The Supreme Court has ruled that statutory authorities may intervene in the internal affairs of co-operative housing societies when those societies refuse to decide on or unduly delay decisions regarding membership applications. The Court observed that while housing societies have the freedom to manage their own affairs, this autonomy is not absolute and cannot be exercised in a manner that results in persistent inaction or prolonged pendency of applications by prospective members. In such situations, the statutory authority entrusted with oversight under the relevant co-operative societies legislation may step in to ensure that fair and lawful decisions are made without unreasonable delay and that statutory remedies are effective. This principle was articulated by a bench of the Supreme Court comprising Justices Vikram Nath and Sandeep Mehta while hearing a case involving the refusal and delay by a housing society in granting membership to flat owners who had been residing peacefully in their flats for several years without enjoying the benefits of membership rights.
The dispute arose from the failure of one Malboro House Co-operative Housing Society Limited in Mumbai to grant membership to certain flat owners despite their long-term residence. The flat owners had applied to the society for membership, but their application remained pending or was refused on the ground that society authorities claimed they did not have the jurisdiction to take policy decisions on the matter. Frustrated by the society’s refusal to entertain their request, the flat owners approached the Divisional Joint Registrar under the Maharashtra Co-operative Societies Act, 1960, seeking a statutory remedy. The Divisional Joint Registrar, exercising powers under the Act, directed that membership be granted to the appellants, effectively intervening in the society’s inaction. Following this order, the society approached the Bombay High Court, which set aside the Registrar’s order on the basis that only the society itself had the right to decide on membership issues, excluding the statutory authority’s intervention. The High Court held that the Registrar had exceeded his jurisdiction because decisions about who should become a member were to be made solely by the society under its own rules and bylaws.
The appellants challenged the High Court’s decision before the Supreme Court, arguing that where a society refuses to decide or keeps a matter pending for an extended period, the statutory remedies provided under the co-operative societies legislation are intended precisely to prevent injustice due to unreasonable delay or refusal. The Supreme Court agreed with this submission, holding that although housing societies generally enjoy autonomy in managing their affairs, this autonomy does not include the right to indefinitely withhold decisions on matters such as membership applications that are governed by statutory provisions. The Court pointed out that statutory authorities are empowered under the legislative framework to step in where a society’s inaction frustrates statutory rights or remedies, and the High Court’s reasoning that only the society could decide on membership issues was unsustainable in law given the circumstances of the case.
In its judgment, the Supreme Court noted that the appellants had initially approached the authorised officer of the society by way of an application seeking membership. When the society’s authorised officer refused to consider the application or to decide on it on the ground that it lacked jurisdiction to make such policy decisions, the appellants were compelled to avail of the statutory remedies under the Maharashtra Co-operative Societies Act, 1960. The Court emphasised that it was only after the society’s inaction that the appellants exercised their statutory right to appeal to the Divisional Joint Registrar, who issued an order directing the society to grant membership. The Supreme Court held that such statutory intervention was justified because the society had failed to decide the issue within a reasonable time, and the purpose of the statutory remedies was to provide an effective forum for aggrieved applicants when internal mechanisms prove unresponsive.
The Supreme Court set aside the High Court’s order and upheld the Joint Registrar’s direction that the appellants be granted membership in the society. In doing so, the Court clarified that the freedom of a co-operative housing society to manage its internal affairs under its bylaws and the relevant Act must be balanced against the need to ensure that this freedom is not exercised arbitrarily or in a manner that defeats the statutory rights of members and applicants. The Court’s judgment underscores that when a society refuses to discharge its obligations or leaves applications pending for unreasonable periods, the statutory authority—such as the Joint Registrar—has the power to intervene and secure compliance with the law.
The Supreme Court also addressed ancillary aspects of the case, noting that aggrieved members who experience long delays in payment of contributions or other benefits may approach the appropriate authority to seek determination of additional or enhanced interest arising from such delays. The Court left open the question of challenges to decisions of the Annual General Meeting held on a specified date, stating that such challenges must be examined independently in accordance with law. It clarified that its present judgment focused on the specific issue of statutory intervention in the context of delayed membership decisions and did not prejudge any other disputes that might arise from the society’s governance practices.
The appeal was partly allowed, with no order on costs, as the Supreme Court set aside the Bombay High Court’s ruling and reinstated the statutory authority’s directive to grant membership to the appellants. The Court’s decision reinforces the principle that statutory remedies exist to protect applicants’ rights where a society’s internal processes and inaction cause prolonged delay or denial of lawful benefits. It affirms that statutory authorities can and should intervene when necessary to ensure that the rights conferred by co-operative societies legislation are meaningfully upheld and that societies do not misuse their autonomy to bypass or frustrate legal obligations. The judgment thus clarifies the interplay between a society’s autonomy and the oversight role of statutory authorities in ensuring fair and timely decisions on membership and related matters under the co-operative societies framework.
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