General Body Approval Not A Formality In Housing Society Redevelopment: Bombay High Court

The Bombay High Court has held that approval of a housing society's General Body cannot be treated as a mere formality in redevelopment, observing that members surrender possession of their existing homes and thereafter receive reconstructed flats.

“Redevelopment permanently affects rights of all members because they surrender possession of their existing premises and thereafter receive reconstructed flats. Therefore, approval of the General Body cannot be treated as formality,” Justice Amit Borkar observed.

The court made the observation while dismissing a petition filed by Rishabraj Estate Developers Pvt. Ltd., which sought interim protection over its proposed redevelopment of Heeramani Ratan Cooperative Housing Society Limited's property in Goregaon (West), Mumbai.

Section 79A of the Maharashtra Co-operative Societies Act sets out the procedure followed by a cooperative housing society for selecting and appointing a developer for redevelopment.

The court held that completing the Section 79A process, selecting Rishabraj as developer, issuing a Letter of Intent and exchanging draft agreements did not, prima facie, establish a concluded contract. The final Development Agreement still required General Body approval and execution.

The dispute began after the society invited bids for redevelopment of its Goregaon property in December 2022. Rishabraj was selected as the preferred developer in August 2023 and formally appointed in November 2023 after the Section 79A process.

The parties then continued negotiating the redevelopment terms and exchanged several drafts. Rishabraj also paid ₹22.50 lakh as security deposit in April 2024.

On April 20, 2025, the General Body resolved to change the redevelopment scheme from Regulation 33(11) to Regulation 33(20)(B) of the DCPR, 2034 and approved changes to the tentative revised plans.

On April 9, 2026, the society's advocates sent what was described as the final draft Development Agreement. Every page, however, carried the endorsement, “without prejudice draft for discussion purpose only.”

Justice Borkar observed that this “reserves the legal position of the parties and indicates that discussions were still continuing.”

Rishabraj's April 18 communication also became important. It stated that the agreement had been finalised with the Managing Committee but would be placed before the General Body for approval, followed by execution and registration.

“Therefore, even according to the petitioner, the draft had reached finality only with the Managing Committee. It still required approval of the General Body before execution. Thus, approval of the General Body was admittedly still pending,” Justice Borkar observed.

On April 19, the General Body resolved to explore joint redevelopment with adjoining Bhanumati Society and put the standalone project on hold. It also recorded that “RISHABRAJ CANNOT BE TERMINATED AT THIS STAGE.”

Rishabraj then approached the high court under Section 9 of the Arbitration and Conciliation Act, 1996, arguing that a binding contract had already come into existence. It relied on its appointment, the Letter of Intent, completion of the Section 79A process, payments and the extensive negotiations. Its case was that executing the Development Agreement was only a formality.

The society argued that no concluded contract existed because the General Body had never approved or executed the final Development Agreement.

Justice Borkar found that the contractual documents contemplated further steps before the arrangement became binding. The tender conditions required execution of the redevelopment agreement on “mutually agreed conditions”, while the Letter of Intent stated that the parties would “endeavour to execute and register” the Development Agreement and an irrevocable Power of Attorney.

The court noted that a formal agreement is not necessary in every case for a binding contract to exist. Whether a contract has been concluded depends on the parties' intention and the documents governing the transaction.

Here, however, the negotiations had not resulted in a concluded contract. The documents still required General Body approval and execution of the Development Agreement, and Rishabraj itself acknowledged on April 18 that approval was pending.

The court found that these circumstances did not, prima facie, establish a concluded contract. Payments and expenditure by Rishabraj could be relevant to its claims before the arbitral tribunal but could not override the requirement for General Body approval and execution.

The court dismissed the petition and refused interim relief, while leaving the parties' rights and claims open before the arbitral tribunal.

For Petitioner (Rishabraj Estate Developers Pvt. Ltd.): Advocates Mayur Khandeparkar, Rashmin Khandekar, Pranav Nair, Humera Syed, Naman Gupta, Omkar Mendarkar i/b Bishwajeet Mukherjee.

For Respondent (Heeramani Ratan Cooperative Housing Society Limited): Senior Advocate Girish Godbole, Advocates Aseem Naphade, Ameet Mehta, Pratima Soundalkar, Aditi Parwal i/b Solicis Lex.