Can a society refuse an auction buyer membership until undisputed old dues are paid? Bombay High Court in Tanvis Diamoda, decoded

A flat or gala in your society has been sold by a bank, or in a recovery sale. The buyer arrives with a sale certificate and a registered deed and asks to be admitted as a member. The ledger shows years of unpaid maintenance against the previous owner.

The committee must decide what it may lawfully insist on, and within what time, given that silence can become deemed membership under section 22(2). The Bombay High Court addressed exactly this in Tanvis Diamoda Co-operative Housing Society Ltd. v. State of Maharashtra, decided on 20 November 2025 by Amit Borkar, J.

The case in brief

Gala No. 103 belonged to Mrs. Saroj Mehta. Maintenance arrears stood at Rs 57,96,197 up to June 2012 (the figure the judgment records for that period) and were unpaid despite notices. Indian Overseas Bank took possession under SARFAESI, issued a sale certificate on 15 March 2021 and sold to Respondent No. 4 on 27 April 2021, without the society's no-objection certificate.

Respondent No. 4 applied for membership on 19 June 2021. On 15 September 2021, day 87 of the 90-day period, the society's advocate replied that membership needed the dues cleared. The buyer's section 22(2) appeal was allowed by the Deputy Registrar on 22 July 2022, the revision failed on 14 January 2025, and the society went to the High Court.

What the court decided

At paragraph 12 the court treated section 154B-7 as mandatory: where the amount payable is undisputed, the dues requirement is compulsory and protects the society's financial stability.

On SARFAESI, paragraphs 15, 24 and 25 hold that the statute does not exempt auction purchasers. It gives lawful title but does not extinguish the society's claim to dues; neither statute overrides the other. Paragraphs 14 and 16 explain that a transfer may be valid between the parties yet not effective in the society's records; the law does not compel the purchaser to pay, but the society need not record the transfer until dues are cleared.

The holding is tied to admitted dues. At paragraphs 19, 21, 22, 24 and 26 the court stressed that there was no dispute about the amount, that the dues were admitted, undisputed and certain, and that the buyer bought with full knowledge of the arrears and never disputed the quantum. It distinguished Brightland Co-operative Housing Society Ltd v. Divisional Joint Registrar, Co-operative Societies, 2025 SCC OnLine Bom 2795, which turned on uncertainty about the amount and prolonged inaction by the society. It accepted from Brightland that undisputed dues must be paid before membership, while disputed or uncertain dues must first be determined through section 91 or section 154B-29.

Paragraph 27 holds that deemed membership under section 22(2) operates only where the society takes no decision, and does not override the duty to pay dues that are certain and undisputed. Here the society had decided on day 87, and paragraph 28 found it acted reasonably. In the order (paras 29 to 32) the two orders below were set aside, the refusal communicated within the period prescribed by section 23(2) was restored, and the buyer was left at liberty to obtain membership on clearing the outstanding dues.

Why it matters for your society

Title alone does not oblige the committee to admit an auction or recovery-sale buyer. Where the old owner's dues are admitted and certain, the society may decline to record the transfer until they are paid, and deemed membership cannot bypass that.

What your committee should do

1. 1Put the dues beyond dispute in writing. Serve on the buyer a dated, itemised statement of account. The judgment turns on the dues being admitted and certain.
2. 2Diarise the deadline from the day the application arrives. Under B63 shortcomings are notified within 15 days and the application is disposed of within three months at most; B39(c) and B63 provide for deemed admission under section 22(2) if nothing is communicated.
3. 3Decide at a committee meeting and record reasons in the minutes (B63). B39(b) allows refusal only for non-compliance with the Act, Rules, bye-laws or other law or government order, so name the provision.
4. 4Communicate the decision with reasons within 15 days (B63), and inside the three months.
5. 5Do not treat a missing no-objection certificate as a ground. Under B38(d) a society NOC is not required to transfer shares and interest.
6. 6Rely on the society's charge on a present or past member's shares and interest (B74), with set-off under section 46.
7. 7Claim only lawful interest. B71 provides simple interest at 21 per cent per annum, or a lower general body rate; Rule 106C-12 of the Rules 2026 caps interest on defaulted charges at 12 per cent simple, fixed by the general body.
8. 8If the buyer does not pay, recover. B70(b) directs proceedings under section 101. Under Rule 106C-14 (section 154B-29), in force from 18 June 2026, the route is a direct application to the Registrar in Form Y-6 with a Rs 100 court fee, after written notice and resolutions of both the managing committee and the general body; a Form Y-7 certificate is enforceable as arrears of land revenue.
9. 9Ask for nothing beyond B38(e): transfer fee Rs 500, entrance fee Rs 100, premium within the Department of Co-operation circular limits, and no donation or contribution.

Limits of this ruling

This is a single-judge Bombay High Court decision on admitted dues. It does not decide disputed or uncertain dues, where Brightland and adjudication under section 91 or 154B-29 apply.

The society still cannot demand sums the bye-laws do not permit, such as a donation. Neither the 2014 bye-laws nor the Rules 2026 lay down any special procedure for an auction purchaser, and neither has a no-dues-certificate precondition for transfer.

The judgment predates the Rules 2026 (in force from 18 June 2026), which change the recovery route (Rule 106C-14) and cap interest at 12 per cent (Rule 106C-12) while leaving section 154B-7 untouched.