By I C Naik
We saw that the 29th October MAHA CHS Ordinance has virtually reverted the responsibility of elections to committees of smaller housing societies back to the general body meetings; may be an initiative towards democratization or a myth! Simultaneously a few provisions introduced by the Ordinance, we are going to look at soon, seem to suggest very strong apprehensions about the autonomous and democratic functioning of housing societies just as the case with the country’s democracy itself.
Given the choice Indian bureaucracy would not be happy with autonomous and democratic functioning. This is in defiance of the National Policy on Cooperatives under which the India has expressly desired that the role of cooperative regulatory authorities be limited to a few matters like timely elections, audit and measures to take care of interest of members and other stake holders in cooperatives. In its landmark judgment of March 19, 2015 in Vipulbhai M. Chaudhary Versus Gujarat’s Amul Dairy case [(2015) 42 SCD 494] the Supreme Court of India clearly exhorted that “Such societies are to be registered only if they are founded on cooperative principles of democracy, equality, equity and solidarity.” As per the Hon. Apex Court pursuant to the Constitutional (97th Amendment) Act 2011, [in short 97CAA] ” Democratic functioning and autonomy have now become the core constitutional values of a cooperative society.”
Prima facie the most redeeming feature of the amendments is a separate Chapter III Cooperative Housing Societies containing sections 154B, 154-B1 to 154B-31. This creates an illusion that delays in housing society management from Government side will be significantly cut down. Let’s have an over view of the provisions of the Ordinance.
Sub-section (1) and (2) of new Section 154B contains two lists of Sections in the MCS Act 1960. One list I of numbers of sections which shall continue to apply to housing societies also mutatis mutandis (i. e. “matters or things are generally the same, but to be altered, when necessary, as to names, offices, and the like” per Wikipedia). The second list notes the numbers of sections which shall not apply to cooperative housing societies.
Three provisions of this ordinance needs to be carefully noted as they are more like administrative escape gates for the State’s Cooperative Department and can cause inconvenience to housing management of societies.
- Section 154B-31 of this exclusive Chapter III: Cooperative Housing Societies in the MCS Act 1960 has two Sub-sections as extracted below, namely;
” (1) The rules, orders, by-laws, circulars or instruments having the force of law and existing on the date of commencement of the Ordinance (29-0-2018) which are applicable to the societies governed by this Chapter on that date shall until expressly repealed, modified or amended, continue to apply to the said societies.
(2) provides that ”every proceedings by or against the society and pending before any Court, tribunal or authority on the said date of commencement shall be continued and decided as if the provisions of this Chapter are not made applicable in respect of such societies.”.
These provisions are bound to prove highly confusing to housing societies and a source of intense disputes inter se the members and qua the directions from the State Government Authorities. Remedy may turn out to be verse than the disease.
Certain areas of housing society regulations are noteworthy under some of the Sections namely Sec.154B-2 to Sec. 154B30 to the State Government Departments most of which continue to be headed by the same overburdened authority the Commissioner for Cooperation and Registrar of Cooperative Societies [CCRCS]. Decision making on these matters is now entrusted to this regime. Following tabulation proves the point. This move is diametrically opposite to the constitutional imperative to allow the Cooperative Housing Societies to function with autonomy and democratic member control. The direction of the Apex Court [in Chairman Vipul Chaudhary’s dismissal case] namely has also been overturned: “Democratic functioning and autonomy have now become the core constitutional values of a cooperative society.
Such societies are to be registered only if they are founded on cooperative principles of democracy, equality, equity and solidarity.” The cooperatives must be permitted to function in a democratic manner. Apparent contradiction is that the legislature has already recognized the message of the Apex Court in inserting the disabling proviso to Section 78A which empowers the Registrar to supersede elected committees and appoint administrator in Cooperative Housing Societies under certain situations.
Let’s turn to specific retrograde provisions.
- Section154B-15& 16 – Every society shall create such funds as may be prescribed by the Stat Government plus such other funds as it may, from time to time, decide. Every society shall levy the charges as prescribed towards such funds.
Decision as to how much amounts the members should contribute to these funds is to be prescribed by the State. In what way the State administration is the best decision maker of such vital important matter of the life of private citizens? How it becomes a matter of public interest? Why not members themselves take financial decision themselves?
- Section154B-17 is a mandate to housing societies to invest its funds in specified avenues. The income from investments is liable to income tax which is the responsibility of the Housing Society.
- Investments are subject to market risks. Investments in banks are protected under insurance to a limited extent of Rs 1 lac per person: individual and body corporate. Why the State should have the power to enforce decisions to invest money in risky avenues when the loss is wholly of the investor? It is not a matter of public interest. Extent of the risks to deposits placed in the cooperative banks is not a secret. This is interference in to critical areas of life of citizens and cannot be allowed. It has to be the decision of the members of housing society arrived in a democratic manner. If the members’ desire that such decisions must be of a super majority of members they can pass resolutions to that effect requiring super majority of members in making investment decisions.
- Section 154B-19 is about the Strength of the managing Committee. It empowers the State Government to decide the exact number of membership of the managing committee in every housing society by notification or special order, from time to time. Formula of deciding the full strength of Council Ministers of Union and is fixed under law and not by bureaucratic notifications. Why the law cannot decide this number by fixing a formula under a statuette on the same lines?
- Under Section 154B-20 3 seats on the Committee of every Housing Society is reserved in contradiction to only 1 cast based reservation under second Proviso to Article 243ZJ. How the State can direct 3 reserved seats in every Housing Society?
- Section 154B-25 provides that Management of Housing Society, Housing Complex, Housing Association or Housing Federation shall be carried out in the manner as may be prescribed. This means all these autonomous organizations which are constitutionally expected to be managed by adhering democratic principles with members’ democratic control are to be managed as per bureaucratic rules fixed by making Rules. Is this not a clear contempt of the Supreme Court directive extracted earlier?
The field is open for the activists in cooperative movement to take on the State Polity and Bureaucracy may with the help of Courts.