Flat buyers cannot get society membership without clearing pending dues: HC

The court said that under section 154B (7) of the Maharashtra Cooperative Societies Act, no transfer becomes effective unless outstanding dues pertaining to the tenement are cleared

MUMBAI: Flat buyers and purchasers of commercial tenements cannot become members of the cooperative housing society in which their premises are located without clearing outstanding dues pertaining to their premises, the Bombay High Court ruled on Thursday.

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“Membership in a cooperative society is not an unconditional right,” justice Amit Borkar said while striking down orders passed by the divisional joint registrar and the deputy registrar of cooperative societies, R/N ward, compelling a cooperative society in Dahisar to accept a commercial tenement buyer as a member although the buyer did not clear the previous owner’s outstanding dues worth ₹58 lakh.

The case dates back to April 2021 when T&M Services Consulting Pvt Ltd purchased a commercial tenement in Tanvi’s Diamoda cooperative housing society in Dahisar at an auction conducted by Indian Overseas Bank. In June 2021, the firm applied to the society for transfer of membership of the tenement in its favour.

The society, however, refused to admit the firm as a member, saying the earlier owner of the premises, a certain Saroj Mehta, had not cleared outstanding dues worth ₹58 lakh, encompassing maintenance charges and property tax. T&M Services Consulting would be granted membership in the housing society only after they paid ₹58 lakh, the society conveyed to the firm.

T&M Services Consulting then approached the deputy registrar of cooperative societies, who allowed the firm’s appeal in July 2022, prompting the society to approach the divisional joint registrar. On July 14, 2025, divisional joint registrar dismissed the society’s plea, prompting it to approach the high court.

The court on Thursday struck down the orders passed by the registrars, saying under section 154B (7) of the Maharashtra Cooperative Societies Act, no transfer becomes effective unless outstanding dues pertaining to the tenement are cleared.

“This rule applies to all transfers, whether voluntary or through auction,” justice Borkar said. “When the amount payable is indisputable or undisputed, the transferee must satisfy this condition.”

The court clarified that the intention behind enacting section 154B (7) was that housing societies should not suffer financial loss because a member leaves behind arrears.

“If societies are compelled to accept transfers without clearance of dues, they will not be able to recover common expenses. This will affect all existing members. The provision therefore protects the financial stability of the society,” the court said, adding that a cooperative housing society survives on the timely collection of maintenance charges and when arrears remain unpaid for years, the society and its members suffer.

“The law protects the society in such circumstances. Section 154B (7) ensures that the financial structure of the society is not disturbed by transfers that leave arrears behind. It places the responsibility upon the transferee to clear dues when the earlier member defaults,” the court said.