MEMORANDUM
M Mulla Associates │ Advocates & Solicitors
DISSENTING MEMBERS OF A CO-OPERATIVE SOCIETY ARE BOUND BY THE
DEVELOPMENT AGREEMENT AS THEIR IDENTITIES ARE SUBSUMED INTO THAT
OF THE SOCIETY
The Bombay High Court in a recent case of Westin Sankalp Developers v. Ajay Sikand Rana and
Ors., [2021 SCC OnLine Bom 421] has reiterated its stand that minority or dissenting members of a
co-operative housing society have no separate identity from that of the society and that they are bound
by the development agreement.
FACTS 1 and 2 had agreed to vacate their respective
tenements.
The Kandivali Basant Bahar Cooperative Housing.
Society Ltd. (“the Society”) held a plot of land The Development Agreement dated 27th December,
alongwith structure. In 2009, the Municipal 2018 (“Agreement”) contained an arbitration clause
Corporation of Greater Mumbai declared the to govern disputes. Further the Agreement listed all
Society’s structure to be in ruinous condition, unfit the names of the 14 members of the Society,
and unsafe for human habitation. The Society issued however, the names of the two Respondents were
an advertisement in 2018 inviting tenders. crossed out. The Petitioner filed a petition under
Subsequently, the Petitioner-developer submitted to Section 9 of the Arbitration and Conciliation Act
the Society its final offer for redevelopment of the before the Bombay High Court (“the Court”) to pass
property on 26th April 2018. A special general orders of interim measures against the non-
meeting was held by the Society on 27th May 2018, signatories Respondent Nos. 1 and 2 and for
and on 10th June 2018, the Society informed the appointment of the court receiver.
Petitioner that its offer had been accepted. On 5th
November, 2018 the Petitioner, addressed individual
notices to all 14 members of the Society to be present ISSUE
at the office of the Sub-Registrar of Assurances to
The issue before the High Court was that whether the
execute the approved Development Agreement.
Respondent Nos. 1 and 2 being non-signatories to the
Separate notices were also sent to the Respondent
Agreement were bound by the arbitration clause
No. 1 and 2 regarding the same. On 27th December,
present therein and whether any reliefs sought under
2018, 12 out of 14 members signed the Development
a section 9 petition could be made against them.
Agreement. The Respondent No. 1 and 2 members
stayed away. The Intimation of Disapproval (IOD)
for the proposed building was received in November, SUBMISSIONS
2019 and the Transfer for Development Rights
(TDR) was received in December, 2019. All the The Petitioners placed reliance on the observations
members of the Society except the Respondent Nos. and findings in Sarthak Developers v Bank of India
Amrut-Tara Staff CHSL1 and Girish Mulchand
1
Appeal (L) No 310 of 2012
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MEMORANDUM
M Mulla Associates │ Advocates & Solicitors
Mehta & Ors v Mahesh S Mehta & Ors2, both being also observed that in Girish Mulchand’s case the
judgments passed by the division bench of the Division Bench of this Court took the view that since
Bombay High Court. The Petitioners submitted that the dissenting persons were members of the society
the two Respondents being members of the society
and held flats in the society they were bound by the
had no separate identity from the Society and did not
have the right to oppose the decision taken by it and decision of the general body of the society as long as
prejudice the rights of the other members. Further, the decision was in force. The Division Bench further
except for the two Respondents all other members of observed that the acts of the society would bind the
the Society had entered into the Development dissenting members unless the resolutions were
Agreement and agreed to vacate their respective quashed and set aside by a forum of competent
tenements. jurisdiction. Further, the general body of the society
The Respondents on the other hand submitted that as ‘is supreme’ in so far as redevelopment of property
they had not signed the Agreement and are therefore in question or where the appointment of a developer
not bound by the arbitration clause and that no relief is concerned. The Court noted that such a decision
in Section 9 can be passed against them. Reliance was was reaffirmed in subsequent judgments.
placed on the decision of a single Judge of the
Bombay High Court in Acknur Constructions Pvt The Court concluded that the arguments advanced on
Ltd v. Sweety Rajendra Agarwal & Ors3. behalf of the Respondents Nos. 1 and 2 were not
tenable in view of the judgments laid down by the
Division Bench of the Court and reiterated that the
JUDGMENT dissenting persons are subsumed within the identity
of a co-operative society of which they are a member
The High Court observed that all the decisions cited and that each one of them would be bound by the
by the Petitioners were binding and apposite and not agreement which was entered into by the society of
distinguishable from the case at hand. Placing which they are members. It was further noted that
reliance on the decision of Bombay High Court in Respondent Nos. 1 and 2 had never challenged the
Aditya Developers v. Nirmal Anand Co-op. Hsg Soc decision of the general body nor the development
Ltd.4 that which involved a section 9 petition where agreement and that they did not have any protective
a party obstructed on the ground that he was not a order of any court of competition jurisdiction. The
signatory and the agreement was bad, the Court Court also observed that that the Acknur
observed that once a person becomes a member of a Constructions judgment relied upon by Respondents
Co-operative Society he loses his individuality and was no longer good law and was impliedly over-ruled
has no independent rights except what is given to by the decision in the Girish Mulchand case.
him by the statute and bye-laws. Hence the objection
raised by the Respondents therein that there was no In view of the above, the Court on facts held that the
privity of contract between them, and the society was two Respondents were bound by the Agreement and
not maintainable. must vacate their respective tenements. Pertinently,
the Court further observed that the Agreement was
The High Court observed that in light of the several backed by an undisturbed general body resolution of
judgments passed by courts relating to the issue at the Society and that there was inherent evidence in
hand the same was no longer res integra. The Court
2 2019 SCC OnLine Bom 1986 4
2016 SCC OnLine Bom 100
3
2009 SCC OnLine Bom 1951
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MEMORANDUM
M Mulla Associates │ Advocates & Solicitors
the Agreement that the benefits of it inure to all 14
members of the Society, including Respondents Nos.
1 and 2.
The Court also held that if either of the two
Respondents failed to vacate their respective
premises within the time stipulated by the Court, the
court receiver would be appointed to forcibly evict
and eject them from the premises. Lastly, the Court
held that the two Respondents would be entitled to all
the benefits under the Agreement on parity with the
other members and also receive transit rent/
compensation as with the other members from
delivering vacant possession.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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