Co-operative Housing Society

‘Society redevelopments do not attract Sec 50C’

Does Section 50C apply to the redevelopment project of a society in view of the recent tribunal decision? Should TDR be purchased in the name of the society? How can the taxation problems be addressed?
—B Manohar
Society redevelopment projects should not attract provisions of Section 50C of the Income Tax Act, 1961, notwithstanding the recent decision of the Income Tax Appellate Tribunal, Mumbai.
One is required to bring out clearly the relevant construction laws, property laws, limited scope of the provisions contained in Section 50C and the issue that only development rights are being transferred.
It is submitted that society redevelopments do not attract provisions of Section 50C as they deal with transfer of land or building, or both, whereas in redevelopments, there is a transfer of development rights only.

Transferable development rights (TDR) purchased in the name of the society would definitely augur well from a safety point of view, but care should be taken to ensure that before vacating the flats, the development right certificate is loaded in the name of the society in the records of the municipal authorities and stamp duty requirements are complied with, as otherwise, the society would face problems at a later stage. Loading of TDR will be subject to Development Control Regulations.
Taxation problems would have to be addressed while documenting the transaction only, as afterwards it would become only a post mortem exercise. From an income-tax point of view, it would be desirable that the taxable entity is an individual rather than the society. This would also reinforce the property rights of the individual members and their locus standi to take up the issues on their own. Documentation should provide protection to the society and the members against service tax and value added tax. Income-tax returns of the society must be filed disclosing complete particulars and bringing out the claim of tax-free incomes in the hands of the society as well as the individual members.


Property laws and taxes: Individual agreements necessary in redevelopment

We have entered into redevelopment agreement between the society and developer. We, as the members want individual agreements also but the society has taken a stand that members have only right to occupancy and agreement with the society is sufficient. Can we enforce our right to individual agreements?
– Pramod Bhasin
In the process of redevelopment, execution of individual agreements in respect of each member giving complete description or details of his entitlement to new flat under the scheme of redevelopment is absolutely necessary. Such an agreement will become the member’s title document in respect of the new flat. Such a document would also create a locus standi for enforcement of individual member’s rights.
The view that a member in a co-operative housing society has only right of occupancy is itself a questionable view. De facto, a member is the owner of his flat and his property rights are valuable. In fact, the entire scheme of redevelopment should recognise members as the owners of the property standing in the name of the society.

Such a stand would give proper recognition to the property rights of the members and would also enable in contending that the member being a taxable entity would be entitled to various exemption benefits under Income Tax Act, 1961 available to an individual.

In the context of income tax, as of today, some societies have succeeded in claiming up to tribunal level that on the theory of no cost, no capital gains, their transactions under the development agreements in respect of transferable development rights are not taxable, whereas, some societies have been taxed depending upon structure of the scheme and documentation.

However, all these cases have reached and have been admitted at high court. If the high court confirms the view that transaction of transferable development rights is per se not taxable on application of the principle of no cost, no capital gains.

However, in a possible adverse view that no cost, no capital gains theory is not applicable to such transactions, tax will become payable and if tax becomes payable, the cases in which individual members are the taxable entities will be far better placed than the cases in which societies are held as taxable entities because of various exemption benefits available to an individual.

I have purchased a flat in a cooperative society and due to some disputes, the society is not transferring the same in my name and has been charging non-occupancy charges. What is your opinion on this?
—V Ramprasad
A bonafide purchaser of a flat in a cooperative housing society cannot be levied with non-occupancy charges simply because of any reasons whatsoever, he has not been admitted as a member of the society.

Unstamped document no barrier to redevelopment benefit

My flat was bought by my late husband before December 10, 1985, under an agreement to sell on a stamp paper of Rs5.
Can the society general body meeting delegate power of appointment of statutory auditor to its managing committee?
—Ratan Verma
No. The powers and functions or the agenda prescribed for the annual general meeting or special general meeting under the provisions of the Maharashtra Co-operative Societies Act, 1960, or rules framed thereunder or in the bye laws of the society cannot be delegated to the managing committee or its office bearers and the members at the general body meeting would have to exercise or discharge the same.
My flat was bought by my late husband before December 10, 1985, under an agreement to sell on a stamp paper of Rs5. On his death, I, as a nominee, became member in the society. Now, the flat is going under redevelopment. Do I have to pay stamp duty on my earlier purchase to be eligible for a new flat under redevelopment? Can the society/ developer refuse to recognise my title to the existing flat on non-stamping of the document? —Anju Sharma
When your husband purchased the flat, that is before December 10, 1985, stamp duty on market valuation was not attracted on agreement to sell an immovable property.

Then after, the stamp law in Maharashtra was amended to provide that an agreement to sell an immovable property, in which possession of such property is transferred or agreed to be transferred, is deemed as conveyance and the stamp duty as applicable to conveyance of an immovable property is attracted. Consequently, your agreement to sell having been executed before such amendment was not liable to the stamp duty on market valuation of the flat.

By virtue of ownership of the flat, your husband was a member of the co-operative housing society. On his death, you, as a nominee, became member of the society. Subject to ownership rights being sorted out on the basis of testate or intestate succession upon the death of your husband, unstamped document before December 10, 1985, of your flat will not disentitle you to have new flat in the process of redevelopment envisaged by your society.

My flat is on leave and licence. Do I need to make licensee the nominal member of the co-operative housing society? —Ankita Rai
Model bye laws provide that a member letting the flat shall make the licensee a nominal member in the co-operative housing society. Such provision is also in your interest as once the licensee is made a nominal member, he also comes within the jurisdiction of co-operative authorities and the co-operative court. Nominal member’s name does not get entered on the share certificate and he is not entitled to any property rights whatsoever. Nominal member is not entitled to attend general body meetings of the society nor can he be a part of the managing committee.

Sale of your flat in a family would attract taxes and duties

A scheme of amalgamation is approved by a competent court in terms of exercise of jurisdiction under the Companies Act, 1956.
My brother wants to purchase my property at Thane and wants to avail a housing loan from a bank for such purchase. Will the sale attract capital gains tax? Do we have to take permission of the society for such family transaction? How do stamp duty and registration aspects apply to such a transaction? Will the bank grant a loan for such a transaction within the family?
— Ganesh
You are contemplating a property transaction within the family but absolutely on commercial terms and therefore all the implications under the provisions of the Bombay Stamp Act, 1958, under the Registration Act, 1908 and under the Income Tax Act, 1961 would apply as they apply to such transactions between outsiders.
The stamp duty would be attracted on the sale value stated by you in the agreement for sale or on ready reckoner value, whichever is higher. Although there is concession in respect of stamp duty on gift of an immovable property to a family member, there is no such concession on sale within the family. Registration charges would be attracted on value adopted and assessed or assessable for stamp duty purposes.

For income-tax purposes, to compute capital gains in your hands, the gross value of consideration would be the value as stated in the agreement for sale or the stamp valuation adopted and assessed or assessable, whichever is higher. However, the society transfer premium would not be attracted as the transfer is to a family member.

All forms applicable to a transfer would have to be filled in. The requirement of obtaining a no objection or an approval for transfer of flat in a co-operative housing society has been dispensed with under the model bye laws. The bank or financial institution generally advances loans on evaluation of the proposal based on value of the property and repayment capacity of the borrower over the term of the loan sought.

If the bank or financial institution is convinced on such aspects, then simply because it is a case of transaction within the family should not disentitle your brother to avail the loan.

Is stamp duty payable on transfer of immovable property in a scheme of amalgamation of companies under a court order?
A scheme of amalgamation is approved by a competent court in terms of exercise of jurisdiction under the Companies Act, 1956. Under such a scheme, the property is conveyed from one company to another.

An order of the court approving such a scheme to the extent it provides for conveyance of an immovable property would be subject to stamp duty under section 3 of the Indian Stamp Act, 1899. Statutory definition of the term “conveyance” u/s 2(10) of the Indian Stamp Act, 1899 is an inclusive definition of wide import.


Investment in a new house can be from any source

Can I adjust capital gain against purchase of the house? Will I get tax benefit of housing loan interest?
I have sold a depreciated factory and earned capital gain. The factory was owned by me since 1995. Before sale of the factory, I purchased a residential property out of bank loan and my accumulated savings. Can I adjust capital gain against purchase of the house? Will I get tax benefit of housing loan interest?
—Deven C
U/s 50 of the Income Tax Act, 1961, sale of a depreciated asset has given rise to deemed short-term capital gains in your hands. However, since the factory was held by you for more than 36 months and consequently it was a long-term capital asset in your hands, it was possible for you to invest net sale consideration in a residential house and claim exemption of such deemed short term capital gains.
Another issue arising in your query is that you have not used the sale proceeds of the factory for purchase of residential house. In this connection, you will have to submit before the income-tax authorities that for the purposes of section 54F, funds from any source including borrowed funds and accumulated savings can be utilised, as the said section does not specifically require that the sale proceeds be utilised for purchase of the house. At the same time, in your case, you should verify that you have purchased the house
within one year before transfer of factory and you may note that date of transfer for the purpose of the Income Tax Act may not always be the same as the date of sale agreement of the immovable property.

For interest payable on funds borrowed for acquisition of your house, you will be entitled to income tax benefit u/s 24(b) up to an amount of `1,50,000 per year in case the house is self-occupied, but if the house is rented or even notionally rented, the ceiling of `1,50,000 will not apply.

I had deposited a cheque with Rural Electrification Corporation for purchase of capital gains bonds on September 29, 2010 as I was required to invest within six months, expiring on September 30, 2010 after sale of my house. However, I was allotted bonds only on October 27, 2010. Will I get income-tax benefit?
—Toral Mehta
Section 54EC of the Income Tax Act, 1961 requires you to invest capital gains in capital bonds within 6 months of the date of transfer of a long-term capital asset. Under such benevolent provisions, your making the payment within the prescribed time limit would be a sufficient compliance to avail exemption, although legally, the date of allotment of the bonds is the date of acquisition and you will have to hold the bonds for a minimum three years from the date of allotment.

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Don’t worry about withdrawal of incentives for redevelopment

In the city of Mumbai and suburban areas, floor space index (FSI) incentives have been provided by use of transferable development rights (TDR) and under other schemes for redevelopment of properties.
Our society is contemplating redevelopment. Is it possible that the FSI incentives are withdrawn in the times to come?
In the city of Mumbai and suburban areas, floor space index (FSI) incentives have been provided by use of transferable development rights (TDR) and under other schemes for redevelopment of properties.

The prevailing incentives under various development control regulations are not so high as to cause apprehension of withdrawal of some of them. Present incentives are just making the redevelopments possible.
One observes that the quantum of incentives provided, over a period of time, have gradually increased for the logical reason that ultimately the government wants to encourage the redevelopments.

What is being questioned by the present municipal commissioner is the kind of manipulations taking place in construction of elevation features free of FSI. Although, these elevation features do not consume FSI and are legally not saleable areas but the in practice, they are being sold as usable areas.

Many of the rules of law do not get implemented because of the supply of housing stock continuing to be far less than the demand. View that the incentives may be withdrawn and thereafter redevelopment propositions may become less attractive is without basis or logic.

‘Apartments can be used for professional services’

We are a partnership firm carrying on profession from a residential flat. We have a number of staff members and are using them in rendering professional services. Can municipal authorities take action against us for change of user?
We are a partnership firm carrying on profession from a residential flat. We have a number of staff members and are using them in rendering professional services. Can municipal authorities take action against us for change of user? Can the society charge us more?
Even though professional services are being rendered with the help of staff, it does not change the analogy that a professional activity is not commercial activity. Since the use of even the entire residential flat for carrying on professional services does not tantamount to change of user, the municipal authorities cannot take any action against you. The society has no power to charge any extra amount, whether there is a change of user or not.

Before the formation of our society, there were many transfers by the original flat purchasers from the builder. The builder had collected transfer fees in respect of such transfers. Can the society claim such money collected by the builder?
A flat booked under construction and the relevant documents having been properly stamped and duly registered gives the flat purchaser an absolute right to sell or otherwise transfer the flat without any permission from the builder. The law does not support collection of transfer fees or no objection fees at the time of such transfers of flats, by original or subsequent purchasers either during construction stage or thereafter, before the society or other housing organisation is formed. However, if such amounts have been paid, one will have to have evidence of such collections. The person who paid such money would only have the locus to demand the same back and to take other legal actions.
Gifts received from which relatives are not taxable?
Section 56(2) of the Income Tax Act, 1961 inter alia provides that sums received without consideration from following relatives are not income:
(i) spouse of the individual;
(ii) brother or sister of the individual;
(iii) brother or sister of the spouse of the individual;
(iv) brother or sister of either of the parents of the individual;
(v) any lineal ascendant or descendant of the individual;
(vi) any lineal ascendant or descendant of the spouse of the individual;
(vii) spouse of the person referred to in clauses (ii) to (vi).
However, one should note that Section 56(2) provides that amounts and specified properties received from non- relatives, but for the exceptions provided in the said section, are incomes but no where in the Income Tax Act,1961 it is provided that gifts received from relatives are not income and therefore tax free. Therefore, it is not a case that section 56(2) places the gifts from relatives beyond taxing provisions. If gifts are received from specified relatives, the recipient will have to prove genuineness of such gifts with reference to identity of the donor, capacity of the donor, source of funds of the donor, etc.

Sec 50C does not apply to typical society redevelopment

Who is taxable in redevelopment of society — the society or the members? Is redevelopment compensation and rental compensation liable to TDS or not, and does Section 50C apply to redevelopment?

In a redevelopment project, it is better that while conceiving and structuring the scheme and while documenting the transaction, de facto ownership rights of the members are recognised although the property stands in the name of the society. This will give better locus standi to members of their proportionate rights in the redevelopment project. This will also go better with income-tax and other taxes implications as presently although taxability of such projects has been decided in favour of the society, but since all these matters are reaching to high courts, in a possible situation if such transactions are considered taxable by the high court, there will be substantial scope for exemptions if the income is taxed in the hands of individual members rather than in the hands of a society. In any case, provisions of tax deduction at source under the Income-Tax Act, would not apply either to redevelopment compensation or to rental compensation.
Provisions of Section 50C of the Income-Tax Act are attracted on transfer of immoveable properties in the nature of land or building or both held as capital assets and consideration stated in the instrument of transfer is less than the valuation adopted assessed or assemble by stamp duty authorities and the said section in this context in a nutshell provides that in such a case, stamp valuation would be treated as gross consideration for such transfer and accordingly capital gains would be computed on higher side. In a typical society redevelopment, provisions of Section 50C will not apply for the reason that in such a redevelopment, only development rights are transferred and there is no transfer of land or building. In the recent Bombay High Court decision, petitioner had challenged the validity of provisions of Section 50C wherein he failed but applicability of Section 50C to society redevelopment was not decided by the Hon’ble high court.

In contemplation of death, only movable assets can be gifted

A gift in contemplation of death can be made of any movable property which the donor could dispose of under a will. What is a gift in contemplation of death and how to make it? Can one gift his flat in contemplation of death? — S Venkitesh
A gift is said to be made in contemplation of death when the donor is ill and he expects to die shortly and delivers to another person possession of the movable property to be kept by him as gift in case the donor dies of that illness. A gift in contemplation of death can be made of any movable property which the donor could dispose of under a will. It is possible for the donor to resume such a gift before he dies. Further in a case where donor recovers from the illness during which he made the gift then such a gift will not take effect.
Further, if the donor survives the person to whom such gift was made then also such gift does not take place. If such property instead of being given away in contemplation of death is made subject matter of the Will then the bequest under a Will would require executor’s assent to perfect the title of the legatee and will be subject to probate, when applicable. Gifts in contemplation of death can be made only of a movable property. Therefore one can not gift his flat in contemplation of death.

Redevelopment benefit is proportionate to the size of your flat

Society functions by decisions of the majority, but rule of majority cannot be an oppression on minority and the decision of majority has to be within the framework of applicable laws.
Majority of members of our society in redevelopment have agreed to fixed additional areas irrespective of the sizes of our existing flats. We, few members are adversely affected because of our larger sizes of flats. Can the society do so? Whether monies received by us would be taxable as our income or society’s income?
Society functions by decisions of the majority, but rule of majority cannot be an oppression on minority and the decision of majority has to be within the framework of applicable laws.
In a co-operative housing society (CHS) type of organisation, although all members are equal in respect of their membership rights in view of principle of one member one vote but their property rights may be substantially at a variance. Property rights of members in a CHS are with reference to sizes of their respective flats. MOFA, 1963, being a territorial Act, automatically applies to sales of all flats on ownership basis by a builder, developer or promoter and since under MOFA, sale of units in the building is succeeded by conveyance of the underneath and appurtenant land, the builder recovers entire price of the property from sale of flats.

Under such a legal system, therefore, even though each flat purchaser has paid the price for acquisition of his flat, but implicit in the price of each flat is the price of proportionate land.

In redevelopment transaction, whether society is the taxable entity or individual members, would depend upon the manner in which scheme of redevelopment is designed and the documentation of the transaction. Although depending upon the facts of each case, in many cases, redevelopment of properties inter alia of societies have been held non-taxable. But at the same time, in all such cases, appeals filed by the income tax department have been admitted by the Mumbai High Court. Decisions will come after some years.

If the high court confirms non-taxability of redevelopment through TDR-FSI route, things would be fine for societies. But if the high court decides that such redevelopment transactions are taxable, in such an adverse eventuality, if the society is a taxable entity, taxes would have to be paid whereas if a member is a taxable entity then once again due to various exemption sections applicable to individual assesses under the provisions of the Income Tax Act, 1961, the tax liability may come to nil or negligible.

Therefore, a member and not the society as a taxable entity in such transactions, would provide double safety. In the case of Aurovilla CHS Ltd, represented by this writer, Hon’ble Mumbai Tribunal, inter alia held that in respect of corpus fund of Rs 10.26 crore, since the members were the owners of the property, society is not taxable.


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Mass misuse of court order on co-op society

The provision presumably intends to protect the interests of the cooperatives, whose funds would be handled by the committee members.
Many cooperative housing societies are facing harassment, because of a little known order of the Bombay High Court passed on September 15, 2006 that makes it mandatory for every committee member of the society to execute an indemnity bond on a stamp paper of Rs200, within 15 days of assuming office.

The High Court order adds that in case the member fails to do so, he forfeits his office. The order derives from Section 73 of the Maharashtra Cooperative Societies Act 1960, which says that every committee member of a cooperative society shall execute a bond within 15 days of assuming office.

The provision presumably intends to protect the interests of the cooperatives, whose funds would be handled by the committee members.

Upholding the directive as imperative, the High Court dismissed the contention of the appellants in the case of Assissi Cooperative Housing Society, stating that the bond was not mandatory. This directive is increasingly being used by many a disgruntled resident to settle scores with the managing committees of cooperative societies.

In case some resident has a dispute with any of the committee members, a complaint is promptly filed by the resident against the particular member for not executing the bond, says an official. “In such cases, we offer to disband the committee and call for fresh elections,’’ says Divisional Joint Registrar of Cooperative Societies, Mumbai, Shivajirao Pahinkar.

Curiously, there are no statistics available with the Cooperative Societies Registrar on the number of societies who have executed this bond, even though this office is supposed to be provided with a copy of every such bond. It is estimated that less than one per cent of the 29,000-plus cooperative societies in Mumbai have executed such a bond.

“Members are expected to fill up a prescribed M20 form and keep it on the record of the society, The bond stays with the society itself. It is impossible for us to check how many societies have followed the order, unless it is revealed during our annual inspections,” claims Pahinkar.

“Most of the societies are either unaware of the order or don’t want to execute the bond,” says advocate Vinod Sampat. Sampat has been writing to various wards under the Right to Information Act to find out how many members of cooperative societies have executed the bond.
“Most authorities have not replied to my applications,” he said. It is learnt that a Bill to rid the Act of this perceived anomaly was drafted way back to 2001, but is lying in limbo for want of political will.

Getting deemed conveyance of property just got easier

Recent regulatory changes obviate the need for flat owners in the state to enter into endless legal wrangles with their builder/ developer for forming a housing society and getting conveyance of property.
Flat owners slugging it out in the courts for getting their respective builder /developer to form a housing society and execute a deed of conveyance in their favour can take heart.

Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963, popularly known as MOFA, which governs the promotion of construction, sale, management and transfer of flats in the state, has made it easier for them to get an order of deemed conveyance in case the builder/developer fails to do so within the time prescribed under the Act.
Provisions of Act have always required a promoter, including a builder, developer or co-operative housing society constructing flats for sale to take steps to form a housing entity, i.e. either a co-operative society, company or apartment ownership association, within four months of the date on which 60% of the total number of the flats were sold.

They also provided for mandatory conveyance of the subject land and building in favour of the housing entity either within the agreed time period, or, in the absence of any agreed time period, within four months of the date of registration or constitution of the housing entity.

However, the Act in its original form did not have the required teeth, because of which promoters have tended to go slow on forming housing entities within the prescribed time period. In fact, in the majority of the cases, conveyances have not been executed by the promoters for years as the available remedies were quite time consuming.

Now, thanks to the amendments carried out by the Amendment Act, 2005, passed in 2008, followed by the amendment in rules as notified on September 27, 2010, the relevant provisions have been strengthened.

It is necessary that flat purchase agreements are duly stamped and registered as required under the provisions of Bombay Stamp Act, 1958 and Registration Act, 1908, respectively. Applications for both the purposes may be lodged by the party or authorised agent who may or may not be an advocate.

If the promoter fails within the prescribed time period to initiate steps for formation of a housing entity, the competent authority may, upon receiving an application in the prescribed form from the flat purchasers and after verifying the authenticity of the applicants’ request and giving the concerned promoter a reasonable opportunity of being heard, direct the concerned cooperative authority to register the society.

If the promoter fails to execute conveyance in favour of the housing entity within the prescribed period, the members, through the housing entity, may make an application in the prescribed form to the concerned competent authority, accompanied by relevant documents for issuance of unilateral deemed conveyance.

After scrutinising the application and after giving an opportunity to rectify defects in the application, if any, within 15 days or an extended time of maximum 15 days, and being satisfied about the completeness of the application, the competent authority shall within a period of 15 days issue a notice in the prescribed form to the opponent/s, requiring him/them to file the written statement.

On consideration of the replies and after hearing the parties, the competent authority shall, within reasonable time and in any case not later than six months from the date of receipt of the application, pass such appropriate order as it deems fit and may issue a certificate to the concerned registering authority certifying that it is a fit case for enforcing unilateral execution of conveyance deed in favour of the applicant, as deemed conveyance.

The registering authority, on its part, shall, after giving the promoter and the applicant(s) a reasonable opportunity of being heard and on being satisfied that it is a fit case for unilateral conveyance, register that instrument as deemed conveyance.

‘Mixed objective trusts can get income-tax benefits’

Under the provisions of Bombay Public Trusts Act, 1950, as well as the income tax law, even when all the trustees are from your family, the trust can be a public charitable or religious or both.
Can we have a trust which is for charitable as well as religious purposes and all trustees are our family members and still get income tax benefits? Our trust is running and managing a school although permission from education department was refused. Whether it would affect income tax benefit?
Under the provisions of Bombay Public Trusts Act, 1950, as well as the income tax law, even when all the trustees are from your family, the trust can be a public charitable or religious or both. Whether the trust is public or not would be reckoned with reference to the objects thereof and not on the basis as to in whose hands the management is.
Language of section 11 to 13 of the Income Tax Act does not suggest that an institution of mixed objects is precluded from getting registration under section 12AA. Therefore, you can avail benefit of exemption of your trust, subject to limitations in respect of donations u/s 80G. Income tax benefits are not dependent upon permission of the education department. Once you establish that the purpose is charitable and activities of the trust are genuine, your trust is entitled to tax benefits. Charitable purpose includes education.

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Flat owners to get revenue share from cell phone towers, hoardings

For the first time ever, members of housing societies will directly earn revenue from cell phone towers and advertising hoardings in society premises. The co-operatives department has come up with a new set of by-laws for housing societies, which will make it mandatory for societies to share with members 50 per cent of the revenue generated through towers and hoardings on society premises.

The new rules also make it mandatory for the society to seek the consent of 70 per cent of flat owners to allow erecting towers or hoardings. A society is also not allowed to lease out more than five per cent of its open space.
The Co-operatives Department has also proposed comprehensive changes in housing society rules with regard to parking space to ensure equitable distribution of space among members. However, the draft is yet to be finalised with the department studying the Supreme Court directive, as well as other Acts included in the Maharashtra Ownership Of Flats Act, on the issue.

“On mobile phone towers and advertising hoardings we have already drafted rules, but those will have to be approved by the minister, and only then will we issue a directive under Section 79 of the Co-operatives Act in this regard. The new rules will ensure society members directly get benefit. This will help members, who pay various charges to the society,” said Co-operatives Department principal secretary Rajgopal Devara.

The draft rules also makes it mandatory for societies to obtain a structural audit report stating that the building would be able to withstand the weight of the cell phone tower or advertising hoarding, and present it at the general body meeting for members’ consent. Only if 70 per cent of the members agree will the society be allowed to go ahead.

More importantly, the changes in rules also make it mandatory for the society to bear the expenses for repairing any damage, such as leakages, suffered by flats on the top floor from the 50 per cent revenue generated from the lease. The society will have to take care of damages to flats both internally and externally if they are caused due to erection of towers/hoardings.

The policy on cell phone towers and proposed changes in society rules were proposed by the Urban Development Department, however, it was the Co-operatives Department that took the initiative with regard to advertising hoardings and revenue sharing proposals.

Mumbai security men working in worst of conditions

Several experts allege that security agencies and co-operative housing societies in the city exploit a majority of security guards.
A weekly off seems like a distant memory to Ram Singh. The 36-year-old security guard of a commercial establishment in an upmarket suburban area hasn’t been able to take a day off in one-and-a-half years. He is on a tight 12-hour shift, 365 days a year. But working his fingers to the bone hasn’t paid off.

“I can hardly make ends meet despite working for this big company. I get Rs5,000 a month and the firm doesn’t even pay us for working overtime,” he alleges.
A guard sitting by Singh says he will make do with this job till the time a better opportunity presents itself to him. “How else can we send our children to good schools?” he asks.

Several experts allege that security agencies and co-operative housing societies in the city exploit a majority of security guards. Worse, they get away with it because of legal loopholes.

A source from a security agency, which employs almost 7,000 guards, takes umbrage at the state of affairs. “The security sector is the second largest employer after the manufacturing industry. How can we tolerate this? Why can’t people pay them fair wages? A security guard puts his life at stake for a measly salary.”

Outfoxing lawmakers
So, how do these ‘exploiters’ work around the law? Experts point out that provisions of the Contract Labour (Regulation and Abolition) Act, 1970, do not apply to an entity if it hires less than 20 employees. “Housing societies say they do not come under the purview of the Act since they do not have as many security guards. But, the moment a housing society employs guards from a contractor or a security agency that has over 20 guards on its rolls, the law immediately applies to that agency, making it the principal employer defined in the Act,” says a source from a security agency.

He reveals that even some corporate houses pay guards just Rs4,500-Rs6,000 a month for a 12-hour shift. “Companies propose low quotes to security contractors when hiring guards. They have no choice but to agree to low quotes since they don’t want to lose out on contracts. No contractor will work with a loss. So, they try to make up for the loss from the guards’ salaries. If the company is inspected, then it resorts to ‘plausible deniability’ and puts the blame squarely on the contractor, even though the company is the principal employer and it is its responsibility to ensure that contract labourers are not exploited.”

Ideally, explains a security personnel working with a housing society, a guard should make Rs10,000 per month for eight-hour shifts. But, that perhaps happens in an alternative, utopian world. “I make only Rs6,000 and that too for a 12-hour shift, with zero benefits… Is that sufficient in these times? I have no choice, but to work two jobs for 24 hours a day. And then, the residents shout at us and sometimes even beat us up for sleeping on the job. But, how can we stay alive and support our families on such wages?” his voice trails off as he gets back to his station.

With pays ranging between Rs3,000 and Rs4,000, most such guards end up working for 24 hours a day through other security agencies. Additionally, they are forced to wash cars in housing societies and run errands for residents, complains Singh.

A resident of a co-operative housing society in Kurla confides that security guards in her building put in 12-hour shifts for Rs5,000. “We have two guards and they work 12 hours a day. Earlier, they used to live in the building. But now, they have moved elsewhere.”

Cover, huh!
Uday Bhatt, president of the Maharashtra Suraksha Rakshak Agadi, a trade union, says as per a notification on minimum wages for security guards issued by the state government on January 1 last year, a security guard should get Rs7,434, including special allowance, daily allowance/house rent allowance, conveyance and washing allowance.

Again, housing societies manage to cut themselves loose from the law. Forget amenities like leave wages, health benefits through the employees’ state insurance corporation and provident fund, “90% of the guards at housing societies are underpaid,” adds Bhatt.

Advocate Vijay Vaidya explains, “Housing societies are not establishments according to the Bombay high court and hence, the minimum wage notification doesn’t apply to them. The agencies want to increase their profit margin and therefore, pay the guards a pittance. There is no forum available to complain. Clearly, the security guard board will never push for setting up such a forum or even amend the Security Guard Board Act as the authorities are busy looking after themselves.”

The Act applies to people who work as security guards in any factory or commercial establishment through agencies but it does not cover direct and regular employees.

Bhatt says only 24,000 guards who have registered themselves with the security guard board are covered under the Act. “But, there are over 2 lakh guards in the city who are working illegally with no benefits. The government machinery is not interested in curbing this problem despite a number of high court rulings.”

Those guards employed by private security agencies who fail to register themselves with the security guard board have to fill a form to seek exemption from the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Scheme, 2002, which covers the entire state, with the exception of a few districts, says Bhatt. “The main aim of the Act is to do away with middlemen who take advantage of the guards.”

A top official confirms that employees of housing societies are not able to take advantage of the provisions of the Act. “We can’t entertain their complaints and they will have to approach the labour commissioner. Of course, we require an amendment to help resolve this issue. Essentially, the Security Guard Board Act applies only to factories and commercial establishments. It does not cover housing societies.”

No word on the numbers
Gurcharan Singh, president of the Security Association of India, claims that there are over 2 lakh registered security guards in Mumbai and Thane districts and that 80% of them are employed in factories and commercial establishments where they receive a minimum wage of Rs7,200. “Five percent to 10% of the guards are employed in small-scale industries and 20% are employed in co-operative housing societies. Seventy percent of those employed at housing societies are exploited and are not paid minimum wages. Some of these are also deployed by fly-by-night agencies which bend the rules at will.”

But, the association doesn’t seem to have a finger on the pulse of the situation. If one were to take it at its word, only 40,000 guards are reportedly hired by housing societies. So, assuming that there are two guards to a society — one for the day and another at night — what the association seems to be suggesting is that there are only 20,000 housing societies in Mumbai and Thane. Clearly, that is not the case, which means that the association, the government and the Maharashtra security guards board have not yet even begun to enumerate the number of guards in Mumbai and Thane, let alone in the entire state.


A member can conduct audit of his own society

Unlike under the provisions of the Companies Act, 1956, there is no such restriction under the provisions of Maharashtra Co-operative Societies Act, 1960 that a shareholder or a member cannot conduct audit of a cooperative society.
In Mumbai, is it possible for a member to do statutory audit of his own society?
Unlike under the provisions of the Companies Act, 1956, there is no such restriction under the provisions of Maharashtra Co-operative Societies Act, 1960 that a shareholder or a member cannot conduct audit of a cooperative society. Therefore, in the absence of any such bar, a member of a co-operative housing society can conduct internal or statutory audit of the society in which he is a member, but he should not be a part of its managing committee or sub-committee because in that case he would be reporting inter alia on his own actions and inactions.
Can a society allow a flat to be used for commercial purposes by charging extra amounts?
Use of a flat for particular purposes and change of use is allowed by local authorities, primarily the municipal authorities. A cooperative housing society has no power to allow change of use and charging extra amounts for allowing such change would be illegal. However, while permitting change of user, the municipal authorities may require you to obtain no-objection from the society.

During the year, I sold two flats and am contemplating investing the capital gains in purchase of flat(s) by adding my wife’s name in one purchase. Out of the sale proceeds, some amounts have been used by me in repayment of loans and therefore I will be using my savings in acquisition of new flats.
Capital gains resulting from sale of a residential house, if utilised for purchase or construction of another residential house, would entitle you to avail exemption u/s 54 of the Income Tax Act, 1961 if the flat transferred by way of sale was held by you for more than 36 months on the date of transfer thereof and acquisition of new house is within specified time limits and subject to specified conditions.

Section 54 does not contain any condition as to how many houses one may transfer during a year and therefore, your selling two houses and acquiring separately two houses against each sale would be within the provisions of section 54. As far as in one purchase you want to add the name of your wife as a co-purchaser, the same can be done provided only your funds are invested. Further, source of funds for investment in new houses may not be only the amount of sale proceeds but can be from anywhere including your accumulated savings.

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Maharashtra government puts off co-operative society polls by a year

Decision will delay setting up autonomous authority.
If you are living in a large housing society where elections are overdue, you would have to wait for at least one more year, till the proposed election authority to monitor the polls in co-operative bodies is set up.

A few months ago, the state government decided to set up an autonomous election authority for co-operative bodies, to be headed by a commissioner. The process was to be completed by the end of 2013. Now, the government has decided to postpone all elections to co-operative bodies till December 31, 2014, in view of the Lok Sabha and state assembly polls due next year.
The state election authority will now supervise, control and conduct polls in all registered co-operatives. This step was taken under the 97th Constitutional amendment, which aims to ensure autonomous and democratic functioning of co-operatives and accountability of the management to the members and other stakeholders.

But the government has not appointed a commissioner to head the authority yet. The commissioner is to be a retired civil service officer not below the rank of a secretary. Now, it is concerned that the government machinery will have to be engaged in the general elections process.

“The Lok Sabha and state assembly polls are due next year. So these elections are being postponed. Also, the polls to co-operative bodies affect the dynamics of local politics,” said a senior official in the co-operation department.

Polls for about 32,000 co-operative bodies, including about 12,000 housing societies, have not happened since 2011 when the amendment to the co-operatives act took away the elections from the purview of the registrar.

A new election authority would prevent political pressure being exerted on officials in the co-operation department and the voters in these hotly contested elections.

The postponement has angered some in the co-operatives sector. “We are not in agreement with the government’s decision… this is unjust. At least co-operative housing societies and small credit societies should have been exempted from this,” said Ramesh Prabhu, chairman, Maharashtra Societies Welfare Association.

He pointed out that the government’s stay on decision-making by the old committees had affected the progress of work related to redevelopment, conveyance and repairs of buildings.

Advocate Vinod Sampat pointed out that the decision had caused multiple problems. He alleged that the decision to set up the election authority was taken to mollycoddle the sugar lobby, but that it would on the contrary increase political interference in elections to these bodies.

On March 31, 2012, Maharashtra had 2.28 lakh co-operative societies with about 5.25 crore members. Among them 88,472 were co-operative housing societies with 23.11 lakh members.

According to Maharashtra’s economic survey, there are 25,437 co-operative dairy societies, 15,004 urban co-operative credit societies, 526 urban banks, 21,443 primary agricultural credit societies and 202 sugar co-operatives.

Officials explained that as and when the elections to co-operative bodies is taken up by the new authority, it would take about 30 days to complete the election process. They also pointed out that states like Karnataka, Andhra Pradesh and Tamil Nadu had already set up the election authority.

Polling matters to be with state
The state election authority, which would operate along the lines of the election commission, will supervise, control and conduct the polls in all registered co-operatives like housing societies, banks, credit societies and milk federations, that have a membership of more than 100.

Housing society presidents need not sign bond: Maharashtra CM

Prithviraj Chavan announced that a bond which the president of housing societies has to submit within 45 days of assuming charge will be abolished to make the Cooperative Societies Act consumer-friendly.
Chief minister Prithviraj Chavan announced that a bond which the president of housing societies has to submit within 45 days of assuming charge will be abolished to make the Cooperative Societies Act consumer-friendly. The CM said the notification would be issued in two days.

Societies and organisations representing them have been demanding the scrapping of the bond, which places legal responsibility on committee members for their actions.
Societies had been finding the provision tedious as the office bearers work on an honorary basis and the action for failing to abide by the provision was not justified. The announcement is expected to offer respite to more than 50,000 societies in Mumbai and Pune.

Cooperation minister Harshavardhan Patil said in the last six months more than 400 cooperative societies have complied with the deemed conveyance provision. “More than 70% of the societies in Mumbai are expected to obtain the deemed conveyance by March 2013.”

Society can’t charge more than Rs25,000 as transfer fee

About eight years ago, we registered our society which is in Mira Road. I would appreciate if you can advise on the following points:
1. Eight members of our society have sold their flats prior to forming the society. Should the share certificates be issued in the name of the first buyer from the builder and then transferred to the second/third buyer as per the chain agreement?
2. What is the transfer fee the society can charge?
3. A big amount towards the monthly maintenance charges is outstanding from some members from the past many years, ie, prior to and after registering the society. Can the society recover this amount and how?
4. A few flats are expected to be sold shortly. Can the society hold/refuse the transfer application till all the old outstanding dues are cleared/paid?
— Paresh Mehta

Till such time as the society is formed, the builder is de facto and de jure owner. The share certificate is to be issued in the name of the persons whose names are given to the society by the builder as members. Transfer fee is to be decided by the AGM of the society but is restricted to a maximum of Rs25,000. Outstanding from members is to be collected from them by issuing legal notice and following the procedure laid down in the Cooperative Societies Act. All transfers are subject to the approval by the managing committee but it would be subject to the principles of equity, justice and good conscience.

Discrepancy in rates
My complaint with the MTNL, dated August 17, regarding discrepancy in call rates is still pending. Someone has been using my number by getting it associated with my group plan. On enquiry, I found three telephone numbers associated with my mobile number and instead of 90p/min getting deducted Re1/min was deducted for the calls I made. When a call lasting for 29 seconds was made, I realised Rs62 was deducted. That is when I realised someone must be misusing my number. I asked the MTNL help centre to check at their end as to whom the above numbers belonged and also to refund then extra amount. Initially, the help centre people assured me that they would refund Rs62, but till date no action is taken. Instead, I received a letter saying that my complaint had been forwarded to DE Billing GSM, MTNL, and that I should communicate with him directly.
— Ravi

According to Telecom Regulatory Authority of India (TRAI) directives, no customer can be given a Value Added Service (VAS) — even if it is free — without his specific consent. Please send a letter in writing to the MTNL authorities about this, with a copy to TRAI. Regarding over billing or wrong billing, a group number or company number is vulnerable to such pranks because many people have access to the same. While chasing MTNL for a refund, which you are entitled to, think of a way to avoid getting into such situations.

Parking woes
I had gone through a recent article in DNA about car parking space to be provided as per rules. I was extremely satisfied about the outcome from the court room. I live in a building which is now 51-years old. From the past 30 years, I have two cars which the society had permitted and I was paying the society the charges for them. The building has 17 flats and during TDR 11 flats were constructed around 4 years back.

We now have stilt and open car parking. One new member did not opt for stilt car park but has a car which is parked in open car parking. In open space nine cars are parked out. which two slots are given to new members. In the recent AGM, the society passed a resolution that in the open car parking area only one car is permitted. I had protested saying that in the stilt car parking new members are permitted to park two cars, the reply was that such car parking have been sold to them. I have three flats in the society in my name.

I am not clear that how two laws are framed in TDR building; one for new members and the other for the old ones. I am also not clear that how the two new members are permitted to park their cars in open area and the oldest member has been instructed to remove the second car.
— RN Shahani

A cooperative society can frame any rules for itself as long as they are within the laws of the land, and they satisfy the principles of justice, equity and good conscience. An important point in your case is, what were the terms and conditions of redevelopment with regards to parking spaces? Was it stated that all old members will be given the same number of parking spaces as before or that they will be freshly allotted? This will decide the fate of how many parking spaces you are ‘entitled’ to in the new set-up.

Mumbai: Societies can now wrest dues out of you

Are you a repeat defaulter on maintenances charges for your flat? Mend your ways.

Housing societies in the state will soon have the power to initiate recovery proceedings from flat owners who default on such charges.

This was one of the amendments to the Maharashtra State Co-Operatives Act cleared by the state cabinet on Wednesday to bring it in line with the 97th amendment to the Constitution, which is aimed at encouraging the economic activities of cooperatives.
Societies, however, don’t get a free run of things. If they initiate recovery proceedings, they will still have to take the help of a recovery officer of the state.

While the cabinet cleared a move to permit housing society executive bodies to even sell flats to recover dues in extreme cases, the final sale of a flat will require the approval of the registrar of cooperatives.

Worried over an amendment that disallows administrators to be appointed for unaided societies — a move that would do away with state intervention in co-operative societies that do not take any government aid — the state is looking at legal options to allow intervention if there is mismanagement and misappropriation of society funds.

Co-operation minister Harshvardhan Patil said the state is mulling over a legal option of imposing certain conditions which allow it to intervene. “People can then come to us, saying the societies are registered and that the government should do something about the co-operative institution if there is deposit erosion or liquidity collapse.”

The scope for state intervention in co-operative institutions receiving government aid has been further reduced with an amendment that allows suspension or supersession of the board for only a period of six months. In the case of co-operative banks, this period cannot exceed a year.
Another major amendment stipulates that members of co-operatives will have to attend at least one annual general meeting to stay an active member. Else, he/she will be dubbed ‘non-active’, ergo, losing the right to vote.

Advocate Vinod Sampath, housing societies law expert, picked holes in the amendments. “There are a few good things. But the move to allow housing societies to directly start recovery proceedings against defaulters and then get the approval of the registrar may not be right. Any penalty can be levied only by a court, and the society cannot decide and levy them. There has to be a counter-check to the powers vested with the society. The managing committee can charge whatever comes to their mind and levy a penalty on the house owner to recover dues. People with vested interests may take advantage of this amendment.”

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Housing societies act like dictators

Tolerance is being eroded because many of housing societies function as fiefs of dictatorial committee members.
Thane consumer court has recently upheld a Vashi resident’s right to use his housing society’s elevator – the said resident is an 11-year-old infirm Labrador. The owner of the ageing pet is delighted by the judgment, not least because it vindicates his stand that the society was being unfair and foolish in denying the dog an unexceptionable facility.

The owner’s sentiments are intelligible. The society was demonstrating an irrational loathing for pets, of course. But what appals me is that the neighbours were exercised by a molehill of dog hair when housing societies across Mumbai have real problems which amount to a mountain of dog poop.

In August this year, a 70-year-old Andheri (E) resident was murdered in a housing society equipped with attack alarms and guarded by sentries who recorded every visitor’s entry. In March, a 62-year-old woman who lived alone was slaughtered in her Gorai apartment. You think these are recent aberrations that presaged the 26/11 butchery? Let me tell you that there is no way you can blame Pakistan for this.

These crimes are triggered, and sometimes encouraged, by neighbours who are indifferent to each other all the time – except when something as significant as loud conversation provokes a general body meeting. I say this churlishly, but with certitude, because much before south Mumbai bloodied front pages of newspapers across the world, Jay Mahal Cooperative Housing Society in the tony Churchgate was the site of a double murder. A 94-year-old man and his 86-year-old wife were killed by their household help who had been hired without police verification.

As I argued a few columns ago, housing societies would be better served by focusing on strict police verification of tenants rather than by denying accommodation to single people or to members of certain faiths. Tolerance is being eroded because many of these societies function as fiefs of dictatorial committee members. It may be hyperbolic to compare an authoritarian housing society with Pakistan. But the overreach allows you to draw instructive parallels. As democracy is throttled, a tiny cabal takes over.

The cabal is interested in no more than self-preservation, so the interests of the larger group is neglected. But the larger group, remains silent because what matters to it is a no-hassle life. In the circumstances, authoritarianism breeds arbitrariness, because nobody is bold enough to ask questions. In the end, such a society is easily able to ban music, dogs, certain kinds of dress, and faiths. That intolerance opens cracks between one society and another. Mohammad Ajmal Amir and his friends are born in those cracks.

Housing societies, unlettered in law, flout norms at will in Pune

Eight common complaints of members against managing committees.
1. Not signing M-20 bond as required under law: According to Rule 58-A of the Maharashtra Co-operative Societies Rules, 1961, every elected member of the managing committee is to execute a bond in Form M-20 within 15 days of assuming office.
The secretary of the society is responsible for receiving the bonds and keeping them on record of the society and informing the registrar within 15 days of formation of the committee. This rule is often flouted as Form M-20 makes each member liable for decisions taken “jointly and severally”.
Some members of Brahma Majestic in Wanavdi are still awaiting a conclusion in their case on non-issuance of the bonds by MC members elected in April 2007 within the time frame prescribed by the law, even though the matter was brought to the notice of the deputy registrar of co-operatives in October 2008.
Members question several financial decisions taken by the committee, which have led to financial burden on the society as well as members. “Unless there is a resolution of the M-20 issue, we cannot hold any of the members of the MC accountable for what they have been doing,” said Col (retd) JV Singh, a resident.

2. Charging transfer premium at per square foot (psf) rather than the maximum permissible rate: The MC cannot charge a transfer fee on psf basis. “As per bye-law number 38 (transfer of shares) (ix) the premium for transfer fixed by the general body and the law allows a maximum of Rs25,000, as the transfer fee is Rs500 and entrance fee Rs100,” said Shroff. “Further, no additional money can be charged under any head whatsoever from transferer or transferee.”

This rule is openly flouted by MCs that expect an owner to cough up Rs100 psf. For large apartments, the cost could run into lakhs of rupees. The MC holds the member/ proposed member to ransom to pay the extra amount, which is illegal.

“The remedy is that one should approach the registrar of cooperative societies through a lawyer or consultant seeking refund and compensation by way of interest on additional amount so collected by the society. If the members are alert and know the law, they are self-sufficient to fight against any injustice,” said Shroff.

3. Charging illegal non-occupancy fees: The government of Maharashtra issued an order dated 01 August, 2001, in public interest under Section 79A of the Maharashtra Co-operative Societies Act, 1960, (MCS Act) directing the societies not to charge non-occupancy charges beyond 10% of the service charges (excluding municipal taxes). This order, though appealed against, was also upheld by the Bombay high court in March 2007.

In a society in Kalyaninagar, non-occupancy charges are being charged at 10% of the rent amount. “If the rent is Rs18,000, I was being charged Rs1,800 per month,” said Arun Kajaria. On his repeated questioning, the MC insisted that the high court ruling of 2007 was being appealed against in the Supreme Court and until then the societies could charge as they wished.

According to Shroff, the stand of the MC is wrong. “Since the order is not quashed or altered, it stands. As mentioned earlier, the immediate recourse is to open litigation against such a society and to file a case in the matter,” he said.

4. Taking decisions and passing resolutions in contravention of the law: “Some societies also do not follow the law and pass resolutions in contravention of the MCS Act, like excessive charging of transfer amount. Such resolutions should be brought to the notice of the deputy registrar and in certain cases to the co-operative court,” said Shroff.

5. Misuse of funds: The misuse of resources is a common grievance and is difficult to substantiate or prove to an authority. Some members of a housing society in Kondhwa have been on the warpath with the MC alleging misuse of society funds in white-washing of the building and road repairs.

Retired senior citizens who have limited sources of income were caught off guard by the MC’s demands for funds for the same. “Rs20,000 was taken by the MC for major repairs. The job was not up to the mark and ultimately we feel that there has been some sort of financial misappropriation. Contractors have not been chosen carefully,” alleged IC Kapoor, a resident.

Alleged financial misappropriation can be investigated by the deputy registrar. He can order a re-audit of the accounts of the period suspected by a government auditor after a complaint is lodged with him specifically seeking a re-audit. The charges for the same have to be borne by the complainant.

6. Taking decisions, conducting general body without proper quorum or support: Complicating matters is the fact that meetings where major decisions are taken are hardly attended by 10% of the members.

“Lack of quorum is a major problem in meetings. Most owners are not interested in the decision-making process, which gives MCs the upper hand. Out of the few members present, many of them are conduits of the MC, willing to play along which leaves some of us in a minority,” said J Valavil, resident of Brahma Majestic, who has been questioning several financial decisions taken by the MC of the society.

At the general body meeting conducted at one housing society in October 2010, it was observed that resolutions were being passed by a show of hands, co-owners being counted as one vote and opposing members were being disregarded and sidelined in complete contravention to the spirit of the MCS Act.

7. Disregarding members’ views and victimising members who dissent by cutting off water supply, lift and garbage collection: According to Shroff water, lift and common lights are essential services and the society cannot cut them off. “The aggrieved member should file a FIR with the police station as such an act is not permissible under law,” he said.

8. Using society funds to fight cases: According to Shroff, society funds can be used to fight cases as long as they are not personal cases. “For recovery of money from members u/s 101 (non-payment of society dues), appeals in recovery matters, to defend the society against any litigation put by a member, disputes relating to non-compliance of terms between builder and society, sub-standard constructions (where the society has given the building for reconstruction), conveyance matters and any other matter where the society and its property is in question, as per bye-laws, society funds can be used,” he added.


Co-operative society elections in Maharashtra within reality now

polls to Maharashtra’s 32,000 societies have not been held for past two years.
The state government’s decision to set up a co-operative election authority will be a relief for about 32,000 co-operative bodies, including housing societies, which have not held elections since 2011.

This election authority shall be on lines of an election commission for co-operative bodies and it will supervise, control and conduct polls to all registered co-operative societies, including housing societies, banks, credit societies and milk federations, barring exceptions like societies with less than 100 members.
This is being done according to the 97th Constitutional amendment. Though the state had amended the Maharashtra Co-operative Societies Act, 1960, and notified the authority in March, it had not set up the authority so far. However, on Friday, the state government approved 44 posts for the state election authority, which is expected to come into being soon. The body will also get a state co-operative election commissioner, who shall be a retired IAS officer not below the rank of a secretary.

As on March 31, 2012, Maharashtra had around 2.28 lakh co-operative societies with around 5.25 crore members, including 88,472 co-operative housing societies with 23.11 lakh members.

According to an economic survey, the state also has 25,437 co-operative dairy societies, 15,004 urban co-operative credit societies, 526 urban banks, 21,443 primary agricultural credit societies and 202 sugar co-operatives.

“After the amendment to the Act, the registrar of co-operative societies could not conduct elections to co-operative bodies as it was the mandate of the election authority. Moreover, in April 2011, the state had postponed elections to some co-operative bodies due to factors like drought in some areas of Maharashtra,” said a senior co-operation department official. He added elections for some co-operative bodies had not been held for over two years.

Another official said elections to around 32,000 co-operatives, including around 12,000 housing societies had been delayed. He added that even if the body with the commissioner was in place by the second week of November, the department hoped to finish the polls by January second week.

It would take around 30 days to conduct elections to a co-operative society. The official rued that states like Karnataka, Andhra Pradesh and Tamil Nadu were way ahead in setting up the authority.

The amendment also restricts the maximum number of members of the committee to 21. It also reserves seats for women and the weaker sections.

Talk of the ballot
This election authority shall be on lines of an election commission for co-operative bodies
It will supervise, control and conduct polls to all registered co-operative societies, including housing societies, banks etc.

Maharashtra supervision for society elections

state mandate has 44 posts in authority committee that will be formed in next two weeks.
Housing societies in the state with more than 100 members will now have to conduct their society elections under the supervision of a state-appointed co-operative election authority.

The state government has approved 44 posts for the election authority that will come into being within the next two weeks. This is applicable for other co-operatives as well including co-operative banks, credit societies, sugar mills,etc.
In Maharashtra, as many as 32,000 co-operative societies, of which 12,000 are housing societies, will go through the process of elections once the election authority is established. The state will also appoint an election commissioner to oversee the functioning of the committee. A retired IAS officer at the rank of a secretary will fill the post.

Elections for all societies which were due in the last two years will need to be conducted by December 31, as per the stipulated deadline. This deadline is one of the mandates as per the amended Co-operatives Act.

An official of the state co-operatives department said, “We have prepared the election rules and are waiting for an approval from the Minister for Co-operation. Once the state co-operative election commissioner is appointed, the process will begin.”

The mandate, under the supervision of the election commissioner, will eventually apply to all co-operative housing societies, but as of now only societies with more than 100 members must conduct elections under the supervision of the up election authority.

There are a total of 2.27 lakh co-operative societies in Maharashtra. As per the amendments in the co-operative laws, that took place in April this year, the election process of all co-operative societies will be carried for a period of five years, along with the preparation of the voters’ list. The maximum numbers of directors on the board of each co-operative society have been limited to 21.

Besides this, the amendment also mandates a yearly audit for every co-operative society. The Annual General Meeting (AGM) of the co-operative society will have the right to appoint an auditor to conduct their financial audit.

What the amendment says
State government will set up an election authority. State has 44 posts under this authority that will come into being within two weeks

Election commissioner will be a retired IAS officer

Societies with more than 100 members are required to conduct elections under the election authority, it will soon apply to all housing societies.

Maximum numbers of directors on the board of each co-operative society have been limited to 21.


Army Welfare Cooperative Housing Society refutes charges

Army Welfare Cooperative Housing Society has responded to a series of articles carried in DNA between November 13 and December 2, 2010.
Army Welfare Cooperative Housing Society has responded to a series of articles carried in DNA between November 13 and December 2, 2010. The society insists that the reports were neither fair nor accurate, and, therefore, were damaging to the reputation of the society. The reports, the society says, also contained comments from non-members of the society. This reply from the society is because the society feels it necessary to remove any wrong impressions created by the allegations in the series of articles.
Reply to articles dated November 13, 2010, with headlines ‘Charges of fraud in Salunke Vihar’ and ‘Salunke Vihar’s 7/12 entries being probed’

I. The land was granted by the Govt. of Maharashtra to Army Welfare Housing Organisation (AWHO), Delhi in 1980 when this society was not in existence. The condition of constructing 1,728 houses was imposed on AWHO. The construction was completed in 1990. The land and the property were transferred to this society in February 1997. The society is wrongly accused of constructing less houses.

II. As per documents available with the society the point regarding 1728 houses was taken up by AWHO with the government authorities way back in 1993.

III. The Commissioner visited the society in December 2009 along with Collector, Pune and City Engineer, PMC. The commissioner ordered the city engineer to review the case and give recommendations regarding additional construction of houses.

IV. A case for review was already with the government authorities when the reports appeared.

V. There is no stipulation by the collector restricting maximum area of a flat to 600 sq. ft. The figure of 1,728 was arrived at on the basis of economic consideration, i.e. income group of AWHO members.

VI. In the wake of news about ‘Adarsh’ society at Mumbai, Shri. Johar and others tried to prove that this transfer of land is fraudulent. The cases of land of this society and that of ‘Adarsh’ society are incomparable. The land on which this society is located is indisputedly part of the revenue and forest department land.

VII. The land was granted to AWHO at Survey No. 19 as per Rule 26 (1) Maharashtra Land Revenue (Disposal of Govt. land) Rules 1977 under the powers of district collector.

VIII. The AWHO paid the occupancy price to the Government of Maharashtra at full market rate. On making the final payment, AWHO members of Pune scheme formed a society and the land was rightfully transferred to them by AHWO. There was no fraud involved.

IX. The grant of land to AWHO was on condition of Occupancy Class – II. As per Sec. 29 (3) (a) of MLRC Code 1966, a Class – II Occupant holds the land in perpetuity subject to restriction on the right to transfer. Irrespective of the Class of Occupancy the title to the land was made in the name of AWHO as per collector’s order. This society was given title to the land only after the land was conveyed by AWHO with the permission of the collector. Obviously, conclusion of fraud was without ascertaining the facts.

X. The Revenue Records cannot be manipulated as the Record of Mutition Entries is maintained in a register in accordance with Sec. 150 of Maharashtra Land Revenue Code. The operative part of the Mutition Entry is the authority for change (Ferfar). There are no changes in the contents (Ferfar) of Mutition Entry 1740.

XI. The title to the land was changed in the name of this society vide Mutition Entry No. 11877 dated 16 September 2000.

XII. Title of the land was changed on the basis of a sale deed which in actual fact is a conveyance deed. In this regard, the judgment in the case of State of Maharashtra V Mahavir Lalchand Rathod (1992 (2) Bom. C.R. 1) is relevant.

Reply to article dated November 14, 2010, with headline ‘One group of Salunke Vihar Residents seek transparency’

I. The contents of the news betray the headline. Transparency is inbuilt in MCS Act 1960 and the society bye-laws. As per society records, none of these members have availed the provisions of MCS Act and the bye-laws. It is on record that both Shri Johar and Shri Chandhiok were asked to verify details as permitted under the Act. They have not done it so far.

II. In our view, the members purported to be ‘one group’ have complained in vengeance.

Reply to article dated November 15, 2010, with headline `Is Salunke Vihar wrongly registered as co-op society?’

I. Army Welfare Cooperative Housing Society, Salunke Vihar, has been registered under the MCS Act 1960. It is not the only AWHO colony which is registered under the MCS Act in Pune. AWHO Colony Tucker Vihar at Hadapsar in Pune is also registered as Cooperative Housing Society under MCS Act. Registration of this society with that of Dara Enclave Navi Mumbai is not comparable.

II. As regards AWHO, their welfare activity is restricted to providing dwelling units on no profit no loss basis. The housing societies function with the contribution made by the members.

III. As per documents held with AWCHS, all members of AWHO were informed in 1985 that the societies formed by them will be registered under the respective State Cooperative Societies Acts. AWCHS was thus registered in 1986 under MCS Act as per directions of AWHO. There is no direction to the contrary from AWHO to register this society under Registration Act 1860.

IV. You have quoted an extract from AWHO brochure. This is a part of AWHO brochure 1987 as amended on 01 June 2008. In this brochure there is no direction to the effect that registration under Registration Act 1860 has a retrospective effect. This society was registered in 1986. AWHO brochure of 1982 was applicable at that time.

V. As per documents held with the society, Col. Padsalgikar was properly elected as promoter and his appointment was duly approved by the Dy Registrar, Pune City.

VI. It may be noted that AWHO had not sought membership of this society and hence Col. Padsalgikar was not required to obtain any NOC from AWHO.

Reply to article dated November 16, 2010, with headline ‘Did members flout norms at Salunke Vihar society?’

I. The contention that AWHO had sold the property to AWCHS is wrong. In the present case, the Sale Deed executed between AWHO and AWCHS was actually a Conveyance Deed. In this context, the Judgment in the case of State of Maharashtra Vs. Mahavir Lalchand Rathord (1992 (2) Bom. C.R. 1) is relevant. The property was conveyed to this Society because we accepted members of AWHO as our members. There has been no financial transaction between the AWHO and AWCHS.

Reply to report dated December 02, 2010, under the title ‘Probe under way into Stamp Duty evasion at Salunke Vihar’
The society has not evaded any stamp duty whatsoever.



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All the Co-op. Hsg. Societies in the
State of Maharashtra u/s 79(A) of
MCS Act 1960 to pass order
regarding Redevelopment of
Cooperative Housing Societies

Govt. of Maharashtra
No. S.G.Y.2007/L.No. 554 /14-C
Co-op. Marketing and Textile Dept.
Date : 3rd January 2009
Since there are large number of projects under process for Re-development of the Buildings of the Co-op. Hsg. Societies in the State of Maharashtra. We are in receipt of the numerous complaints received from the members against the Management of the Co-op. Hsg. Societies which are undergoing the Re-development process. The natures of complaint received from majority of the Co-op Housing Societies undergoing redevelopment are as given below.

1) While carrying out the process, members are not taken into confidence.

2) Transparency not observed in the Tendering process.

3) Appointment of Contractors in a haphazard manner.

4) Breaches of the provisions of the MCS Act, /rules and Bye-laws in the working of the society.

5) Lack of Co-ordination between appointed Engineer and Project Consultants.

6) Non preparation of Feasibility Report.

7) Proper procedure not followed in the selection of Tender.

8) Disparities in the Development Agreement.


Since, there are no laid down guidelines and / or firm procedures declared, based on the various complaints received and discussion held with the concerned experienced professionals the Commissioner for co-operation and Registrar a Co-op. Societies, Maharashtra State, Pune had appointed a Study Group under the Chairmanship of the Jt. Registrar of Co-op. Societies, CIDCO to consider various types of complaints on the subject and discuss the same with all the concerned parties in the Sector. The Study Group after discussion with all the parties in the Co-op. Housing field opined that Rules and Regulations for the Redevelopment of the buildings of co-op. Hsg. Societies are very essential.

As such, under Section 79 (A) of the M.C.S. Act 1960, the Government is issuing following Orders which are as under:

The following order will be called as “Order of Redevelopment of the Co-op. Hsg. Society’s Buildings”.


For the Co-op. Hsg. Societies in which the Redevelopment work of the buildings is required to be undertaken, an application of requisition to hold a Special General Body Meeting of the members of the society to consider and discuss the Redevelopment Project and suggestions on the same, is to be submitted to the Hon. Secretary of the Managing Committee which is properly elected as per provisions of the society’s Bye-laws and also constituted as per the provisions of the MCS Act 1960. The requisition application is to be signed by not less than 1/4th of the total members of the society.


As per Sr. No.1, on receipt of requisition for calling the meeting, the Managing Committee of the society, within 8 days of the receipt of the application, should consider the same and within a period of 1 month the Hon. Secretary will call the General Body Meeting of the members of the society giving 14 clear day notice for which acknowledgement will be collected from every member and maintained in the records of the Society.

Before holding of the meeting the committee shall call quotations from minimum five Architects or Project Management Consultants who are empanelled with the Government or any local competent Authority. After considering all the quotations received, the Special General Meeting will select one of the Experts.

The SGM will consider the business as per following Agenda.

(1) To take primary decision, after considering the demands and suggestions from the members, on the Redevelopment of the Society Building/s

(2) To select expert and experienced Architect / Project Management Consultant, who are empanelled by Government / local Authority, for the work of Redevelopment and frame Rules / conditions of their work.

(3) To submit the project of proposed Redevelopment of the building.


The members of the society can submit their inputs, suggestions, recommendations and also names of known experienced and expert Architects/Project Management Consultants for the redevelopment project. However this should be submitted to the Committee, in writing, 8 days before the date of the meeting. Further approval letter of the referred Architects / Project Management Consultants shall also be submitted stating that they are interested to take up work of Redevelopment.


The quorum for the SGM called to consider subject of Redevelopment of the society’s building will be 3/4th of the total number of the members of the society. In case of no quorum, the meeting will be adjourned for 8 days and if there is no quorum attained for the adjourned meeting under such circumstances such adjourned meeting will be dissolved considering that the members have no interest in the Redevelopment of the society’s building/s. On condition of attaining required quorum the suggestions, objections, recommendations and references placed by the members regarding Redevelopment of society’s building/s will be considered and noted in the minutes of the meeting along with the observations made by all the members. Thereafter a majority of 3/4th of the members present at the meeting is required to pass a primary resolution regarding the decision for Redevelopment of the society building. After the approval of the Resolution for Redevelopment the Meeting will consider following business.

(a) To approve the Terms and Conditions along with the scope of the work to be carried out by the eligible Architect / PMC who can be selected from the Panel of Govt./ Local Authority for the Building Redevelopment work.

(b) To submit proposal of Building Redevelopment Project.


The Hon. Secretary of the society should prepare the minutes of the SGM and circulate it to all the members within 10 days. The acknowledgement against receipt of the copy of minutes taken from the members should be kept on record. Further, one copy of the minutes should be sent to the office of the Registrar.


The Hon. Secretary of the society as per the decision taken in the Special General Body shall issue Letter of Appointment to the Architect / PMC selected by the SGM within 15 days of the meeting. Further the committee will sign the Agreement containing Terms and conditions passed in the SGM, with the Architect / PMC.


a) To carry out survey of the Land and Building.

b) To seek information regarding the conveyance of the society’s land.

c) To seek information about available F.S.I. and T.D.R. for the building and land considering Rules of the MHADA / S.R.A. / Municipal Corporations, as applicable from time to time, according to ownership of the land and current provisions of the Government.

d) To prepare a feasible project report considering suggestions, references and recommendations made by the society members about the redevelopment taking into account the residential area, commercial area, open spaces, Garden, Parking, the specification of construction etc.

e) The Project Report shall be prepared and submitted to the committee by the Architect / PMC within 2 months from the date of their appointment.


a) After receipt of the Redevelopment Project Report and considering the suggestions presented by society members, the Hon. Secretary of the society will call a joint meeting of committee members and Architect / PMC to obtain approval from majority towards the submitted Project Report. A proper Notice mentioning the day, date, time, place etc. of the meeting will be displayed on the Notice Board of the society. The Notice will also inform that the copy of the Project Report is available to the members for the inspection. Also the members will be informed that they can submit their suggestions, before 8 days of the Committee Meeting. This Notice about members suggestions shall be given to every member and their acknowledgement, shall be kept in the records of the society.

b) The Hon. Secretary shall send all the suggestions received from the members to the Architect / PMC for their consideration, 7 days before the Jt. Meeting.

c) The said Jt. Meeting will consider the suggestions, recommendations received from members along with the opinion expressed by the Architect / PMC, and after detailed discussion on all the related matters and after incorporating the required corrections, the Project Report will be approved by the meeting. The provisional draft of the Tender will also be prepared and day, date and venue will be finalized for the next joint meeting for discussing and finalising the draft of the Tender document. The Architect / PMC will prepare the draft Tender for inviting competitive offers, where in the one of the primary requirements (Unchangeable) carpet area or corpus fund will be decided and considering the other technical aspects tenders will be invited. This will help to receive competitive Tenders from well known, expert and experienced Developers. The members of the society can forward this information to their choice of renowned and experienced Developers.


(a) The Hon. Secretary of the society will prepare list of the Tenders received till the last day of receipt and publish it on the Notice Board of the society.

(b) Within 15 days of the last date of the receipt of the Tenders, the Hon. Secretary of the society will call the Special Meeting of the Managing Committee. The meting will be attended by the official representatives of the Developers where interested members of the society can attend as observers. All the received Tenders will be opened in the presence of all the people participating in the meeting. The Architect / PMC will conduct scrutiny of all the Tenders and prepare a comparative chart. The expertise, status, experience and competitive rates offered etc. will be examined by the Architect / PMC and a selection of minimum 5 Tenders and in case of less than 5 Tenders received, list of all of them shall be prepared to be placed before the SGM. The concerned Tenderers shall also be immediately informed accordingly.


a) The office of Registrar to appoint an Authorised Officer for the SGM.

With the help of the appointed Architect / PMC, selection of the developer to be carried out from those selected tenders, wherein the selection of one developer on the basis of experience, caliber, financial status, technical expertise and competitive rates is to be carried out in the Special General Body Meeting, where the committee will make an application, attached with the members list, within a period of 8 days, to the Registrar, C.S. to appoint an Authorised Officer to attend a Special General Meeting which is called to select one Developer from amongst the Tenderers selected by the Consultants. The Registrar will take decision on the application and appoint Authorised Officer.

b) To call SGM to finalise the Tender.

The Hon. Secretary of the society, for appointing the developer, shall within one month of the appointment of the Authorised Officer and with his prior permission fix day, date, time and venue of the SGM. The Notice of the said SGM will be issued 14 days before the date of the SGM which shall be hand delivered as well as sent to every member by Registered A.D. Post and the acknowledgements will be kept in the Society’s Records. Similarly the Representative of the Registrar’s Office will ensure the presence of the Official Representative of the Tenderers, whose Tenders shall be considered at the SGM. The Arrangement for Video Shooting of the SGM, at the expenses of the society, shall also be made. Only bonafide member of the society shall be eligible to attend the SGM. Members would require to carry their individual identification papers to attend the meeting. While submitting Redevelopment proposal for approval to the concerned competent Authority it is necessary that, the complete business of selection of Developer and allied matters are carried out in presence of the Authorised Officer.

c) If there is no quorum for SGM.

The quorum for the SGM shall be 3/4th of the total number of members of the society. If the quorum is not attained, the SGM shall be adjourned for 8 days. In case of no quorum for the said adjourned meeting, the meeting will be dissolved considering that the members have no interest in the Redevelopment of the society building. The subject cannot be brought before the any SGM for its approval for further one year.

d) The business in the SGM for selection of the Developer.

Authorised Officer from the office of the Registrar will attend the SGM to observe the business of the meeting. On the designated day, date and time of the meeting, only in the presence of the required representative and Authorised Officer and with the presence of sufficient 3/4th quorum as mentioned, the meeting will undertake the following business.

1. To give comparative information about the selected Tenders to be considered. (With regards to Redevelopment work).

2. To present Tenderers in serial order. (Tender Presentation)

3. To select one Developer, with Terms and Conditions, for the Redevelopment of the building and finalise the Tender.

4. To get approval from the selected Developer.

5. To give information about the further work.
For appointment of Developer, 3/4th majority of the present members shall give in writing their approval. The selected developers or their representatives who do not register their presence for the S G M will be considered as having given their consent for the Redevelopment proposal and further process will be carried.


The Managing Committee as per the Terms & Conditions passed in the S G M in consultation with the appointed Architect / P M C and seeking their guidance, shall make an Agreement with the Developer within one month.
The Agreement as per the suggestions of the appointed Architect / P M C along with other important issues should also include the following points.

1. The completion period of Redevelopment shall be of not more than two years and in special cases not more than 3 years in case of any exigencies.

2. The Developer will give Bank Guarantee of 20% price of Redevelopment Project.

3. The Developer will try to give alternate accommodation to the members in the same area till the Redevelopment Project is complete. Otherwise he will pay monthly rent and Deposit agreeable to members or make available Transit Camps.

4. The Agreement will be registered under Registration Act 1908.

5. All the new members shall be admitted in the society after completion of the Redevelopment Project and after approval of General Body Meeting of the society only.

6. The Agreement shall have specific mention of the agreed Carpet Area.

7. The Development rights given to the Developer will be non transferable.

8. The flat owners will vacate their flats only after receipt of all the legal permissions for the Redevelopment work.

9. Those in possession of their flats will not loose their rights.

10. Agreement between contractor, Architect and society shall have a condition that disputes, if any, on the Redevelopment work shall be settled u/s Rule No. 91 of the Rules.

11. After receipt of the Occupation Certificate for the Redeveloped building the distribution of the flats should be preferably made in accordance to the prevailing arrangement of present floors. In case when the Allotment of flats is required to be made by lots, only after completion of the building the Developer should make available the lottery system after completion of the Redevelopment Project. The developer should arrange for draw of lots for the distribution of flats in presence of Registrar’s representative and video shooting of the complete process will be made.

12. No member of the Committee or Office bearer shall be a Developer or his relative.

13. The Building Plans which are approved by the Municipal Corporation / Competent Authority shall be again placed before the General Body Meeting for information. A member wishing to have a copy of the approved Documents can get the same on his written application. The Committee is bound to issue the information on charging a reasonable fee.

By Order and in the name of the Governor

(Dr. Sudhir Kumar Goyal)
Principal Secretary
Textile & Co-operation

C.C. : 1) Commissioner for Co-operation and Registrar of Co-op. Societies, M.S., Pune.
2) Divisional Jt. Registrar, C.S. (All)
3) District Dy. Registrar, C.S. (All)
4) inavaD nastI (14 sa )

Note: Above circular is the liberal translation of the original Marathi Circular

Frequently Ask Questions – FAQ

If your Society is planning for Redevelopment, then the members of the Society should be familiar with the process for undergoing Redevelopment. The following points will make understanding the redevelopment process better.

1. What is Redevelopment?

Ans : Redevelopment means demolishing the Old Structure and replacing the same with New Structure with new Dimensions and Space.

2. What is the difference between Restoration and Redevelopment?

Ans : In restoration, the existing Building is extensively repaired and restored to its original condition. In Redevelopment, the existing building is demolished and new structure of different dimensions is constructed.

3. When should be redevelopment be considered?

Ans : As per Bye-law no. 77, Structural Audit of the Building is to be conducted when the Building is more than 15 years old. The Report of such Structural Audit would reveal the condition of the Building and indicate whether the Society needs Redevelopment. If the building is between 15 years to 30 years old, the structural audit should be done once in 5 years, after the building getting 30 years old the structural audit should be once in 3 years.

4. Who is the authorised person to conduct Structural Audit?

Ans : The Structural Audit is to be conducted only by the structural engineer empanelled with BMC. The list is available with MSWA & BMC.

5. Can a Society go in for Redevelopment without conducting a Structural Audit?

Ans : Conducting Structural Audit is recommended. Since it is the first and the foremost step to be taken for deciding Redevelopment as Structural Survey is required to be carried out for both the building and the adjacent structures. If the building is old/repairs are major expenses Redevelopment can be decided.

6. Can a Society opt for Redevelopment if it is below 30 years of age?

Ans : It all depends on decision of General Body, members request.

7. Can a Society opt for Redevelopment even if Structural Report does not recommend it?

Ans : Yes, The decision of the General body is important as per Govt. Order dt. 3.01.2009 with 75% majority.

8. If the member of the Society are not satisfied with the Structural Audit, can the Society get a second Structural Audit Report from another Structural Auditor?

Ans : Yes, by all means if the Society is prepared to bear the additional financial burden and Once structured report is submitted to BMC, 2nd Structural Audit is not to be done.

9. Do members need to prove their contention for demanding a double check on the Structural Report?

Ans : It is not necessary as a second opinion is always acceptable.

10. What happens in a situation where two contradictory Reports are received?

Ans : The General Body will decide which Reports needs to be accepted & send to BMC.

11. Which is preferable – Restoration or Redevelopment?

Ans : In case of Restoration of a Building by major repairs, though the beams and pillars of the Building are strengthened externally, the inner core composing of steel rods cannot be restored to its original condition. Hence, even after extensively repairing the Building, there are bound to be umpteen complaints about leakages requiring frequent repairs. In the case of Redevelopment, the entire structure being brand new, it will be free from complaints for at least 10 to 15 years
12. What are the Advantages of Redevelopment?

• Better planned and designed flats with earthquake structure with attached bathrooms in bedrooms will be available.
• Corpus fund received by each individual member will take care of increase in the maintenance cost of the Premises or could be utilised for other purposes.
• Additional area of 25-30% will be received as compensation from the Developer. Also, additional space, if available, could be purchased from the Developer at best available price.
• Modern facilities / amenities / gadgets like lifts, intercom system, smoke detectors, fire fighting alarm system, concealed plumbing, concealed wiring for electricity, telephone, cable TV etc. will be available.
• Stilt or under ground parking will be available which will ease space on the ground.
• Clubhouse, Swimming Pool, Gymnasium, Community Hall etc. will be available.

12. What are the Disadvantages of Redevelopment?

• Any lacuna in preparation of Redevelopment Deed would result in a great loss to the members who are eligible for many perks in consideration of giving permission for the project.
• For considerable period of time, members are required to give up possession of their flats which disrupts their age old routine.
• Residential Complexes if converted to Commercial Complexes are seldom preferred for housing purposes or dwellings.
• Additional new members would take longer time to gel with the original members, resulting in disputes on various issues.
• Additional members will require extra consumption of water creating scarcity or shortage of available water supply.
• Additional vehicles will require additional parking space.
• New construction loaded with all kinds of modern amenities which will in turn increase the cost of maintenance to be paid to the Society.
• The Tax burden is high and in case the Occupation Certificate (OC) is not procured, Municipal charges and Water charges are high
• There is increase in Property Taxes.
• Additional area received will attract Stamp Duty and Registration Charge at current Market Price.
• There is always a fear of half way stalled project resulting in Court case.

For starting Redevelopment process, the following process should be carefully followed.

14. When should a Society consider Redeveloping their Building?

Ans : The Society should consider Redevelopment of the building only if an adverse Structural Audit Report is received from an approved Structural Auditor appointed by the Society to do Structural Survey /Audit of the Building as per Bye-Law no. 77 and his report should clearly mention the details of defects / remedies / cost of repairs etc. and as per the decision of General Body called as per govt. Order dt. 3.01.2009.

15. What precaution should the Society take at the time of considering Redevelopment of their Buildings?

Ans : The Society should consider Re-development only if the Society has Conveyance Deed in their favour. Without Conveyance, the Society should not pass any resolution for re-development but should only move towards major repairs & appoint consultant or PMC to get conveyance or Deemed conveyance.

16. What should the Society do in case of a Structural Audit Report?

Ans : In case of adverse Structural Audit Report, the Society should circulate the said Report to all the members of the Society within one month of receipt of such report along with their recommendations and call for the consent of all the Members of the Society in writing within 14 days of circulation of Report giving their opinion whether they would like to go for Repairs or Redevelopment and adopt the structural repair to send in to BMC for then necessary action.

17. Whether individual consent of all the members is required for redeveloping the society’s buildings or only a Resolution by the General Body will be sufficient?

Ans : As per the Govt. Order dated 3.01.2009 a meeting of the society is which 75% of the members should be the present and 75% of the member should vote for redevelopment. The consent are of 2 type. 1) Voluntary consent which need to be given by people who propose the redevelopment as per above circular and faculty the obtaining a consent through the legal process by appropriate Court or authority.

18. What is the consequence if Consent is not received from all the members for carrying out Redevelopment?

Ans : In case some member do not give consent we have to approach appropriate authority/court and force them to give consent.

19. Can a member change his decision after giving his Consent in writing for Redevelopment?

Ans : Consent obtained from the members is irrevocable and embossed with Rs.100/- stamp. Hence, once Consent is given by a member, it cannot be revoked. Only if a member has a strong reason to retract his Consent, then he has to follow the Legal procedure for proving his point of discontent for retracting his Consent. There is High Court judgement saying that consent one given for redevelopment cannot be withdrawn.

20. Can a minority of members stall the process of Redevelopment?

Ans : It depends on what proportion of minority is stalling the development and the reasons behind stalling the project. If the reasons for stalling the project are strong, then redevelopment cannot proceed unless the issues with them are settled. However high court has given a ruling that minority cannot stall the process of redeployment against the wishes of majority.

21. Can one or two members hold the Society to ransom on flimsy grounds?

Ans : No member of the Society can hold the Society to ransom on flimsy grounds. The Society will have to initiate action against such members, the High Court has ruled in no. Of cases against such members compelled them to vacate the premises.

22. What action can the Society initiate against those members who oppose such kind of a move that is supported by a huge Majority?

Ans : Then Society can issue show cause notice to the members and take action even to the extent of Expulsion from the Society. Further the society can move the application before appropriate the authority/court to evict such members.

23. Does a Society require to form a Redevelopment Committee or can a Managing Committee carry out the job independently?

Ans : The General Body has the powers to decide on this issue. Appointing a Redevelopment Committee is not mandatory but is highly recommended to ensure transparency in the dealings. However the General Body should decide the duties of redevelopment committee member their elections powers, responsibility etc.

24. What are the Powers of the Redevelopment Committee?

Ans : The General Body has to decide on the powers to be granted to the Redevelopment Committee. Generally the following powers are to be given to the Redevelopment Committee:

• To approve or reject the proposal received by the society and then handover to Managing Committee for furthers course of action.
• To give suggestions, if any, regarding the Proposal placed before them by society.
• To supervise the work in construction with PMC attend the meeting with PMC.
• To visit the site.
• To find out the credentials of developer

25. What is the tenure of the Redevelopment Committee?

Ans : Generally the tenure of the Redevelopment Committee should be from the start of the Project to the completion of the Project to ensure the continuity of the control of the Project.

26. Whether elections are to be held for selection of members for the redevelopment Committee?

Ans : The Election Rules are not binding on the Redevelopment Committee. They should be selected by the General Body from amongst senior members of the Society who are educated to read and understand the various Documents and have active interest in redeveloping the Society. However the society can also decide general Body meeting how to elect the redevelopment committee member and the process of the elections.

27. Can a Redevelopment Committee / member of a Redevelopment Committee be terminated?

Ans : If the General Body feels that a member of the Redevelopment Committee or the entire Redevelopment Committee acts to the detriment of the interests of the Society and obstructs the working of the Managing Committee in carrying out Redevelopment, then on the recommendation of the General Body, the tenure of a member a Redevelopment Committee or the entire Redevelopment Committee can be terminated.

28. What are the points to be noted for successful Redevelopment?

1. The offer received from the Developer should commensurate with the potential of the Plot taken for redevelopment as per Architect’s report.

2. The Builder should be strictly chosen on the basis of his Financial Capacity and Track Record and not on the basis of the highest offer received.

3. The Tenders received should be objectively evaluated by an able Architect appointed by the Society.

4. All the members of the Society should give their Consents to avoid disputes.

5. Complete details of the offers made by the Developer should be clearly understood by all the members of the Society and there should be transparency in the dealings.

6. Redevelopment Committee should be formed from amongst the other members of the Society by including two or three members from the Managing Committee to oversee the entire Redevelopment process to ensure that complete transparency is maintained by the Managing Committee of the Society.

7. All Agreements / Documents should be got scrutinised by a competent Advocate appointed by the Society to ensure that there is no lacuna.

8. Bank Guarantee for the total cost of the Redevelopment Project should be obtained from the Developer covering the full period of construction.

9. Penalty Clause should be inserted in the Redevelopment Agreement to ensure proper implementation of the Project by the Developer.

10. The Managing Committee and the Redevelopment Committee members should conduct regular inspection when the construction is in process to ensure that there are no deviations from the plans / offers.

29. Can Redevelopment take place on Collectors land?

Ans : Yes, definitely with permission of Collectors.

30. Has it happened in the past and if yes, kindly give name and address of the Society wherein being Collector’s land, redevelopment has taken place.

Yes, redevelopments have already taken place on Collector’s Land where the Lease Agreement of the land is still in force. Our Association has not maintained the list of buildings which are being redeveloped, either on private land or on Collector’s Land. However, if the members’ require the said information, they may be obtained by applying to Collector’s Office under RTI.

31. If so far if not a single case redevelopment has taken place on the Collector’s land, then how do you think that in our case we will be able to get required permissions even though the land is that of Collector and the condition of the existing building as per the report of the municipal approved structural engineer does not warrant redevelopment and can be corrected by repairs.

Ans : As already stated earlier, redevelopments have already taken place on Collector’s land. Since redevelopments are permitted on Collector’s land, you will have to take special permission from the Collector for redevelopment. Permission from the Collector for the redevelopment of the Society’s Buildings can be obtained if the resolution as per the govt. Order dated 03.01.2001

32. Will there be any change in the existing agreement between the Collector and the Society, and if yes, what will be that. At present on every transaction of sale and change of membership the new member is required to pay to the Collector @ Rs. 100/- per Sq. feet. What will be this after the redevelopment and whether any payment required to be made by the existing members on the addl. Carpet area each member would be getting over and above his existing area under the scheme of redevelopment?

Ans : After redevelopment on Collector’s land, the terms and conditions will change. The Collector will ask for higher premium for transfer of flat. These changes in the Terms and Conditions will be intimated by the Collector when the Collector gives permission for redevelopment. The Collector will ask premium on the extra area received by the members; however the builder can be made to pay the same by including it in the Redevelopment Agreement. Since the extra area comes to the members as compensation, it will be free for the members, but the Builder will have to pay premium on the construction cost of the additional area.

33. Is it a must that 100% of the existing members should give consent in writing for the redevelopment? What happens if 4 members out of 64 do not give their consent for redevelopment?

Ans : Earlier, 100% Consent of the members was required for redevelopment. Even the Collector was insisting for 100% consent of the members. Now, if the majority of the members approve for redevelopment in the General Body Meeting, then the BMC as well as the Collector are giving permission for redevelopment. The High Court has also given decision that minority in a Society cannot stop redevelopment when the benefits are going to the majority of the members (including the non consenting members) However, the Society should pass the Redevelopment Resolution in a democratic way by properly adhering to all the Bye-laws of the Society. In such cases, even the members who have not given consent will get equal benefits. In case, the non-consenting members plan to go to Court to bring a stay in redevelopment, the Society can file Caveats in the City Civil Court, Co-operative Court, High Court as well as the Registrar’s Court. The cost of filing Caveat will be about Rs.25000/- in each Court. If the situation demands, we may have to do it. There are now Special Courts for trying Redevelopment matters. Under Section 35 of the MCS Act, if anybody tries to bring hurdle in the redevelopment, the Society can even expel him from the membership and auction his flat. The society should follow the guide lines given under order dated 03.01.2009.

34. What happens in a particular case the flat on rent, legal case pending in the court for vacation, the tenant is ready to give his consent provided the status quo is maintained i.e. the alternative accommodation is given to the tenant and on completion of the project the new flat should also be given to the tenant. The owner is not prepared to give her consent. In another case, on the death of the member, the flat could not be transferred to heirs as there was no nomination, no will and no succession certificate and therefore consent to be taken from whom it is not clear. How to deal in this case.

Ans : In such cases, it will be necessary to take directions from the Court. Even Consent Decrees may be filed in the Court to settle the matter quickly.

35. What happens if a member has more that one flat in his own name or in the name of his family members, family as defined in the bye laws, which is in contravention of the bye laws, how to deal such cases and what is the best way to regularize such cases.

Ans : As per the earlier Bye-laws, one person could hold only one Flat. However, under bye law no. 62 of the new Model Bye-laws, Individual member of the Society may hold more than one flat in the building/s of the Society in his name or in the name of any of the members of his family subject to the conditions as provided under the provisions of section 6 of the “Act”. The member has to obtain the permission from the Society, Registrar of the Co-operative Housing Societies and the Collector MSD by applying in the prescribed Form “Appendix 30” (under bye-law no. 62) giving reasons why he needs more than one flat (such as size of the family) along with the declaration that both the flats will be used by him and his family members for bonafide residential purposes and would not be sub-let or given on leave and license or care-taker basis or possession thereof would not be parted with any other manner, without the previous permission of the Committee of the Society.

36. What happens in case one of the members brings in a Court stay order

Ans : It would not be possible for one person to bring a Court Stay Order unless the Society has made serious violations in following the rules of MCS Act and as per the Bye Laws of the Society while passing the Resolution for Redevelopment. Before passing the resolution, the Society has to attend to all suggestions and objections received from the members satisfactorily.

37. List of the permissions to be obtained for redevelopment from the various agencies. How long does it take to get approvals from these agencies. Is it feasible and advisable that the Society obtains these permissions considering limited resource available with the Society or it should best be left for the developer to obtain with proper agreement with the developer?

Ans more than 50 permissions are required to be obtained from various agencies before going for Redevelopment. It would be difficult for the Managing committee to apply and follow up for these permissions. Further, lot of expenditure will have to be incurred for getting these permissions. Hence, it is best to make it a condition in the Tender Document that the Builder will obtain these permissions at his cost.

38. What is the ratio of FSI? Is it possible to get addl. FSI on Collector’s land and if yes, how much. If not, TDR can be bought to what extent. At present ours is totally residential building, after redevelopment can ground floor be converted into commercial one? Whether the Balcony is included in FSI as per present rule of the BMC and what about the parking space for each existing member of the Society.

Ans : At present, the permissible FSI is one. Hence, you can have built area upto one. However, you can purchase one TDR from the market and have built up area up to two. Balcony is not included in the FSI. 10% of the master carpet area is permitted for Balcony free of FSI. Parking area should be provided by the Builder. It is to be decided in the General Body Meeting of the Society, how the Builder should allot Parking Space, who will have the stilt parking and who will get open parking. There is no adding FSI on Collect land. In suburban collector land it is having I-FSI and I-TDR. Yes, provided same is approached by BMC (commercial question).
39. What would be the benefits for the Members in Cash and in terms of additional area from redevelopment proposal. How much addl. Carpet area in terms of percentage of the existing carpet area members can expect from the developer out of redevelopment. Kindly specify extent of the other benefits and amenities we can expect from the developer under redevelopment proposal such as corpus fund, modern amenities, alternative accommodation and security for it during the period of completion of the proposal.

Ans : The Builder generally allows 15% to 25% increase in the carpet area of the members depending upon the potential of the area. The amount of Corpus that the builder will give depends upon the amount that he will earn by selling the additional flats to the outsiders. If, he develops some commercial area, then he is likely to make a better profit in the project and also offer better corpus and amenities to the members. However, the Society should demand and include the amount of Corpus and amenities that they would like to receive in the Redevelopment Agreement itself.

40. Where would be the members stay when the area is being redeveloped and whether the existing members will have choice to select the alternative accommodation during the period of construction of the new project? Are we right in presuming that the rent will be paid for the alternative accommodation by the developer? How to make it quite secured that till the rent for the alternative accommodation is paid by the developer till the completion of he proposed new buildings and the existing members get due possession of their selected flats in the new building constructed under the redevelopment.

Ans : The members will have to move to alternate accommodation of their choice during the period of redevelopment. The builder will pay the rent for the same. The amount of rent to be received from the Builder should be decided in advance and included the redevelopment agreement. The members may ask for the full rent for 24 months in advance to ensure that full rent is received.

41. Can the member sell the flat to the builder and if yes what should be the rate able value.

Ans : The member can offer his flat to the Builder and negotiate for a suitable amount. If the member is not satisfied with the Builder’s offer, then he has to wait till the redevelopment takes place and then sell the same to the outsider at a price of his choice.

42. Who would sell the additional flats – builder or the members

Ans : The additional flats will be sold by the Builder to recover the cost of his project as well his profit.

43. Whether the existing members will get first choice of selecting flat for themselves considering the location, floor etc. What happens if more than one member makes choice of the same flat in the new building? Till the member is fully satisfied in all the respect, he may not give final consent for the redevelopment as well as the possession of his existing flat.

Ans : The allotment of Flats should be made in the General Body before demolition of the existing buildings. After signing the redevelopment agreement with the Builder, the BMC gives I.O.D. After the Terms and Conditions of the I.O.D. are fulfilled, Building Commencement Certificate is received. After the same is received, the members should insist for Permanent Alternate Accommodation Agreement to be signed between the Member, the Society and the Builder and get the same registered. After signing of the same, Stamp Duty should be paid on the same and the same should be got registered with the Registrar. This Agreement gives full title of the new flat to the member and on the basis of this agreement, he can even sell the Flat.

44. What is the permissible height in view of the fact we are on the flight path

Ans : Depending upon the exact location of the building in the Development Plan of the City, the height permission will be give by the Civil Aviation Dept. from whom permission will have to be obtained.

45. Is there any restriction in view of our location in view of ‘Costal Zone’– are we within than limits?

Ans : Your area does not fall within the Coastal Zone. Only if the Plot is located within 500 metres of the sea, the plot falls under the Coastal Zone.

46. Can the Society appoint our own architect and if yes to what extent the said architect will have say in the planning and designing of the scheme and whether the developer will bear the fees of the architect appointed by the Society.

Ans : The Society can appoint their own Architect or better a Project Management Consultant to look after the interests of the members. The Society can put a condition in the Tender Document as well in the Development Agreement that the fess of the Architect/PMC shall be borne by the Builder.

47. How long will it take to complete the total redevelopment of the Society’s building proposal.

Ans : Usually the entire project is completed by the Builders in 24 months

48. Whether the Developer will give bank guarantee for uninterrupted completion of the project, fulfilling the contractual obligations expected from the developer under the redevelopment agreement. Can there be a penalty clause for non fulfillment of the contractual obligation expected from the developer under the redevelopment agreement and if yes, whom the benefit goes under the said penalty clause.

Ans : Yes, the members will have to include the clauses for Bank Guarantee, Penalty for non fulfillment of contractual obligations etc. in the Tender Document as well as redevelopment Agreement. For ensuring that this is done correctly, the Society should appoint a PMC and take their assistance.

49. What are the formalities to be carried out by the Managing Committee and the Sub-Committee for redevelopment to ensure smooth beginning and completion of the project under redevelopment.

Ans : Since redevelopment can best be handled by professionals, it would be necessary for the Society to appoint proper consultants or a PMC for seeking advice on all the intricacies of redevelopment and follow them scrupulously.

50. What about the stamp duty and registration charges whether it will be applicable to the existing members when they get their new flats in lieu of the old one under the redevelopment scheme and if there are such charges , then who will bear these charges. Is there any capital gain arising out of the redevelopment scheme under which the existing members will get new flats with addl. Carpet area. If yes what the way in which it will be computed and how it will be taxed in the hands of the members.

Ans : The Society should make it a condition in the Tender Document as well as the Redevelopment Agreement that all charges like Stamp Duty, Registration, etc will be paid by the Builder. The members are getting additional area by way compensation for surrendering their old flats. Hence, there is no question of Capital Gain on this account. Further, it has been held by the Courts, that Corpus is the income of the Society and the Society is liable to pay the Income Tax on the same. However, depending upon the amount of corpus received by the member during a financial year, the member is well advised to consult a Tax Consultant to confirm whether he will have to pay any tax after including same with his Income from Salary and Other Sources.

51. BMC permissions/objections regarding redevelopment, BMC norms for new buildings regarding parking / water connections etc.

Ans : These things would be taken care of by the Consultants/PMC appointed by the Society and the Builder.

52. What will be the role of M/s. R. S. Prabhu Associates concerning architect, legal Advisor, Chartered Accountant, if appointed by our Society as “Project Management Consultant” and what will be the terms regarding scope of work and payment.

Ans : If we are appointed as PMC, the Society will have every thing under “Single Window System”. There would be no need to appoint separate consultants like Chartered Accountant, Architect, Civil Engineer, Structural Engineer, Manager etc. Further, there would be no need for the Managing Committee to co-ordinate with various consultants as all the Consultants will be available under a Single Window System.

53. Can a minority stall the chances of a Redevelopment project ?

Ans : Depends on what proportion of minority you have. As one or two members cannot hold the society to ransom on flimsical grounds.

54. What action can the society initiate against those members who oppose such kind of a move that is supported by a huge majority ?
Ans : ……………………….To the extent of Expulsion from the society.

55. Does a Society require to form a Redevelopment committee, or can a M C carry out the job independently?

Ans : The G B has the powers to decide on this issue. Appointing a Redevelopment Committee is not mandatory.

56. What is the minimum or Maximum period a Redevelopment Committee can operate and what kind of powers can be bestowed on them ?

Ans : Again the G B decides on this issue. As it should generally be till the project is completed.

57. Do we require to hold elections for selecting a Redevelopment Committee.?

Ans : You may, you may not. Since this procedure is just for declaring the transparency in the system. As the rules of election are not binding on this selection.

58. If the quorum for a Redevelopment Meeting is poor, how does one go about with the matter?

Ans : You need the majority for carrying out such projects.

59. Can any important decisions be taken in a general body with 50 or 60 % members present ?

Ans : No
60. Any decision taken in such meets, are they binding on those who have not attended the said meet ?

Ans : As explained above

61. Can the associate members vote in such meetings, will their opinion be considered ?

Ans : Yes, as are authorised to speak on behalf of the original member.

62. Selection of P M C , is it mandatory ?

Ans : Yes, It is advised since he plays a major role in the procedure.

63. Is it O K if we choose a P M C, Architect, Legal Consultant or an Advocate without advertising in the newspaper?

Ans : No It is necessary that you give advertisements before finalizing these professionals

64. Is it mandatory to issue an ad in the newspaper to announce our decision of going in for Redevelopment?

Ans : Not exactly.

65. Who guides us to formulate the Tender Forms ?

Ans : The P M C

66. Can we finalise the Tender Form with available quorum ?

Ans : Yes only if you have acquired the written opinion on this regard from all your members.

67. In a 50 – 50% situation, how does one go about with the finalization of a Tender ?

Ans : The G B is the final deciding authority

68. Who has the powers for selection or rejection of the Tenders ?

Ans : The G B

69. What is the procedure to accept or reject a Tender ?

Ans : a comparison Chart to be prepared. Call for suggestions and remarks from each member. Then a detailed discussion on the available feedback. The decision on any selection or rejection of a Tender is to be taken in a democratic fashion only.

70. If the G B is not in agreement with the selection or rejection of a Tender, what is the process to resolve such a situation ?

Ans : G B is the supreme authority for decision making.

71. If any member is unsatisfied with the process and procedure for selecting or rejecting a Tender, what is the recourse for him/her ?

Ans : He or she needs to start a dialogue with the concerned representatives and try to sort out his queries and questions. One should avoid the litigation path as it only leads to loss of time, money and energy, not forgetting the loss of long standing relations.

72. Can a member from the society participate in the bidding process ?
Ans : No

73. Can a member residing in the society apply for seeking the post of the Architect, Solicitor or Legal Consultant ?

Ans : Yes, with the consent of the G B

74. Can a member insist on detaching from the Redevelopment process, and instead demand a compensation to forgo his rights ?

Ans : By all means, as he needs to sort out his requirements with the developer.

75. Can members insist on particular Building Plan, Design, and amenities ?

Ans : Not really

76. Can the society demand both Bank Guarantee and Corpus Fund ?

Ans : Yes, since Bank Guarantee is considered as a Performance Guarantee and Corpus fund is Financial Security.

77. Does the society have the prerogative to decide the relocation plan ?

Ans : Yes before it is finalized.

78. Do the members have a right to demand frontage flats or shops instead of the prevailing position of their respective premises ?

Ans : Depends on your negotiating Skills.

79. Do the members enjoy first rights on the sale of additional area to be built by the builder ?

Ans : Not really

80. Can members select the quality of construction material to be used ?

Ans : Yes

81. Can there be a penalty clause included against the builder for Delay or denial of possession, or O.C or any other statutory requirements ?

Ans : Yes

82. Who is responsible for procuring Electric, Water, Sewage and other mandatory requirements, as also the R C C ? B C C certificate ?

Ans : The Developer / Builder

83. Does M S W A help in sorting out a redevelopment project ?

Ans : Yes

84. Can M S W A provide legal assistance and other support ?

Ans : Yes
85. Can MSWA arbitrate for any unwanted situation through a redevelopment project?

Ans : Yes

86. Can tenants redevelop the property without the owner ?

Ans : The Redevelopment can be done with the consent of the owners only. If the owner is not available and the building is in a dilapidated condition, a petition can be filed before the Competent Court against the land owner who is neglecting the repairs the builder or does not take any step towards the Redevelopment. In case the court gives a favourable order, the tenants can proceed with the Redevelopment.

87. Society accounts are not properly maintained. Who should be made accountable?

Ans : It is the responsibility of the Managing Committee to maintain the accounts properly. In case the same is not maintained, the complaint can be filed before the Deputy Registrar who will conduct the enquiry and fix the responsibility. In case any fraud is noticed, each and every committee member will be jointly and severally responsible to make good the loss and therefore, each committee members are now required to sign the Indemnity Bond in form M-20 on a stamp paper of Rs.100/-.

88. Society is under private forest land & we are waiting for supreme court judgement. If verdict is delayed what should be done?

Ans : No action will be taken by any Authority till the matter is decided by the Supreme Court. Therefore, you have to represent before the Supreme Court properly and get the favourable order.

89. Society doesn’t go for open tender but they opt closed tender. Is it legally valid?
2) Can society ask for security deposit in escorts A/c instead of Bank guarantee

Ans : Open tender means the Tenders are invited by giving proper public notice and any person who fulfills certain conditions mentioned in the tender is allowed to file the Tender. When the Tenders are invited they have to be closed and sealed. The same will be opened in the presence of the members of the society, Project Management consultants. In case you mean to say that the Tenders should be accepted by the society in open form and any member is allowed see and evaluate before receipt of all the tenders is not a proper system. In case you mean to say that the society has opted for closed tender means within the closed circle or from the selected developers, that system is wrong. It has to be called through public notice only.

The society can definitely ask for the deposit in the Escrow account. It is the terms and conditions that we mention in the Tender documents which is most important.

90. Can we go for redevelopment without taking conveyance & agreement

Ans : As per the Government Notification dated 3rd January, 2009, the appointment of Developer or builder can be done only after Obtaining the Conveyance of land and building in favour of the society. However, you can appoint a Project Management Consultant to procure the Conveyance of land and building and thereafter the same Project Management Consultnat can proceed to prepare a feasibility report, Tender and invite the tenders etc. Before conveyance appointing a developer is not only bad in law but also invite unnecessary disputes with the old land owner, old builder, new builder etc.

91. 1) Can society opt for reconstruction instead of redevelopment
2) Why there is lottery system when members get a new flat & why there is no choice

Ans : There is no difference between Redevelopment or Reconstruction. The Redevelopment or reconstruction can be done by the society themselves which is know as Self Redevelopment/Self Reconstruction and if the same is given to the Developer or the Builder the same is known as Redevelopment through the Builder.

The allotment of the flat in the new building can be done by various methods. One of the method is by lottery system. Depending on the number of members and the issues involved, the allotment of the flats can be decided in the General Body meeting of the society as per the majority decision in consultation with Project Management Consultants(PMC).

92. 1) Is there a law about control in redevelopment
2) What are the general problems for delaying redevelopment?

Ans : There was no provision or guidelines earlier in the process of Redevelopment. Now

93. After registration of redevelopment Agreement is it necessary to enter into individual agreement with existing members for the new flat allotted to them by the builder in the new building after the redevelopment and if yes, when the individual agreement has to be executed before vacating the old flat or at the time of receiving the possession of new flat?

Ans: Development agreement is executed between the Society and the builder to construct the new building on the land owned by the society by using available FSI, TDR etc and provide new flats with additional area to the existing members free of cost and also pay rent, corpus, shifting charges etc. as a consideration for allowing the redevelopment on the plot of land owned by the society. Thus this is an instrument/ document to record the transaction between the builder and the Society. By this instruments, the benefit of transfer of development rights has moved from the society to the builder. In turn the builder pays the consideration in the form of cheque for rent, corpus and in kind as a free flat of additional area to the members. When the cheque is given, being a movable item does not require any additional document or registration.

However, when immovable property in terms of new houses in the new building is provided by the builder to the existing member as per the Development Agreement, a separate Agreement known as “ Permanent Alternative Agreement” has to be executed, stamp duty as per Bombay Stamp Act, 1958 has to be paid and also has to be registered. This is because, the new flat will have new number, new area and on the different floor which is provided by the developer. Her the flat constructed by the developer as per the development agreement is being transferred and handed over to the existing member. In order to establish the title of the new flat, a separate agreement in respect of the new flat has to be provided by the builder. As per the Transfer of Property Act, 1882, any transaction immovable property exceeding Rs.100/- needs to be in writing and has to be registered as required under Registration Act, 1908. In case the agreement for permanent Alternative accommodation is not executed between the builder and the existing members, the members will not have title document, they will not able to sell the flats in future nor they can mortgage and raise the loan. As per the amendment done, in the Schedule I to the Bombay Stamp Act, 1958, even, if the society gives an allotment letter in respect of the new flat in the new building, the same will be treated as agreement and applicable stamp duty will have to be paid. Therefore it is compulsory that you should get the agreement executed for new flat with the builder.

This agreement should be executed immediately on receipt of IOD (Intimation of Disapproval) issued by the society along with the approved plan and before vacating the existing old flat. This gives an assurance to the flat purchaser that the new flat number, area etc is identified. In case the builder fails to full fill his commitment, necessary legal actions by the respective flat purchaser against the builder can be initiated under Maharashtra Ownership Flats Act, 1963.

94. 1) What is FSI and How much FSI is available in different areas of Mumbai
2) What is the FSI for slum related projects
3) When does a builder get a building completion certificate

Ans: FSI or Floor Space Index means the area of construction allowed on a particular land as per the Development Control Rules . In Mumbai depending upon the location of the land and type of existing residence and also the project to be developed, the permitted FSI varies.

Just to give you a example, the FSI allowed in South Mumbai (Mumbai City) is 1.33 for all types of construction. However, if the same is cess building, the FSI can range between 2.5 to 4 and it can go beyond FSI 4 considering the present consumption of FSI. Cess building is one, where the tenanted buildings have been taken over by the Mumbai Repair and Reconstruction Board for maintenance by charging a nominal amount as repair cess. When the same is redeveloped, the builder will get incentive FSI of 50% or 60% of the FSI consumed to rehouse the existing tenants. In such cases FSI goes beyond 6 or 7. There is no limit. For Mhada layout, the FSI is 2.5. In case of projects approved by MMRDA in Mumbai Metro Politian Region (other than Mumbai) under Rental Housing scheme, the FSI allowed is 4. In suburban the provision has been made for 1.33 FSI and TDR to the extent of 0.67 can be loaded. Thus total consumption of FSI/TDR comes to 2. Therefore, the Redevelopment is taking place in big way.

Slum Rehabilitation Authority(SRA) has declared certain areas occupied by Slum as the land on which SRA scheme can be developed in which the existing Slum people get 269 Sq.Ft carpet area free of charge. They should be settled in the place before 1995. The same may be extended to 2000. Necessary notification to his effect is awaited. The FSI allowed on such slum land is 4. Even after consuming four FSI, there will be additional construction which is allowed to the developer who has undertaken such development. In such case, the additional allowable construction can be loaded as TDR on other land.

Building when is ready in all respect and received the Occupation Certificate, the builder provides water connection, gets the plumber certificate and the Architect submits his certificate that the building is complete in all respect and all the conditions of IOD are fulfilled. The BMC will verify the certificate of completion given by the Architect and then gives a certificate, that the Architect report regarding the completion of building is completed. This is the last certificate issued by the BMC. Many times, the builders provides the Occupation certificate and nobody bothers to receive the completion Certificate.

95. 0.33 FSI to be obtained by paying the premium to BMC. But why has it been closed for redevelopment?

Ans: In suburban area, the government has amended the Maharashtra Regional Town Planning Act(MRTP), to provide additional FSI by charging the Premium. Earlier notification was set aside by the High Court stating that such a provision to collect premium is not provided in MRTP Act. Since the amendment has already been done, the necessary notification will be issue by the government shortly and then additional FSI of 0.33 will be available for redevelopment in the Suburban area.

96. Is 100% consent necessary for redevelopment or 75% ?

Ans: The Government of Maharashtra has issued an order u/s 79A of the Maharashtra Co-operative Societies Act, 1960 on 3rd January, 2009 regarding the redevelopment of the building by the Co-operative Housing Societies. As per this Order, the Special General Body meeting in which builder has to be appointed has to be attended by 75% members and minimum 75% of the members present should select a particular developer. Thus for the redevelopment and appointment of the developer, may be with 56% of the total members will be sufficient( i.e 75% of 75%). However, at the time of vacating the premises, all the members have to given consent and vacate the premises as per the resolution passed in the General body meeting. In case, some member do not give the consent or vacate the premises, the society or the developer may move before the competent Court/ Authority and get the dissenting member vacated from his premises to implement the decision of the majority. There are many court rulings which has held that the minority cannot stall or create hurdle in the process of redevelopment. Therefore, it is advisable for the societies to compulsorily follow the guidelines , procedure and the system given in the above circular, which will facilitate the redevelopment very smoothly.

97. 1) Is Sec 79A of MCS Act justified? Why cannot the condition be imposed in intimation of disapproval
2) How many builders have complied & completed the project as per development agreement under order of sec 79A MCS Act

Ans: The Government of Maharashtra has been given under section 79A of the Maharashtra Co-operative Societies Act, 1960 to bring out any notification for the smooth functioning of the society. Since there was not standard practice adopted, transparency was lacking, confusion and litigation in the redevelopment has compelled the government to bring out the notification. This is very much justified and all the societies should adopt the same. I understand the Government has directed BMC to verify before issuing the IOD whether the society has appointed the developer as per the Govt Order and whether necessary approval has been given by the Deputy Registrar for appointment of the Builder. IOD cannot have this condition because, the IOD is given to the society based on the proposal submitted by the appointed builder. In case such order is not followed, the aggrieved members should complain to the Deputy Registrar and also to the Building Proposal Department, not to issue IOD till all the procedures laid down under the above order is complied with.

I do not have exact numbers but majority of the societies who have initiated redevelopment after 2009 have started to undertake redevelopment as per the guidelines given in the above circular.

98. 1) PMC appointed by society but fees paid by builder – pmc loyal to whom?
2) Developer to accept pmc as his architect –out of compulsion
3) Pmc fees-% project- too much for issuing members when the builder is going to get profit

Ans: Project Management consultants are appointed by the Society much before the selection of the builder and the developer. The terms and conditions of the appointment letter to PMC should mention that the amount will be paid by the society. The society should collect the amount from the Developer in its name and than pay to the PMC. The society should not all the PMC to receive the payment directly from the builder. If PMC receives the direct payment from the builder, the PMC may not be loyal to society. The builder may ask PMC to relax certain conditions/norms before releasing the payment. Therefore PMC cost should be recovered by the society in advance from the developer and pay to PMC in stages, if the PMC does the work according to the satisfaction of the society and as per the terms and conditions agreed upon. In such cases, PMC will be under direct control of the society.

I recommend that the PMC should have an architect whom the society has appointed to submit the plan and his name will be recorded in the BMC record as the society Architect. The builder should be given a free hand to conceive the idea, let his Architect give the inputs, prepare the plan but the same will be approved and signed by the Architect Appointed by the society. This gives a good control on the modification of the Plan. Once the architect is appointed by the society, before the plan is modified, he will have to take the approval from the society. This also acts as a good control on unscrupulous builder who influence the architect and construct some illegal construction and getting the OC become difficult.

One has to understand the scope of the PMC. The fees is based on the services availed. PMC service is not like a standard product like TV or electronic goods of certain brand which is available in the market with MRP. This is tailor made. The skill, experience and the quality of the services and the scope of the work offered as PMC is different and is based on the requirement of the society. Therefore it is advisable to get the details. Some PMC charge on lump sum basis and some charge on project cost and some charge on square foot basis. Some also charge on the different services and stage wise like preparing feasibility report, obtaining the documents like Property Card, City Survey Plan, Development Plan Remark, Aviation NOC etc. Survey Report, Measurement, Preparing the tender, tax planning, supervision, structural verification, approved plan verification, vetting of various documents, preparing documents etc.

99. Renovation done at heavy Exp… Can builder pay me ..?

Ans: In a society, members carry out different types of renovations in the flat and also many do the fixed furniture which cannot be dismantled. Every member has different circumstances and claims made during the redevelopment. Since the builder/ developer takes up the redevelopment based on the area of the land, FSI and TDR allowed, the same is being distributed amongst the members of the society based on the FSI purchased by them at the time of construction of the building. The society or the builder may not accept your claim of refund of renovation expenses. The builder or the society is not bound to give any extra benefits since you have done the renovation recently.

100. what is the law on about percentage (% ) required of members consent

Ans: As per the Government notification dated 3/1/2009, 75% members should attend the special general body meeting in which redevelopment decision is taken and the developer is appointed. In said meeting with majority of 75% of present members decision can be taken and is binding all all the members of the society.
Thus in effect 75% of the present members of the 75% of total members need to agree and approve the resolution for proceeding with redevelopment and appointment of the developer. This means even 56.25% of the total members are sufficient to carry out the resolutions for redevelopment.

However, 100% members should vacate the flats before the commencement certificate is issued by the BMC for construction of the new building. However, the BMC gives the IOD ( approval of the plan with certain conditions before demolition of the building on execution of the development agreement and appointment of the builder ).

If the members do not voluntarily vacate and give the consent, the due process of law will be initiated by the society and the member may be forced to vacate the flat not to become hurdle in the process of redevelopment. This has been upheld by number of high court judgments. Minority cannot stall the process of redevelopment . Thus voluntary consent or the forced consent by due process of law will be taken during the redevelopment .

101. one flat is used as community Hall

Ans: Since the community hall is given as a common asset by the builder to the society, the benefits thereof,if any will also be shared equally be all the members. It is better to get the community hall in turn in the name of the society to be used by all the members in future.

102. Flat area varies … actual to society Record

Ans: The construction of the building is done as per the Development control Rules as applicable. BMC grants the building construction as per the FSI allowed on such land based on its area. Therefore, the area to be considered is based on approved plan as per the original building constructed. If the same is not available as per the assessment tax collected by the BMC. If both are not available as per the society record/ agreement executed with the builder or as per their respective agreement.
The general body can deliberate on this and take an unanimous decision in the interest of all.

103. Redevelopment in phases..??

Ans: It depends on Developer’s planning .. if he decides to have more Buildings on the plot Society can discuss phased wise program but on small plot such phase wise program not feasible or economical. The same may be informed to the builder can if feasible, that may be worked out in due course.

104. Approved list of PMC

Ans : NO… there is none so far exist ven though it has been mentioned in Govt. order of 3rd Jan 2009 Society has to use its experience or take help of some consultant as PMC consist many duties and experts from many fields are needed. The professionals forming the part of the PMC must be registered with the respective professional bodies like CA with institute of Chartered Accountants, Architect with Council of Architure, Structural Engineer with BMC, Advocate with Bar Association and so on.

105. Plot area.. FSI 1 to 2.. How calculated..?

Ans: Area on Property card will be the base.

106. When allotment is to be decided… ? while executing agreement or procession?

Ans: Once the plans are prepared and approved by the BMC as per the area to be allotted to each persons, the architect and the builder will request the society to initiate the allotment process. Once the flats are allotted by the general body of the society with whatever method is adopted, the builder will execute the Agreement for Permanet Alternative Accommdation in the new building, the same will be stamped and registered and then the persons have to vacate the old flats and hand over the v acant possession to the builder for demolition and redevelopment.
107. Do the redevelopment committee has to make/sign any legal Bond.

Ans: There is no provision for making any Redevelopment Committee as per the latest Government Circular dated 3rd Jan, 2009 regarding the Redevelopment of the society building. Further, there is no provision in the MCS Act, 1960 or the MCS Rules, 1961 or in t he Bye-laws of the society. However, many societies do constitute Redevelopment committee who work under the guidance and the direction given by the Managing Committee or the General Body meeting. Since, Redevelopment committee is not responsible and accountable for any decision in the working of the society, they are also not make accountable and responsible under the MCS Act. It is only the Managing Committee who are responsible and accountable, therefore only Managing Committee members have to sign the bonds and there is no requirement of the Redevelopment committee members to sign the bonds.

108. What are the rights and liabilities of the redevelopment committee.

Ans. As can be fixed by the Society… it is not mandatory… changes from Society to Society..

109. What action can a society take, if during the general meetings, any member breaks the decorum , repeatedly.

Ans: The Chairman of the meeting has the supreme power. The chairman of the meeting can expel him from the meeting and also later on initiate proper legal action against such member as provided in the bye-laws for breach of bye-laws of the society and the decorum of the meeting. The member can also be expelled and later evicted from the flat by taking due process of law. No member of the society can man handle him or start using abuse language with such member. If a particular member is aggrieved of such member behaviour, the same should be reported to the chairman, who has to take the decision by recording the reasons and passing appropriate resolution in the meeting

110. Do the Redevelopment Committee has to make/sign any legal Bond ?

Ans: There is no provision for making any Redevelopment Committee as per the latest Government Circular dated 3rd Jan, 2009 regarding the Redevelopment of the society building. Further, there is no provision in the MCS Act, 1960 or the MCS Rules, 1961 or in t he Bye-laws of the society. However, many societies do constitute Redevelopment committee who work under the guidance and the direction given by the Managing Committee or the General Body meeting. Since, Redevelopment committee is not responsible and accountable for any decision in the working of the society, they are also not make accountable and responsible under the MCS Act. It is only the Managing Committee who are responsible and accountable, therefore only Managing Committee members have to sign the bonds and there is no requirement of the Redevelopment committee members to sign the bonds.

111. Is the parking of 20feet/40feet truck/lorry permissible in a residential co-op. hsg .society ?

Ans: The parking rules are made by the society in the General Body meeting of the society. The society in its General Body meeting may decided and make the rules as to which type of vehicles will be allowed to be parked in the society, where it will be parked, what will be the system of allotment of the parking, parking charges, who is entitle for parking, who can apply for parking etc. There is no guidelines given in MCS Act, 1960 or the MCS Rules, 1961 or any other law except the General body of the society and the Bye-laws of the society which regulates the parking.

It is not possible for me to give any legal answer to this question except the same to be decided in the General body of the society.

112. Is this true that General Body Meeting (GBM) should follow the guidelines prescribed in the Law or the GBM has the right to manipulate the Law ?

Ans: Bye –law No. 111 states as under: “ Subject to the provisions of the Act, the Rules and the Bye-laws of the society, the final Authority of the society shall vest in its general body meeting, summoned in such manner as is specified in these bye-laws” Thus General body is not above the law. No body is above the law. Within the general provisions of the law, the general body can take the decision in the interest of the society.

113. What are the rights and liabilities of the redevelopment committee ?

Ans: No where in any of the Act, Rules , Bye-laws and the government notification, the mention of the redevelopment committee is made. Therefore, if any society wants to constitute the Redevelopment committee, the rights, privileges, powers and the functioning including the election has to be prepared, approved in the General Body meeting and then the same should be constituted. Many societies constitute redevelopment committee without any proper guidelines and get into a major disputes. It is the managing Committee which is responsible and accountable as per the provisions of law.

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Co-op society norms amended

Members of co-op housing societies will have to attend at least 2 AGMs in 5 yrs.
Want to skip the annual general meeting (AGM) of your co-operative housing society? Do it at your own peril. For, it could cost you your membership.

Though members crib about lack of amenities in their housing society, majority of them usually do not bother to attend the AGM. And, even if they do, they do not raise any issue at the meeting or participate in the election process.

So, to increase the participation of members of housing co-operative societies in administrative matters, the state government has introduced a series of amendments to the co-operative act.
According to the amendment introduced in the co-operative Act by the government in March, any member of a co-operative society, including housing, will have to attend at least two AGMs in five years, failing which he or she is likely to lose membership.

However, the member would be given the opportunity to explain his or her absence. The government has also imposed restrictions on the district registrars of co-operatives. Henceforth, a district registrar can supersede the society and appoint administrator only if the government’s financial interest is involved. As the government does not have any stake in housing co-operative societies, the district registrar cannot supersede the body on any issue, said sources in the cooperative.

Of course, this rule only applies to agriculture societies or farmers’ credit societies where the government provides loan for agriculture.


Now, attending general body meetings of your hsg society is a must

Those who do not attend the meet for 5 years will be barred from voting or contesting society polls, according to amended co-op act
Make it a point to attend all general body meetings of your housing society. For, under the amended Maharashtra Co-operative Societies Act, 1960 members of co-operative housing societies who do not attend at least one general body meeting (GBM) in a consecutive period of five years stand to lose the privilege of voting and contesting elections.

Though experts welcome the provision as positive and expect it to bring in more transparency in functioning of cooperatives, property owners especially those working abroad or out of the state find it taxing.
Advocate Dnyanaraj Sant, secretary of Grahak Hitavardhini, a consumer rights organisation, said there is no provision in the act for members to nominate someone else to attend meetings on their behalf. A non-active member may become an active member after five years if he fulfills all eligibility criteria.

“It is not practical for everyone living abroad who own homes in India to come within six months of the closing of the financial year, which is the time period within which the GBM is supposed to be held. Most people come to India in December, when they get Christmas breaks,” said Anagha Bhise, a chartered accountant working in Hampshire, UK who owns a flat in Pune.

To whom the law is applicable

Housing societies registered under the cooperatives act, cooperative credit societies, cooperative banks, cooperative sugar mills, cooperative ginning mills and other institutions registered as cooperative societies under the cooperatives act.

Fundamental right

Constitutional amendment that led to the change: The 97th constitutional amendment makes it a fundamental right to form a co-operative society by inserting the words “or co-operative societies” in Article 19 (1) (c), which guarantees the right to “form associations or unions or co-operative societies”.

The amendments

Amendments to the Maharashtra Co-operative Societies Act, 1960

The amendment makes it mandatory to hold a general body meeting (GBM) within six months of the closing of the financial year, i.e. before the end of September every year.

The term of office of elected members of the management committee is now five years. This is aimed at continuity in executive decisions. The term was not defined earlier.

The minimum number of members for the management committee is 7 and the maximum is 21. The Act has been amended to include reservations for SC/ST, BC, women, NT, in the absence of whom the seats will be filled by the other members.

The state government has been given the authority to constitute a state co-operative election authority, along the lines of the State Election Commission, which will be vested with quasi-judicial powers to take action against members who do not comply with the provisions of the Act.

You can take your housing society to consumer court

The Consumer Disputes Redressal Commission directed the district consumer forum to hear the case of Rajan Alimchandani against his society by declaring him a “consumer”.
Now, residents of cooperative societies, locked in a battle with the management, need not wait for years to get justice from cooperative courts. They can hit the fast track to justice — consumer courts.

In a landmark judgment, the State Consumer Disputes Redressal Commission directed the district consumer forum to hear the case of 72-year-old Worli resident Rajan Alimchandani against his society by declaring him a “consumer”. The commission also directed the forum to dispose of the case within three months.

Three years ago, the management of Venus Cooperative Housing Society on Worli Seaface, of which Alimchandani is a resident, decided to replace the old bathroom pipes. The decision was taken without a general body meeting, and each flat owner was billed an additional Rs5,000 over and above the maintenance charges. The society plumber was entrusted with the job after Rs1,40,000 was collected.

Alimchandani found leakages inside his bathroom ever after the pipes were changed. “This happened after I had my bathroom spruced up at my own cost. I spoke to the management, but no one responded to my written complaints. So, I moved the district consumer forum,” said Alimchandani.

But the forum dismissed the complaint, saying that under the Consumer Protection Act (CPA), 1986, he was not a consumer. Alimchandani then filed an appeal in the State Commission. In an order, Justice BB Vagyani and member Anjali Karadkhedkar said the Supreme Court had observed that the remedies under CPA for the aggrieved party were wider.

It said CPA not only created a framework for speedy disposal of consumer disputes by granting specific reliefs, but the consumer forums too had the jurisdiction to award compensation for mental agony and suffering. The Commission held Alimchandani a “consumer” and his complaint maintainable, and directed the case back to the district consumer forum for speedy redressal.

Although Alimchandani has demanded Rs 32,000 as compensation for his three-year-old battle, he wants to donate the money to the society for repair work. “For me, it was a fight for my rights,” he said.

The judgment has wider repercussions as more than 15,000 cases are pending in the six cooperative courts in Mumbai. “Cases referring to deficiency of services like leakage and parking can now be tried in consumer courts for faster redressal,” said advocate and president of Co-operative Societies Residents and Users Association Vinod Sampat.

No clarity on rules for election to housing societies in Mumbai

Though the state government has postponed the elections to co-operative societies till the end of 2014, there is no clarity on rules for elections to housing societies. The rules for election to housing societies have to be framed by the co-operative authorities.

Co-operation minister Harshvardhan Patil had told media persons that the co-operative societies with less than 100 members can conduct elections on their own. However, confusion still persists as the rules for the same are yet to be framed. The draft for framing of the rules is pending with the minister.
“Even housing societies with less than 100 members will not be allowed to conduct elections on their own. First let the rules be framed,” said an official of the co-operative department.

“It is for the minister to approve the rules and then we can frame them,” an official said.

There are 32,000 co-operative bodies, including housing societies, which have not held elections since 2011. The election authority will supervise, control and conduct polls to all registered co-operative societies, including housing societies, banks, credit societies, sugar factories and milk federations.

The state had amended the Maharashtra Co-operative Societies Act, 1960, and notified the authority too and also appointed certain posts for the election authority. However, it has not appointed the election authority that is the state co-operative election commissioner so far.

The state has around 2.28 lakh co-operative societies with around 5.25 crore members, including 88,472 co-operative housing societies.

Society must pay for repairs of leaky roof: HC

The Bombay High Court, in a recent decision, has held that a co-operative society is responsible for repairs of a leaking roof.
MUMBAI: The Bombay High Court, in a recent decision, has held that a co-operative society is responsible for repairs of a leaking roof.

Justice BH Marlapalle, in his decision last month, ordered Humble Home Cooperative Housing Society in Bandra to reimburse Rs 8,458 — cost of roof repair — to Sham Balani, a flat owner.

The case dated back to 1990, when Balani, who had to repair the roof of his top floor flat as it was leaking, demanded that society reimburse the expenses as per the Maharashtra Cooperative Societies Act, 1960.

The issue became a little tricky, as the terrace above Balani’s flat was owned by another flat owner as a private terrace.

In a suit before the Co-operative Court, Balani pleaded that according to principles governing cooperative housing society, even the private terrace belonging to one of the flat owners was the property of the society, hence the society was responsible for its repairs.

The Cooperative Court upheld this argument, and directed the society, to bear expenses for repair of terrace, which was a part of roof of Balani’s flat.

However, the society challenged the ruling in the Bombay High Court.

But the high court, while confirming that society will have to bear repairing expenses for leaking roof, observed that a private terrace was not society’s property.

Further, the high court held, it was not necessary to decide whether such a terrace was society’s property in this case.

Bylaws framed by the state government for housing societies — under the Maharashtra Cooperative Societies Act — clearly say that maintenance and repairs of roof of a flat is society’s responsibility, the court ruled.

Transfer of shares in CHS is liable to registration

Land has not been conveyed in favour of our society. Is there any stamp duty on transfer of shares? Can society refuse to transfer membership without registration? Can a society charge fees on transfer of garage?
In case of transfer of shares in a co-operative housing society, what is conveyed by the instrument of transfer is not only the transfer of shares but such transfer of shares is coupled with right, title and interest in the immovable property and therefore on such a transfer, stamp duty becomes payable.
Merely because no conveyance has been executed by the builder or landlord in favour of co-operative society, it cannot be said that flat owners are transferring only the shares and not right, title and interest in immovable properties. Instruments of transfers of shares in a CHS by virtue whereof ultimately flats get transferred are conveyance under the provisions of the Bombay Stamp Act, 1958.

With regard to registration, one may like to take a stand that section 41 of the Maharashtra Co-operative Societies Act, 1960 provides, with overriding effect, exemption to any instrument of transfer of shares in a co-operative society.

However, there is a circular of department of co-operation requiring committee to ensure stamping and registration before effecting transfer of shares in a CHS. A flat purchaser may contest validity of the said circular being in contradiction of the specific provisions of law.

As far as society is concerned, committee would have to implement the said circular. Registrar of co-operative societies would go by the circular. Registration Act, 1908 also requires registration of an agreement for sale, but section 41 of MCS Act, 1960 overrides Registration Act, 1908 in respect of transfer of shares in a co-operative society.

Courts have consistently taken a view that transfer of shares in a CHS is in substance transfer of immovable property. Flat purchaser having paid various kinds of considerations would like to get transfer effected by the society in his favour at the earliest.

On such considerations, a strong case lies in favour of requirement of registration of an agreement for sale of a flat in a CHS. If, however, the shares have already been transferred in favour of a member, then the CHS cannot enforce registration.

Under the provisions of MOFA, 1963 read with model bye laws of a CHS, a garage is also a flat and therefore transfer of garage would attract transfer fees.

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Amendment to Maharashtra Co-operative Societies Act approved

The Act is applicable to 2.47 lakh co-operative bodies all over Maharashtra with an annual turnover of Rs6 lakh crore and a total member strength of 5.50 lakh.
The Maharashtra cabinet has approved amending the Maharashtra Co-operative Societies Act, 1960, state minister for co-operation Harshvardhan Patil said in Mumbai on Thursday.

The Act is applicable to 2.47 lakh co-operative bodies all over Maharashtra with an annual turnover of Rs6 lakh crore and a total member strength of 5.50 lakh.

The amendments, necessitated due to the 97th constitutional amendment, were discussed at a cabinet meeting here yesterday, the minister told reporters.
The state government will issue an ordinance and the new measure would become effective from February 16.

As per new norms, co-operatives having an ‘A’ audit class for three consecutive years would be able to park their funds in nationalised, scheduled and urban co-operative banks.

To enable elected co-operative bodies to complete their five-year terms, it has been decided that their elections will be conducted only after completion of their terms, through a proposed State Co-operative Election Authority, Patil said.

The strength of the board of directors will be fixed at 21, of which five seats will be reserved, he said. Out of these five reserved seats, two seats would be for women, one for scheduled caste / scheduled tribe, one for other backward class, as well as one for ‘Vimukta Jati’ and notified tribes, he said.

Co-operative housing societies would be able to initiate recovery of dues from defaulting members by instituting measures which could include seizure or disposal of flats of concerned members, he said.

Under new norms, it would be mandatory for an annual general meeting to appoint an auditor. Audits of co-operative bodies would be carried out by certified government auditors, he said.

Maharashtra: Government to conduct survey of elected bodies in co-operative housing societies across state

Showing concern that hundreds of societies did not have a board or managing committee to look after the affairs of the condominiums, members wanted more information from the government. Ashish Shelar asked if the government planned to gather data on this.
The government will be conducting a survey of elected bodies in cooperative housing societies across the state. This information was recently given in the assembly during a calling attention motion.

Showing concern that hundreds of societies did not have a board or managing committee to look after the affairs of the condominiums, members wanted more information from the government. Ashish Shelar asked if the government planned to gather data on this.
Calling attention is a procedure whereby a member calls the attention of a minister to a matter of urgent public importance. The minister concerned makes a brief statement thereon after which members seek clarifications.

There are nearly 81,000 co-operative housing societies, including over 12,000 from city, in the state. These are divided in two groups – K and D. The first category comprises housing societies that have less than 200 members, while the other has a member count of more than 200. Each housing society should have an elected body in place by June 30.

“We will conduct a survey to check if the elected bodies are in place,” said Dadaji Bhuse, minister of state for co-operation. Two other issues that were raised will also be taken for discussion stated the minister. These were allowances given to those conducting elections and to the CA’s. On the issue of shortage of people in the registrar’s office, the minister said that staff from other departments would be taken for the work to be carried forward.

Housing society administrators or overstaying guests?

The powers enabling the Registrar to expel a committee are to be exercised only sparingly and to bring erring societies and their committees to book.
Here’s a ready reckoner on the office, its powers, duties and responsibilities

Cases of appointment of administrators in cooperative housing societies are on the rise.
Generally, the deputy or assistant registrar of cooperative societies (the Registrar) appoints an administrator upon a complaint(s) from any member(s) of the society, if he finds that it is a fit case to expel the managing committee of the society. Such an action may invite mixed reactions from the concerned society depending upon the facts of the case and depending upon the perception of the members about the manner of management of the affairs of the society by the expelled committee. The powers enabling the Registrar to expel a committee are to be exercised only sparingly and to bring erring societies and their committees to book (M R Bhuibhar vs Divisional Joint Registrar: 1982 Mh.L.J. 368).

Such powers have to be exercised by the Registrar after giving the committee an opportunity of being heard and an opportunity of stating objections and by application of principles of natural justice.

Wide powers
Section 78 of the MCS Act, 1960 inter alia equips the Registrar with such powers to be exercised upon the specified grounds including when the managing committee has committed defaults or has been found negligent in the performance of duties, or has committed an act prejudicial to the interests of the society or its members, or has willfully disobeyed the directions of cooperative authorities, or is not discharging its functions properly and diligently, or if the business of the society has come to or is likely to come to a standstill.

When the committee is removed, the Registrar has two options:
i. to appoint three or more society members, who should not be the members of the committee being removed, or
ii. to appoint administrator(s) in place of the expelled committee.

However, in practice, the first option is hardly exercised. On the contrary, the same person is appointed as an administrator of more than one society.

Remuneration payable to an administrator is to be fixed by the Registrar. The Act and the Rules are silent about the basis for or methodology of fixing such remuneration. On equity and reasonableness, such remuneration has to be with reference to the nature and quantum of functions performed by the administrator. In some cases, the administrator, in turn, appoints a private individual and remotely functions through such private appointee. The bank account of the society is operated by the administrator himself. The administrator or the private appointee, as the case may be, does not devote more time for managing the affairs of the society. Under the circumstances, the remuneration should be based on these aspects. The quantum of time spent by the administrator or his appointee may be noted on a day-to-day basis. The society or its member(s) may keep such records if they want to take up the issue of reasonableness of remuneration at a later date. In fact, the entire practice of appointing such private persons by the administrator and remuneration to him is questionable under the law.

Tenure of administrator
The law provides for appointment inter alia of the administrator for a maximum period of six months, which may be extended for a further maximum of three months. However, suffice to emphasise that such an extension has to be for the reasons to be recorded in writing and under proper intimations to the society. All powers, whether judicial, quasi judicial or administrative, are to be exercised objectively and reasonably.

The spirit of the law is that the administrator should set the things right and hold elections at the earliest. The administrator is like a guest to manage the affairs of the society on an ad hoc basis till a new committee is constituted by due process of law. Problems may arise when the guest overstays and beyond the need.

Powers and functions of administrator
Being an ad hoc appointee, the powers of an administrator are quite restricted. Legally speaking, the administrator replaces the managing committee and therefore the powers of an administrator, under no circumstances, can exceed the powers of the managing committee.

Recently, in the matter of Palm Towers Co-operative Housing Society Ltd, the Bombay High Court has inter alia ruled that the administrator is appointed for the purpose of holding elections and to constitute a proper managing committee. The administrator is not ordinarily required, nor expected to take policy decisions.

The administrator has no power to enroll new members; he has only power to organise elections in accordance with the law and the byelaws of the society (K Shantaraj vs M L Nagaraja, AIR-1995 SC 2925; Joint Registrar of Co-operative Societies, Kerala vs T A Kuttappan and Ors, (2000) 6 SCC 127. Section 32(4) of the Kerala Co-operative Societies Act, 1969 is par-materia with section 78(2) of the MCS Act, 1960.

Supremacy of the general body continues
An administrator replaces the committee and therefore, the supremacy of the general body continues. There is no provision in the Act, Rules or the byelaws prohibiting the holding of general body meetings during the continuance of an administrator. And very rightly so, because upon appointment of an administrator, the functions and affairs of the society do not come to a standstill and the powers, which are reserved and vested in a general body, can be exercised by the general body only. The decision of the general body, subject to the framework of the law, would be binding upon the administrator being in place of the committee.

Administrator to set example of good governance
Since an administrator is appointed in place of a delinquent committee, the manner of functioning of the administrator should be exemplary so that the society, its members and the incoming committee can observe good governance by functioning objectively and transparently. As part of the minimum requirement of such good governance, the administrator should disclose to members complete details of income and expenditure and receipts and payments for each month.

Similarly, decisions taken by the administrator from time to time should be communicated to the members with reasons.

Office of the Registrar is a public authority covered by the RTI Act
There can be instances when the society or its member(s) are not satisfied about exercise of powers by the Registrar in relation to removal of a committee, appointment of an administrator, continuance of the administrator, functioning of the administrator, remuneration to the administrator, etc. In all such or similar circumstances, one may use the provisions of the Right to Information Act, 2005 as the office of the Registrar of Co-operative Societies and all its organs are a public authority subject to the provisions of the said Act.

Housing societies not under RTI yet: Info chief

The 97th constitutional amendment made RTI activists happy because they believed that it brought co-operative housing societies under the purview of the RTI Act.

In February, the state passed its own ordinance implementing the amendment.

He spoke with dna’s Ashutosh Shukla about cooperative societies, pending second appeals and voluntary disclosure.

Your opinion on housing societies coming under RTI?
I don’t think that they come under RTI Act. One has to read section 2h of the RTI Act to see what it covers. Just because an amendment enables something to come up, does not mean it is established by the government. Societies are a body formed by 20 people. Where is the public interest in that? Even if it did come under RTI, whom will we fine as public information officers? Private companies too are formed under Companies Act but that does not mean they come under RTI unless they are financed or adhere to some of the provisions.

What is the status of second appeals?
There are around 23,000 second appeals in all benches. In my bench, people will be able to get orders within two months if they file an appeal today. Due to vacancies the pending appeals in greater Mumbai region are over 3,000, of which, around 1,500 are of 2011 and 1,600 of 2012. By December, 1,500 appeals of Greater Mumbai bench will be cleared.

Voluntary disclosure under section 4 of the RTI Act has not improved much.
There is nothing much the commission can do. The state government, collectors and people heading the authority will have to take most of the initiative. We had issued directions to all public authorities to properly implement section 4. This time, a reminder will go a warning that disobedience of the commission orders will attract serious contempt under section 166 of the IPC (deals with imprisonment of public servant or fine or both)

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Provisions of the Bombay Stamp Act, 1958 for Gifting property to a relative

Q. I am planning to transfer one of my residential flats to a close family member either by gift or sale at a nominal price. Please guide me about the stamp duty and tax implications.

A. Your gifting the flat to a relative specified under section 56(2) of the Income Tax Act, 1961 would not attract any tax. It would not invite any income tax implications except that gifting the flat to your wife or son would also attract clubbing provisions of section 64 in respect of income from the gifted flat. Your gifting will not invite any capital gains tax implication but your sale will certainly. Sale of a flat would also invite the implications under the provisions of section 50C of the income tax act with the result that even if you sell at a lower price the capital gains would be computed on the stamp duty valuation when such valuation is higher than the sale price. Gifting property to a relative specified under the provisions of the Bombay Stamp Act, 1958 would attract lower stamp duty at 2% however sale to such a relative will attract stamp duty at full rate. In either of the cases, registration under the provisions of Registration Act, 1908 would be necessary.
Transfer of a flat to a family member would not attract any transfer premium by the society.

Q. My flat was purchased in the year 1993 and stamp duty was not paid on market value nor was the registration of the document done. Now that the building is going in redevelopment, whether such defects would come in the way?

A. Non-payment of stamp duty or non registration of the document of purchase of your existing flat would not be an issue for redevelopment of the property of your society. Such defect would not be a hurdle to your entitlement to the redevelopment benefits.

Q. We have sold an immovable property in our public charitable trust and we would like to plan the investment from income tax point of view. Our trust also has income from renting of property.
A. The provisions of income tax in respect of trust earning capital gains do not distinguish between short term and long term capital gains. To save tax, capital gains arising out of sale of immovable property should be invested during the same previous year in some other capital asset. For such investment, even a fixed deposit with a bank or a public sector company can also be a new capital asset for this purpose. CBDT circular on the subject requires minimum term of such fixed deposit to be 6 months but it is submitted that such requirement is directory and not mandatory.
As far as renting income is concerned, no general principle can be laid down, for deciding as to when a particular income should be treated as income from house property and when the income from business and each case has to be decided on its own facts. However, in general if the property is not commercially exploited by renting, it can be said that by and large the income from renting of property including a residential and including a commercial property would give rise to the Income from house property as that is the specific head for such income.

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