The Economic Times:
The feisty anti-corruption crusader, 64-year-old Jayant Patel also stood up against the high and mighty of the Andheri Panchvati Housing Society in Mumbai and exposed their wrong practices. “My complaint to the registrar led to an inquiry, which uncovered at least 10 violations by the managing committee. The chairman has now been barred from contesting elections for five years,” he says.
Patel was elected the secretary of the housing society in 2008,
but resigned on 10 July 2010 after differences cropped up with the society chairman. Still, he continued to play an active role in the functioning of the society. Then one day he got the shock of his life when he was slapped with a legal notice for the recovery of Rs 70 lakh. “The money was spent on the building’s renovation and it was a decision everyone knew of before the renovation contract was awarded,” Patel explains.
He says the notice was meant to prevent him from raising issues about the violation of society norms by the managing committee. Far from being cowed down, Patel picked up the gauntlet and complained to the registrar of cooperative societies. “After the enquiry, an administrator was appointed to look into the functioning of the society,” he says.
Patel’s case highlights just one of the many reasons for questioning the working of your housing society. Those of us who live in apartment complexes pay a neat sum every month to the society as maintenance charges. These have gone up significantly in the past few years with the rise in the cost of maintaining premium common facilities. But is your contribution to the society kitty used for your benefit? Like Patel, you should find out how the money is being used and ensure that the office beare.
Though financial dealings is one of the most contentious issues in the functioning of housing societies, there are other problems that crop up frequently between residents and the managing committees. These can be as minor as a resident not being allowed to keep a pet, to as serious as the levying of unreasonable charges and not following the proper procedures in society elections. To be able to protect his rights as a member of a housing society, one must be aware of them and should know which.
Unfortunately, not many people have the mettle to pick up a fight with the office bearers of the housing society. An individual is often forced to buy peace even though the society rides roughshod over his rights. Some societies ask incoming members to sign undertakings that are not part of the bye-laws. Others charge a high fee but disguise this as a donation or repair fund. Most of the time, the members buckle before these unreasonable demands. Almost every society has some bye-laws that violate the law, but as local politicians see housing societies as captive vote banks, local authorities prefer to turn a blind eye on these issues.
The few residents who muster the courage to fight for their rights find themselves in an unequal battle. While the individual member has to deploy his own resources, the management has a war chest of the society’s funds at its disposal. Ironically, these funds are used by office bearers to fight the charges of corruption and misuse of funds.
Many of the disputes in housing societies are rooted in the abject lack of awareness about rules governing housing societies. Residents pay through their nose for maintenance but don’t know how and where the money is used. Ramesh Prabhu, chairman of the Maharashtra Societies Welfare Association, explains that many members do not know how to use the law to elicit information. “All documents, records, and the working and management of a cooperative housing society come under the provisions of the Right to Information (RTI) Act,” he points out. Hence, a member can demand information for further scrutiny, appeal or instruction. The right to access information or documents pertaining to cheques, bank account statements, tenders, contracts, share certificates in a cooperative housing society cannot be withheld on any ground. A member can approach the RTI officer about any dispute with the society or redevelopment programs being grounded if the executive members refuse to answer his queries, he adds.
Norms to be followed
The rules governing housing societies vary across states. “The activities of housing cooperatives in various states are regulated through the respective Cooperative Societies Act and Cooperative Societies Rules administered by the Registrar of Cooperative Societies appointed by the Government,” says Sajit Sankar, national head, property management, Cushman & Wakefield.
These acts lay down the model set of rules and regulations. Individual societies are free to adopt these bye-laws in total or modify them as per their requirement. The law, therefore, offers a certain degree of flexibility to societies. What is inflexible, however, is that the bye-laws adopted by a society must be submitted for approval to the Registrar of Societies.
The bye-laws should mention when and how the annual general body meeting of the society will be held. Usually, the first AGM should be held within six months of the close of the financial year. From the second year onwards, it should be held every year after 31 March and before 14 August as per the bye-law adopted by the society. An AGM can be held by giving at least 21 days prior notice to members.
Free and fair elections:
Apart from financial bungling, the election procedure is a major cause of friction in housing societies. Rules specify that elections of the managing committee should be conducted annually. It is supposed to be a free and fair process, but influential members in the society often resort to underhand tactics. Four members of the Tarana Housing Society at Santacruz, in Mumbai, were disqualified from voting because they were opposed to the decisions of the managing committee. Siva Kumar Lingam (see picture) complained to the Registrar of Societies and their voting rights were upheld
.
Use of society funds:
A housing society collects charges under various heads, including property taxes, utility charges, repairs and maintenance, the formation
of a sinking fund, insurance charges, and
other fees. There are specific regulations for utilizing
society funds. The building maintenance fund, for instance, must be utilized
only for repairs and maintenance of the building, and for carrying out structural additions and alterations that are essential for the safety of the building. “The building maintenance fund of the cooperative housing society, when not required immediately, must be invested with the apex or financing bank. A corpus for replacement fund should be created annually through a budget provision duly approved by the general body of members of the society, and should be utilized
only for replacement of building in course of time,” says Sarkar.
Scrutiny of accounts:
More importantly, the society’s accounts are to be subjected to third-party audits, scrutiny by the registrar of societies and should be made available to the members on demand. A society is required to appoint a third-party internal auditor and the account statements should be submitted for audit to the statutory auditor by 31 May every year. Auditors can be appointed by the society at its general body meeting from the panel of certified auditors maintained by the registrar or any practicing chartered accountant. The auditor is required to file a report for the entire working of the society, its record keeping, compliance of the Act, rules and bye-laws, and the profitability of the society. This should be included in the annual accounts of the society and shared with members during the AGM.
Your rights as a resident
A housing society is close-knit association. Members of the managing committee are neighbours who have known each other for years, even decades. But while the camaraderie is a good sign, it can also be detrimental if the office bearers of the society allow personal prejudices to colour their sense of judgement. Transparency can become an issue if the office bearers become too familiar with each other. Influential members can make the managing committee look the other way even as they indulge in corrupt practices.
When the influential secretary of his housing society grabbed the common area in front of his house, Hemant Dhandekar (see picture) raised the matter at the AGM. His protests were brushed aside by the managing committee. So, he filed an RTI application for the building plan of the society and then complained to the registrar of societies. The matter is pending, but Dhandekar is hopeful that the encroachment will be prevented.
Like Dhandekar and Lingam, you should not take things lying down. If you feel that your rights as a member of the housing society are being compromised, take up the issue with the authorities. “The first step should be the housing society itself. When a member has an issue with another member, the managing committee should be the primary body where he should lodge his grievance,” says Ravi Goenka, the advocate with Goenka Law Associates. According to Goenka, the managing committee has to reply within 15 days of receiving the complaint. However, if you are not satisfied with the decision, you can approach higher authorities.
The next stop should be the registrar’s office. If the matter is not resolved, approach a cooperative court. Approaching a civil court should be your last option because it requires more time and resources than that can be afforded by an individual.
While these are formal ways of redressing your grievances, residents have successfully used a host of informal ways to seek redressal too. One of the most important ones is approaching the local municipal authorities if the local municipal authorities if the complaint pertains to the building structure, alterations or civic facilities like water supply. A building is constructed as per the provisions of urban planning and municipal authorities and they are within their rights to take up such violations.
Similarly, housing societies have to compulsorily become members of the District Housing Federations, which are established under the provisions of the Cooperative Housing Societies Act for the welfare of the housing societies. Residents can also approach such federations with their complaints.
However, before you approach any of these authorities, try to build support for your complaint among other residents. Many residents do not take part in the functioning of the housing society but may be willing to support you if a decision affects them.
Ensure that all society-related issues are shared over e-mail. This enables members to respond to the proposals even if they are not able to take part in regular meetings. It also saves on stationery expenses, something that is usually not tracked and can be a source of leakage.
Use the RTI provisions
The Right to Information Act can be a great tool to bring in transparency in the functioning of the managing committee. While you have been conferred the right to seek information regarding the functioning of the society in the society bye-laws, the office bearers may not always be forthcoming with the information. If the managing committee is not being transparent, you can appeal to the registrar of the cooperative housing societies for the information required. However, if you hit a wall there too, you can use RTI to elicit information about your housing society since a registrar is a government officer. According to the RTI Act, you can access any information that a public body (registrar in this case) can get from a private body(housing society).
Can disputes be avoided?
Many of the common disputes that end up in the registrar’s office or in courts can be avoided if the managing committee is more responsive to the grievances of individual members. Many of the complaints that reach the registrar’s office are simply that the managing committee has not responded to the complaint. According to the law, the committee is supposed to reply within 15 days of receiving a complaint. If such basic rules are followed, many.
If such basic rules are followed, many of the problems can be ironed out at this stage. For instance, Dhandekar’s complaint against the secretary would have been settled at the society level had the managing committee not overlooked the point raised by him at the annual general meeting.
For this to happen, it is necessary that the bye-laws of the housing society are unambiguous and lay down the rules and regulation in clear terms. A well-drafted bye-law should enable any flat owner to raise an issue and expect it to be addressed by the managing committee.
In some cases, the aggrieved member may feel that the association is working against his interests. Such problems are best tackled by being more transparent in the functioning of the society. The managing committee should invite members and show them the documents, as well as relevant laws and rules, explaining the solutions to problems as per the provision in the law. Unfortunately, rather than using a reasoned and transparent approach, office bearers sometimes act in a high-handed manner. They also resort to unfair methods like not accepting the members’ correspondence or issuing notices to intimidate them. Admittedly, a part of the blame also lies with residents. Almost, 90% of the residents in a housing society do not know or care about the developments as long as they get the basic facilities like water supply and electricity.
Even the small number that does attend meetings does not speak its mind. They sign any paper that is circulated. Unless you question the use of your money, you won’t get the full benefit of your monthly maintenance cheque.
WHAT IS A FAIR MAINTENANCE CHARGE?
Maintenance charges usually include the cost of maintaining a housing society and the funds that may be required for major repairs at a later date. However, this charge has led to litigation in many societies. Here are some of the most common ways used by societies to calculate maintenance charges:
A) Per square foot
This is a fixed rate based on the super built-up area of a flat. For instance, at a Rs 2 per sq ft fixed rate, the maintenance for a 1,000 sq ft flat would be Rs 2,000 a month. This is the most common, but also the most debated, method. The bigger the flat, the higher the charge even though the owner uses the same facilities as the one with a smaller flat.
B) Equal fee for all
A favored method in societies where the size of each apartment is the same. The total maintenance charge is divided by the number of units in the complex to arrive at an individual charge, which is the same for all residents.
A combination of the two methods is the ideal way of distributing the maintenance charge. One part of the charge includes cost of services utilised by all members equally, irrespective of the size of the apartment. The second part includes expenses related to the size of the apartment and is calculated on the basis of the flat area. This includes expenses like property taxes, water charges, etc.
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