Recovery of Dues by Society from Members - Section 101

If you live in a co-operative housing society, you must have paid monthly maintenance to society. This maintenance is collected from every member of the society to fulfil various needs of the housing society, such as security dues, lift maintenance, house-keeping, and many other essential things that are important to keep a housing society in liveable and functional condition. But what happens when one of the members of society denies to pay the maintenance bill, be it intentionally or unintentionally? You must know this fact that it is obligatory to take approval as per resolution of general body meeting in the regard of maintenance service and other charges, as per Model bye-laws section 139. Irrespective of the fact whether member is occupying residential or commercial premises, maintenance charges should be same, under rule no 71(A)(7) of Model bye laws. The only difference would be in charges like Property Tax, Water Charges & Insurance. Sunanda J. Rangnekar V/s. Rahul Apartment No. 11 CHS – Bombay High Court on 10 August 2005.
According to section 73FF(1)(i)(e) of Maharashtra Cooperative Society Act 1960, a “defaulter” is a member of a society that defaults the payment of dues to the society within three months from the date of service of notice, in writing.
Usually, a society overlooks the defaults in the dues if it is of less amount. The problem arises when the due amount enters lakhs, and that’s when the society committee decides to take some serious steps in recovering such dues.
In such a situation, there are two courses of action which the managing committee could go for. One process involves lengthy judicial process i.e filing a case against the defaulter in the housing courts and then wait for the judgment, or, to opt for a quasi-judicial process which is much less complex and acts as a quick remedy for the housing societies.
Section 101 of the Maharasthra Cooperative Society Act, 1960 provides for a quasi-judicial process which a managing committee of a society can opt for recovering long overdues of a defaulter. Under section 101 of the Maharasthra Cooperative Society Act, 1960, if there is a case where the defaulter is denying the payment of his overlong dues, the managing committee could proceed with the steps listed out in section. Following steps must be followed to recover such overlong dues under section 101 of the act-
• The chairman or the secretary of the society should issue a warning notice for the payment of dues (including interest up to 21%) to the defaulter with a warning that on failure to make the payment as per the notice, the society will make an application the registrar under section 101 of the Maharasthra Cooperative Society Act, 1960 (MCS) for recovery of these outstanding dues.
• Upon failure of the defaulter to make the payment as mentioned in the warning notice, the managing committee shall pass a resolution to take appropriate action against the defaulter under section 101 of the act.
• Subsequently, the society shall issue one last and final notice to the defaulter regarding the issue.
• Thereafter, the society committee shall submit an application for recovery of dues under Section 101 of MCS Act’1960, where the secretary or the chairman of the society shall sign all the required documents including the defaulter’s overdue bills and and submit it to the assistant registrar or deputy registrar of the cooperative societies and pay the prescribed fee for such an application.
• The application fee is payable through a challan which is payable at the Reserve Bank of India under the head of the account: “0425 Co-operation 800 Other Receipts XVIII Notice & Recovery Fees”. The minimum fee is Rs. 25 and the maximum fee is Rs. 1,000.
Dues to be recovered:
a) Up to Rs. 1,000/-
b) Rs. 1001/- to 2000/-
c) Rs. 2,001/- to 5,000/-
d) Rs. 5,001/- & Above
Enquiry Fee:
a) 5.5% of the Claim
b) 4.5% of the Claim
c) 3.5% of the Claim
d) 3.0% of the claim but, maximum of Rs. 1,000/-
Court Fee Stamp:
a) Rs. 15/-
b) Rs. 20/-
c) Rs. 20/-
d) Rs. 25/-
• On receiving the application sent by the society, the assistant registrar or deputy registrar may schedule a hearing with the defaulter and verify the records submitted by the society. After such verification, the assistant registrar/deputy registrar would issue a “recovery certificate” for the outstanding amount due by the defaulter.
• After the recovery notice is issued by the registrar, the Recovery office on receipt of the Recovery Certificate shall prepare demand notice which shall be sent to the Sale-Officer for attaching the movable property of the defaulter.
• The defaulter member can appeal against the recovery certificate, but first shall make a payment not less than 50% of the total amount due.
• The sale officer on receiving the receipt of the recovery papers, shall visit the flat of the defaulter for preparing a list of the movable property and serve demand notice.
• If the defaulter still fails to pay the outstanding amount then, the sale officer has the authority to seize the movable property of the defaulter and hand it over to the secretary or the chairman of the society.
• Finally, the sale officer would fix a date, time and, place for the auction of the movable property of the defaulter. The money collected from the auction would be used to pay the outstanding money.
Recovering dues is made easy by introducing Section 101 under which, the assistant registrar/deputy registrar is authorized to take appropriate actions for recovering the dues in the most efficient and effective way. This method is easy to follow and it acts as a quick remedy for cooperative housing societies who are tired of long overdue of a defaulter.