Flat Buyers Must Clear Pending Dues Before Joining Society: Bombay High Court
The Bombay High Court has delivered a significant ruling that impacts the acquisition of membership in cooperative housing societies. According to the court, flat buyers and purchasers of commercial tenements must clear any outstanding dues before they can be admitted as members of the society. This decision, which aligns with Section 154B (7) of the Maharashtra Cooperative Societies Act, ensures that housing societies do not suffer financial losses due to unpaid arrears.
Justice Amit Borkar, in his ruling, emphasized that membership in a cooperative society is not an unconditional right. The court struck down orders passed by the divisional joint registrar and the deputy registrar of cooperative societies, R/N ward, which had compelled a cooperative society in Dahisar to accept a commercial tenement buyer as a member despite the buyer not clearing the previous owner’s outstanding dues worth ₹58 lakh.
The case dates back to April 2021 when T&M Services Consulting Pvt Ltd purchased a commercial tenement in Tanvi’s Diamoda cooperative housing society in Dahisar through an auction conducted by Indian Overseas Bank. In June 2021, the firm applied to the society for the transfer of membership of the tenement in its favor. However, the society refused to admit the firm as a member, citing that the previous owner, Saroj Mehta, had not cleared outstanding dues worth ₹58 lakh, including maintenance charges and property tax. The society informed T&M Services Consulting that it would only grant membership after the dues were paid.
Undeterred, T&M Services Consulting approached the deputy registrar of cooperative societies, who allowed the firm’s appeal in July 2022. This prompted the society to approach the divisional joint registrar. On July 14, 2025, the divisional joint registrar dismissed the society’s plea, leading the society to file a case in the Bombay High Court.
The court’s ruling on Thursday overturned the orders passed by the registrars, stating that under Section 154B (7) of the Maharashtra Cooperative Societies Act, no transfer becomes effective unless outstanding dues are cleared. Justice Borkar clarified, “This rule applies to all transfers, whether voluntary or through auction. When the amount payable is indisputable or undisputed, the transferee must satisfy this condition.”
The court further explained that the intention behind enacting Section 154B (7) was to protect the financial stability of housing societies. “If societies are compelled to accept transfers without the clearance of dues, they will not be able to recover common expenses. This will affect all existing members. The provision therefore protects the financial stability of the society,” the court stated.
The financial health of a cooperative housing society is crucial for its survival. These societies rely on the timely collection of maintenance charges to cover common expenses, and when arrears remain unpaid for years, it can have a detrimental impact on the society and its members. “The law protects the society in such circumstances. Section 154B (7) ensures that the financial structure of the society is not disturbed by transfers that leave arrears behind. It places the responsibility upon the transferee to clear dues when the earlier member defaults,” the court added.
This ruling is expected to have far-reaching implications for both buyers and cooperative housing societies in Maharashtra. It reinforces the importance of financial responsibility and transparency in property transactions, ultimately contributing to the overall stability and well-being of housing societies and their members.
