By Ramesh S. Prabhu
Chartered Accountant
Non-Members-Pending Formalities
In case of the flat owners type of Society whether formed with the Co-operation of the Builder or Non Co-operation of the builder, we always find some members do not become the members of the Society. If the flat owners does not become the member, the case u/s. 101 cannot be filed.
LEGAL HEIR / NOMINEE NOT ADMITTED AS MEMBER
When a member expires keeping a huge of amount of Society dues and the legal heirs / nominees also do not pay the dues nor they become complete the necessary formalities to become the member, in such cases also recovery suit u/s 101 cannot be filed.
FUNDS MISAPPROPRIATED BY THE MEMBERS/OFFICES BEARERS
In many cases the office bearers of the Society commit misappropriation or fraud of the Society funds. Even after proving such fraud /misappropriation the recovery cannot be done u/s. 1010 of the M.C.S. Act, 1960. A criminal case will have to be filed separately to recover such misappropriated funds of the Society.
4 DUE FROM BUILDER IN RSPECT OF UNSOLD FLAT/SHOP WHEN NOT BECOME THE MEMBER OF THE SOCIETY
Many times it so happens that Builder also does not become the member in respect of the unsold flats/shops. It is more seen in case in case of formation of societies under Builders non co-operation category. In such cases also, if builder does not pay the maintenance of the Society, the recovery suit cannot be filed u/s. 1010 of the M.C.S. Act, 1960.
PENALTY/CHARGES NOT PROVIDED UNDER THE ACT, RULES AND BYE-LAWS OF THE SOCIETY
When any recovery suit is to be filed under Section 101 of the M.C.S. Act, 1960, the Society should be aware of the type of dues which can be recovered from the members. If any penalty or charges which are not provided in the Act, Rules or the Bye-law of the Society, the same cannot be recovered u/s 101 of the M.C.S. Act, 1960. Therefore, we have mentioned separately the charges which can be levied and the basis of levy of charges is also explained.
Writing off or outstanding found irrecoverable
Subject to the model Bye-law no. 150, the Society may write off any loan and interest thereon, Society’s charges due from the members, the expenses incurred on recovery thereof and the accumulated losses,
which are certified as irrecoverable by the Statutory Auditor.
The amounts mentioned in model Bye-laws No. 149 shall not be written of unless:
the meetings of the General Body of the society has given due sanction for writing off the amounts.
The approval of the financing agency to the writing off of the amounts, if the Society, is indebted to it, is obtained.
The approval of the registering Authority is obtained.
Provided that if the Society is affiliated to the District Central Co-op. Bank or any other financing agency is not necessary.
Provided further that if the Society is classified as A or B at the last Audit no such permission of Bank or the financing agency or the Registering Authority is necessary, if there is sufficient balance in the bad debt fund, specially created for the purpose to cover the amount proposed to be written off.
Question and Answer
Defaulter
Q. When is the member termed as a defaulter ?
A. If on the due date of bill, the member does not make the payment, than he can be categorised as a defaulter. Societies in such circumstances can also charge interest. However it is important that there should be a demand upon the member.
Election by Defaulter
Q. Can a defaulter contest the election ? Can a defaulter propose or second candidate for the election ?
A. A defaulter cannot contest the election. However, a defaulter can propose or second candidate for the election.
Prior claim of society
Q. Does the society have prior claim on the shares of a member if the member has become insolvent or is unable to pay his debts to the financiers/business associates ?
A. As per Section 47 of the Maharashtra Co-operative Societies Act, 1960, it is clearly specified that the society has prior claim on the amount recoverable from a member subject to prior claim of Government in respect of land revenue, or any money recoverable as land revenue as per the provisions of Section 60 and 61 of Code of Civil Procedure Code 1908. The language used in the section also includes the word notwithstanding anything in any other law for the time being in force. This implies that amongst all the claims except for Government claims the society would be getting the first charge on the shares of the defaulter, therefore in my humble opinion, the claim of the society will have to be discharged first before amounts are payable to the financiers / business associates.
Rebate to members
Q. Can the society give rebate to members for prompt payment of dues ?
A. Normally Societies charge interest from defaulting members. If rebate is being given for prompt payment then the defaulter is penalised twice for the same act (i.e. he looses the rebate facility and simultaneously has to pay interest on the defaulted amount). As per the principles of equity and natural justice a person should not be penalised twice for a particular act. We have not come across any case law on the above said subject. It may be mentioned that there are number of societies which are offering rebate for prompt payment as nothing is mentioned in the Bye-laws pertaining to granting rebate. However, we are of the opinion that Society must not grant rebate to members. Clarification from the office of the registrar with regards to granting of rebate will be of immense help to the Societies.
Recovery fees
Q. What is the amount of Enquiry Fee and Court Fee that has to be paid by the Society when the Society proposes to recover the dues from defaulting member under Section 101 of the MCS Act ?
A. If the defaulter does not respond to the request made by the Society then the Society obviously does not have any other alternative but to recover the dues from the defaulting member. The Enquiry Fees and the Court Fee Stamps have to be paid on the amount of claim as made out against the defaulting member. Increase the amount to be recovered from the defaulter is below Rs. 1,000/- then the Enquiry Fee that has to be paid by the Society is 5.5% of the claim and Court Fee Stamp have to be affixed of Rs. 15/-. Incase the amount to be recovered from the defaulter is between Rs. 1,01/- and Rs. 2,000/- then the Enquiry Fee that has to be paid by the Society is 4.5% of the Claim and Court Fee Stamp have to be affixed of Rs. 20/-. Incase the amount to be recovered from the defaulter is between Rs. 2,001/- and Rs. 5000/- then the Enquiry fee that has to be paid by the Society is 3.5% of the Claim and Court Fee Stamp have to be affixed of Rs. 20/-. Incase the amount to be recovered from the defaulter is Rs. 5,000/- and above then the Enquiry Fee that has to be paid by the Society is 3% of the Claim and Court Fee Stamp have to be affixed of Rs. 25/-. The maximum Enquiry Fee is Rs. 1,000/-. The Enquiry Fee is to be paid to the Reserve Bank of India by Government Challan Account 0425 Co-operation, 800 other receipts XVII Notice and Recovery Fees.
Recovery of Dues with Recovery procedure
Q. Some members of our society do not pay their dues inspire of repeated requests. When the office bearers go to recover the dues from other members raise the plea that even if we are late by a few days to pay the dues you charge us interest. Please inform us in detail about the various steps to be taken to recover the dues including the amounts to be paid to the Government Authorities ? We have been given to understand that now it is not compulsory for housing societies to go to the Co-operative Court to recover the dues and the Asst.Registrar / Deputy Registrar can help us out in the above matter ?
A. IT would be advisable if the members of the Committee meet the defaulting members in person and try to discuss out the issue with the defaulters. The defaulters should be firmly told that the Committee has to keep the same policy for all the members and on account of them being in default other members of the society also complain to the office bearers particularly when members have to pay the interest. In case the defaulters do not wish to pay the dues then the office bearers should issue notice for recovery of dues. Inspite of the same if the defaulters do not pay the dues that a suit can be field before the Asst. Registrar / Deputy registrar u/s. 101 for recovery of dues. With the amendment of Section 101 the dues payable be members of a Co-operative Society can be recovered faster. Even the office bearers can do recovery under Section 101 themselves. It is not compulsory to file a suit in a Co-operative Court for Recovery of Dues.
The procedure for recovery of dues is as under :-
Issue a notice for payment of dues to the defaulter.
Pass the resolution to recover the dues in the Managing Committee Meeting.
Issue a final notice to the defaulter.
Apply to the Asstt. Registrar / Deputy Registrar for the recovery of dues.
Pay the prescribed fee.
The fee has to be paid through a challan payable at the Reserve Bank of India.
The rate of fee payable is as under :
Amount (Rs.) Scale of fee court fee
1,000/- 5.5% Rs. 15/-
1,001/- to 2,000/- 4.5% Rs. 20/-
2,001/- to 5,000/- 3.5% Rs. 20/-
5,001/- & Above 3% Rs. 25/-
Maximum Fee Rs. 1,000/-
The above said fee has to be credited in Reserve Bank of India by Government Challan under the head of account.
“0425 Co-operation
800 Other Receipts
XVIII Notice & Recovery Fees”
Disconnection of Essential Services
Q. Can the office-bearers of the society disconnect essential services like electricity, water supply, etc. of defaulters, who refuse to pay the securities dues inspite of repeated requests ?
A. Law cannot be taken in one’s own hand. Essential services like electricity, water supply, etc. are necessary for the occupants. IT is our sincere advice that office-bearers, and / or manager should not disconnect the essential supplies irrespective of the the dispute with the defaulter. If the aggrieve party flies a criminal complaint then the person found guilty for disconnecting the essential service/s can be punished with imprisonment which can extent upto a period of three months and/or fine. If the member refuses to pay the dues then you can recover the dues by filing a suit against the member. The procedure for recovery of dues u/s. 101 is very simple and the office bearers can themselves recover the dues. We have observed that societies can get the recovery certificate without even appointing a lawyer.
Read MOFA point no 10
sir, I had purchased a flat in 2010, the builder has given a letter that they will pay all Govt taxes etc till they submit O C to me of the building. Which they failed to do till now. They have -not got O C of building till now. they did not form society, society was formed by residents, in 2015. Builders have transfered huge debit balane recoverable from me against maintanance from 2012 to 2015. Society is trying to recover same from me. alongwith Interest compounded every month. under threats of action under 101 of MCsa
and declaring me defaulter and not allowing me to vote in election of M C .
Can CHS collect dues spent on maintanance by builders (builders dues) from member,
Is coercive Interest @21% compounded permissible.
I have paid all maintanance chargees except interest component regularly since 2014 to society. by advance cheques of due dates. All cheques cleared on time. I have paid all BMC taxes regularly.
Can society file u/s 101 of MCSA with registrar
Any case laws borbiding society from collecting builders dues of before formation of society,
can they take coercive action against me
They are not giving any calculation details in spite of demand by me.
As a member, I asked them for copies of documents to be made avalabel to me in writing they are not giving any information or copies of documents.
They are not issuing NOC or permitting me to give my flat on Rent. without pre payment of alleged old dues comprising of Builders dues + compound interest thereon
Please advise with case laws reference
This article is very informative and interesting for those who are interested in the engineering field.
What to do when CHS authority is not responding to member for queries/ issues as regards illegally ,excessive levy the charge-payment/s with interest.?
Guidances.
What’s the penalty for enchoachment by a member on the common area of a co-op housing society. Under what provision of the MCS act it can be recovered. Is there any time limit for such recovery procedure?
I would like to bring to your kind notice the following :
Electrical power supply to my flat no. 05/04, PETS Housing Co-operative Society, City Centre, Durgapur, Paschim Burdwan, West Bengal, was intensionally terminated, without notice, by the Office Bearers of PETS Housing Co-operative Society, City Centre, Durgapur, since 24.07.2022 (Sunday) at 04.10 pm as a pressure tactics to harass me and my family so that I would be forced to sell / vaccate flat 05/04 and shift elsewhere, this is being done on the pretext of being expelled from the Co-operative Housing Society. Today is the 19 th day of my sufferings.
The present hot and humid weather conditions is unbearable, moreover due to no power Diabetic medicines of my spouse got damaged therefore she is could not be administered with the medicine for the last 15 (ten) days, being a cause for deroriation of her health. Presently her food intake and body weight has come down to an alarming level. My BP has also sought up causing angina / breathlessness and occasional blackouts.
I understand from the Office Bearer’s that they do not intend to collect the pending electricity dues from me on the pretext of expulsion. The dues remain pending since 2019 because of NO DEMAND from the end of Office Bearers of the Society.
Considering an average monthly amount of Rs. 3,500/- against maintenance, electricity, water and other charges excluding penalty which is not payable, the approximate dues payable by me comes to Rs. 1,08,500/- (RUPEES ONE LAC EIGHT THOUSAND FIVE HUNDRED only).
I would like to mention that an approximate sum of Rs. 1,00,000/- deposited by me in Society’s bank account which till date remains un-accounted numerous reminders for joint reconciliation remains un-attended.
Forcible termination of domestic electricity without notice and cause is wrong, contrary to law, violation of the principles of natural justice and may be considered as extortion, an act of mischief, inhumanity, leading to imprisionment.
Electricity, water, air, etc. are basic amenities of life, curtailing them is violation of Section 21 of the Indian Constitution, it is curtailment of right to protection of life and personal liberty.
Further, I would like to state that there is no provision in the Possession Certificate, Deed, By-Laws of PETS Housing Co-operative Society, West Bengal Co-operative Societies Act 2006 read with WBCS Rules 2011, that in case of expulsion of a member from Co-operative Housing Society, the Officer Bearers are empowered to snap domestic power to an individuals apartment nor the State Goverment has issued any Order to them for termination electrical power to the individual’s house. The Society should have shown their patience and dignity and legally taken up the matter for realisation of dues and other issues in relevant Civil Court rather than such illegal short cut methods.
Due to no electricity I am unable to use internet, charge mobile, etc. therefore without proper mode of communication, causing difficulty to approach the proper forum for remedy.
The expulsion is under APPEAL.
I have run from pillar to post for getting relief, but in vain.
Sir, after COVID 19 Pandemic I have been rendered jobless, in extreme financial crisis, therefore to get immediate relief I seek the kind intervention of the mentioned dignitaries.
Sir, in the 75th year of Independence me and my family is left behind to perish, which may call for an IRREVERSIBLE TRAGEDY.
In view of the above may pls. do the needful at the earliest on humanitarian grounds, so that I can get necessary assistance
I’m case society initiated any major repair through the tendor. There are charges decided which all members needs to pay and people have started paying. During contractor selection, very few members have raised concerns but it was ignored by the managing committee as there was majority of members are in favour of this contractor. These members have also made multiple complaints about the contractors and the possible losses to the society. This was ignored by the managing committee and the special committee of major repair.
This is the reason these few members have not paid any repair charges.
Later on there was dispute between contractor and the society on quality of work and the increased cost requested by contractor. Contractor is not willing to complete work and left as it is. Society has also made the payment of all dues except the last instalment.
Now during monsoons there were multiple complaints received from members on leackages which was not there before major work. Contractor is now absconding and there is no trace. Now in such cases, the members who have not paid repair work charges are eligible to pay now. Can still society force these complainant members to pay the common repair charges?