The Bombay High Court has clarified that a co-operative housing society’s power to levy a transfer premium, even when provided for in a lease agreement, is subject to and regulated by the statutory framework of the Maharashtra Co-operative Societies Act, 1960. Specifically, the Court held that any contractual right to charge a premium is overridden by binding directions issued by the State Government under Section 79A of the 1960 Act that impose a ceiling on such charges.
The Court observed that a society cannot demand a premium in excess of this statutory ceiling, and any such excess amount does not constitute “legally recoverable dues” as defined under Section 154B-1(12) and for the purposes of Section 154B-7 of the 1960 Act. Therefore, the enforcement of a private contractual clause in a lease must be consistent with, and not contrary to, the statutory limitations prescribed under the Act.
The Court therefore held that the orders passed by the statutory authorities were not vitiated by any jurisdictional error, and the revisional authority acted within its statutory jurisdiction by directing the petitioner society to enrol the respondents as members, based on the finding that the respondents had complied with all documentary formalities and had tendered the dues, including the transfer premium, as permissible under the statutory ceiling fixed under Section 79A. The society’s insistence on a higher premium based on its lease clause was not legally sustainable as it exceeded the permissible statutory limit.
A Single Judge Bench of Justice Amit Borkar observed that Clause 14 of the lease deed dated 29 July 1963 created a clear bar against transfer without prior written consent, which was a condition precedent. The society’s reply was interpreted not as an immediate grant of no objection, but as a conditional assurance that the society would act upon the submission of documents and payment of charges; it was not a waiver of the prior consent requirement.
The Bench noted that the statutory authorities under the Maharashtra Co-operative Societies Act, must examine whether transfer requirements can be regularised subject to statutory limits. It was observed that the revisional authority had recorded a factual finding that the respondents had substantially complied with the formal requirements by submitting the necessary forms and tendering the permissible transfer fees and premium.
The Bench further observed that Section 79A of the 1960 Act empowers the State Government to issue binding directions, such as a ceiling on transfer premiums, which societies cannot disregard based on contractual rights. The Bench clarified that the term “dues” under Section 154B-1(12) only includes amounts lawfully demanded under the Act, rules, and bye-laws, meaning any premium demanded beyond the statutory ceiling is not a legally recoverable due.
The restriction on transfer under Section 154B-7 is expressly ‘subject to the provisions of this Act’, making it subordinate to directions issued under Section 79A. Also, the proviso to Section 154B-7, which refers to lease terms, does not grant an unconditional right to enforce contractual stipulations that are inconsistent with the Act; the statute prevails over the private contract, concluded the Bench.
Briefly, the petitioner, a co-operative housing society, leased a Plot via an indenture, which stipulated that any assignment or transfer required the society’s prior written consent and the payment of a lease premium. Later, the assignees of the original lessees sought permission to sell the plot. In response, the society outlined the documents required and the applicable transfer charges.
Subsequently, the predecessors of Respondent Nos. 4 and 5 sought a No Objection Certificate (NOC) to assign the plot to them. Accordingly, a deed of assignment was executed in favour of Respondent Nos. 4 and 5, allegedly without the society’s prior written permission and without paying the lease premium.
Consequently, the society rejected the membership application of Respondent Nos. 4 and 5, citing a breach of the lease conditions. The respondents successfully appealed to the Deputy Registrar (Respondent No. 3), who directed the society to grant them membership. The society’s subsequent revision application was also dismissed by the Divisional Joint Registrar (Respondent No. 2), confirming the Deputy Registrar’s order.
Appearances:
Advocates Venkatesh Dhond, Preteek Pai, Vinodini Shrinivas, Shashwat Rai and Aditya Shete, for the Petitioner
AGP Dhruti Kapdia, along with Advocates Surel Shah, Kausar Banatwala, and Tushar A. Goradia, for the Respondents
