Thursday, September 30, 2010

Amendments of Bye-laws

Part 1

v     General
An amendment may mean an alteration or deletion of words, clause or a whole paragraph.

No amendments of the Bye-laws should be contrary to the Act, Rules or inconsistent with other Bye-laws of the society.

Amendments take effect only after they are approved and registered by the Registrar and a memo to that effect is issued by him under his signature and the seal of his Office (Section 13).

v     Procedure
(1) As per Rule 12, the notice should be issued to the society members before calling the general meeting. The following points should be carefully noted vide drafting notice calling the general meeting:

(a)    Period of notice

(b)   Parties to whom the notice should be issued

(c)    Manner in which the notice is issued

(d)   Contents of the notice (Date, hour, place of meeting and the specific amendments to be placed before the meeting for approval)

The officers who have been empowered under the Bye-laws are to sign the original copy of the notice (vide enclosure I) to the proposal form.

(2)   The following additional information should be furnished along with the amendment proposal

(a)    A copy of the notice of the Annual or Special General Meeting in which the amendment/s were considered.

(b)    A copy of the resolution of the Managing Committee of the society authorizing the signatories to sign the amendment proposal.

(c)    A copy of the latest Balance Sheet and the Income and Expenditure Account for the preceding Co-operative year.

(3)    The amendment to be forwarded for the Registrar’s approval should be approved by the general meeting and the following requirements should be satisfied :

(a)    At the general meeting there should be a quorum. What constitutes a “quorum” is laid down in the Bye-laws of the society.  If at the meeting there is no quorum the meeting should be adjourned.  At the adjourned meeting whether there is quorum or not the amendment/s may be considered and voted upon.

(b)    The resolution should be formally proposed, seconded and passed by a vote of at least tow-thirds of the members present and voting, in favour of the amendment/s.

(c ) One copy of the resolution of the general meeting approving the amendment/s should be sent to the Registrar within two months from the date of the meeting at which the resolution was passed (vide enclosure II of the proposal form).

(c)    The approval of the amendment/s by general meeting should be in the form of a resolution.

(4)    The copy of the resolution sent to the Registrar should be accompanied by a statement showing the existing Bye-laws, the proposed amendment/s and the reasons for the amendments. If however, the society adopts a whole set of revised model Bye-laws in place of the existing Bye-laws, it should be sufficient to submit the statement showing how the blanks in the revised model Bye-laws are different from those in the existing Bye-laws (vide enclosure III of the form).

(5)    Four copies of the Bye-laws as they would read as per the amendment/s should also be attached to the copy of the resolution.  These should be written in the same language in which the Bye-laws of the society are framed (vide enclosure IV of the form).

(6)    Certain additional information regarding the society as on the date of the general meeting at which the amendment/s are approved should be supplied to enable the Registrar to decide whether the proposed amendment/s are proper, necessary and desirable (vide enclosure V of the form).

(7)    All these enclosures (I to V) to the proposal should be written in ink, printed or typed on separate full sheets of paper providing at least one fourth margin.  They should be signed by the Chairman and another member of the committee and the Secretary and should carry the stamp of the Society.  The enclosures should be submitted together with a forwarding letter to the Registrar through the Assistant Registrar of the Division in which the society is situated.

Wednesday, September 29, 2010

Transfer Of Shares And Interest In The Capital/Society

Part 6


*      If ‘WILL’ is there then nomination is required?
A.  If there is a ‘will’ of the deceased member, no nomination is required or even if the nomination does exist, the same becomes null and void after the will is probated. It is the responsibility of the society to transfer the flat as per the letter of administration issued by the court after the will is probated.

*      If the flat is owned by two persons and if one dies then is the flat automatically transferred to other person or is nomination required?
A.  The second person on the share certificate is an associate member who has got only voting rights in the General Body Meetings in the absence of the original member. The Associate member also ceases to be an associate member on the death of the first named person on the share certificate. The flat is required to be transferred to the nominee of the first named person on his death.

*      One of the members of the society expired and the flat owned by him has to be transferred in the name of his wife. She is not an earning member. Can the society transfer the loan outstanding in the name of the deceased member to his wife’s name?
A.  If the society has obtained a loan from the Housing Finance Society, the society can put the claim before the Housing Finance Society under the Group Insurance, if the deceased member was covered by the said scheme, and the nominee will not be required to discharge the loan liability. If the loan is not covered by the scheme, the nominee will have to obtain a declaration from the person on whom the nominee is dependent to the effect that he will discharge all the present and future liabilities including charges of the Society on behalf of the nominee who is going to be admitted to membership of the society.

*      A father and two sons B & C are jointly owners of a flat and members of a co-operative Housing society. They are following a understanding within the family, the father and son B do not wish to remain as members and want to delete their names from the membership of the society. Is it necessary to prepare any documents for the society? Is it necessary to prepare any documents for the society and to pay stamp duty and registration charges?
A.    In the present case there is withdrawal from membership by father A and son B and the corresponding enlargement of the rights of son C in the property. It is a case of renunciation of claim against another person in a specified property and it is not the case of conveyance of property. It is necessary to execute a deed of release on Rs.200 non-judicial stamp paper and get the document registered. Son C has to submit to the society the deed & the original shares certificate for deletion of names of A & B.


*      There are 219 flats in the building of the Society out of which 136 purchasers have been paid the stamp duty and registered their documents and they have been admitted to the membership of the Society.  The managing committee of the society refuses the 83 promoters/purchasers admits membership of the society.  Is it correct for the society to take a step? If these 83 purchasers are admitted to membership of the society, how will this affect the conveyance of the property to the society?
A.                                                                                        There are circulars from The commissioner of co-operative societies and registrar of co-operative Societies dated 18.2.1994 &  8.7.1996 for verifying the Registration receipt of the document of Transfer but it appears that the non payment of stamp duty and registration of documents in the present case must be prior to these circulars and accordingly they are not applicable. Before these circulars were issued a Co-operative Society is under no legal obligation to insist that a purchaser pays correct stamp duty and register his agreement with the builder/developer before being made a member. A person who complies with the requirements of section 32 of MCS Act has right to be made a member. A person who complies with thus the duty of the society to make these 83 persons provided they do not have any other disqualifications.

Non-registration of their agreements by 83 persons will come in the way of conveyance of the land and building to the society. This is because stamp duty and registration fees will be calculated on the land and the building to be conveyed.  The amount unpaid by the 83 members will become payable now by the society.  The society can at this stage insist that the 83 members register their documents.

 It is to be clarified to the 83 members that it is of the utmost importance for them to register their documents because both under section 32 of the Bombay Stamps Act, 1958 and Registration Act, 1908 an unpaid stamped and unregistered document is inadmissible as evidence in a court of law.

*      In a society a flat was transferred 20 years ago.  The share Certificate does not bear the signatures of any office bearers.  All the office bearers are now not the members of the Society. What can be done if it is to be transferred now?
A.    Though the Share Certificate of the Society was not endorsed by any office bearer, in the other record of the society the flat must be in the name of the member who now wants to sell the flat.  If no dues are there, present office bearers should endorse the share certificate and give correct date of the transfer. After this all the formalities of the present transfer should be complied with.

*      In case no proper documents are produced about the transfer of a flat to the ex-committee, can the transfer be nullified or challenged by the new committee?
A.  The new Managing Committee can request the member to complete the formalities and if he is not complying with the requirement a complaint can be filed with the Registrar for regularizing the things or to expel the member from the society.

Tuesday, September 28, 2010

transfer of shares and interest in the capital

Part 5
v                                  Issues & Replies

*      Can a flat in a co-operative housing society be transferred on the basis of the nomination registered with the society?
A.  In view of the mandatory provisions under Section 30 of the MCS Act a society is bound to transfer the shares and the interest in capital/property of the society of the deceased member to his nominee if any. However it may be noted that it is settled law that the nomination does not create interest in the nominee to the exclusion of those who in law will be entitled to the estate of the deceased. However, till the matter is decided by the Competent court the nominee to whom the shares and interest are transferred will hold it in trust.

*      Can a corporate body like a company file a nomination?
A. Corporate bodies like partnership firms have succession and as such it is not necessary to obtain nomination from them. The transfer of the flat and shares will be governed by the deed of dissolution.

*      What is the procedure of transferring a flat by a mother to her son?
A.  The procedure of transfer of a flat is the same even in the matter of a mother transferring her flat to her son during her lifetime. She will have to execute the necessary document of transfer or gift, which will attract stamp duty. Instead of transferring the flat, if she nominates her son, he, as her son will inherit the flat after the mother’s death.

*      Can a society refuse membership to the person who makes additions to and alterations in his flat without the permission of the society?
A.  A society is perfectly justified in refusing to admit a person to thee membership of a society, if he makes any alterations in and additions to the flat, without taking written permission from the society, as provided in Bye-law No.47. This includes withhold admission to the membership of the society.

*      Does a co-operative housing society have to obtain all documents/papers (including a copy of the sale agreement) in case of transfers from the husband to his wife as in other transfers, where the transferors and the transferees are not related to each other as husband and wife?
A.  According to Section 29 of and the Bye-laws for Co-operative Housing Societies, every transfer of shares and interest of a member in the capital/property of the society, whether between two relatives or not, could be made after complying with the member transferring the shares and interest in the flat to his wife or vice-versa, has to furnish all documents/papers. The agreement is not required but the gift deed should be there.

*      Can a guardian of a minor dispose of the property of the minor?
A.  The guardian has no right to dispose of the property of the minor as per the provisions of the Hindu Minority and Guardianship Act, 1956. If at all he wants to sell the property, he will have to take the permission of the competent court.

*      One of the members wants to sell his flat and he has intimated the society about the incoming member. The transferee wants to obtain a loan from the bank and he has submitted a form given by the bank to be filled up by the Secretary. The outgoing member’s bank has a lien on the flat. Can the society give Undertaking to the incoming member’s Bank before admission of the member?
A.    Mere intimation from a member of his intention to sell his flat does not create any right or interest of the transferee in the said flat. The transferee therefore cannot raise any charge on the flat until he has been duly admitted to the membership of the society. The society therefore should not give any undertaking to the bank in favour of the transferee till such transferee is admitted to the membership of the society.  The society has to give “no objection” to bank for granting a loan to proposed transferee.  But before giving the no objection, out going member should bring clearance from his bank. If he does not, a remark is to be given in the certificate that there is lien of outgoing member’s bank on the flat.

*                                                                                              One of the members has expired in a society. He had nominated his son. However, despite repeated requests, the nominee is not coming forward to become the member of the society. He is also not paying the outgoings of the society. What action should be taken by the society against the nominee?
A.  On his death the member cease to be a member of the society and his shares and interest in the society are to be transferred to his nominee as provided under section 30 of MCS Act. The nominee may be specifically asked in writing to make an application for transfer of shares and interest in the property of the deceased, in his favour, within the stipulated time, failing which, it will be presumed that the nominee is not interested in getting the shares and property transferred to him, and the society will be constrained to acquire the shares and interest of the deceased in the flat. On failure of the nominee to make the necessary application, the society can proceed to acquire the shares and interest after following the procedure provided under Bye-law No.66.

*      No Objection Certificate is not required for transfer of flats. What about the outstanding of the member selling the premises?
A.  Bye-law No. 38(e)(vi) provides for submission of an undertaking by the transferor to discharge all the liabilities to the society. In view of this provision, the society can withhold the transfer till the dues are cleared or the incoming member undertakes in writing to pay off the dues.

*      No Objection Certificate of a society is not required for transfer of flat but if the flat is sold for commercial purpose, or to trust for religious purpose then what is the solution?
A.    The prospective member, before his admission has to furnish an undertaking on Rs. 20 stamp paper to the society that the flat will be used for the Purpose for which it is allotted. The allotment letter is to be issued to the prospective member at the time of admission as per Bye-laws which stipulate in para five, the use for which the flat is allotted to him. If he makes any change in the permitted use, the incoming member can be expelled from membership of the society as stated in para 6 of the allotment letter.

Monday, September 27, 2010

Transfer Of Shares And Interest In The Capital/Society

Part 4

v     Transfer in case of nomination

In cases where there is nomination [Bye-law No. 36]

(1)  Where there is a single nominee
      
(a)    The nominee named in the nomination made by the deceased member should give an application for membership of the society in the form prescribed for membership of a nominee. Bye-law No. 34.

(b)   The application for membership of a nominee should accompany an attested copy of the death certificate in respect of the nominator deceased member, and the original share certificate in the  name of the deceased member

(c)    The nominee has to pay all the dues outstanding against the deceased member along with the application for membership/Entrance fees of Rs. 100/-.

(d)   The nominee should give a declaration in the prescribed form regarding non-holding of any vacant land or land with a building in any urban agglomeration, specified under the Urban Land ( Ceiling and Regulation) Act, 1976, exceeding 500 sq. meters.

(2)    Action in cases where there are more nominees than one

(a)    All the nominees will have to decide amongst themselves as to who should become the member of the society.

(b)   After arriving at a decision, the nominees should make an affidavit to that effect.

(c)    The nominee named in the affidavit should make an application for membership in the manner indicated above. In addition, he should enclose a copy of the affidavit along with the application for membership.

(d)   He should comply with the requirements mentioned above.

(3)    Action in cases where a member dies without making nomination or no nominee comes forward for transfer (As per Bye-law No. 35).

(a)    The society shall invite the legal heir or representative of the deceased member within one month from the information of the member’s death, by giving a public Notice, in the prescribed form. The same must be exhibited on the notice board of the society. The society shall also publish such notice in at least two local news papers having wide circulation at the cost of the would be valid claimant.

(b)   After taking into consideration the claims or objections received in response to the said notice and after making such inquiries as the committee considers proper in the circumstances prevailing, the committee shall decide as to the person, who in its opinion is the heir or legal representative of the deceased member. Such person will be eligible to be a member of the society subject to the provisions of Bye-law No. 17(a) or 19.  He has to give an indemnity Bond along with his application for membership in the prescribed form.

(c)    If  there are more claimants than one they shall be asked to make an affidavit as to who should become a member of the society and such person named in the affidavit shall furnish the indemnity Bond as indicated above along with application for membership referred to above. If the Committee is not in position to decide as to the heir/legal representative or if claimants do not come to an agreement as to who should become a member of the society, the committee shall then call upon the claimant/s to produce the succession certificate from competent court.

(d)   If there are no claimants, the shares and interest of the deceased member in the capital/property of the society shall vest in the society.

 Case Law:

Om Siddharaj Co-op Housing Society Ltd. v. The State of Maharashtra, 1998 (4) Bom. C.R. 506; 2000 Mh. Co-op. J 888


v     Right of Heir or Legal Representative : Death of Member of Society

When a member of the society dies, even though Sec. 25 of MCOS Act does not speak about the right of heirs or legal representatives of the deceased member it does not mean that the right of the heir or legal representative to claim membership or value of share or interest is taken away. Sec. 25 deals with extinguishments of right of a member who is not alive. Once the Statute ensures the right of the heir or the legal representative to claim membership and/or the value of the shares or interest of deceased member, at the option of the such share or legal representative the transfer of the membership or the share is not permissible otherwise than as provided under the provision of law and in accordance with the procedure prescribed under Rule 25 of MCOS Rules, 1961. [Virendra Bhanaji Rathod   v.  Anand Vihar Co-op.  Soc., Mumbai, 2004(1) Mh.L.J.656: 2003 (4) All MR 843]

Sunday, September 26, 2010

Transfer Of Shares And Interest In The Capital/Society

Part 3

v     Action after the approval of the transfer
After the transfer has been approved, the following action must be taken by the society:

(a) Where the society has taken a loan from the Maharashtra Co-operative Housing Finance Society Ltd., it should furnish information to the Maharashtra Co-operative Housing Finance Society in the firms prescribed. Requesting the Housing Finance Society to approve the transfer. The transfer should not be given effect to until the approval is received from the Maharashtra Co-op. Housing Society Finance Ltd.

(b) The transferor and the transferee should be informed of the decision of the Managing Committee accepting the transfer in prescribed form under Bye-law No.40.

I A remark should be made in the Member – Register ‘I’ Form about the transfer in respect of the transferor and the name of the transferee should be entered on a separate sheet of the Register, after the last entry therein.

(d) In the list of members in the ‘J’ Form, against the name of the transferor, a remark should be made “Ceased to be member under Resolution of the Managing Committee Meeting held on ______________________”, and the name of the transferee be entered in the ‘J’ Register after the last entry therein.

      (e) In the Shares Register, against the name of the transferor, the remark “Transferred to Shri/Shrimati ____________________________  under should be made and the transferee’s name should be entered after the last entry in the register with the required details.

(a)      Necessary endorsement should be made on the reverse of the share certificate, under the signatures of the Chairman, the Hon. Secretary and one Managing Committee duly authorised in that behalf. It is not at all necessary to issue a new share certificate to the transferee who has been admitted to the membership of the society.

Saturday, September 25, 2010

Transfer Of Shares And Interest In The Capital/Society

Part 2

v     Action at the level of the society

(1)   Upon getting the transfer application from the transferor in the form prescribed and the membership application from the transferee in the form prescribed along with the required accompaniments, the Hon. Secretary of the society has to thoroughly examine the documents received by him and see whether they have  been correctly and properly filled in and also to satisfy himself whether the following have been  complied with :

(a)    Whether the transferor has discharged his liability to the society in full.
(b)    Whether the transferor has paid the transfer fee of Rs. 500/- as mentioned in Bye-law No. 38(e)(7)
(c)    Whether the transferee has paid the entrance fee of Rs. 100/- as required under Bye-law No. 38(e)(8)
(d)   Whether the transferor has held the shares and interests in the capital or property of the society for a period of not less than one year.
(e)    Whether the transferor and the transferee have given declaration under Section 27 of the Urban Land (Ceiling and Regulation) Act, 1976, in the prescribed form.
(f)     In case of admitting a firm/company to the membership of the society, whether the limits for membership of firms and companies and the specification for the holding of flats as well as any other conditions laid down in orders issued by the govt. have been complied with.

(2)   If the Hon. Secretary finds that there is any deficiency in the compliance to be made by the transferor and/or the transferee, the Hon. Secretary should bring this to the notice of the transferor and/or transferee and advise them to comply within a reasonable period to be allowed by the society. In case, the transferor and/or the transferee do not make the required compliance within the time allowed , the Hon. Secretary should place the case before the meeting of the Managing Committee, to be held next year after the expiry of the period allowed for the compliance and act according to the decision of the Managing Committee.

(3)   If the Hon. Secretary finds that the requirements for the purpose of transfer have been fully complied with, he should place the case before the meeting of the Managing Committee held next after the receipt of the application for transfer.

If the Managing Committee in whom the power of admitting new members is vested, decides to reject the transfer application, the Hon. Secretary has to communicate to the transferor and the transferee the reasons for the refusal of the application within a period of 15 days of the decision or within 3 months of the date of receipt of application, whichever is earlier, as provided under Section 22[2] of the Maharashtra Co-operative Societies Act, 1960.

(4)   If the application of transfer is rejected, he may exercise his right to make an appeal to the Registrar under Section 23 of the Maharashtra Co-operative Societies Act, 1960. it may further be noted that an application for transfer cannot be rejected on any grounds other than non-compliance of the requirements mentioned in Section 29 of the Maharashtra Co-operative Societies Rules, 1960, Rule 24 of the Maharashtra Co-operative Societies Rules, 1961 and Bye-laws of the society, the non-furnishing of a declaration under Section 27 of the Urban and (Ceiling and Regulation) Act.

(5)   On approval of transfer by the managing committee, the necessary resolution to the effect should be recorded in the minutes. The Society should write a letter to the transferor.

Friday, September 24, 2010

Transfer of Shares and Interest in The Capital/Property of The Society

Part 1

The procedure required to be followed for the transfer of shares and interest of a member in the capital/property of a society is explained below:

v     Regular case of transfer
As per Bye-law No. 38

(1)   A member designing to transfer his shares and interest in the capital/property of the society shall give 15 days Notice of his intention to do so to the Secretary of the society in the prescribed form, along with the consent of the proposed transferee in prescribe form. [Appendix-20(1)-(2)]

(2)   On receipt of such a notice, the Secretary of the society shall place the same before the meeting of the committee, held next after the receipt of the notice pointing out whether the member is prima-facie eligible to transfer his shares and interest in the capital/property of the society in view of the provisions of Section 29 (2)(a) of the Act, i.e. The transferor has to hold shares and interest in capital/ property of the society for a period of not less than one year.


(3)   In the event of ineligibility [in view of the provisions of Section 29(2) (a) (b) of the Act] of the member to transfer his shares and interest in the capital/property of the society, the committee shall direct the Secretary of the society to inform the member accordingly within 8 days of the discussion of the committee.


(4)   “No objection Certificate” of the society is not required to transfer the shares and interest of the transferor to transferee. However, in case such a certificate is required by the transferor or transferee [in case of loan taken by the transferor or to be taken by the transferee] he shall apply to the society and the committee of the society may consider such application on merit, within one month.


(5)   The Transferor/Transferee shall submit the following documents and make the compliance as under :


(a)      Application of transfer in the prescribed Form along with the original share certificate

(b)      Application for membership of the proposed transferee in the prescribed Form


(c)      Resignation of transferor in the prescribed Form


(d)     Valid reason for the proposed transfer [Normally – sale of flat]


(e)      Undertaking to discharge the liabilities to the society by transfer or Form


(f)       Payment of the transfer fees of Rs. 500/-


(g)      Remittance of entrance fees of Rs. 100/- payable by the proposed transferee.


(6)   Payment of amount of premium at the rate to be fixed by the general body meeting but within the limits as prescribed under the circular issued by the Department of Co-operation / Government of Maharashtra from time to time. [Refer order – 2, 2A, 2B].

At present, the premium amount should not exceed 2.5% of the difference between the book value of the flat [original purchase price of a flat taken as contribution towards land & building] and the price realized by the transferor, on transfer of his flat subject to the maximum limit prescribed.

It is to be noted that no additional amount towards donation or contribution to any other funds or under any other pretext shall be recovered from the transferor or transferee. In the case of transfer within the family or on nomination on his death, to member’s heir/legal representative and in case of mutual exchange of flats among the members no premium amount is payable.

(7)   Submission of No objection Certificate required under any law for the time being in force or order or sanction issued by the Government, any financing agency or any authority.

(8)   The undertaking/declaration in compliance with the provisions of any law for the time being in force in such forms as is prescribed under these Bye-laws:


(a)      A Form of declaration for not holding immovable property in any urban Agglomeration, specified under the Urban Land ( Celling and Regulation)  Act, 1976 exceeding 500 sq. meters to be given by transferor
(b)      A Form of declaration for not holding immovable property in any urban Agglomeration, specified under the Urban Land ( Celling  and Regulation)  Act, 1976 exceeding 500 sq. meters to be given by transferee
(c)      A form of undertaking about the registration of Transfer of a flat under Section 269AB of the Income Tax Act if applicable.
(d)      A form of undertaking regarding the registration of the acquisition of a flat under Section 269AB of Income Tax Act, 1961 to be given by the transferee, if applicable.

Thursday, September 23, 2010

Levy of Charges Of The Society

Part 4

v     Issue & Replies
*      Can a garage owner also be charged water charges?
A.  Water charges should be charged in proportionate to the number of inlet originally provided in the flat. A Garage owner can also be charged water charges if a inlet is provided in his garage.

*      In case of shops, which are in the name of individual members and if individual members enter into a partnership deed, can society recover non-occupancy charges?
A.  If a shop-keeper enters into a partnership deed for carring out any business in the shop which is in his individual name, he will have to transfer the shop in the name of the firm, after following the procedure for transfer. In such a case, the question of recovery of non-occupancy charges would not arise. However, if it is not transferred in the name of partnership firm then non occupation charges to be charged. The society finds that the shop is being used by, others; the society should serve the member with a notice to stop unauthorized use of the shop by others, failing which he would be required to face eviction proceedings.

*      I am the owner of an apartment, but I am staying abroad. Do I have to contribute towards the common expenses?
A.  According to section 17 of the MCS Act, no apartment owner can exempt himself from liability for his contribution towards the common expenses. He cannot get exemption, even if he waives the use or enjoyment of any of the common areas and facilities, or by abandonment of his apartment. The reason for this is that interest he holds in undivided common areas and facilities is appurtenant to his apartment.

*      What are the provisions for payment of society bills?
A.  The Secretary of the society shall prepare a demand notice in respect of charges of the society payable by members on the basis of the Bye-law No. 69(a). A member of the society must pay the bill amount in full to the society without unilaterally deducting any amount for any expenses/claims incurred without taking permission from the society.

*      When does a member become a defaulter?
A.  As per Bye-law No.71, a member shall be deemed to have committed default in payment of the charges of the society, if the payment mentioned in the demand notice is not made within the period as prescribed under Section, the demand notice/bill amount is payable on presentation of it or on completion of 30 days on availing pf the service by the member, whichever is earlier. The Secretary of the society shall bring the cases of defaulters to the notice of the Committee for taking further necessary action.

*      Is it compulsory to charge maximum interest allowed in Bye-laws?
A.  Though the model Bye-law empowers a society to charge up to 21 percent interest, it will not be violation of the Bye-law if less than 21 percent charged, if resolved at the General Meeting of the society.

*      Can a society give rebate/discount for early payment of bills?
A.  There is no provision under MCS Act, MCS Rules, and Mode Bye-laws where by it can give a discount/rebate to its member for their early payment, even after passing resolution in the general body meeting.

However the society can amend its Bye-laws for granting the rebate which is generally not provided the conditions there in are observed.

*      Is there any way by which a member is compensated for advance payments?
A.  Yes, as per Bye-law No. 11, the society can treat the advance payment as deposit bearing interest, provided the conditions there in are observed.

*      Are professionals like Chartered Accountants, Advocates required to pay additional charge for carrying out their professions in the residential society?
A.  Professionals like Chartered Accountants, Architect, and Advocates can use their premises for their professions. There is no provision under the bye-law to charge anything more than what is given in the bye-law No. 70 and 71. They should be charged outgoings on par with other members.

*      Can the society charge a compound rate of interest or levy additional penal interest or penalty on the defaulted dues?
A.  No. According to the Bye-law No. 72, a defaulting member of the housing Society shall be required to pay simple interest and not compound rate of interest on defaulted amount.

The maximum rate of interest applicable on the defaulted amount shall be 21 percent per annum.

The society cannot decide to charge any higher rate of interest even by passing a resolution at the Managing Committee or at the General Body meeting. The society cannot levy a penalty in addition to interest at the rate of 21 percent per annum.

*      If payment is received in part/on account, what must it be adjusted against, first Principal amount or interest outstanding?
A.  The part payment received must first to be adjusted against the Principal amount though normally banks appropriate interest. If it is first adjusted against interest it will work out compound interest. A society can not charge compound interest as per Bye-laws No. 72. Co-operative Housing societies are not commercial organizations and are not supposed to make profit from its activities.

*      What procedure is to be followed by a society if there is more expenditure than income?
A.  The Co-operative Housing Societies are to be managed on a no profit no loss basis and therefore, at the end of each year, 31st March, if there is increase of expenditure over income, the society can revise the maintenance charges to the extent of deficit by raising additional bill. Further in next year maintenance charges to be raised to extent of deficit plus 5 to 10 percent for anticipated increase in cost during the current year, with effect from 1st April, of each year.

*      To what extent can a society can recover penalty from defaulting members, even with the approval of the General Body? Can penalty and interest be charged for the same period?
A.  The existing Bye-laws do not authorize a society to levy penalty on a defaulter. If the General Body passes a resolution-levying penalty on a defaulter, it will be irregular and illegal. Any such resolution, passed by a general body meeting should not be given effect to. The society can charge interest on the defaulted dues at the rate mentioned in the Byelaw No. 72, for the period for which the dues of the society stand defaulted.