There is no legal basis on which a builder can levy transfer charges on the apartment owner.
The builder succeeds to exert influence as banks and home financing companies demand that the buyer procure a no objection to mortgage certificate from the builder, failing which the loan cannot be availed. Also, the builder takes on the responsibility to form society or condominium and can manipulate undue influence by leaving out a particular owners name as member of the society.
It violates the Transfer of Property Act, 1882; which states that a transfer of property, passes forthwith to the transferee, all the interest which the transferor is then capable of passing in the property and in the legal incidents thereof. According to the Act, the owner alone holds the full right to property and the builder has no right, title or interest over the property post registration of the property in the name of the owner.
2. It violates the Indian Contract Act, 1872. It is an extra contractual demand made by the builder.
As per RERA:
In case of not adhering to the rules, the builder stands not only to lose the registration of the project too but may also be punishable by imprisonment for a term which may extend up to three years or with fine which may extend up to a further ten per cent of the estimated cost of the real estate project, or both. Some states have, however, compounded the offence to avoid imprisonment of the developers.