HC bars CIDCO from levying transfer fee on Navi Mumbai societies with pre-1990 leases lacking such a clause

The Bombay High Court has delivered an important ruling for flat owners in Navi Mumbai's housing societies. The court said CIDCO cannot demand flat transfer fees from societies whose land leases were executed before 8 February 1990 and whose original agreements contained no condition for such a fee. The ruling curbs CIDCO's power to impose a financial burden on older lease agreements on the strength of later rules.

However, the relief will not reach every society automatically. Whether a society benefits will depend on the terms and dates of its original agreement.

CIDCO levies a fee when ownership or membership rights in a Navi Mumbai housing society flat pass from one person to another. But the original lease agreements of some older societies had no condition requiring CIDCO's permission for a flat transfer or payment of a transfer fee. The question before the High Court was whether the rules could be changed later to apply the fee to older agreements as well. A bench of Justice Bharati Dangre and Justice Manjusha Deshpande delivered the verdict.

The dispute began with the Manmandir Co-operative Housing Society in Nerul. CIDCO's estate officer had written to the society seeking Rs 24.58 lakh for the transfer of 27 flats. The society claimed that its original lease agreement had no condition requiring such a fee, and moved the court. The Surya Co-operative Housing Society in Vashi and the Navi Mumbai Co-operative Housing Federation also filed petitions in the same matter. Senior advocate Gayatri Singh appeared for the petitioners.

The New Bombay Disposal of Lands Regulations, 1975, were amended on 8 February 1990. Provisions such as obtaining approval for flat transfers and paying a transfer fee were added in this amendment. The petitioners argued that these rules could not be applied retrospectively to alter lease agreements and their terms made before the amendment. They contended that a financial liability absent from the original agreement should not be imposed later.

CIDCO opposed the petitions. It argued that the land had been given to the societies at concessional rates and that the fee provision was made to bring flat transfers within the rules. CIDCO also said the amendment merely clarified the rules that existed before it.

The High Court did not accept CIDCO's argument. It said the 1990 amendment, which made permission and payment of a fee mandatory for transfers, was a substantive provision and could not be treated as merely clarificatory. The court concluded that where the original lease agreement had no transfer fee condition, a new financial liability could not be imposed on older agreements on the basis of later rules.

The question now is whether all 2,528 housing societies in Navi Mumbai will get relief. The answer is that they will not get it automatically. The court's ruling is confined to the two societies concerned, Manmandir and Surya. Other societies wanting the benefit will have to check the date of their lease agreement, its original terms and the provisions relating to transfer fees. The ruling is thus significant for older societies, but each society's eligibility will be decided separately.