In fast-redeveloping pockets of Thane, Mumbai, and Navi Mumbai, buyers occasionally discover — sometimes only after possession — that the unit they paid for was never sanctioned as a residential flat at all. It may instead be a refuge area: a fire-safety space that building regulations require developers to leave open on certain floors, which cannot legally be sold or occupied as a home. In March 2026, the Bombay High Court settled a long-running dispute over exactly this scenario, and the ruling gives every Maharashtra housing society a clear, statute-backed answer on whether such a buyer can force their way onto the membership register.
The case matters well beyond the four societies that fought it. It confirms that a managing committee is not merely entitled but obligated to check what was actually sanctioned on a floor plan before admitting a new member — and it gives buyers a hard warning about what to verify before signing an agreement for a "flat" that looks unusually cheap or oddly shaped.
Why this matters now
Refuge areas, staircase heads, and other statutory open spaces are sometimes informally partitioned and sold by developers as "extra" flats, particularly in older buildings where enforcement was weaker or where a builder disappeared before conveyance. This ruling gives committees a clean legal basis to say no to admitting such buyers as members — and gives genuine flat buyers a reason to check floor plans before, not after, signing.
The Case: Dheeraj Dreams Building No.1 CHS Ltd. & Ors.
The dispute involved a group of co-operative housing societies in Bhandup, Mumbai — Dheeraj Dreams Building No.1, 3, 4A, and 4B CHS Ltd. — challenging orders of the Divisional Joint Registrar, Co-operative Societies, that had directed them to admit two purchasers as members. Those purchasers held agreements for sale, executed by the original developer in 2019, for what the agreements described as flats. The societies' case was that no such flats existed: the areas sold were refuge areas, marked as such on the sanctioned floor plans, and never assessed to property tax as residential units by the municipal authority.
The societies also pointed out that by the time they were registered, there were no unsold flats remaining — the developer had not been admitted as a member in respect of any leftover units, which meant it had nothing left to sell. The 2019 agreements, executed after deemed conveyance had already taken effect, were therefore made without any authority to convey what did not exist.
Justice Firdosh P. Pooniwalla, deciding Writ Petition No. 973 of 2023, agreed with the societies. The Court examined the sanctioned floor plans and found the disputed spaces were consistently marked as refuge areas, not residential units, and noted that the civic authority had never levied property tax on them as flats — reinforcing that no such flats existed to begin with. The Court quashed the Registrar's orders, set aside the execution proceedings that had followed, and restored the original decision rejecting the purchasers' membership applications. The judgment is reported as 2026 LiveLaw (Bom) 148.
Why Section 154B-5 Makes This a Hard Line, Not a Discretion
The Court's reasoning turned on Section 154B-5 of the Maharashtra Co-operative Societies Act, 1960, which restricts a housing society from admitting members beyond the number of flats actually available for allotment in the building. If the "flat" a purchaser is relying on was never sanctioned as one, admitting that purchaser would push membership past the number of real, existing units — a direct breach of the section, regardless of what the sale agreement says or how long the buyer has been pursuing the claim.
This is a meaningful distinction from disputes over illegally constructed or unauthorised flats, where courts have generally held that a society cannot refuse membership merely because construction was irregular — the flat still physically exists, and illegality of construction is a matter for municipal authorities, not the society's membership register. The Bombay High Court drew a clear line between the two situations in this judgment: a refuge area is not an irregular flat, it is not a flat at all. As the Court put it, "the refuge area cannot be considered as a flat or even a raw flat."
For committees, the practical takeaway is that this is one of the few genuine, statute-backed grounds to refuse a transfer or membership application outright — provided the underlying facts, especially the sanctioned floor plan, actually support it.
How the Court Distinguished a Refuge Area from a Flat
| Evidence Examined | What It Showed |
|---|---|
| Sanctioned floor plans annexed to existing flat agreements | The disputed spaces were consistently marked as refuge areas, never as residential units |
| Municipal property tax records | No tax had ever been levied on the disputed area as a flat, consistent with it not being one |
| Society membership records at formation | The developer held no unsold flats and was not a member for any remaining unit, meaning it had nothing left to convey |
| Timing of the sale agreements relative to deemed conveyance | The 2019 agreements were executed after conveyance, when the developer had no remaining authority over the building |
Each factor on its own might be inconclusive. Together, they built a picture the Court found impossible to ignore — which is exactly why committees facing a similar dispute should gather the same categories of evidence early, rather than relying on a general objection.
Due-Diligence Checklist Before Admitting a New Member
- 1Ask for the sanctioned building plan approved by the municipal corporation or planning authority, not just the developer's marketing layout, and check how the specific unit is labelled.
- 2Cross-check the unit against the society's own flat count as recorded at registration — if the number of members already equals the number of sanctioned flats, any additional claimed unit is immediately suspect.
- 3Verify whether property tax has ever been assessed and paid on the unit as a residential flat — a gap here is a strong indicator the space was never treated as one by any authority.
- 4Check the date of the sale agreement against the date of deemed conveyance or final conveyance — a developer who has already conveyed the building has nothing left to sell.
- 5Record the committee's reasons for refusal in writing, tied specifically to Section 154B-5 and the documentary evidence above — a bare refusal without reasons is far weaker if the applicant approaches the Deputy Registrar.
Don't confuse this with refusing membership over illegal construction
If a flat physically exists but was built with an unauthorised extension, extra loft, or deviation from the sanctioned plan, that is ordinarily a matter for the municipal authority, not grounds for the society to refuse membership. This ruling applies specifically where the space sold does not correspond to any sanctioned residential unit at all. Committees should get this distinction right before refusing an application, since applying it too broadly can itself invite a successful challenge.
What This Means for Buyers and Sellers
Before signing an agreement for sale — especially for a resale flat in an older building, or a unit priced noticeably below similar flats nearby — insist on seeing the sanctioned floor plan, not just the developer's brochure or a photocopy of the agreement.
A registered agreement for sale and a paid stamp duty do not, by themselves, prove the unit is a legally sanctioned flat; courts look at the underlying municipal plans and tax records, not just the paperwork between buyer and seller.
If you are buying from someone who is not the original allottee, ask specifically whether the unit has ever been assessed to property tax as a residential flat — this is one of the fastest checks available.
If your membership application is rejected on this ground, you are entitled to see the society's basis for the refusal, including the floor plan reference, and can challenge the decision before the Deputy Registrar of Co-operative Societies if you believe it is wrong.
Societies should apply this ground carefully and only where the documentary evidence genuinely supports it — using it as a pretext to block a valid transfer for unrelated reasons carries its own legal risk.
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