Bombay HC rejects housing society’s bid to restrict membership transfers

A single bench of the Bombay High Court recently set aside a petition filed by a housing society seeking restriction of transfer of membership The HC order gives a new dimension to over 12 lakh housing societies in the state which otherwise believed that the decision of the managing committee and general body is binding on its members However the HC stated that Society canrsquot impose any restrictions on the transfer of Membership overriding the provisions of Maharashtra Coop Societies MCS Act MCS Rules and Bylaws thereunderThe caseThe case concerns Kendriya Vihar Cooperative Housing Society Ltd a large cooperative housing society in Pune with 307 flats versus the Divisional Joint Registrar and others The petitioner society had imposed restrictions on admitting nongovernment employees as members In its general body meeting it resolved that flat transfers through salepurchase could only involve government employees If a transfer was made to a nongovernment employee their membership application would be rejectedAdvocate Shreeprasad Parab expert director state housing federation right Subhash Gargote 49 the petitionerAdvocate Shreeprasad Parab expert director of the State Housing Federation representing the nongovernment employee flat buyers said ldquoMy clients challenged the societyrsquos arbitrary decision before the deputy registrar of cooperative societies Pune in February 2024 The Deputy Registrar ruled in their favor The society then appealed to the divisional joint registrar who upheld the deputy registrarrsquos order on July 11 2024 Unsatisfied with both rejections the society further challenged the order in the Bombay High CourtHC orderAfter hearing all sides Justice Sandeep V Marne held that as there are no restrictions in the bylaws on the transfer of a flat in favour of nongovernment employees and therefore the membership of such nongovernment employees canrsquot be deniedPetitioner speakSubhash Gargote 49 a businessman and the petitioner in the case said ldquoI had bought my flat around two years ago I am happy that the Bombay High Court has given me relief in the case as the managing committee had decided in their meeting to refuse my membership and it would be given only to central government employees and I challenged this decision The moot issue is that the housing societies managing committee cannot take frivolous and arbitrary decisions and they have to follow the MCS rules acts and bylawsrdquoMisconceptionsldquoMembers of the managing committee are under the impression that the general body of the society can pass resolution which will be binding on all the members of the Societyrdquo said Advocate Parab ldquoThe law is very clear as Section 72 of the Maharashtra Cooperative Societies Act 1960 states that lsquoSubject to the provisions in this Act and the rules the final authority of every society shall vest in the general body of members in general meeting summoned in such manner as may be specified in the bylawsrsquordquoCommon violations by the General Body in housing societiesgtgt Redevelopment Many General Bodies appoint developers for redevelopment without transparency fairness or due process ignoring membersrsquo rightsgtgt Transfer of membership Some societies impose restrictions on membership transfers limiting them to specific communities or professions charging excessive transfer premiums or demanding donationsgtgt Nonoccupation charges Certain societies unlawfully levy nonoccupation charges beyond prescribed limits on flats given on leave and licencegtgt Restrictions on Bachelors Many societies prohibit bachelors from renting flats restricting subletting and rental rightsWhat Act rules and bylaws stategtgt Any individual or a legal entity or a firm who is competent to contract under the Indian Contract Act 1872 is entitled to become a member of any Cooperative Housing Societygtgt No Society shall without sufficient cause refuse admission to membership to any person duly qualified under the provisions of this Act and its Bylawsgtgt There is only one provision under Section 154 B7 of the said Act which restricts the transfer of share or interest of a member if the dues of the housing society are not paid or if the transferee has not applied and acquired membership of the cooperative housing society in due course of time