When two competing applications for cooperative society registration are pending, the authority must adjudicate the earlier filed claim before permitting any consequential steps by the rival applicant. The Bombay High Court has affirmed that procedural shortcuts undermining this sequence violate the principles of natural justice and defeat the statutory safeguards meant for flat purchasers.
Background & Facts
The Dispute
The dispute arises from competing applications to register a cooperative housing society under the Maharashtra Ownership Flats Act, 1963 (MOFA) for land measuring 26,000 square meters in Jalochi, Baramati. The original promoter, R.V. Realty, failed to initiate registration within the statutory period. In response, flat purchasers convened a meeting on 26 February 2025 and appointed Shabnoor Ayub Pathan as Chief Promoter. On 12 March 2025, he filed an application under the first proviso to Section 10(1) of MOFA seeking registration. Meanwhile, the developer, Rohit Jadhav, claimed to be the Chief Promoter and filed a rival application on 13 May 2025.
Procedural History
- 12 March 2025: Petitioner files Application No.36 of 2025 before District Deputy Registrar invoking first proviso to Section 10(1) of MOFA.
- 13 May 2025: Developer files proposal for society name reservation.
- 4 June 2025: Assistant Registrar returns developer’s proposal due to objections.
- 5 June 2025: Developer submits revised proposal claiming compliance.
- 9 June 2025: Assistant Registrar permits developer to open a bank account in the name of the proposed society, despite knowledge of petitioner’s pending application.
- 17 June 2025: District Deputy Registrar rejects petitioner’s application solely on ground that bank account permission had been granted to developer.
- 18 June 2025: Assistant Registrar grants registration to developer’s proposed society.
- 21 August 2025: Divisional Joint Registrar dismisses all appeals and revisions.
Relief Sought
The petitioner seeks quashing of all impugned orders and restoration of his application for fresh adjudication. He further requests that the bank account opened by the developer be frozen pending final decision, and that the Assistant Registrar be subjected to departmental inquiry for procedural impropriety.
The Legal Issue
The central question was whether a quasi judicial authority may permit a rival applicant to take consequential steps - such as opening a bank account or securing registration - while an earlier statutory application remains pending and undecided, and then rely on those very steps to reject the earlier application.
Arguments Presented
For the Petitioner
The petitioner’s counsel argued that the application filed on 12 March 2025 was prior in time and duly brought to the notice of the Assistant Registrar. Permitting the developer to open a bank account during pendency of the petitioner’s application amounted to creating a fait accompli and violated the principles of natural justice. The petitioner relied on Union of India v. K.K. Dhawan to assert that quasi judicial authorities must act fairly and avoid prejudicing pending claims. He further contended that the reduction in land area from 26,000 sq.m. to 7,903.86 sq.m. materially altered the corpus of the society and required independent scrutiny. The affidavits of 84 individuals alleging fraud in signature procurement could not be dismissed summarily.
For the Respondent
The developer’s counsel contended that MOFA and the Maharashtra Cooperative Societies Act, 1960, do not prohibit simultaneous proceedings under Sections 9 and 10. He emphasized that the developer’s proposal had signatures of 142 out of 252 flat purchasers, representing a clear majority. He argued that the petitioner’s application was merely procedural and that the promoter’s statutory right to initiate registration under Section 10 was primary. The Assistant Registrar, he submitted, lacked investigative powers to verify signatures and could not be faulted for relying on documents submitted in good faith.
The Court's Analysis
The Court held that a quasi judicial authority, though not bound by strict civil procedure, is bound by the principles of fairness and natural justice. When two competing applications exist, chronology is not merely procedural - it is substantive. The Court emphasized that an earlier statutory application cannot be rendered infructuous by permitting a rival applicant to complete preliminary steps and then using those steps as grounds for rejection.
"The authority must first examine whether such proposal satisfies the statutory requirements and whether it has been validly filed. Only after recording a reasoned conclusion on that proposal can the authority proceed to consider any subsequent proposal."
The Court found that the Assistant Registrar’s act of permitting the bank account on 9 June 2025 - while Application No.36 of 2025 remained pending - was a critical error. Opening a bank account is not a mere formality; it confers recognition, enables financial transactions, and advances the proposal toward registration. By doing so, the authority effectively tilted the balance in favor of the developer and deprived the petitioner of a meaningful opportunity to be heard.
The Court further held that the reduction in land area from 26,000 sq.m. to 7,903.86 sq.m. raised a prima facie issue requiring documentary scrutiny. The area of the society determines the corpus of property, common amenities, and future conveyance rights. The authority’s failure to examine sanctioned plans, layout approvals, and agreements under Section 4 of MOFA rendered its decision legally unsustainable.
Regarding the affidavits alleging fraud, the Court rejected the notion that the Registrar lacks power to verify signatures. While not conducting a criminal trial, a quasi judicial authority must compare signatures on the proposal with those on registered agreements and assess the credibility of deponents. Summarily dismissing 84 affidavits on grounds of lack of investigative power amounted to abdication of adjudicatory responsibility.
The Court also clarified that while majority support is relevant, it cannot override a prior statutory claim under the first proviso to Section 10(1) of MOFA. The legislature intended this proviso as a safeguard against promoter inaction. Permitting the developer to leapfrog the petitioner’s application defeated this legislative intent.
The Verdict
The petitioner won. The Court held that an earlier statutory application under the first proviso to Section 10(1) of MOFA must be adjudicated on merits before any consequential steps are taken by a rival applicant. The impugned orders were quashed, the petitioner’s application was restored, and the Assistant Registrar’s conduct was referred for departmental inquiry.
What This Means For Similar Cases
Prior Application Prevails Over Subsequent Steps
- Practitioners must argue that any action taken by a rival applicant - bank account opening, name reservation, document submission - during pendency of an earlier application is legally invalid.
- Authorities cannot use their own procedural missteps as grounds to reject a prior claim.
- Courts will treat such conduct as a violation of natural justice, not mere error.
Area of Society Must Be Scrutinized on Documentary Evidence
- Reduction in land area from original agreements under Section 4 of MOFA cannot be accepted without verification of sanctioned plans, development permissions, and sale agreements.
- Practitioners must insist on production of original documents and cross-checking of area claims with municipal records.
- Any discrepancy exceeding 20% warrants independent inquiry.
Affidavits of Alleged Fraud Cannot Be Dismissed Summarily
- When multiple affidavits allege forged signatures or fraudulent meetings, the authority must conduct a limited verification: compare signatures, confirm deponent status as flat purchasers, and examine attendance records.
- Lack of criminal investigative powers does not absolve the authority of its duty to assess prima facie credibility.
- Failure to do so renders registration vulnerable to judicial annulment.
