It is no secret that corruption runs rampant where power is centralised. In the case of cooperative housing societies (CHS'), certain dishonest members or office-bearers sometimes embezzle funds for personal use, or they may abuse their position and power to favour some members of the Society.
Unfortunately, incidents such as misappropriating the Society's funds and showing falsified statements, charging members with unnecessary bills, writing off pending dues from favoured members, embezzling funds from repair funds, and bribing officials for fraudulent expenses are common. In many cases, the managing committee charge illegal non-occupancy charges from unsuspecting residents even when a close relative occupies the apartment or the flat is not given on rent.
Fighting against such corruption may seem daunting, but there is a simple solution that concerned residents and members can follow. This week, I will address one such problem where the chairman of a housing society abuses his power to hide financial statements and exploits his position to coerce others into following his orders. I will also clarify the difference between a repair and sinking fund in the periodic maintenance bills and the illegality of selling a portion of the common area in a housing society.
Abuse of Power by the Chairman in Housing Society
Question: The chairman of our Society does not disclose accounts related to or any Society matter to committee members, particularly to those who disagree with his view. He always says that office-bearers have the power to make any decision and continue to exploit his position to do things in his manner. Our secretary is also of no use and he acts only as a rubber stamp for the chairman's wishes. Please advise on how we can resolve this.
Answer: Please make a complaint to the deputy registrar of cooperative societies (DtyRCS) of your area, against the irregular work that the managing committee has done in your Society. You may make this complaint under bye-law no. 174(A)(xxii).
Accordingly, the deputy registrar will call a hearing in his office, together with you and the office bearers of your Society present, to redress your grievances. If things do not improve even after this hearing, you may make another complaint to the deputy registrar, who will appoint an authorised officer (administrator) to your Society. This officer will take charge from the present managing committee and will set irregularities of your Society in its proper place. He will also call for an election in the Society.
Repair and Sinking Fund Charges in Maintenance Bill
Question: Our Society is collecting charges in the maintenance bill, at 0.75% under the header of repair and maintenance charges. Apart from this, they are also collecting charges under the titles of annual maintenance, administrative charges, electricity charges, electricity components charges, garden maintenance charges, sanitary cleaning charges, plumber charges, housekeeping charges, security charges, water tank cleaning charges and other similar charges. Can you please clarify whether all of these charges are already a part of the repair and maintenance charges?
Answer: Under Bye-law No. 67(a)(iii), 0.75% of the construction cost of your flat are to be collected as expenses on repairs and maintenance of the building of the Society.
Under Bye-law No. 67(a)(v) 0.25% of the construction cost of your flat, is to be considered as part of the sinking fund.
As these two charges depend on the area of the flat, they will vary between each flat. These two charges are also kept in fixed deposits in a Bank in the Society's name. They are only to be used with the permission obtained in a general body meeting and from the deputy registrar for repair work of your building.
All other charges stated by you are under bye-law nos. 66 and 68 are equally levied to all the flats, irrespective of the area of the flat.
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
Selling Common Area in a Housing Society
Question: My Society has completed the deemed conveyance process. The developer's daughter, who stays in the same Society, now wants to sell some portion of the common area in the building. I wanted to understand whether this is legal and, if not, what action we can take as members of the Society.
Answer: A common area of a CHS cannot be sold, either by the builder or by the Society. Your Society can make a civil suit in the cooperative court under bye-law no. 174(B)(x), against the developer's daughter for illegally attempting to sell the common area of the Society.
You have to hire an experienced advocate who has taken up such cases in cooperative court and then argue the case for your Society in the court.
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, a 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.)
