Case Note & Summary
The petitioner, Bharatiya Bhavan Cooperative Housing Society Limited, challenged the orders of the First Cooperative Court and the Maharashtra State Cooperative Appellate Court directing refund of an amount paid by respondent No.1, Smt. Krishna H. Bajaj, as transfer fees. The respondent had purchased shares and premises from Mrs. Preeti Umesh Khimji in March 1992 for Rs.3.21 Crores. The agreement required both parties to contribute 3% of the consideration towards transfer fees. The respondent paid this amount to the society, which was credited to the Repair & Maintenance Fund, and was subsequently granted membership and share certificates between April and July 1992. In August 1994, the respondent, through her advocate, challenged the payment as illegal and made under coercion, demanding refund with interest. The society refused, leading to a dispute before the Cooperative Court, which partly allowed the claim for refund with 12% interest. The society's appeal to the Appellate Court was dismissed. The High Court, in this writ petition, upheld the lower courts' findings, holding that the demand for transfer fees was illegal and the payment was made under coercion, as the society had withheld membership transfer until payment. The court dismissed the petition, affirming the refund with interest.
Headnote
A) Cooperative Law - Transfer Fees - Coercion - Section 22 Maharashtra Cooperative Societies Act, 1960 - The issue pertained to whether a payment of 3% of the sale consideration made by a transferee-member to the society as transfer fees, under the guise of a repair fund contribution, was illegal and made under coercion. The court held that the demand was illegal and the payment was made under coercion, as the society refused to transfer membership without such payment. The transferee was entitled to refund with interest at 12% per annum from the date of payment. (Paras 1-5) B) Cooperative Law - Refund - Interest - Section 22 Maharashtra Cooperative Societies Act, 1960 - The court upheld the orders of the Cooperative Court and the Appellate Court directing refund of the amount paid as transfer fees with interest at 12% p.a., as the payment was made under coercion and the society had no authority to demand such fees. (Paras 3-5)
Issue of Consideration
Whether the payment of 3% of the consideration amount as transfer fees, disguised as a contribution to the Repair & Maintenance Fund, was made under coercion and is recoverable with interest.
Final Decision
The High Court dismissed the writ petition, upholding the orders of the Cooperative Court and the Appellate Court directing the Society to refund the amount of Rs. 9,63,000 (3% of Rs. 3.21 Crores) with interest at 12% per annum from the date of payment.
Law Points
- Coercion
- Transfer fees
- Cooperative housing society
- Refund with interest
- Section 22 Maharashtra Cooperative Societies Act
- 1960
