Brightland Cooperative Housing ... vs The Division Joint Registrar Coop ...

2025:BHC-AS:32482 -WP-3466-2025.DOC

SSP

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

WRIT PETITION NO. 3466 OF 2025

Brightland Co-operative Housing Society Ltd. ...Petitioner Versus 1. The Divisional Joint Registrar, Co-op. Societies, Mumbai Division 2. The Deputy Registrar, C.S. H-West Ward, Mumbai 3. Mrs. Arati Satish Gunjikar 4. Ms. Aditi Satish Gunjikar ...Respondents

Mr. Ashok Satpute, for the Petitioner. Mr. P. V. Nelson Rajan, AGP for the State - Respondent Nos.1 and 2. Mrs. Aarti Gunjikar, Respondent No.3-in-person, present.

CORAM: N. J. JAMADAR, J. RESERVED ON : 25th JULY, 2025 PRONOUNCED ON: 31st JULY, 2025

JUDGMENT:

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1. Rule. Rule made returnable forthwith and, with the

consent of the parties, heard finally.

2. The Petitioner takes exception to a judgment and order

dated 2nd September, 2024 passed by the Divisional Joint

Registrar, Co-operative Societies, Mumbai, in Revision

Application No.38 of 2024, whereby the revision preferred by the

Petitioner against an order dated 4th December, 2023 passed by

the Deputy Registrar, Co-operative Societies (R2) under Section

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22(2) of the Maharashtra Co-operative Societies Act, 1960 ("the

Act, 1960"), came to be dismissed affirming the said order

passed by respondent No.2.

3. Shorn of unnecessary details, the background facts

leading to this petition can be summarised as under:

2.1 The Petitioner is a Housing Co-operative Society registered

under the Act, 1960. Mr. Kanayalal Merani and Mrs. Rakhi

Merani were the members of the Petitioner Society and

occupants of Flat No.11. Punjab National Bank, which had

created security interest over Flat No.11, resorted to enforce the

security interest by auction sale of the said flat. Respondent

Nos.3 and 4 claimed to have purchased the said flat in an online

auction sale, on 30th August, 2018. The physical possession of

Flat No.11 was delivered to respondent Nos.3 and 4 on 30 th

December, 2018.

2.2 Respondent No.3 and 4 claimed to have applied for the

membership of the Petitioner Society and the transfer of shares

in their name. Asserting that despite repeated requests the

Petitioner Society committed default in admitting respondent

Nos.3 and 4 as the members of the Petitioner Society,

respondent Nos.3 and 4 filed an application before the Deputy

Registrar under Section 22(2) of the Act, 1960.

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2.3 The Deputy Registrar issued notices to the Petitioner.

However, the Petitioner did not appear and participate in the

said proceeding before the Deputy Registrar.

2.4 Eventually, by an order dated 4th December, 2023, the

Deputy Registrar was persuaded to allow the application and

direct the Petitioner to admit respondent Nos.3 and 4 as the

members of the Petitioner Society and make entries in the

register of members and issue the share certificate.

2.5 Being aggrieved, the Petitioner Society preferred a revision

before the Joint Registrar. It was contended on behalf of the

Petitioner that since respondent Nos.3 and 4 have not paid the

dues of the Society qua Flat No.11, the membership of the

Society cannot be granted to Respondent Nos.3 and 4. If

respondent Nos.3 and 4 clear the dues, as claimed by the

Society, the latter would grant the membership.

2.6 The Joint Registrar did not find any substance in the

challenge to the order of the Deputy Registrar, mounted on

behalf of the Petitioner. The Joint Registrar after adverting to

the controversy on facts as regards the liability of respondent

Nos.3 and 4 and the quantum of the outstanding dues claimed

by the Society, dismissed the revision opining, inter alia, that

the Petitioner Society was always at liberty to invoke the

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remedies under Sections 91, 101 or 154B-29 of the Act, 1960, to

recover the amount towards maintenance and other society

charges.

4. Being further aggrieved, the Petitioner has invoked the

writ jurisdiction.

5. I have heard Mr. Ashok Satpute, the learned Counsel for

the Petitioner, Mr. P. V. Nelson Rajan, the learned AGP for the

State - respondent Nos.1 and 2 and Ms. Arati Gunjikar,

respondent No.3 in-person, at some length. With the assistance

of the learned Counsel for the parties, I have perused the

material on record.

6. Mr. Satpute, the learned Counsel for the Petitioner,

submitted that the authorities under the Act, 1960 committed a

manifest error in directing the Petitioner to admit the

respondent Nos.3 and 4 as the members of the Petitioner

Society in teeth of an express statutory provision which

warrants the payment of the dues of the housing society before

grant of membership. Mr. Satpute invited the attention of the

Court to the provisions contained in Section 154B-7 subsumed

under Chapter XIII-B, inserted by Maharashtra Act No.23 of

2019 in the Act, 1960, with effect from 9 th March, 2019. Laying

emphasis on Clause (a) of Section 154B-7 which incorporates

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restrictions in the matter of transfer of share or interest of a

member of the housing society unless the dues of the housing

society are paid, Mr. Satpute would urge the learned Joint

Registrar did not delve into this principal objection, and

proceeded on an incorrect premise that the Society was at

liberty to pursue the recovery proceedings against respondent

Nos.3 and 4. Such an approach, which is clearly in derogation

of the express statutory provision, vitiated the entire order.

7. Mr. Satpute further submitted that the Petitioner Society

is not averse to admit respondent Nos.3 and 4 as the members

of the Petitioner Society if they clear the outstanding dues. The

unreasonable stand of respondent Nos.3 and 4 that they are not

liable to pay the maintenance which has accumulated since the

year 2009, as they purchased the Flat No.11 in the year 2018,

when respondent Nos.3 and 4 purchased the subject flat on "as

is where is" basis, could not have been given credence, urged

Mr. Satpute.

8. Mr. Satpute also submitted that, Respondent Nos.3 and 4

had not complied with the mandatory requirement for grant of

membership in respect of Flat No.11 by submitting application

in the prescribed form.

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9. In opposition to this, Ms. Gunjikar (R3) would submit

that, respondent Nos.3 and 4 have duly deposited the

maintenance charges which have fallen due from November

2018. An unreasonable demand of Rs.9,50,000/- to transfer the

shares in the name of respondent Nos.3 and 4 was made. The

office bearers of the Petitioner refused to give a break up of the

outstanding amount. Ms. Gunjikar would further submit that

with a view to harass respondent Nos.3 and 4, the repairs were

not carried out to the terrace of the society building by the

Society, and respondent Nos.3 and 4 were required to incur

huge expenses towards repairs as well. The Petitioner Society

did not appear before the Deputy Registrar and, by way of

afterthought, raised the ground of outstanding dues before the

Joint Registrar.

10. Before appreciating the legality and correctness of the

impugned order, it may be apposite to note few uncontroverted

facts. As it emerges from the record, Mr. Kanhaiyalal Merani

and Rakhi K. Kerani were the original holders of Flat No.11.

Punjab National Bank had extended financial facilities to them

and security interest was created on the said flat. Eventually,

Punjab National Bank enforced the security interest and the

subject flat was put for sale by e-auction. In the said e-auction,

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Respondent Nos.3 and 4 purchased the said flat and a

registered instrument along with the sale certificate dated 30

August 2018 issued under Rule 9(6) of the SARFAESI Rules

came to be executed on 30 August 2018. The subject flat was

sold on 'As is where is basis' and 'Whatever there is basis'.

11. Respondent Nos.3 and 4 seem to have applied for the

transfer of the flat in their names on 28 September 2018.

Indisputably, Respondent Nos.3 and 4 were not admitted as

members of the Petitioner Society till the year 2023, which

necessitated the filing of the Application, being Application

No.10 of 2023, under Section 22(2) of the Act, 1960 in the

month of April 2023. The principal reason sought to be ascribed

by the Petitioner Society for not admitting Respondent Nos.3

and 4 as members of the Petitioner Society was the failure of the

Respondent Nos.3 and 4 to clear the outstanding maintenance /

service charges qua Flat No.11.

12. By and large, the material on record indicates that

Respondent Nos.3 and 4 have paid/deposited the maintenance

charges payable from the date of purchase of the subject flat.

The core controversy between the parties revolves around the

extent of the dues to the society for the period prior to the

purchase of the subject flat by Respondent Nos.3 and 4 (owed

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by the previous holders) and the liability of the Respondent

Nos.3 and 4 to pay the same.

13. This propels me to the justifiability of the action, nay

inaction, on the part of the Petitioner society. Section 22 of the

Act, 1960 enumerates the persons who may become a member

of the Society. In the case at hand, we are primarily concerned

with sub-section (2) of Section 22, which reads as under :

22(2) Person who may become member "Where a person is refused admission as a member of a society, the decision (with the reasons therefor) shall be communicated to that person within fifteen days of the date of the decision, or within three months (from the date of receipt of the application for admission, whichever is earlier. If the society does not communicate any decision to the applicant within three months from the date of receipt of such application the applicant shall be deemed to have been (admitted) as a member of the society. [If any question arises whether a person has become a deemed member or otherwise, the same shall be decided by the Registrar after giving a reasonable opportunity of being heard to all the concerned parties].

14. Sub-section (2), on its plain reading, indicates that where

a person is refused membership of a society, the society shall

communicate such decision, with the reasons therefor, to such

person within 15 days from the date of the decision or within

three months from the date of receipt of the application for

admission, whichever is earlier. This implies that the Society is

free to resolve to admit or refuse membership to a person who

applies for the membership of the society. The decision to

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refuse along with the reasons therefor is, however, required to

be communicated to such person.

15. What follows is of material significance. If the society does

not communicate the decision to the applicant within three

months from the date of receipt of such application, the

applicant shall be deemed to have been admitted as a member

of the society.

16. It would be contextually relevant to note that the deeming

fiction of admission to the membership of the society upon

failure to communicate the decision within three months came

to be inserted by substituting the word "admitted" for the words

"refused admission" by Maharashtra Act No.20 of 1986. The

legislature, thus, consciously chose to confer deemed

membership upon the failure to communicate the decision by

reversing the legislative policy diametrically. If the society either

does not take the decision or having taken a decision, fails to

communicate the decision, within the stipulated period, it runs

the risk of the membership of a person being foisted on such

society by the deeming fiction.

17. In the latter part of sub-section (2) of Section 22, the

Registrar comes in the frame as an arbiter. It, thus, provides

that if any question arises whether a person has become a

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deemed member or otherwise, the same shall be decided by the

Registrar after giving a reasonable opportunity of being heard to

the concerned parties. It is in the exercise of the aforesaid

power, the Deputy Registrar, in this case, by an order dated 4

December 2023 directed the Petitioner Society to admit

Respondent Nos.3 and 4 as members of the Petitioner society

and also transfer the share certificate. Thus, the question that

arises for determination is whether, in the facts of the case, the

deeming fiction came into operation?

18. Mr. Satupte, learned Counsel for the Petitioner, made a

faint effort to urge that Respondent Nos.3 and 4 had not

submitted the application for membership of the Petitioner

Society in the prescribed form. Thus, there was no question of

the society taking a decision on the said application.

19. There are indeed provisions in Rule 19 of the Maharashtra

Co-op. Societies Rules, 1961, which stipulate the conditions to

be fulfilled before a person is admitted as a member of the

Society. Rule 19 reads as under :

"19. Conditions to be complied with for admission for membership, etc. No person shall be admitted as a member of a society unless. -

(i) he has applied in writing in the form laid down by the society or in the form specified by the

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Registrar, if any, for membership;

(ii) his application is approved by the committee of the society in pursuance of the powers conferred on it in that behalf and subject to such resolution as the general body of members may in pursuance of the powers conferred on it in that behalf from time to time pass and in the case of nominal or associate member, by an officer of the society authorized in that behalf by the committee;

(iii) he has fulfilled all other conditions laid down by the Act, the rules and the by-laws;

(iv) in case of a firm, company or body corporate, society registered under the Societies Registration Act, 1860, a public trust registered under any law for the time being in force relating to registration of public trusts or a local authority, the application for membership is accompanied by a resolution authorising it to apply for such membership."

20. Qua a person seeking the membership of the society in

individual capacity, two conditions need to be fulfilled. First, he

shall apply in writing in the form laid down by the society or in

the form specified by the Registrar. Second, he shall fulfill all

other conditions laid down in the Act, rules and the by-laws.

21. At this juncture, it is necessary to note that the thrust of

the submission of Mr. Satpute was that, in view of the

provisions contained in Section 154B-7(a) of the Act, it was

necessary to pay dues of the society before seeking grant of

membership. I will deal with this substantive challenge a little

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later. The procedural challenge deserves to be dealt with first.

22. As noted above, from the material on record, it emerges

that Respondent Nos.3 and 4 had applied for admission as

members of the Petitioner Society as early as 28 September

2018; under a month of the purchase of the subject flat. The

said application was received by the Secretary of the Society on

13 November 2019, as is evident from the acknowledgment

thereon. Along with the said application, Respondent Nos.3 and

4 had annexed a cheque drawn for Rs.25,000/- towards the

transfer fee. It could not be controverted that Respondent Nos.3

and 4 had made such application. It further emerges that

Respondent Nos.3 and 4 submitted repeated applications

seeking transfer of the subject flat. At no point of time, the

Society had communicated to the Respondent Nos.3 and 4 that

their applications were not in order or prescribed form.

23. Moreover, the application dated 3 July 2021 seals the

issue as the Respondent Nos.3 and 4 had submitted the

application in the prescribed Form No.33, under the by-laws

No.38(e)(ii). Therefore, the submission on behalf of the

Petitioner that the society was not required to take a decision on

the application preferred by Respondent Nos.3 and 4 as they

were not in the prescribed form, does not carry any substance.

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At any rate, the authorities under the Act and the Courts, would

be required to look at the substance of the matter rather than

form.

24. In the case at hand, Respondent Nos.3 and 4 had been

pursuing for transfer of the membership for over three years

before filing an application under Section 22(2) of the Act, 1960,

before the Deputy Registrar. Yet, there is not a shred of

material to show that the society ever called upon Respondent

Nos.3 and 4 to file an application in the prescribed form or

otherwise pointed out the deficiencies, or for that matter, the

outstanding dues which were required to be cleared. Nothing

prevented the Petitioner Society from taking a decision to refuse

to grant membership to Respondent Nos.3 and 4 and

communicate the said decision. In that event, Respondent Nos.3

and 4 could have resorted to the remedies provided under

Section 23 of the Act. The only inference which is deducible is

that the Petitioner Society did not take any decision, and,

consequently, the deeming fiction for failure to communicate the

decision came into play with full force and rigour.

25. Resultantly, the determination by the Deputy Registrar on

the aspect as to whether Respondent Nos.3 and 4 deemed to

have become members of the society, on account of the default

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of the society to take a decision within three months from the

application dated 3 July 2021, which was received by the Society

on 9 July 2021 along with the prescribed form, cannot be

faulted at.

26. This propels me to the consideration of the submissions

based on the non-compliance of the provisions contained in

Section 154B-7 of the Act, 1960. It reads as under :

"154B-7. Restriction on transfer of share or interest of a Member

Subject to the provisions of this Act, in case of a housing society, no transfer of share or interest of a Member or the occupancy right, except the transfer of his heir or a nominee, shall be effective unless, -

(a) the dues of housing society are paid;

(b) the transferee applies and acquires Membership of the co-operative housing society in due course of time :

Provided that, the transfer of share or interest in respect of lease hold properties shall be governed by the terms of the lease, which are not inconsistent with lease of land to the co-operative housing society or with lease by housing society to its Members.

Explanation. - for the purpose of this section, occupancy right shall not include right of a tenant or a licensee on leave and license basis."

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27. Chapter XIII-B under the title 'Co-operative Housing

Societies' came to be inserted by Maharashtra Act No.23 of 2019

with effect from 9 March 2019 with the object of providing a

separate Chapter to cater to the specific requirements of the co-

operative housing societies which constitute almost half of the

societies registered for the various objects under the Act, 1960.

28. Section 154B makes certain provisions of the Act, 1960

applicable mutatis mutandis to the housing societies, including

Section 22 and sub-sections (1), (2) and (3) of Section 23.

Section 101 of the Act which relates to the recovery of the dues

or arrears from the members of the society has, inter alia, been

made inapplicable to the housing societies, and, instead a

special provision for recovery under Section 154B-29 has been

inserted.

29. Since Section 154B-7 is expressly made subject to the

provisions of the Act. The provisions contained in Sections 22

and 23 of the Act, would govern the aspect of membership of the

housing societies. However, as noted above, Rule 19 of the

Rules, 1961, mandates that the person seeking membership of

the society shall fulfill all other conditions laid down in the Act,

1960, the Rules and the by-laws. Thus, a harmonious

construction of the provisions contained in Sections 22 and 23,

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on the one part, and Section 154B-7, on the other part, is

required to be made. The legislature's anxiety in insisting for

the payment of the dues of the housing society before the

transfer of interest of the member is appreciable. If the dues of

the society are not paid, it would have cascading effect on the

orderly management of the affairs of the housing society. Thus,

the provisions contained in Section 154B-7 deserve adequate

weight.

30. At the same time, the attendant facts of the case cannot

be lost sight of. Where the dues of the housing society are not

in dispute or indisputable, the requirement to pay the same

before seeking membership can hardly be contested. However,

in cases where there is a serious dispute as to what are 'the

dues' of the society, the matter cannot be left to the sweet will of

the managing committee of the society. Lest the said provision

would operate onerously and may be abused to seek unjustified

sums from the transferor or transferee disguised as dues of the

housing society. Where there is a genuine dispute as regards

the dues of the housing society owed by the erstwhile or

prospective member of the housing society, determination by the

authorities under the Act, 1960, would be warranted. In such

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a situation, the attendant circumstances, acts and omissions on

the part of the parties assume importance.

31. In the case at hand, as noted above, the Petitioner society

claims that the maintenance / service charges were outstanding

from Meranis, the erstwhile members, since January 2009.

The Petitioner society seeks to enforce the said liability qua the

subject flat. Respondent Nos.3 and 4 contested the liability on

the premise that they purchased the subject flat under an

instrument dated 30 August 2018, purportedly free from

encumbrances. To resolve the controversy, it may be necessary

to note the implications of the purchase of the said flat on the

express terms 'as is where is' and 'whatever there is' basis.

32. Respondent No.3 in person made an endeavour to urge

that the Respondent Nos.3 and 4 cannot be called upon to

discharge the alleged liabilities of the erstwhile holders of the

subject flat. Emphasis was laid on a stipulation in the sale

certificate that the sale of the property was made free from all

encumbrances known to the secured creditor (PNB).

33. I am afraid, the aforesaid stipulation in the sale certificate

is of determinitive significance, especially in the face of the

express term of the bargain that the sale of the subject flat was

on "As is where is" and "whatever there is" basis. The import of

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the superimposed conditions of "As is where is" and "Whatever

there is" basis is not confined to the physical condition of the

property which is the subject matter of the sale. Such

conditions, in given circumstances, may extend to the quality of

title to the subject property and the claims against such

property. A greater responsibility is cast on the person who

purchases the property with express superimposed conditions

of "As is where is" and "Whatever there is" basis to carry out

due diligence and find out for himself not only the condition of

the subject property, but also the vulnerability of the title

thereto and the obligations in relation to such property.

34. A useful reference, in this context, can be made to a three

Judge Bench judgment of the Supreme Court in the case of

K.C.Ninan V/s. Kerala State Electricity Board and Ors. 1 wherein

the Supreme Court, after a survey of precedents, enunciated the

position in law, as under :

"143. Thus, the implication of the expression "as-is- where-is" or "as-is-what-is-basis" or "as-is-where-is, whatever-there-is and without recourse basis" is not limited to the physical condition of the property, but extends to the condition of the title of the property and the extent and state of whatever claims, rights and dues affect the property, unless stated otherwise in the contract. The implication of the expression is that every intending bidder is put on notice that the seller does not undertake any responsibility to procure permission in respect of the property offered for sale or any liability for the payment of dues, like water/service charges,

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electricity dues for power connection and taxes of the local authorities, among others."

(emphasis supplied)

35. The aforesaid being the position in law, the question as to

whether the Respondent Nos.3 and 4 were required to discharge

the liability to pay the outstanding maintenance / service

charges qua the subject premises cannot be determined solely

on the basis of the stipulation in the sale certificate that, to the

best of the knowledge of the secured creditor (PNB), the subject

property was free from all encumbrances. Therefore, the broad

submission sought to be canvassed by Respondent No.3 that

the Respondent Nos.3 and 4 were not liable to pay outstanding

dues towards the maintenance/service charges for the period

prior to purchase cannot be readily acceded to.

36. Nonetheless, what were the dues of the society is not free

from infirmities. First and foremost, it is imperative to note that

the material on record does not indicate that, the despite

numerous communications, the Petitioner Society had called

upon the Respondent Nos.3 and 4 to pay the alleged

outstanding maintenance / service charges since the year 2009.

Secondly, the Petitioner Society did not resolve to refuse to

admit Respondent Nos.3 and 4 as members of the Petitioner

Society until the dues of the society were cleared. Thirdly, there

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is material to show that the Respondent Nos.3 and 4 had called

upon the Petitioner to give the break-up of the amount payable

towards the maintenance charges, by erstwhile members, since

the year 2009, and, yet, there was no response from the

Petitioner Society. Lastly, a bare perusal of the chart appended

to the maintenance bill for the months of 1 st August 2024 to 31st

December 2024 indicates that the major component of the

amount claimed by the society is of previous accumulated

interest. These factors cumulatively make the determination by

the authorities under the Act, either in a dispute under Section

91 or in a proceeding under Section 154B-29 of the Act, 1960

imperative before the dues of the society are crystalized.

37. A bald assertion that the dues of the society have not been

cleared, in such circumstances, without participating in the

inquiry before the Deputy Registrar, or even diligently pursuing

revision application before the revisional authority, by no stretch

of imagination, can be a sustainable ground to refuse to admit

Respondent Nos.3 and 4 as members of the Petitioner Society.

38. Undoubtedly, the dues of the housing society must be paid

before admitting a person as a member. However, the said

stipulation cannot be construed in an unrealistic manner and

torn out of the factual context. Otherwise, it would give a long

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leash to the society to insist for the payment of the exorbitant

amount under the guise of dues to the society.

39. Moreover, as noted above, in the facts of the case, the

Petitioner society did not decide to refuse to admit Respondent

Nos.3 and 4 as members of the Petitioner Society on the said

count, for over three years. Resultantly, the deeming fiction

operated. The authorities were, thus, justified in directing the

Petitioner to admit Respondent Nos.3 and 4 as the members of

the Petitioner Society, and, then work out its remedies to recover

the outstanding amount towards the maintenance charges from

the erstwhile holders. Such a course, in my considered view,

cannot be said to be unreasonable.

40. The conspectus of aforesaid consideration is that the

impugned order does not warrant interference in exercise of

extra-ordinary writ jurisdiction.

41. Hence, the following order:

:ORDER:

(i) The petition stands dismissed with costs.

(ii) Rule discharged.

(iii) By way of abundant caution, it is clarified that the

observations as regards the liability to pay the

maintenance / service charges for the period prior to the

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purchase of the subject flat by Respondent Nos.3 and 4

were confined to the determination of the legality and

correctness of the impugned order, and, this Court may

not be understood to have expressed any opinion on the

liability of Respondent Nos.3 and 4 on the said count and

all questions would be open for consideration in an

appropriate proceeding before the authorities / courts as

and when the said issue arises for the determination.

[N. J. JAMADAR, J.]

Signed by: S.S.Phadke 22/22 Designation: PS To Honourable Judge Date: 31/07/2025 20:35:21