FAQs on Redevelopment of Housing Societies in Maharashtra

FAQs on Redevelopment of Housing Societies in Maharashtra

Q1: Why is redevelopment important in cities like Mumbai?
SRELJ: Redevelopment is vital because old buildings have a shelf-life and become unsafe or difficult to maintain after a point. In fully developed city centers like Mumbai, redevelopment is also the only way to generate new housing supply.

Q2: When should society members vacate their flats for redevelopment?
SRELJ: Members should vacate only after the developer has obtained the Intimation of Disapproval (IOD) approvals. This ensures clarity in timelines and reduces the financial burden of rentals on the developer.

Q3: What should be checked regarding handover timelines?
SRELJ: The agreement must clearly define handover timelines with a specific date for project completion. This helps protect members from unnecessary delays.

Q4: What reimbursement should society members expect during redevelopment?
SRELJ: Members are entitled to monthly rental payments equivalent to prevailing rents in the locality, along with reimbursement for packers and movers and basic interior changes in temporary rented homes.

Q5: Why is a rental escalation clause important?
SRELJ: Since rentals typically increase by 10% every year in Mumbai, the redevelopment agreement should clearly state escalation terms to protect members from financial stress during prolonged redevelopment.

Q6: Will maintenance charges increase after redevelopment?
SRELJ: Yes, maintenance charges usually rise due to additional amenities such as gyms, swimming pools, landscaped gardens, or covered parking. Members should negotiate for only essential amenities and ask for maintenance-free periods or deposits by the developer.

Q7: What should be included in the delay clause?
SRELJ: The agreement must specify the construction timeframe, handover date, and penalties if the developer delays possession. Penalties can be monetary compensation or contract termination terms linked to the stage of construction.

Q8: Who should bear the maintenance-free period cost?
SRELJ: Developers often agree to bear maintenance charges for a defined period. This amount should ideally be deposited in a separate account before the developer is allowed to sell surplus flats.

Q9: What safeguards should be taken while signing the redevelopment agreement?
SRELJ: Societies should ensure maximum clarity in the agreement, covering timelines, penalties, reimbursements, rental escalation, and maintenance costs. This protects members from future disputes.

Q10: What is the monthly reporting requirement under the new model bye-laws?
SRELJ: Monthly reporting is expected on the 5th of every month regarding the progress in adopting the new bye-laws as per the circular issued by the Additional Registrar. Initially, the focus is on voluntary compliance by co-operative societies.

Q11: What are Tenant Ownership Housing Societies Bye-Laws?
SRELJ: Tenant Ownership Housing Societies Bye-Laws apply to societies formed when land is purchased by the society, and the building is constructed by the society. This is covered under Rule 10 Class 5, Sub-clause (a) of the Maharashtra Co-operative Societies Rules, 1961. Such bye-laws usually govern bungalow plots (e.g., JVPD Scheme at Juhu).

Q12: What additions/amendments have been made in Tenant Ownership Housing Societies Bye-Laws?
SRELJ: Amendments have been introduced in bye-laws Nos. 1(b), 1(c), 2(b), 3(3), 3(8), 3(12), 3(21), 5(a), 6, 7, 13(a), 14(d), 17 (Note 3), 19(a)(4), 23, 27(d), 28, 29, 30, 34, 38(b), 38(c), 38(d), 41(6), 50(c), 71(a), 77(2), 78(b), 114, 115, 116(a), 118(2), 118(6), 126(b), 128(1), 129, 139(16), 146, 149(b)(2), 158(e), 158(i), 161(b), 161(c), 161(d), 166, 171, 172, and 175.

Q13: What are Tenant Co-Partnership Housing Societies Bye-Laws?
SRELJ: Tenant Co-Partnership Housing Societies Bye-Laws apply to societies where flats are purchased by members from a builder. These are covered under Rule 10 Class 5, Sub-clause (b) of the Maharashtra Co-operative Societies Rules, 1961.

Q14: What additions/amendments have been made in Tenant Co-Partnership Housing Societies Bye-Laws (2009)?
SRELJ: The proposed 2009 amendments cover bye-law Nos. 1(b), 1(c), 2(b), 3(3), 3(6), 3(11), 5(a), 6, 7(u), 13(a), 17 (Note 3), 19(a)(3), 19(a)(4), 19(a)(6), 23, 27(d), 28, 29, 30, 34, 38(b), 38(c), 41(5), 43(1), 50(6), 56(8), 70(b), 76, 81(10), 81(11), 90, 106, 107 (Note), 108(a), 110(2), 110(5), 118(a), 120(1), 121, 125, 138, 150(e), 150(i), 152(12), 152(13), 152(14), 153(b), 153(c), 153(d), 165(g)(b), and 166.

Q15: What are the key highlights of the amendments in Tenant Co-Partnership Housing Societies Bye-Laws?
SRELJ: The highlights include:

• Chief Promoter’s role continues till the first special general body meeting.

• Open terrace means a terrace accessible to all members.

• Redevelopment has been recognized as a need with time.

• Members’ rights linked to the number of flats owned.

• Society must give requested papers within 15 days.

• Time limits have been specified for acts under certain bye-laws.

• Nominee cannot create interest in favour of third parties without proving legal heir rights.

• Submission of stamp duty and registration receipt is mandatory at the time of transfer of flat.

• Child labour is strictly prohibited in societies.

• Dues can be recovered from legal heirs or occupants.

• Structural audit must be conducted by a structural engineer.

• Members cannot sell parking spaces not purchased by them.

• Society funds for day-to-day activities must be invested in a scheduled co-op or nationalised bank with intimation to registrar within 15 days.

• If a lady member declines to join the committee, her place can be filled by a male member.

• Secret ballot voting is mandatory if society share capital exceeds ₹10,000.

• Candidates who pay society dues before scrutiny of nominations are eligible for elections.

• No-confidence motions cannot be moved against the same office bearer within 6 months of a rejected motion.

• Casual vacancies can be filled (maximum two seats) with registrar’s consent.

• Amounts above ₹1,500 must be paid by account payee cheque.

• Honorarium is capped at 15% of income or ₹2,000 (whichever is lower) per office bearer.

• Repair contracts up to ₹1,00,000 can be approved by committee with 10% flexibility for lowest tender.

• Societies must prepare a disaster management plan with risk analysis and emergency contacts.

• Provisions of the Child Labour Act, 1986 must be strictly implemented with penalties for violations.

• Intimation must be given to police, social organisations, and labour commissioner for child labour cases.

• Rights of widows of members are protected by restricting nominee’s property dealings.

• Maximum penalty cannot exceed ₹1,000.

• Complaints must first be made to the advisory committee before approaching authorities.

• Societies must comply with redevelopment circular dated 3/01/2009.

Q16. What is a Bank Guarantee (BG) in the context of redevelopment?
SRELJ: A Bank Guarantee (BG) is a financial security provided by the developer to the housing society before redevelopment begins. It assures that the developer will fulfill all contractual obligations. If the developer defaults, the society can invoke the BG to recover losses.

Q17. Is the Bank Guarantee mandatory for redevelopment projects?
SRELJ: Yes, as per Clause 18(2) of the Government Resolution (GR) dated July 4, 2019, it is mandatory for the developer to provide a BG equivalent to 20% of the total redevelopment cost. Societies must ensure this condition is included in the Development Agreement (DA).

Q18. What is the main purpose of the Bank Guarantee in redevelopment?
SRELJ: The purpose of a BG is to safeguard society members by offering:

• Protection against developer default

• Financial assurance that the developer has the capacity to complete the project

• Legal enforceability in case of breach or delay

Q19. What key terms should be included in the Bank Guarantee?
SRELJ: The society must ensure the BG includes:

• Amount: Exactly 20% of the total project cost

• Tenure: Valid for the entire redevelopment period, renewable if needed

• Invocation Conditions: Clearly stated reasons for invocation (e.g., delay, breach of agreement)

• Dispute Resolution: Defined procedure for resolving disputes over invocation

Q20. Should society members vacate their premises before receiving the BG?
SRELJ: No, members should never vacate their premises until a valid BG is handed over to the society. Moving out without securing the BG can put members at financial and legal risk if the project stalls or the developer defaults.

Q21. How does the BG protect society members in case of disputes?
SRELJ: If the developer delays, breaches the DA, or fails to complete the project, the society can invoke the BG and use the funds to recover losses or hire another developer, ensuring members are not left helpless.

Q22. Does having a BG mean the society can select any developer without worry?
SRELJ: No, the society must still conduct due diligence, check the developer’s financial capacity, past track record, and credibility. A good developer minimizes the chances of disputes and ensures timely completion of redevelopment.

Q23: Can a company become a member of a housing society?
SRELJ: Yes, a company can become a member of a cooperative housing society, provided certain conditions are fulfilled. The company’s Memorandum of Association (MoA) and Articles of Association (AoA) must clearly state that the purchase is for providing residential accommodation to its employees. Additionally, the company’s head office must be located within the society’s area of operation.

Q24: How many shares must a company purchase to become a member?
SRELJ: A company is required to purchase at least 20 shares of the society to qualify for membership. This ensures that the company has a financial stake in the society and participates equally in its functioning.

Q25: Is there a limit to the number of company members in a society?
SRELJ: Yes, as per cooperative housing society rules, the number of firms and companies admitted as members cannot exceed 50% of the total number of members in the society. This rule maintains a fair balance between individual and institutional membership and prevents companies from dominating decision-making.

Q26: What should a society verify before approving company membership?
SRELJ: The society should verify the following before granting clearance:
• The company’s MoA and AoA include a clause for employee housing.
• The head office falls within the society’s area of operation.
• Total company memberships do not exceed 50% of the society’s strength.
• The company has purchased the minimum required 20 shares and the share register is updated.

Q27: Can a company representative be part of the managing committee?
SRELJ: Yes, a company can nominate a representative to participate in the managing committee. However, there is a limit — not more than one-fourth of the total managing committee members can be company representatives. This restriction is based on Government of Maharashtra Order No. CHS-179/CG148/14C dated 09.11.1993.

Q28: For what purpose can a company purchase flats in a housing society?
SRELJ: A company can purchase flats or land only for providing residential accommodation to its employees. Using such flats for commercial or unrelated rental purposes may violate society by-laws and cooperative principles.

Q29: Why is verification of company membership important for societies?
SRELJ: Proper verification ensures that the company is eligible for membership, prevents breach of the 50% membership cap, and maintains a fair balance of power within the society. This protects individual members’ rights and ensures smooth functioning of the society.

Q30: What happens if a flat owner does not become a member of the society?
SRELJ: If a flat owner does not become a member of the society, a recovery case under Section 101 of the Maharashtra Co-operative Societies (MCS) Act, 1960, cannot be filed against them. Societies must encourage all flat owners to complete membership formalities to enable legal recovery of dues.

Q31: Can a legal heir or nominee who has not completed membership formalities be proceeded against under Section 101?
SRELJ: No. When a member passes away leaving large society dues and the legal heirs or nominees neither pay the dues nor complete membership formalities, a Section 101 recovery suit cannot be filed until membership is regularized.

Q32: How can societies recover funds misappropriated by office bearers or members?
SRELJ: If office bearers or members commit fraud or misappropriate society funds, recovery under Section 101 is not applicable. Societies must file a separate criminal case to recover the misappropriated funds and initiate action under relevant sections of law.

Q33: What can be done if the builder has not become a member and has unpaid dues on unsold flats/shops?
SRELJ: In cases where the builder does not become a member and fails to pay maintenance charges, especially in non-co-operation society formations, the society cannot file a Section 101 suit. Societies may need to approach the competent authority or court for recovery through alternative legal remedies.

Q34: Can societies recover penalties or charges not mentioned in the Act, Rules, or Bye-laws?
SRELJ: No. Only those charges specifically provided under the MCS Act, Rules, and Bye-laws can be recovered under Section 101. Any penalty or charges outside the legal framework cannot be enforced.

Q35: Can a society write off irrecoverable outstanding dues?
SRELJ: Yes, subject to Model Bye-law No. 150. The society can write off irrecoverable loans, dues, and recovery expenses if certified by a statutory auditor and approved by the general body. Additional approvals may be required from the financing agency and the registering authority unless the society is classified as ‘A’ or ‘B’ with adequate funds in the bad debt reserve.

Q36: When is a member classified as a defaulter?
SRELJ: A member is classified as a defaulter if payment is not made on the due date of the bill. Societies can also charge interest on outstanding dues provided a demand notice has been issued to the member.

Q37: Can a defaulter contest or participate in elections?
SRELJ: A defaulter cannot contest the elections. However, they can still propose or second a candidate for election.

Q38: Does the society have a prior claim on a member’s shares if the member becomes insolvent?
SRELJ: Yes. As per Section 47 of the MCS Act, 1960, the society has a first claim on the member’s shares and interest, subject only to government claims like land revenue. This ensures society’s dues are settled before other creditors are paid.

Q39: Can a society offer a rebate to members for prompt payment?
SRELJ: Legally, there is no clear prohibition, but as per principles of natural justice, offering a rebate penalizes defaulters twice (loss of rebate + interest). It is generally advised not to grant such rebates unless clarified by the Registrar.

Q40: What are the enquiry fees and court fees for filing a Section 101 recovery suit?
SRELJ: The fees depend on the amount of claim:
• Up to ₹1,000 – Enquiry fee 5.5%, Court Fee ₹15
• ₹1,001 to ₹2,000 – Enquiry fee 4.5%, Court Fee ₹20
• ₹2,001 to ₹5,000 – Enquiry fee 3.5%, Court Fee ₹20
• ₹5,001 & above – Enquiry fee 3%, Court Fee ₹25 (Maximum Enquiry Fee ₹1,000)
Fees are payable via Government Challan to RBI under Head of Account “0425 Co-operation, 800 Other Receipts, XVIII Notice & Recovery Fees”.

Q41: What is the procedure for recovering dues from members under Section 101?
SRELJ:

1. Issue a notice for payment of dues to the defaulter.

2. Pass a resolution in the managing committee to initiate recovery.

3. Send a final notice to the defaulter.

4. Apply to the Assistant/Deputy Registrar for recovery.

5. Pay prescribed fees through RBI challan as per the scale above.
   This process allows societies to recover dues faster without filing a suit in Co-operative Court.

Q42: Can societies disconnect essential services of defaulters?
SRELJ: No. Societies cannot disconnect water, electricity, or other essential services even if dues are unpaid. Doing so can attract criminal liability, including imprisonment up to three months and/or fines. The proper remedy is to file recovery under Section 101.

Q43. Can WhatsApp notices be treated as legally valid for general body meetings?
SRELJ: No, WhatsApp notices alone cannot be treated as legally valid for general body meetings. As per the 2014 Model Bye-laws of Cooperative Housing Societies, the secretary must serve notices using formal methods such as hand delivery, postal dispatch, registered post (with or without acknowledgment), or email (if registered). Additionally, a copy of the notice must be displayed on the society’s notice board. WhatsApp can only be used as an additional reminder, not as a substitute for legal notice delivery.

Q44. What are the legally accepted modes of serving notices as per model bye-laws?
SRELJ: Bye-laws 98 and 162 of the 2014 Model Bye-laws specify the following legally accepted modes:
• Hand delivery to the member’s registered address
• Dispatch through post office
• Registered post with or without acknowledgment
• Email communication (if the member has registered an email address)
Additionally, a copy must always be displayed on the society’s notice board.

Q45. Can a member challenge a society’s decision if notice was sent only on WhatsApp?
SRELJ: Yes. If the society only posted the notice on WhatsApp and did not follow the legally prescribed modes of notice delivery, a member may challenge the decision in case of a dispute. WhatsApp messages alone will not hold as proof of proper service under the law.

Q46. Is it okay to use WhatsApp notices as a reminder?
SRELJ: Yes, societies can use WhatsApp as a convenient tool to remind members of general body meetings. This practice improves participation and awareness but cannot replace the mandatory modes of service.

Q47. What best practices should societies follow regarding meeting notices?
SRELJ: Societies should:
• Serve notices through formal modes (hand delivery, postal, or email) as per bye-laws
• Maintain a proper record of service (acknowledgment, postal receipt, email logs)
• Post notices on WhatsApp groups only as an additional reminder
• Always display a copy of the notice on the society’s notice board

Q48. Why is it important to follow proper procedure despite using WhatsApp?
SRELJ: Following proper procedure ensures that notices are legally enforceable and prevents disputes. WhatsApp is convenient but not recognized as an official mode of service under the bye-laws. A failure to serve notices formally may invalidate the meeting resolutions or decisions if challenged.

Q49. Can the managing committee approve film shooting without consulting the general body?
SRELJ: No, the managing committee cannot unilaterally approve film shooting in common areas. As per Model Bye-law 170, such decisions require approval from the general body. The committee must place the proposal before the general body meeting for discussion and collective decision-making.

Q50. What does Bye-law 169 say about letting out common areas?
SRELJ: Bye-law 169 clearly restricts societies from letting out, subletting, or giving on leave and license basis any common spaces such as open areas under staircases, terraces, rooftops, gardens, or community halls. These areas must be used only for the purposes for which they are intended and cannot be used for commercial activities like film shooting without due approval.

Q51. When can common areas be used temporarily for activities like film shooting?
SRELJ: Temporary use of terraces, open areas, or gardens is permitted under Bye-law 170, provided that the general body has granted approval. The decision must be taken collectively, and terms and conditions for usage should be clearly defined by the general body.

Q52. What is the process to get approval for film shooting in a society?
SRELJ: The managing committee should follow these steps:
• Place the proposal before the general body in the meeting agenda
• Discuss and finalize terms such as charges, duration, timings, and safety measures
• Pass a resolution approving or rejecting the proposal
• Record the resolution in the minutes of the general body meeting for official reference

Q53. What precautions should societies take before granting permission for film shooting?
SRELJ: Societies should ensure proper security arrangements to prevent trespassing, restrict shooting timings to avoid disturbing residents (especially children and senior citizens), and decide adequate compensation or charges to justify the inconvenience caused to members.

Q54. What happens if the managing committee gives permission without general body approval?
SRELJ: If permission is granted without general body approval, the concerned office bearers can face penalties. The penalty may be up to five times the regular charges for using such common premises. This ensures accountability and discourages unauthorized decisions.

Q55. Why is general body approval important for such decisions?
SRELJ: General body approval ensures legality, transparency, and fairness. It prevents disputes, protects the rights of members, and maintains harmony in the society while generating additional revenue through lawful means.

Q56. Can an administrator be appointed after the date of election is announced in a housing society?
SRELJ: No, once the election process has started, the returning officer has been appointed, and the election date has been notified, the registrar cannot appoint an administrator or authorised officer merely based on complaints from members.

Q57. What is the process of election in a cooperative housing society?
SRELJ: The process involves:
• Appointment of a Returning Officer (by the society or State Cooperative Election Authority depending on society size)
• Preparation of the election schedule including nomination, scrutiny, and polling dates
• Preparation and finalization of the voter list and candidate list after scrutiny
Once these steps are completed, the election date is officially notified.

Q58. Under what circumstances can the registrar appoint an administrator under Section 77A of the MCS Act?
SRELJ: The registrar may appoint an administrator when:
• The managing committee fails to make arrangements for holding elections
• The committee is prevented from taking charge or performing its functions
• There is a dispute between two groups claiming to be the elected committee, and the matter is before the cooperative court
• An officer or member of the society requests appointment of an administrator
However, if the election process is already underway, such appointment is unnecessary and legally questionable.

Q59. What are the implications of appointing an administrator after the election process has started?
SRELJ: Appointment of an administrator after elections are announced would disrupt the democratic process, delay the formation of the new managing committee, and create unnecessary interference in society governance.

Q60. How can societies protect themselves from unnecessary appointment of administrators?
SRELJ: Societies should strictly follow the MCS (Election to Cooperative Societies) Rules, 2014, ensure timely appointment of the returning officer, and keep the registrar informed of every step of the election process. This compliance safeguards the society’s democratic rights and prevents unnecessary disruptions.

Q61. Why are membership records important in a cooperative housing society (CHS)?
SRELJ: Membership records form the legal foundation of a CHS. They define shareholding, establish members’ rights, and ensure transparency in society operations. Accurate records are essential for voting rights, dividend entitlement, and smooth participation in society affairs.

Q62. What is the Register of Members and what details does it include?
SRELJ: The Register of Members is the primary legal record maintained by every CHS in Form I. It includes:
• Name, address, and occupation of the member
• Number of shares held
• Date of admission as a member
• Date of cessation of membership (if applicable)
• Details of share transfer in case of sale, gift, or inheritance
This register is considered prima facie evidence of membership.

Q63. What is the Register of Shares and why is it important?
SRELJ: The Register of Shares records details of shares issued, dates of share transfers, and details of transferors and transferees. It acts as legal proof of shareholding and is necessary for participating in society meetings and decision-making.

Q64. Can members inspect membership and share records?
SRELJ: Yes, under model bye-laws, members have the right to inspect society records during office hours or at a time fixed by the managing committee. Members can make a written request and pay the prescribed fee to inspect or obtain certified copies of the register of members and share details.

Q65. How can a member verify whether their details are correctly recorded?
SRELJ: A member can submit a written request to inspect the register of members and share register, verify details of joint holders, share certificate numbers, and addresses, and obtain certified copies. If an error is found, the member should submit a written correction request to the society.

Q66. Are societies required to report membership details to the registrar?
SRELJ: Yes, every CHS must submit an annual audit report to the registrar of cooperative societies confirming that Form I (members) and Form J (active members) are updated. This ensures that discrepancies are reviewed and corrected regularly.

Q67. What steps should a member take to safeguard their membership rights?
SRELJ: Members should:
• Inspect membership and share records periodically
• Cross-check joint holder details and share certificate numbers
• Request corrections in writing if discrepancies are found
• Maintain certified copies for personal records