Court dismisses petition by Gera Developers challenging single society formation; affirms majority consent and statutory obligations under MOFA and RERA.
In a significant ruling, the Bombay High Court has dismissed the petition filed by Gera Developers Private Limited, challenging the formation of a single co-operative housing society for a large residential project in Bavdhan, Pune. The court upheld the decision of the Minister of Co-operation, State of Maharashtra, which favored the majority decision of the unit holders to form one unified society despite the developer's preference for separate societies.
The case arose from Gera Developers' failure to initiate the formation of a co-operative society for their multi-phase residential project within the statutory timeframe. While Gera Developers argued for the creation of separate societies for each of its towers, citing differing statutory regimes under the Maharashtra Ownership Flats Act (MOFA) and the Real Estate (Regulation and Development) Act (RERA), the court found that a significant majority of the purchasers had already consented to a single society formation.
Justice Amit Borkar emphasized the statutory obligation of the promoter to facilitate the formation of a legal entity once a specified percentage of units are sold. The court highlighted that mere preparatory steps like sending emails do not suffice as compliance with this obligation. The ruling clarified that the law allows purchasers to initiate the formation of a society if the promoter fails to do so within the prescribed period.
The court also addressed the argument about treating each tower as a separate project. While acknowledging that each tower could technically be considered a distinct project, the court noted the overarching unity of the development, which included shared amenities and infrastructure. The judgment underscored that the statutory scheme allows for the formation of an Apex Body or federation of societies in complex projects, and does not strictly mandate separate societies for each building.
The court's decision was influenced by evidence showing that 109 out of 155 unit holders supported the single society formation, satisfying the statutory requirement of a 51% majority. Justice Borkar concluded that the formation of one society would ensure efficient management and maintenance of common areas, aligning with the collective interests of the unit holders.
The ruling has set a precedent for similar cases where developers and purchasers are at odds over the formation of co-operative societies in composite projects. The court's decision reinforces the rights of purchasers under MOFA and RERA, while underscoring the responsibilities of developers to adhere to statutory timelines and obligations.
Bottom Line:
Formation of co-operative housing society in composite development projects - Promoter's obligation to form legal entity within prescribed time - Purchasers' right to act in absence of promoter's compliance.
Statutory provision(s):
Maharashtra Ownership Flats Act, 1963 Section 10, Real Estate (Regulation and Development) Act, 2016 Section 2(zn), Rule 9
Gera Developers Private Limited v. State of Maharashtra, (Bombay) : Law Finder Doc id # 2875895
