‘Non-refundable’ parking deposit must be returned if society cannot justify retention: Court

A Mumbai housing society cannot withhold a parking deposit simply by labelling it ‘non-refundable’; it must establish a lawful basis for retaining the amount

MUMBAI: A housing society cannot retain money collected as a ‘non-refundable’ parking deposit merely by labelling it so. The society must establish a lawful basis for keeping the amount, the Co-operative Court has ruled while directing RNA Regency Park Tower Co-operative Housing Society in Kandivali West to refund ₹50,000 to its members, Jignesh Khiraiya and Kusum K Khiraiya, with 6% simple interest per annum.

A Mumbai housing society cannot withhold a parking deposit simply by labelling it ‘non-refundable’; it must establish a lawful basis for retaining the amount.

The court, on September 22, also directed the society to pay the couple’s legal costs. The interest will be calculated from January 30, 2022, when the society receives their written demand for repayment, until the amount is fully recovered.

The dispute arose after the couple paid ₹75,000 as a non-refundable deposit for stilt parking while transferring their flat in June 2017. They challenged the society’s decision to retain ₹50,000, arguing that it had no lawful basis to keep the money.

According to the couple, a general body resolution passed on June 10, 2012, required incoming members to pay ₹75,000 for stilt parking, in addition to a ₹25,000 transfer premium for the flat. They said they had paid the amounts as demanded. After they objected to the parking deposit, the society credited ₹25,000 to their maintenance account but retained the remaining ₹50,000.

The back story

After examining receipts, the general body resolution and correspondence between the parties, the court found that the society had failed to establish a lawful basis for retaining the ₹50,000. The amount had been collected in connection with the transfer of membership, but the society could not justify the levy through its registered bye-laws, an independent agreement or evidence of any service provided in return.

The court also referred to earlier judgements holding that a general body resolution cannot authorise a housing society to collect amounts beyond what the law permits. It held that unauthorised collections must be refunded under Section 72 of the Indian Contract Act, 1872.