Bombay High Court blocks membership for buyers of non-existent flats
The Bombay High Court has ruled that housing societies can refuse membership to buyers of flats that do not legally exist. This decision follows a dispute over properties sold by a developer despite the units being classified as non-residential refuge areas. The court's verdict also imposes serious legal consequences on the developer for selling non-existent flats.
The case involved flats marketed as residential units, though they were originally designated as refuge areas. After the society obtained deemed conveyance in 2017, the developer continued selling these spaces without proper authorisation. Municipal records showed no property tax had been levied on the disputed areas, confirming they were never recognised as residential units.
The court overturned earlier orders that had forced the society to admit the purchasers. It ruled that granting membership would exceed the permissible limit under Section 154B-5 of the Maharashtra Co-operative Societies Act. The judges also clarified that societies can reject membership if the property itself does not exist, distinguishing this case from previous rulings on illegal construction. For the developer, Housing Development & Improvement India Ltd., the ruling carries severe penalties. These include liability for fraud, cancellation of contracts, and restitution for buyers. The court further noted potential charges under the Real Estate (Regulation and Development) Act (RERA) and the Indian Penal Code (IPC) for cheating.
The verdict reinforces the legal boundaries for developers and housing societies in Maharashtra. It prevents the admission of buyers into non-existent flats and holds developers accountable for misleading sales. The ruling also restores the society's earlier decision to reject membership applications for these units.
