Redevelopment and mighty co-op regime!

By I C Naik

This post is a tribute to 236 genuine co-operators’ suffering for extra 5 years in nearly a century old building under redevelopment – thanks entirely to mighty State Cooperative  regime, operating with zero accountability-Naik

Some of those tracking this series may feel sort of overemphasis laid on Cooperative Principles. We are going to look at a recent judgment of the Hon. Bombay High Court which rescued the 236 genuine cooperators having put up additional 5 years in a 90 year old dilapidated property. It was the most unfortunate consequence of apathy of the membership towards the right management practices which evolved on its own as if, the Cooperative values and Principles weren’t there to fight the evil.

The reality is almost every redevelopment project in Mumbai passes through corridors of Bombay High Court thanks chiefly to a minuscule number of disgruntled members of the society blessed by the motivated power centers in the Cooperative regime. Little do such disgruntled members realize the dire consequences of their misguided moves on their own community life; perhaps they are not blessed with a sense of maturity and have not heard of cooperative values and principles. In that cooperative management cannot shirk its responsibility. They are to be blamed too.

Last June the Hon. Bombay High Court delivered the judgment on a writ petition in favor of a 236 member housing society which had embarked on a redevelopment eight years ago [of a  property constructed 90 year ago situate at Currey Road adjoining Parel -Lalbag Area in Mumbai

 The project was on track till 17th April, 2013 when the society was slapped a notice by the office of the Divisional Joint Registrar Mumbai Division (the DJR) purportedly exercising suo-moto powers under section 154 of the MCS Act taking cognizance of a complaint made by the 9 disputant members of the society.

Significance of the redevelopment project of this housing society can be well appreciated by perusing a few notations of the Court; extracted below.

1. Paragraph 3; “The society is the owner of the plot of the land bearing Cadastral Survey No.2/71 of Parel and Sewree Division, totally ad measuring about 3593.1 sq.mtrs., four buildings comprises of 19 shops, 222 residential tenements, 3 society rooms, 1 go down and 1 society’s office. The society has 236 members out of which 219 members are active members. The construction of the building was carried out 90 years ago and the condition of the building is dilapidated and has precarious condition according to the society“
2. Paragraph 33: “The Municipal Corporation of Greater Mumbai had issued notices under section 354 of the Mumbai Municipal Corporation Act, 1888 to the society  for carrying out the repairs stating that the conditions of the building was dilapidated”

The society fully adhered to Redevelopment guide lines issued on January 3 2009 by the State Government u/s 79A of the M C S Act 1960, notwithstanding the controversy whether these directions were mandatory and binding on the society or merely guidelines and were optional.

By April 2011 the society had made a fairly good progress in planning the redevelopment project and executed redevelopment agreement with M/s Ratnaraj Realty.

As required, the Assistant Registrar was also present in all Special General Body Meetings held for getting various approvals of members as required under the aforesaid Guidelines. After each of these meetings the Assistant Registrar on his own accord issued a letter addressed to the society asking to take actions on the resolutions passed at these meetings. This letter was not called for under the aforesaid directions. In the absence of these letters also the society could go ahead with the project as per resolutions without any further approvals.

It appears that at the behest of the 9 disputant members (the respondent nos. 4 to 12 in the WP6701.2013) the Divisional Joint Registrar  purportedly exercising suo-moto powers under section 154 of the MCS Act issued a Notice to the society on 17th April, 2013. The DJR also referred to letter of the 15th April, 2013 of the District Deputy Registrar, Co- operative Societies [Respondent No 2 in the WP6701.2013] and a report of enquiry officer and Deputy Registrar, Co- operative Societies, Mumbai. [ Respondent No 3 in the WP6701.2013]. The society was called upon to remain present before the DJR on 25th April, 2013.

The society appeared and requested for copies of the report of enquiry officer and the complaint mentioned in the said notice and to allow time to file a reply to the said notice. The DJR allowed only five days’ time to the society to file reply which was eventually filed on 4th May, 2013.  On that very date the DJR  passed an order quashing and setting aside the three letters  issued by the Assistant Registrar, Co-operative Societies, F/S Ward, Mumbai recognizing as his directions liable to revision and held that the said directions were contrary to the provisions of the Government directive dated 3 rd January,2009.

A few important observations made by Hon Justice Dhanuka J. in his order. dated June 28, 2018:

1. Various resolutions were passed by the society in various meetings attended by the majority of the members on various decisions taken from time to time. These meetings were also attended by the authorized officer.
2. The Assistant Registrar had issued three letters to the petitioner; giving directions to the petitioner to proceed with redevelopment.
3. The respondents could not point out any authority for authorizing the Assistant Registrar to issue any NOC or instructions (referred to in 2 above) to take any steps for redevelopment of the buildings of the society.
4. As per order passed by the DJR the disputant members had made complaint against the society alleging various breaches in respect of the process of the redevelopment proposed by it and they wanted the DJR to stall the redevelopment process and to enquire in the entire process of redevelopment.
5. The DJR however purportedly exercised powers under section 154 of the MCS Act. Hon. Dhanuka J. observed;

“since the Assistant Registrar himself has no power to issue any directions to the society to execute the development agreement in favor of the developer or to take any further steps under any of the provisions of the MCS Act or even under the said Government resolution dated 3rd January, 2009,the instructions issued to the petitioner were not in the nature of any directions or orders. Section 154 of the MCS Act therefore would not be attracted to the facts in this situation. The DJR could not have thus set aside those directions issued by the Assistant Registrar.”

6. Since the said Government resolution itself is not mandatory but is directory, no consequences having been provided in the said Government resolution dated 3rd January, 2009 for non compliance thereof, the DJR could not have set aside those three letters. The DJR could not have thus rendered any findings against the society that it had committed breach of those directives issued by the State Government under section 79(A) of the MCS Act.
7. The order passed by the DJR is in gross violation of principles of natural justice as he did not furnish copy of so called report submitted by the District Registrar, enquiry officer/ Deputy Registrar. No reliance on such report could be placed by the DJR without furnishing a copy thereof to the society and without giving an opportunity to deal with such report.

Justice R.D.DHANUKA, J. quashed and set aside the order dated 14th May, 2013 passed by the DJR in Revision Application No.245 of 2013.

The society for the last three years (2010-2013) was on proper course to timely redevelopment, lost 5 precious years just because the over enthusiastic officer of the State Cooperative Regime issued wholly redundant directives to the society, that too sans any authority to do so. Quashing of these illegal letters pushed the deadline of redevelopment by 5 years. What a pitty!!! The irony is the law or the State has nothing under their command to suitably punish the erring officer causing severe damage to innocent members as also for wasting the most precious judicious time. The members of the society demonstrated complete respect to even the optional directions and members of cooperative regime acted in causal manner. The judgment should be an eye opener to State Administration that orders issued without providing for consequences of breach thereof are not orders but mere advisories of no consequence.

The lesson for housing societies is to ensure that cooperative values and principles are so well inculcated in the management practices as also in the culture of the membership in general that they can handle their differences without resorting to expensive and protracted litigations like the one we talked at length.