Bombay High Court sets aside Rs 15.45 lakh penalty over bicycle parked in society staircase

A bicycle worth Rs 11000 parked in the staircase of a Mumbai cooperative housing society has triggered a significant Bombay High Court ruling on the limits of societiesrsquo powers to penalise members for alleged commonarea encroachmentThe dispute saw the society demand Rs 1545730 for alleged encroachment over nearly 11 years The court set aside the recovery proceedings and directed the society to refund Rs 386433 deposited by the petitioners Justice Sandeep V Marne in his August 25 2026 judgment held the action arbitrary in the peculiar facts of the case and cautioned committees against unreasonable or disproportionate exercise of their powerspopcorn numberRs 386L descAmount the HC ordered the society to refund classDefaultThe disputeThe petition was filed by Yogini Bhupendra Parikh and Sejal Bhautik Patel members of Dhanlakshmi Cooperative Housing Society Ltd Matunga West concerning Flat No 9 Building No 1 The society alleged that they had encroached on common space by parking a cycle between floors for nearly 11 years A showcause notice was issued on August 13 2021 followed by a demand of Rs 689220 Recovery Application No 8 of 2024 ultimately led to a Rs 1545730 recovery certificate on April 4 2025 The petitioners challenged the proceedingsLegal basis questionedA key issue before Justice Marne was whether the society had the legal authority under its registered byelaws to impose the penalty It relied on Byelaw 169a of the new Model Byelaws prescribing a penalty equal to five times the monthly maintenance charges for each month of encroachment However the District Deputy Registrar found that Dhanlakshmi Society had not adopted the new Model Byelaws The High Court held that the provision could not apply11 years of silenceThe court also examined how the penalty was imposed Justice Marne noted that nothing on record showed that the society had objected to the bicycle being parked in the staircase between 2011 and 2020 The first objection came in August 2021 followed by a retrospective penalty demand The court found this approach unacceptable in the peculiar circumstances If an act is considered encroachment society should object when it is noticed and require its removalDisproportionate demandThe disparity between the bicyclersquos value and the penalty demanded also featured prominently The court strongly criticised the demand and cautioned that managing committees cannot act as ldquosuperregulatory authoritiesrdquo over fellow members by raising disproportionate demands However it clarified that its observations do not encourage encroachmentslsquoNot to generate revenuersquoAccording to According to Advocate Shreeprasad Parab expert director Maharashtra State Cooperative Housing and Apartment Federation Ltd a key feature of the proposed byelaws is their enforcement philosophy The provisions prioritise restoration of property removal of unauthorised work structural safety and legal compliance expressly stating that the objective is ldquonot to generate revenue through penaltiesrdquo Parab said read with the Bombay High Court ruling the framework establishes an important principle for housing society administrationCourt clarificationThe High Court did not lay down an absolute bar on retrospective penalties Justice Marne clarified that the decision was based on the unique facts and circumstances of the case and should not be read as holding that housing societies can never penalise encroachments or that retrospective levies are categorically prohibited The Courtrsquos concern was how the power was exercised particularly the absence of timely objection the disputed legal basis for the penalty and the enormous amount sought to be recoveredNotice before penaltyParab pointed out that the proposed byelaws prescribe a more structured procedure before a penalty is imposed The managing committee is expected to inspect and record the violation obtain professional reports wherever necessary issue a detailed notice requiring discontinuance or restoration and provide the member a reasonable opportunity before imposing a penalty This approach places the emphasis on correcting the violation rather than allowing it to continue while the financial penalty accumulatesRecovery claims scrutinisedThe judgment also has implications for proceedings before cooperative authorities The court held that the recovery process could not simply convert the societyrsquos claim into a certificate without examining its legal basis Once it was established that the society had not adopted the byelaw supporting the penalty there was no justification for remanding the matter for another round of adjudication The court therefore brought the recovery proceedings to an end