Mumbai, 15th May 2013: Uncertainty looms before Maharashtra's 80,000 co-operative housing societies where lakhs of families live. This is because many thousands of societies have not complied with government diktats issued a couple of months back with a grim ultimatum, "if information does not reach from your side, it is assumed that the working of the society is closed." The looming danger is that the Registrar will de-recognize any society that misses the 31st May deadline.
Specimen circulars in English and Marathi: http://tinyurl.com/CHS-adopt-model-byelaws
Office-bearers of most societies are finding it hard to even understand the circular, which mandates them to hold a special general-body meeting (SGM) to adopt the bye-laws, appoint auditors for 2013-14 from a government-approved panel, and submit some basic information to the Deputy Registrar in a tabular format. The circulars, issued in English or Marathi, also contain a lot of other confusing information besides! Also, different dates and deadlines have been issued by different Deputy Registrars in various wards, but all leading up to the 31st May deadline.
Some office-bearers are not aware of the grave consequences of non-compliance. Others are locked up in internal disputes and power struggles, and therefore unable to comply. And many are afraid to pass the new model bye-laws, which will subject them to statutory audit, an independent Grievance Redressal Committee, and democratic elections supervised by a special authority. They are afraid of losing their grip over power and exposing their past misdoings!
OTHER COMMON REASONS FOR DELAY:
- Many societies have not even received the circulars. The co-operation department has not made due efforts for disbursal. Most of the information-dissemination is happening due to activists.
- Some societies may have been advised by lawyers and other professionals to be complacent.
THE OPINIONS OF EXPERTS & ACTIVISTS ARE DIVIDED:
1) At one extreme are the experts/activists who feel that that the circulars are nullified, as the Gujarat High Court has partially quashed the 97th Constitutional Amendment. See their reasoning here: http://tinyurl.com/97th-Quash
2) On the other extreme are those who believe that Maharashtra is mostly unaffected by the Gujarat High Court judgment. Their logic is here:http://tinyurl.com/MCS-Byelaws-Valid
3) Some feel that the ultimatum of de-registration is an empty threat, which cannot be fulfilled. Section 14 of the Maharashtra Co-operative Societies Act 1960 (MCS Act 1960), relating to the Registrar's 'Power to direct amendment of bye-laws' states, "If the society fails to make the amendment within the time specified, the Registrar may… register such amendment, and issue to the society a copy of such amendment certified by him…. the bye-laws as amended shall, subject to appeal (if any), be binding on the society and its members." These experts also argue that the Registrar has no powers to penalize any society by de-registering it. His powers to de-register may be exercised only as per Section 21 of the MCS Act (http://tinyurl.com/CHS-MCS-Act-1960 ) and not otherwise. In other words, if the society fails to adopt the new bye-laws, then the Registrar may at most impose them unilaterally, but can do nothing more.
4) However, some experts are advising the co-operative societies to tread cautiously by immediately complying with the circular. They point out Section 79-A, titled 'Government's Powers to Give Directions in the Public Interest etc.' Non-compliance may have extremely serious consequences, as per Section 79-A, Sub-section (3): "Where the Registrar is satisfied that any person was responsible for complying with any directions or modified directions issued to a society under sub-sections (1) and (2) and he has failed without any good reason or justification, to comply with the directions, the Registrar may by order — (a) If the person is a member of the committee of the society, declare him to be disqualified … for a period of six years from the date of the order, (b) If the person is an employee of the society, direct the committee to remove such person from employment of the society forthwith, and if any member or members of the committee, without any good reason or justification, fail to comply with this order, declare them disqualified as provided in clause (a) above." In other words, managing committee members may be dismissed and also disqualified to contest elections for six years (effectively, two terms, or ten years), and employees may lose their jobs. Why take the risk, and suffer the pain and uncertainty of legal battles? So, societies should hurry up and comply within the next 15 days, advise these experts and activists.
POSSIBLE LONG-TERM FALLOUTS:
i) It is likely that the Commissioner/Registrar of Co-operation will give extension of the 31st May deadline. It is unlikely that he will take any widespread penal action.
ii) The Registrar may condone reasonable delays, provided the managing committee shows at least some reasonable efforts to comply.
iii) However, if any aggrieved society member moves the registrar or co-operative court to take penalize the office-bearers, then they may be dismissed and disqualified.
iv) Dismissal of existing office-bearers may lead to a "vacuum at the top" in many societies, as very few members have the competence or temperament to run societies.
v) If any housing societies are de-registered, they will fall into a no-man's land. Their bank accounts, the powers of its office-bearers to sign cheques and enter into contracts, and to seek legal remedies – all will suffer serious legal shortcomings.
vi) If a society that has signed a Redevelopment Agreement with a builder is de-registered, it will put a big question-mark on its redevelopment. Even if the society is registered again, the earlier agreement may suffer from legal flaws. Some redevelopers may lose their shirts as they have already paid huge bribes and make huge investments before even a brick is laid!
BOTTOMLINE: Some basic questions: If a housing society is de-registered, by what laws and rules will this group of neighbours govern themselves? Which authority will regulate their affairs?
In the aftermath of the Gujarat High Court judgment partially quashing the 97th Constitutional Amendment (and pending PILs before other high courts), there is much uncertainty about the MCS (Amendment) Ordinance 2013, scheduled to be ratified by the State legislature in July.
Dark storm clouds are gathering on the horizon, and there is sure to be some thunder and lightning in the monsoon session of the State Legislature. The big question is: Will it rain?
Warm Regards,
Krish
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