By Legal Bureau
Societies suffering from non payment of dues cannot recover if initiatives to recover them under sec 101 of Maharashtra Co-operative Society Act or any other Act in other part of the country because it is covered under Limitation Act. If managing committee do not initiate legal action before the expiry of three years, the dues becomes time barred and covered under Limitation Act.
Extension of time period happens only when dues are acknowledged and promised to be paid and such written request must be within three year of period when the dues become due. Part payments also gives eligibility of further period of three years of the dues with interest.
A recurring bills or monthly bills are recoverable and each bill has time limitation of three years. Suppose a member is not paying since 2007 then in 2014 only bills which were due since 2011 will be eligible for recovery and rest bills cannot be recovered as covered under Limitation Act. However, if the case is filed or even filed in wrong jurisdiction then the period of limitation shall not apply.
A society can write off its bad debts and outstanding amount due to its members. As per model bye-law no. 149 subject to the bye law no. 150 the society may write off any loan and interest thereon society’s charges due from members the expenses incurred on recovery thereof and the accumulated loses which are certified as irrecoverable by the statutory auditors.
As per model bye-law no. 150 the amounts mentioned in bye laws no 149 shall not be written off unless : (i) the meeting of the general body of the society has given due sanctions for writing off the amounts (ii) the approval of the registering authority is obtained. Provided that if the society is affiliated to the dist. Central co-op.bank or any other financing agency but it is not indebted to it the permission of the bank or the financing agency is not necessary. Provided further that if the society is classified as a or b at the last audit no such permission of the bank or the financing agency or the registering authority is necessary if there is sufficient balance in the bad debt fund specially created for the purpose to cover the amount proposed to be written off.
OFFHAND
“A recurring bills or monthly bills are recoverable and each bill has time limitation of three years. Suppose a member is not paying since 2007 then in 2014 only bills which were due since 2011 will be eligible for recovery and rest bills cannot be recovered as covered under Limitation Act….”
The proposition. so categorically advanced, but with no reservation, prima facie, does not seem to be right; and in any view, not free from bona fide doubt. If one is not mistaken, such a view runs counter to one’s understanding of the legal positron that in case of a continuing default- i.e. a person who has been, and continues to be a perpetual defaulter, even while still being a member of the society,-the last committed default would give rise to a fresh start of limitation, in respect all past defaults. That is what is commonly known as concept of ‘running account’ of any type of debtor-creditor relationship. Instantly, in support, there seems to be-open to correction- decided court cases on a similar proposition wrt promoter’s continuing default to comply with any of the mandates of say, the MOFA often come-across. Over to law experts for further deliberation, elucidation, and enlightenment.