Bombay High Court Rejects Khernagar Society Members’ Self-Redevelopment Challenge, Holds Co-operative Court Lacks Jurisdiction Where Third-Party Property Rights Precede the Filing of the Dispute
Society Members Challenge Redevelopment Agreements Over Alleged Diversion of Constructed Area; Bombay High Court Upholds Rejection of Dispute and Identifies Civil Court as Proper Forum
Facts
Members of Khernagar Nandadeep Co-operative Housing Society Ltd., Bandra East, opposed the society’s self-redevelopment project for its 1956 building. The society resolved in August 2018 to pursue self-development under Regulation 33(5) of DCPR 2034. Its arrangements later included a Development Manager Agreement of 8 October 2024 with Vinca Realtors Pvt. Ltd. and a Finance Agreement of 31 March 2025 with Vinca Realtors Khernagar Pvt. Ltd. The petitioners alleged non-transparent selection, inadequate financial disclosures, conflict of interest, and allocation of about 71% of the constructed area to the development manager/financier against 29% to members. These were allegations, not findings on the merits. In Dispute CC/II/49/2026 they sought records, compliance with Government guidelines, and a halt to the project. The Co-operative Court refused interim relief but initially declined to reject the dispute. On appeal, the Co-operative Appellate Court rejected the dispute under Order VII Rule 11 CPC and separately upheld the refusal of injunction; two writ petitions challenged those outcomes.
Issues
Whether a dispute ostensibly seeking disclosure and compliance with society guidelines actually challenged completed redevelopment arrangements; whether it could be maintained under Section 91 of the Maharashtra Co-operative Societies Act, 1960, where the society’s bye-laws were not pleaded to have been amended and third-party property rights had already arisen; and whether any injunction could survive rejection of the underlying dispute.
Petitioner’s Arguments
The petitioners maintained that their grievance concerned society management, General Body processes, transparency, financial credentials of the development manager, and compliance with Government guidelines. They argued that the Co-operative Court had jurisdiction under Section 91 because relief was directed against the society and its office-bearers, not against the development manager or financier. On their case, those entities were neither necessary nor proper parties. They sought reversal of the plaint’s rejection and an interim restraint to prevent further development from rendering their challenge ineffective.
Respondent’s Arguments
The society argued that the real controversy concerned selection of a developer, financing arrangements, and the implementation of redevelopment—not merely the supply of documents. The agreements had already created interests in society property in favour of persons who could not be impleaded in a pre-existing-rights dispute under Section 94(3)(a) of the MCS Act. It also pointed to the absence of any pleaded post-2019 bye-law amendment making redevelopment the society’s business. The society opposed a project-stopping injunction, citing a dilapidated building, numerous members having vacated, executed permanent alternate accommodation agreements, and the serious prejudice of delay.
Analysis of the Law
Section 91 of the MCS Act requires both qualifying parties and a dispute touching the specified business or affairs of the society. The 2019 amendment introduced redevelopment within the statutory conception of a housing society, but did not automatically rewrite existing bye-laws. Under Section 94(3)(a), as interpreted by the Supreme Court, a third party who acquired an interest in society property before a co-operative dispute was instituted cannot be joined in that dispute. The Court harmonised the authorities and specified three requirements for a Section 91 redevelopment dispute: the society’s bye-laws must actually have been amended after the 2019 legislation so redevelopment forms its business; no right, title or interest must yet have been created in favour of a third party; and both circumstances must be specifically pleaded. Absence of either requisite averment exposes the dispute to rejection under Order VII Rule 11 CPC. Once interests are created under development-related agreements, a composite challenge belongs before the competent Civil Court.
Precedent Analysis
In Margret Almeida v. Bombay Catholic Co-operative Society Ltd., (2012) 5 SCC 642, the Supreme Court’s interpretation of Section 94(3) prevented impleadment of persons who acquired property interests before institution of a dispute. Parimal H. Solanki v. Bhoumik Co-operative Housing Society Ltd. held that the 2019 amendments do not by themselves transform redevelopment into a society’s business without amendment of its bye-laws. Baliram Totaram Misal v. Saujanya Co-operative Housing Society Ltd. required a composite challenge to society resolutions and executed development agreements to be pursued in the Civil Court. Anthony Irineus Carneiro v. Francis Colaco clarified that redevelopment-related resolutions are not invariably outside Co-operative Court jurisdiction, especially before any developer is appointed or third-party rights arise; that materially different situation did not assist these petitioners.
Court’s Reasoning
Justice Sandeep V. Marne read the dispute as a whole rather than accepting the petitioners’ description of it as a request for documents. Its averments challenged the very model of self-redevelopment, the development manager’s appointment, financing, and the agreements conferring interests in the proposed built-up area. The two agreements had been executed in October 2024 and March 2025, whereas the co-operative dispute was filed only on 13 February 2026. The affected development manager and financier had therefore acquired rights before the dispute and could not be joined under Section 94(3)(a). Independently, the pleading did not assert amendment of the society’s bye-laws to include redevelopment as its business. The Court held that both jurisdictional defects justified rejection. Whether the petitioners’ allegations of misconduct or disadvantage were factually established was not decided. The remedy, if pursued, was a civil suit challenging both society decisions and the relevant agreements.
Conclusion
The Bombay High Court dismissed Writ Petition No. 12770 of 2026 and upheld rejection of Dispute CC/II/49/2026 under Order VII Rule 11 CPC. Writ Petition No. 11719 of 2026, concerning refusal of an interim injunction in that dispute, was rendered infructuous and was also dismissed. The petitioners were left to seek appropriate relief, including interim protection, before the Civil Court. There was no order as to costs. The ruling addresses jurisdiction and maintainability; it does not pronounce the redevelopment project lawful on its merits.
Case: Ramesh K. Devadiga & Ors. v. Khernagar Nandadeep Co-operative Housing Society Ltd. & Ors.
Court: High Court of Judicature at Bombay, Civil Appellate Jurisdiction
Case Number: Writ Petition Nos. 11719 and 12770 of 2026
Judge: Justice Sandeep V. Marne
Date: 14 October 2026 (reserved on 28 September 2026)
Result: Both writ petitions dismissed; co-operative dispute not maintainable; civil suit remedy preserved; no costs.
