HOW TO RECOVER DUES FROM DEFAULTER MEMBERS OF HOUSING SOCIETY
A Housing Society needs funds to operate efficiently and effectively. It normally has no commercial business and depends entirely on charges payable by the members for its sustenance and continuance. However, the problem of defaults seriously disturbs the functioning of the society. When the dues are not paid by any defaulter-members, it adversely affects the functioning and development of a society. No other matter receives greater attention in the general body meetings or consumes more time and energy of the managing committee. It is no exaggeration to say that ‘default’ is the single most hard-core problem encountered by almost every society. Unfortunately, the members who regularly make payment of their outgoings suffer the consequences of inferior service due to decreased inflow of funds.
Some Housing Societies have the problem of recovering dues from members who are habitual defaulters. The causes of default vary from blatant violation of the byelaws by the managing committees to stubborn attitude of the defaulter-members. When the default is the result of charging an amount that is either impermissible or inadmissible, and the member concerned defaults, the blame should squarely lie on the high-handed administrative skills of the managing committees. In the real sense this ‘default’ is not a default at all. A ‘default’ occurs only when a member fails to make payment of the charges that are legally due. What a managing committee considers ‘rightfully’ due may not be ‘legally’ due. As such, it is imperative for a managing committee to know what is chargeable and what is not. Barring this exception, a default is a bane that needs timely action, both preventive and curative.
Unless the managing committee meets this problem head-on, it grows like a monster and the entire society feels the pinch. Many a time, it is no use lecturing a defaulter-member to clear the dues particularly when the default is opted out of choice and runs like a low-risk business. The time taken by the Society in taking action against the defaulters is directly proportional to the hardships that may be faced for recovering the said dues in future.
Hence, the managing committee should take timely action on a regular basis because defaults can only be controlled, not entirely eliminated. The moment there is no action; someone adds himself to the bandwagon of defaulters. It is only the timely action of the managing committee that deters a member from turning to be a defaulter, and keeps this menace under control and manageable.
Section 101 of the Maharashtra co-operative societies (MCS) Act 1960 has a solution for this and the best part is that Co-operative courts can be entirely avoided. As per the section, societies can obtain ”Recovery certificate” from the Registering Authority and recover dues from the defaulter member by executing the same through special Recovery officer appointed for the purpose.
1. Prepare a statement of dues in respect of each defaulter-member showing particulars of month-wise dues indicating bill no., bill amount, amount paid, amount balance, interest on balance amount etc. Make sure that the ‘dues’ do not include inadmissible* and impermissible** amounts, and the interest charged is simple interest at rate fixed by the general body. The maximum permissible interest is 21% per annum (*example: compound interest; **example: levying of non occupancy charges when a flat is kept closed).
2. Discuss this issue under the regular agenda in the next monthly meeting of the managing committee and pass a resolution to the effect that the defaulter-member be issued with a demand notice to pay the dues by a certain date, failing which action under section 101 of the MCS Act, would follow.
3. Issue the demand notice stating clearly the amount, date by which it should be paid (15 days from the date of receipt of notice would be ideal), and the consequences of non-payment (i.e. action under section 101). The demand notice need not be in any particular form, and may be signed and issued by the Secretary.
4. If the payment is not received by the date specified, or only part-payment is received, and the committee decides to go ahead to recover the balance, make an application under section 101 to the Assistant/Deputy Registrar (the authority that registered your society). There should be individual application in respect of each defaulter-member.
5. Make your application with the following particulars:
(a) Name and place of authority to whom the application is made
(Deputy/Assistant Registrar, Co-operative Societies, ____)
(b) Name, full address and registration No. of the society
(through its Secretary, Shri/Smt.______, APPLICANT)
(c) Name and address of the defaulter-member
(Shri/Smt.______, Member, Flat/Shop No.____, OPPONENT)
(d) Details in separate paragraphs beginning with the amount due, and explaining the efforts made by the managing committee to recover dues and the failure of the defaulter-member to make payment.
6. Make three complete sets of the application, the first copy to the Registrar, the second to the defaulter-member (to be served through the Registrar), and the third copy for your record. Each copy of the application should be enclosed with true copies of the:
(a) Statement of dues,
(b) Resolution, and
(c) Demand notice.
7. There is some fee payable on this application, depending upon the amount due. The fee has to be paid through a challan payable at the Reserve Bank of India.
The rate of fee payable is as under:
| AMOUNT | PERCENTAGE | FEES PAYABLE |
| 1,000/- | 5.50% | Rs. 15/- |
| 1,001/- to 2,000/- | 4.50% | Rs. 20/- |
| 2,001/- to 5,000/- | 3.50% | Rs. 20/- |
| 5,001/- & Above | 3% | Rs. 25/- |
| Maximum Fee Rs. 1,000/ | ||
8. The Registrar, after scrutiny of the application, will fix a date to decide the matter and informs both the parties (society and the defaulter-member). On the date fixed (or any other subsequent date/s to which the matter is adjourned) and after hearing both the parties, the Registrar decides the matter and if satisfied, issues a certificate of recovery to recover the dues from the defaulter-member.
The forms and documents required in the entire procedure of Section 101 of MCS Act are:
(a) Form of notice to be issued to the member/ occupant.
(b) Draft resolution to be passed by the manging committee
(c) Form of final notice to be issued to the member/occupant
(d) Form of application for issue of recovery certificate \
(e) Form of letter regarding remittance of enquiry fee into government treasury
(f) Form of recovery certificate.
A certificate of recovery issued by the Registrar is final and conclusive proof of the arrears stated to be due, and recoverable from the defaulter-member. Even though the defaulter-member may appeal against the order of the Registrar, before preferring an appeal, he has to make payment of not less than 50% of the amount due. There will be little or no scope for an ‘appeal’ when the certificate of recovery granted by the Registrar is for recovery of dues that are legitimately levied by the managing committee. Moreover, if the dues claimed are legitimate, they will be recovered, no matter how many appeals a defaulter-member makes.
No comments:
Post a Comment