Redevelopment: A Cooperative movement ………………..?
“Co-operative Movement is a Socio-Economic and Moral Movement. It is to fulfill the Constitutional Goal (Article 43) that it is encouraged by the State. It is not a profit making activity nor is it a tool for power politics. Its true role cannot be forgotten or else commerce will displace service.” Justice Dharmadikari of Bombay High Court emphasized while delivering a landmark judgment in M/s. Acknur Constructions Pvt. Ltd.v/s Fardoon Apartment Co-op. Hsg.Soc. Ltd. & others, pertaining to redevelopment of housing societies. The Court observed that any activity of redevelopment of housing society should not compromise the rights of members and must safeguard the existence of the Society. The Court further observed that the Development Agreement entered into between the Society and the Developer is not binding on the dissenting minority and in case the dissenting members fails to abide by the resolutions passed at the meetings than the Society only will have to take appropriate action against those members.
The judgment has raised a hue and cry among developers community since in most redevelopment projects one world is always missing i.e. “Co-operation” (by all members) and the learned Judge has given this the highest importance.
……………..or Redevelopment a commercial call ?
The developer community felt a big relief when, within a few days, a Division Bench of Bombay High Court held that redevelopment of a property is the commercial wisdom of General Body of the Society and it is not open to the Court to sit over the said wisdom of the General Body. Merely because some members in minority disapprove the decision, it cannot be the basis of the decision of the general body unless it is shown that the decision was the product of fraud or misrepresentation or was opposed to some statutory prohibition.
Assuming that the Double Bench has finally decided that redevelopment of a society is a commercial wisdom of a society, yet understanding of both the judgments along with recent guidelines (issued on 3rd January 2009) on Redevelopment of Societies by Maharastra Government are quite relevant for hassle free redevelopment projects. The Single Bench judgment emphasized cooperative nature of society’s deal, transparency, importance of parity among members, process in case of dissent, importance of safety of Society in case of redevelopment and the rights of the Developer and the Society. The Double Bench on the other hand upheld the rule of supremacy of majority in society’s affairs in case proper processes are followed up. The Guidelines have clearly spelt the process of calling meeting for redevelopment and business of such meetings, process of selection of developer, appointment of an Authorized Officer, terms of development agreement and so on.
Further, in light of various observations made by learned Judges in both the cases the Guidelines for redevelopment of Society buildings and process of doing a society re-development deal needs thorough revision.
