- 1 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF JUNE, 2026 PRESENT THE HON'BLE MR. JUSTICE D K SINGH AND THE HON'BLE MR. JUSTICE T.M.NADAF WRIT APPEAL NO. 1337 OF 2025 (LB-TAX) BETWEEN: 1. BRUHAT BANGALORE MAHANAGARA PALIKE BY ITS CHIEF COMMISSIONER CORPORATION OFFICE BUILDING BENGALURU-560002 …APPELLANT (BY SRI PRASHANTH CHANDRA S N, ADVOCATE) AND: 1. DATTAPRASAD CO-OPERATIVE HOUSING SOCIETY LIMITED 10TH MAIN, MALLESHWARAM BENGALURU-560055 REPRESENTED BY ITS CHIEF EXECUTIVE SMT. SHASHIREKHA K. MURTHY 2. ADDITIONAL CHIEF SECRETARY OFFICER URBAN DEVELOPMENT DEPARTMENT VIKASA SOUDHA, AMBEDKAR VEEDHI BENGALURU-560 001 …RESPONDENTS (BY SRI SATISHCHANDRA N D, ADVOCATE FOR R-1; SRI M N SUDEV HEGDE, AGA FOR R-2) ® Digitally signed by VASANTHA KUMARY B K Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE IMPUGNED ORDER DATED 02.07.2025 PASSED BY THE LEARNED SINGLE JUDGE IN WRIT PETITION NO.1690/2018 (LB-TAX) AND ETC. THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE D K SINGH and HON'BLE MR. JUSTICE T.M.NADAF ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE D K SINGH) I PREFACE: 1. The present intra Court appeal has been filed impugning the judgment and order dated 02.07.2025 passed by the learned Single Judge in W.P.No.1690/2018. 2. The parties are referred to as per their ranking before the writ Court for the sake of convenience. II FACTS OF THE CASE: 3. The petitioner, Dattaprasad Co-operative Housing Society Limited, is a registered Tenant/Co-partnership Housing Society under the Karnataka Co-operative Societies Act, 1959 (hereinafter referred to as 'the Act'). The Society was registered in the year 1970 and acquired lands under registered - 3 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 sale deeds dated 29.03.1971 and 16.08.1971 for the purpose of constructing residential apartments. For construction of the apartment complex, the petitioner/Society availed financial assistance from HUDCO and constructed multiple residential units/flats. 4. The flats so constructed were allotted to the members of the Society. According to the petitioner/Society, the number of flats corresponded to the number of members and each member was placed in exclusive possession of the allotted flat through possession certificates issued by the Society. Ever since the allotment, the members have been residing in and enjoying their respective flats. The petitioner has also been paying property tax in respect of the apartment complex, which was accepted by the municipal authorities for several decades. 5. Subsequently, the Bengaluru Mahanagara Palike, now Bruhat Bengaluru Mahanagara Palike (‘BBMP’) issued a demand notice dated 03.01.2002 seeking differential property tax. The demand was founded on the premise that, since no registered conveyance deeds had been executed by the petitioner in favour of the members, the members were to be treated as - 4 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 "tenants" of the Society. Proceeding on the said basis, BBMP invoked the amended proviso to Section 38 of the Act and sought to levy additional property tax. Challenging the consequential demand of differential property tax, the Society filed W.P.No.1690/2018 contending that its members were not tenants but allottees in a tenant co-partnership housing society, that they had acquired possessory and beneficial rights long prior to the 2001 amendment to Section 38 of the Act, and that the amendment could not be retrospectively applied to classify them as tenants merely because conveyance deeds had not been executed. 6. These facts gave rise to the principal question that whether the members of a tenant co-partnership housing society, who had been allotted flats and put in possession prior to the insertion of the proviso to Section 38 of the Act, could be treated as tenants for the purpose of property tax merely on account of non-execution of registered conveyance deeds. III FINDINGS OF THE LEARNED SINGLE JUDGE: 7. The learned Single Judge recorded the following findings while allowing W.P.No.1690/2018: - 5 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 i. The petitioner/Society is a valid Tenant Co-partnership Housing Society and there was no legal prohibition under Section 38 of the Act, prior to the 2001 amendment, for such societies to allot flats to members without executing registered conveyance deeds. ii. The relationship between the petitioner/Society and its members is not that of landlord and tenant. The petitioner/Society does not collect rent from the flat owners and merely recovers maintenance-related charges such as property tax, water charges, overhead expenses, etc. Therefore, the members cannot be treated as tenants. iii. The flats were constructed from contributions and share capital raised from members, and not from the Society's independent funds. The bye-laws also demonstrate that the members acquired rights in the flats through their financial contributions and shareholding. iv. The ownership rights substantially vest in the members. The learned Single Judge held that the Society had not retained beneficial ownership over the flats and that the members - 6 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 enjoyed rights in their respective flats through allotment, possession, and shareholding. v. The expression ‘tenant’ in a Tenant Co-partnership Housing Society is only a term of art in co-operative law and does not denote tenancy in the sense understood under the Transfer of Property Act or rent control legislation. Members occupy flats as co-owners within the co-operative framework and not as tenants. vi. The proviso inserted to Section 38 of the Act requiring compulsory registration of instruments transferring rights in immovable property applies only prospectively. vii. The 2001 amendment does not retrospectively affect vested rights or lawful possession already acquired by members before 01.04.2001. The members who were allotted flats and put in possession prior to the amendment cannot be treated as tenants or licensees merely because registered conveyance deeds were not executed. viii. A Division Bench in W.A. No. 3883/2003 had already recognized that the proviso to Section 38 of the Act operates - 7 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 prospectively, and even the State had conceded the same position. ix. Consequently, the BBMP's attempt to classify the members as tenants solely on the ground that registered conveyance deeds were absent was legally unsustainable, since the allotments were made prior to the 2001 amendment and the members' rights stood protected. x. The learned Single Judge further held that the petitioner had complied with the 2001 amendment by amending its bye- laws by providing that future transfers would be effected only through registered instruments, thereby complying with the legislative mandate. IV POINT FOR CONSIDERATION: 8. The only issue which requires consideration in this appeal may be summarized as under: Whether the finding of the learned Single Judge that the proviso inserted to Section 38 of the Karnataka Co-operative Societies Act, 1959 with effect from 01.04.2001 has only - 8 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 prospective operation calls for interference by this Court? V ANALYSIS AND CONCLUSION: 9. A statute or an amendment is prima facie prospective; retrospective operation requires express words or necessary implication. 10. Section 38 of the Act before amendment in the year 2001 would read as under: "38. Exemption from compulsory registration of instruments.- Nothing in clauses (b) and (c) of sub-section (1) of section 17 of the Indian Registration Act, 1908 (Central Act XVI of 1908), shall apply to,— (a) any instrument relating to shares in a co-operative society notwithstanding that the assets of the society consist in whole or in part of immovable property; (b) any debentures issued by any such society and not creating, declaring, assigning, limiting or extinguishing any right, title or interest to or in immoveable property except in so far as it entitles the holder to the security afforded by a registered instrument whereby the society has mortgaged, conveyed or otherwise transferred the whole or part of its immoveable - 9 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 property or any interest therein to trustees upon trust for the benefit of the holders of such debentures, or (c) any endorsement upon or transfer of any other debenture issued by any such society" 11. The proviso inserted to Section 38 of the Act with effect from 01.04.2001 read as under: "Provided that the exemption from compulsory registration of instrument shall not apply to instruments which is intended to transfer or in effect transfers the right title or interest in immovable property executed by or in favour of House Building Co-operative Societies, registered under this Act." 12. The amendment introduced with effect from 01.04.2001 imposes a requirement of compulsory registration of instruments intended to transfer rights, title or interest in immovable properties executed by or in favor of House Building Co-operative Societies. However, the amendment does not contain any express language indicating that it was intended to invalidate or alter allotments already made, nor does it disclose any necessary implication warranting retrospective operation. - 10 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 13. It is no longer res-integra that statutes affecting substantive rights are presumed to be prospective unless the legislature has manifested a contrary intention in clear and unambiguous terms. 14. In SHYAM SUNDER AND OTHERS vs RAM KUMAR AND ANOTHER [(2001) 8 SCC 2024], the Supreme Court held that every statute is prima facie prospective unless it is expressly or by necessary implication made retrospective. The Supreme Court held that retrospective operation is not to be given merely because such an interpretation appears convenient or desirable. Where a statute affects vested rights, courts must lean against retrospective construction. The Supreme Court also held that a legislation which impairs existing rights or creates new obligations in respect of past transactions cannot ordinarily be construed as retrospective in the absence of clear legislative intent. The relevant paragraphs are extracted hereunder: “22. In Maxwell on the Interpretation of Statutes, 12th Edn., the statement of law in this regard is stated thus: “Perhaps no rule of construction is more firmly established than thus — ‘that a - 11 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 retrospective operation is not to be given to a statute so as to impair an existing right or obligation, otherwise than as regards matters of procedure, unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only’. The rule has, in fact, two aspects, for it, ‘involves another and subordinate rule, to the effect that a statute is not to be construed so as to have greater retrospective operation than its language renders necessary’.” 25. In Dayawati v. Inderjit [AIR 1966 SC 1423 : (1966) 3 SCR 275] it is held thus: (AIR p. 1426, para 10) “10. Now as a general proposition, it may be admitted that ordinarily a court of appeal cannot take into account a new law, brought into existence after the judgment appealed from has been rendered, because the rights of the litigants in an appeal are determined under the law in force at the date of the suit. Even before the days of Coke, whose maxim — a new law ought to be prospective, not retrospective in its operation — is oft-quoted, courts have looked with disfavour upon laws which take away vested rights or affect pending cases. Matters of procedure are, however, different and the law affecting procedure is always retrospective. But it does not mean that there is an absolute rule of inviolability of substantive rights. If the new law speaks in language, which, expressly or by clear intendment, takes in even pending matters, the court of trial as well as the court of appeal must have regard to an intention so - 12 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 expressed, and the court of appeal may give effect to such a law even after the judgment of the court of first instance.” 26. In Hitendra Vishnu Thakur v. State of Maharashtra [(1994) 4 SCC 602 : 1994 SCC (Cri) 1087] this Court laid down the ambit and scope of an amending Act and its retrospective operation as follows: (SCC p. 633, para 26) “(i) A statute which affects substantive rights is presumed to be prospective in operation unless made retrospective, either expressly or by necessary intendment, whereas a statute which merely affects procedure, unless such a construction is textually impossible, is presumed to be retrospective in its application, should not be given an extended meaning and should be strictly confined to its clearly-defined limits. (ii) Law relating to forum and limitation is procedural in nature, whereas law relating to right of action and right of appeal even though remedial is substantive in nature. (iii) Every litigant has a vested right in substantive law but no such right exists in procedural law. (iv) A procedural statute should not generally speaking be applied retrospectively where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished. (v) A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation, unless otherwise - 13 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 provided, either expressly or by necessary implication.” 28. From the aforesaid decisions the legal position that emerges is that when a repeal of an enactment is followed by a fresh legislation, such legislation does not affect the substantive rights of the parties on the date of the suit or adjudication of the suit unless such a legislation is retrospective and a court of appeal cannot take into consideration a new law brought into existence after the judgment appealed from has been rendered because the rights of the parties in an appeal are determined under the law in force on the date of the suit. However, the position in law would be different in the matters which relate to procedural law but so far as substantive rights of parties are concerned, they remain unaffected by the amendment in the enactment. We are, therefore, of the view that where a repeal of provisions of an enactment is followed by fresh legislation by an amending Act, such legislation is prospective in operation and does not affect substantive or vested rights of the parties unless made retrospective either expressly or by necessary intendment. We are further of the view that there is a presumption against the retrospective operation of a statute and further a statute is not to be construed to have a greater retrospective operation than its language renders necessary, but an amending Act which affects the procedure is presumed to be retrospective, unless the amending Act provides otherwise…” - 14 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 15. Applying this principle, allotments made by a co-operative housing society and possession delivered to its members prior to 01.04.2001 created enforceable rights in favor of such members. The subsequent insertion of the proviso to Section 38 of the Act cannot be construed as retrospectively altering the legal implication of those allotments or reducing the status of members to that of tenants merely because the conveyance deeds had not yet been executed. 16. The same principle was explained in ZILE SINGH vs STATE OF HARYANA AND OTHERS [(2004) 8 SCC 1]. The Supreme Court held that retrospective operation may be inferred only when the legislative intent is clear either from express words or from necessary implication. The Supreme Court emphasized that statutes affecting substantive rights stand on a different footing from procedural enactments. Unless the legislature clearly indicates otherwise, courts should avoid an interpretation that disturbs vested rights or reopens concluded transactions. The relevant paragraph is extracted hereunder: - 15 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 “13. It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation. But the rule in general is applicable where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only — “nova constitutio futuris formam imponere debet non praeteritis” — a new law ought to regulate what is to follow, not the past. (See Principles of Statutory Interpretation by Justice G.P. Singh, 9th Edn., 2004 at p. 438.) It is not necessary that an express provision be made to make a statute retrospective and the presumption against retrospectivity may be rebutted by necessary implication especially in a case where the new law is made to cure an acknowledged evil for the benefit of the community as a whole (ibid., p. 440).” 17. The proviso to Section 38 of the Act cannot be interpreted so as to make the allotments made decades earlier and lawfully acted upon by the petitioner/Society and its members as a relationship between the Society and its members as one of ownership and tenant in absence of registration of Conveyance - 16 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 Deed. Such an interpretation would have the effect of unsettling long-standing possessory and proprietary rights without any express legislative mandate. 18. The rights enjoyed by the members of the petitioner/Society prior to 01.04.2001 were not merely expectant or contingent rights. The members had contributed funds, were allotted specific flats, had been issued possession certificates, and were in exclusive enjoyment of their respective units for several decades. These rights had crystallized long before the amendment came into force. Therefore, it constituted vested rights which could not be impaired by a subsequent statutory amendment unless the legislature expressly so provided. 19. Another well-settled principle governing statutory interpretation is the distinction between substantive and procedural laws. While procedural statutes are generally regarded as retrospective in nature, amendments affecting substantive rights are presumed to operate prospectively unless a contrary legislative intention is expressly provided or necessarily implied. The reason being, procedural law merely - 17 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 regulates the manner in which rights are enforced, whereas substantive law creates, extinguishes, enlarges, restricts or otherwise affects the rights and liabilities. The Supreme Court in MANISH KUMAR vs UNION OF INDIA [(2021) 5 SCC 1], explained that the first inquiry in determining retrospective is whether the amendment affects substantive rights or merely alters procedural machinery. If the provision alters substantive rights and obligations, the presumption is that it is prospective; conversely, if it merely regulates procedure or the forum for enforcement of rights, it may ordinarily apply to pending and future proceedings. The relevant paragraphs are extracted hereunder: “332.4. Our attention is drawn to the judgment of this Court in Hitendra Vishnu Thakur v. State of Maharashtra [Hitendra Vishnu Thakur v. State of Maharashtra, (1994) 4 SCC 602 : 1994 SCC (Cri) 1087] , wherein this Court laid down that statute, which affects substantive right, is presumed to be prospective, unless made retrospective expressly or by necessary intendment. Every litigant has a vested right in substantive matters but no such right exists in procedural law. The law relating to right of action and right of appeal, even though remedial, is substantive in nature. A procedural - 18 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 statute should not, generally speaking, be applied retrospectively, where the result would be to create new disabilities or obligations or to impose new duties in respect of accomplished transactions. 405. In an action, where the law is not challenged, the court would ordinarily proceed as follows. It will presume that a law, which affects substantive rights, is meant to have prospective operation only. In the same way, as regards procedural laws or the laws relating to a mere matter of procedure or of forum, they carry retrospective impact. 406. A statute is not retrospective merely because it affects existing rights. This is, however, in regard to the future operation of law qua the existing rights. If the existing right is modified or taken away and it is to have operation only from the date of new law, it would obviously have only prospective operation and it would not be a retrospective law.” 20. In view of the aforesaid discussion, we are of the considered view that the proviso inserted to Section 38 of the Act imposes a requirement of compulsory registration in respect of instruments intended to transfer rights, title or interest in immovable property. Thus, it affects the substantive rights relating to transfer and recognition of interests in - 19 - HC-KAR NC: 2026:KHC:26484-DB WA No. 1337 of 2025 immovable properties and cannot be regarded as a mere procedural regulation. Consequently, in absence of any express provision or necessary implication indicating a contrary legislative intent, the proviso must be construed as prospective in nature and cannot be applied so as to affect the rights that had already accrued prior to its commencement. 21. In view of the aforesaid, the judgment and order dated 02.07.2025 passed by the learned Single Judge does not call for any interference. Accordingly, the appeal is dismissed. Sd/- (D K SINGH) JUDGE Sd/- (T.M.NADAF) JUDGE RKA CT:SN List No.: 1 Sl No.: 11