Pending Civil Suit Over Agreement For Sale Does Not Bar Deemed Membership In Co-Operative Society: Bombay High Court

The Bombay High Court held that the mere pendency of a civil suit relating to the enforcement of an agreement for sale or recovery of consideration does not bar the Registrar from deciding an application for membership or deemed membership under Section 22(2) of the Maharashtra Co-operative Societies Act, 1960. The Court observed that the MCS Act confers power upon the Registrar to decide membership when the society does not perform its duty, and the Registrar can confer membership in such a situation, subject to the decision in the civil suit. Justice Amit Borkar was hearing a writ petition filed challenging the revisional order dated 25 November 2024, passed by the Divisional Joint Registrar, Co-operative Societies, Mumbai Division. The petitioners had entered into a registered agreement for sale dated 16 September 2013 in respect of Hubtown Viva Premises Co-operative Housing Society Ltd. After the society failed to act on their application for membership, the Assistant Registrar granted deemed membership to the petitioners under Section 22(2) on 18 August 2022, followed by appointment of an authorised officer under Section 79(2)(b) to implement the order. The developer thereafter filed a revision, which was allowed solely on the ground that a civil suit filed by the developer in 2016 for enforcement of the agreement was pending.The Court held that the revisional authority erred in treating the pendency of the civil suit as a complete bar to conferment of membership. It noted that a purchaser under a registered MOFA agreement in Form No.5 is a person who has “taken” a flat for the purposes of the MCS Act, and such purchaser is entitled to apply for and be considered for membership of the co-operative housing society. Any dispute regarding unpaid consideration or enforcement of contractual terms gives the developer remedies under civil law, but cannot be used to block statutory rights of membership. “A pending civil suit does not automatically stop society from acting. Only if the civil court passes an order restraining the society, then the administrative authority must hold back,” the Court observed. The Court further held that issues of title or contractual enforcement cannot be conclusively decided by authorities under the Co-operative Societies Act, but that does not prevent them from granting provisional membership subject to the outcome of civil proceedings. It observed:“It is true that authorities under the Co-operative Societies Act should not decide pure questions of title. Those issues belong to civil courts. However, membership under the MCS Act involves a provisional determination. This does not finally decide ownership finally. It only recognises the applicant as a member for society purposes.”Accordingly, the High Court quashed and set aside the revisional order dated 25 November 2024 and restored the order dated 18 August 2022 granting deemed membership to the petitioners. It clarified that the pending civil suit would continue in accordance with the law, uninfluenced by the observations in the writ proceedings. The writ petition was allowed with no order as to costs.Case Title: Digant Parekh (HUF) & Anr. v. Akruti Kailash Construction & Ors. [WRIT PETITION NO. 13583 OF 2025]Click Here To Read/Download Order

Pending Civil Suit Over Agreement For Sale Does Not Bar Deemed Membership In Co-Operative Society: Bombay High Court

Saksham Vaishya

Tags