MUMBAI: The Bombay High Court recently held that individual members of a co-operative housing society cannot assert their rights in a litigation founded on the society’s contract with a third party. The court refused to allow 61 members of a housing society to intervene in a developer’s suit related to conveyance and possession of the land.
A single bench of justice Jitendra Jain said, “Once a person becomes a member of a co-operative society, he loses his individuality as a separate litigating entity in the society and cannot advance independent claims in a suit that enforces an agreement to which only the society and the developer are parties.”
The dispute arose from a development agreement in April 2003, between a developer, Nitin Chandrakant Patel, proprietor of Mahalaxmi Land Development, and the Pariwar Co-operative Housing Society Ltd, in Sion. Under the agreement the society gave Patel the right to certain plots reserved for a district centre and a school, and in return he agreed to construct around 500 flats for the society and pay a certain amount. The land given to the developer included a 5,412 sq-mtr plot in Kanjur.
The builder told the court that he had kept his side of the agreement, built 485 flats, and paid the required amount, and therefore the society ought to transfer the Kanjur plot to him.
However, 61 members of the society, led by Sudesh Gurudas Jotkar, asked the court to intervene in the matter claiming that a 2014 high court order permitted them to “take part in the management of the society”. The members said that they had a stake in the fate of the vacant plot and without their presence the matter could not be “fully and fairly” decided.
The builder and the society strongly resisted the move by the members. Patel pointed out that the applicants had admitted they were members of the society, and legally, an individual member does not possess independent legal rights to the society’s land. The society said that even if the 61 applicants were counted separately, they would form only a minority, since the society has about 546 members, and the 2003 agreement had been approved by the majority.
Justice Jain held that the 2003 agreement, executed by the society and not challenged in any forum, remained binding between the society and the developer. The applicants were not signatories to the 2003 agreement individually and had not shown any statutory or by-law right that would permit them to contest the agreement as independent parties. The court added that the 61 members were neither “necessary party”, one without whom an effective order cannot be passed, nor were they a “proper party”, one whose presence would enable a more complete legal procedure.
At this point the suit is a straightforward case where the developer is simply claiming land that was promised to him. The court noted that if it intervenes, the case would be converted into an internal dispute between the 61 members and the society.
Justice Jain emphasised that if the members had any issues with the society’s functioning or decisions, they must be addressed by legal proceedings directly against the society. The court added that the members could not indirectly bring up those issues by trying to intervene in the developer’s case.