By I C Naik
A good example of how vigil a managing committee can be that, it went all the way to Bombay High Court to give a fight successfully to divisional joint registrar also for legal compliance. This is a story of the managing committee of Bandra Breeze C H S registered in Mumbai which refused to bow down to the high handedness of the State’s Cooperative Authorities in erroneously ordering the C H S to grant membership to a flat purchaser who had not paid stamp duty.
The managing committee had refused membership because it found an improper payment of stamp duty and registration of agreement. Hon. Bombay High Court reportedly quashed the order passed by the divisional joint registrar and deputy registrar of cooperative societies against the society’s refusal. Justice Anoop Mohta observed that the authorities had not given reasons for reversing the society’s order of declining membership and had not given hearing to all the parties in the case. “Merely because someone has claimed membership, a society is not under obligation to grant the same.”
The Court reportedly observed and added “The lawful occupation, their rights, title and interest in the property, permissible transfer of shares and property as per the bye-laws and all related aspects, just cannot be overlooked by the parties concerned, including the society, as well as, the registrar and authorities,“ Justice Anoop Mohta also observed “Normally, the society needs to grant membership if all other requisite elements and qualifications are available.
Even for rejection, the society must give sufficient reason and must show the grounds for such refusal of admission,“ The Court pointed out that in the present case the society’s reason to refuse membership ought not to have been overlooked by the authorities. “The society needs to apply its mind to the law, as well as, the related record before granting or refusing admission. The statutory authorities are also under obligation to consider this, if the society refused the membership or any challenge is made to grant such admission.“
The High Court asked the deputy registrar to hear the matter afresh and decide the matter about grant of membership within six months. It will be interesting to see what stand the authrities now take.
Reading between the lines one can see that the managing committee was in fact preventing a leakage to the State revenue in respect of stamp duty payments, which an authority of the cooperative department not only failed to appreciate but practically supported the defaulter to evade it. Had the managing committee not been compliance savvy which not every committee is the State would have lost the revenue.
Members of www.indiancooperative.com have been going through the flaws in Model bye laws for quite some time. Even in this case it looks like that a flaw in Bye-Law No 19(vii) has been a most probable cause of erroneous orders by divisional joint registrar.
The CC & RCS has prescribed various conditions upon satisfaction of which the membership of the concerned housing Society may be granted. One of the conditions as per Bye-Law No 19 of Model Bye-laws 1984 reads as under:
“(vii) he has sent, along with the application for membership of the society, a certified copy of the agreement, entered in to by him with the Promoter (Builder) under section 4 of the Ownership Flats Act.”
In Model Bye-Laws 2001 this condition number was modified which now reads as under:
(1)he has sent, along with the application for membership of the society, a certified copy of the agreement, *(duly stamped) entered in to by him with the Promoter (Builder) under section 4 of the Ownership Flats Act. *(Or transferor under Section 4 of the Ownership Flats Act)
The words in Brackets having asterisks * are added to this condition in 2001.
It is pertinent to understand implications of the words (duly stamped) inserted as aforesaid by having a look at requirements Section 4 of the Ownership Flats Act [ full name the Maharashtra ownership of flats (regulation of the promotion of construction, sale, management and transfer) Act, 1963] which is reproduced below.
QUOTE: Notwithstanding anything contained in any other law, a promoter who intends to construct or constructs a block or building of flats all or some of which are to be taken or are taken on ownership basis, shall, before he accepts any sum of money as advance payment or deposit, which shall not be more than 20 per cent, of the sale price enter into a written agreement for sale with each of such persons who are to take or have taken such flats, and the agreement shall be registered under the Registration Act, 1908 (hereinafter in this section referred to as “the Registration Act”) and such agreement shall be in the prescribed form. UNQUOTE
Only in the year 2001 the CC & RCS appears to have noticed the requirements of flat purchase agreement executed under MOFA needed to be registered. The requirements of registration of a cooperative society under section 9 of the M C S Act 1960 requires the Registrar to satisfy himself that a proposed society has complied with the provisions of this Act and the rules, or any other law for the time being in force.