While setting aside Registrar’s orders granting ordinary membership to a company occupying 10 shops in Worli Sagar CHSL, the Bombay High Court has held. The Court held that although Chapter XIII-B of the Maharashtra Co-operative Societies Act, 1960 (MCS Act) removed the concept of nominal membership for housing societies, the amendment operates prospectively. Persons already admitted as nominal members continue in that capacity unless lawfully granted regular membership.
Emphasising that the 2019 amendment abolished future nominal memberships but did not automatically convert existing nominal members into regular members, the High Court has clarified that a person admitted only as a nominal member, licensee, lessee, caretaker or occupant cannot claim ordinary membership merely because he is in possession of a shop. Regular membership requires a legally recognizable ownership or title interest in the unit.
The High Court asserted that private transfer deeds cannot create rights where none exist, and found that the Deeds of Confirmation/Transfer executed by the shop occupant with former allottees were legally ineffective because those allottees had already surrendered their rights to the society years earlier. Such deeds could not confer ownership, title or membership rights.
Stating that Registrar cannot directly grant membership without a membership application to the society, the Court clarified that Sections 22 and 23 of the Maharashtra Co-operative Societies Act can be invoked only after a person first applies for membership to the society and the application is either rejected or not decided within the statutory period. In the absence of such a ‘source application’, the Deputy Registrar lacks jurisdiction.
Since the land was allotted under a government policy for residential housing and shop premises were permitted only through a limited commercial-use concession, the society was justified in treating shop occupants as nominal members and not as regular members eligible to participate in the society’s management, added the Court.
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Briefly, the dispute arose after Prowess Financial Services Pvt Ltd. (Respondent No. 4), which occupied ten commercial shops in Vaitarna Bheema Worli Sagar CHSL, sought to be treated as a regular member of the housing society. The shops were part of a residential cooperative housing project built on government land allotted at concessional rates under a State policy meant for residential housing. Commercial shops were later permitted only to a limited extent, and shop occupants were admitted only as nominal members with occupancy rights.
Respondent No. 4 had obtained the shops after previous allottees surrendered their occupancy rights to the society. It was admitted only as a nominal member for each shop and accepted allotment conditions that prohibited transfer of occupancy rights and required surrender of the shops to the society before exit.
In 2024, Respondent No. 4 executed registered Deeds of Confirmation/Transfer with former occupants and then approached the Deputy Registrar seeking regular membership. The Deputy Registrar allowed the request and directed the society to issue share certificates and grant ordinary membership. The Divisional Joint Registrar upheld that decision, leading the society to challenge both orders before the Bombay High Court.
A Single Judge Bench of Justice Sandeep V. Marne observed that under the statutory scheme of the Maharashtra Co-operative Societies Act and the society’s bye-laws, a nominal member is ordinarily only a lessee, licensee, caretaker or occupant and cannot claim ownership rights in the unit. Admission as a nominal member itself presupposes that the person does not possess title or ownership in the property.
The Court noted that the allotment agreements and letters issued to Respondent No. 4 clearly described it as a nominal member and imposed strict restrictions on transfer, assignment or creation of third-party rights. The society retained the right to terminate the arrangement and recover possession in case of breach. These conditions were fundamentally inconsistent with ownership rights.
The Court further held that the 2019 amendment introducing Chapter XIII-B of the Maharashtra Co-operative Societies Act abolished the concept of nominal membership for housing societies prospectively. However, the amendment did not automatically convert existing nominal members into regular members. Persons who were already nominal members before the amendment could continue in that capacity, but their status could not be elevated automatically.
The Court found that the registered Deeds of Confirmation/Transfer executed by Respondent No. 4 were legally ineffective because the previous occupants had already surrendered their rights to the society years earlier. Since no transferable rights remained with those occupants, the deeds could not confer any ownership, title or membership rights upon Respondent No. 4.
The Court also emphasized that the original government allotment of land and the permission to construct shops contemplated only sub-lessees or occupants of commercial premises, while regular membership of the society remained restricted to persons satisfying the eligibility criteria under the Government Resolution governing residential housing projects.
Another significant observation was that Respondent No. 4 had never made a formal membership application to the society. Since there was neither a refusal of membership nor any deemed-membership situation under Sections 22 or 23 of the Act, the Deputy Registrar lacked jurisdiction to entertain a direct claim for membership.