Many managing committees in Maharashtra believe a general body resolution can lawfully decide who is allowed to buy into their society, whether that means limiting sales to a particular community, profession, or marital status. The Bombay High Court has repeatedly said otherwise. In a case involving Kendriya Vihar Co-operative Housing Society Ltd., a 307-flat society in Pune, Justice Sandeep V. Marne struck down a resolution that restricted flat transfers to government employees only, holding that a general body cannot impose conditions the Maharashtra Co-operative Societies Act, Rules, and bye-laws do not themselves permit.
With the state Cooperation Department set to roll out a single, revised set of Model Bye-Laws for every registered housing society from October 2026, this is exactly the moment for committees to check their own bye-laws and transfer practices against what the law actually allows, before an aggrieved buyer takes the same route these petitioners did.
Why this matters now
Transfer disputes are one of the most common sources of Deputy Registrar complaints against Maharashtra housing societies. A resolution that feels reasonable in a general body meeting — restricting sales to a certain profession, community, or family type — is very often unenforceable in law, and can expose the committee to a reversed decision, legal costs, and reputational damage.
The Case That Reset the Rules
Kendriya Vihar CHS had passed a general body resolution stating that flats could only be transferred to government employees; if a member sold to a non-government employee, the buyer's membership application would be rejected. A group of affected buyers, represented by Advocate Shreeprasad Parab, challenged this before the Deputy Registrar of Cooperative Societies, Pune, in February 2024. The Deputy Registrar ruled in the buyers' favour, a decision the Divisional Joint Registrar upheld on 11 July 2024. The society then approached the Bombay High Court to overturn both rulings.
The High Court dismissed the society's challenge. Since the society's own bye-laws contained no restriction on transferring flats to non-government employees, the court held that such a condition could not be imposed arbitrarily through a general body resolution. The judgment leaned on Section 72 of the MCS Act, 1960, which requires that general body decisions comply with the Act, the Rules made under it, and the society's registered bye-laws — a resolution cannot go further than what these three sources of authority permit.
What Committees Can and Cannot Restrict
Section 154 B-7 of the MCS Act sets out the narrow, specific grounds on which a society can lawfully hold up or refuse a transfer. Everything outside that list is generally on shaky legal ground, however sensible it may seem to a general body at the time.
| Generally Lawful to Restrict | Generally Unlawful to Restrict |
|---|---|
| Transfer while the outgoing member has outstanding dues to the society | Transfer based on the buyer's profession, employer, or income category |
| Transferee failing to apply for membership within the stipulated time after purchase | Transfer based on caste, community, religion, or region |
| An application incomplete or defective under the bye-laws (missing documents, unpaid transfer premium up to the statutory cap) | Blanket bans on renting or selling to bachelors or single working women |
| Refusing membership where the unit being sold was never sanctioned as a residential flat — for example, a refuge area or fire-safety area sold as if it were a flat | A general body resolution creating a new eligibility condition not found in the Act, Rules, or the society's registered bye-laws |
That last row on the lawful side is worth flagging: courts have also held that a society can legitimately refuse membership where a builder sold an area never sanctioned as residential — such as a mandatory refuge area — as though it were a flat. The distinction is between a society enforcing a genuine legal or planning defect, which is permitted, and a society inventing a new eligibility filter for buyers, which is not.
What Committees Should Do Before the Next Transfer Application
- 1Pull out your society's registered bye-laws and check whether any transfer-related clause imposes a condition beyond dues clearance, timely application, and the standard documentation the Model Bye-Laws prescribe.
- 2If a past general body resolution added an eligibility condition — profession, community, tenant type, or similar — treat it as unenforceable and do not rely on it to reject a fresh application, even if it was passed unanimously.
- 3Reserve genuine scrutiny for the grounds the law actually permits: confirm dues are cleared, the transfer premium charged does not exceed the statutory cap, and the application is complete within the prescribed time.
- 4Where the concern is genuinely about the unit itself — an unsanctioned refuge area, illegal extra construction, or a flat under a title dispute — record the specific legal or planning basis in writing rather than a general objection to the buyer.
- 5When the revised Model Bye-Laws are notified from October 2026, review the transfer clauses again and remove any local addition that goes beyond them.
A unanimous resolution is not a shield
Committees sometimes assume that because a restrictive resolution passed with full member support, it is automatically valid. The Kendriya Vihar ruling confirms that a general body cannot legislate beyond the Act, Rules, and bye-laws under Section 72, regardless of how the vote went. A rejected buyer can, and often does, take the dispute to the Deputy Registrar — and as seen here, that process can end at the High Court, at real cost to the society.
Know Your Rights as a Buyer or Seller
A society cannot refuse your membership application solely because of your profession, community, religion, marital status, or the fact that you plan to rent the flat out to a bachelor tenant.
The only grounds a society can generally rely on to hold up a transfer are unpaid dues of the outgoing member, an incomplete application, or a transfer premium dispute within the statutory cap of ₹25,000.
If your application is rejected or delayed on grounds not found in the society's bye-laws, you can challenge the decision before the Deputy Registrar of Cooperative Societies for your area.
Ask to see the specific bye-law clause the committee is relying on before accepting a verbal 'no' — under Section 72, any restriction not backed by the Act, Rules, or bye-laws does not bind you.
Sellers should raise transfer restrictions with the committee early, ideally before finalising a buyer, to avoid a dispute emerging after the agreement for sale is signed.
Reviewing your society's transfer bye-laws?
We help committees audit transfer clauses against the MCS Act and prepare for the October 2026 Model Bye-Laws update, and help buyers and sellers resolve disputed applications.