Admitting a new member in a society and the societies rights

By Legal Bureau

Minno J. Pallia a Chairman of a Housing Cooperative Society has written whether a Society has a right to ask a member to settle all dues before he can be given permission to sell his ownership flat. Can a member say that a certain bill is in dispute and be matter decided by the court of law. Now Mr. Pallia wants to know the right of the Society not to grant a no objection Certificate, to a member to sell his flat.
Section 23 of the Maharashtra Cooperative Society has to be followed for admittance of a new member in a society. Under this section, it is indicated that the Society cannot disregard the application from as applicant without a true and good reason. If a Society does so, an appeal can be filed with the Registrar. The Registrar would give his verdict within 15 days of receiving such an application from the member, which will have to be accepted by the society.
Many questions come up in this regard. Can a Society maintain that it will not transfer the Share Certificate on the name of a new member provided all the dues are paid by the old member of the society ? Certainly yes. One thing is clear that in case a member applies to sell his flat and request transfer of the Share Certificate to the name of the purchaser, he must settle all the dues of the society. Even if such a payment is debatable or disputable he cannot make part payment and has to settle his accounts in full before the Society could give his permission to transfer the Share Certificate.
Now many Societies pass a resolution in their Managing Committee, or Annual General Meeting or a Special General meeting, that if a member wants to sell his flat then it should be sold only to relative of the member or their person indicating by the member, if the relatives of the member do not wish to buy the flat, then only it can be sold to an outsider. It is clear that such kind of a resolution by any Society is absolutely illegal and cannot be implemented. A member has full right to sell his flat to anybody and a Society cannot prevent him from selling the flats to an outsider.
Now lets find out the circumstances under which a Housing Cooperative Society can stop the admittance of a new member. Now suppose if an application to buy the flat has been made by lady who is the sole person in the family and the Society comes to know that she has a bad character and may start some immoral business in the building, the Society can stop the admittance of such a member under such circumstances. However, it should be remembered that the Society cannot stop admittance of a member only on the basis of doubt.
If suppose the member buying the flat has a large family and the Society feels that admittance of such a member would mean excessive use of water and lift facilities, can it stop the admittance on this pretext ? Certainly not. That a member has a large family, cannot be a reason enough to restrict the membership. This cannot be held as a good and fair reason.
In addition, if a Society is informed that the purchaser of that flat is a smuggler and has a police record, then can a society stop admittance of a new member ? The reason is that the Society has a solid evidence, in order to reject the application of the purchaser of the flat and the transfer of the Share Certificate.
When the Society receives application from a member, can it interview the member to find details according to law ? Yes. Infact, when a new member is being admitted, he must be called and an interview should be taken. The new member should be strictly told that he will have to follow the byelaws and resolutions of the Society and he will have to pay the maintenance charges of the society regularly.
Now, Supreme Court judgement on giving rights to the societies for restricting admission of outsider on religion and community basis, has given society right to deny admission to outsiders. The society must pass its intention in the AGM with majority.