SOCIETY FORMATION IN MUMBAI

A cooperative housing society is a set-up formed through mutual cooperation and consent of a number of members. The members have a sense of community spirit and camaraderie which most of the independent residents miss out on.

The right to form a society is now a fundamental right of the citizen (Article 19 of constitution).

 

THE NEED & PRACTICAL APPROACH

Every developer is compelled at some point to form a Co-operative Housing Society at one point of time or another.

The limited amount of options available with regard to management of the affairs of the building i.e.

(a) Condominium

(b) Private Limited Company and

(c) Co-operative Society, (excluding the unrealistic rental housing),

It will not be an exaggeration to state that in at least 90% cases particularly in Mumbai, the Promoters and/or the Builders have formed a Co-operative Housing Society.

 

COOPERATIVE HOUSING SOCIETIES – TYPES

There are basically four types of Co-operative Housing Societies: –

• Open Plot Societies
• Flat Owners Societies
• Tenant Societies
• Housing Board Societies

 

Open Plot Societies

In Open Plot Societies, members purchase or take one lease a plot of land and themselves construct the building. Due to bureaucratic formalities and lack of specialized knowledge, a few societies are formed under the head of open Plot Societies

  

Flat Owners Societies

When a builder constructs flats and sells them to Flat Owners, the Society when formed is called Flat Owner’s Society

 

Tenant Societies

When Landlord forms a Society of tenants, it is called Tenants Society

 

Housing Board Societies

 

When a Society is formed by Allottees of flats and building is constructed by the Housing Board Authorities, i.e. Mumbai Housing and Development Board, then the Society so formed is of the type of Housing Board Society

 

• The procedure that should be followed for formation of societies of the above said types is different for different types of Societies. Members who wish to form Co-operative Housing Societies are generally ignorant of the procedural aspects and as a result of the same they have to run from place to place and get entangled in bureaucratic delays.

 

WHAT ARE THE MAIN OBJECTS OF FORMATION OF A SOCIETY?

 

SR. NO.	OBJECTS
1.	To obtain conveyance from the owner/Promoter (Builder), in accordance with the provisions of the Ownership Flats Act and the Rules made there under, of the right, title and interest, in the land with building/buildings thereon as described in the application for registration of the Society;
2.	To manage, maintain and administer the property of the society;
3.	To raise funds for achieving the objects of the society;
4.	To undertake and provide, for on its own account or jointly with cooperative institution, social cultural or re-creative activities;
5.	To provide Co-operative Education and Training to develop co- operative skills of its Members, Committee Members, Officers and Employees of the Society.
6.	To do all things, necessary or expedient for the attainment of the objects of the society, as specified in the bye-laws.
7.	To obtain conveyance from the owner/Promoter (Builder), in accordance with the provisions of the Ownership Flats Act and the Rules made there under, of the right, title and interest, in the land with building/buildings thereon as described in the application for registration of the Society;

 

REGISTRATION OF SOCIETY & CHIEF PROMOTER

 

The procedure for Registration of a society begins with electing a Chief Promoter in a meeting of the Promoter. The builder under the Flat Owners type of co-operative society has the first right to act as the chief promoter.

 

• The term Builder-Promoter is defined under the Bye-law No. 3(xiii) of the Model Bye-laws of the Society. A “Builder- Promoter” means a person and includes a partnership firm or a body or association of persons, [whether registered or not] who constructs or causes to be constructed a block or building of Fats [or apartments] for the purpose of selling some or all of them to other persons, or to a company, Co-operative Society or other association of persons, and includes his assignee’s; and where the person who builds and the person who sells are different persons, the term includes both.

 

FIRST GENERAL BODY MEETING (BEFORE REGISTRATION)

 

• The developer/flat purchasers should call for a meeting of the Promoters by issuing the notice under Agenda of the meeting given at least 14 days’ notice to the Promoters. In this meeting, a Chief Promoter is elected who can exercise such powers and carry out such functions as are mentioned in the minutes of the Promoters of the proposed Co-operative Society.
• In this meeting under Society’s Model Bye-law 3(iii), the Chief Promoter (could be the builder) is primarily selected by the promoters, who are members co-signing the registration application before the Registering Authority, under Bye-law 3(xii).

 

• The builder under the Flat Owners type of co-operative society has the first right to act as the chief promoter.

 

• In this meeting, necessary resolutions are passed like opening the account in bank in the name of proposed society and for obtaining permission for reserving the name of the society. It is compulsory for SRA/ MHADA recognized societies, for the first meeting to be video-recorded.

 

 

NAME SELECTION

 

• Normally, the name reservation proposal should be accompanied with the society resolutions and signatures of at least 10 Promoters who have attended the meeting.

 

• It is a common belief that the Society should consist of at least 10 members. If the number is less than 10 then special permission from Government has to be taken. In such cases, the garages/car parking may be allotted to other relatives of the promoter to reach number of 10.
• It would be of interest to note that the model byelaws define flat as a ‘Flat means a separate set and self-contained set of premises used or intended to be used or intended to be used for residence, or office or show-room, or shop, or godown and includes a garage, or dispensary, or consulting room, or clinic, or flour mill, the premises forming part of a building and includes an apartment’.

 

Co-operative Societies Commissioner & Registrar’s GR No. SAGRUVO/1094/Pra.Kra 277/14C dated 10 March 1995 says “By exercising the powers in section 7 of the Co-operative Societies Act 1960 the government is pleased to exempt the provision of minimum 10 members for registering co-operative Housing society under sub-clause 1 in Section 6 of the said Act subject to the conditions that the plinth area of each flat in the proposed co-operative Housing Society should not be more than 700 sq. ft and FSI should not be balance for utilization in the proposed societies land/ building.”

 

 

• On allotment of name and permission to open a bank account by the Registrar, the Chief Promoter has to collect Share Capital, Entrance Fees from promoters and deposit the same in the branch of the bank permitted by the Registrar.

 

• It should be noted that the amount cannot be withdrawn from the Bank till the society is registered or its registration is refused, except with prior written permission of the Registrar. The Chief Promoter should submit registration proposal to the registering authority within a period of 3 months from the date of issue of Letter of Reservation in the name of the proposed society.

 

• The Flat Purchasers are generally unaware of the basic requirements for Registration of Co-operative Housing Society. It is here that apart from the statutory obligations cast upon the builder, the builder as a friend, philosopher and guide of promoters helps & must help in forming a Co-operative Housing Society.

 

 

DOCUMENTS GENERALLY REQUIRED FOR REGISTRATION OF FLAT OWNER’S HOUSING SOCIETY:

 

SR. NO.	DOCUMENTS
1.	7/12 extract of the land or property card.
2.	Certificate from the competent authority regarding non-agricultural land
3.	The order regarding applicable/non applicable of land ceiling Act
4.	Construction layout approved by the competent authority
5.	Letter of sanction for starting construction
6.	Certificate regarding completion of construction work
7.	Development Agreement if the land is taken for development
8.	Letter of Power of Attorney of the land
9.	Title search report of the land
10.	The registered agreement of purchases of the flat with necessary stamp duty paid
11.	Architect Certificate regarding construction
12.	List of Members
13.	Scheme of the Society
14.	Application for reserving name
15.	At least ten members are necessary for registration of society. However, the government has given permission subject to some conditions for the Housing society of less than 10 members by exercising powers under section 7. For registration proposal, signature of sixty per cent promoters, who participated in the registration proposal are necessary.
16.	If the land is given by the government or undertaking agency of the government then its guarantee letter
17.	No objection certificates from the Charitable Commissioner if the land is of Trust.
18.	Certificate of the competent authority regarding non-agricultural plot
19.	While registering SRA/SRD and MHADA recognized Co-operative Housing Societies, it is obligatory to fulfil the necessary papers as per instructions given by the authorities by their circulars in addition to above criterion.
20.	Application for Registering Society (A form)
21.	Table giving information of society (B Form)
22.	Table giving details of the members (C Form)
23.	Statement of Accounts of the Members (D Form)
24.	Notarized Guarantee letter by the Chief Promoter of the society on the stamp Paper of Rs. 100/-
25.	Notarized Guarantee letter by the Builder, Promoter on the Stamp Paper of Rs. 100/-
26.	Affidavit of Members (Affidavit of Minimum 10 Promoters)
27.	Two copies of bye laws of the Society approved by the Commissioner, Co-operation and Registrar, Co-operative Societies and Maharashtra State, Pune
28.	Proof of the bank balance of the promoter member (deposit of each share of Rs. 500 and admission fee of Rs. 100), after getting permission for reservation in the District Central Co-operative Bank
29.	Challan of Rs. 2500/- deposited in the Government Treasury Registration fee for the Housing Society of Backward class is Rs. 50/-

 

• For Tenant Ownership Housing Society, in addition to the above mentioned documents, Layout Plan and Zone Certificate from the competent authority regarding in which area the land situated, are required.

 

• If builder/ promoter is not co-operating in registering the Co-operative Housing Society, then in that case, the application for registration of society be submitted in Form 6 (Rule 12) before the District Deputy Registrar, who has been given power under section 10(1) of the Maharashtra Ownership Flats Act 1963. While submitting the said proposal, a Notarized Indemnity Bond of the members who applied for the registration of society on the stamp paper of Rs. 200 is required.

 

Stamp duty Present rates of stamp duty for residential premises in the city of Mumbai are RS. 38,750/- on Rs. 10,00,000/-. Thereafter it is @ 8% for the additional value. The rate of stamp duty for shops/Galas/office Premises and Garage even if used for car parking is 10% in Mumbai Stamp duty has to be paid on the agreement Value or the market value of the property whichever is higher. Stamp duty has to be paid every time the flat is being sold. Stamp duty has to be paid even if it is a transfer within family. If the authorities are demanding more stamp duty than the agreement value, then a representation should be made to the authorities emphasizing the below mentioned points (as may be applicable); – (a) Possession of the premises will be acquired at a later date. (10% reduction in the market value is normally given                       by the town planners if possession is not given to the purchaser at the time of execution of the agreement) (b) The duty has to paid on built up are and not super built up area. (c) If payments have been made in say 1995 and the agreement has been executed in 1998 then the market value of                      the year 1995 has to be taken as per the principles of Land Acquisition Act. (d) There are reductions in the market value if the size of the shop is big. (e) The area is lacking in infrastructural facilities. (f) There is a defect in the title of the property and therefore, market value will also be reduced. (g) The officer should be told to inspect the premises and the only the market value should be fixed.   Inspite of a fall in the property prices in the last few years the market value as mentioned in ready reckoner by government has increased by more than 50%. Earlier, for old buildings, land plus construction cost method of valuation was followed by many officers.   Presently, land plus construction cost system of valuation has been stopped. & Secondly the market value per sq. ft. has been increased and thirdly the quantum of depreciation given for old buildings has been reduced thereby.

 

 

APPROVAL BY REGISTRAR

 

 

• It is the duty of the concerned Registrar to register the Co-operative Housing Society, by scrutinizing the proposal submitted after fulfillment of above mentioned documents, and shall make an arrangement of issuing certificate of registration society under Section 9(1) of the Maharashtra Co-operative Society Act 1960, and copy of the registered bye-law, memorandum regarding registration of society to the chief promoter.

 

• The order regarding registration of society should have been sent for publishing in government gazette to the Government Printing Press for appropriate action. It is necessary to take decision on the registration of the society within a period of two months from the date of the proposal of the society submitted to the Registrar.

 

• If proposal of society registration is denied or no decision is taken within two months then it is necessary to send that proposal to the Divisional Joint Registrar, Co-operative Societies under section 152 of the Maharashtra Co. operative societies Act, can be approached.

 

 

FIRST GENERAL BODY MEETING OBLIGATORY AGENDA (AFTER REGISTRATION

SR. NO.	AGENDA/S
1.	To elect a Chairman for the meeting
2.	To admit persons to membership who have applied for membership of the society.
3.	To elect a provisional Managing Committee
4.	To receive and approve the statement of account as prepared by the Chief Promoter of the society up to 14 days prior to the first general body meeting of the society.
5.	To authorize the committee to secure conveyance of right title and interest in the property in the name of the society from the promoter builder
6.	To impose restrictions on raising loan amount from outside
7.	To appoint internal auditor and to fix his remuneration
8.	To authorize one of the members of the provisional committee to call the first meeting of the provisional committee
9.	To take decision about taking membership of District Housing Federation and other institutions
10.	To give power to one member of provisional management committee to call meeting of the managing committee
11.	To consider the matters raised by the member except these matters which are necessary for giving advance notice with the permission of chairman and eleventh hour matter and to make resolution in that regard.

 

 

FREQUENTLY ASKED QUESTIONS

 

1. Is the chief promoters have rights to withdraw money deposited in the bank in the name of proposal society?

• The chief promoter no such rights. The chief promoter has a right to withdraw money before registration of society and with the prior consent of the registrar.

 

2. Minimum how many promoter members are to be participated in the society registration proposal?

• If the building is built by the Builder and Developer than 51 per cent purchaser or promoter should be participated in the registration proposal.

 

3. What is the registration fee for registering co-operative housing society?

• It is necessary to pay the registration fee at the rate, prescribed by the government time to time. At present the rate of the registration fee is as under:
• Co-owner/Ownership/Co. operative Housing Society Rs. 2,500/-
• Other (general) Co. Operative societies Rs. 2,500/-

 

4. Minimum how many promoters’ sign are required on the registration proposal?

• Sign of fifty one per cent promoters/who participated in the registration proposal are necessary.

 

5. When the condition of minimum 20 percent backward class member is applied while registering the co-operative housing societies?

• The said condition is applicable if the Authority who gave the financial assistant or land to the society laid down such condition.

 

 

 

6. Is it necessary that the promoters of the society have to make an application to chief promoter for membership before registration of society?

• Yes, if an application of membership is made before registration of society, then it would be feasible to the chief promoter to take sign on the “Y” form which is to be submitted to the registrar with the proposal of registration and to give its receipt.

 

7. What are the remedies to be adopted if some person collected money on account of share capital from the proposal members in the name of registration of society by providing false information?

• It is a sort of offence under section 146 of the Maharashtra Co-operative societies ACT 1960. Prosecution can be filed against such person by making formed application to the concerned Divisional Joint Registrar and with his consent.

 

8. Whether the registration of the building having less than 10 flats is made?

• Subject to the following orders the society having less than 10 members can found the only condition is that the built up area of each flat should not be more than 700 sq. ft. carpet area/ built up area and the F.S.I. should not be balanced.

 

9. What are the measures to be adopted if the chief promoters did not deposit the amount of the share capital collected by the Chief Promoter in the bank?

• The said act of the Chief Promoter can become the offence under section 146 of the Maharashtra Co. Operative Societies Act, 1960. Similarly, prosecution may be file in the competent court against the chief promoter with the consent of the concerned Divisional Joint Registrar.

 

10. What is the Area of Operation of the Society?

• The Area of Operation of the Society is confined to the area in which it is located. The Society must specify its Area of Operation in its Bye-laws while submitting its bye-laws for approval before the Registering Authority during the registration of the Society. For the societies in Brihan Mumbai, they must insert the City Survey Number/Gat Number and Ward in its Bye-laws. For the societies located at other places, they must insert the City Survey Number/Gat Number and Municipal Corporation/City/Village, Taluka and District.

 

11. What are the remedies if the proposed of societies registration is denied?

• Divisional Joint Registrar, Co-operative Societies under section 152 of the Maharashtra Co. operative societies Act.

 

12. What are the alternations if builder is not co-operating for forming co-operative society?

• In such situation, the chief promoter of the society should submit the registration proposal to the concerned registrar in the category of builders’ non-co-operation.

 

13. Within how many days has the change in the registered address of the Society to be intimated to the Registering Authority?

• The Society has to intimate the Registering Authority and all others concerned about any change in the registered address of the society within 30 days of such change.

 

14. What is the procedure for changing the name of the Society?

• The Society has to follow the procedure which is laid down under Section 15 of the Act and Rule 14 of the Rules for changing its name. Section 15 and Rule 14 are reproduced hereunder:

Section 15: Change of Name:

• A Society may, by resolution passed at a General Meeting and with the approval of the Registrar, change its name; but such change shall not affect any right or obligation of the Society, or of any of its members, or past members, or deceased members; and any legal proceedings pending before any person, authority or Court may be continued by or against the Society, under its new name.

• Where a Society changes its name, the Registrar shall enter the new name in its place in the register of Societies and shall also amend the certificate of registration accordingly.

Rule 14: Change in name of Society:

• The name of a Society may be changed under Section 15 so howsoever that it does not refer to any caste or religious denomination and is not inconsistent with the objects of the Society.
• Every change in the name of a Society shall be made by an amendment of its Bye-laws and shall be notified in the Official Gazette.
• After the change in the name is approved by the Registrar, the Society shall send the original registration certificate for amendment to the Registrar, who shall return the same to the Society duly amended.

The registrar shall enter the new name in the register of Societies maintained by him.

 

15. What is the procedure for changing the address of the society?

• For the change in the registered address of the Society, it has to follow the procedure as laid down under Rule 31 of the Maharashtra Co-operative Societies Rules of 1961. Rule 31 of the Rules are reproduced as under:

Rule 31: Procedure for change of address of Societies:

• Every Society shall communicate in writing to the Registrar its postal address as indicated in its Bye-laws registered under the Act and wherever applicable mention the name of the District, Taluka, Tahsil, Town or Village, Municipal Ward or Mohalla, Street, House Number and Postal Circle. While communicating the postal address of the Society, the Committee of the Society shall also send a copy of the resolution passed by it for adoption of the address communicated to the registrar.

• On receipt of the Communication from the Society under Sub-Rule 1, the Registrar shall register the address communicated by the Society in a register to be maintained for that purpose and inform the Society of such registration.

• Every change in its registered address shall be communicated by the Society to the Registrar in the manner laid down in Sub-Rule 1.

Any such change shall not be treated as registered unless:

1. It is indicated in the Bye-laws by amending them and the amendment so made is registered under the Act, and
2. The change is registered in the manner laid down in Sub-Rule 2.

• The registered address of a Society or such change therein as may be registered, from time to time, shall be exhibited on the notice board of the Society, immediately after registration.

 

16. Under which section of the co-operation Act and in which situation the deregistration of society made?

• Under section 21 (A) of the Maharashtra co-operative housing society Act 1960, the society can be deregistered. If the society is registered under following situation: –

• Registrar by giving false information
• Work of the society not completed.
• Purpose of not server for which it was format.

 

17. How will the Common Seal of a Society be used?

• The Common Seal of the Society has to be kept in the custody of the Secretary of the society and has to be used under the authority by means of a resolution of the Committee and the deeds of conveyance, share certificate or any other documents, to which the seal is affixed on behalf of the Society, which shall be attested by the Chairman, the Secretary and one member of the committee, authorized by the committee in that behalf.

 

18. What is the advantage of registration of a Society?

• The registration of a Society renders it to be a body corporate by the name under which it is registered, with perpetual succession and common seal and with power to acquire, hold and dispose of the property, to enter into contracts and other legal proceedings and do all such things as are necessary for the purpose for which it is constituted.

 

19. In which circumstances the registration of the co-operative housing societies becomes cancelled?

• Under section 21 of the Maharashtra co-operative society Act 1960, the registration of the society becomes cancelled in the following situation.

1. If the society transferred its all property and dues to another society.
2. If the society is amalgamating with another society.
3. If the society is divided in two or more part.
4. If the liquidation procedure of the society under section 109 of the Maharashtra co-operation society Act 1960 is completed.

 

20. Is a Registrar competent for making division of the Society?

• The Registrar may impose division of the Society if he thinks it necessary in keeping with interest of the members of society.

 

21. What is a provision for making separation or amalgamation of the Housing Society?

• According to Section 17 of Co-operation Law if a resolution is passed by the majority of the members present in the General Body Meeting and with prior permission of the concerned Dy/Asst. Registrar than the society can

1. Merge in another society.
2. Transfer owns properties and liability in total or part in another society.
3. Divide in 2 or more societies.

Classification of the society can be changed. However, in this regard, unless following the procedure as mentioned in Section 17 and Rule 16 made there under of co-operation law, the above cannot be completed legally. Similarly, even with the orders of the Registrar the process of division or amalgamation of the society can be made under Section 18 and Rule 17.

 

22. In what circumstances the amalgamation or division of the Housing Society can be done?

• Society’s division can take place in following circumstances.

1. If there are two or more than two buildings.
2. There should be a separate water tank and connections in each building.
3. There should be a separate entrance.

 

23. Can Registrar impose Bye-laws?

• Registrar has powers under Section 14 of the Maharashtra Co-operative Societies Act 1960 to impose Bye-law amendment which is in the interest of the society.

 

24. If the registrar has not given his decision on the registration proposal within the period of two months, then what is alternative on its?

• If the Registrar has not given his decision on the proposal of registration within the period of two months, then the proposed should be submitted to the Sr. Officer within the 15 days of expiry of the two months period. If the Sr. officer has not given decision on this registration proposed within two months period, then it is presumed that deemed registration is executed under the provisions in the Maharashtra co. operative societies Act.