Can a society refuse a flat transfer over a dispute about the adjoining open space? Bombay HC in Punam CHS v. Alok Agarwal, decoded

A flat in your building has just changed hands. The deed is registered and the incoming purchaser has applied for membership. But the society has a running quarrel with that flat’s owners over the garden or open space next to it, and someone at the committee table says, “Hold the transfer until this is settled.” It sounds prudent. On the facts before it, the Bombay High Court found that it does not hold up.

The case in brief

Punam Co-operative Housing Society Ltd. v. Alok Agarwal & Ors. was Writ Petition No. 1480 of 2010 in the Bombay High Court, decided by G.S. Kulkarni, J. on 26 July 2019 (2019 (5) ABR 781). Respondent 1 bought Flat No. 1, with an annexe, garage and stilt parking, in the society’s building “Punam” at Napean Sea Road, Mumbai (para 5), under a registered Deed of Transfer dated 30.5.2007. The society claimed that the open space and garden adjoining the flat were society premises. Respondent 1 applied for transfer of the shares on 4.3.2008 (para 9). The Secretary rejected the application on 31.5.2008, citing the open-space claim and alleged strong-arm tactics (paras 9 and 20). Respondent 1 approached the Deputy Registrar, who on 10.10.2008 allowed the application under section 23(2) and directed the transfer (paras 11 and 12). The society’s revision under section 154 was dismissed (para 13), and it filed this writ petition.

What the court decided

Faced with concurrent findings below, the court said it was not exercising appellate jurisdiction and would look only for patent illegality or perversity (para 19). The society had not disputed execution of the Deed of Transfer, nor asserted that the transfer application failed to comply with its bye-laws, the Act or the Rules. The reasons in the rejection letter were extraneous to the requirements of section 23 (para 22). A claim that the area in the purchaser’s possession is excessive, or partly the society’s, is a purely civil dispute; the remedy was a civil suit (para 23). Nor can a society, on a membership application, investigate the transferor’s title in a way that assails the registered deed (para 28). Relying on Harish Commercial Premises (para 29), RNA Classics (para 30) and Apna Sahakari Bank (para 31), the court held at para 32:

> Once there was a registered agreement and it was not declared to be illegal by competent court the society cannot reject the membership application and refuse to transfer the shares.

The condition matters: the court spoke of a society asserting rights over premises adjoining a flat, against a person who had applied properly and in accordance with the rules (para 32). A separate “no reasons” challenge failed: the orders did record reasons and the society identified no prejudice (paras 33 and 34). The petition was rejected, subject to those observations (para 37), with no order as to costs (para 39).

Why it matters for your society

Section 23(1) says no society shall, without sufficient cause, refuse admission to a duly qualified person. Bye-law 39(b) goes further and confines refusal to non-compliance with the Act, the Rules, the bye-laws, any other law, or an order issued by the Government in exercise of its statutory powers. Holding a transfer hostage to a grievance that is extraneous to the section 23 enquiry fits neither. The court called that dispute totally extraneous to section 23 (para 35). Getting this wrong is costly: this society refused in 2008 and lost before the Deputy Registrar, in revision and in the High Court, the ownership question still unresolved.

What your committee should do

1. 1Treat the transfer as its own file. Test it against bye-law 38(e) and nothing else: the application with the share certificate, the transferee’s membership application, the transferor’s resignation, the registered and stamped agreement, valid reasons, the transferor’s undertaking on liabilities, the prescribed fees and premium, any no-objection certificate or sanction required under another law or by a financing agency, and the undertakings and declarations prescribed by the bye-laws.
2. 2Do not insist on a No Objection Certificate. Bye-law 38(d) says none is required; if either party asks for one, the Committee considers it on merit within one month.
3. 3Send the open-space or parking dispute where it belongs, to a civil suit or a dispute before the Co-operative Court. That is what the court pointed to in para 23, and para 38 expressly keeps those issues open for the pending proceedings.
4. 4Have the Secretary flag any shortcoming within 15 days (bye-law 63(b)) and dispose of the application within three months (bye-law 63(e)).
5. 5Mind the deemed-admission trap. If no decision is communicated within three months, the transferee is deemed admitted (bye-laws 39(c) and 63(g)). Where the Registrar has forwarded an application, section 23(1A) deems membership after sixty days of silence.
6. 6If you must refuse, refuse only for non-compliance, record the reasons in the minutes (bye-law 63(f)), and communicate them within 15 days (bye-law 63(g)). The purchaser has an appeal to the Registrar within sixty days, whose decision is final (sections 23(2) and 23(3)).
7. 7Once admitted, the member exercises rights on receipt of the society’s letter or the Registrar’s order (bye-law 40). Say in your reply that admission is without prejudice to the society’s separate claim (para 38).

Limits of this ruling

This is a single-judge writ ruling on its own facts: a registered deed stood undisturbed and no non-compliance with the Act, Rules or bye-laws was alleged (paras 22 and 32). It does not decide who owns the open space; para 38 kept that expressly open, with the Co-operative Court case and a High Court suit still pending. It also does not say a society can never refuse: section 23(1) still turns on “sufficient cause”, and bye-law 39(b) still permits refusal for non-compliance. Finally, the admission procedure for housing societies has since moved into the new Chapter XI-B of the 2026 Rules (Rules 106C-4 to 106C-6, replacing the old Rule 19), though section 23 of the Act, which this ruling interprets, is unchanged.