Society transfer premium

When I bought my flat, society was registered but handover of flats from builder to society was still not done. There was no society body elected as AGM was not yet done. So we received NOC from builder by paying builder. But now after society body is formed, society is now asking us to pay Rs. 25000 as society transfer premium, otherwise they won't issue share certificate on my name. I even notified society about the NOC charges I paid to builder via a mail from builder. Is society eligible to ask for transfer premium now?

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2 Answer(s)

If u are a promoter member/ first purchaser then society cannot charge transfer premium.

Answered on February 14, 2017.
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Dear Sir/madam,

The reference of the solution to the given situation at hand comes majorly from 2 laws, namely – the Societies Registration Act, 1860 and the Bye-Laws of the Housing Co-operative Societies which are state wise (varies with the difference in State).

Apart from the above mentioned laws, the Constitution laid down by your particular society also plays part in understanding the nature and scope of the acts which they do i.e. asking for Rs.25000 (in this particular case). Now something contrary to the law or otherwise, written in the constitution of the society can very well be challenged in the court of law of your district by way of instituting a civil suit.

There are certain things/certain developments that are undertaken by the society only eg. electricity, water etc. for which i becomes compulsory to be a member of the society + whenever you wish to transfer your flat to someone, an NOC from the society is also necessary without which one cannot transfer the flat.

Further, talking about the Transfer Premium[1] :-  the said fees/premium is a mandatory tariff to be paid everytime whenever the property changes hands(from one to another). If a major chunk of the members object to the unreasonable sum of money (Rs.25000) asked by the society, then Registrar of Societies can be approached for an amicable solution.

A lot of it, depends upon the membership agreement that you might have signed at the time of becoming a member of the society. The conditions mentioned in the agreement sort of creates a binding element on you to object in future.

As per the circular dated 27th November 1989, the maximum premium to be paid has been increased to Rs.25,000. Issued by the Registrar Co-operative Societies and the Commissioner of Co-operation.

While taking the above advice of filing a civil suit, the below mentioned case laws can come in handy.

Shri Ramanna Co-operative Housing Society Limited v. S. D. Chittar, Bombay 1989

The Hon’ble 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.

The Poona Hindu Middle Class Co-operative Housing Society Limited v. Shri Sudhakar Gopal Palsule, 1991, 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 plus 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.



Answered on February 17, 2017.
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