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, 31^st 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 1^st 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.  

Levy of Charges Of The Society

Part 3

v     Demand Notice/Bill

As per Bye-law No.70, the Secretary of the society shall prepare a demand notice in respect of the charges of the society payable by members on the basis of the society Bye-law No.69(a) and issue the same to all the members on or before the date fixed by the Committee in that behalf. Every Member of the society shall pay the amount mentioned in the demand notice in full within such period as may be fixed by the committee. The demand notice/bill can be issued monthly, bi-monthly, quarterly, half yearly or yearly.

v     Interest, rebate/discount

(iii)               Interest 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 73 FFI of the Maharashtra Co-operative Society Act, 1960. As per the Section, the demand notice/bill amount is payable on presentation of it or on completion of 30 days on availing of the service by member, whichever is earlier. The Sectary of the society shall bring the cases of defaulters to the notice of the Committee for taking further necessary action.

As per Bye-law No.72, a defaulted member shall be required to pay simple interest at such rate as is fixed by the general body of the society at its meeting, subject to the maximum of 21 per cent per annum, on the charges in respect of which the member has defaulted, from the date of default until the payment.

(ii) No Validating of charging compound interest or penal interest There is no provision under the Maharashtra Co-operative Societies Act, 1960, Maharashtra Co-operative Societies Rules, 1961 or under the Model Bye-laws, allowing the Co-operative Housing Society to charge either compound interest or penal interest and thus, a Co-operative Housing Society cannot do so, even if the society passes a resolution to the said effect, at the general body meeting/committee meeting, by whatsoever majority. The Registrar may not allow such type of amendment in the Bye-laws. (i.e. even after following the due procedure, as laid down by the law/Bye-laws).     

(iii) No Validity of giving rebate/discount to those members who pay their dues in advance

At present, there seems to be no specific provision in the Maharashtra Co-operative Societies Act, 1960, Maharashtra Co-operative Societies Rules, 1961 or the Model Bye-laws, thereunder, which would enable the society to give any rebate or discount in the above case. Hence, the same may be termed as illegal. However, societies can incorporate such provision, whereby they can give discount/rebate which shall be at a nominal rate of simple interest, by amendment, the society can give such rebate/discount. If any advance amount is taken by way of deposits or loans from the members, the same may be covered by the provisions of Bye-law No.11 of the Model Bye-laws, provided the conditions laid down therein are observed.

v     Ground Rent

It is to be collected from all the members of the society. In case of Bai Puribai Mohanlal Shah v. Swantanra Bhavan C.H.S. Ltd., [1965 C.T.D. 486], it was held that upper flat owners in a society cannot say that ground is being used by the ground floor occupants and that ground rent is not payable by them. The ground floor sustains all the other floors constructed upon on it.

Levy of Charges Of The Society

Part 2

v     Basis of charges

As per Bye-law No. 69(a) the Committee shall apportion the share of each member towards the charges of the society on the following basis:

(i) Property Taxes Normally such charges are fixed by the Local Authority on the basis the ratable value of the flat/shop per sq.ft. And should be collected according. Where the property tax is collected by the authorities individually in respect of each flat/shop no charges should be collected by the society.

(ii) Water Charges On the basis of the total number and size of inlets provided in eachflat.

(iii) Expenses for repairs and maintenance of the building/buildings of the society

At the rate fixed at the general body from time to time subject to the minimum of 0.75 percent per annum of the construction cost of each flat for meeting normal recurring repairs.

(iv)Expenses on repairs and maintenance of the lift, including charges for running the lift

Equally by all the members of the building in which the lift is provided, irrespective of whether they use the left or not. For detail discussion refers chapter No. 18.

(v) Sinking Fund As provided under Bye-law No.13(c), at the rate decided at the meeting of the general body, subject to the minimum of 0.25 percent per annum of the construction cost of each flat, excluding the proportionate cost of the land.

(vi) Service Charges Equally divided by the number of flats/shops/unit, (for Co-operative department order refer order 3 & 3 A.) Every Managing Committee should prepare a budget for each year at the Annual General Body Meeting for the expenses stated above. Approval at the general Body Meeting should be taken for equal division of the expenses among all the flats/shops etc. Some societies divide the above service charges on the basis of square feet. This is bad in law as it is not within the purview of the Bye-laws. Bye-law No111 sates that the general body is the society. Accordingly, the General Body cannot take any decision beyond the provisions of the bye-laws.

(vii) Parking Charges At the rate fixed by the general body of the society at its meeting under the Bye-laws No.84/85. For detail discussion refer chapter No. 18.

(viii) Interest on delayed payment of Charges At the simple rate not exceeding 21% fixed under the Bye-law No.72 to be recovered from the defaulting members

(ix) Repayment of the installment of the loan and interest the amount of each installment with interest fixed by the financing agency

  

(x) Non-occupancy charges As per Bye-law No.43 (2)(iii)(c), the members shall pay non occupancy charges to the society at such rate as is decided by the meeting of the general body of the society. Non Occupancy Charges should not be more than the directive of the Co-operative department. Refer Order-4 & 4A. At present it is 10% of service charges.

For detail discussion refer chapter No. 18.

The State Government issued a circular to co-operative Housing Societies not to levy non occupation charges more than one time of the service charges. This was held as not illegal. The direction are mandatory. (Twin Star Venus CHS LTD Mumbai & others v. G. N. Sainani & & ors, 2006 (1) Mh.L.J.721)

(xi) Insurance Charges It is proportionate to the built up area of each flat. If there is an increase in the insurance premium due to the storing of specific goods in any flat, used for commercial purposes, the extra burden of insurance premium shall be shared by those who are responsible for such increased premium in proportion to the built up areas of their flats.

(xii) Lease Rent The built up area of each flat

(xiii) Non Agricultural tax The built up area of each flat

(xiv) Any other charges As may be decided by the general body of the society at its meeting

Levy of Charges of the Society

Part 1

v     Items

The Managing Committee has to work out the contribution to be collected from the members for the day to day working of the society. Levy of the charges of the society has been given in Bye-laws Nos.67 to 72.

Bye-law No. 67 gives the details of the contribution to be collected from members of the society, towards out goings and establishment of its funds, referred to in these Bye-laws as “the charges” may be in relation to the following:

(1)   Property Taxes

(2)   Water Charges

(3)   Common Electricity Charges

(4)   Contribution to Repairs & Maintenance Fund

(5)   Expenses on Repairs and Maintenance of the Lift of the society, including charges for running the lift

(6)   Contribution to the Sinking Fund

(7)   Service Charges

(8)   Car Parking Charges

(9)   Interest on the defaulted charges

(10)     Repayment of the Installment of the Loan and Interest

(11)     Non Occupancy Charges

(12)     Insurance Charges

(13)     Lease Rent

(14)     Non Agricultural Tax

(15)     Any other Charges.

v     Service Charges

Bye-law No. 68 gives the details of the service charges of the society referred to above and shall include the following:

(A) Salaries of the office staff lift men, watchmen; Mail and any other employees of the society

(B) Where the society has any independent office the property taxes, electricity charges, water charges etc for the same

(C) Printing, stationery and postage

(D) Traveling allowance and conveyance charges to the staff and the members of the Committee of the society

(E) Sitting fees paid to the members of the Committee of the society

(F) Subscription to the Education Fund of the Maharashtra Rajya Sahakari Sangh Ltd.

(G) Annual Subscription of the Housing Federation and any other Co-operative institution to which the society is affiliated

(H) Entrance fees for affiliation to the Housing Federation and any other Co-operative Institution

(I) Audit fees for internal, statutory and re-audit, if any

(J) Expenses incurred at meetings of the general body, the committee and the Sub-Committee, if any

(K) Retainer fees, legal charges, statutory enquiry fees

(L) Common Electricity Charges

(M) Any other charges approved by the general body at its meeting, However such charges should not contradict the provisions of the Act, Rules and Bye-laws of the society.

General Body Meeting

Part 7

v     Issues & Replies

      Since the General Body is the Supreme Authority, are all resolutions, passed by the General Body Meeting, binding on the Members of the Society?

A.  Though the General Body is supreme, within the frame work of the Act, Rules and Bye-laws, any resolution passed by the General Body in contravention of the Act, Rules and Bye-laws will be void.

(Sea-side Apt. C.H.S. Ltd. v. M. Swaminathan M.S.C. Appellate court 1994 C.T.J.354)

      What are the procedures for issuing notice and agenda of the General Body Meeting?’

A.  The Secretary of the society will issue notice of the general body meeting specifying the time, date, place and agenda. If the Secretary fails to issue notice, the notice can be issued by the Chairman.

      Who is entitled to attend the General Body Meeting?

A.  A member whose name stands first in the share certificate is entitled to attend the general body meetings. In the absence of the member, the associate member is entitled to attend the general body meeting. No proxy or a holder of power of attorney or holder of letter of authority is entitled to attend a general body meeting of the society.

      Can a bonafide lady member issue a power of attorney to another male member for discharging the obligation on her behalf such as voting at the general body meeting or contesting election to the managing committee?

A.  A holder of a power of attorney is a good as a proxy. A proxy is not allowed to participate in the affairs of the society i.e. voting at general body meeting and contesting election to the managing committee of the society as he is prohibited from voting in view of the provisions of section 27(2) of the MCS Act.

      Does a defaulting member have a right to vote?

A.  The voting right of a member is not affected even when he is in default.

      Can the representative of a company occupying a flat in a society attend its Annual General Meeting (A.G.M.)?

A.  The representative of a company occupying the flat allotted to the company cannot attend the A.G.M., unless he is authorised by the Company to represent it at the Annual General Meeting and also to participate in the management of the society. Mere occupation of the flat does not confer of any right of representation on behalf of the company at the A.G.M.

      What is to be done if any items on the agenda remain incomplete?

A.  If all the business on the agenda of the notice cannot be transacted on the date of a general meeting, the members present can decide to postpone the meeting and call it on any other suitable date and time but within 30 days of the meeting.

      If voting is required at the General Body Meeting, how is it conducted?

A.  Voting rights of a member and an associate member of the society shall be regulated in accordance with the provisions of section 27(1), (2), (3), & (3A) of MCS Act. At a general body meeting of the society every member of the society and in his absence his associate member shall have one vote only. In case members possess more than one flat/units he too is entitled to a single vote only. If there is equality of votes the Chairman of the meeting shall have a casting vote.

      “To consider any other business laid before it with the permission of the chair.” This appears on the notice and as an item on the agenda. It has been noticed that any member may raise objection to putting any other item on the agenda with the permission of the chair. How can the society overcome such a difficulty?

A.  The Bye-law No. 89 of the society makes very clears the functions of the annual general Body Meeting. Item No.10 of the Bye-law No.89 reads as under:

To consider any other matter to be brought before the meeting with the permission of the Chair, excepting those, which require proper notice.

In order to avoid the contingency narrated above, a circular should be issued well in advance of the issue of the notice of the agenda of the annual general body meeting, requesting members to suggest the item to be discussed at the ensuing annual general meeting before the date fixed by the managing committee so that all such items could be considered by the managing committee and included in the agenda. This will help to minimize complaints.

      The Annual general Meeting was called within prescribed time, but was adjourned. Will failure to call the adjourned meeting within the stipulated period attract Registrar’s powers to call the said meeting?

A.  Where the Annual General Meeting is actually called within the period prescribed under Section 75(1) of MCS Act, but is adjourned for want of quorum, failure to convene the adjourned general meeting, does not come within the mischief of section 75(5) of the MCS Act, hence it does not attract Registrars power to call the meeting.

(Lourdes Chandrhas Shetty (Mrs.) and Anr. V. Vishal Kokan Co-op. Hsg. Society Ltd. & Ors. 2005(3) Mh.L.J. 320, 2005 Bom.C.R.41)

      Hon. Secretary is vested with the power of recording the proceedings in the minute book of the society. Can the Chairman effect any change in that minute book under his authority? Is he the whole and sole authority?

A.  The Managing Committee alone is competent to effect any changes in the minutes recorded by the Secretary when the same are placed for confirmation before the committee at its next meeting. The minutes are to be approved and confirmed by the committee and not by the Chairman alone.

      MCS Act states that the final authority of every society shall vest in the General Body of members in General Meeting. Can a general body pass a resolution, which may cause hardship to a member?

A.  No doubt the general body in a co-operative society is its supreme or sovereign body entitled to regulate its own procedure, but even so the doctrine of internal management cannot prevail. Where any resolution passed may be harsh, unjust, inequitable, it is only by standards of justice and equity that the resolution or the action of the managing committee or general body must be judged. If a resolution causes undue hardship and is divorced to all cannons of justice, such a resolution will not be enforced. It is only where the resolutions is passed upon equitable principal of internal management will prevail.

First Cluster development scheme off the blocks

Dilapidated buildings and slums built before 1960 will make way for high-rises in Lower Parel; similar projects coming up on Currey Road and Mahalaxmi

¯     WHAT IS CLUSTER DEVELOPMENT

LAST YEAR, the State Government had amended the development control (DC) rules for Mumbai, paving the way for cluster development in the island city as well as redevelopment of cessed buildings. Cluster redevelopment is simply redeveloping an area comprising several buildings rather than individual structures, on a minimum 4,000 square metre plot.

NM Joshi Marg at Lower Parel becomes one of the first areas in the city where dilapidated buildings and slums built before 1960 will make way for high-rise complexes. Part of the proposed project, by Shreepati Group, is a 73-storey tower, which will be one of the first to be built under the Cluster Development Scheme.

Last year, the State had amended the development control (DC) rules for Mumbai, paving the way for cluster development in the island city as well as redevelopment of cessed buildings.  Cluster redevelopment is simply redeveloping an area comprising several buildings rather than individual structures, on a minimum one-acre plot.

In the Lower Parel project, 840 tenants living in old buildings and slums will be rehabilitated in three buildings.

A commercial complex will be handed over to MHADA as part of its share in the project. Pranav Merchant, vice-president, Shreepati Group, said, “We received the urban development clearance around a fortnight ago.  Work will start in three to four months after BMC gives its nod.  We aim to complete (the project) in about four years.”

In 2009, Chief Minister Ashok Chavan had announced a floor space index as high as four for redevelopment under the scheme.  While it is an obvious bonanza for the builders, they will also be obliged to provide amenities like parks and roads.

Apart from the Lower Parel project, Nish Developers’ seven-acre project in Currey Road, and D B Realty’s 22,000 sq mt project in Mahalaxmi, have been approved under the scheme.

Construction has already begun at Nish Developers’ One Avighna Park project will have 64-storey twin towers with three, four and five BHK apartments, apart from Penthouses.

Kailash Agarwal , promoter of Nish Developers, said “We will have a five-star hotel –cum-service apartments ready by 2014. The project will change the face of Currey Road.” There are 18 other proposals awaiting urban development clearance under the scheme.

 Report From TOI Dated 17/09/2010 Page No 2

Minutes of Meeting

Part 6

v     Minutes

(1)   Meaning

“As the term suggests” minutes constitute a minute account of the meeting. They record answers to the following questions.

(a) What happened?

(b) When did it happened?

         (c) Who was involved?

In other words minutes of the meeting are a replica of the proceedings of the meeting held on a particular date.

(2)   Writing of minutes of the meeting

Minutes of the meeting have to be recorded in writing. The minute book is an important document since it serves as legal proof and evidence of all the members of the society as well as concerned other parties who are, in any way, the Co-operative housing society. Further, it can be consulted to see how been resolved in the post.

(3)   Recording, Approval of the minutes and the time limit within which the minutes to be recorded

The Secretary of the society is responsible for writing the minutes of all the meetings of the General Body. The Committee should finalise the minutes of every General Meeting of the society within 3 months of the date of the meeting and circulate them among the members within 15 days of the meeting of the committee at which the draft minutes were finalised as specified in the Bye-law No.109.

v     Role Of Managing Committee

The managing committee has its own role to play at the general body meeting. It is the responsibility of the Managing Committee to carefully make all the preparations. Prior to the meeting, reports and circulars may be sent to all the members so as to apprise them of matters to be discussed at the meeting. They are also usefull in recording the important events, plans for the creation of funds, justification for increase in charges, explanations regarding items in the accounts statements, expectations of Committee from the members’ etc. this will educate the members and they will attend the meeting prepared. On account of prior information about the matters to be discussed, participants in the deliberations will be specific on points. Misunderstanding and consequent lengthy discussion may thus be avoided. Dialogue between the managing committee and members through such circulars/Reports before the meeting will generate interest in the conduct of meeting. Members gain confidence and feel they are also part of the management and have responsibility to the working of the society. The managing committee should respect the views expressed by the members and should not hesitate to accept good and concrete suggestions made during the meeting. It should also give reasons as to why some suggestions cannot be accepted. Everybody including the Chairman, Secretary, managing committee and the members, has a role to play in the general body meeting and all should work together to make it successful.