Six homeowners of a Vile Parle housing society took legal action against the managing committee for misappropriation of Rs 3.08 crore of society funds. In response, the housing society made an unusual decision; it raised the monthly maintenance fees by Rs 71,429 specifically for these six homebuyers during June, July and August, 2024. When the residents questioned why only they faced this increase, the society claimed the extra charges covered legal costs related to their lawsuits.
The six homeowners found were very unhappy with this justification from the housing society. They believed the charges were unlawful and designed to label them as defaulters. So they filed a second court case requesting an order to stop the housing society from charging legal fees and interest through their maintenance bills in this selective manner.
On October 14, 2026, the six homeowners won the interim case in the Maharashtra State Co-operative Appellate Court. The court issues an interim order asking the housing society to stop this practice immediately and refund all money already collected from these residents.
Why did the six homeowners win this interim case?
Aradhana Bhansali, Senior Partner at Rajani Associates, said to ET Wealth Online that the six homeowners who were the disputants in this matter succeeded in obtaining interim relief from the Court, as the documents placed before the Court found that the Housin Society had debited legal expenses to their maintenance bills on June 7, 2024, even prior to the passing of AGM resolution dated September 3, 2024. The Court further observed that, under Bye-laws 65, 66(k) and 67(vi) of the Model Bye-laws, legal expenses form part of the Housing Society’s service charges and are to be equally divided amongst its members.
The Maharashtra Co-Op Appellate Court found that the disputant members had established a prima facie case that the Housing Society had charged the alleged legal expenses through their maintenance bills without a prior resolution or compliance with the prescribed procedure. It was further alleged that the levy constituted an extra-judicial measure intended to pressurise the members, scare them from pursuing legal remedies, and wrongfully classify them as defaulters.
Accordingly, the Maharashtra Co-Op Appellate Court restrained the Housing Society from levying, demanding or recovering the disputed legal expenses, together with interest thereon, until the final disposal of the main dispute.
According to Bhansali, although a housing society is managed by its Managing Committee, the Society must function within the framework of law and cannot be permitted to pursue the personal agendas of its office-bearers or act vindictively against members who have raised legitimate legal issues before a competent court of law.
Maharashtra Co-operative Appellate Court discussion
Justice A. S. Wanve of the Maharashtra Co-operative Appellate Court, Mumbai, heard this case and gave the judgement on October 14, 2026.
Housing society’s own bylaws say legal expenses are to be recovered from all members equally
The court read the model bye-laws for co-operative housing societies and observed that Chapter IX talks about levy of charges by the society. The relevant bye law is 65, 66 (k) and 67(vi) and according to the model bye-laws updated later, their numbers changed to Model byelaw Nos.64, 65 (k) and 66 (vi).
The court explained that these bylaws say that legal charges are included in service charges of the Society and as per the bye law, service charges should be recovered by equally dividing the sum by the number of flats or units.
The court said: “In the light of byelaws, it is prima facie seen that legal charges can be recovered equally from all members.”
The court also explained that if a housing society wants to recover legal expenses from any particular member by passing the resolution in its general body meeting, then also, it is necessary to give a chance to the concerned member to put up his defence before the general body and any charges can be imposed according to the directions of concerned court or forum which adjudicate the dispute and pass the order on who has to borne the cost of the court proceedings.
Housing society’s conducts show it tried to put pressure on the six homebuyers who filed a case against them for misappropriation of funds
The court said that the six homeowners have filed a case against the managing committee of the society which is in the nature of creating personal liability of payment on the managing committee members and the interim injunction application was partly allowed by the court.
Thus the court said that when the six homeowners succeeded in getting interim relief in the misappropriation case, the housing society debited the legal expenses in their bills selectively from June 2024.
The court said: “This conduct of the Society prima facie shows that it is adopting extra judicial methods against the disputants to pressurize them and deprive them from pursuing the legal remedies.”
The court also said that the society’s decision to recover the legal expenses selectively from these six homeowners’ maintenance bills is from the society’s AGM resolution dated September 3, 2024 as the recovery started from June 2024 itself.
Court orders society to stop this recovery and give refund
The court said that it is prima facie seen that the Society has debited the legal expenses in the maintenance bill of the six homeowners without there being any resolution or proper procedure and it is prima facie seen that the legal expenses are debited in the maintenance bill of the six homeowners as an extra judicial method against them to pressurize them and deprive them from pursuing the legal remedies and to declare them as defaulters.
The court said: “The opponent Society is restrained by an order of interim injunction from levying, charging, demanding or collecting the legal expenses along with interest thereon from the disputants, till disposal of the dispute application.”