Society ‘Transfer Charges’ or ‘Premium’ from the incoming and the out-going members
04 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