Case: Sarita Nagari Phase ?? 2 Co-Operative Housing Society Limited &amp; Others Vs. The State of Maharashtra, Through The) Minister For Co-Operation &amp; Others

residence or place of business of such person which shall be within the city, town or village in which the building is located;(i) Provision as to the percentage of votes by the apartment owners which shall be determinative of whether to rebuild, repair, restore, or sell the property in the event of damage or destruction of all or part of the property;(j) Any other details in connection with the property which the person executing the Declaration may seem desirable to set forth consistent with this Act;(k) The method by which the Declaration may be amended, consistent with the provisions of this Act.(2) A true copy of each of the Declaration and bye-laws and all amendments to the Declaration or the bye-laws shall be filed in the office of the competent authority.40. A perusal of the declaration in the present case shows that it is clearly a hurriedly executed document, which violates rights of the flat purchasers under the MOFA Act and the Apartment Act. Section 4(1)(v) of the MOFA Act specifically provides that the agreement between the flat purchaser and the developer shall specify the precise nature of organisation to be constituted of the persons who take the flats. While various clauses of the agreement in the present case, quoted above, show that it was specified that a Cooperative Society would be formed, but, the hurriedly executed declaration violates this specification. Section 11(1) of the MOFA Act provides that the promoter (developer in the present case) shall take all necessary steps and execute all relevant documents to convey title to the organisation of persons in accordance with the agreement under Section 4 of the MOFA Act. As stated above, in terms of the agreements entered into between the respondent developer and flat purchasers, such organisation of persons was to be a Cooperative Society. The hurriedly executed declaration by the respondent developer and the owner, by catching hold of five flat purchasers, violated the said mandate and hence it cannot be held to be a valid declaration in law.41. Apart from this, the declaration does violence to Sections 6 and 11 of the Apartment Act, as it does not fully disclose the extent of common areas and facilities available to the flat purchasers, because it does not disclose the common areas retained by the respondent developer. In fact, it is a unilaterally executed document, which takes away the right of the flat purchasers to be able to determine such use of common areas and facilities by formation of Cooperative Society, which, in fact, was contemplated in the agreement that they signed with the respondent developer. There is substance in the contention of the petitioners that the declaration dated 27.12.1999, executed by the Respondent Developer and the land owner violates second proviso to Section 2 of the Apartment Act, as it specifies that the owner will grant lease of the land to apartment owners and terms and conditions of such lease shall be disclosed in the declaration, which has not been done in the present case. Hence, the said declaration cannot be said to be a declaration as provided under the Apartment Act as contemplated under Section 10(2) of the MOFA Act. Consequently, it could not have rendered unlawful, the formation of Cooperative Societies by flat purchasers/members of the petitioner Cooperative Societies.42. As noted hereinabove, facts in the present case show that in Writ Petition No. 798 of 2005, there are 244 flat purchasers who are members of the Cooperative Society, while in Writ Petition No. 414 of 2005, there are 52 flat purchaser members. As opposed to this, only 33 flat purchasers are members of the Apartment Association contemplated in the hurriedly executed declaration and even they are paying monthly charges to the Cooperative Societies. These Cooperative Societies have been functioning for the benefit of the flat purchasers/members for more than 17 years.43. Thus, an overwhelming majority of the flat purchasers have opted for and formed Cooperative Societies and this aspect cannot be overlooked. The amendment to Article 19(1)(C) by the 97th amendment of Constitution by addition of the words Cooperative Societies is also an aspect that has to be taken into consideration. Even prior to the amendment, the right of the flat purchasers was protected under Article 19(1)(C) of the Constitution. The whole object of the amendment is to further fortify the cooperative movement and the fact that the cooperative spirit has to be encouraged. The Honble Supreme Court in the case of Vipulbhai Vs. Gujarat Cooperative Milk Marketing Federation Ltd. (2015) 8 SCC 1 , has noted that a Cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise and that Cooperatives are based on the values of self help, self responsibility, democracy, equality, equity and solidarity. The formation of Cooperative Society by the flat purchasers is intended to ensure that they are able to take care of their own welfare and that they are not defendant on the Respondent Developer. This cannot be permitted to be scuttled by the hurriedly executed declaration by the developer, particularly when the agreements entered into by the developer with the flat purchasers specifically provided for formation of Cooperative Society.44. We are not discussing the judgments relied upon by the counsel for the parties because they were decided on the facts of the respective cases.45. As regards the apprehension expressed on behalf of the Respondent Developer that if the Cooperative Society is allowed to persist, the Respondent Developer would find it difficult to undertake construction of proposed additional constructions in the sanctioned layout, it is made clear that the rights of the Respondent Developer would not be adversely affected only because the flat purchasers have formed a Cooperative Society. The rights of the Respondent Developer would be governed by the relevant provisions of law and the agreements executed by the Respondent Developer with the flat purchasers. Therefore, the apprehension of the Respondent Developer is misplaced.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]25. The learned counsel appearing on behalf of the Respondent Developer is correct when he points out that although references have been made to formation of Cooperative Society at various places in the flat purchasers agreement, at the same time reference is also made to apartments/corporate body and that clause 24 very specifically states that the agreement shall be subject to provisions of the Apartment Act and Rules framed thereunder.26. Thus, one of the issues in these writ petitions before this Court is, as to whether the flat purchasers were given a promise by the Respondent Developer of formation of Cooperative Society or that they had acquiesced to formation of an apartment association/condominium in terms of the Apartment Act. On an analysis of the various clauses of the flat purchasers agreement, it is evident that formation of Cooperative Society of the flat purchasers was clearly mandated under the agreement, although it was also stated that the agreement would always be subject to the provisions of the Apartment Act. This would show that the flat purchasers who have formed the Petitioner Societies are justified in claiming that they purchased flats from the Respondent Developer because they were given assurance that Cooperative Society of flat purchasers would be eventually formed and that this was one of the factors which went into their decision of purchasing flats from the Respondent Developer. As regards the agreement being subject to the Apartment Act, it would mean that the provisions of the Apartment Act would have to be applied strictly in the present case.27. Apart from this, it is an admitted position that affidavits were taken from the flat purchasers in terms of the requirements of MCS Act and Rules wherein the flat purchasers were required to state that they or any dependent member of the family were not members of any Cooperative Housing Society in the area of operation of the proposed housing Society. The fact that such affidavits were taken from the flat purchasers by the Respondent Developer while entering into flat purchase agreements, shows that at all times the formation of Cooperative Society of flat purchasers was intended.28. Another relevant aspect highlighted on behalf of the Petitioners is that even the order of exemption passed under the provisions of Urban Land (Ceiling and Regulation) Act, 1976, states that the persons applying for exemption had stated in their application that the exemption was sought for the land in question for construction of tenements that would be governed by the MOFA Act or the MCS Act. Therefore, right from the stage of inception of the project of construction of apartments, starting with the issuance of the exemption order under the provisions of the Urban Land (Ceiling and Regulation) Act, 1976, to the execution of flat purchase agreements, it was held out that a Cooperative Society of flat purchasers would be formed.29. It is in this backdrop that the contentions of the parties will have to be appreciated to examine as to whether the petitioners are justified in claiming that when the flat purchasers were about to form the Cooperative Society as the Respondent Developer had failed to form such a Society mandated under Section 10(1) of the MOFA Act, the Respondent Developer rushed into execution and registration of a declaration under Section 10(2) of the MOFA Act by catching hold of five flat purchasers along with the owner and sought to scuttle formation of the Cooperative Society in a most illegal and highhanded manner.In the light of the above, the said contention raised on behalf of the Petitioners stands rejected. As a result, what remains to be considered is whether the Respondent Developer had complied with the requirements of Section 10 (2) of the MOFA Act in a strict manner so as to successfully claim that upon the declaration being executed, registered and intimated to the Registrar under the MCS Act, it was no longer lawful for the flat purchasers to form a Cooperative Society. The requirements of Section 10 (2) of the MOFA Act are that a declaration as contemplated under the provisions of the Apartment Act is to be executed and registered and then this fact is to be informed to the Registrar as defined under the MCS Act so as to render formation of Cooperative Society by flat purchasers as unlawful.32. Since the effect of the Respondent Developer along with the owner executing such declaration under Section 10(2) of the MOFA Act, is drastic for the flat purchasers, as they are prevented from forming a Cooperative Society, it is necessary that such a declaration is scrutinized closely and it is to be examined whether it strictly complies with the requirements of Section 10(2) of the MOFA Act and the provisions of the Apartment Act.33. In the instant case, the admitted position about the chronological sequence of events shows that the declaration was executed and registered prior to the flat purchasers submitting their application for formation of Cooperative Society under the provisions of the MCS Act. The fact that execution and registration of such declaration by the Respondent Developer and the owner was intimated to the competent authority under the MCS Act has not been disputed by the petitioners and it is so recorded in the orders passed by the authorities under the MCS Act. Therefore, it is contended on behalf of the Respondent Developer that by operation of Section 10(2) of the MOFA Act, the flat purchasers could not have formed a Cooperative Society.We have given thoughtful consideration to the said contentions raised by both parties on the question as to whether the said declaration can be relied upon for rendering formation of Cooperative Societies by the petitioners as unlawful. In the aforementioned judgment in the case of Paul Parambi .vs. The Bombay Dyeing and Manufacturing Co.Ltd. (supra), this Court, while considering the question as to the nature of the declaration and whether it was contrary to provisions of the Apartment Act, has held in the facts of the said case that a deed of declaration ex facie contrary to the provisions of the Apartment Act could not be considered as a declaration at all for the purposes of Section 10(2) of the MOFA Act. In that case, the owner of the property had unilaterally executed such a declaration despite the fact that 80% of the flats had been already sold. While deciding that case, this Court took into consideration the fact that since the flat purchasers lose their right to form a Cooperative Society, it has to be seen whether the declaration strictly complies with the provisions of the Apartment Act to prevent the flat purchasers from forming a Cooperative Society under Section 10(2) of the MOFA Act.As regards the reliance placed by the learned counsel for the Respondent Developer on Section 31 of the Specific Relief Act, 1963, to contend that the Petitioners would first have to successfully prove before a Civil Court that the declaration executed by the Respondent Developer was bad in law or voidable and then they would be entitled to claim that such a declaration could not be the basis for preventing them from formation of Cooperative Society under Section 10(2) of the MOFA Act, we find that in the said case of Paul Parambi (supra), this Court has found the declaration to be ex facie contrary to the provisions of the Apartment Act, despite the fact that in the said case the flat purchasers had instituted a suit in respect of declaration, which was pending. Thus, even when a civil suit on the said question was pending, this Court has examined the issue as to whether the declaration executed was in terms of the provisions of the Apartment Act or not. Therefore, we find that while deciding these writ petitions, this Court can certainly look into the question as to whether the declaration relied upon by the Respondent Developer, which has the drastic consequence of preventing the Petitioners from forming the Cooperative Society under Section 10(2) of the MOFA Act, is or is not in terms of the requirements of the Apartment Act. This is particularly so because Section 10(2) of the MOFA Act clearly states that such declaration ought to be in terms of the provisions of the Apartment Act. The failure to adhere to the provisions of the Apartment Act can certainly be examined in the instant case. It is also necessary to examine whether the hurriedly executed declaration in the present case infringes any valuable rights that accrued to the flat purchasers/members of the petitionerCooperative Societies underthe provisions of the MOFA Act.A perusal of the declaration in the present case shows that it is clearly a hurriedly executed document, which violates rights of the flat purchasers under the MOFA Act and the Apartment Act. Section 4(1)(v) of the MOFA Act specifically provides that the agreement between the flat purchaser and the developer shall specify the precise nature of organisation to be constituted of the persons who take the flats. While various clauses of the agreement in the present case, quoted above, show that it was specified that a Cooperative Society would be formed, but, the hurriedly executed declaration violates this specification. Section 11(1) of the MOFA Act provides that the promoter (developer in the present case) shall take all necessary steps and execute all relevant documents to convey title to the organisation of persons in accordance with the agreement under Section 4 of the MOFA Act. As stated above, in terms of the agreements entered into between the respondent developer and flat purchasers, such organisation of persons was to be a Cooperative Society. The hurriedly executed declaration by the respondent developer and the owner, by catching hold of five flat purchasers, violated the said mandate and hence it cannot be held to be a valid declaration in law.41. Apart from this, the declaration does violence to Sections 6 and 11 of the Apartment Act, as it does not fully disclose the extent of common areas and facilities available to the flat purchasers, because it does not disclose the common areas retained by the respondent developer. In fact, it is a unilaterally executed document, which takes away the right of the flat purchasers to be able to determine such use of common areas and facilities by formation of Cooperative Society, which, in fact, was contemplated in the agreement that they signed with the respondent developer. There is substance in the contention of the petitioners that the declaration dated 27.12.1999, executed by the Respondent Developer and the land owner violates second proviso to Section 2 of the Apartment Act, as it specifies that the owner will grant lease of the land to apartment owners and terms and conditions of such lease shall be disclosed in the declaration, which has not been done in the present case. Hence, the said declaration cannot be said to bedeclaration as provided under the Apartment Act as contemplated under Section 10(2) of the MOFA Act. Consequently, it could not have rendered unlawful, the formation of Cooperative Societies by flat purchasers/members of the petitioner Cooperative Societies.42. As noted hereinabove, facts in the present case show that in Writ Petition No. 798 of 2005, there are 244 flat purchasers who are members of the Cooperative Society, while in Writ Petition No. 414 of 2005, there are 52 flat purchaser members. As opposed to this, only 33 flat purchasers are members of the Apartment Association contemplated in the hurriedly executed declaration and even they are paying monthly charges to the Cooperative Societies. These Cooperative Societies have been functioning for the benefit of the flat purchasers/members for more than 17 years.43. Thus, an overwhelming majority of the flat purchasers have opted for and formed Cooperative Societies and this aspect cannot be overlooked. The amendment to Article 19(1)(C) by the 97th amendment of Constitution by addition of the words Cooperative Societies is also an aspect that has to be taken into consideration. Even prior to the amendment, the right of the flat purchasers was protected under Article 19(1)(C) of the Constitution. The whole object of the amendment is to further fortify the cooperative movement and the fact that the cooperative spirit has to be encouraged. The Honble Supreme Court in the case of Vipulbhai Vs. Gujarat Cooperative Milk Marketing Federation Ltd. (2015) 8 SCC 1  , has noted that a Cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise and that Cooperatives are based on the values of self help, self responsibility, democracy, equality, equity and solidarity. The formation of Cooperative Society by the flat purchasers is intended to ensure that they are able to take care of their own welfare and that they are not defendant on the Respondent Developer. This cannot be permitted to be scuttled by the hurriedly executed declaration by the developer, particularly when the agreements entered into by the developer with the flat purchasers specifically provided for formation of Cooperative Society.44. We are not discussing the judgments relied upon by the counsel for the parties because they were decided on the facts of the respective cases.45. As regards the apprehension expressed on behalf of the Respondent Developer that if the Cooperative Society is allowed to persist, the Respondent Developer would find it difficult to undertake construction of proposed additional constructions in the sanctioned layout, it is made clear that the rights of the Respondent Developer would not be adversely affected only because the flat purchasers have formed a Cooperative Society. The rights of the Respondent Developer would be governed by the relevant provisions of law and the agreements executed by the Respondent Developer with the flat purchasers. Therefore, the apprehension of the Respondent Developer is misplaced.