Managing Committee

This page will provide visitors with details on Cooperative Housing Society managing committee's rights and liabilities as well as examine all legal issues associated with them. Issues regarding a CHS Secretary's right to inspect a member's flat to ascertain repairs; getting a society officer to evict office; laws affecting NRIs and more have been dealt with in detail in print and online by legal counsel Gajanan Khergamker. You could contact him to avail legal services here. Click on any of the links below to read the full article:

The Secretary Can Inspect Member's Flat To Ascertain Repairs
Getting An Officer Of Society To Evict Office
Getting A Society's Accounts Verified, Audited
The Laws Affecting NRIs
Clear Title Needed For Mortgage Too!

The Secretary Can Inspect Member's Flat To Ascertain Repairs

According to bye-law number 156, every member of a cooperative housing society should allow the secretary of the society to examine his or her flat to check and report about repairs that need to be undertaken.

The secretary of the society can be accompanied by any other member of the committee to ascertain the amount of repairs that need to be carried out in a member’s flat. After carrying out such examinations, the secretary should make a report to the committee indicating within it the particulars of the repairs that need to be carried out by the society at its cost and those by the members at their cost. Besides the secretary of the society no other society member has the right to violate the privacy of other members by asking for an examination of his or her flat.

Once the managing committee of the society receives such a report, the committee should ascertain the cost involved in the repairs that are required to be carried out by the society as specified under bye-law number 160 (a). The committee can then issue a notice to be served to the concerned member to announce their intention to carry out such repairs. The member concerned should allow the workmen – engaged by the society directly or through its architect – access to his flat for the purpose of carrying out repairs.

If the concerned member fails to provide access to such workmen without any reasonable or convincing reasons, the secretary of the society has the authority to enter into such flats and carry out the work under the supervision of the member of the committee duly authorised by it in that behalf or the architect appointed by the society.

Very often though, there are many repairs that need to be carried out by members at their own cost. In such cases, the committee can serve a notice to the concerned members. The notice should clearly indicate the particulars of the repairs necessary to the member’s flat and call upon the member to carry out the repairs in his flat t his own cost and to the satisfaction of the architect approved by the society. The notice can also include a time period within which the concerned member should carry out these repairs.

If a member fails to comply with the notice, the secretary of the society or the architect appointed by the society has the right to enter into such a flat and cause the repairs to be made after giving due notice to the member concerned. The amount spent by the society on such repairs would then be recoverable from the member concerned.

Getting An Officer Of Society To Evict Office

By Gajanan Khergamker

If a motion of no-confidence is passed by two-third majority of the total number of committee members entitled to vote at the election of managing committee members, any officer of the society shall cease to hold office.

The requisition for such a special meeting shall be signed by not less than one-third of the total number of members of the committee who are entitled to elect the managing committee member, as the case may be, of the committee and shall be delivered to the Registrar.

The requisition shall be made in such form and in such manner as may be prescribed and provided that, no such requisition for a special meeting shall be made within a period of six months from the date on which any of the officers mentioned has entered upon his office.

Within seven days from the date of receipt of the requisition, the Registrar shall convene a special meeting of the committee. The meeting shall be held on a date not later than fifteen days from the date of issue of the notice of the meeting. The meeting shall be presided over by the Registrar or such officer not below the rank of an Assistant Registrar of Cooperative Societies authorised by him in this behalf.

The Registrar or such officer shall, when presiding over such meeting, have the same powers as the President or Chairman while presiding over a committee meeting has, but shall not have the right to vote.

The meeting called under this section shall not, for any reason be adjourned. The names of the committee members voting for and against the motion shall be read in the meeting and recorded in the minute book of committee meetings.

If the motion of no-confidence is rejected, no fresh motion of no-confidence shall be brought before the committee within a period of one year from the date of rejection of such a motion.

Getting A Society's Accounts Verified, Audited

By Gajanan Khergamker

Every cooperative housing society should have their books of accounts audited at least once every cooperative year. Auditing is the verification and examination of books of accounts regularly audited by a statutory auditor.

The Registrar of societies also has the right to enforce additional audits at any time of the year according to his discretion. Housing societies can approach an auditor from the panel of auditors maintained by the Registrar or by a chartered accountant who holds a certificate in cooperative audit issued by the institute of Chartered Accountants in India.

An audit generally includes the examination and verification of the following points:
a) Overdue of debts, if any;
b) Cash balance and securities valuation of the assets and liabilities of the society;
c) Whether loan, advances and debts made by the society on the basis of security have been properly secured and the terms on which such loans or debts are incurred are not pre-judicial to the interest of the society and its members;
d) Whether the transactions of the society which are presented merely as book entries are not pre-judicial to the interest of the society;
e) Whether personal expenses have been charged to the revenue account;
f) Whether the society has incurred any expenditure in furtherance of its objects;
g) Whether the Managing Committee is taking proper care to deposit the share money collected from the members specified securities or long term deposits as specified in the Bye-laws.
h) Whether the Cash on hand is exceeding the limits prescribed in the Bye-Law number 143. While it is necessary for the society to maintain a minimum cash balance, the treasurer or secretary should always deposit additional cash into the bank.

The Registrar may on his own or on the urging of interested parties depute a ‘flying squad’ to examine the books, records, accounts and any other society papers to verify the society’s cash balance. During this period, the Registrar or an officer deputed by him can ask any person who is or has been at any time an officer or employee of the society or any past or present member of the society to furbish information regarding the transactions and working of the society.

If during the course of an audit, the auditor believes that some books of accounts or other documents contain any incriminatory evidence against past or present officers or employees of the society, the auditor can immediately report the matter to the Registrar. The auditor can also, with previous permission from the Registrar, impound the books or documents after giving a receipt thereof to the society.

The Laws Affecting NRIs

By Gajanan Khergamker

Until some ago, investing in immovable properties for NRIs was quite an uphill task. In the days of the Foreign Exchange Regulation Act, the buying or selling of immovable property was governed by the citizenship of a person.

At present, the term Non-Resident Indian means a person residing outside India who is either a citizen of India or is a person of Indian Origin who is no longer a citizen of India. An Indian citizen who stays abroad for the purpose of employment, business or to pursue any kind of vocation outside India or under circumstances indicating an intention for an uncertain duration of stay abroad is a non-resident Indian. In addition, non-resident foreign citizens of Indian origin are treated on par with Indian NRI citizens for the purpose of many investment related facilities.

To avail of a number of facilities in India such as opening and maintenance of bank accounts or investment in shares and securities in India, the term ‘Person of Indian Origin’ means a citizen of any other country other than Pakistan or Bangladesh who,
(a) at any time has held an Indian passport;
(b) he or either of his parents or any of his grandparents was a citizen of India by virtue of the constitution of India or the Citizenship Act, 1955 (57 of 1995);
(c) is a spouse of an Indian citizen.

For investments in immovable property, a Person of Indian Origin covers the same criteria. But it also debars citizens from neighbouring countries such as Pakistan, Bangladesh, Afghanistan, Bhutan, Sri Lanka, China, Iran or Nepal to be called a ‘Person of Indian Origin’. All persons whether residing in India or outside India who are citizens of the above said countries require prior permission of the Reserve Bank of India for acquiring or transferring any immovable property in India.

A person of Indian origin residing outside India does not require permission to acquire any immovable property in India other than agricultural land, farmhouse or a plantation property by way of gift from a person who is a resident of India or a person who resides outside India but is a citizen of India or from another person who is of Indian origin but resides outside India. The same holds true in the case of inheritance too. This means that a person of Indian origin residing outside India does not require permission to acquire any immovable property in India through inheritance from another person residing outside India who had acquired such property in accordance with the provisions of the foreign exchange law in force at the time of acquisition.

Non-resident Indians and persons of Indian origin can also freely rent out their immovable property in India without seeking any permission from the Reserve Bank. The rental income being a current account transaction is freely reportable outside India.

Clear Title Needed For Mortgage Too!

By Gajanan Khergamker

Just like buyers take tremendous care before buying a property, financial institutions such as banks too take the same amount of care, when investigating the title of the property they are considering for mortgage. In the course of their appraisal, they are not likely to accept copies of title deeds believing rightly that they may not actually be the document of title. The only exception being situations in which the original has been destroyed or irretrievably lost and is no longer in existence.

Even in these extreme situations, they are likely to accept only certified copies of the title deeds issued by the Registrar of Assurances where there is conclusive proof that the originals have been destroyed or irreversibly lost. Keeping in mind the government’s rights over the mortgage in the bank’s favour in the event of the borrower keeping the land revenue or other public dues in arrears, bank officials ensure that everything is free of any irregularities. They will make sure that the land revenue and municipal taxes due on the immovable property have been paid until date and also future dues are paid promptly.

To avoid any claim of priority under section 295 of the Income Tax Act, they will also make sure that there are no outstanding tax dues. Advocates and solicitors may also be asked to make sure that the documents of title are complete in all respects and that documents convey a clear, absolute and marketable title to the property. Bank officials will make sure that the property offered as security to the bank is unencumbered and unattached. They will make sure that the persons seeking to secure the property to the bank have a clear and marketable title to it and are legally capable of creating a charge on it in favour of the bank.

If the said property is subject to tenancy laws, it will affect the bank’s right eventually to take possession or to be sold or any other rights that they can exercise in the future, so checks on this scenario will also be carried out.

Besides this, financial institutions are also likely to carry out searches among records with the Sub-registrar of Assurances, Collector and / or other revenue authorities to ascertain whether there is any outstanding mortgage or charge on the property to be mortgaged to the bank. There are a number of fraudsters that are constantly doing the rounds and banks routinely examine documents to verify their authenticity to make sure that they have not been provided with forged title deeds.

There are a number of additional checks that financial institutions carry out such as verifying the schedule of the property, where it is situated and its registration with the sub-registrar’s office. Next they may also verify the consideration paid in the document, authenticate the stamp duty affixed on the said document plus examine the security marks on the paper which are visible only on a close examination. If the stamp paper is mutilated in any manner, they are quite likely to get suspicious.