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.  



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