By I C Naik
1.The M C S Act 1960
i.Pursuant to Section (19) (a) of the M C S Act 1960 a “member” of a cooperative society is a ‘person joining in an application for the registration of a cooperative society which is subsequently registered, or a person duly admitted to membership of a society after registration and includes a nominal, or associate member;
ii.In housing societies normally a builder is a Chief Promoter as he is duty bound under MOFA 1963 and the Flat Purchasers are the Co-promoters. Person who has not purchased a flat can not be a co-promoter. A person joining in an application for the registration of a cooperative society could thus be a second party to a flat sale agreement executed under Section 4 of MOFA and as such is also member as defined in Section (19) (a) as soon as the housing society is registered. He must be registered as Associate Member as the first named party in the agreement is a member of the Society.
iii.As per above definition a person who is admitted to membership of a society after registration could also be an Associate member, holding the right, title and interest in the property. Such second holder must apply for his admission as an Associate Member because Rule 19(1) says “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;”
iv.The Associate Membership of housing society is supported by two definition clauses under Model Bye-Laws and also by Bye-Law No 19(b) laying down conditions for admitting a person to Associate Membership.
2.Bye-Law No 3(xxiv)
i.”Member” means a person joining in an application for the Registration of a Cooperative Housing Society which is subsequently registered, or a person duly admitted to Membership of a Society after Registration and who holds the right, title and interest in the property individually or jointly;
ii.By virtue of this definition also a second party to flat purchase agreement becomes Associate Member as soon as a housing society is registered.
iii.Under Model Bye-Law No 3(xxiv)(b) Associate member is separately defined specifying that an Associate Member should hold the right, title and interest in the property individually or jointly as a second or third party;
QUOTE: “Associate Member” means a Member who holds the right, title and interest in the property individually or jointly with others, but whose name does not stand first in the share certificate UNQUOTE
iv.Model Bye-Laws do not envisage a person not holding the right, title and interest in the property to be admitted to Membership of housing societies except as a Nominal Member who occupies the flat for the time being instead of the member, occupying, with prior approval of the managing committee as provided under Bye-Law No 20.
3.Bye-Law No 19
i.Sub-Clause (b) provides QUOTE: An Individual, a Firm, a Company or a Body Corporate, registered under any Law for the time being in force, who/ which is eligible to be an Associate Member and who/which shall apply through Member in the prescribed form for such Membership, along with the entrance fee of Rs. 100/-, may be admitted as AssociateMember by the Committee.
ii.Index of list of Appendices attached to bye-laws at pages 68-70 includes entries of two Appendices viz 5 and 6 displaying forms to be used to submit application for Associate membership respectively by an individual and a firm, a company or Public Trust or any Body Corporate being eligible to be admitted as such.
iii.Appendix 5 is titled as “The Form of application for Associate Membership by an Individual, who desires to hold shares jointly with Member, who is already admitted to membership of the Society” This tile indicates three situations namely
a.that the applicant was not a party to agreement with the builder and hence could not join in an application for the Registration of the Society or
b.a transferee was a sole purchaser of a flat from existing member
c.the flat was purchased jointly from an existing member but only the 1st named person became its members initially the 1st named person is now desirous of having an Associate member for the flat so that he could attend the general body meetings in his absence.
The flaws
a.The 1st flaw is that no person under situations (a) and (b) is eligible to be admitted as Associate member in view of the definition of Associate member. He is misguided by a declaration which an applicant could make as provided in the Appendix namely ‘ I state that do not jointly own or have joint title to the property with the above mentioned First Member’
b.The 2nd Flaw is that no form is prescribed for the person to apply for associate membership who had joined in an application for the registration of the Housing Society along with the flat holder whose name appears first in the agreement with the builder/Chief Promoter. Associate member has become (Associate) member automatically in defiance of Rule 19(1) as reproduced earlier.
c.The 3rd flaw is that in the form as per Appendix 5 an individual can apply for Associate membership through an existing member who should also be individual as the member is shown as holding 10 shares and salutation of the consenting member could be either “he or she” Eligible Firms, Companies or Corporate Bodies being original members cannot use this form to give consent to an individual to become Associate Member.
iv.Appendix 6 displays the Form of application for Associate Membership by a Firm, or a Company or any other Body Corporate with the person already admitted to membership of the Society.
The flaws:
a.The first flaw is that in this form only an Individual member can give his/her consent for eligible Firm, or a Company or any other Body Corporate as the salutation of a member giving consent is he or she as also the shares held by him/her are Ten only.
b.The 2nd Flaw is that while giving consent the member’s share-holding is stated as 5 shares although he holds ten shares.
c.The 3rd flaw is that without reading the terms and conditions of eligibility as notified by the Government an applicant declares that “ We hereby declare that we are eligible for membership of the society as provided under bye-law No. 18.” Although Note to Bye-Law No 18 specifies so the latest circular by the Government notifying conditions is not annexed to the Bye-Laws.
d.The 4th flaw is that the applicant is silent as to his holding the right, title and interest in the property of the Society which is a pre-condition for being an Associate Member.
4.Nominal members
i.Bye-Law No 20 / 26 read as under
a.A sub-lettee, a licensee, a care-taker, or occupant who is eligible to be a Nominal Member and who shall apply through Member for such Membership in the prescribed form applicable, along with entrance fee of Rs. 100/- may be admitted as Nominal Member by the Committee.
b.“A nominal Member shall have no rights such as Member.”
ii.Applicant has to use form at Appendix 11 claimed to be prescribed for Bye-laws Nos. 20 and 43(b).
The Flaws:
a.The 1st Flaw is that mentioning Bye-Law No 43(b) is misleading as it reads “
(b) “No permission of the Society is required to sublet the flat / shop. However the intimation needs to be given to the society 8 days before such subletting.” Where Bye-laws 20 is a mandate that ‘A sublettee, a licensee, a care-taker, or occupant ………… shall apply through Member for such Membership’
b.The 2nd Flaw is that the member undertakes to abide by bye laws with any modifications, the Registering Authority may make in them, when the Registrar has no authority to do so and if the Society amends them the nominal member does not undertake to abide by them.
c.The 3rd flaw is in the Nominal member giving an undertaking that “I/We hereby undertake that we shall be liable for the payment of all the outgoing of the society.’ but as per Bye-Laws member is liable to pay outgoings.
d.The 4th flaw is that approval to admission to nominal membership need not wait till the meeting of the managing committee is held. Rule No 19 (ii)provides that ‘subject to such resolution as the general body of members may in pursuance of the powers conferred on it in that behalf from time to time pass and in the case of nominal, or associate member, by an officer of the society authorised in that behalf by the committee; Bye-Laws fail to recognize this facility.