Housing Society Membership Transfers: The Bombay High Court has ruled against a housing society’s attempt to restrict membership transfers, reinforcing that cooperative housing societies cannot override the provisions of the Maharashtra Cooperative Societies (MCS) Act, MCS Rules, and Bylaws. This landmark judgment impacts over 1.2 lakh housing societies in Maharashtra, clarifying that managing committees and general bodies cannot impose restrictions beyond what the law permits.
The case involved Kendriya Vihar Co-operative Housing Society Ltd., a large housing society in Pune with 307 flats. The society had resolved in its general body meeting that flats could only be transferred to government employees. If a transfer was made to a non-government employee, their membership application would be rejected.
A group of affected buyers, represented by Advocate Shreeprasad Parab, challenged the society’s decision before the Deputy Registrar of Cooperative Societies, Pune, in February 2024. The Deputy Registrar ruled in favor of the buyers, which was later upheld by the Divisional Joint Registrar on July 11, 2024. The society then approached the Bombay High Court, seeking to overturn the previous rulings.
High Court Ruling
Justice Sandeep V. Marne, after reviewing the case, held that as there were no restrictions in the society’s bylaws regarding the transfer of flats to non-government employees, such restrictions could not be imposed arbitrarily. The court reaffirmed that membership cannot be denied based on employment criteria.
Petitioner Subhash Gargote, a businessman who bought a flat in the society two years ago, welcomed the verdict. He emphasized that managing committees cannot take arbitrary decisions that contravene the MCS Act, rules, and bylaws.
Common Misconceptions in Housing Societies
Advocate Parab highlighted a widespread misconception that general body resolutions are binding on all members, even if they contradict the law. He cited Section 72 of the Maharashtra Co-operative Societies Act, 1960, which states that general body decisions must comply with the provisions of the Act and bylaws.
Frequent Violations by Housing Societies
- Redevelopment: Many societies appoint developers without transparency, ignoring members’ rights.
- Membership Transfers: Some societies impose restrictions based on community, profession, or demand excessive transfer premiums.
- Non-Occupation Charges: Unlawful charges are often levied on flats given on leave and license.
- Restrictions on Bachelors: Many societies prohibit bachelors from renting flats, violating rental rights.
Legal Provisions on Membership Transfers
- Eligibility: Any individual, legal entity, or firm competent to contract under the Indian Contract Act, 1872, can become a housing society member.
- Admission: Societies cannot refuse membership without sufficient cause if the applicant meets the Act’s and bylaws’ criteria.
- Restriction on Transfer: Under Section 154 B-7 of the MCS Act, membership transfers can only be restricted if the member has outstanding dues or if the transferee fails to acquire membership within a stipulated time.
This ruling sets a significant precedent, ensuring that cooperative housing societies follow due legal process rather than enforcing arbitrary rules.
