Bombay High Court on Cooperative Housing Society Bifurcation: CIDCO Permission Not Required.

Headnote:

The Bombay High Court upheld the bifurcation of Balaji Tower Cooperative Housing Society Ltd. from Shree Ganesh Cooperative Housing Society Ltd., ruling that prior permission from CIDCO was not required for division under Sections 17 and 18 of the Maharashtra Cooperative Societies Act, 1960. The Court restored the Joint Registrar’s order approving bifurcation and quashed the appellate authority’s order that had set it aside. It held that the registration of the new society itself operates as a statutory conveyance of assets and liabilities, making separate permissions or deeds unnecessary.

Background:

1. The petitioners, Balaji Tower CHS Ltd. and a member thereof, challenged the order of the Minister for Cooperation (Respondent No.2) that had set aside the Joint Registrar’s decision bifurcating the society under Section 18 of the Maharashtra Cooperative Societies Act, 1960.
2. Shree Ganesh CHS Ltd. (Respondent No.4) was registered in 1993 on two separate plots—Plot No.1 (Sector 28) and Plot No.8 (Sector 22) in Nerul, Navi Mumbai—about one kilometre apart.
3. While Plot No.1 had 18 residential and two commercial buildings, Plot No.8 comprised 80 flats that were independently completed by residents and granted an occupation certificate in 2004.
4. Over time, the residents of Plot No.8 (Balaji Tower) managed all their affairs separately, including maintenance, audits, and utilities, without involvement of Shree Ganesh CHS Ltd..
5. The Joint Registrar allowed the bifurcation on 24 March 2022 and registered Balaji Tower CHS Ltd., but the Minister later set aside that order on appeal, citing absence of CIDCO’s prior permission and questions over membership authorization.

Court’s Observations:

1. The Court found overwhelming factual evidence that both plots operated as independent societies for years: separate maintenance, utilities, audits, accounts, and tax assessments existed, and members of Balaji Tower were not allowed to participate in Shree Ganesh CHS’s decision-making.
2. Section 17(2) of the MCS Act expressly provides that registration of a new society after bifurcation acts as a legal conveyance of assets and liabilities, overriding requirements of the Transfer of Property Act or Registration Act.
3. Section 18(5) applies these provisions to cases of division or reorganization, meaning that once a new society is registered, no additional permission or conveyance deed is required.
4. The Court held that introducing a requirement of CIDCO’s prior permission would amount to adding conditions not found in the statute and would defeat the cooperative law’s purpose of ensuring administrative efficiency and collective welfare.
5. It was also noted that Shree Ganesh CHS Ltd. had passed a resolution granting no objection for the bifurcation, and that the appeal against the Joint Registrar’s order was filed without proper authority.

Decision:

1. The Court allowed the writ petitions and set aside the appellate order dated 23 January 2023.
2. It restored the Joint Registrar’s order dated 24 March 2022 approving the bifurcation and registration of Balaji Tower CHS Ltd.
3. It directed both societies and concerned authorities to complete all consequential actions, including transfer of records, accounts, and assets.
4. The request to stay the judgment was rejected.

Legal Provisions Discussed:

1. Section 17(2), Maharashtra Cooperative Societies Act, 1960 – Effect of registration of new society as statutory conveyance of assets and liabilities.
2. Section 18, Maharashtra Cooperative Societies Act, 1960 – Division, bifurcation, and reorganization of societies.
3. Sections 35, 88 & Rules 28–29, Maharashtra Cooperative Societies Act/Rules – Membership and audit procedure.
4. Article 226, Constitution of India – Writ jurisdiction of High Courts.

Citation: 2025:BHC-AS:47814

Case: Balaji Tower Cooperative Housing Society Ltd. & Anr. v. State of Maharashtra & Ors.

Court: High Court of Judicature at Bombay (Civil Appellate Jurisdiction)

Coram: Justice Amit Borkar

Date of Decision: 11 November 2025

Writ Petition Nos.: 1218 of 2023 & 1228 of 2023