In a relief to older cooperative housing societies in Navi Mumbai, the has ruled that Cidco cannot demand transfer charges from flat owners in societies whose land lease deeds were executed before February 8, 1990, if the original agreements did not provide for such charges.
The ruling means cannot use a rule introduced in 1990 to impose a new financial obligation on societies whose leases were signed before the amendment came into force. However, the relief granted by the court is limited to two societies — Manmandir Cooperative Housing Society in Nerul and Surya Cooperative Housing Society in Vashi — and does not automatically extend to all 2,528 societies represented by the Cooperative Housing Federation.
A division bench of Justices Bharati Dangre and Manjusha Deshpande delivered the judgement on September 29, while hearing a petition filed by the federation and the two housing societies.
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Dispute centres on Cidco’s transfer charges
Transfer charges are fees that Cidco demands when a flat or the associated membership rights in a cooperative housing society are transferred from one owner to another. The dispute arose over whether Cidco could collect these charges from societies whose original land lease agreements did not require flat owners to obtain its permission or pay a fee when transferring their flats.
The case began after Cidco’s estate officer demanded ₹24.58 lakh from Manmandir CHS for the transfer of 27 flats in a letter dated October 26, 2016. The society challenged the demand, arguing that its original agreements with Cidco contained no condition requiring such payments.
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Petitioners oppose retrospective application of 1990 amendment
Appearing for the petitioners, senior advocate Gayatri Singh argued that Cidco could not introduce fresh financial obligations through a subsequent amendment when the original allotment letters, agreements to lease and did not impose such restrictions on flat owners.
The amendment to the New Bombay Disposal of Lands Regulations, 1975, came into effect on February 8, 1990, and introduced provisions requiring approval and payment of transfer charges in connection with the transfer of flats. The petitioners argued that these provisions could not be applied retrospectively — that is, used to impose new obligations on transactions or agreements governed by rules that existed before the amendment.
Cidco opposed the petition, arguing that the land had been allotted to housing societies at concessional rates, rather than at competitive market prices or after charging a premium. It said transfer charges were introduced to regulate transfers when original members sold their flats and shares to third parties.
Senior advocate GS Hegde, representing Cidco, also argued that the amendment merely clarified the existing regulations and did not conflict with the terms of the lease deeds or agreements.
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HC rejects Cidco’s clarification argument
The bench rejected this argument, holding that the amendment introduced a substantive provision by requiring approval and payment of . It could not, therefore, be treated as a mere clarification and applied retrospectively to impose a financial liability that was absent from the original agreements.
The court held that where the lease deeds did not contain a condition requiring Cidco’s permission or payment of transfer charges, the corporation could not subsequently impose such a requirement on the societies.
As the lease deeds of Manmandir and Surya CHSs predated February 8, 1990, the court ruled that Cidco could not demand transfer charges from their members. However, the bench declined to extend the same relief to the federation’s other 2,528 member societies because their lease deed dates were not available on record. The applicability of the ruling to other societies will therefore depend on their individual lease deeds and the relevant terms.