In a city where flats prices have moved from the lakhs range to crores and housing society members are locked in fierce and often mortal combat with each other over issues like charges and parking space, experts are often inundated by questions from confused residents.
Many of these are about their rights as buyers and housing society members. Housing expert Vinod Sampat decided to compile all this into books and thus Sampat’s efforts fructified into 11 books on all aspects of real estate, recently released at a function in Ghatkopar.
Sampat says, “In this way, it is easy for housing societies to address problems and doubts as everything is indexed in the books under various different topics.” Some of these 11 books are written by Vinod, Dharmin, Heena and Mithil Sampat. Together, the Sampats form the first family of housing society matters in the city, to give them a label. Vinod Sampat laughs at that description. Here are some of the most Frequently Asked Questions (FAQ) taken from these books.
Can a builder charge an amount as per his sweet will, if I wish to sell my flat when no Co-operative Society has been formed by the builder?
Pursuant to the Notification issued by the Housing Department, the builder is not entitled to charge a single rupee at the time of transfer of flat by the flat purchaser.
Can a Co-operative Housing Society as a matter of right, recover say R one lakh at the time of flat transfer?
Once the legal entity like a co-operative housing society is formed, then, the maximum transfer charges that may be taken by the co-operative society for transfer of flat is R 500 towards transfer charges and R 25,000 towards share premium amount. I may add that if any individual pays a certain amount voluntarily at the time of transfer, then it may be difficult for the individual to recover the said amount from the co-operative society.
The builder is demanding five per cent amount towards Valued Added Tax (VAT) not only on the cost of the flat but on the maintenance charges. Am I liable to pay the said amount?
As of date, 1 per cent gross amount has to be paid towards VAT. As far as the amount payable from June 20, 2006 till April 1, 2010, the builder has an option to select the method under which he would be paying VAT. The Actual Expenses Method, Standard Deduction Method and Compensate Rate Method are the three alternative methods.
Under Actual Expenses Method: Certain deductions are permissible like the cost of labour, cost of sub-contracts, cost of consumables and services, value of land and cost of establishments. The builder is eligible to reduce taxes i.e. VAT paid known as input tax credit on procurement of material from the total tax payable.
Under Standard Deduction Method: If the builder is not in a position to determine the material value on actual basis, option is provided to determine the value of material at 70 per cent by allowing ad hoc deduction of value services at 30 per cent of the total contract value. The builder is also eligible to reduce the land value from the total contract value and input tax credit from the total tax payable.
Under Compensate Rate Method: The builder has an option to discharge VAT liability by paying ad hoc 5 per cent, of the total contract or Agreement Value of the property. The rule is silent about the deduction of land value from the contract value. However, input tax credit is available to the builder.
Irrespective of the options, the VAT liability on the builder would not exceed 2.5 per cent. From April 1, 2010, uniformity is introduced and ad hoc one per cent on the total contract or Agreement Value of the property has to be paid as VAT. One needs to note that if the construction of the flat is completed and the Occupation Certificate is received before purchasing the flat, then VAT is not to be paid. Under no circumstances can a builder charge VAT or maintenance expenses.
What are the precautions that should be taken by a flat purchaser if he is purchasing a flat in a building that is going for redevelopment?
The flat purchaser should make it a point to go through the Development Agreement executed by the Co-operative Society with the builder. He should ensure that the plans of the property are passed. He should talk with the office bearers of the Society. It is advisable for him to take a bank loan on the said flat. He should also ensure that the flat if any offered by the builder to the Society, as lien is not the flat, which is being sold by the builder to the flat purchaser. The payment to be made to the builder should be linked to the various stages of construction. Above all, the track record of the builder is of utmost importance.
I am secretary of the Society. My Society is going for redevelopment. What precautions should be taken by the Society to ensure that there are no problems at a later date?
Please ensure that the builder has undertaken redevelopment projects. As office bearers of Co-operative societies, you should ensure that the builder obtains a Building Completion Certificate. You have to ensure that the construction goes on as per the Bar Chart, which must be annexed to the Agreement. Individual Members Agreement should be registered before the members vacate the individual flat. The best way to ensure that the builder does not cheat you is to insist for 10 per cent lien on the property till the Building Completion Certificate is obtained by your Co-operative Society.
Is the permission of the Registrar of Co-operative Societies required by the Co-operative Society, if it wants to go for redevelopment?
In a landmark judgment delivered on March 8, 2010 in Civil Appellate Jurisdiction in Writ Petition No. 10285 of 2009 by the High Court in the case of Harsha Co-operative Housing Society Limited and Others v/s. Kishandas Rajpal and Others, Justice (Mrs) R S Dalvi has categorically stated that the reliance upon the Government Notification is itself misplaced. When the members of the Cooperative Housing Society which, under law of Cooperation, decides by a majority of 11:1 members that the Society premises be developed in a particular fashion by a particular developer, it would be contrary to the principles of democracy by which the Society is governed, for the sole dissenting member to interfere and require a procedure, not required by the majority of the members to be followed which would only consume time and be counterproductive. The Government Resolution would be required to be followed by the Society where the members are unable to come to any decision by a resolution of their own. In view of the same, I am of the opinion that permission of the Dy. Registrar of Co-operative Societies is not required when a Co-operative Society is going for redevelopment.
The General Body meeting of the Society was called on August 10, 2012. Is it necessary that the proceedings of the General Body meeting as well as Managing Committee meeting should be recorded? What is the procedure with regards to complaints being made by members?
I invite your attention to the Government Circular dated March 15, 2010 wherein it has been categorically stated that Minutes of the Managing Committee and General Body should be video recorded and a copy must be given to all the members. It has also been specified in the circular that there has to be a system of instant redressal of complaint and for the same, three member Committee should be formed. The Complaint Redressal Committee should be headed by the Chairman or the Secretary and one member should be appointed by the General Body, who should not be a Managing Committee Member. One lady member resident in the Society, should also be part of the Committee. Members with complaints should put up their complaints before the Committee. If the Committee is not able to solve them, then only the member should file a complaint before the Registrar of Co-operative Societies. Hearing should be done by the Registrar of Co-operative Societies within 15 days and further action has to be taken by the Registrar. In reality, the said Circular is not implemented by Co-operative Societies.
I have heard about the Housing Regulatory Act, which is proposed to come into effect as soon as it receives the approval of the President. Should my Society wait for the new Housing Regulatory Act or should my Society approach the Courts immediately to get Conveyance?
The bureaucrats have provided negligible budget of R 1.5 crore for setting up of infrastructure for the Housing Regulatory Authority for the entire State of Maharashtra. Various alternatives are available to a legal entity like a Co-operative Housing Society to get conveyance. Today, the legal entity can approach the High Court, City Civil Court and Consumer Court. In addition they can approach Criminal Courts like Metropolitan Magistrate’s Court. It is advisable to immediately file a case in the Consumer Court and Metropolitan Magistrate’s Court. The Housing Regulatory Act is tilted in favour of the builders.
When is a member termed as a defaulter?
If on the due date of the bill, the member does not make the payment, then he can be categorised as a defaulter. In such circumstances, the Society can also charge interest. However, it is important that there should be a demand made upon the member.
Can a defaulter contest the election? Can a defaulter propose a second candidate for the election?
A defaulter cannot contest election. However, a defaulter can propose and second a candidate for election.
For what should the member approach the Registrar of Co-operative Society? For which type of complaint should the member approach the Co-operative Court?
Many times people approach a different Authority for redressal of their complaint. For normal day-to-day complaints such as (a) Charging of compound interest, not issuing of passbook to members, not admitting the purchaser as member of the Society, recovery of the dues etc., the members of the public should approach the Registrar of Co-operative Societies. The Registrar has power under Section 77A of the Maharashtra Co-operative Societies Act, to appoint Members of the Committee, a new Committee or Administrator when there is a failure to elect members to constitute or whether committee does not enter upon the office. Under Section 78, the Registrar has power of removal of Committee or member thereof. Under Section 79, the Registrar has power to enforce performance of obligations.
The member can approach the Co-operative Court under Section 91 if there are disputes between a member and the outgoing/incoming member. More powers are vested in the Co-operative Courts. It is normally observed that as Co-operative Courts take a long time, there is a tendency amongst members to approach the Registrar of Co-operative Societies, even in matters in which the Registrar does not have the jurisdiction. Section 91 of the Co-operative Court relates to disputes between the Society on the one hand and the members on the other.
Even disputes between members of the Society and other disputes is governed under Section 91 of the Co-operative Societies Act. The value of flats are in lakhs, if not in crores. Thus, the jurisdiction of Co-operative Court is unlimited and is almost on par with the jurisdiction of the High Court as far as pecuniary jurisdiction is concerned. If a member is not paying his dues then too the Society can approach the Co-operative Court for recovery of dues. Election disputes challenging the Managing Committee of any Co-operative Society have also be referred to the Co-operative Court.
Which records of the Society can be inspected free of charge as per Section 32 of the Maharashtra Co-operative Societies Act, 1960? Can the members of the Society inspect all the records of the Society?
As per Section 32 of the Maharashtra Co-operative Societies Act 1960, the members of the Society can inspect free of cost at the Society office during office hours or any time fixed for the purpose by the Society, audited balance-sheet, profit and loss account, list of members of the Managing Committee, Register of Members, Minutes of the General Meeting, Minutes of the Committee Meeting and those portions of the books and records for which his transaction with the Society has been recorded.
Sec. 16: Builder is left scot free even if he does not comply with his statutory obligations like Building Completion Certificate (B.C.C.) No criminal liability for constructing the building on time!!!
Sec. 18 (1): What happen if the builder collects amount in cash initially and does not form the Society?
Sec. 18(2): The government wants CHS Ltd. To fight one another. What about common amenities, Parking Space?
Disclaimer: The authors are not liable for the views in the replies given above. One should crosscheck the same.