HC: Courts can’t question financial wisdom of housing society’s general body

The Bombay High Court ruled that courts can't interfere with co-operative housing society decisions unless illegal, upholding a resolution despite member dissent.

MUMBAI: The Bombay high court has ruled that courts cannot interfere with policy decisions taken by the general body of a co-operative housing society merely because some members disagree with its financial reasoning.

HC: Courts can’t question financial wisdom of housing society’s general body

Justice Amit Borkar, in an order last week, said resolutions of the general body can only be struck down if they are illegal or violate statutory provisions. “Judicial scrutiny cannot extend to reviewing the merits of economic wisdom of the general body,” he observed.

The court was hearing a petition filed by Nyati Environ Cooperative Housing Society in Pune. The society had challenged orders of the Cooperative Court and the Cooperative Appellate Court, which had restrained it from implementing a resolution passed in its September 10, 2023 meeting. In that meeting, the members resolved to get the conveyance deed executed from the promoter.

The restraint was imposed after 14 of the society’s 481 members complained that the society should instead seek deemed conveyance under section 10 of the Maharashtra Ownership Flats Act, 1963. They also argued that the resolution was arbitrary, based on a mistaken assumption that it would save ₹50 lakh.

The high court rejected these objections, noting that the cooperative court’s reasoning of “suppressing minority voices” was based on principles of company law, which do not apply to cooperative societies. In company law, voting rights depend on shareholding, leading to safeguards for minority shareholders. But under the Maharashtra Cooperative Societies Act, each member has one vote, ensuring equality and preventing domination by any group, the bench clarified.

Justice Borkar added that even if the estimated savings of ₹50 lakh were wrongly calculated, that alone cannot justify judicial interference. The court therefore set aside the lower courts’ orders and upheld the general body’s resolution.