FAQs on Co-operative Societies

By Legal Bureau

Q: How to proceed if the BMC Authorities are not responding to the Complaint lodged with them?

Ans: Many times it so happens that an individual is writing various Letters to the Municipal Offices but for certain reasons replies are not forthcoming from the BMC Authorities. In such circumstances what should be the stand of an individual to get justice for his Complaint is to lodge with Sr. Municipal Corporation Officers including the Assistant Municipal Commissioner, Dy. Municipal Commissioner. The Complainant may also lodge has Complaint with the vigilance Department. If in spite of the same cases are not moved to the satisfaction of the Complainant, then in that circumstances it would be in the interest of the Complainant to lodge a Complaint with the Public Information Officer and get the necessary information from the concerned Public Information Officer under the provisions of Right to Information Act, The reasons for the same is factual position as regards progress of the matter can be easily available. Thereafter armed with the reply (if received) from the Public Information Officer the relevant information an appeal should be lodged with the Urban Development Department address of which is for the City of Mumbai is at Sachivalaya in Mantralaya Bldg., 3rd floor, Nariman Point, Mumbai – 400 021. When an appeal is lodged with the Urban Development Department, a hearing will be fixed.  At the said hearing a copy of the Complaint lodged by the Complainant sent to the concerned Municipal Corporation Officer, an explanation from the same Municipal Authorities is taken into consideration. Thereafter Urban Development Department passes the Order which order shall be binding on both the parties.

The above said order is passed by the competent Authorities as per the provisions of section 53(1) of MRTP (Maharashtra Regional Town Planning) Act, 1966.Experience shows, when a Complaint is lodged with the Urban Development Department, there is a scope for individual to get justice, as the approach of the Government Officer is based on fairly, equity and natural justice.  The approx time frame for the above said matter taken by the Department is 3 months.  A simple claim for the same has to be filed.

It needs to be emphasized that the Officers employed by the Urban Development Department include Town Planners, who are having vide experience with the provisions of the BMC (Bombay Municipal Corporation) Act, as well as MRTP (Maharashtra Regional Town Planning) Act,

It needs to be emphasized that the common errors done by the Builder with regard to construction activities are as under:

(a) Converting Garages for commercial use since the garages used for car parking are

(b) Terrace Flats are sold by the Builder

(c) The Societies office space is sold by the Builder

(d) Refuge Flats are sold by the Builder

(e) Niche spaces are broken and used as a regular Flat

(f) Change of user permission is granted without complying with statutory formalities.

(g) Amalgamation of Flats is done without complying with statutory formalities.  Basically exempt from FSI bigger flat as per Table 15 of the BMC Act, stipulates number of parking space that has to be mandatory kept upon which in many cases are not complied with particularly with fire extinguisher to take a U turn.

(h) The Statutory obligation as regards open space on the ground floor is not left open

(i) Basements are converted into shopping space.

(j) Permission for temporary weather sheds on the terrace under the guise of leakage are misused.

Q: How are the open stilt area and garages converted into shops?

Ans: First and foremost condition that requires to be ensured is that there should be balance FSI with the Society / Builder. Presuming that balance FSI is having, and then also statutory compliance with regard to open space requirement has to be adhered to.  It will not be out of place to mention that if the space in the Society should be sufficient to ensure that there is no deficit place for open car parking space as has been stipulated in Table 15 of the BMC Act, Inhabitable residence where it is used for residential or office should be at least 2 feet above ground level.  In the event compliance of 2 feet height above ground level is adhered to then there is a possibility that sufficient height will not be available for the shops to carry out day to day activities.  This has been stipulated in section ______ of the BMC Act, The minimum height of 9 feet is stipulated for passing premises as a shop.

One of the reasons for insisting for 2 feet height above the normal level is to ensure that rain water does not come into the premises.  There are instances where heights of the road have been increased by one foot as and when roads are made.  In the earlier year’s height of the basement are used to be up to 11 to 12 feet.  However with the passage of time in many places the height of the Flat has been decreased.  In the event 2 feet height is increased on the ground floor then subsequently for the specific purpose of compliance with section _______, there is a possibility that the condition as regards 9 feet cannot be complied with by the Flat owners/occupant.  Misuse of temporary weather sheds.  The provisions with regards to affixing temporary weather sheds are mentioned in section _____ of the BMC Act,   The above said section is reproduced hereunder:

Table 19 stipulates the height that has to be complied with for converting a parking space into a habitable room.

Q: What should a Member of a Co-operative Society do if the office bearers of the Society are restraining the Member from parking his car inside the Society premises? Would parking of vehicles inside the Society premises amount to an essential service?

Ans: As per provisions of D.C. Rules, the Builder needs to make provision for car parking space in respect of dwelling units of the Building and as such, if the car parking space is open space, the Society is liable to demarcate parking place and allot it to the Members on pro-rata basis. Parking of vehicles inside the Society premises does not amount to essential service.

Q: There has been some unauthorized construction done in the building. What is the best way to regularize the same?

Ans: It needs to be emphasized that if the premises are Society then the best alternative for the Society and/or its Members is to purchase of TDR. If the Society and builder consent for regularizing, then revised plan should be submitted to BMC. By this way occupant will have mental peace and can find a lasting solution to the problems of unauthorized construction.

Q: The Flat has been sold by the Builder in the year 2001. By what time he is supposed to form a Society? Within how much time can action be initiated against the Builder for not forming of Cooperative Society, as well as for not giving Statement of Accounts?

Ans: The Circular issued by the Co-operative Societies, dated _____ stipulates that as soon as 60% of the flat purchasers have purchased the Flat it become the obligation of the Builder to form a Co-operative Society. In the event the Builder does not form a Society immediately as soon as 60% of the flat purchasers have purchased the Flat then the Builder would be liable for his various acts of omission and commission. The term “Deficiency of Service” would include negligence as regards formation of Society. As far as the time limit within which flat purchasers can take action against the Builder the same would be normally two years from the date of cause of action but when a Builder is supposed to perform the statutory obligations like formation of the Society or obtaining the Occupation Certificate or giving a conveyance in favor of the Society these being the statutory  obligations the cause continues resulting from the time and hence the limitation will not _______ continuing cause of action as there is no time limit for statutory obligations.

Q: Is it advisable for the Society and its members to file case in Consumer Courts?

Ans: It is an admitted fact that the procedure in Consumer Courts is for speedy disposal of cases. Depending on the type of matters the Society and its members should decide as to where a suit has to be filed. If the suit pertains to matters like transfer charges, repairs, inflated billings then definitely it is in the interest of the parties to approach the Consumer Courts. This will result not only in justice to the Complainant, but will also ensure more sense of responsibility on the opposite party.

Q: If a Builder has not formed a Co-operative Society can action is initiated against the Builder under the Consumer Protection Act?

Ans: Yes, Builder would be liable for action under the Consumer Protection Act, for not forming a Co-operative Society as he has collected money for the same.

Q: Please give some landmark Court Judgments pertaining to Co-operative Society related matters?

Ans: The landmark judgments pertaining to Co-operative Society matters are as under:

(a)  Prerna Co-operative Housing Society Ltd. V/s. M/s. Sharma Properties Pvt. Ltd. This is

(b) Torana Co-operative Housing Society Ltd. V/s. Shri Hiraji Dinanath Jamsandekar. The regards to Occupation Certificate. Same is with regards to criminal action against the Builder for not taking steps to form the Society and to solve the grievances of the flat purchaser. This sentence has been awarded by the Metropolitan Magistrate Courts. In fact in this judgment the Ltd. Metropolitan Magistrate has made specific remarks that this judgment should act as an eye-opener for persons who are having intentions of similar kind. In this case Builder of the age more than 70 years was awarded six months imprisonment.

(c) Lata Construction Co. & Ors. V/s. Dr. Rameshchandra Ramniklal Shah & Ors. In this case the jurisdiction of the Co-operative Societies to take up issues with regards to conveyance related matters has been confirmed by the Consumer Courts. The same is a continuous cause of action.

(d) Jurisdiction of Corporate Court in the case of Tiruvendrum V/s. ________________, Tamil Nadu.  It has been held that Co-operative Societies are covered under the Consumer Protection Act.

Q: What should a Member of a Co-operative Society do if the office bearers of the Society are restraining the Member from parking his car inside the Society premises? Would parking of vehicles inside the Society premises amount to an essential service?

Ans: As per provisions of D.C. Rules, the Builder needs to make provision for car parking space in respect of dwelling units of the Building and as such, if the car parking space is open space, the Society is liable to demarcate parking place and allot it to the Members on pro-rata basis. Parking of vehicles inside the Society premises does not amount to essential service.

Q: There has been some unauthorized construction done in the building. What is the best way to regularize the same?

Ans: It needs to be emphasized that if the premises are Society then the best alternative for the Society and/or its Members is to purchase of TDR. If the Society and builder consent for regularizing, then revised plan should be submitted to BMC. By this way occupant will have mental peace and can find a lasting solution to the problems of unauthorized construction.

Q: If a Builder has not formed a Co-operative Society can action is initiated against the Builder under the Consumer Protection Act?

Ans: Yes, Builder would be liable for action under the Consumer Protection Act, for not forming a Co-operative Society as he has collected money for the same.

Q: The Co-operative Society has availed the services of a Contractor. The work done by the Contractor is of substandard quality. Can the Co-operative Society insist for interim application for depositing amounts in Consumer Courts?

 

Ans: Any party while filing a suit in Consumer Courts can make an application for depositing certain amounts at the interim stage itself. It is at the discretion of the Court to admit the interim application or not. This would depend on the facts and circumstances of each case.

Q: Can employees of a Co-operative Housing Society be made parties in Consumer Courts?

Ans: Employees of a Co-operative Society or of any other employer are not liable for the acts as the relation between them is of a principle and an agent. The definition of Consumer as on section is as under: “If one pursues the above said definition it is crystal clear that services provided by the  Co-operative Society, if one pursues the above said definition it is crystal clear that service of personal contract is not included. Therefore, employees of a Co-operative Society would not be answerable. But Office bearers of a Co-operative Society, Managing Committee members of a Society as well as professionals like Chartered Accounts, Architects would be liable for action under the provisions of the Consumer Protection Act.”

Q: Can the Office bearers of a Society be made parties in Consumer Court cases for not providing services?

Ans : Co-operative Society is bound to provide services to its members. In the event the services are not provided by the Co-operative Societies then definitely the Managing Committee members can be made parties and would be liable.

Q: What is the limitation applicable to Co-operative Societies under the Consumer Protection Act?

Ans : Sec. 24 of the Consumer Protection Act, specifies the period of limitation. The same is two years from the cause of action. So from the date of formation of Society, the limitation would be for a period of two years.

Q: If a Society’s Managing Committee is misusing its power can suit be filed against the Society only or against all the members of the Managing Committee?

Ans : No doubt Society is a party to the suit, but in the interest of justice the member of the Society is well within its rights to make the Managing Committee members also as party to the suit. The approach of the Courts in such matters is to allow the Complainant to make the Managing Committee members as parties.  It will not be out of place to mention that the bye-laws cast a responsibility on the Managing Committee members that they are jointly and severally liable for their various acts of omission and commission.

Q: If a Co-operative Society is not formed then can individual members approach the Consumer Court or they should form an Association and approach the Courts? Should the limit be taken on an individual basis or the limit would be taken as on a collective basis?

Ans : If all the members are filing a representative suit then the aggregate limit would depend on the value of the claim for all the members.  It is definitely in the interest of the flat purchasers to take action against the Builder by filing suits in the Consumer Courts.

Q: Please explain the Stamp Duty implications in case of Tripartite Agreements where the first party that is the investor has not paid the Stamp Duty. The Builder acts as a Confirming Party and the Agreement are executed between Investor, Builder and the new flat purchaser. Who would be liable to pay the Stamp Duty?

Ans : Basically, the Builders take an Indemnity Bond from the flat purchasers that in the event some Stamp Duty liability occurs at any point of time, even for the transaction executed by the Builder with the investor then the flat purchaser would be liable. However, as far as Co-operative Society is concerned, they can definitely take up the issue against the Builder in Consumer Courts as it is a case of negligence of the Builders.

Q: What tactics should be adopted against the Erring Builders who are harassing the Societies? Can one approach Consumer Courts?

Ans :If the Builder is harassing the Co-operative Society by not giving Statement of Accounts, not executing the Conveyance, not forming the Society, not getting the Occupation Certificate then in such circumstances the Co-operative Society and/or the flat purchasers are well within their rights to approach the Consumer Courts.

Q: What is the remedy against Managing Committee members for wrongful acts by the Managing Committee members of harassing the members of the Society?

Ans: The members of the Managing Committee are jointly and severally liable for their various acts of omission and commission. If they harass the members of the Society then the harassed member has a right to approach the Consumer Courts not only against the Society but also against the Managing Committee members of the Society.

Q: There are dues on the Flat. The said Flat is attached by DRAT. What steps should be taken by the Society to recover their dues?  Where the suit should be filed, before the Deputy Registrar of Co-operative Societies or in Co-operative Court?

Ans : If the Flat is attached by DRAT authorities, then it would be in the interest of the Society to approach the DRAT authorities with documentary evidence like Society’s Bill for getting its arrears recovered.  The implication of the same is as and when the Flat is put for Auction Sale, the DRAT authorities make this fact known to the bidders and the property is sold with the earmarking of the amount for Society’s dues. The auction buyer has to clear first the Society dues and get his right noted through approval of Society on the flat so purchased. Society is the Owner of the property and the member only gets the limited right to occupy the Flat.

Q: THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 stipulates that the purchaser gets title to the property irrespective of the claim of the other claimants. Whereas as far as Society dues are concerned the stand of a Co-operative Society is that the Co-operative Society is the owner of the property and the member only gets a right to occupy the Flat.  What is the correct position?

Ans: If one observes that whenever auctions are held, the same would be on “as is where is” basis.  The dues of the Society have commenced prior to bank issuing notice for its intention to evoke provisions of THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 and to take possession and sale. The implication of the same is that the Society is the owner of the property and the member is getting right to occupy the property on the basis of the share certificate issued by the Society.  Therefore, the Society will have the first charge of its claim rather than the claim of the bank/ financial institutions.  The right of the purchaser would depend on the terms and conditions of the auction which normally is on “as is where is” basis.  Of course, the other Claimants may not get their right on the assets, but the Society has certainly the right to recover arrears from the buyer.