Quick Summary: A cooperative housing society in Mumbai refused to let a new buyer join because the previous owner hadn't paid their bills. The court agreed with the society, saying the new buyer must pay the bills first.
Tanvi’s Diamoda Cooperative Housing Society in Mumbai faced a tricky situation. Mrs. Saroj Mehta, a member, didn’t pay her maintenance fees for a long time. The society tried to get her to pay, but she didn’t. Eventually, the bank took over her property because of her unpaid debts and sold it to T&M Services Consulting Pvt. Ltd. However, the sale happened without getting a "no objection" letter from the society.
When T&M Services asked to join the society, Tanvi's Diamoda Cooperative Housing Society said no. They insisted that the application wouldn’t be processed until all past bills were paid. The society informed T&M Services of this decision within the legal ninety-day period, as required by the Maharashtra Cooperative Societies Act.
"Membership could not be granted unless the outstanding bills of the earlier member were paid."
T&M Services didn’t agree and filed an appeal. At first, the appeal was successful, but Tanvi's Diamoda Cooperative Housing Society challenged this decision. The case went up to the High Court, where Judge Amit Borkar had to decide if the society’s refusal was legal.
The court sided with the society. Judge Amit Borkar emphasized that according to Section 154B-7, no transfer of membership is valid unless all bills are paid. The law aims to protect the society’s financial health, ensuring all members contribute to shared expenses.
"The law protects the society... ensuring that the financial structure of the society is not disturbed by transfers that leave unpaid bills behind."
Even though T&M Services bought the property through an auction, the court stated that they still needed to clear the bills to gain membership. The court clarified that buying the property at an auction doesn’t free them from this responsibility.
The court canceled earlier judgments that favored T&M Services and restored Tanvi's Diamoda Cooperative Housing Society’s original decision. T&M Services can become a member, but only after paying the outstanding bills.
This case highlights the importance of clearing all bills when acquiring property in a cooperative housing society. The court’s decision reinforces that societies have the right to ensure financial stability by insisting on bills being paid before transferring membership.
