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By Legal Bureau

Facts which are no commonly known about co-operative Societies
1. According to Service Tax department, Co-operative societies are liability to pay Service Tax @ 12.24% on receipts excluding statutory payments, if the receipts are above Rs. 4,00,000/-. Interest @13% per annum and penalty upto 200% can also be levied by the authorities on the defaulted amounts.
2. Service ax will be applicable for business center agreement at the abovesaid rate once the finance bill is approved.
3. in the eyes of law, nominee is not the owner of the flat. He does not get the ownership rights in the flat. The purpose of the nomination is to ascertain the person with whom the society has to deal and not to create interest in he nominee to the exclusion of those who in law will be entitled to the estate (Gopal V. Ghatnekar v/s Madhukar V. Ghatnekar). In the absence of nomination as per the provisions of sec. 30 of the MCS Act 1960 society is well within its right to transfer the shares in favour of any of the legal heirs on the demise of the member. This is inspite of the fast that their may be some WWF (FIGHT) amongst the legal heirs.
4. bye laws do not have then force of law (Girdharilal B. Pardeshi V/s. Sate of Mah. & others).
5. only one share certificate has to b issued even if the members has got more than one flat.
6. the principal in Co-operative Society is ‘One Member, one Vote’ Even if member has tow or more flats then also he is allowed to cast only one vote.
7. power of Attorney holder cannot attend the meetings of the society.
8. Service charges have to recovered equally from all the members of the society. This has also been confirmed by the Bombay high Court on 30.07.02 in the case of Venus .H.S. Ltd. V/s Dr. J.Y. Deliogni & Others.
9. it is in your interest to put harsh conditions for flats which are being purchase by Companies to be utilised as Guest house. This can be a source of permanent nuisance to the resident members in your society.
10. As per Commissioners circulars dated 08/02/2006 the provisions of Right of information act are applicable to housing societies which fit to a certain criteria.

Landmark Court Judgements

Sanwarmal Kejriwal V/s. Vishwa C.H.S. Ltd., Judgement Delivered by Supreme Court.
Content. There can therefore be not doubt that a member allotee has a right to transfer his interest in he flat to a third party and therefore the right to induct a third party on leave and licence basis.
Comment. A member is well within his right tot transfer the flat to third party of his choice or to give the flat on leave and licence basis.

Chival Consume Protection Society & others V/s. Anand corporation & others.
Content. Jurisdiction of Consumer Forum was not barred by sec. 3 of the Co-operative societies, Act.
Comment. Consumer courts have the right to try matters connected with Co-operative Societies.

Mrs. Kokila Shah Chief Promotor of Sky Anchorage CHS Ltd., (Proposed) V/s. State of Maharashtra & Others.
Content. The requirement of 60% membership of a proposed society is only a part of guideline policy and not a statutory limit.
Comment. It is normally insisted by the Registrars that until and unless 60% member sign the registration on proposal society should not be formed.

Versova Gurudutt CHS Ltd., V/s. Div. Jt. Registrar.
Content. Amount claimed included charges beyond three years prior to date of such claim and therefore they were barred by law of limitation.
Comment : If the member has not paid the dues during the last three years than it would be advisable to file the dispute in Co-operative Court rather than u/s. 101 of the MCS Act to ensure that the recovery is not barred by the law of limitation.

Smt. Ramagauri Keshavlal Virani Versus Omwalkeshwar Trivenie C.H.S. ltd., Other.
Content. Open space (terrace/open car parking) belongs to the Society.
Comment. The implication of the above said Judgement is that the builder cannot sell the open space like terrace.

Madhukar M. Mahajan & others Verus Archana Sahakari Gruha Rachna Sansatha Maryadit, Pune.
Content. The activities of tution or Balawadi are permitted in Housing Society as the same are covered under the objet clause of Housing Society.
Comment. The implication of the above Judgement could be that some activities like tution, balwadi can be carried out by the member / flat occupier. The dominant use o the premises should be of residence. Incidential use of the flat could be activities like tuition, balwadi activities in our opinion can also be carried out from the flat.

Twin star Venus V.H.S. & Anr. V/s. G.N. Sainani & Ors. Judgement delivered delivered on 05/12/2005 by the Bombay High Court.
Content. Society cannot claim non-occupancy charges from its members contrary to the directions by the competent authority.
Comment. Non-occupancy charges more than that prescribed in circulars, Orders, etc. of competent authority like Co-operative Department cannot be demanded by society.

3 thoughts on “Society’s Legal aspects”
  1. Shares are issued in the names of A and B.Nominees are C and D.A dies.Is B the only owner of shares or B and C?

  2. Sir
    I am referring to your post herein about Versova Gurudutt Co-op hsg Society V/s Jt. Registrar. You have stated that if a member has not paid society charges for three years than the same will be barred by limitation. However as per the order of Ho. Justice R. Kahndeparkar dated 7th Oct 2003, under point 3 he has upheld the contention of the petitioners Versova Co-op hsg society that the limitation does not apply to recovery cases under 101 and had set aside the order of Jt registrar, In view of this kindly clarify the correct position.

  3. due to earlier dispute there is an arrears in society, subsequent bills are being regularly paid. the society is first recovering interest of earlier dues and balance is being settled towards current bill, thereby, the total outstanding amount is increasing. further in subsequent month, the sty is charging interest on initial disputed amount and the shortfall from previous bill(as explained) and hence, the interest calculation for 1st year works out to 19.56%, 2nd yr to 23.38%, 3rd yr to 27.96%, 4th yr to 33.43% & 5th yr to 39.97%. if sty adjusts pymnts made regularly on bills raised then, only 18% interest on initial disputed bill is to be paid. Many CAs have adopted this method, pls explain in detail or write to me for sending further details

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