Bombay High Court
Can Enterprises Private Limited vs State Of Maharashtra on 27 February, 2024
Author: Sandeep V. Marne
Bench: Sandeep V. Marne
2024:BHC-OS:3201-DB
kishor 1/7 15 WPL 190 of 2023 (OS).dox.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (STAMP) NO.190 OF 2023
CAN Enterprise Pvt. Ltd. ...Petitioner
Versus
State of Maharashtra & Ors. ...Respondents
....
Mr. Drupad S. Patil, for Petitioner.
Mr. Manish Upadhye, AGP for Respondent Nos.1 & 2-State.
....
CORAM : SANDEEP V. MARNE, J.
DATED : 27 FEBRUARY 2024.
ORAL ORDER:
By this petition Petitioner challenges Order dated 04 November 2022 passed by the Divisional Joint Registrar allowing the Appeal filed by the Respondent No.3-Society and setting aside the Order dated 18 May 2022 passed by the District Deputy Registrar. The Divisional Joint Registrar has directed the District Deputy Registrar as well as Deputy Registrar to register the proposed society (Respondent No.3) and to issue Registration Certificate under Section 9(1) and 154-B(2) of the Maharashtra Cooperative Societies Act, 1960.
2. I have heard Mr. Patil, the learned counsel appearing for Petitioner. He would submit that the Order passed by the Divisional Joint ::: Uploaded on - 28/02/2024 ::: Downloaded on - 29/02/2024 05:34:15 ::: kishor 2/7 15 WPL 190 of 2023 (OS).dox.docx Registrar on 4 November 2022 is unsustainable and without jurisdiction in the light of imposition of moratorium by the National Company Law Tribunal, Mumbai vide Order dated 27 January 2020 qua Petitioner- Company. According to Mr. Patil, once the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) is imposed, even the proceedings for registration of cooperative society under provisions of Section 10 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA) could not have been instituted or continued in view of bar under Section 14 of IBC. The second grievance of the Petitioner is that there are certain unpaid dues by some of the members of the proposed Society and unless the said unpaid dues are recovered, the Society could not have been registered. The third grievance of the Petitioner is with regard to it's alleged right to put an additional construction in the building in view of availability of TDR. According to Mr. Patil, in the agreements executed with the flat purchasers, right of the Petitioner to put additional construction is specifically recognized. Mr. Patil would further express an apprehension that based on the impugned Order dated 04 November 2022, the Competent Authority would procced to grant deemed conveyance in favour of Society, which application, according to Mr. Patil, is again barred under provisions of Section 14 of IBC.
3. I have considered the submissions canvassed by Mr. Patil.
4. So far as the first objection about imposition of moratorium under Section 14 of IBC is concerned, in my view, imposition of such moratorium is for institution or continuation of suits or proceedings against corporate debtor. The application filed by promoter of a Society under Section ::: Uploaded on - 28/02/2024 ::: Downloaded on - 29/02/2024 05:34:15 ::: kishor 3/7 15 WPL 190 of 2023 (OS).dox.docx 10 of the MOFA for registration thereof cannot be construed as a suit or proceedings within the meaning of Section 14 of the IBC. Section 10 of MOFA provides thus :
10. (1) As soon as a minimum number of persons required to form a Co-operative society or a company have taken flats, the promoter shall within the prescribed period submit an application to the Registrar for registration of the organization of persons who take the flats as a co-operative society or, as the case may be, as a company; and the promoter shall join, in respect of the flats which have not been taken, in such application for membership of a co-operative society or as the case may be, of a company. Nothing in this section shall affect the right of the promoter to dispose of the remaining flats in accordance with the provisions of this Act.
Provided that, if the promoter fail within the prescribed period to submit an application to the Registrar for registration of society in the manner provided in the Maharashtra Co-operative Societies Act, 1960, the Competent Authority may, upon receiving an application from the persons who have taken flats from the said promoter, direct the District Deputy Registrar, Deputy Registrar or, as the case may be, Assistant Registrar concerned, to register the society:
Provided further that, no such direction to register any society under the preceding proviso shall be given to the District Deputy Registrar, Deputy Registrar or, as the case may be, Assistant Registrar, by the Competent Authority without first verifying authenticity of the applicants' request and giving the concerned promoter a reasonable opportunity of being heard.
(2) If any property consisting of building or buildings is constructed or to be constructed [and the promoter submits such property to the provisions of the Maharashtra Apartment Ownership Act, 1970, by executing and registering a Declaration as provided by that Act] then the promoter shall inform the Registrar as defined in the Maharashtra Co-operative Societies Act, 1960, accordingly; and in ::: Uploaded on - 28/02/2024 ::: Downloaded on - 29/02/2024 05:34:15 ::: kishor 4/7 15 WPL 190 of 2023 (OS).dox.docx such cases, it shall not be lawful to form any co-operative society or company.
5. Thus, under Section 10 of MOFA, upon sale of flats to minimum number persons required for formation of a cooperative society, an obligation is imposed on Promoter to register a Cooperative Society. Upon failure of the Promoter to register such Society, the right is conferred on the promoter of the Society to file an application with Competent Authority under first proviso to Section 10 of MOFA. The limited right of A promoter in respect of such application is to be found in the second proviso to Section 10(1), under which he has right of being heard before a direction is issued by the Competent Authority to the Deputy Registrar or the Assistant Registrar for registration of a Society.
6. Section 10 imposes an obligation of the promoter to file an application for registration of a society. Section 14 of IBC cannot be construed to mean as if the obligations imposed on promoter under Section 10 of MOFA get suspended or extinguished on account of imposition of moratorium under Section 14 of the IBC. It is only when a promoter fails to discharge his obligation under Section 10(1) of MOFA that the flat purchasers exercise their right of filing an application before the Component Authority for registration of Society under the first Proviso to Section 10(1) of MOFA. Such right of the flat purchasers to file application for registration of society under the first Proviso to Section 10(1) of MOFA remains unhindered even after imposition of moratorium against the promoter under Section 14 of the IBC.
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7. Considering statutory framework of Section 10 of the MOFA I am unable to accept the contention of Mr. Patil that moratorium imposed under Section 14 of the IBC would impede the proceedings under Section 10 of MOFA. Mere right conferred on a promoter to be heard cannot be equated with institution of suit or proceedings under Section 14 of the IBC. It must be observed here that the provisions of Second Provio to Section 10(1) are compiled in the present case as the Resolution Professional representing Petitioner has been heard by the Competent Authority as well as by Divisional Joint Registrar. Therefore, first objection raised by Mr. Patil deserves to be rejected.
8. So far as second objection about alleged dues from some of the flat purchasers are concerned, the Petitioner will have to initiate appropriate proceedings for recovery of such dues. Failure on the part of any flat purchaser to pay any amounts allegedly due to the Promoter under the flat purchase agreement cannot be a reason for refusal to register a cooperative society. Therefore, second objection to the impugned order cannot be sustained and is liable to be rejected.
9. So far as third objection about Petitioner's alleged entitlement to put additional construction in the building is concerned, the same cannot be a subject matter of challenge in proceedings filed under Section 10 of the MOFA. Under Section 10, the remit of enquiry is limited where the Competent Authority adjudicates right of flat purchasers to form a cooperative society. The right or entitlement of Promoter, if any, to carry out any additional construction at the site falls outside the scope of enquiry under Section 10 of the MOFA. Therefore, third objection sought to be raised by ::: Uploaded on - 28/02/2024 ::: Downloaded on - 29/02/2024 05:34:15 ::: kishor 6/7 15 WPL 190 of 2023 (OS).dox.docx Mr. Patil is not germane to the enquiry that is conducted by the Competent Authority or by the Divisional Joint Registrar in the present case.
10. Mr. Patil has expressed an apprehension that the Order passed by Divisional Joint Registrar would be relied upon by the Society before the Competent Authority for seeking Certificate of unilateral deemed conveyance under Section 11 of MOFA. According to Mr. Patil, even if any application for registration of a Cooperative Society under Section 10 could be decided against a corporate debtor, at least the application for grant of deemed conveyance under Section 11 of MOFA would be covered by moratorium imposed under Section 14 of IBC. In my view, this objection will have to be raised by Petitioner before the Competent Authority who is seized of Society's application for issuance of unilateral deemed conveyance. This Petition does not involve the issue of maintainability of Society's application for deemed conveyance in view of Section 14 of the IBC. Therefore, I refrain myself from commenting about such apprehension expressed by Mr. Patil. All contentions parties in this regard are left open.
11. I am unable to trace any patent error in the Order passed by the Divisional Joint Registrar, which is unexceptionable. Registration of the Society, to my mind, appears to be in order. Needless to observe that in the event Petitioner is permitted to construct and if it actually constructs any additional flats in the building, the Society would be under obligation to admit purchasers of such flats as its members. This direction however shall not be construed as expression of opinion by this Court about Petitioner's entitlement to put additional construction.
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12. Writ Petition is accordingly rejected leaving open all the contentions to be raised by the Petitioner before the Competent Authority in application filed by the Society for issuance of unilateral deemed conveyance.
SANDEEP V. MARNE, J.
Digitally signedKISHOR by KISHOR VISHNU VISHNU KAMBLE Date:
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