When a cooperative housing society (CHS) decides to undertake major repairs to its building, the managing committee cannot simply hire the services of a local builder for the work. In the interest of transparency and to avoid misuse of funds, there are specific bye-laws which clarify that resident members should be consulted before any major repair work and that due process is to be followed to evaluate the scope of work involved while inviting cost quotations from prospective firms.
The entire process of selecting the right builder, evaluating cost proposals, and the scope of the work involved, has to be made transparent by the managing committee. Failing to do so can result in the dissolution of the managing committee by the deputy registrar. This week, I will address one such case where a managing committee has failed to invite tenders for major repairs and has avoided revealing the cost quotations that it has received.
Lack of Transparency in Awarding Contracts for Major Repairs
Question: Our managing committee (MC) is doing work of major repairs, but somewhere down the line, it seems to be lacking transparency and is not following the due procedure as per bye-laws while awarding contracts for such repairs, as per bye-law 157(c) and 157(i), which is mandatory. They were bound to convene a special general body meeting before awarding the contract. This is what I have understood from the bye-laws.
However, there has been no official communication from the MC to members regarding the aforesaid, nor has the MC shared the different quotations they received, along with the scope of work and other critical financial aspects as per the quotation. The MC has not even bothered to inform the members that the contract for the major repairs has been awarded.
Request for your guidance and what action we can take to maintain transparency while awarding contracts. The MC has just announced that they will be collecting an amount of Rs16 crore from the members towards major repairs.
Answer: You rightly said that transparency in awarding contracts for major repairs is lacking in your Society. You have also correctly mentioned the bye-laws under which such transparency is mandatory.
For any repairs above Rs1 lakh (termed as major repairs), the MC has to follow a mandatory process of calling for tenders and evaluating them in the presence of members in a general body meeting and a Society-appointed experienced structural engineer.
Since it is clear that your Society has not followed such a process, you should file a complaint against the MC to the deputy registrar of cooperative societies (Dy RCS), under bye-law no. 174(A)(xxii). The deputy registrar shall then call a hearing in his office seeking justification from the MC and would pass an order to enforce bye-laws 157(c) and 157(i) to follow the mandatory process of awarding contracts for major repairs.
If your Society has already awarded the contract, then you should make a complaint against MC in cooperative court, under bye-law no. 174(B)(iii). Before approaching the cooperative court, please complete a structural audit of your Society's building from a local municipality-approved architect. This will give you a good estimate of the repairs needed for your building and the approximate cost, which will serve as the basis of your argument in the cooperative court.
Also, it would be best to hire the services of an experienced advocate who is an expert in handling such building repair cases in cooperative court.
Transfer of Property with an Unregistered Will
Question: My mother, in Mumbai, is a member of a CHS. Shares are in her name. She has nominated my brother as per the Society's norms and also made a Will mentioning his name. Due to her advanced age of 96 years, she is not able to go out at all, so the Will has been notarised but not registered. Through a separate letter, the advocate/notary has also informed the Society that such a Will has been made and it shall be produced at the appropriate time.
There is absolutely no chance of contesting the Will at any point of time. I want to understand whether not registering the Will would cause my brother problems getting the flat transferred in his name and making him a member.
Answer: If your mother cannot go out, then after paying visiting charges, the sub-registrar of assurances will come to your home, to register your mother's Will, before or after his office hours, that is, between 6am and 7am (before the first shift) 2pm and 3pm (after a first shift or before the second shift) and 9pm and 10pm, (after second shift), Monday to Friday.
If the Will is registered with sub-registrar of assurances office, and it is witnessed by two witnesses, then for getting its probate, it only takes 15 days to three months. If it is not registered with sub-registrar of assurances office, it takes six months to one year in get its probate.
Even an unregistered hand-written Will, signed by two witnesses is a legally valid Will, which can be probated, but it takes more time to probate such a Will, perhaps a year to two years.
NOTE
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Shops in Residential Society Refuse To Pay Sinking Fund
Question: In my housing Society, there are eight flats and four shops. Shop owners refuse to pay sinking funds and have decided to manage certain common expenses such as electricity, and water charges, by themselves. Kindly advise whether this is legal. What action can be taken against this?
Also, some members whose names do not appear in the sale agreement have been attending the annual general meeting (AGM). Please clarify whether such persons have any right to do so.
Answer: A person whose name appears in the sale agreement will have a share certificate issued to them bearing their name. Any other person is, therefore, not a shareholder of the flat or shop in the Society and cannot attend the AGM or any meetings of the Society.
It seems that your Society is not aware of how maintenance charges should be levied. Kindly see the details below, which will explain how maintenance charges will be applied.
Maintenance charges are levied in a society based on bye-law nos. 65 to 71. Bye-law no. 65 gives different headings (17 headings, (a) to (q)) under which maintenance can be charged. Bye-law No. 66, gives a detailed break up of the service charges listed in bye-law 65(g), which covers 13 headings, (a) to (m), which have to be equally charged to all the members.
Bye-Law No. 67(a) gives a break up in 16 parts, from (i) to (xvi), of charges, which are to be shared equally among members. Of these, the following six charges are only shared and calculated on the basis the area of the unit (flat/shop),
• Property tax as fixed by local authority, on built up area of each flat/shop.
• Expenses on repairs and maintenance of the building/s of the Society, at the rate fixed at the general body meeting from time to time, subject to a minimum of 0.75% annum, of the built up area of construction cost of each flat, for meeting expenses of normal recurring repairs.
• Sinking fund, as provided under the Bye-law No.13(c), at the rate fixed at the general body from time to time, subject to the minimum of 0.25% per annum of the built up area of construction cost of each flat/shop.
• Insurance charges, on the basis of built-up area of each flat/shop, provided that if there is an increase in the insurance premium due to storing any specific goods in any flat/shop, used for commercial purposes, the extra burden of insurance premium shall be shared by these who are responsible for such increased premium in the proportion of the built-up areas of their flat/shop.
• Lease rent on the basis of built up area of each flat/unit.
• Non-agricultural (NA) tax on the basis of the built up area of each flat/unit.
Furthermore, Bye-law in all cases where reference if to a specific bye-law a list of 27 services, from (i) to (xxvii), to be looked after by the Society, at their expense. Bye-law No. 71 says, if a member defaults in payment of his dues, then under this bye-law, a maximum of 21% simple interest can be charged to his defaulted dues till its payment.
If your Society tries to charge any of the charges on the area of the flat in violation of bye-laws as stated above then, under Bye-law No. 174(A)(xxii) make a complaint against your Society, with written proof, to the deputy registrar of cooperative societies of your area, to direct your Society to charge Society's maintenance, as per Bye-laws, as stated above.
Disclaimer: The guidance provided in these columns and on our Legal Helpline is on the sole basis of the facts provided by the reader/questioner and does not amount to formal legal advice in any form whatsoever.
(Shirish Shanbhag has an MSc in Organic Chemistry, Diploma in Higher Education, and a Diploma in French and has completed his LL.B. in first class in 2021. Before his retirement, he was a junior college teacher at Patkar College from July 1980 to May 2012, teaching theoretical and practical chemistry. Post-retirement in 2012, he started providing guidance and counselling to people on several issues, specifically focusing on cooperative housing society-related matters. He has over 30 years of hands-on experience in all matters about housing societies and can provide out-of-box solutions for any practical issue.)
