Implications Of The Items To Be Discussed At The First General Body Meeting

Item No.1: This item refers to the election of a President for the first general body meeting of the promoters of the society. The President elected at the meeting will conduct the meeting in an orderly manner, keeping in view the provisions of the Maharashtra Co-op. societies Act, 1960, the Maharashtra Societies Rules, 1961 and the Bye-laws. The President elected at the first general body meeting will authorize any one of the members present at the meeting to take notes of the discussion. The President has than to write down the minutes of the meeting, sign the same and hand over the same to the Chairman of the society.

      Item No.2: This refers only to the recording of the Bye-laws registered by the Registering       Authority. Bye-laws No.22 of the Bye laws of the society entitles a member to receive a copy of the Bye-laws at cost price.

Item No.3: This item refers to the admission of persons to membership of the society. It may be noted that the persons who have signed the application for registration of the society become members on the date of registration of the society. At times, it happens that during the period intervening between the submission of the registration proposal and registration of the society, some of the purchasers of the flats transfer their flats, with or without the consent of the builder promoter/developer, without carrying out the required corrections in the registration proposal submitted to the Registering Authority. The position of the transferee in such a case is that of an unauthorized occupant of the flat. All rights with regard to such a flat vest in the transferor, who is a member of the society and not in the transferee. The Chief Promoter, who formulates the registration proposal and submits it to the Registering Authority has to take care to see that the changes in names are recorded in the registration proposal as soon as the builder Promoter/developer allows the transfer of any flat. The transferee should also ensure that his name is entered in the registration proposal, before the society is registration of the society. If this is not done, the transferor himself will not be eligible too transfer the flat to the transferee till the expiry of the period of one year from the date of formation of the society. The transferees will not be eligible to be members of the society, neither will they be eligible for transfer of shares and interest in the flats purchased by them before registration of the society from the purchasers, whose names are included in the application for registration until the expiry of one year from the date of registration of the society.

Position with regards to on sold flats in a flat owners’ society. If flats which were shown as unsold in the registration proposal are purchased after the submission of the proposal but before the first general body meeting, the purchasers will have to be admitted to membership of the society, provided the condition of membership are fulfilled by them. Those persons, who have purchased the flats which were shown as unsold in the registration proposal and which have been sold after submission of the proposal for registration of the society but before the first general body meeting and/or any flat purchaser who has not signed & joined the registration proposal whatever reason but desires to become member of the society after registration will have to be admitted to membership of the society, if the conditions of membership are fulfilled. The chief Promoter should place applications for membership received from such purchases of flats in the form prescribed under the Bye-laws before the first general body meeting. The Chief Promoter should satisfy himself that the applications for membership are placed before the first general body meeting. The Chief Promoter should satisfy himself that the applicants are eligible to be members of the society before their applications for membership are placed before the first general body meeting of the society. The first general body meeting should further be kept in mind that the number of members does not exceed the number of flats in the building. In case of a plot type Co-operative housing society, the Chief Promoter of the proposed society should not accept applications for membership in excess of the number of flats proposed to be constructed. 

Queries By The Members

Solution From The Desk Of Mr. Umesh Bhat (FCA) 

Query 1 : A person wants to invest in the property .The society is willing to admit the person as a member.  In the next few months the property  is going to be redeveloped. Whether the person will be liable  to pay any Income tax on the amount received by him from the developer?

Solution: 

First issue is whether on facts of case, capital gains tax arises or not. Here if the development rights as arising from right to TDR are passed on to the developer, in most of the cases, the income tax liability should  not arise. Structure of the transaction and documenting the same is very relevant here. Under this analogy obviously the tax would not arise and therefore who is the taxable entity is not an issue at all. Going ahead, if taxability arises, then whether the society is the taxable entity or the members, once again would have basis upon the  manner in which the transaction is structured, carried through and documented. On facts of the case, each of the views is likely to succeed. If the member is considered as taxable entity, then in your case the resultant capital gains would be the short term capital gains.

Query 2 : A Society is receiving the rent  from the Telephone Towers installed on the terrace of the society.  The society is paying the Income tax on the rental income as income from house property and filing the Income Tax Returns regularly. Now the Society wants to gift certain amount  to the members from the Income of the Society. Can the society  do the same?

 Solution:

In strict sense gifting requires presence of natural love and affection. Under the bye laws also gifting by the society to members is not visualized. However, distribution as dividend is possible. Further by applying the  concept of mutuality one may argue that what is received by the society is received by the members and as the society has already paid tax on the impugned amount, once again the tax should not become payable on the same amount when distributed to members. As an abundant precaution, there   may  be better and more safe ways of giving benefits to the members.

Scrutinies

 PART 1:

SCRUTINY OF SUITABLE BIDDER.

1.      Scrutiny Of Developers Offer On The Merits And Parameters.

2.      Attending Negotiations With Selected Developers On Behalf Of Society.

3.      Drafting Of Specifications And Technical Terms Of The Development Agreement.

PART 2:

 PRE CONSTRUCTION SCRUTINY OF SUBMISSION.

1.      Scrutiny Of Municipal Drawing, Structural Drawing, Elevation And Construction Details Prepared By Developers/Architect. Suggesting/Recommending Changes To Society.

2.      Monitoring The Submission And Approval Of Proposal.

PART 3:

 CONSTRUCTION OF THE BUILDING

1.      Preparation Of Bar Chart Of Various Construction Activities.

2.      Supervising The Quality And Workmanship Of Work. Implementing The Specification As Per Agreement, Reporting Deviation And Preventing Any Further Reoccurrence.

3.      Submitting Monthly Progress Report Of Work.

4.      Co-Ordinate Between Architects, Structural Engineer, Developer, Contractor And Authorized Society Representative For Progress And Quality Of Work.

5.      Monthly Progress Meeting With Society And Developer For Work Progress.

6.      Expected Changes In Scope Of Services, Nature And Pattern Of Reports If Any Will Be Intimated By Society At Earliest To Us To Prevent Any Loss Of Man Hours, Infrastructure And Duplication Of Responsibilities.

SERVICE STAFF

1.      Experience Supervisor For Day To Day Supervision.

2.      Weekly One Visits Of Senior Engineer.

3.      Monthly Meeting With Authorized Society Representative, Architect And Developer.

EXCLUSION

1.      All Approvals As And When Required From The Authority Concern, (MCGM, Collector And Police ETC).

2.      Implementation Responsibility Towards Work.

3.      Work Certification.

4.      Anything Not Explicitly Mentioned In Scope Of Work.

   

Important Documenst To Be Collected From Registrar Office

v     Documents to be Collected from The Registrar’s Office

If the application for registration is in order in all resects, the registrar of the co-op. housing society will issue the Certificate of Registration and return one copy of bye-laws and an application for the registration in From No. ‘A’ along with Statement ‘A, B, & C’ duly sealed.

v     Documents to be Collected By The Chief Promoter

On the formation of a Flat Owner Society, the Chief Promoter is required to collect a number of documents from the builder to be handed over to the Chairman or any authorized member of the Provisional Committee. The list of documents is contained in Bye-law No.91 as Follows:

(1)   All records of the society, particularly the copy of the application for registration of the society,

(2)   received back from the Registering Authority

(3)   The copy of the bye-laws of the society registered by the Registering Authority

(4)   The certificate of registration of the society

(5)   The Challan for credit of amounts into the bank

(6)   The Counterfoils of the used Cheques and the unused forms of the Cheques

(7)   The bank pass books

(8)   The copies of all the agreement entered into by him with different parties

(9)   The statement of accounts as prepared by him

        (10)The applications for membership

       (11)  The statement of information of the promoters

       (12)  The Vouchers for amounts spent

       (13)  The cash balance, if any

       (14)  The site plan/the scheme of construction (for plot purchase type)

       (15)  The minutes of the first general meeting of the society

       (16) The files of the correspondence with the Registering Authority, the Local   Authority

       (17) All such others records and assets of the society as are in the possession, leaving nothing with    the chief promoter.

v                            Holding The First General Body Meeting

      On getting the society registered the first task of the Chief Promoter is to hold a General Body Meeting within three months from the date of registration as per Rule No.59 of Maharashtra Co-operative Society Rules, 1961.

      Failure of the Chief Promoter to call the meeting within the prescribed period attracts Bye-law No.87. The Chief Promoter or any other promoter should bring to the notice of the Registering Authority can take action to convene the first general body meeting of the promoter of the society.

      The first general body meeting of the society is to be attended by those persons who have signed the application for registration. The notice of the meeting should therefore, be sent only to those who have signed the application for registration of the society.

The Chief Promoter or the Registering Authority, as the case may be, has to give 14 days’ clear notice (the day of posting the notice and the day of the meeting are to be excluded from the period of 14 days) to the promoters who signed the application for registration.

Issues & Replies of Society members(registration)

What are the duties of the Chief Promoter?

Ans. (1) The Chief Promoter has to make an application for reservation of the name for the proposed society in the prescribed from.

         (2) He has to complete the registration formalities in respect of which the name has been reserved, within 3 months for the proposed society.

        

               However if he cannot complete the formalities he can apply for extension of one month.

         (3) He must open a saving account in the name of the proposed society.

         (4) He should collect share capital entrance fees, cost of purchase of land/building and other incidental expenses and deposit them in the same bank.

         (5) The chief promoter has to issue receipts in the name of the proposed society.

What steps are to be taken if the builder does not form a Society?

Ans. As per Section 10 of the MOF ACT the Promoter has to take steps for formation of Co-operative Society. If he fails, first the purchasers must write a letter to the builder indicating the intention to from a society. If builders refuse to extend their co-operation in formulating registration proposals, the form of affidavit and letter must be given too the Deputy/Assistant Registrar of Co-operative Societies in lieu of an undertaking by builder as contained in the ‘Z’ From.

The building has been occupied in 1976. Neither the flats nor the society is registered so far. How to proceed?

Ans.  All the flat owners should pay the Stamp Duty on their agreement, get the same registered and thereafter they and go for registration of society after getting 60% or 10 flats whichever is more of flat owners’ agreement registered. 

Failure To Get OC Costs Bldr Rs 5 L

Ref: TOI Dt; 02/08/2010

Consumer Forum Orders Compensation To Malad Hsg Soc For Hiked Charges

    Mumbai: In An Order Passed This Week, A District Consumer Forum Directed A Builder To Pay A   Compensation Of Rs 5 Lakh To A Housing Society In Malad For The Inconvenience They Had Faced In The Absence Of The Mandatory Occupation Certificate (OC).

   

                      According To The Sai Sankalp Housing Society, From 1993 To 2001, They Had To Pay Double The Water Charges And Higher An OC Due To The Breach Of FSI Norms And Construction Of An Illegal Floor.

                   

                          Agreeing That There Was Deficiency In Service By The Builder, The Forum Ordered Him To Pay An Additional Rs 5,000 To The Society And To Take Appropriate Steps With The Authorities And Obtain The OC As Well As The Execution Of Conveyance Within Four Months.

                         Residents Of The Malad Building Ad Taken Possession Of Their Flats And Formed The Society In 1993-94. According To Them, Despite Repeated Requests, The Builder, Narendra Jadhav, Has Failed To Obtained The OC As Well As The Completion Certificate And Also Did Not Furnish The Copy Of The Approved Plans To Them. As A Result, The Society Allegedly Had To Suffer A Loss Of More Than Rs 5 Lakh For Having To Pay Higher Water Charges And Property Tax From 1993 To 20002: They Paid Higher Property Tax, Which Added Up To Around Rs7 Lakh Per Year, And Double The Water Charges, Which Came To Around Rs3.10 Lakh Over Nine Years.

                     Denying The Charges, Jadhav, However, Claimed That The Housing Society Neither Had To Make Any Extra Payment Nor Did They Suffer Any Loss Due To The Absence Of The OC. Jadhav Also Alleged That The Buyers Took “Possession Of The Flats Before Schedule” As A Result Of Which, He Could Not Obtain The Occupation Certificate. He Claimed That He Then Had To Lodge A Police Complaint Of Criminal Trespass Against The Flat-Owners.

                          The Mumbai Suburban District Consumer Disputes Redressal Forum, Presided By JL Deshpande And Member V G Joshi And D S Bidnurkar, However, Did Not Find Any Substance In Jadhav’s Defence And Observed That “The Builder Has Not Produced Any Material On The Record To Substantiate These Allegations…(Jadhav) Has Not Offered Any Justification For Not Obtaining The OC From The Competent Authority”.

                                       Citing Development Control Rules, The Forum Said The Onus Was On The Builder To Obtain An OC And Even If The Flat Purchasers Had Insisted On Taking Possession Earlier Than The Scheduled Time, He Did Not Have Any Reason For Not Getting The OC. The Forum Also Cited The Provisions Of The Maharashtra Ownership Flats Act, 1963, Which States That If There Is No Fixed Period To For Execution Of The Conveyance Then The Builder Is Under An Obligation To Execute The Conveyance With In Four Months From The Date Of Formation And Registration Of The Society. In Its Absence, Jadhav Had “Committed Deficiency Of Service And Breach Of Statutory Obligation”, The Order Stated.

                         The Forum Also Ordered That If Jadhav Failed To Procure The Certificates Within Four Months From The Date Of Receipt Of The Order, He Would Have To Pay The Housing Society A Penalty Of Rs500 Per Day From The Date Of Expiry Till The Compliance Of The Directions.

          

Registration

Ø      Issue of Registration Certificate

  

(a)    Upon the proposal being complete and upon the Registration Authority being satisfied, as aforesaid, he is under an obligation under Section 59(1) of the Act, to register such Society within two months from the date of lodging of the application with Registration Authority. If the registration is not completed within 2 months as aforesaid, then within a period of 15 days from the expiration of the time limit, the Registration Authority is under an obligation to forward the proposal for registration to the Government for further action.

(b)   Upon registration of a Society under Section 9. Maharashtra Co-operative Societies Act, 1960 the Registration Authority should grant to the Society a certificate of its registration together with a certified copy of the approved bye-laws.

Ø      Evidence of Registration

      A certificate of Registration signed by the Registrar shall be conclusive evidence that the society therein mentioned, is duly registered, unless it is proved that the registration of the society has been cancelled. So long the registration of the society stands and so long as it was not cancelled by the Registrar, the said Certificate evidence of the fact that the society was duly registered.

  

Ø      De-registration of societies

      As per Section 21A, if the Registrar is satisfied that any society is registered on a misrepresentation made by applicants or that the work of the society is completed or exhausted or the purpose for which the society has been registration are not being served, he may, after giving an opportunity of being heard to the Chief Promoter, the committee and the members of the society, de-register the society.

      De-registration of Co-op. Society: Show – cause notice necessary

      De-registration of Co-op. Society under above referred Section of the Act, 1960 will have civil consequences and therefore before passing any order to that effect the principles of natural justice are required to be followed. Even though there is no specific provision in the said Section for issuing show cause notice, in the interest of the principles of natural justice, prior notice is required before taking any final action. It was held that the occupant of the premises and his/her capacity is not relevant for registration. Therefore, it was held by the Single Bench that non-disclosure of above referred information cannot be treated as suppression of facts or information.

Ø      Societies are bodies corporate

     

      Section 36 makes every registered society a corporate body having perpetual succession and a common seal. The Society as a corporate body acts through committee for management with the rest of authority being rested in general body of members at meetings.

An unincorporated association of persons which is not yet registered as a co-operative society cannot sue in its proposed name or through the promoters/ chief promoter without obtaining leave to defend under Order 1 Rule 8 of CPC. Application dismissed.