New model bye-laws are being adopted by thousands of co-operative housing societies
Thousands of co-operative housing societies are adopting the new model bye-laws every week, following government directions to complete the process before 30th May 2013. Less than one percent of these societies’ may have read the provisions before adopting these bye-laws. Even if a few persons have studied them, almost nobody will have taken the initiative to modify them before adopting them.
Not all the changes in the new model bye-laws are based on recent amendments in Maharashtra Co-operative Societies (MCS) Act 1960. Some changes have been arbitrarily made by the Co-operation Department. Though seemingly well-intentioned, some new provisions have dangerous side-effects. Let me point out just one such provision here.
Download the official model bye-laws: http://sahakarayukta.maharashtra.gov.in/SITE/PDF/Rules_Acts_Bylaws/Model_ByeLaws_of_Housing_Cooperative_societies.pdf
Read bye-law no. 170(a), which was not there earlier. It says, “All open /common spaces meant for use of all members for eg. staircase, steps, landing areas, parking areas, lift, corridor, and such other spaces, cannot be occupied by any member for his own use. The use of such areas shall be restricted to the cause for which these are meant. Any member found to be violating the above condition by encroachment shall have to vacate the encroachment and further he /she shall pay an amount equal to five times the monthly maintenance charges per month for the period for which he/she has encroached such spaces and further members must not carry out any constructions, structural changes over and above the sanctioned plan without prior permission of the society and concern municipal authorities. Also members must not use the flat /unit for which it was meant /sanctioned. Any member violating the above directives shall pay an amount equal to five times the monthly maintenance charges, per month with retrospective effect for the period for which such violation is existed.”
At first, this sounds great! We all agree that societies must discourage encroachment with exemplary penalties. But let us apply this bye-law to a case study and see what happens.
CASE STUDY: SHOE RACKS IN THE LOBBY
Mr Agarwal and three neighbours living on tenth floor of Mumbai’s Sangharsh Co-op. Housing Society have placed shoe-racks, flower-vases and decorative lighting in the spacious lift lobby outside their flats. Agarwal and one other person have constructed marble benches fixed to the wall, with shoes cabinets underneath. This arrangement does not obstruct the separate stairwell, and has never caused inconvenience to anyone.
However, it has caused jealousy to Mr Desai, a former friend of Agarwal. Desai has some photos taken after a children’s party, showing that the marble bench outside Agarwal’s house was there since April 2008.
Desai complains to the managing committee, and insists on penalty being levied as per the newly adopted bye-laws. So the society issues a notice to remove all the shoe-racks, benches etc.
It also sends Agarwal a bill for penalty amount calculated as per bye-law no. 170(a):
(i) Monthly Maintenance bill = Rs 12,000
(ii) Penalty for encroachment with retrospective effect = Rs 12,000 x 5 = Rs 60,000
(iii) Penalty for encroachment for the last five years i.e. 60 months = Rs 36 lakhs
Similar bills are sent to the other three residents of that floor, for varying amounts between Rs 6 lakhs and 36 lakhs.
In the next month, Agarwal receives the following bills:
(a) Monthly Maintenance Bill – Rs 12,000
(b) Monthly penalty amount – Rs 60,000
(c) Monthly simple interest @ 21 percent per annum (see bye-law 72) on Rs 36 lakhs – Rs 63,000
TOTAL MONTHLY BILL OF RS 1.35 LAKHS
The monthly interest shown in item (c) will increase in geometric proportion for every month if Agarwal does not promptly pay the penalty amount. At 21% per annum, interest on Rs 60,000 is Rs 1050. So, in the second month after the society’s unpaid penalty, Rs 1050 will be added to his amount. In the third month, Rs 3150 will be added. In the fourth month, Rs 6,300… and so on!
After the third month, the society will be duty-bound to issue notices proclaiming Agarwal and his neighbours as defaulters, and initiate recovery proceedings under Section 91 or 101 of the amended MCS Act.
In other words, the matter will definitely land up before the Registrar or before Co-operative Court. There is no chance of its being resolved easily.
Can you imagine the anger and fear that Agarwal, his neighbours and their families will be feeling in these months? Does anybody believe for a moment that they will quietly pay such an unbelievable penalty amount demanded by the society? Don’t you think that they will fight tooth and nail by every possible means—lawful and unlawful, to avoid paying such crushing penalties?
These provisions are like time-bombs waiting to explode after a few months. They will cause a huge outbreak of bitter quarrels and enmities in housing societies that will be costly and impossible to resolve. All the societies where bye-law no. 170(a) is implemented will become like Sangharsh Co-op. Housing Society.
BOTTOMLINE: PLEASE DELETE OR MODIFY 170(a) BEFORE ADOPTING THE MODEL BYE LAWS. Societies that have already adopted them must urgently call another Special General Meeting for this purpose.