Surya Lok Co-operative Housing Society Ltd. & Ors. vs Deputy Registrar of Co-operative Society & Anr.

The Petitioner-society is aggrieved by the order dated 15 January 2018 passed by the Divisional Joint Registrar, Co-operative Societies, Mumbai Division (Divisional Joint Registrar) dismissing its Revision Application No. 416 of 2017 and confirming the letter dated 8 December 2016 of the Deputy Registrar. By letter dated 8 December 2016, the Deputy Registrar has conveyed that his office has no objection for commercial use of the flat by Respondent No.2. Petitioner-society is opposed to commercial use of the residential flat located on ground floor of its building and has accordingly filed the present Petition. Petition challenges the ‘No Objection Certificate’ dated 8 December 2016 issued by the Deputy Registrar, which is confirmed in revision by the Divisional Joint Registrar.

Petitioner is a cooperative housing society registered under the provisions of the Maharashtra Cooperative Societies Act, 1960 (MCS Act). It is Petitioner’s case that its building comprises of only residential flats. The building of the Petitioner-society has flats on the ground floor. Flat No.3 on the ground floor of the Petitioner’s building was initially owned by one Harshdev D. Pathak, who was the member of the Petitioner-society. By deed of transfer dated 31 December 2009, the flat was sold and transferred in favour of Mr. Kunal S. Jumani. Mr. Kunal S. Jumani was admitted as member of the Petitioner-society. After the death of Mr. Kunal Jumani on 2 December 2010, letters of administration in respect of the flat was issued in the name of his mother-Mrs. Kiran S. Jumani. By transfer deed dated 11 January 2016, Mrs. Kiran S. Jumani transferred Flat No.3 in the name of Fazal Abbas Sayed and Ms. Aafreen Fatima Fazal Abbas Sayed [Respondent Nos.2 and 2(A)], who applied to the Petitioner-society for transfer of membership in the society. It is Petitioner’s case that Respondent Nos. 2 and 2(A) converted Flat No. 3 for commercial purposes and illegally commenced commercial operations in the same. Since Petitioner-society did not grant membership to Respondent Nos.2 and 2(A), they filed application under Section 23(2) of the MCS Act before Assistant Registrar. By order dated 4 August 2016, the Deputy Registrar directed grant of membership to Respondent Nos.2 and 2(A) qua Flat No.3. According to the Petitioner, Respondent Nos.2 and 2(A) furnished undertaking to the society to use Flat No.3 for residential purposes and accordingly the society granted membership to Respondent Nos.2 and 2(A). In the meantime, Respondent Nos.2 and 2(A) commenced proceedings for conversion of use of Flat No.3 from residential to commercial use by filing proposal before the Municipal Corporation. Since the Municipal Corporation required society’s NOC, which it was not willing to grant the same, they approached the office of the Deputy Registrar who has issued the impugned NOC dated 8 December 2016 communicating that his office does not have objection for commercial use of Flat No.3. Aggrieved by NOC dated 8 December 2016, Petitioner-society filed Revision Application No. 416 of 2017 before the Divisional Joint Registrar. However, society’s revision is dismissed by order dated 15 January 2018. Petitioner-society has accordingly filed the present petition challenging the decisions of the Deputy Registrar and the Divisional Joint Registrar.

Mr. Engineer, the learned senior advocate appearing for the Petitioner-society submits that the impugned decisions of the Deputy Registrar and Divisional Joint Registrar are grossly illegal and arbitrary and deserve to be set aside. He submits that the Deputy Registrar does not have any jurisdiction to issue NOC for conversion of use of the premises from residential to commercial. That in the impugned NOC dated 8 December 2016, the Deputy Registrar has not quoted any particular provision of the Act under which the NOC has been issued. He submits that provisions of Section 154B-27 of the Maharashtra Co-operative Societies Act, 1960 (MCS Act) which empowers the Registrar to issue NOC does not bring within its ambit power to issue NOC for conversion of use of the premises. In support he relies on judgments of this Court in Siddharth Borivali Cooperative Housing Society Limited Versus. State of Maharashtra and others^{11.2025 SCC Online Bom 4348} , Oberoi Springs Cooperative Housing Society Limited Versus. Deputy Registrar Cooperative Society ^{22.2025 SCC Bom Online 4270}, Vaibhav Industrial Premises Cooperative Society Ltd. Versus. Divisional Joint Registrar Cooperative Society ^{33.WP No. 14878/2023 decided on 16 December 2025} and order passed by this Court in Shree Raghunandan CHS Ltd. versus. State of Maharashtra ^{44.WP No. 2143 of 2020 dated 5 August 2020}

Mr. Engineer further submits that Respondent Nos. 2 and 2(A) are estopped from applying for a change in the user of Flat No. 3, in view of the express undertakings given by them and their predecessor-in-title that the said flat would be used exclusively for residential purposes. Mr. Engineer further submits that the impugned order is passed by the Deputy Registrar in gross violation of principles of natural justice since no notice was issued to the Petitioner before issuing the impugned NOC. He submits that though a resolution is adopted by the society on 16 April 2000 for allowing commercial use of the flats on the ground floor, the same was withdrawn by subsequent resolution's dated 5 August 2007 as re-affirmed on 14 September 2014. That Respondent Nos.2 and 2(A) have purchased Flat No.3 with their eyes wide open to the fact that all the flats in the building are to be used for residential purposes only. He therefore prays for setting aside the impugned order.

Mr. Sakhare, the learned Senior Advocate appearing on behalf of Respondent Nos. 2 and 2(A), opposes the petition, submitting that concurrent findings have been recorded against the Petitioner-Society, holding that the Society had erroneously withheld its NOC for the conversion of the use of the flat for commercial purposes. He submits that almost all the flats on the ground floor of the building are already put to commercial use. He submits that all the buildings on the road have shops on the ground floor. That it is easily permissible to convert the use of Flat No.3 for commercial purpose as per the planning norms. That it is Petitioner’s right to have the flat converted for commercial use. He submits that definition of the term ‘flat’ in the bye-laws of the society includes commercial premises. He further submits that the bye-laws do not prohibit the use of any flat for commercial purposes and that the flat in question has been used for commercial purposes since 2001. He draws my attention to the electricity bills and municipal assessment records in support of his contention. He further submits that the recitals in the transfer deed make it clear that the previous owner was using the said flat as a tailoring boutique. He also points out that Respondent Nos. 2 and 2(A) have paid stamp duty on the basis of the commercial valuation of the flat. He therefore submits that the Petitioner-Society was fully aware from the inception that Flat No. 3 was being used for commercial purposes and that the only purpose of the present proceedings is to accord legal recognition to such commercial use in the municipal records.

Mr. Sakhare further submits that the issue of commercial use of the flat has already attained finality by order dated 4 August 2016 passed by the Deputy Registrar under Section 23(2) of the MCS Act. That the society’s objection about commercial use has already been adjudicated by the Deputy Registrar. Society did not challenge order dated 4 August 2016 which has attained finality. He also invites my attention to NOC dated 22 August 2017 which is not challenged by the society. That society has granted membership to Respondents Nos. 2 and 2(A) after adjudication of issue of commercial use by acceptance of donation and transfer fees from Respondents Nos. 2 and 2(A).

Mr. Sakhare further submits that the petition is filed at the instance of the developer who is not willing to grant commercial premises to Respondents Nos. 2 and 2(A). He invites my attention to the Development Agreement to demonstrate that Respondents Nos. 2 and 2(A) have not signed the same. He, therefore, submits that this Court need not exercise its extraordinary jurisdiction under Article 227 of the Constitution of India to assist the developer in increasing profits by not permitting the commercial use of the premises. He prays for dismissal of the petition.

Rival contentions urged on behalf of the parties now fall for my consideration.

Petitioner-society comprises of only residential flats as per the plan sanctioned by the Municipal Corporation. Apparently, in the original plan sanctioned, there are no commercial shops and offices in the building of the Petitioner-society. There is no dispute to the position that Flat No.3 on the ground floor of Petitioner’s building is sanctioned for residential use. Respondents Nos. 2 and 2(A), who have purchased Flat No.3 vide transfer deed dated 11 January 2016, are desirous of using the same for commercial purposes. Respondent Nos. 2 and 2(A) have already been admitted as members of the Petitioner-Society. It appears that Respondent Nos. 2 and 2(A) desire to obtain sanction from the Planning Authority for commercial use of the flat and, for that purpose, require the Society’s NOC. They, therefore, approached the Deputy Registrar, who has issued the impugned NOC dated 8 December 2016 in favour of Respondent Nos. 2 and 2(A), which reads thus:

Armed with the NOC dated 8 December 2016, Respondent approached Municipal Corporation for processing the proposal change of user from residential to commercial and Municipal Corporation has apparently issued permission dated 27 July 2017 for carrying out certain works for change of use by approving the attached plan. Petitioner-society filed Revision Application No. 416 of 2017 challenging the NOC issued by the Deputy Registrar after noticing that such NOC was issued by the Deputy Registrar. Though the Deputy Registrar has condoned the delay in filing the Revision Application, the same is dismissed by order dated 15 January 2018.

The first objection raised by the Petitioner-society to the impugned NOC dated 8 December 2016 is absence of jurisdiction of Deputy Registrar to issue any such NOC. The impugned NOC reproduced above does not refer to any specific provision of the MCS Act, under which the Deputy Registrar purported to exercise jurisdiction while issuing the same. At the time when the impugned NOC was issued, provisions of Section 79 of the MCS Act applied to cooperative housing societies. Under sub-section (2) of Section 79 Registrar was empowered to take any action which society fails to take under the Act, Rules or bye-laws. Section 79 of the MCS Act provides thus:

After amendment of the MCS Act by introduction of Chapter XIII-B w.e.f. 9 March 2019, special provisions have been made in relation to cooperative housing societies. Under Section 154B-27, an obligation is imposed on the society to take action and powers are conferred on the Registrar to enforce performance of some acts by the society. Section 154B-27 of the MCS Act provides thus:

Thus, under sub-section (3) of Section 154B-27, society is obligated to decide application submitted by a member for certificate of sale/mortgage of its flat or any other purpose within 30 days and upon failure of the society to decide the application, an aggrieved member can file an appeal before the Registrar. Thus, Section 79 and Section 154B-27 are the only two provisions which are referable to Registrar’s power to perform an action which the society fails to perform. As observed above, Section 154B-27 was not in force when the impugned notice was issued. Thus, what applied at that time was provisions of Section 79 of the MCS Act.

The issue as to whether the Registrar can issue NOC for change of user of the premises under Section 79(2)(a) of the MCS Act fell for consideration before this Court in Shree Raghunandan in which an interim order is passed on 5 August 2020, holding in paragraphs 4 to 6 as under:

This Court recorded a prima-facie opinion in Shree Raghunandan that provisions of Section 79(2)(a) cannot be invoked in for the purpose of issuing NOC for change of user of the premises in the building of a society. I am in agreement with the above prima-facie view expressed by the Coordinate Bench of this Court in Shree Raghunandan.

Under Section 79(2) of the MCS Act, the Registrar is empowered to take such action which the society fails to take in terms of the MCS Act, the Rules made thereunder or as per the bye-laws. Section 79(2) of the MCS Act is not an enabling provision for the Deputy Registrar to issue notice for change of user of the premises in the building of the society. There is no provision under the MCS Act, Rules made thereunder or bye-laws, which obligates the society to issue such NOC. Thus, what society is not obligated to do cannot be directly done by the Deputy Registrar. Post amendment of the MCS Act in the year 2019 and after incorporation of Section 154B-27 therein, this Court has repeatedly held that Deputy Registrar has no jurisdiction to issue NOC for change of user. In Siddharth Borivali Cooperative Housing Society Limited, the Respondent therein had sought permission form the society for change of user of its premises from residential to commercial. The society refused to grant permission. The Respondent approached the Deputy Registrar and sought direction against the society to allow change of user. But the application was rejected by the Deputy Registrar. However, the revisional authority directed the society to issue NOC to the Respondent for change of user. After taking into considerations the provisions of Section 154B-27 of the MCS Act, coordinate Bench of this Court has held in paragraphs 7 to 13 of the judgment as under:

In Oberoi Springs Cooperative Housing Society Limited (supra) the Registrar had directed the Petitioner-society to grant permission for submitting a proposal before the planning authority and the issue before this Court was about interpretation of the expression ‘for any other purpose’ appearing in Section 154B-27 of the MCS Act. This Court held in paragraphs 6 to 9 of the judgment as under:

Similar issue is dealt with by this Court in Vaibhav Industrial Premises Cooperative Society Ltd. (supra) in which again, provisions of Section 154B-27 of the MCS Act are interpreted and this Court held in paragraphs 5 to 7 of the judgment as under :

In my view, therefore the impugned NOC issued by the Deputy Registrar on 8 December 2016 is wholly without jurisdiction. The Deputy Registrar is not invested with the power of directly issuing NOC permitting particular use of the premises in the building of the society when provisions of the MCS Act, rules made thereunder or bye-laws of the society do not obligate the society to issue such NOC.

The action of the Deputy Registrar in the present case is wholly untenable in law. The Deputy Registrar has not merely directed the society to issue an NOC, rather, he has himself issued the NOC, stating that ‘his office has no objection to the commercial use of the premises’. The Deputy Registrar has no jurisdiction or authority to issue such an NOC in his own capacity. The provisions of the MCS Act, do not contemplate issuance of an NOC by the Deputy Registrar for a change in the use of the premises. Even assuming arguendo that the Deputy Registrar has the power to direct the society to issue an NOC, such power cannot, by any stretch of interpretation, be construed as conferring upon him the authority to issue the NOC himself. The distinction between directing the society to issue an NOC and issuing the NOC himself is fundamental. The latter action is wholly beyond his jurisdiction and is legally unsustainable. The Deputy Registrar has acted in a most arbitrary manner in the facts and circumstances of the present case by stating that ‘his office does not have objection’ to change of user of the premises to commercial use.

It is unfathomable that Deputy Registrar sitting in his office grants NOC for particular use of the premises without even bothering to hear the society or verifying whether there are any commercial premises in the building of the society or not. The Deputy Registrar has clearly usurped the powers and functions of the society by issuing the NOC himself, despite having no statutory authority to do so. In such circumstances, the impugned NOC issued by the Deputy Registrar deserves to be set aside as being completely arbitrary and ab-initio void.

The Deputy Registrar has also breached the principles of natural justice to the impunity while issuing the impugned NOC. Respondent approached the Deputy Registrar by letter dated 10 November 2016 and the Deputy Registrar proceeded to issue him NOC on a platter without even bothering to issue notice to the Petitioner-society. The impugned NOC is thus granted by the Deputy Registrar without even affording an opportunity of hearing to the Petitioner. This is yet another reason why the impugned NOC deserves to be set aside.

Perusal of the impugned NOC would indicate that the same is addressed both to the Chairman/Secretary as well as to Respondent No.2. The Deputy Registrar was thus laboring under a misconception as if the society also desired his NOC for conversion of the premises to commercial use. He apparently thought that society inquired with him as to whether he personally has any objection of change of use of premises and by letter dated 8 December 2016, the Deputy Registrar conveyed to the society that his office does not have any objection for change of user. The impugned NOC thus indicates complete non application of mind on the part of the Deputy Registrar who has acted arbitrarily, capriciously and illegally. Unfortunately, the Divisional Joint Registrar has failed to notice the illegalities committed by the Deputy Registrar in issuing the impugned notice.

It is also contended by the Petitioner-society that Respondent Nos.2 and 2(A) are estopped from applying for change of user of Flat No.3. It appears that Respondent Nos.2 and 2(A) have purchased Flat No.3 with their eyes wide open to the fact that there are only residential premises in the building of the Petitioner-society. There are apparently notices prominently displayed in the premises of the society prohibiting any commercial activity in any of the premises of the society. It appears that the Petitioner-society was averse to grant of membership to Respondent Nos.2 and 2(A) on account of their intention to use Flat No.3 for commercial purposes. The society therefore did not decide application of Respondent Nos.2 and 2(A) for grant of membership. Therefore, they approached the Deputy Registrar under Section 23(2) of the MCS Act. By order dated 4 August 2016 the Deputy Registrar directed grant of membership to Respondent Nos.2 and 2(A) qua Flat No.3.

Mr. Sakhare has strenuously relied on findings recorded by the Deputy Registrar in the order dated 4 August 2016 in support of his plea that the issue of commercial use of Flat No.3 has attained finality by order dated 4 August 2016. He has relied on following findings recorded by the Deputy Registrar in order dated 4 August 2016:

In my view however, while deciding the issue of grant of membership, the Deputy Registrar has not adjudicated the issue of commercial or residential use of the flat. He cannot decide the issue of use while passing order under Section 22(2) or Section 23(2) of the MCS Act. The order dated 4 August 2016 cannot be read to mean as if commercial use of Flat No.3 is permitted by the Deputy Registrar. All that is held by the Deputy Registrar is that grant of membership is a concept different than use of the flat. Though some stray observations are made about use of other flats on the ground floor for commercial purposes and commercial assessment by the Municipal Corporation, the said observations cannot be read to mean as if the Deputy Registrar has permitted commercial use of Flat No.3. The Deputy Registrar steered clear of the controversy regarding the use of the premises by holding, in his order dated 4 August 2016, that the purpose for which the flat was to be used could not constitute a ground for refusing membership to Respondent Nos. 2 and 2(A).

It also appears that the Petitioner-society had specifically contended before the Deputy Registrar that if Respondent Nos. 2 and 2(A) were to submit an undertaking of use of the premises for residential purpose, membership would be granted to them. This is clear from the following stand taken by the Petitioner-society before the Dy. Registrar, as recorded in the order dated 4 August 2016 which reads thus :

It appears that after passing of order dated 4 August 2016, Respondent No. 2 submitted an undertaking before the society on 25 October 2016 as under:

Thus, Respondent No. 2 specifically undertook to use Flat No. 3 exclusively for residential purposes. Membership was ultimately granted to the Respondents on the basis of the undertaking dated 25 October 2016 submitted by Respondent No. 2. It is for this reason that Mr. Engineer submits that, having expressly undertaken to use the flat for residential purposes, the Respondents cannot now turn around from their undertaking and seek to convert the use of the flat from residential to commercial. It is also seen that while submitting various forms for membership, Respondent Nos. 2 and 2(A) specifically gave an undertaking that they would use the premises for purpose mentioned in the letter and that there would be no change of user made by them without previous permission of the society in writing. However, Respondent Nos. 2 and 2(A) appear to have grossly violated the undertaking by changing the use of the premises by directly approaching the Deputy Registrar seeking his NOC for change of user.

Respondent Nos. 2 and 2(A) have relied upon the resolutions adopted by the General Body of the Society at its meeting held on 16 April 2000. Para No. 7 of the minutes of the said meeting records that the Society had no objection to the use of flats for commercial purposes. While selectively relying on General Body resolution dated 16 April 2000 and by producing the same at Exh.B to the affidavit in reply, Respondent Nos. 2 and 2(A) have suppressed subsequent resolutions adopted by the society. In the AGM held on 5 August 2007, the society withdrew Para/Resolution No.7 of the minutes of the Special General Body Meeting dated 16 April 2000. The decision to not allow commercial use of the premises in the building was reiterated in subsequent AGM held on 14 September 2014. Both these resolutions of 5 August 2007 and 14 September 2014 are suppressed by Respondent Nos. 2 and 2(A) while selectively relying on resolution dated 16 April 2000. This Court does not appreciate this conduct on the part of the Respondent Nos. 2 and 2(A).

Mr. Sakhare has relied on electricity bills, municipal assessment, payment of stamp for commercial premises in support of the contention that the premises are always used for commercial purpose. However, mere municipal assessment for commercial purposes does not automatically convert the use from residential to commercial. Similar is the position with regard to supply of commercial electricity connection. Payment of stamp duty for commercial purposes is a voluntary act of Respondent Nos. 2 and 2(A) which does not ipso-facto convert use of the flat from residential to commercial. Respondent Nos. 2 and 2(A) are both aware of this position and therefore they submitted proposal to the Municipal Corporation for change of user and for that purpose, applied for NOC. Thus, in the absence of an NOC from the Society, even the Municipal Corporation cannot sanction a change in the user of the premises. The Society is a tenant co-partnership society, wherein the Society is the owner of the land and building, while its members have only the right to occupy the premises allotted to them. In these circumstances, a change in the user of the premises from residential to commercial is impermissible without obtaining Society’s NOC. Since the building of the Society comprises exclusively residential premises, the Society has refused to permit the use of any of the flats for commercial purposes. Whether action of the society in not permitting commercial use is valid or not can be tested before a Co-Operative Court by an aggrieved member by filing a dispute under Section 91 of the MCS Act. The Deputy Registrar cannot be a machinery for securing NOC for change of user. As observed above, the Deputy Registrar does not have jurisdiction to either himself issue NOC or even to direct the society to issue NOC for change of user.

Mr. Sakhare’s contention that the developer is driving the entire litigation does not appeal to this Court. The redevelopment agreement is executed on 12 November 2025 whereas the present petition is filed on 9 February 2018. It therefore cannot be contented that the developer appointed in 2025 has initiated the present Petition with a view to earn more profits by denying commercial premises to Respondents Nos. 2 and 2(A) as alleged.

In view of the above discussion, the NOC issued by the Deputy Registrar is clearly unsustainable and liable to be set aside. Even the order of the revisional authority which refuses to interfere with the impugned NOC is also liable to be set aside. The Petition accordingly succeeds and I proceed to pass the following order :

With the above directions, the Writ Petition is allowed. Rule is made absolute. There shall be no order as to costs.