Harsh Malhotra
1) I am based in Mumbai and member of a society in Mumbai having Regn. No. MUM/MHADB/W-HE/TC/11322/2001-2002 dt.07.08.2001. This society was split from a larger society and was granted separate registration in 2001
2) I purchased a flat in late 2016 in this society after redevelopment from an existing/old member after it received OC. Society approved my membership in early 2017.
3) The society has been in existence for almost 40 years hence has accumulated balance in the General Reserve Fund for period till society went for redevelopment. In 2017 AGM decided to use this fund for setting off society’s monthly maintenance bills of original members only.
4) I am being denied this benefit on the ground that it belongs to original members and as a new member I am not entitled to that benefit. First, I argued that under my agreement with seller I have paid consideration for flat, corpus fund, car parking and all benefits attached to the purchased flat hence I should also be given benefit. This was not accepted by society.
5) In the alternative, I suggested to society to pay it to original member, the Seller, and under my agreement I will collect it from him. Society rejected this also on the ground that they cannot pay it in cash as it may involve tax and other legal issues.
6) In view of unreasonable attitude of MC, especially Secretary, neither I am getting that benefit nor seller. It appears that MC wants to appropriate my as well as similar other persons’ share and distribute it among remaining original members.
7) My queries are as:
- a) Can society use Reserve Fund to set off maintenance bill of only original members?
- b) If so, whether Society can selectively deny me / seller this benefit and would it not amount to cheating me?
- c) Would it not amount to criminal breach of trust as MC is depriving me my legitimate entitlement but also ensuring that other members get benefit of my share and enrich unjustly?
- d) What would be best and expeditious forum to get this redressed – Deputy Registrar or Consumer Courts?
I eagerly look forward to your reply.
I C Naik
Answer to
7(a) ) THE SOCIETY cannot use the Reserve Fund to set off maintenance bills of members.
Utilization of RESERVE FUND is regulated by the M C R 1961.
“Rule 54 (3) provides: “In the case of a society constituted with the object of co-operative housing on a co-partnership basis, the reserve fund may be utilized for expenditure on the maintenance, repair, and renewal of buildings of society.”
Moreover Section 64 of the M C S Act 1960 is very clear on distribution of funds:
“No part of the funds, other than the dividend equalization or bonus equalization funds as may be prescribed or the net profits of a society, shall be paid by way of bonus or dividend, or otherwise distributed among its members”
The decision to allow reserves to be adjusted to Maintenance Bills is in breach of Act and Rules and must be revoked. You can inform the Dy Registrar to initiate proceedings against the society or the Committee as the case may be.
Sometimes Dy Registrar seats on such matters. So file a complaint to the District Consumer Court against discrimination with in members which is a deficiency in service. Such arrangement is illegal will on its own come up and the society will be ordered to reverse the decision and call back the reserve fund distributed to members.
