Bombay HC: Auction Buyer Must Clear Past Maintenance Dues Before Getting Membership

The Bombay High Court has ruled that a person who buys a flat at a bank e-auction cannot claim membership of the cooperative housing society without first clearing the previous owner's outstanding maintenance dues. Justice Sandeep V. Marne, deciding the case on 14 July 2026, set aside orders of the Assistant Registrar and Joint Registrar that had directed a society to admit the auction-purchasers as members despite unpaid dues.

How the dispute arose

The flat's original owners had defaulted on both their bank loan and the society's maintenance charges. The lender bank invoked the SARFAESI Act, took possession, and sold the flat at e-auction in March 2023. The sale certificate explicitly made the sale subject to the buyers clearing pending and future maintenance dues. The auction-purchasers nonetheless asked the society to waive the previous owner's arrears, arguing they were liable only from the date they took possession. When the society refused membership until the dues were paid, the buyers approached the Assistant Registrar, who ordered the society to admit them — a decision the Joint Registrar upheld on appeal.

What the court held

The High Court found that both the Assistant Registrar and Joint Registrar had ignored Section 154-B-7 of the Maharashtra Co-operative Societies Act, 1960, which bars transfer of a member's share or interest until the society's dues are paid, and Section 154-B-14, under which unpaid maintenance dues become a charge on the flat itself. Since the buyers purchased on an "as is where is, whatever there is" basis and were aware of the arrears before bidding, that charge — and the liability to clear it — passed to them along with the flat. The court also held a society can simultaneously withhold membership and pursue a separate recovery case for the dues; doing one does not waive the other.

What this means for housing societies

• A society can lawfully refuse membership to an auction-purchaser (bank/SARFAESI or otherwise) until past maintenance dues on that flat are cleared, provided the sale was on an "as is where is" basis and the dues are undisputed in amount.
• Filing a separate recovery dispute against the arrears does not stop a society from also withholding membership over the same dues — the two remedies can run together.
• Societies should keep dated records of demand notices and dues communications; the court leaned on the society's paper trail of repeated demands between 2017 and 2020 to reject claims that it had been negligent.
• Where the dues amount is genuinely disputed or the society has stayed silent instead of demanding payment, courts have gone the other way and ordered membership granted — so a clear, documented demand history matters.

The court gave the auction-purchasers six weeks to pay the principal amount of the outstanding dues (with interest waived up to the purchase date, but payable thereafter) as a condition for the society to admit them as members. Societies dealing with SARFAESI or court-auction buyers should flag pending dues to the purchaser and the bank in writing before possession changes hands, and insist on clearance as a precondition to membership.