By I C Naik
This benevolent series was launched on 20th July, 2020. This idea was triggered by the strong apprehension of new normal in Indian lifestyle; masks on every face, stubborn distancing and the awful home isolation. Cooperatives generally and particularly the Cooperative Housing Societies appear to be blissfully ignorant of a potential dent in the cooperative principles.
These principles have been given a prominent place in the National Cooperative Policy 2002 (CP 2002). This CP2002 is wholly based on the definition, values and principles contained in the International Cooperative Alliance Statement on the Cooperative Identity adopted in Manchester, United Kingdom on 23.09.1995.
This series was opened with a sombre advice to the members of Cooperative Housing Societies (MAHA-CHS for brevity) registered under Maharashtra Cooperative Societies Act 1960 (the MCS Act) : “Undertake a voluntary but honest self-assessment of their individual level of understanding of the functioning of their own respective MAHA-CHS ”.
In Part 1, attention was also drawn to the latest State initiative of focusing on Housing Societies in the MCS Act: insertion of an exclusive chapter of provisions applicable only to Cooperative Housing Societies. In a Statement attached to the Maharashtra Co-operative Societies (Amendment) Ordinance, 2019, promulgated on the 9th March 2019 ( which was eventually replaced by the Act passed by legislature); there was a tacit recognition by the Government of Maharashtra that over the last several years MAHA-CHS failed to garner due respect of their members especially to the truthful adherence to the cooperative principles; the most important being “Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership.”
The reason for this apathy appears to be quite low appreciation by the most flat-owners of the MAHA-CHS Regulatory Regime (the MCHSRR in brief). The registered bye-laws of the concerned C H S is an extremely critical entity of the MCHSRR; but is widely overlooked. The Honorable Supreme Court of India has held [ in the case of Zoroastrian Co-Operative Housing Society Limited Rd-Sc 253 (15 April 2005)] that “The bye-laws of a cooperative society setting out the terms of membership to it, is a contract entered into by a person when he seeks to become a member of that society.
It is as if every individual member has entered into a contract with every other member of the Society. The ultimate implication of new Chapter XIII Cooperative Societies is that every MAHA-CHS should amend its registered bye-laws to incorporate the provisions of this new chapter.
It is a matter of huge comfort that the latest release of the Model of bye-laws of MAHA-CHS
[https://sahakarayukta.maharashtra.gov.in/SITE/PDF/Rules_Acts_Bylaws/Model_Bye_Laws_of_Coop_Housing_Society_New_Flatowner_Type_(2-9-14)%20(1).pdf] took place on 2nd September 2014 i.e. within three years of 97AAA becoming effective. Not only that but the State amended the MCS Act 1960 and the Maharashtra Cooperative Housing Societies Rules 1961 (in brief the MCR 1961) to align both of them to 97CAA ahead of their release. The most discomforting to management of MAHA-CHS is however quite serious: Consequential modification to the MCR 1961 has not been carried out by the State Government though expressly mandated under various provisions of the MAHA-CHS Amendment Act 2019.
In the absence of such Rules as a practical solution let us incorporate necessary procedures in this Model 2014 and adopt the same in every MAHA-CHS (as per Section 13 of the MCS Act – read with Section 154B(1) in the new Chapter XIIIB).
This will be a marathon exercise but it should definitely remove the acknowledged weaknesses in MAHA-CHS namely awe full lack of clarity to most members on the rationale of each and every bye-law provision. In order to make it a comfortable exercise let us concentrate on the most important areas in 2014 Model bye-laws to start with. Due regard must be had to the Constitutional imperatives as ruled by the Supreme Court in validating the dismissal of Chairman of Amul Dairy by adopting a democratic process as discussed in part 2. { Vipul Chaudhary Vs Amul Dairy (Anand ) dated March 19, 2015 [(2015) 42 SCD 494].The Apex Court has in fact exhorted Cooperative Societies in this Case): “When the Constitution is eloquent, the laws made there under cannot be silent. If the statute is silent or imprecise on the requirements under the Constitution, it is for the court to read the constitutional mandate into the provisions concerned and declare it accordingly.”
So make sure that amendments to bye-laws are in consonance with the Constitutional aspirations. A MAHA-CHS de jure owns all the flats, the value of each one which was paid by its members to the Developer; (this value includes the prorated cost of common assets being an integral part of the composite property of the concerned MAHA-CHS). The management objectives of MAHA-CHS are ingrained in to its definition as per clause 17 of new section 154B.(1).
(17) “housing society” means a society, the object of which is to provide its Members with open plots for housing, dwelling houses or flats; or if open plots, the dwelling houses or flats are already acquired, to provide its Members common amenities and services and to demolish existing buildings and reconstruct or to construct additional tenements or premises by using potential of the land; This definition is not complete because it relates to one class of society only, we must understand the “Society “ defined by clause 27 of Section 2 of the MCS Act 1961 reading:
“society” means a co-operative society registered, or deemed to be registered, under this Act which is an autonomous association of persons, united voluntarily to meet their common needs and aspirations through a jointly owned and democratically controlled enterprise and adhering to the co-operative principles and values
The Cooperative Principles and values are part of the CP2002 which are borrowed from the International Cooperative Alliance Statement on the Cooperative Identity adopted in Manchester, United Kingdom on 23.09.1995.The very first amendment to Model 2014 is therefore to expand the objects of MAHA-CHS by adding the following clause to the Bye-law No 5 (b):
“to provide its Members common amenities and services and to demolish existing buildings and reconstruct or to construct additional tenements or premises by using potential of the land;
This change adds to the Community Housing arrangement to travel smoothly to the next generation as self re-development is now one of the objects of MAHA-CHS. The State initiative discussed earlier has made an amendment in law to make it easy to convert what is really a family dwelling but held in the name of one or more individuals because of a change in the definition of eligibility of persons for joining MAHA-CHS as a member. Now HUF can hold a flat as a member.
This object has direct link to a bye-law the rationale of which has completely escaped the attention of the management of most MAHA-CHS. Its financial implications are far too serious which also got completely neglected. Its impact on the long term future of MAHA-CHS is so critical that certainly the next generation is bound to curse the present-day management for overlooking the most critical issue for such a long time. As such to understand his issue an in-depth analysis of this lapse is a must, so as to induce the members to prepare themselves for taking corrective steps. Hopefully in part 4.