Redevelopment Dispute in Housing Society: Supreme Court Resolves Conflict Between Members

The case of Kamgar Swa Sadan Co-operative Housing Society Ltd. vs. Vijaykumar Vitthalrao Sarvade & Ors. revolves around a long-standing dispute regarding the redevelopment of a co-operative housing society in Mumbai. The Supreme Court had to balance the interests of the majority of society members who supported redevelopment with the objections raised by a small group of members opposing the project. The judgment brings clarity on the legal principles governing co-operative societies, redevelopment agreements, and judicial intervention in housing disputes.

Background of the Case

The appellant, Kamgar Swa Sadan Co-operative Housing Society Ltd., was formed under the Maharashtra Co-operative Societies Act, 1960. The society decided to redevelop its old and dilapidated buildings under the provisions of Regulation 33(7) of the Development Control Regulations for Greater Mumbai, 1991.

A Special General Body Meeting was held on February 12, 2011, where the members unanimously resolved to accept the redevelopment proposal submitted by Respondent No. 26. Subsequently, on December 2, 2012, another meeting was held, where Respondent No. 27, a sister concern of the original developer, was appointed as the new developer.

Challenges Raised by Some Members

Despite the majority of members supporting redevelopment, a small group of members, the respondents in this case, opposed the project and filed multiple legal challenges. They argued that:

The resolutions passed in the General Body Meetings were illegal and violated government guidelines.
The tender process for selecting the developer was unfair.
The redevelopment agreement did not adequately protect their interests.

They sought a declaration from the court that the redevelopment resolutions and agreements were null and void.

Legal Proceedings and Court Rulings

Several rounds of litigation followed:

2013: The opposing members filed a revision application under Section 154 of the Maharashtra Co-operative Societies Act challenging the redevelopment approvals granted by the Assistant Registrar of Co-operative Societies.
2016: The respondents filed a civil suit before the City Civil Court in Mumbai, challenging the redevelopment resolutions and seeking a fresh tender process.
The Bombay High Court: The society and the developer argued that the suit was barred under Section 91 of the Maharashtra Co-operative Societies Act, meaning only the Co-operative Court had jurisdiction. However, the trial court and the Bombay High Court ruled that the civil suit was maintainable.

Supreme Court’s Analysis

The Supreme Court examined whether the civil suit was maintainable and whether the redevelopment project should be stalled due to objections from a minority of members. The Court made the following observations:

“A small section of members cannot hold the entire redevelopment process hostage. If the majority has approved the project and safeguards are in place, judicial intervention should not delay the project indefinitely.”

The Court also took note of the dilapidated condition of the buildings, recognizing the urgent need for redevelopment:

“Photographs and reports submitted show that the structures are unsafe for habitation. Further delays could endanger the lives of residents.”

Key Directives from the Supreme Court

To resolve the dispute fairly, the Court issued the following directives:

The redevelopment project will proceed as per the existing agreements.
All eligible members will be allotted 475 sq. ft. of carpet area in the new building (increased from 450 sq. ft. previously offered).
Members will receive transit rent for five years in advance, along with shifting and brokerage charges.
The developer must complete the project within five years from the date of taking possession of the buildings.
The civil suit filed by the respondents was disposed of, and the criminal complaints filed by them against the society and developer were quashed.

Implications of the Judgment

This ruling has a significant impact on redevelopment projects and housing disputes:

It reinforces the principle that majority decisions in co-operative societies should be upheld unless there is clear illegality.
It establishes that courts should not stall redevelopment based on minority objections if the project follows due process.
It ensures that adequate safeguards are provided for all members in redevelopment agreements.

Conclusion

The Supreme Court’s decision in Kamgar Swa Sadan Co-operative Housing Society Ltd. vs. Vijaykumar Vitthalrao Sarvade & Ors. provides a roadmap for resolving housing society disputes. By balancing the interests of majority members with the rights of dissenting members, the judgment ensures that redevelopment projects proceed smoothly while protecting residents’ rights.

This ruling will serve as an important precedent in future cases involving redevelopment disputes in co-operative housing societies across India.

Petitioner Name: Kamgar Swa Sadan Co-operative Housing Society Ltd..
Respondent Name: Vijaykumar Vitthalrao Sarvade & Ors..
Judgment By: Justice Ajay Rastogi, Justice Abhay S. Oka.
Place Of Incident: Mumbai.
Judgment Date: 08-02-2022.

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