Recover Transfer Fees from Housing Societies

If any Co-operative Housing Societies in West Bengal gains any transfer fees illegally from an individual who intends to buy apartments or flats or wants to sell the apartment or flat to another third person then they are liable to refund the amount to the individual within a specific period which is mentioned by the court of law. There is no bar for any member to donate to a Co-operative Housing Society. However, if the Co-operative Housing Society is gaining any amount from any member as transfer fees, then they should return the same.

While the earlier Co-operative Societies Acts in West Bengal did not specifically have any provision debarring the transfer fees, under the West Bengal Co-operative Societies Act, 2006 read with the 2011 Rules, the provision for transfer fees has been done with. It should also be pointed out that law in itself is dynamic and these rules may further change or alter in the future. However, as the law stands today, no housing societies can seek transfer fees for change of membership.

Earlier, the government had released a notification in the year 2003 which restricted the transfer fees or donations at 0.5% of the sale value which any member is bound to pay to the Co-operative Housing Society during transfer. However, this Rule under 142(2) was subsequently removed from the WBCS 2011 Rules. Hence, today if any housing society seeks a transfer fee, then one can recover transfer fees obtained illegally by such co-operative housing societies in West Bengal.

Any Co-operative Society can take funds only according to the laws of the state or if there are any other laws to collect funds which are necessary to collect or compulsory or as stated by the competent authority and which is legal then they can collect funds from the members of the society. The Co-operative Society cannot make any profits from the members regarding the transfer fees or donation and if anyone makes such payment then it should be voluntary without any compulsion and coercion and tax must be paid on it.

Recover of Transfer Fees from Housing Societies

West Bengal Co-operative Societies Act, 2006 provides different sections such as Sections 32, 49 and 92 to 94 which gives power to the State Government and Registrar to superintendence over the activities and actions of the Co-operative Housing Societies and it also mentions that if any Co-operative Housing Society illegally collects any money from its members as a condition of transfer of membership in violation of the rules framed by the government under different Acts and Rules then they have the power to pass necessary order to the Co-operative Society to refund the amount within the specified period.

Any person or individual who is deprived in this case then they can write a simple notice to the Co-operative demanding a refund of the transfer fees which were illegally obtained by the Co-operative Society if they are unable to recover the amount, they can also write a warning letter to the Co-operative Society stating that he or she will file a suit against the Society and if they fail to comply with the letter then it will lead to Registrar order to recover the money. And even if the Co-operative fails to comply with the directions of the Registrar then the aggrieved party or the member of the Society who is deprived can approach the State Government Court to recover the money.

Case Law Analysis:

Dover Co-Operative Housing vs State Of West Bengal And Ors (2007)3CALLT522(HC):

In this case, the court held that:

“In our view, Rule 142(2) prohibits the society from accepting any amount as transfer fees unless sanctioned by the notification and that too, to the extent indicated in the notification. Therefore, in the year 1998, the society was not authorised to accept any amount as transfer fees as in the absence of any notification, there was no sanction for such acceptance.”

“We, therefore, dispose of the appeal being FMA No. 828 of 2Q05 by recasting the relief granted by the learned Single Judge as indicated above by directing that if the entire amount is not paid within one month from today, the State Government will take necessary step for the realization of the amount by the appointment of an administrator over the affairs of the Society by dissolving the existing Board with the authority to realize the money from the assets of the society as indicated above.”

Bharatiya Bhavan Co-Operative vs Smt. Krishna H. Bajaj & Ors on 17 February 2010 Bombay High Court held:

“The Respondent challenged the receipt of the amount representing 3% of the consideration amount towards transfer fees as illegal demand for transfer fees having been paid under coercion in the guise and name of the building repair and maintenance fund for the first time by her Advocate’s notice dated 11th August 1994. Under that notice, she demanded repayment of the amount paid to the Society with interest at 21% p.a thereon along with other amounts upon certain bills for repairs raised upon the Society. That having not been repaid by the Society the Respondent No.1 filed a dispute before the First Co-operative Court at Mumbai being C.C.No.1/1222/94. The learned Co-operative Court partly allowed the dispute for a refund of the amount paid to the Society under coercion with interest at 12% p.a thereon.”

The above case declares that the Respondent challenged the Co-operative Society and demanded the transfer fees back along with interest from the Society and the learned Co-operative Court directed the Co-operative to refund the amount paid by her as transfer fees along with interest at the rate of 12% p.a. since this transaction was made under coercion.

Recover Transfer Fees Illegally Obtained

Overall, under the current WBCS Act 2006 read with the WBCS Rules 2011 (as amended up to date), transfer fees are illegal, and if you have paid the same, you can complain to the Registrar to recover transfer fees illegally obtained by the housing society. However, it is better to consult an expert property lawyer before proceeding in such cases.