Maharashtra, India · property

Can a Housing Society Demand a Donation for Flat Transfer in Maharashtra?

Under Maharashtra law, a co-operative housing society cannot demand donations, welfare fees, or infrastructure corpus funds as a condition to transfer a flat. The state government strictly caps the transfer premium at ₹25,000, and courts treat compulsory donations as illegal extortion. If your society management committee is withholding your No Objection Certificate (NOC) or share transfer for money, you have immediate legal remedies to enforce compliance.

The Legal Transfer Premium Ceiling in Maharashtra

In Maharashtra, the law strictly prohibits co-operative housing societies from demanding arbitrary donations or development funds when a flat is sold or transferred. Under Section 79A of the Maharashtra Co-operative Societies Act, 1960 (MCS Act), the State Government issued a binding circular dated 9 August 2001 fixing the maximum transfer premium at ₹25,000 for societies in Municipal Corporation areas (such as Mumbai, Pune, Thane, and Navi Mumbai). Model Bye-Law No. 38 explicitly incorporates this restriction.

The Bombay High Court has repeatedly struck down attempts by societies to extract additional funds under clever monikers like 'voluntary donation,' 'welfare fund,' or 'amenity corpus.' In landmark rulings—including Alankar Sahkari CHS Ltd. and the 2025 decision in Tirthankar Darshan CHS Ltd. v. State of Maharashtra—the court confirmed that collecting amounts beyond ₹25,000 is an illegal camouflage. A housing society is not a commercial enterprise entitled to profit off outgoing or incoming flat owners.

Why General Body Resolutions Cannot Override State Directives

Managing committees often claim that the society's General Body passed a unanimous resolution authorising a donation of several lakh rupees for flat transfers. The Bombay High Court has settled this issue decisively: any society resolution or internal rule that violates a Section 79A government directive is ultra vires, void, and unenforceable. Neither a managing committee nor an Annual General Meeting has the power to legislate around statutory fee caps.

Furthermore, an NOC is not a weapon for extortion. Under Section 22 and Section 23 of the MCS Act, once the lawful transfer application, share certificate, and statutory fee of ₹25,000 (plus nominal membership entrance fees) are submitted, the society cannot refuse or delay membership. Withholding transfer documents to force a 'voluntary' donation is recognized by courts as payment made under economic duress, rendering the amount fully refundable with interest.

Remedies Against Unlawful Society Demands

If a housing society blocks your flat sale or refuses to endorse your share certificate, you do not have to succumb to their financial demands. Under Section 23(2) of the MCS Act, you can file an appeal directly before the Deputy Registrar of Co-operative Societies having jurisdiction over your ward or taluka. The Deputy Registrar has statutory authority to direct the society to admit you as a member and issue the required NOC without extra charges. If the society fails to decide within three months of application, deemed membership provisions can also be invoked.

Facing an aggressive managing committee during a stressful property purchase can feel intimidating, but the statutory framework is entirely on your side. You can use Caunsel to research relevant circulars, securely compile and track your paper trail in an organized case file, or consult an independent property lawyer to serve a legal notice to the committee.

Steps

• Demand all transfer fee claims in writing on official society letterhead, asking the secretary to specify the exact legal basis and breakdown of any donation or welfare charge.
• Tender formal compliance by submitting the transfer forms, registered sale agreement copies, and a cheque capped at ₹25,000 accompanied by a formal letter citing the Maharashtra Government Circular dated 9 August 2001.
• If forced to pay under tight closing deadlines, issue the payment explicitly marked 'Under Protest and Without Prejudice' across both the cheque and covering letter to prevent the society from claiming the payment was voluntary.
• File an appeal under Section 23 of the Maharashtra Co-operative Societies Act before the local Deputy Registrar of Co-operative Societies to compel membership admission and seek recovery of any extorted amounts.

Common mistakes

• Paying illegal donation amounts in cash or without obtaining an official stamped receipt clearly describing the ledger head.
• Signing an unconditional declaration or indemnity bond stating that your donation to the society is purely voluntary.
• Assuming an Annual General Meeting (AGM) resolution overrides Maharashtra government transfer directives.
• Delaying formal submission of the membership transfer dossier while engaging in informal verbal arguments with committee members.

Questions people ask

What is the legal maximum transfer fee a housing society can charge in Maharashtra?

The maximum transfer premium permitted by law in Municipal Corporation areas is ₹25,000, as fixed by the Maharashtra Government Circular dated 9 August 2001 under Section 79A of the MCS Act. In smaller municipal councils and rural areas, the prescribed cap is even lower.

Can the society reject my flat transfer if I refuse to pay a development fund or donation?

No. The Bombay High Court has ruled that societies cannot make donations a prerequisite for an NOC or membership transfer. Refusing to admit an eligible buyer who has paid the statutory ₹25,000 fee is illegal, and the Deputy Registrar can order immediate admission.

If I already paid a donation under pressure, can I get a refund?

Yes, provided you can demonstrate that the payment was made under duress or as a compulsory condition to release documents. In cases like Alankar Sahkari CHS, the Bombay High Court ordered societies to refund coerced donations with interest.

General information only, last updated 2026-10-16. Caunsel is not a law firm and does not practise law. AI answers and this guide are not legal advice. Verify filings, deadlines, and statutes with a licensed lawyer in Maharashtra, India.