Today we are discussing very important issue of transfer of shares in a society when a seller is not traceable and when Owner is not traceable.

What is the difference between the two?

Before going to the core issue let us first learn definition of the term “member” under the Maharashtra Co-operative Society Act 1960 and the Bye-laws.

Bye-Laws 3 (xxiv)

“Member” means a person joining in an application for the Registration of a Cooperative Housing Society which is subsequently registered, or a person duly admitted to Membership of a Society after Registration and who holds the right, title and interest in the property individually or jointly;

Share Capital:

  1. a.) A Share Certificate, prescribed in bye-laws, bearing distinctive number and indicating the name of the Member, the number of shares issued and the value paid there on, shall be issued by the Society to every Member for the shares subscribed by him, within a period of six months of the allotment of the shares.

Conditions of Membership:

19.

An individual / applicant who is eligible to be the Member and who has applied for Membership of the Society in the prescribed form, may admitted as Member by the Committee on complying with the following conditions :-

i. applicant has fully tendered the value of at least Ten shares of the Society, along with his Application for Membership;

ii. applicant has paid the Entrance Fee of Rs. 100/-, along with the Application for Membership;

iii. applicant has submitted the application as prescribed, of the particulars in regard to any house, plot or flat owned by him or any of the Members of his family, anywhere in the area of operation of the Society;

iv. applicant has submitted undertaking in the prescribed form to the effect that he shall use the flat / unit for the purpose for which it was purchased by him;

v. applicant has furnished an undertaking in the prescribed form, if he / she has no independent source of income;

vi. applicant has submitted, along with the application for Membership of the Society, a certified copy of the agreement, duly stamped and registered entered into by him / her/ them with the Promoter Builder or Transferor under Section 4 of the Maharashtra Ownership of Flats Act;applicant has furnished such other undertakings/declarations, in the prescribed forms as are required under any law for the time being in force and such other information as is required under the Bye-laws of the Society along with the application for Membership.

viii. In case of Societies registered under the jurisdiction of special planning Authority like CIDCO / MHADA / SRA / MMRDA etc. the applicant should be eligible person as per the provision of respective Act and the directives of the Govt. / the Planning Authorities, if any.

Note : The conditions at (iii), (iv), (v), and (vii) above shall not be applicable to the Promoter Builder, applying for Membership of the Society, in respect of the unsold flats.

  1. An Individual, a Firm, a Company or a Body Corporate, registered under any Law for the time being in force, who/ which is eligible to be an Associate Member and who/which shall apply through Member in the prescribed form for such Membership, along with the entrance fee of Rs. 100/-, may be admitted as Associate Member by the Committee

A Firm, Company or any other Body Corporate, registered under any law for the time being in force, which is eligible to be a Member of the Society and has made an application for Membership of the Society in the prescribed form may be admitted as a Member by the Committee of the Society on complying with the following conditions :-

  1. applicant has sent, along with application for Membership of the Society, a certified copy of the agreement duly stamped entered into by it, with the Promoter(Builder) or transferor under Section 4 of the Ownership Flats Act.1963,with certified copy of resolution of the firm or company as the case may, authorizing to sign the application.
  2. applicant has paid, along with application for Membership, full value of at least 10 shares and entrance fee of Rs. 100/-.

iii. applicant has complied with the conditions mentioned in the notifications, issued by the State Government, from time to time, under the Second Proviso to Section 22 of the Act.

  1. applicant has furnished the undertakings / declarations in the prescribed forms required under any law for the time being in force along with the application for Membership.

Note : The conditions at (i) and (iii) shall not be applicable to the firm/ company of the Promoter Builder, applying for Membership of the Society in respect of the unsold flats

WHAT HAPPENS WHEN SELLER IS UNTRACEABLE?

Seller is untraceable means the original owner has signed the Agreement, but other documents required hereinabove are not signed, and Agreement is unregistered.

In such case the buyer has to

  1. File a missing complaint that is a FIR;
  2. Give public notice that seller has entered into an Agreement and is not traceable;
  3. approach court and obtain order from court that the seller is dead.

Thereupon shall apply for membership. If the documents are in order and there are no other claims Society may proceed to transfer the shares.

In next eventuality

WHEN THE OWNER IS NOT TRACEABLE:

It means A owner of shares and flat is not traceable. Flat is vacant or occupied. In such case if any third-party alien to the Owner sells of claims Society may refuse to transfer the shares. It would be very difficult for society to transfer in absence of Magistrate order that the owner is dead.

Here also the claimant has to follow entire process of declaring owner  dead has to be followed.

How one could say that X is owner? Share Certificate is in X name. He has signed Conveyance and maintenance is paid till X was physically present. But after 30 years Y applies for membership and is rejected.

Is Society duty bound to admit Y ?

WHAT ARE RIGHTS OF SOCIETY.

Dealing with limited issue of non availability of original member under bye-law No 34 :  “society, can however, the committee is not able to decide as to the person who is the heir/legal representative of the deceased Member or the claimants do not come to the agreement, as to who should become the Member of the Society, the Committee shall call upon them to produce succession certificate from the Competent Court. If, however, there is no claimant, the shares and interest of the deceased Member in the capital/property of the Society shall vest in the Society.”

No outsider or third party who is neither nominee nor holding probate or succession certificate can claim the ownership.

In support of the above contention let us see view of Bombay High Court:

In Bandra Owners Court Co-op Housing Society vs Div Joint Registrar WP No 1011 of 2010

Merely because someone has claimed membership, a Society is not under obligation to grant the same. The lawful occupation, their rights, title and interest in the property, permissible transfer of shares and/or property and/or interest as per the byelaws and all related aspects, just cannot be overlooked by the concerned parties, including the Society, as well as, the Registrar/Authorities

Summary:

The society is not wrong to deny membership without proper title; the buyer must first resolve the title issue legally before the society can admit them as a member, as per cooperative laws and bye-laws

Shruti Desai

8th January 2026