Please guide me –
1) Is there any *time barred suit* for the co-op society’s office to file a case under section 101 recovery on a defaulter member?
2) If there is a time barred of 3 years as I have read below article then after that What’s the other option for recovery?
Pls. Go through this article
https://accommodationtimes.com/societys-dues-not-recoverable-after-three-years/
I C Naik
Law of limitation & Recovery Certificate of Overdue Society Charges
In reply to this extremely important issue of housing society over dues I have answer it in rather a long story which I hope our readers will appreciate
Law of limitation & Recovery Certificate of Overdue Society Charges
Cooperator N Soni of New India Works Mumbai presumably, has asked an important question on time barring of Housing Society charges in arrears along with an URL https://accommodationtimes.com/societys-dues-not-recoverable-after-three-years/ containing views of an eminent Advocate Vinod Sampat as per the Judgment of the Bombay High Court (dated 7 October, 2003) in the case of Versova Gurudutt Co-Operative – vs Divisional Joint Registrar, [2004 (1) MhLj 1118] namely that:
“if the Society has not recovered the dues from the defaulting member for three years, then it will be difficult for the society to recover under section 101 of the Maharashtra Co-operative Societies Act, 1960.”
Mr. Soni wants to know if there was any other alternate mode of recovery of so called time barred overdue outstanding or is an all time loss to the Housing Society i.e.to all the members indirectly.
The members of the Management Committees render honorary service. Unintended lapses can take place more so in legal compliance. As per the bye-laws the Committee is duty bound to apportion the entire outgoings to all flats/members in specified manner and raise demands to be collected as the members’ contribution. In other words the Committee asks members to reimburse to the Society all the common expenses incurred for the members. All demands must be settled in a timely manner, alternatively interest at pre fixed rate is charged to the defaulting member. Large outstanding means the members who have already reimbursed their share have to contribute some extra funds towards the society expenses pending contribution by other members. Even such members’ property tax liability is born by the disciplined members. Housing societies are mutual benefit associations and the doctrine of mutuality of interest is applicable. The hon. Supreme Court of India in their judgment delivered on March 19, 2015 [(2015) 42 SCD 494 at paragraph 15 observes:
“The cooperative societies having been conferred a constitutional status by the Ninety Seventh amendment*, the whole concept of cooperatives has undergone a major change.”
[* 97CAA acronym of the Constitution (97th Amendment) Act 2011]
This observation has been further elaborated at Para 44 in these words:
“44. It may be seen that all these decisions dealt with the pre-Ninety Seventh Amendment status of the cooperative societies. The amendment providing constitutional status to the societies has brought out radical changes in the concept of cooperative societies. 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.”
At Para 48 the Apex Court exhorts the judiciary to ascertain what the law should be in terms of constitutional mandates and not what the law is:
“48. In the background of the constitutional mandate, the question is not what the statute does say but what the statute must say. If the Act or the Rules or the Bye-laws do not say what they should say in terms of the Constitution, it is the duty of the court to read the constitutional spirit and concept into the Acts.” …
Principles of Equality and equity:
“Principles of equality, equity and solidarity” referred to in the aforesaid judgment require the judiciary to identify and stop the burden of society expenses getting unjustly shifted to some other members because of operation of law of limitation. If at all it has to be borne by other than those actually liable to bear, it is the responsibility of the Management Committee to bear the brunt of their lapse of recovering the society charges in timely manner. Section 101 is a legal help to the Management Committee to recover members’ dues avoiding protracted proceedings in the cooperative court under Section 91(1). Recourse to provisions of Section 101 is well within the right of the Management Committee. At the same time it is inequitable that those members providing voluntary services are put to loss on account of some members’ willful default in performing their duty. If time barring was applied to forego the unpaid dues because the members did not pay in time, the dishonest members will be discouraged to pay dues in time and will also inspire others to fall in line. This is far from cooperative values the Constitution aspire. So the law must be taken to mean that the housing society dues are recoverable from the members as long as their names appear on the membership register of the Society.No members shall be allowed to vacate the membership as long as he owes any sum to the Society. It does mean that the High Court judgment in “Verso a Gardens CHS Ltd. (Supra) needs to be read down accordingly going by the March 2015 judgment of the Apex Court (supra).
Order under Section 101 and Law of limitation
Should the ratio of Verso a Gardens society judgment be further probed? First, let us understand the scheme of “Recovery Certificate” under Section 101. There is no denying that the Housing Society or a defaulting member can certainly raise a dispute in cooperative court under Sub-section 1 of Section 91 and as per Section 92(1) limitation period of six years run from the date of cessation of membership. The rationale seems to be the relationship between the former member and the Housing Society has now changed to that of a debtor and a creditor like ordinary trade relationship. If the dispute is raised before the cooperative court, after the end of the limitation period it is time barred and court may or may not entertain it. There is a gate way to the aforesaid time barring provision also. Sub-section 3 of Section 92 provides:
( 3) Notwithstanding anything contained in sub sections ( 1) and{ 2),8[the Co-operative Court] may admit a dispute after the expiry of the limitation period if the Applicant satisfied2[the Co-operative Court] that he had sufficient cause for not referring the dispute within such period and the dispute so admitted shall be a dispute which shall not be barred on the ground that the period of limitation had expired.
Scope of Section 101 is narrower than that of Section 91(1). For certificate under 101 an application is to be made in form U (Rule 86) along with fee of Rs 100 and other documents to be submitted as prescribed under Rule 86. Recovery officer attends to the process once he gets the recovery certificate issued by the Dy Registrar. Once certificate is issued the dues become recoverable as the arrears of land revenue and that is quite different from recovery of an ordinary trade dues.
Sub-section 2 OF Section 101 extracted below is extremely relevant to the contentious issue of time barring:
“Where the Registrar is satisfied that the concerned society has failed to take action under the foregoing sub-section in respect of any amount due as arrears, the Registrar may, of his own motion, after making such inquiries, as may be prescribed grant a certificate for the recovery of the amount stated therein to be due as arrears, and such a certificate shall be deemed to have been issued as if on an application made by the society concerned.”
This provision was made under Mah. Act 27 of 1969, vide s. 17(b).Going by the stories we heard of Dy. Registrar appointing administrators in the name of Authorized persons under Section 77A as amended post 97CAA it should be a matter of pleasant surprise to know how many housing societies benefited out of such gestures of the D Registrars as contemplated by the legislature under this Sub-section.
If one tries to go behind the facts of the dispute in the aforesaid Judgment he finds that the text of the judgment does not offer full story to afford a satisfactory understanding. For example it is not at all explainable as to how the appellate authority happened to examine the question if the law of limitation was applicable to the certificate of recovery issued by the Dy Registrar at the last stage of the recovery officer processing the recovery of outstanding as land revenue in arrears. Was it not akin to a contempt of Court or abuse of law by the Divisional Joint Registrar? It was not a dispute adjudicated by the Cooperative Court. Moreover Sub-section 3 of Section 101 categorically ruled out any such review in these words namely ;
“(3) A certificate granted by the Registrar under sub-section (1) or (2) shall be final and a conclusive proof of the arrears stated to be due therein, and the same shall be recoverable according to the law for the time being in force for the recovery of land revenue.
The order was final and not appealable in any court. Post 97CAA the MCS Act 1960 was amended and amendment Act Mah. 16 of 2013, vide s. 64(b) added an option of revision application to order of recovery certificate:
“A revision shall lie against such order or grant of certificate, in the manner laid down under section 154 and such certificate shall not be liable to be questioned in any Court .” ;
It is nowhere mentioned in the order of the Divisional Joint Registrar that it came up to him under revision. This was because the revision has been provided in 2013 and the matter was decided in 2003.
So it is hoped that N Soni has got the answer.