The Bombay High Court has reaffirmed that housing societies cannot recover property tax from members based on arbitrary or uniform rates that diverge from official municipal assessments. This judgment underscores the necessity of accurate, period-specific calculations grounded in documentary evidence, setting a critical precedent for financial accountability in cooperative housing bodies.
Background & Facts
The Dispute
The petitioner, Pearl Mansion CHS Limited, a housing society, sought recovery of outstanding maintenance charges from a member under Section 154B-29 of the Maharashtra Cooperative Societies Act, 1960. The claim included not only routine maintenance fees but also repair cess and property tax allegedly paid by the society to the Municipal Corporation for the period 2005 to 2018. The member contested the computation, arguing that the society had applied a uniform rate of Rs.1,153 annually for property tax throughout the entire period, despite actual municipal rates varying significantly over time.
Procedural History
- 2005 - 2018: Society collected property tax at a flat rate of Rs.1,153 per annum from members.
- 2020: Member filed objection under Section 154B-29, challenging the accuracy of the tax component.
- 2021: District Deputy Registrar appointed an independent Auditor to verify the claims.
- 2022: Auditor’s report revealed that municipal property tax rates were Rs.95.25 (2005 - 2010), Rs.823.25 (2010 - 2015), and Rs.1,153 (2015 - 2018).
- 2023: Revisional Authority reduced the recovery amount from Rs.1,66,058 to Rs.76,751 based on the Auditor’s period-wise recalculations.
- 2023: Petitioner filed Writ Petition No.11374 of 2023 before the Bombay High Court seeking to set aside the revised order.
Relief Sought
The petitioner sought quashing of the revised recovery order, arguing that the reduction was arbitrary and violated the society’s right to recover duly paid expenses. The member sought confirmation of the corrected amount based on authentic municipal records.
The Legal Issue
The central question was whether a housing society may recover property tax from its members based on a uniform, inflated rate that does not reflect the actual, period-specific rates levied by the Municipal Corporation, and whether the revisional authority acted lawfully in recalculating the amount using official records obtained under the Right to Information Act, 2005.
Arguments Presented
For the Petitioner
The petitioner contended that the society had acted in good faith by applying a consistent rate for administrative convenience and that the member had not objected to the rate during the 13-year period. It relied on Cooperative Societies Act provisions permitting recovery of amounts duly paid by the society, arguing that the revisional authority had no power to recompute municipal tax liabilities retrospectively. It further claimed that the reduction amounted to a retrospective alteration of financial obligations without due process.
For the Respondent/State
The respondent, supported by the member, argued that the society’s uniform rate was factually incorrect and misleading. They relied on municipal records and RTI responses proving the actual tax slabs for each period. They emphasized that Section 154B-29 empowers revisional authorities to ensure accurate computation and prevent unjust enrichment. The State contended that the Auditor’s methodology was transparent, evidence-based, and aligned with statutory obligations under the Act.
The Court's Analysis
The Court held that the revisional authority’s role under Section 154B-29 is not merely ministerial but includes a duty to verify the correctness of claims before issuing recovery certificates. The Court emphasized that natural justice requires that financial recoveries be based on verifiable facts, not assumptions or convenience.
"The revisional order is founded on actual figures drawn from official records. The Auditor did not speculate; he cross-verified with municipal data and RTI responses obtained by the member."
The Court distinguished between administrative convenience and legal accuracy, noting that while societies may adopt uniform rates for billing, they cannot enforce recovery based on rates that contradict official municipal assessments. The Court rejected the petitioner’s argument that long-standing payment implied consent, stating that non-objection does not validate an unlawful demand.
The Court further held that the use of RTI-obtained municipal records was lawful and admissible under the statutory framework. The revisional authority’s reliance on these documents did not constitute procedural irregularity but rather fulfilled its duty to ensure accuracy.
The Verdict
The petitioner’s writ petition was dismissed. The Court held that property tax recovery by a housing society must reflect actual municipal rates applicable in each fiscal year, and that revisional authorities are empowered to correct inflated or uniform calculations using authentic documentary evidence. The reduced recovery amount of Rs.76,751 was upheld.
What This Means For Similar Cases
Accurate Records Override Uniform Billing Practices
- Housing societies must maintain and produce municipal tax slabs for each year when claiming property tax recovery.
- Practitioners must challenge recovery certificates based on flat rates by demanding period-wise municipal records via RTI.
- Uniform billing for variable municipal charges is legally unsustainable and may be reversed by revisional authorities.
RTI Data Is Admissible in Cooperative Disputes
- Information obtained under the Right to Information Act, 2005 is valid evidence in proceedings under the Cooperative Societies Act.
- Members may use RTI responses to substantiate objections to recovery claims, shifting the burden to the society to justify its figures.
- Courts will treat RTI-obtained municipal records as authoritative unless contradicted by superior evidence.
Revisional Authorities Have Duty to Verify, Not Approve
- Authorities under Section 154B-29 are not rubber stamps; they must scrutinize claims for accuracy.
- Failure to verify may render recovery orders vulnerable to judicial review.
- Practitioners should routinely request Auditor’s reports and municipal data in all cooperative recovery disputes to preempt unjust claims.
