The board of Nashik District Central Cooperative Bank has been dissolved by the Maharashtra government.  The bank provoked the govt to take an extreme step as it indulged in various alleged   irregularities  and violation of the Nabard guidelines.

Meanwhile, a  govt  functionary has been  made  the administrator of the bank.

The Chief Minister Prithviraj Chavan is being kept posted on the developments.

Sources say the administrator would soon take necessary steps to repair the bank’s financial situation   as well as make preparations for a free and democratic election.

Vijay Trimbak Gokhale

First of all let me thank you profusely for yeomen service you are doing to needy persons by giving them legal advice.

I have a following query and would earnestly request you to please enlighten me on this. A person was staying in a rented premises viz.a two room block on rent in a house owned by some owner. That was in 1950-80 or so.

Subsequently the owner decided to develop the property and this tenant moved out of the rented place and eventually came back in a flat given by the developer somewhere around 1985 or so.

At the time of moving out he has not entered into any agreement with developer in good faith because he knew the developer well. But the developer had written to the then municipal authorities, while seeking their permission for development that this tenant was staying along with other tenants in the building to be demolished. He has a copy of this.

The developer builder has since been absconding and not traceable and all communication sent on his last known address comes back with remarks “addressee does not stay at that place”.

After the development was completed, society was formed in 1987. He was made a member and he has a share certificate in his name and he has been regularly paying maintenance and other dues of society regularly and there is no default at all till date.

The conveyance is not yet done.

Society wants to go for redevelopment now.

1. Now can this member be deprived of redevelopment because he does not have agreement?

2. What are remedial steps to regularize the ownership of flat and entitlement to redevelopment?

3. Is there any SC judgment which supports/protects the rights of such owner of a flat who does not have agreement with original developer but he is member of society as mentioned above.

I C Naik

The State Government has issued directions for redevelopment of older properties of cooperative societies under Section 79(A) of Maharashtra Co-operative Societies Act 1960 to all the Co-operative Housing Societies in the State of Maharashtra. These directions are having the effect of provisions of the M. C. S. Act 1960.

The relevant directions for reaching answer to the case under reference are as under suggesting that the member’s rights are protected despite the deficiency pointed out in the query.

1. Agreement to be entered into with Developer:-

Subject to the terms and conditions approved by General Body Meeting of the Society, an agreement should be entered into with the Developer within one month under guidance from the Architect / Project Management Consultant.

2. There should be particulars of the existing flats with carpet area of the flats occupied by each of the member of the buildings. The area of the plot as per the ‘Property Register Card’ should be mentioned. The total estimated FSI area that can be constructed by utilizing TDR on the plot should be mentioned. The agreement should clearly mention the carpet area, including the additional area which will be made available to the members in the new building.

3. Rights of those who are in possession of the flats will remain unaffected.

4.After receipt of Occupation Certificate, flats in the redeveloped building should as far as possible be allotted as per present conditions floor-wise and if it becomes necessary to allot flats by drawing lots, on completion of construction, Developer should make arrangement drawing lots, and at that time flats should be allotted in the presence of Registrar’s representative and this process be recorded by video shooting.

5.Building plans sanctioned by the Municipal Corporation / Competent Authority should be put up before the General Body Meeting for information and if any member wants copies of approved documents, he should submit application for the same to the Society and it will be binding on the Committee to furnish the information by charging necessary fee.

6. The drafts of all the relevant documents pertaining to the redevelopment process must be circulated to all members well in advance and the objections, suggestions and modifications if any, must be discussed in the Special General Body Meetings including recording proper minutes of each meeting to maintain the transparency. It’s advisable to discuss the documents in detail at the general body meeting so as to arrive at a consensus about the terms and conditions in order to avoid later hassles.

7. The society shall accept and admit the prospective/additional flat owners of the newly constructed building/s as members of the society and treat them at par with existing members.

Above mentioned are some of the important points relating to redevelopment of old buildings by cooperative Societies. Since the laws on the subject of redevelopment are yet to be fully developed, any decision in this matter should be taken with great care or else it could lead to a possible dispute or litigation.

Permanent Alternate Agreement between redeveloper and the member in respect of the flat the building of which was redeveloped is necessary to create titles of occupancy rights in favour of member.

Secretary ought to have asked for it 3 years before, but that cannot held against him in defence. It is also required for further transfers in future. Now with liberalized Conveyance Procedure, it should be possible to get a deemed conveyance taking help of the Conveyance lawyer. It will entail expenditure, but that was unavoidable at the time of purchase of the flat.

Maharashtra State Cooperative Bank (MSCB) is always hot copy for the media. This time round the bank has gone out of its way defending the state deputy chief minister Ajit Pawar whose name figures in a petition before the Bombay high court seeking registration of FIR in a scam involving a largescale diversion of funds of the bank.

MSCB has told the high court that Mr Ajit Pawar’s name is being mentioned to gain cheap publicity.

One Mr Shankarao Bhosale from Satara has filed the controversial petition.

Mr Bhosale states depite the appointment of a board of administrators on the advice of RBI, the board has done nothing to recover defaulted loans and therefore urges the court to direct them to start criminal proceedings with the economic offences wing.

MSCB has told the court that the petitioner who is vice-president of a sugar factory has taken loans from the bank and has been defaulting on them. The petitioner is therefore only blackmailing the bank and hiding his own illegalities.

The petioner, however, maintains Mr Ajit Pawar’s followers and associates who are also members of the NCP have availed themselves of crores of rupees of loans from the bank and are not willing to repay these loans.

It is no secret that Mr Pawar and his followers have decisively been dominant over the years in the management board of MSCB.

Confusion of election symbols has led to postponement of the elections to the Maharashtar State Cooperative BanK (MSCB) employees union. Shrikant Bhuyarkar who was a candidate from the ruling Sahkar panel and contesting for the post of treasurer had his rival’s election symbol torch against his name.

This angered the opposing Parivartan panel.

The parivartan panel charged that the confusion was deliberate and the opposite panel was not willing to abide by democratic norms. The election should be held every three years as per rules of the union but sahkar panel had been in power for the last several years, parivartan panel complained.

Sources say fresh elections would be held on the 16th September now.

The state government on Thursday abolished a condition that requires people who volunteer as office bearers in cooperative housing societies to furnish an indemnity bond taking responsibility of all acts and omissions that may cause any loss to the society.

Cooperation secretary Rajgopal Deora told HT on Friday that the state issued a government resolution to do away with the condition – the M-20 bond, in legal parlance – on Thursday night. The decision was not published till Friday evening.

The M-20 bond is an undertaking given by each managing committee member within 15 days of his assuming office. It says, “I shall be jointly and severally responsible for all decisions taken by the managing committee during its term relating to the business of the society and shall be jointly and severally responsible for all acts and omissions detrimental to the interest of the society…”

Housing societies were brought under the ambit of this rule in 2001.

By implication, any person who signed society documents without signing an M-20 bond on assuming office was liable for prosecution for serious crimes including fraud, cheating, misrepresentation and forgery.

There are more than 90,000 cooperative societies in the state of which about 50,000 are in Mumbai and Thane. More than 30% of these are run by state appointed administrators. The state takes control of the society when the committee is dissolved on legal grounds or members resign and others are not willing to fill up vacancies.

Deora said that the decision would encourage people willing to take up the honorary job. “In absence of M-20 bonds and in case of any wrongdoing, the aggrieved parties could take up the issues with competent authorities,” he said.

The initiative was planned by CM Prithviraj Chavan and cooperative minister Harshvardan Patil after receiving feedback that people did not come forward to run societies.

But a few housing society activists were upset with the decision. “The M-20 bond was a deterrent against any wrongdoing in the society. I demand that the state now introduce a more effective mechanism to check corruption and inefficiency in housing societies,” said activist JB Patel. He said that the government would also lose revenue that it earned through stamping of bonds.

Courtsey: HT

I C Naik commented as under:

The condition of Execution of an Indemnity Bond was imposed under Section731AB of the Maharashtra Cooperative Societies ACT 1960 which was inserted in 2000 vide Section 3 of the MAH. ACT 41.The legislature was very clear about what it was doing and declared that failure of executing such a bond within specified period (specified by the Executive 15 days initially which was relaxed to 30 days) unseats the member after expiry of the specified period  Form without any further act.M20 was later specified under Rule 58 effective 2001.

Ritesh

Dear Sir,
I am a member of the management committee in our society.

Can a society pass a resolution to put a blanket ban on the foreign national’s entry to the society?

I C Naik

No. It is against the very 1st Principle of Cooperation.

“Co-operatives are voluntary organisations, open to all persons who use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.”

Cooperative Housing Society is bound to admit all those who meet the eligibility criteria laid down in the State’s Cooperative Act. For example Section 22 of Maharashtra Cooperative Societies Act permits an individual, who is competent to contract under the Indian Contract Act, 1872 to become a member of a Society. However, as per Section 23(1) for a “sufficient cause’ an individual can be refused membership.

Non Compliance of any regulation under any applicable Indian law by an individual is a sufficient cause for such refusal.

If any foreigners are likely to become member for any reason, as a matter of abundant caution the society should lay down additional (In addition to those in the bye laws) conditions as to eligibility criteria which should definitely include Security Clearances and Clearance for acquisition of Property as laid down by the Government/Statutory Authorities.

Exchange Control Dept of RBI has issued a Notification No-FEMA 21 /2000-RB dated 3rd May 2000 laying down conditions for ac acquisition of immovable property.

Nitin Sav

Hello sir,

My name is Nitin Sav. I live in registered society. I have kept my shoe rack outside my flat but the society members are asking me not to keep the shoe rack outside. Are so legally correct to say so?

I C Naik

You have encroached upon common area which belongs to the Society. It could be valid only if the General Body passes a resolution permitting members to keep the shoe rack outside the flat.  Presently you are committing breach of Bye Law 50 (a) Model 2009 approved for CHS in Maharashtra.

The Nagpur District Central Cooperative Bank fraud case involving an amount of Rs  50 crore has been  an infamously delayed case as it has experienced nothing but obstruction from the all the 11 accused.

The latter use the simple expedient of being absent from the court on the days of hearing by turns and thus are able to prevent the court from framing charges against them. The case has been pending for more than a decade.

All the accused including the Congress MLA from Saoner, Sunil Kedar have been mocking the judicial process with impunity. The court has issued warrants against them several times but to no avail.

Sources say the case would continue to drag on without any result as the court is neither splitting up the case nor cancelling bails of the accused. The case is stalemated and there is no progress, they add.

However, some lawyers are of the view that the case could be brought to its logical conclusion soon if the court so desired. The accused should immediately be arrested and charges framed against them, they remarked.

The Registrar of Co-operative Societies, Maharashtra has also been requested to issue an order by RBI for winding up the Premier Automobiles’ Employees Co-operative Bank and appoint a liquidator for the bank.

RBI had earlier advised the bank to explore the possibility of merger with another bank. However, the bank did not take any action in this regard.

The RBI inspection revealed various deficiencies and irregularities in the working of Bank and it restricted it from opening ATMs/ extension counters/ branches and extending the area of operation, declaration of dividend without permission of the Bank and acquiring or shifting its office premises.

RBI also found out that the bank had given loans to several persons who were not employees of Premier Automobiles Ltd.

It also noted that the performance of the committees of the Board was not satisfactory. The bank had violated RBI guidelines on induction of professional directors on the Board of the bank.

The deterioration in bank’s financial position showed the inability of the management to bring about any major improvement and arrest the deteriorating financial position of the bank. The performance of the Board of the bank was not satisfactory as it could not take initiative in framing risk management policies of the bank.

The IT giant Wipro has provided the state cooperative banks in 5 states of the country with the core banking solution in a bid to extend e-banking facilities to customers in the countryside. Wipro sources say the cooperative banks are located in Bihar, Haryana, Maharashtra, Punjab and Utter Pradesh.

As  desired by Nabard, the IT company will undertake computerisation of 76 state  and district  cooperative banks including nearly three thousand branches existing in several states across the country.

Provision of computer facilities will mark a revolutionary change in the functioning of the cooperative banks operating in rural areas.

Farmers will be able to receive e-payments towards subsidy, sending of money from cities to the countryside will become easy.

The cooerative banks will expand their business and activities and they will be on a par with the rest of the banks in terms of application of technology and banking methods.