The society had challenged the order passed by the cooperative court which had directed it to return an amount of Rs.4,75,000/- with interest to two former members of the society.
Observing that "there is no bar for any member to pay donation to the society, however, it should be voluntary without any compulsion and coercion", the Bombay High Court has directed a Pune-based housing society to return the extra amount it charged society members to allow transfer of their membership.
Justice Mridula Bhatkar while turning down the plea filed by Alankar Sahkari Griha Rachana Sanstha Maryadit, challenging the order of the Maharashtra State Cooperative Appellate Court, said, "A society is not expected to indulge in profiteering business from the members and if such amount is earned, it is taxable under the law. Transfer fees cannot be charged under the pretext of donation."
The society had challenged the order passed by the cooperative court which had directed it to return an amount of Rs.4,75,000/- with interest to two former members of the society. The plea by the members, led by Atul Bhagat claimed that in the year 2005, they decided to sell their flat to a third party since they were in dire need of the money. For the same, they agreed to pay transfer fees of Rs.25,000 to the society. However, the society demanded Rs 5,00,000 to regularise the transfer. Under pressure, they paid the amount. When they sent a letter of demand on July 4, 2005, the society denied liability for such payment.
The society argued that respondents could not produce any evidence that the society demanded Rs 5,00,000 as transfer charges. Further, if the members of the housing society voluntarily agree to pay money to the society, it is not a restriction under the bye-laws. After weighing the evidence, the court concluded: "The society enjoys a dominant status in the transfer of the premises. The incoming member somehow wants the possession of the premises and share certificate to be transferred in his name without any hassle. The outgoing member, who is in need of money, wants to get rid of further complications and is interested in a smooth transaction. For this reason, the consent of managing body by passing a necessary resolution to that effect is required. Under such circumstances, it cannot be inferred that the outgoing/incoming member has paid the donation voluntarily. It can be safely concluded that the amount was not a donation but money was a transfer fee paid out of compulsion and it was not a voluntary payment."
FALLING IN LINE?
- A Pune-based housing society procured Rs 5,00,000 from two former members to allow transfer of their membership
- The society, however, denied liability for the payment when the members sent a letter of demand on July 4, 2005
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