Navi Mumbai: ‘CIDCO levying transfer premium is wrong’

B R Mhatre, general secretary, Navi Mumbai Cooperative Housing Federation

The Maharashtra State Housing Federation's Navi Mumbai wing states that CIDCO should stop levying transfer premium on flats/commercial outlets on resale properties, as it is double taxing the property buyer.

CIDCO has entered into a lease agreement of 60 years with most housing societies in Navi Mumbai, as a town planner for decongesting Mumbai, and a flat buyer already pays a transfer premium of Rs 25,000 to the cooperative housing society as per the Maharashtra Co-operative Societies (MCS) Act, 1960 and its byelaws, but CIDCO is levying a transfer premium as per slab rate ranging from over Rs 23,000 to over Rs 8 lakh, excluding 18 per cent GST, which is legally and ethically wrong of CIDCO, claims the federation.

A writ petition is already filed in Bombay High Court, challenging this dual transfer premium charges. The matter is slated for hearing before the month-end.

Advocate Shreeprasad Parab, expert director, Maharashtra State Housing Society Limited, said, "CIDCO, acting as an agent of the state government, provides land to co-operative housing societies/developers only on lease of 60 years in accordance with the land disposal regulations."

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"CIDCO charges transfer premium from individuals who sell their flat/commercial outlet and transfer their membership in the society. The transfer premium charged by CIDCO ranges from R23,000 plus 18 per cent GST for a flat with 215 sq ft carpet area to R8,35,000 plus 18 per cent GST for flat/commercial outlets with carpet area above 2,150 sq ft," said Parab.

B R Mhatre, general secretary, Navi Mumbai Cooperative Housing Federation, said, "A member in the housing society who sells the flat also has to pay transfer premium to the housing society up to the extent of R25,000 along with transfer fees of R500 and entrance fees of R100. Therefore, a person staying in Navi Mumbai is bound by a double transfer premium that is payable to the housing society and to CIDCO, which is not the case for a person staying in Mumbai, Thane, Pune, etc."

Mhatre added, "The contractual obligation of the housing society with CIDCO is forced on the members who have no privity of contract with CIDCO. We can understand that if there is a transfer of land by the society; then certainly the society has to take permission and pay transfer charges to CIDCO but in a flat sale, there is only a transfer of membership, that is transfer of shares, which is regulated by the MCS Act. The transfer of internal membership/shares is controlled by CIDCO by way of transfer premium, which is beyond contractual obligation."

Apex court view

According to Parab, the Supreme Court has held that an agreement to transfer shares of a co-operative housing society or a limited company cannot amount to an agreement to sell an immovable property. Although the flat purchaser has a right to occupy the flat as a member of the society, the transfer of shares by itself does not amount to the transfer of immovable property.

Writ petition filed

The Navi Mumbai Cooperative Housing Federation has already filed a writ petition against the transfer premium. "There is also pressure from Navi Mumbai's elected representatives [MLAs and MPs] on state leaders to convert the land from leasehold to freehold, thus restricting CIDCO from levying transfer premium," said Parab.

Other side

CIDCO officials preferred not to make any official comment on the subject.

Unanswered questions

According to Parab, two moot questions remain unanswered. He said, "First, whether such amendments (made in 2008) can be enforced retrospectively as the agreement for lease/lease deed executed prior to such amendments is a contract agreed upon by CIDCO and housing societies? And secondly, if the societies were informed about such amendments to take force in the future, many would not have consented. Also, if such amendments are allowed, the state in the future may also force housing societies to agree to more stringent conditions.