Society ‘Transfer Charges’ or ‘Premium’ from the incoming and the out-going members04 Jun 2014
"Can society Charge excess amount what is laid down in bye laws as a ‘Donation’ or ‘Transfer Charges’ or ‘Premium’ from the incoming and the out-going members as a pre-condition to the approval of the transfer of the flat.”
Transfer of flats in a Co-Operative Housing Society are regulated by the bye-laws of the society and are approved by the managing committee of the society. In view of query i relied on and referred regulatory provisions of Maharashtra Co-operative Societies Act 1960 (Amended 2013), Maharashtra Co-operative Societies Rules 1961 and Bye Laws and ruling of Hon’bel Co-operative Appellate Court.
The charging of transfer fees is governed by the bye-laws of the society. According to the Bye-law 40(d)(vii) of the old Model Bye-laws, the transfer fees chargeable is Rs.50 and the premium amount chargeable is a maximum of Rs.1,000. Subsequently, by a Circular issued by the Commissioner of Co-operation and Registrar Co-operative Societies dated 27th November 1989, the maximum premium was increased to Rs.25,000.
Under the new Model Bye-laws, Bye-law 38(e)(vii) provides for transfer fee of Rs.500 only. Further, Bye-law 38(e)(ix) provides for the payment of premium at the rate to be fixed by the General Body but within the limits as may be prescribed by the Department of Co-operation, Government of Maharashtra from time to time.
The Government of Maharashtra (Co-operation and Textile department), by its Notification No. CHP-2001 /M No. 188/14-S, dated 9-8-2001, has prescribed the ceiling of the charges. described as 'premium' to be recovered at the time of transferring the flat/tenement of a member in a co-operative housing society and his share and right in the share capital /property of the society. According to the said Notification, rate of premium to be charged at the time of transferring the flat/ tenement should be fixed in the general meeting of the society subject to the ceiling laid down in the said Notification. In other words, the societies are authorized to charge premium at the time of transferring the flat but the premium so charged should, in no case, exceed Rs. 25,000 in the areas falling under the Municipal Corporation and the Authority.
Thus, under both the old and the new model bye-laws, the maximum premium which a society can charge is only Rs.25,000.
Case Laws with reference to subject matter :
a) The practice of demanding transfer fees has also been strongly condemned by the Maharashtra State Co-operative Appellate Court, Bombay in the case of Shri Ramanna Co-operative Housing Society Limited v. S. D. Chittar, Bombay, 1989 C.T.J. 319. The Co-operative Court has held that the co-operative society can place reasonable restrictions on transfer of a member’s interest to prevent nuisance from unwanted element but that does not mean that the society can have such a right of profiteering out of the co-operative movement. It further held that the practice of demanding transfer fees not approved by the Registrar is totally illegal.
b) In the case of The Poona Hindu Middle Class Co-operative Housing Society Limited v. Shri Sudhakar Gopal Palsule, 1991 C.T.J. 326, the Maharashtra State Co-operative Appellate Court, held that the practice of demanding donation or transfer fees deserves not only to be discouraged but also to be condemned, because the practice was repugnant to the very concept of co-operative housing societies. The Court further held that such payments are always made under coercion and there is no element of consent or voluntariness as there is a threat that the shares will not be transferred if the payment is not made. The Court directed the Society that since payment amounts to extortion, was illegal in law and hence, it should refund the amount back to the member along with interest.
In the light of the aforesaid discussion, in my opinion Co-Operative Housing Societies cannot charge transfer charges or donations more than Rs. 25,000/-.
From : Gorane Consultancy Services, Pune