Mumbai Housing Society Queries: 'Society Should Insist On Bank Guarantee From Developer,' Says Expert

My society is undergoing redevelopment. The developer has submitted a proposal which does not include bank guarantee. Is it mandatory to give a bank guarantee?

Pradeep Patil, Kanjur Marg

The GR dated July 4, 2019, for redevelopment of cooperative housing societies issued by the Maharashtra government, provides for the points to be included in the development agreement (DA). Clause 18(2) provides that the developer shall give 20%of the total cost of the redevelopment project as bank guarantee (BG) to the society. Your society should insist on getting a BG as mandated.

BG protects the society/members against any default made by the developer. The BG should clearly mention the terms with regard to amount, tenure, validity, renewal and more importantly how and when the BG can be invoked in the event of default by the Developer and the dispute resolution mechanism, etc.

Please note the members should not vacate their premises unless the developer hands over valid BG in favour of the society. Please choose the developer carefully after considering his financial stability and track record to avoid any unforeseen situation.

Is appointment of a returning officer by the registrar mandatory for conducting elections for members of a managing committee having 200 members?

Mayuresh Mehatani, Shewri

Elections in all cooperative societies are conducted under the superintendence and control of the State Cooperative Election Authority (SCEA). Since your society has less than 250 members, it is classified as ‘Type E’ for the purpose of conducting elections as per the MCS (Election to Committee) Rules, 2014.

The returning officer (RO) plays a significant role in conducting elections. It is not necessary for Type E societies to appoint an RO through the registrar. Any member who is not desirous of contesting election can be appointed as RO. Such appointment has to be done 60 days before the expiry of the tenure of the existing managing committee. Please note that your society’s auditor, employee or any member of the outgoing managing committee cannot be appointed as an RO.

Further, an RO is required to undergo training related to election from the District Housing Cooperative Federation or any other training institute notified by the state government. Your managing committee has to inform the details of the RO so appointed to the registrar.

Alternatively, your managing committee can consider appointing RO from the approved panel available with the divisional joint registrar. If your managing committee fails to appoint such RO, the registrar is empowered to appoint the RO from the approved panel. (Refer Rule 76 for Type E Societies).

Can a society compulsorily collect charges towards cultural activities from its members?

Alia Kachwala, Dadar

Bye laws 65, 66 and 67 provide that ‘Any Other Charges’ may be collected from members. Many societies are collecting cultural charges from members by passing a resolution in the general body to this effect. Managing committees rely of the fulfilment of the objects of the society stated in the Bye Law 5 for collecting such charges viz, 5 (c) state “to raise funds for achieving the objects of the society” immediately followed by 5(d) viz., “to undertake and provide for on its own account or jointly with a cooperative or other institution for social, cultural or recreational activities”. Considering this provision, attention may be drawn to Bye Law 148(b (iii) which provides that a portion of the balance 75% of the profit may be allocated to a common welfare fund, as per the decision of the general body be utilised in furtherance of the object specified in Bye Law 5(d).

Amount collected towards cultural activities may be utilised considering the cultural diversity of members in the society, which will help to increase the bonding amongst the members.

The questions are answered by Sharmila Ranade, a legal expert associated with Mumbai Grahak Panchayat. The questions, in brief, may be sent to fpjchs@gmail.com