When you buy a resale flat in a cooperative housing society, the transaction does not end with the registered sale deed. You must also become a member of the society — and that is where many buyers encounter a problem. The managing committee presents a list of charges: transfer premium, welfare fund contribution, development fund, society repair donation, and administrative fee. The total can run into lakhs. Almost none of it is legal.
The Maharashtra government issued a landmark circular on 9 August 2001 under Section 79A of the Maharashtra Co-operative Societies Act, 1960, fixing the maximum transfer premium a cooperative housing society can collect at ₹25,000 in Municipal Corporation areas and at lower amounts in smaller towns. This ceiling has not changed, and no society resolution or general body vote can override it. Yet the violations are widespread and largely go unchallenged because flat buyers — already stretched by a major purchase — do not want to delay getting their share certificate.
The ₹25,000 Ceiling: What the Law Actually Says
Section 79A of the MCS Act empowers the State Government to issue directives to cooperative societies on any matter of policy. The August 2001 circular issued under this power is binding on all cooperative housing societies registered in Maharashtra. It caps the transfer premium — the one-time amount a society charges to transfer membership from outgoing member to incoming member — as follows:
Transfer Premium Limits Under the 2001 Circular
- Municipal Corporation areas(Mumbai, Thane, Pune, Navi Mumbai, etc.): ₹25,000 maximum
- Municipal Council / Nagar Panchayat areas:₹10,000 maximum
- Other areas:₹5,000 maximum
These amounts are all-inclusive. A society cannot break the total into sub-charges to get around the ceiling.
The Bombay High Court has, on multiple occasions, directed cooperative societies to refund amounts collected in excess of ₹25,000 with interest, and has held that collecting excess transfer charges under any name — welfare fund, development fund, donation — is unlawful. Office-bearers who insist on such payments can, in principle, be prosecuted for extortion under the law, though in practice most disputes are resolved through recovery proceedings before the Co-operative Court.
What Societies Can and Cannot Charge: A Complete Table
In addition to the transfer premium, a society can legitimately collect a small share capital amount and an entrance fee as prescribed in its registered bye-laws. Everything else is outside the law. The table below summarises what is permitted and what is not:
| Charge | Permitted? |
|---|---|
| Transfer Premium | Yes |
| Share Capital | Yes |
| Entrance / Admission Fee | Yes |
| "Welfare Fund" Donation | No |
| "Development Fund" Contribution | No |
| "Administrative Charges" | No |
| Outstanding Maintenance Arrears | Yes (recovery) |
The Membership Transfer Process: Timeline and Rights
Under Model Bye-Laws 2014 (Bye-Law 38), the process for transferring flat ownership and society membership follows a defined sequence. Knowing this timeline protects both buyer and seller from unnecessary delays.
Submit application with documents
The incoming member (buyer) submits a written application for membership to the managing committee, along with the registered sale deed, share certificate, identity proof, and a no-dues certificate from the outgoing member.
Society decides within 30 days
The managing committee must accept or reject the membership application within 30 days of receiving a complete application. If rejected, the reasons must be communicated in writing.
Deemed acceptance after 3 months
If the society neither accepts nor rejects within 3 months, the application is deemed accepted under the MCS Act. The buyer can then approach the Registrar to enforce membership.
Share certificate issued
Once membership is approved, the society cancels the outgoing member's share certificate and issues a new one in the buyer's name. The managing committee must maintain this record in the register of members.
Clearance of dues
The society can withhold processing until all maintenance arrears, electricity dues, and other outstanding amounts owed by the outgoing member are cleared. Unpaid dues do not transfer to the new owner.
What About the Society NOC?
This is one of the most misunderstood aspects of flat transfers in Maharashtra. A Society NOC (No Objection Certificate) is not a legal requirement under the MCS Act for the execution or registration of a resale flat. The sale deed can be registered without it.
In practice, however, the buyer's home loan lender will almost certainly insist on a Society NOC before disbursing funds. This gives managing committees an informal chokehold that some use to extract illegal charges. The legal position is that if a society refuses to issue an NOC without cause, or delays it to extract payment, this constitutes an unfair practice and can be challenged before the Registrar of Co-operative Societies.
Watch Out for "Voluntary Donation" Requests
A common workaround used by societies is to present a separate receipt for a "voluntary donation" to the welfare fund or development corpus — on the understanding that the NOC or share certificate will be delayed until the donation is made. Courts have treated such coerced donations as transfers made under duress, and the amounts are recoverable with interest. If you are asked for a “voluntary” payment that conditions the transfer process, document it in writing and keep all receipts.
Your Rights as a Flat Buyer or Seller
- Right to refuse any payment beyond ₹25,000 transfer premium, share capital, and entrance fee
- Right to demand a written itemised receipt for every amount collected
- Right to apply to the Registrar if the society delays or refuses to process your transfer without cause
- Right to recover excess amounts already paid, with interest, through the Co-operative Court (Section 91, MCS Act)
- Right to inspect the society's register of members and confirm your membership has been recorded
- Right to a share certificate within a reasonable time of membership approval — the committee cannot indefinitely withhold it
How to Recover Excess Charges Already Paid
If you paid more than ₹25,000 in transfer-related charges and have receipts or bank transfer records, you have a valid claim. The most effective forum is a complaint to the Registrar of Co-operative Societies for the district, citing the 9 August 2001 circular and requesting an inquiry under Section 77 of the MCS Act. The Registrar can direct the society to refund the excess amount. For amounts above a threshold, you can alternatively approach the Co-operative Court under Section 91.
Documentation is critical: preserve your payment receipt, bank statement, the society's demand letter (if issued in writing), and the registered sale deed. Many buyers pay in cash on the committee's insistence, which makes recovery harder — always insist on a receipt even for amounts that appear to be informal.
Facing illegal transfer charges or a delayed NOC?
We advise CHS managing committees and flat owners across Thane, Mumbai, and Navi Mumbai on legally compliant transfer processes.