Empty Mandate to Mah C H S Law – 4

By I C Naik

In previous part we saw the Cooperative Department under Housing Manual has accepted violation of provisions of the M C S Act 1960 by the flat/shop purchasers occupying flats/shops without joining the concerned housing society as members. In any case the system to preempt such defaults is shockingly absent under MOFA regime till this date. This has an evil effect of encouraging an investor in real estate, to save maintenance expenses till he disposes off the flat at a profit avoiding the hassles of membership. This also artificially boosts up market prices of dwelling units making them less affordable,

We therefore decided to explore what mechanism is in place under the M C S Act 1960 to enable the managing committee, prevent such illegal occupancy of flats without too much hassles.

As we all know in a scheme of housing society a flat purchaser either

  1. joins the Developer as co-promoter and upon registration of the housing society, he acquires its membership or
  2. applies for membership, post registration after buying the unsold flat from the developer executing a sale agreement u/s 4 of MOFA, or
  3. he buys the flat from a member after prior permission of the Committee .

This scheme can be easily perceived on perusal of the definition of a member [Section 2(19)(a) of the M C S Act 1960 ] and Section 26(1) as extracted below:

“member” means a person joining in an application for the registration of a cooperative society which is subsequently registered, or a person duly admitted to membership of a society after registration and includes a nominal, or associate member;

Further Section 26:

Sub-section (1) “A member shall be entitled to exercise such rights as provided in the Act, rules and by-laws”

Provided that, no member shall exercise the rights, until he has made such payment to the society in respect of membership, or acquired such interest in the society, as may be prescribed and specified under the by-laws of the society, from time to time”

Let us see what the registered bye-laws provide about membership rights [based on Model bye-laws released on 24 12 2010, when the Housing Manual was released by Commissioner for Cooperation and Registrar of Cooperative Societies[c c r c s]:

  1. Bye-law No. 76(a) provides :

The member, person/firm who had purchased the flat under an agreement under Section 4 of the Ownership Flats Act, or acquired interest in the flat on transfer of the same by existing member with the previous permission of the society, shall be deemed to have been allotted the same flat by the society subject to the terms and conditions set out in the letter of allotment in the prescribed form, issued to the member.”

  1. Form of Allotment Letter is at Appendix 12 appended to the bye-laws.
  2. It clearly indicates that it is addressed to the member of the society :

“You are the member of the …………………….Co-operative Housing Society Ltd.”

  1. And the condition 3 of Allotment letter reads:

You will enjoy the right of occupation of the said flat as provided under the bye-law No. 24 (a) of the Bye-laws of the society.

  1. Bye-law No. 24(a) provides:

The member, who is deemed to have been allotted the flat under the bye-law No 76(a) of the bye-laws of the society shall have a right to occupy the flat subject to the terms and conditions set out in the letter in the prescribed form under the said bye-law.

A person buys a flat/shop under the provisions of MOFA by entering in to an agreement (mandatory) with the builder/developer under Section 4 of the MOFA (FORM V : Para 12 ) The purchaser is contractually bound with the builder/developer to join the organization to which the builder is duty bound to convey the title of the property. If a shop/flat purchaser does not become member as aforesaid. he is liable to a fine of Rs 2000 under Section 12(2) of MOFA. The Registrar of cooperative societies is nowhere in the picture to take cognizance of the flat purchaser’s default under MOFA.

Why this happens? The Builder hands over the possession (keys) to flat/shop buyer as provided under the sale agreement, with/without intimation to the Committee at his sweet will. He is not bound to do so. Where he is bound to start registration of the society after giving possession as aforesaid, he gets away without this compliance leaving the building management to sheer luck of the gullible flat purchasers. Normally in case of new housing societies the flat buyers/provisional committees are rarely well versed with bye-laws and the society law. So what’s going on in the society is not known in most cases. Housing Manual has proved it an empty direction and provided an escape route to avoid maintenance cost to be borne by such investors as aforesaid.


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