Week after week, we receive a steady stream of questions from cooperative housing society (CHS/the Society) members who are grappling with the complexities of society management—be it redevelopment, maintenance charges, or annual general meetings. While the Maharashtra Cooperative Societies Act and its model bye-laws lay down clear procedures, confusion often arises when managing committees take shortcuts or fail to communicate essential information transparently.
This week’s questions reflect just a few of the many issues that emerge when procedures are not followed as prescribed, whether it is the appointment of professionals during redevelopment, circulating financials ahead of an annual general meeting (AGM), or calculating interest on overdue charges. As always, it is essential for members and managing committees to know what the law says—and to follow it in both letter and spirit.
Appointment of Project Manager for Redevelopment
Question: I live in the island city of Mumbai. Under existing laws, when a Society is considering redevelopment, does the appointment of a legal firm, tax advisory firm and architect require general body (GB) approval, or can the managing committee make these appointments? Section 79A clearly states that the project management consultant (PMC) has to be appointed by the GB. Please guide.
Answer: Any decision regarding the redevelopment of a CHS building must be passed by a resolution, with the approval of at least 51% of the total members of the Society. The meeting must be attended by a minimum of 75% of the members.
For example, if your Society has 100 members, then 75 members must attend the GB meeting convened for redevelopment and at least 51 members must approve the appointment of the PMC.
This PMC group should include:
- An experienced lawyer who has handled legal paperwork for CHS redevelopment
- A chartered accountant (CA) who has managed accounting for redevelopment projects, including maintaining an escrow bank account and
- An architect who works in association with a structural engineer to oversee the new building’s construction and RCC framework.
Your understanding that the PMC must be appointed by the GB under Section 79A of the MCS Act is absolutely correct.
Audited Financial Statements along with AGM Notice
Question: When an AGM notice is sent two weeks before the meeting, is it mandatory to share the audited financials along with the notice? Is the AGM notice invalid if the audited financials are not sent along with the notice?
Answer: Your question contains the answer which I am reiterating here. When an AGM notice is sent two weeks before the meeting, it is mandatory to share the audited financial statements along with the notice.
Your Society’s AGM notice is invalid, if the audited financial statements are not enclosed with the meeting notice. In this regard, you should make a complaint to the deputy registrar of cooperative societies (DRCS), requesting that the AGM be conducted by appointing an authorised officer.
Interest Charged on Overdue Maintenance Charges
Question: A person has paid the Society dues of Rs4 lakh, including most of the 18% interest charged. However, a small portion of the interest remains unpaid. Can the society charge 18% interest on this remaining interest amount?
Answer: No, the Society cannot charge interest on interest. As per cooperative society norms, the interest charged (maximum 21%, usually 18%) must be simple interest and not compound interest.
Therefore, once the principal dues and most of the interest have been paid, no further interest can be levied on the small balance of unpaid interest. The interest is meant to be applied only on the principal amount, not on previously accrued interest.
NOTE
We will not be answering queries posted in the comments. Only questions sent through the Moneylife Foundation's Legal Helpline will be answered. If you want to seek guidance or ask questions to Mr Shanbhag, kindly send it through Moneylife Foundation's Free Legal Helpline. Here is the link: https://www.moneylife.in/lrc.html#ask-question
Disclaimer: The guidance provided in these columns and on our Legal Helpline is on the sole basis of the facts provided by the reader/questioner and does not amount to formal legal advice in any form whatsoever.
(Shirish Shanbhag has an MSc in Organic Chemistry, Diploma in Higher Education, and a Diploma in French and has completed his LL.B. in first class in 2021. Before his retirement, he was a junior college teacher at Patkar College from July 1980 to May 2012, teaching theoretical and practical chemistry. Post-retirement in 2012, he started providing guidance and counselling to people on several issues, specifically focusing on cooperative housing society-related matters. He has over 30 years of hands-on experience in all matters about housing societies and can provide out-of-box solutions for any practical issue.)
