Divorce will dissolve the WILL

By VIMAL PUNMIYA FCA, LLB.

Q.1 What is a Will and the benefits of making one?
Ans: A WILL is a written document in which you provide for:-
a. The administration of your estate/assets when you die; and
b. The distribution of your possessions in specific proportions to specific people whom you wish to have a share of your estate/assets;
c. Appoint a person or persons of your choice to administer your estate; and
d. Appoint a guardian or guardians for your infant children (if any).
In other words it a document where you direct, who is to receive your property upon your death. If you have any real property (land) or personal property (cars, jewelry, money) that you want to give to a specific person than you must have a will.

Q.2 Should everybody – working or non-working person, man or woman make a will? and What if you die without making a Will
Ans: “Where there’s a Will, there’s a way….Where there is no Will, there will probably be family bitterness/family disputes…” If people die without a WILL, then the law will decide to whom the property of the deceased person should go to.
Thus, every person whether working or non working , man or women should make a will.

Q.3 When should people make a will? At what age on an average?
Ans: Every adult, no matter what age, should have a Will. Most preferably a person above the age 50 should have a will. And while making a Will a person must be of sound mind.

Q4 How do they make this will? Is there a process to making a will? What kind of paper is to be used? What language do they write it in? Do they need other people to witness the will?
Ans:
• No prescribed form for a Will; only needs to be signed and attested
• Can be in any language; no technical words need to be used
• Two witnesses must attest a Will; one preferably a doctor
• They should sign in the presence of each other and the person making the Will.
• In India, the registration of Wills is not compulsory
• The Will should provide for the appointment of executors, though not mandatory.
• No stamp duty is required to be paid for executing a Will.

Q.5 Where should they keep the will when they finish writing it? Should somebody in the family/or friends know where they have kept this paper/will?
Ans: Keep the original in a safe place where it may be found easily after your death. Leave a copy with the attorney who wrote it for you or with a copy with your family friend, CA or Advocate.

Q.6 Can a will be verbal like told to a person before death, or does it have to be written?
Ans: A Will has to be Written but a verbal will is permitted in Defence Personal. However, a verbal will is not valid if you have a valid, written will. If you have no written will, a verbal will can be valid with regard to any property you own, except land. Property that can be transferred under a verbal will includes stocks, bonds, cars, coin collections, jewelry and appliances. A verbal will is valid only if know you are dying and say what you want in your will to two competent, disinterested witnesses. The witnesses must put the will in writing and sign the transcription within ten days.

Q.7 We see lots of problems in families when the head of a family passes away without leaving a will. Is that true? Would things be easier if there was a will?
Ans: If you die without leaving a valid legal Will, you are said to have died ‘Intestate’. The law dictates who will inherit your Estate and in what proportions. The law also decides who will have responsibility for administering your Estate (your Personal Representatives). Such an decision may create a disputes and some family hurdles among the family members.

Q.8 Should you keep the contents of a will a secret? Or, can they be shared with people?
Ans: It is advisable to keep the contents of a will secret. However, it is not necessary to keep it secret, it depend upon person to person and case to case.

Q.9 A husband may leave a will should a wife also make a will? Or Can a Husband and Wife can make a Joint Wills?
Ans: No it is not possible to have a joint Will they must be individual Wills.
However “Mirror Wills” are quite common. A mirror Will is when a spouse or partner make almost identical Wills, or even identical Wills, leaving for example, everything to each other respectively should one partner perish and if both perish together then direct to children. If they have no children then to a named beneficiary’s. This is where major differences often occur say, for example, the husband could leaves his possessions and estate to his siblings and the wife leaves her possessions and estate to her siblings!!!.

Q.10 Supposing a person makes a will leaving his/her assets and money not to family but to an outsider or perhaps to a charity – is this will to be honored?
Ans: Yes, basically a Will is a document that states or directs the will of the person, as to whom he/she wants his/her property to be handled after their death. So the person in whose name the assets are transferred can be any person a outsider or even an charitable trust etc.

Q.11 Wills are often contested by people. Can you enumerate three of the most common grounds on which they are contested?
Ans: Yes, Wills are often contested by peoples. Some common grounds on which wills are contested are as follows-
a) That the person was of not sound mind.
b) The Testator lacked testamentary capacity to sign a will.
c) The person was unduly influenced into signing a will/ a will is made under pressure.
d) The will was procured by fraud.
e) The Will is not signed before two witnesses.
f) The name of family members is not mentioned in will.

Q.12 Wills often result in bitterness in families and fragmentation – maybe somebody thinks they have not quite got what they wanted or lesser than the other person.
Ans: Yes, it might happen in various situations. In order to prevent such happening it is advisable to consult a lawyer which will help you to draft the will in the manner and giving the proper statements as to why only certain assets are given to a particular member instead of others.

Q.13 Have there been cases in which a will has been deliberately tampered with? Or, when maybe mentally unsound people have been fooled into making wills?
Ans: There are very few cases where the will has been deliberately tampered with or when the mentally unsound people have been fooled into making Wills.

Q.14 Can a person change a will he has already made?
Ans: You can change your will any time you want to. However, make sure that when you make a new will, you mention that this will is the latest and supersedes all earlier wills. If you don’t, it can complicate the situation, cause major confusion, make such matters go to the court of law and take several years before arriving at any final verdict
You can also make an additions to your will by signing a “codicil,” with all the formalities of a will. The codicil must be in writing, dated and signed by you and two witnesses. You cannot change a properly executed will by writing revisions into the will, even if you initial and date the changes. Such changes are valid only if they occur before the will is signed and witnessed. If major changes are needed, consider making a new will.

Q.15 What would you advise? Always make a will with a cool head, never in a rash or impulsive manner – what should be a person’s state of mind when they make a will?
Ans: A person should make a Will in a sound mind and should have the will Registered with the Registrar of Sub Assurances in presence of two witnesses registrar will also ask for Indentify proof, Doctor Certificate, Residential proof of person who makes Will, Identity proof of witness expenses are very nominal.

Q.16 Should they take the help of a lawyer when making a will or can they make it on their own?
Ans: The procedure of making a Will is very simple, if assets are few than the help of lawyer is not necessary but in case if the Assets are many and the family is big and if there is a possibility of disputes than it is advisable to take the help of the lawyer. As “Do-it-yourself” wills often do not contain all the necessary components as required by law and many times ruled as invalid by courts (for example no signatures from witness or no witness at all). Many a time, it can happen that while creating the will, you use such ambiguous language that it results in lengthy legal battles (“My House should go to Sunita.” Now if both mother and wife are called Sunita, which Sunita ought to get it?. Anyone who might benefit from the ambiguity of the will can jump in to claim a share! And if the courts decide in his/her favour, you won’t like that situation (not that, you’ll be around!).

Q.17 Does marriage / entering into a civil partnership affect my Will?
Ans: Yes, if you marry or enter into a civil partnership, your Will is revoked. This is because there is an assumption that you would wish to provide for your new spouse or civil partner. There is an exception to this rule if you have made your Will ‘in anticipation of’ marriage / entering a civil partnership. If you are in any doubt about this, consult your Solicitor for advice.

Q.18 Does divorce / dissolution of civil partnership affect my Will?
Ans: Yes, if you divorce or your civil partnership is dissolved, any Will you have made is revoked but only to the extent that your ex-spouse or ex-partner is referred to. For example, any appointment of your ex-spouse or ex-partner as an Executor or beneficiary is revoked. However, your Will may still be valid and, again, you should consult your Solicitor for advice.

Procedure for Self Redevelopment of housing societies in Maharashtra

By Dr Sanjay Chaturvedi, LLB, PhD

Builders are not finding viable projects offered by housing societies in Maharashtra, are going in for self redevelopment. Due to slow down in market and new DCR where the redevelopment is not viable in Mumbai, housing societies in Maharashtra are going in for self redevelopment.

Developing a residential project is not a joke. It requires 56 NOCs from local self government but also having jurisdiction of Maharashtra Co-operative Societies Act 1960 and further amendments. There are many other NOCs required besides BMC. Like for example CRZ clearance, Environment clearance, Traffic, Fire, Civil Aviation, defense and railway NOC if you fall under their jurisdictions.

First step: Society must know its potential FSI, fungible FSI and total FSI consumed till date. This is first step because society first should determine that they want redevelopment and reconstruction for themselves or there is sale elements in it. If society wants to redevelop its premises then there is no question of RERA registration. But if society wants to sell some of new flats in its redeveloped project and it is more than 8 units or 500 sq mtrs or more then it has to register it in Maha RERA.

The society must have conveyance its name. While applying for new plan, IOA and CC to BMC, society must be owner of the land on which redevelopment is proposed. If the land belongs to MHADA, Collector, any statutory authority, Pugree, or any ostensible ownership like trust etc then NOC from such owner is must for redevelopment.

Second Step: Society must convene extra ordinary meeting under section 79A of Maharashtra Co-operative Society Act 1960 and notify the Registrar office who will send his representative to conduct the EAGM of the society. Due and clear notice of the meeting must be given to all members and associate members. For procedure under 79A, please read my article on the subject.

The question arises that should society appoint a Project Management Consultant (PMC) compulsory? There is no such statutory compulsion to appoint PMC for redevelopment. Neither for self redevelopment nor for builder redeveloping it. PMC, in my opinion is nothing but cordinator between legal aid, architect and structural engineer. PMC, eat away profit of builder as it ask from builder huge compensation besides a hefty fees from society.

Society should appoint its own advocate and architect who gives honest and fair opinion to society on various aspects of redevelopment. It requires huge documentation and agreements hence vetting from a good advocate is always desirable. Any extra area which is not included in the development agreement will attract stamp duty, income tax later on so it is advisable to first vet the legal documents.

Third Step: Get the approval of 50% of the members of the society who have attended the meeting. The meeting should have proper quorum and 50% of them must approve the redevelopment. Mind you, society is the owner of your premises and since you hold a share in it hence you are eligible to occupy one of its units/ flats.

It is advisable to register the all documents which are executed by the society. An Advocate shall give advise to the society on various aspects including when society wants to sell its flats in the open market to fund the redevelopment.

Fourth Step: Find the proper team. Society must appoint own advocate, chartered accountant and Architect to help the process of redevelopment. Role of Chartered accountant will be to find the financier, if society wants to take loan for redevelopment, if self funded then maintaining accounts for redevelopment process and certifying for statutory needs like RERA , income tax and GST.

Fifth Step: Finding contractors under tender system. Many builders are also lending their names to society for Development Model (DM). The builder manage entire process, take loan on society’s behalf, construct it for society and sell for society while just keeping 20% profit margin on entire sale. In this process, the entire statutory requirements, procuring NOC and permissions, observing contractors and sale depends on builder. Builder work like PMC for society. But when society don’t want builder and want to do it self, then society’s architect will prepare tender and scrutinize for society and finalize contractor. Supervise the construction work and vet the contractor’s bills to be cleared time to time.

Sixth Step: While construction work is going on and before that, architect shall get the new building plan approved from BMC/ Municipal Corporation, fulfill all the compliance and make society pay premiums/ permission fees if any. Advocate shall register the project at RERA if there is any sale portion. Chartered Accountant shall keep and record all financial transaction and certify as and when required under GST, RERA and Income Tax.

Seventh Step: Getting Occupation Certificate and Building completion certificate from Authorities, NOCs from various authorities, handing over new premises to members and new purchasers, inducting them into society as members and issue them new share certificates, closing accounts, filing Form 4 to RERA, filimng forms with registrar for co-operative societies.

Eight Step: Update in income tax, file GST returns, Audit accounts and pass in AGM.

There are still some areas left which I have to cover it in my next article on pre-requisites of high rise in Mumbai. Keep in touch.

Resale of Agreement in a Society: Hanuman Vitamin Case

law1By Advocate S R Agarwal

Usually, there is a misconception that a resale agreement for the purchase of a flat in a registered society does not require registration and such understanding seems to be based on the provisions of Section 41 of the Maharashtra Co-operative Societies Act 1960, which provides that Clause No.(b) and (c) of Sub-Section (1) of Section 17 of the Indian Registration Act, 1908, will not apply to any instrument relating to shares in a society, notwithstanding that the assets of the society consists in whole or in part of immovable property, as the transfer of the property is incidental to the transfer of the share certificate.
However, this question arose in the case of Hanuman Vitamin Foods (P) Ltd. and others v/s State of Maharashtra before the Bombay High Court, reported as 1989-Bank J-377. The said petitioners, as the members of the Dalamal Towers Premises Cooperative Society Ltd. and as holder of 5 shares and as occupier of office premises No.904 at Nariman Point Bombay, purported to transfer the said premises by an Instrument dated 31.3.1986 the said 5 shares of the face value of Rs.50/- each for a consideration of Rs.9,46,900/-. The petitioners sent the Instrument to the Superintendent of Stamps for adjudication under the provisions of Bombay Stamp Act with the contention that, though the said Instrument was wholly exempt from stamp duty, it has been sent for adjudication by way of abundant precaution. The Superintendent of Stamps informed that the document was a ‘conveyance’ chargeable with stamp duty under Article 25 (b) (i) of the said Act on the present market value of the property. The said Order was challenged before the Hon’able Bombay High Court.
After hearing both the parties and examining the relevant clauses of the Instrument of Transfer, the Division Bench of High Court came to the conclusion as under:-
“… There is no getting away from the fact that the form of transfer ….. concerns itself with conveying a right to occupy the office premises ….. and, as such, a right to immovable property. The right to occupy a flat in a cooperative housing society has been held by the Supreme Court to be a “species of property” in the case of R.H.Shah v/s H.J.Joshi reported as, AIR-1975-SC-1470 and that …. there is no absolute prohibition against transfer of a right to occupation of the flat or even to transfer a share ….. What is more, in the instant case, one finds that there is intrinsic material in the document itself to indicate that what has been sought to be transferred is not merely the shares but the right to occupy office premises…… the bye-law D.1.1.(of the said Society), inter-alia, provides “no person shall be admitted as member unless he has entered into an agreement for the purchase of a flat in the building mentioned in bye-law No.2 (a) as per provisions of Section 4 of the Maharashtra Ownership Flats Act 1963, read with Rule No.5 of Maharashtra Ownership Flat Rules 1964,” …. and allotment under (1) above would give only the right of occupancy to the member as a right acquired by him by virtue of his holding shares or agreeing to hold share to the extent of value of flats. It is difficult to visualize a situation where a purchaser paying close to a million rupees is interested merely in the transfer of five shares of the face value of Rs.50/- each for the said consideration and nothing more. What is more, he is not willing to leave other things to the operation of law …… that is why there seems to have been an insistence in mentioning that one of the incidence of the first petitioners’ membership of the society is that as such member, the first petitioner has a right to occupy the office premises…… In the circumstances, we feel that it would be a travesty of the truth to hold the document for an instrument of transfer under the heading “Form of Transfer” purports to transfer only the share and nothing beyond the shares ….. In substance and effect, therefore, this document incorporates along with the transfer of shares the conveyance of the property …..Although the label is one of the transfer of shares only ….. in substance and effect, the document also includes the conveyance of a right to occupy immoveable property which as the Supreme Court has pointed out is a ‘species of property’ …. One finds that the conclusion can be arrived at even on the consideration of the document itself as a whole…..”
When such an instrument has been held as “Conveyance”, the provisions relating to the stamp duty and registration will, automatically, be attracted as per the provisions of law applicable from time to time. Nevertheless, with a view to avoid any such confusion, the State Govt. by way of Amendment dated 5.12.1985, effective from 10.12.1985, added an “Explanation” to Article 25 relating to the payment of stamp duty on a conveyance in the Bombay Stamp Act, whereby an Agreement to Sell an immovable property shall be deemed to be a “conveyance” and stamp duty thereon shall be leviable accordingly. By another amendment by Maharashtra Act No.17 of 1993, effective from 1.5.1993, stamp duty has been made payable as a conveyance on an instrument executed by a society in favour of its member or incoming member whether in consequence of purchase of its share or not or by a member of such society in favour of another member (and incoming member) whether in consequence of transfer of its share to another member or not. The Department of Co-Operation also issued a Circular on 18.2.1994, whereby registration of such an instrument for the purchase of the premises from a member in a registered society has been made compulsory. This Circular cannot be termed as in contravention of Section 41 of the Maharashtra Co-operative Societies Act, as it has been issued in the back drop of the said judgment of the Division Bench of Hon’able Bombay High Court.
Again in the year 2001 by an Amendment Act No.48 of 2001, effective from 24.9.2001, a clause numbered as (1-A) has been added to section 17 of the Indian Registration Act 1908 providing as under:-
“(1-A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of Section 53-A of the Transfer of Property Act, 1882, shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001, and if such documents are not registered on or after such commencement then, they shall have no effect for the purposes of the said section 53-A.]”
Thus it is amply clear from the judgment of the Division Bench of the Hon’able Bombay High Court in Dalamal Towers case and subsequent amendments to the Bombay Stamp Act and the Indian Registration Act, an instrument of transfer of a flat by a member in a society is not, merely, an instrument to transfer of the share certificate of the society, but it tantamount to conveying right, title and interest in an immovable property bringing it into the category of a ‘Conveyance’, thereby attracting the stamp duty and registration thereof, as per the provisions of law applicable from time to time. Otherwise also, in most of the cases loans are availed of by such purchasers from the Banks and financial institutions, usually, by way of equitable mortgage and in the present day context, it may not be possible for such institutions to advance loans unless the agreements are duly registered. It is, therefore, legally essential and in the interest of purchasers to go for the registration of an agreement for resale of a flat in a registered society.
lll

Society matters in Courts : Lis Pendence

societyBy Legal Bureau

What precautions should be taken by the parties during the pendency of dispute in Co-operative Court ?

Answer: Even if the Advocate is appointed by the Society, the Society should see someone on its behalf attends the matter, but it remain present by the parties concerned or on the scheduled date, but on dates of hearing, the concerned parties must remain present preferably along with Advocate. It is to be noted here that taking submissions of Advocate is at the sole discretion of the Co-operative Court. The Co-operative Courts are empowered to refuse the appearance of Advocate in the case for the reasons given, but the party concerned must remain present in the Court. The interested party may appear through his Constituted Attorney or by any means of authorization of such person concerned. As stated earlier, the Opponent must file his Written Statement within 30 days or as early as possible, but in any case before expiry of 90 days. The parties must not make an issue of controversies finalized by the Co-operative Court, because the evidence is to be laid on the basis of issues. The parties may pray for recasting of issues in case the burden is wrongly placed. The parties should have copies of evidence including Cross Examination recorded on the scheduled date. The important points to be noted here is that the party, who feels some correction in the deposition of witness must pray before the Court then and there only because application for correction on deposition after a lapse of time may not be entertained by the Court. It is also to be borne in mind that staffs in the Co-operative Court, as on today are not the trained staff as that of the Civil Courts. Therefore, there is likelihood of certain mistakes in recording the proceedings and recording of deposition too. Therefore, the parties must be careful in reading the proceedings before the Court and correct it then and there. At times small mistakes in cross Examination may effect the finality of the judgment in the concerned dispute. Therefore, the parties are informed and suggested to read carefully the depositor’s sworn statement of the parties concerned. The parties are also advised to note down all the orders passed by the Court during the pendency of the litigation. The parties are also advised to note down the daily Roznama recorded by concerned person and signed by the concerned presiding judge. Instead of asking for Certified copes of the proceedings, if the party records the proceedings i.e. Roznama daily in their brief, it helps the party at the time of final argument of the matter. The parties must remain present on the date of judgment or order because at times the aggrieved party may not be able to go to the Appellate Court because during the period of presentation of Appeal rights may be taken away. Therefore, the party may place an application before the same judge for saying execution of judgment or Award. Generally if the parties are present, the judges can exercise their discretionary powers in writing such orders. The Co-operative Courts have power to redirect the dispute and Therefore due precaution in necessary in this regard.

Non Occupancy Charges is 10% of Service Charges in Maharashtra

lawBy Advocate S R Agarwal

The levy of non-occupation charges has been a
controversial issue for a long time, which resulted into
disputes between members and the Societies flooding
the offices of the Deputy Registrar and the Courts.
Therefore, attempts have been made by the State Govt
from time to time to regulate it. The commissioner for Cooperative
Societies, Maharashtra State, issued a Circular
on 13.3.1992 laying down that the Societies could levy
non-occupation charges upto a maximum of 25% of
service charges and, accordingly, clause No: (C) of Byelaw
No: 45 (2) (iii) of the old bye-laws was replaced by
the following words.
“He shall pay non-occupancy charges to the Society at a
rate of not exceeding 25% of the service charges as will
be determined by the meeting of General body of the
Society.”
This Circular was challenged in Writ Petition No: 1618 of
1993, but it was disposed off as the said Circular was
withdrawn. In exercise of the powers vest in the State
Government under Section 79 A of the Maharashtra Co-
Operative Societies Act, the State Government issued
an Order on 9.3.1995 laying down that the non occupation

charges shall not be fixed beyond 100% of the
maintenance charges. But this Order was also challenged
in Writ Petition No: 1398 of 1996. Therefore, the State
Government appointed a Committee on 19.6.1997 to look
into the whole gamut of non-occupancy charges. The
Committee submitted its report to the State Govt on
31.7.1998 and when the said Writ Petition came up for
hearing in January 2000, it was dismissed as withdrawn,
as the State Govt submitted that the report of the said
committee was under consideration of the State
Government and, in the meanwhile, the earlier Order
dated 9.3.1995 was not being applied.
After the consideration of the Committee’s Report, the
State Government issued an Order dated 1.8.2001 in
Public Interest under Section 79 A of the said Act, there
by directing the Societies not to charge non-occupancy
charges beyond 10% of the Service charges (excluding
Municipal Taxes). Agian a number of the Societies led by
Palm Beach Riviera CHS Ltd., challenged this
Government Order dated 1.8.2001, fixing the non occupancy
charges not more than the 10% of the service
charges, before the Hon’ble High Court during the years
2002 and 2006 on various grounds such as, that this
Order was against the interest of the Societies, arbitrary,
not in public interest and unwarranted interference in the
affairs of the Societies and there is no legislative policy
enabling the Govt or Registrar to override the bye-laws

of the Societies duly approved by the Registrar enabling
the General Body to fix the non-occupancy charges
payable by the members and that the said Order may
enable a member to use the flat as a vehicle for carrying
out the object of earning money, thereby defeating the
spirit of the co-operative housing.
The State Government, justifying the Order dated 1st
August 2001, submitted before the Hon’ble High Court
that it has been issued in exercise of statutory powers
under Section 79 A of the said Act in public interest as it
serves the interest of the Societies, as well as the
members, because by virtue of a bruit majority and with
a view to extract more money from the members not
occupying the flats, non-occupancy charges were being
imposed whimsically and at exorbitant rates and on the
basis of the income earned by such members, which
amounted to levying the tax on income of the members
and in some cases at the rate of per sq.ft. of the area of
the Flat and the complaints were received by the Govt.
that in case of a few societies, the non-occupancy
charges recovered in respect of two flats were being
utilized towards the property taxes for the remaining 47
members, who were not required to pay anything towards
the Property Tax and the non-occupancy charges
recovered from three to six flats were more than the
property tax bill of the entire society, which levied these
charges @ of Rs. 9/- per sq. ft per month. Therefore, the

Government constituted a committee and after due
consideration of its recommendations decided a uniform
rate of non-occupancy charges throughout the state,
without linking the same with the rateable value of the flat
or the rental income derived by such members and to
achieve the objective of stopping the Societies from
profiteering and to prevent unjust enrichment and acting
to the detriment of the members, who gave their flats on
rent or on leave and license basis and to protect such
minority members from the oppression by majority in as
much as a flat is a property of the member and he is
entitled to return from the same as he has invested the
money for acquiring the same. It was also pointed out
that in such cases, societies do not spend any extra
money on account of the member giving the flat on leave
and license or rental basis and Govt. is concerned for
solving the housing problem in the State. Therefore, the
State Govt issued the Order dated 1-8-2001 and at the
same time, replaced by Bye-law No: 45 in the amended
Bye-law numbered as 43 which, interalia, provided as
under :-
“ C) He shall pay non-occupancy charges to the society.
Non occupancy charges shall be charged in accordance
with the circular issued by the Government of
Maharashtra/Commissioner for Co-operation from time
to time and shall not be levied if the flat is occupied by the
‘family’ of the member as defined under these Bye-laws.”

After the careful consideration of the submissions made
on behalf of the Societies and the Sate Government, the
Hon’ble High Court observed that the validity of Section
79 A of the said Act has already been upheld by this Court
in the cases 1989 Mh-L-J. 173 and 1993 (2), Mh L.J. 1716
and that it has been found that in some area, levy of nonoccupancy
charges has become a profit making business
and the State Government is empowered to issue Order
in public interest preventing the affairs of the Society being
conducted in a manner detrimental to the interest of the
members and looking at the housing cost as at present,
the member concerned must be allowed to earn some
income on the investment he has made and a good
member of flats remain unoccupied for various reasons
and if non-occupancy charges are allowed at the rate,
the majority decide, it would be an additional impediment
in the flats being available on leave and licence or tenancy
basis, which does not in any way violate the provisions of
the Maharashtra Ownership Flats Act and the provision
of the earlier Bye-law No : 45, empowering the General
Body of the Society to fix the non-occupancy charges,
was being abused by some of the societies, which cannot
be allowed to use the authority under the bye laws, a
vehicle for making money and exploit the minority
members, as it is not the business of the societies to
impose taxes and derive income by different modes, like
non-occupancy charges etc. The Hon’ble High Court came

to the conclusion that the exercise of the power by the
State Government is bonafide one with the objective to
avoid unnecessary litigation and disputes and bringing
uniformly in the rate of nonoccupancy charges without
linking the same to the income derived by the concerned
member or the rateable value of the Flat and to prevent
the exploitation of minority members. The argument on
behalf of the Societies that the entire property of the
Society was assessed as one Unit for Municipal Taxes
and the flats given on rent or lease and licence basis would
add to the rateable value component thereby, giving rise
to increase in such taxes did not find favour with the High
Court as of no significance and need not be considered,
as each flat is assessed separately for Municipal taxes
with effect from 1st April 2006.
Thus, the issue of the quantum of the non-occupancy
charges has been finally settled by the Hon’ble Bombay
High Court by its Judgment dated 2nd March 2007 by
upholding the Government Order dated 1st August 2001,
prescribing the non-occupancy charges not more than
10% of the service charges, excluding property taxes, both
in respect of residential as well as commercial premises,
irrespective of the fact whether the new Bye-laws are
adopted by the Societies or not. This Judgment has
brought in a great relief to the members of the Societies,
who give the flats on rent or leave and licence basis.

However, this judgement has been challenged before the
Hon’ble Supreme Court of India, which, after preliminary
hearing has passed the order dated 30.4.07, as “Interim
order passed by the High Court shall continue in the
meantime.” Therefore, no society can charge more than
10% as non-occupancy charges, unless ruled otherwise
by the Hon’ble Supreme Court of India.

Transfer / Sale of flats in society in Maharashtra

By Legal Bureau

Q.1. For sale of shares and flat in a Co-operative Housing Society, is it necessary to enter into any written Agreement by and between a member and the intending Purchaser ?

Under the Contract Act there can be an oral agreement which is not in writing. Such an oral Agreement is valid and binding on the parties thereto. Under the Transfer of Properties Act also it is not necessary to enter into an Agreement in writing for the sale of the shares or rights of a member in the properties of the Co-operative Society. Such an Agreement can be an oral Agreement. The Maharashtra Co-op. Societies Act, 1960, Maharashtra Co-operative Housing Societies Rules, 1961 and the Model Byelaws of Co-operative Housing Societies, no where mention or provide that such an Agreement should be in writing.

The relevant Sections of the said Act for transfer of Membership is Section 29, which is negative in form, providing restriction on transfer. Under the said Section certain conditions are prescribed. But no where is it mentioned that there should be an Agreement in writing for the Sale of shares and the rights in property of the Co-operative Society. Rule 24 of the said Rule prescribes procedure for transfer of shares. Under the said Rule also there is no mention of any Agreement or an Agreement in writing. Clause 40 of the Model Bylaws of Co-operative Housing Societies, which provides for the notice of transfer of shares and interest in the capital of the property of the Society. Clause 40 (D) provides for the documents to be submitted along with the application for transfer. There is no reference whatsoever that any Agreement or a copy of any Agreement should be furnished to the Society. Therefore, there is no need for an Agreement in writing or furnishing an Agreement for Sale or a copy thereof to the Society. Under the provisions of Contract Act, Transfer of properties Act, Maharashtra Co-operative Societies Act, 1960, Maharashtra Co-operative Societies Rule 1961 and the Model Bye-laws of Co-operative Housing Society. it has been recently held by the High Court of Judicature at Bombay in its Judgement passed in Writ Petition No. 2094 of 1994, Shri. Harish G. Bulchani V/s. Shri. Subhash Manoharlal Arora and Others reported in 1992 (2) All Maharashtra Law Reporter, Page 349, that if a member or Intending Purchaser does not produce Agreement for Sale and if its not required under the Maharashtra Co-operative Societies Act, Rules or Bylaws then it could not be a valid the ground of refusal to transfer the shares and the rights of a member in a property of the Co-operative Housing Society. Therefore it is not necessary for a transferor or transferee to produce any Agreement or copy thereof to the Co-operative Housing Society.

Q.2) Is it possible to enter into oral Agreement for Sale without executing an Agreement for Sale and paying stamp duty thereon ?

The stamp duty is payable only if an Agreement for Sale has to be executed in writing. In case of Oral

Agreement for Sale of shares and the rights in property by a member to intending Purchaser, if there is no Agreement in writing, then the question of payment of any Stamp Duty does not arise.

Q.3) Is it necessary to Register Agreement for Sale between a member of the Co-op. Housing Society and the Intending Purchaser ?

Section 41 of the Maharashtra Co-op. Societies Act Specifically provides for exemption from compulsory registration of an Instrument relating to shares and debentures of the Society. Nothing in clause (b) and (c) of sub – section (1), of section 17 of the Indian Registration Act, 1908, shall apply to any instrument relating to shares in a society, notwithstanding that the assets of the society consist in whole or in part of immovable property. Therefore, under the said Section it is specifically mentioned that such an Agreement does not require registration. In fact it has been held by Bombay high Court in its Judgement in USHA DONGRE VS. SURESH KOTWAL reported in 1990 Maharashtra Law Journal 306 that such an Agreement does not require Registration . Therefore, such an Agreement is not required registration with the Sub-Registrar of Assurances.

Q.4) Is the second part of the Notification or Circular issued by Commissioner for Co-operation and Registrar, Co-operative Societies dated the 18th February, 1994 valid ? Are Co-op. Societies or members thereof bound to comply with it ?

As stated in answers to earlier questions the Co-operative Societies Act, Rules and Bylaws do not provide for any Agreement for Sale between a member and intending members to be in writing or payment of the stamp duty thereon. As stated in earlier answers it is not necessary to register such an Agreement between a member and the new member of the Society. If the said Act, the said Rules and Bylaws of the Society or Indian Registration Act not require such a Agreement to be in writing, then the question of payment of Stamp Duty on the same will not arise if such an agreement is not in writing. Similarly, neither the said Act nor the Indian Registration Act requires Registration of such an agreement.

In fact the 2nd part of the said circular amounts to imposing of tax on the citizens. Citizens will have to pay Stamp Duty and Registration fees even though the Acts and Rules do not provide the same. Under Article 265 of the Constitution of India no taxes can be levied or collected except by authority of Law. Stamp Duty and Registration charges can be imposed only by legislation. The Commissioner cannot levy taxes which he has purported to do through his circular. The said Circular is bad in law and against the provisions of the said Act, the said Rules, the Indian Registration Act and against the Judgements of Bombay High Court which have been referred in answers to earlier questions. It is ultra-vires of Article 265 of the Constitution of India. It is respectfully submitted that 2nd part of the same is, therefore, illegal, unlawful, invalid and not binding on the Society or the members or the intending Purchasers.

Q.5) Is Commissioner’s aforesaid Circular is valid because it is issued after the judgement of the Bombay High Court in USHA DONGRE VS. SURESH KOTWAL ?

By Circular, Commissioner cannot validate which is unconstitutional or invalid under any Act or Rules. Section 41 of the Maharashtra Co-op. Societies Act and the Judgment in USHA DONGRE VS. Suresh KOTWAL make it abundantly and absolutely clear that such an Agreement for Sale does not require registration. The Commissioner, Circular dated the 18th February, 1994 is beyond jurisdiction and it is contrary to and inconsistent with the provisions under the said Act, the said Rules, the said Bylaws, Indian Registration Act and Article 265 of the Constitution of India.

Q.6) In a case of Sale of Flat by Builder or Developer to Flat Purchaser, can there be an Oral Agreement ?

The aforesaid questions and answers are with reference to sale of shares and flat by a member of a Co-op. Hsg. Soc. To an Intending Member. The law relating to purchase of a flat from a builder is not governed by Maharashtra Co-op. Societies Act but is governed by The Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale , Management and Transfer) Act, 1963. Under Section 4 of the said Act it is necessary that Agreement has to be in writing and it must be duly registered. Therefore, such an Agreement between the Builder and Flat Purchaser has to be in writing and has to be stamped as per Bombay Stamp Act 1958 and needs to be registered.

Q.7) Is it necessary to register an Agreement for Sale of purchase of a Flat from Flat Purchaser (and not builder) wherein a Society is not registered ?

The Agreement between the Flat Purchaser and another purchaser is not governed by the provisions of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 and therefore, it is not necessary to have such an Agreement registered with the Sub Registrar of Assurances.

Society’s Rights under Dispute amongst Legal Heirs

By Legal Bureau

If there is a dispute amongst legal heirs of the deceased member then the Society should tell the claimants to produce a Succession Certificate/Letter of administration from the Competent Court. Till the time the Succession Certificate/Letter of Administration is not obtained the Society may not transfer the flat.

DISPUTE RESOLVING MACHINERY

Co-operative movement was initially sponsored by the state. Apart from the public sector and the private sector, Co-operative sector has now come into existence. The Co-operative sector has the benefit of both the public sector as well as private sector. One of the principles distinguishing the Co-operative sector from the private sector is that the control of Co-operative enterprises is not in the hands of the capitalist who corner the share capital. The Co-operative sector is based on the principal of “one man one vote”. The beauty of the dispute resolving machinery is that even a single member who is aggrieved can approach the court/registrar for redressal of his grievances. With the passage of time a need was felt to provide a separate chapter on settlement of disputes and accordingly chapter nine consisting of Section 91 to Section 101 has been incorporated in the Maharashtra Co-operative Societies Act, 1960. Some type of dispute have to be referred to the registrar and some types of disputes have to be referred to the Co-operative Court. The Registrar of Co-operative society is a quasi-judicial authority. The Registrar of Co-operative society has the power as regards refusal of membership by the society to a prospective member. (Section 22 and 23). If the party is aggrieved by the decision of the Registrar or its subordinate then a provision exists for revision application under section 145 of the Act before higher authority i.e. joint Registrar of Co-operative Societies and even before the State Government under the said Section, 154. Finally the remedy under Writ Petition under Article 226 or 227 of the Constitution of India is also available to the aggrieved person in extra ordinary circumstances. Even at the time of expulsion, if passed with ¾ majority under Section 35 of the Act has to be submitted to the registrar and only after his approval can the society take steps to expel the member. The Registrar has power under Section 77A to appoint a new committee or administrator when there is a failure to elect member to constitute committee. Under Section 78 the Registrar has power to remove the managing committee or the members of the managing committee. The Registrar under Section 79 has powers to enforce performance of obligation. Under Section 80 Registrar has power to seize records of the society. However, the Registrar or the person authorized by him must apply to the executive Magistrate within whose jurisdiction the society is functioning for seizing and taking possession of the records and property of the society. Under Section 81, the Registrar has powers to appoint an Authority to audit the accounts of the Society. Under Section 82, the Registrar has power to direct the society to rectify the defects in the accounts. The Registrar on receipt of complaint or on his own can initiate an enquiry under Section 83. The Registrar can also initiate action under Section 89 to summon and enforce an attendance of any person and examine him on oath or affirmation or by affidavit or to compel the production of any document in the same manner, as is provided in the case of Civil Court under the court of Civil procedure 1908. The Registrar has power to inspect the working of the society under Section 89A.

DISPUTES: WHOM TO APPROACH?

It is observed that many times people approach a different authority for redressal of their complaint. For normal day to day complaints such as- (a) Charging of compound interest, not issuing of passbook to members, not admitting the Purchaser as member of the society, recovery of the dues etc., the members of the public should approach the Registrar of Co-operative Societies. The Registrar has power under Section 77A of the Maharashtra Co-operative Societies Act to appoint members of committee, new committee or administrator when there is failure to elect members to constitute or whether committee does not enter upon the office. Under Section 78 The Registrar has power of removal of committee or member thereof. Under Section 79 the Registrar of powers to enforce performance of obligations. The member can approach the Co-operative Court under Section 91 if there are disputes between a member and the outgoing/incoming member. More powers are vested in the Co-operative courts. It is normally observed that as Co-operative courts take a long time, there is a tendency amongst the members to approach the Registrar of Co-operative Societies even in matters in which the Registrar does not have the jurisdiction. Section 91 of the Co-operative Court relates to dispute between a member of the society and another member of society, or the dispute between the employees of the society and the society or its members are govern under Section 91 of the Co-operative Societies Act. The value of flats is in lakhs if not in crores of rupees. Thus the jurisdiction of Co-operative court is unlimited and is almost on par with those jurisdiction of High Court as far as pecuniary jurisdiction is concerned. If a member is not paying the dues then also the society can approach the Co-operative court for recovery of dues. Election dispute challenging the Managing Committee of any Co-operative society have also be referred to the Co-operative Court under Section of the Act. It is observed that though the Co-operative Courts have jurisdiction to try and entertain the disputes amongst members pertaining to property matters of lakhs of rupees then also the infrastructure Section 23 (with regards to transfer of flats) or Section 35 (expulsion of members) or Section 77A (appointment of members of committee, new committee or appointment of administrator), Section 78 (power of removal of committee or member thereof) or under Section 81 audit, Section 83 enquiry by Registrar then in such cases an appeal is provided under Section 152 of the Co-operative Act before the Divisional Joint Registrar in Charge of the appeals.

 

Can Society transfer the Share Certificate in the name of the nominee in spite of objections from legal heirs?

By Legal Bureau

Lets  deal with the above query in detail, since similar problems are faced in many co-operative societies.
For instance, a person has been nominated as a legal nominee by the deceased member in the records of a co-operative housing society. The said deceased husband died in Mumbai in 1999, leaving behind him his wife and his two adult sons. The sons have filed their objection with the society and requested them not to transfer the share certificate in the name of their mother, although she is the nominee of the flat as per the records of the society.
Section 30 of the Maharashtra Co-operative Societies Act 1960 deals with the provision of transfer of interest which is as under :-
Section 30(1) : On the death of a member of a Society, the society shall transfer the share or interest of the deceased member to a person or persons nominated in accordance with the rules. Or if no person has been so nominated, to such person as may appear to the committee to be the heir or legal representative of the deceased member.
Provided that such nominee, heir or legal representative, as the case may be duly admitted as a member of the Society.
All transfer and payments duly made by a society in accordance with the provisions of Section 30(4) shall be valid and effectual against any demand made upon the society by any other person.
Rule 25, for the purpose of transfer of his share or interest under sub-section (1) of Section 30, a member of a Society may by a document signed by him, or by making a statement in any book kept for the purpose by the society, nominate any person or persons. Where the nomination is made by document, such document shall be deposited with the society during the members life-time and, where the nomination is made by statement it shall be signed by the member and attested by one witness.

Rule 25 Section 3
Where a member of a society has not made any nomination, the society shall on the member’s death by a public notice exhibited at the office of the society, invite claims or objections for the proposed transfer of the share or interest of the deceased within the time specified in the notice.
After taking into consideration the claim or objections received in reply to the notice or otherwise, and after making such inquiries as committee considers proper in the circumstances prevailing, the committee shall decide as to the person who in its opinion is the heir or the Legal Representatives of the deceased member and proceed to take action under Section 30.
However, what is important is the section and not the rules and bye- laws in as much as the rules and bye laws cannot provide everything contrary to the section. It is very clear on the plain reading of the section that the intention and purpose of Section 30 of the Maharashtra Co-operative Societies Act is to provide for who has to deal with the society on the death of a member and not to create a new rule of succession. The purpose of the nomination to make certain that the person with whom the society has to deal on the death of a member. The society has to deal with the legal nominee who has been nominated by the deceased member on the records of the society. The purpose of this section is to avoid confusion in case there are dispute between the heirs and legal representatives and to avoid uncertainties as to with whom the society should deal to get proper discharge. The society is not concerned with any kinds of dispute raised by any person whosoever, so for the transfer of membership of deceased member to his nominee is concerned. Nevertheless all the persons entitled to the estate of the deceased as per succession law applicable to them do not lose their right to the same, even after transfer of the shares in the name of the deceased member.

It is pertinent to note that transfer of any property including share of the society is not governed by the ordinary law but by the provisions of the Maharashtra Co-operative Societies Act, and the rules and bye-laws framed by the Society. However, the right of society to admit a person of its choice as a member cannot be exercised arbitrarily and so as to deprive person of his/her right to the shares or property of a deceased member. The law does not give a right to the society to refuse membership to a person who is entitled to become a member. To repeat, a society has the right to admit a nominee of a deceased member of an heir or legal representative of deceased member as chosen by the society as a member. A member of the society will have to obtain relief in the normal court against such person and have his rights ascertained and declared, and thereafter apply to the society on the basis of the Court Judgement to make him a member of the society.
Whether nomination is will
From the requirements for making a nomination, one may feel that nomination is Will. But is reality the Nomination is not a Will. Will as nomination filed in accordance with the provisions of rule and bye laws in the prescribed form and general intention (which is must in the Will) is not to provide for succession after death of a member.
Status of a Nominee
The provisions of nomination is found in various Acts, for example, L.I.C., Provident Fund, Gratuity, but the nomination does not create any title or interest in favour of the nominee. In a recent case under the Insurance Act, the Supreme Court in SMT SARBATI DEVI versus SMT USHA DEVI reported in A.I.R. 1984 SC, 346 held that it does not confer any beneficial interest in the nominee and the other heirs can claim the amount in accordance with the law of succession governing them. Therefore as a principal as can very well say that nominee is mere trustee with whom society can initially or prima facie deal with and after the death of a member, all the heirs of the deceased member will have a right of succession to the property, and the nominee cannot exclude other heirs. In other words the provisions of ordinary succession law will not be affected by nomination.
In view of aforesaid facts and the judgement, it is simply clear that the society will have to transfer the shares in the name of the nominee, irrespective of any objection being raised by any other person unless and until the aid objections obtain relief in the normal court against the nominee and society. In my opinion the society has no alternative except to transfer the shares in the name of the nominee.

 

Society Dues recoverable only within three years

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.

Carpet area with new standards for building measurements, RERA

By Legal Bureau

In order to unify and standardise the method of measurement of plinth, carpet and rentable areas of buildings, the Method of Measurement of Works of Civil Engineering Sectional Committee, CED44 of Bureau of Indian Standards has brought out and Indian Standards, namely IS3861:1975 Method of Measurement of Plinth Carpet and Rentable Areas of Buildings (first revision).
The standards defines various important terms like plinth areas, carpet area, rentable area, balcony, staircover (mumty), loft and porch. It stipulates that the areas of basement, floor without cladding (stilled floor), floors including top floor, which may be partly covered, mezzanine floor, and garage shall be measured separately. For measurement of plinth area of the above categories, the various areas required to be included and those not to be included in the plinth area are clearly mentioned. From the plinth areas as worked out above, the carpet areas if obtained by deducting the are of wall in accordance with the method given in the standard, which details the wall areas to e include and excluded. The carpet area so obtained shall exclude the areas of portions like verandah, corridor and passage, entrance hall and porch staircase and stair-cover (mumty), shaft and machine room for lift, bathroom and lavatory, kitchen and pantry, store, canteen, air-conditioning duct and plant room and shaft for sanitary piping in accordance with the provisions of the standard.
Apart from plinth and carpet areas, the standard also gives the method of measurement of rentable areas for residential and non-residential buildings by adding certain areas to the carpet area. It clearly mentions the areas to be included and excluded while working out the rentable areas.
It is recommended that the architects, engineers, government detects, engineers government departments, contractors, builders, developers and promoters and all other concerned should adopt/implement this Indian Standard for uniform implementation of the standard method of measurement of areas of buildings, especially in the interest of common consumer.

Now RERA is also having definition on carpet area. Any area wall to wall, below internal walls, column and all usable FSI is counted in carpet area.

1 2