I have been an avid reader of your website and an active and responsible member of our society (not only of housing society alone) and have lots of issues concerning autocratic, illegal and unfair practices prevailing in our Housing Societies.I have one question for which I want your valuable opinion. I will also narrate the background under which I am requesting your good-self to help me with your reply.
My Question is:
Are there any Laws, Bye-Laws, Section, Sub-Section, or guideline or precedent or any citation which restricts The Managing Committee of the Housing Society to use Society’s Funds to defend the suits filed against all members of Managing Committee?
I must also write the backdrop of my specific issue which is as under:
2 ladies have filed an appeal against Society, Managing Committee Members, Auditors, Deputy District Registrar and The PMC of the society who has been appointed to help the society in conducting the redevelopment procedures. Redevelopment process is in its early stage. The final status is: The society has yet not selected THE FINAL Builder. Before that we have raised few pertinent questions which the society failed to reply and out of their failure, more doubts were raised against the wrong-doings of the MC members and when we started demanding all papers, true colors of defiance shown to us and we were told to do whatever we can but they will not give us the documents. So we approached DDR- Bandra and filed a Complaint (280 pages Complaint) after having written so many letters to DDR. On finding the fact that DDR also is not interested in helping us, we filed an APPEAL in Co-operative Court.
Its a 46 member Society.
Two lady members have filed an Appeal in Cooperative Court with following major Prayers:
1) To order The society to strictly follow Section 79 (A) and the directives issued on 03.01.2009 for its redevelopement process
2) To order The Society to give photocopies of all The documents pertaining to Redevelopment which The Society through the arrogance of The Secretary and other MC Members is not giving to the disputants
3) To Order the society to start the entire process of Redevelopment De-Novo
4) To restrict one of the members of the society to be an architect of the PMC whom this member only selected as PMC because this member is Chairman of Redevelopment Committee.(under Bye-law 116)
5) To Restrict above member under Bye-law 116 to not to prepare Architectural Drawing preposterous and incorporate these drawings into the Tender
6) To restrict MC members not to use the Society Funds to fight the litigation and instead use their own funds to do so
I want your assistance and advise on The SIXTH PRAYER, I am looking for any Section, Sub-Section or bye-law or any citation or any precedent which I can submit in the court so as to get confirmation from our side before we write any such thing to the court as regards to prayer number 6
I will be indeed obliged to get your views. It will indeed help these two ladies who are fighting a lone battle to fight the Injustice and for their rights.
I C Naik
As per Section 73 of the MCS Act 1960 the Managing Committee is vested with such powers and perform such duties as may be conferred or imposed respectively by the Act, the rules and the by-laws. Bye-Laws also contain similar provision. For example Bye-Law No 112 (Model 2014) reads ; Subject to the direction given or regulation made by a Meeting of The General Body of the Society, the Committee shall exercise all powers, expressly conferred on it and discharge all functions entrusted to it under the bye-law No. 138.
Bye-Law No 138 contains a list functions and responsibilities but as far as the powers are concerned the Managing Committee can exercise all powers, expressly conferred on it.
The society can sue and can be sued also. Where the society is sued / faces a complaint in the Cooperative Court , the Managing Committee does not have an express power to defend the society against such suit or complaint. The Managing Committee has to get power and budget approval to defend the society. If the Managing Committee is not empowered and still in defending the society incurs legal costs that can not be charged to the society funds as finally such charge falls on members, who have not approved it.
Here comes provisions of Section 731(AB) in to play :
“(1AB) The members of the committee shall be jointly and severally responsible for all the decisions taken by the committee during its term relating to the business of the society. The members of the committee shall be jointly and severally responsible for all the acts and omissions detrimental to the interest of the society.”
Bye-Law No 137 also says the same thing.
In a dispute filed by two lady members in the Cooperative Court, it is a matter of enquiry if the general body meeting empowered the Managing Committee to defend the society and spend society funds therefor. The general body meeting could give directions to the Managing Committee to resolve the dispute by an out of Court settlement and avoid wasteful expenditure.
Suppose in your case the Managing Committee is prima- facie at fault as they are defending their action / omissions and not of the society, then for fixing responsibility of the Managing Committee members severally and jointly following proviso needs to be invoked:
“Provided that, before fixing any responsibility mentioned above, the Registrar shall inspect the records of the society and decide as to whether the losses incurred by the society are on account of acts or omissions on the part of the members of the committee or on account of any natural calamities, accident or any circumstances beyond the control of such members”
Based on facts write concurrently to the Dy. Registrar of cooperative societies to fix the responsibility of the Managing Committee members severally and jointly as provided under Proviso to Section 73(1AB) in respect of a dispute petition No.xxx dated …
Write one more letter addressed to The Commissioner & Registrar, Cooperative Housing Societies (Maharashtra State), Central Building, Station Road, Pune-411 001. Tel: 020-2612 2500, 020-2612 2739 with a request to direct Dy Registrar to attend to 280 pages Complaint pending before him.