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

Headnote:

The Bombay High Court held that prior permission from CIDCO is not required for bifurcation of a cooperative housing society under Section 18 of the Maharashtra Cooperative Societies Act, 1960. The Court restored the Joint Registrar’s order directing the bifurcation of Shree Ganesh Cooperative Housing Society into Balaji Tower Cooperative Housing Society and the original society, observing that both functioned independently for years with no functional, administrative, or financial link. The Court ruled that registration under Section 18 operates as an automatic conveyance of assets and liabilities by operation of law and quashed the appellate order that had set aside the bifurcation.

Background:

• Shree Ganesh Cooperative Housing Society (Respondent No.4) was registered in 1993 on two non-contiguous plots—Plot No.1 (Sector 28) and Plot No.8 (Sector 22) in Nerul, allotted by CIDCO. The two plots were a kilometre apart and functioned separately.

• The members of Balaji Tower (Plot No.8) completed their building independently and obtained occupancy in 2004. Over time, they maintained separate accounts, water, and electricity connections.

• Due to administrative difficulty, Balaji Tower members sought bifurcation. The Joint Registrar allowed bifurcation under Section 18 of the MCS Act in March 2022, creating Balaji Tower CHS Ltd.

• However, the appellate authority (Respondent No.2 – Minister for Cooperation) set aside the bifurcation order in January 2023, citing lack of prior CIDCO approval and unauthorized filing.

• The petitioners challenged the appellate order before the Bombay High Court.

Court’s Observations:

• The Court found that Plot No.8 (Balaji Tower) and Plot No.1 (Shree Ganesh CHS) are over 1 km apart, with no common entrance, utilities, or management. Each plot functions autonomously.

• Balaji Tower residents were never issued notices of General Body Meetings, could not vote or participate, and maintained separate accounts, audits, and property taxes.

• The Court held that such physical, administrative, and financial separation justified bifurcation under Section 18 as it promoted collective welfare, better administration, and harmony among members.

• On CIDCO’s permission, the Court emphasized Sections 17(2) and 18(5) of the MCS Act: once a new society is registered, assets and liabilities automatically vest in it “notwithstanding anything contained” in the Transfer of Property Act or Registration Act. No external permission or separate deed is required.

• The Court also noted that Shree Ganesh CHS itself passed a resolution granting “no objection” to bifurcation, and the appeal before the Minister was filed based on a fabricated resolution without proper authority.

Held:

• The appellate order dated 23 January 2023 was quashed and set aside.

• The Joint Registrar’s order dated 24 March 2022 directing bifurcation was restored.

• Balaji Tower Cooperative Housing Society Ltd. shall continue its operations independently in accordance with law.

• Respondent authorities must cooperate to transfer all records, assets, and accounts relating to Plot No.8.

• Request for stay of judgment was rejected.

Legal Provisions Discussed:

• Section 17(2), Maharashtra Cooperative Societies Act, 1960 – Transfer of assets and liabilities upon reorganization without need for separate conveyance.

• Section 18, Maharashtra Cooperative Societies Act, 1960 – Bifurcation and division of societies.

• Section 35, Maharashtra Cooperative Societies Act, 1960; Rules 28–29, MCS Rules, 1961 – Procedure for membership removal.

• Article 226, Constitution of India – Writ jurisdiction of the High Court.

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