My query relates to issue of share certificate and transfer fee receivable from members.
Ours is a cooperative housing society registered in the state of Maharashtra. Society has adopted 2014 Bylaws.
Query No.1: The fact are as follows:
- Mr. A was the original buyer/allottee of the flat from the builder.
- Therefore, his name appeared in Form “A” submitted along-with the application for registration of the society.
- During the period after submission of Form A by the builder but before the society was registered, Mr A sold his flat to Mr. B.
- The society, after being formed, received the “I” and “j” Registers from the builder, which had Mr. A as the member, even though the flat was sold before the date of registration of the society.
- On society’s record, Mr.A’s name still appears in “I” Register as the same was never updated later on, even though the bills were raised in the name of Mr. B.
- Society has still not issued/printed any share certificate for some of the members, which includes the flat sold by Mr.A to Mr. B.
- Mr. B has now turned as defaulter and society has initiated recovery proceedings against him.
- Society is now required to attach copy of share certificate standing in the name of Mr. B along-with the documents to be submitted to registrar.
The society wish to be advised on –
- a) Whether it is proper for the society to issue a new share certificate directly in the name of Mr B based on the documents on record, after passing necessary resolution in the managing committee meeting or
- b) Whether the society should first print/issue share certificate in the name of Mr.A whose name appeared in ‘I” Register and endorse it in the name of Mr. B , after passing necessary resolution in the managing committee meeting. or
- c) Is there any other option?
Just as an academical query, could you please guide on what happens to transfer fee. Is the incoming Mr.B is liable to pay any transfer fee to the society, as he was not a signatory at the time of making an application to the registrar for registration of society.
I C Naik
A flat purchaser who has signed application for registration of Housing Society is one of the promoters of the Society and he becomes a member upon the Registrar issuing the registration certificate. [Section 10: A certificate of registration signed by the Registrar, shall be conclusive evidence that the society therein mentioned, is duly registered, unless it is proved that the registration of the society has been cancelled.] Entering member’s name in the register/list in forms J & I is a procedural formality and it does not decide the status of a person. I the case before us “A” is a member of the Society. About membership Rule 19 is also needed to be complied:
“No person shall be admitted as a member of a society unless,—
(i) he has applied in writing in the form laid down by the society or in the form specified by the Registrar, if any, for membership;
(ii) his application is approved by the committee of the society in pursuance of the powers conferred on it in that behalf and subject to such resolution as the general body of members may in pursuance of the powers conferred on it in that behalf from time to time pass”
The builder as a chief promoter has failed to get the application form signed by the flat purchaser as prescribed in the registered bye laws. This is also a procedural flaw and it does not affect the status of A as a member. The Society started issuing maintenance bill in the name of B without admitting him to membership is a serious legal flaw and not just procedural flaw. The payments made by B are deemed to have been paid on behalf A as he was liable to pay the same.
Section 29(2)of the MCS Act 1960 is also to be com lied which provides ; “A member shall not transfer any share held by him or his interest in the capital or property of any society, or any part thereof, unless–(a) he has held such share or interest for not less than one year;
So the conclusion that A is a member of the Society and not B. The remedy is A/B jointly applies to the Society to transfer the shares and interest in the property from A to B and take all steps required to give effect to the transfer.
If A&B cannot reach an understanding as aforesaid the Society should pursue the expulsion procedure in respect of A‘s membership and acquire the flat to dispose of and adjust society dues including the transfer fees. The Society may advisedly notify its intention to dispose of the flat through advertisement in two newspapers inviting objections or claims.
Transfer fee is payable by the transferor and not the transferee.