Co-operative housing society Act what are bye laws maharashtra india Sarfaesi in co op bye-laws

Nomination for your flat must to avoid hassles in the future

It can ensure smooth transfer of membership in the CHS after the death of the flat owner

Nomination by a member in a cooperative housing society is an important responsibility to be essentially carried out to ensure smooth transfer of membership after his/her death to the heir/legal representative. A member, when alive can nominate one or more persons of his choice and can revoke or vary the nomination as many times as felt necessary. The society should also encourage the members to submit the nomination at the earliest to safeguard the interest of the immediate family or dependents as the case may be.
Sub-Section(1) of Section 30 of The Maharashtra Cooperative Societies Act 1960 specify that on the death of a member of the society, the society shall transfer the share or interest of the deceased member to a person or persons nominated in accordance with the rules. Rule No.25 and 26 of Maharashtra Cooperative Rules 1961 specifies the procedures for submission /revoking of nomination and registration of such nomination/revocation in society records. Bye-law Nos.32 and 33 of Model Bye-laws specify similar conditions for submission and registration of nomination in cooperative housing societies.
The managing committee is required to consider the application for nomination from a member, approve the same and record it in the nomination register. The member should be provided with the approved copy of the nomination form for his record. On the death of a member, the society after receiving the death certificate and application for membership from the nominee/s in format under Appendix-15; following the provisions of Bye-laws no. 34, 17A, 19 and Section 30 of MCS Act 1960, shall transfer the shares and interest in the capital/property of the society to the nominee/s.
It shall be kept in mind that the intention of specification under section 30 of MCS Act is only to provide for who the society has to deal with on the death of a member and not to create a rule of succession. Though in law, the society has no power to determine the heirs or legal representatives, in order to obviate difficulty and confusion, the section for a limited purpose confers the right to determine to whom the society can transfer the shares of the deceased member as legal representative/heir.
The admission of the nominee as a member is only to provide for interregnum between the death and the full administration of the estate and not for the purpose of conferring any permanent right on such person, who in fact shall act as a trustee on behalf of the successors /heirs. The legal heirs or the persons entitled to the estate are decided in a court of law. The society will be bound by such court orders. It is to be noted that a will executed under law will supercede a nomination.

Rules for removal of chairman from committee

Our society has elected managing committee of members in August 2010. Now, due to disputes and other problems, five committee members want to remove the chairman. They are also demanding re-election of the entire committee or they will resign and reduce committee to minority. Will our committee be valid then? Tenure of our committee is 5 years which is found to be quite long.
In the context of your query, chairman, secretary or treasurer can be removed by a no-confidence motion in a special meeting of the committee called and presided by the Registrar or under delegated authority by an assistant registrar or an officer above his rank.
The notice for such meeting will have to be given by one-third members of the committee and motion of no confidence is to be passed by three-fourth members present at such meeting. Attendance at such meeting will have to be two-third of the committee members.
If 5 out of 9 members of the committee resign, the strength of the committee would reduce to minority and apparently, functioning of the committee becomes questionable. However, the apprehensions about the validity of the committee are ill conceived. It is true that to transact business at a committee meeting, members present should form quorum agenda. However, such requirement of quorum would not be applicable for the purposes of filling in vacancies caused by death, resignation, disqualification or removal of committee members. Period of office of a co-opted member, would be co-terminus with tenure of the committee, which in your case is 5 years from the date of election. Tenure of the committee can be reduced by an amendment to the byelaws.

'It is the duty of the society to stop terrace leakage'

Answers queries on property matters

IS PROPERTY TAX LEVIED FROM OCCUPANCY CERTIFICATE?
I booked a flat in an under-construction building in September 2009. The builder informed in February 2010 that occupancy certificate has been received on 27.1.2010 but he has given the possession of the flat in May 2010 because of the delay in providing the amenities. Please let us know the date for payment of the property tax from the date of occupancy certificate or possession date.
–Ramesh Narayn Kamath
In terms of Section 6 of the MOFA 1963, a promoter, while in possession and where he collects the sum for the payment of outgoings, including property tax, water charges, electricity charges, is under legal obligation to pay the same to the concerned departments until he transfers the property to the persons taking over the flats or to the organization of such persons. A flat purchased, as per Section 12 of the said Act, has to pay his proportionate share of the said charges in accordance with the terms and conditions of the Agreement of Sale executed between him and the promoter.

SHOULD MODEL BYE-LAWS BE REGISTERED WHEN ADOPTED?
Our society have adopted model bye-laws in the special general body meeting in 2009 and sent to the cooperative department for registration under Section 13 of MCS Act. Please advise whether the registration is necessary or simple adoption by the society is enough to meet the legal requirements and whether the new bye-laws become enforceable on adoption or only after registration and if registration is a must, what is the remedy for expediting the registration?
–S. Gupta
In terms of Section 13 of the MCS Act, read with Rule 12 under the said Act, registration of the bye-laws is essential and till then, these are not valid. For expediting the registration, the matter should be followed up with the office of Registrar of the Societies and in case of undue delay Co-operation Department at Mantralaya may be approached.

WHAT IS THE PROCEDURE FOR NAME TRANSFER IN MHADA PROPERTY?
We have purchased a flat in a MHADA society in Byculla, Mumbai, in May 2005 as the third sale. We have already obtained NOC from the society, but we have to have the flat transferred in the records of MHADA. Please let me know the procedure, requirements, tax and charges applicable for the transfer.
–Amit Jain
In the case of a society in respect of MHADA property, any change in the membership by way of any addition or deletion therein would need the prior permission from MHADA. After obtaining the NOC from the society, you and the seller may approach MHADA with the said NOC of the society for approving your name as the member of the society in lieu of the seller. The transfer, prescribed form etc. for this purpose would be available in the office of the society or these may be obtained from the office of MHADA as also the charges payable, because the transfer charges differ from location to location, area of the flat, age of the building etc.

DOES FIXING BOX GRILL FOR AIR CONDITIONER REQUIRE CONSENT?
Our rented flat is converted into a co-ownership flat in JVPD Mumbai by the land lord on payment of the amount with registration fee etc. A number of the flat owners in the building have fixed box grills to safeguard the AC and to keep the flower pots from slab level to top of window without the consent of anybody. However, the care taker of the land-lord has objected to my fixing the box grill. Can I fix grill without the consent of the land-lord and our flat owners' association has not given any account from the date of its formation. Can we take any action against them?
–Mahesh Goradia
It is not clear from your query whether the society has been registered or the apartment owners association under the provisions of Maharashtra Ownership Apartment Act has been registered or the building is still under the control of the builder or the developer. However, there cannot be any discrimination for the fixing of the grill on the windows amongst the purchasers, either by the land-lord or the society or the apartment association, as the case may be. But it has to be ensured that it should not cause any annoyance or inconvenience to the other residents by way of muddy water from the flower-pots or throwing waste material etc. in the compound or the water dipping from the wet cloths hanged in the box- grill. As regards the account, if the building is under the control of the builder, he is bound to render the accounts of all the amounts collected for the purpose as per the provisions of Section No.5 of the Maharashtra Flat Ownership Act 1963, failing which he may be dragged to the court. If the society has been registered, the accounts have to be circulated with the agenda in the general body meeting and the failure may be brought to the notice of Dy. Registrar of the societies. In case of apartment owners association, remedy lies with the civil court.

CAN SOCIETY DISALLOW PARKING FOR LESSEES AND LEVY FINES?
A flat, in the joint-names of myself and my wife at Mulund Mumbai, has been given on rent since May 2008 and the copy of the lease agreement has been submitted to society and we have been paying the non-occupancy charges. My tenant was parking his two wheeler in the compound and the society, which was charging Rs.30 per month as parking charges from all the members and Rs.45 from the non-members, payable with the monthly charges. However on 15.6.2009 the Secretary has issued a circular that the non-members shall not be allowed to park their vehicles in the open space and in case of violation of this decision, they shall be fined Rs.360 per vehicle per month and these charges will be added in the maintenance bill from 1st June 2009 onwards. Is the managing committee of the society empowered to issue such a circular and to levy fine which is 12 times of the parking charges payable by the members per month? Please let me know the remedy available to me against the dictatorial and arbitrary decision of the managing committee.
–Haridas Sambhat, R.F.Daruwala
Parking slots, whether stilt or open, have to be allotted by the society as per the provisions of the bye-laws of the society (refer Model Bye Law No.78 to 85). There should not be any discrimination in the charges payable by the members and the lessees (who could also be enrolled as nominal members) for parking the vehicles allotted by the society. However, the society shall allot parking slots first to the members of the society as per the said bye laws and, thereafter, to the lessees. The decision as per the bye laws have to be taken in the general body meeting of the society and the managing committee is not competent to take such a decision. Even the general body meeting cannot take a decision in violation of the rules, regulations and bye-laws. Any violation may be taken up with the Dy. Registrar of the Co-operative Societies for the redressal of your grievance.

IS A 'THUMB IMPRESSION WILL' CHANGING PROPERTY HEIRS ACCEPTABLE?
We are two brothers and one sister. Our late parents had left a will in favour of all the three of us for equal shares in the property at Mumbai. We two brothers are living with our family out of town, but our married sister, along with her family was living with the aged parents and was taking care of them. After the death of our mother, our sister got a new will prepared in her favour as the only legal heir from our father, who was not in stable mind and could not sign and, therefore, she got his thumb impression on the new will and got it attested from a medical practitioner, who claimed that my father was in an unstable mind and could not sign and hence the thumb impression. She got this will notarized. What is the status of us two brothers, who trusted our sister and allowed her to look after our aged and unwell parents?
–Kanal Bansal
It is a case of two wills by your parents, one in favour of two brothers and the sister and another by your late father in the exclusive name of your sister. The question which is the valid will of your parents will be determined by the court in the facts and the circumstances and the evidence led before the court. Since the will produced by your sister is notarized, evidence of the notary whether your father had appeared before him and put the thumb impression on this will and the Register maintained by the notary to be produced in the court and also the testimony of the attesting medical practitioner that your father was not in a stable mind, which could be construed that he was not in a proper frame of mind to understand the contents of the will, will be material evidence to decide the issue.

WHO HAS TO BEAR THE COST OF SOCIETY BUILDING TERRACE LEAKAGE?
I stay along with my mother (a divorcee), elder brother and younger sister on the 4th floor of the building. During the monsoon, we have to face excessive leakage from the roof. On our complaint several times over the years, the society has not carried out any foolproof repairing work, except filling the cracks etc. by cement. We pay regular maintenance, but suffering due to society's negligence. What is the solution? Can we stop paying the maintenance charges or repair it and claim the amount from the society or where I can complain against the society?
–Deepak Gawas,
A. Gomes, Satish Sood
As per the bye laws of the society it is the responsibility, of the society to carry out proper repair of the terrace to stop leakage and in case of the failure of the society to maintain the building in a good condition, you may take up the issue with the Dy.Registrar of the Societies; but you cannot retaliate by stopping the payment of the maintenance charges. Similarly you cannot claim the amount from the society, if you carry out the same without the prior written permission of the society.

CAN MORE AREA BE GIVEN IN REDEVELOPMENT AFTER SIGNING AGREEMENT?
Our building is in the process of redevelopment since December 2008 and the builder has given us 225 sft CA as per the agreement signed by him with existing tenants. But during the construction, the builder has offered extra area by including some area near window of the kitchen and living room in exchange of huge amount. Is it legal to include such area without any new agreement or can I include such area after the possession?
–Name withheld on request
The builder and the members will have to strictly adhere to the building plan sanctioned by the local authority i.e. Municipal Corporation Greater Mumbai and inclusion of any extra area within the constructed area in contravention of such plan would amount to unauthorized construction liable to be demolished by the Municipal Corporation.
Therefore, neither the builder nor you can include such an area within the sanctioned built-up area, without having the revised building plan approved by the Municipal Corporation.



CAN A SOCIETY AUGMENT INCOME WITHOUT NOC FROM PLOT OWNERS?
Our society building is on a lease-hold plot for a term of 99 years with automatic renewal clause for another term of 99 years. But since last over 14 years the owners of the plot have not executed the Lease Agreement, though the draft has already been approved in the AGM of the society. Please let us know whether a lease for a term of 99 + 99 years, after execution of lease deed, is as good as full and free ownership of the land by the society. Whether the society can augment its dwindling financial resources by putting up hoardings, ATMs etc. within the compound in the absence of lease agreement and NOC from the plot owners.
–U.K.Hitesh
A lease-hold land shall always remain lease-hold irrespective of the term, unless it is converted into a free-hold and, therefore, the plot of your society shall remain as a lease-hold plot on the execution of the lease for a term of 99 years, with the automatic renewal clause for another term of 99 years. The society shall be bound by all the terms and conditions of the lease and breach of any term or condition may give rise to the cancellation of the lease and the right of re-entry to the plot owners. If there is a condition of prior permission of the owner of the land in the lease for putting up the hoarding or ATM in the open compound, NOC from the land owner will be necessary, in addition to the previous permission of the local authority, if provided in the rules. After obtaining all these permissions, hoarding or the ATM etc. may be permitted by the society with the approval of the general body and on the terms and conditions, as may be decided in the general body meeting of the society.

DOES RESIDING WITH FLAT OWNER MAKE ONE AN EXCLUSIVE HEIR?
My mother and brother were staying in a flat at Khar, Mumbai. My mother has expired last year, who has neither nominated anyone for this flat nor has left any will. The flat is in her name and my brother's name, who is forcing me to sign the papers for exclusive rights of the flat in his name. I have to stake the claim on the flat, being the eldest son of my parents. Can he sell the flat without my consent? What is my legal right as the legal heir of my late parents?
–Sunder Shahani
You are one of the Class-I legal heirs of your parents along with your brother, if no other legal heir has been left by them, you are entitled for half of the share in the property left by your parents. Your brother, by simply residing with your mother, will not have the exclusive right to the ownership of the flat, unless you relinquish your 50% title and interest therein by way of duly registered relinquishment deed or a gift deed. If you want to stake the claim of your share in the flat, you should not sign any papers for the transfer of the right, title and interest in the name of your brother and you should lodge your claim with the society and serve a notice to it not to transfer the flat in the name of your brother or anyone else without your prior written consent.

'There cannot be any discrimination among members'

CAN THE SOCIETY PREVENT SHOP OWNERS FROM PARKING PERSONAL CARS?
In the AGM a resolution has been passed debarring me to park my personal car in the compound of the society, as I am a shop owner member, failing which a penalty of Rs.1000 will be charged. Is this resolution discriminatory?
–F. Sayani
Any resolution passed by even the general body, which is contrary to the provisions of bye laws of society, MCS Act and the Rules or the Government Notifications are not legally valid and binding on the members. There cannot be any discrimination amongst the members on the basis of the ownership of the flats or shops. The parking spaces have to be allotted by the society, as per the provisions of model bye-law No.78 to 85.

WHAT IS THE LIMIT FOR LEVYING NON OCCUPANCY CHARGES on A MEMBER?
I understand that the society can charge 10% of service charge as non occupancy charges from the members, who have given their flats on lease. Kindly suggest the method of arriving at this figure. We are currently charging 10% of our monthly maintenance, is this in order?
–Secretary of a Society
The society can charge non-occupancy charges as per the decision of the general body, but subject to a ceiling of 10% of the service charges, the break-up of which is given in model bye law No.68, which include the expenses running for the society, electricity charges, audit fee etc., but these charges do not include the property tax or the expenses on the maintenance or the repairs of the building of the society.

WHAT ARE THE TRANSFER NORMS IF THE FLAT IS PURCHASED BY A TRUST?
In our society one member had purchased a flat in the name of the trust where trustees are father and mother and his two adult sons, as the nominees. Now they intend to transfer the flat in the names of two sons and have applied to the society. What is the procedure and whether any transfer fee or stamp duty has to be paid?
–Sanjay Shah
It is a case of a private family trust and the transfer of the flat can take place only as per the provisions of trust deed and the procedure mentioned therein. If such sale is permitted as per trust deed, then the trustees will have to execute a deed of transfer in favour of both the sons, which would attract stamp duty as per the provisions of Article 61 of the Bombay Stamp Act and to be registered as per the provisions of the Indian Registration Act. However in terms of model bye law No.38, no transfer fee will be payable to the society, when the transfer of the property in the society and the share certificate is in favour of the family member/s.


IS IT ESSENTIAL TO SUBMIT FINANCIAL STATEMENTS TO THE REGISTRAR?
Please advise whether it is essential to submit the annual financial statements and the report of the managing committee to the Registrar of the Co-operative Societies and if so, the compliance has to be made whether by the outgoing managing committee, which resigned in the AGM, or the new committee elected in the AGM?
Our society is operating a saving bank account with a nationalized bank and it also has another savings account with Bombay District Co-operative Society. Whether after the amendment in Section 70 of MCS Act from 29.10.2007, is it valid to continue to invest the funds in nationalized bank, because of the practical operational convenience?
In our society some of the members are the companies and the registered partners firms, which have purchased the flats from the builders who collected Rs.250/- (Rs.50/- per share for 5 shares) from all the purchasers. Whether the society can merely issue 5 shares to each member based on the share money collected by the builder or Government Order under Section 22(1) of MC Act is still in force and applicable?
–Secretary of a Society
The Registrar of the Co-operative Societies has been vested with powers for the supervision, control and monitoring the functioning of the societies, and, therefore, annual financial statement and the report of the managing committee have to be submitted to him for the discharges of his functions. If before filing such statements and returns, the outgoing committee has handed over the charge to the new committee, it will be the responsibility of the new committee to comply with all the requirements.
The society should not continue to operate the account with the nationalized bank, without obtaining prior written permission from the Dy.Registrar of the Cooperative Societies, explaining the practical operational inconvenience for the operation of the account with the Bombay District Cooperative Society. Till such permission is obtained, it would be advisable for the society not to operative the account with the nationalized bank.
The company or a registered firm or a corporate body have to subscribe for minimum 10 years as per the provisions of the bye laws (model bye-law No.19 C (ii) and the Government Order under Section 22(i) as mentioned is still valid and in force. If these members do not comply with the requirements of these provisions or other related provisions, their membership will not be treated as valid and such members will not have any rights, privileges as may be available to the members in a society.


CAN A SOCIETY INSIST ON TRANSACTING ALL MATTERS IN ONLY ONE LANGUAGE?
Our society has adopted Marathi bye-laws and passed a resolution in the general body that the correspondence of the society, except the balance sheet, will be in Marathi language. In the society out of 47 flat owners 13 are non-Maharashtrian and are not very well versed with Marathi language. Whether I can send the letter to the Chairman expressing my inability to communicate in Marathi and send letters, suggestions etc. in English, because according to me Constitution of India permits a citizen to use any of the three languages i.e. state language, Hindi or English.
–Rajan Uppan
Society may use Marathi language in its working, but the Chairman or the Secretary or the members of the managing committee cannot refuse to entertain your letters or the suggestion written either in English or Hindi. It is advisable that an extreme position should not be taken in such matters and it should be the endeavour of all to further cooperative spirit which is possible by enlisting participation of all the members. The majority should take minority members along for healthy atmosphere in a society.

A member can conduct audit of his own society

In Mumbai, is it possible for a member to do statutory audit of his own society?
Unlike under the provisions of the Companies Act, 1956, there is no such restriction under the provisions of Maharashtra Co-operative Societies Act, 1960 that a shareholder or a member cannot conduct audit of a cooperative society. Therefore, in the absence of any such bar, a member of a co-operative housing society can conduct internal or statutory audit of the society in which he is a member, but he should not be a part of its managing committee or sub-committee because in that case he would be reporting inter alia on his own actions and inactions.
Can a society allow a flat to be used for commercial purposes by charging extra amounts?

Use of a flat for particular purposes and change of use is allowed by local authorities, primarily the municipal authorities. A cooperative housing society has no power to allow change of use andcharging extra amounts for allowing such change would be illegal. However, while permitting change of user, the municipal authorities may require you to obtain no-objection from the society.

During the year, I sold two flats and am contemplating investing the capital gains in purchase of flat(s) by adding my wife's name in one purchase. Out of the sale proceeds, some amounts have been used by me in repayment of loans and therefore I will be using my savings in acquisition of new flats.

Capital gains resulting from sale of a residential house, if utilised for purchase or construction of another residential house, would entitle you to avail exemption u/s 54 of the Income Tax Act, 1961 if the flat transferred by way of sale was held by you for more than 36 months on the date of transfer ther
'Ad-hoc committee is not a legal entity for issuing NOC'
AD-HOC COMMITTEE IS DEMANDING ONE TIME VSAT ANTENNA FEE

I owned a shop in a residential/commercial complex in Kopar Khairane, Navi-Mumbai, which I have leased out to a reputed Bank for ATM, after NOC from the proposed society (ad-hoc committee) and builders for installing a V -SAT dish antenna for the bank and agreed to pay nominal charges, if any, to the society. Now proposed society is demanding Rs.35,000 as one time fee. Is it legal to demand such an amount?

The ad-hoc committee of the proposed society is not a legal entity for the purposes of issuing the NOC. Since you have obtained the NOC from builder, he has to pass on such developments to the society on its registration and the registered society may decide, with the approval of AGM, to levy the charges in such cases. Therefore, the demand of Rs.35000 by the ad-hoc committee of the proposed society is illegal and not justified and
without any authority, which should not be met.
My wife wants to be a joint member of the society along with me in respect of my flat in a CHS.This flat is mortgaged with my employer. Do I need permission to do so? What is the difference between associate membership and joint membership in terms of ownership rights? Can the society raise any objection for admitting my wife as an associate member? My sister’s husband recently passed away without making nomination in favour my sister in his landed property. They have a plot and bungalow in Thane and society is formed for all these bungalows. What is the best course to get this property transferred in the name of my sister without much legal hurdles? — Sanjeev Aras
Your wife can certainly become an associate member along with you in the co-operative housing society (CHS) in which you own a flat. The procedure for acquiring associate membership in a CHS would include submission of an application with prescribed fee of Rs10 or Rs100 depending upon bye laws of your society. Also, enclose share certificate in original for the purposes of endorsement of the name of your wife on the reverse thereof.
Since your flat has been mortgaged, the share certificate would be in custody of the lender. In all fairness, the lender should not mind adding your wife’s name in the share certificate, as ultimately an associate membership confers no property rights and it only entitles the associate member to attend, participate, vote at the general body meetings and be a part of the committee of the society but all these rights are at your consent and at your pleasure.
However, the society will be justified in taking a stand that unless the lender consents, the society will not effect any changes in the share certificate. By adding your wife as an associate member she would not be a party to property rights in respect of your flat. If your wife contributes for acquisition of flat or if you release your property rights partly in favour of your wife in that case she would become a joint owner also of the property and that will be the case of joint membership. However, even by becoming joint owner and joint member, her membership rights would not increase beyond those of an associate member as stated herein before. To get title of the bungalow in her name, your sister would have to obtain a succession certificate from a competent court. However, at the time of death, if your brother-in-law was already a member of the society but had not filed a nomination, then the model bye laws permit transmission of name from the deceased to your sister with consent of other legal heirs, on your sister executing an indemnity bond and affidavit and on satisfying the society that your sister is the only legal heir or that all other legal heirs have consented to her membership.
However, please note that the society granting your sister membership in place of your deceased brother-in-law does not necessarily mean transmission of property in her favour. Property rights and membership rights do not go together always.
We are two brothers and four sisters, all married. The last sister married in 1984. My father has made a house out of his earnings in Visakhapatnam in 1987. He did not make any will and he expired in 2006. My mother is also no more. Now, what is the status if we have to share the property among ourselves? Do we come under the definition of a Hindu Undivided Family (HUF) and are we called a joint Hindu family governed by the Mitakshara law? What would happen if one of the married sons or daughters had died leaving children before the death of father or mother? We are Hindus.
—CV Nageswar Rao, Visakhapatnam
Since your father expired intestate in 2006 and left inter alia a house property and as it transpires that your father was a Hindu at the time of his death, the succession in your case would be governed by the provisions of Hindu Succession Act, 1956.
A property can become HUF property in various ways and one of them is that an ancestral property becomes HUF property. In your case since your father acquired the subject property out of his own earnings, therefore, the same is not a HUF property. On the death of your father, if he was survived by his wife then the widow along with the sons and daughters became equal co-owners of the house property.
have two house properties one is self occupied property. Second property is under construction & possession is expected around Dec’10 against which I have taken a housing loan which has been partly disbursed and utilized in payments to the builder. Now I am paying Pre-EMI interest. Now my query is how to calculate income of my second house & what benefit I will get against pre-EMI interest payment. I am not yet decided whether I will rent the second house or will self use. Whether from rental income, I will get deduction of society maintenance and non occupancy charges? — S Kadam


Presently, till your second house gets constructed, you are owning only one house as in respect of second house under construction, you have only booking right.
Therefore, as far as income from house property is concerned, presently, till your second house is constructed, your incomewould be computed only in respect of your one self occupied house and the same will be Nil subject to deduction of interest on housing loan within the limit prescribed for the purpose at Rs1,50,000/- on prescribed conditions.
After your second house is constructed, you will be owning two houses and for the purposes of computation of income under the head “Income from house property” of the Income Tax Act, 1961, even if you are self using both the houses, you will be entitled to claim only one house as self occupied and the second house, if not let, would be deemed as let out and notional rental income therefrom would be taxable as your income.
If the house is actually let, then the notional rental value or actual rent received whichever is higher would be taxable as income from house property. From rental income, whether the house is treated as notionally rented or actually rented, deduction would be allowed in respect of interest payable during the year on housing loan but the ceiling of Rs1,50,000/- is not applicable to such house whether actually let or deemed as let.
From such rental income, municipal taxes and other such taxes levied by the municipal and other local authorities, actually paid during the year would be deductible.
You may be paying such taxes directly to concerned authorities or as a part of your maintenance bill to the society or other similar organization or to the builder. You should also get deduction fornon occupancy charges, if so levied by the society, as such charges are necessary to earn rental income and in this connection you will be supported by relevant case laws.
Deductibility of society maintenance charges in respect of such house may be debatable although there are favourable decisions on this count also. Before your second house is constructed, since you are not owning the house there is no income from house property and therefore you will not be able to claim deduction of interest on your housing loan. However, law provides that aggregate of such pre-construction interest payable by you till construction of your house, would be deductible in five equal installments commencing from the year in which your house gets constructed.
If in a Hindu family, partition has been done before new the law granting equal rights to daughters, will it be affected?
Hindu Succession Act, 1956, stands amended by the Hindu Succession (Amendment) Act, 2005, with effect from September 9, 2005. The amended law inter-alia grants coparcenary rights to daughters in a joint Hindu family governed by Mitakshara law. Although the amendment is effective since September 9, 2005, the law operates retroactively in some respects. As far as partition of a Hindu family is concerned, if the same is effected before December 20, 2004 and if the partition is registered under the provisions of Registration Act, 1908, then such partition shall not be affected by amended law.
Is it correct to say that a flat purchased in joint names is owned
equally by two persons?
For the purpose of property rights under the property laws as well as for the purpose of Income-Tax Act, 1961, unless otherwise specifically decided between joint purchasers, the rights of co-owners in an immovable property would be with reference to funds contributed by each joint purchaser in acquisition of such property.
Since in most cases, the agreements for purchase of immovable propertiesare silent about co-ownership rights of joint purchasers and since such co-owners do not have specific agreement with regard to their proportions of co-ownership rights, therefore the above analogy of co-ownership rights with respect to funds contributed by each of them will apply in most cases.
I am contemplating purchase of a flat in a co-operative housing society in the name of a Hindu minor. Can I purchase it under the signature of his father and/ or mother. Will the society be required to place any further conditions in this regard?
It is a mis-conception that if an immovable property is of the Hindu minor, the same can be purchasedunder the signature ofhis natural guardian, that is father and afterfather, the mother. This is because in case of a Hindu minor, even the powers of a natural guardian are much restricted in connection with immovable property. The natural guardian cannot, without the previous permission of the court, mortgage or charge, or transfer by sale, gift, exchange or otherwise, any part of the immovable property of the minor or lease any part of such property for a term exceeding five years or for a term extending more than one year beyond the date on which the minor will attain majority. Any disposal of immovable property by a natural guardian in contravention of these provisions is voidable at the instance of the minor or any person claiming under him.
Is it compulsory to pay stamp duty on leave and license agreements for flats in registered housing societies for residential purpose? Are such agreements required to be registered? Our society has given on leave license a terrace area for installing a mobile tower.
Leave and licence agreement in respect inter-alia of a flat in a co-operative housing society is liable to registration under the provisions of Registration Act, 1908. Before registration, such an agreement is liable to be stamped under the provisions of the Bombay Stamp Act, 1958. It is the duty of the licensor to get the agreement registered, failing which, the licensor would be liable to fine up to Rs 5,000 and /or imprisonment up to 3 months.
Further, in case of dispute about the terms of the license, the contentions of the licencee shall prevail. Leave and licence agreement for allowing a mobile tower on the terrace of the society would stand on the same footing and accordingly, would require stamping and registration.
Please explain provisions about non-occupancy charges and interest from members in the hands of a co-operative housing society.
Non-occupancy charges are collected by a co-operative housing society from a member who lets out his flat. Such charges are to be collected under the provisions of the approved bye-laws and subject to upper ceiling of 10% of service and maintenance charges excluding rates and taxes. The non-occupancy charges collected by the co-operative housing society from its members would be covered by concept of mutuality and therefore, would not be its taxable income. Similarly, interest on defaulted dues collected from members is also covered by the concept of mutuality and therefore would not be a part of the taxable income of a co-operative society.

In a redevelopment, amounts are received by the society as corpus and by the members as consideration/compensation from the developer. Who would be taxed? If TDR is bought in the name of society, what safety precautions may be needed? —Amit Kalkar
In transactions of redevelopment, like in any commercial transaction, legal aspects are more important. In redevelopment, the developer is the business risk taker and therefore no risk should fall upon the society or its committee members and the development agreement should reflect this position. The redevelopment agreement should be drafted by the society’s consultant and besides being legally tenable, it should take due precaution against practical irregularities and defaults happening in redevelopments so that a wrongdoer suffers more than the honest. Further, for safety of the members, in addition to development agreement, a separate agreement with each individual member should be entered into. Documentation should be done on due consideration of the provisions of the Transfer of Property Act, 1882, MOFA, 1963, Maharashtra Co-operative Societies Act, 1960, various construction laws and regulations, eligible FSI, TDR - FSI and the possible increase in FSI or TDR entitlements after development agreement is signed. Rights of existing members and the incoming members would have to be balanced on consideration of property laws and the society laws. Mere purchase of TDR in the name of the society is not sufficient as the same should be properly documented in municipal records before the building is vacated and stamp duty aspects should be complied with; or the society and its members may have to suffer at a later stage.
The manner in which a transaction is structured and documented would have impact on taxability under various laws. Income tax department would insist that taxable entity is the society and not the members. However, in an appropriately structured and documented transaction, it is possible to contend that the taxable entity is not the society but its members. This would provide double safety from income-tax point of view as it can be contended firstly, that the tax liability is nil and secondly, that individual members are entitled to various exemptions.
Recently, in the case of Auro Villa CHS, where the members had in aggregate received Rs 10.26 crore in redevelopment, the Mumbai Income Tax Appellate Tribunal ruled that members are the taxable entities and not the society on the reasoning inter alia that society is only ostensible owner and in reality flat owners own the land and building. While structuring the deal, one should also strive to keep the burden of service tax and VAT liabilities away from existing members of the society. In appropriately structured transaction, stamp duty would be attracted only on the development agreement and the same can be avoided on individual agreements.

CAN A SHAREHOLDER OF A PROPERTY SELL HIS SHARE WITHOUT CONSENT?
There are three share holders A, B and C for a single property. A is the property owner and the member of the society. Can the other share holder B sell his share to C in the same property, without NOC of member A and, if it is possible, is there any effect on the membership of A in the society?
Name withheld on request
The membership rights in a society and the joint ownership of the property are two different matters. If A is the exclusive owner of the property and B and C, being family members are the associate members, none of the two has any right to sell his share in the property. If all the three are the joint owners of the property, B may sell his share in the property to C without any NOC from A., who may be the member of the society being the first holder of the property. After such transfer, he would continue as the member of the society and C as an associate member. The transfer requirements, with the copy of the instrument of transfer, may be submitted by B and C to the society to enable it to delete the name of B from the joint ownership of the property and the membership of the society.

NO AGM HAS BEEN HELD BY MY SOCIETY FOR THE LAST TWO YEARS
I have purchased a flat about 2 years back in a society at Vasai (East) Dist. Thane and ever since the so called committee has not held an AGM for the last 2 years and not furnished the accounts, though the maintenance charges are being collected regularly. Please guide what action we, a few members, can take against the committee, even if we are in minority?
–Calesh Jagtiani
The Chief Promoter is under an obligation to convene the first general body meeting within three months of the date of the registration of the society, failing which the registering authority may take steps to convene the same. Thereafter, the AGM has to be held on or before 14th August of each year or within the maximum extended period of six months as per Section 75 of the Maharashtra Co-operative Societies Act and the annual report of the managing committee with the statement of the accounts etc. have to be circulated in the general body meeting. In case of failure, the matter may be taken up with the Dy.Registrar of the societies for necessary action (Refer to Model Bye-Law No.86 to 96).


AGREEMENT IS IN JOINT NAMES BUT ONLY ONE ON SHARE CERTIFICATE
A flat has been purchased by my mother, but the agreement is in the name of mother and elder sister. But the share certificate is in the single name of my mother, who expired recently. Father had expired long back. My mother had nominated two daughters (including joint-holder) and two sons as the nominees. Can the share certificate be transferred in all four names and what is implication of mother's nomination and joint-holder's position. If the shares are to be transferred in favour of two sons only, what legal papers are required and what is share of eldest daughter the joint-holder plus nominee?
–Name withheld on request
If the total sale consideration has been contributed by your mother and the name of your elder sister has simply been added in the agreement, the flat shall be inherited by all four of you, if there is no other legal heir. As all the four have been nominated by your mother as the nominees, they may make a joint application to the society to indicate the name of the nominee who should be enrolled as a member and the other nominees shall be enrolled as the associate members. If the ownership of the flat is to be transferred in favour of only two sons, the remaining legal heirs will have to relinquish their right, interest and title therein by way of a duly registered relinquishment deed or a gift deed in favour of both the sons and the steps should be taken with the society to complete the transfer formalities in the names of both the sons. The joint ownership of the property and the membership rights are two different matters. If the eldest daughter has contributed any amount towards the sale consideration she will be owner to the extent of the share in proportion of amount contributed and after the death of the mother her share in the property will be inherited by all her legal heirs, including the eldest daughter.

CONFUSION IN SOCIETY OVER THE LEVY OF NON-OCCUPANCY CHARGES
I have purchased a flat in Nallasopara, Thane, which was kept vacant for many years. Recently, I have given it on leave and license basis for 11 months. There is a difference of opinion in our society for non-occupancy charges as nobody knows the exact rules. I am a senior citizen, please guide me.
–Uday Ganguli
A flat may be given on leave and license basis only with the prior written permission of the society and you will have to pay non-occupancy charges to the society, as may be decided in the general body meeting of the society but only in accordance with the Circular dated 1st August 2001 (issued by the State Government) @ 10% of the maintenance/service charges, as per the details given in Model Bye Law No.68 (excluding property taxes, expenses on repairs etc.). The validity of the said Circular has been upheld by the Hon'ble Bombay High Court in the case of Palm Beach Riviera CHS declared on 2nd March 2007, and the said petitioner could not get any stay against this order on the SLP filed before the Hon'ble Supreme Court of India. Therefore, the non occupancy charges cannot be levied more than 10%, as said, even with the resolution passed in the general body meeting.


DOES ASSOCIATE MEMBER HAVE TO BE ENDORSED ON SHARE CERTIFICATE?
In our society, one of the members has nominated her husband for the associate membership, which has been duly approved by the society and minuted in the records. Please inform whether the share certificate has to be endorsed for the associate membership and the member and the associate member has to be formally issued a letter, containing the extract of the minutes of the meeting of the committee.
–K. R. Ramachandran
The name of the associate member, after the approval by the society, may be endorsed on the back of the share certificate and the member and the associate member may be formally informed of the same, so that, on the authority of the member, there may not be any objection by the other members for attending the general body meetings etc. of the society by the associate member. But in that letter, the minutes of the committee need not be extracted; as a member has always the right to inspect free of cost books, registers, documents of the society as per the bye-laws of the society (Refer to Model Bye-law 23).

WHO IS THE RIGHTFUL TENANT OF THE REDEVELOPED PROPERTY?
After the death of my father-in-law, a small room on rental basis was transferred in the name of my mother-in-law, who was residing with her three sons and one daughter for last many years. Thereafter she started living with her younger son at Adipur (Kutch) and the room was closed for some time. One of her sons, who had some problem, obtained the key of the room and started staying therein with her oral consent. The said property is under redevelopment and in the course of the time, that son fabricated certain documents. A public notice was given in the news papers for the redevelopment, wherein the name of my mother-in-law was shown as the tenant. That son, who fabricated the documents before the builders, is now claiming the right to the ownership flat on redevelopment. My mother-in-law is aged about 83 years. Please advise what is her position with regard to this flat?
–Jaydev Dave
Your mother-in-law, who has been shown as the original tenant, would only be entitled for the ownership flat on redevelopment and any claim by her son on the basis of fabricated or false documents will not be sustainable in the law, as no person can take any advantage out of his own fraud. If the possession has been given to the son and documents have been executed in his favour by the builder or the society, your mother-in-law should immediately take legal steps to nullify the so called ownership of the flat in the name of her son.

CAN I SEEK THE CONVEYANCE DEED OF REDEVELOPED SOCIETY?
My society was redeveloped six year back and a conveyance deed has been executed duly stamped and registered, wherein all the relevant particulars of the other members and the flats are mentioned. Is this fine and if not, how can I rectify it? Can a member ask for a copy of the conveyance deed from the society?
–Simon D'Lima
It seems that before the redevelopment, individual agreements were not executed and registered between the builders and the individual existing members of the society. Now after the execution of the conveyance deed the society may issue the allotment letters to the members, along with the share certificate, giving the details of new flat in lieu of the old flats. Such an allotment letter may be registered and it would attract stamp duty of Rs.100 only, as full duty has been paid on the conveyance deed. A member of a society have got the right, as per the bye-laws, to inspect the books, registers, documents of the society and even to get the copies of the documents on payment of charges prescribed by the society in accordance with the bye-laws. (Refer to Model Bye-law 23 and 172). In the alternative, you may obtain a certified true copy of the Conveyance Deed from the office of Sub-Registrar.

Once an account turns NPA, the Sarfaesi Act takes over

V N Kulkarni
We had taken a home loan of Rs 52 lakh and cash credit of Rs 50 lakh from Centurion Bank of Punjab in 2006. Our account was good until the bank was taken over by HDFC Bank. After the takeover, it started returning our cheques even if we deposited cash during banking hours on the same day. This resulted in a loss of goodwill and caused us heavy losses. The recession only worsened things. Then, all of a sudden, the bank issued us a notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act in December 2009. They even collected instalment on March 10 and published possession notice in newspapers on March 26. We went to the Debt Recovery Tribunal and got a stay. Now the stay is vacated and hearing is on in the court. The bank has not given any reason as to why it made our account NPA. The court too has not questioned this and seems to be favouring the bank. What do we do?

Banks are commercial organisations. More importantly, they too are in business. It is expected that a bank as well as its clients conduct themselves according to the terms and conditions as agreed upon by both parties. Coming to your point that the bank categorised your account as NPA even though you were paying interest within 90 days, it may not be the only reason. NPA norms specify that your account should not be continuously out of order; the credit in the account should be sufficient to cover the interest debited in the account, etc. Maybe if you had met the branch authorities before things went out of control, they would have helped you by taking into account the financial crunch you were facing during the economic crisis. The banker would have re-phased your instalment of housing loan, which would have helped you carry out your business better. A banker has every power to use the authority given to him under the Sarfaesi Act 2002 to initiate action once the account is classified as NPA. This Act cannot be questioned. It is for the borrower to ensure that his account is conducted according to the terms and conditions.
Getting deemed conveyance of property just got easier
Recent regulatory changes obviate the need for flat owners in the state to enter into endless legal wrangles with their builder/ developer for forming a housing society and getting conveyance of property

Flat owners slugging it out in the courts for getting their respective builder /developer to form a housing society and execute a deed of conveyance in their favour can take heart.
Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963, popularly known as MOFA, which governs the promotion of construction, sale, management and transfer of flats in the state, has made it easier for them to get an order of deemed conveyance in case the builder/developer fails to do so within the time prescribed under the Act.
Provisions of Act have always required a promoter, including a builder, developer or co-operative housing society constructing flats for sale to take steps to form a housing entity, i.e. either a co-operative society, company or apartment ownership association, within four months of the date on which 60% of the total number of the flats were sold. They also provided for mandatory conveyance of the subject land and building in favour of the housing entity either within the agreed time period, or, in the absence of any agreed time period, within four months of the date of registration or constitution of the housing entity.
However, the Act in its original form did not have the required teeth, because of which promoters have tended to go slow on forming housing entities within the prescribed time period. In fact, in the majority of the cases, conveyances have not been executed by the promotersfor years as the available remedies were quite time consuming.
Now, thanks to the amendments carried out by the Amendment Act, 2005, passed in 2008, followed by the amendment in rules as notified on September 27, 2010, the relevant provisions have been strengthened.
It is necessary that flat purchase agreements are duly stamped and registered as required under the provisions of Bombay Stamp Act, 1958 and Registration Act, 1908, respectively. Applications for both the purposes may be lodged by the party or authorised agent who may or may not be an advocate.
If the promoter fails within the prescribed time period to initiate steps for formation of a housing entity, the competent authority may, upon receiving an application in the prescribed form from the flat purchasers and after verifying the authenticity of the applicants' request and giving the concerned promoter a reasonable opportunity of being heard, direct the concerned cooperative authority to register the society.
If the promoter fails to execute conveyance in favour of the housing entity within the prescribed period, the members, through the housing entity, may make an application in the prescribed form to the concerned competent authority, accompanied by relevant documents for issuance of unilateral deemed conveyance.
After scrutinising the application and after giving an opportunity to rectify defects in the application, if any, within 15 days or an extended time of maximum 15 days, and being satisfied about the completeness of the application, the competent authority shall within a period of 15 days issue a notice in the prescribed form to the opponent/s, requiring him/them to file the written statement.
On consideration of the replies and after hearing the parties, the competent authority shall, within reasonable time and in any case not later than six months from the date of receipt of the application, pass such appropriate order as it deems fit andmay issue a certificate to the concerned registering authority certifying that it is a fit case for enforcing unilateral execution of conveyance deed in favour of theapplicant, as deemed conveyance.
The registering authority, on its part, shall, after giving the promoter and the applicant(s) a reasonable opportunity of being heard and on being satisfied that it is a fit case for unilateral conveyance, register that instrument as deemed conveyance.