High Court Rules: Flat Buyers Must Clear Outstanding Dues for Society Membership

MUMBAI: The Bombay High Court has ruled that flat buyers and purchasers of commercial tenements cannot become members of a cooperative housing society without clearing outstanding dues pertaining to their premises. This decision comes as a significant clarification for the rights and responsibilities of both buyers and housing societies.

The court's ruling, delivered by Justice Amit Borkar, was in response to a case involving T&M Services Consulting Pvt Ltd, which purchased a commercial tenement in Tanvi’s Diamonda cooperative housing society in Dahisar through an auction conducted by Indian Overseas Bank in April 2021. 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 T&M Services Consulting as a member, citing that the previous owner, Saroj Mehta, had not cleared outstanding dues worth ₹58 lakh, which included maintenance charges and property tax. The society informed the firm that it would only be granted membership after the dues were paid.

Dissatisfied with this decision, T&M Services Consulting approached the deputy registrar of cooperative societies, who allowed the firm’s appeal in July 2022. The society then appealed to the divisional joint registrar, who dismissed their plea on July 14, 2025. This prompted the society to approach the Bombay High Court.

Justice Amit Borkar, in his ruling, struck down 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 pertaining to the tenement are cleared. “Membership in a cooperative society is not an unconditional right,” Justice Borkar emphasized.

The court clarified that 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 judge added. The intention behind enacting section 154B (7) was to ensure that housing societies do not suffer financial losses due to members leaving behind arrears.

If societies are compelled to accept transfers without the clearance of dues, they will not be able to recover common expenses, which can adversely affect all existing members. The provision, therefore, protects the financial stability of the society. “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 stated.

This ruling is expected to set a precedent for future disputes involving cooperative housing societies and their members. It underscores the importance of financial responsibility and the need for buyers to be aware of any outstanding dues before completing a purchase. The decision also highlights the role of the judiciary in maintaining the financial integrity of housing societies, ensuring that they can continue to operate smoothly and provide essential services to their members.