Supreme Court Judgement on Non Occupancy Charges in Housing Societies
The Supreme Court judgement on non occupancy charges clarifies that housing societies can charge non occupancy fees only when a flat is rented out. These charges cannot exceed 10% of service charges excluding property tax, and cannot be arbitrary or excessive.
What Is the Supreme Court Judgement on Non Occupancy Charges?
The Supreme Court judgement on non occupancy clarifies when and how housing societies in India can collect additional charges from flat owners who rent out their apartments.
The Supreme Court and various High Courts, especially the Bombay High Court, have upheld that:
- Housing societies can charge non-occupancy fees when a flat is rented.
- These charges cannot exceed 10% of service charges.
- Property tax must be excluded while calculating this limit.
- Charges must follow the registered bylaws and state cooperative laws.
The intent behind the Supreme Court judgement on non occupancy charges is simple. Housing societies can recover reasonable administrative costs, but they cannot treat rented flats as a source of profit.
When Do Non-Occupancy Charges Apply in India?
A common area of confusion is applicability. The Supreme Court judgement on non occupancy charges makes this clearer when read along with the state cooperative bylaws.
Non-occupancy charges apply only when:
- The flat is let out to a tenant.
- The tenant is not a defined family member.
- The housing society’s registered bylaws permit such charges.
Non-occupancy charges do not apply when:
- The flat is vacant.
- The owner resides in the flat.
- A family member occupies the flat.
As per the Maharashtra Cooperative Societies Act bylaws, family includes:
- Husband or wife
- Father or mother
- Son or daughter
- Son-in-law or daughter-in-law
- Brother or sister
- Grandson or granddaughter
So if your family is staying in your apartment, the housing society cannot levy non-occupancy charges.
Read also: What is Occupancy Certificate?
What Is the 10% Limit Rule?
One of the most important parts of the Non occupancy charges Supreme Court judgement relates to the 10% cap.
The Bombay High Court upheld a government order stating that non-occupancy charges:
- Must not exceed 10% of service charges
- Must exclude property taxes
- Should be reasonable and uniform
The supreme court judgement on non occupancy charges supports this principle in spirit, reinforcing that housing societies cannot impose arbitrary or excessive fees.
For example, if monthly service charges are ₹5,000, the maximum non-occupancy charge should be ₹500. It cannot be ₹2,000 or ₹3,000 just because the flat is rented. This rule protects owners from financial exploitation while allowing housing societies to recover minor administrative costs.
Can Housing Societies Charge More Than 10% of the Service Charges?
In general practice, no. The Supreme Court judgement on non occupancy charges makes it clear that the housing societies cannot:
- Impose exorbitant penalties
- Discriminate against owners who rent out flats
- Create special charges outside the registered bylaws
If a housing society charges more than the permitted limit, owners have legal remedies. They can approach:
- The Registrar of Cooperative Societies
- Cooperative courts
- Appropriate legal forums
Maintenance policies must be fair, proportionate to flat size, and uniformly applied. A society cannot create one rule for owners and another for tenants.
Who Is Responsible for Paying Maintenance and NOC?
The registered owner remains primarily responsible. As per the Supreme Court judgement on non occupancy charges in society, even if a tenant occupies the flat:
- The owner must pay maintenance.
- The owner must pay non-occupancy charges, if applicable.
- The society deals legally with the owner, not the tenant.
It is common for owners to recover these charges from tenants through rental agreements. But legally, the housing society’s relationship is with the owner. Also, regular maintenance is mandatory. Whether the flat is rented, vacant, or self-occupied, common facility charges must be paid.
Are Non-Occupancy Charges Taxable?
An important clarification from the Supreme Court relates to taxation. Under the doctrine of mutuality, amounts collected by cooperative housing societies from members for maintenance and non-occupancy charges are generally not taxable as income.
The reasoning is simple. The housing society and its members are part of the same mutual entity. There is no profit motive. The supreme court judgement on non occupancy charges reinforces that such collections are part of mutual arrangements within a cooperative structure.
How Housing Societies Can Ensure Fair Implementation of this Rule?
Understanding the Supreme Court judgement on non occupancy charges is only step one. Implementation matters more. Here are practical steps for managing committees:
1. Follow Registered Bylaws
Ensure your bylaws clearly mention non-occupancy charges and align with state cooperative rules.
2. Maintain Transparency in Billing
Show service charges and non-occupancy charges separately in invoices.
3. Document Resolutions and Communication Properly
All decisions regarding non-occupancy charges should be passed through a formal Managing Committee resolution and recorded in meeting minutes. Share circulars or notices with residents explaining:
- Why the charge is applicable
- The calculation method (for example, 10% of service charges as per state norms)
- The effective date
Proper documentation protects the housing society in case of disputes and ensures consistency in implementation.
4. Avoid Arbitrary Penalties
Do not introduce “special tenant charges” beyond what is legally allowed.
5. Educate Residents
Many disputes arise from misunderstanding. Conduct short awareness sessions during AGMs.
A well-informed community is easier to manage and legally safer.
What Should Residents Do If Charges Are Unfair?
If you believe your housing society is violating the Supreme Court judgement on non occupancy charges, here are practical steps:
- Check your housing society’s registered bylaws.
- Review your maintenance bill calculation.
- Confirm whether property tax is excluded from the 10% calculation.
- Raise the issue in writing with the managing committee.
- Escalate to the Registrar of Cooperative Societies if unresolved.
Keeping written records is important. Most disputes are resolved when residents are informed about the legal position. Transparency reduces friction within the community.
Read also: Sample Complaint Letter Format to Registrar of Societie
How NoBrokerHood Supports Transparent Housing Society Billing
NoBrokerHood is a society management app that helps housing societies implement the Supreme Court judgement on non occupancy charges in a transparent and compliant manner through structured billing and documentation tools.
| Services Provided | How It Supports Compliance |
| Maintenance Billing Software | Apply non-occupancy charges as per the 10% rule and exclude property tax from calculations |
| Resident Database | Mark rented units to ensure charges apply only where applicable |
| Invoice Transparency | Show service charges and non-occupancy charges separately in bills |
| Accounting & Reports | Track collections and maintain clear financial records |
| Communication & Document Storage | Share bylaws, resolutions, and policy updates with residents |
This ensures fair calculation, proper documentation, and reduced disputes within the housing society.
All Solutions by NoBrokerHood:
FAQs
It allows housing societies to charge a fee when a flat is rented, but limits it to 10% of service charges, excluding property tax. Charges cannot be arbitrary or excessive.
No. If the flat is vacant and not rented out, non-occupancy charges do not apply under established court rulings.
No. If a defined family member occupies the flat, housing societies cannot levy non-occupancy charges as per the cooperative bylaws.
Legally, the registered owner is responsible for paying the housing society. The owner may recover the amount from the tenant privately.
You can raise the issue with the managing committee first. If unresolved, approach the Registrar of Cooperative Societies for redressal.