Builder delayed society formation for 9 years, Homebuyers took matters into their own hands; Bombay HC backs residents

The Bombay High Court recently ruled that homebuyers shouldn't have to wait indefinitely for a builder to set up and register a society for their building tower. On this ground, the court supported the single society that the homebuyers had registered themselves for all the various towers in the housing project.

This ruling came about in a case where the builder had sued the homebuyers for forming a single society for the housing project without his approval, which went against his plan to create separate societies for the five towers and 35 villas in this housing project.

The Bombay High Court pointed out that though the builder had sent emails and prepared documents for signatures regarding the multiple societies, these actions might indicate some intention but do not satisfy the legal requirement. According to the law, steps to form a society must be taken within three months.


Therefore, the high court clarified that there is a difference between preparing papers and actually initiating the legal process before the competent authority. If these incomplete actions are seen as compliance, then the whole point of having a timeline would be pointless. The builder could then indefinitely delay the process of forming a society by claiming they were ready and willing without ever finishing the job.

How did this dispute between the builder and homebuyers start

This builder had acquired development rights for 5 Hectare 20 Ares of land in Bavdhan Khurd, Pune from a co-operative housing society and signed a joint development agreement (JDA) also. The project was planned to be developed in phases and the building plans and layout were initially sanctioned in 2011 and subsequently approved in 2015 after a Commencement Certificate was issued.

The builder's development consisted of a layout project comprising Tower-1 with 30 flats under MOFA (Maharashtra Ownership Flats Act), Tower-2 with 60 flats under RERA, Tower-3 with 30 flats under RERA, 35 bungalows/row houses under MOFA, and two proposed towers, Tower-4 and Tower-5, to be under RERA.

The homebuyers in Towers one, two and three received their apartments and signed respective registered agreements with the builder. The builder had not formed any society even after handing over the keys to the buyers in Towers one, two and three. The other towers and bungalows were still being built.

Therefore, the Tower one, two, three homebuyers united and on January 24, 2023, sent a notice to the builder proposing the formation of a co-operative society.

On February 7, 2023, the builder explained his plans for creating separate societies for different phases of the project: Phase one for the villas, Phase two for Tower one, Phase three for Towers two and three, and Phase four for Towers four and five, along with an apex body to oversee these societies.

In the meantime, on February 8, 2023, Mr. Garad, who claimed to be the Chief Promoter of the proposed Co-operative Housing Society Ltd., filed an application before the District Deputy Registrar, under Section 10(1) of the MOFA Act. The builder participated in these proceedings and raised objections. However, the deputy registrar after hearing the parties, allowed the application.

On February 10, 2023, the builder informed the homebuyers (Towers one, two, three) that they had no authority to independently initiate the process of forming a society without his consent.

On October 3, 2023, the registrar granted registration to the single society and thus a single co-operative housing society for all the towers was officially registered.

Aggrieved with the homebuyers' action, the builder filed a case. Over the years, the case was heard in multiple courts and ultimately landed up in the Bombay High Court. In between, this case was heard in the Pune Civil Court in 2024 which issued a order restraining the builder from further construction of Towers four and five.

However, the Pune civil court in its final judgement on March 26, 2025 allowed the builders' appeal and cancelled the society's registration. But the builder claimed before Bombay High Court that despite having knowledge of the Pune Civil Court's order, Mr. Garad, acting as Chief Promoter of the society, withdrew approximately Rs 56 lakh from the society's bank account and transferred it to his personal account.

In this context, the builder on April 3, 2025, had made an application before the deputy registrar seeking appointment of an interim liquidator under Sections 102 and 103 of the Maharashtra Co-operative Societies Act, 1960, with a view to prevent further financial irregularities and to safeguard and regulate the assets and liabilities of the society.

After this, he filed an appeal in Bombay High Court. On April 1, 2026, the builder lost the case in Bombay High Court.

Why did the homebuyers win this case?

Advocate Chandrakant Choudhary, Choudhary & Associates, said to ET Wealth Online: The Bombay High Court's recent ruling in this case speaks directly to a problem that has dogged Maharashtra homebuyers for years: housing societies that never get formed, and the conveyances that stall behind them.

The Court's central holding is simple but consequential: being "ready and willing" is not the same as complying with the law. Sending emails, or keeping documents ready for signature, does not discharge a promoter's obligation under Section 10 of the MOFA and Rule 9 of the RERA Rules. What the statute requires is the actual filing of a registration proposal before the Registrar, within the prescribed period. Where the promoter does not act, the right to form the society passes to the buyers

Equally significant is the Court's refusal to accept that every tower in an integrated layout must become its own society. Choudhary says: "Where a project is conceived, marketed and used as a single composite scheme with shared amenities, a single society is permissible and the choice rests with the majority of existing purchasers rather than the developer."

Choudhary says that society formation has too often been treated across the sector as something a promoter may defer at its convenience. This judgment narrows that space. For the industry, the practical message is to document and file on time, or cede the ground to homebuyers. For buyers, it is reassuring confirmation that a developer's inaction cannot indefinitely stall the collective rights they have paid for.

Bombay High Court order and discussion

The Bombay High Court said that the builder's arguement was because some parts of the project are under MOFA and some are under RERA, a single society for all of them was not proper. The builder also argued that they had expressed willingness to form separate societies phase wise, and that the homebuyers should not have bypassed him and directly moved to forma a single society.

The high court noted that the homebuyers argued that the builder failed to take timely action, that the home buyers had the right to act, and that a clear majority of the relevant home buyers (unit holders) chose to form a single society for the completed parts of the housing project.

The Bombay High Court said that after going through the material placed before them, they are of the view that the challenge raised by the builder cannot be accepted.

A summary of the Bombay High Court judgement (dated April 1, 2026, 2026:BHC-AS:15342) is as follows:

The law say once a sufficient flats are handed over to buyers, builder has to form society
The high court said that Rule 9 of the Rules and Section 10 does not leave any discretion with the developer to act as per its convenience. The language of these provisions shows that once a sufficient number of flat purchasers come into the project, a legal obligation arises.

The high court said: "The promoter is required to take steps within the time prescribed by law for formation of the legal entity, such as a co-operative society or any other recognised body."

The high court observed that home purchasers, after investing their money and taking possession, are entitled to have a proper organisation which can manage common areas, handle maintenance, and represent their collective interest. Without such a society body, the home purchasers remain dependent.

In this background, the high court said that the contention of the builder that it had sent emails or had kept documents ready for signatures cannot be accepted.

The Bombay High Court said: "Such acts may show some intention but they do not satisfy the requirement of law. The rule 9 speaks of steps to be taken within three months. There is a difference between preparing papers and actually initiating the legal process before the competent authority."

The high court observed that if such incomplete acts are treated as compliance, then the purpose of fixing a time limit would fail. The promoter could then indefinitely delay the process by saying that it was ready and willing without ever completing the task.

The high court said: "The law expects the promoter to move the process of registration in an effective manner. Therefore it must be held that mere readiness does not keep the promoter's right alive."

Rule does not mandate that in all circumstances each tower must have a completely separate society
The builder had argued that every tower must be treated as a separate project, and therefore a separate society is required for each such tower. According to the builder, since each tower consists of apartments which are independently developed and sold, each tower answers the definition of a separate project. On that basis, the builder contended that Rule 9 makes it mandatory to form a separate society for each such project.

The high court said that at first glance, this argument appears logical because the definition of "real estate project" is wide and includes development of a building consisting of apartments for the purpose of sale. A single tower can indeed fall within that definition. However, the difficulty arises when this definition is applied in isolation without considering the full scheme of the law and the factual situation of the development.

Thus the high court observed that the definition itself is not as narrow as the builder suggests. It not only refers to a building, but also includes common areas, development works, improvements, and all rights and other aspects connected with it.

The high court said: "This indicates that the concept of a project is not always confined to a single structure. It can extend to a larger development where different parts are connected by common facilities and common planning."

The high court also said that Rule 9 cannot be read in a mechanical manner as the it speaks of formation of a legal entity for a building or a wing, but it also recognises situations where there is a layout consisting of more than one building. In such cases, the Rule itself contemplates formation of an apex body or federation of societies.

The high court said that this shows that the law is conscious of complex developments where more than one building forms part of a larger scheme.

The high court said: "Therefore, it cannot be said that the Rule mandates in all circumstances that each tower must necessarily have a completely separate society, without regard to the overall nature of the project."

In the present case, the material on record shows that the development was planned as a composite layout. The towers and bungalows are situated on the same plot, and share common infrastructure and amenities. The purchasers were part of one larger residential scheme.

In such a situation, the high court said, to treat each tower as entirely independent for all purposes, including formation of society, would ignore the unity of the project.

At the same time, it is also true that the law does recognise that in certain cases separate societies may be formed for separate buildings or phases. But that depends upon the facts and the manner in which the project is implemented. It is not an absolute rule flowing automatically from the definition of "project".

Therefore, the high court said that while it may be correct to say that each tower can be viewed as a project for certain purposes under the law, it does not necessarily follow that a separate co-operative society must be formed for each tower in every case.

The Bombay High Court said: "The formation of society has to be decided by considering the overall development, the existence of common facilities, the intention reflected in the agreements, and the conduct of the parties, along with the statutory scheme."

Thus the high court said that the builder's argument would lead to fragmentation even in cases where the project is clearly integrated.

Homebuyers can't be made to indefinitely wait for builder to form society
The high court said that the record shows that the home buyers themselves had already started taking steps for the formation of a society. At the same time, the builder, in their own communications, had accepted that the project was to be developed in phases and that separate societies and an apex body could be formed.

The high court said: "This shows that the petitioner (builder) had full knowledge of the process of registration which it now seeks to rely upon."

The high court observed that despite such knowledge, the builder did not bring the process to its logical conclusion within the legal timeframe. There is no material to show that the builder actually initiated the statutory process in the prescribed manner by filing proposals for registration.

The high court said that once the promoter, who is primarily responsible, fails to act within time, the law does not compel the purchasers to indefinitely depend upon the promoter. The statutory scheme itself provides that in such a situation, the right to move forward passes to the purchasers. They are then entitled to take steps for formation of the legal entity.

The high court said that this shift of right is provided to protect the purchasers from delay on the part of the promoter. Therefore, the argument of the petitioner (builder) that it was willing to act cannot override the fact that it did not act in the manner and within the time required by law.

Thus the high court ruled that the home purchasers, having waited and having found no effective action from the promoter, were justified in proceeding on their own. Once that stage was reached, the petitioner (builder) cannot turn back and say that its earlier intention should be treated as sufficient compliance.

Common society benefits this case as amenities are shared among all the towers and bungalows
The high court observed that in this case, records show that 109 out of 155 existing home buyers supported the proposal for formation of one co-operative housing society. Out of 35 bungalow owners, 21 have supported the proposal. This clearly crosses the threshold of 51 percent.

The high court said: "It is a clear indication that more than half of the existing occupants were in favour of one society. Therefore, the majority of 109 out of 155, including 21 bungalow owners, has to be treated as valid and sufficient for the purpose of forming the society."

The high court observed that when a project is developed in such a manner that it provides common facilities to all residents, it indicates that the project is not divided. A common entrance, a shared club house, swimming pool, gymnasium, garden and other such amenities are meant for daily use by all occupants. People living in different towers or units use the same access, the same facilities, and depend upon the same maintenance arrangements.

Because of this, the high court said that their living conditions become connected with each other. In these circumstances, formation of one common society may, in the present case, be more effective. It avoids duplication of management, better coordination in maintaining common areas and reduces confusion about responsibility.

The Bombay High Court said: "It also ensures that all persons who are using shared amenities contribute and participate through a single body. Therefore, the idea of one society in a composite project cannot be said to be contrary to law in the present case."

Order: In the background of these discussions, the high court dismissed the Writ Petition.