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Co-operative Housing society (CHS) rules under Co-operative Societies Act, 1960

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Download the Maharashtra State Co-operative Societies MCS Act, 1960 (Size: 616 KB):
http://www.diehardindian.com/ngo/download/MCS-Act.pdf

Download Model Bye-Laws of Co-operative Housing Societies, as per 97th constitutional amendment 2013 (Size: 506 KB):
http://www.diehardindian.com/ngo/download/model-97.pdf

It is a must to adopt bye-laws in your own society. Utilization of all funds in the society have to be with the prior approval of the General body

How much non-occupancy charges can be taken from flats vacant or given on lease?

Co-operative housing societies registered under the Act cannot charge non occupancy charges beyond 10% of the service charges (excluding municipal taxes), as per Government Order dated 1/8/2001 issued in public interest under Section 79A of the MCS Act, for flats given out on rent. Exemption from the payment of non-occupancy charges will not be applicable to the near relations like son-in-law, brother-in-law (sister's husband), sister-in-law (wife's sister) and sister-in-law's (wife's sister) husband and the same exemption shall be applicable only to the members of the family, including a married daughter and grand children.

Non-occupancy charges of 10% will also be applicable to the paying guest, as per GR SAGRUVA- 2010/PRA.KRA-173/14S.

Basics of Associate members

The person whose name stands second in the share certificate i.e. an associate member will have a right to vote provided that the original member i.e. person whose name stands first in the share certificate is absent at the Annual or Special General Meeting, as per amendment to Section 27(2) of the MCS Act 1960. But the member whose name stands first in the share certificate, should be required to surrender his voting right in writing to the society. The Associate member has to fill up a form and pay Rs 100 to the society. The society should prepare before the election an eligible final list of voting members. An Associate member cannot contest elections (Sec 79A of MCS Act).

No associate member has any property rights over flat held by the member to whom he is an associate member. It is the nominee of the First member who claims right over the shares and the interest in the flat on death of the original member (i.e. the member whose name stands first in the Share Certificate) and on admission of the nominee to membership of the society, it is further clarified that an associate member has no right over the shares and interest in the property of the society and when the original member dies his associate member automatically ceases to be an associate member.

Nominees

Nominee is merely a trustee. He does not get ownership rights in the property till the member is alive. Member is advised to make a will.

Subject to the provision of the Section 30 of MCS Act 1960 by sub rule No. 34, 17(A) or 19, in the event of death of the member, nominee/ nominees shall submit the application within 6 months for membership. If there are more than one nominee on the death of a member, such nominee shall make joint application to the society and indicate the name of the nominee who should be enrolled as member. The other nominees shall be enrolled as its Associate member unless the nominees indicate otherwise.

The nominees shall also file an Indemnity bond in the prescribed form indemnifying the society against any claims made to the shares and interest of the deceased member in the property of the society by any of them. The society shall then transfer the shares of the deceased member in the property of the society to the nominees.

As per the new bye-laws, cost of any legal action between society member and their family in which the society is made a party, can be recovered from the respective member.

Procedure where no Nomination is done by member in society

  1. Bye law No. 35 provides that where a member of the society dies without making a nomination or no nomination comes forward for transfer, the society after knowing this shall display such a notice in the prescribed form exhibited on the notice board of the society. It shall also publish such notice in at least two local news papers having wide circulation, inviting claims regarding property or objections of deceased member through this notice.
  2. The Managing Committee by considering the claims received after the notice should select the legitimate representative of the deceased member as per provisions of the bye laws No. 17(a) and 19. Provided that he gives indemnity bond along with his application for membership in the prescribed form indemnifying the society against any claims made to the share and interest of the deceased member in the capital property of the society at any time in future by any person above taking and the society could approve the membership.
  3. If there is not one such person and there are more than one person then such nominees shall make a joint application to the society. Society should give first person membership and to others co-membership. Such person should not be owner by this transfer. He should be a trustee. The society should make aware of this fact to them.
  4. Society should also make aware to them that legal heirship certificate from the competent court regarding ownership of the property is essential.
  5. However, if there is no consensus among the person came forward after this notice the society can inform to all such members claiming heirship that they should bring legal heirship certificate from the competent legal machinery and then only membership will be transferred.

Other membership issues

A member may have multiple flats or a flat and a shop. For each flat, member will get separate share certificate. SUPREME COURT opines in the case of Veena Kumari Tandon vs Neelam Bhalla and Others. Civil Appeal No. 5130 OF 2007 (Arising out of SLP (C) No. 525 of 2005). ONE FLAT ONE VOTE AND NOT ONE MEMBER ONE VOTE.

It is binding to make provisions in the rules of the Company, to make provision for making available of residential places for their employees. It is compulsory for the company to take the membership of the society. The management committee shall consist of not more than one fourth members of the firms and companies and the remaining shall be from the individual members and such provision shall be made in the bye-laws of the society.

No animal, birds should be kept in the flat of the society without prior permission of the society and local authority. The society should make code as per the provisions in the law regarding pet animals by making resolution in the general body meeting.

Commercial usage

The member can use his flat for the purpose of dispensary, consulting room, nursing home, flour mill, coaching classes, cradle home, beauty parlour etc. as per the bye-law No. 3. However, it is obligatory on him to obey the code of conduct if made by the general body meeting in such a way that there would be no nuisance to other members in the society by this profession.

Commercial usage in no way violates provisions of change of user and is not a breach of model bye-laws. Presently rules allow 20% commercial usage in residential units. (Supreme Court V Sasidharan v/s Peter and Karunakar and ors) and (Supreme Court Dev Brat Sharma v/s Dr Jagjit Mehta CA No 4216 of 1988).

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Repairs and Illegal construction

If member wants to do internal structural changes in his flat, he has to obtain approval from Municipal Corporation and a society NOC. If such changes were made without the prior permission of the society, then the society can take action under the Bye-law No. 166 of the model Bye-laws and similarly can make complaint to the local authority in this regard.

Having regard to the recent building crashes, a specific provision has been made that if a member changes the usage of the premises and carries out unauthorized construction without permission of the society as well as of the competent authority, then he can be expelled.

Whose responsibility is leakage?

Terrace repairs and other relevant external leakages are the responsibility of the Society (Bombay High Court Writ Petition No. 7231 of 2002 delivered on 28/06/2006) and Section 160 of Model Bye-laws.

Old Bye-laws stipulated that internal leakage as well as external leakage of the premises was the responsibility of society. However, in the new Bye-Laws it is specifically mentioned that internal leakage will be the responsibility of the member.

If the resident above and/ or society is not co-operating to solve the internal leakage problem, you can complaint to local BMC ward office. BMC has the power to inspect and then issue a notice to the resident staying above, under section 381 of the BMC Act. If the member or the society still does not act, then there are several district court orders (Vile Parle district court order on Prashant Trivedi v/s Bansi CHS, as reported by DNA newspaper on 22/1/2011) also in such matters of internal flat leakage.

Other solutions for solving internal flat leakage problem:

  • File police complaint.
  • Mandatory injunction against him/her for carrying out the repairs to the seepage or file a civil suit for injunction and obtain stay order restraining that resident from using the area which is the cause for the seepage
  • For quick response file a petition u/s 133 crpc in the court of local 2nd Class Magistrate.
  • Criminal cases can also be filed against him/her with charges of criminal intimidation and verbal abuses/insult.

To prevent water leakages:

  • Do not throw hair clumps or threads or matchsticks or chewing gum or band-aids or diapers or sanitary pads or plastic carry bags or leftover foods or ear buds into the drain. It tangles, and clogs the drainage system, potentially leading to leakage or seepage in drainage pipes. Only toilet paper can be easily flushed out.
  • Do not poke the drainage pipe with a sharp object like screw driver to remove blockage. It may cause leakage to the lower floors.
  • Do not use a strong acid to clean the drains at it may damage the plumbing sealings leading to leakage
  • Educate your children and maid to follow the above instructions

Transfer fees/ Donation on transfer of Flat

The Co-operative Court has held that the co-operative society can place reasonable restrictions on transfer of a flat to prevent nuisance from unwanted element but that does not mean that the society can have such a right of profiteering out of the co-operative movement. Transfer fee of Rs. 25000/- maximum is allowed.

Even though there is no necessity of society No objection certificate for transfer of flat, according to rule 24 of the Rule 1961, he has to give 15 days notice to society before transferring of flat. On receipt of such notice, the Secretary should place the same before the meeting of the committee and take decision thereof before 30 days and inform such decision to the member within 8 days from the decision of society. If Society has not taken any decision of transferring the share certificate within the 3 months stipulated period as per provision in Section 22(2) there is a provision to appeal before the Register u/s 23(2).

Donations under Model bye Laws 2001 have been expressly prohibited. Societies having bye laws as per earlier Model Bye Laws can accept donation given voluntarily.

Parking basics and Garages

There are 3 types of parking spaces viz. Closed garages; stilt parking and Open parking spaces.

As per MOFA Act, the definition of a flat includes closed garage, but does not include an open car parking space. An enclosed garage is not the same as a stilt parking slot. Stilt portion is not charged to property tax whereas garage which is closed on all the four sides is charged to property tax.

Parking space (stilt or open) availability is as decided by Layout (LOP) plan approved by BMC and also as dictated by DC Rules and Fire Safety Act. As per Supreme Court order; Bombay High Court and Maharashtra State Consumer Disputes Redressal Commission judgements, no builder can sell such common parking space (open or stilts) separately. Such common parking space can be allocated by the housing society committee on 'First-come-first-served' basis or on rotation or as decided by the AGM. No 'deposit' can be collected by the managing committee for such common parking space.

Just because one member has paid money to the builder for car parking space that does not mean that the said member is entitled to the said parking space. Court judgments are crystal clear on the same. Even if a member has not paid for car parking space he is entitled to park his vehicle in the building premises, based on resolution passed by the AGM.

Parking facilities have to be given to members having shops on ground floor. Visitors also have a right to park their vehicles in the building premises. 10% of the total parking space has to be reserved for visitors as per Table 15 (and Regulation 36) of the Development Control Rules.

As per sub regulation (18) of Regulation 38 of the Development Control Rules, the size of a clearly marked parking space should be 2.5m x 5.5m. The size of scooter, motorcycle parking must be 2 sq. m.

Can members see each documents and transactions of the society?

Maharashtra Co-operative Societies Act (1960), Section 32 states that any registered member cannot be denied right to see how the society is functioning. If the society is not co-operating, then the member can make an application to Chairman/ Secretary u/s 32 of the MCS Act, to inspect the required information, with prior permission, in the society office during office hours. Your society is bound to give you the required information within 30 days of the application on payment of legitimate charges prescribed in the bye-law, at Rs. 5/- per page. It is IMPORTANT to use polite language, and avoid accusations, references to previous incidents.

In your application you may mention:- Under section 164 of MCS Act 1960, No suit shall be instituted against a society, or any of its officers, in respect of any act touching the business of the society, until the expiration of two months next after notice in writing has been delivered to the Registrar or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims, and the plaint shall contain a statement that such notice has been so delivered or left. With luck, this notice may itself subdue the managing committee, causing them to give you the necessary documents.

Can one make an RTI application?

Cooperative Housing Societies are not directly under Right to Information (RTI) Act 2005. But they are indirectly covered, through the office of Deputy Registrar u/s 2(f), which entitles you to information relating to any private body which can be accessed by a public authority under any other law for the time being in force. The Deputy Registrar has to provide the said information, after getting it from your Society, using his powers u/s 77 & 78 of the MCS Act. But if the desired information is not provided within 30 days, you can invoke the mechanism of First Appellate Authority under RTI Act Sec 19(1).

Where else can members approach for solving their grievances?

It has been specifically provided in the new bye-laws that every application made to the society should be acknowledged by the society. Managing Committee members live under the mistaken notion that the General Body is the supreme body for resolving all grievances.

Recourse to general misappropriation/ frauds:

  • To prevent fraud, members should meet office bearers at least once in three months for informal discussions on society matters and ask for explanations.
  • Once the audit is done the members can appoint outside chartered accountant to scrutinize the audited accounts if they feel that there is any misappropriation.
  • If managing committee refuses to give information or if a fraud has occurred in the affairs of the society then a minimum of 1/3 members can complaint in writing to Deputy Registrar of Co-operative Department u/s 83 of MCS Act, 1960, for investigation and recovery of losses done to the society. You can ask to impose penalties and punishments on the managing committee under Section 146(J) and section 147 of the MCS Act. Under Section 89A of the MCS Act, you can petition the registrar to "Inspect" the affairs of the society.
  • On receiving the complaint letter, the officer or his nominee is duty bound to conduct such an inquiry. The registrar may direct the applicants to deposit a sum of nominal amount with him and this amount can be forfeited if the allegations made against office bearers turns out to be vexatious or malicious. If the inquiry discloses substance in the charges made the amount has to be refunded to the applicants if the allegations are not false but yet cannot be proved the state government would bear the cost of inquiry.
  • The Maharashtra Co-operative Society Act, 1960 provides that all office bearers and members of the society past and present are supposed to co-operate with such inquiry and produce any document that is needed and is in their possession. The registrar is supposed to inform the society as to the findings arrived at through the inquiry. Under the Act, the registrar has the power to himself (suo-moto) commence an inquiry into the financial condition of the society based on the complaint of even a single member. The society can also pass a resolution in the general meeting to expel any of the office bearers of the Society.

For maximum effect, file separate complaints with the following offices:

  • The Deputy Registrar of Co-operative Housing Societies (at the concerned Ward Office)
    http://tinyurl.com/Mumbai-CHS-Dy-Registrar-Wards
  • The District Registrar of Co-operative Housing Societies
    City - Malhotra House, 6 Floor, Opp. GPO, Fort, Mumbai 400001
    Western suburbs - Ground floor, MHADA bldg, Bandra East, Mumbai 400051
    Eastern suburbs - Vardavat mansion, 1 flr, Station Rd, Opp Thane District Co-op bank, Thane West 400601 (Tel: 25331486)
  • The Mumbai District Co-operative Housing Federation Ltd, 103, Vikas Premises, 1 Floor, Dr NGN Vaidya Marg, Behind State Bank of India Head Office, Fort, Mumbai 400001. Tel: 22660068
  • The Commissioner and Registrar, Cooperative Housing Societies (Maharashtra State), Central Building, Station Road, Pune 411001. Email: commcoop@rediffmail.com
  • The Registrar of Co-operative Societies, Co-operative Societies Dept, Sakhar Sankul Bldg, Pune 411005.
  • The Chief Secretary of the Cooperatives, 3 Floor, Mantralaya, Mumbai 400020
  • State Minister of Housing & Co-operatives, 7 Floor, Mantralaya, Mumbai 400020

Can one go to Co-operative court or Consumer courts?

If your RTI is not replied to, you can invoke Section 148A i.e. Contempt of Co-operative Courts, which says, If any person - (a) when ordered by a Co-operative Court or the Co-operative Appellate Court to produce or deliver up any document or to furnish information, being legally bound so to do, intentionally, omits to do so, he shall, on conviction, be punished with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

Complaint in Co-operative court can also be made on the matters of:

  • Repairs, internal repairs, leakages.
  • Parking
  • Escalation of construction cost
  • Unequal water supply
  • Excess recovery of dues from members

In parallel, as a consumer of services provided by a co-operative housing society, you are covered by the Consumer Protection Act in matters concerning the business of the society. Failure to give you necessary documents is a deficiency in service, and so you may approach the Consumer Court (engaging a lawyer is not required) and pray for reliefs i.e. copies of documents, and compensation for difficulties suffered by you, but must be done within the limitation of time i.e. within 24 months from the date of grievance arising. Please bear in mind that these for are not for settling personal disputes, but for housing society business

Even if you have initiated proceedings in Cooperative Court and Consumer court, you may also file a FIR and initiate proceedings in Criminal Courts, if you have documentary evidence of nefarious activities such as misappropriation of funds, forgery of society records, duplicate share certificates, letting out the society property for mobile towers, advertisement hoardings etc. without the written consent of 75% members, rigged and manipulated elections, refusal to transfer membership based on caste, creed, religion, threat or assaulting members or Creating noise after prescribed deadline hour in the evening. This can be done without any permission/ sanction from the Registrar of Co-operative Housing Societies, because it is against individuals, and not against the society.


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NOC from developer

In a major relief to flat buyers, the state government has said that there is no need for a no-objection certificate from the developer for sale or transfer of flat (resale) in a fully constructed building.

The state housing department has said there was no requirement for NOC under norms mentioned in the Maharashtra Ownership of Flats Act (MOFA). The department has also written to the Inspector general of registration, to ensure that officials in the registration department register sale documents without insisting on the NOC from developers.

Thanks and regards,
gaurang Damani

Please do not use this write-up as a replacement for legal opinion. However this article has been compiled from various experts like JB Patel, Adv Ameet Mehta, Mukund Parikh, Adv Vinod Sharma, Adv. RP Rathod, Rajendra Popat, Adv Hemant Agarwal, Housing Times, MSWA Housing Societies Review and also personal experiences of the author of this website.


    

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