Bombay HC – Contractor Cannot Usurp Members Flats in Housing Society

Judgment dated 24.9.2026 of the High Court of Bombay in Writ Petition No.751 of 2019 of Dr. Omprakash B. Soniminde and another   Vs.  Le Chateau Cooperative Housing Society Limited and others

The case involves a bizarre situation where the chairman of the housing society, which has constructed additional flats in the building for allotment to members, is left with no flat, whereas the contractor engaged to carry out the construction work has received a windfall gain in the form of allotment of four flats.

The petitioners are the purchasers of flat Nos.601 and 602 from the developer in the building comprising of stilt plus six upper floors and 12 flats.   The developer had conveyed the land and the building to the society with the tenanted structure named “Shamrock”.

In 1994, the society decided to purchase TDR / FSI for construction of the additional flats.  It was decided to offer the additional flats to the existing members on payment of construction cost & purchase cost of TDR / FSI.

The petitioner no.1 was Chairman at the relevant and was instrumental in initiating the construction of additional flats.

Respondent no.6 was appointed as contractor for the construction of additional flats.  Accordingly, Agreement dated 20 June 1996 was executed between the society and Respondent No.6 under which Respondent No.6 agreed to procure TDR from the market for construction of additional flats and to construct the same. The society agreed to pay Respondent No.6 Rs.4,000/- per sq.ft. in respect of the cost of construction and TDR.

The petitioners were allotted flat Nos.701 and 702 and they paid Rs.5 lakhs.  However, in 1997, when the Managing Committee took over the society, it had called the petitioners to pay Rs.35 lakhs.

By the letters dated 21.10.1997 and 18.11.21997, the society communicated schedule of payment and demanded Rs.43 lakhs and Rs.43,09,000/- for the flats.

I am of the view that allotment of both set of flats (Nos. 701 and 702, as well as Flat Nos.801 and 802) made in favour of directors of Respondent No.6 is clearly arbitrary. However, it is too late in the day to take away flat Nos.701 and 702 from Respondent Nos.4 and 5. They have been occupying those flats for a considerable period of time. It is also an admitted position that Petitioners did not pay their contributions qua flat Nos.701 and 702. Though ordinarily flats ought to have been auctioned instead of allotting them to Respondent Nos.4 and 5, it is now too late in the day to take away those two flats from Respondent Nos.4 and 5. I am therefore not disturbing allotment of flat Nos.701 and 702 in favour of Respondent Nos.4 and 5.

However, in the AGM meeting of 19.7.1998, the agenda was for allotment of said flats to interested members.  The meeting was changed to 24.7.1998.  The petitioners did not receive the notice of any of the meetings.  In the meeting it was resolved to allot both the flats to respondent nos.4 and 5 who were directors of respondent no.6 contractor.

The respondent nos.4 and 5 are not the original members of the society.

Thereafter, the proposal to expel the petitioners as members was rejected by the Registrar vide order dated 24.1.2000.  The appeal was also dismissed on 3.5.2001.

.The petitioners filed dispute for possession of the flats and other reliefs.

The unjust enrichment by Respondent Nos. 4 to 6 in the present case is more than apparent. There is no dispute to the position that all other members of the society had paid their agreed contribution as per the agreement executed with Respondent No. 6. The members were required to contribute Rs. 4000 per sq.ft. for construction of additional flats which included cost of construction and cost of acquisition of TDR. Apart from flat Nos. 701, 702, 801 and 802 (secured by Respondent Nos. 4 and 5), the society members apparently paid them an amount of Rs. 4,61,68,500/-. Additionally, it has secured allotment of four flats of substantially large size. The total area of flat Nos. 701 and 702 is apparently 1300 sq.ft.

The Respondent-Society is accordingly directed to formally cancel the allotment of flat Nos.801 and 802 made in favour of Respondent Nos.4 and 5 and enter the names of Petitioners in its membership register in respect of flat Nos. 801 and 802. Petitioners shall pay to Respondent Nos. 4 and 5 an amount of Rs. 2,50,00,000/- within 6 weeks. Respondent No. 4 and 5 shall hand over possession of flat Nos. 801 and 802 to the Petitioners upon receipt of amount of Rs.2,50,00,000/- from Petitioners.