Members, Rights And Responsiblities

Part - 12

v     Insolvency Of Members

Notwithstanding anything contained in the Presidency – Towns Insolvency Act, 1909, the Provincial Insolvency Act, 1920, or any corresponding law for the being in force, the dues of a society from a member, in insolvency proceeding against him, shall in order of priority next to the dues payable by him to Government or to local authority.

[Mapusa Urban Co-operative Bank Ltd. v. Dattarya A.P. Mhambra, 1999(2) Mh. L.J.505]

v     Issues & Solution

      Can a Public Trust be admitted to the membership of a society?

Ans. Yes, it can be admitted to the membership of the society as per provision of Model Bye-law No.18. However, it is to be noted that the change of use is not permissible unless the Municipal Corporation approves it.

      Can a society refuses membership? If so, on what grounds?

Ans. As per Section 23(1) MCS Act no society shall, without sufficient cause, refuse admission of membership to any person duly qualified thereof under the provision of the said Act and its Bye-laws.

      Can a member continue his membership in respect of his garage only?

Ans. A member can sell his flat and continue his membership in the society in the respect of garage only. There are the number of cases in housing societies where a member holds only a shop or a garage. It is not a condition precedent to membership that a person must hold a flat. A person can therefore be member of a Co-operative housing society in respect of only a shop or a garage. 

      What steps should be taken by eligible person if the Society refuses to accept him as a member even after the Registrar forward his application to his society?

Ans.(1) The eligible person has to make an appeal to the Registrar under Section 23(2)     of MCS Act.

       (2) The decision of the Registrar in appeal shall be final. 

          (3) However, application for revision can be made within two months by either party affected by the order to the State Government.

Note: The Registrar also can revise the order passed by the Deputy Registrar or the     Assistant Registrar.

      One of the members of our society has kept his flat locked for a long period. Now the society has decided to treat all the flats for white ants. The Pest Control people say that all the flats are to be treated simultaneously. What should be done about the flat locked by the member?

Ans. As per Bye-law No.46 it is the responsibility of every member to keep his flat clean. By keeping the flat locked for a long time and preventing it from being treated for pest control, the member is violating this obligation. The member should be directed to make the flat available for of pest control treatment failing which he will be liable for breach of Bye-law.

      Why is nomination necessary?

Ans. Nomination means nominating a person who will become a member on the death of a member. Nomination makes clear as to who will be the next member of the society and avoids obtaining probate from the court.

      Does a nominee become the owner of the Flat?

Ans. As such, a nominee does not automatically become an owner of the flat on the death of the owner. He holds the shares/interest in the flat in trust. In the absence of a will, however, the nominee does become the owner of the Flat. In case of a dispute raised by any of family member or legal heirs, the matter is referred to a competent court whose decision will be binding on the society, the nominee and the disputants.

      What is the position in the event of the will being contrary to the nomination?

Ans. The will is the final legal document and the person whose name appears in the will is the owner. In case of a contrary direction in the will, the nominee acts as a trustee & is obliged to transfer the interest & right of the deceased owner to the beneficiary named in the will.

      On what grounds can a member be expelled?

Ans. A member of Co-operative Housing Society is expected to follow the provisions, Bye-laws, Regulations and refrain from any act which is detrimental to the interest and working of the society. He may be expelled on the following grounds:

(1)   If he has persistently failed to pay the charges due to the society.

(2)   If he has willfully deceived the society by giving false information

(3)   If he has used his flat for immoral purposes or misused it for illegal purposes habitually.

(4)   If he has been in the habit of committing braches of any of the provisions of the Bye-laws of the society, which in the opinion of the Committee, are of serious nature.

(5)   If he has furnished false information or omitted to furnish material information to the Registering Authority at the time of registration of the society

      Can an expelled member be readmitted?

Ans.No member of the society, who has been expelled from its membership, shall be eligible for readmission to membership of the society, until expiry of the period of one year from the date of his expulsion, provided that on the recommendations of the meetings of the general body of the society, the expelled member may be readmitted to its membership, as a special case before the expiry of the period of one year, with the prior permission of the Registering Authority.

      If a nomination does not give any succession rights, why should one make it?

Ans.A nomination is a facility only. Upon the death of a member, the Co-operative Society will immediately transfer shares in the nominee’s name and admit the nominee as a member. If there is no nomination then legal heirs would have to follow a cumbersome and expensive procedure of obtaining a succession certificate from Civil Court.

      Is there any provision in the Model Bye-laws of the Society to suspend the rights and privileges of a member?

Ans.There is no provision in the Model Bye-laws of Co-operative Housing Societies authorizing the general body meeting of the society to suspend the rights and privileges of a member. The society, however, can consider expelling the member from the society under Section 35 of the MCS Act, read with Rules 28 and 29 of the MCS Rules.

Members, responsibilties

Part -11

v     Procedure For Expulsion of a Member

(1) Where a member commits any breach of the provisions of the Act, the Rules, the Bye-laws, regulations made thereunder or resolutions of the managing committee or the general meeting, the society has to place the matter before the managing committee of the society, bringing out the Bye-laws or Regulations thereunder or the resolutions of the managing committee or the general body, committee comes to the expulsion of the member from the society. If the managing committee comes to the conclusion that it has to deal with the member adequately by expelling him from the membership of the society, it should pass the necessary resolution to that effect. After passing the resolution for taking action against the member for expulsion, the society has to call a special general meeting or an annual general meeting as the case may be and include the matter of expulsion of the member concerned in the agenda for such a meeting. It should be noted that the members should have a notice of 30 days of the general meeting at which the proposal of expulsion of the member is proposed to be considered. The member proposed to be expelled should also be specifically informed that he should remain present at the general meeting and explain his case personally. If it is not possible for him to attend the general meeting, he should send a written statement explaining his case well in advance of the date of the general meeting.

(2) The resolution of the expulsion of a member is required to be passed by 3/4^th majority of the members present and voting at the general meeting.

(3) After the resolution as stated above is passed at the general body meeting, a true copy thereof should be sent to the Deputy/Assistant Registrar, Co-operative Societies, for his confirmation.

(4) After the resolution of expulsion passed at the general body of the society is approved by the Registrar, the member concerned will stand expelled from the membership of the society with effect from the date of approval by the Registrar.

(5) After expulsion of the member, the society should file arbitration proceedings under Section 91 of the Maharashtra Co-operative Court for his eviction from the flat and for recovery of the outstanding dues, if any from the expelled member.

v     Cessation of Membership

(1) Circumstances under which a persons ceases to be a member of the society – As per Bye-law No.57

      The person shall cease to be the member of the society

     

(a)    On his resignation from membership of the society having been accepted by the committee

(b)   On transfer of all his shares and interest in the capital/property of the society

(c)    On his death

(d)   On his expulsion from the membership of the society

(e)    On being adjudged as an insolvent or legally disabled from continuing as member

(f)     If the whereabouts of the member are not know for a continuous period of seven years and if his shares and interest in the property/capital of the society are not claimed by anybody else

(g)    On cessation of right/title and interest of a member in the property of the society, by way of legal attachment or sale

(2) Circumstances under which a person ceases to be an Associate Member of the society As per Bye Law No. 58 the person shall cease to be an associate member of the society, when the original member ceases to be a member of the society or on the death of the associate member or on the acceptance of the resignation of the associate member by the Committee.

(3) Circumstances under which the person occupying the flat on behalf of the firm/company ceases to be the nominal member

      As per Bye Law No.59 if there is a nominal member occupying the flat on behalf of a firm, company or any other body corporate he shall cease to be member of the society as such:

(a)    On his death

(b)   On the acceptance of his resignation by the Committee

(c)    On cessation of membership of the original member on whose behalf he occupies the flat in the society

(d)   On cessation of his nomination on account of expulsion of the original member

(e)    On intimation from the original member of termination of the occupant’s nomination

(4) Circumstances under which a Sublettee, licensee, caretaker ceases to be the nominal member

     As per Bye Law No. 60

     The nominal member, who is the sublettee, licensee or care-taker or possessor in any other manner of the flat or the part thereof, shall cease to be as such member of the society:

(a)    On his death

(b)   On his resignation been accepted by the Committee

(c)    On the cessation of the membership of the original member

(d)   On the expiry of the period for which the flat or part thereof was permitted to be sub-let, given on leave and license or care-taker basis or occupied in any other manner

Note: The words ‘Original member’ used in the Bye-laws No.57, 58, 59, and 60 means the member, with whom the associate members held the shares of the society jointly, the firm, the company or any other body corporate, on whose behalf the member who has been permitted to sub-let, give on leave and license or care-taker basis his flat or part thereof or part with its possession in any other manner.

(5) Action by the Committee in case of cessation of membership of the society

      As per Bye-law No.61 the committee shall record the facts of cessation of a member’s membership of the society under Bye-law No.57 and of associate and nominal member’s membership respectively under Bye-laws No.58, 59 and 60, in the minutes of its meetings and accordingly the Secretary of the society shall inform the concerned members in writing within 7 days of the dates of such decision of the committee.

Members , Responsibilities & Rights

Part -10

v     Statutory Provisions For Expulsion Of A Member

ü      Rule 29 Procedure for expulsion of members

(a)    Where any member of a society proposes to bring a resolution of any members, he shall give a written notice thereof to the Chairman of the society. On receipt of notice or when the committee itself decides to bring in such resolution, the consideration of such resolution shall be included in the agenda for the next general meeting and a notice thereof shall be given to the member against whom such resolution is proposed to be brought, calling upon him to be present at the general meeting, to be held not earlier than a period of one month from the date of such notice and to show cause against expulsion to the general body of members. After hearing the member, if present, or after taking into consideration any written representation which he might have sent, the general body members shall proceed to consider the resolution.

(b)   When a resolution passed in accordance with sub-Rule 29(1) is sent to the Registrar or otherwise brought to his notice, the Registrar may consider the resolution and after making such enquiries as he may deem fit, give his approval and communicate the same to the society and the member concerned. The resolution shall be effective from the date of such approval.

ü      Bye-law No. 51 of the Bye-laws of the society

A member of the society, who has been expelled from its membership, shall be eligible for readmission to membership in the society, until expiry of the period of one year from the date of his expulsion, provided that on the recommendations of the meetings of the general body of the society, the expelled member may be readmitted to its membership, as a special case before the expiry of the period of one year, with the prior permission of the Registering Authority.

Case Law:

Tajnagar Co-operative Housing, Nanded v. Fateh Mohammed Maulana, 2002 (5) Mh. L.J.495. Resolution expelling Respondent No. 1 to 28 from membership of Petitioner society. Mandatory procedure with respect to notice was not followed, resolution expelling Respondents No.1 to 28 members was allegedly passed by two-third majority and not three fourth majority of members as required under section 35 of the Act. Thus, it was held illegal.

Members : Their Rights, Responsibilties and liabilities

                                                                    Part 9

v     Statutory Provisions For Expulsion Of A Member

A member of a Co-operative Housing Society is expected to follows the provisions of the Maharashtra Co-operative Societies Act, 1960, the Maharashtra Co-operative Societies Rules 1961, the Bye-laws of the society, the Regulations made there under and the resolutions passed by the managing committee and the general meeting from time to time. A member While making an application for membership of the society undertakes to abide by the Bye-laws of the society and the Regulation made thereunder. In case a member of the society contravenes the provisions made provision of the Maharashtra Co-operative Societies Act, the Maharashtra Co-operative Societies Rules, the Bye-laws of the society, the Regulations made there under and the resolutions of the managing committee or the general meeting, the working of the entire society is disturbed. In order to deal with a member of a Co-operative housing society who contravenes the provisions of the Act, the Rules, the Bye-laws of the society, the Regulations made thereunder and who acts in a manner detrimental to the interest of the society and its members, Section 35 of the Maharashtra Co-operative Society Act, Rules 28 and 29 of the Maharashtra C-operative Societies Rule and Bye-law No. 51 of the Bye-laws of the society provide for expelling such a member from the membership of the society. The relevant provisions of the Act, the Rules and the Bye-laws dealing with the expulsion are reproduced below for ready reference.

ü      Section 35(1) of the Maharashtra Co-operative Societies Act, 1960

A society may, by a resolution passed by a majority of not less than 3/4^th of the members entitled to vote who were present at the general meeting held for the purpose, expel a member for acts which are detrimental to the interest or proper working of the society:

Provided that no resolution shall be valid unless the member concerned is given an opportunity of representing his case to the general body and no resolution shall be effective unless it is approved by the Registrar.

ü      Section 35(2) of the Maharashtra Co-operative Societies Act, 1960

No member of a society who has been expelled under the foregoing sub-section shall be eligible for readmission as a member of that society or for admission as a member of any other society for a period of one year from the date of such expulsion:

Provided that the Registration may on an application by the society and in special circumstances, sanction readmission within the said period, of any such member of the said society or of any other society, as the case may be.

ü      Rule 28 of the Maharashtra Co-operative Societies Rules, 1961

Any member who has been persistently defaulting payment of his dues or has been failing to comply with the provision of the Bye-laws in connection with his dealings with society or who, in the opinion of the committee, has brought disrepute to the society or has done other acts detrimental to the interest or proper working of the society may, in accordance with the provisions of sub-Section (1) of Section 35 be expelled from the society. Expulsion from membership may involve forfeiture of shares held by the member.

LandguruZ Salutes our Legendary Mother on her 100th birth anniversary

Members, Their Rights, Responsibilities and Liabilities

Part 8

v     Why is Nomination Necessary?

If a member of a Co-operative housing society dies, what happens to his or her membership in the society? In case there is no proper nomination made by the deceased member, what is the position of his or her heirs as to the property rights? What should be done by a member to avoid any confusion after death? These questions are very important and members should take steps to prevent any awkward situations in the eventuality.

A proper nomination by a member as provided under the Bye-laws, therefore, assumes extreme significance in the functioning of a society. It is in the interests of both the society and the members in order to protect the rights of family members.

An associate membership or a joint membership does not by itself entitle an automatic transfer of membership.

This is a wrong impression with many members and must be removed. As per the Bye-laws, a joint or associate member has no property rights. Under the law, a joint or an associate member automatically ceases to be so after the death of the first member.

The first and foremost precaution to be taken by a member is that he or she should nominate a family member in the nomination. The society finds it difficult to fix a legal heir to the shares for the transfer of interest in the property. It is also difficult for the society to collect contributions towards out goings even as the flat continues to be occupied by family members of the deceased member.

Even if a member makes a will and appoints a legal heir as a beneficiary of the interest and shares in the property, a probate has to be obtained from a competent court in the absence of the nomination. This procedure is tedious and time consuming.

      What are the precautions?

A society member must fill in the nomination form and submit it to the society and obtain an acknowledgement on the third copy. Thereafter the committee passes a resolution and accepts the nomination form duly certified by a resolution number and the date of the managing committee meeting endorsed on the form.

It is of utmost importance that the document of nomination be deposited with the society in the manner explained above during the lifetime of the member.

Bye-laws also provide that a member can revoke the nomination. The provisions are contained in Section 30 of the Maharashtra Co-operative Societies Act, 1960, Rule 25 of the Maharashtra Co-operative Societies Rules, 1961 and Bye-laws No. 34 and 35 of the model Bye-laws.

A nominee holds the shares and interest in the flat in trust, and in case of a dispute the matter is referred is referred to a competent court whose decision will be binding on the society and the nominee and disputants.

v     Right of nominee

Dispute was filed by the society for the recovery of the flat for allowing responding No.2 to occupy the flat without obtaining prior permission of the society. Respondent No.1 is the member and Respondent No.2 is his close relative being the husband of his sister. Wife of Respondent No.2 was a nominee of the Respondent No.1 The question was, whether bye-law No.12(1)(g) r/w bye-law No.12(1)(a) would permit the member of the family, in particular who is nominee of the member to occupy the suit flat without obtaining prior permission of the society. Nomination by member does not create any right in favour of the nominee, but the right is in favour of the nominee is limited and fructifies only after the death of the original member. Occupation of flat by Respondent No.2 and his family members was unauthorized users of the flat. Petition was allowed.

Members, Their Rights, Responsibilities and Liabilities

Part  7

v     Documents that can be Obtained from the Registrar’s Office on Payment of Fees

(1)   Application for registration of a society

(2)   Certificate of registration

(3)   Bye-laws of a society

(4)   Amendment of the Bye-laws of a society

(5)   Order of cancellation of registration of a society

(6)   Audit memorandum of a society

(7)   Annual balance sheet

(8)   Order under section 88

(9)   Order of supercession of a committee or removal of any member thereof

(10)     Order referring a dispute for decision.

(11)     Any other order against which an appeal is provided

v     Resignation by Different classes of Members

(1)   Resignation by a member

A member can resign by giving three months notice, to the Secretary of the society as provided under Rule 21(1) of the Maharashtra Co-operative Societies Rules, but it cannot be accepted unless such a member has made payment of the charges payable to the society in full.[Bye-law No.27(a) (b)].

If any charges are found payable by the member to the society, it is the duty of the Secretary of the society to intimate the same to the member within fifteen days of the receipt of the notice of resignation, advising him to make payment thereof within thirty days of the date of the intimation.[Bye-law No.27(c)].

If there are no charges of the society outstanding with the member, the committee has to accept the resignation of the member and the decision is to be communicated to the member within three months from the date of receipt of receipt of the notice of resignation. [Bye-law No.27 (d)].

The Resignation of membership shall also be subject to such restrictions regarding the maximum amount of share capital that can be refunded in a year or as may have been provided for in the Act, Rules or Bye-laws of the society.

If the resignation is rejected, the committee has to record the reasons and has to communicate the same to the member within three months from the date of receipt of the notice or resignation [Bye-law No.27 (e)].

(2)   Resignation by an Associate Member

An Associate member may resign his membership at any time by writing a letter of resignation to the Secretary of the society, through the member, with whom he held the shares of the society jointly. The Secretary of the society shall place the letter of resignation of the Associate Member before the meeting of the Committee, held next after the receipt of the letter of the resignation, duly recommended by the member for acceptance by the committee. The decision of the Committee, accepting the resignation of the Associate Member shall be communicated by the Secretary of the society to the member and his associate member within 15 days of the decision by the Committee. If the resignation is rejected, the Committee shall record the reasons therefore in the minutes of its meeting and the Secretary shall communicate the same to the member and his associate member within the time specified above (Bye-law No.28).

(3)   Resignation by a Nominal Member occupying the flat on behalf of a firm, Company or any other Body Corporate

If there is a nominal member occupying the flat on behalf of a firm, company or any other body corporate, he may resign his nominal membership, at any time, by writing a letter of resignation to the Secretary of the society through the firm, the company or any other body corporate, on whose behalf he is occupying the flat. The Secretary of the society shall place the letter of resignation, before the meeting of the committee, held next after the receipt of the letter of resignation of the Nominal Member, duly recommended by the firm, the company or any other body corporate for acceptance by the Committee. The decision of the Committee, accepting the resignation shall be communicated by the Secretary of the society to the firm, company or the body corporate and the nominal member, within 15 days of the decision by the Committee. If the resignation is rejected, the committee shall record the reasons thereof in the minutes of its meeting and the Secretary shall communicate the same to the firm, company or the body corporate and the nominal member within the time specified above (Bye-law No.29).

(4) Resignation by a Nominal Member, who is a Sub-lettee, Licensee, Caretaker etc.

A sub-lettee, licensee, caretaker or possessor of a flat or part thereof, who has been admitted as a nominal member of the society may resign his nominal membership at any time, by writing a letter of resignation to the Secretary of the society, through the member who has been permitted by the Committee to sub-let, give on leave and license or caretaker basis the flat or part thereof or part with its possession in any other manner. The Secretary of the society shall place the letter of the resignation before the meeting of the Committee, held next after the receipt of letter of the resignation. The decision of the committee shall be communicated by the Secretary of the society to the member concerned and his sub-letter the licensee, the caretaker, or as the case may be, the possessor of the flat or part thereof, within 15 days of the decision by Committee. If the resignation is rejected, the Committee shall record reasons thereof in the minutes of its meeting the secretary of the society shall communicate the same to the member concerned and his sub-lettee, licensee or caretaker etc. within the specified above (Bye-law No.30). 

Members, Their Rights, Responsibilities and Liabilities

Part 6

v     Rights of Members

(a)    Inspection of Books and records:

As per Section 32(1) of the Maharashtra Co-operative Societies Act, 1960 the member has the right of access to certain books and documents and as per Section 32(2) of the Maharashtra Co-operative Societies Act, 1960 and to get copies by paying nominal fees prescribed under Bye-law No.172. The list of book/documents is given below.

(1)   Bye-laws of the society for Rs.10/- more than the cost price

(2)   Amendment of the Bye-laws of the society for Rs.2/- per page

(3)   Last audited Balance Sheet of the society for Rs.10/- per page

(4)   Application for membership of the society for Rs.5/-

(5)   Second and Subsequent Nomination by the member of the society for Rs.5/-

(6)   Share Certificate of the society for Rs.50/-

(7)   List of Members of the society for Rs.5/- per page

(8)   Correspondence (related to member) for Rs.5/- per page

(9)   Minutes of the general body meeting & Committee Meeting for Rs.5/- per page

  (10) Indemnity Bond for Rs.10/-

(b)   Occupation of Flats:

         The member, who is deemed to have been allotted the flat under Bye-law No.76(a) of the society shall have a right to occupy the flat subject to the terms and conditions set out in the letter in the prescribed form (refer Appendix-12) under the said Bye-law. The associate/nominal member and may have a right to occupy the flat with the consent of the member and the permission of the society, subject to the conditions set out by the society.

(c)    Restriction on the rights of Associate and Nominal Members

(1)   No associate member shall have any rights or privileges of a member except as provided under Section 27(2) of the Maharashtra Co-operative Societies Act, 1960 i.e. an associate member can enjoy the same rights as the first member but only in the absence of first member.

(2)   A nominal member shall have no right such as member (Ref. Bye-law No.26)

(d)   The member of the society has the following rights

(1)   Right of voting at the General Body Meeting – It may be noted that only one vote to be casted by every member though he/she is holding more than one flat in the society.

(2)   Right to contest elections for the post of any committee or Board of Directors.

(3)   Right to know the affairs of the society.

(4)   Right to transfer shares or interest in the society, subject to provision of section 29. (Refer Chapter No.9 for detail).

(5)   Right to refer the dispute between him and the society to the appropriate authority for or a decision.

(6)   Right to get a refund of share money on amalgamation, division, conversion etc.

(7)   Freedom from attachment of shares.

(8)   Right to nominate a successor.

(9)   Right to inspect society’s records.

Note:  Refusal to allow inspection: An application can be made to the Registrar under section 154 of the Maharashtra Co-operative Societies Act, 1960 if the society refuses to allow inspection. A dispute can be raised under section 91.

Members, Their Rights, Responsibilities and Liabilities

Part 5

v     Refusal to Admit membership & Appeal against decision

      Every member is entitled to appeal under section 23 of Mah. Co-op. Societies Act, to the Register even if refusal of membership is at the formation stage or in respect of the registered society.

      Transfer of interest in the property of the society – Quantum of payment of premium. Circular dated 9^th April, 2002 Maximum Limit.

      Transfer of right and interest and interests in the premises or transfer of the shares of the society. Demand of premium by petitioners – society challenged by respondent No.1 Adjudication before the lower authorities was confined that they were entitled to claim for such premium cannot in any case exceed Rs.25,000/- Neither of the authorities below considered those issued which deciding the matter. Orders passed by lower authorities were set aside by the single judge, and the matter was remanded.

v     Responsibilities and Liabilities of Members

(1)   Every member has to keep his flat clean. – Bye-law No. 46.

(2)   No member shall, without the previous written permission of the committee make any addition to or alterations in his flat. – Bye-law No. 47(a).

(3)   Every member has to allow the Secretary of the society, accompanied by any other member of the committee, to enter his flat with prior intimation to examine its condition for ascertaining the repairs if necessary. – Bye-law No. 48(a).

(4)   In respect of repairs to be carried out by the society in accordance with Bye-law No. 160(a) at its cost, the committee can issue a notice to the member indicating the particulars of repairs necessary to his flat which are proposed to be carried out by the society.

(5)   In respect of repairs to be carried out by the member at his cost, the committee can issue notice to the member, indicating the particulars of repairs necessary to his flat and calling upon the member to carry out the repairs to the satisfaction of the approved architect within a specified period. – Bye-law No(c).

(6)   No member can stock or store any kind of goods or materials, which are combustible or obnoxious or other goods without previous permission of the committee. Bye-law No.49.

(7)   No member shall do or suffer anything to be done in his flat which may cause nuisance, annoyance or inconvenience to any of the members of the society or carry on practices which may be repugnant to the general decency or morals of the members of the society.