The Bombay High Court has clarified that co-operative housing societies cannot withhold membership on the grounds of unpaid lease premium if such premium exceeds the statutory ceiling imposed by the State Government under Section 79A of the Maharashtra Co-operative Societies Act. This judgment reinforces the supremacy of statutory regulation over private contractual stipulations in housing society governance.
Background & Facts
The Dispute
The petitioner, Vallabhnagar Co-operative Housing Society Limited, refused membership to respondents Vijay S. Khetan and Meena Vijay Khetan after they acquired a leasehold flat through a deed of assignment executed on 1 August 2024. The society contended that the transfer violated Clause 14 of the 1963 lease deed, which required prior written consent and payment of a lease premium calculated as half the consideration received by the transferor.
Procedural History
- 2012: Predecessors of respondents requested a No Objection Certificate (NOC) for transfer of the plot.
- 2013: The society replied that it would act upon submission of transfer forms, notarised assignment deeds, and payment of transfer charges at Rs. 250 per square yard.
- 2024: Respondents executed a deed of assignment under a court settlement and applied for membership.
- 2024: The society rejected the application citing breach of lease conditions and non-payment of premium.
- 2024: Respondents appealed to the Deputy Registrar, who allowed the appeal and directed membership.
- 2025: The Society filed a revision petition before the Divisional Joint Registrar, which was dismissed.
- 2026: The Society filed a writ petition under Article 227 before the Bombay High Court.
Relief Sought
The petitioner sought quashing of the revisional order directing membership, arguing that the respondents failed to pay the full lease premium as stipulated in the 1963 lease deed and had not obtained prior written consent.
The Legal Issue
The central question was whether a co-operative housing society can refuse membership under Section 154B(7) of the Maharashtra Co-operative Societies Act on the ground of non-payment of lease premium that exceeds the ceiling fixed by the State Government under Section 79A, and whether contractual lease conditions override statutory limits.
Arguments Presented
For the Petitioner
The petitioner argued that Clause 14 of the 1963 lease deed created a binding condition precedent requiring prior written consent and payment of a premium calculated as half the transfer consideration. It relied on the proviso to Section 154B(7), which permits enforcement of lease terms, and contended that the revisional authority erred in disregarding this contractual obligation. It further argued that the judgment in New India Co-operative Housing Society Ltd. v. State of Maharashtra (2013) supported its position, as it had previously upheld the enforceability of such lease conditions.
For the Respondent
The respondents contended that the society’s 2013 communication constituted a conditional waiver of the prior consent requirement, subject only to compliance with formalities and statutory charges. They submitted that the revisional authority correctly found that they had paid all permissible dues, including transfer fees and premium within the ceiling prescribed under Section 79A. They relied on Mont Blanc Co-operative Housing Society Ltd. v. State of Maharashtra (2007) to argue that statutory directions under Section 79A prevail over private lease terms.
The Court's Analysis
The Court undertook a detailed statutory interpretation of Section 79A, Section 154B(7), and the definition of "dues" under Section 154B-1(12). It held that the phrase "subject to the provisions of this Act" at the beginning of Section 154B(7) renders the entire provision subordinate to other statutory mandates, including those under Section 79A.
"The Act is regulatory in character. Section 79A is designed to prevent arbitrary or excessive impositions of premium by housing societies which may otherwise burden members."
The Court emphasized that any amount claimed as "dues" must be based on the Act, rules, or bye-laws, and cannot be unilaterally inflated by the society under the guise of lease enforcement. The society’s demand for a premium exceeding the statutory ceiling could not be treated as a legally recoverable "due" under Section 154B-1(12).
The Court distinguished the 2013 judgment in New India Co-operative Housing Society on the ground that it was delivered before the insertion of Section 154B(7) and its proviso, which now explicitly subordinates lease terms to statutory limits. The proviso to Section 154B(7) does not grant unfettered power to enforce lease conditions; it merely permits enforcement so long as they are not inconsistent with the Act.
The Court further held that the society’s 2013 communication was not a waiver of the consent requirement but a procedural roadmap. The respondents had complied with all formalities and paid the premium within the statutory ceiling. Therefore, the revisional authority’s finding of substantial compliance was legally sound.
The Verdict
The petition was dismissed. The Court held that membership cannot be denied if statutory dues are paid within the ceiling fixed under Section 79A, even if the lease deed prescribes a higher premium. The revisional authority acted within its jurisdiction by directing membership upon finding compliance with statutory requirements.
What This Means For Similar Cases
Statutory Ceiling Overrides Lease Terms
- Practitioners must now assess whether any premium claimed by a society exceeds the ceiling under Section 79A before advising on membership disputes.
- Lease clauses demanding higher premiums are unenforceable to the extent they conflict with statutory limits.
- Societies cannot use contractual language to circumvent government directives.
Payment of Statutory Dues Is Sufficient for Membership
- A transferee who pays all dues as defined under Section 154B-1(12) - including transfer fees and premium within the ceiling - satisfies the conditions under Section 154B(7).
- Non-payment of excess premium beyond the ceiling does not constitute a valid ground for refusal.
- Societies must issue clear, itemised bills for dues and cannot withhold membership on vague or inflated claims.
Procedural Communications Are Conditional, Not Waivers
- A society’s letter outlining required documents and charges does not constitute a waiver of consent or premium requirements.
- Such communications are procedural guides; compliance with them must be complete and within statutory bounds to validate transfer.
- Practitioners should advise clients to retain all correspondence and payment receipts as evidence of compliance.
