CHENNAI: The Madras High Court has ruled that collection of transfer fees by residential flat owners association from individual flat owners, whenever a flat changes hands or is sold, is illegal and impermissible. The court also said coercive action by flat owners’ association in this regard is liable for prosecution.
The ruling was given by Justice SM Subramaniam while dismissing a petition filed by a flat owners’ association challenging an order of the registration department official concerned to return the transfer fee collected from a flat owner.
“The apartment owners’ association has no role to play either in the purchase or transfer of flats. It is the property right conferred on the owner to sell or transfer his flat. The association cannot prevent any owner who is empowered to sell, settle, gift, will or transfer property. It is a Constitutional right which cannot be infringed,” the judge said in the order.
The petition was filed by Ankur Grand Owners’ Association, EVR Periyar Road, Kilpauk, in Chennai, challenging the 2016 order of the district registrar (admin) cancelling the transfer fund collection and directing refund to a purchaser.
The association had been collecting Rs 25 per sqft as corpus fund from flat owners and raised it to Rs 40 per sqft in 2010. A year later, it was enhanced to Rs 50 per sqft or 1% of the sale value of the flat. Roshini Kiran Kumar Davey purchased a flat and paid a transfer fee of Rs 1.47 lakh, but another purchaser, Ashish P Davey refused to pay the transfer fee and took up the matter with the concerned authorities of the registration department.
The district registrar declared clause - 8 of the bye-laws of the petitioner association null and void and directed to refund the transfer fee to Roshini. Challenging the order, the association moved to the high court.
The judge upheld the order of the district registrar as it is in consonance with the provisions of the Act and rules and there is ‘no infirmity or perversity’ as such. Justice Subramaniam directed the association to refund the transfer fee to Roshini within four weeks.