The Mumbai High Court has deeply analyzed the legal issues at stake while redeveloping properties of co-operative housing societies when there is dissent by a few members. The stakeholders and persons concerned in such cases should include the society, the developer, minority members, consultants, and municipal authorities.
There have been sharp reactions from such quarters. It is unfortunate that a well-worded and analyzed decision of the court has given rise to apprehensions. In my view, these are unfounded.
It is an established position of law that a development agreement by itself does not create rights in a property in a developer’s favor. The developer, thus, has no locus standi and cannot be entertained for eviction of society members. But the society can approach the co-operative court to enforce its resolution.
The propagators of rule-of-majority should appreciate that the majority cannot sideline legal provisions and procedures. The problem arises when a society management, owing to vested interests, does not act as per rules, isn’t transparent and disregards objections on merits by minority.
In a society, decisions are not necessarily taken by the application of mind by all. More often than not, some individuals influence the majority. That is because, normally, only a handful are able to evaluate right and wrong and distinguish between what is talked about and what is actually being done.
If the minority dissenting members do not have points on merits and the society has gone by the law, the minority may ultimately lose before the law. What is important is the merit in the objections. Per se, rule of majority is not the solution, whether it is redevelopment or any other matter in a Co-operative Society.
The court decision came after the developer represented that in pursuance of the development agreement and power of attorney in his favor, he had spent a substantial amount of time, money, and energy. But the more pertinent point is that at the time of execution of the documents and while spending, a developer is fully aware that there is dissent in the society. It is a business risk knowingly taken.
In this case, the society had played malafide by not admitting the true legal heirs as members and by not accepting arrears of dues from members with the intention of expelling dissenters.
A further question, though it did not arise in this case is when can a building be demolished under the provisions of the law? A building cannot be demolished without a commencement certificate (CC). The law is misinterpreted when it is said that a building can be demolished on the basis of IOD (intimation of disapproval). The literal law and logic is that a building can be demolished on the basis of CC only says Adv. R. P. Rathod.