The Bombay High Court, through a judgment dated 22 November 2024, ruled on a dispute involving the formation of a Federal Society in an ongoing real estate development project in Pune. The case, Lodha Belmondo Housing Federation Ltd. vs State of Maharashtra and Others, examined the interplay between the Maharashtra Cooperative Societies Act (MCS Act), Maharashtra Ownership Flats Act (MOFA), and the Real Estate (Regulation and Development) Act (RERA).
Background of the Case
The petition involved six cooperative housing societies formed as part of a larger layout developed by Respondent No. 2. This layout included 28 buildings and various residential units such as country houses and villas. On 22 April 2022, the petitioner applied to register a Federal Society under the MCS Act. The Assistant Registrar approved the application, classifying it as a “General Society” under the sub-class “Other Society.”
However, Respondent No. 2, the promoter, challenged the registration, citing Rule 9(1)(ii) of the Maharashtra RERA Rules, 2017, leading to the Federal Society’s de-registration. Subsequent appeals by the petitioner were dismissed, and the Court was tasked with determining whether Rule 9(1)(ii) of RERA infringed on the societies’ rights to register as a Federal Society under the MCS Act.
Key Observations by the Court
No Conflict Between MCS Act and RERA
The Court clarified that the MCS Act (State law) governs cooperative societies under Entry 32 of List II (State List), while RERA (Central law) regulates real estate under Entries 6 and 7 of List III (Concurrent List). As the legislative fields are distinct, no conflict arises between these laws.
RERA and MOFA Work in Tandem
The Court emphasized that while RERA and MOFA regulate the relationship between allottees and promoters, the MCS Act governs society registrations. The provisions of RERA and MOFA must harmoniously align with the MCS Act when dealing with Federal Society formation in larger layouts.
Premature Registration of Federal Society
The Court noted that Rule 9(1)(ii) of RERA requires the formation of an apex body only after receiving the occupancy certificate (OC) for the last building in the layout. The registration of the Federal Society before the project’s completion was deemed premature and non-compliant with RERA provisions.
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Flat Purchasers Bound by Agreements
The Court highlighted that flat purchasers had agreed, via contractual terms, to form a Federal Society only after the project’s completion. Common amenities such as the golf course, club, and spa were designated to be managed by a facility management company.
Conclusion
The Court upheld the authorities’ decision to deregister the Federal Society, ruling that the application was premature and inconsistent with RERA Rules. The judgment reinforces the need for cooperative societies to adhere to project timelines and contractual agreements while balancing statutory provisions.
