

It noted that the “frivolous and misconceived opposition by a few members” puts a huge financial strain on the developers. It expressed that such conduct by the minority members frustrates the redevelopment plan meant for the benefit of all member of the Society.

On the issue of awarding costs, the Court stated “Considering the frivolity of the defense and complete disregard for the well settled position in law to the issue at hand and balancing it with the age of the members of the Respondent No. 1 Society, I deem it fit to grant costs.”

It ordered respondent nos. 2 to 11 to pay cost Rs. 5,00,000 to the petitioner and the respondent no. 1 only in case they fail to vacate their respective flats within a period of two weeks from the date of the order. Bottom of Form

Case title: M/s. Dem Homes LLP vs. Taruvel C.H.S.L. & Ors. (Commercial Arbitration Petition (L) No. 13474 of 2024)

Click Here To Read/Download Order