Maha – CHS poised to by-passing the Real Estate Market -2

By I C Naik

Part 1 (February 07, 2018) ended with an assurance to discuss “making and re-making of bye-laws of housing societies in Maharashtra”. In fact the topic of housing society Bye-laws is frequent visitor to COOPERATIVE COFFEE SHOP. Here we look at from a different angle – in the context of self-redevelopment. Yes, society bye-laws are to be made by its members and in that sense they can re-make them also. That’s the Cooperative Society Law. For those who reject this proposition or never thought so, here is a brief write up based on provisions of the M C S Act 1960.

A society, which has as its objects the promotion of the economic interests or general welfare of its members, or of the public, in accordance with co-operative principles can be registered as a cooperative society [Sec. 4] by at least ten persons, each of them being a member of a different family and who are competent to enter in to a contract [Sec.6].  For registration, an application is to be made to the Registering Authority and it should be accompanied by four copies of the proposed by-laws of the society.[ Sec. 8(1)]. Rule 4 lays down in detail as to how these ten persons should proceed with registration process. This Rule requires an application in Form A to be signed by these ten persons required therein. Rule 8 has two Sub-Rules. Sub-Rule 1 describes in items (a) to (z) matters concerning management of a society.  The Registering Authority may direct the Promoters of the proposed society to make bye-laws in respect of all or any of them. Sub-Rule 2 provides an illustrative list of matters on which bye-laws can be made as may be desired by the promoters of the proposed society. In getting the society registered most critical legal requirement is provided in Section 9 – Registration. Its sub-section 1 is extracted below:  

(1) If the Registrar is satisfied that a proposed society has complied with the provisions of this Act and the rules, or any other law for the time being in force, or policy directives issued by the State Government under section 4 and that its proposed by-laws are not contrary to this Act or to the rules, heshall, within two months, from the date of receipt of the application register the society and its by-laws.  to satisfy himself that the proposed by-laws are not contrary to this Act or to the rules.  Rule 9 appears to be giving a wrong impression about his power to approve the  bye-laws.  The Registering Authority is not supposed to undertake an objective evaluation of any of the requirements stated in the bye-laws for his personal satisfaction. If he does and gives any direction to change any proposed bye-law , it goes contrary to the law laid down by the Supreme Court of India  [In Karvanagar Sahakari Griha … on 3 May, 2000: JT 2000 (8) SC 68] ” In our view, what is in the interest of the society is primarily for the society alone to decide and it is not for an outside agency to say. Over past several decades the practice set in by Commissioner for Cooperation and Registrar of Cooperative Societies is to release a Model of bye-laws which he asks the Registering Authorities to force the builder (The Chief Promoter) for its submission as proposed bye-laws. The Builder as defined under bye-law No. 3(iii): ‘Chief Promoter’ means the person who is elected by the Promoters, in their first meeting, or in their subsequent meetings in case the post of the Chief Promoter lies vacant, till the first general meeting.  In most cases it’s a paper meeting held by the Chief Promoter and no bye-laws are shown to members  before proposing as their management code for rest of their cooperative living.

As we saw in Part 1 the emerging trend of Self redevelopment offers an opportunity of re-making the society’s bye-laws originally registered. After more than 5 decades of growth in number of housing societies, going forward the number of housing societies going for redevelopment should surpass the number of new housing societies. The existing housing societies can undertake activities the objects stated in their registered bye-laws permit. If any activity is to be undertaken, which the object (bye-law No. 5) does not permit, it is to be added to the existing objects by amending the registered bye-laws. A new object to be added is Redevelopment of the property, with or without the help of development agencies, except that no turn-key redevelopment agreement is to be assigned to a sole developer by what-ever name called, transferring additional FSI benefits to him. Better add an Explanation namely: As the society shall undertake self Redevelopment, no sale of flats in open market (except other than to the existing members,) the project need not be registered under the Real Estate (Regulation and Development) Act, 2016. The Redevelopment project seems to be quite close to the observations made by the Supreme Court of India in Zoroastrian’s case (supra) at Para 10 of the order  “In the suggestions for the promotion of a housing society the first essential is said to be that there should be a bond of common habits and common usage among the members which should strengthen their neighborly feelings, their loyal adherence to the will of the society expressed by the committee’s orders and their unselfish and harmonious working together. In India, this bond was most frequently found in a community or caste or groups like cultivators of a village.” A housing society going for Self- Redevelopment has a vast majority of members fulfilling having this bond of oneness. They are fully qualified and matured to undertake a good analysis of members’ habits likes and dislikes tastes and interests etc and can attain consensus on any change in the bye-laws they find it necessary.   

May be we are ready to embark upon remaking the bye-laws for a housing society poised to undertake self-redeployment, by passing the real estate players. May be after some time……