Rules for co-operative housing societies have been in existence for some years now, but there is a serious lack of knowledge and understanding of these important guidelines even today. Mr Vimal Punmiya, a leading property expert, explained some of these issues at a well-attended seminar hosted by the Moneylife Foundation recently
Vimal Punmiya, one of the leading property experts in the country, has underlined the importance of co-operative housing societies operating by the rules to safeguard the interests of resident members and the smooth functioning of day-to-day affairs.
Mr Punmiya was addressing a seminar on co-operative society rules at a well-attended seminar hosted by the Moneylife Foundation recently. "In this state, the Maharashtra Co-operative Societies Act (1960) is the guiding legislation which covers co-operative housing societies (CHS) too. Model bye-laws were introduced for housing societies by the state government, in 1984, to facilitate functioning. These rules were improved through the new model bye-laws published in 2001," he explained.
Mr Punmiya pointed out that co-operative housing societies can amend the bye-laws according to their requirements, and as per the procedure laid down for such changes, but these must be in line with the common interest of the members and have to be ratified by the registrar of co-operative societies. While older societies can continue to follow the old model bye-laws, new societies are expected to adopt and follow the new model bye-laws.
Mr Punmiya also shared information with examples from his extensive experience of over three decades on matters such as stamp duty charges, registration procedures, income-tax and accounting practices, as well as wills, nominations and transmission.
"In the co-operative housing society system the ownership of the building rests with the society and all members hold a certain share in it. The residents are superior to tenants, but inferior to a landlord as the society is the owner and not the individual," he explained.
NoC for flat re-sale
Giving an example of a change in the bye-laws, Mr Punmiya said that previously, a flat owner was required to apply for a no-objection letter from the society to sell his property. However, under the new bye-laws, the owner is free to sell the flat to anybody without requiring the society's permission. This is one reason why several societies had chosen not to shift to the new bye-laws, he pointed out.
Owner and associates
Another example is that of ownership. Under the previous rules, the person whose name appears on the share certificate of the society is considered the deemed owner, whereas the others whose names are also listed are termed 'associates'. There is a dichotomy here. For income-tax purposes, all persons whose names appear on the share certificate of a co-operative housing society are deemed to be the owners of the property, Mr Punmiya said. But the new laws recognise joint ownership.
In Maharashtra, a daughter is considered a part of the family even after her marriage. But for the purpose of taxes, a married daughter is not included in the father's family. Under the new rules, if a flat is given to the daughter after her marriage, or if she stays in the flat after marriage, she is still using the property as a member of the family and, therefore, the society cannot charge non-occupancy charges.
One other example of a change in the rules is nomination. In the old bye-laws, a flat owner could file a nomination form before death, whereas a legal heir could apply whenever he/she wants. But under the new bye-laws, the legal heirs must apply for nomination within six months, failing which the society has the right to refuse registration of the nomination. In such cases, the legal heirs can approach the registrar, who has the power to accept it, Mr Punmiya said.
Regular upkeep and maintenance of the building and premises is yet another important matter.
According to the rules, any building that is about 15-30 years old must conduct a structural audit at least once in five years. Older buildings should be surveyed at least once in three years.
There are rules also on the limit of expenditure that a secretary of a society is allowed. Previously, the principal managing committee member was allowed to spend Rs300 at a time, for daily expenses, without having to seek sanction. That amount has been hiked to Rs1,500 for a society with up to 20 members, Rs2,500 for a society of 20-50 members and Rs4,500 for a society with more than 50 members.
According to the new model bye-laws, in the event that a member/s of the managing committee, or the committee itself, resigns, the member/committee will continue to fulfil the responsibilities till a new member/committee is appointed.
In the case of charges levied at the time of transfer of a flat, Mr Punmiya said that under the Maharashtra Co-operative Societies Act a housing society can levy a fee of up to Rs25,000 or 2.5% of the agreement value, whichever is lower.
The Bombay High Court has ruled that under the concept of 'mutuality', the money that a society receives from a member is not taxable. However, receipts collected from non-members are taxable. So any revenue generated by a society from sources other than its members is liable for income-tax, Mr Punmiya explained.
Member not traceable
If a member is not traceable for a period of over seven years and has not paid the maintenance charges, the society can approach the registrar and initiate the process to take possession of the vacant flat. Previously, the society had to file a civil suit in such a matter. Similarly, if the flat owner passes away and no legal heirs come forward to claim the property, the society can take over such property.
Stories of market manipulation
Valuemart Info Technologies (Rs19)
The Indian market is poised for a green opening on the back of supportive global cues. The US markets ended with modest gains on Friday despite the rate hike announced by the Chinese government after the close of the last trading day of the week in the region. The Asian pack was mostly higher in morning trade today but global economic concerns still remain. The SGX Nifty was 55 points higher at 5,930 compared to its previous close of 5,875.
Global cues and institutional outflows were responsible for the Indian market ending lower for the second week in a row. The 2G spectrum allocation scandal, which has rocked the government, was responsible for the sharp plunge on Friday. While monthly inflation data for September perked up the market on Monday, the Chinese government's announcement of a rate hike spooked markets across Asia - India included - on Friday. The market closed 3% lower on a weekly basis with the Sensex tumbling 571.45 points and the Nifty down 181.35 points.
The US markets closed with modest gains on Friday, brushing off concerns relating to the Chinese government’s rate hike. Besides, Federal Reserve chairman Ben Bernanke defended the recent stimulus package in a speech on Friday after severe criticism that the move would devalue the dollar and give American companies an advantage in global trade.
The Dow Jones industrial average rose 22.32 points (0.20%) to 11,203. The S&P 500 added 3.04 points (0.25%) to 1,199. The Nasdaq gained 3.72 points (0.1%) to 2,518.
Markets in Asia were mostly higher in early trade today but global economic concerns still linger. The Chinese central bank on Friday raised the deposit reserve ratio for the fifth time this year and the latest hike is the second one in November. The People's Bank of China said the deposit reserve ratio has been further hiked by 50 basis points effective 29th November. The easing of the debt crisis in Ireland supported the gains this morning.
The Shanghai Composite was up 0.07%, the Jakarta Composite rose 0.05%, the KLSE Composite added 0.08%, the Nikkei 225 surged 1.01%, the Seoul Composite gained 0.24% and the Taiwan Weighted climbed 0.50%. On the other hand, the Hang Seng declined 0.41% and the Straits Times fell 0.28% in early trade. The SGX Nifty was 55 points higher at 5,930 compared to its previous close of 5,875.
Faced with a liquidity crunch, microfinance companies have urged the Reserve Bank of India (RBI) to direct banks to set up an emergency fund of Rs1,000 crore to help them tide over slowdown in their business.
The micro finance sector has been reeling under a liquidity crisis after the Andhra Pradesh government issued an ordinance to control interest rates charged by micro finance institutions (MFIs) and also to check the coercive recovery tactics adopted by these firms.
From time to time, RBI had helped various sectors to deal with the money shortage. At the time of global financial crisis, the central bank had announced special liquidity injection measures for the mutual fund industry when it was facing a cash shortage.