Legal Updates · Bombay High Court
Bombay High Court: A Residential Flat Cannot Be Converted to Commercial Use Without the Society’s NOC
Commercial property tax assessment or a commercial electricity connection does not by itself make a flat commercial. And the Deputy Registrar cannot issue that NOC, or force the society to issue it.
By Adv. Omkar M. Sapre ·
Case Surya Lok Co-operative Housing Society Ltd. v. Deputy Registrar of Co-operative Societies & Anr., Writ Petition No. 14286 of 2018
Citation 2026:BHC-AS:44326
Court Bombay High Court, Sandeep V. Marne, J.
Decided 30 October 2026
In brief
The Bombay High Court has held that a residential flat in a co-operative housing society cannot be converted to commercial use without the society’s NOC. The municipal corporation assessing the flat for property tax at commercial rates, a commercial electricity connection, or stamp duty paid at commercial rates does not by itself change the use from residential to commercial. The Court also held that the Deputy Registrar has no power to issue such an NOC himself, or to direct the society to issue one. A member who wants the society’s NOC must file a dispute under Section 91 of the Maharashtra Co-operative Societies Act, 1960.
Background
Surya Lok CHS in Khar (West), Mumbai, is a tenant co-partnership housing society whose building has only residential flats under the sanctioned plan. The buyers of Flat No. 3 on the ground floor were admitted as members in 2016 after the Deputy Registrar ordered membership under Section 23(2). They had given the society a written undertaking to use the flat only for residential purposes.
They then applied to the municipal corporation to change the flat’s use to commercial. The corporation needed the society’s NOC, which the society refused. The buyers wrote to the Deputy Registrar, who on 8 December 2016 issued a letter saying his office had “no objection” to commercial use of the flat. The society was not given notice or heard. The Divisional Joint Registrar dismissed the society’s revision on 15 January 2018, and the society filed this writ petition.
Before the High Court, the flat owners argued that the flat had been used commercially since 2001, and relied on its commercial municipal assessment, commercial electricity bills and the stamp duty they had paid at commercial rates.
What the High Court held
1. The society’s NOC is needed to convert a residential flat to commercial use
The society owns the land and building, and members only have a right to occupy the flats allotted to them. In these circumstances, the Court held, a change of use from residential to commercial is impermissible without the society’s NOC, and without it even the municipal corporation cannot sanction the change. Whether the society is justified in refusing can be tested only by the member in a dispute under Section 91.
2. Commercial tax, electricity and stamp duty do not change the use
A commercial property tax assessment by the municipal corporation does not automatically convert the use from residential to commercial. Nor does a commercial electricity connection. Paying stamp duty at commercial rates is a voluntary act of the buyer and does not convert the use either. The Court noted that the flat owners knew this, which is why they had applied for a formal change of use and needed the society’s NOC.
3. The Registrar has no power to issue or compel that NOC
Section 79(2), which applied in 2016, and Section 154B-27, which has applied to housing societies since 9 March 2019, let the Registrar enforce what a society is required to do under the Act, the Rules or the bye-laws. No provision requires a society to grant an NOC for change of use, so the Deputy Registrar cannot do it in the society’s place. The Court followed its earlier decisions in Shree Raghunandan CHS, Siddharth Borivali CHS, Oberoi Springs CHS and Vaibhav Industrial Premises Co-op. Society.
4. Issuing the NOC himself was “wholly beyond his jurisdiction”
The Deputy Registrar did not merely direct the society; he issued the NOC himself. The Court called this a usurpation of the society’s functions and held the letter arbitrary and void from the start.
5. Natural justice was breached
The NOC was issued on the buyers’ letter without notice to the society or a hearing, which was a further reason to set it aside.
6. A membership order does not decide the use of a flat
An order granting membership under Section 22(2) or 23(2) cannot decide how a flat may be used. Remarks in the 2016 membership order about other ground-floor flats being used commercially did not amount to permission for commercial use of this flat.
7. Undertakings and resolutions matter
The buyers had undertaken in writing to use the flat for residential purposes, and had relied on a 2000 general body resolution while leaving out later resolutions of 2007 and 2014 that withdrew permission for commercial use. The Court said it did not appreciate this conduct.
The NOC and the revisional order were set aside and the petition allowed. The flat owners are free to file a dispute under Section 91, which is to be decided on its own merits without being influenced by the judgment.
Advocate’s view · Adv. Omkar M. Sapre
What this means for societies and members
What follows is my view, as an advocate practising before co-operative authorities and the Bombay High Court. It is not part of the judgment.
The most practical point for members is that commercial property tax bills or a commercial electricity connection, for example from the PMC and MSEDCL in Pune, are not proof that commercial use is permitted. Many flats are run as shops or offices on the strength of such papers. In my view, after this judgment they will not answer an objection from the society, and a buyer should not treat them as settling the question.
For managing committees, the lesson is to keep the record clean. The society here succeeded partly because its general body resolutions and the member’s written undertaking were on file and consistent. Societies should record any decision on commercial use by a general body resolution and take a clear undertaking on use at the time of admission or transfer.
For members who want to convert a flat, the route is a dispute before the Co-operative Court under Section 91, not an application to the Deputy Registrar. In my view, its outcome will depend on the sanctioned plan, the bye-laws, the society’s resolutions and any undertaking given. The Court’s reasoning on the society’s NOC rested on the society owning the building, as a tenant co-partnership society does; the position may need closer analysis in other types of housing society.
Practical points
- Buyers of flats in residential societies who intend commercial use should check the sanctioned plan, the bye-laws and the society’s resolutions on use before buying. Commercial tax bills or electricity connections from the seller are not enough.
- If the society refuses an NOC for change of use, the remedy is a dispute under Section 91 before the Co-operative Court, not an application to the Deputy Registrar under Section 154B-27.
- Committees should keep resolutions on commercial use up to date and consistent, and take written undertakings on use at admission or transfer.
- If you hold a Registrar’s NOC or direction for change of use, take advice before relying on it with the planning authority.
This note is for general information only and does not constitute legal advice. Readers should refer to the full text of the judgment and seek advice on the facts of their own case.