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SERVICE & MAINTENANCE CHARGES:

01. Under, “The Maharashtra Co-Operative Societies Act I960”, ONLY a Registered Coop. Society, is entitled to duly levy and recover “Service & Maintenance Charges” from its registered members.

a) The Society CANNOT levy or recover any charges from non-registered members.

b) The Society can levy service charges ONLY WHEN the Society provides “Common Amenities and Services” to its members.

c) IF any Services are NOT provided to members and IF charges are forcefully or misleadingly recovered from members (in which-so-ever manner), THEN the Society can be held liable for “Deficiency & Negligence” under the Consumer Protection Act.

d) Depending on various parameters, the Managing Committee (MC) may also be prosecuted under the Criminal laws, the Coop. Laws and the Consumer laws.

BUDGET PROJECTIONS OF INCOME & EXPENDITURE:

02. A Coop Society, MUST prepare yearly “Budgetary Projections” of its Income & Expenditures.

a) The consolidated & projected Expenditure has to be EQUALLY divided between the number of units (means Flats /Shops /Offices or whatever) AND ONLY then levy a fixed amount of “Service Charges” to each unit, via a duly prepared & duly issued bill.

b) Service Charges MUST be levied Unit-wise and NOT any otherwise.

c) Service Charges are NOT to be levied Unit-area-wise or say square-feet-wise.

d) Budgetary projections MUST be circulated & duly approved by the General Body, in a duly called General Body (GB) meeting.

e) Without GB approval of the Budgetary projections, disputed recovery of any increase in “service charges”, shall not be tenable in a Court of Law.

f) It is not the business of a Coop. Society, to earn .OR. accumulate money. Hence no other funds in any manner can be collected from members.

g) One unit is defined in the BMC approved floor plans, which is irrevocable. BMC approved one unit means one Share Certificate. Each Share Certificate, in turn means one Service Bill, irrespective of anything.

SERVICE & MAINTENANCE BILLS:

03. The Secretary is compulsorily liable to prepare “Service & Maintenance Bills”, on Monthly or Quarterly (or whatever agreed basis) and give it to the member, under due acknowledgement.

a) IF the Secretary fails to prepare “Service & Maintenance Bills” within the pre-determined time frame, THEN the Secretary is liable for his omission and any related loss to the Society (means loss of the Bank-Interest component, that the Society could have necessarily appropriated).

b) Here, the Secretary’s usual consistent RANTING claim of holding a “Honorary Post”, can lawfully be flushed down the sewage drain.

c) The Liability of the member, to pay the Bills, arises only after receiving the Service Bill. There is no concept of automatic billing or automatic payment of bills.

d) The member is not liable to pay Interest, when bills have not been received by him.

Note: RANTING MEANS: To utter in a high-flown, self-important way, with obvious intention to subdue & demoralize other members.

BMC PROPERTY TAXES:

04. The Society has to collect BMC Property Taxes, from the members, on behalf of BMC, and deposit the same, within the BMC bill period.

a) Members BMC Property Tax contributions, cannot be used for any other expense heads, irrespective of whatever reasons .OR. which-so-ever emergency.

b) Mandatory and Statutory Property Taxes are levied by BMC, on square feet area-wise, for each individual flat-owner (member). This is to be determined accurately from the “Property Tax Extract” document, that has to be obtained from BMC, for preserving the same on Society records..

c) To avoid recovery arrears, the Society should first clear off all the pending Property Tax bills and apply to BMC, to individualize each members portion of the Property Tax bills, into the name of individual flat-owner (member), to avoid subsequent defaulter members dues on Society accounts.

d) Property Tax for common areas of the Society building, have to be divided equally and borne by each member.

BMC WATER CHARGES:

05. The Society has to collect “Water Charges”, from its members:

a) On the number of each Inlet-pipe connected and going inside the members flat. This can be determined by Plumbing-Layout diagram, as approved by BMC.

b) Actual Water bill amount must be divided by the total number of Inlets, irrespective of water usage pattern.

c) Society is eligible to duly amend its Bye-Laws, to change the criteria for levy of water charges to members.

d) Common water charges (for Garden, Car washing, Lobby /Staircase washing, Fire-tanks, Rain-dance showers, Swimming pool ….), are to be borne equally by all members, irrespective of anything.

BORE-WELL WATER CHARGES:

06. Bore-well or Open-well or Grey-water or stored Rain-water …., may be supplied to members, vide separate tanks, BUT without any charges.

a) Bore-well Motor-Pump service & maintenance charges and electricity charges, are within the definition of “Common Amenity expenses” and are to be borne equally by all members.

b) Permission to dig Bore-well, in Mumbai, is to be duly sought from BMC (Pest Dept).

c) It would be an offence to mix bore-well water with Municipal supplied water, and can be prosecutable under the Consumer Protection Act, as well as BMC Act.

SINKING FUND & REPAIR FUND:

07. A Society has to mandatorily collect, from its members:

a) Sinking Fund, at the rate of 0.25% of the prevailing construction cost

b) Repair Fund, at the rate of 0.75% of the prevailing construction cost

c) Every alternate year the Society must get a certified Architect’s certificate, for the prevailing construction cost and only then levy appropriate Sinking Fund and Repair Fund.

d) It would be illogical & a fatal error, to statically keep collecting Sinking and Repair Funds, at the buildings original construction cost.

e) It would further be illogical & a fatal error to consider the accumulated bank-interest on such Sinking and Repair Funds deposits, as a substitute for “prevailing construction costs”.

f) The exact amount of Sinking Fund and Repair Fund, collected from members must be deposited in Coop. Dept., approved Banks only, on long-term deposits.

g) It would be highly unwise, for the Society, to utilize the Sinking & Repair funds, for routine or intermediate repairs of the building.

h) In a Flat-Ownership Society, where a membership is voluntary, a member may relinquish his Society membership, and is entitled to claim his contribution of his Sinking and Repair Fund and interest thereon.

i) Due to the latest amendment of the BMC Act, pertaining to mandatory repairs (as required), of 30-Plus year old buildings, majority of the Societies would be in a Stale-Mate situation, since the existing reserves of Sinking and Repair Fund (and interest thereon) are grossly insufficient, more specifically so, since majority of the Society’s are ignorantly collecting Sinking and Repair Funds, at the buildings original construction cost (which may be at 200/- per feet in 1970’s vis-a-vis the present 2000/- per feet in 2013).

j) This Stale-Mate situation further aggravates more so, specifically due to the gross apathy and penny-pinching service-charges being half-heartedly paid by members.

k) Majority of the Society’s Balance Sheets, are apathetic and the Society building also grows more pathetic, with passage of time.

COMMON SERVICE CHARGES:

08. During Budgetary projections and provisions, the Society must decide the “Common Service Charges” that needs to be levied on members.

a) Yearly Expenses of the Society on Lift, Insurance, staff Salaries, Electricity, Security services, Stationery, Legal fees, Billing, Accounts & Audit fees and other common expenses, are to consolidated and divided and are to be borne equally by all members.

b) Levy of “Separate Amenity Charges”, on selective member or members Tenants, are illegal and not tenable for subsequent recovery proceedings.

c) Specific Repair Work (like Mass Plastering and Painting, Replacement of Lifts, Replacing Electrical cabling & wiring, Replacing Plumbing pipes) are not within the ambit of “Common Service Charges”.

d) A separate duly approved Fund needs to be freshly generated, for “Specific Repair Work”. The preserved Sinking & Repair fund (and accumulated interest), may also be used for the “Specific Repair Work”, subject to various parameters.

MAINTENANCE FREE SOCIETY:

09. The false concept of “Maintenance Free Society”, being propagated by few ambitious Society’s, is not tenable under the Law.

a) It is mandatory to collect routine “Service Charges” from members, irrespective of anything.

b) It will be an offence to collect “Deposits” (in any guise of voluntary donations or corpus fund or excess Share Transfer Premium or whatever) from members, (more so specifically from Flat-Owner type Society) and invest such deposits for the sole purpose of earning Interest, for meeting the common expenditure of the Society.

c) The preamble of the Cooperative Movement, would be compromised, since the Member would not be paying anything for the “Common Services and Amenities”, while availing free services.

d) Some nefarious minded MC’s would discontinue selective services, on the pretext that Society is providing “Complimentary Service” to the members. AND the members would not have any legal remedy, in any court of law.

e) Such “Maintenance Free Society”, run on Bank Interest Money, would also circumvent, statutory payments under statutory laws like “Service Tax, Income Tax and so on….

NON-OCCUPANCY CHARGES:

10. The Society has to mandatorily levy a fixed 10% as “Non-Occupancy Charges”, on:

a) Members flats, given out on Rent /Lease to non-family members.

b) Anything beyond 10% as “Non-Occupancy Charges”, shall be illegal.

c) A fixed “10% Non-Occupancy Charges”, is to be levied on the regular Society Service /Maintenance charges, but to the exclusion of Statutory charges (e.g. BMC Property Tax, NA Tax, BMC Water Charges).

d) IF the Mg. Committee (MC), fails to levy the Non-Occupancy Charges to the member (if duly applicable), THEN all the MC has to jointly compensate the Society for the relevant loss, by paying the same from their own pockets.

PARKING CHARGES:

11. The Society is entitled to levy “Parking Charges”, only if the Society owns the land (means the plot of land should be conveyed in the Society’s name, means the Society should be the Land-Lord of the plot of land, on which the Society building is standing)

a) IF the Balance Sheet, does not reflect the heading “Land” and the value of the same, THEN it would mean that the land is not in the name of the Society.

b) IT also means that the Land is in the name of the original Land-Lord or the Builder /Developer.

c) The Seven Twelve extract (7×12), obtained from the Tehsildars office would also reflect the real land-owners name.

d) In a Flat-Owner type Society, there is no “Privity of Contract” between the landlord/builder and the Society, since the Society is formed /registered only after the flats are constructed.

e) Further, in a Flat-Owner type Society, there is no “Privity of Contract” between the Flat-Owner and the landlord/builder, towards the usage of plot of land, more so since a typical Flat-Purchase agreement, reflects only the absolute rights in the Flat, that is purchased by the Flat-purchaser..

f) There is Latin saying;” Nemo debet quod non habet “. THIS means that no one can give what he does not own. More Simpler it means – You cannot earn from someone else’s property. Here since the Land belongs to the Landlord /Builder, the Society cannot earn “Parking Charges”, without the express written agreement /contract from the Landlord /Builder.

g) IF the plot of land is conveyed in the Society’s name in the Seven Twelve extract (7×12), THEN the Society can levy “Parking Charges”, subject to fixation of Parking Charges and consequent approval from the General Body vide a duly proposed and seconded resolution.

h) The amount of Parking Charges, chargeable per vehicle, per month, may vary from Ten rupees to Ten thousand rupees, which is leviable at the discretion of the General Body’s duly approved resolution.

Note: No GB Resolution is equal to No Parking Charges, which also means “Charge-Free-Parking”, for all members.

i) The Society shall remain liable, by legal default, for any damages to vehicle in the Parking slots, irrespective of the nefarious board, broadcasting “Parking at Owners Risk”. The Car-Owner, shall always have an open option to approach the Consumer Court, for successfully claiming damages and compensation, alleging “deficiency and negligence” by the Society /MC. This is subject to “Parking Charges” being collected from members.

INTEREST:

12. A Society is entitled to levy Interest on Society Dues, on its members, subject to various parameters.

a) The Coop. Dept., allows a maximum of 21% simple interest (non-compoundable) on the outstanding dues of the Society.

b) Interest cannot be levied on BMC Property Taxes and BMC Water Charges and NA Taxes or any other statutory taxes or charges.

c) IF the registered and approved bye-laws, do not reflect the relevant Interest Charges, THEN the Society cannot levy any Interest on members outstanding dues.

d) The Society is free to levy Interest from 0% to a maximum 21% Interest on outstanding dues of member, subject to the fixation and approval of the Interest rate, in a duly proposed and seconded General Body resolution. However the relevant courts of law, during disputes, usually refrain from granting exorbitant interest as high as 21%.

OTHER CHARGES:

13. Majority of the Society’s are under deep hallucination, that the General Body is vested with power to pass resolutions for any charges they deem fit and categorize the said charges, into “Other Charges”.

a) The Society may categorize “Other Charges”, for only those services and amenities, that is proposed to be provided and is not categorized separately in the bye-laws.

b) The Society is not entitled to levy any “Legal Charges” .OR. any other charges to a member, if it does not fall under the broader category defined as “Service and Amenities”.

c) In newly constructed buildings, the developer-builder provides “Sewage Treatment Plants”, which comes under the definition of “Service and Amenities”. Since “Sewage Treatment Plants”, is not covered under the present bye-laws, the service charges can either be collected labeled as “Common Service Charges” .OR. “Other Charges”. Same example applies for “Club House”, “Swimming Pool”, “Recreational Area”, “Community Hall”, Generator and so on…. Subject to various parameters.

d) The Society is not entitled to recover “Legal Fees & Expenses”, from members, towards filing of Recovery Proceedings u/s 101 of the MCS Act. Such costs can be recovered, ONLY subject to written orders of the competent authority.

PENALTY:

14. The ONLY objective of a Coop. Housing Society, is to provide “Common Services & Amenities”, to its members, on mutual & equal contributory terms.

a) Penalty can be extorted from ignorant /innocent members, under indirect threats, till the member can be fooled /subdued.

b) A Society is a Service-Provider, under the Consumer Protection Act.

c) A Society has no lawful jurisdiction to levy any type of Penalty on members, since the Society is not a law-implementing .OR. law enforcing authority.

d) The concept of Penalty in a Coop. Society, is dictatorial and breaches the very concept of a “Cooperative Movement”.

e) It would be unlawful to levy Penalty on Flower pots placed outside Main doors or on Window Grills, .OR. levy Penalty on Shoe-Racks kept outside the Flats main doors, .OR. for throwing banana skins outside the Flats window .OR. keeping Gas cylinder /Washing Machine on Window chajjas, AND so on ….

f) It is beyond the jurisdiction of a Society, to levy penalty for “Box Grill”, “Internal Alterations”, “Amalgamations” and so on, since the lawful jurisdiction to do so, rest ONLY with the BMC authorities.

g) It is beyond the jurisdiction of a Society, to levy penalty for “Loud Music”, “Spitting”, “Rude behaviors”, Wife-beating, Pick-pocketing, Drinking & Gambling and so on, since the lawful jurisdiction to do so, rest ONLY with the law-enforcing /implementing authorities.

INTROSPECTION:

15. IT is lawfully essential, for every Coop. Society to:

a) Audit the Accounts and get the Audit Report by a enlisted Coop. Panel Auditor

b) File Income Tax and TDS returns

c) File Service Tax returns (subject to certain parameters)

d) Pay Property Tax, NA Tax, Profession Tax and Water charges, as per Statutory provisions

————–

AUTHOR: Hemant Agarwal

Email: ha21@rediffmail.com

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

23 Comments

  1. Vijay Gosavi says:

    Our registered soc.in Thane (Maha) I purchased flat no.26 in 1992 and resale flat no.25 in 2002.
    Now I clubbed both the flats for one family only. Sinking fund and rep funds as per sq.ft but service charges and common elec for one ffamily not for two flats.Is it ok or what

  2. Ashwini says:

    I have sold my house in September 2020 due to financial problem which I had just purchased in Feb 2020 which means not even for a year I have stayed in the house now my society is forcing me to pay 53000 as major repair fund before leaving what can I do in such a situation kindly guide

  3. Harshit Chand says:

    Our society is charging the following from licensee:
    1) Sanitization charge Rs. 1000 without passing any resolution (both times when previous vacates and when new comes)
    2) Penalty Rs. 1500 for not giving 8 days notice of leave & license
    3) Shifting charge Rs. 1000

    Are the above charges justified?

  4. archana says:

    Can a CHS levy flat charges for wi-fi facility to all members….even to those members whose flats are locked.?..Is it mandatory to pay?

  5. Ajay Verma says:

    Sir,

    Does the flat member have to bear the ground filling and levelling cost, left by the gas company for obtaining the gas line? There are 2 more members staying below him who have not taken gas connection. Does the cost fall under the common road repairing costs or the member has to personally pay it to the society?

  6. Anil Kamath says:

    I suppose the byelaws cover certain clauses to address the mis- use of common areas. I can’t imagine living in a society where people leave flower pots, shoe’s,/shoe rack outside in the common areas. We need to be aware of the
    byelaws 168.
    The Society shall not let out or give on leave and license basis or permit any
    subletting, any open space available under the Staircases, Terraces/Open
    ground/Lawns/Club house/ Common Hall etc. to any person whether the
    Member of the Society or not, for any purpose whatsoever.
    a. All open /common area meant for use of all Members for eg. staircase, steps,
    landing areas, parking spaces, 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 Concerned Municipal Authorities /
    Competent Authorities. Anil Kamath, 9130460249

  7. rucha pawar says:

    it was very helpful informaton, thanks
    My query is that can a register society lock the premises of its member for non payment of manintenance charges . does the society has any powers to lock th premises of member, if yes under which section and if not what will be members right upon this ..

  8. Sundararaman iyer says:

    Your article is good, but if the Society cannot levy penalty on objectionable activities of Members, how do you stop nuisance ? Does your post for example, imply that Members are free to keep shoes or shoe racks outside their flats and cause obstruction in the free movement or access to Members inside their own flat ? If Society does not impose a fine for keeping shoes outside the flat, what is the remedy ? People can start keeping anything outside their flats if the Society cannot do anything ? Kindly clarify, Thanks

  9. Yogendra Ray says:

    Dear Sir, my society has added penalty to my maintenance bill without any notice or letter claiming that I stored materials in the passages for continuously two months while doing painting work in my flat. This is false as the painting work lasted hardly for two weeks and no time the passage was obstructed. I wrote to the Committee but they did not reply. They destroyed even my copy of application. The same committee members sold the Fire Hydrant Pump provided by the builder. The subsequent committee members have been reluctant to take any action. Other members also want to keep quite. Our family questioned them and are being penalized. Our society: Sanskruti, Bldg. Nos. 29 & 30, Thakur Complex, Kandivali-East, Mumbai 400101.

  10. Amit Parmar says:

    Dear Sir,

    I have Raw under Co.op.Society in Bharuch Gujarat, Society Take charges for Rs.9300 for Drainage Line Connection.I have no take connection for Drainage line till date but also i had given Rs.7000 for the same in advance but still i get Notice from the Advocate for the rest amt payment in 10 days with penalty.

    Kindly suggest for the next step from my side

    Amit

  11. Sivanarayanan K says:

    Dear Sir,

    Please confirm is 10% Non Occupancy Charges are applicable for Residential Apartment Association registered under Society Act in Chennai, Tamilnadu

  12. anil dalvi says:

    our socity desided to make internal cement road in 2012.also desided contribution 12000 per member.but actual work started in this week.now socity send me notice to pay outstanding with interest for 2 years.is it legal to charge interest for last 2 years,because actual work in progress,75% work just completed…
    please give me reply
    thanking you,

    anil dalvi amarjoyti soci.hadpsar,pune13

  13. Digvijaysinh Thakore says:

    Our society is registered under Gujarat Register Co. Operative Housing Society. Scoiety do not have constitution and by laws. I was not paying quarterly maintanance for reason 1. The society committe was not giving audit for almost five months. i as a member told them till committe meeting is not conducted i will not pay maintanance. they called society meeting and imposed penalty on me for not paying maintanance. i told them moment you call the meeting i will pay maintanance.

    The question is can society coolect penalty from me?
    Registe Housing society can act without constitution and bylaws?

    I request you resolve my query.

    Thanking you,

    Digvijaysinh Thakore

  14. Yogendra Singh says:

    Sir,
    Pl. clarify whether the Co-op. housing having income only from members’ contribution shall have to pay service tax and if yes then what are the parameters?

    kindly reply.

  15. raj says:

    Hello
    I am an owner of a flat in mumbai.
    I have a 2 wheeler parking slot in my society. I am parking a 2 wheeler bicycle instead of a motorcycle in the parking slot alloted to me. The Managing Commitee claims this is illegal. Is this true.

    2) The MC threatens about box grills on my windows. Is it legal to have box grills on windows.

    The M.C is basically wanting to take away my old parking as they would like to allot the adjoining plot which is the access way to my parking to another car. Also as my flat is on the ground floor, they want my box grill removed so that a car can park a foot away from my window leaving me no privacy. Please help

  16. Venky says:

    We have approached authorities like Bmc or police for certain members doing damage to society property and other members have complained but the authorities informed to settle the same within the society and did not accept the request. In this can can society levy penalty to stop the same.

  17. Makhan Jhaver says:

    you have given details of Maharasthra Coop Hosing Society Rules – I think that most of them are not applicable in Tamilnadu under TN Apts Act- For eg maintenance charges are to be collected on area -per sqft basis. Imagine apts having flats with large variation in area – ranging from 1000 sq ft- 3500sq ft – If maintenance charges are collected on unit basis it will be unfair to owners with smaller area- I suggest you pl write article applicable to Tamilnadu

  18. NEEL says:

    Dear Sir.,

    Request you to upload the changes in Maharashtra Model Bye Laws for C.H.Societies.

    Role and responsibilities of M.C members etc.

    thanks

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