I request you enlighten me on the common problem faced by our cooperative housing Society whose building is being redeveloped and reconstructed after a period of about more than 35 years. This CHS is having a balance of about Rs.60 lakhs in sinking fund contributed by 12 members over the period of last about 35 years. Though each member was having different area and size of flat in the CHS, each member contributed differently to this sinking fund in last about 35 years.
Now also after redevelopment and reconstruction of the building each of the existing member will get the flat of different area and size. The new building will also have some more flats to be sold by the developer to the new flat purchasing persons who will be admitted in the CHS as new members. Whether the existing balance in the sinking fund should be withdrawn and distributed amongst the 12 old members of CHS? if so, under which provisions of the Act? Please enlighten us.
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I C Naik
It’s a very good question, post redevelopment.
Before that Sinking Fund contribution is linked to original cost of the flat and is bound to be higher for larger flats.
As far as returning the Sinking Fund to members following Section prohibits the same;
Section 64 Funds not to be divided
No part of the funds, other than the dividend equilisation or bonus equalisation funds as may be prescribed or the net profits of a society, shall be paid by way of bonus or dividend, or otherwise distributed among its members:
The future contribution to Sinking Fund will also be on the same basis by all members new and old. This is because it is the Financing plan of redevelopment which takes in to account in any manner for example the New Members paid higher price and a part of that comes to C H S as Builder’s contribution to corpus as greed in financial plan.
