Demand for exorbitant transfer charge illegal

Most states don't allow societies to charge beyond ₹10,000 to ₹25,000; seek legal remedy if subjected to high demands

- ARSHDEEP KAUR & NAMIT GUPTA

Media professional Sushil Bahal bought a house a few years ago in a suburban Mumbai society for about 30 lakh. While the resale flat cost him less than what a newly-constructed one would have, the society asked him to cough up ₹1 lakh as transfer charge for membership. Bahal paid up to avoid friction.

Bahal isn't alone. Many buyers are either unaware of the maximum amount a society can charge, or give in to such demands for reasons similar to Bahal's.

States' laws vary

The amount a society can legitimately levy varies from one state to another. Says Dinesh Kadam, partner, MZM Legal LLP, a Mumbai-based law firm: "The law in Maharashtra doesn't permit a society to charge beyond ₹25,000. Another ₹500-650 can at most be charged for change of name in the share certificate."

Ashoo Gupta, partner at law firm Shardul Amarchand Mangaldas, says under the Delhi Cooperative Societies Act, 2003, society membership carries a transfer fee of ₹500, plus some amount chargeable as share money and admission fee. She adds the courts in the National. Capital have deemed a payment of 10,000, charged by some societies, as reasonable.

Anshul Gupta, managing partner, ANG Partners, Advocates & Solicitors, cites a January 2019 notification by the Registrar of Cooperative Societies, Delhi, that directs all residential cooperative societies not to charge any "entry fee" from persons taking possession of flats or plots.