One good thing in offing is virtual management of MAHA-CHS should nearly eliminate fierce verbal exchanges the most irritating characteristic of FACE TO FACEmeetings. Hope fully housing societies will have left such agonizing moments for good.The diagnosis of this agonizing feature of the society meetings rests largely in the poorappreciation of the cooperative identity by its members.May beit’s a repetition, but it looks inevitable to elucidate the identity of the Maharashtra Cooperative Housing Society Regulatory Regime (MCHSRR).By inserting Article 43A and Part IXB Cooperative Societies in the Constitution of India vide the Constitutional (97th Amendment) Act 2011 [97CAA] the Indian Parliament conferred a Constitutional status to Cooperative Societies: ”The Apex Court in the case of Vipulbhai M. Chaudhary Versus Gujarat Cooperative Milk Marketing Federation Limited and others decided on March 19, 2015 [(2015) 42 SCD 494].TheMCHSRR consists primarily of two legal identities:the State Law namely the Maharashtra Cooperative Societies Act 1960 (the MCS Act) and the Maharashtra Cooperative Societies Rules 1961 (the MCR)framed under Section 161, for carrying out the purpose of theAct. The third extremely important identity but nearlyoverlookedis the registered bye-laws ofthe concerned Society:bye-laws in every cooperative society are must to conduct its internal managementin terms of the provisions of these two identities. The bye-laws are a society specific document which are actuallythe compilation of contracts inter se the members of theSociety,as if every member has agreed to the conditions of bye-laws with every other member.Obeying bye-laws means demonstrating respect forone’s own words. The first bye-laws are registered with the Registrar of Cooperative Societies at the time of registration of of the Societyafter the lateris satisfied that the bye-laws as drafted by the flat (purchasers eventually,the membersof the society) are in full conformity with the provisions of the afore said two identities. Housing Society Bye-laws are very much like the Constitution for Indian Citizens.The writers of the Constitution candidly declared that WE, THE PEOPLE OF INDIA ….DO HEREBY ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION”How many Indians nave actually gone through or even seen theworld renowned document ofIndian Constitution?https://www.india.gov.in/sites/upload_files/npi/files/coi_part_full.pdfThe Indian Constitution is the mother of all laws in India. State Legislatures draw power from Article 246of the Constitution to enact laws for the Statewhich must conform to the Constitutional provisions.
Resuming the thoughts on virtual management of housing societies every member must have observed that the most common business interestin Housing Society meetings is the fixation of monthly rate of maintenance. Our immediate goalis:to fully understand the rationale of Bye-law (No 67(a) of Model 2014 specifically)as a pilot for meaningfully engaging in the process of overhaul of registered bye-laws.Many members including those in management of MAHA-CHS are not necessarily aware that fixing rate of society maintenance is not in the domain of the Annual General Meeting (Bye-law No 8) Society charges must be the responsibility of current member. A member who transfers his share of interest in the society’s capital and property by way of sale of (of the Flat) ceases to be liable to share these charges. This implies that all expensesincurred/accrued must form part of the aggregate amount to be apportioned to members/flats by reflection in the rate of maintenance. In most housing societies some portion of the amount chargeable to current members is bound to be carried forward to be borne by the future members. This is unfair because the benefit of such expenses has been enjoyed by erstwhile members but the financial burden rests on all others including new members. The rationale of this bye-law 67(a) is: the beneficiary member of every rupee of the society charges must pay for them. That can be ensured if the rates of maintenance arefixed from year to year strictly in accratecompliance of this Bye-law No 67(a).
Very long term implications are relevant to far more serious issue of redevelopment of building which in most housing societies is due to-day or tomorrow. Now the trend is self redevelopment as that is far more practicable as alsomost beneficial. The MAHA-CHS is now allowed to admit HUF as its member and as the flat belongs to family mostly HUF, the self redevelopment is a logical step to accommodate expanded family. For this purpose also the accurate collection of society charges is uite logical. The Society Charges include establishment and maintenance of two funds namely the Sinking Fund and Building Repair Fund [Items (iii)/(iv) of this bye-law 67(a)]. These funds are to be maintained out of actual collections from members every year and not by diverting any other fund accumulated over past years. There was a case of one MAHA-CHS which diverted substantial amount of transfer premiums (which must be credited to Reserve Fund) were applied to square off the short fall in maintenance and these to funds. Genesis of breach of Bye-law No 67(a)is:incorrect accountingpolicies adopted by the management committee, may be unintentionally andthe auditors also failed to detect. The generally misconceived accounting is in the accounting treatment of contribution made by members towards the demands on members under Bye-law No 67(a) as income and not as contribution to funds or tothe society outgoings. For such incorrect policies the culprit seems to be model bye-laws which do not containthe correct object of the Housing Society. The Housing Society is classified as such on account of its objects as per the MCS Act Section 2 (Clause 16) reading as under:
“housing society”means a society, the object of which is to provide its members with open plots for housing, dwelling houses or flats; or if open plots, the dwelling houses or flats are already acquired, to provide its members common amenities and services;”No none of the models of bye-laws released for MAHA-CHS includes this object. The result is funds accounting is as per incorrect policies. Far more serious is the incorrect determination of surplus of income over expenses which must be applied for various purposes listed under Bye-law No 148 (Section 66 of the Act). Very incorrect collections aremade in most housing societies from members for meeting expenses on object as per clause 5(d) [Cultural or Recreational activities] as these can only done out of Common Welfare Fundset up and maintained as per Bye-law No 149(b)(iii) by transferring a part of the net profits as the Housing Society may decide to appropriate in Annual General Meeting. In fact most societies exhaust the interest income on surplus funds invested as permissible under Section 70 of the MCS Act by diverting to meet the expenses on utilities and services being the main object of the Housing Society which has been missed out in almost Housing Society. These anomalies have weakened the financial edifice of every Housing Society. Model 2014 adopted by most societies must be amended accordingly.How and to what extent, hope fully in Part 5.