1) transfer charges have to be paid by the transferor only

2) society can recover maximum Rs 25000 as flat transfer charges

3) in any case once you have agreed you are bound to pay transfer charges

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

CHAMBER SUMMONS NO. 415 OF 2012

IN

EXECUTION APPLICATION NO. 730 OF 2013

IN

ARBITRATION AWARD DATED 29th DECEMBER, 2010

Ram Prithviraj Bhargava ..... Claimant/

Decree Holder

VERSUS

Anand Prithviraj Bhargava & Anr. ….. Opposite Parties

Mr.Pratik Majumdar, i/b. Ms.Bina Pillai for the Claimant.

Mr.Tushar Goradia for Opposite Party No.1.

Mr.Ramesh Shah, Secretary of Dimple Co-operative Housing Society Limited.

Mr.Ketan Raiyani, Treasurer of Bharatiya Friends' Co-operative Housing Society.

Mr.B.M.Gore, Commissioner for Taking Accounts.

CORAM : R.D. DHANUKA, J.

DATED : 10th APRIL, 2014

P.C.

Learned Court Commissioner for Taking Accounts has submitted this report

in view of the terms and conditions for transfer of two flats received from the

respective societies which flats are directed to be sold by this court. It is stated in

the Commissioner's report that in so far as flat no.52 situated at Bharatiya Friends'

Co-operative Housing Society Limited is concerned, the society has addressed a

letter to the Commissioner for Taking Accounts on 28th March, 2014 stating the

terms and conditions for transfer of the said flat. One of the amount demanded by

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the society is towards voluntary contribution at Rs.500/- per sq.ft. carpet area in

the total sum of Rs.6,27,500/-. The said amount is demanded over and above

transfer fees of Rs.25,000/-.

2. In so far as flat No.10 in Manav Mandir Building of Dimple Co-operative

Housing Society Limited is concerned, the said society by its letter dated 3rd

March, 2014 to the learned Commissioner for Taking Accounts has conveyed that

for transfer of the said flat, the society transfer charges would be Rs.25,000/- and

in addition thereto, society would also charge at the rate of Rs.300/- per sq.ft.

towards society welfare totaling to Rs.2,44,500/-.

3. Learned counsel appearing for the claimant and judgment debtors have

urged before this court that according to the bye-laws of these two societies,

society cannot demand any amount more than Rs.25,000/- towards transfer fees. It

is submitted that neither the claimant nor the judgment debtors are ready to give

their consent for payment of voluntary contribution as demanded by the society

either under the head of voluntary contribution or towards society welfare charges.

It is submitted that societies cannot demand more than Rs.25,000/- contrary to the

bye-laws pertaining to transfer charges. Learned counsel appearing for one of the

party has invited my attention to the judgment of this court delivered 17th February,

2010 in case of Bharatiya Bhavan Co-operative Housing Society Limited and

another vs. Smt.Krishna H.Bajaj & Ors. in Writ Petition No.1094 of 2004.

Reliance is placed on paragraphs 53 to 55 of the said judgment in support of the

submission that any recovery over and above the maximum amount of Rs.25,000/-

permissible as transfer fees by the society by way of donation or under any other

head as a condition precedent for transfer of the flat is illegal. Paragraphs 53 to 55

of the said judgment read thus :-

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53. The payment made under the contract with the Society

by the Respondent as agreed between the Respondent and the

Society reflected in the aforesaid correspondence as well as

between the Respondent and Khimji as reflected in the

aforesaid agreement of sale shows that the contract was

entered into and completed by performance though it was

illegal at the relevant time. Such a contract is void from the

very inception under Section 23 of the Indian Contract Act - it

is made with knowledge of the legal position. It does not

happen to have been void. It is not later discovered to be void.

It was not executed under a mistake of what the Law is. It is

completely covered by the judgment of the Supreme Court in

the case of Kuju Collieries Ltd supra. It does not fall within

the protective ambit of Section 65 and Section 72 of the

Contract Act. The flats were to be purchased upon the illegal

condition. The Respondent succumbed to the illegality. She

failed to keep a straight bat. This was despite the knowledge of

law derived from the legal advice that she obtained. If the

contract was illegal the Respondent need not have been

coerced to enter into such a contract. She could have resisted

the illegality. She could have refused to make the illegal

payment. She could have applied under Section 22 of the

Maharashtra Co-operative Societies Act for transfer of

membership without making the illegal payment. She chose

not to do so. She chose the illegal way of getting the shares

and the premises transferred in her name. Had she applied as

per procedure established under the aforesaid law, the Society

would have been enjoined to admit her as member. It could not

have refused membership upon the refusal to pay transfer fee

in excess of the legally prescribed amount under Section 23 of

the Act. But the Respondent chose an easier option. She paid

the illegal amount in consideration of which she expedited her

transfer and membership status. The consideration being

unlawful, the contract is void.

54.The payment of transfer fee to the Society of such a large

amount which is by way of percentage of the sale price is

illegal under the Co-operative Societies Act and the model

bye-laws issued thereunder being model bye- law No.40

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adopted by the Society as their bye-laws. The premium

required to be paid to the Society is allowed up to the

maximum amount of Rs. 25,000/- only. Any amount in excess

of that payment is, therefore, illegal contribution. The only

exception under the aforesaid bye-laws is the donation which

would be given only with the consent of the member. Hence if

the amount is taken to be not the illegal transfer fee, but

donation in the name of contribution to the Society towards

the repair fund, it would be a valid contract. It could then be

avoided as voidable at the option of the Respondent only if she

proved the coercion alleged. The intrinsic oral as well as

documentary evidence unmistakenly shows lack of that

vitiating factor. The Respondent having sent the typewritten

letter dated 8th July 1992 annexing as many as 7 documents

shows that the latter was not prepared under detention. The

circumstantial evidence points to the irresistible conclusion of

lack of any coercion. In that case the valid donation given by

the Respondent to the Society cannot be refunded or repaid to

her.

55.Consequently it is seen that knowing this precise legal

position the Respondent, Khimji as well as the Society

contracted for Rs.9.63 lakhs which was paid and received as

and by way of transfer fee for transferring the shares and the

premises purchased by the Respondent in the name of the

gracious contribution made by the Respondent as directed by

the Society. The illegal payment of transfer fee was made in

the garb of the legal payment of contribution stated to be

gracious contribution of the Respondent. Any which way one

sees the transaction, it gives the Respondent no leevay for

backtrackking, the tenacious and erudite exposition of the Law

of Contracts made by Mr. Andhyarijuna notwithstanding.

4. The members of the Managing Committee of these societies who are present

in court submit that though under the bye-laws, transfer fees of Rs.25,000/- is

permissible, since the building of the society is quiet old, it requires heavy repairs

and thus society has to demand such contribution under the head of voluntary

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contribution or society welfare charges which are ultimately for the benefit of

members of the society.

5. I am not inclined to accept the submissions made by the Managing

Committee members of these two societies. Society in my view can collect only

transfer fees permissible under the bye-laws which is in the sum of Rs.25,000/-

and cannot demand any other contribution by way of voluntary contribution,

donation or towards society welfare charges from the member as condition

precedent for transfer of any flat in the society. Such demand as a condition

precedent for transfer of flat or any premises in the society is contrary to bye-laws

and the Maharashtra Co-operative Societies Act, 1960 and is illegal.

6. This court has already considered this issue at length in the judgment in case

of Bharatiya Bhavan Co-operative Housing Society Limited (supra). I do not

propose to take any different view in the matter.

7. It is thus made clear that the societies will not be entitled to recover any

amount over and above Rs.25,000/- towards transfer fees in respect of transfer of

these two flats when sold as demanded in the letters dated 28th March, 2014 and 3rd

March, 2014 respectively under any such heads as demanded.

8. The report submitted by Commissioner for Taking Accounts is answered

accordingly. Learned Commissioner for Taking Accounts cannot accept the

demand of Bharatiya Friends' Co-operative Housing Society for payment of

Rs.6,27,500/- by way of voluntary contribution and similarly demand of Dimple

Co-operative Society Limited towards society welfare charges. The learned

Commissioner for Taking Accounts is directed to pay Rs.25,000/- towards transfer

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fees in respect of both these flats in the society and pay legal charges of

Rs.15,000/-, Rs.500/- and share transfer fee of Rs.200/- as demanded by Bharatiya

Friends' Co-operative Housing Society. Similar legal charges and share transfer fee

if any demanded by Dimple Co-operative Housing Society Limited, the same also

be paid. Report is disposed of accordingly.

[R.D. DHANUKA, J.]

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1. CHS has no right to levy such money unless some arrears is pending.

2. In this case you are not liable for payments.

You are liable to pay the maintenance charges as agreed by you while executing the sale deed to he buyer.

If you have forgotten the issue, it cannot be claimed as an excuse.

This was agreed to be paid by you at that time itself hence it becomes your duty to honor the commitment.

1. The cost of registration on admission of a new member is to be borne by the member who desires to register himself.

2. The amount is a fresh amount and not a maintenance due.

1. Yes, despite the above bye law, all societies claim/demand donations for transfer of flat in some other name otherwise they will refuse registration,

2. However, this donation is always paid by the buyer since his name is goint bto be registered and it is not your pending due.