Bombay HC: Societies Cannot Refuse Membership Transfer Over Unrelated Property Disputes

The Bombay High Court has ruled that a cooperative housing society cannot refuse to transfer membership to a flat buyer who has met the statutory requirements, even where the society has an unrelated property dispute with the seller. Justice Amit Borkar passed the order on a petition filed by Clover Park Co-operative Housing Society in Mumbai, which had resisted registering a membership transfer for a row house sold under a registered Deed of Assignment.

What triggered the dispute

The row house's original owner, Narendra Shah, executed a registered Deed of Assignment on 4 May 2024 in favour of buyer Parvinder Singh Dhillon, who applied for a share certificate and membership transfer nine days later. The society did not act on the application. Dhillon approached the cooperative registrar's office; his first appeal was rejected, but a revisional authority later ruled in his favour. The society then challenged that order in the High Court, arguing that a disputed patch of open space or garden area adjoining the row house belonged to the society and could not be part of the transfer.

What the court held

The court rejected the society's objection, holding that a membership-transfer application is an administrative and statutory enquiry, not a trial of rival ownership claims. Once an applicant produces a valid registered transfer document and satisfies the eligibility conditions under the Maharashtra Co-operative Societies Act, the Rules and the society's bye-laws, the society is obligated to process the transfer and cannot withhold it on grounds unconnected to that enquiry. The court noted the society had never alleged the Deed of Assignment itself was unregistered, forged or otherwise invalid, so it had no basis to sit on the application. It also clarified that granting membership does not settle the separate open-space claim, which must still be resolved through a civil suit.

What this means for housing societies

• Managing committees cannot delay or refuse a membership transfer by raising an unrelated ownership or boundary dispute; if the transfer document is valid and registered and eligibility conditions are met, the transfer must go through.
• A society wanting to protect a disputed claim over open space, garden area or similar common property should pursue it separately through a civil suit, rather than using it as leverage to withhold membership.
• Committees should process transfer applications promptly once statutory conditions are satisfied — the unexplained delay in this case contributed to the society losing at both the revisional authority and the High Court.
• Approving a membership transfer does not concede or resolve any pending property dispute; societies keep the right to pursue such disputes through the appropriate civil forum afterward.

Secretaries handling pending transfer applications should separate the two issues: statutory eligibility checks, which the society must complete without adding extraneous conditions, and any independent title or boundary dispute, which should be pursued on its own track rather than used to stall a member's transfer request.