Let us first learn Law relating to Liquidated damages in India. Section 73 in The Indian Contract Act, 1872 Compensation for loss or damage caused by breach of contract.—When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. —When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.” Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Compensation for failure to discharge obligation resembling those created by contract.—When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract. —When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract.” Explanation.—In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account. Section 74 in The Indian Contract Act, 1872 74 Compensation for breach of contract where penalty stipulated for:- [When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for. Explanation. — A stipulation for increased interest from the date of default may be a stipulation by way of penalty.] (Exception) — When any person enters into any bail-bond, recognizance or other instrument of the same nature or, under the provisions of any law, or under the orders of the [Central Government] or of any [State Government], gives any bond for the performance of any public duty or act in which the public are interested, he shall be liable, upon breach of the condition of any such instrument, […]Continue Reading
“Nearly all men can stand adversity, but if you want to test a men’s character, give him power.” Said Abraham Lincoln This aptly applies to the Managing Committee of a society. Once the power comes neighbor becomes your Master. There are many incidents where the committee manipulates bills and contracts, and even in redevelopment cases three honorary office bearers Secretary, Chairman, and Treasurer have weightage in the finalization of the deal. We see litigations and stalling of projects of a housing society. Human tendency is such that they think of self-gain, instead of taking care and executing responsibilities that they have taken with utmost care and truthfulness. Corrupt minds see financial benefits in every deal. They forget that while doing this they prejudice the property and interests of other flat members. Election: 1 With the new election rules, an election is held similarly to the way in which how elections are held in any Assembly and Parliament. Cartel is formed and elections are won. It has killed the neighborhood’s love, respect, and honor. One family and one flat provision are also violated royally. Even if distant relatives or cousins have a cartel. This creates a monopoly in management. Suggestion: Like Multi Co-operative society, provide that same member or any other joint member from one flat cannot contest the consecutive election. The flat owners/member must take a break or drop out from the next election to give an opportunity to other flat owners/members. So, after serving for 5 years the said member/flat owner cannot contest election for immediate subsequent another term. This will reduce the monopoly of a few flat owners and their families, and their friends. For the convenience of the readers and lawmakers reproduced below is the provision of the Multi-State Cooperative Societies Act,2002 below which restricts reelection after two terms. Prohibition to hold the office of chairperson or president or vice chairperson or vice president in certain cases (1) No member of a board shall be eligible to be elected as the chairperson or president or vice-chairperson or vice-president of a multi-state cooperative society if such member is a Minister in the Central Government or a State Government. (2) No member of a board shall be eligible to be elected as the chairperson or president of a multi-state cooperative society, after he has held the office as such during two consecutive terms, whether full or part: Provided that a member who has ceased to hold the office of the chairperson or president continuously for one full term shall again be eligible for election to the office as such. Explanation:- where any member holding the office of the chairperson or president at the commencement of this Act is against elected to that office after such commencement, he shall for the purpose of this section, be deemed to have held office for one term before such election. Proposed Suggestion : A similar principle must be applied to the housing society. A.2 A Managing Committee was disqualified for 5 years, and an administrator was appointed. Managing Committee manages to suppress the facts from members of the society and manages that the […]Continue Reading
CAN SOCIETY CHARGE MAINTENANCE CHARGES ON AREA WISE BY WHICH LARGER FLAT OWNERS CONTRIBUTE A LESSER AMOUNT THAN SMALLER UNITS?
Nowadays an ultra-vires method of chargability has been adopted by several societies. The committee uses its majority power and misguides the General Body of members and passes the resolution. Chargeability on unit-wise results in higher contribution by small flat owners and lower contribution by larger flat owners. Maintenance charges are the foundation to run the expenses of the society. Now first let us see the provisions in the Act of 1960 and the byelaws. Byelaws are contracts between the management and society. Any breach of byelaws amounts to a breach of contract and breach of trust. Any discrimination made is a serious breach of equal rights granted under the constitution of India. BYE-LAWS PROVISIONS FOR CHARGABILITY OF MAINTENANCE: LEVY OF CHARGES OF THE SOCIETY The contribution to be collected from the Members of the Society, towards outgoing and establishment of its funds, referred to in these bye-laws as ‘the charges’ may be in relation to the following : (i) Property Taxes, (ii) Water Charges, (iii) Common Electricity Charges, (iv) Contribution to Repairs and Maintenance Fund, (v) Expenses on repairs and maintenance of the lifts of the Society, including charges for running the lift. (vi) Contribution to the Sinking Fund, (vii) Service Charges, (Viii) Car Parking Charges, (ix) Interest on the defaulted charges, (x) Repayment of the installment of the loan and interest, (xi) Non-occupancy Charges, (xii) Insurance Charges, (xiii) Lease rent, (xiv) Nonagricultural tax. (xv) Education and Training Fund (xvi) Election Fund (xvii) Any Other Charges. The Service charges of the Society referred to at 64 (vii) above shall include the following: Salaries of the office staff, liftmen, watchmen, malis and any other employees of the Society. Where the Society has independent Office, the property taxes, electricity charges, water charges etc. for the same. Printing, Stationery and Postage, Travelling Allowance and conveyance charges to the staff and the Members of the Committee of the Society. Sitting fees paid to the Members of the Committee of the Society, Subscription to the Education Fund of the Maharashtra Rajya Sahakari Sangh Ltd. Annual Subscription of the Housing Federation and any other co-operative institution to which the Society is affiliated. Entrance fees for affiliation to the Housing Federation and any other cooperative institution. Audit Fees for internal, Statutory and reaudit, if any. Expenses incurred at meetings of the general body, the Committee and the Sub-Committee, if any k. Retainer fees, legal charges, statutory enquiry fees. Common electricity charges. Any other charges approved by the General Body at its Meeting. However such charges should not contradict the provisions of the Act, Rules and Bye-laws of the Society. 66. The Committee shall apportion the Share of each Member towards the charges of the Society on the following basis: Property taxes: As fixed by the Local Authority Water Charges: On the basis of the total number and size of inlets provided in each flat. iii. Expenses on repairs and maintenance of the building/buildings of the Society: At the rate fixed at the general body from time to time, subject to the minimum of 0.75 percent per annum, of the construction cost of each flat for meeting […]Continue Reading
CAUTIONARY The Committee of Society should not use the law for harassment but for betterment. We have a question before us. Let us analyze There was a leading case of Kalpita Enclave vs Kiran Builders. This was under Section 7 of the Maharashtra Ownership Flats Act,1963. In this case, two flat purchasers had filed suit under Section 7 of said MOFA, which was objected by the builders. Subsequently, MOFA Section 4 was amended and 4A was inserted. 1[4A Where an agreement for sale entered into under sub-section (1) of Effect of section 4, whether entered into before or after the commencement of the Maharashtra Ownership Flats (Regulation of the promotion of construction, registration sale, Management and transfer) (Amendment and Validating Provisions) Act 1983, remains unregistered for any reason, then notwithstanding anything required to contained in any law for the time being in force, or in any judgment, decree be or order of any Court, it may be received as evidence of a contract in a suit registered for specific performance under Chapter II of the Specific Relief Act, 1963, or of as evidence of part performance of a contract for the purposes of section 53A of the Transfer of Property Act, 1882, or as evidence of any collateral 1882. transaction not required to be affected by registered instrument.]. Subsequently, Maharashtra Textile and Co-operation Ministry came out with a Circular dated 16th October 1991 not to effect transfer by the Society till Stamp Duty and Registration charges are paid. However the unregistered document is not invalid and can be received in evidence as per Section 4A of the MOFA Act,1963. The market value concept came into force on 1st January 1986 and all documents prior thereto are out of the purview of the market value. Concluding Remarks: In current times society is bound to transfer flat upon payment of stamp duty and registration charges. But old documents are out of the scope of the valuation. Documents which are executed up to 31st December 1985 are not liable for market value. Even documents prior to 1986 and subsequent which is unregistered are not invalidated by their non-registration. SHRUTI DESAI 7th September,2022Continue Reading
SUCCESSION, TRANSFER, AND TRANSMISSION OF SHARES IN SOCIETY A peculiar case came up. The deceased a Hindu was a sole member of society. It was his self-acquired property. He dies suddenly without leaving a WILL. But the wife is a nominee. Out of wedlock, they have only one daughter who is major and unmarried. Wife applies for transmission of shares as per nomination. Shares are transferred by the society without any endorsement that it’s transferred in trust as a nominee or get succession certificate. Now this widow, gifts 50% share to her daughter. This happens when parties prepare documents without consulting a lawyer to save money on professional charges. I am saying this because the daughter has by succession 50% right in the property as a member died intestate without leaving a WILL. There was no need of executing the Deed of Gift. The twist is the case comes now, she applies for endorsement and transfer of 50% share ( which is otherwise there under the law) to the society. After several years Society takes opinion and now seeks a Succession Certificate. How far society is justified? We must first refer to bye-laws If there is a single nominee and if he demands payment of the value of Shares and interest of the deceased Member, in the capital/property of the Society, the Society shall acquire the same and pay him the value thereof as provided under the bye-law No.63. If, however, there are more nominees than one and if they demand payment of the value of the shares and interest of the deceased Member in the capital/property of the Society, the Society shall acquire the same and pay them value thereof as provided under the bye-law referred to above in the proportion mentioned in the nomination form. If no proportion is mentioned in the nomination form, the payment shall be in equal proportion. Bye-law 135 (v). The managing committee of the Society shall take necessary precautions to see that no injustice is done to any widow in the cooperative housing Society after the death of a Member before transferring the flat in her name. In such cases, Society shall verify the nomination form duly submitted by the deceased Member or succession certificate /heirship certificate obtained from the Civil Court under the Indian Succession Act 1925 or Will of the deceased Member duly probated by the Civil Court through the executor of the will. After verifying and taking legal guidance Society then only can take appropriate action within the time limit to avoid further legal complications. This procedure can be followed in all cases after the death of a Society Member Section 30 of Maharashtra Cooperative Societies Act, 1960 provides that: Section 30 – Transfer of interest on the death of a member (1) On the death of a member of a society, the society shall transfer the share or interest of the deceased member to a person or persons nominated in accordance with the rules, or, if no person has been so nominated to such person as may appear to the committee to be the heir or legal representative of […]Continue Reading