Query of Sachin D Mahajan

Posted in Cooperative Queries on April 05, 2017 by Mr. I C Naik

https://www.indiancooperative.com/cooperative-queries/query-of-sachin-d-mahajan/

After going through the two posts you might say that your society’s case is not falling in either. This is because:

You think, the Annual General Meeting of a co-operative housing society has no power to sanction society funds to spend on celebrations of Ganapati Festivals, Navratri Festival, Janmashtami Festival,Christmas & Holi Festival essentially because not all members are interested in them and all may not believe in all religious occasions.
On the back of your mind you have a question as to which object is being attained in Annual General Meeting sanctioning proposed celebrations and use funds of the housing society. Your society’s objects as per registered bye-laws are as under:

a) To obtain conveyance, of the right, title and interest,
b) To manage, maintain and administer the property of the Society;
c) To raise funds for achieving the objects of the Society;
d) To undertake and provide for, on its own account or jointly with a cooperative or Other InstitutionSocial, Cultural or Recreational activities;
e) To provide Co-operative Education and Training to develop co-operative skills of its Members, Committee Members, Officers and Employees of the Society.
f) To do all things, necessary or expedient for the attainment of the objects of the Society, specified in these bye-laws.
You also want to know what is the remedy available to members who want these programs by voluntary contribution that is not by using common funds of the society build up by collecting contributions from members as per bye-law No. 67(a) or from a Reserve Fund?

For finding logical and convincing answers to these questions, it is necessary to understand, the scheme of financials of housing societies, envisaged in the registered bye-laws. The financial scheme is to be gathered out of relevant bye-laws in three groups namely A,B and C.

Group A : Funds of the society under different bye-laws

Different modes of raising the funds of the society
Share capital of the Society
(i) How the Reserve Fund shall be constituted

(ii) Appropriation of the amounts to the reserve Fund of the Society

Other Funds to be created by the Society

(a) Creation of the repairs and maintenance fund by the Society

(b) Creation of Major Fund by the Society

(a) Utilisation of the Reserve Fund

(b) Utilisation of the Repairs and Maintenance Fund

(d) Utilisation of the Corpus Fund

(e) Payment of remuneration to a member for services rendered by him to the Society.

(f) Utilization of Major Repair fund

Group B : Contribution of members to the Funds and Society Maintenance expenses

67 Composition of the charges of the society

Breakup of Service Charges of the Society

69 (a) Sharing of the Society’s charges by the members

(b) Committee to fix Society’s charges in respect of every flat

Payment of the Society’s charges.
Review of cases of defaults in payment of the charges of the Society.
Interest on the default charges.

Group C: Appropriation of Profits

[ Per Explanation II to Section 75(2)— In the case of a society not carrying on business for profit, xxx references to xxx “profit” or “loss” in this Act, shall be construed in relation to such society as references respectively to the “excess of income over expenditure”, and “excess of expenditure over income.”;

(a) Contribution to the Statutory Reserve Fund of the Society

(b) Distribution of the remaining profit of the Society.

The Resolution proposed to your Annual General Meeting on 14 9 2017 seeking members’ approval to Celebrating Specified Auspicious occasions and to the budget of Rs 2,25,000. It must be appreciated that the Committee has not taken this decision on its own because it is conscious of the fact that its powers listed under Article 138 do not include celebrations as proposed and in that it needs Annual General Meeting to approve budget also if it is decided to go for celebrations.

I however find the proposal incomplete as the Committee has not recommended the source of Rs 2,25,000 for example Reserve Fund or any other Fund of the society with a rationale that such utilization is within the objects of the society. Member who deliberate proposals with due diligence and bringing out is rationality to convince the majority of members should find it very difficult to muster support of the majority. The Proposal is bad on account of its “incompleteness” the absentee members had not got any Notice of use of funds.

If it is passed in Annual General Meeting you can take actions as per bye-law No. 172-173.

Member/Members shall submit their complaint application to any of the Office bearers of the Society, in writing, giving thereby the details of the complaint.
After receipt of such, complaint application, the committee shall take decision thereof, in the immediate next Managing Committee meeting. Such decision shall be communicated to the concerned Member, within 15 days thereafter.
If the Member/Members are not satisfied by the decision of the Committee, or does not receive any communication from the committeewithin 15 days, the complainant Member may approach below mentioned Competent Authority.
CO-OPERATIVE COURT

Disputes between the Members and/or the Members and Society, which falls under Section 91 of the MCS Act 1960 such as:-

Disputes pertaining to:-

Resolutions of the Managing Committee and General Body.

Prognosis

You should seek clarification/affirmation of the Chairman/the Hon. Secretary / the Committee if the activity to Celebrate these occasions recognized as “auspicious” by certain section of members [ and not all ] are covered by the object No 5(d) namely

“To undertake and provide for, on its own account or jointly with a co-operative institution, social, cultural or recreational activities;”

If the answer is yes, then the question is as to why no welfare fund has been set up as specified in bye-law No. 149 (b) (iii) i.e.” Io allocate to a common welfare fund, such part of the profit, as the annual meeting of the general body may determine, to be utilized in furtherance of the objects specified in the bye-law No. 5(d).

If the answer is NO then from which fund 2,25,000 should be withdrawn?

The utilization various funds of the society is specified in respective bye-laws.

In other words this amount cannot be spent except by fragrant violation of bye-laws.