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The Bombay High Court has set aside a state government order that sought reconsideration of a proposal to bifurcate Madhurnaina Co-operative Housing Society in Borivali, ruling that the move would obstruct an ongoing redevelopment project. The court held that Section 18 of the Maharashtra Co-operative Societies Act cannot be invoked merely because a minority of members disagree with the redevelopment process or the choice of developer.The judgment reaffirmed that redevelopment decisions approved by the majority of members through valid general body resolutions must be respected, and minority members cannot stall such projects through indirect means. The ruling allows the redevelopment of the society's Naina and Veena buildings to continue under the newly appointed developer, with demolition already completed and most members having executed rehabilitation agreements.
The Bombay High Court has cleared the way for the redevelopment of Madhurnaina Co-operative Housing Society in Borivali by quashing a state government order that had directed fresh consideration of a proposal to bifurcate the society into two separate housing societies. The court ruled that the proposed division was intended to derail the redevelopment process and could not be permitted under the Maharashtra Co-operative Societies (MCS) Act, 1960.
The dispute relates to the redevelopment of two residential buildings—Naina and Veena comprising a total of 32 flats on a common plot in Borivali. The society had initially appointed M/s Narayan Shelter as its redevelopment partner in January 2022. However, after alleging prolonged delays and lack of progress, the society terminated the developer's appointment in June 2024 and subsequently selected Navkarmik Infra and Development Private Limited as the new developer through a special general body meeting.
Before the change in developer, a proposal was raised to split the existing society into two independent housing societies, one for each building. The proposal was placed before a special general body meeting on May 5, 2024, where it was rejected by a majority, with 18 members voting against bifurcation and seven supporting it.
The High Court observed that the proposal for bifurcation was advanced by a minority of members primarily because of disagreements over redevelopment and the choice of developer. It held that Section 18 of the MCS Act, which deals with the division or amalgamation of co-operative societies, cannot be used as a mechanism to frustrate or delay redevelopment projects approved by the majority of society members.
The court also noted that both the Deputy Registrar and the Divisional Joint Registrar had earlier rejected the bifurcation proposal after concluding that differences over redevelopment did not constitute sufficient grounds for splitting an existing society. The High Court found no justification for the state minister's subsequent order remanding the matter for fresh consideration.
Referring to previous Supreme Court and Bombay High Court rulings, the bench reiterated that co-operative housing societies function on the principle of majority rule and that minority members are required to abide by decisions validly taken by the general body. The court emphasised that redevelopment cannot be stalled merely because a small group of members prefers a different developer or redevelopment strategy.
The judgment also recorded that redevelopment had already progressed substantially. The existing buildings have been demolished, transit rent is being paid to eligible members, and most residents have executed Permanent Alternate Accommodation Agreements (PAAAs) with the newly appointed developer. The court observed that reopening the bifurcation issue at this stage would adversely affect the redevelopment process and the interests of the majority of members.
Accordingly, the High Court set aside the minister's remand order, reaffirming that disputes over redevelopment cannot be used as a basis for dividing an existing co-operative housing society.
Source: Indian Kanoon
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