97th Constitutional Amendment - Injurious To Health of Housing Societies

The State Cabinet's decision to amend the Maharashtra Co-operative Societies Act, 1960 will affect the functioning of about 90,000 Co-operative Housing Societies in the State.

It is stated that the 97th Constitutional Amendment aims at bringing about uniformity across the Indian States/Union Territories and across all Cooperative Sectors in several matters of cooperative law in the wake of new directive principle to promote voluntary formation, autonomous functioning, democratic control and professional management of Co-operative Societies. The constitution and functioning of the Board/Committees of Cooperative Societies is an important aspect in Cooperative Society Law in that context.

The new Regulations will end the role of Government appointed Administrators in Non-Government aided Housing Societies. An Administrator is usually responsible for conducting Annual Election and other day-to-day working of Housing Societies in the absence of a Managing Committee.

The Amendment will end the role of Administrators, but no assurance from the Government that it will be able to curb malpractices prevailing in thousands of Housing Societies and atrocious behaviours of Members of Managing Committees towards their Members.

These Amendments to the Co-operative Societies Act shall curb the Registrar's powers. Members will now have to turn to In-House Committees to solve problems, or move Court to settle their disputes.

An Authorised Officer, appointed by the Ward Registrar, shall now be responsible to conduct elections once in five years or if the Managing Committee is dissolved before the tenure is over. The Managing Committee will prepare a list of active Members (who will be eligible for voting) and non-active Members (ineligible for voting). If a Member has not attended a Single General Body Meeting in five years, he will not be allowed to vote. They will also decide on voting rights given to defaulters.

The question here is that is it that easy for the Society to establish documentarily, the non-eligibility norms of voting rights against any Member of the Society?

Members who have not paid maintenance charges or other dues will be termed as defaulters and will not be allowed to vote.

The autonomy status includes the Co-operative Housing Societies to first try to recover dues from defaulting Members with the help of Section 101 of the Cooperative Act; else they can auction off the defaulter's home. Societies, however, don’t get a free run of things. If they initiate recovery proceedings, they will still have to take the help of a Recovery Officer of the State.

The Society will appoint an Auditor who will submit an Annual Report of various works undertaken in a year like repairing, water issues, common problems, total expenditure, etc to the Society Members who will then submit it to the Ward Registrar. The Audit has to be done before September 30 of every year.

Societies will have to maintain an Annual Register of active Members. An Auditor (Chartered Accountant/Certified Auditor/Government Auditor) will have to be from a Government-Approved Panel during a General Body Meeting. It will be the Auditor's responsibility to submit Special Reports pertaining to financial losses and misconduct to the Members and the Registrar respectively.

The Annual General Body Meeting has to be conducted by September 30 with no further extensions, or the guilty parties will be disqualified from being on the Managing Committee for five years. If the Annual Report is not filed on time, a penalty will be. Here again, the quantum of penalty is nonfigurative.

A Separate Team of Dispute Redressal Committee to address Members' issues will be formed. However, it is not clear as to what shall be the criterions to appoint such Team? The Managing Committees with vested interests may take advantage of this amendment.

With the enactment of new regulations, the Managing Committee of a Housing Society will be responsible for all activities and it is feared that the Managing Committee can further misuse the power in the absence as they have been.

For instance, if the Managing Committee refuses to give a No-Objection Certificate to a Member to sell a flat, the Member can complain to the Dispute Redressal Committee and if the issue still doesn't get resolved then the Member will have to go to Court. Members can get the Managing Committee dissolved only when they have a majority.

Housing Societies will have to bear the expenses of the Election. Appointing an Authorised Officer, who is not a Member of the Society, is as problematic as having a Government-Appointed Administrator. Registrars will have limited power to control the functioning of the Society, due to which, the Managing Committee shall now turn more heroic towards their Members.

The aggrieved Members will have to go to Court even for small disputes with the Managing Committee to take years for a dispute to resolve.