The amendment to Section 38 of the Karnataka Co-Operative Societies Act does not apply retroactively, preserving the legal status and rights of members in Tenant Co-Operative Housing Societies established before the amendment.

ORDER :

1. The captioned petition is filed by the petitioner/Society a registered tenant/Co-Partnership Housing Society under the KARNATAKA CO-OPERATIVE SOCIETIES ACT , 1959 (for short "The Act") challenging the demand notice issued by respondent/BBMP whereby the Society is called upon to pay differential property tax by treating the members as tenants solely on the ground that the Society has not executed conveyance deeds in their favour.

2. The facts leading to the case are as under:

Petitioner/Society is formed and registered in the year 1970. Petitioner/Society acquired lands and after securing conversion order and by availing loan from HUDCO constructed the residential apartments consisting of multiple residential units (flats) which were allotted to its members. Society claims that the number of flats corresponds to the number of members and each member was issued possession certificate and continues to be in exclusive possession of their respective units. Therefore, Society asserts that respondent/BBMP has been collecting property tax from the Society in respect of residential building eversince. The impugned demand notice issued by BBMP seeks to retrospectively treat the members as tenants of the Society and therefore, the impugned demand notice is issued demanding additional tax by invoking amended proviso to Section 38 of the Act.

3. Heard the learned counsel for the petitioner and the learned counsel appearing for respondent/BBMP and the learned AGA appearing for respondent No.2

4. It is not in dispute that the petitioner/Society was registered in 1970 and lands were secured by the Society for construction of apartments under two sale deeds dated 29.3.1971 and 16.8.1971. The Society by availing loan from HUDCO constructed the apartments. Prior to 2001 amendment to Section 38 of the Act, there was no embargo on members having a transferable interest even without the registered conveyance provided the allotment was made in accordance with the Bye-laws. On examining the records, more particularly, Section 38 of the Act, it is clearly evident that there is no legal bar on the constitution of Tenant Co-Partnership Housing Society before 2001.

5. Therefore, in Karnataka also the Tenant Co-partnership housing societies are recognized as legitimate model of co-operative ownerships where land and building are held in the name of the Society and the members are allotted specific units for exclusive occupation. Such societies function under Bye-laws approved by the Registrar of Co-Operative Societies. Allotments are made pursuant to resolutions and possession certificates and members enjoy long term, heritable and in many cases transferable interest in their allotted plots.

6. The additional documents placed on record by the petitioner/Society disclose several crucial aspects relevant to the present case. Firstly, it is evident that the Society does not collect any form of rent from the flat owners, which strongly indicates that the nature of the transaction between the Society and its members is not that of a landlord-tenant relationship. It is further significant to note that the Society has produced a demand notice issued to one of the flat owners for the calendar year 2025. A careful perusal of the breakup of charges mentioned in the said receipt reveals that the Society is merely collecting amounts under various heads such as property tax, overhead charges, water charges, and other miscella