Converting Personal flat into Family Flat under MAHA-CHS Regulations

By I C Naik

With the good news that the MAHA-CHS has set in motion a process of conferring membership to HUF and after learning what HUF is, the family flat-holders registered in single names should become restless for a change over to family flat. It is almost a rule that a reform to the functioning of the housing societies should wait for the initiative from the Government / Bureaucracy. In this article we are going to prove it wrong and show how to align the membership culture to Indian family system distinct from the western individualistic thinking. Though it is late in India but has merits in any case.

Such MAHA CHS should expect a bare minimal help of the State bureaucracy. It’s time housing societies start living by the Constitutional aspirations of self help, democratic functioning with full autonomy adhering to cooperative principles and values. The very first formal cooperative society “Roshdale Equitable Pioneers” was launched (on 21-12-1844) by 28 distressed wavers in a place called Roshdale, Lancashire District of United Kingdom. What they did was they acted upon the brilliant advice given by Sir Peel’s Robert [twice Prime Minister of UK in nineteenth century]; and “took their own affairs into their own hands; autonomous functioning nearly two centuries ago. How many of MAHA-C H S cooperators feel that the affairs of their cooperative societies are in their own hands?

Cooperative society having been bestowed a Constitutional status [vide 97CAA per Supreme Court order in Vipul Chaudhary Vs Amul Dairy (Anand ) dated March 19, 2015 [(2015) 42 SCD 494] now onwards housing societies may not be allowed to continue with the ban on HUF. Currently none of the Model bye-laws permit HUF to be admitted to membership which means no MAHA CHS can make HUF its member. So this will have to be changed. A procedure including rights and duties will have to be defined in the bye-laws. A form of application by HUF will have to be devised as Rule 19(1) of the MCR 1961 provides that:

No person shall be admitted as a member of a society unless,—

(i) he has applied in writing in the form laid down by the society or in the form specified by the Registrar, if any, for membership

It is an open secret that the State bureaucracy is not getting time to respond to the amendments to the MCS Act the legislature made early 2019.It is good that a CHS is permitted to prescribe its own forms. Every MAHA CHS should immediately amend the registered bye-laws to insert in the registered bye-laws a form for application for seeking membership by HUF.

Moreover, the MCS Act [Section 26(1)] provides that

“A member shall be entitled to exercise such rights as provided in the Act, rules and by-laws:

It is implied to include rights of HUF as members of MAHA CHS in the suggested amendment. Inserting a separate chapter namely “Special Provisions for HUF as a Member” sounds most practical idea. It should help prevent the amendment process getting prolonged. Such amendment should enable a fast track scrutiny by the Registering Authority being a mandatory bureaucratic process under the MCS Act (Under Section 13). Amendment should be comfortably comprehensible to the society management and members alike and should not be hit by the requirement of Section 13[1B] of the MCS Act reading as:

“No amendment of the bye-laws of a society shall be registered by the Registrar under this section….. if the amendment is repugnant to the policy directives, if any, issued by the State Government under section 4.”

In respect of the Policy directives the Supreme Court has clarified as under [in Zoroastrian Co-Operative Housing Society Limited Rd-Sc 253 (15 April 2005) [Para 13]:

“The concept of public policy in the context of the Cooperative Societies Act has to be looked for under the four corners of that Act…When a statute is enacted, creating entities introduced there under on fulfillment of the conditions laid down therein, the public policy in relation to that statute has to be searched for within the four corners of that statute”

Every registered bye-laws of C H S contains a red alert, namely:

“No bye-law shall be made, altered or abrogated unless (i) a proposal to do so has been communicated to all Members 14 days before the Meeting of the General Body of the Society, at which it is proposed to be considered, and, (ii) the resolution is passed by not less than 2/3rd majority of the Members present and voting at the meeting of the General Body of the Society, and (iii) the making, alteration or abrogation is Approved and Registered by the Registering Authority.”

Now that the Statute (the MCS Act under a new Chapter XIIIB) has lifted the ban on admission of HUF to MAHA CHS membership the policy directive is clear that there is a statutory recognition of a family as a stakeholder in MAHA-C H S.

The cooperative society is a voluntary association of persons, owes its existence to the Contracts inter se the promoters (members) thereof evidenced by the registered bye-laws of the concerned Cooperative Housing Society. [The Supreme Court in Zoroastrian Co-Operative Housing Society Limited Rd-Sc 253 (15 April 2005) at Para 21” clarified that;

“The bye-laws of a cooperative society setting out the terms of membership to it, is a contract entered into by a person when he seeks to become a member of that society. Even the formation of the society is based on a contract.”

The registration of bye-laws drawn up and agreed to be bound by its requirements by the promoters is necessary as a primary means of regulating the growth of cooperative movement. The MCS Act lays down the areas of management of cooperative society to be covered by the bye-laws by specifying the internal rules under each such matters. Every amendment must also conform to this provision.

On these lines the Content of the suggested new Chapter namely: Special Provisions for HUF as a Member is indicated below.