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by sayum
10 November 2026 6:45 PM
"If a developer constructs a building without securing permissions, sell units therein and after a society is formed by the unit purchasers, he applies for de-registration on the ground that the building constructed by him is illegal. Can de-registration of a society can be undertaken in such case at the instance of errant developer? Answer to my mind, appears to be in the negative." Bombay High Court, in a significant ruling, unequivocally declared that an errant developer cannot be permitted to benefit from his own illegalities by seeking the de-registration of a cooperative housing society formed by purchasers of units he constructed without proper permissions.
A bench of Justice Sandeep V. Marne set aside orders by the Divisional Joint Registrar and the Hon'ble Minister (Co-operation) that had deregistered an 18-year-old industrial premises cooperative housing society, emphasizing the limited scope of Section 21A of the Maharashtra Co-operative Societies Act, 1960.
The dispute originated from the registration of Hatkesh Udyog Nagar Industrial Premises Cooperative Housing Society Ltd. (the Society) on November 11, 2008. The Society was formed by purchasers of 72 industrial units constructed by M/s. Hatkesh Builders, a proprietorship concern of Respondent No.1, Paresh Satyendra Vohra, on land in Ghodbunder, Thane. Respondent No.1 sought the de-registration of the Society under Section 21A of the MCS Act, alleging misrepresentation, fraud, and reliance on forged documents during its registration, primarily contending that the construction itself was unauthorized.
The primary legal question before the High Court was the scope of the Registrar's power under Section 21A of the MCS Act to de-register a society based on "misrepresentation," particularly when the alleged misrepresentation concerned the legality of construction and was raised by the promoter responsible for the construction. The court also considered whether the illegality or irregularity of construction could be a valid ground for de-registration.
Narrow Scope of De-registration under Section 21A MCS Act
The Court highlighted that Section 21A of the MCS Act vests a Registrar with a narrow power to de-register a society only if specific grounds are met, such as misrepresentation by applicants, completion/exhaustion of the society's work, or unserved purposes. This power is much narrower than the broader appellate remedy available under Section 152 of the Act.
Interpretation of 'Misrepresentation' under Section 21A
Referring to its earlier judgment in Elite Diagnostic Center Private Limited, the High Court reiterated that misrepresentation for de-registration must be of such nature and degree that, had it not been made, the society would not have been registered.
"The misrepresentation must be of such a nature and magnitude that if the same was not made, the Registrar would not have registered the society. Non-disclosure of full information or giving of inaccurate or incomplete information may not always amount to misrepresentation within the meaning of Section 21A of the MCS Act warranting de-registration of the society."
The court clarified that the misrepresentation must go to the root of the matter and upon discovery, render the registration ab-initio void.
Divisional Joint Registrar's Flawed Findings
The Divisional Joint Registrar's order, upheld by the Hon'ble Minister, relied on several grounds including misleading information in the proposal, production of a completion certificate from a non-existent Gram Panchayat, issues with non-agricultural (NA) permission, discrepancies in the number of units, and overwriting/corrections on documents. The lower authorities also considered the subsequent rejection of a deemed conveyance application as a factor.
Allegations of Forged Documents and Society's Defence
Mr. Shah, senior counsel for Respondent No.1, stressed that documents relating to Survey No. 365 of Village-Navghar were allegedly used to secure registration for a society on land in Village-Ghodbunder, with survey numbers altered using whitener. The Society, however, denied submitting these specific documents, stating they had no nexus with their land and were not key for registration.
Promoter's Own Wrong and Misrepresentations to Purchasers
The High Court found that Respondent No.1, the promoter, had sold industrial units with representations that construction was as per sanctioned plans and had expressly promised the formation of a cooperative society.
"Thus, while selling the units, Respondent No.1 had not only made representation that the construction was being put up as per sanctioned plans but had also expressly promised formation of cooperative society/company in respect of units sold by him."
Despite these promises, Respondent No.1 failed to obtain proper development permissions and did not form a society for over 20 years.
Suppression in De-registration Application and Delayed Challenge
The court noted that Respondent No.1's de-registration application cleverly omitted details about his own role in the unauthorized construction, painting a picture as if someone else caused the illegal industrial use. Furthermore, the claim of ignorance about the society's registration until 2013 was found to be fallacious, as evidence showed Respondent No.1 was aware in 2010.
De-registration as a Counterblast to Society's Legal Action
The Court observed that Respondent No.1's application for de-registration appeared to be a counterblast to a suit filed by the Society against him in 2013 regarding encroachment and obstruction of access.
"Considering the above position, the question that falls for consideration is whether this Court would come to the aid of Respondent No.1 who himself has committed illegalities and wants to take disadvantage of his own illegalities."
The court deprecated Respondent No.1's act of seeking to cancel the society's registration by citing his own illegalities after indulging in massive unauthorized construction and profiteering from unit sales.
Illegality in Construction Not a Ground for De-registration
Crucially, the Court reiterated previous rulings in Sukhsagar Co-operative Housing Society Limited and Airoli Neha Apartments Co-operative Housing Society Limited, holding that mere illegality or irregularity in construction is not a relevant factor for either registration or de-registration of a cooperative society under the MCS Act.
"The question as to whether the construction is in accordance with building regulations and if so, whether an occupation or completion certificate should be granted, does not lie within the province of the Registrar."
The court concluded that the Divisional Joint Registrar considered extraneous factors by focusing on the legality of construction and the subsequent rejection of a deemed conveyance application, which were irrelevant for Section 21A jurisdiction.
Consequence of De-registration: Chaos and Oblique Motive
De-registering an 18-year-old society would lead to "total chaos" in the collective management of the premises. The court found that Respondent No.1's opposition to the society stemmed from an "oblique motive" to reclaim rights over the land from which he had already profited.
"Having sold the units to the purchasers, it is incomprehensible as to why the promoter/Respondent No.1 is opposing the collective management of those units by the owners."
The court stressed that the society's registration does not affect Respondent No.1's rights to seek title declaration or take action against encroachments.
The Bombay High Court held that in the peculiar facts, where the promoter sought to benefit from his own wrongs by using his illegal construction as a ground for de-registering a long-standing society, such an order was indefensible. The court allowed the petition, setting aside the deregistration orders and dismissing the builder's application, thereby protecting the society's existence despite discrepancies in its registration documents, given the promoter's conduct.
Date of Decision: 05 August 2026
