27/06/2013
PAY TRANSFER FEES AS PER LAW INSTEAD OF DONATING
The unlawful concept of ‘donation’, employed by the cooperative housing society’s managing committees, to facilitate the transfer of a flat by a CHS member, urgently need to be examined at length.
Each time, a cooperative housing society member wants to sell his property anywhere in Mumbai, he is bullied into paying up way beyond the officially ‘legal’ transfer fee of a maximum of Rs 25,000. The excess he pays ranges from Rs 5,000, in case of small societies to as high as a few lakhs of rupees, depending on the size, status and level of moral accountability of the society in question. The cooperative housing societies and their managing committees, charging the fees, are spurred by a skewed sense of logic in their acts of demanding donations. “If a member is getting a good price for his flat, it’s because we’ve collectively maintained the society and the common amenities too. Why then, should the member be reluctant to ‘donate’ something for the society that he’s lived in for years? He pays only voluntarily and as a gesture of goodwill,” is the regular rejoinder of managing committee members ‘charging’ donation fees. Any argument, however illogical, is permissible in a democracy but only in the context of a debate and within socially-approved parameters. The managing committee members have even evolved ways to elbow outgoing members into paying up the excess. In several cases all over the city, society’s managing committee members refuse to provide the no-objection certificate for the purpose of sale and transfer to the outgoing member. While it may be realised that by law, no member needs a no-objection certificate for the sale of one’s own property in a cooperative housing society, there’s a bit of a glitch here. A potential buyer, intending to ‘purchase’ a flat in a society, usually pays the amount through a loan, approved from a financial institution which, almost mandatorily, insists upon a no-objection certificate from the cooperative housing society, housing the property. If the outgoing member refuses to pay up the excess, in cash or in the form of a ‘voluntary donation to the society’, as is usually the case, the managing committee will delay, procrastinate, sometimes outrightly refuse to give the new member the required no-objection certificate, in order to avail the loan on the property. In the absence of a clear intention to provide a no-objection certificate, no buyer would be keen on ‘buying’ a property, however clean its title. So, by creating a sense of ambiguity in the otherwise legally-clear title of a property, the society’s managing committees continue to intimidate and blackmail the members keen on selling their own properties. The Co-operative Court has held that the housing society can place ‘reasonable restrictions’ on the transfer of a flat, to prevent nuisance from the unwanted elements but that does not mean that the society can have such a right of profiteering out of the co-operative movement. However in practice, the complete reverse holds true. The law clearly puts down that even though, there is no necessity of the society’s no-objection certificate for the transfer of a flat, according to Rule 24 of the Rule 1961; one has to give a 15-day notice to the society before transferring the flat. On receipt of such a notice, the secretary should place the same before the meeting of the committee and take the decision thereof, before 30 days and inform such a decision to the member within eight days from the decision of the society. If the society has not taken any decision of transferring the share certificate within the three months, the stipulated period, as per the provision in Section 22(2), there is a provision to appeal before the Registrar, under Section 23(2). Now, no outgoing member, selling his property, will want to delay the process of transfer by resorting to the law. So, he puts up with the demands of his managing committee and pays up, what he sees, as his last dues, however illegal. That apart, while there’s no need for a society’s noobjection certificate to validate a transfer where a seller is concerned, it’s needed by the financing agencies much on the line of a non-encumbrance certificate, to ensure that the title is clear of the risk in financing the buyer’s interest. The very concept of ‘donation’ and ‘coercive tactics’, employed by the cooperative housing society’s managing committees, urgently need to be examined at length. While the Maharashtra Cooperative Societies Act (1960) and the Maharashtra Cooperative Societies Rules (1961), don’t address the subjects exclusively, contesting members could check whether the funds collected are accounted for the Gift Tax, Income Tax and Capital Gains Tax, as the case may warrant. Also, with every transfer of property within a cooperative housing society, eliminating the ‘voluntary donation’, despite it being a pre-requisite for the transfer, could well be a breach of the Indian Stamp Act and Indian Registration Act. The cooperative housing society, by way of non-disclosure of income and concurrent non-payment of legal dues, deprives the state of taxable dues. The state authorities may, in time, plug the snag by way of legislation but till then, corrupt managing committees will continue to compromise the law and force the members into paying up and pocket the ‘voluntary donations’, which are simply lost in the quagmire of societal accounting that concentrates on ‘collected dues and outstanding amounts’, ‘day-to-day expenditures to run the society’ and ‘service charges’; all of which are accountable and ‘open’ to member examination. The cooperative housing societies, in the absence of a legitimate‘check’ on their general body meetings, continue to pass ‘patently-illegal’ resolutions by simple ‘show of hand’ majorities, ‘signature campaigns’ and ‘bullying tactics’. Resolutions of a ‘general rule’ to collect ‘fixed’ yet ‘voluntary’ donations from all sellers, are passed in the general body meetings in violation of the law and the very spirit of cooperation. What can be legally examined easily is how can a ‘voluntary’ donation be ‘fixed’ and collected as ‘a rule’ from the members selling their premises. REMEDIES BY LAW Approach the police and file an FIR against the secretary of the society and the managing committee member under Section 418 which pertains to: Cheating with the knowledge that wrongful loss may ensue to person whose interest offender is bound to protect. Accordingly: Whoever cheats with the knowledge that he is likely, thereby, to cause wrongful loss to a person whose interest in the transaction to which the cheating relates, he was bound, either by law or by a legal contract, to protect, shall be punished with imprisonment of either description for a term which may extend to three years or with fine or with both. Once you file an FIR, move a no-confidence motion against the society’s managing committee or the member (secretary, if necessary), in question. Evict the person from the position of authority on the premise that a person can’t be a judge and an accused in the same case. Approach the Consumer Court and file a suit for dereliction of services by the cooperative society’s managing committee. Demand redress for loss suffered by way of time and money. The cooperative housing society is bound to provide you ‘service’ under the Consumer Act. The model bylaws, under Bylaw 7, clearly ensure that the society can raise funds from voluntary donations collected but ‘not by transferor or transferee’. For every request of ‘voluntary donation’ made by a cooperative housing society, you could approach the Registrar with a written complaint detailing Bylaw 7 of the New Model bylaws. Escalate the matter to a Cooperative Court or Civil Court, detailing illegalities under the Maharashtra Cooperative Housing Societies Act for collection of the ‘voluntary donations’ without following due process of law.
