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Home > Business > Personal Finance

Co-operative society: All about new byelaws

Geeta Nair, | January 24, 2007 09:26 IST

If your co-operative society is old it may continue to follow old byelaws. But when a new co-operative society approaches the registrar it would have to compulsorily adopt the new byelaws.

Under the Maharashtra Co-operative Societies Act 1960, a housing society is free to adopt its own set of laws that governs its members. These are called byelaws and are limited to the Maharashtra state.

Byelaws are the rules that govern a co-operative society and its members and these undergo changes from time to time through amendments whenever the government feels the need for changes.

For instance, the cash on hand limit under the old byelaws was Rs 300. Cash on hand is maintained by the society for day to expenses such as plumber's payments for instance. Over the years it was felt that the amount was not sufficient. And hence in the new byelaws the same has been increased to Rs 4,500.

Such changes under various headings become imminent and that is how the new model byelaws came into effect from July 2, 2001. Since then, the government has made it mandatory for co-operative societies in Maharashtra to adopt the new byelaws.

Byelaws are district specific. In other words while these are more or less the same there could be minor changes depending on which district you fall in whether it is Mumbai, Pune or Thane.

Enumerated here are some of the differences between the old and the new byelaws.

Transfer of flat: Under the old byelaws in case you were to transfer your flat, a charge of 2.5% of the difference in the purchase value minus sale value would be levied as transfer charges. But under the new model byelaw number 45 all that has been scrapped and a common charge is levied as per the general body resolution subject to the condition that it is not above Rs 25,000.

Maintenance: Under the old byelaws the maintenance charged varied among members. For instance, let us say the monthly maintenance amount payable was Rs 500. Now if the flat was given on leave and licence, the maintenance charge would be hiked to Rs 1,000.

But as per the new byelaws, maintenance is 10% of service charges. Service charges include salary of the office staff, liftmen, watchman, the property taxes, electricity charges, water charges, etc. in case the society has an independent office.

That apart it also includes entrance fees for affiliation to the housing federation and any other co-operative institution, audit fees for internal, statutory and re-audit if any besides expenses incurred at meetings of the general body, the committee and the sub-committee retainer fees, legal charges, statutory enquiry fees among others.

Purchase of second flat: Under the old byelaws there were restrictions on holding more than one flat. You needed to obtain the registrar's permission to purchase a second flat in the same society or within the limits of a certain district.

You were also needed to submit an affidavit saying that you do not hold any other flat in the same district. For instance, if you were the owner of a flat in Mumbai you could not own another flat in the same city. But another flat in Pune or Thane was allowed.

In the new byelaws the same has been done away with. So you can very well purchase a flat in the same society. Under Byelaw number 62 of the new model byelaws all you need to do is make an application to the society saying that you intend to purchase another flat. It's the society's consent that matters.

Transfer among family members: Under the old byelaws there were transfer charges applicable even if the transfer was between family members.

But then under Section 6 read with byelaw number 3 of the model byelaws, no transfer charge is to be levied in case of transfer of flat to any one of the family members. Under byelaw number 3(25) family members means the following group of persons: husband, wife, father, mother, sister, brother, son, daughter, son in law, brother in law, sister in law, daughter in law, grandson, granddaughter.

Says Vinod Sampat, property lawyer, "If your co-operative society is old and continues with the old byelaws it may do so as byelaws cannot be enforced by law per se. Also, in my opinion, there are many mistakes in it. For instance, under the new model byelaw number 61, the managing committee needs to inform the member in writing within seven days of the date of the decision of committee about cessation of a membership."

He adds: "Cessation of membership can take place when the member has sold his flat. And such communication in reality takes more than seven days or even a month since the committee needs to find out whether all dues such as electricity bills, housing loans if any among others have been paid. But then note that when a new co-operative society approaches the registrar it would have to compulsorily adopt the new byelaws."

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