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Corner The Defaulter
By Gajanan Khergamker

The one thing that bothers almost all societies is the issue of arrears. Sadly, despite the law being clear on defaulters, the inordinate delay in recovery process emboldens trouble-mongers who thrive in the mess.

While you are attempting to recover pending funds and arrears from a defaulter, he only gets bolder and continues to dodge his most basic duty - that of paying his maintenance. What is worse is; He looks like he is getting away with it. Through legal means, there are ways to stop him and there are extra-legal ways to get him to relent. Extra-legal ways that legal and do not employ the use of force, coercion or violence in the least but socio-psychological pressure tactics and simpler reward-punishment modes that usually help in fetching results.

Very often, society members and in particular managing committee members tend to either barge into the defaulting member’s house “with lady members” to force him into paying up; try to “cut his water or cable connection” so that he is forced to pay and attempt similar means all of which inevitably aggravate situations further.

All such means are illegal and only aim to settle personal scores more than procure funds for the society, a solution to the situation is far from being close at hand. In fact, an attempt to recover funds through such means will be perceived as an insult and only worsen things.

However, societies could attempt to discuss matters with the defaulting member, either in the open at a general body meeting if the member is a mischief-monger and capable of levelling false charges on select committee members or in person in private if s/he has a financial problem or is undergoing a crisis of sorts. Also, reward members even defaulters who pay back on time or as promised with a notice on the notice board and/or special mention thanking him/her for the same.

The gesture will go a long way and will be appreciated by the defaulting member who should make the payment soon enough. Remember, most issues can be resolved through conversation. And, the legal recourse is neither the best one not the last one.

You Need To Act Swiftly By Law To Recover Dues!
By Gajanan Khergamker

The recovery procedure is as follows:
1) The Cooperative Society should give a notice to the defaulter member giving him opportunity to make a payment of his dues to the cooperative society within such period, as the society may allow, with a warning in the notice that on failure to make a payment of the same, an application would be made to the Registrar under Section 101 of the MCS Act for recovery of the outstanding dues.

2) Upon the failure of the defaulter member to make the payment of the outstanding dues to the society within the stipulated period mentioned in the notice the managing committee should pass a resolution in a special meeting to take action against the defaulter member under Section 101 of the MCS Act 1960 authorising the Secretary or the Chairman of the society to sign all the documents to be submitted to the Registrar Cooperative Societies and to furnish the necessary information required by the registrar for issue a Certificate.

3) The Secretary or the Chairman of the society should then make an application to the Registrar Cooperative Societies along with other necessary documents that are required to be submitted.

4) On receipt of the application from the Cooperative Society, the Registrar shall give a hearing to the member concerned and on verification of the records, if the Registrar is satisfied about the correctness of the outstanding dues and after making such inquiries, as the Registrar deems fit, a Certificate will be issued to the society.

5) On receipt of the Certificate under Section 101 from the Registrar along with other documents, the Recovery Officer has to prepare demand notice for being sent to the sale-officer for restraining the movable property of the member concerned.

6) The sale officer, on receipt of the recovery papers from the recovery officer, will visit the flat of the member concerned to prepare an inventory of the movable property and handover such list to the member concerned and serve a demand notice on the defaulter member.

7) If the amount is not paid by the member concerned forthwith on service of the demand notice, the sale officer will seize the movable property of the member concerned as per the inventory and handover the same to the Secretary or the Chairman of the society for safe custody.

8) Thereafter the sale officer will fix a date, time and place for an auction of the movable property seized and auction the same and pay the sales proceeds thereof to the society, in satisfaction of the outstanding dues payable by the defaulter member to the society.

9) In the event of the proceeds of the sale of the movable property are found to be insufficient to cover the outstanding dues in full, as per the Certificate, the sale officer will then proceed against the flat of the member concerned by arranging an auction of the flat to recover the balance of the dues payable to the member.

Pay Up Or Else...
By Gajanan Khergamker

If, like much of Mumbai, you are living in a cooperative housing society and have defaulted on any of your dues, you’re in for trouble! Effective from today onwards, the new amendments to the Maharashtra Cooperative Societies Act, 1960 empower your society’s managing committee to proceed swiftly by “seizure or disposal of flats,” to recover pending dues and, at the same time, prevent you from voicing your dissent or vote in the general body meeting.

This is the outcome of the 97th constitutional amendment approved by the Maharashtra cabinet which will affect 2.47 lakh cooperative bodies all over Maharashtra. As per the law, these would be required to prepare lists of active and non-active members at the end of every financial year. Active members will be eligible to vote in elections to the managing committee while non-active members will not.

Those with maintenance or service charges arrears pending at the end of a financial year will be deemed ‘defaulters’ and classified as ‘non-active members’ and even prevented from exercising their votes.

The amendments that seemed to most societies a move to clip the overreaching powers of the Registrar have curtailed the role of an administrator – the scourge of most cooperative housing societies. Now the Registrar’s power to appoint an administrator on unaided societies has been taken away and instead provisions have been introduced, permitting him to initiate recovery proceedings even in cases of maintenance and service charge default by members.

Even for aided societies, the administrator’s term now cannot exceed six months (one year for banks) except under exceptional circumstances and all societies will have to set up an in-house grievance redressal forum.

Also, only those members who have attended at least one general body meeting in five years and provided a minimum level of services will be eligible to vote. This addresses a huge issue with most societies facing ‘attendance’ problems.

Now, the number of reserved seats on committees has been lowered from seven to five and co-opted managing committee members will have voting rights for all matters except for office-bearer elections. In an attempt to clean managing committees of history-sheeters and those with criminal records, those who have been sentenced to jail for over a year can now be removed from office.

While the amendments don’t yet deprive the Registrar of intervening powers, they don’t quite spell out the extent and grounds for his intervention.

Mischievous managing committees could land up ‘interpreting’ the ‘defaulter’ clause to their convenience only to deprive bonafide members of their right to vote. The amendments - however interpreted - don’t prevent a wronged member from approaching court for redress.