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. 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 miscellaneous expenses. This substantiates the contention that the Society is acting only as a representative or agent for the purpose of maintenance and administration, rather than as an owner retaining any proprietary interest in the flats. 7. Moreover, the construction of the flats has been undertaken by utilizing the contributions and share capital raised from the members themselves. The Society has not independently financed the construction from its own retained earnings or assets. The bye-laws of the Society also corroborate this position, as they provide that the funds of the Society are to be raised primarily through the issuance of share certificates to its members and by accepting deposits from them. Additionally, the Society is empowered under the bye-laws to raise funds through donations, admission fees, and also by availing loans, including by way of issuing debentures and loan stocks. 8. The bye-laws further prescribe that the share capital of the Society is fixed at Rs. 5,00,000/- (Rupees Five Lakhs Only), divided into 5000 shares of Rs. 100/- each, which again reinforces the fact that ownership of the flats is vested in the individual members, proportionate to their respective financial contributions. 8. The bye-laws further prescribe that the share capital of the Society is fixed at Rs. 5,00,000/- (Rupees Five Lakhs Only), divided into 5000 shares of Rs. 100/- each, which again reinforces the fact that ownership of the flats is vested in the individual members, proportionate to their respective financial contributions. These facts, taken together, unequivocally demonstrate that the petitioner/Society has not retained title or ownership over the immovable property in question, and the rights in the respective flats have been conferred upon the individual members through their shareholding and capital contributions. 9. Therefore, this Court opines that the expression "tenant" in "tenant co-partnership" is a term of art used in the Co-Operative law and not in the sense of tenancy. Under the transfer of property act or rent control statutes, the member's occupation is not as a tenant-at-will or monthly tenant, but as a co-owner within the Co-Operative framework having a beneficial and often transferable interest. 10. Section 38 of the Act deals with rights and liabilities of members of Co-Operative Society. By Amendment Act 6/2001 w.e.f. 1.4.2001, a proviso is added to Section 38 of the Act, which reads as follows: "Provided that the exemption from compulsory registration of instrument shall not apply to any instrument 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." 11. This statutory insertion imposes a clear mandate that, insofar as House Building Co-operative Societies are concerned, any instrument purporting to transfer or effect a transfer of right, title, or interest in immovable property must be compulsorily registered. This marks a deviation from the general exemption from compulsory registration afforded to instruments involving shares in a co-operative society. 12. However, this Court is of the considered view that the aforementioned proviso does not operate retrospectively. It does not alter or affect the legal character of possession already vested in members prior to the amendment. In other words, members who were already in lawful possession of flats or tenements allotted by the Society prior to 01.04.2001 cannot, by virtue of this amendment, be deemed to be mere tenants or licensees. It does not alter or affect the legal character of possession already vested in members prior to the amendment. In other words, members who were already in lawful possession of flats or tenements allotted by the Society prior to 01.04.2001 cannot, by virtue of this amendment, be deemed to be mere tenants or licensees. The statutory change introduced by the 2001 amendment is intended to apply prospectively i.e., to transactions or transfers occurring on or after 01.04.2001 and seeks to regulate future dealings rather than disturb vested rights or lawful possession of existing allottees. 13. This interpretation is not only in accordance with the legislative scheme and the principle against retrospective impairment of vested rights but has also been judicially recognized. A Division Bench of this Hon’ble Court in Writ Appeal No. 3883/2003 has categorically upheld this view. In the said case, even the respondent-State unequivocally conceded that the proviso to Section 38 of the Act operates only prospectively, thereby affirming that it does not nullify or affect earlier transactions or allotments made prior to the amendment. 14. In light of the above authoritative pronouncement and the legal position clarified therein, it is evident that the petitioner-Society and its members, who were allotted flats prior to the 2001 amendment, are not required to retrospectively comply with the mandate of registration under the newly inserted proviso. Consequently, the attempt by the respondent-authorities to treat such members as tenants on the ground of absence of registered conveyance deeds is misplaced and legally unsustainable. The protection arising from the prospective operation of the proviso directly enures to the benefit of the petitioner-Society and its members, thereby rendering the impugned demands and classifications devoid of statutory support. 15. Furthermore, the record clearly reflects that the petitioner-Society has acted in compliance with the statutory amendment. Pursuant to the 2001 amendment to Section 38 of the Act, the Society has suitably amended its own bye-laws to align with the new legal requirements. The amended bye-laws, which have been produced along with the additional documents, now expressly provide that any future transfer of allotted tenements shall be effectuated only through registered instruments. This demonstrably establishes that the Society is in consonance with the legislative mandate introduced by the 2001 amendment. The Society has thereby institutionalized the requirement of compulsory registration for all subsequent transactions, reaffirming both its regulatory compliance and its members' legal entitlements. 16. This demonstrably establishes that the Society is in consonance with the legislative mandate introduced by the 2001 amendment. The Society has thereby institutionalized the requirement of compulsory registration for all subsequent transactions, reaffirming both its regulatory compliance and its members' legal entitlements. 16. For the foregoing reasons, this Court proceeds to pass the following: ORDER : (i) The writ petition is allowed. (ii) The impugned order dated 12.09.2017 passed by respondent No.2 vide Annexure-A is hereby quashed.