03 August,2026 10:51 AM IST | Mumbai | Vinod Kumar Menon
Housing societies need to bring procedures in line with revised provisions. REPRESENTATION PIC/ISTOCK
CO-OPERATIVE housing societies across Maharashtra will now have to revisit their interest recovery practices following the implementation of the Maharashtra Co-operative Societies (Amendment) Rules, 2026, which came into effect on June 18, 2026.
A key change that many housing societies may be unaware of is that the amended Rules have reduced the maximum permissible interest on delayed payment of maintenance and other society dues from 21 per cent to 12 per cent per annum. Societies continuing to levy higher interest rates based on earlier General Body resolutions could face legal objections from defaulting members during recovery proceedings, as such resolutions may no longer remain enforceable under the amended statutory framework.
Legal experts have advised managing committees to immediately review their existing resolutions, billing practices and recovery procedures, and bring them in line with the revised provisions to avoid future disputes and compliance issues.
Adv Shreeprasad M Parab, expert director, Maharashtra State Co-operative Housing & Apartment Federation Ltd
"The amended Rules require societies to align their interest recovery practices with the prevailing statutory provisions. Existing resolutions must be reviewed in the light of the amended legal framework to avoid unnecessary disputes and recovery complications."
Under Section 154B-1(17) of the Maharashtra Co-operative Societies Act, 1960, housing societies exist primarily to provide accommodation, common amenities and services to members.
These budgets are approved by members during Annual General Meetings, after which members are required to pay their respective contributions.
However, legal experts point out that General Body resolutions remain subordinate to the Act, Rules and registered bye-laws. Under Section 72 of the Act, the General Body cannot pass resolutions that override statutory provisions. "The General Body is the supreme authority of the society in matters provided under the law, but its decisions must operate within the boundaries prescribed by the Act, Rules and registered bye-laws. Majority approval cannot override statutory provisions," Adv Parab said.
The Maharashtra Co-operative Societies (Amendment) Act, 2019 introduced clearer definitions regarding unpaid society charges. A member or flat owner becomes a defaulter when:
Once classified as a defaulter, the member becomes liable for recovery action along with applicable interest. Adv Parab observed, "The classification of a member as a defaulter must be based on the procedure prescribed under the law. Societies should ensure proper billing, communication and documentation before initiating recovery proceedings."
Before the 2026 amendment, Model Bye-law No. 70 (2014) permitted societies to charge:
Based on this provision, several societies passed resolutions fixing delayed payment interest between 18 per cent and 21 per cent. However, societies were never permitted to charge compound interest under the bye-laws.
The introduction of Rule 106C-12 has changed the legal position. The amended Rule provides that:
Experts describe the amendment as one of the most significant financial changes affecting Maharashtra's co-operative housing sector in recent years. "The reduction of the interest ceiling is intended to create a balanced approach. While societies must have an effective mechanism to recover legitimate dues, members should not be subjected to excessive financial burdens," Adv Parab said.
Thousands of housing societies currently rely on General Body resolutions passed when higher interest rates were permissible. While such resolutions were valid when adopted, they cannot continue to operate if they conflict with the amended Rules.
Therefore, an earlier resolution approving 18 per cent, 20 per cent or 21 per cent interest cannot override the new statutory ceiling. Adv Parab explained, "A resolution passed by the General Body cannot acquire a status higher than the law under which the society functions. Once the statutory provision changes, societies are required to bring their resolutions and practices in conformity with the amended provisions."
Experts have advised managing committees to undertake immediate compliance measures. Societies charging above 12 per cent should:
Adv Parab advised, "Managing committees should take corrective steps at the earliest by reviewing their existing resolutions, accounting practices and recovery procedures. Compliance at this stage will help societies avoid disputes in future."
Housing societies that continue charging interest above the prescribed limit could face objections from defaulting members during recovery proceedings under Section 154B-29 of the Maharashtra Co-operative Societies Act or before the Co-operative Court. Legal practitioners caution that such disputes could:
Timely revision of resolutions, experts say, will help societies avoid procedural difficulties.
Adv Parab said the amendment marks a significant shift in co-operative housing governance by balancing societies' legitimate recovery rights with protection of members from excessive financial liabilities. "The reduction of the maximum interest rate from 21 per cent to 12 per cent reflects an effort to maintain this balance," he said. "Societies should view the change as an opportunity to review their resolutions, billing systems and recovery procedures. Proper documentation, transparent communication and legally compliant practices will help reduce disputes and strengthen recovery mechanisms."
