Admitting a New Member in a Society and the Society’s Rights & duties in this regards

A Chairman of a Housing Co-operative Society called me at 10:00 p.m. just to ask whether a Society has a Right to ask a member to settle all dues before he can be given permission to sell his ownership flat, just because the member was sitting on his head, citing his urgency in the matter said Adv. R. P. Rathod. Actually a member in their society has disputed a certain bill and had said that let the matter be decided by the Court of Law. Now the chairman wanted to know the Rights of the Society not to grant a No Objection Certificate, to a member to sell his flat.

In this connection I reiterate & intend to elaborate a bit, what I informed the said Chairman as this may serve as guidance to other persons in similar situation.

In this regards Section 23 of the Maharashtra Co-operative Society Act 1960, has to be followed for admittance of a new member in the society. Under this section, it is indicated that the Society cannot disregard the application from an applicant without a true and good reason. If a Society does so, an appeal can be filed with the Registrar. The Registrar would give his verdict within 15 days of receiving such an application from the member, which will have to be accepted by the society.

Many such questions come up in this regard. Can a Society maintain that it will not transfer the Share Certificate on the name of a new member provided all the dues are paid by the Old member of the society?

Certainly Yes. One thing is clear that in case a member applies to sell his flat and request transfer of the Share Certificate to the name of the purchaser, he must settle all the dues of the society. Even if such a payment is debatable or disputable he cannot make part payment and has to settle his accounts in full before the Society could give his permission to transfer the Share Certificate.

Now many Societies pass a resolution in their Managing Committee, or Annual General Meeting or a Special General meeting, that if a member wants to sell his flat then it should be sold only to a relative of the member or persons referred by the other members, if the relatives of the member do not wish to buy the flat, then only it can be sold to an outsider. Some societies also bar a member of society by passing certain resolutions in the general meetings stating that a flat should not be sold to bachelors or persons consuming non-veg or a non Jain or persons from other communities. Let me make it very clear that such kind of a resolution by any Society is absolutely illegal and cannot be implemented. A member has full right to sell his flat to anybody and a Society cannot prevent him from selling the flats to certain category of persons.

Now let’s find out the other circumstances under which a Housing Co-operative Society can stop the admittance of a new member. Now suppose if an application to buy the flat has been made by lady who is the sole person in the family and the Society comes to know that she has a bad character and may start some immoral business in the building, the Society can stop the admittance of such a member under such circumstances. However, it should be remembered that the Society cannot stop admittance of a member only on the basis of doubt; there should be some conclusive evidence or history of convictions of such persons.

If suppose the member buying the flat has a large family and the Society feels that admittance of such a member would mean excessive use of water and lift facilities, can it stop the admittance on this pretext?

Certainly, not. That a member has a large family, cannot be a reason enough to restrict the membership. This cannot be held as a good and fair reason. In addition, if a Society is informed that the purchaser of that flat is a smuggler and has a police record, then can a society stop admittance of a new member. Again the reason is that the Society should have solid evidence, in order to reject the application of the purchaser of the flat and the transfer of the Share Certificate, falling which the actions of the society would be considered as undemocratic & illegal.

Certainly, Yes. In fact, when a new member is being admitted, he must be called and an interview should be taken. The new member should be strictly told that he will have to follow the Bye-laws and resolutions of the Society and he will have to pay the maintenance charges of the society regularly.

So to conclude with Adv. R. P. Rathod says that the issue of transfer of Share Certificate and flat is certainly not trivial, but is of a profound nature, so adequate caution has to be adopted.

-      Adv. R. P. Rathod.