My Society (Regd. No. BOM / W-K (East) /HSG/ TC-10200/1998-99 ) is in Mumbai (Maharashtra) fallng under MCS act 1960
My query is : My society has incurred an excess of expenditure over income. What is the next step as per law? Recover from members or use reserves?
I C Naik
The registered bye-laws of every C H S contain balanced scheme of Housing Society financial management. Unless your C H S has replaced the originally registered bye-laws subsequent to society registration, by adopting any Model [2001 or 2009 or 2014] released by the Registrar, your Housing Society has chapter VIII LEVY OF CHARGES OF THE SOCIETY with following bye-laws :
- Composition of the charges of the society
- Breakup of Service Charges of the Society
71 (a) Sharing of the Society’s charges by the members
(b) Committee to fix Society’s charges in respect of every flat
- Payment of the Society’s charges.
- Review of cease of defaults in payment of the charges of the Society.
- Interest on the default charges.
Bye-laws71(a) mandates the Management Committee to apportion all outgoings of the Society on all flats / members on different basis laid down therein. In compliance of this requirement the general body meeting of the Housing Society has no power to exonerate members of the Management Committee if in any year in breach of this bye-law the Committee determines a rate lower than what will work out in strict compliance of the bye-law71(a). If it happens that the maintenance rate worked out by the Committee does not cover all items of Bye-law No 71(a) and the situation what your society is facing has come o light. The Committee has to step up the rate exactly as in accordance with Bye-law No 71(a) plus some higher up to make good the unapportioned expenses in earlier year. If the Committee does not agree with this proposal of general body meeting the Registrar has to be requested to invoke provisions of Bye-law No 136 read with provisions of Section No 73[1AB] both are extracted below:
Bye-law No 136:
The members of the Committee shall be jointly and severally liable for making good any loss, which the society may suffer on account of their negligence or omission to perform any of the duties and functions cast on them under the Act, Rules and the bye-laws of the society.
Section 73[1AB]:
(1AB) The members of the committee shall be jointly and severally responsible for all the decisions taken by the committee during its term relating to the business of the
society. The members of the committee shall be jointly and severally responsible for all the acts and omissions detrimental to the interest of the society.
Provided that, before fixing any responsibility mentioned above, the Registrar shall inspect the records of the society and decide as to whether the losses incurred by the society are on account of acts or omissions on the part of the members of the committee or on account of any natural calamities, accident or any circumstances beyond the control of such members:
Provided further that, any member of the committee, who does not agree with any of the resolution or decision of the committee, may express his dissenting opinion which shall be recorded in the proceedings of the meeting and such member shall not be held responsible for the decision embodied in the said resolution or such acts or omissions committed by the committee of that society as per the said resolution. Such dissenting member, if he so desires, may also communicatein writing his dissenting note to the Registrar within seven fifteendays from the date of the said resolution or decision. Any member, who is not present for the meeting in which the business of the society is transacted, and who has not subsequently confirmed the proceedings of that meeting, such member shall also not be held responsible for any of the business transacted in that meeting of the society.
So try taking further action as aforesaid. Do come back if any doubt still persists.